I am tempted to follow the logic of others who think 2015 or so for the bottom of the market, but we still have a few large (bigger than previous) shocks to hit the financial system. These include massive commercial losses, massive consumer debt defaults and massive municipal defaults. This is the power of deflation, and certainly the current policy is to allow the loans to fail and then mop up the mess.

By the time we get to 2015 (if) we still have a viable economy, prices should be very low indeed. However, the big wild card, is how far down the financial collapse our government is willing or able to allow us to fall.

It is possible that “cash for X” and other programs will become much larger and we may even see works programs, in which case, perhaps we do not see massive defaults in the credit markets, but rather very high inflation and in inflated dollars asset inflation.

So while I am inclined to sit on the fence and wait for financial Armageddon, it is just possible intervention will work and house prices really have seen their lowest point?