February 09, 2007

We'll be talking about this mania and crash for the rest of our lives.

The late great housing bubble was such a perfect and textbook financial mania. Every single criteria was met, straight out of the mania (and eventual panic) gameplan.

But just wait now, loyal HP'ers, for the fallout from the biggest mania in recorded human history. A mania which caught in its trap over 70% of the American population. A mania on steroids, with unimaginable levels of leverage, the likes of which we've never seen before. And a mania with an almost surreal level of fraud and deception.

Oh, we'll be talking about this mania and crash for the rest of our lives. And so will our children, and our children's children. And 500 years from now, The Great Housing Bubble will be taught in classes.

I couldn't be more proud. We did it. We created the biggest financial mania in recorded human history.

Congrats Americans! Congrats people of the world! You did it!

Now deal with it.

And isn't it time for Newsweek or Time to put the housing crash on their cover already? The AP story of the year after all. What are they waiting for?

An economic bubble (sometimes referred to as a "market bubble", a "financial bubble", or a "speculative mania") refers to a market condition in which the prices of commodities or asset classes increase to absurd or unsustainable levels (that no longer reflect utility of usage and purchasing power).

It occurs when speculation in the underlying asset causes the price to increase, thus encouraging even more speculation. The bubble is usually followed by a sudden drop in prices, known as a crash or a bubble burst.

8 comments:

Anonymous said...

Just think of what the growth industries are going to be: Westwood College will develop a Repo man program, led by esteemed professor Emilio Estevez. Dog the Bounty Hunter will launch his own international school & sell his own fashion line. And Simon Cowell will truly dread what comes through the door at American Idol auditions, as they will come by the tens of thousands.

Anonymous said...

Time Magazine put the housing love-affair story on their cover at the peak of the bubble. Can we expect them to put the story of the crash at the nadir of the market?
Several people thought (correctly) that when Time Magazine put the housing story on their cover that it was time to sell. When they put the bust story on their cover will that be the time to buy?

Anonymous said...

I think the housing bubble has "jumped the shark."

Housing Panic will be disintermediated as people realize your overblown predictions fall short of reality. In a few months, any talk of a bubble will be over.

Anonymous said...

The interesting thing about a ponzi scheme as that it all comes crashing down when noone can afford to buy in at the bottom of the pyramid. When home values became to rediculously high because of fraudulant borrowing the person at the bottom was priced out. The little guy stopped buying because the system finally priced them out.

That means those left holding the bag especially at the top of the pyramid take the biggest losses. In other words it's not the rich guy that determines the value it's the little guy.

Thank you little guy.

Anonymous said...

"The little guy stopped buying because the system finally priced them out."

Many of us "little guys" are making upwards of 150K/year and, in many markets, cannot afford anything.

I truly cannot understand how the median wage earner gets by.

Anonymous said...

anon 8:10 Good one -

In pop culture the rule is it's not a trend until you spot three occurrences. That blog only cites one instance of a mention of the housing bubble. Then quotes Lereah to back it up with some "gravitas". More likely, the writers for Shark are reading HP.

Anonymous said...

Sorry, not seeing any problems where Im at. Have not heard any friends or co-workers having any problems either. It must be area by area.

Anonymous said...

Just let me say this:

The real estate market values are only stable if lenders are all on the same page . With the sub-prime group giving anybody a loan ,combined with faulty inflated appraisals ,the "system",got messed up .

When your in competition for a house ,you would like to think that your competition can afford the house ,the downpayment ,the taxes , homeowners fees ,etc. If your in competition with unqualified liar loan low down borrowers and flippers you are not in competition with "able" borrowers .

So we have a real estate market that was inflated by "fake"demand by the unable to pay long term loans .

So all the appraisals are fake in that the demand was fake (unqualified buyers and flippers ).

Now that the sub-prime buyers are folding ,the "fake buyers " no longer have a sourse of funds to be fake with .

I hope this little public service announcement helps some people .

Housing Wizard