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

To: GST who wrote (75234)	12/11/2006 12:17:54 AM
From: bart13	Read Replies (1) \| Respond to of 110194

As for positional goods -- a Harvard education is a perfect example. The value of a Harvard education lies in its social scarcity. Only so many people can get in. If it was easy to get in it would become worthless to me. I am willing to pay almost any price to get in -- literally. Positional goods tend towards price bubbles. This is why real estate bubbles. It is why gold can bubble. It is why stocks with small floats bubble. Real estate in most of America is not really all that frothy -- the real froth is in markets with strong positional appeal. In some markets it spills over to infect large areas -- California for example. But for the most part Greenspan was right to say that real estate bubbles are location specific. Japan's real estate bubble was amazing and puts our own to shame by the way. It is worth noting that it is unusual for markets to bubble that do not have some positional appeal. There are still plenty of places where people in America have little desire to live -- prices there ain't so high. Thanks. It sounds like positional goods to you is a specific under the general supply & demand or relative scarcity area? And I'm still in the dark on what you're driving at on how "international trade related imbalances" creates inflation. I do recall Greenspan's "frothy" comment on housing early last year, and thinking at the time that frothy was just Fed speak for "small" bubbles, not a nationwide one. The US bubble has indeed been relatively the smallest one in major nations. Britain, Australia and much of the Euro area has outperformed us, and not just due to exchange rate issues.

To: GST who wrote (75234)	12/11/2006 11:26:47 AM
From: John Vosilla	Respond to of 110194

'Real estate in most of America is not really all that frothy -- the real froth is in markets with strong positional appeal. In some markets it spills over to infect large areas -- California for example. But for the most part Greenspan was right to say that real estate bubbles are location specific. Japan's real estate bubble was amazing and puts our own to shame by the way.' Yes that is very true. Most of these markets that happened to be coastal ports and international destinations benefitted in spades from the collapsing dollar, much lower interest rates and a shortage of buildable land with speculation feeding on itself during the short demand/supply imbalance in 2004. However the big problem is the bubble markets constitute a majority of the total real estate gross asset value in this country, anywhere from 70-90% of the total from reports I've read..