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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: John Vosilla who wrote (88018)10/27/2007 12:09:36 PM
From: Mike Johnston  Read Replies (1) of 110194
 
"You can't have raging inflation and declining home prices in a balanced market at the same time"

I think house prices are pretty much close to the bottom in nominal terms. But in real terms they will plunge at least another 50% or more, so will the stock market ( in real terms ).

Many homeowners will be bailed out by the government through Fannie M, CFC or state governments but in a few years they will not be able to afford taxes or to heat or repair the house.

It will take only 3.6 years of 20% inflation for real house prices to decline 50% even though their nominal prices stay the same.

In my scenario gold will exceed the price of the SP500 somewhere around 1800 area in 08/09 ( read : 50% plunge in real stock prices is coming )
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