The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: GST who wrote (98793)	1/3/2008 7:58:22 AM
From: RockyBalboa	Read Replies (1) of 306849

I just reread "The Devil takes the Hindmost". I am no historian so it is not my claim that people learn nothing. Yet, the mechanics of a bubble and its unwinding still seem to remain the same in the medieval ages or the 21th century. As you posted about (easy) credit and its impact on inflation: a striking example is the South Sea Bubble: The exchange of an asset (public debt titles) with a relatively stable and well defined value measured by interest rates into stock with variable and to be defined conversion ratios; and the subsequent stock floatation with as little as 10% down payment did the remainder being loaned, after all contributed heavily to asset inflation in unrelated assets, like real estate, raw materials and livestock. I was wondering how that could be as it meant that lots of equity was extracted from the inflated asset class (bubble stocks). By means of credit only after the bubble burst, the general unwinding of excess credit depressed prices of all assets including those ones which havent been bid up earlier.

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