Can you smell inflation???

you got it right the first time---a fart.

Lavender

So now inflation are your friends? Not surprising. Maybe a rest cure would help?

Ever hear of he j curve?

whats wrong with a new buble?

Wait, i thought all you idiots said we are in a deflationary collapse.

BINGO!

I smell burning peanuts...........someone call me an ambulance!

Hey, W67thst....
Your useless indicator continues to power higher.

http://finance.yahoo.com/echarts?s=SHIAX#chart4:symbol=shiax;range=2y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

wait....your S...A....T....score is too high to figure out what this is for or means...

you're an ambulance

domestic US real estate is in a deflationary collapse because the credit that fueled it is gone.

internationally traded commodities that sre priced in dollars are experiencing inflation because the dollar is going down and there is demand for commodities.

Dollar perspective -- June 2008. $1.60 per euro..... September $1.20 ..... Now $1.50

Everyone is an idiot, but you own in the Powerhouse. No one called for a deflationary collapse. A year ago, I pointed at $1.2mm apartments and said they could easily go to $900k and it wouldnt be dogs running in Manhattan streets type of scenario. And its not over.

How does dollar collapse impact local goods....you are the moron.

The deflationists point to weak economy, and ignore rising commodity prices and declining dollar....

Stagflation is an economic situation in which inflation and economic stagnation occur simultaneously and remain unchecked for a significant period of time.[1] The portmanteau stagflation is generally attributed to British politician Iain Macleod, who coined the term in a speech to Parliament in 1965.[2][3][4] The concept is notable partly because, in postwar macroeconomic theory, inflation and recession were regarded as mutually exclusive, and also because stagflation has generally proven to be difficult and costly to eradicate once it gets started.

Economists offer two principal explanations for why stagflation occurs. First, stagflation can result when an economy is slowed by an unfavorable supply shock, such as an increase in the price of oil in an oil importing country, which tends to raise prices at the same time that it slows the economy by making production less profitable.[5][6][7] This type of stagflation presents a policy dilemma because most actions to assist with fighting inflation worsen economic stagnation and vice versa. Second, both stagnation and inflation can result from inappropriate macroeconomic policies. For example, central banks can cause inflation by permitting excessive growth of the money supply,[8] and the government can cause stagnation by excessive regulation of goods markets and labor markets,[9] Together, these factors can cause stagflation; equally, either can, if taken to such an extreme that it must be reversed. Both types of explanations are offered in analyses of the global stagflation of the 1970s: it began with a huge rise in oil prices, but then continued as central banks used excessively stimulative monetary policy to counteract the resulting recession, causing a runaway wage-price spiral.[10]

Maybe we should consider the main point...Inflation will not help Manhattan values, as the interest rate impact will more than offset the rent impact...further local rents need not inflate just because the dollar is weak. See all of 2009 as an example.

well my dollars can buy about 40-50% more house in markets like Miami, Phoenix, LA, etc..30-40% in most other markets, and 15-30% more house here in Manhattan then only 1-3 years ago.

Also, my dollars can buy about 30% more stock than 2 years ago.

How is this inflationary?

that wont compute to ericho. economics for dummies doesnt go into such finer points. anyways evrything is a lagging indicator to the stock market, so as long as stocks go up, everything else will too

inflation will show up in the form of higher rates, higher taxes, higher health care costs, higher food, higher energy, higher commodoties, etc..the stuff that squeezes corporate margins, and pinches consumers wallets. my 0.02 anyway that is now worth $0.01 due to crazy inflation

well my dollars can buy about 40-50% more house in markets like Miami, Phoenix, LA, etc..30-40% in most other markets, and 15-30% more house here in Manhattan then only 1-3 years ago.

