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Has the U.S. housing bubble delayed or prevented other bubbles from collapsing?


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2006 Aug 30, 10:05am   13,085 views  113 comments

by HARM   ➕follow (0)   💰tip   ignore  

global housing bubble

Given this is a very Bay Area and California-centric blog, we often tend to forget that the RE bubble is arguably international in scale. The Economist pointed this out in an excellent piece last year. One of the most perplexing mysteries to many of us fundamentals-driven contrarians, is why haven't the housing bubbles in other countries --which started before the U.S. bubble-- already collapsed?

The Australian, UK and Irish bubbles had a good 2-3 year head start on the U.S. by some measures, while the Netherlands hasn't had a significant price correction in some 15 years. By all accounts, they should have seen sizeable price corrections well before now, and yet we are only recently seeing reports that indicate these booms are finally past their peaks. Could it be that the U.S. housing bubble itself delayed or prevented these other bubbles from collapsing as quickly as they otherwise might have? Could it be that all the Fed/GSE generated USDs and specuvestor credit sloshing around the globe might have propped up the overseas housing bubbles for longer than they would have survived without us?

For that matter, does a rapidly deteriorating housing & credit market here portend doom for these overseas markets? If an SDCIA "investor" here sneezes, does the rest of the world catch a cold?

Discuss, enjoy...
HARM

#housing

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71   Peter P   2006 Aug 31, 6:12am  

And how do you propose to set up the “right price” for clean air, or clean water, or salt, or Alaskan brown bear reserves?

Just let people bid for them.

72   skibum   2006 Aug 31, 6:12am  

Can we say, "Waterworld"???

73   Peter P   2006 Aug 31, 6:13am  

Can we say, “Waterworld”???

Whatever happens in the future, we will adapt, or not. We should not worry too much about it.

74   skibum   2006 Aug 31, 6:15am  

Peter P Says:

Whatever happens in the future, we will adapt, or not. We should not worry too much about it.

Que sera sera...

75   skibum   2006 Aug 31, 6:18am  

SF Woman,
That may very well be true. From the perspective of a potential buyer (not that unit), personally, I'd much prefer renovating myself rather than paying for someone else's choices and tastes. Especially if one were buying in that price range, it seems preferable to do things the way you want them. I do realize, however, that there are people who like everything "move in ready."

76   Peter P   2006 Aug 31, 6:18am  

Que sera sera…

Two things you cannot avoid: tax and death.

On the species level: suffering and eventual extinction.

77   astrid   2006 Aug 31, 6:21am  

"Just let people bid for them."

What do UC Irvine profs teach in lieu of communal goods and inelastic demand curves?

78   astrid   2006 Aug 31, 6:22am  

"On the species level: suffering and eventual extinction."

Let's hope our breeding habits do not resemble that of carrier pigeons.

79   Peter P   2006 Aug 31, 6:25am  

What do UC Irvine profs teach in lieu of communal goods and inelastic demand curves?

How would I know?

I understand the importance of communal goods but I understand human nature better. We cannot force people to become responsible when it is against their nature. They have to come to their enlightenment on their own "free will".

80   astrid   2006 Aug 31, 6:29am  

SFWoman,

$3.1 million is a heck of a lot of renovation! If I was in the market I'd be tempted to ask if they've installed 24 karate golden toilets and bathtubs.

81   astrid   2006 Aug 31, 6:34am  

"We cannot force people to become responsible when it is against their nature. They have to come to their enlightenment on their own “free will”."

Yet there are national parks and police departments and free public education throughout the world...

I may think humanity is a bit slow on the uptake and may well be marching towards extinction, but I'll give it credit for teetering along this far. Not everything needs to be auctioned off like cellphone bandwidths.

82   DinOR   2006 Aug 31, 6:36am  

SFW/astrid,

This will be interesting to watch unfold. I'm definitely w/astrid b/c with Zillow etc. how difficult would it be to mistake this for any thing other than naked greed? No offense to your friend.

With all of the "market coverage" we have at our avail it's going to be a lot more difficult to find an "undiscovered gem" or more specifically (to be able to pawn it off).

