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Sunday, November 15, 1981

Wednesday Open Thread

This is your open thread for today. Please post random links and off-topic discussions here.

22 comments:

Eleua said...

The laughing at great cost to my posterior continues unabated...

Gasoline was up another nickel yesterday, which puts it up $.20 in one week - since election day.
The only news I hear about gasoline relates to the absolute bogus inflation numbers the government released yesterday, which had everyone in a lather.

According to the Institute of Economic Reality, a one-man Kitsap based thinktank, the PHI (Poulsbo Hydrocarbon Index) is up 8.77% in one week, which is 456% annualized.

At this rate, $3.00 gas should be back by the first week of December.

Stay tuned for further developments.

biliruben said...

Why do you think the PPI is bogus?

Don't you think that as the housing ATMs that are cash-out refis close down, that those pricing pressures aren't being felt on the producer side?

Eleua said...

When I heard yesterday's inflation numbers discussed, it was how the CORE rate (energy and food) were down big time.

The biggest contributer to the declining prices was the temporary cratering of oil prices.

On the way up, oil and food were stripped out of the calculus, thus hiding the grotesque inflation that everyone can see with their own two eyes.

I don't buy any gov't econ number. They are political, not realistic.

Click here for more info.

Eleua said...

I'm not saying the housing ATM isn't weighing on the consumer - it obviously is.

I'm just saying the gov't inflation numbers are a joke - just like their unemployment numbers.

There is no goldilocks.

biliruben said...

No question inflation indeces are crap.

But also I know that demand for products will slow due to the end of the equity fueled consumption we've seen the last decade.

Econ 101: What happens to prices of discretionary goods when demand declines?

Eleua said...

Asssuming that supply stays constant, or does not decline in step, prices will decline.

Econ 102: What happens when the FED prints money in a reckless manner within a declining economy?

Peter Taylor said...

Econ 102: What happens when the FED prints money in a reckless manner within a declining economy?

Exactly. We're looking at one of the nastiest and longest periods of stagflation in history. The Fed is determined to keep interest rates low, print more money, and ignore inflation completely.

Cost of production is rising and productivity is decreasing. Not good. Not good at all.

meshugy said...

State's jobless rate dives in October; payrolls swell

Washington state's two main employment gauges did something in October they haven't done for several months: move in sync, painting a relatively unambiguous picture of a healthy job market.

The state's unemployment rate dropped half a percentage point, to 4.8 percent, and nonfarm payrolls rose by 10,700 jobs. Both figures, adjusted to account for seasonal variations in the job market, indicate a strong, stable economy.

Payroll gains were widespread through most industrial categories. The aircraft industry gained 700 jobs in October to lead the manufacturing sector.

Retailers added 2,200 jobs as they geared up for holiday shoppers, led by food and beverage stores, clothiers and home-and-garden stores.

Construction added 1,500 jobs, despite concerns the slowing housing market would weaken what has been a key jobs engine. But real estate and rental leasing lost 100 jobs, one of the few weak spots in October's report.

synthetik said...

>Cost of production is rising and productivity is decreasing. Not good. Not good at all.

Yet, Mr. Market shrugs all this bad news off and continues its steady climb... where is the exhaustion? What is it going to take for people to hit the exits?

Eleua said...

What is it going to take for people to hit the exits?

The day after I capitulate...

synthetik said...

Is it just me or is this market even more bizarre and hard to understand than the tech-fueled 99 extravaganza?

When you look at everything, it's obvious that we're sitting on a house of cards.

Fundamentals were even more out of whack back then, but at least you could point at one thing "tech" and go "that's nuts!".

As fleck said recently "Vine Ripe and Ready, but holding Steady"

Matthew said...

synthetik,

Agreed. I have been trying to figure out what is going on with this market for a while now and it has left me speechless. I thought Bernake was supposed to be extremely inflation wary but yet he has been holding rates steady. The FED is losing credibility IMHO.

Something has got to give..... Soon.

PugetHouse said...

Cost of production is rising and productivity is decreasing.

The last I heard, about a month ago, the opposite was the case. Where did Peter get that tidbit?

ECON 102: The FED's hands may be tied from here on out. Since housing prices have recently had an unprecedented run-up, due in no small part to the credit expansion, any drastic tightening of the money supply could cause major damage in housing. The Fed is already wringing its hands over the housing slump.

If stagflation gets a foothold, some pretty creative monetary policy will be needed to prop everything up.

Eleua said...
This comment has been removed by a blog administrator.
Eleua said...

Pugethouse,

I agree. However, creative monetary policy is what put is in this position.

It would have been easier to just let the '98/99 recession to occur. No tech bubble, no housing bubble, no credit bubble.

We would have likely been much better off.

MisterBubble said...

Interesting: 6,500 of the 10,700 jobs added in October were either in "local government," "food and beverage stores," or "specialty-trade contractors" (granite countertop installers?)

What a vibrant and robust economy we have....

Hork said...

Mushugy,

Since you only quoted from a limited selection of the article, you are misleading people into believing that the article completely supports your rosy view.

The measurements that you quoted are further analyzed by the author where he suggests that they don't necessarily mean that the economy is strong. I believe his point is to tell people to look closer at the numbers.

"a person working two part-time jobs would be counted once in the household survey but twice in the payroll survey."

The headline could have just as easily been: "Housing sector shows signs of collapse; Owners taking multiple jobs to avoid forclosure."

Peter Taylor said...

pugethouse said:

The last I heard, about a month ago, the opposite was the case. Where did Peter get that tidbit?

Click here. Next, click on any one of the many hundreds of news articles that state U.S. worker productivity has ground to a halt and production costs are up nearly 4%.

redmondjp said...

Improved productivity is a limited resource with a diminishing-return curve. I always cringe whenever I hear on the news that "US Productivity has increased", as this usually translates into "less bees, more honey." Not discussing improvements in technology here, as we've already picked most of the low-hanging fruit in that orchard (remember the 'paperless' office?) . . .

Where I work now (we supply products to industrial equipment OEMs), we're in desparate need of a production manager, mfgr. engr, and mfgr. tech., and have recently lost a few production personnel, but are still expected to get the same amount of work done (my productivity is crap as I've been out on the shop floor troubleshooting our most complex machine for the past two days--steep learning curve!).

You can keep improving productivity up to a certain point, and shortly after that you can just forget it! Sort of like housing prices, eh?

Matthew said...

Meshugy is a troll. He cherry picks data from articles and then never responds when called out.

PugetHouse said...

Peter,

Thanks for propping me up in my laziness. I wasn't surprized to see that productivity gains have stagnated, but I doubt they will be going down. There are too many ceo's out there looking for recognition by throwing out support staff and cutting services (a' la McGavick).

In any case, I'm more-or-less in the same camp as redmondjp on the interpretation. Recent productivity gains have the rather nasty smell of gutted pensions and 3rd-world outsourcing. I can't say I find anything positive about increased productivity. In the US, our only successful manufacturing bases are prescription drugs and pesticides banned in other countries.

PugetHouse said...

It would have been easier to just let the '98/99 recession to occur. No tech bubble, no housing bubble, no credit bubble.

We would have likely been much better off.


I'm not sure I agree. The rats may have all run to commodities and utilities, instead of housing. One Enron is enough, thanks. Unemployment would likely be much higher with entreprenieurial investment crippled.