This never ends : “CA Foreclosure Prevention Act Coming Up”

[patientrenter]

I am glad to see Piggs are beginning to see what’s happening:

1. Government is committed to do “whatever it takes” to allow homeowners to hold onto their massive capital gains accumulated since the early 1980’s.

2. In the short run, the levers that will be pulled all involve generating lots of easy (taxpayer-funded) money for people who buy overpriced homes.

3. In the long run, the easy money levers will generate enough inflation to sustain existing nominal home prices that are unsustainable in real terms. Our govt will make sure this becomes well established before “realizing” that inflation is a menace once again and starts, very slowly and ineffectually for many years, fighting it.

Who gains and who loses? Well, people who bought their first home a long time ago are going to do well. The more expensive a home they bought, and the more borrowed money they used, the better off they will be. People who bought more recently are not going to do well or terribly badly either – they will get no great gains and no great losses, either.

People who buy other real assets without leverage will do neither all that well nor really badly. Inflation will be neutral to them, except that it will increase their tax bill on phantom inflation-driven nominal price gains.

People who buy real assets using borrowed money at fixed interest rates will do OK, as they get to default, in effect, on part of their debt due to inflation.

People who save in banks and other fixed dollar instruments will lose – big. Every period of history in unique in some respects, but I’d encourage all Piggs (many of whom are too young to remember the 1970s’) to become familiar with the financial history of the 1970’s and later. We might be about to re-live some of what happened then.

[paranoid]

patientrenter, you draw your conclusion too quickly by assuming that hyperinflation is or will soon occur.

What I’m seeing instead is DEflation worldwide, not inflation, nor hyperinflation. I believe in short term, more DEflation will occur. We will have plain time to see housing price drop to a much lower level before it starts to increase again. Sure US is not Japan. But there are a lot of similarities.

I believe most people, including most piggs, will be surprised by how low the housing price will go.

[paranoid]

patientrenter, you draw your conclusion too quickly by assuming that hyperinflation is or will soon occur.

What I’m seeing instead is DEflation worldwide, not inflation, nor hyperinflation. I believe in short term, more DEflation will occur. We will have plain time to see housing price drop to a much lower level before it starts to increase again. Sure US is not Japan. But there are a lot of similarities.

I believe most people, including most piggs, will be surprised by how low the housing price will go.

[paranoid]

patientrenter, you draw your conclusion too quickly by assuming that hyperinflation is or will soon occur.

What I’m seeing instead is DEflation worldwide, not inflation, nor hyperinflation. I believe in short term, more DEflation will occur. We will have plain time to see housing price drop to a much lower level before it starts to increase again. Sure US is not Japan. But there are a lot of similarities.

I believe most people, including most piggs, will be surprised by how low the housing price will go.

[paranoid]

patientrenter, you draw your conclusion too quickly by assuming that hyperinflation is or will soon occur.

What I’m seeing instead is DEflation worldwide, not inflation, nor hyperinflation. I believe in short term, more DEflation will occur. We will have plain time to see housing price drop to a much lower level before it starts to increase again. Sure US is not Japan. But there are a lot of similarities.

I believe most people, including most piggs, will be surprised by how low the housing price will go.

[paranoid]

patientrenter, you draw your conclusion too quickly by assuming that hyperinflation is or will soon occur.

What I’m seeing instead is DEflation worldwide, not inflation, nor hyperinflation. I believe in short term, more DEflation will occur. We will have plain time to see housing price drop to a much lower level before it starts to increase again. Sure US is not Japan. But there are a lot of similarities.

I believe most people, including most piggs, will be surprised by how low the housing price will go.

[CA renter]

[quote=paranoid]patientrenter, you draw your conclusion too quickly by assuming that hyperinflation is or will soon occur.

What I’m seeing instead is DEflation worldwide, not inflation, nor hyperinflation. I believe in short term, more DEflation will occur. We will have plain time to see housing price drop to a much lower level before it starts to increase again. Sure US is not Japan. But there are a lot of similarities.

I believe most people, including most piggs, will be surprised by how low the housing price will go.[/quote]

The govt is definitely trying to turn us into a Japan.

[CA renter]

[quote=paranoid]patientrenter, you draw your conclusion too quickly by assuming that hyperinflation is or will soon occur.

What I’m seeing instead is DEflation worldwide, not inflation, nor hyperinflation. I believe in short term, more DEflation will occur. We will have plain time to see housing price drop to a much lower level before it starts to increase again. Sure US is not Japan. But there are a lot of similarities.

I believe most people, including most piggs, will be surprised by how low the housing price will go.[/quote]

The govt is definitely trying to turn us into a Japan.

