Read the rest at Dr. Housing Bubble
Never in the history of our modern economic system have we had coordinated housing bubbles rage across the world like some sort of financial plague. The proliferation of boiler plate media and the ubiquitous spreading of banking debt made the real estate religion spread quicker than any time in the past. The way real estate was being played up in the media was like some sort of spiritual revival. I remember a colleague showing me a clip of a real estate seminar in California at the peak of the bubble where people looked as if they were in some sort of glorified peyote induced trance. At the core of any mania is human psychology and herd behavior. People never want to believe that their special niche market is not in some sort of bubble. On January 15 we discussed theCanadian housing bubble and many people fell off their rockers as if this was some sort of spectacular revelation. Reading through the comments on the Canadian bubble post is very reminiscent of 2007 in California where the “not in my back yard” arguments dominated the discussion. The nature of this housing bubble is global and the collapse of markets across the globe will have wide ranging impacts that are yet to be felt.
When the global housing bubbles collapse like a row of dominoes – Canadian housing bubble at apex. Real estate markets from Australia, UK, Italy, and Ireland now into correction phases.
Steve Keen agrees.
The good news for the US is that housing bubble already popped. The bad news is that is still further to go in the correction, and a global contraction due to a worsening financial crisis could stifle the recovery, especially with the austerity talk that is coming out of Washington and being echoed in state capitols.