Fireside Deflation Chat

imageThe high risk time for the economy comes when a number of factors begin to all stack up on one side of the financial equation.

The first indicator may be something like the 10-year Treasury hitting a new low and refusing to go lower.  If you look at a one month chart of the CBOE 10-year US Treasury, it looks like that bottom might be in.

Then the next thing that you’d expect to see begin to edge up a bit would be inflation as indicated by the price of oil.  Well, crap, that too looks to be going up.

And what’s more, after hitting as 2009-like low, the Baltic Index this morning is up a whole two points at 2009 levels.

But we wonder what the West Coast Longshoreman’s slow down is driving as part and parcel?  Well, they shouldn’t be having too much impact, since negotiations are back on again.

Still, the risk of returning deflation isn’t yet passed.  The folks in the UK are still worried, and rightly so, and consequently, the lipstick goes on the pig with stories trying to explain how in deflation there could be some good news for families.

Eventually, the US government will have to inflate its way out of the present mess.  But deflation does something very important for the US – if we’re smart enough to do it.  That would be to refinance as much of the public debt as we can at absurdly low rates.

In the short term, that will allow for prices to be contained somewhat and by the time the results of such investment folly come to light, we’ll have kicked the can so far down the road that the real perps of bad policy will be dead and buried.

And that’s where we sit this morning:  Sharpening darts after reading stories like these:

China’s deflation worries should prove temporary

Deflation set to hit UK for the first time in 50 years

Fed’s Plosser sees little risk of deflation in the US

Demark has joined the deflation club

These are just a few samples.  I don’t mean to turn this into an economics reader of bad news, but you can see the juxtaposition here:

It’s like some of the market types are lining up on the side of muddle through around these levels and then moving in the future.  But there are extremists who believe that deflation has not yet run its course, yet.

Whether we are still in a disinflationary period (*inflation slows to zero) or deflation (*where prices actually go down) depends on what you’re shopping for.

I’ve got a back of the envelope way of looking at this: 

When comes to computers, you can get a Acer Aspire Predator AG3-605-UR1D Desktop Computer – Intel Core i7 i7-4770 3.40 GHz – 12 GB RAM – 2 TB HDD – DVD-Writer – NVIDIA GeForce GTX 760 – Windows 8.1 64-bit – Wireless LAN – Bluetooth DT.SPXAA.015 for about $1,400 bucks. 

The same rig equivalent (although four HDMI video outs) two years ago was about $1,800 so not much change on computers.  Either one would likely delivery around 5.9 on the Windows User Experience Index, and a SSD upgrade would get you to 7.2-7.4. 

But the hard drive is bigger and like Win 8.1 or not, it’s faster…so maybe we see some deflation in computational horsepower.

On Gasoline?  Triple A Fuel Gauge says we’re up about 3-cents from a month ago, but down a buck something from a year ago.  So still cheap on gas, not that it matters if you stepped up to a hybrid or a high fuel economy car like my son’s Versa which does him 35+ MPG reliably.

Food?  Up, and by our eating style, which leans to fresh and organic, up 15%.  If you want to eat processed crap you can still eat cheap for as long as you’re around.

Housing?  Not getting much cheaper except in markets like Dallas and Houston where we are seeing some decent homes in the under $150,000 range.  Check it out of Trulia or wherever you troll property.

Vegas is coming back.  Home prices rising…but is the bottom really in?  Not sure yet.  Could still be the Roaring Twenties Effect.

The Disappearing Data Problem

I suppose it is entirely coincidental that data that used to be freely available on the net is now being disappeared.

The reason is simple enough:  I’m sure those in power and pulling the strings of compunism don’t want to be found out which is why Depression era data from the 1930’s is being disappeared from various sites.

I’m sure it’s only a coincidence that the Federal Reserve Bank of St. Louis data services are now only going back to (in a few cases) 1955.

Finding data prior to that which used to be easy pickings?  Oddly going, going….

Yet this is how historical revisionism happens.

Dow Jones data is disappearing, too.  Once upon a time you could download historical data on the Dow Jones Industrials going back into the 1900’s.  Now?  Best on Yahoo is 1985.  Used to be to the early 1920’s.

That, my friend, is how compunism works.  Just like Greenspan et al made M3 disappear, all kinds of data is going down the rabbit hole, lest the dogs of data dig up some embarrassing parallels…

He who rewrites history, owns the future…go ahe3ad and try to find data from the 1920’s.  Send along what you find, please.

Also of note, at least on my computers:  Internet Explorer is suddenly not opening a lot of web pages.  Gee, who’d have thunk…

State of the What?

The Chinese are getting interested in the Hawaiian Independence Movement.

No doubt that would be a plum for them.

But there is so much Japanese stake in the islands that one way to view this is as an extension of the China-Japan East China Sea Oil War yet to come.

Discrimination is OK?

So Bryn Mawr College has clarified its admissions policies to allow transgender students who identify themselves as “female” on the ap?

So help me here:  Does the school get /use Title IV money and is gender discrimination really OK?  Got more research to do, I guess…

Hold the phone:  Wikipedia doesn’t have a list of men’s colleges in the US but does have a list of women’s colleges….help me here!  I thought the discrimination game was over?

Comments

Fireside Deflation Chat — 5 Comments

  1. “On Gasoline? Triple A Fuel Gauge says we’re up about 3-cents from a month ago” – regardless of what AAA says – reg gas was up here this morning 10¢/gal from three days ago – not all of them – but the one with them most ‘gas stations’ and others will follow suit within 24hrs – perhaps 1¢/gal less (3¢ less at some stations that take cash in lieu).

    ” Internet Explorer is suddenly not opening a lot of web pages. Gee, who’d have thunk…” really – you still using IE?

  2. Caucasians can not file for minority status under the law, even though in CA they are or have become such

    • Liberal bite-back at its finest. Remember, a liberal is someone who’s never spent a night in jail, many time. And mostly white and mostly not poor.

  3. Disappearing data: this is where I wish I’d been a packrat. In the early 1980’s, a magazine (Omni?) had an article stating that earth was on a collision course with some planetoid object. But it said not to worry; it was to be in the far future, during which I’d be not only over 30, but even more elderly after the turn of the millennium. That stated year was…2014! Another article i wish I’d saved involved a raid at the Wood’s Hole weather station in Massachusetts. Witnesses saw agents remove boxes and boxes of papers. Elsewhere, I had also read of temperature gauges being removed from rural areas, so that the temperature was only to be gauged from airports and other concrete jungles of cities. Data can be “disappeared” so much easier now.