Yep, old George has flipped out on this analogy to markets: Seems like they’re acting in Slinky fashion. You had a Slinky, right? Coiled spring that would walk down stairs? Might not be a bad analogy for markets, down, bounce, down, bounce…
What’s driving it? Well, let’s start with “government statistics” and this eye opening piece from Business Insider titled “Chinese Researchers Find Official Statistics Massively Understating Inflation“.
The reason this hits home is not because the BBC is reporting 10.1 percent and higher food inflation rate in China, but because governments all over the world seem to be engaged in competitive statistical manipulations, since they (rightly) figure that rabid economic fundamentalists – of the sort that blow up markets through highly levered bets one way, or the other – might actually pay attention to such things.
—-
So, with this in mind, a stiff upper lip, and a firmly set jaw, we move on to this morning’s first set of numbers: the Consumer Price Index here in the US:
“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in October on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.2 percent before seasonal adjustment.
As has frequently been the case in recent months, an increase in the energy index was the major factor in the all items seasonally adjusted increase. The gasoline index rose for the fourth month in a row and accounted for almost 90 percent of the all items increase; the household energy index rose as well. The food index rose slightly in October with the food at home index unchanged.
The index for all items less food and energy was unchanged in October, the third month in a row with no change. The indexes for shelter and medical care rose, but these increases were offset by declines in an array of indexes including new vehicles, used cars and trucks, apparel, recreation, and tobacco.
Over the last 12 months, the index for all items less food and energy has risen 0.6 percent, the smallest 12-month increase in the history of the index, which dates to 1957. The energy index has risen 5.9 percent over that span with the gasoline index up 9.5 percent. The food index has risen 1.4 percent, with both the food at home index and food away from home index rising the same 1.4 percent.
The first time we saw the game of global statistical abuse game being played out, it was in the Middle East where – according to the late Matt “Twilight in the Desert“ Simmons, annual oil reserve estimates were routinely pumped almost annually in order to edge up OPEC production quotas. If it worked for oil, why not commodities and currency trading?
Now – if the Chinese researchers are right – and I have no reason to suspect their findings are unique) there may be a global government “game on” of “let’s screw the global population by understating the costs of living.
Not to put too fine a point on it, but a week back, CNBC’s Fast Money site was talking about a 0.6% food price hike at Wal-Mart for a two month period, and that in turn inks out to a 3.65% annualized rate. That, in turn, means that people who don’t get a Social Security COLA adjustment in 2011 face cutting calorie intakes by 4% to make up for it, I guess. And this was on top of no COLA in 2010.
Now, as to the most recent peek at food from today’s report?
The food index rose 0.1 percent in October after a 0.3 percent increase in September. The index for food away from home rose 0.1 percent while the food at home index was unchanged. Among the six major grocery store food groups that comprise the food at home index, the index for dairy and related products posted the largest increase, rising 1.1 percent. This was its fifth increase in the last six months and its largest since January. The index for meats, poultry, fish, and eggs also rose, increasing 0.6 percent as increases in the indexes for beef, poultry, and pork offset a decline in the eggs index. These increases offset declines in the remaining food at home groups. The fruits and vegetables group posted the largest decline, falling 0.7 percent, while the index for nonalcoholic beverages fell 0.5 percent. The indexes for cereals and bakery products and for other food at home both fell 0.2 percent. Over the past year, the indexes for cereals and bakery products and for nonalcoholic beverages have declined, while the index for other food at home was unchanged and the indexes for the remaining three groups have risen.
Oh, yeah: The price of shelter is down 0.3% for the month. It’ll likely do that for some time to come so long as the foreclosure festival continues. Food goes up, housing goes down. On average, you’re supposed to work it out. What’s the old saying? With friend like this….
Euro Imploding
Not much to do but sit back and have popcorn while the EU seems working every which which way to implode itself. This morning’s changes include the Financial Times report that “Dublin says aid package might be needed” a conclusion which comes not, we assume from running out of Bushmills, but rather attacks on the Euro.
