patrick.net

robertoaribas says

I just bought some bananas for 49 cents a pound. I

Do you always draw your conclusion based on anecdotal evidence? That's unfortunate. I see that you ignored other commodities. Here is a chart for banana.

www.mongabay.com/images/commodities/charts/banana.html

In any case, the inflation does benefit some people, at least in the short term.

CDon says

So again, is there ever a drop dead date wherein you will reconsider your thesis?

CDON - you make a good point. If the Fed stops printing trillions and raises rates and the economy does NOT collapse then I would admit I was wrong. They are only kicking the can down the road by flooding the system with cheap money. Who knows how long they can do this for but I am betting that it will only lead to a bond market collapse, much higher rates and a currency crisis if they stay on this course.

gsr says

Do you always draw your conclusion based on anecdotal evidence? That's
unfortunate. I see that you ignored other commodities. Here is a chart for
banana.

I can make a cup of starbucks coffee at home for about 5c. Starbucks can make the same cup for less than 1c. In the US we don't get nailed with these price changes on commodities because we are already paying in most cases 10 to 100 times the real cost.

Now when you are talking about some poor undeveloped country, yeah they get fucked and starve when there is food commodity inflation.

yup1 says

Now when you are talking about some poor undeveloped country, yeah they get fucked and starve when there is food commodity inflation

Right.

Having said that, excluding the cost of food, our cost of other items involving human labor is relatively very high. A lot of low income people have been living on debt. The rate of savings is very low. So a marginal increase in food prices could cause a bigger problem.

HousingBoom says

CDon says

So again, is there ever a drop dead date wherein you will reconsider your thesis?

CDON - you make a good point. If the Fed stops printing trillions and raises rates and the economy does NOT collapse then I would admit I was wrong. They are only kicking the can down the road by flooding the system with cheap money. Who knows how long they can do this for but I am betting that it will only lead to a bond market collapse, much higher rates and a currency crisis if they stay on this course.

I agree with you in result, but not in timeframe. With an unlimited timeframe, I have little doubt that it will all come crashing down, but why do you think it will happen in the next 10 years, much less within your lifetime?

Just because you are now aware of the can kicking, dont assume it is somehow unique or novel. Far as I can tell, the US has been kicking the can down the road, sucessfully for over 200 years now - a pittance compared to other empires who did it for hundreds or thousands of years. Multiple generations have thought these actions of the US were "unsustainable", yet they are all dead now, and the can kicking continues unabated.

As far as the bond markets go, I feel very certain they will cannibalize each and every other marketplace in the world before they start asking for substantially higher risk premiums from the US. As of this moment, you cant really say they have finished cannibalizing greece, the very weakest of say 40 targets, before we are up at bat. If 5 years in, they are still working over the weakest one, are they really going to eviscerate all of them and then proceed to the USA in your lifetime?

And therein lies the problem for the doomer perspective. Just because something is "inevitible" (which is correct), dont assume it is "imminent". I learned this lesson back in 1999 when I bought a house and decided to run the gauntlet, despite some telling me we were truly on the "verge" of massive upheaval. If I listened to them, I likely would now be in year 14 of renting, with no end in sight. As it is, because I ignored them, I am now 12-13 years away from being payment free.

CDon - simple math proves it is imminent.
http://patrick.net/?p=1221282

HousingBoom says

CDon - simple math proves it is imminent.
http://patrick.net/?p=1221282

That whole presentation was simply... math with huge scary numbers = the day of reconing is coming. Yet, this has been going on for hundres of years.

150 years ago, the same argument was advanced with the then staggering sum of 3 billion. Imagine some guy, with parchment and quill, pointing hysterically at a number most people at the time had never even heard of and screaming "three billion people...three BILLION!!!". I tell you now the day of reconing is coming"!!!

The guy in your video is right, as was the hysterian of 150 years ago - the day of reconing IS coming. But is it imminent?

Far as I can tell, the answer is no. Far as I can tell, we are about 1/3 of the way through the tricks up its sleeve before the govt cannot kick the can anymore.

Want to know when things are truly "imminent"? The day the govt does what every govt in history has done and sell of periphery to preserve the core - and even then, it might not play out as you might think. The UK reached its nadir as an empire about 200 years ago, and has been cutting lose periphery territories (india, australia, hong kong, etc) to preserve the core since. Yet, that continued deterioration of the emprie for 2 centuries has done little do quell the breathtaking homeprices in core areas like london we see today.

