Oil Setback Long 'n Painful

[Rareearth]

The housing market is influenced by , the replacement cost or the cost to build new pricing and the demand. The developers, contractors have been going flat out for some time now, now a correction, not that unusual. Now the length and depth of the correction is another thing, fundamentals... Charts don't factor bubbles.

[ajl]

Actually the order is first inflation and then deflation. Examples include the 1920 then 30's. The 1970's then the 80's. Last six years inflation then the next years deflation. Inflation was largely confined to asset and commodity prices because Asia helped keep the consumer prices under pressure these last few years but they were the inflation years.

[ado089]

Money is such a small part of the money supply. You can print until you run out of ink if it's not being lent, leveraged and put into producing goods it doesn't mean a thing. What has been the gross impact of $4 trillion of stimulous on the US economy? A few hundred billion in GDP? Sounds like a piss poor investment to me. That money has gone straight into the equity markets and any sort of meaningful correction in either equities or bonds or few major deafaults and all that extra printed money is gone at the click of a mouse. Luckly for us we've taken alot of our lumps price wise but I think servicing debt on imaginary equity will be tough on our industry.

[kato]

Which is why we cattle producers are pretty much pounding the proceeds of this years good prices back onto debt. Been there, done that, never want to do it again. We had the experience of losing 90% of our equity in five minutes back in 2003. Now that's a market " correction" if there ever was one.

Unless you lived it, it's hard to describe what that felt like. Imagine in the space of time it took to drink a cup of coffee, you were told that your $500,000 house is now worth $50,000. You are still expected to make the payments on the full amount, and oh, by the way, it may be a couple of years before you can have a paycheck.

It was closer to ten years before things started looking up. That's a long time. It's all a matter of perspective. What causes greater suffering? Losing the ability to trade that $80,000 truck in every year? Or lose everything, like some people I know did.

[canolacrazy]

oil is down another 4% today. that makes over 60% in just six months. just sit back and watch the carnage. fertilizer, chemical is next. the bright side, cash is king again.

[cottonpicken]

It's still all about the debt. The entire market is rigged and if investors ever got a wiff of inflation they would sell those low yield bonds in a heart beat and the fed would be forced to buy them then the entire thing becomes unglued.

[furrowtickler]

Agreed ajl
When we look back at the past 5 years we will see a strong inflationary time here in Canada
Just think about the increase in costs from say 2008 up till Dec 2014 for
Food
Fuel
Housing
Vehicles
Machinery
All transportation - air , rail , trucking
Land - rual and urban
Labour
Some of these alone have doubled or trippled in this time period. Inflation has been starring us in the face for a while .
It may not have been an overnight issue but it has been strong and steady just under the radar, constantly.
I also agree with housing - the writing has been on the wall for two years - it is not sustainable at any level of economics - it just needed a trigger ( oil) to pop the bubble .

[farmaholic]

Sooooo, land prices will be coming down?

Oh well, it looked good on the Net Worth Statement for a while.

[fjlip]

Maybe not selling saved us from losing it on paper and in other investments. Just an imaginary number, buying power was low in inflated housing etc. Time will tell, if you have time to wait that is.

[Klause]

Last couple years all this new money poured into the economy has just been diluting value.

20 bucks an hr and a 275000 house or 40 and a 550000 house... Same thing except you have more interest costs.


People don't get it... In the depression governments print money and built things... New highways tracks bridges... dams schools hospitals. All these are real hard assets adding to the value of the country and thus it's currency.


All this money getting poured into equity markets inflates paper. It's like getting a farmer getting a 250000 cheque... If you invest it in land a tractor cattle grain bins or paying off debt it increases your net worth.


If you spend it on hookers and blow it makes you feel happy for a little while and then the money is gone and you have nothing to show for it. That's basically what governments are doing today.