1
   

CANADA'S NEW PRIME-MINISTER TELLS U.S. "TO BUTT OUT"

 
 
Chumly
 
  1  
Reply Thu 16 Feb, 2006 10:15 pm
Agreed,

I am not saying that at some point inflation will not return, but that it can be predicted by the Fed, and moderated by the Fed's micro-management of the short end, I am very dubious.

In fact (and I have said this before somewhere) I suggest that the Fed's micro-management of the short end actually exacerbates overall long term interest rate volatility.
0 Replies
 
georgeob1
 
  1  
Reply Thu 16 Feb, 2006 10:25 pm
Chumly wrote:
Agreed,

I am not saying that at some point inflation will not return, but that it can be predicted by the Fed, and moderated by the Fed's micro-management of the short end, I am very dubious. {/quote] Perhaps they are conscious of the self-fulfilling potential of their ritual action to 'exercise this power' - and, as well, of the destructive effects of the example of no action on their part.

Quote:
In fact (and I have said this before somewhere) I suggest that the Fed's micro-management of the short end actually exacerbates overall long term interest rate volatility.
Undoubtedly that has been true in several cases. However we did get a relatively soft landing from the deflation of a very large bubble in 1999. It may be that the effect of this (we hope) damping of the economic cycles may be to avoid the occasional wild excursion at the cost of amplifying some of the miler cycles.
0 Replies
 
timberlandko
 
  1  
Reply Thu 16 Feb, 2006 10:28 pm
Anon-Voter wrote:
timberlandko wrote:
Its been mentioned before, without apparent effect (and I see no reason a repeat might change anything) - the US deficit, in terms of percentage of GDP, is well within historically proven sustainable norms, and is a lower GDP percentage than that of the deficits of a number of nations which take pains to point out the magnitude of the US deficit. Get real, folks: a slice of pie is sized relative to the overall size of the sliced pie. A pound of pie slice is a pound of pie slice, any way you figure it. However, a pound removed from a 5 pound pie puts a much bigger empty spot in its pie than does a pound removed from a hundred pound pie.


I'll remember this economic flim-flammery when we start having to pay the tab! I should say, when our children start paying the tab. Since when does GDP have anything to do with the National Income? You know, things like taxes, etc. Interest payments have already shot up with minimal interest increases. Wait till interest rates get to where they should be, and indeed, where they are going!

One thing the Republican Party has shown us ... they don't really care if they bust the bank, just so they do it the way they want to do it!!

Anon

Its simple economics, Anon. Browse the tables, current, historic, and comparative, available at the Bureau of Economic Analysis.

Something shown, BTW, is that over the years and forums we've known one another, not only my refusal to buy into the economic doom-and-gloom scenarios you've posed, but my economic outlook have caused you some consternation. Given the consistency of economic developments over those years, I can understand why you might be upset Mr. Green
0 Replies
 
Anon-Voter
 
  1  
Reply Thu 16 Feb, 2006 10:46 pm
georgeob1 wrote:
Anon-Voter wrote:
.... Since when does GDP have anything to do with the National Income? You know, things like taxes, etc. Interest payments have already shot up with minimal interest increases. Wait till interest rates get to where they should be...


Remarkable confusion and incoherence.


Maybe so George .. perhaps badly said ... but here's the concept!!

You can get a great Gross, but if your cost of goods and your expenses exceed your gross ... well George, you don't last long!

You can make all the sales in the world, but if it costs you more to make them, you go out of business.

Now it's that fricking simple George ... I've been in business since I was 24, and I'm 59 now. I've done better than great. Frankly old buddy, I'm shipping my investment out of country, just like the Corps are shipping out jobs!

George Bush and his Administration are running this country at a annual minus 500 Billion Dollar clip ...

Some day, somehow ... ya gotta pay your bills!

So we have a dandy GDP, but if we got $an annual 500 Bill debt ... Has it ever occurred to you that someone may want to get paid, in full!!


