Will history see the dot-com and dot-condo bubbles as one and the same?
March 23, 2007
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A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.
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31 comments:
No... we will change the wording to make it sound like something that it's not.
No, they are not the same. I do not think the Gov. Bailed out the dot.com losers.
True Story
My former neighbor's Lawn Mower man and woman team are retired CPA's.
They are married and lost all investment things in the dot com crash. Where is the Gov. welfare? These two senior citizens mow grass now to pay their bills, because their retirement went poof in the 401K casino.
Well, they do own a riding lawn mower now, and they put weed killer on my mint plants.....
Yes. They were both manias.
Yes and I'm predicting today's existing home sales report will be 100,000 less than expected. Kiplinger says the Fed will ignore housing all year. More here: http://infohype.blogspot.com
Yep! It is the same ... Oddly one of the problems in 1929 was that people were buying stocks on margin (I think the ratio was 10 to 1???) sort like a 'bet' on an asset, right? Works great only as long the asset increases in value, the other way around, well sounds like Arizona real estate to me...
I don't think so. I think the dot-com bubble is something a lot of people laugh about even now, because although it was a huge credit bubble, it really didn't impact on a broad range of people.
And most people seem less upset (relatively speaking!) about stock losses than losing their home or a large part of their equity within it.
Let's face it, most people get told a house is 'as safe as bricks' and is something you just HAVE to buy if you are a serious adult (and as real estate agents tell us even today, for goodness sake, you MUST buy now before ITS TOO LATE!!!!), whereas stocks for most people (held outside a retirement fund) are seen as a bit of a 'play' on the side.
That shared folklore about housing and the 'fact' it 'never goes down' combined with the fact its much more widespread makes me think the dot-com crash will be merely a footnote when all is said and done.
Yes. Both are a way to "game" the system for just a little longer & postpone the day of reckoning.
Yes, it will be viewed as one continuous bubble. WHY? Because that was the plan Al la Greenspan & Co. Transfer the bubble from dot bomb equities to housing and then because housing is more "sticky" than equities the economic pain will be dragged out over a decade in the form of a mild recession in the housing sector instead of a sudden systemic and sever recession caused by the dot-bomb equities fall out. The wild card was human behavior in that it made the housing bubble more equity like in nature so that its initial pricking was a bit more painful than anticipated.
Yes - in that future historians and analysts will see that it was all part of one huge liquidity blowoff, powered by the Fed.
By arranging for incredibly easy access to credit as opposed to printing paper Fed dollars they still got inflation, but it was massive asset inflation, which made everyone feel richer, inviting idiotic speculation in assets.
In the end, it will all be seen as one massive mania, in my opinion.
Dot-com - small portion of society participating, 50% leverage ($1 buys you $1.50 of buying power)
Dot-condo - 71% of society directly participating, infinite leverage ($0 buys you $1,000,000+)
Dot-com: Buy $15,000 worth of pets.com stock ($10k cash, $5k margin), lose $15,000, live another day.
Dot-condo: Buy $500,000 Arizona condo with $0 down, lose $200,000 really quick, financial ruin, bankruptcy.
Let’s see, it’s almost 10 AM on Friday. The home sales report will be disappointing, but the PPT will come back between noon and 2PM to make the market positive. Nothing earth shaking here folks, please keep on walking in an organized manner…
Existing home sales up 3.9% in February
Now everyone go home....nothing to see here
I don't know if history WILL see them as the same, but they certainly are both the result of the same credit bubble.
What I find most amazing lately is the complete lack of clear analysis from the blogosphere, not to mention the mainstream financial pundits.
Everybody has a different spin on this same thing. I feel like I'm watching a weekly episode of LOST waiting for each successive shoe to drop in this goddamn mess.
I'm seeing the wisdom of the Warren Buffet types who forsaw how the complexity of the whole financial plate of spaghetti is its Achilles heel. When the amount traded, spun, leveraged, and hedged, outweighs the amount produced, consumed and delivered by fantastic ratios in the thousands, who the fcuk knows what will happen next. All the kings horses and all the kings men could take years to unsuccessfully try to put humpty together again (and make it worse in so doing...).
Frustrating.
Seneca and Keith are correct IMHO.When stocks were going nuts I only knew a small percentage of people in the i-nets but it seems as if everybody is in the housing mess.
I was deep in the stock market during the run up,but it was a small amount that grew into a massive amount only to loose alot but at the end of the day the gain was siil huge off the original invetsment.
