[The-Shoveler]

I need to add this I think; obviously this is not an Ideal solution (inflation),
The best thing would have been never to have gotten here in the first place,
But that said,
It is what I think is the most likely to occur.

IMO.

[The-Shoveler]

It we calculated CPI like we did before 1981, most of that (food gas “the Price of homes” etc,,, ) would be part of the equation not just cheap imported stuff like it is now for the most part.

[The-Shoveler]

Deflation only helps people who have no debt, a constant fixed income (Retired mostly) or a very large bank account.
ie… not the majority of Americans or working people paying off debt.
Most DB pension plans have a fixed inflation adjustment cap (most are 2% some go up to 5%) I have never seen an unlimited one or at 8-10%.

Wages and everything except DB payouts.

[The-Shoveler]

I don’t have time to dig up the link to the interview, but admittedly Ben was talking more to the Record Stock market levels than housing saying that QE was not the cause.

But RE-Prices development fees and Tax’s do have a direct effect on the States bottom line.
And there is such a thing as supply and demand

Other than that (YOU WIN!!)
This is not going anywhere and I don’t have time.

[The-Shoveler]

Interest rates and enabling selling blocks of REO’s to Big investment houses.

Also Ben (official statement) denying that QE had any effect on Stock market and housing.

These aren’t the droids you’re looking for.

Really there was no pressure applied to banks (not).

In a larger sense, even without housing you would still need a fair amount of inflation to monetize these debts.

Housing is just the most direct way to inject money into state coffers.

[The-Shoveler]

I also believe that this was the entire reason for the Fed-Gov tireless reflating of the housing bubble.

THEY HAVE TO.

There is no other way to bail out local municipalities

[The-Shoveler]

When the City of Los Angeles goes the whole house of cards falls IMO.
It’s the 800 pound gorilla,

Note, also I believe 8-10% inflation would make all this a non-event if it were to last over 5 years.

The pension short fall would be reduced to a small amount, (so would DB pensions as well).

For a city with annual revenue of 3.6 billion, a 26 billion pension short fall seems insurmountable,
No fear, inflation will save the city…
• In 2012-13, Los Angeles’s pension costs are expected to rise to $1.3 billion, or 18% of the city’s budgeted expenditures. In 2002-03, just 10 years ago, pension costs were only $157 million, or 3% of total expenditures.
• Over the last decade, pension costs have grown at an annual average growth rate of 25% and have outpaced spending growth for every major area of the city’s budget.
• In 2012-13, the city of Los Angeles is expected to spend up to 32 cents toward pension benefits for every dollar it spends on total payroll for its employees. Employees will pay 9 cents for every dollar of payroll.
• From 2003 to 2012, the total official funding ratio of the city’s pension plans declined from 99.7% to 77.2%. Correspondingly, the city’s officially-reported unfunded liability increased from $87 million to $9.4 billion, more than a 100-fold increase.
• The growth in the unfunded liability and declines in the funding ratio are largely attributable to investment returns falling below the rate pension plans assumed they would earn (on average 7.75% per annum, net of expenses, on a portfolio consisting largely of bonds and equities). Over the last 10 years, LACERS, LAFPP, and LADWP pension trust funds have earned compound annual rates of return of 6.46%, 6.68%, and 5.11%, respectively. Over the last five years, these return rates were 0.68%, 1.06%, and 1.47%, respectively.
• Using Moody’s investment return assumption (5.5%), the unfunded liabilities would nearly triple to $25.9 billion.

[The-Shoveler]

I am going to go the other way on this,

IMO, 10 years from now, the great recession will be a very vague memory, minimum wage will be 15 dollars (or More). everyone will be talking about the great boom in energy production and automation we have had in the last 10 years that has allowed the U.S.A. to be a net exporter (in overall world trade).

That’s just my honest opinion.

[The-Shoveler]

If the population experts are correct, we should be increasing the population by 25% by 2050 .
Maybe they over estimated.
But yea I would suggest no one fully retire.
Inflation can unset the best pension in the world in a few years’ time.

Most the rest of the world has puts up with 7-15% inflation. it has only been the very unusual policy and circumstances of the last 30 years that has allowed the low inflation we have experienced.
It all started in 1981 and the feds war on inflation at all costs, including standard of living for 50% or more of the population,

[The-Shoveler]

[quote=bearishgurl][quote=The-Shoveler]I had one heck of a good time in the 70’s BTW,

always bough a new surf board once a year at least, and never drank domestic beer.[/quote]

Yeah, yeah. Corona and Dos Equis weren’t considered “Domestic Beer” back then :=D[/quote]

My experience was fairly typical I think.

Yep those horrible days of 70’s stagflation.

It was very rare for anyone to live at home past 18,

unless they were in college, after that they were gone baby.

[The-Shoveler]

Don’t worry,

I am fairly certain Gen-y and Z will be buying Mc-Mansions and driving expensive cars fairly soon.

Hair shirts never stay in style long.

[The-Shoveler]

Beck’s and heineken were the beers of choice back then
(in the 70’s).

No one would be caught dead with a bud in their hand at the disco.

but yea a Corona would set you back 4 bucks even back then at the bar, beck’s maybe 5 or 6.

[The-Shoveler]

I had one heck of a good time in the 70’s BTW,

always bough a new surf board once a year at least, and never drank domestic beer.

[The-Shoveler]

Haa, hmm I don’t want to get in the middle of this but I did live that,

Designer Jeans and Disco and expensive beer were Unambiguous in suburbia in the late 70’s

So was spending more that you make.

[The-Shoveler]

“These are not the droids you’re looking for”
There is nothing here move along

“its all part of the plan”

Fed chairman discussing record high stock prices, only in this instance, Ben Bernanke not only refused to take credit for the rally, but went one step further, saying “At this point, we don’t see anything out of line with historical patterns.”
As my co-host Jeff Macke and I discuss in the attached video, while many investors are nervous about lofty stocks right now, Bernanke does not appear to be one of them. I like to call this his anti-irrational exuberance moment, as it aimed to defuse investor worries rather than heighten them, and even saw the Fed chief advancing the theory of inflation-adjusted stock prices still being well below an all-time high.

[Author]

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