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

To: GraceZ who wrote (31491)	5/19/2005 9:05:41 AM
From: Mike Johnston	Read Replies (3) \| Respond to of 306849

I think somebody is in a desperation mode to buy government bonds. The Fed knows that bursting of the bubble would have dire consequences. What would a 50% decline in house prices on the coasts mean ? 1. Majority of the banks would collapse. 2. 10-20 million foreclosures (in all likelihood most of those that bought in the last 2 years of the bubble) 3. 20 million + jobs lost. 4. Budget deficit at 20% of GDP due to collapse of receipts. 5. Most of the businesses involved in real estate would go bankrupt including homebuilders, mortgage brokers etc. 6. Collapse of GSE's. 7. GDP would probably decline by 30% or more. Is this going to happen ? I believe it will not. However those things should happen, if prices were to go down 50%. So what gives. I think there already is and will be a massive intervention in the market by the government. Whatever it takes. The housing economy is too big too fail at this point. I think most people would agree that massive monetary inflation and introduction of socialism into parts of the economy is a better outcome than a horrific depression that would make The Great Depression like like a boom.