Like Japan in the eighties, the United States has experienced a stock and real estate bubble developing side by side. While the bubbles in Japan collapsed simultaneously at the end of the decades, the collapse of the U.S. stock bubble likely helped to feed the growth in the housing bubble. Its continued expansion over the last seven years has led to accumulation of more than $8 trillion of housing bubble wealth.
However, bubbles always create the conditions for their unraveling. In the case of the housing bubble, the main condition is an enormous oversupply of housing which has led to record inventories of unsold homes and record high vacancy rates in both rental and ownership units. This oversupply is already leading to falling prices in many areas. These price declines are likely to lead to a downward spiral as more and more homeowners find themselves with negative equity, which will lead millions to default. At the same time, the growing wave of bad mortgages will lead to a further tightening of credit that will choke off demand, putting even more downward pressure on prices.
The housing bubble was recognizable, as some economists did warn of the potential problem several years ago based on an analysis of the fundamentals in the housing market. However, as was the case with the stock bubble, those who focused their analysis on fundamentals were largely ignored in the media and in policy circles. Instead, many of the most visible voices were explicit bulls on the housing market, and often people with a vested interest in sustaining the bubble. The economy and the country are likely to pay a very large price for this policy failure.
Prospects for the Stock and Housing Markets
When "peak oil" theory was first widely publicized in such path breaking books as Kenneth Deffeyes' Hubbert's Peak (2001), Richard Heinberg's The Party's Over (2002), David Goodstein's Out of Gas (2004), and Paul Robert's The End of Oil (2004), energy industry officials and their government associates largely ridiculed the notion. An imminent peak - and subsequent decline - in global petroleum output was derided as crackpot science with little geological foundation. "Based on [our] analysis," the U.S. Department of Energy confidently asserted in 2004, "[we] would expect conventional oil to peak closer to the middle than to the beginning of the 21st century."
Recently, however, a spate of high-level government and industry reports have begun to suggest that the original peak-oil theorists were far closer to the grim reality of global-oil availability than industry analysts were willing to admit. Industry optimism regarding long-term energy-supply prospects, these official reports indicate, has now given way to a deep-seated pessimism, even in the biggest of Big Oil corporate headquarters.
The change in outlook is perhaps best suggested by a July 27 article in the Wall Street Journal headlined, "Oil Profits Show Sign of Aging."[....]
Entering the Tough Oil Era
Yesterday, ... POTUS told reporters he's considering more tax cuts for those who need it most - corporations! [more]
Excellent article. Takles the subject of "Art of Living". Explains, ... just perhaps, why some of us insist that owning and driving - for example, Bently Azure is part of our hopes dreams. [more]
Walking does more than driving to cause global warming, a leading environmentalist has calculated
[... very clever article, but silly!]