So thus we have deflation coming, housing goes through the roof, consumers up to their eyeballs in debt and all will be okay? Increased wealth generated by many as well as strong corporate balance sheets is a big plus and keeps me from being negative as many are here on the overall economy. However the coastal housing bubble along with excess credit by a certain segment of the population will result in a needed correction of some magnitude to adjust for the imbalances.
Either there is inflation in which case rents go up, operating expenses of RE continue up, incomes go up, interest rates go up a lot and coastal housing collapses.
Or there is deflation in which case rents go down, operating expenses are flat, incomes go down, interest rates go down a little, credit tightens and coastal housing collapses.
The one in a million scenario is we enter a goldilocks economy for the next decade where we remain in lala land, fed fine tunes just perfectly, non of our foreign creditors call the loans due, inflation remains tame, economy continues humming along, wages increase at a fast but steady pace, the overextended consumer continues spending at a measured pace and the greatest bubbles of our lifetimes end up being a non event<g> |
