Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: JDN who wrote (44509)	8/18/2001 10:38:29 AM
From: QwikSand	Respond to of 64865

Far as I know Housing still holding up well but autos falling off. JDN: The things I'm reading about housing these days are scaring the crap out of me. Rates are down. Housing prices are up. People refinance, borrowing big bucks on their house at a lower rate. They pay off the old mortgage, and with the cash left over they buy consumer goods, hence the consumer spending numbers keep 'looking good' even though the economy's head has already been chopped off. This isn't just a small phenomenon, it's happening enough to get written up all over the press. As AG continues to push on a string with his rate cuts, and the layoffs continue and demand drops, these people with the bigger mortgages and bigger TV sets won't be able to pay them, and we get a real-estate asset bubble popping with dire results. The real carnage begins, with people losing their houses. The price pressure on real estate magically transforms into more overcapacity and deflation, as it already has done in the San Francisco bay area where office-space rates have dropped in half--or lower--in some spots. I think Steve Lee has it about right, we're just seeing the beginning of this mess. I don't know if it's 3 or 5 or 7 years (and neither does Steve Lee :-). But think back 8 or 9 months when the utterly discredited "second-half recovery" theory was rampant in our sterling financial media. It sort of shows how much the information fed to the American public on a daily basis is worth. There are still people who dare to suggest that people taking equity out of their houses, going deeper in debt, and spending the cash on SUV's and TV sets are going to save us from a recession. How much is it worth? Less than we pay for it. Congratulations on having your IRA in cash. That move will look smarter and smarter in a deflationary environment. --QS