[quote=sdduuuude]
If it overshoots to the downside, then we may have an underdamped and possibly unstable system (positive feedback or open loop), as I suspect.
[/quote]
I think this is the most likely scenario (its always happened in the past with much smaller bubbles).
Foreclosures beget more foreclosures. Same with short-sales and unemployment. I remember hearing a statistic that during the 80’s slump, when one engineering job left SD, three 7/11 employees went with them.
You are correct that its only a ‘negative’ feedback loop if you are talking about negative bias against the upside. You could make the case that this is correct in the long term, as the generic long-term trend is upwards.
