Inflation and a recession are now here :(

[HuffyCane]

I agree that high rates are fundamentally a problem right now, but the housing supply right now is still vastly dwarfed by the housing demand. Analyses from Freddie Mac, the National Assoc. of Realtors, and Zillow put the shortage number somewhere between 2.5 and 4.5 million homes. It's not just the rates that are the problem.... even if relatively low rates were to come along tomorrow, you're talking about mortgages for national average homes being astronomical and sellers would likely play into those low rates and raise their prices even more, add to that the rising cost of home insurance and you're really in trouble.

You are focusing on only the demand side of the analysis. The supply side drives it as well.

The cost and availability of lots, lending, lumber/materials, and legal/regulatory policies and fees play as much a role, if not more, than demand side issues like rates, new home inventory, and the like.

I’ll leave the analysis to poke, but it ain’t no secret why homes are expensive when the cost of framing jumps from $20,000 to $60,000 inside the same gated community during a build out. And it has nothing to do with Wall Street or Washington.

We had a housing crisis. The industry switched to building multi family complexes just at the moment some popular government subsidies for SFR home buying ended. That led to under building that has only recently increased to an acceptable available supply.

In areas of the country where people want to live (the South) home prices continue to rise despite run away costs. If you are willing or able to live in places with low supply side variables like lot price, reduced competition for materials, and reasonable govt impact fees, housing remains affordable. But not everyone wants to live 60 miles west of Wichita.

And that’s the trick. In an inflationary economy how do you bring down the price of materials to build houses near decent safe schools during a period of spiking demand due to simple demographics. A whole generation delayed home buying and child rearing due to the 2008 housing crisis then again during CoVid. And suddenly wanted to make up for lost time. Right when the government decided to print money like it’s the end of the world.

No amount of bank manipulation is going to overcome the hormones of middle class families ready to settle down. Especially a two family income household over $500?000 a year with a fertile female occupant with no children age 36 and above. And there’s a lot of them for the next few years at least.

The real question is what happens when the demand cools and the supply side can no longer triple prices/costs with impunity? Is it a bubble or not?

That’s what poke and I warned about when it comes to inflationary economies so many years ago.

 

[astonmartin708]

You are focusing on only the demand side of the analysis. The supply side drives it as well.

The cost and availability of lots, lending, lumber/materials, and legal/regulatory policies and fees play as much a role, if not more, than demand side issues like rates, new home inventory, and the like.

I’ll leave the analysis to poke, but it ain’t no secret why homes are expensive when the cost of framing jumps from $20,000 to $60,000 inside the same gated community during a build out. And it has nothing to do with Wall Street or Washington.

We had a housing crisis. The industry switched to building multi family complexes just at the moment some popular government subsidies for SFR home buying ended. That led to under building that has only recently increased to an acceptable available supply.

In areas of the country where people want to live (the South) home prices continue to rise despite run away costs. If you are willing or able to live in places with low supply side variables like lot price, reduced competition for materials, and reasonable govt impact fees, housing remains affordable. But not everyone wants to live 60 miles west of Wichita.

And that’s the trick. In an inflationary economy how do you bring down the price of materials to build houses near decent safe schools during a period of spiking demand due to simple demographics. A whole generation delayed home buying and child rearing due to the 2008 housing crisis then again during CoVid. And suddenly wanted to make up for lost time. Right when the government decided to print money like it’s the end of the world.

No amount of bank manipulation is going to overcome the hormones of middle class families ready to settle down. Especially a two family income household over $500?000 a year with a fertile female occupant with no children age 36 and above. And there’s a lot of them for the next few years at least.

The real question is what happens when the demand cools and the supply side can no longer triple prices/costs with impunity? Is it a bubble or not?

That’s what poke and I warned about when it comes to inflationary economies so many years ago.

You are focusing on only the demand side of the analysis. The supply side drives it as well.

The cost and availability of lots, lending, lumber/materials, and legal/regulatory policies and fees play as much a role, if not more, than demand side issues like rates, new home inventory, and the like.

I’ll leave the analysis to poke, but it ain’t no secret why homes are expensive when the cost of framing jumps from $20,000 to $60,000 inside the same gated community during a build out. And it has nothing to do with Wall Street or Washington.

