Paul Krugman "Inflation Scare"

[flintlock]

Re: Paul Krugman "Inflation Scare"

I'm invested in commodities, so that part is good, but unfortunately a lot of my business relies on people having money to spend on their homes, here in the good ole USA.

[Jay]

Re: Paul Krugman "Inflation Scare"

I'm invested in commodities, so that part is good, but unfortunately a lot of my business relies on people having money to spend on their homes, here in the good ole USA.

flintlock, how much of a bump in business did you get from the housing boom?

[Prazak]

Re: Paul Krugman "Inflation Scare"

Its not always just pure corruption. A lot of these people are starstruck. They get to meet the president, give him advice. All this praise and attention comes with a price. Don't rock the boat. I have no idea if this applies to Krugman but I've seen it before.

As an example. George W Bush used to invite talk radio personalities to come to the White House and spend the night. Atlanta talk radio host Neal Boortz used to be on Ws case all the time. After a weekend at the White House, he was so starstruck, he turned into a Bush apologist overnight. It was so transparent it was embarrassing.

You've hit the nail exactly on the head. Obama's boys were spinning to manage inflation expectations, and Krugman was seduced into drinking the kool aid.

It's always interesting to see an administration spin journalists by political leanings, and how they tailor their spin to each group.

[flintlock]

Re: Paul Krugman "Inflation Scare"

flintlock, how much of a bump in business did you get from the housing boom?

Oh, during the boom, we couldn't keep up. The problem was never gettting enough business. It was getting customers who wouldn't drive you crazy or finding good help to do the work. I almost never worried about finding work. Never advertised. I could screen customers and weed out the problem types if I wanted to. Hell, I'd come back to the office and actually be glad nobody had called. We were very spoiled.

We did mostly residential service work and remodeling. No new construction, so the bust didn't impact us right away. But now, all those unemployed construction workers are hungry for any job. They work for peanuts. All cash under the table, no insurance, no license, and in many cases no skill.

The business has really changed. It went from a profession where people cared about quality to basically just a bunch of crap. I pretty much quit doing remodeling work because the people doing it are total hacks. No permits or inspections, screw the building codes, that kind of mentality. Of course that mentality had already taken over before the housing bust. Kind of like the discussion on another thread about appliances, people want it cheap and with all the bells and whistles, but don't want to pay for quality. So they are getting what they pay for. I wouldn't want to be a person hiring a remodeling company these days. Most are either incompetent, crooks, or both.

[rogermexico]

Re: Paul Krugman "Inflation Scare"

compare his accomplishments to those of previous winners of the nobel in economics. the scent of payoff is overwhelming.

You mean like these clowns?

gore12507.jpg

page5_1.jpg

Oh sorry, you meant economics. I guess they are trying to turn the econ
prize into an ironic joke, too.

[Jay]

Re: Paul Krugman "Inflation Scare"

Oh, during the boom, we couldn't keep up. The problem was never gettting enough business. It was getting customers who wouldn't drive you crazy or finding good help to do the work. I almost never worried about finding work. Never advertised. I could screen customers and weed out the problem types if I wanted to. Hell, I'd come back to the office and actually be glad nobody had called. We were very spoiled.

We did mostly residential service work and remodeling. No new construction, so the bust didn't impact us right away. But now, all those unemployed construction workers are hungry for any job. They work for peanuts. All cash under the table, no insurance, no license, and in many cases no skill.

The business has really changed. It went from a profession where people cared about quality to basically just a bunch of crap. I pretty much quit doing remodeling work because the people doing it are total hacks. No permits or inspections, screw the building codes, that kind of mentality. Of course that mentality had already taken over before the housing bust. Kind of like the discussion on another thread about appliances, people want it cheap and with all the bells and whistles, but don't want to pay for quality. So they are getting what they pay for. I wouldn't want to be a person hiring a remodeling company these days. Most are either incompetent, crooks, or both.

Great info, thanks. I hope you get plenty of reasonable cutomers who want quality (and safety!) going forward.

[Jay]

Re: Paul Krugman "Inflation Scare"

"Global cooling beware!"
"Global warming is coming, you will all drown!"
"Ah screw it, CLIMATE CHANGE is coming, you will all die unless you pay the piper, and in cash punk!"

[Slimprofits]

Re: Paul Krugman "Inflation Scare"

And about your gas price comment, I've got a feeling that guy Bensimon is gonna turn out right.

Get this Babbittd, he forecast, maybe 12-18 months ago that oil would crash into the 50's by the end of 2008, and then soar straight past $100 all over again by the end of 2009. That was a pretty explicit call.

