TJ, re your worries, the great escape of Y2K is now 6 years old. Still no deflationary implosion. Rant from Mq way back then, before The Great Financial Collapse of 2001 was started:http://www.siliconinvestor.com/readmsg.aspx?msgid=13795203
The Y2K worries are now all just water under the bridge. Nothing much happened [in the grand scheme of things]. There is now just the small matter of a lot of houses in the USA, and some in NZ/Oz which are overpriced when salaries, wages, rents, interest rates, debts and prospects are considered.
As you say, Wealth Effect due to Biotelecosmictechdot.com irrational exuberance is nothing compared with the Wealth Effect from a rising tide raising all houses. No, wait. A rising tide raises all boats, not houses. Houses get swamped by rising tides, floods and storms.
The Biotelecosmictechdot.com bust was taken care of by our great and estimable idol Uncle Al KBE slashing interest rates in a world record reduction to world record low rates [Japan and Islamic interest rates excluded - Islam hides their interest rates by calling it something else]. I am not so sure that Big Ben will be able to pull off the same trick with a far more electorally-sensitive housing, income and debt crisis, which is a much bigger deal than the sharemarket.
Fortunately, Uncle Al KBE subsequently raised interest rates in a world record series of steps back to a Happy Meal level of 5.25%, which at least gives some wiggle room. I have a sneaking suspicion that the monster USA housing market might take a bit more than some wiggling to adjust the debt/asset/income/rent/tax/savings/inflation/deflation situation back to "steady as she goes".
Apparently some housing market clearing is under way in Oz.
Mqurice |