The same will be the case here when we decide the gig is up and sell territories like Alaska where (depending upon the multiple we get for the purchase price) we have maybe 50 more years of can kicking before it all goes kaboom. Think that cannot happen? Tell that to the russian-alaskans who woke up one morning in 1867 and found out they were no longer part of their mother country.

So again, it not a question of if but (as always) a question of when. If you are parked on the sidelines now, waiting out the imminent collapse, how long will you continue to maintain that position before you decide, gee, its not as imminent as I thought?

Cdon, personally i do not believe there is any end of the world in sight. Having said that, we did have two world wars. Currently, the currency war has started gaining momentum. No one talked about it in 1998. But people are talking about it now. We have historically low interest rates.

The administration has been trying devalue the dollar, and has been failing due to competitive devaluation. But it will succeed at some point, perhaps sooner than we imagine. The question is, whether it will be a smooth one.
https://www.youtube.com/watch?v=OeIFcuVTS3U&feature=youtube_gdata_player

In the event you missed the Department of Homeland Defense request to buy 7000 assault rifles and hollow point bullets. Maybe they are preparing for cannibal anarchy here at home?

underwaterman says

Was the US "non-sense" all the time we were on the gold standard and avoided
most of the boom bust cycles of fiat money?
Learn from history or repeat it.
What is nonsense is people ignorant of history.

You do need to learn from history. The US suffered from many more boom bust cycles under the gold standard than it has since it went to fiat money.

underwaterman says

No, the US was on a gold standard in 1971 until Nixon tooks us off because
France called his bluff. Was the US "non-sense" all the time we were on the gold
standard and avoided most of the boom bust cycles of fiat money?
Learn from
history or repeat it. What is nonsense is people ignorant of history.

I agree with tatupu WTF are you talking about? You are the one ignoring history........

robertoaribas says

AVERTED an imminent financial crisis

Brought on by deficit spending to fund the Vietnam War.
Do you really think that the Fed operates for the benefit of anyone but the predatory, metastasizing, financial sector?
Or that they won't set policy to benefit the predatory banks at the expense of the rest of the economy?

underwaterman says

Here is a current article in Forbes that explains it. Each financial crises gets
bigger and worse with monetary manipulation after going off the gold standard in
1971 by nixon

Please show me where the article presents data to that effect. Because I must have missed that portion.

The article basically presents nothing other than the author's opinion-Fed bad, gold good.

I can see why you like it.

underwaterman says

Below is another one. I see your up to your usual ignorant contrarian sniping
attacks tutu70. You guys really are idiots when you talk or criticize gold. You
don't know much about real estate and you no nothing about gold and currency
wars.

I'm doing nothing of the sort. You made an obviously false statement and I called you out on it. The author of the 2nd piece you posted basically refutes your statement. He admits that there were booms and busts under the gold standard but tries to argue that they happened for reasons unrelated to monetary supply. Maybe, maybe not. The point is that booms and busts were MORE frequent under a gold standard than they have been under a fiat monetay system. Period.

underwaterman says

You guys really are idiots when you talk or criticize gold. You don't know much
about real estate and you no nothing about gold and currency wars.

Says the man that attacks the argument, not the person....

HousingBoom says

Raw says

Why must you always have extremes?

Prices coould just keep going up and then stabilize for a few years. That would be the best case scenario for the economy, jobs, deficits, growth etc etc. For the sake of this wonderful country lets hope that is exactly what happens.

That is wishful thinking in my opinion. I don't want to "pretend" that everything will be okay. I know for a fact that the financial system is on the precipice. I am trying to wake up the sheep

A total collapse like this results in most people dead. There's no "waking up".

The good news is that its complete and utter bullshit. You can find people talking like this throughout history.

Nobody ever accurately predicts economic collapse. Anyone betting on it happening is a fool, or a bullshitter.

No point arguing with crazy people.

underwaterman says

This will be my last point of the topic because you have no interest in
understanding currency wars nor gold. You just post your usual contrary
positions without presenting any evidence for your ignorant opinions just as you
did here on unemployment and interest rates which was easily disproved by call
it crazy with 2 simple charts:

underwaterman says

Here is another example of stupid statements just to be contrary in which you
say consumers are not broke but a distribution problem

What's stupid about it? It's a fact.