We had a housing crisis. The industry switched to building multi family complexes just at the moment some popular government subsidies for SFR home buying ended. That led to under building that has only recently increased to an acceptable available supply.

In areas of the country where people want to live (the South) home prices continue to rise despite run away costs. If you are willing or able to live in places with low supply side variables like lot price, reduced competition for materials, and reasonable govt impact fees, housing remains affordable. But not everyone wants to live 60 miles west of Wichita.

And that’s the trick. In an inflationary economy how do you bring down the price of materials to build houses near decent safe schools during a period of spiking demand due to simple demographics. A whole generation delayed home buying and child rearing due to the 2008 housing crisis then again during CoVid. And suddenly wanted to make up for lost time. Right when the government decided to print money like it’s the end of the world.

No amount of bank manipulation is going to overcome the hormones of middle class families ready to settle down. Especially a two family income household over $500?000 a year with a fertile female occupant with no children age 36 and above. And there’s a lot of them for the next few years at least.

The real question is what happens when the demand cools and the supply side can no longer triple prices/costs with impunity? Is it a bubble or not?

That’s what poke and I warned about when it comes to inflationary economies so many years ago.

I know that you like to cosplay as a middle class guy, but in very few parts of the country is $500K household considered "middle class". Nationally the top 4% of households are making more than $200K.

 

[lawpoke87]

One of the forgotten effects when housing becomes unaffordable for so many

 

[aTUfan]

We are pumping more oil than in the history of the nation.

so why are we using the reserve and buying foreign oil?

 

[astonmartin708]

so why are we using the reserve and buying foreign oil?

We have increased reserve capacity by 11% in the past year.

As to the second part of your question.... Chat GPT's response:

1. Crude Oil Grade Mismatch​

• Crude oil comes in different grades based on its sulfur content (sweet or sour) and density (light or heavy).
• The U.S. produces a large amount of light, sweet crude, especially from shale formations, but its refineries, particularly those along the Gulf Coast, are optimized to process heavy, sour crude.
• To maximize efficiency and profits, the U.S. imports heavy crude from countries like Canada, Mexico, and Venezuela while exporting surplus light crude to countries with refining capabilities for that grade.

2. Geographic Considerations​

• The cost and logistics of transporting oil and gas can make it more practical to import resources regionally. For instance, refineries on the East Coast might find it cheaper to import oil from West Africa or the Middle East than to transport it from U.S. oilfields like those in Texas or North Dakota.

3. Global Market Integration​

• Oil and natural gas are traded on a global market, meaning prices and availability are influenced by international demand and supply.
• The U.S. participates in this market by exporting oil and gas to buyers willing to pay competitive prices while importing resources to meet domestic needs.

4. Demand vs. Production Distribution​

• The U.S. is a large country with diverse energy needs, and domestic production doesn’t always align with local demand. Some regions, such as the Northeast, have limited pipeline infrastructure and rely on imports to meet natural gas demand, particularly in winter.

5. Strategic and Economic Relationships​

• Importing and exporting energy resources helps the U.S. maintain strategic trade relationships and ensure energy security through diversified supply sources.

6. Price Arbitrage​

• The U.S. exports natural gas (primarily as liquefied natural gas or LNG) and crude oil because international prices are often higher than domestic prices, providing economic benefits to U.S. producers.
• Meanwhile, the U.S. imports resources that may be cheaper than producing or transporting from domestic sources.

 

[HuffyCane]

We have increased reserve capacity by 11% in the past year.

As to the second part of your question.... Chat GPT's response:

1. Crude Oil Grade Mismatch​

• Crude oil comes in different grades based on its sulfur content (sweet or sour) and density (light or heavy).
• The U.S. produces a large amount of light, sweet crude, especially from shale formations, but its refineries, particularly those along the Gulf Coast, are optimized to process heavy, sour crude.
• To maximize efficiency and profits, the U.S. imports heavy crude from countries like Canada, Mexico, and Venezuela while exporting surplus light crude to countries with refining capabilities for that grade.

2. Geographic Considerations​

• The cost and logistics of transporting oil and gas can make it more practical to import resources regionally. For instance, refineries on the East Coast might find it cheaper to import oil from West Africa or the Middle East than to transport it from U.S. oilfields like those in Texas or North Dakota.

