May 3, 2009

I wrote this in March 2006. Yet the CEOs of major banks, our leaders in DC and most of the MSM said that nobody could have seen this coming.

Uh, it was pretty obvious to HP'ers, and to the thousands and thousands of people reading and writing on the bubble blogs.

Makes you wonder what the hell Ken Lay and Ben Bernanke were really thinking, huh?

_________________

HousingPANIC - March 29, 2006:

The Double Bubble - Dot-Com to Dot-Condo

It's becoming more and more obvious to HP'ers that the .com crash, which really was a credit bubble, never really stopped - the mess was just postponed a bit with a second bubble (still a credit bubble) - the housing bubble.
Some pretty smart (and rich) folks have identified this and are positioning themselves correctly. Some really stupid people, let's just say ones who have never read an econ book, wouldn't know a financial bubble if it hit 'em in the face, are doing the opposite and charging full speed ahead.

The leverage used by day traders and housewives back in 1999 - 2000, where $5000 would get you $10,000 in margin, was replaced by absolutely MASSIVE leverage used by condo flippers (and housewives, and strip club managers, and 21 year old unemployed kids, and ...), where $5,000 would get you a $500,000 mortgage - an INCREDIBLE amount of leverage never before seen, never before available to humanity, used by an INCREDIBLE number of people.

This mother of all credit bubbles, represented by the double bubble of .com and now .house, is now
coming to an end, but too late to stave off the carnage to come. Now we'll see the ramifications, which we were supposed to see in 2001, but were delayed 60 short months, with 2007 being D-day.

Get ready. Get ready. It's here.

21 comments:

Bukko_in_Australia said...

So what have you oracle'd for us lately? A seer has to keep seeing, or else he's a one-hit prophet...

keith said...

I see a massive and necessary deleveraging and reversion to the mean, complicated by the Fed and US tossing $10 trillion into the mix. And possibly complicated by a global pandemic.

We haven't been here before. Econ students will be studying this one forever.

Get popcorn. And keep doing the exact opposite of what the sheep are doing.

les said...

They are all predicting the end of the recession. Green Shoots!

They've conned much of the sheeple.

Anonymous said...

Props, yo.

BVM said...

I love you, Keith. ;)

-BG

goadam said...

You discount the Fed's ability to just add and add to it's balance sheet. So instead of deflation, you will see an inflationary depression (not weimar, not zimbabwe, not the great depression). look for a bubble in emerging market stocks.

Mammoth said...

"Some really stupid people, let's just say ones who have never read an econ book, wouldn't know a financial bubble if it hit 'em in the face"
-----------------------
Keith,
You can refer to studying Economics all you want, but the fact is that this whole housing/credit bubble - and its fallout - surprised many of the experts in Economics.

Here is what sums it all up:

Back in college, my Economics class had ~200 students in it. The day that the professor discussed Reaganomics and presented the ‘Trickle-Down Theory,’ I waited until all of the other students had left the class so that I could ask him a simple question.

“Could you please explain to me why Reagan’s ‘Trickle-Down Theory’ did not actually work and produce results?” I asked him.

The professor glanced in both directions to ensure that nobody else was within earshot, looked at me right in the eyes, and said, “If I REALLY understood economics, do you think that I would be working here?”

That just said it all.

Many of us here have gotten more of an education in Economics by following HousingPanic and S&A than we ever did in a classroom.

-Mammoth

fat amelican said...

I see the future for Australia. I see Bukko buying wheelbarrows for the kids down under. When filled with sand and pulled backwards, they are excellent simulators for training future rickshaw drivers. The new land barons from China will appreciate the fealty.

Anonymous said...

I see insanity all around me .I see greedy people who thought the world owed them a lush living . I see people who thought it was ok to screw the next greater fool or generation in the ponzi scheme .I see the rich investment class threating to sue the money-changers unless they come up with the money . I see bail-out plans designed to keep the elite out of jail and save the corrupt money machine institutions .

I see a fake out play by the Powers that isn't working . I see the insurance Casino blackmailing
Paulson and Palson trying to protect his acts and vast wealth made at Goldmans during the boom .

I see people shooting themselves and other people shooting their neighbors or strangers in a act of rage .

I see the winners and the losers are picked and chosen by the new law of the Jungle ,not any form of Justice . I see a breakdown of civilization because the Rule of Law and the Rule of Contracts has no meaning anymore . I see money taken from the innocent to give to the corrupt and greedy .

I see America falling from within and than it get attacked from the outside . I see pain and suffering
while the corrupt take the money and run . I see the rich building great walls around their Mansions to keep out the losers that were playing a rigged game in this
bagholder change of hands trick .
I see people talking about law and order for the rich and the sad state of affairs.

I see mothers and fathers and uncles and aunts being called to take care of full grown people when the money runs outs. I see baby boomers not being able to retire uless they worked for a union ,or the government .

