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Main Street headline: "Raw materials are getting cheaper" Wall Street headline: "Market crash: next global catastrophe?"
by evanpw 11y ago
Main Street headline: "Raw materials are getting cheaper"
Wall Street headline: "Market crash: next global catastrophe?"
- meatysnapper 11y agoIn all fairness, Canada and Australia are more or less commodity extraction economies with catastrophically inflated real estate markets. Lower commodity prices could prick that situation and cause some jumbled jonathans.
- sterl 11y agoI would love to see a huge correction in Vancouver but many people have been born and died waiting for it to happen.
- nosuchthing 11y agoApparently it's an acceptable outlet for dirty cash from shady foreign 'investors', http://www.theprovince.com/travel/Chinese+money+launderers+snap+Vancouver+real+estate+because+lenient+border+laws+loose/11262931/story.html http://www.theprovince.com/travel/Chinese+money+launderers+s...
- deleted 11y ago[deleted]
- branchless 11y agoThis is disgusting. London is traditionally the home of money laundering. Sigh. New money has no sense of history.
- notNow 11y agoHow much of a correction you're looking for? a 10% sounds very feasible in a down market but a 50% hit sounds implausible esp. in the short run.
- ironsides 11y agoIn 2008-2011 a 40-60% swing took place in many parts of the US. Arizona, Nevada, Florida all being at the top of the list. The number of foreclosures was devasting to those areas. Vegas, Phoenix etc. were hit extremely hard. Many folks placed keys in the mail box and just walked away from properties -- leading speculators and savvy home buyers to come in at rock bottom and buy their homes on the cheap. History may not repeat itself but it definitely rhymes.
- notNow 11y agoI don't know about the real estate market for each state you cited but if the market activities were driven mainly by speculation and short term flipping then a 50% dive esp. in a highly leveraged market sounds very plausible but it seems that Vancouver has very sound fundamentals to sustain the higher prices.
- linkregister 11y agoNot to mention Florida, Nevada, and Arizona had a housing supply glut where you will likely never see one in Vancouver in your lifetime.
- ectoplasm 11y ago> it seems that Vancouver has very sound fundamentals to sustain the higher prices. Have you seen the pictures? http://www.crackshackormansion.com/ http://www.crackshackormansion.com/
- deleted 11y ago[deleted]
- Tiktaalik 11y agoMedian house for a detached house in the "poor" east side is $1.28 million, $2.9 million in the traditionally more desirable west side. http://www.theglobeandmail.com/report-on-business/vancouvers-detached-house-prices-keep-soaring-as-supply-dwindles/article25852584/ http://www.theglobeandmail.com/report-on-business/vancouvers... Vancouver is actually one of the poorest large cities in Canada. Average income in Vancouver proper in 2009 was $43,911. https://www.biv.com/article/2014/9/trick-or-treating-planner-peers-vancouvers-future/ https://www.biv.com/article/2014/9/trick-or-treating-planner... All this means that Vancouver is the 2nd most unaffordable housing market in the world (after Hong Kong) http://www.theglobeandmail.com/news/british-columbia/only-hong-kong-has-less-affordable-housing-than-vancouver-study-finds/article22538901/ http://www.theglobeandmail.com/news/british-columbia/only-ho.... Accordingly a housing is already so inflated that a 10% drop means nothing. Even a 20% drop wouldn't make things affordable.
- georgeecollins 11y agoThat is a huge generalization about the Canadian economy. Mining and oil is 8% of the economy. Less than manufacturing and less than services. https://en.wikipedia.org/wiki/Economy_of_Canada https://en.wikipedia.org/wiki/Economy_of_Canada
- branchless 11y agoAnd 4% less than: real estate!
- x0ra 11y agoAverage people: looking at the weather, draws long term conclusion Science literate people: looks at the past X hundreds years of data, and the past 30 years mean to assume trends. You can blame the markets for a lot of things, but they conduct larger analysis than you do at the grocery store and try to understand all the variable leading to a situation, thus, having a deeper global overlook on things.
- lambdasquirrel 11y agoWell it could be indicative of a crisis fomenting overseas. The two obvious trouble spots are China and Europe. The Chinese have questionable economic statistics (gathering accurate statistics was never easy to begin with), and who knows what's happening in Europe. One way to get a gauge on things is to measure the inputs, i.e. consumption. The billion dollar question for those of us living in the U.S. is, if there is a problem, will it spread?
- jayess 11y agoBrazil is running into big problems too: http://www.businessinsider.com/brazil-indicators-look-like-2008-2015-8 http://www.businessinsider.com/brazil-indicators-look-like-2...
