Where’s the bottom?

The current freeze that has befallen the American economy is due for a large part to a general lack of confidence from investors that have been, in growing numbers, standing on the fence and waiting for a clear signal to re-enter the market. At this moment, it seems that both the real estate and financial markets hold the keys to returning to business as usual. If we take the two bottlenecks individually, real estate must clearly go back to a pre-bubble price level, but this is hampered by sellers that are still in denial, are not really motivated to sell or owe more money than their holdings are worth. The financial sector is still muddied with its so-called “toxic assets” that according to some credible experts could result in $3 to $4 trillion additional losses. So we are left with a situation in which market levels must sink down to what’s expected in order for investors to feel “safe” again. Given all the “skeletons” that are hanging in both sectors and the inertia still showed by some, this clearing up process may take another good couple of years…