Will housing bubble implosion cause ripples into comic market?

[tth2]

Or better yet, what will the dollar be trading at when the Fed decides to cut rates again early next year? The last time I checked, our national deficit was still out of control, and the dollar is losing fans all over the world for any number of reasons.

 

And cut the Fed will. Ben Bernacke is in the unenviable position of having to either ward off inflation or suffer the consequences of a severe housing-inspired recession. Considering he is a student of the Depression, and how he believes lack of liquidity prolonged and deepened its effects, I'm pretty sure he'll try to inflate his way out of a corner.

JTMF, I've really got to disagree with you on this. While Bernanke has STUDIED the Depression and observed from afar the impact of deflation in Japan, he actually LIVED THROUGH and EXPERIENCED the inflation of the 1970s. He (and virtually every other prominent economist today in his 50s or 60s) cut his teeth during the 1970s and was profoundly affected by that period. As a result, I believe that first and foremost Bernanke is an inflation hawk, and in the situation you describe, he will err on the side of raising rates rather than cutting.

 

Once inflation is in the system and in people's mind-set, it is incredibly difficult to wring out. Just ask Paul Volcker. There is no way Bernanke wants to be in a situation of 20% interest rates again. While deflation is no fun either, it is easier to beat, and he has the advantage of being able to rely on Japan's experience in the 1990s to figure out what NOT to do.

[lou_fine]

Figures she would also point out to me that prices in Calgary continues to motor right along with a year over year increase of over +45%.

Lou, tell your wife she can buy a place in Calgary, but then she has to live there (year round)! That should bring that particular line of discussion to a screeching halt.

 

Tim;

 

Actually, the last time I was there was quite a few years ago. It's actually quite a nice little city and much much nicer than dreary old Edmonton. City planner was a really young guy in his early 30's who has just become the new city planner for Vancouver. Would you believe that Calgary is the city with the second largest number of head offices in Canada, behind only Torinto.

 

Calgary is actually growing really fast with a ton of new buidings and homes going up with the city undergoing a huge construction boom. Similar to Vancouver right now where you see tons of construction cranes no matter where you are in the city.

 

Maybe JC can let us know how house prices are going in Toronto.

[JiveTurkeyMoFo]

Or better yet, what will the dollar be trading at when the Fed decides to cut rates again early next year? The last time I checked, our national deficit was still out of control, and the dollar is losing fans all over the world for any number of reasons.

 

And cut the Fed will. Ben Bernacke is in the unenviable position of having to either ward off inflation or suffer the consequences of a severe housing-inspired recession. Considering he is a student of the Depression, and how he believes lack of liquidity prolonged and deepened its effects, I'm pretty sure he'll try to inflate his way out of a corner.

JTMF, I've really got to disagree with you on this. While Bernanke has STUDIED the Depression and observed from afar the impact of deflation in Japan, he actually LIVED THROUGH and EXPERIENCED the inflation of the 1970s. He (and virtually every other prominent economist today in his 50s or 60s) cut his teeth during the 1970s and was profoundly affected by that period. As a result, I believe that first and foremost Bernanke is an inflation hawk, and in the situation you describe, he will err on the side of raising rates rather than cutting.

 

Once inflation is in the system and in people's mind-set, it is incredibly difficult to wring out. Just ask Paul Volcker. There is no way Bernanke wants to be in a situation of 20% interest rates again. While deflation is no fun either, it is easier to beat, and he has the advantage of being able to rely on Japan's experience in the 1990s to figure out what NOT to do.

 

I certainly hope you are right Tim. The last thing any of us want to experience is stagflation.

[tth2]

Or better yet, what will the dollar be trading at when the Fed decides to cut rates again early next year? The last time I checked, our national deficit was still out of control, and the dollar is losing fans all over the world for any number of reasons.

 

And cut the Fed will. Ben Bernacke is in the unenviable position of having to either ward off inflation or suffer the consequences of a severe housing-inspired recession. Considering he is a student of the Depression, and how he believes lack of liquidity prolonged and deepened its effects, I'm pretty sure he'll try to inflate his way out of a corner.

JTMF, I've really got to disagree with you on this. While Bernanke has STUDIED the Depression and observed from afar the impact of deflation in Japan, he actually LIVED THROUGH and EXPERIENCED the inflation of the 1970s. He (and virtually every other prominent economist today in his 50s or 60s) cut his teeth during the 1970s and was profoundly affected by that period. As a result, I believe that first and foremost Bernanke is an inflation hawk, and in the situation you describe, he will err on the side of raising rates rather than cutting.

 

Once inflation is in the system and in people's mind-set, it is incredibly difficult to wring out. Just ask Paul Volcker. There is no way Bernanke wants to be in a situation of 20% interest rates again. While deflation is no fun either, it is easier to beat, and he has the advantage of being able to rely on Japan's experience in the 1990s to figure out what NOT to do.

 

I certainly hope you are right Tim. The last thing any of us want to experience is stagflation.

If you look at current bond yields, the market apparently has ZERO fear of inflation at the moment, as reflected by the yield curve, where you have to go all the way out to 30 years to get above 5%! Either the market is overly complacent, or they are confident that Bernanke will be extremely vigilant about inflation.