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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (12588)	4/25/2004 6:31:25 PM
From: Elroy Jetson	Respond to of 110194

Many people have convinced themselves that higher mortgage rates are required to collapse a real estate bubble, yet I don't know of any price bubble which collapsed because of higher rates. I'd bet you can't think of such an example either. home.pacbell.net Here's a chart of mortgage rates from 1983 to 2004. The bubble in California home prices reached a peak in 1990 and declined until 1996. Maybe someone can point out to us the role higher rates played in this price collapse of 28% to 55%. Real estate bubbles simply run out of buyers. The supply of homes offered for sale remains very limited. Once prices have declined for several years, the number of homes offered for sale increases dramatically. You have correctly observed this is the way the property bubble collapsed in Japan. home.pacbell.net I would add this is the same way the property bubble of the 1880's in Southern California collapsed more than 100 years ago. The common factor is human behavior.

To: russwinter who wrote (12588)	4/25/2004 7:19:59 PM
From: Elroy Jetson	Respond to of 110194

This chart shows the ratio of home prices relative to the potential rent they could generate. home.pacbell.net The chart, from Paul Kasriel at Northern Trust, shows the extreme nature of the current real estate price bubble.

To: russwinter who wrote (12588)	4/25/2004 7:28:50 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 110194

Here's some charts which show the devastation of the American economy, created by the Reagan tax cuts of 1986. home.pacbell.net home.pacbell.net home.pacbell.net

To: russwinter who wrote (12588)	4/25/2004 11:06:39 PM
From: Peter Joseph	Respond to of 110194

Hi Russ, Even you are starting to give up (on predicting timeframes for the popping of the housing bubble). This must be the top <g> Really, i've learned more from your posts (and those of lambeth-palace and Jim Willie CB) in the past month, than in 2+ years of grad school. This thread is really the comforting voice of reason in a madly leveraged, speculative America. So when does "Russ Winter capital" start accepting funds from the public? Best wishes, Peter PS: Japan (and much of Asia) are compulsive savers. The USA, OTOH.. well, never mind. The differences are mind-numbing.