ScottEX

Commodity Price Inflation Is Inflation and Is Happening Now

Mad Hedge Fund Trader... Here is some great summer journalism here.. Roasting the Pig...

www.youtube.com/watch?...


On Jun 10 11:04 AM Mad Hedge Fund Trader wrote:

> But up is up. First of all, let me warn you that reading this paragraph
> is a complete waste of time. Still interested? There is chatter about
> that the Fed is considering raising interest rates at its next meeting.
> After all, where can they go from zero, but up? The bond market is
> certainly telling us that rates should go higher, with yields on
> ten year Treasuries jumping from 2.45% to 3.95% since March. This
> is the usual kind of gibberish you get from financial journalists,
> who deep into a summer with no real news, resort to making stuff
> up out of thin air. US industrial capacity utilization is terrible
> and still falling, while unemployment is still rising at a record
> pace. Sure, commodity prices have doubled this year. But this is
> happening because investors are looking for an alternative to the
> sick dollar, not because there is huge underlying demand by end users.
> This is one of the reasons why I have recently become cautious about
> all of my long positions. So I can say with complete confidence that
> the chances of an interest rate hike are less than zero for the foreseeable
> future. This discussion did have the one benefit that it did enable
> me to fill this space in my newsletter.

Commodity Price Inflation Is Inflation and Is Happening Now

A, I am an Ass. B. I spell drivle with six letters as and when they appear, got a problem with that?

"hedge funds, derivatives, repeal of glass-steegal, and "regulation
> is bad" policy of W and cheney is at the center of the problem."

100% Agree. Facism doesn't work.

Inflation people, look at today's WSJ. More firms cut pay, apple halves iphone, small firms revise pricing.

A recent study of the five commodity bull markets going back to the 70s and compared the run up in the CRB to the surge in CPI. Historically there is a 37% pass through. In the most recent cycle, 2002-2007 the pass through was only 18%.

During that cycle the US received billions in dollars from the Chinese through repression of the Yuan, which our out of control greedy pigs on Wall Street converted into trillions of derivatives paper. I'm proud of the regulation in my great free country. Let's not confuse democracy and regulation. Without it what we have is a sick monkies gone mad orgey. Had Bush and in his cronies not been so diehard in deregulating WS, the credit bubble could have been averted.

During the bubble-leveraged (unregulated derivates orgy) economy of 2002-2007 unemployment went as low 4.4% and industry capacity utilization ran at 83%. Today CAPU rates are 69% and unemployment is pushing 10%.

If anybody here is seeing commodity driven inflation I would like to be on what you are on.

Let's face it, the republicans squandered quite irresponsibly an advantage the US has that all countries would enjoy, being the world's central bank. The political and economic clout the US derives from the world's central banks holding 70% of their reserves in USD is enormous. You can thank Regan and Bush for blowing that. I don't think it's going to be completely devastating but I do see the rest of the world reducing their holding to something like half that in the nearish term. But who knows what the communists in China are really thinking.

Unfortunately, with all the writing clearly on the wall, the US is missing the opportunity to really fix up it's banking system. See Cohen-Lewis in last weekends New York Times.

Anyways, I hate republicans, sorry, look what they've done to the world economy. And for any good reason, unless you count greed as one of them, I count 0.









On Jun 07 10:22 PM Missing_Link wrote:

> On Jun 07 03:35 PM backtoreality wrote:

Commodity Price Inflation Is Inflation and Is Happening Now

Gold... right.. Gold=Inflation. Can I have my phd now, the 30 second online phd in modern economies! Yay...


On Jun 07 09:01 AM Jimmy James wrote:

> What inflation? Who'd a thunk?
>
> Gold and silver have generally and sustainably tripled in 8 years.
> Inflation is just continuing. Inflation is actually the increase
> in the M1 number anyway, and that has gone from .8T to 1.7T in 7
> months. THAT is the physical source of the inflation. The rest
> are just side effects.
>
> AUDIT THE FED. Please help support HR 1207 THIS WEEK!

Commodity Price Inflation Is Inflation and Is Happening Now

Hey Genius, where did you get your phd in Economics? It would be nice if the non-educated types would just read and not type. It really ruins these columns.

There is nothing more important to the inflation story than wages. If you had any research ability or actual knowledge of economics you would see that Krugman's view is based on the 'FACT' that companies are continuing to cut salaries.

Maybe save your anti-left politics for a politics bashing forum, I'm sure there are many your type can have fun in. But please keep the uneducated drivle out of this forum about economics, which clearly you know nothing about.


