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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: X Y Zebra who wrote (24777)	10/24/2004 8:37:00 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

Real estate benefits for a period under Monetarism, but later falls back to those bothersome real factors that Bernanke treats as a footnote to the Big Plan. Like your example of the teenager given a Porsche and a credit card, Monetarism reaches a point like Japan where no further debt can be induced into the economy - the constraints being near zero interest rates and stagnant income growth. When no further leverage can be forced into the system, those who need further appreciation to pay their loans default. Previously, we have always reached this point artificially when the Fed decides to put the brakes on debt creation by raising both rates and lending standards. But in a deflationary environment, and with true-believers at the Fed, the Fed currently sees no reason for the economy to even have brakes in the first place. They see themselves as preventing deflation by "stabilizing prices" as if it were some sort of dangerous disease. But as Charles Rist said, "A policy aimed at monetary stability will secure a relative stability of prices, but the economic history of the 1920s teaches us that a policy whose goal is stabilization of prices may result in inflation of money and credit, and very unsound speculation." The end-game for real estate will be ugly. .

To: X Y Zebra who wrote (24777)	10/24/2004 9:23:56 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

I think your observation about financial engineering to try to replace exported jobs is correct. So how to protect yourself? For the time being, I sent virtually all of my life savings more than a year ago to Australia earning more than 5% in bank accounts (and some money to Canada simply because I can drive there). So far the central bank of Australia has taken a firm stance against the Fed's insane scheme. I think their appreciating dollar is a combination of: 1.) the Australian Reserve Bank's policy and 2.) inflated raw materials prices (farm output, metals, minerals, and petrol products) all of which Australia exports. I also have a lot of faith in Australia's internal demand as well, since the consumer there is far less leveraged. .

To: X Y Zebra who wrote (24777)	10/24/2004 9:58:10 PM
From: Elroy Jetson	Read Replies (2) \| Respond to of 306849

Perhaps I should add some pertinent personal information. My parents, age 73 and 71, are real estate developers, always living with huge debts. They generally continue to own everything they build -- retail and office in the San Francisco Bay Area. If the economy collapses in a way that helps those with massive debts, I'll inherit many millions. If the economy collapses the way it did in the 1930s then I'll be the big winner - except that I'll have to support my parents, and probably my brother and sister and their families as well. Even if I didn't see things the way I do, it wouldn't be strategically wise for me to be taking the same bet as my parents.