It remains my sincere belief that we are at the bottom the current real estate slump. And I guess there could not be a better time to reflect on the consequences of over inflated house prices. .... again.
The United States of America has been fairly immune to such crashes in real estate values, but that does mean they have not occurred elsewhere.
In the United Kingdom during the Thatcher administration there was a notorious crash in real estate values with similar stories of huge quantities of families sitting on negative equity. That real estate crash began in 1987 and did really revitalise itself until 1992.
In this instance a large spurt of inflation burst into the economy as a result increasing real estate values. The inflation occurred as the United Kingdom economy was based on producing its own goods and product. Therefore as demand increased it over heated the local economy creating inflation. Basically because England was not globalised.... yet... and funnily enough globalization for that was one of Margaret Thatcher's mantras and she would do everything to change.
In the current U.S real estate crash, the economy did that feel that "overheating" with an increasing amount of production out side the local economy therefore easing any inflationary pressures. Technological advances aid the process of keeping inflation low.
Irony does exist in the world as Margaret Thatcher's number 1 model economy in the world, one that she based her heart and soul upon was that of Japan's. ... and guess what Japan was about to join the United Kingdom in a real estate crash that would last a decade.
Japan's prolonged real estate debacle was created by the over lending of financial institutions. An exceptionally complicated Japanese political process made things worst for they could not admit accept that a lot of the banks were sitting on huge real estate losses.
And nothing was done! (here in the US that has not been the case fortunately).
Finally around 2000 the Japanese real estate market started to loosed up and the country proceeded into oblivion as the demand for goods and services expanded from the western nations. Today the Western nations and other nations a long with other "over lending" nations are not buying that Toyota (this week the company reported a $9 billion loss).
Its kinda funny to see Japan laying off folks as a result of the very same mistake they made themselves in 1990.
When will start real seeing a very liquid and inflated real estate market and a disproportionate real estate value compared to median incomes as a very serious RED FLAG?
......and lets not forget that just having low inflation is not the panacea for economic problems.
...... has globalization finally hit America?
The United States of America has been fairly immune to such crashes in real estate values, but that does mean they have not occurred elsewhere.
In the United Kingdom during the Thatcher administration there was a notorious crash in real estate values with similar stories of huge quantities of families sitting on negative equity. That real estate crash began in 1987 and did really revitalise itself until 1992.
In this instance a large spurt of inflation burst into the economy as a result increasing real estate values. The inflation occurred as the United Kingdom economy was based on producing its own goods and product. Therefore as demand increased it over heated the local economy creating inflation. Basically because England was not globalised.... yet... and funnily enough globalization for that was one of Margaret Thatcher's mantras and she would do everything to change.
In the current U.S real estate crash, the economy did that feel that "overheating" with an increasing amount of production out side the local economy therefore easing any inflationary pressures. Technological advances aid the process of keeping inflation low.
Irony does exist in the world as Margaret Thatcher's number 1 model economy in the world, one that she based her heart and soul upon was that of Japan's. ... and guess what Japan was about to join the United Kingdom in a real estate crash that would last a decade.
Japan's prolonged real estate debacle was created by the over lending of financial institutions. An exceptionally complicated Japanese political process made things worst for they could not admit accept that a lot of the banks were sitting on huge real estate losses.
And nothing was done! (here in the US that has not been the case fortunately).
Finally around 2000 the Japanese real estate market started to loosed up and the country proceeded into oblivion as the demand for goods and services expanded from the western nations. Today the Western nations and other nations a long with other "over lending" nations are not buying that Toyota (this week the company reported a $9 billion loss).
Its kinda funny to see Japan laying off folks as a result of the very same mistake they made themselves in 1990.
When will start real seeing a very liquid and inflated real estate market and a disproportionate real estate value compared to median incomes as a very serious RED FLAG?
......and lets not forget that just having low inflation is not the panacea for economic problems.
...... has globalization finally hit America?
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