Wednesday, November 21, 2007

The Stagflation Spike

The stagflation spike
As a measure of our global economic angst this is certainly striking. Credit Suisse have done some research looking at the incidence of the terms “stagflation” and “recession” in news stories.

Their results suggest mounting anxieties on the former, while recession fever has yet to take hold.

I'd say that on average the voters in my poll (thank you!) have nearly equal anxieties between stagflation and a disinflationary recession.

I'm a fence rider between the two for the most part (as you may recall). About all I really expect is that real yields continue to fall. I'm using the theory that in a fiat currency system, strong economies generate high real yields (1980s and 1990s) and weak economies generate low real yields (1970s and 2000s).

I'm also under the impression that we've simply borrowed this recovery and that the downturn we are seeing now is just a continuation of the dotcom crash from which we never did truly recover. The monetary printing presses offered up a rather convincing illusion though (by devaluing our currency so that all assets rose in price). However, there are now serious cracks in the facade.
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7 comments:

  1. AnonymousNovember 21, 2007 at 1:05 PM

    ". . .this recovery and that the downturn we are seeing now is just a continuation of the dotcom crash from which we never did truly recover."

    Funny, I saw a piece on the local TV news this morning where a "financial adviser" was opining that RE in Las Vegas is already a great buy. Relative to your piece was a comment on the "similar" opportunities afforded by the aftermath of the dotcom crash. I have a suspicion that the current mess may lead to deeper funk than the dotcom crash so I'm not rushing out to buy RE in Vegas just yet. Well, I guess it is called "Lost Wages" for a variety of reasons!

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  2. AnonymousNovember 21, 2007 at 2:16 PM

    Surveys indicated a record 38.7 million U.S. residents were likely to travel 50 miles or more for the holiday between Wednesday and Sunday, up about 1.5 percent over last year, according to the AAA auto club.

    About 31.2 million of them were expected to drive despite gas prices that were nearly 85 cents more per gallon than they were a year earlier. The national average for regular gasoline on Nov. 16 was $3.09 a gallon, up from $2.23 on Nov. 17, 2006.

    "The question becomes 'Is $10 or $15 more for gas enough to change travel plans?' and obviously most Americans said 'no,'" said AAA Mid-Atlantic spokesman Lon Anderson in Washington.

    Despite the gas prices, AAA has said, prices for hotels, airfares and car rentals are mostly declining, with car rentals averaging 12 percent lower than last year, airline tickets down about 7 percent and some hotel holiday rates down 3 percent.

    Light check-in volume surprised travelers departing from the United Airlines terminal at Los Angeles International Airport.

    "We were expecting a much longer delay. LAX is infamous for that," said Charles Gwyer, 70, of Philadelphia. He and his wife were heading to Hawaii for a family gathering after a stopover in Los Angeles.

    "It's empty, that's weird," Mike Patulo, 23, said at Newark Liberty International Airport in New Jersey, where he arrived by 8 a.m. for a 10 a.m. flight to Cleveland.

    http://www.iii.co.uk/news/?type=afxnews&articleid=6404183&action=article

    Kevin

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  3. Stagflationary MarkNovember 21, 2007 at 4:14 PM

    kwark,

    I never saw Mad Max talkin' to a real estate agent.

    Kevin,

    I never saw Mad Max talkin' to an airline gate agent.

    D'oh! ;)

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  4. AnonymousNovember 21, 2007 at 4:55 PM

    StagMark,

    But one o' these days we may see Mad Max talkin' to an economist in the bankerdome!

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  5. Stagflationary MarkNovember 21, 2007 at 5:44 PM

    kwark,

    The bankerdome economy is going to have some serious problems.

    Will fractional reserve banking even work in a canned goods economy?

    In other words, if I deposit one can of green beans will the bank actually be able to loan out ten cans of green beans to other people on my behalf?

    I think not! Anarchy I tell you! ;)

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  6. AnonymousNovember 21, 2007 at 7:09 PM

    According to the American Farm Bureau Federation, the cost to feed 10 people in 2007 is $42.26, up 10.9% from last year and the biggest year-on-year increase in over a decade.


    Kevin

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  7. Stagflationary MarkNovember 21, 2007 at 7:36 PM

    Kevin,

    Nice find!

    http://www.fb.org/index.php?fuseaction=newsroom.newsfocus&year=2007&file=nr1115.html

    Have you seen the chart of Thanksgiving dinner ex-food and ex-energy though?

    There's ZERO inflation. *sarcastic and tragic gallows humor chuckle*

    ReplyDelete