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Economists use models and rarely do they include things like demographics, they think it is all money supply and interest rates. They assume all consumers are the same, they don't differentiate between a single 25 year old and married 48 year old with 3 teen kids, and to them they all spend the same way all the time. Read the Myth of the Rational Market and the Black Swan to see why economists are where they are now.
Demographics also predicted the market peak, I did a report for clients in 2005 saying that 2006 is the peak and we have 10 years of down. This is because the average person buys their move-up home at age 43 and we had more and more 43 years olds every year through 2006. Now we are seeing a massive drop of people turning 43 through 2017.
As I said affluent people peak in spending at 54 so you will still see that cohort spend, the problem is there are not enough of them.
I am positive long term especially in emerging markets but they will suffer short term as we suffer. Just as Japan did during even as their exports skyrocketed, their boomer peak was 1990 BTW. Deflating bubbles are painful.
I understand the inflation worry but the cost of infrastructure build out is inflationary when we have a young population, not one with a shrinking need for current infrastructure. For other nations they are laying cheap fiber, not expensive copper and the infrastructure is in place to produce newly inexpensive goods, plus the next “cheap labor” will be Africa, so we don’t have a shortage of cheap labor. We will see inflation, just after the bubble has deflated, they always do.
Civil discussions are fun, that is how we all learn.
Well, I agree with everything you said since you have compelling numbers that make sense to support them. But what about housing in other countries? They seem to be building a lot of new apartments and homes, and based on myself (LOL), I see a rising demand for things like decorative items etc once the buyers become more settled in their houses.
A couple of billion people even buying cheap furniture I think would increase the prices for wood, aluminum and steel. Any thoughts?
Also, I had trouble deciphering the tables from the list you posted. What's the type of work that you do? Just curious. Also, what makes you think that the housing market will stop decreasing in 2016?
Well, I agree with everything you said since you have compelling numbers that make sense to support them. But what about housing in other countries? They seem to be building a lot of new apartments and homes, and based on myself (LOL), I see a rising demand for things like decorative items etc once the buyers become more settled in their houses.
A couple of billion people even buying cheap furniture I think would increase the prices for wood, aluminum and steel. Any thoughts?
Also, I had trouble deciphering the tables from the list you posted. What's the type of work that you do? Just curious. Also, what makes you think that the housing market will stop decreasing in 2016?
It all depends on how fast those two billion move into "modern living", if it happens quickly and we do focus on old style materials then we could so those prices rise but it doesn't necessarily mean we would see across the board inflation.
Using the Japan example of a country that peaked in spending due to demographics, they have had a TOTAL inflation of about 5% over the same time we had a total inflation of 55%. Even though they imported goods such as wood, steal and oil, their demographic forces bucked the inflationary trend worldwide.
Once we deflate we will see inflationary spikes but not like the 70's until we have another baby boom enter the workforce.
Housing should bottom before 2016 if we have a fast capitulation down but I don't see a big turn around until at least 2017. At that stage we will see a drop in apartment housing as the echo boomers stat leaving apartments and buying condos and houses. This could be the turnaround off the bottom but the number of vacancies and boomers selling will not cause it to skyrocket. We have probably seen the peak in housing for a generation.
I don't think most people have figured out the economic black hole that demographics, stupid fiscal policy, lack of personal financial responsibility, overpopulation, and resource depletion is creating. Let's start with the Baby Boomers. Directly and indirectly, they benefited from the high productivity and accumulated capital of their parents. Directly through inheritances and indirectly by the economic productivity their parents created. What have we Boomers done with that legacy? Largely p***ed it away on nonproductive spending, overconsumption, and nonproductive speculation. Simply put, we Boomers are eating up a good chunk of both the accumulated capital of our parents, as well as our own--and we are even indebting future generations, to boot. As we Boomers retire, we are not only going to further indebt later generations (because those later generations will be the ones paying to Social Security to pay the Boomers' checks--way to go, government), but the Boomers will have to liquidate many of their "investments" in order to survive. Well, who is going to buy all of those stocks, real estate, etc. that the Boomers will have to liquidate? The coming generations? They won't have the money. Expect the stock and real estate markets to take a big, long-term digger when the Boomers begin liquidating their assets en masse in order to live.
The Gen X'er's, etc.? They are even less financially responsible than their parents. They are, for the most part, already lousy savers, horrible at managing their own personal financial affairs, and often of an even bigger "entitlement" mentality than their parents. Plus, they are going to have to carry the burden of not only their own financial irresponsibilities--both individually and collectively--but also the "debt-overhang" created by their parents.
The cherry on top is resource depletion, which means that everything people have to buy to survive is going to increase in real cost over the long-term--and, in some cases, become short in supply to the point of being unavailable to some people or groups. Contrary to past generations, additional population growth will not grow us economically out of our problems. Resource constraints will mean that population growth will actually make our economic problems worse and more intractable.
