I can add Mr. Shiller to my long list of jackasses. What bubble? Stock markets have bubbles, housing does not. A stock market bubble is when you have investment at rates that exceed the rational (and expected) par value of securities. These frenzies push valuations to heights that can be supported only in the imaginary sense. They are also supported by REAL MONEY, even if one is buying short or bouncing around day trading. The last time we had a condition of "0" down, pay later in the stock market resulted in 1929. Bubble in not an appropriate word for housing. Escalation is a better fit, and it has happened numerous times in the past. The difference between than and now is that the present "boom" got out of hand and the general public developed a "gold rush" mentality. Everyone wanted apiece of the action and the "gold field" was nation wide. I saw this coming nearly two years ago and I am not an economist, just practical and observant. This has a simple bottom line - no economy can have an single segment that is exceedingly out of price with the overall general. To keep this simple - the cheapest auto could not start at 50,000 and that is what we have (had) in housing. Home prices have to get back in line. The will, but unfortunately, everything else is going to impacted in a negative sense. At the very best the U.S. can expect a recession. The innovative financing in the mortgage industry has left homeowners, banks, insurance companies, local governments, companies all with shortfalls and soon even the multi-nationals will feel the pinch. Check the clothes that you wear and see where they are made. The dollar continues to slide and it is a matter of time until these foreign makers must raise price. Inflation is already at 12+%, given fuel and food - and it will continue to rise.
Whose to blame? I am sure the general consensus would fall on the banks with the Fed being number two. I would like to remind all that the banks are there for business and the Fed has little regulatory power on their day to day activities. Some would say the consumer and of course, the speculators. Not really, as they need credit/money, just as the builders. So who do I nominate for all to blame?
Barney Franks and his committee. They were the only ones with the authority to control the banks. When Greenspan uttered "irrational exhuberance" they should have started looking at the economy with a wary eye. Al Jackson, the HUD director warned about increasing the HUD limits, but the government is doing it anyway. It's and election year - do something, take a mad guess and act.
We are in deep doo-doo.

There are still pockets of strength in the US despite a "real estate bubble", and these places in the US are places where no ridiculous run-up occurred. Places in Texas such as Houston. Our members here buy up these foreclosures and rent them out. Life is good. -Phillip

http://www.mylifechanger.com