“See the coast clear and then we will depart.”
Shakespeare, Henry VI
While reading a press release today I summed up its overall message in my mind as “the coast is clear.” Then it hit me that I did not really know what this common phrase really meant.
My first thought that it had to with Colonial smuggling and the American Revolution. It was indeed used by an American officer at the end of the War to refer to the absence of British ships, but as we can see above, it was used much earlier by Shakespeare.
In any case, the phrase does refer to situations where various dangers are no longer present. It is used often to refer to circumstances where people have successfully escaped detection usually by authorities such as the Coast Guard, police officers, teachers, and other enforcement figures. It is also used to refer to criminals, such as burglars, robbers, murderers, rapists who have committed a crime and they have evaded enforcement of the law.
The actual message of the press release was that the housing market crashed and has been slow to recover, but that more recent information suggested that housing is getting back to its “pre-bubble” level, a result of improvements in consumer confidence, unemployment, and household incomes. In other words, the coast is clear.
The press release supports this “coast is clear” message with an article from the Wall Street Journal and the results of Fannie Mae's National Housing Survey from January 2015
"If the housing market performs as well as predicted, then that growth will spill over to the rest of the economy," said Abby Shemesh of Amerinote Xchange, a principal note buying firm that purchases mortgage and business notes nationwide. "As more people buy homes, more homes will need to be built, resulting in more jobs for the construction industry. Likewise, consumers will buy more products and services needed for their home, such as furniture, appliances and plumbing, which will lead to further growth in other industries and revitalize the economy."
Spotting a British Man-of-War with a telescope is one thing, but determining whether the housing market is healthy or is in a bubble is a different matter, especially in an era of zero interest rate policy, a world currency war, quantitative easing and where the government dominates the mortgage market. It could be that housing is in another bubble, or it could be that housing is perceived as a cost effective inflation hedge given historically low interest rates.
The one thing I can say is that the coast is definitely not clear.
Mark Thornton is a Senior Fellow at the Mises Institute and the book review editor of the Quarterly Journal of Austrian Economics. He has authored seven books and is a frequent guest on national radio shows.