Wednesday, March 01, 2006

The Only Thing We Have to Fear is Fear Itself....

Don't Fear the Bubble Burst - NY Times

An interesting read on the perils of real estate purchases as a market cools off. I disagree with the authors assumptions (that this bubble will pop like 89) and that it will have a minor impact on the economy.

I think this time we're facing a market more like Japan circa 1992. Real estate fell 60% in Japan and stayed down for 12 yrs. This coupled with the dramatic change in financing in the US today - zero down, interest only, etc have become the norm - will, in my opinion, have a dramatic negative effect on the US economy.

There are ways to turn this around, but we'll talk about that later.

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