U.S. Housing, Real Estate, Credit Bubble Deflation, 5 More Years of Financial Hell

Tuesday, June 1, 2010
By Paul Martin

By: Steve Moyer
Market Oracle
Jun 01, 2010

“…and it is in such twilight that we must be aware of change in the air, however slight, lest we become unwitting victims of the darkness.” ~William Orville Douglas

First of all, please allow me to apologize for the infrequency of my Safehaven posts, as obviously I have become a fellow more inclined to write at market turns than one who chimes in on an ongoing basis. I appreciate to no end the number of emails I receive requesting updates, but my fingers are in a few more pies now (including the penning of a second screenplay with writing partner Tim Wells and the pursuit of my investment advisory representative license).

guess what they say is true: There are only so many hours in the day. Then again, our most significant call hasn’t changed one iota: The global economy is still caught in the eddy of real estate, asset and credit deflation and there is nothing anyone can do of any consequence other than to delay the inevitable (and, ultimately, make things worse). Suffice to say you’ll be hearing the “D” word on an ever-increasing basis over the next five years.

For those reading my pap for the first time, our claim to Safehaven “fame” is based on giving heed to investors before the storms hit. May, 2005: “The relentless drag of deflation is coming soon to a theater near you. A contraction in credit will change the rules of the asset game for at least a decade”; June, 2006: “Real estate deflation has begun and will persist for a longer period than almost anyone can imagine. Our call is for an astonishing percentage decline in real estate values over the next ten years”; September, 2006: “It’s time to deleverage — now!”; March, 200: “Stocks will crash. Time to sell all real estate”; January, 2008: “Values have a long way to go (down), both in terms of price and timeframe”; February, 2008: “ALL U.S. property values are poised to take an increasingly substantial dive in the next 24 months. No property type will be spared”; May, 2008: “Stock markets around the globe will face ever-more downward pressure”; and April, 2009: “The current stock market rally will have legs, and will run longer than most expect” (more below).

Anyway, I write today’s update because the worst of it is dead ahead and we care greatly about the finances of our readership. Scores of you have written to tell us how much you’ve saved selling important assets before their respective markets tanked (or by waiting to buy until prices were lower), and believe me when I say we have taken those stories to heart. That’s the main reason you’ll continue to get trusty asset and credit deflation updates from us from time to time. Meanwhile, it pains me greatly to write this one, but I suppose every cancer patient needs a guy wearing a stethoscope — hopefully with proper bedside manner — to offer that victim the sobering news.

Onward. Last April, we steered clear of the dreaded permabear label by calling for an extended stock market rally, to wit:

The Rest…HERE

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