Prepare For Asset Price Declines Of 50-75%
What we have is a totally propped-up market based upon debt. Energy isn’t producing positive growth, really. So instead of having real economic growth, we have inflated economic growth and inflated asset values.
When growth starts to decline, I think we’re going to see the valuations of assets decline considerably. It’s anyone’s guess how quickly they can fall, but according to what I have been looking at, I think we are going to see a 50% increase in real estate values right off the bat. I am not saying this will happen in a day, but the first wave will be a 30-50% decrease in real estate values when the markets really start to crack. They are already at the edge of the cliff — and I see prices falling down the cliff, struggling to recover, and then falling even further. Actually, I predict within the next 5-10 years, we can easily see a 75% or more reduction in real estate values.
This was part of my interview with Chris Martenson at Peak Prosperity. During the interview, Chris and I discussed how the disintegrating energy industry would negatively impact the value of most assets, Stocks, Bonds and Real Estate, while the precious metals would ultimately be the higher quality safe haven and store of value.
Out of all the analysts in the alternative media, I find that Chris Martenson’s work at Peak Prosperity gets closer to the root of the problem as it pertains to the future of our financial and economic markets.This is due to the fact that Chris focuses on energy and the Falling EROI – Energy Returned On Investment.
Unfortunately, most precious metals and resource analysts overlook energy.Thus, their analysis is likely flawed because they view the future as a continuation of “business as usual”, once the debts and leverage are taken out of the system. This is an incorrect assumption because the debt and leverage have allowed our financial system and markets to continue to function well beyond its expiration date.Getting rid of the debt and leverage would cause a collapse of the system… one that we will be unable to grow back out of.
Lastly, I believe it is important to continue focusing on the information and data as it changes.This will provide the investor-public with a guideline as to the timing of the upcoming disintegration of our highly leveraged debt based financial market.
Disclosure: None.
Interestingly, contributor Egon von Greyerz agrees saying in a recent article entitled Buying A House Today Will Turn Out To Be A Ruinous Experience In 5 Years Time – Here’s Why (www.munknee.com/buying-a-house-today-will-turn-out-to-be-a-ruinous-experience-in-5-years-time-heres-why/) that:
>"I expect that the inflated housing bubble fuelled by credit will collapse. House prices will go down by at least 75% and probably by as much as 90%."
I could see maybe 35-45%, but 75%! That's a bit much don't you think? Anybody else agree?
I know a lot of young people who would see that as a positive not a negative given they can hardly afford to live let alone buy a house in this bizzaro economy spawned by the central bank screwing with capitalism. Sometimes bad things are actually goodness in disguise.
Despite calls for a meltdown, such things don't happen without a catalyst. Although I don't see the market rising at a breakneck speed as growth is still lackluster, I don't see anything causing a 50-75% crash right now. The Fed's rate hikes slow things further but it is not likely to cause a crash because it enables them to lower rates back down if something happens.
This is the main reason why they should have done thing long ago. It is not safe to be so close to zero rates this long in a cycle. Will the cycle end. Most certainly. Will it be bad when it ends, most likely. Do you see it happening in the next 3 months, no.