Bottom line is that America is headed for a long-term decline in material living standards that is largely inevitable. For most Baby Boomers, it may mean that "retirement" as we know it now will be long-delayed if it occurs at all. For those younger, it will mean harsh declines in living standards very likely lasting for their lifetimes, and keen competition for many to be able to even survive economically at a subsistence level. I used to think that a very dramatic shift in our economic, social, and demographic policies in this country might avert such harsh outcomes, but I think our continuing bad economic behavior and refusal to acknowledge some unavoidable but ugly truths about what we have done to ourselves has foreclosed the opportunity to avoid some very savage economic times that will persist for a very long time. That does not mean that we should not change course socially and economically in this country to a more sustainable and responsible model--we must, if we expect this country to survive at all, but it does mean that we have passed the point of any solution to our problems that will not be both very painful and very protracted.
Keep laughin and jokin slackjaw, because laughter is good for the soul. Nonetheless, your laughter does not change the reality that jazzlover speaks of. People like you, and society at large still believe in the wizard, but a growing number of us have seen the man behind the curtain. Yet when we attempt to expose him, people like you just laugh. The smoke and the mirrors are far more entertaining.
Well, I agree with everything you said since you have compelling numbers that make sense to support them. But what about housing in other countries? They seem to be building a lot of new apartments and homes, and based on myself (LOL), I see a rising demand for things like decorative items etc once the buyers become more settled in their houses.
A couple of billion people even buying cheap furniture I think would increase the prices for wood, aluminum and steel. Any thoughts?
Also, I had trouble deciphering the tables from the list you posted. What's the type of work that you do? Just curious. Also, what makes you think that the housing market will stop decreasing in 2016?
I think this post is so smart!! I honestly think you are very very smart and have a bit of Frank Zappa humor. You know I read between the lines. I think its funny too!!! Plastic can be cheap furniture!!!!
I think this post is so smart!! I honestly think you are very very smart and have a bit of Frank Zappa humor. You know I read between the lines. I think its funny too!!! Plastic can be cheap furniture!!!!
That was my point about old style materials. There are tons of cheap or recycled materials that can be used in building houses and other goods. The emerging countries don’t need to rely on wood and steal.
That was my point about old style materials. There are tons of cheap or recycled materials that can be used in building houses and other goods. The emerging countries don’t need to rely on wood and steal.
Plastic can be cheap and make some cool stuff.
Yep like the cool flotillas of plastic waste in the oceans of the world or the clots of garbage floating around in space..but you're right: A lot of modern apartments in Asia seem to have the 'white box' look and are filled with pressboard cabinets, plastic furniture etc.
I just figured people did that because it was inexpensive, but as they stay in the apartments longer they'll want a place that looks more beautiful.
At least human beings seem to have been able so far to think our way out of the messes we have made. IMO plastic/celluloid was one of the worst inventions we've made as the race of man, but with recycling, maybe we can patch up that boo boo too.
But I'm still not sure what to think. Here is more anecdotal information from Moi:
1. Taxes - My assessments went up AGAIN this year.
2. Gas costs more. Way more.
3. Rents are increasing - According to a recent story in the Baltimore Sun.
The only decreases I have notices are:
1. Services - flooring, construction etc. It's easier than in previous years to get cheap good work.
2. WINE! - I can get good wine for under 12 bucks again. Is there a glut...maybe I should start a wine cellar.
(Also, I looked at the tables you posted, but pls don't make me look at them again! )
Is it your opinion that there will be across the board deflation or do you think there will be only a deflation in the price of US real-estate?
Yep like the cool flotillas of plastic waste in the oceans of the world or the clots of garbage floating around in space..but you're right: A lot of modern apartments in Asia seem to have the 'white box' look and are filled with pressboard cabinets, plastic furniture etc.
I just figured people did that because it was inexpensive, but as they stay in the apartments longer they'll want a place that looks more beautiful.
At least human beings seem to have been able so far to think our way out of the messes we have made. IMO plastic/celluloid was one of the worst inventions we've made as the race of man, but with recycling, maybe we can patch up that boo boo too.
But I'm still not sure what to think. Here is more anecdotal information from Moi:
1. Taxes - My assessments went up AGAIN this year.
2. Gas costs more. Way more.
3. Rents are increasing - According to a recent story in the Baltimore Sun.
The only decreases I have notices are:
1. Services - flooring, construction etc. It's easier than in previous years to get cheap good work.
2. WINE! - I can get good wine for under 12 bucks again. Is there a glut...maybe I should start a wine cellar.
(Also, I looked at the tables you posted, but pls don't make me look at them again! )
Is it your opinion that there will be across the board deflation or do you think there will be only a deflation in the price of US real-estate?
I do like your Austin Power type stools.
I saw that article from CNN, that practice has been around a long time.
When I talk about inflation I am talking more about systemic overall trends, not isolated instances of price increases of goods that have non-monetary factors influencing the price such as weather or speculation.
Higher costs of taxes, gas, etc will cause deflation to be even deeper, we will have less money to spend on consumer goods and consumer goods is what keeps our economy growing.
I think deflation will be widespread along with a corresponding destruction in debts and assets. It is a rigged system we are in sadly and since the banks control everything and they have assets, they don't want inflation that would make the value of their asset (our debt) less valuable as we would have more dollars to pay fixed debts.
As long as they can keep most of our debts in place or create livable payback schedules they are happy.
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..but you're right: A lot of modern apartments in Asia seem to have the 'white box' look and are filled with pressboard cabinets, plastic furniture etc. 
. I do have two really cool fiberglass stools in my house, though. 
) 
