We’re suffering from paradox overload this morning.
We read in the paper that June saw the lowest inflation gains in five months. Ben Bernanke, speaking to the US Congress, dumbed-down his remarks, in a message dumbbells wanted to hear:
“Core net inflation should edge a bit lower,” he said.
But food has been rising this year at three times the rate of a year ago – or 6.2% per year. And gasoline already sells for a price 30% more than it did last year.
Meanwhile, from Las Vegas comes word that house sales are collapsing – they’re down 42% from a year ago. Nationwide, new housing permits are at their lowest in 10 years. And in Southern California, house sales are at their lowest volume in 14 years. But while houses weren’t selling, when they did sell they sold for slightly higher prices.
Go figure again.
Up the mortgage loan food chain, on Wall Street, the big fish at Bear Stearns (NYSE:BSC) say that investors are out of luck. There is trouble galore in the CDO market. But over at the equity trading desks, things have never been better. What trouble, ask the stockjobbers? What housing problem, they want to know? The Dow is near an all-time high. Neither housing slump…nor subprime slump…nor any kind of slump is going to stop this market, say the pros.
Dick Gaylord, who will become the nation’s top REALTOR next year, claims that the market “isn’t down, but just returning to normal”.
“I don’t know that there’s ever been a bad time to buy,” adds Gaylord sagely. “If people will hold on, there’s no bad time to buy in real estate…”
The whole financial world is full of paradox and contradictions.
The Daily Reckoning Australia