Reply #35: I think the downside might have officially begun today

[Phoebe Loosinhouse]

1. GM and Ford both got downgraded to junk bond status.
2. Big downsizing at IBM (I know most of it in Europe, but it still shows the softening of their market)
3. Greenspan made noise about Fannie and Freddie being restrained in size because they were too consolidated and had too much effect in and of themselves to the economy. Also some blather about derivatives which is beyond my level of sophistication.
4. Co-incidentally, Fannie Mae employees today were told they could NOT buy and sell any Fannie Mae stock. That is very, very, bad in my eyes. Fannie Mae is already making billions in restatements of income and this makes me think that there must be more bad news on the way and they are afraid of insiders tipping off the broader markets. This could be big. This mean the housing bubble could burst in a much scarier, larger way than anyone imagined.

Tracer asked "how high can it go?" As long as there is a pool of ready willing and able buyers it can go higher. But if that buyer pool starts to dry up because of lack of financing or raises in interest rates or economic or job instability, then the game of musical chairs has ended. Some of the more fortunate posters in this thread may have gotten out in good time. And if you bought your house as shelter and can afford your payments and keep your job and plan to stay awhile, you'll be fine. There will be a downturn, then flatness and then the cycle upward will start again. But the last bubble in New England took over ten years to make the correction before they were off to the races again. In the meantime, all of that equity literally evaporated.