dailyreckoning.com
The Financial Times ran an article by two guys named David Pilling and Barney Jopson, who were writing about how Japan is intervening mightily in the foreign-exchange markets to keep the yen from rising, and to keep the dollar artificially propped up, to little avail. They quote one Japanese official yahoo, who said, "We can't continue this intervention policy indefinitely. But if we stop now, the yen might soar. It's a Catch-22."
What you have in this case is the Japanese government trying to suppress the yen, and if they stop, the yen will rise. It's as simple as that, and it has nothing to do with anybody catching anything, either a 22 or a case of common sense.
To use this definition of Catch-22 in the context of Japanese intervention in the currency markets, only crazy people want to intervene to debase their own currency by manipulating the currency market, and crazy people should not be allowed to intervene in the market. But if you do not want to intervene, then you are not crazy, and therefore you should, umm, no, this is not working out, and so it just proves my original objection, namely, it is NOT a Catch-22.
The Fed's beige book came out and said that wages are not rising. Separately, the Producer Price Index of the Labor Department was released and it showed that, in one year, Finished Goods are up 4% in price, Intermediate Goods are up 3.9% in price, and Crude Goods are up 18.5% in price.
To put a spin on it, they decided to take the 4% increase in the price of Finished Goods, ignore the hefty inflation in Intermediate Goods, and ignore the roaring inflation in Crude Goods, and back out food and energy out of what is left, and that brought that index down to an inflation reading of 1%. They think this is real clever.
Then the CPI came out, and it was up 0.2%. Food prices were up 0.6% for the month, education costs rose 0.4 percent, health care costs rose 0.6 percent and housing prices rose 0.3 percent. But, and this passes for good news, I suppose, apparel prices fell 0.4 percent and transportation costs fell 0.2 percent. These are MONTHLY increases in prices, so to get the annual increase, multiply each number by twelve, which I would do for you, but given my adroit handling of a calculator it would take the rest of the afternoon for me to do that, and I would get it wrong anyway. But I will get you started, and will conscript a passing fourth-grade kid to do the math, and tell you that multiplying 0.6% by twelve equals a 7.2% annual inflation in food.
Of course, the lying weasels in the Fed and in the government proper are all strutting around saying how inflation is tame, quiescent, non-existent. To which I say, as you knew I would, "What a load of crap!" Three-percent annual inflation in food and energy used to be enough to cause heart attacks in bankers and bond holders, and here we are looking at a trend that is more than TWICE that!
- The King Report also had an interesting take on the latest employment report:
"The details of the report are more troubling than the headline numbers. Temp workers (+30k for month; 166k for 2003), education & healthcare (21k, 301k for 2003) and other low-paying gigs are the main job generators. Manufacturing lost 516,000 jobs in 2003 and has shed 2.8 million jobs since July 2000...The average workweek for production or nonsupervisory workers on private nonfarm payrolls decreased by 0.2 hour in December to 33.7 hours, seasonally adjusted. The manufacturing workweek declined by 0.1 hour to 40.7 hours, and manufacturing overtime edged up by 0.1 hour to 4.6 hours. The index of aggregate weekly hours of production or nonsupervisory workers on private nonfarm payrolls fell by 0.6 percent to 98.8 in December."
So much for the vaunted recovery, which is more and more contained solely in stock prices, bond prices, oil prices, housing prices, healthcare prices, food prices, gasoline prices, etc., and not in people getting high-paying jobs and paying their bills and having fun.
Kurt Richebächer's take on the subject is, "The production side with high-paying jobs is contracting, while the consumption side with low-paying jobs is booming." |
