DOOM DOOOM DOOOOOOOOOMMMMMMM! Beware! Everything leads back to fiat, "hyper inflation" and our DOOOOOOOMMMM, even if it has nothing to do with it. That's what the Ron Paul Bots specialize in...>DOOOOOOOOOOOMMMMMMM!!!!
DOOM DOOOM DOOOOOOOOOMMMMMMM! Beware! Everything leads back to fiat, "hyper inflation" and our DOOOOOOOMMMM, even if it has nothing to do with it. That's what the Ron Paul Bots specialize in...>DOOOOOOOOOOOMMMMMMM!!!!
Oh the wonderful tulip land of fiat! Everything is perfect, puffy white clouds, rolling green hills full of trees being cut down for the mighty fiat empire! The most valuable resource in human history! Paper! Not just any paper mind you, the special paper printed by the infallible FED! Everything is rosy, all things are fine, comfy on a fresh batch of fiat cuttings. Never fear! Fiat Money is here!
Thump553
Lifer
- Jun 2, 2000
- 12,839
- 2,625
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They had some pretty scary stats on the NBC Nightly News tonight. Home prices fell 18% last year in Miami, and 15% in three other major cities (Las Vegas and two other western ones, I forget which).
Having your home, which is the principal savings vehicle of most Americans, drop 18% in one year is a horrendous hit, especially if you bought within the last few years.
I've never been able to understand why food and fuel are EXCLUDED from the government's "core inflation" statistic, to me those two groups are central purchases to most people. I don't particularly care if latte prices rise, or movie tickets, but home heating fuel is critical. Seems to me like they gutted the core by excluding these.
It's probably for the same reason that the BLS reclassified McDonald's jobs from service to manufacturing, on the theory that they are manufacturing their burgers in the restaurant. Its pure coincidence, I'm sure, that this has the effect of bumping up the number of manufacturing jobs-a stat many follow as significant of the health of the economy.
Having your home, which is the principal savings vehicle of most Americans, drop 18% in one year is a horrendous hit, especially if you bought within the last few years.
I've never been able to understand why food and fuel are EXCLUDED from the government's "core inflation" statistic, to me those two groups are central purchases to most people. I don't particularly care if latte prices rise, or movie tickets, but home heating fuel is critical. Seems to me like they gutted the core by excluding these.
It's probably for the same reason that the BLS reclassified McDonald's jobs from service to manufacturing, on the theory that they are manufacturing their burgers in the restaurant. Its pure coincidence, I'm sure, that this has the effect of bumping up the number of manufacturing jobs-a stat many follow as significant of the health of the economy.
- Sep 29, 2000
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Since I bought in an already-trying area at the end of 06 and undoubtedly own less than I owe, I take solace in your words
It also doesn't bother me much, though of course it would if I moved, and I admit I"m thinking about looking into putting some time toward getting the appraisal on my property lowered. I pay 3.7% of my house's real value each year in property taxes (thank you NY State) so even a 10% reduction is a lot of money. Of course, the appraisal I got recently didn't represent the loss of value in this area at all, surprise surprise.It's a savings vehicle in relation to renting your home not being a savings vehicle. Baring some catastrophe, you can more or less expect to get your money back for your home in the future. If you can't, well who cares, it's what you live in, and one day you won't be paying any more monthly fees once you've got it all paid off. Whereas if you rented you would still be paying.
Where do you guys get this kind of information? I'm reading these threads and seeing all kinds of intelligence and prowess that I don't know how to replicate in spite of my desire to learn more about economics. I've been hooked since my macro class, but there's still so much I don't know that I know is essential to functioning effectively in the market. Where can I read more of this/where can I find it/who should I be reading/what should I be reading/what books/etc are all some of my questions. Those sorts of astute observations like you made about McD I know I could eventually make (because in my own fields of specialization I see them there) but I don't know where to start or go to educate myself on this so I can start effectively sifting through all the noise.
The biggest problem I'd say I have is determining which stuff is fluff and BS and which is legit investment information. NYT is all over the place, and I don't quite trust USA Today given every single day they have a picture of a celebrity on their front page, and some news article about them. I don't see them as having quite the brightest target audience. In other words, as far as not trusting goes, everyone has an agenda, and I don't know where I should go or who I should read or what I should research to see through that agenda so I can understand how they're trying to play.
Stuff like what you said and information on why Dullard chooses the snapshots he chooses (well aside from the obvious S&P, those are just hard numbers); and from whom, and how he is interpreting that to make investment decisions, etc. I know investors are typically pretty closed lip fellas and that's the name of the game; so if you feel obliged to reply and don't want to post it for all to see in this thread my PM inbox has plenty of space free.
