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

To: Perspective who wrote (240424)	3/10/2010 4:03:24 AM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

It's so simple - when the ratio of debt-to-income begins to rise, as it has since 1981, it eventually reaches a point when the economy deleverages through bankruptcies and foreclosures. The initial years of a credit bubble always feel magical - most everyone spending more than they earn and no apparent need to pay the bill. As Reagan said, ". . . after all, it's your free money." It's been almost a mirror image of Argentina and the wildly popular Juan and Eva Peron and the credit bubble they initiated. The final irony is in the years after it became obvious that the Peron's policies destroyed their economy, when you think the Perons would have been reviled, there was a mad wave of people insisting that streets, mountains and other objects objects of interest be renamed for either Juan or Eva Peron. Some sort of magical-thinking attempt to recapture the "good times" created by rising debt levels. I predict many will demand new shrines built to Reagan. As for today, once the debt-to-income tipping point is reached, the restoration of equilibrium can be postponed, but only at a immense cost, resulting in even greater pain, distress and dislocation. Policy does not allow a choice between depression or no depression, but between depression now or a worse depression later. Inflation pushed far enough would undoubtedly turn depression into the sham prosperity so familiar from European postwar (WW-I) experience, and would, in the end, lead to a collapse worse than the one it was called in to remedy. For recovery is sound only if it does come of itself. For any revival which is merely due to artificial stimulus leaves part of the work of depressions undone and adds, to an undigested remnant of maladjustment, new maladjustment of its own which has to be liquidated in turn, thus threatening business with another worse crisis ahead. Joseph Schumpeter

To: Perspective who wrote (240424)	3/10/2010 8:51:09 AM
From: patron_anejo_por_favor	Read Replies (3) \| Respond to of 306849

>>Boy was that eerily prophetic given the eventual short sale ban.<< Yes, that was very prescient. I'm still waiting for the gold confiscation part, but that one's a lot harder to implement. Rereading that thread from that month is a goldmine in itself. I encourage everyone to do it, history on the fly.