Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (69451)	9/7/2006 3:02:26 PM
From: Roads End	Respond to of 110194

Maybe, but the reader's perception is reflected by the number of recommendations that post received.

To: mishedlo who wrote (69451)	9/8/2006 9:54:16 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 110194

As far as belittlement - he purposely distorted my position with mocking statements about Danville gee mish, you sure like to dish it out but doesn't seem like you can take it. you want to know why i thought you were talking about Danville? you provided a link to your own blog article here: Message 22770685 in this article you claim Bennigan's lowered prices 37%. i asked you about this here: Message 22772027 [mish]: Bennigan's restaurant dropped the price of their half pound burger from $7.99 to $4.99. That's a drop of $3 or 37.54 percent! [Wyatt]: i know that must be exciting, since it totally contradicts 99% of restaurant diners' experiences. where exactly did you come by this information? guess what--Bennigan's the chain is not going to drop prices "37.54 percent" or it is going out of business. my guess is you walked into a sale. or else American consumers are so turned off by mad cow scares that nobody eats beef anymore." [mish]Prices at restaurant are dropping. [Wyatt]: i guess you say this based on the drop in one data point--a hamburger sale at some Bennigan's you came across. and also here: Message 22780913 [Wyatt]: it does not seem you have any national data. you also declared Bennigan's was cutting its hamburger prices by more than 37%. based on what--you went into a Bennigan's one day and they were having a sale? thus giving you AMPLE OPPORTUNITY to substantiate your claim that "Bennigan's" is lowering prices 37% nationwide. since you didn't respond to these questions of mine (do your even read them?), i assumed you were talking about a local Bennigan's. now, after not responding to my REPEATED questions about your source for your claim, you get mad because i assume you were talking about a local restaurant. since you got mad (wrongly assuming i was trying to poke fun at you), i assumed you must have some other "source" beyond the local market. so i googled your blog. google.com i see that your "source" for the supposed 37% drop at Bennigan's was a blurb from an article you copied. here's what the blurb said: "Next month, some markets will sell all burgers at $4.99, marketing chief Clay Dover says." guess what, Mish--"some" doesn't mean "all". it could mean "two". and "next month" doesn't mean "forever"--it sounds like it is a short-term marketing ploy, because obviously a high-fixed-cost business like Bennigan's cannot suffer a permanent, chainwide drop like that and survive. it doesn't even necessarily mean 37%, since they probably have different prices for different burgers, so the average sales-weighted price drop would probably be different. so, even based on your source, the implication is not that there is any permanent decline in restaurant prices across the nation. what the above blurb means is "Bennigan's will temporarily lower prices in some markets because of slack demand." what it doesn't mean is Bennigan's is lowering prices across the board because the US Dollar suddenly has 58% more purchasing power (the inverse of a 37% price drop). it is not surprising that some areas are overbuilt with restaurants. that stuff happens. restaurants are cyclical and we are entering an economic downturn. guess what--some of the restaurants will go out of business and the industry will consolidate. a few years ago, there was a glut of movie theaters in America. a bunch ended up going bankrupt and the industry consolidated. now i'm paying more than ever to go to a movie. it seems to me you notice these superficial things going on and immediately extrapolate them to fit your theory, which was originally that we would have deflation and Greenspan wouldn't raise rates past 175bp. isn't that what you believed? didn't you frequently say that there was no way Greenspan would raise rates to 2%, 2.25%, etc? well, that theory got blown out of the water rather badly. every non-USD currency which has had a large C/A deficit has gotten killed. IOW, high current-acct-deficit currencies see a marked DECLINE in purchasing power. yet you somehow think USD will see an INCREASE in purchasing power, and you consider the case of a Bennigan's blurb about temporarily lowering prices in some weak markets to be PROOF of this increase in purchasing power. i think all around the world, there are some restaurants and some manicurists who are having a tough time, every year. they cope with tough conditions by lowering prices or running specials. if things get too bad, then the weaker ones will go out of business until supply is realigned with demand. that's the "Invisible Hand" at work. the workings of the Invisible Hand, in aligning supply and demand, have nothing whatsoever to do with where the currency's going. probably some restaurants have lowered prices in New Zealand, and probably some manicurist offers discounts in Iceland. but both the Kiwi and the Icelandic Krona got shellacked in the currency markets--reducing their purchasing power--due to unsustainable currency flows. this forces these countries to remain vigilant on interest rates. nobody knows when the US will break, but when it does, USD purchasing power will not be going up as you predict based on your hamburger price theme.