Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Tommaso who wrote (37382)	7/31/2005 1:24:01 PM
From: loantech	Read Replies (2) \| Respond to of 110194

Very good post and I agree 100%. In my case I am keeping our modest home because it is a home not just a house. By this time next year or maybe sooner it will be F&C. Of course that will come with a healthy price tag for taxes, insurance and utilities all of which will be about $550.00 per month. Taxes = $180.00, Insurance = $35.00, Water, N gas, electricity about $325.00.(Need to check on the utilities costs.) I prefer here to an apartment which would rent for $900.00 or so now for a three bedroom. Yes us middle class people will need to tighten the belt as all we need will cost more in the future, energy, gas, food etc.......

To: Tommaso who wrote (37382)	7/31/2005 3:09:02 PM
From: jackjc	Read Replies (1) \| Respond to of 110194

The thinking in the 30's was so different than now. I recall my father who had 2 trades and was never off work during the depression, was so afraid of debt he would never buy a house or anything on credit. We rented for 20/mo 2 story small house. When the 3 story large house across the st rented for 65/mo, we could not comprehend the high rent. I got over the fear of debt and bought props in the 70's but the banks were so careful at times. But then most banks went broke in Fla twice. What I am reading about in res buying for 0 down and no income proven is so foreign to what I went through, hard to believe the banks do it but of course they package and pawn it off with derivatives to make it 'safe'. Will be interesting to watch this go its inevitable way from a safe distance.

To: Tommaso who wrote (37382)	7/31/2005 5:43:50 PM
From: Crimson Ghost	Respond to of 110194

Excellent post! We agree perfectly. Asset deflation But more CPI inflation -- especially for necessities.

To: Tommaso who wrote (37382)	7/31/2005 5:46:52 PM
From: NOW	Respond to of 110194

yep, a huge mess. where to pull up a chair and watch it unflod from?

To: Tommaso who wrote (37382)	7/31/2005 8:24:43 PM
From: KyrosL	Read Replies (1) \| Respond to of 110194

Why should commodities inflate in the long term? Let me give you some arguments against such inflation: Farm productivity is increasing by leaps and bounds around the world. For example, in South America, especially Brazil, huge areas that are only now being affected by the green revolution. The sudden increase in China's demand caught the world by surprise, but there is no reason the new demand cannot be satisfied at low prices in the not too distant future. Also, there is a lot of talk of getting rid of agricultural subsidies in Europe and the US, which will result in a big increase in agricultural production in Africa. As countries such as India and China join the developed world, fertility drops and population stops increasing. China's population is projected to stabilize and start decreasing in the not too distant future. Europe's population, is already going down, if you subtract immigration. Brazil's fertility rate has dropped precipitously in the last few years and is now at replacement levels. And so on. That does not bode well for commodity demand. Commodities may not escape the general deflationary trend. In the last couple of decades energy research has stagnated, in the face of cheap oil and myopic politicians and electorates. This is changing rapidly in view of peak oil. This time may be different. A massive commitment to nuclear power, along with hefty taxes on oil and gas use (nothing more than Europeans and Japanese are already paying) can reduce US oil demand drastically -- just like it happened after the seventies oil shocks. Finally, throughout the world, GDP is increasingly shifting from industrial high energy content goods, to services and high intellectual content goods with little energy content. Ultra cheap communications make commuting to work and traveling for business meetings increasingly obsolete. Our dependence on heavy use of energy to do our work is rapidly diminishing. When the basic physical needs of the newly industrializing populations of Asia and Latin America are taken care off, commodities will suffer a horrendous crash. I doubt the commodity boom will last beyond the end of this decade.

To: Tommaso who wrote (37382)	7/31/2005 10:43:57 PM
From: Crusader	Read Replies (3) \| Respond to of 110194

< Houses, stocks and bonds: Down. Commodities: up. > One thing I wonder though about this theory is that yes I could see stocks and bonds being down but how long would house prices be down when the basic raw materials to replace them are rising? Rising energy costs are a factor too. Is it really a housing bubble or is it just becoming more expensive to build a home? Of course there is speculation that will definitely become subdued but in the end I just find it hard to believe that house prices will drop in value below replacement cost which keeps rising. I'm just playing devil's advocate here but in all honesty can any of us really know what is going to ultimately happen?