UPDATE!! 

See my October Denver real estate prices report for an update on what Paul Krugman is saying now (11/7/07)

My favorite economist -- mainly because he's been right about so many things -- warns of a possible coming meltdown in the financial markets.

Yesterday I heard our President tell us that there's still strong liquidity" so the future may not be as bad as some are predicting, and I wondered if he knew what he was talking about.  Seemed to me that nobody wants to buy what could potentially be bad mortgage-backed securities.  So liquidity dries up because the buyers have gone to ground.  It could cause a serious ripple effect in the economy by falling dominoes of debt defaults.

And then this morning, sure enough, Paul Krugman posted a piece in the NYT saying exactly what I had been thinking.  And the title of the article is "Very Scary Things" (unfortunately if you're not a member of Times Select you won't be able to read the article). Krugman says the really scary part is that there's nothing policy-makers can do to rectify the situation.  He talks about a similar meltdown in 1998, when a senior Federal Reserve official advised Krugman that the best strategy would be prayer.  Prayer?? 

Okay, so I'm a believer in prayer.  But for an impending economic crisis??  Well...maybe that's the only thing we can do at this point.

All I hope is that mortgage money doesn't dry up altogether, or that the Chinese don't decide it's time to start pulling back American debt because it's too risky.

For further information or for questions contact Judith Clausen at Buyers Advantage Real Estate of Metro Denver, 303-587-3509.