stagflation

joanna bujes joanna.bujes at ebay.sun.com
Fri Sep 6 10:35:27 PDT 2002


At 01:18 PM 09/06/2002 -0400, you wrote:
>Economy.com's analysis points out that the inflationary pressures are
>being felt mainly in the housing market (which isn't surprising,
>given that the index is being driven upward by real-estate loans).
>So, once again, it's more an inflation in asset prices - houses this
>time rather than stocks - and not in goods and services.

...well, or the continuation of the credit bubble. You too can own a modest two bedroom in the bay area for a modest half a million. Margin requirements (down payments) are dropping like stones and the fools rush in....

Thing is, at some point, the cost of those high mortgages (combined with fixed or falling incomes) will translate into less and less consuming power: if you're spending most of your paycheck on a mortgage, you'll have that much less to spend on other commodities. At that point, prices will stop rising and the real-estate market will no longer look like a winning investment. At that point, prices will start to fall....or crash.

Optimistically,

Joanna



More information about the lbo-talk mailing list