83   Peter P   2006 Aug 31, 6:40am  

Yet there are national parks and police departments and free public education throughout the world…

People were not necessarily responsible. They were just acting on their own self-interests.

Many environmentalists (not all) choose to do the "right thing" simply because they like things to stay certain ways. They may even ignore Nature's tendency to evolve and renew.

84   DinOR   2006 Aug 31, 6:49am  

"we will adapt, or not"

To a large degree....... that is true. I just can't help sensing this daily burden to do our absolute level best. Each preceeding generation fought and struggled just to survive and, we are their children. They've brought us this far. So with every acre they cleared with primitive hand tools just to ensure there would be a next generation we can and should seek innovations to confront our issues. Even we do become extinct we should at least go down swinging! Don't we owe them at least that much?

85   astrid   2006 Aug 31, 7:08am  

Humanity is overrated. Just wait until the cockroaches become the dominant species on Earth.

86   Randy H   2006 Aug 31, 7:20am  

alien

I gently remind you that you opened this volley by scoffing at the notion of space conquest as a source of growth. What credentials do you have in that area, since you seem to think only direct participants in a field are qualified to participate in discussions.

87   Peter P   2006 Aug 31, 7:25am  

What credentials do you have in that area, since you seem to think only direct participants in a field are qualified to participate in discussions.

I have no credentials whatsoever. :(

88   HARM   2006 Aug 31, 7:27am  

Buffett and his wife remained friends over the years even after Buffett’s current girlfriend Astrid moved in with him.

Wait a minute --astrid is Warren Buffett's GIRLFRIEND?? When did this happen? Moving up in the world, eh, astrid?

89   astrid   2006 Aug 31, 7:30am  

No point in worrying about nuclear power plants and water shortages and space travel, humanity will be destroyed by superbugs and rogue nuclear warheads and polygamy cooties long before we get to that point.

90   astrid   2006 Aug 31, 7:32am  

"Wait a minute –astrid is Warren Buffett’s GIRLFRIEND?? When did this happen? Moving up in the world, eh, astrid?"

Alas, no. This particular online handle comes by the way of a Scottish indie pop band named after the 5th Beatle's photographer girlfriend. I will agree that there's much worse things than being a long time girlfriend to an charming, philanthropic, and exceedingly wealthy older gentleman.

91   Randy H   2006 Aug 31, 7:35am  

alien said:

I think this is unlikely due to EROEI issues.

then

Actually I have a Major in physics.

So I'd guess that someone with a masters in finance would be more qualified to determine EROEI, or did they teach that along with thermodynamics? Aside, I did complete the undergrad engineering physics series through quantum, but that was a long time ago. This is why credentials pissing matches are stupid.

I'm still befuddled as to why somewhere like Israel would knowingly invest their national security and economic future in a desalinization technology that apparently everyone knows is the "wrong technology". It is possible. But you know what they say about incredible claims.

92   astrid   2006 Aug 31, 7:35am  

"I will agree that there’s much worse things than being a long time girlfriend to an charming, philanthropic, and exceedingly wealthy older gentleman."

Like a complete loss of grammar function. (Where's the Google toolbar grammar check?)

Correction

I will agree that there ARE much worse things than being a long time girlfriend to A charming, philanthropic, and exceedingly wealthy older gentleman.

93   Peter P   2006 Aug 31, 7:47am  

RE: Correction

I can guess that "charming, philanthropic, and " was inserted afterwards. Am I right? :)

94   astrid   2006 Aug 31, 7:57am  

"I can guess that “charming, philanthropic, and ” was inserted afterwards. Am I right? I can guess that “charming, philanthropic, and ” was inserted afterwards. Am I right? "

No, actually, charming and philanthropic came first. I always liked Warren Buffet's apparent lack of pretensions (including lack of pretension at not having pretensions) and his ability to get along with a large and disparate group of people. I also admire how he made his money and how he and his family are spending its money. The exceedingly wealthy part is kind of an afterthought...I'm not aiming to marry him or get some money off of him, so the exact extent of his wealth isn't important for me.

