To: jrhana who wrote (20079 ) 10/17/2004 1:16:32 PM From: russwinter Read Replies (2) | Respond to I have a different twist on real estate. It has already exhibited Crack Up Boom behavior. The reason for this is that it's a poor man's version of the Crack Up Boom. And note what Mises said about inflations, they exhibit different pricing structures at different times, not always uniform especially at first. often without money to engage in a Giant Carry Trade. But it's still crack up boom behavior on the part of buyers, that recognizes real interest rates are far too low, given the true level of inflation, and that lending standards are far too easy. The issue going forward will be the behavior of the lenders into this Bubble. Will they now recognize (too late) that a Flucht in die Sachwerte is a threat, and therefore withhold credit extension on easy terms to people without money? This kind of loan is antithematic to sound banking, you just don't loan money to poor credits at big negative real rates. In normal, healthy conditions dominated by prudent private lenders, adjustments would have happened several years ago. However, although they have tagged along, private lenders aren't really the ones making most of these real estate loans. Mortgage finance has been preempted and socialized by merchantilistic Asian governments and central banks (and also US based GSEs) engaging in foolish policy. Prudent lending behavior is not a factor, it's all about currency manipulation.
