"Correction" Math - Life is strange...
Dec. 6th, 2008
04:10 pm - "Correction" Math
Hi!
Here is an interesting comment on a SF news story related to the housing price slump:
BusStopLoser 12/4/2008 10:11:37 AMClick here to read the original story.As we slide into widespread price deflation, the Fed will crank up the printing presses and push inflation in to the six to eight percent range. This will let real estate prices stay flat in nominal terms while declining in real terms - so your $500K house will still sell at that price while actually declining in real value $30-$40K per year. Let that run for three or four years and you have a 20-25% correction, with most people being too math stupid to realize it.
What do you think will happen?
Cheers! generalist
Current Location: home
Current Mood: even
Current Music: disk drive, cpu fan
Deflationary spirals are a bug-a-boo much talked about on conservative channels. It's usually used to divert people from the fundamental economic problems. We avoid admitting that the national debt grew to bursting points over the last eight years, corruption is getting out of hand, or that the ending estate taxes has meant the loss of major funding. It's all execution.
The fact is that the market *needed* correction. I've been saying for years that the real estate market in Silicon Valley, for instance, was ludicrously overvalued. Letting the air out of the tires gently beats the crap out of slashing the tires, which is the only other real alternative.