Plant the seeds'  Instablog

Plant the seeds
Send Message
I have an MBA in Finance from the Booth School at the University of Chicago and a masters degree in Industrial Engineering from the University of Cincinnati. I manage our investments and advice my friends & family on financial decisions. I work in Marketing Research using stats to support... More
  • Housing connection to the Broad Economy? 0 comments
    Oct 9, 2009 4:19 PM | about stocks: GE

    My thoughts on housing and the economy

    - Housing activity: New Construction, Real Estate are not a huge part of overall economic activity.  Which is why housing went into a depression in 2007 but economy didn't start to really plunge till end of 2008.

    - House Assets are the biggest part of the balance sheets of both households and banks. Relative small change in prices can really affect the solvency of banks (Net Equity=Assets-Liabilities) especially with overleveraged banks (Net equity 2-7%)

    - Recession took its toll because banks stopped lending because of their fear of bankruptcy and consumers stopped spending because their fear of foreclosure and bankruptcy.

    Should housing prices stabilize, the unemployment risks will play through, but the banks and individual solvency will improve as they continue to earn income to plug their balance sheets.

    What is a risk is that housing prices continue to decrease, I feel that is lower but not zero.

    Long GE

    Stocks: GE
Back To Plant the seeds' Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.