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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: andiron who wrote (71324)	11/17/2007 8:30:14 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

It's not different in Portland and Seattle A look at the Portland, San Diego, and Seattle Housing Bubbles. globaleconomicanalysis.blogspot.com Mish

To: andiron who wrote (71324)	11/18/2007 12:44:46 PM
From: Tommaso	Read Replies (1) \| Respond to of 116555

>>>total housing is 1/3rd of total US household wealth..<<< OK, accepting that, what percentage of total national wealth is household wealth? Is it as much as 50%? Then that makes housing 16% of total national wealth. Then a 40% decline in the value of houses (back to what they were priced maybe 5 years ago)would mean a 6.6% decline in real national wealth. That could certainly cause a serious recession. But a decline in purchasing in the United States could easily be offset by increased demand elsewhere in the world, especially for oil and food. We may have rising prices for all sorts of goods and services, even with a depression in housing and automobile sales. Abundant paper money makes this possible. A gold-backed dollar would prevent the inflation, but then we would have another Great Depression The government is in the process of inflating away our external debt (and also that of any citizens foolish enough to hold long term treasuries). What to do for oneself? Hold commodites, including foodstuffs and energy; try to have your wealth priced in Canadian dollars, yen, perhaps euros, as much as possible; I find holding physical gold to be most inconvenient, but the gold miners look undervalued; if you prefer cash measured in USD, despite the inevtable falling dollar, use short term treasuries; you will salvage some of your wealth and may be poised to reinvest in a much lower stock market.