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Surely there are pockets of weakness, look at the devastating deflation
farmers have seen.
The fact is, this country has experienced the greatest speculative mania
since
the Tulip mania of old, many of the smaller cap stockholders are getting
their due, but the major
averages are still defying gravity, along with real estate prices in much of
the US.
Wage pressure is also rampant, a few examples:
Union electricians in the San Francisco area have received a $10 per hour
raise over the next three years ($3 + $ 3 + $4). They already make over $38
per hour now. In three years they will make $48 per hour. That is 100k
annual pay.
Another example:
I've also observed inflation many times recently, such my own health care
insurance up $30.00 a month, a friend of mine with a family of four [whose]
policy jumped $180.00 a month. Recently I got an estimate on getting my
house painted, [the painter] said he couldn't do it for six weeks, after six
weeks he informed me their union contract had just gotten a boost and would
add $8.00 times 200 hrs. to the bill. He also said the price of paint had
recently gone up too. A similar thing happened when I hired an electrician a
few months back, got an estimate, waited two months for the work to start
because his schedule was backed up, then two days before the work started he
called to inform me their labor rate had gone up ten dollars an hour and the
job would cost an additional $100.00.
Another:
These two episodes from the wacky world of health care show how inflation
psychology can be contagious. First, a reader's note about rising insurance
premiums:
My Regence Blue Shield health insurance premium just jumped over 25% (not
an individual specific rate increase either). I'm only 30 years old. But
there's no inflation so I don't have to worry.
Another reader sent in this note about the affects of rising wages on
premiums and inflation:
Another data point for you: A friend who works for a major integrated HMO
told me that they recently concluded national bargaining with staff for pay
raises -- 5 year contract term. Depending on specialty, RNs are getting in
the range of 7 percent/6 percent/5 percent/5 percent/5 percent TOTAL raises
over 5 years. That is about a 32% raise over 5 years. Some specialties are
getting more. What do you think will happen to premiums?
Another:
in Metro Denver area. One of the five-year leases is up for renewal in
January. Based on the comparables, the rent increase to the little high-tech
company is to be about 100 percent. So roughly 15 percent per year for five
years. This unit is in an area of a large industrial park development where
there are good comparables and good choices.
and....
Schools can't find enough bus drivers, even after boosting starting pay to
$11.50 an hour. Last month, a job fair was held at the Travis County
Community Justice Center, a state jail, that attracted headhunters who
pitched jobs paying as much as $25 an hour, plus benefits that included
retirement plans, company cars and the promise of career advancement, to
many of the inmates scheduled to be released in the next two months. .
.economist Angelos Angelou.
"United Airlines became the fourth U.S. airline in two days to boost fares
$20 for roundtrip domestic flights, as airlines try to make up for a
27-percent rise in jet fuel prices the past month." I thought the boys at
the Fed just said oil price rises wouldn't impact inflation.
. There is no inflation. I live in Manhattan. The cost of co-ops has only
risen by 45 percent the last two years (but that's OK due to productivity
gains). The cost of gas to the country house has doubled in a year (but
that's OK since the government drops energy prices from its CPI index).
Heating costs are soaring for the country house (but that's OK since we heat
with electricity, our bills might only rise by 40 percent). Our daughter
goes to private school with costs going up 10 percent a year (but that's OK,
since they have been going up by 10 percent each year for the last 10
years). My basketball season tix are up by 10 percent this year (but that's
OK since they are up 487 percent since 1990).
No inflation my arse. The pied piper Greenspan is leading the sheep right
to the edge of the cliff, when will they go over ?
Wish I could help with a well deserved shove.
----- Original Message -----
From: "The Doctor" <droex@xxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Cc: <realtraders@xxxxxxxxxxxxxxx>
Sent: Thursday, September 21, 2000 10:08 AM
Subject: [RT] Re: Oil inflation
> In the greater Chicago area .... not the city itself .... prices are
> relatively unchanged for the last decade. The city itself has gone nuts
> with the bull market, but you can't give a house away in many of the
> burbs.
>
> Gary Fritz wrote:
>
> > > Huh ? Yes, check the dismal scientist site, prices did rise over
> > > 15% in California last year. Over 40% in the San Jose area. If
> > > that aint RAMPANT asset price inflation, I sure don't know what is.
> >
> > James. Did you READ what Dennis wrote? Yes, housing inflation in
> > the Bay area is insane. But the Bay area is an ANOMALY. Look at the
> > Dismal Scientist site again and you'll see San Jose has the HIGHEST
> > rate of housing inflation in the country. (If I remember right,
> > anyway. The site seems to be down now.)
> >
> > As Dennis pointed out, the AVERAGE housing inflation rate, across the
> > country, is closer to 3-5%. Which is NOT "RAMPANT asset price
> > inflation" by any stretch of the imagination.
> >
> > If you have 100 people and ONE of them has a temperature of 106 degF,
> > do you slap all 100 of 'em into the hospital? Of course not. And if
> > ONE small area of the country has housing hyperinflation, should you
> > expect it to appear across the entire country? Of course not. Sure,
> > it's possible the Bay area's "fever" could spread, but that would
> > require fundamental changes in the economy around the country, and
> > even then it's hardly likely to spread in the same degree as found in
> > California.
> >
> > If the entire country was in the 15-40% range, that would indeed be a
> > major problem. If isolated pockets are in the 15-40% range, that is
> > a problem ONLY for the people who **CHOOSE** to live there, and it
> > should not be a driver for national economic policy.
> >
> > If you don't like the housing inflation in the Bay area, go live
> > somewhere else. But quit calling people stupid because they don't
> > think the Bay area is the only thing in the whole freakin' country.
> >
> > Gary
>
>
>
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