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Bitcoin & The Commercial Real Estate Collapse

[heading]Bitcoin & The Commercial Real Estate Collapse[/heading]

In 1340 AD, the last great real estate collapse in history took place in Italy. It almost destroyed civilization. When real estate prices fell by 50 percent in Florence, Europe was thrust into a dark age.

Humans, however, have yet to learn their lesson.

Already, the price of Southern California homes are down 41%, and Southern California has not been as quick to collapse as some other areas (and, as we will detail below, has actually continued its’ increase since 2008). Over the past 7 years, housing bubble all over the world have begun collapsing: in China, France, Spain, Ireland, the United Kingdom, Eastern Europe and many other regions.


Jeremy Grantham wrote about the biggest bust in 1,200 years:

Investors should be wary of a Fed whose policy is premised on the idea that 3% growth for the U.S. is normal. Remember, it is led by a guy [Bernanke] who couldn’t see a 1-in-1200-year housing bubble! Keeping rates down until productivity surges above its last 30-year average or until American fertility rates leap upwards could be a very long wait!

So, this is the worst real estate collapse since 807 AD! But, it was anticipated.

In 2005, the Economics magazine wrote that the global boom was “the biggest bubble in history.”  The Economist noted that – to that time – the total value of residential property in developed countries rose by more than $30 trillion, to $70 trillion, over the past five years – an increase equal to the combined GDPs of those nations.

Where The Great Depression Fails To Provide Context, Japan Succeeds

During the last great debt bubble in the US, which peaked in 1929, the average household could not afford a house and had to put down 50% to receive a 5-year balloon mortgage.

Home prices did not bubble like stocks did, and during the worst depression in US history, fell only 26%.

The US had fair warning in the Japanese example, where a major housing bubble burst starting in 1991 after home prices increased 160% in but 6 years and then fell 64%. Til’ this day housing prices are still down about the same.

From 2000-2006, the US followed with a 130% bubble up in 6 years from 2000-2006.


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