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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: The Wharf who wrote (22585)	3/10/2005 3:06:06 PM
From: sea_urchin	Respond to of 81068

Darleen > I see only inflation that could possibly represent that the US $ has decreased in buying power Although the "official" figures, and AG, tell us there isn't any inflation, the CRB tells us another story. stockcharts.com[w,a]dalaynay[dj][pd200,2][ilb14!la12,26,9] Of course, the soaring oil price is the big kicker. And when the war in Iran, possibly even Syria, happens that price will zoom into outer space. > The lower income group are not faring so well as more people are lining up to get rebates on aluminum tins. Don't worry about them -- they'll be sent to Iran or Syria when "democracy" is brought to those nations. In fact, they'll be bringing it. > increase in rates will affect those holding flexible rate mortgages and that pending on the amount of debt held by lower income earners could create a whole new problem in the retail area That's the big worry because consuming is what the US economy is all about. And if the Americans can't consume -- pouf! > There are fewer houses for sale which could mean that fewer are able to upgrade and price start to become more stable So, if there's demand, the unavailability of product will drive the prices up. And if demand falls, because people haven't the wherewithal, then prices will fall. I know that and I haven't even learned economics. > Hopefully that could mean invest in the economy not in the ranch. Sweetie, there is no economy as we understand an economy to be -- it's only borrow and buy. If no borrow, then no buy. In fact, it's bye bye. > If there is a slow down it is not to me visible Au contraire, as you have just said the "economy" is being driven by inflation. And, since the USD is pegged to the renminbi, all the trinkets are still available at much the same price as before. Indeed, the cheap Chinese goods prevent the USD devaluation from helping potential US manufacturers to be competitive, but we won't talk about that. Meanwhile, the Asians are still buying their $2bn worth of US debt every day. So, superficially, nothing has changed. But something is changing -- commodity prices can't keep going up and up (in USD terms), the nation mulcted in debt which goes up and up and which can never be repaid, industrial production a thing of the past and the government spending untold billions on making wars which benefit no-one but Ariel Sharon, without something changing. There is a saying to the effect that often the hardest thing to see is that which is right before one's very eyes.

To: The Wharf who wrote (22585)	3/11/2005 9:23:28 AM
From: sea_urchin	Read Replies (1) \| Respond to of 81068

Darleen, I am sure you will find this article interesting. economist.com >>America's housing bubble continues to inflate. Although the rate of increase slowed in the fourth quarter, prices were still up by 11.2% over the year. In California and Washington, DC, housing prices rose by more than 20%. Alan Greenspan, the Fed's chairman, recently admitted in congressional testimony that there may be property bubbles in “certain areas” and a risk that prices could decline. There is certainly evidence that prices are being driven by speculative demand: a new study by the National Association of Realtors shows that one-quarter of all houses bought in 2004 were for investment, not owner-occupation. The ratio of prices to rents is a sort of price/earnings ratio for the housing market. Just as the price of a share should equal the discounted present value of future dividends, so the price of a house should reflect the future benefits of ownership, either as rental income for an investor or the rent saved by an owner-occupier. To bring the ratio of prices to rents back to equilibrium, either rents must rise sharply or prices must fall. Yet central banks cannot allow rents to surge as this would feed into inflation. Rents directly or indirectly account for 29% of America's consumer-price index, so rising inflation would force the Fed to raise interest rates more swiftly, which could trigger a fall in house prices. Alternatively, if rents continue to rise at their current annual pace of 2.5%, house prices would need to remain flat for over ten years to bring America's ratio of house prices to rents back to its long-term norm. There is a clear risk prices might fall. The unusual divergence between house prices and rents does not just affect investors; it also undermines the conventional wisdom that it is always better to buy a house, because “rent is money down the drain”. Today in many countries it is much cheaper to rent than to buy. The figures look even more striking in the San Francisco Bay Area, where it is possible to rent an $800,000 house for $2,000 a month. Making the same assumptions about rents and house prices, but also deducting tax relief on a fixed-rate mortgage and adding property taxes, a buyer would pay $120,000 more over seven years than if he had rented. House prices in San Francisco would need to rise by at least 4% a year (2% in real terms) for it to prove cheaper to buy a house. Since 1950 American house prices in real terms have risen by an annual average of just over 1%. To expect them to rise faster from their current dizzy heights smacks of irrational exuberance, to say the least.<<