That is shaping up to be a pretty damn good forecast, as it looks like we are going to get $100+ oil by year end - all over again. He's also forecasting $50 silver by 2011 as an *early* price trajectory target! :eek:

In early October 2008, David Bensimon predicted that oil would fall to $80 in April of 2009 and soar again to $200 in December '09 and fall back to $98 in November '10.

non-embeddable video here: http://www.bloomberg.com/avp/avp.htm...6eG0NYPsus.asf

[Guest]

Re: Paul Krugman "Inflation Scare"

Babbittd -

My bad - I have all of his interviews bookmarked but I have not checked those old videos for a long time. I believe I put a disclaimer on any price trajectory numbers on that Birinyi thread, mentioning that I "needed to check" what number's he had suggested.

It's a Sunday, and my plans today are more in the direction of taking a five mile walk and then going swimming, rather than get into a disagreement with you on the merits of this analyst.

So I won't go there today. However, your citing has me a bit puzzled because in early October of 2008 the price of petroleum was right around $80, so I don't know how he could have been forecasting a "plunge" from "$80", to "$80" six months later?

Can we leave the mystery to another day? Today is scheduled for exercise fitness and releasing the stress of full time job and school combination for me. Here's the price data for crude in early October 2008, so you can see why this quote seems odd.

I do however fully remember now (and I stand corrected) he indeed predicted the price to surge very fast in 2009, up towards $200, and then to plunge in the subsequent year.

We must look over the next year to 18 months to see if the broad outlines of his suggestion materialise in terms of percentage rises and falls, but at a lower price point, as he miscalled the depth of the oil decline by about $35.00. That discrepancy may recede to minor, if the price surges up well past $100 again.

In current interviews he has (very sensibly and without much fuss) revised his forecast for $145 dollar oil (meeting the old highs) pushing it out by a year or two at this point. Does that satisfy your curiosity? I know you'd asked me whether this prediction was still "on track". Apparently therefore it is not.

Predictions as you know are exceedingly risky business Babbittd. But suggesting an analyst is a windbag full of hot air on a miscall like this may be selling the analyst short to suit your inclination to find points proving that "all forecasting is rubbish".

The simplest, most sensible thing to do if one wanted to delve into whether he's offering any real insights into market trend, would be to see in 24 months if the very broad lines of what he suggested in early 2008 materialise. If so, then his method is "interesting".

My sense is that prior to this very large market turbulence, his very precise price point calls were tracking with very "interesting" regularity. But like dropping a boulder into a still pond, the ensuing turbulence throws all the prior trajectories off by a large amount. This is what we've had occur in the market - a once in a century crash.

Whether you cut him some slack for that or not is your own decision.

My take away however remains that to conclude this analyst is specious on the basis of his $200 oil call not being attainable within Jan 2010 would be selling this analyst's work notably short. We must each make our own conclusions, and I am certainly not foisting him upon you.

As you can see, in October 2008, the price of crude was in fact right where he is quoted as having suggested it was "going to fall" to, in April 2009. So I can't make sense of that quote in it's calendar context:

10/1/2008	98.53	97.92	98.00	98.17
10/2/2008	93.97	93.29	93.24	93.41
10/3/2008	93.88	93.01	92.81	92.88
10/6/2008	87.81	86.71	86.52	86.64
10/7/2008	90.06	88.71	88.40	88.45
10/8/2008	88.95	88.43	88.48	88.59
10/9/2008	86.59	86.62	86.91	87.19
10/10/2008	77.70	77.99	78.34	78.79
10/13/2008	81.19	81.68	82.04	82.42
10/14/2008	78.63	78.95	79.33	79.78
10/15/2008	74.54	74.88	75.24	75.71
10/16/2008	69.85	70.26	70.69	71.14
10/17/2008	71.85	72.13	72.49	72.92
10/20/2008	74.25	74.39	74.69	75.08
10/21/2008	70.89	72.18	72.64	73.13
10/22/2008	66.75	67.16	67.64	68.11
10/23/2008	67.84	68.24	68.71	69.17
10/24/2008	64.15	64.58	65.06	65.54
10/27/2008	63.22	63.71	64.23	64.75
10/28/2008	62.73	63.21	63.72	64.23
10/29/2008	67.50	67.99	68.54	69.07
10/30/2008	65.96	66.54	67.27	67.97
10/31/2008	67.81	68.48	69.22	69.92
11/3/2008	63.91	64.59	65.30	66.02

In early October of 2008 oil already was right at the $80 mark? :confused:

In early October 2008, David Bensimon predicted that oil would fall to $80 in April of 2009 and soar again to $200 in December '09 and fall back to $98 in November '10.

non-embeddable video here: http://www.bloomberg.com/avp/avp.htm...6eG0NYPsus.asf

And it appears he was about $35 too high for April 2009, and indeed about the same dollar amount for the averaged lows of the two months which actually did mark the bottom of the oil price slide which was February 2009.

