Of course out in the real world things don't flip flop quite that quickly. The liquidity bubble caused serious problems that will result in serious consequences.
Home Builder in Spain Crashes as Ex-Chairman Keeps New York Pad: "From the looks of things at the newly built Aparta Hotel Residencia, you'd never know that it's the high summer tourist season in Canet d'En Berenguer, a town of 5,000 just north of Valencia on Spain's Mediterranean coast.
The compound's 308 apartments, completed this spring, are all unoccupied. Grass has started to sprout between the red terra-cotta tiles that lead to the empty, peanut-shaped swimming pool.
The residence is just one of a trail of buildings dotting the sandy coastline constructed by Enrique Banuelos as he amassed a fortune of more than 4 billion euros ($5.4 billion) over the past 15 years. Banuelos lost much of that money -- and shareholders' -- as the stock market punished the firm he founded, Astroc Mediterraneo SA, amid a rapid cooling of Spain's housing market. "
I've mentioned the real estate bubble in Spain a few times now.
The UK is next.
Toll Brothers Profit Drops on Writedowns, Weak Demand (Update2): "Toll Brothers Inc., the largest U.S. luxury homebuilder, said fiscal third-quarter profit fell 85 percent as the deepening housing slump cut sales and forced the company to write down property values."
This is not the bottom yet. Wait for the the big rate reset months of Januaray through June of 2008. (ARM reset schedule in US dollars, billions.)
Solent, Avendis Fund Ratings Slashed to Junk by S&P (Update2): "S&P cut the rankings on $3.2 billion debt issued by funds of London-based Solent Capital Partners LLP and Avendis Group in Geneva by as much as 17 levels to CCC. The credit ratings may be cut further, S&P said today in a statement. "