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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 (56346)	3/21/2006 12:12:35 PM
From: TimbaBear	Read Replies (2) \| Respond to of 110194

Mish, for someone who purports to understand economics, your logic structure surely could use some work. If a new car is a new car then buy a Hundai for $11,000 and your cost just went way down. All the rest is Fluff? OK for the sake of argument I agree you are 100% correct. So Buy a Hundai or a Toyota, pay less and your price dropped. What the heck kind of argument is that? My price dropped compared to what? What I could have purchased a Hyundai for 10 years ago? You are still embedding in your paradigm that everyone who experiences higher inflation than you is merely buying more expensive stuff than you. Get your head out of your paradigm and think logically! Geezus lad, you're putting yourself on the national stage, you've just got to think more clearly than that if you want it to be more than your 15 minutes of fame! Take the cheapest standardly equipped Ford or GM new car and compare it to the cheapest new Ford or GM product. It makes absolutely no sense to take a new car at say $15,000 and hedonically adjust the price down to $8,000 when you can't buy that car for $8,000. Or, to use your example $11,000 down to $7,000 when you can't buy your vaunted Hyundai for that revised money. Its a world of make believe from which you then think you can determine reality. Just take the reality and try to understand it for what it is. I am working on a friendly debate right now with Faber. Debate is not the right word, discussion is the right word. Hopefully I will have an announcement on that soon. BTW, I do not know his definition of inflation. What will you do if his is the same as mine? You must think me some kind of sycophant just waiting for someone to follow! If you and Marc Faber agree on the outlook for the USD and the US economy, it will be you that has grown in understanding, not Faber getting persuaded to your view. But if you both agree, I'll look at the arguments you present as dispassionately as I can and come to my own determination as to what I consider valid when combined with my own experiences and education. That said, let's say I accept your definition "A new car is a new car." Mine cost $10,500. If you paid more, according to your defintion (given that extras are "fluff"), you got taken. If one were to buy a Jaguar in 2006 and they had purchased Jaguars all their adult life and the last time they purchased a Jaguar was in 1980. Would the valid comparison be the cost of a Jaguar to the cost of a Hyundai? Mish, you just have to quit trying to prove that you are correct and start allowing some sunlight into your fixed notions. If the notions are correct, they'll look better in the sunlight and, if they have blemishes the sunlight will reveal them. The ONLY way it makes sense to compare prices is on exact equivalents. A tomato is still a tomato. A potato is still a potato. $100,000 of life insurance is still $100,000 of life insurance. A gallon of gas is still a gallon of gas. A 16 oz T-Bone steak is still a 16 oz T-Bone steak. A ton of copper is still a ton of copper. Home insurance per $100,000 valuation home is still home insurance per $100,000 valuation. Are you sure you don't want to hedonically adjust the tomato because there is more productivity on the farm land or the farmer has mechanized or the tomato is genetically engineered? Is it still a tomato? I ask this quite facetiously to point out that one who insists on finding something to quarrel with can easily do so when allowing hedonics anywhere in the equation. It is that subjectivity that you mention. But I dismiss someone telling me that on "average" the CPI has gone up 10% a year for 5 years. No freaking way in hell unless someone has really unusual experiences. There's more of that logical, objective, dispassionate thought process on display again. You can't dismiss someone telling you their experience if you want to be on the world stage. You can say that while their experience may have been what they claim it is, you don't believe that the nation as a whole has experienced anything close to a rate that high. But even in order to do that, you have to have really looked at the numbers and not just with a view to dismissing them because you don't want to believe them. One of the reasons you have to really look at the numbers is because sometime there is going to be sitting across from you on one of the shows a person who is a quant and they will begin throwing statistics at you that will make you look like an idiot if you are not prepared for them. I am not saying you are an idiot, quite the contrary, you are quite bright, but it may appear differently if you can't answer the numbers with more than just Mish's opinion. You certainly will have to do better than your Hyundai argument. I'll look forward to the outcome of your discussions with Marc Faber. I'll give you this: You are at least pitting your ideas up against some of the better economic thinkers and that speaks very well for you. Timba