Who Would Have Thought?
“Clearly, the recession that hasn’t begun yet is over. At least, that’s what all the folks who never saw the recession coming, then decided we are going to have one, and who now say it’s over, believe. I know because I heard them say so on TV, time and again.” -Helene Meisler
Speaking of not seeing a multitude of events coming, let alone sitting right there on his lap, Alan (a.k.a “Ea$y Al”) Greenspan is hard at work defending his legacy. Once again he takes the “who could have seen or known” approach, claiming that bubble management has never been successfully applied. Alan, that is probably true when policy is determined by calling bankster and Pig Man buddies, and then asking them to write down exactly what they need on slips of puke yellow Big Chief tablet paper.
While the MSM (media) debates the pros and cons of the Greenspan method and whether the Fed cuts 25 bp or stands pat, the criminally neglected Mad Max economic disaster rages on. Under Greenspan’s successors, banksters and their Risklove clients continue to “rule by committee”, and the following charts offer new clues as to what they are up to. Despite the poor fundamentals of many, if not most of these commodities and materials, an unchecked crack up boom (CUB) is a dangerous train to try and step in front of. That’s especially true when men like Alan Greenspan and Ben Bernanke still actually have credibility.
Who could have known?
The Mad Max economies in Asia are undergoing two definite trends. One, as I have been reporting, is to shut down exporting operations. And the players “still in the send goods at a loss to the US in exchange for Clown Bucks and run to the pegged currency window exchange game”, are hard at work raising prices. And where prices aren’t actually being raised, my anecdotal experience is that more crappy shaved coin products are being sent over. Electronics seems to be a favorite. I can’t believe how many non-functioning products I have sitting around my office right now, awaiting yet another trip back to Best Buy, for yet another attempt at a refund.
BAT TRANG, Vietnam — The free ride for American consumers is ending. For two generations, Americans have imported goods produced ever more cheaply from a succession of low-wage countries — first Japan and Korea, then China, and now increasingly places like Vietnam and India. But mounting inflation in the developing world, especially Asia, is threatening that arrangement, and not just in China, where rising energy and labor costs have already made exports to the United States more expensive, but in the lower-cost alternatives to China, too. “Inflation is the major threat to Asian countries,” said Jong-Wha Lee, the head of the Asian Development Bank’s office of regional economic integration.
Perhaps 10% monthly wage increases to keep up with rice prices might keep workers on the job?
April 8 (Bloomberg) – Rice climbed to a record for a fourth day as the Philippines, the biggest importer, announced plans to buy 1 million tons and some of the world’s largest exporters cut sales to ensure they can feed their own people. Rice, the staple food for half the world, gained 2.4 percent to $21.50 per 100 pounds in Chicago, double the price a year ago.
Typical of how Mad Max economics works we see results from Alcoa. It looks like a game of hot potato where these material companies absorb costs, then pass them on. Clearly, the number one management skill set globally right now is knowing how to play this hot potato, and it’s hardly conducive to efficient and productive operations, let alone investment. This quarter Alcoa came up short on hot potato, but nevertheless Wall Street is hopeful that they will successfully raise prices and be able to climb back on the trend mill.
Aluminum producer Alcoa Inc. said Monday that first-quarter profit was half that of a year ago, as higher energy costs and a weak dollar offset a surge in the metal’s price. The results, the first by a member of the Dow industrials this earnings season, missed expectations by 5 cents a share. But Wall Street looked beyond the profit shortfall and currency issues to focus on the rising price of aluminum, and the shares recovered after briefly declining in after-hours trading.
And fortunately for material companies like Alcoa, Mad Max repairs and reconstruction looks to be a most promising “economic opportunity”.
EDMONDTHORPE, England — Thieves peeled long strips of lead from the roof of St. Michael and All Angels, until a barking dog sent them fleeing from this tiny Leicestershire village. But by then, they had left a hole of about 100 square feet in the top of the 800-year-old church.
Also in the “who could have known” department comes news that small business is completely aware that Mad Max inflation is a difficult challenge. In fact in the latest NFIB report this was spelled out. The message to me equates to inflate or die. I suspect many are in fact dying judging from hiring plans.
The index of small business optimism fell 3.3 points in March to 89.6, the lowest monthly reading since the surveys began in 1986, the National Federation of Independent Business said. “It is clear that lower rates aren’t inducing small business owners to run out and borrow money to make more capital outlays, expand facilities, or add to inventories,” Dunkleberg said. And a slowing economy has not deterred firms from raising prices, the group said. The number of firms planning to raise prices rose 7 percentage points to 29 percent. During the next three months, 3 percent of the owners surveyed plan to create new jobs, down 8 points from February and the lowest reading since March 2003.
And who would have ever thought that a country trashing it’s currency results in less purchasing power for it’s consumers?
April 2 (Bloomberg) — European automakers’ U.S. sales fell 1.2 percent in March, the third consecutive monthly decline, as recession-wary consumers shied away from luxury vehicles. Sports-car maker Porsche SE had the biggest drop, 25 percent from a year earlier. Sales fell 5.4 percent at Bayerische Motoren Werke AG, the largest seller of luxury autos in the U.S., and 3.7 percent at Daimler AG’s Mercedes-Benz. Volkswagen AG’s namesake brand rose 13 percent,
Join Russ Winter's Actionables
Click here to access Russ Winter's Actionable
To discuss this, or any issues pertaining to the economy and the financial markets, visit our new forum.
Click here for a listing of all recent Wall Street Examiner blog postings.
