you hit a critical issue, Art
it might be a little worse than you describe though
the employment cost index rose rather sharply recently
health care costs are up
we have higher producer prices, as you cite
but I conclude we have higher production costs generally
- employment costs
- producer prices
- energy costs
- shipping costs
one more biggee, where the US is the most vulnerable
as the dollar declines, materials and supplies rise in cost
and Asian imports eventually rise in price
both finished products and components
almost everything made in the USA has foreign parts
so the advantage of a lower dollar is offset by higher costs
I believe this erases almost the entire US currency translation
most Americans are just plain simpleton dumbshits
when it comes to financial matters, economic issues
they see the rising commodities prices, and applaud the return of inflation, a success for the Fed Reflation efforts
how wrong could they be ???
we are seeing a rise in production costs, which will now lead to a further erosion in corporate profit margins
already the chemical sector is complaining of rising production costs
there is good inflation -- rising purchasing power, rising asset prices
there is bad inflation -- rising product costs
(against a backdrop of ZERO PRICING POWER)
WE GOT BAD INFLATION, which wipes out profit margins
A BIG BAD RECESSION IS COMING, which could worsen quickly
the crude oil issue is a looming giant issue
I expect retaliation by Islamic world in the form of demanding EUROS for OIL
this will exacerbate our dollar problem, taking it to the next level, closer to a crisis
I laugh when I hear of economist efforts, like Bergsten of the Institute for Intl Economic, where he implores that we seek a lower dollar
these guys never point out the risks of a declining dollar
they only cite the need for a lower dollar
the dynamics of change will wreck havoc
I havent pestered you recently
last March-April, I believe you were expounding the benefits of a lower dollar
e.g. Qualcomm Asian sales
you cited specifically that our multi-nationals would benefit from favorable currency translations
I warned that foreign economies would not in sufficiently strong condition to place and take delivery on orders from our US firms
I also said that the US doesnt build and ship much of anything anyway
and lastly, I said our import prices would be rising
(commodities incl crude oil are almost all imported)
did I get all these righton?
where is the benefit to multi-nationals?
you seem to be more aware now of the ravages of a declining dollar
with higher production costs, which will kill profits
there are no benefits to a declining dollar
the world is too dependent on the US demand
a declining dollar breeds a world economic recession
/ jim |
