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International Investments and Bubbles of Wealth V

investment trends

Gary Scott

Our last four messages have looked at whether or not there is a real estate bubble and have examined reasons why some people do not think there is a real estate bubble.

Others feel that there is a bulge perhaps, but not a serious bubble as evidenced by the July 2005 Atlantic magazine article "Pffffttt The U.S. real-estate bubble is likely to leak, not pop".

 However there are many who feel that there is a bubble and that there are serious economic dangers.

For example the special report "In come the waves" in the June 18, 2005 Economist. "The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops.

"NEVER before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Rising property prices helped to prop up the world economy after the stock market bubble burst in 2000. What if the housing boom now turns to bust?"

According to estimates by The Economist, the value of residential property rose an equivalent of 100% of these countries combined GNPs and is bigger than the stock market bubble of the 90s which rose 80% of the nation’s GNP.

The house price index shows that from 1997 to 2005 prices are up

244% in South Africa
192% in Ireland
154% in Britain
145% in Spain
114% in Australia
87% in France
84% in Sweden
76% in the Netherlands
73% in the U.S.

This article predicts that there will not be an overnight collapse but a slow puncture that sees prices fall for the next five years. 

There are many other warnings. The Executive Intelligence Review:

Are 'Fannie and Freddie Were Lenders': U.S. Real Estate Bubble Nears Its End by Richard Freeman says:

"The U.S. financial system is now dependent to an unprecedented degree upon one prop: the greatest housing-real estate bubble in human history. A hyperinflationary spiral has sent home prices shooting up by 10-40% annually in recent years—depending on the region of the country—and artificially pushed the price of millions of homes into the $400,000 to $1 million range or above. Already in 2001, one out of every ten homes for sale in the United States was priced at $1,000,000 or more."

Yet this article appeared in June 2002.

CNN Money wrote an article Bubble trouble

This article said:

"Real estate will make you rich, eh? If everyone thinks so, how can it be true?

"NEW YORK (Money Magazine) - Forget book clubs and poker nights. America's property craze has spawned a new social network: The real estate investment club.

"Hmm. Substitute the words tech stocks for real estate, margin loan for interest-only mortgage, and the housing boom takes on an ominously familiar tone. 

"The question isn't whether home values across the country will vaporize all at once, as the Nasdaq did. (They won't.) It's whether too many people are acting as if nothing bad could happen.

Let's be clear: No one knows when home prices will top out in your area. History suggests, however, that it'll happen not long after homeowners and buyers reach maximum certainty that they've discovered the fail-safe key to riches. Considerable anecdotal evidence suggests that fateful time may be near."

Yet this article was written September 20, 2004 and since that time, according to the Economist, real estate has risen nearly 12.5%.

Perhaps the strongest suggestions that there is a bubble can be seen by looking at comparisons of house prices versus income and rents.

According to the Economist article mentioned earlier, the most compelling evidence that home prices are overvalued is the diverging relationship between house prices and rents. They claim that in relationship to rents house prices are at record highs in America, Britain, Spain, the Netherlands, Ireland and Belgium.

A July 13 article in the Washington Post, "Home Prices Put Squeeze On Families" by Anjali Athavaley focuses on this as well. ARTICLE

This article says:

"Rising home prices are putting pressure on families to move to lower-priced areas, commute more than an hour to work and worry about meeting mortgage costs, according to the results of a national poll released yesterday by the Homeownership Alliance, a Washington-based housing association.

"In the Washington area, high prices in the District and nearby suburbs are pushing home buyers farther out. Rising costs are affecting lower- and middle-income families, said Terry Lynch, executive director of Downtown Cluster of Congregations, a D.C. nonprofit group that focuses on community service and housing issues.

"The poll also shows that 45% of respondents are concerned about whether they will be able to meet mortgage or rent payments. 

"Even if they are worried, low-income home buyers should watch out for enticing payment plans such as interest-only mortgages, which offer low initial payments but can be risky if interest rates go up, said Sheila Crowley, president of the National Low Income Housing Coalition."

The concerns of rising mortgage rates may be well funded as another July 13, 2005 article in Businessweek “Fannie Mae Sees Mortgage Risks” by Peter Coy points out at:

This article says that the head of Fannie Mae is worried about people with shaky finances when adjustable-rate mortgages do adjust.  The article says that nearly 20% of Alt-A mortgages will reset within the next two years, rising to more than 40% within five years. Even worse nearly 60% of sub prime loans will reset within the next couple of years, rising to around 70% within the next three years."

So there are many reasons why we can expect real estate values to either slow, down, stall or even fall.

Tomorrow’s message concludes this series by looking at what we can about the current state of real estate markets and how to react in either direction. Until then good may all your estates be real.


P.S. Whether boom or bust, there will be opportunity. Those who look for it and know how to process information correctly can gain. This is why we are conducting a special course "Super Thinking - Super Learning” to help you unlock the power of your untapped knowledge.

One of the biggest challenges of this decade is overcoming the pressures of adaptation. As technology accelerates life, we gain so many time saving devices that we have no time left!

