On 16 August 1960, Joe Kittinger jumped from a balloon into the stratosphere (102,800 ft.) to make the longest skydive from the highest altitude in history. He reached a peak velocity of 614 mph (988 km/h), a mark that still stands as the fastest speed ever reached by a human without a vehicle. Though Kittinger fell short of supersonic speeds, he did get pretty close.Automatic camera recording Kittinger as he leapt from the Excelsior balloon
I see this as analogous to the RE market that we have. It is stratospheric, and record-breaking. It is very cold and lonely up here, and there is only one way down - free-fall, and hope that the parachute works.
Despite the planning of NASA, USAF, etc., no one knew just how it would go. Kittenger's pressure suit sprang a leak, and he suffered intense pain in his hand. Between 90,000 feet and 70,000 feet, Kittenger had great difficulty in breathing. Jayzus, 614 MPH straight down.
Here is the formula that describes his acceleration:
v = terminal velocity
v/0 = initial velocity, which is zero in this case
a = acceleration, due to gravity in this case
Deltax = change in distance, 12,800 ft (3,900 m) in this case
I wanted to write a formula that would describe the potential of acceleration once this market starts its free-fall, but my calculus sucks. It will be horrific though, and will likely reach a velocity heretofore unheard of.
Canadians owe $100 Billion in unsecured credit card debt, and who knows how many billions in mortgage debt. Our manufacturing sector has imploded, and continues to burn. Job growth in recent years is mostly in the government, and of course, part-time and service industry jobs. Our federal government has no cookies in the cupboard for when things start to get tough in the next year or so. The US (our biggest market) is already in free-fall, with $1 Trillion in unsecured credit card debt, and of course, a 15% decline in property values (nationally - with some markets down ~40%). That $1 Trillion is not so scary - it is 10x what Canadians owe, but they have 10x our population. Per capita, we are in the same boat.
It is a long, long way down from here, and I think that the fall is going to be very swift.
No parachute either.