The Money Illusion

During the bubble, agents in the UK, the US, and elsewhere always said: Real estate prices never go down; they only go up.

I said: They say that because the are lying... or stupid...

First, such statements refer to the nominal prices of houses, not to their inflation-adjusted prices.

Bread nominally cost 5 cents when my grandmother was young, but then, wages were 25 cents an hour. Adjusted for inflation, that is like 1 dollar a loaf at a wage of 5 dollars an hour, which is not so different from now in spite of a century of technical progress and us currently burning a whole hell of a lot of oil.

Second, the prices of houses do, in fact, go down. Typically, they double and then drop by half, adjusted for inflation, although there can be significant undershoot. And sometimes they go down and stay down for decades. This is not secret information. Just google it. It is amazing that the biggest housing bubble in history inflated when there was Internet access... or maybe people just looked for what they wanted to hear. (Oh, wait, when you have TimeWarner AOL, you have something vaguely resembling Internet access, except you have to wait on hold for customer service literally for hours just to find out that they set fields so that you cannot access what you want and you have to manually go through 7 separate pages putting in random codes so that it works... just like the YahooBroadbandJapan 6M modem for 15 dollars a month that I picked up, plugged in, and turned on with the computer... ten years ago. They know that if they offered high-speed broadband, like the 50M I have now, everyone would just cancel their cable subscriptions. TimeWarner AOL? 1M and just 30 dollars a month! And what convenience and service! It is not only our roads and bridges...)

Currently, we have a number of monkey wrenches flying around at the same time.
We overbuilt, so there are too many units.
We overbuilt, so many of the units are too big and expensive to maintain.
We overbuilt by expanding farther and farther into surrounding areas, making commutes ridiculous.
The price of oil, and therefore of gasoline, will become progressively chaotic as supply wanes (I guess lows of 2 dollars a gallon and highs of 5 to 10).
The supply of oil has plateaued over the last 5 years, and considering that the price went from 30 dollars to 147 during that time, it is pretty clear that even with the producers pumping as fast as they could, there was no increase in output. That is not a good sign. And it is even a worse portent if this means that new oil projects, while possible, take so much time to set up because of financing and, well, the oil is at the north pole or 7 miles under the sea, that the lag time until the oil actually flows has become the killer.
The dollar could start a steep decline, which would make the price of oil skyrocket denominated in dollars. The US imports 70 percent of its oil. That alone could take oil in the US back up to 150, with 5 dollar a gallon gas, making those overbuilt units accessible only by ridiculous commute worth even less.
Our infrastructure is BIG! But it is also of low quality and requires maintainance, without which, oh, I don't know... bridges fall down for no reason? The roads are so full of potholes that that is further impeding access to the faraway overbuilt units of declining value.
California finances are about to blow up. Ratings agencies (otherwise known as useless shills) are threatening to reduce California's ratings by multiple notches, which would render bonds near junk levels, or actually at junk levels, which would cause wholesale dumping of such bonds since many retirement funds etc. cannot by law hold junk bonds.
Bad economy and less employment means the overbuilt units are worth even less, and the commute becomes even more prohibitive.
It is not just California; other states are in as bad shape. When California blows up, the other states may all follow.

George Soros said the worst is behind us... hmm, I wonder what he is shorting... or buying...

This isn't finished. This is like in an Indiana Jones movie where they fall off a cliff, and after a terrifying plunge, find themselves safely teetering on a ledge, only to fall off in a much much worse plunge. California will be the lighting of the fuse that will really make the whole fiat-currency petrodollar-and-overseas-manufacturing-dollar-recycling overconsumption debt-financed don't-worry-we-will-get-8%-annual-return-on-the-pension-fund ponzi scheme blow up.

The only way out of this: Cause to materialize in the US a whole lot of 20 dollar a barrel oil that will last for decades.
If anyone knows how to do this, please let the rest of us know.