Thursday, April 16, 2009
updated housing outlook from t2 partners
not much change of tone, but disquieting nevertheless -- particularly beginning around slide 37, with slide 29 as pretext. this shows the complete disaster that is california housing prices, but most importantly that prices have smashed though their trend mean without even a pretense at slowing.
this is what makes aggregate demand management the foremost imperative for the obama administration. if aggregate cash flows are not supported, asset prices will chase discounted cash flows to the floor and right through it, annihilating financial, corporate and household balance sheets, turning what is already a bad dream of interminable balance sheet repair into a financial apocalypse without remedy or shelter. positive carry won't be enough if rents continue to collapse under pressure from falling incomes as well as general oversupply.