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is the bubble due to burst?

Discussion in 'Vintage Ferrari Market' started by PFSEX, Jan 18, 2013.

  1. henryr

    henryr F1 World Champ
    Silver Subscribed

    Nov 10, 2003
    16,774
    Atlanta
    Full Name:
    Juan Sánchez Villa-L
    sorry, there was never a govt surplus........

    maybe if you akin to enron type accounting.

    aka "on budget" accounting
     
  2. cheesey

    cheesey Formula 3

    Jun 23, 2011
    1,921
    who cares about how monetary policy affects pricing, not everyone is a speculator ready to flip cars every time the economic wind changes direction... appreciation of the F car brand transcends economic up and downs... the values of the brand have been up and down since day one, yet everyone that appreciates the brand and held on to their cars has been rewarded generously, while the markets have changed around them... "the sky has not fallen" instead to their surprise have found gold at the end of their rainbow... there are much better vehicles for speculation
     
  3. Bradwilliams

    Bradwilliams F1 Rookie
    Silver Subscribed

    Yep. Especially the Clinton administration "surplus"

    Can you say dot com bubble? That thing vanished the second he stepped out of office. That was all phony paper wealth with nothing behind it but hype and greed. A bunch of twenty somethings sitting in 500 squarefoot office spaces playing solitaire on their computers. Thanks for the Capital investment! We're outta here! LOL

    This one was my personal favorite

    https://en.wikipedia.org/wiki/TheGlobe.com
     
  4. 360modena2003

    360modena2003 Formula 3

    Jul 11, 2009
    1,498
    The only way that Trump will even near in attempting reach his targts is through deficit spending - this is also in line with what the world needs, higher commodity prices.

    The dollar is far too expensive, deficit spending will help counter this. I foresee the USD losing against all majors (Euro, Yen) - we are already seeing a run up on the Euro (from 1.05 to 1.09).

    The Fed's tightening policy will also have to be revised and perhaps reversed.
     
  5. F458Spider

    F458Spider Karting

    Apr 12, 2015
    170
    Fallacy. No economy "needs" deficit spending or "higher commodity prices." That's just an argument to continue money printing and propping up over leverage. No one can centrally manage an economy. Govt spending is just an inefficient redistribution (through tax or debt [future tax]). And some of that debt is monetized with electronic money printing by the central bank created by the Federal Reserve Act (state sponsored monopoly). The money printing is also just a tax (inflation tax - defined by increase in the money supply - we get diluted and $ buys less). The dollar has been devalued since the creating of the Fed. What we need is to let the markets price themselves. The massive debt needs to be restructured or repriced. Massive deflation is a good thing as prices are lower and makes us all wealthier. It's absurd to argue for higher prices. Wouldn't we love to buy cars, food, housing at lower prices? Of course. But the public buys the propaganda from govt and Fed. 2% inflation target? Seriously? Why? It's a sham to prop up the banks who don't want to take any write offs. The centrally managed banking system has created a bubble. More bubble is just deferring the problem. We swept it all under the rug in 2008 and nothing has changed - derivatives are higher, total Fed debt is higher, total worldwide debt is higher. World wide banks are printing $200B per month. They won't let the free markets do what they are supposed to do - let the over leverage issue correct itself. At some point the people who bought the overvalued paper have to take responsibility for their own actions and take the loss. Govt can't keep bailing everyone one through money printing. As for govt spending, I highly recommend this book (goes through the broken window fallacy and others). It's logical and an easy read: https://www.amazon.com/Economics-One-Lesson-Shortest-Understand/dp/0517548232
     
  6. 360modena2003

    360modena2003 Formula 3

    Jul 11, 2009
    1,498
    Fallacy is the new normal - politics do not care about what the "economy" needs.

    Although everyone calls out Central banks for printing, I'm sure we can all agree that the opposite could end up being far worse.

    What would happen if mortgage rates go up to 10% or if a treasury bill yields 15%? This would be a catastrophic event, run on all banks, and a complete collapse of the financial system.

    Allowing the system to "de-leverage" sounds like a noble proposition, while we are in our air conditioned homes, and have plenty to eat, but for a large part of the population these crashes meaning less food, civil unrest and chaos.

    If a Dino goes from 400k to 200k no lives will be affected, but if you can no longer afford your mortgage, or if the currency of your country devaluates to the point where you can no longer pay for basic needs, then lives are changed.

    Sent from my EVA-L19 using Tapatalk
     
  7. F458Spider

    F458Spider Karting

    Apr 12, 2015
    170
    The world would not end. We just take the medicine that is going to happen anyway - whether through another crisis or death by a thousand cuts. Rates going up would strengthen the currency which is what every country should want (then you can buy more other other people's stuff cheap). Civil unrest and chaos is very low probability and is the reason the banks, Fed and politicians use to continue to bail out banks and others. It's a lame excuse. Anyone who is fully diversified and not overleveraged would not get seriously hurt. The status quo will just end in an even worse situation later. I would love rates at 15%. Then my portfolio will shift from high cash to more bonds. Now sitting on cash.
     
