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High tech industry. They stopped hiring new grads after 2001 or so, and they're just running the existing labour force into the ground. If you had the misfortune of graduating from an EE or CS program after 2001, you are pretty much screwed. Can't find a job, too overqualified to work retail...

Yeah, those sneaky bastards will do exactly what you describe to play with the CPI stats. You're right on the money.

A loss of depositors is a margin call. If they can't pony up the cash, then they're bankrupt. Practically speaking, once they drop below a certain amount of required capital, the banking regulators simply shut them down.

That's simply not true, asstard. Traditionally the rate of return on housing hasn't been any higher than inflation, and that's before you include maintenance inputs. Inflation has been nowhere near 7.2% (rule of 72) required for a house to double in 10 years as you would suggest.

My income's been increasing extremely rapidly because of what's been going on. Its all about positioning. If you didn't see the writing on the wall in 2000 when oil was $15/barrel, and every moron and their cousin was racing to buy a SUV and monster house (monster house = high energy costs)..

Doubles in value? Hardly. The long-run rate of appreciation in real estate is just slightly above the rate of inflation. The past 30 years has been a combination of interest-rate related repricing (in stocks..we call this P/E multiple expansion), small amounts of inflation, and of course, the...

http://www.federalreserve.gov/boarddocs/meetings/2008/20080303/advancedexp.htm Just scheduled on the 28th -- might Uncle Ben repeat his emergency 50bp trick this afternoon before closing?

Might there be at least a few Orange County's hidden in admist this mess? Sure sounds like it, especially if school districts can be convinced to speculate in derivatives.

...But Ben (Bernanke) doesn't lend money into the housing market. Not a dime. And with the banking system essentially bankrupt, will there really be an appetite to take risk on mortgage securities in a market that has a couple years of depreciation behind it? The idea that "large...

There are plenty of tech firms that would have been economic if fed funds were at 1%, and the money went into them. I mean, at 1%, a P/E of 100, + some growth is tolerable and makes sense. There were *plenty* of firms, Cisco, Intel, you name it, that had P/E's well under 100. But the...

Stock owners get leverage too. So don't try and use that argument. Only a moron would leverage a 3% asset (housing) with a 5% loan. Whereas, it makes perfect sense to leverage a 6% asset (stocks) with a 5% loan. Of course, you knew all that, eh? :)

They tried to pump the tech industry back up with 1% Fed Funds rates. Didn't work. Don't see why it'll work with the housing industry either. The issue is that the industry has just built far too much capacity for the demand available. Prices will keep dropping until such a point where...

Americans haven't been saving for the past 5-6 years, yet the stock market keeps going up (until recently). Why? Because the private sector is, in fact, doing a lot of saving, and is able to buy back ridiculous amounts of stock by way of share buybacks. I'd expect that buybacks will at...

These things *always* overshoot to the underside, just like the upside. Just like oil stocks were ridiculously undervalued in 2000 -- why won't houses be ridiculously undervalued in 2012, or whenever your chart shows that real prices may drop to fundamentals. An entire generation of people...

Smart Money, part of the (major) problem with your analysis is that you haven't included the maintenance costs on the house, that you appropriately should be subtracting from the net rent yield. These costs are borne by the homeowner or the landlord, but are included as part of the gross rent...

That "major drugstore" (I am assuming you mean Walgreens) has activities that can provide a 15%+ ROE. Long-run RE returns are similar to long-run long-term bond yields, ie: around 7% or so, give or take a little bit. The CFO is acting rationally by dumping lower-returning assets off the...

Might I add...the implication of a PV of $50k, on a $100k property, is that the $100k property 'really', based on the long-term fundamentals, is close to 100% overvalued based on discounted cash flow analysis. Usually when it comes to investing, people try to buy present-value dollars worth...

The fallacy lies in looking at it from the point of view of 'paying down the mortgage'. That's not the issue. Leverage only works if the total return on an asset is greater than the cost of the financing. The current yield on typical real estate is less than 5%. Inflation is 3%. 30-year...

Also, you might ask yourselves why most major corporations in America have been offloading their real estate to REITs and to other buyers gradually over the past decade. Why? Because they see that property is in a bubble, and they can rent, and deploy their capital towards other activities...

Most of the people here are completely missing the point; if housing, according to Case and Shiller, barely has long-term appreciation in excess of inflation, and if the cashflow from rental is substantially below the T-bill rate, then your long-term overall ROA is around 6-7%. Which...