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

To: GraceZ who wrote (28230)	3/16/2005 1:14:10 PM
From: CalculatedRisk	Respond to of 306849

Grace, that is an interesting observation. My view was for the short term and, at least during that short period, there would be a dislocation phase that would impact the general economy. In an intermediate period, I agree with your assessment: money would flow to productive investments and savings - a positive for the economy. But correcting dislocations takes time, it doesn't happen overnight. And this misallocated capital (RE bubble) has an added problem. I think a significant portion of the increase in the trade deficit can be traced to the boom in mortgage debt. That means there might be some unwinding of international positions associated with a RE slow down. And that might have an additional negative impact (again short term - long term rebalancing the global economy is a positive). Best Regards.