Bensimon uses long cycles, and has employed the 60 year commodity cycle (which Bart has also investigated) as a key commodity trend indicator. The correlation between 1948 and 2008 hints strongly at being non-random.

So as suggested above, if one wishes to appraise Bensimon's work from a vantagepoint removed to some sensible degree from that of an accountant, one can look towards the next couple of years to get a sense of whether the general chronology of his early 2009 forecast will have been proved to fit.

That is, whether in retrospect two years from now, oil will be shown to have staged a notable price collapse into early 2009, per his early 2008 forecast, and then a blistering rally expressing at least a doubling of price, from there into early 2010, followed by another stunning price collapse.

If we see these broad lines of price trend emerge, then it wll become evident that Bensimon's work in early 2008 evidenced qt least some trend forecasting skill. But far be it from me to foist him upon you!

1/1/2009	NA	NA	NA	NA
1/2/2009	46.34	50.21	52.23	53.64
1/5/2009	48.81	52.69	54.70	56.07
1/6/2009	48.58	53.13	55.34	56.79
1/7/2009	42.63	47.39	50.06	51.95
1/8/2009	41.70	46.51	49.45	51.43
1/9/2009	40.83	46.07	49.11	51.21
1/12/2009	37.59	43.65	46.97	49.25
1/13/2009	37.78	44.77	48.37	50.83
1/14/2009	37.28	44.19	48.28	50.71
1/15/2009	35.40	43.54	48.11	50.61
1/16/2009	36.51	42.57	47.02	49.51
1/19/2009	NA	NA	NA	NA
1/20/2009	38.74	40.84	44.25	46.56
1/21/2009	43.55	45.55	47.12	48.51
1/22/2009	43.67	45.83	47.41	48.79
1/23/2009	46.47	49.21	50.76	51.95
1/26/2009	45.73	48.49	50.03	51.05
1/27/2009	41.58	44.90	47.18	48.70
1/28/2009	42.16	46.07	48.56	50.11
1/29/2009	41.44	46.04	48.66	50.27
1/30/2009	41.68	46.13	48.52	49.98
2/2/2009	40.08	43.92	46.17	47.62
2/3/2009	40.78	44.04	46.13	47.59
2/4/2009	40.32	44.24	46.68	48.24
2/5/2009	41.17	45.76	48.38	49.96
2/6/2009	40.17	46.15	48.85	50.39
2/9/2009	39.56	45.84	48.69	50.25
2/10/2009	37.55	43.76	46.76	48.41
2/11/2009	35.94	42.47	45.95	47.83
2/12/2009	33.98	42.17	45.92	47.81
2/13/2009	37.51	41.97	44.94	46.67
2/16/2009	NA	NA	NA	NA
2/17/2009	34.93	38.54	41.23	42.88
2/18/2009	34.62	37.41	39.72	41.15
2/19/2009	39.48	40.18	42.51	43.97
2/20/2009	38.94	40.03	42.17	43.56
2/23/2009	38.44	41.27	42.86	44.16
2/24/2009	39.96	42.76	44.23	45.43
2/25/2009	42.50	44.66	45.89	46.90
2/26/2009	45.22	47.47	48.74	49.69
2/27/2009	44.76	46.89	48.05	48.98
3/2/2009	40.15	42.45	43.68	44.73
3/3/2009	41.65	43.91	45.03	46.01
3/4/2009	45.38	47.20	48.09	48.93
3/5/2009	43.61	45.66	46.77	47.70
3/6/2009	45.52	47.72	48.77	49.58
3/9/2009	47.07	48.06	48.75	49.38
3/10/2009	45.71	46.98	48.07	48.98
3/11/2009	42.33	43.99	45.29	46.42
3/12/2009	47.03	47.97	49.01	49.99
3/13/2009	46.25	47.03	48.11	49.05
3/16/2009	47.35	48.05	49.11	49.96
3/17/2009	49.16	50.04	51.21	52.18
3/18/2009	48.14	48.90	50.35	51.64
3/19/2009	51.61	52.04	53.53	54.79
3/20/2009	51.06	52.07	53.80	55.20
3/23/2009	53.80	55.73	57.20	58.33
3/24/2009	53.98	55.63	57.00	58.08
3/25/2009	52.77	54.19	55.47	56.52
3/26/2009	54.34	55.78	57.04	58.07
3/27/2009	52.38	54.02	55.48	56.65
3/30/2009	48.41	50.20	51.79	53.05
3/31/2009	49.66	51.37	52.85	53.93
4/1/2009	48.39	50.20	51.77	52.84
4/2/2009	52.64	54.52	56.10	57.22
4/3/2009	52.51	54.68	56.52	57.71
4/6/2009	51.05	53.38	55.40	56.76
4/7/2009	49.15	51.91	54.29	55.83
4/8/2009	49.38	52.07	54.48	56.07
4/9/2009	52.24	54.69	56.90	58.33
4/10/2009	NA	NA	NA	NA
4/13/2009	50.05	52.98	55.33	56.83
4/14/2009	49.41	52.52	54.93	56.44
4/15/2009	49.25	51.77	54.09	55.62
4/16/2009	49.98	52.16	54.36	55.93
4/17/2009	50.33	52.47	54.56	56.11
4/20/2009	45.88	48.51	50.77	52.43
4/21/2009	46.51	48.55	50.61	52.22
4/22/2009	48.85	50.70	52.19	53.49
4/23/2009	49.62	51.07	52.33	53.50
4/24/2009	51.55	52.94	54.10	55.12
4/27/2009	50.14	51.52	52.69	53.74
4/28/2009	49.92	51.09	52.18	53.19
4/29/2009	50.97	52.21	53.31	54.32
4/30/2009	51.12	52.28	53.40	54.45
5/1/2009	53.20	54.54	55.73	56.78

