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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 (30416)	4/12/2005 11:47:33 AM
From: mishedlo	Read Replies (2) \| Respond to of 110194

Massive Capital Losses on Forex Reserves - Part 2 George J. Paulos, Editor/ Publisher Freebuck.com chimes in on the discussion as does Rien from the Motley FOOL. globaleconomicanalysis.blogspot.com Feel Free to rebut. I am hoping to get Roubini chiming in. Perhaps this will do it. Mish

To: russwinter who wrote (30416)	4/12/2005 12:03:49 PM
From: John Vosilla	Read Replies (2) \| Respond to of 110194

As these folks get in trouble, and turn over their keys, I can make a good case that rents will go higher, not lower. I predict housing (and apartment building) prices decline, but rents will actually increase some. You constantly think universal deflation, I think in terms of maladjustment, which is IMO the correct model to use. Perhaps the end result is your thesis along with Mish's Japanese style version of slowly deflating asset values. I'm seeing operating costs skyrocketing for property investors at double digit inflation figures. Even a decent uptick in rents won't even begin to cover that. Remember the good old days of 9-10% cap rates? When those valuations are back then we hit bottom. Conceivable that rents could double or even triple in 7+ years while values drop 30-50%.

To: russwinter who wrote (30416)	4/12/2005 12:06:09 PM
From: ild	Read Replies (1) \| Respond to of 110194

<<<I can make a good case that rents will go higher, not lower>>> I'd like to hear it.

To: russwinter who wrote (30416)	4/12/2005 1:37:01 PM
From: benwood	Read Replies (1) \| Respond to of 110194

I think your model -- housing down, and rents up -- makes sense. People who quit claim deed will look to rentals. Those who get squeezed out will look to rentals. And landlords have been squeezed already and will be looking for every toehold for rent increases. I believe that in Heinz's long term view a year or two ago he described an environment like you describe, with deflation and inflation (the maladjustment correction). As he put it, things you NEED will go up, things you WANT will go down. I believe this to be true -- anything that is a discretionary item, like a new wide screen TV or a fully loaded minivan or SUV, will have it's sales hurt as the consumers' discretionary budget collapses. However, things like college tuition and doctor fees and construction will be held up by wages and by the enormous inertial of expectations and behaviors built up during the mania and ensuing debt bubbles. I have a college bound junior right now, and I'm simply stunned at the monetary attitudes of other parents who are expecting (almost as if to demand) to pay 40 thousand a year for college for their kids without blinking an eye. The parents of his jazz band sign up for overseas tours biannually without blinking an eye, and often the entire family tags along. My wife have income in the top 20% nationally yet I feel like we are in the bottom 20% next to my peers' spending mentality. For this sort of reason, I think that any potential deflation of the perceived MUST HAVE items will be long in coming, if at all. Perhaps if we get a 15-year grind like Japan it will eventually come on, but again the inertia in the system is huge.