3. Global Market Integration​

• Oil and natural gas are traded on a global market, meaning prices and availability are influenced by international demand and supply.
• The U.S. participates in this market by exporting oil and gas to buyers willing to pay competitive prices while importing resources to meet domestic needs.

4. Demand vs. Production Distribution​

• The U.S. is a large country with diverse energy needs, and domestic production doesn’t always align with local demand. Some regions, such as the Northeast, have limited pipeline infrastructure and rely on imports to meet natural gas demand, particularly in winter.

5. Strategic and Economic Relationships​

• Importing and exporting energy resources helps the U.S. maintain strategic trade relationships and ensure energy security through diversified supply sources.

6. Price Arbitrage​

• The U.S. exports natural gas (primarily as liquefied natural gas or LNG) and crude oil because international prices are often higher than domestic prices, providing economic benefits to U.S. producers.
• Meanwhile, the U.S. imports resources that may be cheaper than producing or transporting from domestic sources.

Chat GPT told me the other day that a certain ancient road used by the Seljuks in the 12th century contained charging stations and a McDonald’s.

 

[astonmartin708]

Chat GPT told me the other day that a certain ancient road used by the Seljuks in the 12th century contained charging stations and a McDonald’s.

As the young folks say, you have a “skill issue” in how you’re using the tool. also…. “Get good”

 

[Gmoney4WW]

so why are we using the reserve and buying foreign oil?

I'm simplifying/generalizing this to make it such that you can understand it. Because you produce enough Natural Gas to have excess, means you will sell gas and buy light or heavy, sweet or sour, crude. Our net energy production being enough for our net needs means we sell gas & buy crude with the profits from natural gas. As long as we don't spend any more on crude to exceed our profits on natural gas this does not mean we produce less than our needs.

 

[astonmartin708]

Here is the real problem… one of the globe’s biggest markets for combustion engines is drying up (and with it a significant market for light oils used for transportation) China is now set to sell more electric vehicles than ICE vehicles for the first time ever next year. Oil is not going to go away completely, but the market may be shifting beneath our feet, and we may not love the end result if we’re not flexible enough to handle the outcomes of such a change.

 

[TulsaRulzOSUdrools]

Aston is right. The market is shifting. Demand status is changing. Unfortunately, you have to get there after the semi-market (tesla, Volvo, Freightliner, Mercedes, Einride, which hasn't been broken into. Those companies are making pretty big leaps. The three most significant freight costs are people, fuel, and insurance. Einride is trying to do get ride of the first, significantly reduce the cost of the second and third.

China knows that oil is a strategic vulnerability. They want to reduce that.

Look at Ukraine; the Europeans would love to be more aggressive with the Russians but are held by the balls because of the nat gas and crude. Certain countries are even worse. Listening to ding-a-lings denigrating the Euros and us for our renewable efforts is hilarious. Renewables are a national strategic imperative. Renewables have actually allowed them to be as aggressive as they are in Ukraine.


I could go on for hours. The Republicans employ Tommy Tuberville, though.

 

[astonmartin708]

Inflation returns.... treasury yields are rising as traders get nervous about policy positions of the incoming admin.

 

[lawpoke87]

Inflation returns.... treasury yields are rising as traders get nervous about policy positions of the incoming admin.

The bond market reacted positively to Trump’s election. The Fed is the issue here. Yields began to jump the second the Fed cut rates last month. I called it at the time. Here is my post from Dec 18th in this thread. Go look at the yield curves.

“Feds cut rates a quarter of a point. Mortgage rates immediately spike. Not really sure what we’re doing here with this rate cut.”

 

[TulsaRulzOSUdrools]

The bond market reacted positively to Trump’s election. The Fed is the issue here. Yields began to jump the second the Fed cut rates last month. I called it at the time. Here is my post from Dec 18th in this thread. Go look at the yield curves.

“Feds cut rates a quarter of a point. Mortgage rates immediately spike. Not really sure what we’re doing here with this rate cut.”

That is quite an interesting take.....

 

[lawpoke87]

That is quite an interesting take.....

That’s not a take it’s the facts. Look at the ten year bond curve. I called it out the day the Feds cut rates last month and I’ve been proven 100% correct

 

[Gmoney4WW]

Inflation returns.... treasury yields are rising as traders get nervous about policy positions of the incoming admin.

