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The Repercussions of $4 Gas
In many cases, the extra gas expenses will outstrip the free money consumers will get through the stimulus checks the government will send out this spring.
Expenses will outstrip the free money?
As a stagflationist, that has got to be one of the funniest things I've read in a long, long time.
I have an easy solution to this problem. Since the money is free and can be printed in infinite quantities, why not just give us more of it and drop it out of helicopters if need be? Surely that would allow us to pay for the gasoline.
Deeply sarcastic gallows humor, that's what I'm talking about.
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
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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
4 comments:
Here's one for you Mark.
Stagflation Fears Escalate
10:11:00, March 11, 2008
The number of articles published that mention "stagflation" have surged in recent weeks to a new extreme, highlighting investor angst and the headwinds for risky assets.
There is certainly plenty for investors to worry about in the current environment. The global economy and earnings backdrop continues to deteriorate, U.S. housing shows little sign of improving, and the credit crunch continues to intensify. Indeed, it would seem that each positive policy development is met with the fall of another sub-prime related domino. The latest development has been the failure of some investment firms to meet margin calls, sparking fears of forced selling and further deleveraging. To amplify concerns, energy and food prices continue to surge, helping to stoke inflation fears. However, we are less worried about broad-based price pressures. It is unlikely that rising commodity prices will lead to a rise in core CPI inflation because manufacturers will be unable to raise prices amidst weak demand. Moreover, the softening job market will help prevent second round effects. Bottom line: Stagflation has returned as a hot word. However, as occurred the last time stagflation had its moment in the limelight in 1990, weak growth will soon undermine pricing power.
http://www.bankcreditanalyst.com/public/index.asp
Anonymous,
Thanks for the link.
It is unlikely that rising commodity prices will lead to a rise in core CPI inflation because manufacturers will be unable to raise prices amidst weak demand.
Manufacturers will be unable to raise prices. Good to know! Let's check out how many of "our" manufacturers are doing.
U.S. Import and Export Price Indexes
http://www.bls.gov/news.release/ximpim.nr0.htm
Prices for imports from China rose for the ninth consecutive month in January, increasing 0.8
percent, the largest monthly advance since the index was first published in December 2003.
Has anyone told them they would be unable to raise prices yet?
Weak Dollar - Why You Should Care
http://www.cnbc.com/id/23558239
Additionally, there is almost a perfect correlation between import prices and inflation. As import prices continue to rise, so does Core CPI (Core CPI excludes volatile food and energy prices).
China's Inflation Shocker
http://www.businessweek.com/globalbiz/content/mar2008/gb20080311_222191.htm?chan=top+news_top+news+index_global+business
"When you factor in that the yuan has appreciated at an annualized rate of 15% during the first two months of 2008...
Sounds like the "deflation from China" party has just about run its course.
Yeah, it's like living in Zimbabwe, watching those gas prices change every day. I'm starting to think that I may have to follow them in another behavior change, sleeping outside my work place since I can't afford gas to drive to work on the hourly wage I make.
Teri,
If they keep treating our currency like it is worthless, then it will no doubt be worthless someday. At some point our "benign neglect" may turn into "active panic".
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