The thing that irks me most on this board is that EVERY slight uptick in ANTHING is immediately pounced on as PROOF of inflation.
Today it is coffee.
Well for over 6 months the price of corn and beans and wheat have fallen like a rock. Not one single peep. Not a one. I did not bitch about them being deflationary either.
Now starbucks or whoever raises coffee prices and we hear about it as if it is some big earth sahttering news and worse yet I am mocked over it.
Well take a look at lumber:
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Corn
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Beans
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Any screams of delation from the commodity bitchers here?
No - nary a peep.
How about the prices of houses falling in California and Las vegas and San Antonio? No, no one here cares, all we want to talk about here about is ANY uptick in ANYTHING.
Well what about oil?
My view is that oil acts like a tax and is NOT inflationary. At least on this one there is some room for disagreement. But given that the US, UK, Japan, and Europe have all lowered GDP estimates because of rising oil I believe by far and away I have the better argument. Furthermore, given that oil has geopolitical factors as well as peak oil factors it is totally NUTS to play the whole rise in oil as a rise due to "inflation". It is even sillier to think that the rise has an inflationary affect when wages are stagnant.
Speaking of wages......
This board convenient ignores them for the US and Europe, but immediately raises the big red flag when wages in China rise $US 50/ per month. Is that really a big deal? Of course you ignore the fact that even China is losing manufactoring jobs. You ingore Chinese productivity increases.
Now what about steel?
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What about housing?
Everyone here think that houses are going to keep rising to the moon? If housing declines, will you totally IGNORE it like I expect or will you call it deflation?
OK so where are we?
I will freely admit that there WERE hugely inflationary pressures put on by dropping rates to where they were while at the same time lowering taxes, and giving tax credist to businesses. I will also admit that the CPI is a joke and inflation was far worse than reported. The housing boom we saw as a result was Russ's crack up boom.
Well IMO that boom is about ready to turn to a bust. Housing prices are now falling in the US, UK, Japan, and Australia.
So where's the beef? Nowhere here, as we are more concerned with a meaningless rise in the price of coffee. BTW pork chops last week were $1.69 a pound. Any talk of deflation there?
We HAD and that is HAD as in PAST TENSE our crack up boom. Now we have rising interest rates, falling home prices, rising inventories, China exporting steel, China stopping two new steel mills from coming on line, more bad news on the jobs front just today in the US, GM laying off 9,000 more workers in the US, ATT getting rid of 12,000 workers or whatever it was, airlines that are about ready to go bust and would if idiots did not front them more money, tax credits expiring, a stock market that surely looks on edge (especially financials), an expectation of both home prices and stocks crashing on this board which IMO is contradictory with a view of inflation, and I get a meaningless rise in the price of coffee rubbed in my face.
In short, those hugely inflationary pressures are now taken off IMO, the "inflation" that a simultaneous record stimulus of tax credits, GSE loans, refis, declining rates, etc etc etc has or is about to expire. What next?
What is next should be clear but it sure is not if one focuses on coffee and other nonsense.
Mish
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