"They'd go back to historical real-estate prices over 60 years and say they had never fallen all at once."

Translation: There are no black swans!

The lone exception, he said, was Goldman Sachs...who said, "between you and me, you're right."

Translation: Well, there was that one black swan...

In every other depression I studied in the U.S. in the 1800s, they ALL included a collapse in real estate prices. Going back 60 years (1945?) omits the Great Depression, and even events in the early 1900s.

You could say, let's study a period ... which will give us the answers we want. The Japanese collapse was also occasioned by a collapse in retail/office real estate. And that was only 20 years ago. So they did not study INTERNATIONAL stituations either.

But what do you expect from MBA's who avoided history and probably any alternative economic analyses in all their years at 'school'? Marx! Never! A relative of mine in Hungary who is a mathmetician and trained in Marxism knew this event was going to happen - as did most trained Marxist economists. "Boom" and "Bust" are the CLASSIC signs of unrestrained capital. Marx wrote about it more than a 100 years ago.

Money corrupts and absolute money blinds completely.

Google maps puts "hunting valley" in ohio (very rusty rust belt).

Looks like Cuyahoga county, and the very western parts, are urban cleveland. I don't think I'd touch that area without some major due diligence on the Cleveland economy.

We think the same dark thoughts, apparently ;].

A home one street over from me just sold at Sheriff's auction for...$9000. Yes, the zeros are correct. NINE THOUSAND DOLLARS for a 1500 square foot home, on a 1/4 acre of land, two car garage, new windows and siding, fireplace, etc. A completely livable house, not a tear down.

I'd be willing to bet that one of those genius MBA minds saw an opportunity to buy a home for $9000, and then resell it in 4-5 years for a very high profit. What town/area do you live, because I'm now VERY interested in looking at residential real estate there, if the market prices are indeed that low. At the worst, you could probably gut the houses appliances and copper and recoup the 9k

I wish I knew who it was, but the saying goes "the worst mistake we make is that we assume that TOMORROW is going to be exactly like TODAY...only more so."

In other words, if housing went up-up-up in the past, then OBVIOUSLY it would always continue to do. If the new vastly increased housing costs meant that people needed to work longer hours, or that women had to go to work (instead of staying home to care for small children), then so be it. Up...up, up, up! Prices, profits...debt. It could have gone on longer. Maybe if people only accepted triad marriages, where a third partner could have been pressed into a 60 hour a week job, then would have worked out...for a while longer.

BTW, the party is only over for the working class and poor. Wealthy Americans still have it very, very good. Construction workers may be unemployed, but almost no lawyers are...and zero doctors. Check out real estate prices in the toniest area of your community and I'll bet they are stable or even rising slightly.

I live in the rustiest bit of the Rust Belt, and our county is one of the tops in foreclosures. BUT...if you drive to the furthest eastern part of the county, to a 'burb called "Hunting Valley" (as in "fox hunting")...well, where the millionaires roam, it's still good times. Housing prices in Hunting Valley actually INCREASED, while the rest of the county has been hit with 30% plus devaluation of our homes.

A home one street over from me just sold at Sheriff's auction for...$9000. Yes, the zeros are correct. NINE THOUSAND DOLLARS for a 1500 square foot home, on a 1/4 acre of land, two car garage, new windows and siding, fireplace, etc. A completely livable house, not a tear down.

This will just be more of the brutal inequality that started in the 80s, or thereabout, under Reagan, and came to full fruition under Dubya Bush. And it won't get better for a long, long time -- the damage is too intense and severe.

It's not just AIG or any particular company, or even just the financial services industry. It's all of us. It's the way we all drank the Kool-Aid and the way we continue to worship at the altar of money, and "specialists" who are the "only ones" who can possibly understand it or create it or manipulate it.

It is of course, wayyyy too complex for our tiny, stupid, non-MBA minds to comprehend.

Another comment had the same subject. I want to make a couple points though:

1. Suppose you're the CEO of an investment bank ca 1970, etc, and have a bunch of well meaning investor trader guys. They do ok. 8%, 10%, that's good. Reliable. The company they own goes public, and the shareholders demand management do *anything* they can to drive short term results. All shareholders en masse can see, by and large, is the short term.

2. Now imagine some clever fellow gets hired who can, by speculating, pile up 11% gains/year. It only makes sense to find more like him, right? Given the focus of shareholders (also know as the people who own your business, as CEO, and vote on whether you continue in your job) on short term results, can you expect to hold out for keeping the boring, dependable guys? Does it make sense that you, as a CEO of a big competitive company, are the type of person to voluntarily choose discipline and long-term stability over short term piles of cash? When you're already old and approaching retirement?

3. Now imagine some even more clever guys come in and say "we can, over time, use lobbying money to influence the regulatory environment and make even more mone".. could you possibly resist, if you're the CEO described above? Even assuming you know you're making a fatal long-term choice, does that matter from your point of view?

I make a practice of never assuming conspiracy where simple human laziness, greed or stupidity suffices. In this case only greed is required. Given we're talking about the financial industry, where greed is the absolute primary survival trait, it was completely inevitable that this would happen.

I lay the responsibility at the feet of the voters. We need to fight for campaign finance and lobby reform, to begin to address this problem at the source.