The reality is you have offered absolutely no current evidence (throw away your first half, 2003 playbook) to support this position. I have now offered several hundred examples of higher prices coming into the economy with little evidence that demand is being reduced.
I do not need to provide evidence. You are doing all the work for me. You show all the PPI's going up. No prices are going up. If they are where? Skyrocketing commodities and bitching manufactors who know that hikes can not be passed on are my proof. Until we see consumer prices rise you have only proved my case not yours.
If they could raise prices why haven't they?
The simple answer is that demand only exists at current prices. Commodity prices up 30% and consumer prices flat or down. That is classic deflation problem of overcapacity and little real demand. All of your examples do indeed show why prices SHOULD be going up, but "should be" and "is be" are two different things.
Are auto loans still 0%?
Can they sell cars if they hike prices or rates?
Tools at HD - are they going up or are we seeing more sales?
Computer prices going up? Where?
Lights, furniture, cameras, batteries, flash memory, toenail clippers, towels, jeans?
What is going up?
All of those SHOULD in theory be skyrocketing if raw material are up 20%, 50% or whatever %.
My theory has nothing to do with Greenspan being a wizard. It has everything to do with no jobs, no payroll hikes, and no price hikes on finished goods.
You have offered hundreds of examples of why things should be going up, but the plain fact is they are not doing what you suggest. You refuse to accept the reasons I offer as to why they are not going up, but keep insisting that they should. They are not going up because of overcapacity and little demand except at rock bottom prices.
As for housing, yes prices are inded going up. Too much money chasing houses for sure. But if there was any merit in your overall argument, then carpeting, refrigerators, appliances etc should be going up. They are not. Housing can not be off-shored, and neither can lumber prices or copper prices. Those do get reflected in prices of houses. Trademen are one of the few areas in the economy that can command top $ and get it (as long as the housing boom holds up).
How long house demand can keep up is problematic. The reason I suggest that is we keep digging deeper and deeper into the bottom of the barrel of marginal buyers with 0% down loans, gift down payments, the US govt giving away down payments etc. Yes that has horribly overheated housing, but it is also a sign of panic on the part of this administration. If housing goes kiss this economy bye bye, and the fact that they need to do this to keep it going is telling IMO.
That we are going to such lengths to keep it propped up is a sign that something indeed is very very wrong. Housing can easily implode on the slightest impovication and I think that has the FED and the white house sacred shitless.
Mish |
