Running Out of Bubbles

[Maxprofit$]

There's a bearish bubble growing that you see posted everywhere these days:

"The economy is going to hell, we are all doomed!!!!"

 

[murray t turtle]

Quote from ratboy88:

the next bubble will be in collection agencies and substandard financing.

Ratboy88;
wouldnt call it a bubble , but the Feds /state gov have
'' popped '' & popped some of those subprime lenders good

 

[libertad]

Excellent Commentary

The question is...when are prices expensive...reasonable...cheap...??

For example...lets say you have a house in town a that was built 10 years ago...is the same now as it was 10 years ago...and is not going to change in the future...


Price

10 years ago: $100,000

Now: $400,000

Is the price now expensive...cheap...moderate ???


Tomorrow: $100,000

Is the price now cheap...expensive...moderate...etc..??

Since the house is the same...and will always be the same...then what is it that has changed ???

It is the legal agreement about its value that has changed...the asset is there everyday....

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One view of the US has been its highly effective legal paperization of wealth...This legal paperization takes hold in the form of increasing the liquidity of assets held by a legal name....this liquidizing (capitalizing) the value of an individual or businesses earning ability...

When there is little left to capitalize with respect to an individual or company...and a very high percentage of this capitalized value has been spent on other capitalized goods....there can be a dramatic loss due to ¨reverse capitalization¨....
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The world has not yet experienced...realization of ¨reverse capitalization¨and may not ever experience it....what the world will experience are rising and falling confidence levels...or beliefs in prices...
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Reverse capitalization is reflective of the the very lowest form of confidence...

 

[onewaypockets]

Quote from jficquette:

I have been a big advocate that there was a housing bubble here in San Diego where I live. However, after waiting in vain for the bubble to pop for the last two years I have come to the realization that it doesn't have to pop anytime soon. This market here could stabilize and drift up right up to the next presidential election cycle.

Rates are the key and I don't see them getting much higher. As long as rates stay low and the economy keeps growing then there is nothing to get the sell off going.



John

Only when all the real estate bears show angst, frustration, and throw in the towel...and all the bulls have exhausted their kinky mortgage options can this thing actually crash.