Quote:
Originally Posted by bestfriend
What is history telling you about the state of the current market? Personally, I don't see a dip, or even a crash in the housing market as having a huge impact on the stock market. Especially since the housing market is overinflated. It will just be knocked back down to size. Happened to both New York and Texas in the recent past, no?
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BF, you have to know how "money" and "wealth" are created in order to see the long term effects of a large scale housing bubble burst. Money as you know it is not the paper in your pocket or the digital numbers in your account, money is the "wealth" created but lending. Thats where your real purchasing power comes from, your ability to take on debt, not your ability to buy a $500 watch because it catches your eye. Lending practices of the recent past are going to kill lending to the majority in the future.....risk for the lender. When some lenders that are ranked in the top ten mortgage companies in the country go belly up, you know we have serious issues.
This whole situation you see now shows some very close similarities to the Japan crash of the 90s. Most people haven't heard of, or don't remember, the Japanese housing crash that stagnated their economy, because it's scary and it's the kind of talk that scares investors.
http://www.investmentu.com/IUEL/2005/20050328.html
http://archive.mailtribune.com/archi...ries/02biz.htm
http://en.wikipedia.org/wiki/Housing_bubble (I hate quoting wikianything but...)