You’ve seen me list a number of reasons for a melt-up leading to an epic market fall from grace thereafter.
As we’ll see below, we are seeing early warning signs (i.e. bearish growling) from the real estate market.
In the coming days, I’ll be providing even more signals and tailwind reports to capture and track the current bull run while also preparing you and your portfolios for the return of a very angry bear thereafter.
But speaking of falling from grace and major market disasters, today I wanted to share yet another example of guilty “elites” trying to play at being good guys.
One Man’s Risky Business Is Our Nation’s Financial Turmoil
Recently, I’ve noticed that those directly responsible for causing prior recessions are increasingly seeking to redeem themselves by warning of the next recession.
There’s an ex-president of Harvard, for example, that I like to poke fun at.
In his political days, he helped deregulate the very derivatives market that unleashed the 2008 disaster.
But now he spends his time endorsing books warning of “risk.”
The ironies do abound…
Such self-serving anti-heroes are almost too many to count.
But today I’m reading about a certain sub-prime mortgage tycoon (the veritable face of the housing disaster) warning of yet another real estate crisis.
Whatever one may think of such “good guys,” I’ll at least admit that a housing crisis is among just one of the many triggers to come when the eventual meltdown hits the U.S. markets and economy.
In the current example, this former mortgage executive is at least correct in predicting a massive fall in real estate values, especially in the high-end coastal regions of the Northeast and West Coast.
This former sub-prime peddler partly blames the next crisis on the loss of special deductions in the 2017 tax overhaul which has made high-end homes harder to afford.
The other reason for falling housing prices is just a matter of simple supply and demand-i.e. too much supply (“inventory”) and not enough demand (cash-rich buyers). When such supply and demand forces collide, prices fall like rocks.
Of course, not all of you own $10 million homes in Malibu or Nantucket, so a loss of 40% of more of value in the high-end space may not seem to be a primary concern.
But the larger picture affects us all, and the larger picture is this: Things are falling apart within the U.S., from the middle class to the coastal class.
I’ve shown elsewhere how the U.S. middle class has been crushed by the Fed and Wall Street.
I’ve also shown the truth behind the great unemployment lie.
But soon even the rich will start to sweat.
Come One, Come All to the Crippling Debt Show
Indeed, it may be hard to sympathize with those uber-wealthy folks who have been trading and profiting like drunk teenagers in a Fed-supported market.
But folks, when even the uber wealthy (many of whom are just living off massive debt) suffer, everyone suffers.
As Americans of every stripe, middle-class to upper-class, start feeling more and more pain, the economy rots from within despite markets climbing on a “supportive” Fed and a surging U.S. Dollar.
This “internal rotting” accelerates when more and more Americans can no longer meet their debt obligations.
Toward this end, we already know that household debt is a big part of total U.S. debt, which is off the charts higher than ever:
As for mortgage debt, well it’s just one more classic example of consumer debt rising toward a historical tipping point and yet another “Uh-Oh” moment.
Stick with the Critical Signals Report as we track this debt-driven market storm through its rising and falling stages.
We’ll not only keep you informed, but armed, prepared and profitable as the weather patterns change.
In the interim, be careful, be smart, and be on the lookout for more to come.
10 responses to “How Today’s Real Estate Crisis Could Shake Your Lifetime Wealth Potential”
May 09 2019