The outro, 51st State of the Union.

The irony would have been real if 'The The' was Canadian, Panamanian, or Greenlander.

 

[lawpoke87]

Speaking of Canada, didn’t take long for Trudeau and his 20% approval rating to resign. Not sure I’ve ever seen a western leader with a 20% approval rating.

 

[Gmoney4WW]

Speaking of Canada, didn’t take long for Trudeau and his 20% approval rating to resign. Not sure I’ve ever seen a western leader with a 20% approval rating.

The lady that probably takes his spot pisses Trump off even more. He was stupid for supporting those two gimmicky pieces of legislation while his popularity was plummeting.

 

[HuffyCane]

The lady that probably takes his spot pisses Trump off even more. He was stupid for supporting those two gimmicky pieces of legislation while his popularity was plummeting.

Parliament can’t meet or take action until after the election. Whoever takes the spot is knotting their neck to the anchor.

 

[Gmoney4WW]

Whoever takes the spot is knotting their neck to the anchor.

Why do you say this?

123 MORE DAMMIT!

 

[lawpoke87]

Why do you say this?

123 MORE DAMMIT!

Assume because the Liberal Party in Canada has an approval rating of 20% and unless things dramatically change is facing a shellacking in the 2025 national election. As of today, the Liberal Party in Canada is a sinking ship.

 

[Gmoney4WW]

Assume because the Liberal Party in Canada has an approval rating of 20% and unless things dramatically change is facing a shellacking in the 2025 national election. As of today, the Liberal Party in Canada is a sinking ship.

From what you say, and what I infer from @HuffyCane 's post. I think you both misunderstood what I was saying. She will take his spot as the leader of the liberal party, not the prime minister. If he's talking about the lady that will take Trudeaus spot as leader of the liberal party, then I had no question over that. I guess I just thought that was matter of fact, and a rhetorical issue.

123 MORE DAMMIT!

 

[lawpoke87]

From what you say, and what I infer from @HuffyCane 's post. I think you both misunderstood what I was saying. She will take his spot as the leader of the liberal party, not the prime minister. If he's talking about the lady that will take Trudeaus spot as leader of the liberal party, then I had no question over that. I guess I just thought that was matter of fact, and a rhetorical issue.

123 MORE DAMMIT!

Understood. I’m curious why she would want to assume the head of a political party who’s about to suffer an historic defeat in the upcoming election? I don’t know Canadian politics but in the US most politicians would have a very difficult time recovering from such a loss. Harris received just over 48 percent of the national vote and will now likely struggle politically on the national scene. Can you imagine her outlook if she received 30%? 20%?

 

[HuffyCane]

Understood. I’m curious why she would want to assume the head of a political party who’s about to suffer an historic defeat in the upcoming election? I don’t know Canadian politics but in the US most politicians would have a very difficult time recovering from such a loss. Harris received just over 48 percent of the national vote and will now likely struggle politically on the national scene. Can you imagine her outlook if she received 30%? 20%?

Money.

 

[Gmoney4WW]

Understood. I’m curious why she would want to assume the head of a political party who’s about to suffer an historic defeat in the upcoming election? I don’t know Canadian politics but in the US most politicians would have a very difficult time recovering from such a loss. Harris received just over 48 percent of the national vote and will now likely struggle politically on the national scene. Can you imagine her outlook if she received 30%? 20%?

I don't think it is perceived quite like that. It is more like when the Democrats or Republcans win/lose the Senate or House. Don't think the leader of every party is saddled with the full weight of the party loss/Prime Minister loss. Especially when your party is so far down the totem pole of votes. Now if you were pushing your party hard, and trying to win the Prime Minister-ship because you were in one of the top two parties, and your party lost, that would be a different story.

It might take a little bit out of your sales for the time being, but two or four years later if your party becomes popular again, it is not impossible to come back from that loss. The problem is maintaining that party leadership between now and then, or stepping down from it in a way that allows you to vie for it later on when the party's popularity returns. She is viewed quite favorably despite being a member of the unpopular liberal party. I would way bet on her future chances over Sanders. Sanders will never win a higher office, ever.

 

[astonmartin708]

The bond market reacted positively to Trump’s election. The Fed is the issue here. Yields began to jump the second the Fed cut rates last month. I called it at the time. Here is my post from Dec 18th in this thread. Go look at the yield curves.

