Tuesday, September 23, 2008
What you don't know/see can really hurt
I was speaking with our resident mad scientist last night, the good Doctor Lalani, and he mentioned a liability that I had not considered, but which I think was must be.
What if gasoline prices, for whatever reason, rise to $6.50 + per gallon? What would that do to suburban home values? I think it would CRUSH them. And the government's rescue plan is NOT taking this issue into its calculations. After all, for ANY plan to succeed, home prices must not collapse outright, and they likely would if people could not get back and forth to their home.
The $6.50 number does not have to happen overnight. The process of unwinding this disaster is going to take YEARS. If the intersection of the X & Y graph happens before most of the unwinding is complete, the bailout could fail - with predictable consequences.
Mentatt (at) yahoo (d0t) com
Posted by The Short Story Man at 5:45 AM