  8. ggjjr

    ggjjr Formula Junior

    Nov 11, 2003
    828
    Detroit
    Full Name:
    George
    Anyone who thinks deflation would be a good thing doesn't run a real business with real employees.
     
  9. F458Spider

    F458Spider Karting

    Apr 12, 2015
    170
    I agree that when the economy or sector of the economy (eg housing crisis 2008) gets over leveraged, debt-induced deflation is not good for anyone. I define deflation as a contraction in the money supply, not a decrease in prices. Inflation is an increase in the money supply. Both result in price changes.

    But price decreases through productivity (e.g. technology) or competition is good for all - lower prices and better product/service. A business owner does not want the costs of their inventory going up, as those increases need to be passed on to customers (who wont be happy) or margins will decrease. If competition forces you to cut prices of your product/service, you may not like it for your business, but it benefits the customer, so you have to figure out how to add more value to keep the prices up.

    Debt-induced monetary deflation may be painful, but printing money (more inflation) to solve a problem of too much debt (that was ignited by low rates and money printing in the first place) is not the solution. It's just adding fuel to the fire and deferring the problem. Severe inflation is not good for a business either. Devaluing (diluting) the dollars you earn is not in your interest. Taking a one time deflation hit today will be equal to monetizing the trillions of debt over the long run (fiat is destroyed either way). Wealth just gets transferred. Some businesses may actually benefit. The cost / pain is the same in the end.

    We are past the point of no return (auto loans, education loans, federal debt, off balance sheet entitlement liabilities, etc etc). No way it can ever be paid back. But the monopoly financial system(s) created this problem. So we either have a big deflationary event or inflate it away (which is what we are doing so far). Most of the printed money is sitting in reserves, so prices are not increasing yet (although they are increasing more than govt data indicates - see Shadowstats website).
     
  10. 360modena2003

    360modena2003 Formula 3

    Jul 11, 2009
    1,498

    Exactly my point - it is easy to talk about these economic principles from an "armchair" -

    Deflation does not put food on a the table.
     
  11. Ferrari 308 GTB

    Ferrari 308 GTB F1 Veteran

    Feb 21, 2015
    5,915
    Trump reducing taxes soon? that should fuel asset prices even more.
     
  12. ggjjr

    ggjjr Formula Junior

    Nov 11, 2003
    828
    Detroit
    Full Name:
    George
    We are past the point of no return (auto loans, education loans, federal debt, off balance sheet entitlement liabilities, etc etc). No way it can ever be paid back. But the monopoly financial system(s) created this problem. So we either have a big deflationary event or inflate it away (which is what we are doing so far). Most of the printed money is sitting in reserves, so prices are not increasing yet (although they are increasing more than govt data indicates - see Shadowstats website).[/QUOTE]

    I'm not calling you out, but I've been hearing people on this board say that we are in for massive inflation due the govt.'s monetary policy for the whole of the last administration. I have seen no evidence of this on a wide scale view. In fact, if we had started a "Massive Inflation is Coming" thread, it would have been going as long as this thread. I do see froth in some of the real estate markets, where incomes don't support housing prices. That worries me just like it did ten years ago. Otherwise, it seems to me that the economy is limping along as reported.
     
  13. henryr

    henryr F1 World Champ
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    Nov 10, 2003
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    Juan Sánchez Villa-L
    there is deflation in the tech sector those cos seem to do just fine....

    everything i seem to pay for has gone up....
     
  14. Bradwilliams

    Bradwilliams F1 Rookie
    Silver Subscribed

    Not entirely. I don't see how anyone can make an argument that all of this inflation and government controlled real estate market is a good thing. All it does is divert resources and wealth into four walls and a roof. Looting people's savings just like college tuition does. Deflation in some areas is a good thing if you ask me. If everyone is making more money and you get government the hell out of these areas, pushing prices back to normal levels, then I don't see how it can erode people's confidence in the economy. People have more assets, money, and a decent paying job to go with it.


    Anyone want to address the tax loopholes getting erased? I'm curious to see if they'll try to eliminate the 6000 pound vehicle deduction. I was looking to make use of that for the first time this year. If they're going to eliminate it, then I'm going to get on it pronto.
     
