Peak Oil and Real Estate

James Kunstler sounds a pretty disturbing note in his rift on the confluence of the end of the real estate bubble and the possibility of a "peak oil" doomsday scenario. I'll add that the fact that we as a nation have a negative savings rate does not leave us much room for error should even a portion of Kunstler's nightmare scenario come to pass.

When I speak to home builders that I know, they are sanguine about the bubble period that they've just come through. They see it as an exact replica of the asset bubble that took place in the stock market in the late 90s. Unfortunately, the banks weren't as unforgiving as brokerage firms were in 2001, and the fallout from this one is more likely to reverberate more widely, I'd guess. In 2001, you got a margin call, or more typically, your 401K lost 80% of its value. Therefore, you either paid up and got out, got blown out of your positions, or lost a bunch of future money that only ever existed "on paper". No such luck right now, if you've used your home as an ATM, got into an 80/20 ARM, and are facing higher monthly payments for a house you could barely afford with rates at 5.625%.

Now it's a default and personal bankruptcy. In 2001, stockbrokers lost their jobs, but now its carpenters and laborers and truck drivers. You tell me which group impacts the overall economy more.