2022–First News

You have begun a new year…a year of elections, pandemic and far Right silliness and hatred….so I feel bad about being the messenger of more bad news for us mere mortals…..

Our holiday season of last year was the most expensive in recent history….sorry to say 2022 is not looking like any improvement…..

Red-hot inflation has been showing up in tangible form in everyone’s grocery bills throughout 2021. Is there relief on the horizon in the new year? Not so much. The Wall Street Journal surveyed several major food manufacturers and finds that prices for just about everything will keep rising. Kraft Heinz, for example, projects an average price increase of 5% for its products, though some will go as high as 20%. Fans of the company’s Grey Poupon mustard should brace for a hike of up to 13%. Another big name, Mondelez International, plans to raise the price of its cookies, candy, and other goodies by up to 7% starting in January. General Mills also will be raising prices next month. Produce, dairy, bread, juice, mac-and-cheese, frozen meals, mayo—you name it, it’s probably going up.

“There’s nothing immune,” says Tony Sarsam of of food retailer and distributor SpartanNash Co. The story cites by-now familiar problems, including supply-chain issues and higher labor and packaging costs. Not surprisingly, this will not only affect those who cook at home but those who eat out, notes Mashed. The costs of some items have risen higher than others over the past year, including beef (24%), bacon (20%), and eggs (12%), and no short-term relief looks to be in sight. Virtually all restaurants surveyed report major supply-chain problems with key ingredients, and menu prices are on track to keep rising. The Cheesecake Factory, for example, just raised prices 3% and may add another 2% in 2022.

Not to worry as wages stagnate the billionaires will still go to space and rake in fed money as they wait their turn in the rocket.

My prediction for 2022….nothing will change…the GOP will continue to do what they do best…..obstruct, the Dems will rant and rave and in the end do nothing, the MSM will continue to push a pro-war agenda of the MI-C….Americans will suffer from high prices and low wages…in other words the same crap we have suffered with for many decades.

Sorry to pee on the new year’s parade but forewarned is forearmed…..

Be well and be safe….

I Read, I Write, You Know

“lego ergo scribo”

Inflation Is On The Rise

If you have been shopping anytime recently then you will be paying more for goods and services….and sadly it does not look like there is any relief any time soon…..

Prices for US consumers jumped 6.2% in October compared with a year earlier as surging costs for food, gas, and housing left Americans grappling with the highest inflation rate since 1990. The year-over-year increase in the consumer price index exceeded the 5.4% rise in September, the Labor Department reported Wednesday. The Wall Street Journal notes it’s the fifth month in a row where the increase was north of 5%. From September to October, prices jumped 0.9%, the highest month-over-month increase since June.

Energy costs soared 4.8% just from September to October, with gasoline, natural gas, and heating oil surging for the same reason that many other commodities have grown more expensive: Demand has risen sharply as Americans are driving and flying more, but supplies haven’t kept up, reports the AP. “If you … fill your gas tank on the way home so you can go to work or take your kids to school, you’re feeling this,” Mary Daly, president of the Federal Reserve Bank of San Francisco, tells NPR, noting that pain is looming in the form of ramped up heating bills this winter. To wit, the Energy Department forecasts those bills will be up 54% this winter over last.

Economists still expect inflation to slow once supply bottlenecks are cleared and Americans shift more of their consumption back to pre-pandemic norms. As COVID-19 fades, consumers should spend more on travel, entertainment, and other services and less on goods such as cars, furniture, and appliances, which would reduce pressure on supply chains. But no one knows how long that might take, though predictions skew pessimistic. “The inflation overshoot will likely get worse before it gets better,” said Goldman Sachs economists in a research note Sunday. “Inflation is clearly getting worse before it gets better,” echoes Principal Global Investors’ head strategist to CNBC.

Inflation is where Biden is losing support….to the point that the White House is trying to find a way out of the downward spiral….

