I generally not try to predict the price of anything. I’m not very good at it. If I was, I would never have purchased a condo in 2007 after its price fell 25%. I felt I was receiving a bargain. But five years later it’s worth 75% less than I paid for it, even after making $50,000 of improvements.

There’s an object lesson here, too. My condo has the exist same utility as it did five years ago, more in fact if you count the improvements I’ve made to it. Its value to me hasn’t decreased. Its value to others though has, as expressed via the price mechanism.

In 2012, I think we will see a continuation and even intensification of deleveraging – people, companies, and governments borrowing less, and lenders tightening credit standards further.