Well given that retractions are based on actions taken I think all are somewhat self full filling.
I pay attention to the talking heads to see if any of them manage a well reasoned comment.
One did a few weeks back.
“Well we are not seeing any bubbles which usually proceed failure”.
Smart guy- I like to say that the boom period is the dangerous one.
In the worse case the ‘new normal’ allows extension of debt to parties normally restricted from it so a downturn cascades into failure as those notes go sour.
2007 was interesting- it was proceeded by a decade of building waves of heightened real estate inflation which ultimately brought prices up by a aggregate of 70 trillion dollars.
The first pop was Ireland’s Celtic Tiger boom followed in turn by 18 or so additional countries.
Fear is a wonderful motivation- “Main Street” was immersed in as the bubble swept over the states.
My crappy neighborhood had bidding wars with forty folk driving housing prices through the roof.
The papers were carrying articles stating that ten years hence would see a national housing shortage which would cripple hopes for the American Dream of home ownership.
Crude spiked as well- remember that first one and the fear behind it as supply suddenly seemed so uncertain...
The stumble was abrupt when real estate failed.
I remember a bit in the paper- “when this happens the market is next”...
That chap called it well enough.
I used to think hard booms and busts are a generational thing.
A social/institutional memory of aberrations serves to curve reckless behaviors which cause the run ups.
A safety valve if you will- the economy self regulates.
Enough years pass and folk with cash in the game didn’t experience the last one.
Hmmmm- right?:
We had another bubble in real estate here- it peaked months ago..
Worth a read and some nice graphs :
What The 1990s Tell Us About The Next Housing Bust - Real Estate Decoded