Friday, December 14, 2012

Use it or lose it.

It is really hard to figure out what is going on with the real economy right now. Most people believe we have turned a corner. Real estate prices are up. And that is the only thing that matters. I mean, it makes me feel slightly better too. Obviously. There is nothing I want than real estate prices to rise. This directly benefits me.

However, I am still in the camp that believes this is all bullshit. There are too many distortions in the market right now. If it isn't cities giving 10,000 dollar down payment assistance, it's something else. Like the Fed increasing the amount of mortgage backed bonds they are buying.

I was actually a little surprised retail sales were not up more than .03%. Perhaps I am the only one on the planet who is doing this, but I have been pushing all my large ticket items into this year. Replacing things that cost a lot of money and that I've been holding out on because of the economy. And this is the reason why...

Yesterday I was reading a story about how business owners were OK with higher taxes. The person in the story said higher taxes were not going to affect her. But went on to say she would pay a new employee 2000 dollars less and she would not go to as many trade shows. Mr S. pointed out how it was funny she claimed there would be no affects, and then went on to list affects. And really what she meant is - It's not going to affect me. It's going to affect you. Businesses will pass all these costs on to consumers. Hence my frenzied buying spree. I believe everything is going to cost more next year, and it won't all be to inflation.

Bureaucrats seems to believe that raising taxes are going to duplicate the 1987 period where there was a huge boom after that when they raised taxes. Now I don't know all the details about that period, but I think these guys are dead wrong. I think the only reason people are not in an incredible amount of pain is because of the lowered gas prices.

I also think the holiday season is going to be distorted because of the above. Things are going to look much, much, better than they are. And this is going to make people have a false sense of betterness.

My general feeling about the herd is..... they are asleep. Coma sleep. I was talking to a guy I've know forever who owns a business. I'm not going to go into all the details, but I was completely shocked about his complacency of what is going to happen on the 1st. And really, even if you wanted to plan for the future, you can't because no on knows what the rules are. So when they wake up in Jan. 1, I think there is going to be a real shock.

No comments: