Reply #32: Housing Bust Would Be Painful, But U.S. Might Weather Shock

[UpInArms]

http://www.investors.com/editorial/general.asp?v=7/12

Lois Lane is falling from the top of a Metropolis skyscraper. Superman, whom she has never seen, flies up and catches her in midair. "Don't worry, Miss Lane, I've got you." In midair, she looks at the flying man in the funny costume and spurts out, "You've got me? Who's got you?"

That's how many see the U.S. real estate market today. Except there may not be a Superman.

<snip>

A property plunge would be felt well beyond the construction industry, its suppliers and overextended speculators. We could expect a flight to quality, as defaults soar among builders and homeowners. Mortgage-backed securities would be shunned, as would other nongovernment debt. The rush into Treasury bills would widen those crucial spreads.

As the impact rippled out, consumers would quickly cool their heels. And what's bad for the U.S. is awful for countries that rely on robust American spending.

...more... (it goes on to cheerlead)