Comments on: Consumers lag but business confidence builds on recovery

By: EdMcGon

EdMcGon — Mon, 01 Mar 2010 13:07:37 +0000

Here’s the deal folks. As long as we have housing prices going down, we have a deflationary effect caused by the destruction of wealth which is contained in that real estate. We would need a huge amount of CPI inflation to counteract that (that would create other problems).

Frankly, I’m not aware of any historical precedent for this specific economic situation.

Ideally, our government should be deregulating the banks to allow them to open their credit spigots. Mind you, that is NOT my suggestion, but merely the most effective way of getting our economy back to normal. Absent that solution, the only way to get the economy back to normal is to pour money on consumers, and hope that their temporary spending spree will snowball.

By: georic

georic — Sun, 28 Feb 2010 21:26:43 +0000

what made for such a buoyant economy was that you gave money to people for them to buy houses and whatever, which they could never have repaid.
States are penniless, we don’t want to pay more taxes, demand can at best keep level and I have a growing itch it will soon be time to jump to the side lines.
Warren goes to work tap dancing and says you should buy when others fear: Jim, any idea what?

By: bsdgv

bsdgv — Sun, 28 Feb 2010 15:57:09 +0000

The BusinessWeek article that goes with my previous post:
http://www.businessweek.com/magazine/content/10_10/b4169016613365.htm
Just to make sure you don’t think I am making things up… (Some people do.)

There is always politics in everything discussed in this site. Why is it an issue to determine that there inflation in this country. Who are the ones who claim inflation? Conservatives or liberals? Republicans or Democrats? Who is in the White House? Who benefits in the next elections if people are scared there is inflation? Who benefits if economy gets worse as a result of non-stimulation for fear of inflation? It’s all about politics…

By: bsdgv

bsdgv — Sun, 28 Feb 2010 15:38:37 +0000

OK… Officially, there is no deflation in America because the CPI index went up .2% in January. Well, I am not sure if that .2% would be -.2% if they recorded the price of potatoes, instead of onions. What I am trying to say is these numbers come with + or – error limits and we might as well be officially deflating.

Some people say the price of commodities (namely food and energy) is important too. Price of commodities while China is trying to deflate its own bubble? Come on!…

Some people say it is unfair in this housing mess to give sheltering costs 30% weight (in the calculation of CPI) . Let’s take housing out, include food and energy but let’s count the percentage of items that went down in price instead of their contributions. 44% of the items in the PCE index went DOWN in price!

Remember, guys (and gals)… We are not debating inflation/deflation to tell each other how our living standards got worse or better. We trying to see if the economy is picking up. 27.4% of our economic capacity is lying idle. It is insane to expect the businesses to raise prices in this climate. It is not ‘manufacture it and they will buy.’ It is ‘show me the money.’

By: javos

javos — Sun, 28 Feb 2010 13:28:29 +0000

Inflation is here?!! Where pray tell? I’ve just bought new car, re-roofed my home, added a deck and sunroom..all at bargain prices! A friend just bought a new Acer notebook for $400. An Alaskan cruise that I took last year is now 30% cheaper. Restaurants are offer twofer specials right and left. My wife is finding attractive bargains in clothing. The best cuts of beef are frequently on special. Where do you see “nascent” inflation? I see only “deflation”.