This link was sent to me by Ken Kapple, writer for our local Home Owner's Economist site. It is an interview with John Rubino. This is well worth the approximate 28 minutes to listen to and it is worth listening to more than once. Here is what Mr. Kapple has to say about Mr. Rubino:This guy is oh so very smart, as you’ll discern right away. I’ve read one of his books and he is, did I say, oh so very smart.Executive summary: People who should not have been able to get a mortgage loan were able to get such a loan (if you had a job and a pulse you could get a humongous loan with silly terms), especially on the coasts (e.g., California). Rate resets will hit us hard. In terms of its asset bubble, the US today is like Japan in the 90s. But unlike Japan, we have no one who can bail us out. A real estate crash is coming, not a correction, but a crash. All we will be able to do is to dramatically scale back our lifestyles, job losses, foreclosures, a stock market crash. Right now we are on the cusp of the turn in real estate. The next step in the cascade is that sellers will try to get out at any price in the hottest real estate markets.
This is re real estate, moreover, how structured finance is rapidly changing the real estate profile, and, about the macro economy, easily explained, and why you need to pay close attention to what is coming for the preservation of your stuff. Whatever stuff that might be.
I’m thinking family, particularly for those of you who have people dependent on you. I’m thinking, don’t get caught holding assets that are sure to diminish in value. Maybe John will convince you.
The liquidity contraction that is going on right now is global in scope and will accelerate; interest rates are going up all over the world. History says a painful adjustment is unavoidable. We either get a global recession or a global currency collapse (due to a flood of fiat currency).
5 comments:
Your fearmongering is so sexy. You would enjoy the OCRegister's take on this. Perhaps a perspective about why people are so motivated to warn people of an impending crash may be better the point being, is since when has living in fear helped anything? Don't we all agree that anything worth wile involves risk. It does take effort, research and intellect to decide what amount of risk is acceptable. IMO
"Your fearmongering is so sexy."
Well, let’s give credit where it's due. I also seem to recall fear has been an effective tool to sell homes in the past few years: ”Buy now before you’re priced out forever”.
Some fear leads to impulsive behavior, and some leads to well-advised caution.
junkie -
But living in enlightenment and truth about your own situation and the market forces around you (which is largely what marinite opines about) DOES help you.
Wow! Thanks. I'm touched. You "get it" (I knew you did but this is the first time you have "voiced" it AFAIK).
Sure, sometimes I get a bit too preachy as I have emotions too, but this site has always been about trying to provide the data that the real estate industry is loath to share and countering the real estate industry's propaganda (their anti-truth).
I would suspect you were not blaming statisticians when OC was going up 20+% every year.
Thank you for pointing out that hypocrisy which is, unfortunately, all too common in the real estate industry. It's better if a reader points that out than me.
marin_explorer -
I also seem to recall fear has been an effective tool to sell homes in the past few years: ”Buy now before you’re priced out forever”.
Again, thanks for pointing out that hypocrisy. Yes, the fear mongering of the real estate industry is one of the things that so moved me to start this blog. It really angers me.
The real estate industry's behavior and statements over at least the last few years has been all about their profits, their commission, not a fair and healthy market. It's that simple.
I started considering the possibility of a bubble while researching to buy a vacation home. I began getting concerned because once I scraped the surface of the market, contrary indicators would emerge. That was enough for me to opt out of that plan altogether.
Something I appreciate about this particular blog is the wealth of data and participants from a wide range of backgrounds and opinions, without the usual trollish polemics.
junkie -
FWIW I tend to agree with your long-term outlook but I would have to say that it's the next 0 to 10 years where buying for investment reasons makes no sense, not 0-5 years like you say.
I am confident that 15 years from now, prices will be double what they are today
That seems like fanciful thinking to me unless incomes can double in that time or ultra-cheap credit returns by then.
I mean, the reason why historically house prices increase and keep up with inflation (plus an additional 1-2%) is because wages have historically increased with the rise of inflation. House prices are tied to wages plus whatever is going on with credit/financing and not inflation itself per se or so it seems to me. We have seen over the last few short years that wages have not really been keeping up with inflation so it may turn out to be that the house price-inflation connection is broken. But it's too early to know.
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