Tuesday, November 22, 2005

That Little Red Light In People's Brains is Beginning to Blink

The limbic system, as you will recall, is that part of our primitive brain that controls emotions. As such, it is common among nearly all mammals. In fact, for some mammals (like mice) the brain stem is pretty much all they've got to work with.

The little red thing shown in the picture is the amygdala, an almond-shaped brain structure that forms a critical part of the limbic system. Whether you like it or not everyone and their mouse has one (two actually) and they all work the same.

For most of us during our ho-hum day the amygdala hums right along and does its thing, keeping us within the bounds of a nice emotional equilibrium. That's a good thing when minor annoyances occur such as when driving down the freeway and some arse cuts you off. But if something threatening occurs it will scream bloody murder such as when a bear is, uh, bearing down on you. And that's a good thing too (not the bear part, but the inner scream-of-bloody-murder part).

But it's not so good for markets. Right now the amygdalas inside of a lot of housing speculators and property owners in bubble-land are lighting up pretty strongly now and are likely to be going into the equivalent of an epileptic fit fairly soon. Why? Because it looks like this housing bubble has turned. We can't be sure yet (I'm waiting to see what happens in the Spring), but it sure is looking like it. Home equity loan growth has slowed down to a trickle, home builders are sinking fast (and here), price reductions have increased significantly and sales volumes are down in Florida (and here), Arkansas, Nebraska, Massachusetts (and here), Colorado, New York, Virginia, Marin, Sonoma, California (and here, and here, and here, and here, and here, and here, no need to go on), just to name a few. Speculators are beginning to panic. Even Warren Buffett is waiting to scoop up properties on the cheap.

3 Comments:

Blogger sf jack said...

ascending = greed
descending = fear

And perhaps the Marin housing market will "turn up" in the spring - in its first "deadcat" bounce of the next half decade.

Nov 22, 2005, 5:16:00 PM  
Blogger Marinite said...

I know. And every time there is a sucker's rally (dead cat bounce) all the Marin RE bulls will come out, wet themselves, and scream "YOU SEE? THERE IS NO BUBBLE". And we'll just have to restrain ourselves from laughing at them.

Nov 23, 2005, 9:57:00 AM  
Blogger marin_explorer said...

"...we'll just have to restrain ourselves from laughing at them"

Not if my amygdala lets me.

Nov 23, 2005, 1:13:00 PM  

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