Wednesday, 27 August 2008

In Passing

mmmmmmmmmmmmm... SPLAT!

Excellent (if wince-producing) comment [in thead to this post at The Big Picture] on trying to use the “decrease in the rate of acceleration of the fall of  prices” as an excuse to call the bottom in the housing market:

I’m a mechanical engineer by trade so I “see” things in the physical sense.  Let me give you a physical analogy to the bottom callers and the decreasing acceleration that I’ve grown so sick and tired of hearing about.  If I jump out of a plane with no parachute, I accelerate (via gravity) until I reach a point that the air friction... equals the force of gravity pulling me toward the earth.  This point is called terminal velocity.  The highest... acceleration I experience is the instant I jump out the plane and it “decreases” to zero... at terminal velocity...  BTW – terminal velocity for a human is about 125 mph (store this trivia tidbit for use in just a second.)  So the housing rate of acceleration slowed, SO WHAT!!!!  At terminal velocity my acceleration has slowed to zero, BUT I'm still screaming toward the earth at 125 mph!  The instant right before I face plant into Firma Terra, I'm still experiencing no acceleration.  My point is the acceleration, while important, has NOTHING to do with calling a bottom in housing! The only thing that matters is the direction.  If I’m still heading down then there is no bottom reached regardless of whether I’m headed down faster or slower (acceleration) than last period.

Posted by: Rob P. | Aug 27, 2008 9:50:58 AM

Via:  Howard

Posted by: Old Grouch in In Passing at 18:45:49 GMT | No Comments | Add Comment
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