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China’s Inflation Hits American Price Tags
Because of new cost pressures here, American consumers could see prices increase by as much as 10 percent this year on specific products — including toys, clothing, footwear and other consumer goods — just as the United States faces a possible recession.
I have bought nearly a lifetime's worth of clothing this month (think t-shirts, underwear, socks, sweat pants, sneakers). Most of it went directly into storage. First, it is still cheap. Second, the Christmas season was a bust so many of the things I bought were on sale. Third, I think most take it for granted that the things that have been deflating will continue to do so. I'm of the opposite belief. Clothing was one of the first to be outsourced. I would therefore argue that it is a safer thing to hoard. Much of the disinflation has already been squeezed out of it perhaps.
We also bought nearly a lifetime's worth of sheets. I'm not sure how the sheets will last but 14 sets (10 regular and 4 flannel) should cover me for a LONG time, lol. Once again, most are in storage.
Like toilet paper, clothing is about the cheapest it has ever been relative to gold and silver. I see very little downside in buying things while they are cheap. If they stay cheap, no harm done. If they become more expensive, there'll be little need to buy in the future. Win win.
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
-
At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
11 hours ago
19 comments:
Stag,
http://www.businessweek.com/investor/content/jan2008/pi20080130_845431.htm?chan=top+news_top+news+index_top+story
Another stagflationary article.
It surprised me that on a quarterly basis, inflation exceeded 5%. Ouch! Its no wonder I feel poorer. And productivity appears to be in a downward trend to boot. No wonder with illegals feeling the housing squeeze and the gov't expanding its payroll.
Investors continue to ignore the inlfation data. Twenty years of investor prosperity makes for one heck of an anchor.
Stag,
From the January 2008 ISM report:
Question 1 — Is the turmoil in financial markets having any effect on your firm's ability to obtain regular or additional financing?
Yes — 7.4% No — 92.6%
Prices*
The ISM Prices Index registered 76 percent in January, indicating manufacturers are paying significantly higher prices on average when compared to December.
Credit crunch?
MAB,
Investors continue to ignore the inlfation data. Twenty years of investor prosperity makes for one heck of an anchor.
Investor: Am I being lynched?
Wall Street Mob: That's not how we do things. Look at the trees. Do you see any nooses?
Investor: That's a relief. Say, why are my feet in cement right now? That's really stagnating my movement.
Wall Street Mob: You'll feel better once you get in the boat.
Investor: Where are we headed?
Wall Street Mob: Your inability to repay your debt means we'll be needing you to take a little swim.
That last comment was intended for Anonymous. Sorry about that!
MAB,
The ISM Prices Index registered 76 percent in January, indicating manufacturers are paying significantly higher prices on average when compared to December.
Just imagine what the Chinese version would look like, since that's where most of our manufacturing is currently located!
Say- aren't you suppose watch out for buying things that moths and rust corrupt and thieves break in and steal?
My wife is threatening to throw out some perfectly good jeans just because they don't have fabric where my knees are. She just isn't getting the frugal lifestyle that I lead! :)
David,
Say- aren't you suppose watch out for buying things that moths and rust corrupt and thieves break in and steal?
I'm just trying to balance the known evils!
Rust? Corrupt? Thieves? Sounds like something that reminds me of our new and improved US coins!
Why does a coin rust fasterin saltwater than freshwater?
http://answers.yahoo.com/question/index?qid=20080103130156AAJ6TTi
I'd like one of our founding fathers to offer an opinion on that question, lol.
My wife is threatening to throw out some perfectly good jeans just because they don't have fabric where my knees are.
I have some perfectly good t-shirts that are missing fabric where our pet bird's beak has been. :)
where our pet bird's beak has been.
I used to tame Umbrella cockatoo's for a friend to sell-- a lot of getting bitten and not reacting to show them it didn't matter. I found a Mexican green cheeked Amazon starving a few years ago, and persuaded my wife to tame it down. The biting hits its peak when they are tame enough not to be afraid of you, but still not sure you mean no harm, painful, but when you succeed in gaining their trust it's really neat. There are Amazon parrots breeding in El Cajon (San Francisco too) and I believe it was a 6 month old fledgling that wasn't smart enough to find enough food. It got out a year later and probably rejoined the flock. Currently we are birdless and okay with that, got enough pets to take care of.
President George W. Bush will unveil a budget of more than $3 trillion on Monday for fiscal year 2009 that begins on October 1. The proposal will be sent to the Democratic-led Congress, likely setting the stage for a fresh round of sparring over spending priorities.
Here is what Bush's budget is expected to show:
FORECASTS
* The White House will forecast deficits of about $400 billion in fiscal 2008 and 2009, according to a U.S. official who spoke on condition of anonymity. A deficit in that range is equivalent to about 2.8 percent U.S. gross domestic product.
* A $400 billion deficit would be more than twice the $163 billion shortfall recorded in 2007 and would approach the $413 billion gap of 2004, which was an all-time high in dollar terms.
* The administration says its goal of a budget surplus by 2012 is still achievable while making Bush's 2001 and 2003 tax cuts permanent.
http://www.reuters.com/article/bondsNews/idUSN0144126920080203
But I tell you there is such a thing as a free lunch!
Kevin
George W. Bush took office in 2001 with budget surpluses projected to stretch years into the future. But it's almost certain that when he returns to Texas next year, the president will leave behind a trail of deficits and debt that will sharply constrain his successor.
