Friday, 18 September 2009
Baseline Scenario, Japanese style and the Kalio Pub
One see an apple that has grown bigger and bigger and yet not falling from the tree, as an interesting phenomenon and somehow is overwhelmed by the strength of this apple - still hanging hard and defying its fate. However ultimaltely it will succomb the force of nature and follow the law of gravity. The fall is unavoidable and this particular fall may open new opportunities for others (at least one fell in the head of Mr Newton and allowed major breakthrough).
So yes, house price are still hanging , helped by unnatural phenomen called politicians and policy makers. However the fall is unavoidable...bear in mind that they are not fighting to rescue the housing market but instead the whole system (see the UK and US where politicians and economist are a little bit more advanced in policy making and global economical strategy...at the moment they control the rest including the fate of Finnish Finland)
Back to reality... Observe the phenomenon that occured in 1990, as show in the picture above: a double top (I suppose created by the one who desperatly were waiting for a correction, so clearly a bear trap)...and what deceively followed by a lifetime correction.
This scenario is my baseline scenario with most probably between 30-40% correction by 2012 and probably 10-20% by end of 2010, a time where the stimulus are all but disappearing. The economy will be in such a state that it will not handle another crisis currentl ygerming that is unavoidably bound to happen: the currency crisis due to last resort measure exercised in the past year to disable the effect of the financial crisis created by about 10-20 years of policy making and regulation miscalculation assorted with uncompetence...(believe it or not I'm not writing, on the fly, after few pints in a dark pub in kalio...instead I'm surrounding by my daughter that do not understand how is it possible that there is better thing to than wathing a cartoon with her (TiTi Nalle)...)
All in all, the best case scenario for Finnish Finland, which could invalidate my baseline , is the Japanese type scenario, a slow decrease of price in the period of 20 years...losing 50-60% during that period...almost unnoticeable (3%/year). this could be a stagnation of price combined with higher inflation...
I will update soon my prediction of the current price evolution based on the latest technology (...), when I decide to become unproductif...