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restructuring the u.s. economy: downward

  1. 22,691 Posts.

    "And finally, equity and real estate bubbles are very different animals, of which the latter is manifestly the far more dangerous. In its World Economic Outlook of April 2003, the International Monetary Fund published a historical study, titled When Bubbles Burst, and explained differences in the effects between bursting equity and housing bubbles. It stated, in brief, the following:

    First, the price corrections during housing price busts averaged 30%, reflecting the lower volatility of housing prices and the lower liquidity in housing markets.

    Second, housing price crashes lasted about four years, about 1 1/2 years longer than equity price busts.

    Third, the association between booms and busts was stronger for housing than for equity prices...

    Fourth, all major bank crises in industrial countries during the postwar period coincided with housing price busts".

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