Strange situation

I looked at last 50 years, housing market slump was always behind a big job loss. In fact, past slumps had been caused by job loss on a local scale without exception.

This time something strange is happening. Job picture seems to be fine. Big conglomerate companies are making huge monies on a global scale. Weak dollars are helping them sell at a competitive pricing. Exports are growing. Definitely, we can conclude that this housing slump is not caused by the traditional factor: Job loss. Is it caused by subprime credit crunch? No, because this slump started in late 2005 and early 2006, long before the subprime became a problem. The subprime issue simply worsened the slump but it was not the cause.

It's also very strange that 20 months after the housing recession, the general economy has been chugging along very fine, only until very recently, it appears that the housing recession is dragging Wall Street into a credit crunch, it potentially trigger the economy into a recession.

As a serious observer, we would like to identify cause and effect. In the past, the cause was always a weakening economy triggering a job loss, then triggering housing slump, like the late 70s, late 80s. The housing recession then was a effect, never a cause. This time around, the order is reversed, housing market got itself into a recession, then triggered a credit crunch, then potentially trigger a recession in general economy (not happened yet). Today, the effect became the cause. That's the weird part of it.

Maybe the housing cycle has a life of its own, like a precise timer, or like an automatic pressure relief valve, it must reset itself to avoid over heating.

Some say it's 1990 all over again. But the cause and effect is entirely reversed. I have a gut feeling that this time, a healthy global economy may come back to benefit US in a surprise way.

所有跟帖： 

• Very nice write up, but... -Frontline- ♀ (39 bytes) () 10/31/2007 postreply 16:38:29

• 回复：Very nice write up, but... -说事- ♂ (47 bytes) () 10/31/2007 postreply 21:05:58

• A good example is when you listen to a nice foreign song:) -Frontline- ♀ (0 bytes) () 11/01/2007 postreply 08:20:14

• this time is caused by easy credit which is the -pediatrician2- ♂ (1411 bytes) () 10/31/2007 postreply 16:40:23

• agree with this analysis. -crazydog- ♀ (386 bytes) () 10/31/2007 postreply 16:45:54

• You brought up a nice point: Inflation must catch up housing pri -miat42- ♂ (738 bytes) () 10/31/2007 postreply 16:58:45

• Your logic is not convincing enough :-) -miat42- ♂ (1044 bytes) () 10/31/2007 postreply 16:51:50

• 回复：Your logic is not convincing enough :-) -pediatrician2- ♂ (1471 bytes) () 10/31/2007 postreply 16:59:15

• 回复：回复：Your logic is not convincing enough :-) -miat42- ♂ (1443 bytes) () 10/31/2007 postreply 17:11:39

• well, all of your confusing words can be summrized -pediatrician2- ♂ (274 bytes) () 10/31/2007 postreply 17:19:26

• Thanks, we are basically on the same page :-) -miat42- ♂ (0 bytes) () 10/31/2007 postreply 17:22:01

• 太精彩了,二位, DDD! -左右逢源- ♂ (0 bytes) () 10/31/2007 postreply 20:35:17

• The key point is what caused over 100% increase in the 4 years -playForever- ♂ (990 bytes) () 10/31/2007 postreply 17:24:55

• Secondary causes versus primary cause -miat42- ♂ (632 bytes) () 10/31/2007 postreply 17:32:50

• 顶大师们的讨论，受益匪浅。只是在这个坛子，我不敢发言 -笛笛- ♀ (0 bytes) () 10/31/2007 postreply 17:40:23

• 顶是一种非常严肃的发言 -屋漏痕- ♂ (0 bytes) () 11/01/2007 postreply 06:28:40

• all you are saying is 'this time is different'. -tafa- ♂ (148 bytes) () 10/31/2007 postreply 19:30:00

• Please don't follow my post 'cause I don't find interested -miat42- ♂ (28 bytes) () 10/31/2007 postreply 19:47:50

• afraid of being commented? just stop writing. -tafa- ♂ (0 bytes) () 10/31/2007 postreply 20:27:41

• No, not that. The problem with you is: -miat42- ♂ (1023 bytes) () 11/01/2007 postreply 06:43:24

• I just pointed out your wrong prediction. -tafa- ♂ (4398 bytes) () 11/01/2007 postreply 11:02:52

• and miat's ba prediction of may 2007- -tafa- ♂ (121 bytes) () 11/02/2007 postreply 23:30:45

• 阳光底下没有新鲜事。只不过是财富重分配而已。 -SNY- ♂ (381 bytes) () 10/31/2007 postreply 20:13:46

• your writing is short and clear- -tafa- ♂ (70 bytes) () 10/31/2007 postreply 20:23:41

• Small investors speculating about the economy will -dividend_growth- ♀ (35 bytes) () 10/31/2007 postreply 20:20:41

• It's very inspiring. Thanks for sharing. -芦苇葱葱- ♀ (0 bytes) () 10/31/2007 postreply 21:24:55

• Good thinking -凌空长老- ♂ (306 bytes) () 10/31/2007 postreply 23:16:42

• 回复：Strange situation -zzz555- ♂ (100 bytes) () 11/01/2007 postreply 13:57:40

• don't understand your points -miat42- ♂ (97 bytes) () 11/01/2007 postreply 20:32:23