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That still does not answer my question.

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It sounds like your site is crashed again but not yet the market,comment sections are not opening.

with best regard from enternal "tu2" magic triple quad hard drive.

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I know it's not. It's just a citation. The article is pay-per-view at the Economist website. But I downloaded a copy while it was free.

I really don't know much about natural gas or other commodities. Really all I claim to know is that the net rental yield for RE has to be above the cost of borrowing money in the long run. That's all you need to know about this bubble.

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Why are you anonymous?

How can we associate what you are saying to anything else you have said or will say? How should I take your comment?

Regards,

arit

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That's exactly what I mean. Yes, in retrospect you can pull out an article or two that DOES warn, but the overall tone was very complacent. The occasional article that DID ring alarm bells seemed to really stand out for me for me, but I almost put that down to my personal bias. Almost, but not quite, for which I'm relieved, gratified and in a much better financial position than if I wasn't such a pessimist. "Economic Miracle" and all that just didn't sit right with me!

Also, your second link is not an Economist article.

BTW, I do respect and value your opinion, Patriotz. Don't take this as criticism. I am generally in broad agreement with you. Now that I've buttered you up a bit…. Do you think natural gas is worth going strongly bullish on? It sure seems oversold to me, I still have quite a bit of uncommitted cash doing almost nothing for me and want to place it. Sure is interesting times out there, huh? Kinda dangerous.

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You're starting to talk like Rob Chipman!

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The UBC reports discounts each city differently. It takes expenses such as maintenance fees, etc. as a % of the purchase price. Given the historically high nature of these expenses as a % of historical prices – the Vancouver %'s are skewed to the low side and historically cheaper cities are skewed to the high side. So in Vancouver he starts with a low cost of capital % to use as a discount rate. Error #1. He then discounts the % that prices must drop (by reducing the cost of capital by his prediction of how much prices will increase in the future) by to come to equilibrium by assuming in his formula that prices will go up in the future at the same rate they did in the past…which is completely illogical as he includes the period 2001 to 2008 which had increases that were clearly unsustainable in the long run and historically as the price drops are proving – so why would prices grow as they rates in the future (grow a number a 5% on a compounding basis and watch it go to the moon quickly…kind of like prices from 2001 to 2008). Error #2.

You would think a professor at UBC would find the flaws in his analysis…but he's only an associate professor and the paper looks like it was actually written by one of his grad students and he oversaw it.

Pricing on the margin will drive prices down. What I mean by this is that those that are being crunched by being overstretched (cutting cheques each month to cover negative cash flow at one of more properties where rents don't even come close to covering the mortgage, bought a number of presales, etc.) or those that are just speculators – when they all run for the door they will drive down prices. Whether others in their buildings or area can hold out for a long period of time or not without reducing prices…pricing always occurs on the margin…ie – your property is worth what your neighbor sold for…not what it used to be worth or what you think its worth.

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2 mortgages? Wow.. some are really expecting that others are going to make them rich.

Being a cheapskate and frugalist to madness, I spotted this bubble 7 years ago. Not from having a degree in economics, but common sense. I questioned as to why people were expecting so much, I questioned why people were willing to pay. I asked around and asked who is making more money, no body did or knew anybody who got raises, only more expenses. I knew it did not add up. The papers were saying one thing, and for each month that went by, the news paper world segregated even further from my world, a real world. Stone soup. And it went on for 7, seven! years!!!! Unbelievable. And here we are.

I dont like bubbles, I dont like fevers. In fever people become delerious, hallucinate and live in a surreal world.

Not healthy. It was a gold rush, and some paid a big price.

Either way, I figured this would have to burst in the seams sooner all later. What goes up must come down. I guess mother nature rules.

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