  15. 166&456

    166&456 Formula 3

    Jul 13, 2010
    1,720
    Amsterdam
    Inflation is a whole lot higher than the CPI print in the paper. First you need to make the distinction between price and monetary inflation. They are closely related but they are not the same.
    The economics print called for an increase of 2% a year and many of the recent years were stated as to have been lower. This claim would amount to an increase of less than 22% over a decade.
    It is my guess that is monetary inflation and not the inflation I see in prices. I challenge anyone to point out to me day to day items where price increases have been so low. Most items have in my experience doubled and often more the past decade.
    In Europe the situation around the € changeover have been even worse. The change was 15 years ago, a lot of things are now priced 3-4 times higher. This is about 8% a year and nearly everywhere where I apply that number, prices make a lot more sense relative to the past.
    I can only say: please act accordingly and treat fiat money for the hot potato that it is.
     
  16. richardson michael

    Aug 17, 2013
    239
    brittany. france
    Full Name:
    michael richardson
    Jan 2013.,and this thread asked a question...is a Dino at $400K sustainable,or are we in a bubble ? !55 pages,and over four years later,we have discussed the world of high finance,and drifted way off the map.Just looked today in UK. Very few Dinos on offer. Talk quality,and you are looking at £GBP 400K for a GT,and around 600K for a GTS. I would say that the 'bubble' is no longer a bubble,the state of the market is moving onwards,and comfortably upwards. We made £80K profit on a GTS in 2014/5,but now regret its departure.Would suggest that this thread has now run its course.
     
  17. F458Spider

    F458Spider Karting

    Apr 12, 2015
    170
    No one can time the bursting of a bubble. It burst in 200 and 2008. This one will burst also, but there is no way to know when. It's history in the making when central banks like the Swiss National Bank are printing dollars to buy US stocks. It's all just one big inflation tax. If there is no bubble burst, then it will continue to be death by a thousands cuts through devaluation. Ferrari's are going up in value due to demand and the inflation tax. So if the bubble bursts, will demand also fall? Who knows. Buy a Ferrari to enjoy it no matter how much it costs. If you happen to make money on it, then great. A diversified portfolio will protect you from any bubbles over the long term.
     
  18. Caeruleus11

    Caeruleus11 F1 Veteran
    Rossa Subscribed

    Jun 11, 2013
    9,257
    The question is whether or not we are in a bubble, not the normal ebbs and flows of a rational/ stable market. Overall, I would say we are in a pretty rational market. However, specific cars you might call bubbles. I agree the primary reason to buy anything like this is because you love/ have a passion for/ it. My own opinion is the value of the classic Ferraris (in general) is likely to keep increasing- albeit it slowly.
     
  19. F458Spider

    F458Spider Karting

    Apr 12, 2015
    170
    I don't think there is a Ferrari "demand" bubble. True free market demand is not a "bubble." A lot of wealth has been created in technology for example and some of that wealth is chasing cars, art etc. However, the financial markets are absolutely in a bubble due to the central banks printing $250B per month (and Swiss Bank using some to buy stocks). The markets would be much more tempered if rates were set by a free market. PEs are at record highs due to the central bank interference. It's a bubble from that respect because that money was not earned by the banks.
     
  20. Caeruleus11

    Caeruleus11 F1 Veteran
    Rossa Subscribed

    Jun 11, 2013
    9,257
    I see your point and I can't argue the logic, but I also think rates are going to stay low for a long time further. This is not my opinion, it is based on discussions with friends and colleagues who are far smarter and knowledgable than I am. This is what they say. There are several factors but the short version is low rates for a long time. So that means lots of money floating around. I think its good to keep abreast of the market place on our favorite cars, but, when behind the wheel, I hope no one is thinking about values. Only the values on the gauges and the tactile, aural, and other sensory benefits!
     
  21. F458Spider

    F458Spider Karting

    Apr 12, 2015
    170
    I agree. Politicians always take the easy way out. Fed raised a couple times and they might do it again, but there is no way rates are going up materially. There is too much debt everywhere and instead of default they will choose monetization and inflate it away. So in nominal terms the bubble should continue. The wealthy are diversifying out of the dollar for this reason (homes, art, cars etc). This is one reason why Ferraris should continue to do well.
     
  22. Platini 289

    Platini 289 Karting

    Sep 21, 2015
    81
  23. wintrader

    wintrader Rookie

    Dec 22, 2010
    21
    They bubble lies in fiat currency...not in assets.

    Sent from my Redmi Note 4 using Tapatalk
     
  24. F458Spider

    F458Spider Karting

    Apr 12, 2015
    170
    Yes, but a bubble in fiat leads to nominal value increases in assets (stocks at highs, art, cars, homes, etc). If the dollar is devalued through printing fiat, then the assets traded in dollars require more dollars to buy (nominal increase in value). Real value of assets doesn't change. Increases in amount of outstanding fiat is just a tax - inflation tax.
     
  25. ferrari1971

    ferrari1971 Karting

    Jul 26, 2015
    51
    Santa Barbara , Ca.
    The Bonham Greenwich sale did not seem to fair very well. Does anyone know how the Russo & steel sale did ? Hammer Price does not list results for whatever reason.
     

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