The Real Estate Cycle And Property Predictions

Let me ask you an important question - How much do we learn from history

?

In Secret life of Real Estate and Banking, I use the American real estate experience over the last 200 years as a case study to reveal the existence of a regular (18-20 year)property cycle with a financial collapse marking the trough of each cycle. I show clearly how each phase of the cycle repeats, with 'nobody seeing it coming', the only variation being the new ways bankers find to avoid the regulations put in place after each collapse to ensure 'it will never happen again':

After the real estate collapse of 1837 'So bad was the downturn, every state was prepared at least to attempt some banking reform to avoid another panic. Some thought forbidding the issue of small-denomination notes might help, by forcing the use of gold and silver coins which ought not to depreciate. Others introduced legislation to control banks' reserve ratios, compelling them to maintain a certain level of specie to support the notes issued. Some states went so far as to control the banks through state (public) ownership. There were even suggestions to do away with banks completely as those distraught by what they saw as an utterly corrupt system took a fervent, almost religious, stand. Some states, like New York, went for 'free-banking'.

After the real estate collapse of 1857 'The dual problems of free banking and how to pay for the Civil War led to the creation of a new banking system, the result of the National Banking Act of 1864'

After the real estate collapse of 1873

The 1873 downturn lasted four years; the bankers weathered the storm better than the workers: "As a result of the panic of 1873, a bitter antagonism developed between workers and the leaders of banking, railroads and industry. Labor unrest, with mass strikes, was the general rule for several decades. On occasions federal troops were brought in to break the strikes. A land and rail monopoly (and banking) was acceptable; striking workers were not. After the 1890s real estate collapse, (followed by a currency crisis):

"A desire was developing amongst the wealthier bankers and financiers for a central bank to moderate the effects of downturns, especially runs on banks that couldn't pay out." The panic of 1907 sealed the decision of course, from which we have the Fed.

The one thing that we DO learn from history, is that we DON'T learn from history.

by: Richard McMunn

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