re: If/when there is a major correction and/or housing crash

quote:

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Will you consider this a good thing or a bad thing?

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The problem is housing is only a symptom, the real problem is the credit bubble the US consumer has created.

Credit card debt is at an all-time high and still quickly increasing. Credit card delinquency rates are rising quickly and will likely rise further and faster as student loan repayments start on Sunday.

PPI has begun creeping back up...



Which means CPI will likely go up again at least for September, if not both September and October.



Which makes another .25 rate increase more and more likely.

All of this means that consumers will have less and less money going forward to afford things like homes or servicing credit cards as basic necessities continue to rise in price. As consumers are purchasing fewer items, GDP slows down. My fear is that if we see GDP go negative while Unemployment is increasing, that's going to cause businesses to panic and cut more jobs than they normally would, thus exacerbating the problems.

Once all this balances out (whenever that is), we would likely have come out the other side with some deflation and a frickton of room for re-growth. The issue is that it's going to also put millions through a frickton of pain to get us there.