Does Gundlach have a terminal disease that he's hinting to?
I don't know, this kind of kooky prediction sort of reminds me of the prediction T. Boone Pickens made back in 2008 or 2009 (can't remember exactly), when he said, "We'll never see $2 natural gas again in my lifetime."
Gas was like $9 or something at the time and it promptly fell to, $1.90 in 2012.
Gundlach's had some success, but maybe he's starting to go off the rails like the rest of them now.
By the way, doesn't he look a little crazy in that pic?
3 comments:
Interesting read on some of the causes of our fading ( but recoverable) American Dream:
http://tinyurl.com/neww9nt
Young people aren't buying houses because they prefer doubling up or living with their parents? Or maybe because they don't the money.
According to conventional economics on price as the equilibrium of supply and demand, housing prices are too high and need to come down, or incomes have to rise to the level of affordability. Incomes have been stagnant for decades, so that doesn't seem to be the solution. The high prices were based on easy credit and that's now gone, too, even though mortgage rates are at historical lows.
Of course, government could step in to increase demand but not in an ear of austerity.
So prices are too high and need to fall significantly.
If Fannie and Freddie go bye bye then Gundlach will likely proven right. Also, if interest rates rise, prices will fall, but affordability will still be out of reach for most, especially the millions of existing home owners becoming underwater home owners. 20% down payments need to be pared back too. Perhaps they have been? All in all it seems like a vicious cycle of damned if you do and damned if you don't, that could go on as far as the eye can see. Absent some sort of strong government intervention I'm afraid Gundlach has a better chance of being right than being wrong, especially if his lifetime consists of only a decade or so more.
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