For months, the White House downplayed concerns about inflation by describing the steep rise in prices as “transitory”—just a temporary blip related to the pandemic recovery. But as Kevin Liptak writes in a CNN analysis, President Biden didn’t use the term Wednesday when discussing the news that inflation had surged to a 30-year high. Biden has no choice but to shift his message—”Did you ever think you’d be paying this much for a gallon of gas?” he asked—given that Americans are facing inflation every day at the gas pump and grocery store, and there’s no end in sight. Coverage:

  • Context: “The metaphor of frogs in a pot of water has never been a more apt analogy,” writes Mark Cudmore in an assessment of rising inflation at Bloomberg. “A year ago, if you had told any investor the inflation … they would be seeing today, there would have been disbelief and uproar.” Since last year, inflation is up a whopping 6.2%.
  • Biden’s problem: By many traditional measures, the pandemic rebound is booming, notes CNBC. But inflation is so tangible that most Americans—57% in an NBC poll—disapprove of Biden’s handling of the economy. In fact, fears about inflation and the economy appear to be outpacing those of COVID. Democrats will try to counter with legislative achievements on infrastructure spending and climate change, but the political “headwinds” related to prices will be fierce heading into the midterms, predicts policy analyst Ed Mills.
  • Echoing that: The president is “in a particularly precarious position because there is little he can do to quickly alleviate the problem,” notes an analysis in the Los Angeles Times. “And even as the job market rebounds and wages rise, inflation threatens to swallow those gains and provide a daily reminder of the problem whenever voters dig into their wallets or swipe their credit cards.” In the meantime, Republicans are intensifying their attacks, blaming Biden for worsening the problem.
  • Big voice: Republicans are also happy that Lawrence Summers, a former economic adviser to Barack Obama, has been criticizing the White House for months on inflation. He previously warned that the $1.9 trillion coronavirus relief bill passed in the spring would make things worse. “I think that the policymakers in Washington unfortunately have almost every month been behind the curve,” Summers said on CNN Wednesday, per the Hill. “They said it was transitory; it doesn’t look so transitory. They said it was due to a few specific factors; doesn’t look to be a few specific factors. They said when September came and people went back to school, that the labor force would grow, and it didn’t happen.”
  • Bigger picture: Reuters takes a point-by-point look at the inflation criticisms being lobbed at Biden and concludes they’re frequently off base in terms of pure economics, and that many of the underlying problems preceded his administration. But given that inflation is expected to endure well into 2022, that may be of small comfort to Democrats on the campaign trail.

If Biden and the posse cannot find a cure for this economic problem then he can kiss re-election good-bye….what is the old saying….”gonna get worse before it gets better”…..

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I Read, I Write, You Know

“lego ergo scribo”

 

How About Some Economic News?

Trump tells us that since the markets are making CEOs wealthy the rest of us are doing super good…..let me say here…there is more to an economy than what the markets do or don’t do…..but hey you believe the crap you want then don’t coming crying when it all goes to sh*t.

Markets are up….unemployment is high…..foreclosures on the rise…..food expensive…….medical expensive…..but according to Trump all is well….even good.

First let’s look at Q2 (Second Quarter)……

The US economy plunged at a record rate in the spring but is poised to swing to a record increase in the quarter that just ended. The Commerce Department reported Wednesday in its final estimate for the April-June quarter that the gross domestic product, the economy’s total output of goods and services, fell at a rate of 31.4%. (This estimate, the third, is down from the initial estimates of 33% and 31.7%.) The report shows a decline that is almost four times larger than the previous record-holder, a fall of 10% in the first quarter of 1958 when Dwight Eisenhower was president. The Washington Examiner reports the biggest GDP drop during the Great Recession was 8.4%. The Q1 decline was 5%.

The AP reports economists believe the economy will expand at an annual rate of 30% in the current quarter as businesses have re-opened and millions of people have gone back to work. That would shatter the old record for a quarterly GDP increase, a 16.7% surge in the first quarter of 1950 when Harry Truman was president. The government will not release its just-ended July-September GDP report until Oct. 29, just five days before the presidential election. Many are forecasting that growth will slow significantly in the final three months of this year to a rate of around 4% and could actually topple back into a recession if Congress fails to pass another stimulus measure or if a rising number of coronavirus cases sharply curtails economic activity.

I hate to be the bearer of bad news…..but inflation is already here….at least for the stuff you buy as a normal person…..

If it feels like the price of everything you buy has been soaring, that’s because it has—even as central bankers everywhere worry about the danger of deflation.
The gap between everyday experience and the yearly inflation rate of 1.3% in August is massive. The price of the stuff we’re buying is rising much faster, while the stuff we’re no longer buying has been falling, but still counts for the figures.
Economists will be relieved that the laws of supply and demand are still working, at a time when so much in the discipline is in doubt. But for investors it hangs a veil over the outlook for perhaps the single most important issue for the markets: whether we’re headed for a future of inflation, deflation or a continuation of the past decade’s lackluster price rises.
 
Have you noticed that banks can do whatever they want and never have to pay for their stealing and perjury?
 
