Putting The Pieces Together

This report does an excellent job walking through the economic indicators that show that the housing market has been both the weight driving the pendulum of the markets up and now down again over the last few years.

Anyone with 20 minutes on their hands who wants some insight into where we are and where we might be headed should give this a read:

Midsummer Meltdown Prospects for the Stock and Housing Markets

“This paper examines the factors that have led to the recent instability in financial markets, specifically the housing bubble and the recent run-up in stock prices. Prices in both the housing market and the stock market are often moved by psychological factors that have little to do with fundamentals.

The paper notes that the economists and analysts who give advice to the public and policymakers are often caught up in the psychology of financial bubbles along with everyone else. “

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