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Unfortunately the 3/4-1% increase isn't going to be the last one......we can expect additional rate increases each month into 2023.....I don't see it stopping until mortgage rates are 8-10%
The inflation beast isn't going to be tamed until all the massive spending is stopped and it won't stop at least until the end of January.
I don't expect to really see the market and economy to start to take significant hits until the end of the 1st quarter into the 2nd..........I'm expecting at least two years of significant pain.....the poor and those on fixed incomes are going to be hurt the most.
The three people you need to pay attention to are Larry Summers, Larry Kudlow and not Paul Krugman.
Back in July of 2022, entitled "I Was Wrong About Inflation" https://www.nytimes.com/2022/07/21/o...inflation.html , Paul Krugman said:
"Looking ahead, the economy is currently cooling off — the decline in first quarter G.D.P. was probably a quirk, but overall growth seems to be running below trend. And private sector economists I talk to mostly believe that inflation either has already peaked or will peak soon. So things may seem less puzzling a few months from now."
And, he is still wrong. I factually knew this wasn't "transitory inflation". No-way-no-how! Fact: unemployment needs to go up, and people need to be worried about their livelihood. Until there is fear, I expect inflation to continue.
This is what happens when you have a government that just prints money. And I'm talking about both administrations. It's sickening. There is no free lunch, people.
The three people you need to pay attention to are Larry Summers, Larry Kudlow and not Paul Krugman.
I'm sure they're smarter than me, but I formed tremendous negative respect for Summers after seeing PBS Frontline's "The Warning" (can be watched in full here).
Summary: around 1998, then Commodity & Futures Trading Commission (CFTC) chair Brooksley Born was concerned about exotic derivatives (credit default swaps, etc) being traded "over the counter" with no visibility into counterparty risk (the ability of anyone to pay their bets; proper reserves). She saw it as a systemic threat to the system and sought to regulate it as futures contracts (which they are, essentially.). Greenspan, Ruben and Summers destroyed her. (Ten years later, the system imploded due entirely to the opaque counterparty risk -- most notably AIG who couldn't pay its bets, was over-optimistic about the future.).
I know there were more factors involved in that mess. But, just that one sensible thing (insight into who's beholding to whom, something we do in stock trading, grain, oil, etc.)? I don't see how Summers wasn't "cancelled" due to that. Instead, Obama hired him to lead the recovery(!) in 2009. That looked to me like the perfect example of how the system is rigged. The Fed Reserve intervenes in the market supposedly to smooth things out for us, but causes a lot of problems itself. It became "the buyer of last resort" of all the toxic assets back then. The economy did pretty good until Covid, but the Fed refused to even talk about when they would unwind their balance sheet (containing this unprecedented amount of market holdings). Then they cranked it up even higher during covid. They use interest rates like theater when the real monster in the room is the balance sheet (all because they couldn't let the system crash in 2008, and couldn't stop the party around 2014. Tthere never seems to be any accountability for these guys getting it wrong.).
Summers may know what he's talking about. But, I can't see him as anything other than a contemptible person for what he did in 1999, and deserves to carry that reputation far (far) more than he does. Almost nobody knows about his contribution to the 2008 disaster. He's treated like a perfect genius. A lot of these guys seem to wield their expertise politically. Economics is largely "conjuring." I think all these guys have biases that influence their what they read from the tea leaves. Summers displayed his back then. I don't see how he's escaped his own actions back then. He opposes sensible transparency of a risky market for no apparent reason other than the powerful people above him were opposed. How do we know his "insight" today isn't influenced similarly?
I'm not claiming to know what's going on. But, these guys seem to be pulled out for their sorcery skills (and who they know, or knew). There's no track record they're held to.
Back in July of 2022, entitled "I Was Wrong About Inflation" https://www.nytimes.com/2022/07/21/o...inflation.html , Paul Krugman said:
"Looking ahead, the economy is currently cooling off — the decline in first quarter G.D.P. was probably a quirk, but overall growth seems to be running below trend. And private sector economists I talk to mostly believe that inflation either has already peaked or will peak soon. So things may seem less puzzling a few months from now."
And, he is still wrong. I factually knew this wasn't "transitory inflation". No-way-no-how! Fact: unemployment needs to go up, and people need to be worried about their livelihood. Until there is fear, I expect inflation to continue.
He is not wrong. Inflation has ended. Annualized MoM rate is around 3% and falling. Producer prices are actually going into deflation with dramatic cuts in commodities and transport. Today's housing reports were beyond worrisome. Housing prices are dropping like a rock all over the country - especially around here. We will all be talking recession and deflation in 6 months due to the Fed screwing everything up with the rate hikes and especially the assault on liquidity. A 25% drop in area home prices is a virtual certainty with the latest rate increase and, if they keep it up, 40% is possible.
Last edited by Ponderosa; 09-21-2022 at 03:10 PM..
