Minutes: Fed less certain that inflation would be contained

yahoo news ^ | 4-12-05

[Independentamerican]

"Inflation has been roaring along at 5-6% for the last several years, and the oil spike should kick it up to about 10%."

Sure would be if they were to count the increase in state and property taxes,local city taxes, tolls, vehicle registration fees, state tuition fees and housing !

[justshutupandtakeit]

Not when technological advances reduces the amount of energy used. Compare the energy used by the old tube televisions (if you are old enough to know what these were) to that used by solid state tvs. This is true with cars and industrial equipment as well. Even refrigerators, heating equipment and air conditioners have seen this.

[ClintonBeGone]

Foreclosures and other distressed properties?

Sometimes, although you can get a good deal on a regular sale home if you catch a motivated seller. The idea is to simply buy at such a price that with even modest improvements, you'll make some money. Don't count on being the nicest home on the block in order to recoup your investment.

[ClintonBeGone]

Core inflation numbers take out energy.

Yeah, but the article is a little confusing since it talks about both core and total inflation.

[junkbond]

There is more talk veryday about a housing bubble. Just google housing bubble and you come up with lots of advertisements for hpw to make money if house prices crash. There are even alot of bloggers in on the bubble talk.

http://thehousingbubble.blogspot.com/

http://shorebubble.blogspot.com/

[expat_panama]

 productivity depends on energy more than labor or technology....   ...Not when technological advances reduces the amount of energy used... .  

Over time energy use per capita holds steady, but energy use per dollar gdp goes down.  Energy optimists have been proven right- we can and have gotten richer without increasing our energy use.

[RegulatorCountry]

Outside of the west coast and the northeastern and middle Atlantic states... in the red states, essentially, we're either fairly valued or even undervalued, so any bubble is going to be regional, as has been the case in the past. All this carrying on about interest rates is a bit unhinged, I think, because we're still well below any putative long-term average interest rate for home mortgages. You can still find a 30 year conventional mortgage for under 6%. That's cheap, historically speaking. California has collapsed before and recovered, as has Boston. Houston does not seem to have fully recovered to this day, though, still being regarded as undervalued. That may well change, with the oil bust looking like it could revert to a boom.

[Mr. Jeeves]

Outside of the west coast and the northeastern and middle Atlantic states... in the red states, essentially, we're either fairly valued or even undervalued, so any bubble is going to be regional, as has been the case in the past.

I expect the red states are in for a ugly surprise when real estate values make their next cyclical downturn. Demand from exchange rate-rich foreign buyers for coastal property will keep prices in California and New York relatively high, though they will go down some. But this time, unfashionable zip codes are going to bear the brunt of the correction.

[ClintonBeGone]

I expect the red states are in for a ugly surprise when real estate values make their next cyclical downturn. Demand from exchange rate-rich foreign buyers for coastal property will keep prices in California and New York relatively high, though they will go down some. But this time, unfashionable zip codes are going to bear the brunt of the correction.

I can't explain the East coast other than it's always been rather expensive to live there. However, if you're in a warm state (Red) you're going to do OK regardless. The babyboomers, with a lot of money, turn 60 next year. They want to retire where it's warm. Therefore, they'll move from the midwest and northeast to FL, AZ, NM, NV, GA and TX. I think you're right about the midwest being OK, since things are not as out of control there. It seems to bust is going to hit the North East hardest.

[ClintonBeGone]

Interesting chart. With the three variables (energy, labor and technology (which really is a substitute for labor) it helps to see them graphed like that to appreciate their impact.

[ClintonBeGone]

Of course it ends in 2000, it would be interesting to see how the chart goes through 2005.

P.S. Are you still living in Panama? Is it as awesome as I hear?

[w6ai5q37b]

Fed less certain that inflation would be contained

Translation: "Oops, we printed too much funny money."

[elbucko]

Not when technological advances reduces the amount of energy used....

This is true, albeit over time. However, the immediate responses industry has available to precipitous increases in the cost of energy are:

1. Absorb the cost for as long as economically possible.
2. Increase prices.
3. Layoff employees.

In the long term everything is eventually resolved, one way or another. It's the short term that is in question.

[expat_panama]

see how the chart goes through 2005.... 

Here's my graph with the latest numbers from the DOE.   I've forgotten where I got the other graph, but the long term trend is holding steady.

Panama's a lot of fun.  Land and labor are cheap.  It's no longer far away as airline and internet are cheap too.  I just came in from finding a new trail in my rainforest.  I like to look at the monkeys and parrots after the market closes.