[CA renter]

[quote=paranoid]patientrenter, you draw your conclusion too quickly by assuming that hyperinflation is or will soon occur.

What I’m seeing instead is DEflation worldwide, not inflation, nor hyperinflation. I believe in short term, more DEflation will occur. We will have plain time to see housing price drop to a much lower level before it starts to increase again. Sure US is not Japan. But there are a lot of similarities.

I believe most people, including most piggs, will be surprised by how low the housing price will go.[/quote]

The govt is definitely trying to turn us into a Japan.

[CA renter]

[quote=paranoid]patientrenter, you draw your conclusion too quickly by assuming that hyperinflation is or will soon occur.

What I’m seeing instead is DEflation worldwide, not inflation, nor hyperinflation. I believe in short term, more DEflation will occur. We will have plain time to see housing price drop to a much lower level before it starts to increase again. Sure US is not Japan. But there are a lot of similarities.

I believe most people, including most piggs, will be surprised by how low the housing price will go.[/quote]

The govt is definitely trying to turn us into a Japan.

[CA renter]

[quote=paranoid]patientrenter, you draw your conclusion too quickly by assuming that hyperinflation is or will soon occur.

What I’m seeing instead is DEflation worldwide, not inflation, nor hyperinflation. I believe in short term, more DEflation will occur. We will have plain time to see housing price drop to a much lower level before it starts to increase again. Sure US is not Japan. But there are a lot of similarities.

I believe most people, including most piggs, will be surprised by how low the housing price will go.[/quote]

The govt is definitely trying to turn us into a Japan.

[patientrenter]

[quote=CA renter][quote=paranoid]patientrenter, you draw your conclusion too quickly by assuming that hyperinflation is or will soon occur.

What I’m seeing instead is DEflation worldwide, not inflation, nor hyperinflation. I believe in short term, more DEflation will occur. We will have plain time to see housing price drop to a much lower level before it starts to increase again. Sure US is not Japan. But there are a lot of similarities.

I believe most people, including most piggs, will be surprised by how low the housing price will go.[/quote]

The govt is definitely trying to turn us into a Japan.
[/quote]

I hope what I said was clear about long term versus short term: In the short term, home prices are dropping due to market forces, and that is only slowly being matched by govt free money tactics. So prices will drop more. But in the long run, our govt (driven by the perceived interests of the majority of voters) will drive for inflation, and has the tools to achieve it. For the full story told more eloquently, just look up Rich’s article about why we will not be going down the Japan road.

But I recognize all this is guesswork, and there is a difference of opinion. I like the Pigg group, and I am just trying to make sure not too many are blindsided by what I consider as the more likely outcome. Many of you are in the IT field, and have been on the sharp end of wage competition from newly emerging countries, and that produced relentless downward pressure on real and dollar incomes. For some younger folks for whom that phase of our economic history dominates their personal experience, it probably seems that no other environment is possible. But the truth is that no environment lasts unchanged forever. The pressure on real wages will probably continue, but inflation will devalue the dollar, and that will mean the impact on nominal wages will be less.

An international company deciding where to get its supply of programmers doesn’t give a *** what the nominal dollar wages are – all that matters is the relative cost adjusted for currency exchange rates. If inflation caused the dollar to lose half its real purchasing power tomorrow, along with half its value relative to other currencies, then US programmers could be paid twice as much and leave the companies using them in exactly the same position they are today when deciding which countries to use. I know, because I have to look at making those decisions for my own IT dept.

[patientrenter]

[quote=CA renter][quote=paranoid]patientrenter, you draw your conclusion too quickly by assuming that hyperinflation is or will soon occur.

What I’m seeing instead is DEflation worldwide, not inflation, nor hyperinflation. I believe in short term, more DEflation will occur. We will have plain time to see housing price drop to a much lower level before it starts to increase again. Sure US is not Japan. But there are a lot of similarities.

I believe most people, including most piggs, will be surprised by how low the housing price will go.[/quote]

The govt is definitely trying to turn us into a Japan.
[/quote]

I hope what I said was clear about long term versus short term: In the short term, home prices are dropping due to market forces, and that is only slowly being matched by govt free money tactics. So prices will drop more. But in the long run, our govt (driven by the perceived interests of the majority of voters) will drive for inflation, and has the tools to achieve it. For the full story told more eloquently, just look up Rich’s article about why we will not be going down the Japan road.

