TJ, that was a few years ago and had little to do with what we were discussing. Interestingly, <Now we still need to have financial relativity theory correct the relationship among incomes, rents and house prices. Which is not a slam dunk. But, I remain hopeful [rather than complacent] that Big Ben will complete what our great and estimable idol Uncle Al KBE has left as a legacy. >
That was now over three years ago and still house prices are falling as incomes, rents and house prices continue to seek equilibrium after being absurdly out of kilter.
You having been right 3 years ago over various matters doesn't mean you can dine out on that for the rest of your days. As in golf, you are only as good as your last round, and the shot that matters is your next one.
If you parse my ululation a little, you'll see that it wasn't carte blanch of general wonderment.
Meanwhile, is the current rally fool's gold or the real thing? There are hordes of people with money in the bank which they were hoping would provide them with a modest income but which now is at very UnHappy Meal interest rates. They must be thinking they have to do something, anything, to get a better return. Dividends of 1% would be looking extremely good at present. No wonder there has been a surge in share prices.
A look at the Nikkei from 1990 to now, property prices and returns on Yen [interest rates] and shares [dividends] shows just how long and arduous investment interregnums can be.
In 1989 we had a Japanese student staying with us [an extremely bright young woman]. I was explaining to her how the Nikkei had gone berserk and it was absurd that the Emperor's tennis court was worth more than Auckland and the palace was worth more than California [give or take a bit]. They should expect a very substantial correction to revalue things to reality. Sure enough and soon enough, the revaluation arrived with a thump and continued for a long time. A very long time. I really did NOT in the slightest consider that 20 years later, I'd be entering my dotage and the Nikkei would be still at less than quarter of the 1989 level.
It's quite a warning to the rest of us how things can go bad and stay that way. And they can get a lot worse, in Zimbabwe fashion, if politicians work hard enough to "correct" everything.
From May 1999 onwards I was predicting a Biotelecosmictechdot.com bust, but not of such extensive proportions or lasting as long. The housing bust should be much more substantial and long-lasting since it was allowed to go so far up the speculative ladder. In snakes and ladders, there's a long ladder and a long snake = the housing boom and bust are those two biggies.
Mqurice |
