patrick.net

On why food and energy are omitted from CPI:

I agree that *for an individual*, the CPI isn't very useful because essentials are left out, like food and energy.

But the problem is that CPI has morphed into an aggregate indicator used to index inflation for things like pensions, labor contracts, and government obligations. There was a legitimate issue with including inelastic/sticky things along with elastic/non-sticky things. There was another problem with "supply chain" effect.

The problem is that we've overloaded CPI with multiple meanings today. There are better indicators to use personally, though, which an easy Google search will reveal.

“find the trend whose premise is false and bet against it” George Soros.

Soros is my childhood and current hero. However, I do not necessarily agree with his political views. His quest to dethrone Bush was way over the top, I have to say.

Nevertheless, he is my favorite speculator role model.

The Financial Times? Please. I had to subscribe to FT for an economics course I took several years ago. I read it, and I let my subscription expire. I didn’t read anything in FT that impressed me, then or online now.

How could you resist pink?

New thread: Death of inflation?

auger-inn,

I don't disagree with most of your observations. In fact, since they are personal observations, they are to be taken at face value. What many economists are trying to do is figure out how to explain these very real phenomena with models and emperical econometrics. We all know gravity makes things fall, but it is still useful to understand the mathematics and physics responsible for the fall, so that we might avoid falling when unnecessary.

The global and national economies are orders of magnitude more complex today than even 30 years ago, and they're only getting moreso with time. As with all complex systems--especially those we endeavor to manipulate like the economy--it is very important to suffer through all the discovery of models and emperical testing, as well as the failures, if we are to ever have any degree of sustainable success.

Peter P wrote:

> I am eagerly looking forward to 100-year mortgage in Bay Area soon.
> Quick fact: I was pre-qualified for a 40-year loan just for the fun of it.
> Honestly, I doubt a 50-year loan can save much over a 30-year loan.

If you borrow $750,000 the monthly payments at 6.5% will be:

30 year am $4,740
40 year am $4,390
75 year am $4,094
100 year am $4,068
Interest Only $4,063

FormerAptBroker

I am getting mixed signals. Just talked to a friend who is looking for a home up in the Peninsula, he said inventory is going down while buying is up, and many seller raised price after their houses have been sitting for the last few months. Anyone from the Peninsula?

Well, I used to live in Los Altos/work in Palo Alto, and this is purely anecdotal, but I've thought many pen. towns have the highest amount of exuberant optimism in all the SF Bay. Think of all those dot-com seed companies and VCs. Scads of self-delusional entrepreneurial genius, now transfered to real estate. They'll be the last ones holding the bag (IMO).

I am getting mixed signals. Just talked to a friend who is looking for a home up in the Peninsula, he said inventory is going down while buying is up, and many seller raised price after their houses have been sitting for the last few months.

He is probably just giving in to fear. Just go to viewfromsiliconvalley.com, they have weekly sale stats for San Mateo county.

I am not from the Peninsula, but South Bay (Sunnyvale). Prices seem to be holding up well so far, much better than I would have thought. A comparable house just sold within 5k of asking, and asking price was not what I would call low. The asking price was only 6% less than what a much nicer home on the street sold for at the "peak" in October. The nicer home had been almost completely gutted and redone whereas the latest sale was an "as-is" with over $30k in plumbing repairs needed. Floorplans and square footage were the exact same- these are cracker jack 1950's ranch places, as is mine.

I just put my house on the market last week and had the first open house over the weekend. Something over 35 groups came through. I will report what develops. Wish me luck. Hopefully, I will be looking for a rental soon.