Good news on the interest rate front

[dsilvar]

My opinion is that we're on a tightrope, on one side is a den of hungry lions and on the other a tank of Great Whites.

Aaaahhhh..this is why I love your posts, SHELLY. Keeps us bulls grounded for sure.
I cannot help but wonder, however, how physcoanalysis would help you. You must have had some deep economic trauma in your past life..this is evident. Your deep desire to have the US economy tank is very revealing..lions and tigers and great whites..oh my!
I love you man!

 

[redfisher]

In this economic environment, if your depressed its because you allow yourself to be...the facts are inarguable...Right on, dsilvar

 

[SHELLY]

.Bob, if oil prices keep going up how can rates do anything but come down...the market will be doing the Fed's job for them and they'll be forced to cut...the Middle East has been screwed up for 60 years, this time is no different except that by giving the Iranians a bloody nose maybe they'll slow expansion...

Rising oil prices= rising consumer goods products (lots of plastic, shipping of goods, farming crops, gas to get to work, etc. etc.)

Raising consumer goods =pressure to raise wages (which have been flat--adjusted for inflation--for several years for 80% of Americans)

Raising wages = Rising price of goods/service passed on to consumers

Rising price of goods/service = Inflation

Fed VOWS to fighting inflation = raising Funds Rate

Raising Fed Funds rates = Raising interest rates

Shampoo, rinse, repeat.

 

[bdc63]

In this economic environment, if your depressed its because you allow yourself to be...the facts are inarguable...Right on, dsilvar

spoken like someone that has an interest-only loan, who buys stocks on margin, and carries credit card debt ... I would agree that the facts are inarguable as long as you look at ALL of the facts and not just the ones that feel good

(I'm back up from the bomb shelter ... it turns out that my gold bar doesn't take all that long to count, and Dick Chenny really isn't very good company)

 

[redfisher]

Its Cheney, scholar...and I hear he's looking for a hunting partner...

And I'm not sure I understand how rising prices are passed thru as wage pressure...Wage pressure is generated by a full workforce...btw, I'm not in the 80% category...

Snowflakes melting in your... shampoo, rinse, repeat... or something

 

[Bob]

My God, I don't get all this blah, blah, blah...How can an economy w/less than 5% unemployment, a moderating gdp of 3-3.25%, a downwardly revised deficit, at the top end of a rate cycle equate to all this "down in the mouth" postulating...Shelly, you are unbelievable...How is the Fed pausing uncharted territory (I can't imagine why they think your stupid)...that's what you get after a RAISING CYCLE - A CUTTING CYCLE...A great many "true" economists call these situations Goldilocks

Bob, if oil prices keep going up how can rates do anything but come down...the market will be doing the Fed's job for them and they'll be forced to cut...the Middle East has been screwed up for 60 years, this time is no different except that by giving the Iranians a bloody nose maybe they'll slow expansion...

Redfisher, your view of the economy through Republican sunglasses is mighty bright. I hope you are correct, but the stated goal of the Fed is to fight inflation. If oil continues to rise, core inflation will accelerate well ahead of depressing aggregate demand. Do you think the Fed would ease rates in response to higher inflation figures? The last time we had a recession, oil was one sixth the cost of current market prices for crude. Real Estate prices were well connected to wages, and there existed a budget surplus. The last time we had a killer recession[25 years ago], we had high energy prices, rampant inflation, and a stagnant economy. The Fed's response? Volker raised rates to the moon. Inflation was tamed when no one could find a job. Hopefully history will not repeat itself, and my daughters will stop asking me why I voted for Bush twice.

 

[redfisher]

Bob respectfully, I'm not sure I understand...are you suggesting that high energy prices (doubling) are going to drive ci to the point that demand will be overwhelmed...When?...do they need to double again?...The Fed hikes revolve soley around the idea that the economy is growing too fast...There is no hyperinflation or stagnation of the economy...Real GDP will "moderate" to 3.25% from 4-5%, inflation to 2% at statistical full employment...Are you really suggesting, like some of these other knuckleheads, that a Volker-type response is possible...Bob, don't doubt the supply side...

 

[Pirate]

Does it not concern anyone here that a large chunk of the economic expansion of late has been due to the explosion of debt levels? With increasing construction costs, increasing intrest rates and stagnant or nonexistant sales prices the market and economy are in for a rough ride. It might not even matter if the fed holds the rate, most of the equity based economic expansion is past tense and with construction costs out of control new starts are destined to come to a halt.

Why the discussion about intrest rates anyway? I thought all the houses in Sowal were paid for with cash :rofl:

There are so many negative signs I don't understand how anyone can look past them ALL. I look at RE every time I come there and it is still way too high for investment.

 

[SHELLY]

Does it not concern anyone here that a large chunk of the economic expansion of late has been due to the explosion of debt levels?

Absolutely! During the stock market bubble there weren't nearly as many "ordinary citizens" with a pony in that race as there are in this Real Estate run-up (wacky loans, equity loans, refi cash outs). And for so many folks it's not going to be a quick "pop" and rapid decline--it's going to be a slow, aching, net-worth-declining ride to the bottom.

In Florida in 2000 there were 67,388 licensed RE agents, in 2005 that number jumped to 144,174--add to that all the other folks associated with the housing market (title, brokers, construction, furnishing, banking, appraisers) and you can understand why our state had such a great unemployment rate.

Housing over the last couple years fueled the economy's fire--they're crossing their fingers that businesses are going to take over where housing left off...personally I think they're hoping a Band-Aid will do when what's really needed is a tourniquet.

 

[Indigo Jill]

In Florida in 2000 there were 67,388 licensed RE agents, in 2005 that number jumped to 144,174--add to that all the other folks associated with the housing market (title, brokers, construction, furnishing, banking, appraisers) and you can understand why our state had such a great unemployment rate.

Housing over the last couple years fueled the economy's fire--they're crossing their fingers that businesses are going to take over where housing left off...personally I think they're hoping a Band-Aid will do when what's really needed is a tourniquet.

Zero-profit condition

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Zero profit condition is a term in the theory of competition in Economics. It describes the condition that occurs when a business or industry has an extremely low (near-zero) cost of entry.

In these cases, people tend to join the industry until all the money is gone. This means that a person's ability to make a lot of money in that industry is low, because when others see the opportunity to make money, they will also join the industry, thus cutting into your profits.

Take, for example, the real estate industry. In the mid 2000's there has been a huge real-estate boom, but real estate agents are not making any more money then previously. Why? Because it is very easy to become a real-estate agent, so when profits start to rise, more people become agents, and each agent already in the industry starts to sell less houses.