Gov't excludes this from inflation. CPI stats omitted on the way up so you can't include on the way down..

inflation will show up in the form of higher rates, higher taxes, higher health care costs, higher food, higher energy, higher commodoties, etc..the stuff that squeezes corporate margins, and pinches consumers wallets. my 0.02 anyway that is now worth $0.01 due to crazy inflation

Higher Taxes will crimp savings & consumption. Too bad Washington doesn't get this and lower sending Gov't spending instead.

When you trade you have to cut losses fast and at Predetermined level and if you're bad at it stop.

there is zero inflation! more signs of deflation. my cost of living is going down

If you are living in Manhattan, you are experiencing massive deflation. Assuming 30% of your spending is rent or owner's equivalent rent, and rents have gone down 25%, that's 7.5% deflation alone. Does not matter if you actually own or rent. When your mortgage does not drop as rents are dropping, this does not mean that you are not experiencing deflation. You are simply realizing part of your losses on your home, and these losses are offsetting your deflation.

Asset prices do not count in inflation.

owner's equivalent rent

if this means common charges or coop maintenance fees then this is wrong.

fyi - i just renewed my lease for a 10% discount to last year's + a 13th month free. It is not slightly above the starting rent in 2006 before counting in the one free month concession.

for what its worth. landlords are giving many concessions so Im not sure if that is figured into the numbers

sorry for typo, meant, it is NOW slightly above starting rent in 2006

inonda that is one more reason why renting is better then owning for now

UD, that's in line with what I've seen: 20% reductions in people renegotiating seriously (i.e., willing to move), maybe a little more if you actually do move. Really f-ing crazy. As mentioned elsewhere, almost a decade of rent inflation disappeared.

Riversider, OER has nothing to do with maintenance. It is simply how much you could get by renting your apartment. That has gone down, which the Fed considers deflationary.

samadams, given that prices have come down somewhat more than rents, I think that makes it a net positive for buying, no? Not arguing with the overall state of things, just that the total change in the last year improved the (in my view poor) argument for buying over renting.

interesting review of a recent book that is a diary from a small town lawyer during the 30's.

"Mr. Roth’s [the diarist] inflation fears are one good example. A rock-ribbed Republican, he can’t understand why Roosevelt’s New Deal programs — and the spending they require — don’t bring with them the kind of scary inflation that had occurred in Germany after World War I. He keeps waiting for it, predicting it, ever fearful that it will make an awful economic situation even worse. He is baffled that inflation remained subdued. He can’t get outside of his mental framework and see — as we can today — that Roosevelt’s programs are the only things keeping the economy alive."

http://www.nytimes.com/2009/10/17/business/17nocera.html

seems to me the same thing is happening today...many are convinced that inflation is inevitable and therefore continue to see signs of it despite the overwhelming evidence to the contrary. i am hardpressed to think of anything that costs more than it did a year ago; perhaps some parts of health care but even that is debatable.

Rental equivalence. This approach measures the change in the price of the shelter services provided by owner-occupied housing. Rental equivalence measures the change in the implicit rent, which is the amount a homeowner would pay to rent, or would earn from renting, his or her home in a competitive market. Clearly, the rental value of owned homes is not an easily determined dollar amount, and Housing survey analysts must spend considerable time and effort in estimating this value.

I love it! my cost of living is down because I would earn less if I chose to rent out my apt!

inonada it makes more sense then it did last year to buy however its still makes zero sense to buy. If you look at historical own to rent ratios they are still way off the charts

Samadams, completely agree. I guess it's 5-10% closer to being back on the charts.

Riversider, this is how the Fed tries to remove the effect of investment / speculation / financing from attempts to control the money supply. When interest rates were going down and people were refinancing, did that count as deflation? No. If it did, then loosening of the money supply to stoke inflation would have had a reinforcing effect, resulting in lower rates and even more deflation by the metric. Kinda silly to do that, don't you think?

This is part of how deflation (or lower-than-expected inflation) makes you realize a loss. Your mortgage is fixed, but your income keeps getting smaller (deflation). Therein is the nightmare, and it can be very self-reinforcing. This sort of thing is why the Fed pumps money as if it's the plague. Thankfully with fiat currencies (funny money like the dollar as opposed to gold), you can control this. Try doing that in a system with the gold standard: not easy to pump gold when the economy needs it...

