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Before his summer 2007 death, noted economist Kurt Richebacher titled his 2004 commentary: "Property Bubbles: Beware of Property Bubbles," explaining:
the certainty that they all "end painfully, housing (ones) in particular. They're an especially dangerous (type) asset bubble because of their extraordinary debt intensity." Extracting wealth (through refinancing) from rising valuations, and "heavily entangl(ing) banks and the whole wealth financial system as lenders" assures a bad ending eventually. Moreover, the longer excesses continue, the worse the outcome and greater amount of time needed to recover.
As a result, property bubbles have historically been the main cause of major financial crises. In Japan and America alone, their banking systems experienced "calamitous effects....through a horrendous legacy of bad loans" that continue to plague both countries - besides others, notably China with a far greater housing bubble than America's at its peak.
In 2010 alone, China built up to 15 million units. In 2006, America's bubble peak, only 2.5 million were completed. At the end of the 1980s, Japan had a monstrous housing bubble. China's current one rivals it, but so far it hasn't burst. Richebacher's warning, however, bears repeating: "Beware of Property Bubbles." They all end badly.
(4) Falling prices show America's house price deflation continues.
(5) At 26.5%, "(h)ousing is still the largest asset on the baby-boomer balance sheet." Declining valuations affect their spending and attitudes.
(6) Real US unemployment and underemployment remain major problems, neither showing signs of improving.
(7) At nearly seven million, the total number of unemployed Americans for 27 weeks or longer is a record high. At 45%, so is the ratio of their numbers compared to total unemployment.