patrick.net

Loss of lives and capital is always damaging to the national wealth and the economy. The disruption of normal economic activity is additional loss of national wealth. The economic disruption from Katrina will accelerate the arrival of the recession that was already in the cards.

Fed rate hikes have a long lag before they really have much actual effect on the level of economic activity. However, the psychology of their actions can be immediate. If the Fed fails to raise by another quarter this month the bond markets will react unfavorably and yields will rise on the 10 year. The stock market would decline.

Would the bond markets react unfavorably because not raising the rate signals a weakening economy? If so, then would it be better to keep raising rates?

Here! Here! New (but at the same time old) topic!
Discuss it all! In particular & in addition to the "normal" discussion, I'm curious as to how historical economic responses to rate changes may not apply in these crazy days...and why that is...and what are the alternatives to historical responses. What groups (i.e. oversease, etc.) are strongly influencing bond yields...what kind of group mentality, if any, exists with these parties? There is mention that recent steepening of yield curve means expectation of no rate hike...what say you? Of course the ultimate goal is PREDICTION. I'm quite an economic layman, but I hope some of this sounds compelling to some of you! If not, then ahhh...think of something compelling!
Oh, and I'm sure it's been posted before, but here's a fun animated yield curve to play around with:
http://www.smartmoney.com/onebond/index.cfm?story=yieldcurve
The wave-like behavior through some years is nifty!
g'nite.

Zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz unlurking...

Could it be that foreign investors might now lack an apetite for American debt?
Could it be that the FED will have to support the dollar by hiking rates?
Could it be that it won't really matter?
Oil, Iran, or some other distraction will take front seat to what ever the FED does.
(Wild statesments of course, but hopefully will generate some discussion)

FED might pause, but me thinks there are now more reasons to hike rates.
(not investment advice)

back to lurking ZZZZzzzzzzzzzzzzzzzzzzzzzzz.

My crystal ball is a big cloudy today, but I predict no serious lasting economic effect from Katrina. A bit of gasoline price gouging, especially in the South, but even that will end pretty quickly.

Perhaps Greenspan will use this as an excuse to stop his rate raising campaign, but I seriously doubt it. New Orleans is barely a spot in the national economy. Losing the port will hurt, but there should be spare capacity nearby. Losing the refineries, which have been running at full tilt will hurt a bit more. The rest of the country will be sharing $3/gallon gasoline with California for a while.

Oh, I found this nifty new toy that you can use to check gasoline prices all over the country:

http://www.gaspricewatch.com/

With this and Yahoo maps to help you find zip codes, you can check out what they are charging in Chicago, Atlanta and Houston. It is amazing, everyone is charging $2.99/gallon for regular. None dare call it collusion.

The big *what if* is how this is going to effect consumer confidence. Economists know that they can explain only about 1/3 of all changes in economic activity. The rest of it is psychology or voodoo or whatever you want to call it. A few are finally starting to research here, but it is more sociology than anything else. Has anyone else here read _Freakanomics_ by Levitt and Dubner?

Anyway, if consumers flip out, anything can happen. We are already seeing the effect of irrational fear in The South as everyone lines up to top off their gas tank, even though there is no real good reason to do it. Everyone just went home and watched the scenes of disaster unfolding in New Orleans and got worried.

In a week, our national and media attention will be focused on something else: a terrorist attack in Australia or Karl Rove's indictment or civil unrest in the Philipines or something. Not saying that is a good or bad thing, that is just the way it is.

Dipanjan you sound like an economist. What do you do for a living?

I agree that inflation is inevitable. Oil prices were already high and driving costs up, and now they're higher compounded with a very large natural disaster. We're gonna be paying more for everything for awhile.

Many economists say rising oil prices are not inflationary, and rather act more as a “tax” on everything… I do not understand this point at all.

Have you heard this argument?

Jack, steadily rising oil price is perhaps inflationary. But rapidly rising oil price can be recessionary and deflationary. This is becauses the economy cannot adjust in time to translate costs into prices and wages. But it is all very difficult to ascertain.

BTW, they are trying to sell time-shares in Las Vegas now. They are saying, "we raise prices every month," or "you will have made so much moneu by the time we finish selling."

I wonder who is buying these time-shares, which are extremely expensive to finance.

Back from Lost Vegas? Or still there?

Still lost in Vegas...

I took Iceman's comment out to avoid a flame war, and my response to it since it wouldn't make sense anyway.

I can take off Iceman’s post if you think they are too inflammatory.

It is getting inflammtory. He should tone down or face delisting.

Jack

AND, Iceman is a racist

That's why I went ahead and took off the post, it was racist. I have to admit though, the political posts on the other thread were starting to get just as offensive to me. They were getting increasingly shrill and in an "always on transmit never on recieve" mode. This is why I really don't like to do politics.

Take my above post off too then if you like because that one and this one wont make sense either!

It is like removing things in history from existence ... remember that Star Trek Voyager episode?

Peter P

You know Star Trek but not Firefly? How is this possible?

Jack

No, I have no accusations of racism on the other thread, just kind of irritating. Glad to be done with it.

I must admit I like the power to delete. :twisted:
Mwaaaahahahahahahhahahah.

SQT-

You WERE rather lightning-quick. I believe you do like that power.

My only mistake is that I don't create more threads. Have to work on that. :D

You know Star Trek but not Firefly? How is this possible?

I will watch Firefly then... is it a vampire show?

