The Next Bubble

[sniglet]

Prices are falling for almost every commodity and asset these days. Stocks are falling. Real estate is falling. Soybeans, corn, wheat, and rice are falling. Oil and natural gas are falling. Lumber and cement are falling.

Looking at charts of prices for all the items mentioned, it almost looks as if they have been jumping off a cliff in the last month.

Prices for finished goods always take longer to decline than the underlying materials. For example, it now costs more to build a house than to buy an existing one. This works on the way up to. It took quite some time before consumers saw the price increases in milk, wheat, and other items show up on the store shelves, even though the underlying goods had been getting more expensive for quite a while.

Eventually we will start to see the price of capital goods fall, now that the underlying materials are getting cheaper (even the energy the plants use is getting cheaper now). Further, the higher unemployment rates will lead to downward wage pressure which will further reduce the costs of manufacturing. We are already seeing how construction contractors are unilaterally making 20% or 30% reductions in the rates they pay to tradesmen in markets like California and Florida.

We are entering a deflationary depression and can expect to see ALL prices continue to decline in the next couple years.

[lamont]

[lamont]

[sniglet]

[perfectfire]

[rose-colored-coolaid]

[TJ_98370]

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Justifiably resurrecting an old thread, I believe ------
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A 60 Minutes feature well worth watching / reading;
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....."Approximately 60 to 70 percent of the oil contracts in the futures markets are now held by speculative entities. Not by companies that need oil, not by the airlines, not by the oil companies. But by investors that are looking to make money from their speculative positions," Gilligan explained.
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Gilligan said these investors don't actually take delivery of the oil. "All they do is buy the paper, and hope that they can sell it for more than they paid for it. Before they have to take delivery."....
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Dan Gilligan is president of the Petroleum Marketers Association and represents more than 8,000 retail and wholesale suppliers.
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[sniglet]

[TJ_98370]

I believe the general public is aware that oil prices were manipulated and they are pissed! Stricter regulation of specualtion in commodities markets is inevitable, IMO.

[rose-colored-coolaid]

[sniglet]

[KayBee]

[WestSideBilly]

[FreedomLover]

[FreedomLover]