The dollar has benefitted somewhat in this, as ‘hot money’ seeks safety at some level. And since the dollar now buys a bit more, it takes a few dollars less to buy the Dow, which dropped more than 200 points for a while on Tuesday.
I talked to Robin Landry about it Tuesday afternoon and he doesn’t figure ‘the end’ is in sight yet, although how far ‘down is’ could be determined by whether the Dow 10,900 to 10,800 level holds. Not investment advice, mind you, just munching popcorn while my triple short on the banks was up more than 6% yesterday.
Cope de Grope Dept.
Let me see here: Prison Planet headlines that TSA is getting lawsuits coming its way over airport pat downs … The San Francisco Chronicle’s SFGate website has a dandy account of patting down a screaming toddler.
Down the 101 a ways, the San Diego guy who said “No!” to TSA’s junk-check may end up with the government coming after him for $11,000 in civil penalties….and while all this is going on, Gizmodo is offering up video purportedly of 100 naked citizens. You know, the one’s that government wasn’t going to keep, right?
—-
Here at the ranch, Elaine happened through the kitchen Tuesday afternoon while I was alternately standing naked in front of the microwave and then stepping away touching myself (in a very professional manner, mind you, with a latex glove on).
“Nothing to worry about dear, just practicing for possible upcoming business travel and trying to decide what to do at the airport…” I reassured her. “My way of taking matters in hand….”
Oddly, she didn’t seem even the least bit reassured. Go figure.
Reality check: I figure a few more days of this kind of behavior and she’ll let me buy us a small airplane. Used Mooney is still on my bucket list.
Meantime, Back at the Circus
Efforts to extend the Bush-era tax cuts are running into trouble. quick, look surprised.
Then one of our sources sent in this accounting of DoD budget hearings this week:
“George,
I just sat in on a discussion centering on some interesting happenings on Capitol Hill these days.
Seems the outgoing congressional staff failed to adequately consult the GOP regarding the FY11 DoD budget. The incoming GOP majority does not agree with the outgoing Dems on proposed defense spending. Sources tell me that it looks very likely that the DoD will thus be functioning on continuing resolutions ‘at least’ until Feb/Mar, perhaps all year!
The GOP apparently has major problems with some of the key defense initiatives and programs that were given priority by the outgoing congress, and they fully intend to either correct course or go dead in the water. Either way, more financial turmoil for our fighting men and women in uniform is pretty much guaranteed in the coming months. Will it lead to troop frustration and more ‘resigned commissions’ like this one?
Now, think about this — it has all came to a head because of the election results earlier this month. The new congress convenes in early January, when the partisan rancor and political spear throwing will surely begin in earnest. Might a warring congress leave the military so operationally paralyzed that it cannot respond to either the key threats requiring decisive action or the grim conditions requiring humanitarian aid?
These developments clearly marry up with the ‘economic linguistics,’ and the timing around the election (tipping point) and a GOP controlled House of Reps (convening in January, thus fitting the ‘building tension’ toward a release) is way more than coincidental.
Just one more possibility to consider — and to watch as events transpire in the coming weeks. Will U.S. peer competitors try to take advantage of this time of uncertainty and deep division? It surely wouldn’t be the first time in history that such a calculated maneuver took place.
And, God forbid, look carefully at the military officer oath of office here:
. . . particularly this line: “I will support and defend the Constitution of the United States against all enemies, foreign and domestic.” What entity determines who ‘domestic enemies’ are and how one is to ‘defend against’ them? Brings to mind the old Kirk Douglas thriller: “Seven Days in May,” eh!
It’s a pretty thick pot of stew you are stirring up. I’ll just close with an old saying attributed to the legendary Texas Rangers (lawmen, not BBall players): “A people that values its privileges above its principles will soon lose both.”
Of course, the republicorps are very beholden to military contractors, so this could be one of those year-long stories which never gets resolved.
I figure we might as well start reporting the beginning of the story, since there’s a good chance there’ll be no end to it for years…
(continues below ad)