OK--Here is a chart showing US GDP since the early 1800s. You tell me--does it look like there were more boom/bust cycles before 1970 or after 1970?

underwaterman says

First of all you have to differentiate between a true 100% gold standard,
bimetallic standard (based either on gold or silver), a quasi-gold standard,
and
then a pure fiat standard to even talk about the specific time periods
and the root causes.

No I don't. You said this:

underwaterman says

Each financial crises gets bigger and worse with monetary manipulation after
going off the gold standard in 1971 by nixon.

And the chart I posted shows definitively that you are full of crap. All the other BS you spouted is completely irrelevant. Try to stay on topic. Did booms/busts get worse under fiat money.

underwaterman says

The 99% are broke. They keep the economy on life support by injecting fake
money into it to keep the 99% going. The economy and the 99% are saturated with
debt. Take it away and the economy collapses.

You are right about that. The 99% are broke because the 1% has everything. If you REDISTRIBUTE-take money away from the 1% and give it to the 99%, people aren't broke anymore.

underwaterman says

Even producing a chart, you produce an unreadable one from a no-name
person.
What the hell is even on the Y-axis?

I told you what the chart was. If you think it's incorrect, how about you provide a GDP chart showing that booms and busts got worse after 1971. That's your position, right?

We don't have to worry about the housing market bringing down the economy. It will be the other way around. The economy is contracting even with all this money printing. Sorry but the bulls will be wrong. They have no clue how messed up this economy is right now. We are headed for a "great depression" like scenario.

HousingBoom says

Sorry but the bulls will be wrong. They have no clue how messed up this economy
is right now. We are headed for a "great depression" like scenario.

Imminently?

If it hasnt happened by 2 years from now (i.e. 2015) will you change your tune? Or will you (in early 2015) look around you, see the massive debt (which will still exist), and then extend the timeline for another 2 years (at which time you likely repeat the same conclusion yet again).

CDon says

Imminently?

If it hasnt happened by 2 years from now (i.e. 2015) will you change your tune? Or will you (in early 2015) look around you, see the massive debt (which will still exist), and then extend the timeline for another 2 years (at which time you likely repeat the same conclusion yet again).

The economy is already contracting LOL

CDon - If you think printing trillions of dollars out of thin air to boost the economy (which is not working) will fix things then I think you should hold your dollars and keep your houses and see what happens in 2-4 years.

HousingBoom says

We don't have to worry about the housing market bringing down the economy. It will be the other way around. The economy is contracting even with all this money printing. Sorry but the bulls will be wrong. They have no clue how messed up this economy is right now. We are headed for a "great depression" like scenario.

Then why are you living here?

NO country, at any point in history, has been a nice place to live during a financial collapse.

Please gtfo if you think its all going down.

HousingBoom says

CDon says

Imminently?

If it hasnt happened by 2 years from now (i.e. 2015) will you change your tune? Or will you (in early 2015) look around you, see the massive debt (which will still exist), and then extend the timeline for another 2 years (at which time you likely repeat the same conclusion yet again).

The economy is already contracting LOL

Very true. And it is something I will certainly take note of, if the trend continues and deepens.

That said - if the economy quits contracting and goes back to stagnaton type growth say Q1 2014, will you change your tune? Or will you then pick yet another of the multiple potential calamaties (which will still exist) and say this is the reason to wait further?

Kevin says

Then why are you living here?

NO country, at any point in history, has been a nice place to live during a financial collapse.

Please gtfo if you think its all going down.

You sound like a moronic 12 year old.

CDon says

That said - if the economy quits contracting and goes back to stagnaton type growth say Q1 2014, will you change your tune? Or will you then pick yet another of the multiple potential calamaties (which will still exist) and say this is the reason to wait further?

I already answered your question on when I will admit I was wrong. Go back and find the thread

bgamall4 says

Wouldn't Wall Street have to fall on its sword and stop speculation if wages were to at least show more purchasing power?

I have heard that if inflation gets bad enough then wages will eventually rise to the point where cash buyers will lift home prices. I am still on the fence with this scenario but I would imagine there would be much more downside to home prices before this took place.

HousingBoom says

CDon says

That said - if the economy quits contracting and goes back to stagnaton type growth say Q1 2014, will you change your tune? Or will you then pick yet another of the multiple potential calamaties (which will still exist) and say this is the reason to wait further?

I already answered your question on when I will admit I was wrong. Go back and find the thread

What you said was:

If the Fed stops printing trillions and raises rates and the economy does NOT collapse then I would admit I was wrong.