Anon
0 Replies
 
Anon-Voter
 
  1  
Reply Thu 16 Feb, 2006 10:54 pm
timberlandko wrote:
Anon-Voter wrote:
timberlandko wrote:
Its been mentioned before, without apparent effect (and I see no reason a repeat might change anything) - the US deficit, in terms of percentage of GDP, is well within historically proven sustainable norms, and is a lower GDP percentage than that of the deficits of a number of nations which take pains to point out the magnitude of the US deficit. Get real, folks: a slice of pie is sized relative to the overall size of the sliced pie. A pound of pie slice is a pound of pie slice, any way you figure it. However, a pound removed from a 5 pound pie puts a much bigger empty spot in its pie than does a pound removed from a hundred pound pie.


I'll remember this economic flim-flammery when we start having to pay the tab! I should say, when our children start paying the tab. Since when does GDP have anything to do with the National Income? You know, things like taxes, etc. Interest payments have already shot up with minimal interest increases. Wait till interest rates get to where they should be, and indeed, where they are going!

One thing the Republican Party has shown us ... they don't really care if they bust the bank, just so they do it the way they want to do it!!

Anon

Its simple economics, Anon. Browse the tables, current, historic, and comparative, available at the Bureau of Economic Analysis.

Something shown, BTW, is that over the years and forums we've known one another, not only my refusal to buy into the economic doom-and-gloom scenarios you've posed, but my economic outlook have caused you some consternation. Given the consistency of economic developments over those years, I can understand why you might be upset Mr. Green


I have no reason to be upset. George Bush has made the family much wealthier than we would ever deserve. We're crying all the way to the bank, at Americas expense.

Maybe I don't have a great handle on world economics, but I've run a very profitable business, and have a very very heathy family trust I run. This I can tell you ... I learned the lessons of Real Estate in the early 80's ... get the hell out when it's at the top! I've been doing that little by little, and we will be divested of U.S. holdings in a fairly short time!!

If I was younger, I would start learning Chinese!

Anon
0 Replies
 
Chumly
 
  1  
Reply Thu 16 Feb, 2006 11:01 pm
georgeob1 wrote:
Perhaps they are conscious of the self-fulfilling potential of their ritual action to 'exercise this power' - and, as well, of the destructive effects of the example of no action on their part.

However we did get a relatively soft landing from the deflation of a very large bubble in 1999. It may be that the effect of this (we hope) damping of the economic cycles may be to avoid the occasional wild excursion at the cost of amplifying some of the miler cycles.

Hi georgeob1,

You may be right but I have certain doubts. Why? When/if inflation runs rampant for a true and fundamental economic reason i.e. commodity prices, labor shortages (whatever it takes to have too many dollars chasing too few goods) I suggest we will again see a rather ineffectual Fed doing the only thing it can, raise the hell out of the short end until the economy chokes.

Also I have never seen any accurate long term studies showing any economist or central bank has ever been able to accurately predict inflationary trends. Without any real ability to predict interest trends by the Fed I suggest the Fed is just pissing in the wind (except in extreme cases such as a stock market crash or rampant inflation).

Consider: If it was really possible for a central bank or economist, they could easily earn as much money as would wish as the equity markets and even more so the bond market is predicated on interest rate trends.

Consider: Even if in the past for some period of time, it could be argued that a central bank or economist did predict interest rate trends, there are at least two factors working against continued predictions.

1) Return to mean (ask me to explain if you do not understand)

2) The efficient market theory (ask me to explain if you do not understand)

As far your belief that the "relatively soft landing from the deflation" was because of *predictive * Fed action I suggest the following scenario: Put 100 coin flippers in a room. They keep flipping their coins until only one coin flipper is left that has consistently gotten heads. I ask you georgeob1:

1) Is that man an expert coin flipper?

2) What are his chances of getting heads the next time he tosses?

Cheers,
Chum
0 Replies
 
Anon-Voter
 
  1  
Reply Thu 16 Feb, 2006 11:20 pm
Chun,

You must be really in tune with all this.

