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

To: John Vosilla who wrote (56480)	3/22/2006 11:46:06 AM
From: TimbaBear	Read Replies (1) \| Respond to of 110194

Would you agree pass through of rising RE and energy prices are main drivers of the cost push side of inflation? Well, John, I'm not exactly sure I have a handle on all of the major forces at play in this inflation but certainly rising RE costs and energy costs have to be recouped. Somehow folks have been led to believe that profits are just so high that these extra costs are just absorbed somehow without end users having to feel the pain. In some sectors perhaps that's true. But the story of the US economy has been one of how it has switched from a manufacturing base to a service base and the service base has certainly had no problem passing the added costs along. The traditional forces of too much money and too much credit are definitely at least partially responsible for the higher real estate prices. The higher energy prices though stem from two other main factors: geopolitical tensions which don't seem to be transitory and demand outstripping supply. I think some other big forces are also at play and one of the largest is that the fiat currencies are coming under increasing doubt about the strength of the fiat in some of the most widely used currencies. How this interplays with the other big influences is what is tough for me to get a good handle on. Timba

To: John Vosilla who wrote (56480)	3/22/2006 11:54:02 AM
From: mishedlo	Respond to of 110194

The biggest problem is home prices in many places have already factored in the inflation of the next decade in already Agreed, and then some. Except for places like Danville. But it will not just sit there either. As jobs are lost all of those gains (and perhaps more) will be taken back. LTV's will skyrocket. Mish

To: John Vosilla who wrote (56480)	3/22/2006 4:59:09 PM
From: Tradelite	Read Replies (1) \| Respond to of 110194

<< The biggest problem is home prices in many places have already factored in the inflation of the next decade already<g> >> That's a very thought-filled statement, and one with which I agree. What many people don't realize is that prices can simply pause. I've seen price appreciation or price changes pause for years during the decades I've owned my own house. It happens. Everyone who buys needs to be prepared for that. And it leads to the number-one rule of buying/owning real estate: Real estate has never been designed or intended to be a short-term investment. You can own it for a couple years and come out OK taxwise under current rules, if you're lucky, but it doesn't mean the value actually rises during that time.