Take JP Morgan got caught manipulating the stock and what was the penalty….a slap on the wrist and a fine…..
Following hard on the heels of revelations that major global banks have been involved in a network of criminal money laundering, JPMorgan Chase has been fined $920 million for manipulating markets on two of its trading desks.

The charges involved the practice of spoofing—quickly placing and then withdrawing buy and sell orders to give other traders and their algorithms the false impression that there is a surge of activity.

The spoofing activity covered trades in gold, silver and other metals futures markets as well as markets for Treasury bonds and cash. It covered thousands of trades and involved numerous traders and staff at JPMorgan in New York, London and Singapore.

The Commodity Futures Trading Commission (CFTC), which conducted the investigation, said traders knowingly placed orders on trading platforms they did not intend to fulfil in the hope this would trick others and enable the JPMorgan traders to obtain a better price.

https://www.wsws.org/en/articles/2020/10/01/jpmo-o01.html

Now think back to 208….Morgan was part of the problem that cause the recession and the economic crash….and they are still doing illegal stuff and getting away with it.

And you think it is a fair and equatable system…..NOT!

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I Read, I Write, You Know

“lego ergo scribo”

Land Of The Lost (Decade, That Is)

I am sure when the word “Lost” is mentioned we will have a wealth of people that will tear up at the mere mention of the now defunct TV show……thanks to say this is NOT about a bunch of fictional people lost on the island of Manhattan…..but rather…..

Back in the 1990’s I was a frequent player on the stock exchange…made some money…lost even more….but I recall the days of my adventurism……Japan was a shining light of capitalism especially in the later 80’s….but that was about to change…..

The economic miracle ended abruptly at the very start of the 1990s. In the late 1980s, abnormalities within the Japanese economic system had fueled a massive wave of speculation by Japanese companies, banks and securities companies. Briefly, a combination of incredibly high land values and incredibly low interest rates led to a position in which credit was both easily available and extremely cheap. This led to massive borrowing, the proceeds of which were invested mostly in domestic and foreign stocks and securities.

This popped the bubble in spectacular fashion, leading to a massive crash in the stock market. It also led to a debt crisis; a large proportion of the huge debts that had been run up turned bad, which in turn led to a crisis in the banking sector, with many banks having to be bailed out by the government.

Overall, this has led to the phenomenon known as the “lost decade”; economic expansion came to a total halt in Japan during the 1990s. The impact on everyday life has been rather muted, however. Unemployment runs reasonably high, but not at crisis levels (the official figure is a little under 5%, but this is a considerable underestimate – the real level is probably around twice that).

I will bet you wonder why I mention this……does it sound familiar?  It should or you are not paying attention to your life.

I gave you a little economic history because I see this happening in the US and I am not alone….Paul Krugman writes:

It’s not that nobody understands the risk. I strongly suspect that some officials at the Fed see the Japan parallels all too clearly and wish they could do more to support the economy. But in practice it’s all they can do to contain the tightening impulses of their colleagues, who (like central bankers in the 1930s) remain desperately afraid of inflation despite the absence of any evidence of rising prices. I also suspect that Obama administration economists would very much like to see another stimulus plan. But they know that such a plan would have no chance of getting through a Congress that has been spooked by the deficit hawks.

We hear daily that the US could become the next Greece because of the growing deficit….which seems to be the call of most conservatives these days,,,,,,,but I see it differently….I see the possibility of the US becoming another Japan with a “Lost Decade” and many years of suffering for the working majority of the country.  Slow growth, high unemployment and a rise in the inflation rate.

Things To Come

I realize it is a little early to be predicting the next year and so on….but what the hell I am game….

There has been many that say that the 1st stim plan did not go far enough and that a second one may be needed to get the economy on the right track….and it is written:

The U.S. economy does not need a second fiscal stimulus package, instead the government should cut spending over the next two years, according to a survey of business economists released on Monday.

While economists in the NABE survey acknowledged that the stimulus package had helped to brake the pace of the economy’s decline in the second quarter, only 35 percent viewed fiscal policy as being “about right”.

Half of the respondents saw fiscal policy as too stimulative. About 266 members took part in the poll which was conducted between August 3-18. The U.S. economy contracted at a 1.0 percent annual rate in the second quarter after collapsing 6.4 percent in the first three months of the year.

Okay, many are saying no that the one will be sufficient to get us on the right track…..I say there probably will NOT be a 2nd stim package, not because the economy is doing well but rather the gutlessness of the Dems….they will not have the spine to do another one and still hope to be re-elected.