Anon
0 Replies
 
Chumly
 
  1  
Reply Thu 16 Feb, 2006 11:29 pm
I do like it!
0 Replies
 
Anon-Voter
 
  1  
Reply Thu 16 Feb, 2006 11:36 pm
Chumly wrote:
I do like it!


Do you think I'm all wet with the way I see it?

Anon
0 Replies
 
Chumly
 
  1  
Reply Thu 16 Feb, 2006 11:56 pm
Hi Anon-Voter,

I have not read your posts really carefully as I was chatting with georgeob1. If you could put down, in as clear and direct a manner as possible, two or three main points you feel demonstrate your fundamental perspectives, I will comment without any nastiness etc.
0 Replies
 
Anon-Voter
 
  1  
Reply Fri 17 Feb, 2006 12:06 am
Chumly wrote:
Hi Anon-Voter,

I have not read your posts really carefully as I was chatting with georgeob1. If you could put down, in as clear and direct a manner as possible, two or three main points you feel demonstrate your fundamental perspectives, I will comment without any nastiness etc.


I'll do it tomorrow .. I'm pooped, and distracted by the Olympics at the moment. Thanks!

Anon
0 Replies
 
Anon-Voter
 
  1  
Reply Fri 17 Feb, 2006 12:40 am
Anon-Voter wrote:
This I can tell you ... I learned the lessons of Real Estate in the early 80's ... get the hell out when it's at the top! I've been doing that little by little, and we will be divested of U.S. holdings in a fairly short time!!

If I was younger, I would start learning Chinese!

Anon



Almost as if on que ... Tomorrows newspaper ...


Home sales falter, hinting at slowdown

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/02/17/HOMES.TMP

Quote:
Bay Area home sales tumbled to their lowest level in five years last month, and prices hovered well below record territory, further evidence that the region's seemingly unstoppable housing boom may have peaked with the blistering market of 2005.
0 Replies
 
Chumly
 
  1  
Reply Fri 17 Feb, 2006 01:56 am
Hi Anon-Voter

Is one of the below, the point you wish to make?

1)Should interest rates go up enough, over a short enough time, certain sectors of the economy will not do as well. If that is your point, I agree.

2)Certain sectors of the US real estate market may be over-bought, and are due for a correction. If that is your point, it may well be true. An historical perspective will give a more fundamental perspective on this. By fundamental I mean the technique of fundamental analysis which is most often applied to stocks, but which can apply to real estate. By historical perspective I mean 20 years from now.

3)The US's economic interaction with China causes interest rate increases and hence an imminent across the board housing market decline. If that is your point I disagree for a number of reasons, but I'll list only two, to keep things clean.

a) It is an intentional act by the Fed to increase interest rates. This has been done by the Fed in an attempt to moderate the so-called boom to bust swings. This interest rate increase is not a response to Chinese US economic activity. This type of interest rate tweak is done all the time by the Fed, both up and down. I personally do not approve of the tweaking, but that is another matter entirely.

b)Given that the goods coming from China are plentiful, inexpensive and getting ever cheaper and better, the action of Chinese trade with the US would actually be counter to an inflationary trend.
US trade with China would in fact, tend to decrease interest rates not raise them.

In very, very general terms from a supply / demand equation:

Rates go down when there are too few dollars chasing too many goods.

Rates go up when there are too many dollars chasing too few goods.

Note: I am not referring to the Fed here, who I would argue has a less constructive influence then some others might assert.
0 Replies
 
Chumly
 
  1  
Reply Fri 17 Feb, 2006 02:10 am
To understand interest rates you must understand the difference between the short end which the Fad has some control over, and the long end which is essentially bond market driven. If I was you, I would not pay much attention to the Fed (at least at first) and instead focus my attentions on learning about the bond market, in particular the long end. Understanding the debt market is one of the keys to understanding interest rates.

