80 to 90% Drop in home prices?
from the automatic earth:
Ilargi: One of the few things that Stoneleigh and I occasionally disagree on -and there really are but a few- is the rate at which real estate prices will decline. I proudly and steadfastly maintain that it will be 80+%, while she insists it will be 90%. Once you do the math, it’s obvious that's no basis for a healthy disagreement. We basically even agree on this one. Bummer!
The reactions to the fact that Stoneleigh mentioned her 90% prediction in her latest interview with Max Keiser are amusing. Not least of all Max' own immediate one, jokingly suggesting the segment may need to end up on the cutting room floor for being too extreme. Mostly, though, I've seen tons of people say that Stoneleigh is a loony doomer who has no idea what she says. Thing is, that would make me a loony doomer as well, and no, you ain't getting away with that one.
Of course we see where people are coming from; no-one who hasn‘t thoroughly thought this through could possibly see an 80-90% drop in home prices, and most who have can't either. However, that's where the Big Picture enters, stage left in five.
What we have been predicting for the past five-odd years is first and foremost a credit crunch and collapse, across the western world. That is, available credit will decrease ever more, until there's hardly any of it left. And that in turn will have grave consequences across economies, including real estate markets.
Our economies run on credit, it's their lifeblood. Take it away, and they will stop running. Not altogether, but to a very large extent. Shipping letters of credit are getting harder to procure; the Baltic Dry Index is once more tumbling as we speak. Nearly everything you find in your stores is bought with credit; if storeowners would have to pay in advance for what they haven't sold yet, they wouldn't be able to.
Now imagine that coming to a grinding halt.
read the rest at:
theautomaticearth.blogspot.com
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IMHO, if home prices drop that much we'll be buying them with something other than dollars... |
