Here's Bill Fleckenstein at Contrarian Chronicles on MSN, pretty much echoing what's been said here:
The 'use-your-house-as-an-ATM-to-live-beyond-your-means' stimulus is finished, thanks to the recent de-leveraging/crackup in the bond market.
The refi game and the bull market in housing it created postponed the consequences of the largest stock market bubble in history.
Even more leverage was created in the system, as we attempted to speculate our way to prosperity.
In short, the excesses from the bubble have not been cleared away, but they will be, along with the recent excesses from the refi bubble … These developments will tend to be self-reinforcing, and especially damaging, if and when housing prices join the decline.
It will indeed be a very ugly period, as the economy shrinks and people scramble to figure out how best to service their enormous debt loads. This will play havoc with the dollar, and I believe the "vaporization" of the dollar will be part-and-parcel of the next-time-down scenario.
July 04, 2006
The bills for the housing bubble and all the debt that's been run up in the last few years are coming due
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6 comments:
bill is on the money ...look out
I kinda like vaporization of the industrialized world.
http://en.wikipedia.org/wiki/Olduvai_theory
The Industrial Civilization is defined in Duncan's paper as the time from when energy production per capita rises above 30% of its peak to when it falls below 30% of its peak. The 30% point is 3.32 boe/c/yr (barrels of oil equivalent per capita per year). The peak is 11.15 boe/c/yr and occurred in 1979.
The part of the decline from 1979 to 1999 is called the Olduvai slope. The rest is predicted to occur in two stages:
the Olduvai slide (2000–2011) - 'may resemble the "Great Depression" of 1929 to 1939: unemployment, breadlines, and homelessness'
the Olduvai cliff (2012–2030) - 'I know of no precedent in human history.'
In terms of energy, world oil production per capita also peaked in 1979 and has since fallen faster than world energy consumption per capita. The paper does not discuss how this shortfall is met.
Don't mess with Fleckstein!
I had Fleckenstein bookmarked but haven't seen his weekly diatribe against the dollar and the Fed in over a month.
http://tinyurl.com/hlbm2
has fleck ever been right about anything? this guy has been a raging bear throughout a great 3 year upswing in the market. listen to him and you stay poor.
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