As LeReah's worm turns, NEW on the housing blogs

[Spartacus]

Someone could have accidentally put the wrong document in the wrong place.

http://bubblemeter.blogspot.com/

[EJ]

Re: As LeReah's worm turns, NEW on the housing blogs

After the stock market crash, we posted a page...

Bubble Pundit Watch
Outstanding Accomplishment Demands Recognition

...that poked fun at the big brand stock market bubble cheerleaders. Incredibly, some of them are still in the game.

Maybe it's time to start collecting the names of the housing bubble boosters for a similar awards page. I've considered guys like Carl Steidtmann, chief economist and director, Consumer Business, Deloitte Research, who went on record at the top of the market with articles like The Housing Bubble Myth in July 2005.

I've resisted doing this because, as painful as tech stock bubble collapse was, I worry that the housing bubble will cause much greater economic damage and inspire far more widespread desperation and hatred. This won't be middle class and upper middle class people, made temporarily rich by a stock market bubble, falling back to earth when it popped. Rather than objects of derision, the housing bubble boosters won't simply wind up as clowns splattered with virtual eggs in the Internet town square. These guys may find themselves the targets of deeper passions, and I don't want iTulip to be any part in that. It has no practical benefit to our members.

After the housing bubble ends, either large segments of the indebted middle class will be, as Catherine Fitt says, wiped out, or they will be "preserved" via inflation (see Inflation is Dead! Long Live Inflation!) at the expense of the creditor class. Or something in between.

This is the multi-trillion dollar political/monetary question that we here at iTulip are tracking.

Which way do you think it will go?

[Spartacus]

Re: As LeReah's worm turns, NEW on the housing blogs

Eric, I've yet to hear your thoughts on the possibility of a legislated (or maybe even an executive-ordered) debt amnesty. This has not happened on a large scale in recent history, but it has happened before.

If the housing situation gets really, really nasty I foresee a huge grass-roots political push for this kind of relief.

Inflation might "solve" the problem, but it will take years - years which the politicians may not have, years during which everyone will keep feeling the pain.

A debt amnesty OTOH would bring immediate relief.

Certainly there will be immense resistance from lending institutions and credit card companies and others - but there are a lot more voting borrowers than there are credit card companies. (I am aware that the recent bankruptcy bill's passage is a good counter-argument, but in this case the voters in fact had no say, and there really was no real organized resistance, whereas there would be organizations (maybe the NAR?) pushing for this kind of amnesty).

There are a lot more voters who stand to gain significantly from a debt wipe-out, than voters who are prudently indebted or not indebted at all.

"preserved" via inflation (see Inflation is Dead! Long Live Inflation!) at the expense of the creditor class. Or something in between.

This is the multi-trillion dollar political/monetary question that we here at iTulip are tracking.

Which way do you think it will go?

[jk]

Re: As LeReah's worm turns, NEW on the housing blogs

i don't think it's worth discussing the housing cheerleaders. i think their role was much more peripheral than that of the tech bubble cheerleaders. i imagine an overwhelming percentage of stock owners in the 90's heard of abby joseph cohen. how many home owners have heard of any of the housing cheerleaders?

i'm not sure of the financial outcomes - deflation, inflation. i actually picture fountains of money spewing in some parts of the economy [if only i can figure out where], secondary to reflation efforts, while disappearing down black holes of debt/leverage in other areas.

emotionally, we can expect mourning - denial, bargaining, anger, depression and acceptance. we are just past denial, perhaps, [note lereah's ppt presentation] and in full bargaining mode - i.e. the all-powerful oz, oops, fed, will manage us to a soft landing. makes you think of feather beds, doesn't it? we have to accept a little pain now, to avoid the big pain if we wait - one of lereah's slides said something to that effect.

when the "bargain" doesn't work, and the pain is becoming greater than we bargained for, we will see increasing anger. this is interesting to contemplate, and links up with the discussion in the "fed-deceitful or incompetent?" thread. what will channel the anger? at whom or what will it be directed? will the timing come soon enough to effect elections as early as this november? and as the pain extends well beyond nov '06, what will be anger's object?

[Spartacus]

Re: As LeReah's worm turns, NEW on the housing blogs

Very good point.

Real estate cheerleading is up to individual mortgage companies (and their commision-sales spam army), local realtors and word of mouth.

Although he gets quoted in a lot of print articles, Lerea is rarely on the tube (at least, as far as the blogs report - I don't own a TV so have no idea).

i don't think it's worth discussing the housing cheerleaders. i think their role was much more peripheral than that of the tech bubble cheerleaders.


and as the pain extends well beyond nov '06, what will be anger's object?