Popping the real estate bubble without blowing up the economy?

[touchring]

I think it's possible.

http://www.straitstimes.com/news/bus...-loss-20150318

If you're able to create other bubbles to replace some of the air lost.

[Milton Kuo]

Re: Popping the real estate bubble without blowing up the economy?

I think it's possible.

http://www.straitstimes.com/news/bus...-loss-20150318

If you're able to create other bubbles to replace some of the air lost.

Dohohoho....

Please don't say such things because it might give central bankers ideas. As we have already discovered when the Federal Reserve replaced the dot-com bubble with a housing bubble, you ultimately get a blow up of the economy if you create a bubble cycle economy. As EJ has stated on this site and in his Harper's article, each popped bubble must be replaced with a bigger bubble or the economy suffers unpleasant hangover effects.

The only way I could see a bubble popping and not killing an economy is if the overpriced assets end up entirely in the hands of a group of super rich who do not have special political privileges or power. Of course, if such a scenario existed, it would be clear to any oligarch that the super rich in the hypothetical scenario did not do things correctly. The overpriced assets must be strewn throughout pension funds and retail investor accounts, preferably all over the planet. That way, when the bubble pops, little people are disproportionately harmed if an economy is asked to "take its medicine."

[GRG55]

Re: Popping the real estate bubble without blowing up the economy?

I think it's possible.

http://www.straitstimes.com/news/bus...-loss-20150318

If you're able to create other bubbles to replace some of the air lost.

So, what is the potential bubble asset that can replace overpriced international trophy properties?

[touchring]

Re: Popping the real estate bubble without blowing up the economy?

It doesn't have to be asset. It could be stocks? It could immigration? Or even more immigration.

[santafe2]

Re: Popping the real estate bubble without blowing up the economy?

It doesn't have to be asset. It could be stocks? It could immigration? Or even more immigration.

I'm beginning to count on that. How about other areas of Canada besides Quebec letting a few Americans in? We agree to buy a bit of your highly priced real estate at our current discounted rate in trade for a passport and maybe, northern citizenship. The deal in Quebec is pretty sweet if you don't mind living in Montreal for five years. I am a little concerned the Loonie will go down another 20% from here but I suppose that's the cost of a passport with additional travel freedom.

[gwynedd1]

Re: Popping the real estate bubble without blowing up the economy?

Nothing is going to soak up credit like real estate. The only option is large deficits which is not politically feasible without large scale war. And all that effectively does is wipe out financial savings via wage inflation. The other option is to wipe out most people's savings in a Depression . Though, the latter does not qualify for the "not blowing up" requirement. But then again the war deficit does mean blowing up for real too I suppose. Ironically the latter blowing up of the economy would likely result in a better economy materially than the stagnation we will inevitably face with the current policy to never really punish bad, unproductive credit.