Now that I have said my piece on the short term how about the long run?  Bloomberg has an article on just this subject:

The Federal Reserve will be unable to prevent the trillions of dollars in government stimulus pumped into the U.S. economy from stoking inflation over the next decade, a survey of business economists showed.

The report is in line with surveys of consumers and indicates the central bank may have to work harder to damp inflation expectations after pouring more than $1 trillion into credit markets in a strategy known as quantitative easing. Economists in the survey also said the Obama administration’s $787 billion stimulus program would push consumer prices higher.

All that maybes, heretowith and sortofs is all legal speak……no one wants to say the word inflation….but I will …..inflation will return and with the deficit as it is today….it will return with a vengeance.

Inflation?  Inflation!  Why inflation?  I know you are asking, is that a gut feeling or something else?  Well to be honest a little of both, but with the expansion of government spending without corresponding tax increases is a disaster waiting to happen….and that disaster could be a rise of inflation.  And the growth of tyhe money supply induced by high amounts of government spending is just another indication, in my book.

And with the way things are looking, wioth the return of inflation and a high degree of unemployment, we are looking at the return of the dreaded “stagflation”.

Inflation, Deflation……Pick One!

The boogey man is in the closet…….many economists are debating whether we will have inflation or deflation……who is right?

CNN Money is reporting that some fear inflation while others fear the opposite.  Which will it be?

Should the Federal Reserve be more worried about the threat of inflation on the long-term horizon, or deflation in the short-term?

Those who fear inflation argue that the recent rise in oil prices, the dollar’s loss of value and the recent rise in yields on U.S. Treasurys are all signs that consumers could soon be grappling with higher prices for lots of goods and services.

These economists say the seeds for inflation have been sown by the Fed’s extraordinary efforts to keep the economy afloat over the past year.

But others argue the economy is still so weak that deflation, or a drop in prices, is the more serious threat. The Consumer Price Index, the government’s key inflation measure, posted its largest 12-month drop since 1950 in May.

This year-over-year decline in prices, coupled with rising unemployment and low factory utilization, could be signs that prices are likely to keep falling. And while lower prices might sound like a positive to consumers with budgets stretched to the breaking point, economists are in general agreement that deflation is far more destructive to the economy than inflation.

Businesses unable to make a profit in an environment of declining prices will likely cut production and lay off more workers. That could cause a deflationary spiral. The Great Depression and Japan’s so-called Lost Decade of economic stagnation are both well-documented examples of the damage that deflation can cause.

When the Fed wraps up its two day policy meeting Wednesday, it is virtually certain that it will leave its key interest rate near zero. What will be watched more closely is whether its statement has language warning of greater risk from rising or falling prices in the future.

In its last statement, the Fed said it “expects that inflation will remain subdued.” It also rang a deflationary warning bell, indicating that “inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.”

I know…I know……so what will it be , Professor?

Back in the “dark ages” of my investing there was a sure sign of approaching inflation, that was the price of gold…if it went up then inflation was expected and investors were trying to get ahead of it.  At last I saw gold was at $900+ per ounce.  Take that for what it is worth.

The Approaching Storm

The federal government will run a near-record deficit of $407 billion this year, according to the latest Capitol Hill estimates.

The Congressional Budget Office released figures yesterday that indicate the red ink will spill over into next year, when the deficit would reach a record $438 billion – and could go even higher as the government takes over mortgage lenders Fannie Mae and Freddie Mac.

The deficit, more than double last year’s sum, is largely attributed to continuing weakness in the economy, high energy and food prices, and the slump in the housing and financial markets, said the nonpartisan agency, which makes economic and budget estimates for Congress.

Such deficits feed inflation, make the nation dependent on foreign lenders, cost taxpayers hundreds of billions of dollars in interest payments on the growing national debt, and drain capital from more productive investments.

The new forecast may restrain the appetite of the next president for adding expensive spending programs or new tax cuts. Pressure may build to allow some tax cuts enacted in 2001 and 2003 to expire as scheduled at the end of 2010, with Congress also feeling pressure to curb spending growth.

The economy still could slide into a recession.

Bernanke: One Sharp Dude

No crap, Sherlock!

Federal Reserve Chairman Ben Bernanke said Friday the financial crisis that has pounded the country — coupled with higher inflation — is taking a toll on the economy and poses a major challenge to Fed policymakers as they try to restore stability.