The nicest comments about housing were;I know its a risk but you have to take risk to make money. Mere words,mere words.If they really understood the risk they wouldnt have gone near it.
Trends go on far longer then expected.The downturn will be long and drawn out.
The new housing data means nothing.Common sense dictates all.Smart money wouldnt touch housing here.
read today in bullnotbull.com article "why having more, no longer makes us happy" that joining a club reduces the risks of dieing by fifty percent in a year. Whats that got to do with talking to a "Sock puppet" !!!
Yes, history will see this as a unique period. But I do think that by the time the history books are written, the true history will be watered down. It will be a chapter titled "The Information Revolution," much like the Industrial Revolution. Two decades will be captured in that chapter and like all American history texts, they will focus on the positives that came from this era.
Enron, Worldcom and the like will be seen as gateways to progress the same way the Triangle Shirtwaist Factory disaster became a catalyst for change during the Progressive Era. The lives that were ruined by the our negligent government will not be discussed.
I wouldn't get excited about the bounce in existing home sales. The supply/demand curve is very elastic right now and the falling prices are bringing the good credit off the sidelines. However, this will not be enough to sustain the binge of the last five years and prices will continue to fall, IMO.
"I don't think so. I think the dot-com bubble is something a lot of people laugh about even now, because although it was a huge credit bubble, it really didn't impact on a broad range of people."
It impacted the banks that lent money to the dot bombs. That may be why Greenie dropped rates and created the current RE bubble.
Supply side easy voodoo lending didn't ultimately work in 1929, and I expect the outcome to be similair in the very near future, once defaults trigger margin calls in masse.
Yes the Bush built scheitt sandwich will take some time to play out, and I expect for it to take GENERATIONS to clean up the collective mess from the fallout of HIS blatant folly.
59 million will get to watch up close and personal their ignorance play out for re-electing the worst president ever, by far, and the CONSEQUENCES of their wanton and willful deluded stupidity.
Fox News, Big Business, friday 23 march 2:50pm pst
Home sales up.....is the bust over?
Have we hit bottom?
Could this be the trap, the come on before the fall?
This is the spring season after all
Bear Trap or Bull Trap time?
"That shared folklore about housing and the 'fact' it 'never goes down' combined with the fact its much more widespread makes me think the dot-com crash will be merely a footnote when all is said and done."
Agreed, just as the crash of 1921 became a footnote to 1929.
No
My take on today's ostensibly decent existin home report: housing prices are falling on increasing volume ... sure sounds like Cisco or JDS Uniphase circa 2000 to me.
The difference is, as I believe Keith has pointed out, you can dump your JDS uniphase with one call to your broker. That overpriced, rapidly depreciating commodity POS McMansion, however, will hang around your neck like a millstone until financial ruin ensues.
Got ramen?
Further out in time, more things probably look associated and get bunched together. I suspect the 9/11 attacks will go down as a harbinger should a crash occur. Matt Groening had a comic in which, after a nuke exchange, everyone ran around senselessly repeating "Reagandidit". It appears that will be "Bushdidit" or "Greenspandidit".
george bush passed a recession to bill clinton passed the dotcom bust to bush and dubya bush will pass the housing bust to hillary clinton. what goes around comes around
No, the dot-com bubble was much niftier. It was insane and yet something was cool about it.
The dot-condo is just plain tawdry and greedy. Nobody had plans to change the world, just pave it over with schlock.
will pass the housing bust to hillary
*******************
OT, BUT YOU ARE KIDDING ME, She will not become Pres., No way. Too much the Manchurian Candidate, imo. Americans are not that stoopid.
Gheezz......
Exhibit A is Casey Serin. He was a web page designer, who turned into a flipper. I think that the boom from the web went in 1997 went into real estate. The real estate boom started when the stock market was going up in 1997. When the market tanked the country was flooded with loan money. That is what has kept the economy going ever since. (The question is what is going to be next.) Other than that there is no relationship.
Barrock Osama will be the first Halfrican-American President.
By my calculations (fool or fooled) every dollar spent on housing in 2001 has produced a dollar a year, in relation to tax assessments. This like the courts allowing (?) the sale of private properties, to for profit corporations without owners concents, seems like a land and private property grab scheme. Note that income tax dollars may be required to have government and corporations build affordable government controlled housing (communism ala the soviet union) note the conspiracy of the inflation calculation numbers calculations of "owners rental equivalency" not ownership, as theory. Note angryness as a possible definition of terror ala terrorist, with or without cause, and the attempts at the confusions of the former, to latter, rules and rulings, as to law and rights,
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