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Just last night there was a piece on evening news with stock option
millionaires lamenting unaffordable housing due to opening bids $100k
above asking price. The stock option millionaires are competing for the
same goods and services the rest of us use and guess what - prices are
going up. Construction costs here are up 30% this year and 4 golf course
developments announced during the past 3 months will nearly double the
population of our remote area (I expect this presages another national
real estate bust). Local fast food outlets are begging for counter help
at $8-$10 per hour and that's with ski season a bust because we didn't
get more than a smattering of snow. Local HMO raised renewal rates 44%
last year and 40% this year. Gas has run from 89 cents to over 160 in
just 6 months (this isn't CA).
Earl
----- Original Message -----
From: "Ira Tunik" <ist@xxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Cc: <realtraders@xxxxxxxxxxxxxxx>
Sent: Wednesday, March 08, 2000 9:56 AM
Subject: [RT] Re: Alan Greenscam, Public ENEMY Number ONE
> Your right, there is no inflation. Gas at $2 isn't inflationary,
Medical
> insurance up 18% isn't inflationary, housing costs up 16% to 40%
depending
> upon where you live isn't inflationary, Dentist visit up 25% not
> inflationary, restaurant prices up 15% to 25% depending on where you
are at,
> (exclude McD and Wendy's for you gourmet eaters), when inflation hits
are we
> going to be in big trouble. Ira
>
> Daniel Goncharoff wrote:
>
> > It is important to understand the problem faced by Greenspan.
> >
> > The market goes up in an 'irrationally exuberant' way. He says he
will
> > take away the punch bowl as soon as he sees signs of the party
getting
> > out of hand, ie, when he sees inflation rise.
> >
> > The economy keeps growing at a healthy pace. But inflation doesn't
rise.
> > Instead, the increase in wealth from the stock market is reinvested,
not
> > spent.
> >
> > This leaves Greenspan with a dilemma. Does he raise interest rates
> > anyway, risking stifling the economy and creating a deflationary
> > environment? Or does he wait for signs of the stock market bubble
> > translating into artificially higher asset prices?
> >
> > Obviously, he has done the latter. But inflation is not there. The
> > wealth effect is much smaller than economists would have expected.
> >
> > The FT recently had an article saying that spending patterns of
> > individuals reflect a 75% expectation of a serious market downturn.
> >
> > Perhaps it would have been better to assume that raising interest
rates
> > would not have an important economic impact. Perhaps not...
> >
> > Regards
> > DanG
>
>
>
>
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