Word of the Day from The Housing Bubble Blog: Stagflation
June 5th, 2006
I was catching up on the chatter at The Housing Bubble Blog and saw this little gem:
10-year note yield down big today. What does it portend . . .
What does it portend??? STAGFLATION. Stagnant economy with high inflation and no jobs. Welcome to hell.
I was recently talking with some friends about the economy and the topic of a recession coupled with inflation, as opposed to the devaluation of the dollar, or reduction in inflation at least, that’s supposed to accompany a downturn in the economy.
A quick google turns up the wikipedia entry for stagflation
From the article:
Stagflation is a term in macroeconomics used to describe a period characteristic of high inflation combined with economic stagnation, unemployment, or economic recession.
Stagflation is thought to occur when there is an adverse shock (a sudden increase, say in the price of oil) in a country’s aggregate supply curve. The effects of rising inflation and unemployment are especially hard to counteract for the central bank. The bank has one of two choices to make, each with negative outcomes. First, the bank can choose to pursue a loose money policy to stimulate the economy and create jobs by increasing the money supply (by lowering interest rates) and exacerbate the inflation problem further. Or second, pursue a tight money policy (by increasing interest rates) to try and rein in inflation at the cost of perhaps increasing unemployment further.
Housing inventory growth in Phoenix
May 12th, 2006
Ever blow up a balloon, and then stretch the neck to hear it go “EEEEeeeeee”.
Yeah. This is the sound of the housing bubble deflating. It’s not quite as noticable as letting go of the balloon and having it fly around with a “Pbbbpbth!” but it’s damn annoying, and the balloon’s getting smaller, and it’s certainly not going to blow itself back up.
There was an interesting comment on the housing bubble blog listing “available inventory”, otherwise known as the number of houses currently for sale, in Phoenix. It listed the available inventory on a daily basis from 7/20/2006 to 5/9/2006 (up to the day it was posted!) Seeing numbers this concrete takes the guess work out of where the housing market is headed. The law of supply and demand says that as inventory goes up, prices come down. As you can see, inventory is on a very steep, consistent climb.
Phoenix is one of the “hot” markets of the housing bubble, but certainly isn’t the top of the list. Inventory run ups like this are being seen nationwide, and are leading to price reductions (if the seller is smart) and long waits to sell as bubble flippers all try to cash out at once.
They’re all looking for the bigger sucker right now.
GlitchNYC is the personal blog of Eric Skiff, Community Evangelist for 
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