“Although we have seen improved functioning in some markets, the financial storm that reached gale force” around this time last year “has not yet subsided, and its effects on the broader economy are becoming apparent in the form of softening economic activity and rising unemployment,” Bernanke said in a speech to a high-profile economics conference here.

While Bernanke welcomed the recent drops in oil and other commodities’ prices, and believes inflation will moderate this year and next, the Fed chief also warned the inflation outlook remains highly uncertain.

The economy is the top concern for voters and of keen interest to presidential contenders Sens. Barack Obama and John McCain, who are gearing up for their party’s conventions. Financial and credit problems are expected to smolder into next year. And, the unemployment rate, which jumped to a four-year high of 5.7 percent in July, is expected to keep rising.

The bulk of Bernanke’s speech dealt with the need to bolster oversight of the nation’s financial system to make it better able in the future to withstand future shocks.

To that end, Bernanke recommended that regulators work on ways to assess the health of the entire financial system, rather than the condition of individual banks, Wall Street investment firms or other financial companies — as is currently the focus.

You gotta love a guy that gets oaid to state the obvious.

Yes, Irene, The Worse Is Yet To Come

Growing evidence suggests American consumers, businesspeople, and political leaders should all be bracing for double-digit inflation, probably as early as 2009.

The relative price stability of the past 15 years is giving way to worsening inflation, despite the recent softening of oil prices. The Consumer Price Index for all items shows the inflation rate averaged 2.6% a year from 1992 through 2007 but has doubled since January, reaching an annual rate of 5.6% in July. By next year, the monthly figure could hit double digits, and the inflation rate for 2009 overall could triple 2007’s 2.85%.

Anyone who hasn’t been living in a cave for the past year knows that oil prices have soared and pushed up the prices of gasoline, diesel fuel, and heating oil. Largely hidden from view, however, have been steep and continuing price increases across the whole spectrum of commodities.

Oil almost doubled in price, from $78.21 in July 2007 for a barrel of benchmark crude, to $145, where it peaked before dipping below $120. But from a longer perspective, oil sold for about $30 a barrel during 2003 and much of 2004. Thus it has actually quadrupled in five years. Coal, traditionally volatile, sold for about $30 a ton during 2003, peaked briefly at $63 in 2004, and went for $45.25 at the end of July 2007. A year later it hit $139.50 before slipping back a bit. It has tripled in 12 months.

Copper, another basic commodity, went from 82¢ a pound in July 2003 to $1.14 a year later, and to $3.72 by the end of last month. That’s an increase of 350% over five years. The price of steel has climbed from under $240 a ton for hot-rolled steel coil throughout most of 2003 to $1,125 a ton last month, quadrupling in five years.

Grains have also soared in price. U.S. corn prices jumped from $3.01 a bushel in July 2007 to $5.37 one year later. Wheat doubled from $3.05 a bushel in July 2006 to $6.02 last month. A Midwestern bakery owned by one of our portfolio companies turns out 13 million pies a year. The cost of ingredients of a standard pie jumped 100%, from $1.20 a year ago to $2.40 today.

The first step in solving the problem is to recognize that we have one—and it is serious. No American housewife has any doubts about that. Our policymakers shouldn’t, either. Yes, Irene, the worse is yet to come.

U.S. Recessions

JUst a few facts I found that I thought my readers might find interesting, especially on the causes of the recession we have faced since 1950.

1953 — Inflation caused by spending during the Korean War prompted the Federal Reserve to tighten monetary policy, causing a one-year recession.

1957-1958 — A recession hit developing countries the hardest because industrial nations sharply cut their purchases of minerals and farm products. U.S. unemployment rose during this period but, unusual for a recession, prices did also.

1973-1975 — The Organization of Petroleum Exporting Countries, or OPEC, quadrupled oil prices. That and the ongoing expense of the Vietnam war caused two years of inflation with little or no growth.

1980, 1981-82 — The Federal Reserve’s sharp rise in rates to quell the inflationary period of the 1970s and another spike in oil prices, this time triggered by the Iranian revolution, tipped the United States into a brief recession in 1980. A short expansion was followed by a deeper downturn from 1981 to late 1982.

1990-1991 — A credit crisis prompted by the insolvency of many failed U.S. savings and loans and a spike in oil prices during the first Gulf War resulted in a contraction followed by several years of sub-par growth.

2001-2002 — The bursting of the dot-com bubble, the Sept 11 attacks and corporate accounting scandals induced a relatively short and shallow recession followed by two years of slow growth.

Does any of this look familiar to anyone else?