Inonada, CPI ignores asset prices, which to me is a problem. If homes were included in the CPI like they used to be maybe the sirens would've gone off. not sure , but maybe...

CPI should ignore asset prices, save housing. Just because IBM goes up, it doesn't mean your cost of living should go up. Besides, there are good reasons for many assets like stocks to outpace inflation. I'm not sure why housing is not considered directly, but I'm guessing it has mainly to do with the importance of financing and the tunnel vision of the American consumer on the monthly payment. Probably ideal would not be to add asset prices to CPI, but rather to consider them in monetary policy.

yes, home prices only CLEARLY..

I just returned from Europe and there is no doubt that they're got some serious inflation going on. We don't see it because dollar is pegged to yuan. So, my conclusion is that combination of strong euro/weak dollar and eu inflation then NY real estate prices must look really cheap, maybe having to go back ~ 15-20 yrs. for comp.

I don't see this as a long term trend because situation will change but interesting.

so how much are incomes up in europe?

Interesting graph showing what inflation WOULD BE if we measured it with Pre-Clinton metrics

We've gotten so used to the New CPI, we've started to believe it....

http://www.shadowstats.com/

CC: Don't know answer to that but what are you getting at?

While there, I read sevaral articles where the european investor class is aggresively looking for ways to invest in U.S. and in particular NYC RE (pools, funds, REITS) that suposedly lower risk. Looks like a bonaza for certain types to market this and if I remember correctly has been done before.

how can inflation work if no rise in incomes? as income falls or stays steady with inflation in prices, demand inevitably falls cooling off inflation. look at what happened with oil prices. trying to cure imaginary inflation when actual situation is deflation will cause serious additional problems. government deficit is awful but what happens if the government stops?

cc: Yes, what you say is so. What I mean to address is the temporary imbalance that exists and isn’t this a typical situation that attracts greed and bubbles? Also, how do you explain cause of EU inflation? If US policies follow same (too much gov intervention and subsudies) then what happens to inflation here and real estate values?

take a look at my earlier post re: recent publication of 1930's diary and fears then of inflation that never materialized.

This is my fianl comment on the topic. The inflation in Europe that is happening now is REAL and to a European buyer we're dirt cheap!

ECB be damned, there's inflation in Europe because ieb says so. Oh, but they can come to the US and buy stuff on the cheap with their inflated euros whose value has dropped because of inflation??? Oy vey!!!

final answer?

If our imports cost more than Europe's cost less. Inflation IS A PROBLEM HERE, but not in Europe. Imports costs more because of dollar weakness, the opposite is true in Europe.

Except most of our imports come from China, RMB is pegged to the USD.

yep...if riversider says up, count on down.

left means right, etc.

I'd have to disagree...

http://www.marktaw.com/culture_and_media/TheUSTradeDeficitImages/TopTradingPartners.gif

ttp://blog.foolsmountain.com/wp-content/uploads/2009/06/us_trade_volume_2008.jpg

tubed again.

http://internationaltrade.suite101.com/article.cfm/america_s_trade_buddies

Even if China has over-taken Canada in the #1 spot, It still doesn't account for the majority....

up?

down?

right?

left?

Yeah, except CAD has appreciated a lot against the USD, so the USD-denominated exports & imports have increased but not from Canadian perspective.

so...riversider is wrong. again.

Lets get back to real estate. The sad sad dollar that bulls crude oil and gold is not going to help Manhattan property values. When the dollar was weak and the world was flush for money, the NYT could write stories about Irish carpenters. There are not enough Europeans to support this island with second home coops. Rents continue to fall and prices will resume their fall as well soon. Nothing can fall in a straight line. This will take at least three years to wipe out 7-10 years worth of appreciation.