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

To: John Vosilla who wrote (30667)	5/4/2005 2:43:14 PM
From: The Wharf	Read Replies (1) \| Respond to of 306849

I like gold but the problem is the banks don't and physical demand is just not there. So you are almost betting on the failure of banks to control the amount of highly risky debt they hold. You are also betting that the Fed will increase currency which devalue future value of dollar as it increases rates. So you have a double whack to both the economy and dollar. To me who lives in LA it appears there is utterly no way that property can continue upwards unless wages move significantly higher. It is not just a local problem though it is a world problem where property values in commercial urban areas have increased far to rapidly. Expansion occurs and spec adds to inflation for a bit then it either has to contract or wages go up. On that base our FED here is fighting inflation it has utterly no control over with rates. This could create more unemployment here. The other big if to me is the we also have a dollar that is not one accustomed to being viewed as a peso yet If wages increase substantially our products become more costly in world trade and the world holds those dollars while the economy decreases in value. China labor cannot solve the problem that industrialized areas find when cost of living prices increase as jobs create demand. They are looking for that demand to spillover into the all of their nation and that will take more time than it appears to me the contraction world wide will take. If Elroy is right China has a bigger problem then we as her currency carries both the external risk of peg as well as internal risk of correction on overbuilt. Our problem is internal. How is income produced on flyover real estate?