Interesting article about inflation and stagflation

[House_Keeper]

I like Ross Gittins, he writes articles that make a lot of sense.

He argues that we don't have worry about rising inflation from rising oil prices. I hope he's right, even though the peak-oil effect on the oil price may surprise a few economists.

http://business.smh.com.au/stagflat...20080613-2q8a.html?page=fullpage#contentSwap1

Cheers,

 

[Francesco]

Makes sense, I am thinking there is less of the inflation and more of the recession effect coming through. Hence more 'stag' and less 'flation'. Makes sense, we in SS are generally in observation mode, rental increases and refinancing while the effects of IR increases are washing over the RE landscape.

 

[BV]

I hope he's right, even though the peak-oil effect on the oil price may surprise a few economists.
Cheers,

House Keeper

I think most economists would be expecting the price of oil to keep going up due to speculation and also due to the increased demand from China & India.

Is this situation likely to change?
I think it will but I believe things will get worse before they get any better.
Iran is still playing hard ball and are not scrapping their uranium enrichment program so if they are not stopped they will soon become a threat to Israel, the middle east and even Europe & USA.

Therefore I will be very surprised if there are no developments with Iran before George B leaves the White house (In the end of the year).
Iran is a major oil producer so you can imagine what will happen to the price of oil when Iran is hit.

Cheers

 

[Peter 14.7]

Something to digest, HC, thanks Peter

 

[Sunfish]

While arguing against "stagflation" I doubt he was saying "all's well".

He appeared to be making the case for lower living standards. He does not deny rising oil nor could he deny rising resources generally but he says that wages won't follow prices, ergo, no inflation. My take is that that could only mean lower living standards which will flow through to smaller cars, fewer holidays, movies etc and cheaper houses.

 

[boomtown]

Thanks for the link - interesting article.

 

[Peter 14.7]

While arguing against "stagflation" I doubt he was saying "all's well".

He appeared to be making the case for lower living standards. He does not deny rising oil nor could he deny rising resources generally but he says that wages won't follow prices, ergo, no inflation. My take is that that could only mean lower living standards which will flow through to smaller cars, fewer holidays, movies etc and cheaper houses.

Good assessment Sunfish and frankly, about time.

Most cultures need to disconnect the old notion of consumption/volume/ownership with wealth.

We should be having simplier holidays locally first, we should be hiring books/DVDs instead of buying, we should be paying higher prices for lless volumes of better healthier local food than low prices for masses of dodgy imports like Garlic from China, Pineapples from Indonesia, Oranges for USA and then paying $$ for supplements or to go the gym to lose the wieght we put on from eating junk calories.

And we should be driving the car we need, not the car the marketeers tell us we want.

The fact homes are getting bigger on smaller bocks when families are getting smaller is silly. Ironically if they keep going this way we will end up a nation of high density dwellers despite most hating units.

Peter

 

[Ausprop]

cheaper houses.

could not agree more. Social trends have seen bigger and bigger housing, economic realities will now deflate that dream. Expect to see a return to 3x1s and 1x1 villas