“Feds cut rates a quarter of a point. Mortgage rates immediately spike. Not really sure what we’re doing here with this rate cut.”

And yet…. Trump comes out today and says interest rates are too high.

Do you think the fed should be raising rates? That would go against what Trump is asking the Fed to do.

 

[RIP represalia]

We have increased reserve capacity by 11% in the past year.

As to the second part of your question.... Chat GPT's response:

1. Crude Oil Grade Mismatch​

• Crude oil comes in different grades based on its sulfur content (sweet or sour) and density (light or heavy).
• The U.S. produces a large amount of light, sweet crude, especially from shale formations, but its refineries, particularly those along the Gulf Coast, are optimized to process heavy, sour crude.
• To maximize efficiency and profits, the U.S. imports heavy crude from countries like Canada, Mexico, and Venezuela while exporting surplus light crude to countries with refining capabilities for that grade.

2. Geographic Considerations​

• The cost and logistics of transporting oil and gas can make it more practical to import resources regionally. For instance, refineries on the East Coast might find it cheaper to import oil from West Africa or the Middle East than to transport it from U.S. oilfields like those in Texas or North Dakota.

3. Global Market Integration​

• Oil and natural gas are traded on a global market, meaning prices and availability are influenced by international demand and supply.
• The U.S. participates in this market by exporting oil and gas to buyers willing to pay competitive prices while importing resources to meet domestic needs.

4. Demand vs. Production Distribution​

• The U.S. is a large country with diverse energy needs, and domestic production doesn’t always align with local demand. Some regions, such as the Northeast, have limited pipeline infrastructure and rely on imports to meet natural gas demand, particularly in winter.

5. Strategic and Economic Relationships​

• Importing and exporting energy resources helps the U.S. maintain strategic trade relationships and ensure energy security through diversified supply sources.

6. Price Arbitrage​

• The U.S. exports natural gas (primarily as liquefied natural gas or LNG) and crude oil because international prices are often higher than domestic prices, providing economic benefits to U.S. producers.
• Meanwhile, the U.S. imports resources that may be cheaper than producing or transporting from domestic sources.

The Russians can’t get enough of the fact that you all actually believe the crap that liberals do in this country & they get each other amped up reminding themselves that their enemy has to have those who say mean things to them suspended & banned when playing fps video games online with each other.

It’s pathetic. You fuccn cowards just might get to see what you have Wished upon us conservatives coming real soon.

 

[lawpoke87]

And yet…. Trump comes out today and says interest rates are too high.

Do you think the fed should be raising rates? That would go against what Trump is asking the Fed to do.

Hell no they shouldn’t be cutting rates. I don’t care who’s in the White House. You don’t inject more money into the market when inflationary pressures are present. I’ve been preaching this for years. The Fed cutting rates will have the inverse effect on the rates most Americans pay….home and auto loans for starters.

 

[astonmartin708]

Hell no they shouldn’t be cutting rates. I don’t care who’s in the White House. You don’t inject more money into the market when inflationary pressures are present. I’ve been preaching this for years. The Fed cutting rates will have the inverse effect on the rates most Americans pay….home and auto loans for starters.

The fed meanwhile, is recorded in their last meeting to be afraid of the inflationary pressures of Trump's policies on trade and immigration.

 

[lawpoke87]

The fed meanwhile, is recorded in their last meeting to be afraid of the inflationary pressures of Trump's policies on trade and immigration.

I’m having a hard time giving credibility to anything the Fed says at the moment. They’re the reason home loans are approaching and some cases exceeding 8% and car loans are now well over that mark. If they truly cared about inflation they wouldn’t be increasing the money supply

 

[astonmartin708]

I’m having a hard time giving credibility to anything the Fed says at the moment. They’re the reason home loans are approaching and some cases exceeding 8% and car loans are now well over that mark. If they truly cared about inflation they wouldn’t be increasing the money supply

Yes, they are the reason rates are high…. Because high rates prevent spending and fight inflation…. What do you want them to do?

If they raise the fed fund rate… home interest rates go up…. Lower the fed fund rate…. Home interest rates go up…..

Maybe don’t elect a buffoon who knows pretends to know more about the economy than he actually does, and keeps proposing destabalizing and inflationary policy.