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To: kailuabruddah who wrote (23747)2/16/2005 9:51:54 PM
From: mishedlo  Respond to of 116555
 
Strong Retail Sales Reflect Inflation Not Growth

Peter Schiff
Archives
February 15, 2005

Today's larger than expected .6% increase in January Ex-Autos retail sales, while heralded as good news by Wall Street economists, is actually bad news for the long-term health of the U.S. economy. In the past twelve months over-all retail sales rose 7.2%, while the ex-auto gain was 7.6% By far the category registering the largest percentage increase was gasoline, up 17.3%, followed by building material, hardware and garden supplies, up 14.1%. The latter category, which has seen significant price pressure lately, includes purchases which were no doubt financed by home equity loans that will only become increasingly more costly, and a bigger drain on future retail sales, as interest rates rise.

In addition, much of the increase in retail sales resulted from greater purchases of imported products. Had strong retails sales resulted from Americans paying cash to purchase greater quantities of increased domestic production, last year's sales figures would indeed have been reflective of economic strength. However, since the increase resulted from higher prices, rising imports and credit creation, increasing retail sales merely reflect inflation.

Further, as the bear-market rally in stocks appears to have ended, and with the housing bubble closer to bursting, reduced household "wealth" is likely to undermine future retail sales. In addition, rising interest rates will divert an increasing percentage of household income to debt service, reducing the share available for discretionary spending that goes in large part toward retail sales. Similarly, as highly indebted consumers look to pay down debt and replenish their non-existing savings, future retail sales will suffer. Most importantly, increasing retail sales have produced larger trade deficits and a weaker dollar, which intern will lead to rising import prices and higher future interest payments to foreign creditors.

Although some analysts consider consumer spending to be the best measure of economic health, retail sales actually measure the consumption of wealth rather than its creation. In reality, no celebration should be sparked by the fact that over-indebted Americans indulged themselves further by purchasing more imported products on credit. Nor should we rejoice because inflation results in increased sales though higher prices. By going deeper into debt to consume today, Americans will be forced to reduce consumption by even greater amounts tomorrow to allow for the repayment of principal plus interest. Thus future retail sales will suffer as a direct result of their own artificially enhanced past strength.

The only true way for the real value of future retail sales to grow is for Americans to save more. Higher personal savings results in interest income, which enables greater future consumption. However, such a responsible and beneficial change in consumer behavior is being resisted by the Fed, which is doing everything in its power to encourage Americans to go even deeper into debt. A decline in current retail sales, which would result from more responsible consumer behavior, would likely push the U.S. economy into recession. The Fed, in an effort to postpone that recession, is only ensuring that the ultimate recession will be that much more severe.

What so many modern economists fail to understand is that the only true way that a society can increase consumption is to first increase production, which must be proceeded by capital accumulation, which, in turn, must be financed though savings. The 19th Century French economist, Jean-Baptiste Say, expressed this concept well:

"Encouragement of consumption is no benefit to commerce, for the difficulty lies in supplying the means, not in stimulating the desire of consumption; and we have seen that production alone, furnishes those means. Thus, it is the aim of good government to stimulate production, of bad government to encourage consumption."

Can there be any doubt as to into which category our current government falls?

321gold.com



To: kailuabruddah who wrote (23747)2/16/2005 11:22:20 PM
From: mishedlo  Respond to of 116555
 
U.S. Treasury Takes Steps To Lessen Coercion Of Appraisers To Inflate Appraisals

realtytimes.com



To: kailuabruddah who wrote (23747)2/16/2005 11:34:20 PM
From: mishedlo  Respond to of 116555
 
San Diego firm's Internet sale leads to West Texas land boom

9:07 a.m. February 14, 2005

SAN ANTONIO – A California land speculator has generated a land boom in some of the most remote areas of West Texas, thanks to the Internet.

San Diego-based Zarzar Land bought 8,500 acres west of Valentine in Jeff Davis and Presidio counties and began selling 10- and 20-acre plots on the eBay Internet auction site, the San Antonio Express-News reported in Monday's editions.

More than 400 land parcels have been sold, sight unseen, to buyers as far away as France and Hawaii, the newspaper reported. Some land is going for less than $200 an acre.

"We've done 1,000 pages of deeds in January on this property alone. Normally, 1,000 pages lasts about four months," said Jeff David County Clerk Sue Blackley.

The remote, rugged acreage is home to little but cacti, mule deer, mountain lions and drug smugglers, the Express-News reported.

"You can see it's just old greasewood flats – absolutely gorgeous country, but try making a living off of it," said Superintendent Glen Nix of the Valentine Independent School District, which draws 53 students from its 900 square miles.

In fact, about 100 acres is required to support each cow, the newspaper reported.

Try telling that to the buyers.

"You wouldn't believe the number of people who call and say, 'I'm online right now. I have to make a decision. I only have so much time left to buy this land," said Joann Lujan of the Presidio County appraisal office.

"They ask if there is electricity or water and what is the nearest town or city. We advise them there is nothing out there," she said.

Undeveloped land in nearby Brewster, Culberson and Hudspeth counties also is for sale on the Internet.

Some unsatisfied buyers already have complained to state officials, but the officials said they have found no fraud.

"The only thing we could take action on is something like the Deceptive Trade Practices Act, but if you look at the Web sites, they tell people there is no survey, no water, no utilities," said Jim Daross, an assistant state attorney general based in El Paso.

Sandy Pridgeon, chief appraiser for Jeff Davis and Hudspeth counties, said no real estate broker would touch such wasteland in the past.

"To someone back east, $100 an acre sounds like a wonderful deal, but if you can't find your land it's not that wonderful. And if you can find it, you won't be able to live on it," she said.

She said she hasn't seen any "material misrepresentations" in the marketing of the land. "You have things like 'utilities are available.' Yeah, they're available, but it will cost you $50,000 to get a line to your land," she said.

Bob Dillard, former Jeff Davis County judge and publisher of The Mountain Dispatch weekly newspaper in Fort Davis, said West Texas has seen numerous dubious land offerings over the years.

"Barnum is right. The suckers are just jumping on this deal. And it will come to haunt us. The system will bog down trying to collect taxes, trying to foreclose," he said.

Zarzar officials did not respond to requests for comment and further information, the Express-News reported. Zarzar Land, which does not have a telephone number listed with San Diego's directory assistance, has not responded to an e-mail from The Associated Press.

signonsandiego.com



To: kailuabruddah who wrote (23747)2/17/2005 9:19:36 AM
From: Tommaso  Read Replies (1) | Respond to of 116555
 
I consider myself honored to have just given you your second "people mark." I think that posting shrewd and informed information like that, you will be carefully read by many on SI.