Sunday, April 23, 2006

No Soft Landing

As famous economist John Kenneth Galbraith writes in his book "A Short History of Financial Euphoria":
Those who had been riding the upward wave decide now is the time to get out. Those who thought the increase would be forever find their illusion destroyed abruptly, and they, also, respond to the newly revealed reality by selling or trying to sell. And thus the rule, supported by the experience of centuries: the speculative episode always ends not with a whimper but with a bang.
A soft landing will NOT happen in the bubble markets. There will be a bang. A hard landing scenario is inevitable in many metropolitan areas across the country.


  1. Remember that the UK bubble went to higher highs proportionately than the US bubble, but the UK bubble has not burst - it took a long pause where prices seemed to go down a little bit, then in some areas, prices appreciated a tiny bit - it seems to be going sidways now.

    Ditto the Australian housing market.

  2. (I had the 1st comment) - If it does turn out to be a very bad bubble burst, what's the possibility of the FED or the Federal government writing zero interest rate (or lower) housing loan rollovers, or other such emergency measures to control deflation?

    Or the Federal gummint authorizing the GSEs to do that?

  3. so, the money question really is "when", "how long will it last" and "how much will it fall", referring to the bang-like downdraft. Any guesses?

  4. UK/OZ are hocked to the world finance that is still running w/ high liquidity..
    when US thingummy unwinds, it will take them all down.