He is not wrong. Inflation has ended. Annualized MoM rate is around 3% and falling. Producer prices are actually going into deflation with dramatic cuts in commodities and transport. Today's housing reports were beyond worrisome. Housing prices are dropping like a rock all over the country - especially around here. We will all be talking recession and deflation in 6 months due to the Fed screwing everything up with the rate hikes and especially the assault on liquidity. A 25% drop in area home prices is a virtual certainty with the latest rate increase and, if they keep it up, 40% is possible.
He is totally wrong......inflation has not ended.....give it a couple more months for the additional trillions being spent hit then we can revisit.......many of us were talking about inflation last year and in my case two years ago.
Show me anywhere from Nov 2021 through April 2022 where he acknowledged high inflation.......good luck with that.
He is not wrong. Inflation has ended. Annualized MoM rate is around 3% and falling. Producer prices are actually going into deflation with dramatic cuts in commodities and transport. Today's housing reports were beyond worrisome. Housing prices are dropping like a rock all over the country - especially around here. We will all be talking recession and deflation in 6 months due to the Fed screwing everything up with the rate hikes and especially the assault on liquidity. A 25% drop in area home prices is a virtual certainty with the latest rate increase and, if they keep it up, 40% is possible.
It depends on the topic. Housing is going down. Yep. Gas has too. I can list a few hundred more items like container pricing, etc. But a thousands other items are still going UP. Big picture: there is wage pressure on businesses. So they are busy padding their margin. I got another 3 emails in the last week announcing pending price hikes.
Dated Sept 13th, 2022. From https://time.com/nextadvisor/investi...-to-come-down/ "“Even with the likelihood that inflation has peaked, inflation will still remain elevated for some time, as supply chain issues persist and there is still plenty of instability with the Ukraine war, which has caused significant swings in energy prices,” says Zach Stein, chief investment officer at Carbon Collective, an investment advisory firm."
He is totally wrong......inflation has not ended.....give it a couple more months for the additional trillions being spent hit then we can revisit.......many of us were talking about inflation last year and in my case two years ago.
Show me anywhere from Nov 2021 through April 2022 where he acknowledged high inflation.......good luck with that.
I agree. Core inflation rose 0.4% month over month. Headline inflation was down but core inflation was up. Inflation is getting stickier.
Show me anywhere from Nov 2021 through April 2022 where he acknowledged high inflation.......good luck with that.
This is what I meant about the system seemingly rigged & no real accountability. Powell completely missed inflation, calling it "transitory" forever. What was the penalty for his failure? He was promptly renominated/approved to another term. Now he could be over correcting for his own failure (we won't know until we know). Because, what's the worst that could happen? He'll be nominated/approved to another term to do what? "try again?"
I can understand the usefulness of a central bank for international trade (account balances). But, setting interest rates, and buying bonds to prop up the market (after ignoring systemic risk because "it's just a free market, it's better not to intervene")? This stuff looks like kabuki theater. They're always driving from the rear-view mirror, correcting for what's already happened. How bad would it be to just deal with how it is (based upon the market)? (I'm pro-regulation. I'm not a free-market ideologue. But, the central bank as we know it is the complete antithesis of free-markets. I don't see what they add other than the necessary interface to global trade.
FWIW, per Bloomberg, the firm OpenDoor lost money on 76% of the homes it sold in Phoenix in August 2022, lost money on 55% of sales in Los Angeles, and overall lost money on 42% of all its sales in August 2022.
Excerpt: "The losses, which don’t include fees charged to customers or expenses incurred in renovating and marketing homes, have been looming since the housing market turned suddenly in recent months. Opendoor warned investors that it expected to lose as much as $175 million in adjusted earnings before interest, taxes, depreciation and amortization in the third quarter."
I guess that counts as an oops.
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This is what I meant about the system seemingly rigged & no real accountability. Powell completely missed inflation, calling it "transitory" forever. What was the penalty for his failure? He was promptly renominated/approved to another term. Now he could be over correcting for his own failure (we won't know until we know). Because, what's the worst that could happen? He'll be nominated/approved to another term to do what? "try again?"
I can understand the usefulness of a central bank for international trade (account balances). But, setting interest rates, and buying bonds to prop up the market (after ignoring systemic risk because "it's just a free market, it's better not to intervene")? This stuff looks like kabuki theater. They're always driving from the rear-view mirror, correcting for what's already happened. How bad would it be to just deal with how it is (based upon the market)? (I'm pro-regulation. I'm not a free-market ideologue. But, the central bank as we know it is the complete antithesis of free-markets. I don't see what they add other than the necessary interface to global trade.
It is impossible for these guys to take the politics out of their decisions......that explains why he didn't start
raising rates sooner or being more aggressive....the longer he takes and the weaker he acts the worse it
is all going to be and last longer.
The Russian economy continues to out perform experts expectations....the below might be one of the reasons.
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I factually knew this wasn't "transitory inflation". No-way-no-how! Fact: unemployment needs to go up, and people need to be worried about their livelihood. Until there is fear, I expect inflation to continue.
Opendoor loses money on flipped homes.
