26-08-2006, 06:08 PM
You don't have have grey hair to remember a recession.
A recession is the opposite of a Boom.
In a boom, most have money to invest and support lifestyle.
In a recession, most are borrowed to their limits, few can afford to buy more, demand collapses, investment prices fall, living expenses rise.
As more people run out of credit or spending power, demand slows, the recession prolongs and turns into a depression.
M.Y. states that we had a recession but "we did'nt know it".
This really surprises me coming from someone who touts 30yrs in RE, for all those investors that I know (hundreds) that went through the recessions of the 90's, 80's and 70's and before (my dad was born in 1926 btw) will never forget them.
There is still too much liquidity imho for a prolonged recession, but that liquidity does'nt seem headed for the RE market, instead I would say it's going to the share market for the next 3-4 years.
If that liquidity ends, we may be in for a stock market crash, followed by a *real* recession for a few more years.
By then interest rates may be 12-13%, metro RE rental yields 9%, inflation 6%, un-employement 9%, petrol $2 ltr, bread & milk $5.
We will reminisce about the "good ol days" when we could borrow @ 6%, houses were affordable, petrol was $1 ltr, and credit was easy.
By that time the baby boomers will mostly be inactive (or in hell for their 60's sexual revolution) the economy will have slowed down, inflation & interest even higher, and 12% seemed a good rate.
Then ...when night seems darkest, morning begins...again.
Now back to enjoying the good life while I still can.
