What is needed for a sound expansion of production is additional capital goods, not money or fiduciary media. The credit boom is built on the sands of banknotes and deposits. It must collapse. If the credit expansion is not stopped in time, the boom turns into the crack-up boom; the flight into real values begins, and the whole monetary system founders. The final outcome of the credit expansion is general impoverishment. - Ludwig Von Mises, "Human Action"I've been talking about doing a write-up on the housing market. Most of this was written before the latest housing numbers for December were released, which show the high probability that this brief housing market bounce is over.
The thesis is that a slight housing market bounce has been generated by $100's of billions in Government and Federal Reserve monetary stimulus and Government policy implementation with respect to mortgage underwriting and refinancing. But when you analyze the critical variables underlying the housing market, it leaves no doubt that the market is still fundamentally damaged and overvalued, with a very high probability that market has another serious decline ahead of it. Furthermore, housing stocks have completely dislocated from market fundamentals and investors who hold them risk a significant loss of capital once the equity market discounts the underlying fundamentals outlined below.
You can read my analysis here: The Housing Market Recovery Is A Complete Myth