Tuesday, February 26, 2013

Housing is a durable asset

Edward Leamer wrote this no later than 2009, probably before:

The worst way to enter a recession is with a heavy debt load premised on overly optimistic ideas about future growth of sales and earnings. It is doubly bad if that debt is collateralized with durable assets and inventories, whose prices tend to be very soft in recessions, if you can find buyers at all.

This is from page 123 of this book, which I consistently find to be one of the most useful reference books on my shelf, and the italics were added by me.

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