This is why the ability to quickly assimilate, process and recall information is an important tool we all need.

There are numerous little known, but scientifically proven ways to enhance the speed, accuracy and efficiency of your decision making process for greater wealth, health and happiness. Now in just three days you can gain almost amazing thinking power. Plus you become skilled in Spanish as a bonus. In just a weekend!

Sound too good to be true?

This is not a gimmick nor a trick. At least three best selling books, Superlearning, the Mozart Effect and Superlearning 2000 have revealed insights about how we can learn and think more powerfully based on systems drawn from the Bulgarian, Dr. Georgi Lozanov.

In 1980 Superlearning sold over two million copies and showed how the Lozanov learning system blended long-tested sciences of yoga with contemporary physiology and psychology so people could learn faster and better.

Lozanov helped build such a powerful educational system in his poor country (Bulgaria) that the Russians took notice and used his tactics to create an educational system that still produces more scientists and super brains than almost anywhere in the world.

This book exposed this fact and made the system so popular that Dr. Lozanov was allowed to visit the US from Bulgaria to teach to just a very few people so they could pass on this vital information on how to learn and think in a more natural, powerful way so we can enjoy life and enhanced memory more.

Merri was among those few who learned how and is licensed to teach the Lozanov system from this Bulgarian master and she is now offering a practical course on how to learn faster and better. With her modified system, you will learn how to think and learn more powerfully in just three days. To prove how good you will be with this process, she will teach you tricks for being fluent in Spanish over the weekend just as a side benefit.

The learning system you gain expands on Dr. Lozanov’s original work and offers new insights into tapping human potential, drawing from ancient and modern tactics for quick learning such as subliminal memory, music, nutrition, and productivity.

For example you learn how to evoke the power of the senses thus super-charging memory. Ever hear a song from twenty, thirty or forty years past and in a snap know all the words, the tune and remember with who and where your heard it decades ago? Learn how to use ten cycle music to gain almost super human thinking powers.

Essential oils are another thought processing tool you gain. Put on one oil when you put data in and when you use the oil later the information becomes immediately accessible.

Dr. Lozanov was totally committed to learning without stress, to enjoy the thrill of relaxed, leisurely learning. These are just two, whole learning, super-thinking tactics you gain at our course.

You will gain seven easy to use learning techniques that can help you gain any type of skill from computers to athletics to conversational languages--in much less time than traditional learning techniques.

This Super Learning/Super Memory three-day course will literally change the way you think and learn forever.

What is your desire? Do you want to speak Spanish, French, German, Chinese or any language? Would you like to golf better or accomplish more in school? Would you like to easily, quickly zip through projects, chores, reports? "Super Thinking" course can help you learn any subject two-to-five times faster, in exciting and innovative ways.

The techniques you gain will help unlock the quantum potential we all possess. This evolutionary program shows how certain types of music can enhance learning and how even altered nutrition can make you a startling 25 percent smarter, how subliminal messages can increase your energy and thinking process, plus much, much more.

Merri’s system follows and builds upon what was taught in the Superlearning, the Mozart Effect and Superlearning 2000 books plus includes techniques and strategies that she has gained in her 37 years of global travel and study with educational masters around the world.

This is a course that shows you how to increase your mental power to better succeed in the 21st century when we can otherwise be overwhelmed by information.

The system you gain is built from old and new sources ranging from yoga to contemporary Russian science, and ultimate zone training already used by many Olympic champions.

"Super Thinking - Super Learning" presents new ways to use subliminal memory, music and much more to supercharge your mind. The knowledge you gain about smart food and super nutrition allows you to enhance productivity and creativity.

Once these concepts are understood, you will know how to create your own program and build new skills at work in study and play.

Why Spanish?

Spanish is the second most spoken language in the world. Chances are a huge Spanish speaking population lives south of and around you. Yet our North American language system did not teach us how to communicate with or understand this culture. We can all do with a bit of Spanish.

Yet who has the time?

You do! Fluency in a language is considered to come when you know 1,200 words. To prove that it is possible to gain this and much more, let me share one tactic Merri taught me that gives you thousands of Spanish words in less than three minutes.

Here are the hundreds of Spanish words to use instantly:

All words in Spanish and English that end in ION are almost identical, though pronounced differently. Take a look:

English Spanish
Tradition Tradicion
Education Eduacion
Action Accion

Now you already literally know hundreds of Spanish nouns. This is just one of seven Spanish lessons you gain. The next lesson teaches you how to pronounce each of these nouns. Then you learn in a third lesson almost as many verbs, almost as quickly.

The fourth lesson shows how to avoid conjugating verbs by sticking with the infinitive (far easier than it sounds). This simple lesson leaves you sounding like a Spanish professor. Lesson five shows how to sound infinitely polite and yet get almost anything you want in Spanish. Lesson six gives you the valuable connectors and the seventh lesson triples your Spanish capacity with yesterday, now and tomorrow.

By the end of three day course you will comfortable speaking without stress!

For details, or to enroll

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