This blogbook offers, with the aid of various charts, graphs, and tables, a pictorial guide to the 2008 financial crisis.
Out of Whack: House Prices and Disposable Income
Over the last decade or so, residential real estate got way out of whack in relation to disposable personal income. If lending standards return to the stricter ways forged from the last great deflation, it is difficult to see how this ratio can avoid falling at least to the range of the early to mid 1990s. Given the historic tendency of markets to overshoot, a return to the 120 range or below could easily occur. The old maxim says that the likely depth of the fall must be considered in relation to the mania that attended the rise. This is tricky because "real" values might decline while "nominal" values stabilize, which is dependent on the overall rate of inflation.
To see the presentation in order, use either the Labels below for each chapter or the Table of Contents for individual entries.
The initial presentation was made in October 2008 and was last updated in January 2009, though I recently substantially expanded the list of sources. Lately, I have been working on a blogbook called Energy Predicament.
My dubious record for 2008 is reviewed here, by some miscreants.
FEELING GLUM AND OUT OF SORTS, PERHAPS A BIT ANGRY?
YOU HAVE EVERY RIGHT TO FEEL THAT WAY.
A good number of my charts first appeared at Contrary Investor. Though oriented toward investors, CI offers a superb analysis of the real economy and its relationship to the financial system. It is an indispensable source not only for individuals but also for any good library. So subscribe, dammit.