Why Andrew Clavell should be read (and Nouriel Roubini ignored)

Clavell's American Civil War:

The American householder is at war with the financial services industry. At stake, around two trillion dollars. At least, this is the inevitable conclusion if one accepts at face value Nouriel Roubini's recent testimony to Congress. This testimony rehearses the Professor's well publicised conviction in a doomsday scenario and concludes with dire forecasts:

"So let us consider the implications for the household sector of price declines of the order of 20 to 30%. The math is simple as I will flesh out in this note: 10 to 15 million households will end up in negative equity territory and will be likely to default on their homes and walk away from them. Then, the losses for the financial system from these massive defaults will be of the order of $1 trillion to $2 trillion"

Uh huh. 15 million households. Let's see - there are some 116m households in the US population of 303m. So sometime soon, Roubini expects 13% of them will be in the market for a U-Haul truck, cardboard boxes and a decent brazier against which to warm their hands under the arches. Steady on, chap. This isn't Darfur we are talking about. I'll keep it simple - where will these people go? Hmm, hang on, I just noticed something: 15m households on the street, and 15m empty homes.

Yet if Roubini is correct, who is having the last laugh here? None other than the 13% of underwater, insolvent, speculative households presently dialling 1-800-GO-U-HAUL. They have nothing more to lose; they cannot be compelled to pay without the means to pay. They have even managed, somehow, to destigmatise the concept of reneging on a mortgage. I don't doubt that there are presently some terrible hardship stories out there, but ultimately the cavalry will come. They will have their aspirational homes in the end - they just won't have had to work for them and pay for them.