House of Cards

From Holden:

The Bush Economy is like a house of cards, and it’s about to take a tumble.

A possible hard landing for the U.S. housing market poses the risk of a secular bear market for equities, mutual fund manager David Tice said on Monday at the Reuters Investment Outlook 2006 Summit.

“The rollover in real estate could happen pretty quickly,” said Tice, who runs the Prudent Bear, a mutual fund which seeks to benefit from falling share prices.

The United States has leaned heavily on housing and related industries for economic growth in recent years.

That virtuous circle, fueled by rounds of cash-out mortgage refinancing that has propped up consumer spending, will give way in 2006 or 2007 to a vicious cycle that drags down corporate earnings and employment, he said.


“If you continue to goose the economy with more debt it’s like keeping an eight-year-old on a sugar high,” he said.