The Second Housing Bubble Ends With A Bang, Not A Whimper, David Stockman Warns
Following our earlier discussion of the echo-boom in housing, David Stockman appeared on Yahoo's Daily Ticker with Lauren Lyster to pour come much-needed cold water 'reality' onto the hopes of an increasingly sheep-like investing public. Homebuilder stocks up 100%-plus simply reflects that "we are in a bubble once again." The former CBO Director added that "in a world of medicated money by the central bank, things aren't what they appear to be," as he explained there is "no real organic sustainable recovery."
Stockman further contends, "It's happening in the most speculative sub-prime markets, where massive amounts of 'fast money' is rolling in to buy, to rent, on a speculative basis for a quick trade. And as soon as they conclude prices have moved enough, they’ll be gone as fast as they came." Critically, he points out we live in a world of boomers looking to be trade-down sellers, not one of trade-up buyers, as "the fast money will sell as quickly as they can and the bubble will pop almost as rapidly as it’s appeared.
He concludes that the American Dream of home-ownership 'forced' upon the citizens was a huge policy mistake as he chides, "let the market decide," as he clearly sees Bernanke recreating yet another speculative bubble.
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