I will watch Firefly then… is it a vampire show?

It's kind of like a western that's set in space. Sounds strange, but I liked it a lot.

How is the food this trip Peter P?

Very good. It is too early too say how much weight I have gained though.

"The economy is in a raft going down a “Deliverance” style financial white- water rapids BACKWARDS and in circles but going REALLY FAST and even breaking speed records"

Haha! I'd liken it to another film too, Herzog's Aguirre, where RE speculators are slowly consumed by the jungle and their own madness, chasing after the fabled "El Dorado"...

I will have to rent that one. (It sounds familiar somehow… )

Perhaps you recall the film's mad star, Klaus Kinski, lived in Langunitas in his later years. And yeah--he was Natassja Kinski's father. Another movie to watch is Fitzcarraldo

"We saw a documentary “My Best Fiend”, (not a typo) awhile back that was about Herzog and Kinski’s relationship...A few years back she used to see Kinski often, hanging out in front of a breakfast place on “B” Street in San Rafael"

"My Best Fiend"--saw that too. Remember the scene from Cobra Verde, weilding a machete? Man, that guy had some manic energy...truly frightening. Still, would've been cool to meet the guy. A prof of mine lived next to Kinski, who saw him one day, arms draped around a pony's neck, bawling his eyes out. Sad guy.

All,

Just returned & read all the posts from last 24hrs. I'm sorry about the increasing politicization of the previous thread and if my own comments helped to fan the flames higher.

We obviously all have strong opinions on politics and the response to Hurricane Katrina's aftermath, but as many pointed out, these are discussions best reserved for a different kind of blog. This one is about housing (and possibly Firefly).

Thanks to Prat for providing much needed levity and perspective, and thanks to SactoQt for starting this new thread.

Serfer-X

I truly have no idea what you just said.

Jack

I just deleted most of the nights posts, do you think it was enough?

That's a good point Jack. I'll look at another thread and see if the email address or IP is the same. It'll take a minute.

Same email Jack. And I think the last post sounds familiar. I just thing the cheif justice thing has him in rant mode.

Surfer-X

I truly think that any appointment by Bush that is too conservative will be blocked by any means possible. How many fillibusters have there been already over federal judge appointments? A couple at least. I've also heard political commentary that indicates the unlikelihood that regardless of how the supreme court is stacked that Roe v. Wade would ever be overturned. It's been around so long and the majority (as far as I'm aware) of the population support it. It's expected that the social upheaval would outweigh the desire of the conservative justices. Sandra Day O'Connor has said that she voted to keep Roe v. Wade just for that reason.

In San Luis Obispo there is a fucking church on every corner, worse in Cambria, every 1/2 block. Keep your “god” out of my wife’s womb, or give the people who have the children the money to give the child a decent fucking life. I am so sorry people because I just rant and rant, but I don’t know what the fuck to do.

Vote. Encourage others to vote. Can you image if the 50% who don't vote did??? It could change the whole framework of this country.

I gotta log off for awhile. Please behave all. ;)

I'm fine with the popular vote, it's all good with me. The whole vote thing would work. Hear me out. Most of the voters who vote now are the boomers and the elderly. The 18-25 vote is virtually nil. Again 50% of the population doesn't vote. If they did, screw the boomers, they're not powerful enough to outweigh the rest of us if we'd just vote. I vote, but soooooo many people I know don't bother. I'm tired of people who don't vote complaining about how things are.

Btw. I have a unique view on the whole pro-choice issue. I'm for it, I think it's necessary. But, I was adopted as a child before Roe v. Wade and I know if I had been concieved later, weeeeell, I wouldn't be here talking to you good people. I also have never had a pregnancy scare. Birth control is plentiful and effective and if actually used can pretty much prevent most unwanted pregnancy's. I've know women who've had 4-5 abortions because they were too lazy to use birth control and were then unable to have children. Did you know that every time a woman has an abortion it scars her womb? It does. But I still think a woman should have the right, and no woman should ever bear a child out of rape or incest.

Sacto, I don’t think there ever should be a question as to reproductive issues as women should be the only ones who decide when where and what a woman should do with their bodies.

I hear you loud and clear.

Surfer-X

My dad is also extremely passionate about the issue. I'm pretty sure it's saved his bacon some time in the past. And you seem very passionate about so many issues. Are you always like this or is the blog a place to vent. Me? I'm usually pretty even tempered. I figure I'll worry about it when the time comes. I don't think it's worth getting an aneurysm until I know for sure I need to get angry about something.

Surfer-X

I'm sorry if things have been hard. I guess I'm lucky to still feel glad to be here. My upbringing was less then stellar, but I'm learning that's more often the case than not. Oh well, move on. I know from your posts that you have a fabulous sense of humor and I for one am glad you're around to talk to us.

Well Jack, it looks like you've logged off too. Just as well, we can't seem to stay OT no matter what.

Well Jack, it looks like you’ve logged off too. Just as well, we can’t seem to stay OT no matter what.

Geez... should I take back what I posted earlier? I guess this is now the 'anything you're passionate about' blog.

Geez… should I take back what I posted earlier? I guess this is now the ‘anything you’re passionate about’ blog.

I am really passionate about food. Should we talk about sushi or Prime(tm) steak? :)

Anyway, my feel is... rate hike at measured pace until 4.5% - 5%. I guess we will hear more and more from the FED about hw "robust" our economy still is even after Katrina and that risks of inflation remain elevated.