This week's letter is from Paul Kasriel of The Northern Trust Company. Kasriel is Senior Vice President and Director of Economic Research, responsible for producing the Corporation's economic and interest rate forecasts. Not long ago Paul had a contest to try and come up with a new name for his Positive Economic Commentary and The Econtrarian: Your Alternative to the Econsensus won out.
In this edition he turns his focus on the housing market. Many are forecasting continued strength in the housing markets and they point out that previous slow downs have not been disastrous. Although they might go back and look at the Houston, Texas market in the early-to-mid 1980's during the oil industry collapse.
Is the housing market a bubble about to burst or merely in a late winter slow down? Kasriel takes a macro look at some of the numbers behind housing and why things might be different this time and that is why it was picked for this week's Outside the Box.
John Mauldin, Editor
Outside the Box
Is Dave Leonhardt A Renter?
David Leonhardt, a journalist at The New York Times, wrote an article in the March 1 edition entitled "Don't Fear the Bubble That Bursts" (http://www.nytimes.com/2006/03/01/business/01leonhardt.html). He's advising homeowners not to fret too much about the prospect of declining value of the principal component of their net worth. He bases his laid-back argument on the bicoastal experience of the early 1990s'…