Do you understand the antecedent of that statement (i.e. printing trillions) is likely to continue so long as the fed exists? Are you willing to spend, potentially your full lifetime, "waiting out" the fed?

CDon says

Do you understand the antecedent of that statement (i.e. printing trillions) is likely to continue so long as the fed exists? Are you willing to spend, potentially your full lifetime, "waiting out" the fed?

IMO, the Fed won't be able to print like this and keep rates down for very long. It will eventually destroy the currency. If rates go up to over 5%, then that itself will crush housing and the economy.

HousingBoom says

Then why are you living here?

NO country, at any point in history, has been a nice place to live during a financial collapse.

Please gtfo if you think its all going down.

You're going back on my ignore list. good bye =)

HousingBoom says

CDon says

Do you understand the antecedent of that statement (i.e. printing trillions) is likely to continue so long as the fed exists? Are you willing to spend, potentially your full lifetime, "waiting out" the fed?

IMO, the Fed won't be able to print like this and keep rates down for very long. It will eventually destroy the currency. If rates go up to over 5%, then that itself will crush housing and the economy.

So that puts us back at square 1 (read my response upthread & the bond market's insatiable appetite for our debt & their inability to completely topple the first domino {greece}) yet.

Again, no offense here, but I am just trying to get you to sharpen your thinking. Your writing style is one of extreme hyperbole and hysterics - and it doesnt seem to have moderated at all in the past 2+ years as the economy has turned each of your calamaties into nothingburgers.

Further, your statements here "not very long", "eventually" are pretty much verbatim what you said 2+ years ago and my acquaintance said 20+ years ago who is still renting today. Is there any reall difference between you and him other than the date you became aware of TPTB perpetual game of kick the can?

Again, I dont mean to pick on you, but I just cant help but notice the similarities here. Even now, in his 24th 25th year of renting, he is waiting because he is SURE that the collapse is imminent. Thus, if I may, you might want to pick a "hard and fast" date (and again, a calendar date, not an approximation like "2 years" which people slide forward for years on end) where you say "if it hasnt happened by then, then maybe I am just wrong".

Maybe you dont want to do that today. It really should be an end all be all date that you should think long and hard about committing to. Still, if you do, it would be interesting to see how that changes your outlook. Cheers.

If you're friend has been waiting for 25 years then that is a little extreme. We just had the biggest housing bubble in history. I think it has a good amount of downside before we stabilize. When home prices falls to line 110 or 100 then that would be a good time for me to buy. I think we'll see prices at these levels within 3-4 yrs. I think the upcoming recession will bring home prices down much faster than anything expects.

This chart proves that housing is still in a bubble. I remember in 2006, I showed people this chart and they argued that prices will stay stagnate at worst. Prices are trying to get to line 110 but the Fed is trying to prop up prices. Fundamentally, home prices need to fall further.

Keeping rates down artificially comes at a price. We now have a bubble in the bond market and WHEN that implodes, we should see rates move up very quickly. ALL economic bubbles burst so it is probably safe to say that the bond bubble will burst.

HousingBoom says

This chart proves that housing is still in a bubble

No--that chart provides some evidence that housing might still have been in a bubble in 2010. Last I checked, it's now 2013.

And that chart has been discredited by several sources. It's not the true Case Shiller.

HousingBoom says

ALL economic bubbles burst so it is probably safe to say that the bond bubble
will burst.

If the bond bubble bursts the financial system will collapse, rates moving up will basically bankrupt EVERYONE.

Will the Fed let that happen? Does the bond bubble burst if the Fed can expand its balance sheet to infinity?

HousingBoom says

This chart proves that housing is still in a bubble.

As Tatupu notes, that chart has been discredited

http://blog.jparsons.net/2011/04/housing-bubble-graph-fail.html

Note in particular, the conversation this bubble blogger had with Mr. Ritholz:

Update #2: I contacted Barry Ritholtz about the issues with the graph. He then contacted Steve Barry. It has been confirmed straight from the horse's mouth, from 2006 onward the disputed graph uses the S&P/Case-Shiller 20-city index, rather than the national index that Robert Shiller used, and it does not adjust for inflation. This graph is really making its way around the web, which is unfortunate because it is worthless.

Hence, the reason Mr. Ritholz has distanced himself from that chart, and it has not been updated since 2010.

In any event, if you actually took the time to update that chart and correct it, you would not like what it said - it would completely undermine what you want to believe is going to happen.

Mean Reversion Bitches.......