Saturday, November 12, 2005

Economists Use the "R" Word

The party's over and it will soon be time to clean up the mess according to the economists quoted in this article. Lots of "we knew it all along" and "we saw this coming" sorts of talk.

Of course, none of these dire things will happen here in Marin...au contraire, we're special after all. Sure, all those other places (like San Diego, Orange County, Seattle, Vancouver, Boston, various Florida bergs, Las Vegas, etc.) that also happen to (mistakenly) say they are special too (but they're not because we're the ones who are special and we can prove it because we have nice weather, we have hills and intangibles, we're immune, everyone wants to live here, this is God's country [well, no, actually this is]), they're the ones who have to look out. But not us. No way. Not gonna happen. Nope.
""The collapse of the housing bubble will throw the economy into a recession, and quite likely a severe recession," warned a July report by the Center for Economic and Policy Research."

""The demographic story behind the housing market boom, as we always thought, was a giant hoax," wrote Merrill Lynch & Co.'s North American economist, David Rosenberg."

"A downturn in housing could mean more than 1.3 million lost jobs, Goldman Sachs Group Inc. predicts, bumping up the national unemployment rate by 1 percent and the unemployment rate in house-mad California by 2 percent. Those numbers don't include likely job cuts in housing-dependent businesses, such as banking, furniture and building materials."

"The Center for Economic and Policy Research predicts worse, saying a bubble burst would mean the loss of 5 million to 6.3 million jobs."

""At no time in the past three decades has the gap between household formation and housing starts been as wide as it has been over the past 12 to 24 months," Rosenberg wrote. "We've become accustomed to hearing about how housing is in a new paradigm, that the fundamentals are sound, so on and so forth. But please, just don't tell me that the sector has managed to divorce itself from supply and demand realities.""

"Rents provide more evidence of an imbalance between supply and demand. Since World War II ended, sale prices for homes have generally kept pace with the overall rate of inflation, and rents moved at the same pace. That hasn't been the case for the last eight years, according to the Center for Economic and Policy Research."

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