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: Skeeter Bug who wrote (234470)	12/27/2009 5:05:33 PM
From: CalculatedRisk	Read Replies (2) of 306849

Skeeter, it is pretty easy to think up some ugly possibilities. With the banks, the balance sheets are still too opaque, and the Treasury has opted for a race between earnings (helped with low rates and a steep yield curve) and write-downs. At the same time, the government is doing everything possible to support house prices to help the banks minimize write-downs. No one really knows how the race will work out. As far as the debt, I'm not too worried in the short term. I was very concerned - as I noted here on SI in 2000 and 2001 - that the policies / comments of Bush and Greenspan would lead to large structural deficits. In 2004, I pointed out that the deficit would explode when the housing bust came and pile a cyclical deficit on top of the structural deficit. Well - surprise - that is the current situation. It is sad people didn't pay attention in 2001 when it really mattered. In his 2001 testimony, Mr Greenspan talked of surpluses for the foreseeable future: federalreserve.gov Greenspan offered projections of "an on-budget surplus of almost $500 billion ... in fiscal year 2010". The National Debt would soon be retired and the Boomer's retirements secure. Greenspan offered a projection of "an implicit on-budget surplus under baseline assumptions well past 2030 despite the budgetary pressures from the aging of the baby-boom generation, especially on the major health programs." How did that work out? ROFLOL. Here was something I wrote in 2005 expressing your concern about foreign central banks and the U.S. debt: calculatedriskblog.com The last part (your question about foreign CBs) hasn't happened yet - and I'm not too worried in 2010 - but it could be a concern longer term best wishes

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