Market crash: are we there yet ?

[sailingdog]

One thing Cam doesn't point out is that almost all of those categories will be also affected to some degree or another by either increased transportation costs, like:

• Food & Beverages—has to get from farm/factory to store
• Apparel—has to get from farm/factory to store
• Transportation—just the nature of the beast
• Medical Care—has to have supplies brought in
• Recreation—check fuel prices lately
• Education & Communication—Newspapers, reporters, cameras and such don't move without wheels or planes
• Other Goods & Services—has to get from farm/factory to store

or increased raw material costs, like:

• Food & Beverages—Corn has gone up quite a bit in price, as has fuel for running farm equipment
• Housing—Asphalt shingles anyone
• Apparel—Synthetic fabrics come from what? Oil, yeah...that stuff
• Transportation—Parts got to get to the factory to make cars
• Medical Care—ever see how much plastic a hospital uses
• Recreation—Sails are made of what—oh, yeah, oil-based plastics
• Education & Communication—Paper, Newspaper Pulp, Video Tape, Computer Discs—yup all oil-based just about

Originally Posted by camaraderie

Rick...I have not chimed in much here as I don't have any relevant expertise but I have been following the discussion with interest. Your statement that fuel oil and gas did not figure into CPI struck me as rather incredible if true so I looked it up:
What goods and services does the CPI cover?

The CPI represents all goods and services purchased for consumption by the reference population (U or W) BLS has classified all expenditure items into more than 200 categories, arranged into eight major groups. Major groups and examples of categories in each are as follows:

• FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, service meals and snacks)
• HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)
• APPAREL (men's shirts and sweaters, women's dresses, jewelry)
• TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)
• MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)
• RECREATION (televisions, pets and pet products, sports equipment, admissions);
• EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories);
• OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses).

Source:http://www.bls.gov/cpi/cpifaq.htm#Question_1
Can you advise why you are stating that it is not included?

[cardiacpaul]

me? I'm plantin' majik beans.
bush mailed 'em to me yesterday, didn't you get yours ricky?

[chris_gee]

"Capitalism always achieves efficiency in the end, government rarely, if ever, does. Capitalism allows for idiocy."

Perhaps so. Although many would argue about tolerating fraud in unbridled capitalism.

The curious thing is that the capitalists are now calling for the government or the fed to bail them out. Those who argue against that cite the moral hazard arguement.

Unfortunately this time there seems to be concern that greater hardship would result if the rampant speculation in the financial system led to widespread collapses. One reason being that the shadow financial system is now bigger than the official one.

I think it is important to look beyond the symptoms to try to understand why it happened.

I suggest that the reasons include. 1 Greenspan lowering interest rates to very low rates for a long time after 2000 to prop up the markets ie avoid pain.
2. Japan running very low interest rates giving the carry trade.
3. Both contributed to a flood of low interest money setting off speculative booms in various countries.
4. Greenspan and others decided not to intervene.
5. Many countries have been printing money or expanding money supply at over 10% for some years. I suggest prices rises due to scarcity are not inflation, or causes of it rather it is printing money.
6. The desire to do so in many countries is for competitive devaluation for trade advantage or in the case of the US to devalue its debts.
7. The fed has a role of maintaining the economy and a stable currency.
8 However politically taking the bad times with the good seems a difficult option and such things seem best delayed, so the fed and government can be hesitant to intervene in excesses yet hasten to prop up capitalists when they lose.
The question they hope no-one asks is who does the propping up. Like who pays? The answer may well be the middleclass and the elderly who depend on pensions and those who to be safe hold bonds paying less after tax than inflation. The converse is who is being propped up? The poor? Yeah right.

[sailingdog]

CP-
Just be careful when you cook those majik beans, I hear they contribute mightily to your methane output.

Originally Posted by cardiacpaul

me? I'm plantin' majik beans.
bush mailed 'em to me yesterday, didn't you get yours ricky?

[hellosailor]

"Food & Beverages—Corn has gone up quite a bit in price, as has fuel for running farm equipment"
Yeah, but that's a separate crime sprung on us by Archer-Daniels-Midland and other members of the Big Agriculture Business. Agro-alcohol makes sense if, like Brazil, you have lots of sugar cane waste (bagasse) to provide the heat, and you don't mind clearcutting rain forests to get land. The process is something like 10x more efficient than farming foodstock corn and converting it--which ADM just LOVES to do in the US, as it raises corn prices sky high.
Gasahol, in the US with existing technologies, is a scam. Especially when you look at how gas mileage in cars goes down when we burn it. If some of the new technologies (bacterial conversion, etc.) come online...great, but right now gasahol is just an ADM rip-off of the rubes. Too many people have run the numbers, and the only winner is the corn growers. Who advertise heavily on Sunday morning TV, farm radio, and Congressional lobbies.

[sailingdog]

HS—

Considering how much energy it takes to make ethanol from corn, yeah, we got ripped off.

[xort]

Everybody seems to know we are getting screwed by ethanol in many varied ways. Yet it's still getting pushed on us more and more.

[sailingdog]

good lobbyists for ADM and related agricorps.

[sailaway21]

SailingDog managed to leave out the entire Democratic party, Al Gore and the greenie's, as well as farm state congressmen. Otherwise, he hit the nail on the head! ADM and their ilk is why PJ O'Rourke said, in Parliament of Whores, that the whole US government agriculture program "should be taken out behind the barn and shot!". ADM makes Halliburton look benign, but then Halliburton actually does something worth our money.

[chris_gee]

yep they should have raised the taxes on petrol and oil to european levels. now that would have been an energy policy.