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My point wasn't that the "housing bubble blog" is completely baseless and never bothers to mention measures of this or that. Rather, that isn't the focus of the blog. The "housing bubble blog" is opinionated as many of these sorts of blogs are, I prefer not to sift through a cloud of opinion to find the numbers, graphs etc of the things I want to see. I will interpret them myself and if I don't know what to think of them, well then I may visit a more opinionated source on the matter. This is just my personal preference.
My main issue was with your comment that "I already got similar data and theory of the direction of housing and the economy 3 to 6 months before it.", for unless you are psychic this not the case.
Here's a link..this guy has been figuring what M3 should be since the gov't stopped posting it. M3 is very telling and I don't understand why the government says it's not important. Well, maybe I do
Seeing these numbers from the above site seems more in line with what I see around me..the increasing costs of everything. I think inflation is much more than what the government is telling us.
The reason the government hasn't captured all of the critical data necessary to truly reflect the real inflation rate is because they want to avoid having it pass on to wages, social security increases, and all the other components that reset off of the CPI.
As American workers have been pretty much contained to an annual 3% wage adjustment the costs of the things they need such as food, energy, health care, and education has risen much more in comparison. The things that they want may offer cheaper substitutions such as electronics, clothing, automobiles, etc.
Once the inflation passes to the wages it quickly compounds and becomes self-fulfilling.
However, savings rates, bonds, certificates of deposit, and debt instruments should reflect the real rate of inflation and an appropriate risk premium. The banks have loaned money out too cheap passing the risk onto Fannie Mae. The banks have become nothing more than fee-based brokers and the deposits they hold in their portfolio have not reflected the true costs associated with them when they are only paying a token interest rate to the depositors.
Savings accounts should be yielding 5%. CDs 7 to 9% depending on maturity and bonds somewhere around 6 to 7%. This would translate back into an 11% average annual rate of return for the stock market.
Companies have had cheap money available for some time. They have done little to nothing with it in terms of true investment. Cheap capital allows companies to be lazy and unimaginative. If you give a child money with little or no effort required on his/her part they will easily spend it on anything that catches their interest at the time. If you require them to work hard for it they will give a lot more thought over their purchases before parting with their hard-earned cash. The same is true with businesses.
OK fair enough. It all very theoretical. And actually even the author of the article said that M3 seem rather antiquated and we need more type of gauges as the concept of money expands. To me though taking away the M3 is like doing astronomy without the Hubble telescope. Yeah you can do it. but the images are not quite as focused and you can see quite as far.
I took a look and I'm not that impressed. I already got similar data and theory of the direction of housing and the economy 3 to 6 months before it. This type of post is rather arrogant to assume that we only get our information from city data. Look I my get information and forecast what the future of housing and the economy from other blogs and sources (I.E.) the housing bubble blog created by Ben Jones: The Housing Bubble Blog So to assume that I'm just a doom and gloomer for the fun of it is just plain wrong and rather insulting. My personal pessimistic view of the general economy is based from information gathered from a myriad of sources. And I assume that a few others here on CD are doing the same as me. Just because we come to a different conclusion that you does mean that we are wrong in our forecasts. In fact look at some of my past posts and check to see if I was right in the direction of the economy and housing(I can't hide what I've already posted). While I admit I'm not perfect. I've predicted rather closely to what has happen for the last year or so thanks to great blogs and other sources. In fact I'm even willing to thank you Humanoid for some good links in the past.
What the guy said from the link I provided was, M3 leaves out a lot (antiquated) however it is the most inclusive of all the gauges. As I have said many times, this is first year econ stuff. Either people get it or they don't I wouldn't bother arguing with anyone though. You are doing their research for them. If they want to learn let them research and if not they let them remain in the state they are in now.
The reason the government hasn't captured all of the critical data necessary to truly reflect the real inflation rate is because they want to avoid having it pass on to wages, social security increases, and all the other components that reset off of the CPI.
As American workers have been pretty much contained to an annual 3% wage adjustment the costs of the things they need such as food, energy, health care, and education has risen much more in comparison. The things that they want may offer cheaper substitutions such as electronics, clothing, automobiles, etc.
Once the inflation passes to the wages it quickly compounds and becomes self-fulfilling.
However, savings rates, bonds, certificates of deposit, and debt instruments should reflect the real rate of inflation and an appropriate risk premium. The banks have loaned money out too cheap passing the risk onto Fannie Mae. The banks have become nothing more than fee-based brokers and the deposits they hold in their portfolio have not reflected the true costs associated with them when they are only paying a token interest rate to the depositors.
Savings accounts should be yielding 5%. CDs 7 to 9% depending on maturity and bonds somewhere around 6 to 7%. This would translate back into an 11% average annual rate of return for the stock market.
Companies have had cheap money available for some time. They have done little to nothing with it in terms of true investment. Cheap capital allows companies to be lazy and unimaginative. If you give a child money with little or no effort required on his/her part they will easily spend it on anything that catches their interest at the time. If you require them to work hard for it they will give a lot more thought over their purchases before parting with their hard-earned cash. The same is true with businesses.
