At last the major financial press picks up the Train Wreck. I posted a hundred items on this starting New Year's, and everybody should now review them to understand the dimensions of this. The condensed version is here:
financialsense.com
A "big I told you so" from me? Damn straight, and you ain't seen nothin yet.:
New York Time:
"According to American Metal Market, a trade publication, the price of hot-rolled steel, one of the most widely used types, has soared by more than 80 percent in the last year, and by almost half since December; it now sells for about $480 a ton. Many steel makers have also begun to impose surcharges, typically around $40 a ton, because of the high prices of their raw material."
Wall Street Journal: Thursday’s WSJ contains an article on soaring lumber prices. The composite price for framing lumber is up 17% since December. Random Lengths reports the composite price of structural panels, which includes 11 products, is up 60% from December. The article quotes Toll Brother CEO Bob Toll as stating that new home prices in Pennsylvania are up 50% over the past 5 years. And PA is not exactly a hot spot like the US coasts. Yet BLS wants us to believe the major component of the CPI, with over a 40% weighting, are up only 2-3% the past several years.
Shortages of key industrial commodities could force production bottlenecks. It’s time for Econ 101. "Scarcity -The condition in which human wants exceed the available supply of goods, time, and resources. In a world without scarcity, there would be no economics. Shortage - The market condition existing when quantity demanded exceeds quantity supplied. Generally an increase in price will eliminate a shortage." But not in a momentum-trading world.
The recent surge in industrial commodity prices, and central bank instigation or insouciance suggests that a 19th Century-like boom and flame-out bust could occur. During the 20th Century, central banks arrested booms or commodity inflation and later instigated a recovery after an adequate purge and readjustment. Now, the Fed isn’t likely to be the bubble prick. By abdicating their responsibility to halt dangerous excesses suggests they won’t be able to orchestrate a recovery if a bust occurs despite them. |
