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Thread: "It's the (US dollar) inflation, stupid !"

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    Banned Melonie's Avatar
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    Default "It's the (US dollar) inflation, stupid !"

    (snip)"It’s the Inflation Stupid

    Monday, June 2nd, 2008 at 12:13 AM

    While Fed “hawks” like Richard Fischer offer up disingenuous, need to get heads out of asses speeches in the future subjunctive, the real story about inflation is being rendered in various consumer surveys. More than about anything now it is high costs and inflation that is the verdict. The latest Michigan survey is no exception. O que aconteceu?


    NEW YORK (Reuters) - U.S. consumer confidence fell to a 28-year low in May, a survey showed on Friday, as soaring prices for food and fuel soured sentiment and pushed long-term inflation expectations to the highest in more than a decade.The University of Michigan report painted a troubling picture. Its gauge of one-year inflation expectations surged to 5.2 percent — the highest since February 1982.

    Initial reports on the impact of the deficit swelling tax rebate look troubling as well.

    A February survey by the National Retail Federation extrapolated that about 12 million rebate recipients planned to use some of the money to buy gasoline. By May, the number had grown to 17.2 million — a jump of more than 40 percent. Another survey by the International Council of Shopping Centers found that those planning to use rebate checks to largely pay down debt jumped to 51 percent of respondents in mid-May from 46 percent in February. At retail outlets across the country, many merchants say they have yet to enjoy a bump up in business from the tax rebates.

    “They think they give you a check to go out and spend some money, but it’s not enough,” said Mr. Gonzalez. “The dollar doesn’t buy anything anymore.

    Meanwhile the US’ deregulated crony capitalist crack up boom economy continues to suffer from “unexplained” prices surges on numerous fronts. This one might be hard for most to understand, but regular Winter Watch readers should be able to put two and two together. Someone big is putting electricity into their trading account in lieu of 2% T-bills and CDs. Various utilities around the US are seeking and getting double digit rate increases.

    WSJ: Wholesale power prices in Texas have surged to new heights, confounding market officials and worrying regulators who see early signs that the situation could destabilize the state’s deregulated electricity markets. The spikes in wholesale power prices — ominous and so far unexplained – could take a big toll on both power providers and electricity customers if they persist. The state’s utility commission held an emergency meeting Thursday, “which shows the level of concern,” said commission spokesman Terry Hadley.

    Of course Texas is one of those locales where if the mainstream media is to be believed, the economy is strong. One of my litmus tests of o que aconteceu economic conditions are local and state budgets, and once again we see the familiar pattern, even in Texas.

    FORT WORTH — The city will eliminate hundreds of positions as it copes with a budget shortfall and a slowdown in tax revenue, City Manager Dale Fisseler said in a letter to employees.

    The evidence of hyperinflation wack-a-mole conditions are coming right and left, and hardly looks future subjunctive or justifying the Orwellian nonsense about embedded versus not embedded. The reality is more akin to the traficantes in my Rio favela shoot out analogy, who have already crawled out of their hovel windows, are jumping off walls, and are running amok with the lead flying. This particular price increase is “only” 20% and in response to “only” 42% higher costs. O que aconteceu?

    In a move that may fuel inflation in consumer goods ranging from plastic wrap to diapers to food, Dow Chemical Co. said it will boost prices of its products by as much as 20% because of soaring energy prices. Dow Chemical, one of the largest chemical manufacturers in the world, uses oil-based products and natural gas as raw materials and is also a heavy user of energy to power its manufacturing plants. The Midland, Mich., company said its oil- and gas-related costs in the first quarter were up 42% from a year earlier.

    Use photo supplies? More ‘only” 20% price hikes are here.

    Eastman Kodak Co. said it will increase its prices on certain consumer products by as much as 20%, citing the soaring prices of raw materials and the rising cost of petroleum.

    It now appears that political pressure is being applied on the hacks at the Commodity Futures Trading Commission to act on what is being called manipulative behavior. “O que aconteceu” is that this is of course crack up boom behavior, which is a much tougher nut than simply cracking down on some market manipulators. A new policy of sorts is coming this week. I really don’t expect much on this front, because a lot of the swapping that goes on can be conducted offshore, OTC markets and in dark pools. Separately the CFTC has suddenly announced that they have been investigating oil market manipulation for months.

    US regulators on Thursday revealed a wide-ranging investigation into crude oil trading practices amid increasing Congressional concern over the role of speculators in record energy prices. The Commodity Futures Trading Commission, US futures watchdog, said it had decided to break the customary secrecy surrounding enforcement actions because of “today’s unprecedented market conditions”. It said it had been investigating “the purchase, transportation, storage, and trading of crude oil and related derivative contracts” since December 2007.

    “But then, finally, the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against ‘real’ goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. - Ludwig Von Mises "(snip)

    from

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    Default Re: "It's the (US dollar) inflation, stupid !"

    Don't worry. All these price increases will result in a higher revenues for the corp and increased consumer spending.

    Then Xan can point these numbers out and say "See - the economy is going gangbusters! The corps made out like bandits! And consumers are spending more!"

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    Default Re: "It's the (US dollar) inflation, stupid !"

    Think of the manufacturers!

    The weak dollar policy is just as misguided, as the data on office and teco equipment show. It is not helping US exporters. This is especially true if your company is a manufacturer of goods that require energy to manufacture, you are getting killed by inflation.
    http://www.itulip.com/forums/showthr...6997#post36997

    (Attempt at oversimplifying not too inaccurately: China has cheap energy which they use to manufacture stuff. US inflation and the US reliance on other countries for energy means energy costs more USD for US manufacturing companies. Oh oh.)
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: "It's the (US dollar) inflation, stupid !"

    Indeed China, Vietnam, India etc. do have a huge energy cost advantage over the USA, Canada and Europe ... the ability to build inexpensive unscrubbed coal fired power plants ... plus the ability to burn dirt cheap high sulfur coal in them ... plus freedom from any direct or indirect 'carbon tax' per Kyoto treaty ! In the USA, Canada and Europe, such power plants would / could never gain environmental approvals. Thus American / Canadian / European manufacturers are typically paying twice as much per kWh of electricity ... more still if a 'carbon tax' has been imposed.

    If the devalued dollar has helped US export industries, it has only been those industries like Boeing or IBM or Microsoft or G.E. ... which have no direct competition outside of Europe / Canada. In that context Boeing planes are now far less expensive than Airbus, G.E. gas turbines are far less expensive than Rolls-Royce etc. in terms of 'world currency' prices. However, if there is viable Asian competition i.e. John Deere versus Mahindra, the devalued US dollar doesn't even come close to equalizing the lower (dirty) energy costs, the lower labor costs, the lower employee benefit costs, the lower business taxes etc. that are available to Asian competitors. And with each passing year, Asia gains more technical expertise and capital investment to compete in areas where they previously abstained ... a la

    This is the ultimate result of increased outsourcing of sub-assemblies to China by US / Canadian / European manufacturers of aircraft and other high-high tech products ... sooner or later, the Chinese figure out that they can also assemble all of the separate sub-assembly 'pieces' they are building (thanks to foreign expertise and foreign investment) into a complete product, and directly compete.

    ~
    Last edited by Melonie; 06-03-2008 at 02:06 PM.

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    (puts on moderator's hat yet again) - last warning !
    Last edited by Melonie; 06-08-2008 at 08:55 AM.

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