95   astrid   2006 Aug 31, 7:59am  

I'm just a very poor grammarian.

96   Peter P   2006 Aug 31, 7:59am  

As it happens I tend to avoid commenting on subjects of which I have no knowledge.

I always comment on subjects of which I know nothing about. But again, I am for entertainment only. :)

97   astrid   2006 Aug 31, 8:14am  

Randy,

So were you talking about freshwater or tritium?

98   Peter P   2006 Aug 31, 8:46am  

Its just very hot here and my air conditioning has decided to fail

In this situation I would just take a cool bath and meditate. Perhaps I would burn an incense to clear my mind?

99   Peter P   2006 Aug 31, 8:50am  

Randy is a really nice person. So he will not hate you for too long. :)

100   astrid   2006 Aug 31, 8:55am  

I thought deuterium + tritium was considered the most promising combo for fusion power.

As for freshwater. I can't take the US seriously on this matter until they stop keeping lawns and golf courses and make some serious revisions to the American west's water rights apportionment.

Folks in the BA are lucky they get water from Hetch Hetchy. BA water tastes so much better than LA water.

101   Peter P   2006 Aug 31, 8:58am  

BA water tastes so much better than LA water.

Have you been to San Jose?

102   Claire   2006 Aug 31, 9:03am  

off topic....

Okay, I've read several times about people referrring to prices moving sideways - what the hell does that mean, how can a price move sideways, not up or down? I guess I missed that explanation/definition - could anyone enlighten me?

103   astrid   2006 Aug 31, 9:09am  

"Have you been to San Jose?"

Not long enough to drink SJ tap water.

104   astrid   2006 Aug 31, 9:19am  

Though this graphic suggests that SJ is also part of the Hetch Hetchy water diversion system.

http://bawua.org/docs/hetch_map.pdf

105   lunarpark   2006 Aug 31, 9:22am  

http://www.pulteplus.com/landing.htm

Pulte offering incentives in Sunnyvale.

106   astrid   2006 Aug 31, 10:16am  

Tritium, because bone cancer can be painful...

107   Peter P   2006 Aug 31, 10:18am  

Pulte offering incentives in Sunnyvale.

There are several new communities in that part of Sunnyvale: Pulte, Toll, and now Barry Swenson. We will see.

109   surfer-x   2006 Aug 31, 1:07pm  

So at least for the Netherlands I can say we are carefully watching the US. And it doesn’t look good.

So you have your finger in the dike?

110   Different Sean   2006 Aug 31, 3:34pm  

Nature will adapt. It isn’t likely to care whether it is ignored or not. The question of how Nature’s adaptation to human intervention will affect the human race’s survival prospects is unfortunately unanswerable in advance.

it's interesting that whenever there has been a significant shift in global climate, there has been a massive die-off of macro species, and others eventually rise up to take their place. i think man is one of the few species who will be able to persist, as man already lives in a diverse range of climates, can travel quickly over long distances, can change the environment and control technology, and is omnivorous and not dependent on a small subset of species as a food source. it appears nature has come up with the best adaptation so far in the form of bipedalism, a large brain AND opposable thumbs...

by a coincidence, I happened to be watching the head of the Australian Conservation Foundation on the National Press Club talk yesterday, who had a lot of interesting things to say. not happy about nuclear power generally vs 'alternative' energy production. he also made the point that the ACF is the voice for species that cannot speak for themselves when it comes to deforestation, climate change, etc.

a $2bn desal plant was proposed here, but it would have been supplied by coal-burning power stations, not nuclear, which would have meant the release of huge amounts of CO2. not popular, so they shelved it. was going to use some sort of membrane process rather than distillation or similar... and they let huge amounts of water run off the city to the sea as stormwater whenever it rains, which is mostly just on the coast these days - complete inability to recycle...

this guy recycles his sewage onsite in his tiny back yard in an inner-city terrace and catches rainwater, and doesn't use any water from the mains as a result... i've posted him in before...
http://www.abc.net.au/science/planet/house/special.htm

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