Saturday, March 14, 2009

Times are a-changing

Some mixed signals lately in the economy. The saving rate has risen from almost zero in fact we had a few months of a negative saving rate to 5%. That seems like a phenomenal change. Retail sales were better than expected in February, although negative if you take out the impact of home sales there was actually growth. The government says that January retail was better than originally estimated. GM reported an increase in cash due to cost cutting that means they will not be taking a $2 Billion loan from the government they originally thought they would. The stock market had four "up" days in a row. One major bank reported the possibility of a profitable quarter in the first quarter of this year.

Is not the time to dump some money into the stock market? Hmmm!!! Is the economy really as bad as all the pundits say it is or are they over stating their argument to make sure necessary steps to reinvigorate the economy are being taken? Will we simply ignore the bank disaster and skirt the issue? I do not doubt that there must be a major shift in the housing market. I believe that in many areas property values are based on perception and not actual value. For those of us who do not live in California it is hard for me to see why a 3 bedroom home on a city lot with a bath and a half should be worth $500K. I realize that location makes a difference, but with the improvements in communication and the move to working from remote locations does that not spell a decline in property values for those areas now viewed as central to conducting one's business? I hope there is a readjustment. The values our society seems to be willing to pay are too high in my mind and contribute to the larger view that money has value beyond the purchase of subsistence.

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