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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (21865)	1/20/2005 7:27:31 PM
From: orkrious	Read Replies (1) \| Respond to of 116555

A 40% decline would just bring house prices in certain U. S. markets back to where they were three years ago. I do not know how many people would suffer a real loss of wealth if that happens. Anyone who borrowed and spent that equity, or anyone who borrowed and bought at the high prices, would certainly be deflated that's a hell of a lot of people

To: Tommaso who wrote (21865)	1/20/2005 8:59:09 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

I do not see the price of gasoline dropping 40%, or the price of food, or the price of lumber, or most useful commodities. Such prices drop in across-the-board deflations. Instead, I expect those prices to rise. The price of food will move according to the weather and crop yields, changing tastes (more protein & less carbs), as well as demand from China. Gasoline will be priced at the margin by China, peak oil, and geopolitical factors. Therefore it seems silly to have a definition of deflation that requires those to drop. You also seem to imply that all if the gains in oil for the last year couple years must be wiped out before you admit it. That seems even sillier. Finally, did or did not Japan have deflation for 15 years in the face of rising oil prices? I think you need a new definition. ggg BTW - I expect lumber to be smashed. Steel too. Mish