My afternoon train reads:

• The Rally in Three Charts (Hint: It’s Not All About the Fed) (Moneybeat)
Santoli: ‘New Abnormal’ Is the New ‘New Normal’ – but What Is It? (Yahoo Finance)
• The central bank (communications) bubble (FT Alphaville) see also Inflation Continues to Undershoot Fed Target (Real Time Economics)
• Tokyo Shares Get a Second Look (WSJ)
• Not Even ‘Googling’ Your Financial Advisor, Seriously? (CNBC)
• Hospital CEO Bonuses Reward Volume and Growth (ABC) see also The Further Adventures of the Free Market (Esquire)
• 7 Important Examples of How Markets Can Fail (Fiscal Times)
Bartlett: How the Revival of Postwar Germany Began (Economix)
• Are Bigger Universities Better? (priceonomics)
• Gagged by Big Ag (Mother Jones)

What are you reading?

 

Will Home Prices Be Constrained by Stagnant Incomes?
Chart
Source: Real Time Economics

Category: Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

13 Responses to “10 Tuesday PM Reads”

  1. The author is referring to the “oversight” hearing held today entitled, “How Disclosed N.S.A. Programs Protect Americans, and Why Disclosure Aids Our Adversaries.”

    “Today’s congressional hearing was a joke. The reason: Firms like Booz Allen bankroll and own Congress”

    How cash secretly rules surveillance policy (Salon)

    http://goo.gl/d3wn1

  2. couragesd says:

    Affordability? Rent is the new normal, even the feds have said that. Look forward to national legislation on rent in the next 5 years as interest rates increase and wages only gradually increase. People will recognize at that point that the american dream has changed from ownership of land to ownership of connected gadgets, call it the cloud economy. The economy can not sustain quick wage growth even with moderate inflation on goods.

  3. stonedwino says:

    Inflation Continues to Undershoot Fed Target – The biggest understatement of the year. Look, when the income of 90% of Americans has been and continues to be in decline, we are in a deflationary environment, no matter how much anyone wishes otherwise. Inflation is not anywhere in sight except for food and fuel – almost everything else is going down in price…

    • marmot says:

      and assets?

      • MikeNY says:

        Touche, Marmot.

        If it’s not all, or mostly, about the Fed, then why do worldwide markets pitch a hissyfit at the mere mention of “tapering”, requiring an immediate retraction via Hilsenrath?

        And who here thinks that house prices can continue to rise double digits in an environment of stagnant wages and rising interest rates?

        The markets can, and will, force Bernanke’s hand. They know it, and Bernanke knows it. I don’t believe there will be any actual tapering, at least not until there’s someone at the Fed who understands that the asset-driven model is broken. And I don’t think Gentle Ben is that person.

      • bonzo says:

        Fixed coupon assets (bonds) will continue to go up as long as inflation goes down.

        Variable coupon assets (stocks, real-estate) will see the coupon varying to the downside at some point. Some of the current high profit margins in these variable coupon assets is due to unsustainable debt build-up.The remainder is unsustainable due to competitive pressures (other than in natural monopoly situations). High profits attact competition (expanded supply), which drives profits back down to whatever is the underlying cost of capital, which is low, low, low at present (30-year TIPS rate plus a risk premium for real cost of capital, or 30-year nominal rate plus risk premium for nominal cost of capital).

        Gold and other commodities don’t have coupons, so you have to use balance sheet rather than income statement analysis. That is, price of commodities like gold should equal cost of mining or otherwise producing them. Also, if there is a huge inventory build-up (inventory for gold is like 100 years worth, based on current rates of industrial usage), that will tend to depress prices below cost of production.

  4. bear_in_mind says:

    @stonedwino: I understand your meaning about price disinflation, which may indeed be a precursor to outright price deflation. It’s probably price action that consumers notice and care about most. However, that’s not analogous to deflation, which is a measure of negative money supply and credit… which can lead to the aforementioned downward pricing spiral.

    Maybe the best definition of what we’re (possibly) facing is “screwflation” — decreasing median wages + restricted credit for less-than-optimal consumers + increasing prices on certain goods (i.e. food, education, medical) = median household misery.

    I don’t care what others say about food substitutions, hedonics, and all the other machinations being applied to shape Inflation, but food prices are UP and not by a little. Manufacturers have been holding prices and units of measure (i.e. box, carton) steady, but shrinking the package size, weight and volume anywhere from 8 to 20 percent. Now, that may not qualify as official Inflation measurement, but it sure as shootin’ takes an ever-larger bite out of my budget.

    Anyway, here’s some of Doug Short’s outstanding charts on inflation measures:

    Two Measures of Inflation: Headline and Core Below Fed Target
    http://advisorperspectives.com/dshort/updates/CPI-PCE-Comparison.php

    What Inflation Means to You: Inside the Consumer Price Index
    http://advisorperspectives.com/dshort/updates/CPI-Category-Overview.php

  5. bear_in_mind says:

    Question: Will Home Prices Be Constrained by Stagnant Incomes?

    Answer: At some point, absolutely, especially absent a long-term demographic game-changing event.

    Now, if the Congress did something truly radical with immigration reform, say opened the gates to the educated and affluent from across the globe, we could really see the real estate market go parabolic.

    Possibility? 100% Probability? 0.015%

  6. Francisco Bandres de Abarca says:

    What am I reading? Well, lately I have been monitoring the decreasing liquidity and increasing credit stresses emerging in China. How will it end? Beats me! That’s why I keep reading. (The Chinese central bank reversing course on liquidity injections would be one obvious guess, though.)

    http://www.bloomberg.com/news/2013-06-18/china-swaps-climb-to-2011-high-as-pboc-refrains-from-adding-cash.html

  7. Mike in Nola says:

    I’m in Bar Harbor mostly not reading anything but maps and menus. Nice place. Anyways, ran across this in The Independent. Looks like some has grown some balls.

    http://www.independent.co.uk/news/business/comment/james-moore-why-george-osborne-must-beware-of-the-banking-backlash-8664195.html

  8. PeterR says:

    The words “Secret Court” leaped off the page this morning, confusing me as to whether I was reading the New York Times or this morning’s Dilbert.

    Shame on us for allowing this to happen.

    http://bits.blogs.nytimes.com/2013/06/18/google-asks-secret-court-for-permission-to-publish-national-security-request-data/?hpw

    http://www.dilbert.com/strips/

  9. Gonzop says:

    not all about the FEd indeed there are rapid credit developments in China that are rather worrying

  10. rd says:

    Here are some interesting anecdotes about dealing with the Rube Goldberg machine known as the American health insurance system (system is a eupimism here for lack of any otehr printable word).

    http://blog.syracuse.com/opinion/2013/06/so_hows_a_guy_supposed_to_keep.html#incart_river_default

    As a person living in the US but with close family in Canada, I can assure you that most Canadians are baffled about Americans accepting and wanting the American health care system.