Wednesday, May 18, 2005



This cartoon from CBS Market Watch pretty much sums up the entire American civilization. Everything else flows out of this very simple sentiment. "What I want basically, is a line of credit that will tide me over the rest of my life".

The entire country wants this for the entire existence of our country, too. Very simple, no? Eternal debt that is never due.

Inflation is running at 6% a year but the "core" is stagnant. The "core" is all those goodies we can live without. So, just as in previous contractions, this "core" sits there and rots while inflation rages all around it. Today the stock market is going up because everyone things China will obey us thanks to Bush's hot air yesterday and since inflation is ravaging only things we need, this means there isn't any inflation, what? Huh?

Today's stock market went way up because they expect the Fed to keep interest rates low despite the 6% inflation. So long as cars and computers are cheap, the Fed will hew to this off balanced standard. Of course, inflation is raging all over the place especially homes. I talked to a client today who was offered even more loans because his properties all went way up in paper value. The banks don't worry about ultimate value, everything is very much "here and now".

Inflation Pressures Ease Despite Jump in Food and Energy Costs says the NYT headlines. Oh, the joy. Time to go to the bank and get yet another loan at 5%. Everyone knows what readers here know. But knowing and understanding are two different things. If one can get richer and live better by ignoring consequences then they will happily do so. This is why having responsible people run things is so vital. Someone has to be the frowning banker who says "no".

China's industrial output rose 16% from that month a year earlier to 564.7 billion yuan ($68 billion), accelerating from March's 15.1% on-year increase.

April production had been forecast to slow to 14.6%, according to the median forecast of eight economists surveyed by Bloomberg News.

China is on a roll....
The output data released Wednesday showed April exports of industrial enterprises rose 29.9% to 379.2 billion yuan. The sales-to-production ratio, an indication of inventory levels, stood at 97.9%, 0.47 percentage points higher than the same period last year.

Exports rose 30%? In one month? Inventory levels ratios 98%? Think about this. Who has the "strong economy" here? How many more years can their end of the see saw rise while ours falls?

Just give us a lifetime credit line we will never have to repay.

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