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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (22851)	12/5/2004 1:02:32 PM
From: Carlos Blanco	Respond to of 110194

Are these dollars just floating around like hot potatoes with everyone trying to get rid of them? my gut feeling is that this is the most likely answer. the average circulation velocity of each dollar is increasing--most people (except for japan/etc) are exchanging them for something else (or hedging them) more quickly than in the past, anticipating further declines. and it also seems that dollars which had not been in circulation for a long time (e.g. bank reserves, cash in mattresses) are coming out onto the market. there is a known link between inflation (= loss of intrinsic value) and increasing money velocity, so perhaps the dollar decline and the "hot potato" effect are just two sides of the same coin. a chicken-and-egg kinda thing. no one wants them because they are likely to be worth less, or are they worth less because no one wants them? when a psychology sets in that expects an ongoing decline in value, there is no question that the hot potato analogy is very apt--the goal is to pass the currency onto someone else as fast as possible before it loses further value.

To: mishedlo who wrote (22851)	12/6/2004 8:22:07 AM
From: russwinter	Read Replies (1) \| Respond to of 110194

Easy Money maladjustment du jour. My view: these Bubbles need to be popped to save these cities, as only BubblePeople are going to be left. Get those rates up, and fast!: Economic forum cites commutes, relocations By Carl Larsen UNION-TRIBUNE STAFF WRITER December 4, 2004 The San Diego region's housing problem ultimately translates into a transportation problem as families are pushed farther from the central city to find affordable homes, a local economic development official said yesterday. At the same time, local companies are increasingly being told by middle and lower income employees that high housing prices are forcing them to seriously think about relocating to other cities, said W. Erik Bruvold, a vice president of the San Diego Regional Economic Development Corp. Appearing at an economic forecast breakfast sponsored by the local chapter of the Institute of Real Estate Management in Mission Valley, Bruvold said the region's economy overall has been boosted by the passage of Prop. 71, the human stem cell research initiative that will benefit a growing biosciences industry in the state. However, he warned that next year a new round of military base closures planned by the federal government could result in a significant blow to the region if local installations are selected for phasing out. He said that "operational" bases such as Camp Pendleton and the Marine Corps Air Station at Miramar appeared not to be in danger of closure. Bruvold said the threat was faced by major support facilities. He cited the Marine Corps Recruit Depot, the Naval Air Depot North Island and the Navy's SPAWAR research and development center as installations that could appear on the closure list. Bruvold took issue with another panelist at the event, radio talk show host Roger Hedgecock, who earlier had told the audience that he was skeptical about the depth of what has been called a housing crisis here. "How is it that the homeownership rate is up?" Hedgecock asked. "Somebody is buying those houses." For 2003, according to the Census Bureau, homeownership in the county stood at 56.6 percent of all households, a gain from 55 percent in 2002. The median price of a house in San Diego County in October stood at a record $489,000, up 26 percent from October 2003. Bruvold said housing prices have become a major concern to companies affiliated with the EDC that are finding prospective employees unwilling to move here. Commuting long distances "is a quality of life problem that is unsustainable to their recruiting," he said. Bruvold hailed the recent razor thin victory of Prop. A, a $14 billion regional funding measure to improve roads and transit systems. Panelist Robert Griswold, a property manager and contributor to a Union-Tribune column on tenant-landlord issues, said a slowdown in residential real estate transactions was apparent to him. "I'm seeing for-sale signs up a bit longer. It used to be a house across the street will be sold, and you wouldn't even know it," he said. Both Griswold and panelist Jack Kyser of the Los Angeles Economic Development Corp., agreed that interest rates, including those for mortgages, will be headed up next year. Kyser forecast the Fed to continue raising rates. He said the federal funds rate, a key barometer, could end 2005 at 3.5 percent. It is 2 percent today. If rates go up, Griswold wondered how already-pressed homeowners could afford to pay more on their mortgages, if they are adjustable. He noted that a 1 percent rise in interest rates translated roughly into $300 more per month in payments. Kyser said policy-makers in Washington are not responding to a major transportation crisis looming for all of Southern California that goes beyond freeway gridlock. He said the movement of manufactured goods, as well as people, has been slowed by a lack of planning for new airports, improved shipping terminals and rail service.