But I recognize all this is guesswork, and there is a difference of opinion. I like the Pigg group, and I am just trying to make sure not too many are blindsided by what I consider as the more likely outcome. Many of you are in the IT field, and have been on the sharp end of wage competition from newly emerging countries, and that produced relentless downward pressure on real and dollar incomes. For some younger folks for whom that phase of our economic history dominates their personal experience, it probably seems that no other environment is possible. But the truth is that no environment lasts unchanged forever. The pressure on real wages will probably continue, but inflation will devalue the dollar, and that will mean the impact on nominal wages will be less.

An international company deciding where to get its supply of programmers doesn’t give a *** what the nominal dollar wages are – all that matters is the relative cost adjusted for currency exchange rates. If inflation caused the dollar to lose half its real purchasing power tomorrow, along with half its value relative to other currencies, then US programmers could be paid twice as much and leave the companies using them in exactly the same position they are today when deciding which countries to use. I know, because I have to look at making those decisions for my own IT dept.

[patientrenter]

[quote=CA renter][quote=paranoid]patientrenter, you draw your conclusion too quickly by assuming that hyperinflation is or will soon occur.

What I’m seeing instead is DEflation worldwide, not inflation, nor hyperinflation. I believe in short term, more DEflation will occur. We will have plain time to see housing price drop to a much lower level before it starts to increase again. Sure US is not Japan. But there are a lot of similarities.

I believe most people, including most piggs, will be surprised by how low the housing price will go.[/quote]

The govt is definitely trying to turn us into a Japan.
[/quote]

I hope what I said was clear about long term versus short term: In the short term, home prices are dropping due to market forces, and that is only slowly being matched by govt free money tactics. So prices will drop more. But in the long run, our govt (driven by the perceived interests of the majority of voters) will drive for inflation, and has the tools to achieve it. For the full story told more eloquently, just look up Rich’s article about why we will not be going down the Japan road.

But I recognize all this is guesswork, and there is a difference of opinion. I like the Pigg group, and I am just trying to make sure not too many are blindsided by what I consider as the more likely outcome. Many of you are in the IT field, and have been on the sharp end of wage competition from newly emerging countries, and that produced relentless downward pressure on real and dollar incomes. For some younger folks for whom that phase of our economic history dominates their personal experience, it probably seems that no other environment is possible. But the truth is that no environment lasts unchanged forever. The pressure on real wages will probably continue, but inflation will devalue the dollar, and that will mean the impact on nominal wages will be less.

An international company deciding where to get its supply of programmers doesn’t give a *** what the nominal dollar wages are – all that matters is the relative cost adjusted for currency exchange rates. If inflation caused the dollar to lose half its real purchasing power tomorrow, along with half its value relative to other currencies, then US programmers could be paid twice as much and leave the companies using them in exactly the same position they are today when deciding which countries to use. I know, because I have to look at making those decisions for my own IT dept.

[patientrenter]

[quote=CA renter][quote=paranoid]patientrenter, you draw your conclusion too quickly by assuming that hyperinflation is or will soon occur.

What I’m seeing instead is DEflation worldwide, not inflation, nor hyperinflation. I believe in short term, more DEflation will occur. We will have plain time to see housing price drop to a much lower level before it starts to increase again. Sure US is not Japan. But there are a lot of similarities.

I believe most people, including most piggs, will be surprised by how low the housing price will go.[/quote]

The govt is definitely trying to turn us into a Japan.
[/quote]

I hope what I said was clear about long term versus short term: In the short term, home prices are dropping due to market forces, and that is only slowly being matched by govt free money tactics. So prices will drop more. But in the long run, our govt (driven by the perceived interests of the majority of voters) will drive for inflation, and has the tools to achieve it. For the full story told more eloquently, just look up Rich’s article about why we will not be going down the Japan road.

But I recognize all this is guesswork, and there is a difference of opinion. I like the Pigg group, and I am just trying to make sure not too many are blindsided by what I consider as the more likely outcome. Many of you are in the IT field, and have been on the sharp end of wage competition from newly emerging countries, and that produced relentless downward pressure on real and dollar incomes. For some younger folks for whom that phase of our economic history dominates their personal experience, it probably seems that no other environment is possible. But the truth is that no environment lasts unchanged forever. The pressure on real wages will probably continue, but inflation will devalue the dollar, and that will mean the impact on nominal wages will be less.

An international company deciding where to get its supply of programmers doesn’t give a *** what the nominal dollar wages are – all that matters is the relative cost adjusted for currency exchange rates. If inflation caused the dollar to lose half its real purchasing power tomorrow, along with half its value relative to other currencies, then US programmers could be paid twice as much and leave the companies using them in exactly the same position they are today when deciding which countries to use. I know, because I have to look at making those decisions for my own IT dept.

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