Money & Policy

[Desertrat]

Inflation stuff: http://www.nytimes.com/2005/04/21/business/21econ.html?pagewanted=1&th&emc=th

There's nothing really unexpected, here, other than tidbits like 1.7% in a month in the New York metro region. That might not last, as implied in the article, but 20% per year is rough on billfolds.

I was reading along, and on Page 2 came to this little bit of intellectual awareness: "While oil prices are not included in the core inflation rate, they appear to be a contributing factor in the rise in other prices."

Contributing factor? Contributing factor? Duh? So if oil were included, the BS about low inflation rates would be a bit more transparent? Does it occur to these people that the raw material for consumer products MUST affect the cost and therefore the sales prices of those products? How many times have you guys heard me holler, "Plastics!"?

So, to make things worse, enter the Congress. Whee!

http://www.nytimes.com/2005/04/21/opinion/21thu1.html?th&emc=th

Nasty old capitalists in China won't roll over and help our trade deficit. Bad China! Dumb businessmen want protective tariffs, and maybe Schumer, et al, are just dumb enough to go along with the deal. Damfino. Smoot/Hawley revisited? You do the Google.

(I'm in a sorta sour mood, this morning; my back hurts for no reason I can figure. And I gotta lotta work I wanna do and can't. :( )

Ah, well. I just hope you guys have been playing the "What if?" game, and doing self-defense on your billfolds...

'Rat

[takao]

Inflation stuff: http://www.nytimes.com/2005/04/21/business/21econ.html?pagewanted=1&th&emc=th

There's nothing really unexpected, here, other than tidbits like 1.7% in a month in the New York metro region. That might not last, as implied in the article, but 20% per year is rough on billfolds.

I was reading along, and on Page 2 came to this little bit of intellectual awareness: "While oil prices are not included in the core inflation rate, they appear to be a contributing factor in the rise in other prices."

Contributing factor? Contributing factor? Duh? So if oil were included, the BS about low inflation rates would be a bit more transparent? Does it occur to these people that the raw material for consumer products MUST affect the cost and therefore the sales prices of those products? How many times have you guys heard me holler, "Plastics!"?

Ah, well. I just hope you guys have been playing the "What if?" game, and doing self-defense on your billfolds...


yeah over here it was the same thank's to oil and very increased Diesel prices (like for Trucks for transporting everything.. costs for that rose 14 percent over the last years alone) the inflation has been growing pretty constantly over the last 2 years .. i think 3-4 years ago we had around 1.something and now we are expected to hit 2.9 % ... ...i'm very thank full that in austria we started at a lower number than in Germany ;)

[Desertrat]

What worries me is what happens when our housing bubble goes Pop! Inflation brings about higher interest rates, and way too many sub-prime borrowers have either interest-only loans or adjustable-rate mortgages. As interest rates rise, these folks lose their homes. The ripple effect spreads into the world of the lenders, as well into those who sell trinkets to consumers.

Gary North speaks to this in http://www.lewrockwell.com/north/north366.html

The scary part is, "In 2001, as the current housing boom got under way, fewer than 2 percent of California homes were bought with interest-only loans, according to an analysis done for the Los Angeles Times by LoanPerformance, a San Francisco mortgage research firm.

By last year, the level had risen to 48 percent. Nationally, interest-only loans were used in about a third of all purchases. In 2001, as the current housing boom got under way, fewer than 2 percent of California homes were bought with interest-only loans, according to an analysis done for the Los Angeles Times by LoanPerformance, a San Francisco mortgage research firm.

By last year, the level had risen to 48 percent. Nationally, interest-only loans were used in about a third of all purchases."

48% in California? 33% nationwide? That's as scary a pair of numbers as I've run across in a while! (I won't even comment on the common sense of the folks who take part in that sort of idiocy.)

Another "hickey" that he touches on is the effect on local governments. That is, these inflated prices lead to new appraised values for tax purposes. Cities and school districts get their budgets set up for the income for the higher taxes. Comes the crunch and the taxes don't get paid, and then there is weeping and wailing and gnashing of teeth.

Interesting times a'coming!

Oh, well. I once heard a fellow comment, "When you're booked on the Titanic, why go steerage?"

'Rat

[zimv20]

48% in California? 33% nationwide?
holy christ! that can't be right, can it? verified from another source? how can so many people be so dumb?

[Desertrat]

I've been reading Gary North's stuff for several years. I've yet to find an allegation of fact to be erroneous. One can argue with his conclusions, but the man does do well about finding fact.

'Rat