IMO everyone here needs to go back and look at that chart Thurgood put up above and dont forget it.
MEW is associated with the levels of aggreagte or "total" real estate activity in the economy - sometimes called residential investment.
Mauldin and Minyanville and everyone else that has pushed that chart around for the last few years has never really asked the key question - Just How Much Borrowing, How Much Of This MEW, How Much Residential Investment had to be done to get us that 2% GDP boost or whatver it was to save us from a much longer recession back then?
Rather than answer it, I'll describe it with an adjusted Nasdaq chart which is a better visualization:
10 years chart
The level of aggregate real estate activity now is about the same as at the start of the chart - 98, 99, 00.
The top is Summer 03 but not at a Nasdaq level of 5,500 but somewhere closer to an equivalent of Nasdaq 20,000 to 25,000!
Couple of points - dont confuse with sales - RE sales topped late summer 05 -- massive real estate investment ALWAYS precedes sales. Tops in real estate investment are usually associated with bottoms in rates - no big insight there.
Another visualization of the bubble collapse - think of a trading account in summer 03. By summer of 04 you have lost 50 - 60%. By summer of 05 another 50 - 60%. Summer 06 - another 50 - 60% and Summer 07 another 50 - 60%.
Yeah, I took some license to highlight the bubble and the gravity of the situation but I believe it is basically in accord with lending data from the feds, my state planning office forcasts adn data, some of my own RE business related data. Final point, even if you dont by a word of my spiel - What will replace the MEW on that chart? What happens if we dont have it anymore/
right?