The reason the government hasn't captured all of the critical data necessary to truly reflect the real inflation rate is because they want to avoid having it pass on to wages, social security increases, and all the other components that reset off of the CPI.
As American workers have been pretty much contained to an annual 3% wage adjustment the costs of the things they need such as food, energy, health care, and education has risen much more in comparison. The things that they want may offer cheaper substitutions such as electronics, clothing, automobiles, etc.
Once the inflation passes to the wages it quickly compounds and becomes self-fulfilling.
However, savings rates, bonds, certificates of deposit, and debt instruments should reflect the real rate of inflation and an appropriate risk premium. The banks have loaned money out too cheap passing the risk onto Fannie Mae. The banks have become nothing more than fee-based brokers and the deposits they hold in their portfolio have not reflected the true costs associated with them when they are only paying a token interest rate to the depositors.
Savings accounts should be yielding 5%. CDs 7 to 9% depending on maturity and bonds somewhere around 6 to 7%. This would translate back into an 11% average annual rate of return for the stock market.
Companies have had cheap money available for some time. They have done little to nothing with it in terms of true investment. Cheap capital allows companies to be lazy and unimaginative. If you give a child money with little or no effort required on his/her part they will easily spend it on anything that catches their interest at the time. If you require them to work hard for it they will give a lot more thought over their purchases before parting with their hard-earned cash. The same is true with businesses.
i agree with the first half about CPI under reporting however I don't agree with your conclusion. Your conclusion helps business, banks but forgets the average person on the street who by the way drive GDP by 70% (spending). The economic health of this country is tied to the health of the average joe on main street. Wages must keep up with cost of living increases, unless we are to continue on as a debtor nation.
i agree with the first half about CPI under reporting however I don't agree with your conclusion. Your conclusion helps business, banks but forgets the average person on the street who by the way drive GDP by 70% (spending). The economic health of this country is tied to the health of the average joe on main street. Wages must keep up with cost of living increases, unless we are to continue on as a debtor nation.
I'm not saying that wages shouldn't keep up with inflation. I'm just saying that is most likely the motivation behind the way the numbers are constructed.
If you read or listen to many of the discussions with economists, investment bankers, and business leaders they keep touting that we don't have an inflation problem because it hasn't translated to wages.
Well that may be true for the vast number of the bottom 50% and reasonably true for the next 30% but the upper 20% have had their wage adjustments because they are in more specialized areas.
You are right that we are becoming more and more of a debtor's nation precisely for that reason. Wipe out the artificially low mortgage rates and you kill home sales. At higher mortgage rates a drop in interest rates has a positive affect on home appreciation. We'll when your interest rates are essentially a little more than 0% inflation-adjusted and your prices are at the peak of the debt to income ratios then there is really no room for price appreciation unless you have a wage adjustment that out paces the rate of inflation. This is the reality we face now. Wages have been flat, interest rates can't get any lower and the borrower is maxed out. Add in rising fuel, energy, health care, food, and education costs and you are bouncing hard off a wall.
If the 50 to 80% don't make any meaningful gains in their wages then we face continued downward adjustments in home prices and the ripple effects that has on all related areas of the economy.
It will be painful because unlike the housing bubbles of the past we don't have the luxury of lowering interest rates like we were able to do in the 80s and early 90s.
In essence we have sold the market short almost all the way down until there's no where else to go.
BTW, municipalities are in a bind too because many of them recently reappraised their grand lists based on higher property values. Now if future market values decline they will have to readjust the mill rate upward which is politically not easy to do even if the aggregate amount doesn't change much.
I agree accept for the "wages keeping up with inflation" and how some people are trying to rationalize the wage versus inflation problem we are having.
Let me explain, generally if you have a smaller working pool i.e. more jobs than there are people, then there is bargaining power on the part of workers to negotiate wages and thus to keep up with inflation. BUT, when you have H1Bs and other foreigners willing to work for less than their American counter part as well as off shoring of jobs, this also keeps wages down (more people than jobs, thus giving employers the power in wage negotiations). I think though, with this coming inflationary period (stagflation?) you will start to see the govt take steps to close these holes in our economic armor. Maybe doing away with H1b, restricting the number of foreigners coming in, stopping off shoring of jobs through tax incentives etc. This is called wage inflationary measures. This country is screwed and we are going to have to do a LOT to fix it. The road ahead is bumpy.
On the municipality front, I wont be shocked to see a lot of municipal bankruptcies for the exact reasons you have mentioned.
What the guy said from the link I provided was, M3 leaves out a lot (antiquated) however it is the most inclusive of all the gauges.
I never claimed it was not the most "inclusive of gauges", that is true by definition. I stated its usefulness in macroeconomic forecasting is less than obvious. But you have an impressive way of not responding to what people actually say, straw man are your forte.
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Either people get it or they don't I wouldn't bother arguing with anyone though.
If you don't want to argue your position that is of course fine, but then you should simply not respond instead of reducing yourself to rather pathetic fallacies.
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