- cryoshon 11y agoConsumption is still pretty weak in the US as a result of late-capitalism income inequality-- in my opinion, the US will continue with the gradual stagnation we've seen since the crash. This stagnation has been going on for years now, and it constitutes a serious crisis of its own, but the sky isn't falling like in 2008. Until there's another crash, that is. Then, there will be another "recovery" with another large slice of the wealth going to the oligarchs. My completely uneducated and totally invented prognostication for this crash is mid Q4 2015 or early Q1 2016. The biggest indications that a crash is coming are the record high stock values we've seen recently. Relatedly, the SV bubble is going to pop when investors realize that there isn't really that much "disruptiveness" in a lot of the software startups they've been funding. China's consumption is strong as a result of it being in early to middle stage capitalism, which drastically reduces income inequality, which takes the form of a new middle class(perhaps temporarily). The problem with China involves their middle class's population-level involvement with the stock market. Everyone and their mom is invested into the market, meaning that the commoners are currently losing vast amounts of wealth as a result of the implosion. Whether this ultimately will hurt consumption isn't clear. Europe might be okay in the medium or long term, but a small crisis is already playing out right now. Greece, while somewhat ameliorated by recent talks, is still a ticking time bomb. An interesting third case is Japan, which is now having its second "lost generation" in a row as a result of long-term stagnation and demographic issues. Japan is a neglected back-door to the world economy. The coming months could be a much-delayed ultimate collapse or resurgence from the sleeping economic giant, though after decades of horizontal movement it's hard to envision what either would look like. Interesting times ahead.
- lmm 11y agoEven on Main Street, when an upscale boutique gets replaced by a dollar store that's not a good sign. When times are good it doesn't feel like stuff's getting cheaper, it feels like people have more money. A crash in raw materials is a bad sign - it likely means companies have stopped buying because they've stopped innovating, or because they think pretty soon people aren't going to be buying stuff.
- branchless 11y agoDue to our banking model in the West when times are "good" it's actually making life worse for our kids as the primary outcome is land price inflation which makes people fell richer but is not for most monetizable.
- cletus 11y agoThe big one here is oil. The markets go down on tumbling oil prices. I mean I see why oil companies go down. It's lower profits and, worse, as oil becomes harder to find the technical cost of extraction goes up. There are I'm sure many fields where the technical extraction cost is pushing if not exceeding $50/barrel. Yet this is actually good for pretty much everyone else. Oil is one of those things that's an input cost into almost everything. So why aren't the markets talking about how this is going to be better for particularly high oil consumption industries? Airlines spring to mind. Actually, side rant: the so-called "fuel surcharge" airlines charge is such a joke. I wish it were illegal. There is no "fuel surcharge". It just costs more than it used to. Put it into the ticket price and be done with it. Because you know the fuel surcharge isn't going away when oil prices drop.
- Cshelton 11y agoGas stations and airline fuel charges have always been first to rise, last to fall. It is confusing when you see oil drop like it has then see the price across the street go up 5 cents tomorrow. Could it be fixed, yes, do they have much incentive to do it...no.
- r-n 11y agoAs far as gas stations go - they make most of their money by lagging behind the fall in oil prices. They make an extremely small profit most of the time and a larger profit when oil prices fall. Gas stations usually operate with the gas almost as a loss leader for the attached convenience store.
- im3w1l 11y agoYou have to ask yourself: are they going down because of increased supply, or because of decreased demand? Increased supply should be good for economy as the increased supply of raw mats cause increased production of higher grade goods. Decreased demand on the other hand indicates that something is wrong. People are not buying anymore. Can't they afford it any longer? Or or they decreasing production due to anticipated lower demand for their higher grade goods?
- nulltype 11y agoWhy does decreased demand indicate that something is wrong? Maybe people don't want those particular goods anymore.
- athenot 11y agoDemand is used as a proxy to measure industrial activity.
- Hermel 11y agoThat's the right question to ask. As far as I can tell, the answer is: both - depending on the comnodity. For oil, it is mainly increased supply. For steel, coal, copper and co. it is probably rather a lack of demand.
- leereeves 11y agoOil is a portion of the price of every other commodity. They all require energy to extract/produce and transport.
- evanpw 11y agoI actually agree with you; I was just poking fun at the "high price good, low price bad" tone of the article. Notice the author's apparent relief that a few commodities have "managed to stay out of the bear market" because of bad weather and supply problems.
- 11y ago