Lakshman Achuthan, managing director of the influential Economic Cycle Research Institute, has said he’s sure the economy is “rolling over” but can’t definitively call it a recession yet. Today he adds that the elevated price of gold signals anxiety more than inflation concerns. ECRI has a good track record as a trend predictor, from all accounts. On the other hand, it’s also true that gold is hitting new highs and the financial media has to put a good spin on that. Wall Street doesn’t like physical gold, because whenever it dominates the news stories, it undermines the stock and fund selling on which the Street mainly depends. Continue reading
Tag Archives: inflation
John Hussman: Not Concerned About Inflation
“The bottom line is that we can expect real wages to stagnate for several years, as a predictable reflection of slack capacity in the labor market. While credit concerns will be helpful in augmenting the demand for U.S. government liabilities as a default-(food poisoning)-free alternative to other assets, there is a continued prospect for significant price inflation beginning in the second half of this decade. With the ECB surrendering monetary discipline for the sake of short-term expedience, that prospect has become even more hostile. Continue reading
Airline Prices Could Go Up 25% Says Industry Spokesman
Airline prices are set to rise this summer, says an industry spokesman:
“Airline capacity and routes flown are still down compared to recent years,” said Mark Koehler, Priceline’s senior vice president, Air. in a statement.
“We haven’t experienced the widespread, aggressive airfare sales seen a year ago. In general, travelers will find that summer airfares could be as much as 25% more expensive than last year, on average, and that’s before factoring in extra fees for baggage, pillows, food and such. Travelers who want to save on air travel will need to plan ahead, be flexible and try different approaches to booking their trips,” he said.
Airlines have started to see increased traffic as travelers returned after cutting back during the recession. The International Air Transport Association recently cut its full-year loss forecast for the airline industry by half to $2.8 billion.
Shares of airlines stocks jumped this morning.”
So, for anyone planning to become a stateless globe-trotter – and we’re all for it if your wallet can take it – here’s another monkey-wrench tossed into your plans.
Not only are fees and security at airports increasing, as I’ve blogged before, but prices and services on airlines are going up too. They even have a lavatory fee coming up at budget airline Ryanair. And they’re thinking of reducing the number of lavatories to make room for more seats.
Personally, I don’t think budget airlines – unless you fly often – are much of a saver. I’d rather pay $100 more and feel free to carry as much luggage as I want, get fed regularly with something other than $5 bags of pretzels, and have wait-staff paid enough not to glower at you.
Not long before you’ll be asked to bring your own seats or stand all the way….
Rick Ackerman: Headlines Misread The Market
“Trader Rick Ackerman interprets the cheer-leading in the headlines:
“Could the newspapers simply be misinterpreting the signs? It would certainly seem that way. To take the headlines cited above, we see oil’s price surge as having absolutely nothing to do with a pick-up in demand. Rather, the push toward $90 a barrel represents speculative excesses in the futures markets, exacerbated by the reluctance of traders to take short positions.
How could they, when, on any given day, a terrorist with a missile launcher could cause the global price of crude to double instantly by scuttling a tanker in the Strait of Hormuz?
As for “bets on growth” pushing stocks higher, it is not bullish speculation that has been driving up shares for the last 13 months, but rather a vast excess of liquidity in the financial system.
As for the rise in T-Note yields to four percent, we seriously doubt this is being caused by competition from expansion-minded borrowers in the private sector; rather, it comes from the rising fear among lenders that they will be repaid in a currency whose value looks all but certain to fall precipitously in the years ahead.
If the central bankers truly believe that strong economic growth is about to trigger inflation, why do they continue to hold the federal funds rate near zero?“
Rick Ackerman On the Deflationary Argument
“Our grasp of deflation’s logic began with the 1976 book, The Coming Deflation, by the late C.V. Myers, and continued with Davidson and Rees-Mogg’s The Great Reckoning. Although Myers’ work was obviously premature, the concepts it emphasized are timeless, particularly this one: “Ultimately, every penny of very debt must be paid – if not by the borrower, than by the lender.” This is the crux of the inflation vs. deflation debate, and because of the way Myers framed it, we’ve never had any doubt that the U.S. would eventually experience a catastrophic deflation. We were early in thinking the financial system would topple as a result of the allegedly “mild” recession of 1990-91 and its S&L crisis. In retrospect, it’s clear that we lacked the imagination to see that the huge amounts of Third World debt that threatened the global economy at the time were relative chump change compared to the galactic sums that Bush, Obama and the Federal Reserve have put into play in the last three years in hopes of saving the system.”
My Comment
I posted this to support my reiterated position that the recession cannot possibly be corrected as simply as advocates of the stimulus programs like to argue. It´s been in the making for more than a quarter of a century. Can a few months change everything so fast? I could be mistaken, but I don´t think so,…
I also posted the Ackerman piece to counter the establishment media spin that Nouriel Roubini was so much “ahead” of others in predicting the recession.
I call Roubini an establishment figure because of several things, including the fact that he does business with Larry Summers. Here is Roubini warning about housing in 2006...
He himself said the earliest he predicted the housing crash was in July and August 2006.
But by then, even a layman, like yours truly had already done that, and done it earlier – July 2005
And I was, at least in part, drawing on my reading of Mises. org, Lew Rockwell, and The Daily Reckoning, when I wrote the piece…which is where they spotted me on the web, and offered me a gig.
(As I said, I´m always walking into synchronicities in my life..)
Compare that with what other experts were saying in 2005, which is, there´s no housing bubble. That´s Ritholtz, by the way, who writes the excellent blog, The Big Picture (At least, Ritholtz also did say that housing was extended).
But then, in that same piece, Ritholtz also predicted that 2008 would be a good time to reenter the housing market. Oops. [Dec 12. On second thoughts, maybe oops isn´t really warranted. Housing may not have bottomed out everywhere, but I´ll bet you could have picked up good bargains in a few places in 2008]
That shows that you can have very good number-crunching skills, but then miss some of the…..dare I say it?…big picture.…because the big picture has nothing to do with number-crunching but with perspective
And that takes a knowledge of history…. and not simply economic history either. It takes a broader knowledge of the world than professional money-managers usually have.
Meanwhile, compared to Austro-libertarians (see those cited above in Ackerman´s post), Roubini was some twenty-five years late in his analysis.
Yet the media studiously ignores Austrian theory and Austrian theorists (Mark Thornton, for example, called the housing bubble exactly on time and called gold $1200 back in 2005) and stamps approval on people who were either late or wrong…and turns to them for solutions.
Why is all that important? Because it shows the intellectual dishonesty that is at the heart of the corruption of the system. Fraud and force go together, and for political and financial fraud to succeed, they need intellectual and academic fraud to cover their sins… and prep the soil.
Deep lack of trust of anyone who adheres to a rival political theory (or to a rival political party)…. and the arrogance of power…lead the establishment media to rewrite history…. and this intellectual dishonesty is the rag behind which the emperor (the state) hides his moral nudity.