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To: Lizzie Tudor who wrote (63765)	6/22/1999 12:48:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

I think his point is that I don't think the exploding real estate values out here mean much as far as the US economy is concerned. Some people here share KIS' view that this huge bubble in housing costs (which they attribute to Greenspan's "loose" handling of the money supply) will eventually unravel causing a deeper recession than we would have if things just slowly escalated upwards I doubt KIS thought that far ahead. You are giving credit where credit is not due.

To: Lizzie Tudor who wrote (63765)	6/22/1999 2:33:00 PM
From: Greater Fool	Respond to of 164684

OT of course ... Pardon me for jumping in, but I beg to differ with your assessment of local real estate values as a "bubble". The tax laws were tremendously different in the 70's and 80's (with passive activity losses allowed), encouraging real estate speculation. We don't now have strong tax incentives to buy real estate, except for the mortgage interest deduction and the capital gains exclusion. (The exclusion is new, and I am not really sure if it's a net boost or drain on property values.) I don't think this is a "bubble", because there's little speculative investment driving it. In a key difference, Tejas cities have essentially unlimited land to expand into, unlike the valley, and so the land values have hardly any floor beyond their use for agriculture. This encourages boom-or-bust cycles that have a life about as long as it takes to build housing on raw land. As far as I can tell, KIS is completely wrong that the valuations -- of stocks or real estate -- spell doom for the economy. But then again, he's the one that hobnobs with VC's and CEO's, so I'm sure he knows more than I.