Going forward, as rates rise from 4% to x%, it is more likely that fixed rates will be your friend.

Why do think this would be the case?? With a variable rate, the borrower bears the interest rate risk. With a fixed rate, the lender takes on that risk and will charge a premium for doing so.

So going forward from any point in time, I’d expect that on average a variable rate will end up costing the borrower less. Whether that actually turns out to be true in hindsight depends on how accurately the lender had predicted future interest rates.

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Most people attribute intelligence to the market. Aetakeo has correctly articulated what many (most?) refuse to recognize.

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They also have the choice of buying that 2 or 3 year old computer way, way cheaper than it was new. That’s an apples to apples comparison.

Technological advancement in new goods drives down the price of used goods.

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You can look at TIPS and RRB yields to see how well the CPI compares to what the market expects for inflation. You are welcome to know better. Driving constituents into poverty is not always the best policy for getting re-elected, right now especially true if you’re the British government.

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Farmers currently maximize production by adding as much fertiliser, pesticides, and other ‘inputs’ as necessary to produce the maximum yield. With rising oil, natural gas, and potash prices, farmers will have to calculate how much fertiliser to add in order to maximize their profit. Wheat production is not likely to rise.

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Given the DotCom meltdown and the subsequent insanity of the sub-prime derivatives trade, and given that tens of thousands of economists and traders believed in the housing boom, I’ve become really comfortable with the idea that tens of thousands of anybodies can be radically incorrect. The herd seems to move based on really local indicators of potential profit, which means that Tulip Mania makes sense for some value of sense.
Seriously, having watched two bubbles, both times scratching my head as to WTF people were thinking, I have faith in the market correcting over time, and I have faith that the market may be indicating nothing more than incompetence and greed at any given moment.

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price will effect the buyers

the affection for the effect
affected the effective effect

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My comment was a bit off. Central banks work off of their target rate which affect the general rates offered in the economy. In the states, treasury bonds are auctioned setting their yield. The currency moves as a function of the demand which is affected by the relative yields.

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Impossible to justify such a conclusion. Adjustable rate mortgages weren’t even legal in the US until 1982, meaning our entire history with them has been during a 2 decade long secular bear in interest rates.

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As for government bonds, if yields are off base, the currency moves to make the market.

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It’s a fact. Common sense confirms it everyday, eventually most people’s purchasing power will be so eroded, a serious recession will set in.

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Listen, it’s well documented that many gov’ts use a variety of techniques to under-report “inflation” (wrongly defined, btw) - the are reporting price changes, not inflation (an increase in supply of money/credit - too much to explain here). This isn’t discussed in MSM, but it’s been well documented over many years. Others on this site can elaborate.

Furthermore, this low long interest rate period we’ve experienced (VHB is correct - that cycle is over) has been driven by multiple factor, including vast sums of price insensitive, mercantilist money recycled from Asia & the Middle East recycled into Western gov’t bonds. The presumptive corollary isn’t the dominant factor.

Even furthermore…it’s also a matter of economic history, through multiple multi-decade cycles, that credit (speculative) booms (like we’ve just completed) experience a flattening of the yield curve, drawing down long term rates.

This too has changed…take a look.

There are additional factors.

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By corollary you are saying government bond rates determined on the open market by tens of thousands of bond traders and in direct competition to other similar instruments from around the world are not correct.

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This is no different from silicon foundries moving from 1um to 65nm and from 8cm to 30cm wafers or for hard drive manufacturers making a 300GB hard drive with a single platter vs. 3 just a few years ago. The price of an “equivalent” computer has to decline. I am not advocating that the government use a linear relationship between CPU frequency to the computer component in the index, but it does need to reflect the reduced costs/improvements to stay valid. The flip side would be that the CPI would be too high relative to reality.

I do feel that the government currently does under-report CPI and creatively uses hedonics to the public’s detriment. However, the more important issue is that the BoC seems to have been ignoring inflation in favor of keeping the dollar competitive with the USD, especially since Dodge “retired”.

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Yeah rob a,some one actually did analysis to show how the commute time+gas price will effect the buyers who chose valley over vancouver now they must consider moving back where the actions are on free of gas infront of their doors,right rob a?

cafe,skirts,bikini’s,and the Canadaline,
world famous shopping promenade,
bussiness district wine,
beach,resturant etc,
or sit in or out of the library
you will be fine
every single task consider saving $5
then count the total activities
from work to the beach
then multiply by 30/31 days of month
- inflation=no inflation.
From cambie to davie
from west side granville to robson
denman to english bay
form burrard to millville
from yaletown to gastown
from west hasting to stanley park
ladies and gentlemens
Vancouver peninsula
is a place of action
“THE BEST PLACE TO BE”-right rob a?

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]]> http://vancouvercondo.info/2008/06/canadian-inflation-22.html#comment-20534 -A- Fri, 20 Jun 2008 00:11:34 +0000 http://vancouvercondo.info/2008/06/canadian-inflation-22.html#comment-20534 I like the fact the greedy fools are missing all the signals, and aren’t yet fleeing the market like rats out of a sinking ship. The inventory glut is building because the market is scraping from the bottom of the barrel for new entrants into the Ponzi scheme. It will be out of the seller’s hands, there will be virtually no market left for the inflated boxes, but they will still hang on to the hope that next spring the market will pick up, while more boxes get built. The only way they can keep this illusion afloat for a while longer is if they can engineer a 65 year mortgage and sell it to the prepubescent foreign investors.<p class="top-comments">Current score: <span class="top-comments-karma" id="karma-20534">0</span> <small>(to vote for this comment, please visit the site)</small></p> I like the fact the greedy fools are missing all the signals, and aren’t yet fleeing the market like rats out of a sinking ship.

The inventory glut is building because the market is scraping from the bottom of the barrel for new entrants into the Ponzi scheme.

It will be out of the seller’s hands, there will be virtually no market left for the inflated boxes, but they will still hang on to the hope that next spring the market will pick up, while more boxes get built.

The only way they can keep this illusion afloat for a while longer is if they can engineer a 65 year mortgage and sell it to the prepubescent foreign investors.

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Buoy, dew eye here ewe!

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The government tracks price when quality/price goes down.

But when quality/price goes up they insist on tracking quality.

They’re only too happy to substitute hamburger for steaks when meat prices are rising. But as computer quality rises they track ‘quality’ and say a basic model computer today is worth twice as much as a few years ago.

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I disagree. Mostly because as soon as you allow wiggle room you’re opening the floodgates.

Computers are a great example. If a student needs a laptop computer for their university education they’d buy a system twice as good today as they would have two or three years ago. They’d pay the same amount but the government says because the RAM and CPU are twice as powerful the cost of that computer has actually deflated by 50% or so.

It’s just a cheat to artificially lower inflation rates, the primary purpose of which is to cheat people out of their pensions and ‘cost of living’ wage increases.

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rob a
there is no their there!
they are where their there is

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The problem rests is the conflict of interest the government has in determining this number (indexed entitlement payments, TIPS, etc.)

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Cedar has been one of the few B.C. forest products where demand has remained strong but it is beginning to soften, Western said. Other markets – the U.S. and Japan – remain weak.

The Western announcement pushes the number of unemployed B.C. forest workers up to more than 12,000.

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