On Monday, the president will unveil a $3 trillion-plus budget request for his final year, which is likely to show a deficit of more than $400 billion. New details of the budget emerged yesterday, with officials saying the White House plans to keep a lid on nonsecurity discretionary spending. It wants to cut about $200 billion from the government's medical programs for seniors and the poor. (See related story.)
The longer-term picture is darker. Despite his efforts, Mr. Bush failed to work out a deal with Congress to tackle the spiraling costs of government health and retirement programs. The next president, if he or she serves two terms, could find the U.S. government so deeply in hock that it would face losing its Triple-A credit rating, something that has never happened since Moody's Investors Service began grading U.S. securities in 1917.
http://online.wsj.com/public/article/SB120183030007834031-ab2duXnC6fv1mIXc15Vpdnc290A_20080303.html?mod=fallstreet.com
Bye, Bye, bucky.
Kevin
Kevin,
Our fiat monetary system encourages intellectual dishonesty. Its very disheartening. Especially when I think of all the hard work and saving that has been stolen by inflation and taxes. In 1974, I worked on an industrial farm for $1.35/hr. An hours worth of my work then couldn't buy my morning coffee today.
I've watched the presidential primary debates with abject horror. We truly are moving towards a welfare state. I see little difference between the democrats and republicans. Tax and spend vs. borrow and spend. Both parties espouse a government solution for almost every problem. I don't trust any of them to be fiscally responsible.
At this point, we have strayed SO far from the path that all main stream economists are screaming for a helicopter drop. And for what? So that we can pretend that our currency is actually backed by work. Remember that all the money loaned by banks for the purchase of over-priced homes buring the bubble didn't even exist. It was conjured into existance by a bogus promise to pay. The work to build the houses was real, the money was not. Watch how that equation is balanced.
Sadly, it seems Cheney is correct. Deficits don't matter. The entire world is begging for a bailout. Not one country has expressed outrage over our increasing inflation rate and lack of fiscal disipline. Sure our currency is weak. But no other major currency inspires confidence. I've been all over Europe and see no reason for optimism in the Euro. The yen or yuan - I just don't know.
Oh how I wish I could demand payment in gold, silver, oil or whatever instead of paper.
David,
I used to tame Umbrella cockatoo's for a friend to sell-- a lot of getting bitten and not reacting to show them it didn't matter.
Fortunately, I'd been through that process once before on a previous rescue bird (mid-sized parrot). It was a very long process since he was SO distrustful of people. He also knew how to grind his beak on skin. Ouch!
Our current bird came with just a bit of that (mostly just bark with little real bite). It only took a few days before she was willing to trust me.
Unfortunately, the bird's still got the upper hand with my girlfriend though. The bird looks just like the previous bird (and the previous bird once bit the corner of my girlfriend's mouth while sitting on her shoulder).
Kevin,
The longer-term picture is darker.
There's talk of the Amero replacing our currency at some point. I might suggest the Romero.
Tales from the Darkside
http://en.wikipedia.org/wiki/Tales_from_the_darkside
Man lives in the sunlit world of what he believes to be reality...
Ben,
The (counter trend) rally in risky assets should just about be over, if I've interpreted this correctly.
Looks like people gave it some thought over the weekend. Name an asset that isn't risky!
Currencies?
Stocks?
Bonds?
Precious metals?
Housing?
Oil?
Toilet paper?
The casino is open for business!
Point me to 100% safe and I'd be all over it. The last one on my list seems the safest to me (one of the few that has not yet run up in price), but only if you don't treat it like an investment bank would treat it. You must write it off once used! It truly is worthless at that point. Believe me, lol. Under no circumstances attempt to resell it to others through a STPIV (Structured Toilet Paper Investment Vehicle)!
NEW YORK (Reuters) - Fear that a hobbled banking sector may set off another Great Depression could force the U.S. government and Federal Reserve to take the unprecedented step of buying a broad range of assets, including stocks, according to one of the most bearish market analysts.
http://tinyurl.com/27wey3
Anonymous,
If THAT doesn't work we'll each be assigned a personal government shopping assistant, lol.
Good grief.
Stag,
More bad news on global inflation.
No worries though, lower global central bank rates justify an increase in asset inflation expectations. Its a win-win baby. The greatest tall tale never told.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aIw9TMUL35L0&refer=worldwide
MAB,
Bank of Japan Governor Toshihiko Fukui said on Feb. 9 that surging energy and material costs are complicating interest-rate policy because they hurt growth as well as boost inflation. A record 84.9 percent of consumers expect prices to rise over the next year, today's household confidence survey showed.
Time to start dusting off the 1970 Stagflationary Handbook again it seems. Just remember that if you can actually find a copy of the mythical text, under no circumstances read its contents aloud. There's no telling what you might summon!
I think you're pretty safe on sheets. It will be toughest on folks that buy at second hand places. Man, I used to see some great stuff, Ralph Lauren,etc at one Goodwill. Last few times I've been there, it's faded to the same junk as everyone else.
Teri,
Perhaps banks will be donating to charities soon. They seem to be building up an excess supply of hard goods.
Repo lots overflow with reclaimed cars
http://www.usatoday.com/money/autos/2008-02-13-repo-man_N.htm
This year's predicted 10% rise in vehicle repos to 1.6 million would be a third higher than 10 years ago, says Thomas Webb, chief economist for a unit of Atlanta-based Manheim, which sells cars to dealers worldwide. The increase comes atop a 10% rise in repos last year.
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