Main Street headline: "Raw materials are getting cheaper"
Wall Street headline: "Market crash: next global catastrophe?"
Wall Street headline: "Market crash: next global catastrophe?"
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?
The billion dollar question for those of us living in the U.S. is, if there is a problem, will it spread?
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.
We don't have capitalism, we have the joining of government and corporations and they are becoming ever more entwined.
People get all ornery when you call it fascism.
So, this is not a product of "late-capitalism income inequality"; it is a product of central banking in the U.S. and around the world, and their artificial tinkering with interest rates/the money supply for political expediency.
Collusion of big business and the state.
The SV scene isn't like the dotcom days without a business plan. There's a lot of startups now that have revenue from day one, and are cashflow positive. The value is tangible in many cases (not all).
Second, I wonder what impact the tanking China economy will have on the US real estate market. Wealthy Chinese have been parking their dollars in real estate here for a while, and with the stock market seen as more risky now, I wonder if that trend will increase and drive up home prices further.
As far as the US real estate market goes, I'd say it's possible that people parking their money here in even greater numbers will accelerate the current drive for luxury real estate while causing a shrinking of the middle value real estate market. You also see this in London right now, with tons of new luxury buildings being built and sold off, only to sit empty and used as a value bank. The general effect is that real estate values in general rise sharply and people are forced out of middle-value areas so that they can be redeveloped into ultra-high value areas. These are geographically centered effects, though. I'm really not sure how much it could drive the larger real estate market, which is already as hot as it's been since the crash.
Conversely, if it were investments in infrastructure, businesses, and tangible productive goods that create real world value, we could rest a bit easier.
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.
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.
Gas stations usually operate with the gas almost as a loss leader for the attached convenience store.
History may not repeat itself but it definitely rhymes.
Have you seen the pictures?
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...
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-ho....
Accordingly a housing is already so inflated that a 10% drop means nothing. Even a 20% drop wouldn't make things affordable.