It's too bad everything is so ******* complicated but you'll find it interesting. While you're learning away, look up "Random Walk" and the "Efficient Market Hypothesis", two of my fave subjects.
0 Replies
 
Anon-Voter
 
  1  
Reply Fri 17 Feb, 2006 02:40 am
Chumly,

I've had a Real Estate Brokers license since 1972. I am well versed with the ebb and flow of Real Estate. I alluded to it with Timber when I mentioned the 1980 collapse of real estate in California. We had been through tough times before, and we were not only able to weather the storms, we came out even better because of the fantastic buys we made when everyone else bailed out. We were arrogant and cocky because we had such great success ... we were invincible! When everyone was bailing out in late 1979 and 1980, we were still buying with what we called 20/20's. (20 points 20% interest - short term). We learned the hard way, trust me!

Thank you for the posts,and I will get back tomorrow ... I can't believe I'm still awake Smile

Anon
0 Replies
 
Chumly
 
  1  
Reply Fri 17 Feb, 2006 01:43 pm
The driving forces behind domestic residential real estate have some similarities to other classes of investments, most notably REITS.

We are way off topic as to what effect the Chinese might have on domestic real estate and interest rates.
0 Replies
 
Anon-Voter
 
  1  
Reply Fri 17 Feb, 2006 02:01 pm
Chumly wrote:
Hi Anon-Voter

Is one of the below, the point you wish to make?

1)Should interest rates go up enough, over a short enough time, certain sectors of the economy will not do as well. If that is your point, I agree.

Short term rates in themselves don't worry me ... It's when they, in effect, become long term by default.

2)Certain sectors of the US real estate market may be over-bought, and are due for a correction. If that is your point, it may well be true. An historical perspective will give a more fundamental perspective on this. By fundamental I mean the technique of fundamental analysis which is most often applied to stocks, but which can apply to real estate. By historical perspective I mean 20 years from now.

I have answered this to a degree, but will add to it

3)The US's economic interaction with China causes interest rate increases and hence an imminent across the board housing market decline. If that is your point I disagree for a number of reasons, but I'll list only two, to keep things clean.

My main concern with our debt to the Chinese is that it's almost a Trillion Dollars. There seems to be no limit! Don't think I'm a China basher ... matter of fact, I think they are elegant people. I've been in China three times, and I have the greatest admiration for them. Matter of fact, I think they are tomorrows major super power.

a) It is an intentional act by the Fed to increase interest rates. This has been done by the Fed in an attempt to moderate the so-called boom to bust swings. This interest rate increase is not a response to Chinese US economic activity. This type of interest rate tweak is done all the time by the Fed, both up and down. I personally do not approve of the tweaking, but that is another matter entirely.

We are borrowing to pay for the war that we are so aggressively pursuing. They are financing it for us. If nothing else, we have to pay the interest payments, and come up with the money to pay the indebtedness. I imagine we will just extend the debt, at higher interest rates than the juicy rates we know have.

b)Given that the goods coming from China are plentiful, inexpensive and getting ever cheaper and better, the action of Chinese trade with the US would actually be counter to an inflationary trend.
US trade with China would in fact, tend to decrease interest rates not raise them.

Yes indeed, as a matter of fact, that is partially my point. Last time, we paid off the VietNam war in part with the hyper-inflation of 1975-1980. The dynamics now, as you point out, is against hyper-inflation saving our butts again!

In very, very general terms from a supply / demand equation:

Rates go down when there are too few dollars chasing too many goods.

Rates go up when there are too many dollars chasing too few goods.

Note: I am not referring to the Fed here, who I would argue has a less constructive influence then some others might assert.


I wanted to answer this before going any further. I may be hijacking this thread, so maybe you could proceed in the other interaction that I am running that parallels this. You are already participating in it.


Anon
0 Replies
 
Finn dAbuzz
 
  1  
Reply Sat 18 Feb, 2006 12:13 am
Anon-Voter wrote:
I may be hijacking this thread...
Anon


When did that consideration ever stop you?
0 Replies
 
Anon-Voter
 
  1  
Reply Sat 18 Feb, 2006 12:25 am
Finn d'Abuzz wrote:
Anon-Voter wrote:
I may be hijacking this thread...
Anon


When did that consideration ever stop you?


Finn, now be nice ... I transferred over to my own thread.

Anon
0 Replies
 
 

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