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From stocks to houses and from boom to bust

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  • From stocks to houses and from boom to bust

    Bay Area home sales fall
    August 17, 2006 (San Francisco Chronicle)

    16-month slide continues with big drop in July

    Home and condominium sales in the nine-county Bay Area fell nearly 31 percent in July while prices rose 3.5 percent in the latest report to suggest that the housing market is cooling.

    The regional snapshot issued Wednesday by DataQuick, a real estate information company, reflects sales volume and price comparisons of new and existing homes as well as condominiums.

    It comes on the heels of a similar report, though with a national focus, issued Tuesday by the National Association of Realtors.

    Both reports are consistent with other data that make it clear the once-booming housing sector is slowing down, without answering the worrisome question of whether it will wind down gradually or eventually crash.

    That's on the West Coast of the US. On the East Coast...

    From stocks to houses and from boom to bust
    August 17, 2006 (The Republican)

    Remember the housing boom?

    It won't be all that long before someone asks that question - without the slightest trace of irony in his voice.

    The housing boom is over. It's over in Massachusetts and it's over across much of the nation. After quarter upon quarter and year upon year in which houses sold - and prices rose - like never before, 28 states and the District of Columbia saw declines in the sales of single-family houses and condominiums in the second quarter of the year.

    What's indisputable is that the once white-hot real estate boom is no more. And that there is no next bubble that is evident on the horizon.

    AntiSpin: From sea to shining sea, the housing bubble ends. The mainstream press has caught onto the idea that The Bubble Cycle is Replacing the Business Cycle. They are asking, where's the next bubble? What will it be? It's not evident. The question of the next bubble is question that was re-started in March this year to try to answer.

    The housing bubble is only one of several, besides private equity and hedge funds, that we've seen since 2003, all fueled by a "put" on US financial assets, purchased by foreign buyers. Ka-Poom theory is a hypothesis that the "next bubble" is not really a bubble at all but a major inflation -- a "Poom" in Ka-Poom parlance -- caused by rapid depreciation of the US dollar as the foreign savings funded "put" turns into a "short" on the dollar. It might feel like a bubble as the nominal prices of goods, services and wages increase, but as the nominal cost of these rise even faster, along with interest rates, the experience will feel like anything but a free ride on an floating asset bubble.

    But before the "Poom" comes the "Ka," a period of deflation. Evidence abounds that the beginning of the beginning of the Ka process has begun. There will later be an end of the beginning, when the Fed begins its experiments with non-traditional means of deflation fighting, and beginning of the end when these begin to work too well. But for now, home prices are falling, oil demand and prices are falling, auto sales are off, the DOW transports are off, numismatic coins are, like over-priced homes, sitting unsold at inflated prices. Only the highest of the high end of these are doing well, purchased with Gatsby hedge fund wealth.

    We refer to the 2003 - 2006 "All Assets Up" period as a "mini-Poom," the Ka is its "All Assets Down" analogue,
    and the entire 2000 to 2006 period as a kind of dress rehearsal for the main Ka-Poom event.

    Will the prices of all commodities be pulled lower in the Ka downdraft? So far, at the beginning of the beginning, precious metals have held up well. Might these be The Next Bubble, acting as a hedge against currency risk that few want to sell even during the period when other assets are declining? Might PMs hold up as market participants anticipate a Poom event much as housing did during the post stock market deflation that bottomed in 2001?
    Last edited by FRED; 08-17-06, 10:31 AM.