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Housing decline is 1/3 complete and will not bottom until 2012 or later
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This Link is located in the Public Channel Housing Bubble and Bear Links.
Posted by ian 355 days ago (myprops.org). Views: 2,427
Tags: housing bubble economics |
| Related Tags: finance wall street business video stocks politics credit crisis |
Cramer, you're wrong. Housing will not bottom until 2012 or later. So far you have called 3 bottoms in the stock market (one after the Fed cut rates by 125 bp in 8 days, one after the Bear Stearns bailout, and now one after the Housing Bill / SEC naked short restrictions). I can't wait until we set new lows later in the next few months, which will make Cramer 0 for 3 in calling bottoms.
If the above graph is right, and we are only 1/3 through the housing decline, by 2012 the economy will be in an absolute depression.
The tech bubble followed this same pattern, as all bubbles do, but was only around one FIFTH the size of the housing bubble ($2.5 trillion versus $12 trillion). We all remember the 80% decline in tech.
As I pointed out many months ago, the fact that the housing bubble is 5 or 6 times the size of the 1990s tech bubble means that the S&P is virtually guaranteed to drop at least 50% from its peak, since it dropped 50% from 2000-2002.
Furthermore, associated with the housing bubble is a massive credit and financial services bubble, including a shadow banking system of 100s of trillions of dollars worth of unregulated derivatives. And much of the consumer credit bubble has nothing to do with housing (credit cards, auto loans, etc), so is not even counted in the $12 trillion figure.
If the S&P bottoms at 50% down, we will be extremely lucky. It could be a lot worse.
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