House prices will eventually stop falling, probably in about two years. But will they ever recover to the levels we saw during the heights of boom? In some areas, prices might climb that high again. But for most markets, such a recovery will probably never happen, and would take decades it were to occur.
In an essay published today, Charles Hugh Smith explains that the bubble vaulations are probably never coming back.
1. Once the bubble in an asset class pops, it never reflates. "It is simply a truism that bubbles never reflate, ever. Tulip bulb valuations did not rise to stratospheric heights after the Tulip Craze popped, and the Nasdaq dot-com bubble did not reinflate, either, for the very good reason that bubbles are never based on rational valuations--they are based on the psychological state of mania which cannot be reinstated once lost," Smith writes.
Read on...
Peacenik thought Stephen Harper said the Canadian banking system was strong...an example for the world. Why then did the Bank of Canada lower interest rates to .25% and promise to keep them there for a year? Peacenik thinks someone is desperately trying to re-inflate the housing bubble. Charles Hugh Smith says it is not going to happen. The Japanese tried zero or negative interest rates for 10 years...their lost decade...and it didn't help.
The financial crisis cannot be solved by low interest rates. It cannot be solved by any of the programs Obama and others are trying, because it cannot be solved. It must play out. It will play out. Depression. Deflation. Collapse. The Black Hole wins. But at least Peacenik is leading his playoff hockey pool.
In an essay published today, Charles Hugh Smith explains that the bubble vaulations are probably never coming back.
1. Once the bubble in an asset class pops, it never reflates. "It is simply a truism that bubbles never reflate, ever. Tulip bulb valuations did not rise to stratospheric heights after the Tulip Craze popped, and the Nasdaq dot-com bubble did not reinflate, either, for the very good reason that bubbles are never based on rational valuations--they are based on the psychological state of mania which cannot be reinstated once lost," Smith writes.
Read on...
Peacenik thought Stephen Harper said the Canadian banking system was strong...an example for the world. Why then did the Bank of Canada lower interest rates to .25% and promise to keep them there for a year? Peacenik thinks someone is desperately trying to re-inflate the housing bubble. Charles Hugh Smith says it is not going to happen. The Japanese tried zero or negative interest rates for 10 years...their lost decade...and it didn't help.
The financial crisis cannot be solved by low interest rates. It cannot be solved by any of the programs Obama and others are trying, because it cannot be solved. It must play out. It will play out. Depression. Deflation. Collapse. The Black Hole wins. But at least Peacenik is leading his playoff hockey pool.
