Housing - Simple As That (12/17/07)


Super Executive Summary:

Q: "Has the housing market bottomed, is it soon to bottom, or is it in the process of bottoming?"
A: No, nope, and no.

There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.

~ Ludwig Von Mises




Executive summary:

  • A series of government bailouts attack the symptoms, utterly failing to address the root cause.
  • The bailouts were for the big banks, not you.
  • House prices need to decline in price by 30% to 50%, and they will.
  • Trillions of dollars of losses lurk in ultra-safe pension bond funds and small Norwegian towns, as well as in some unlikely places.
  • Current crisis is one of solvency, not liquidity.
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