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Originally Posted by aceventura3
The subprime issue is more hype than substance. The fundamental value of real estate is real. True experts are not suprised by what is happening in the market today, are not paniced, and see the correction as healthy for the market.
http://www.frbsf.org/publications/ec...el2004-27.html |
ace....the publication that you posted to support your article was published in 2004, based on pre-Oct., 2004 information. Stephen Roach debunks all of it in the three pieces of his that I posted.
The housing valuation "bubble" did not accelerate to a "bubble top" until after the data/conclusions in your posted publication was published. MEW was not "extracted" from consumer's home equity in $800 billion annual "chunks" until several quarters after Oct., 2004, and the subprime and Alt-A lending abuses that are now destroying the mortgage writing businesses and the credit ratings and financial security of the borrowers of those mortgages, were mostly created in 2005 and 2006.....
Look for valuation losses as high as 50 percent from top of bubble highs, ace,
they are coming. How can housing prices, driven up by waves of liquidity created out of thin air by our fractional reserve banking system, avoid the same decline of Nasdaq 2000 index stocks of 1999 to 2002.....driven up by the same dynamics, and then down when the liquidity driven sentiment, and the credit availability of the speculative buyers (bidders), declined.....
Quote:
http://www.reuters.com/article/newsO...70530620070314
Top investor sees U.S. property crash
Thu Mar 15, 2007 7:45 AM BST17
By Elif Kaban
MOSCOW (Reuters) - Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.
"You can't believe how bad it's going to get before it gets any better," the prominent U.S. fund manager told Reuters by telephone from New York.
"It's going to be <b>a disaster for many people who don't have a clue about what happens when a real estate bubble pops.</b>
"It is going to be a huge mess," said Rogers, who has put his $15 million (8 million pound) belle epoque mansion on Manhattan's Upper West Side on the market and is planning to move to Asia.
Worries about losses in the U.S. mortgage market have sent stock prices falling in Asia and Europe, with shares in financial services companies falling the most.
Some investors fear the problems of lenders who make subprime loans to people with weak credit histories are spreading to mainstream financial firms and will worsen the U.S. housing slowdown.
"Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said.......
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