Housing - Simple As That

Monday, December 17, 2007

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.

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