Wednesday, May 06, 2009

The Wall St Journal is Even on Board

Yesterdays WSJ piece closed with some really interesting comments. I'd like to say that those comments were an original sentiment, but I have been standing on top of the hill waving my arms like a mad man and screaming the exact same things. The closing comments of the article were also rather chilling for the "its almost over" crowd.
I looked at Case-Shiller's index back to 1987 and compared it to federal data on average earnings. The result, rebased to 100 in January 1987, can be seen here. And it's alarming. By this (admittedly very simple) measure, today's home prices are actually more expensive, in relation to average earnings, than at the peak of the 1989 property bubble.

Equally noteworthy is that when the last property bubble burst, it took about eight years before the market showed really strong signs of revival. This bubble was far, far bigger

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