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  1. NRG
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       #1  
    I have got a question here. Now I am no economist but I feel we have got a problem with inflation. Did Greenspan make a mistake by holding interest rates low for so long? I mean there are all kinds of reports out there that say housing has become unaffordable, in Cali for example only 14% of the people of California can afford a median priced house. Gas is up almost %100 compared to 5 years ago. Wholesale prices are up %5.4 versus last year. I would like to hear some your folks thoughts on this matter and how can we fix it.
  2. #2  
    Wage and price controls. A centrally planned economy. Business owners frog marched in front of the cameras. Liberal use of the guillotine. Government funded health care. These are the only things that will save us!
  3. NRG
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       #3  
    Quote Originally Posted by 1911sforever
    Wage and price controls. A centrally planned economy. Business owners frog marched in front of the cameras. Liberal use of the guillotine. Government funded health care. These are the only things that will save us!
    Somehow I think this comment of yours does not address my questions. I feel that this statement of yours is just a snide remark. If you have something to offer then please do, if not, keep your pigeonholes to yourself.
  4. #4  
    Quote Originally Posted by NRG
    Somehow I think this comment of yours does not address my questions. I feel that this statement of yours is just a snide remark. If you have something to offer then please do, if not, keep your pigeonholes to yourself.
    Whether snide or not, you don't agree with what he said?
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  5. NRG
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       #5  
    Quote Originally Posted by Insertion
    Whether snide or not, you don't agree with what he said?
    No, I don't. I am business owner myself. The only thing I can kinda get behind is the healthcare issue.
  6. #6  
    Though a layman, I follow the economy and data announcements daily as it is important to my business on a day to day basis. I would argue inflation has been exceptionally tame in that in spite of increased housing costs and dramatic increases in energy costs, the overall inflation numbers have been relatively low. If anything, IMO, the fed has been too coservative.
  7. #7  
    Quote Originally Posted by NRG
    No, I don't. I am business owner myself. The only thing I can kinda get behind is the healthcare issue.
    Wow. Well, good for you! Wouldn't have expected that.
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  8. #8  
    Quote Originally Posted by treo2die4
    Though a layman, I follow the economy and data announcements daily as it is important to my business on a day to day basis. I would argue inflation has been exceptionally tame in that in spite of increased housing costs and dramatic increases in energy costs, the overall inflation numbers have been relatively low. If anything, IMO, the fed has been too coservative.
    I agree... inflation overall has not been an issue in the current economy. In fact if you take into account the cost of living adjustments (COLAS) into inflation, the price of many commodities like gasoline etc have not increased in price that much at all over the years!
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  9. NRG
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       #9  
    Quote Originally Posted by treo2die4
    Though a layman, I follow the economy and data announcements daily as it is important to my business on a day to day basis. I would argue inflation has been exceptionally tame in that in spite of increased housing costs and dramatic increases in energy costs, the overall inflation numbers have been relatively low. If anything, IMO, the fed has been too coservative.
    That is my point. Inflation has been relatively tame, excluding energy, medicine and housing. But that begs the question, what does the average working American mostly spend their money on besides those? Plus not to mention wages have been stagnant, if not declining.
  10. #10  
    Quote Originally Posted by NRG
    That is my point. Inflation has been relativly tame, excluding energy, medicine and housing. But that begs the question, what does the average working american mostly spend their money on besides those?
    Consumer goods, food and entertainment. And overall, those costs have been quite stable.
  11. NRG
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       #11  
    Quote Originally Posted by treo2die4
    Consumer goods, food and entertainment. And overall, those costs have been quite stable.
    I would think food has risen as well. I think I read somewhere the rise was between 4-8 percent. Just running off memory here so if you have a link to source that either confirm or deny this that would be good.
  12. #12  
    Quote Originally Posted by NRG
    Somehow I think this comment of yours does not address my questions. I feel that this statement of yours is just a snide remark. If you have something to offer then please do, if not, keep your pigeonholes to yourself.
    Oh, no. My comments do address your questions. They do not reflect my convictions, but do jibe with the leftist leanings of many of those on this board.

    Since you're in the medical industry I found your desire for government funded healthcare interesting. You must really plan on cleaning up when healthcare is "free".
  13. NRG
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       #13  
    Look at what $515,000 will buy you in Cali.
  14. #14  
    One of the indicators is the PPI. Here's al link to the most current number out today. As you will see, a .1% (core ppi) increase would lead to a very small annual number.

    http://www.bloomberg.com/markets/ecalendar/index.html

    Another key index is the CPI and ion 2005 it was also fairly tame.

    http://minneapolisfed.org/Research/d...c/hist1913.cfm

    Again, the numbers seem to be tame....

    PPI for 2005: http://www.bls.gov/news.release/arch...i_12202005.pdf
    Last edited by treo2die4; 01/13/2006 at 03:27 PM.
  15. #15  
    The issue with housing is not so much the interest rates, as in the decreasing standards of qualifications. My wife and I just purchased this past summer. We had to tell the lender what we wanted to borrow (they were offering much more). They were offering all sorts of "creative" loans.

    If this is happening across the board, then you have less financially aware people who are making purchases that they can not afford.

    What does this have to do with housing prices?

    {Do While}People sell houses for what they can get.
    Buyers can pay more because lenders will qualify them for more.
    Lenders offer more because there is federal backing on so many of the laon programs.
    Buyers default.
    Lenders recoup as sellers
    {Loop}
  16. NRG
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       #16  
    Quote Originally Posted by 1911sforever

    Since you're in the medical industry I found your desire for government funded healthcare interesting. You must really plan on cleaning up when healthcare is "free".
    Yep. I also believe a lot of business will 'clean up' as well when they are not saddled with health care costs. Win Win the way I see it.
    Last edited by NRG; 01/13/2006 at 12:28 PM.
  17. #17  
    Quote Originally Posted by shopharim
    People sell houses for what they can get. Buyers can pay more because lenders will qualify them for more. Lenders offer more because there is federal backing on so many of the laon programs.
    Actually, this is not entirely accurate. In reality, the bond market supports the creative financing by valuing the mortgage back securities accordingly. It is interesting to note the market is beginning to balk at these types of financing - and for good reason - to the point the available terms have become significantly less attractive to lenders.
  18. NRG
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       #18  
    Quote Originally Posted by shopharim
    The issue with housing is not so much the interest rates, as in the decreasing standards of qualifications. My wife and I just purchased this past summer. We had to tell the lender what we wanted to borrow (they were offering much more). They were offering all sorts of "creative" loans.

    If this is happening across the board, then you have less financially aware people who are making purchases that they can not afford.

    What does this have to do with housing prices?

    {Do While}People sell houses for what they can get.
    Buyers can pay more because lenders will qualify them for more.
    Lenders offer more because there is federal backing on so many of the laon programs.
    Buyers default.
    Lenders recoup as sellers
    {Loop}
    That is well thought out but, I myself would be led to believe it is a combanation of both, what happened when the fed raised rates? The housing boom slowed. Either way that house I listed is NOT worth $515,000.
  19. NRG
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       #19  
    Do mortgage brokers do margin calls?
  20. #20  
    Quote Originally Posted by NRG
    That is well thought out but, I myself would be led to believe it is a combanation of both, what happened when the fed raised rates? The housing boom slowed. Either way that house I listed is NOT worth $515,000.
    Perhaps in your market - value is driven by location and demand. Now don't get me wrong, I feel the same about that property in my market, that doesn't however make it so in California.
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