I see a black cloud that is the biggest one you could inagine that is the black cloud of freedom loss and Obstruction of Justice ,and the final blow of only protection for the Chosen ones . I see the Constitution being burned in favor of a new world order. I see the quilty and greedy rewarded and the true productive and sane people losing their heart and energy .

I see black gold and orange gold and great fires blowing up .I see the great Lord of Chosen Paths calling for change when the true fork in the road does emerge .

dont miss the boat again said...

All we be well.Get out of cash into stocks and real estate and you too can be a winner.quit bitching how you missed the boat.Remember lots of people got rich in both bubbles.sounds like some people here are bummed they keep missing the boat.Grow a set and buy a house.

Anonymous said...

My question Great Seer:

Inflation or Deflation - what's coming next?

i've had it said...

keith, i must say, you absolutely nailed this. An awesome call! you saved many people, including myself.

i fear for the future. i see this market rally as a false one. when the next load of toxic loans start to hit this fall and go until 2012 -- which is biggger than the subprime volume of loans - we could be really, really, really hosed. if all the money spent so far is not going to destroy the economy (just keep it puttering along somewhat), i'm wondering what the next load of bailout and stimulus will do....

Honica Jewinski said...

America.....

Land of the jewed.

Lost Cause said...

Derivitives are still unwinding. See Buffet's latest remarks. There are so many hedge funds left to burn. This thing is far from over.

Anonymous said...

"...Anonymous said...

I see insanity all around me...greedy people who thought the world owed them a lush living...people who thought it was ok to screw the next greater fool or generation in the ponzi scheme.

I see the rich investment class threatening to sue the money-changers unless they come up with the money...bail-out plans designed to keep the elite out of jail and save the corrupt money machine institutions.

I see a fake out play by the Powers that isn't working...the insurance Casino blackmailing Paulson and Palson trying to protect his acts and vast wealth made at Goldmans during the boom.

I see people shooting themselves and other people shooting their neighbors or strangers in acts of rage .

I see the winners and the losers picked and chosen by the new law of the Jungle; not any form of Justice...a breakdown of civilization because the Rule of Law and the Rule of Contracts has no meaning anymore...

...money taken from the innocent to give to the corrupt and greedy...pain and suffering while the corrupt take the money and run...

...the rich building great walls around their Mansions to keep out the losers that were playing a rigged game...

...mothers and fathers and uncles and aunts being called to take care of full grown people when the money runs out. I see baby boomers not being able to retire unless they worked for a union ,or the government...

...the guilty and greedy rewarded and the true productive and sane people losing their heart and energy..."
Whoa. With all the tripe and trash posted here, the occasional nugget of clarity/insight emerges.

Thank you Sir/Madam.

Anonymous said...

"...the ramifications, which we were supposed to see in 2001, but were delayed 60 short months..."

9/11 was a PTB-sanctioned Black Ops attack to forestall the imminent collapse of a fraudulent global financial system.

The looting continues...

Bukko_in_Australia said...

Keith, my question about "what have you predicted lately" was faceitious. I should have put a smiley-face emoticon behind it, except I think those things (plus abbreviations like "ROFLMAO") are so junior-high-school-girl-using-a-heart-to-dot-her-letter-i's.

Of course, you "hath foretold" stuff every week, like the demise of the Republican (followed eventually by the Democratic) Party. Sadly, I think you're right on most of it. It would be a lot better if you (and me too) were wrong.

However, you ARE a bit like the Cramer of prophesy. The balding, excitable one tosses out a lot of picks, many of which don't come true. And you've forecast stuff like "MOABO." Although I suppose there was some truth to that for some things like bank stocks, based on their prices on the date when you called it vs. now.

Anyway, the only one who can predict the future with 100% accuracy is God, and She doesn't exist. All we mere mortals can do is keep our heads up, eyes open, and try to figure out which direction the next storm's coming from.

And fat amelican: One thing we've got plenty of down here is sand! Plus plenty of Bunnings and Mitre 10 hardware stores to sell us wheelbarrows. Too bad they're all made in China.

Anonymous said...

.



I don't know if you've noticed but there's a new micro-bubble on the Tech and Emerging sectors. Lots of Wall Street crooks borrowing at Libor 1.3% and putting on emerging and tech. That shall burst, too.


.

Anonymous said...

Gold to tha moon, Alice!!!

Disclaimer: not the original.

Anonymous said...

Remember lots of people got rich in both bubbles.sounds like some people here are bummed they keep missing the boat.Grow a set and buy a house.Nope, I didn't lose one dime on the crash. I bet you permabull did.

You do realize that the S&P would have to grow 10%, every year, for the next 7 years just to reach 2007 peak and for most of the sheeple to break even?

Glad to help, permabulls and buy-and-hold fools.

patrat said...

Economics. Sort of fake sh*t. Everyone has to "believe" or it doesn't work. (The value of "things" is only what everyone agrees it is.)