Robert Samuleson explains the real estate domino effect in this good article. I think macro economics has its place and he explains it as well as oh say Tom Sowell.
The graph at left is the ICF or the American Stock Exchange Index of Real Estate Investment Trusts or REITS. A REIT is a mutual fund of real estate. It invests in commercials buildings, apartments, whatever and then pays 90% of its income to the investors. That way the REIT avoids paying income tax, the tax is paid by the investor on the dividends. Click on the graph to enlarge it. Notice how the market enthusiasm or psychology has dramatically turned. At bottom the black bars in February indicate that investors just could not buy enough REITS. Now they can’t sell them fast enough. In a weak real estate market, occupancy drops and rents drop, if they drop enough, there are no payments to investors. This is how the bear market of 1973 started, with a REIT collapse. You of course have been aware if this for months by reading the blog and our discussions in class.
Click on February at the side of the blog and read EOP, Selling Out at the Top, now there is a great market call if I do say so myself! Look at the graph in this article again, the actual top was February 8! See, you can learn something reading the blog!!!!!!! Now why can’t these guys that claim to be so smart like the ones at Bear Stearns figure all this out?
Professor Elam 
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