Cheney and Bush and the neocons engineered the house price runup?!? Holy Halliburton, Batman!

Scruffy, a nod for a truly humorous post. However, and as Lurkor aptly pointed out: We ain’t the ones drinking the Kool-Aid, my friend. I am curious, though. What is your profession when not penning adroit little missives like the one above? Bomb throwing Anarcho-Syndicalist? Economic advisor to the French Lysee? Poli-Sci professor at SD State? Just curious. You do seem to represent an interesting mix of Tom Hayden/Jane Fonda rhetorician (circa 1972), salted with a certain level of knowing cynicism. So, I’m guessing you’re professionally involved in the RE business?

Patient Renter: I agree with your overall read, but there is a part of me (that pesky gut instinct again) that says there is a bigger element of risk than any of us (or the Fed) recognizes.

I don’t credit the Fed with any particular ability to stave off disaster, mainly given the lack of imagination that our monetary policy has displayed over the tenure of Herr Greenspan. Given the somewhat kneejerk reaction that all Western central banks (British, German and American to the fore) have shown when it comes to inflation, I think the Fed recognizes the problem and is holding off firing the cannons (in the form of rate hikes) until it is absolutely imperative they do so. I think that the Japanese example (1990 forward), the Dollar Bust/Asian Tigers Crisis (1997) and the NASDAQ/dotcom Bust (2000) are etched deeply in the Fed’s cortex.

I don’t think we are going to see a collapse (the 40 – 50% drop you mentioned), but a correction (20 – 30%). And, no, that doesn’t represent any sort of chicken entrails auguring, in that it is already happening in certain California markets.

Course, I also think Scruffy Dog should put down his copy of “Pravda” long enough to sniff the wind and recognize that where there is smoke, there is generally fire.