I need lots of direction; from there I can find my way. But atm 360degress on 2 axis is too much. Could someone help me narrow it down?1. That % doesn't take into account how fast Miami went up. As somebody who lived there for 2 years, I can definitely say that house prices were absolutely ridiculous and painfully obviously overpriced. They forgot to mention that Miami went up 180% from 2000 to peak.
Only a moron would think that prices at the peak were rational. It's obvious there are a lot of morons out there.
2. Core is only one number published. Regular headline inflation that includes food and energy are *included* and readily available.
3. Link to the McD's reclassification?
Engineer
Elite Member
- Oct 9, 1999
- 39,230
- 701
- 126
Didn't happen. The Bush administration, in it's early term, tried to stem the the lowering of the numbers of manufacturing jobs by trying to get restaurant jobs reclassified as manufacturing jobs. It failed (and hard) and was dropped very quickly.
For the traling 7 months, wholesale inflation ran at a pace over 7%. I would imagine that retaillers and resellers will pass part (or all) of that on to the consumer. Those high energy prices filtering throughout the economy and Ben and the Fed are going to be faced with stagflation at the rate we're going.
Slew Foot
Lifer
- Sep 22, 2005
- 12,379
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Is it really a "savings vehicle" when it costs 2-3x to buy the same house as opposed to rent it? You're better off keeping the money you save in some type of investment. Though knowing the average idiot, they'd spend it on beer and lotto tickets or something.
I heard the McD thing a while back as well, Im not sure if it was legit or not.
Jesus Christ. I cannot fucking believe this same urban legend is going around. I've READ what Mankiw said. He was hypothesizing because the definition was vague, and that McDonald's could CLAIM to be manufacturing -- not that they were!
It has been spun and twisted into saying the admin was trying to say burger-flippers were manufacturing a product. That's not what happened. It was simply a discussion about the vagueness of government definitions in an economic report by Greg Mankiw.
http://query.nytimes.com/gst/f...=&spon=&pagewanted=all
Here is the actual report:
"The Definition of Manufacturing
This year?s Report contains a chapter on the challenges facing manufacturing, discussing both the longer-term trends and the recent business cycle downturn. There is no question that the recent downturn was particularly hard on manufacturing industries. Manufacturing was affected by the latest economic slowdown earlier, longer, and harder than other sectors of the economy. We discuss why this has been the case and how the President?s policies will help to restore and maintain growth in manufacturing and other job-creating industries.
A box in the Economic Report discusses an important consideration in assessing policies that apply to manufacturing: the definition of what constitutes manufacturing is far from clear. For example, when a fast-food restaurant sells a hamburger, is it providing a service or combining inputs to manufacture a product?
The government agencies that collect data on manufacturing are well aware that the distinction is blurry. According to the Bureau of Labor Statistics, bakeries, candy stores, and custom tailors are all part of manufacturing. But one could walk into such a retailer and see many service activities taking place. Sometimes subtle differences can change how an activity is classified. Mixing water and concentrate to produce a soft drink is classified as manufacturing. If that activity is performed at a snack bar, however, it is considered a service.
In the past, it has not mattered to firm owners whether government data collectors classified a business as a manufacturing firm or a service provider. But the blurriness of the definition would matter if policies were based on it."
http://www.whitehouse.gov/cea/...c_report-20040217.html
BTW, the inflation rate has been higher for months, but our official numbers do not show it. Looking at the inflation numbers from the Economist, as well as the Big Mac Index, and you can see that Consumer Prices (especially in relation to food and energy), as well as a weak dollar (oil and many of our imports are priced in dollars), has lead to a fairly large rise in inflation.
Do you agree or disagree that the PPI is heavily influenced by exogenous variables way beyond inflation caused by monetary expansion. Provide backup and reasoning behind your post.
Thump553
Lifer
- Jun 2, 2000
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Ask your parents where most of their savings came from. Until 1960 or so, home ownership in the US was essentially another form of consumership-you were doing good if you got your money back when you sold your house. Since then-whether rightfully or wrongly in a strict financial practices sense-the suburban home has been the great piggy bank for the vast number of Americans. It is precisely that piggybank-dipped into by refinancing and home equity loans-that has been the driving force behind the consumer consumption that has driven our economy in recent years.
Now that tide may be changing-or just as significant, perceived to be changing. People are going to stop raiding the home equity piggy bank (if they have any left) causing the upcoming downturn to be even more severe and more prolonged, in all likelyhood.
I don't think there's anything wrong with seeing a house as a piggybank for a portion of your savings, provided that you understand that that piggybank is going to appreciate at a very low rate and on a opportunity cost basis, it's losing money compared to other investments. That means you don't expect it to appreciate wildly or depreciate wildly in the long-term, short term bubbles exist, but provided you recognize them and act accordingly, you're fine. It's akin to buying government bonds because you are a risk-averse person. I have no problems with that investment policy since it's an individual choice. Provided you understand that and you also buy for the long-term in a rational manner, there's no problem.
