Bursting Bubbles?

Recent polls show people already believe the US is in a recession. But it seems that very few people have changed their spending habits. It is my belief that the national media will continue to hurt local economies because they want the next big story.

National media pushed and pushed that the housing bubble was going to burst, but as the media continued to get it wrong in 2005, the media pushed even harder in 2006 to make that happen. Then about July 2006 things started to slow in the housing industry. We all knew it was going to slow but we didn’t know how much. If the national media wouldn’t have pushed so hard this could have been a much gentler landing.

What is the media pushing to on now and can we stop it?

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Posted by at 06:00 | Posted in Measure 37 | 374 Comments |Email This Post Email This Post |Print This Post Print This Post
  • New Rich Guy

    I suggest you read last wednesday’s Wall Street Journal to get a better grip on the fallout from the sub-prime real estate loan situation. It is affecting most of the major banks and lending companies. It extends into areas of the economy that are far removed from the housing market. Perhaps of greater importance – it’s national in scope – not just hitting a few areas.
    I found it almost funny to see a homebuilder whining about his new homes not selling in the Oregonian business section a few days ago. Talk about clueless. Unless you really need a home – there is no compelling reason to buy or sell. I won’t even go into the thousands of people living in homes they can no longer afford – and who will be renting sooner than they think. Real estate is yesterday’s investment.

  • Landlord Cal

    “Real estate is yesterday’s investment”?

    I wonder what’s in store for us from our brilliant planners?

  • Britt Storkson

    Knowing that politicians often get re-elected because of what is percieved as a good economy and get de-elected as a result of a bad economy why does anybody think that the media/political estiablishment will get this right?
    In other words we could experience the worst depression in American history and we would constantly hear from the media about what a great enconomy we have.

  • www.portlandhousing.blogspot.com

    Andy, let me be the first to welcome you back to the real world. THE BUBBLE WILL CONTINUE TO LET OUT AIR FOR YEARS TO COME. This has nothing to do with the media and everything to do with builders running out of ‘greater fools’ to sell their units to. You can watch the area fall apart at:


    • Fundamentals

      I think that the name of the game here is ‘Financial Fundamentals’. A lot of people who want (need?) to see real estate turn around spend a lot of time talking about buyer sentiment and people’s emotions as if they are the source of the current decline in housing, but they are not.

      At the risk of oversimplifying the issue, the recent ‘housing boom’ was created by the *mortgage industry itself* though the packaging and sale of securities backed by risky loans that should never have been underwritten in the first place. It was then *fueled* by speculation fever and the emotional fears of being priced out of the market, but not CAUSED by these things.

      The mortgage industry has FUNDAMENTALLY changed in at least a semi-permanent way. The institutional buyers of debt are no longer buying lower rated real estate paper and the currently held paper is losing value precipitously as buyer defaults continue to rise. Investment banks are taking billions of dollars of losses onto their books as a result of the credit crunch. The current and recent highs in real estate prices can no longer be sustained because *the industry is no longer able to loan as liberally as they did during the run-up years*..

      Sure, emotions and sentiment affect local market conditions, but housing cycles ultimately occur within the context of broader economic policy and investment/financing vehicles. The temptation to ascribe trends in housing prices to consumer confidence or media hyperbole is understandable, but in this case largely incorrect.

      Ignore or deny the financial fundamentals underlying the real estate downturn at your own peril.

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