Luchasaurus— June 16, 2022

🧩 Today’s Puzzle Pieces 🧩
The Stinger 🦂
Inflation 🎈
Housing Costs 🏘️

There’s something quite amazing about witnessing a human dinosaur be thrown through a stack of four tables.

That was just one of the scenes from last night as Boys The Elder & Younger and I attended AEW Dynamite and Rampage. The biggest news from the event was the crowing of new AEW tag team champions, as Luchasaurus and Jungle Boy were dethroned by the wildly entertaining Young Bucks.

I’ve been a pro wrestling fan since I was BTY’s age, when, on a Saturday morning, I was flipping channels (by turning the knob on the TV set among the five channels we received!) and came upon a mohawked man with his face painted driving a spike into a fat bleach-blond man’s eye.

“Dad! Look at this!” I screamed, not realize yet that what was happening was scripted violence and not a televised assault.

Over the years, I have wandered in and out of the sport, but it’s never been far away, and getting a chance to enjoy some of the most athletic and charismatic names in the game today with my two boys was something special.

The highlight of the evening for me won’t air on television until Friday — the return of “The Icon” Sting, whom I watched as a boy BTY’s age wrestling 60 minute classics vs. Ric Flair.

Sting is old now — in his 60s — but he still does crazy stuff, including jumping off of balconies onto his opponents. Last night marked his return from a “broken leg.” When the lights went out while the heels were attacking his protege Darby Allin, I realized we were in for a treat. And when the lights came back on, there he was.

Yes, folks, I know how much of a dork this makes me. I don’t care. I never have. “You know wrestling is fake, right?” If by that you mean that the outcome is pre-determined, of course, but there’s nothing fake about what these men and women put themselves through. I’ve always been attracted to the storyline development, the swerves, the unexpected moments, the acts of crazy athleticism.

And last night, I got to enjoy all that with my boys.

The Federal Reserve did yesterday what the Federal Reserve indicated it would do, raising interest rates by a massive 75 basis points, an increase not seen since 1994 (which was, like, a few years ago, right?). I began talking about coming inflation in around 2010, when the government was pumping huge amounts of money into the economy after the near-collapse of our capitalistic society thanks to the greed of bankers and the stupidity of regular humans.

Inflation sucks, and most everyone is feeling it. I remember being wowwed when I was a kid on a family vacation in Mexico that a taco would cost something like 7 bazillion pesos. I’m not saying we’re going to get to the point where a Big Mac is going to go for $1,500, but I’m also not saying we should be sure our “great” nation is always going to be great (it won’t and, in my opinion, never was as great as its been made out to be, considering it was built on a foundation of racism and hypocrisy). Empires come and empires go, and to think that we’re somehow different or ordained by a creator to be a beacon of light (we’re not) is insane.

The Fed is (belatedly) doing what it should be, making spending more painful so that we don’t. Just about everything in life runs on the basic principles of economics — supply, demand and scarcity. If a Big Mac costs $1,500 and fewer people have $1,500 to blow on a Big Mac, the price of a Big Mac, absent government interference, will come down.

That it took the brilliant minds that run our government this long to pump the brakes on massive injections of cash to prop up our failing systems is disturbing.

While the average Amuricahn has only lately been feeling the strongest pinch from higher prices, those in my soon-to-be former industry (last day: Friday!) have been seeing it for a few years now. The cost of buying a home has been skyrocketing since the pandemic began, and it, also, has been fueled by scarcity. Here’s what happened.

A ton of Gen-Zers came of age and flooded the housing market with buyers (demand).
The pandemic showed us that work didn’t have to be done from an office near a city-center, enabling more people to move further from their jobs (more demand).
People got sick of living in tiny apartments constantly occupied by their loved ones who weren’t going to work to work anymore (more demand).
People with nice houses in desirable neighborhoods disproportionately decided to stay put because moving in a pandemic is unnecessary if you’re already good with Nos. 2 and 3, above (less supply).

When you combine those factors, it’s a foregone conclusion that prices are going to rise, and rise they did. With few homes on the market and tons of buyers, would-be home buyers started making insane offers well above the list price. My real estate team recently had 54 offers on one home. FIFTY-FOUR! That’s nuts.

We’ve all been waiting for interest rate increases to slow things down, and, indeed, interest rates have triggered massive mortgage rate hikes. The average 30-year rate at the end of 2021 was somewhere around 3% here in Missourah. Now it’s above 6%. That should price some people out of the market, right?

Not so fast, sunshine.

Remember, these folks are flush with government-infused cash and big pay raises brought on by the Great Resignation that made employers desperate (and willing to fork over $$$$) for warm bodies. On top of that, those with investments in the stock market have seen their portfolios swell like an undiscovered tick.

And on top of that is that fact that, while 6% is high in comparison to the historically low rates of 2021, it’s still not all that high.

What that means is that there is still a huge imbalance in the housing market, with far more demand than their is supply. It’s wise to consider a market balanced if there is about four months of inventory. That means that, if no other homes went on the market starting right now, it would take four months for the existing supply to dry up.

That number has been around two weeks for much of the past year and, according to the data I’m looking at, hasn’t improved all that much.

My prediction is different from Bossman, who says prices aren’t going to come back down. They will. It’s just going to take awhile to happen. People need to blow through their stockpile of cash (Amuricahns are good at that), and we have to get through this demographic wave of Gen-Zers looking to move out of mom’s basement. Only then will higher interest rates (which will easily reach 7% by the end of the year) start pushing people to the sidelines.

And then, once demand is less, supply will be comparably more, which means prices will come down.

The Two Business Principles That Govern Life

For as much as we try to complicated it with heady notions such as meaning, purpose and lasting significance, life essentially can be boiled down to two principles with roots in economics. Strip away all the not-unworthy teachings from self-help books, leadership seminars and religious institutions, and what you’ll find is that humans act as…

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