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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: benwood who wrote (77794)	4/16/2008 3:16:17 PM
From: koan	Respond to of 116555

benwood:""If we start running 10% (or high) inflation, I would expect housing prices to float up with inflation sooner or later..." koan: I said sooner or later. Wages should float with inflation except for two things: 1) unions have been decimated in the last 30 years 2) asia is exporting deflation with low labor costs. I expect our standard of living to fall and we could even experience a deep depression, although it will not be categorical e.g. Alaska will boom big time, like Dubai and so will real estate prices. In the future we will live in smaller houses in higher density communities. How the present real estate market works its way out is anyones guess. I expect huge differencs in differnt parts of the country e.g. the huge rise in food prices could fuel real estate price increases in parts of the farm belt. We are the bread basket of the world. I think the future is a sticky wicket, but all other things being equal inelastic commdities will rise with inflation.

To: benwood who wrote (77794)	4/17/2008 1:55:36 AM
From: mishedlo	Read Replies (2) \| Respond to of 116555

Because of contracts, my company won't have any semblance of a cost of living raise for at least 18 months, which means my salary will decline another 10-15% prior to what optimistically will be a raise of 1/2 the going inflation rate. Retail inflation persisting at the current 11-12% rate for another 30 months means my salary will be down approximately 20% in real terms from today. And today is already down 5% from last year. My situation is hardly unique. Indeed. It your situation is commonplace. So people cut back. They stop eating out. They vacation closer to home. They stop going to nail salons. They stop all sorts of frivolous stuff. So corporations hire less, build fewer stores, start laying off..... So people out of work or working fewer hours cannot pay the bills So people walk away So people go bankrupt So banks go bankrupt So credit is destroyed So that is deflation. That is what I am calling for. Mish