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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: J_Locke who wrote (73086)	10/28/2006 12:07:38 AM
From: UncleBigs	Respond to of 110194

great post J Lo. I agree completely.

To: J_Locke who wrote (73086)	10/28/2006 12:29:55 AM
From: NOW	Respond to of 110194

i was not aware that an economy which that deteriorates bit by bit like a boiled frog was what is meant by "soft landing"

To: J_Locke who wrote (73086)	10/28/2006 9:43:52 AM
From: TobagoJack	Read Replies (1) \| Respond to of 110194

<<soft ... slow landing>> worldmarket.blogspot.com Thinking back on the Hong Kong experience with housing bubble in 1997-2000, without exaggerations: - Monetary and price inflation rate (fueled by China and USA, via pegged currency that is still HKD) was higher than borrowing burden - Every other street level shop on very many streets are real estate agencies - Lots of pre-sales - Enough folks able to sell their place in the queue waiting for sales allocation for cash - Some banks specialize in mortgage debt only on parking space - Folks start buying overseas as well, raging from London and Toronto far away to Vietnam and China nearby - Parking spaces in residential buildings 30 minutes drive from CBD transacts for USD 80,000 - Small public traded companies announce purchase of 30 parking spaces, and watch share price increase, thus boosting borrowing capacity - Real estate agencies go IPO - The bell is tolled, trap door sprung, noose tightened, and rack cranked - Volume dries up - Some transactions still gets done, desperately - Mortgage debt still increases - All still under control - Bottom drops out - Lots of frauds and untruth come to light - Legal profession gets busy, and forensic accountants make a mint - A 'soft-landing correction' from peak to valley happens, of 60-80% depending on location - Folks get despondent and upside down - Real estate agencies disappear, along with retail shops, crushing rents, improving rental yields - Department store retail sales clerks get busy on phone to drum up retail sales, treat folks nice for a change, offer to fix buttons and mend belt loops while customers window shop, and is served tea - Nominal value of real estate stabilizes, and given that exchange rate was hard-pegged, take-home income takes a 40% scraping, while debt burden remain the same, pulverizing purchasing power - A 'soft landing' happens, in a manner of speaking, semantics really, and a time of opportunity, for the few, dawns Note: There are at least two ways to look at the situation in the Anglo nations with a possible housing bubble situation, that (i) the ultimate peak is not yet reached, because much financial engineering can still be put in place, and/or (ii) the real estate financing industry is not creative enough yet. Reminder: The bottom is not in until and unless buttons can be sewn on for free, while belt loops are mended at no charge.