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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: CYBERKEN who wrote (554891)	3/22/2004 2:47:13 PM
From: DuckTapeSunroof	Respond to of 769667

The Economist looks ahead. It thinks it sees the next big trend in real estate. Even a slight upward bias in interest rates could do for the average house what Al Qaeda does to Baghdad hotels. Expect a 20% drop in prices, says the Economist. It would be the "first global property bust in history," says its source. It might also be the biggest financial bust in history. Property is a bigger business than stocks. More people own property. There's more debt leaning directly on the wobbly walls of real estate. And more people are in danger of getting crushed when the earth shakes and the bricks and mortar come falling down. While there are about $30 trillion worth of stocks in the world, the property market is estimated at about $50 trillion. Much of it is heavily mortgaged. And in the UK, for example, rental income often doesn't even cover mortgage payments, let alone upkeep and other costs. In the expansion phase of the debt cycle, debt increased... and everything you could buy with debt was bid up. In the contraction phase, which we think is just beginning, debt will be paid down, downgraded, withheld, discounted, written off, blown up, cancelled, renegotiated and worked out. What it bought -- notably real estate -- will go down.