My parents bought their house in 1979 for 62k, it's now worth ~280k, which is a decent portion of their retirement fund. 18 months ago it was worth 320k. They certainly wish they would have sold 18 months ago, but they don't cry about it every day. Sure, it's 40k "lost", but it's not a huge deal.
To people who bought a house in 2001 and "made" a lot of money through appreciation and are now "losing" it, tough shit. To people who bought in 2005, put 0% down and are now out of luck because the mortgage is underwater, tough shit.
I have no remorse for people who bought into a bubble unless they were obviously defrauded.
There was plenty of data out there for any rational person to realize the market was absolutely stupid. Anybody who lived through the .bombs should have known what an asset bubble was and there is no excuse for being suckered into it this time. Fool me once, shame on you, fool me twice, shame on me.
Too bad people are idiots.
dullard
Elite Member
- May 21, 2001
- 26,029
- 4,653
- 126
The economy isn't simple. It is really hard to narrow it down for anyone. Even the Fed chairman is backtracking today as he faces this big inflation number (a number that he ignored the possiblity of just a few weeks ago).
I like to get my numbers right from the source. At least that way, there is the least amount of spin. There isn't a liberal or conservative media altering the appearance of the data that way. Of course, the source itself may be biased. Consider the definition of inflation for example. Should inflation consider the cost of a nice steak in each year? For example if a steak rose from $5/lb to $15/lb the price trippled. Or, should inflation consider consumer switching? For example, if steak rose from $5/lb to $15/lb and hamburger rose from $2/lb to $5/lb the customer switches from steak to hamburger and therefore pays nothing more (inflation is 0% in this case). As you can see, there is plenty of room even for the source to fudge the numbers to make inflation look high or to look low. But, if you know the definition that they are using and if they used it consistantly, then you can truely compare one year to another.
My main sources are (in addition to the ones I linked above):
CPI, consumer price index
Manufacturing and sales data
Federal spending and deficit data.
Here is a good summary of the key criteria, but be warned, this is a biased source so don't read the opinions.
Why did I post just four graphs? Because that is the smallest set of data that gives a good overall impression of the economy.
1) Manufacturing (and therefore sales) are directly related to GDP. I use real GDP because that shows if growth came from more manufacturing, or if growth came because prices rose. Yes, I would like something better than real GDP, but it is the commonly used number. I would like to see it population adjusted and deficit adjusted. For example, did the GDP rise due to better economy, or due to more people or due to borrowing against future GDP growth?
2) That isn't enough though. You need to see the inflation data. I use the CPI instead of PPI since I'm a consumer not a business. But, PPI is important. There are links out there for it. But inflation is important even though the real GDP includes inflation because not everyone meets the average mark. If inflation is 5% and you got a 3% raise, you are doing worse.
3) I include stocks because stocks are the biggest form of accumulated wealth for many people. More wealth = more spending. The S&P gives a good snapshot of the economy vs the smaller and more focussed Dow or NASDAQ averages. There are bigger averages with more companies, but no one discusses them, so I use S&P.
4) Housing is the other main chunk of most people's wealth. If housing does well, the economy does well because people spend that wealth (how many millions of commercials about tapping the home equity have you heard in the last decade)? Plus, housing itself is a trillion dollar industry in the US. Yes, I said trillion. If you include construction, loans, renovation, moving services, furniture for the new homes, etc it gets even more massive. If I recall correctly housing and the directly related industries are about 25% of the consumer spending. If the housing aspect does poorly, it WILL be reflected in the economy.
As you can see from my graphs, you can't look at just the latest data. It is too volitile from month to month. But, you can look at trends. The real GDP growth was positive last quarter. But, it has been steadilly trending downward for quite some time (with quarterly bumps up/down of course). Thus, I am fairly confident that if we don't get any good news soon, that it will be negative during a portion of 2008.
As for investing, I'm a huge fan of (1) Dollar cost averaging, (2) Yearly rebalancing, (3) Diversification, and (4) Long-term investing. If you do those four things, each of which is quite simple, you'll beat 95% of the experts. You'll do that without any extreme economy knowledge or thought. Sure, the lucky 5% of investors will beat the socks off of you. But, in the end you'll be sitting pretty with minimal risk and minimal problems.
WhipperSnapper
Lifer
- Oct 30, 2004
- 11,442
- 32
- 91
Maybe the government will start printing money...and we can all go around with wheelbarrows full of it. Gah, I wish I had bought gold a couple years ago.
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