02/18/09 apparently marked the bottom. April meanwhile, is the precise low of the 60 year cycle. If we look at the broad commodities index we sure have seen some startling changes apparentlyoccur, coming out of March this year, no? Maybe this 60 year cycle thingy is not complete BS after all? One thing is for sure, a mind armored in preconceptions as to that point will never find out.

[nero3]

Re: Paul Krugman "Inflation Scare"

I like Krugman, but he is not a "market" man. I have followed him and his forecasting skills are non existing. That's why I don't trust him at all when he insist that inflation is not going to become a problem. Last year at this time he was all over peak oil, it was not speculation, the oil price was really 100 % genuine, he was using his models to explain that, then later that same year, he was all deflation again (Did I say I, I meant De), and now lately I think he is starting to cover all bases. You had the trend, from around 1981-1998, while commodities were fading, and then from 98/2001, where they have been on a rise. Maybe that's a 16 year trend, or 18 year trend, from 1998-2014/16. He does not seem to understand that this is different from 1990 and japans mess, because of this difference in underlying trend. Why he does not get it, I don't know. But I just don't think he get it. He is a professor and Nobel price winner, but in this game what matters is his results in the market. Nobody can make money getting their investment advice from a professor.

The bond market was wrong, and had bubble tendencies when yields on the 10 year went below 4 % after Lehman. The bubble is over it seems. The biggest question is where it's going to stop. It's certainly not wrong now. And China, they stepped up to the plate in around 2000, and had an important role in creating the housing bubble. Will there be another around of super low yields on treasuries, I don't think so, this next round will be seen as higher yields , and negative real interest rates. It's a remote possibility the fed will monetize some, to keep yields artificially low, to get the housing market going again, but I doubt it. I think the use of fixed interest rates in the US, is taken to far, in Norway more than 70 % of all mortgages are variable interest rates. It should be possible to get the housing market going, with 0 % interest rates, even if the long term rates rise to 5-6 %, as some should be able to take advantage of low, variable mortgage rates.

[Guest]

Re: Paul Krugman "Inflation Scare"

No kidding!? You are not joking around here? :eek: :rolleyes:

Nobody can make money getting their investment advice from a professor.

[metalman]

Re: Paul Krugman "Inflation Scare"

I think the use of fixed interest rates in the US, is taken to far, in Norway more than 70 % of all mortgages are variable interest rates. It should be possible to get the housing market going, with 0 % interest rates, even if the long term rates rise to 5-6 %, as some should be able to take advantage of low, variable mortgage rates.

does the norwegian gov't back 95% of all mortgages there?

apples & oranges.

fixed rates go over 5.5% here and the usa housing crash goes from fast to freefall.

[jtabeb]

Re: Paul Krugman "Inflation Scare"

You mean like these clowns?

[ATTACH]1652[/ATTACH]

[ATTACH]1653[/ATTACH]

Oh sorry, you meant economics. I guess they are trying to turn the econ
prize into an ironic joke, too.

How DARE YOU!

How dare you defame the name of the man who "invented the internet".:p:p:p

[nero3]

Re: Paul Krugman "Inflation Scare"

does the norwegian gov't back 95% of all mortgages there?

apples & oranges.

fixed rates go over 5.5% here and the usa housing crash goes from fast to freefall.

NO backing, and no walk away, no personal bankruptcy, debt follows you forever. We envy your rules.

On the US: It's like the housing market don't like higher fixed rate, that is true. But, then again, negative real interest rates, and some momentum for inflation should be good for housing. I really think houses, old stamps, painting, old whiskey, gold, should all move in the same direction when real interest rates are negative. Maybe the fears of higher yields are overdone.