One of the most tedious aspects of the bursting of the property bubble has been the endless bleating that lower house prices are universally bad news.
In fact, lower house prices can be good news for at least two important reasons:
- If you don’t own a house, lower prices mean you (or your children) are more able to afford a home.
- Lower house prices mean extra money to go into more productive and economically useful assets.
You can repeat these facts to homeowners and financial journalists, but the truth bounces off their skulls like moral justice off a banker’s back.
But perhaps they will listen to Warren Buffett?
Cash is king, or cash is trash?
by The Investor on March 8, 2010
One sign of a bear market bottom is said to be that cash is king.
Such times may be a good opportunity to buy shares for the long-term.
In contrast, in bull markets cash is trash.
At such times, the authorities have usually raised interest rates to try to dampen the boom. Yet everyone is greedy, sending stocks into bubble territory. You’ll even hear the phrase ‘cash is trash’ being used in newspapers and on TV.
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