Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: mishedlo who wrote (72583)	12/20/2007 12:03:44 AM
From: Steve Lokness	Read Replies (2) of 116555

Mish; I have repeatedly said that housing was way understated on the way up and in now understated on the way down. Yes, you have said just exactly that. I sure wasn't taking issue with your early predictions on housing. You were spot on. But is it deflationary times if everything associated with owning a home are going up? Heating, real estate taxes, insurance, maintenance - even lending cost if your mortgage resets are up. That's inflation to me personally because I live in the same home I have lived in for 30 years. My cost are all up and have never climbed this fast. The real estate taxes are just catching up to the wild inflationary past several years. Those are not going to go down as they reset to yesterdays prices. If you take the argument that inflation/deflation is a result of money supply (and debt) in the economy, then you have to think of housing in those terms don't you? Is the downturn in housing a result of shrinking money supply in the economy or is it a result of overbuilding and over supply? I think it is the later. And I think that is why housing is down while all the rest of the things we need daily are up. Are the two issues related (oversupply of housing and reckless money supply by Greenspan/Bernanke), yes I'm sure they are - but until I see some decrease in the things I use daily, my world is in inflation. Before you jump all over the comment above that housing problems are a result of shrinking money supply, I will readily acknowledge that yes there is a lack of money - but not in the economy but rather in the specific building home lending industry. It's a specific problem based on specific industry (housing). If it was the economy as a whole that was witnessing a shrinking money supply, then wouldn't we see less inflation in the areas that are going up so darn fast - energy and food especially? Respectful of your opinions as always; steve

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