On Jun 07 09:16 AM SageNot wrote:

> Isn't Professor Paul Krugman a Liberal commentator, what else would
> you expect from the far left?
>
> Of course commodity price increases are inflationery, didn't $140/brl
> crude oil help blow up our economy less than two years ago? While
> Silver may have many commercial purposes, it's a long, long way from
> $50./ounce, while gold is still the relic that it's always been,
> but indexed for inflation it's worth what, less than $400./ounce
> vs the '80's?
>
> Now grains & meats, there is your inflation, with a weakening
> buck, "look out below!"

Credit Crisis Watch: Signs of Progress?

I agree with joepublic.. A low rate of interest is meaningless if the banks aren't going to lend. You can bet your bottom dollar that TARP money is going offshore.

I really think it might have been just as well if not better to have let the failed banks collapse. The blank checks going to these companies will result in more fraud, more detriment to the US Economy, and there will be absolutely zero transparency so when the swindlers come back to ask for another trillion in TARP, they'll probably get it without question.

Imagine the average Joe really understood the true nature of the banks problems. Didn't a bunch of guys from Enron go to jail for off balance sheet fraud. I worked in the finance department at ML and I saw the network of accounting entities, some 1500 of them. I saw traders working in one entity booking trades though others, trading with themselves in some cases, and crazier things that probably aren't legal. Why don't we treat those responsible like the fraudsters they are instead of giving them more money. Most of those banks should be killed and buried. That's the only real solution to their problems, in my opinion. I do believe that was probably the part of the purpose behind killing Lehman actually. All the major bank's CEO's got together and agreed that was the best way to preserve their illustrious selves. The TARP money won't add a dime of liquidity on the US taxpayers investment, not on its own. If only the taxpayer knew the truth. I'm sure they would demand a different solution, and one would think that with the unlimited money printing option in effect it would be easy enough to setup a few new commercial banks.

Compare the financial bailout to the autos bailout. One offers transparency, the other does not. So all we hear about for weeks on end is about the plant workers earning too much and their retirements costing too much and how it would be better to not make a tiny bridge loan to save the industry, better to destroy thousands of lives and start fresh. Why not do that with Wall Street. Wouldn't a Trillion dollars actually buy a few banks? Seems to me that would make more sense than buying up the same amount worth of bad derivative paper. This all started on Wall Street, but as usual they will not be the ones paying for their blatant fraud. No, they will get paid their bonuses, maybe a tad smaller this year, but they will get paid. Listening to that redneck Republican who scuttled the auto bridge loan in congress just made me sick. (um, aren't we trying to increase credit so companies can loan money, the remember the Trillion TARP), listening to him dump all over the hard working men and women who have toiled their entire lives working for an honest wage while the criminals responsible get blank checks is really trying my faith in the good side of America. You hear about executive compensation now and again in the media, but nowhere near the extent. They sure didn't kill the bank bailout on account of people earning too much, but hell, if a key industry employers workers making a dime more than a worker in Korea, well, better to kill that. No, there are a lot of very rich bankers who should be sharing a cell with Kenneth Lay, but it would seem fraud on wall street is more accepted by the public. They don't seem to get mad about that and obviously it's because they don't understand what these banks have been up to, and now they have another Trillion to go back at it. Nobody will will ever really get into the banks books. You would need an army of specialized accountants that just doesn't exist today. Perhaps if the auto industry had kept its business more secretive over the years, and of course put a nice sounding anacronym to their bridge loan, then everybody's problems would be taken care of, not just the pigs on wall street.

To date I believe W has agreed to a16B bridge loan, after much uproar about it. And this after issuing a few other big companies almost a Trillion! -- designed to induce lending... Lehman probably needed to be wiped, and any other bank that came knocking for money to pay for their sins should have been nationalized, cleaned out, and sold back to the public. It could be done. If money can be printed without to any level, it could be done. So here the taxpayer has purchased a Trillion in junk derivatives when the could be owning the banks that won't lend to them after all that.

Well, sadly, my forecast is for more of the same white glove criminal activity that defines the US financial system. The rich will get richer, (sorry to any of you if you were rich before Bernie), and the salt of the earth, the working man and woman, will suffer more and more in the years to come. Greed is Good. God bless America.

Changing TARP Rules Changes Market Direction

TARP.. My first thought when Paulson announced his team of expert auditors was, good luck. I was an early casualty of the crisis as a fresh and idealistic MBA in the CFO's office at Merrill Lynch.

I was truly shocked by what I found there. I sat within earshot of the CFO in a then temporary office in Hong Kong. I was on a desk of ten controllers charged with managing the book and records for the regions equity derivative books. Under-trained, low skilled, and put to a task that a team of 100 would have trouble accomplishing.

When I arrived there my new boss was frantically trying to make sense of the trading records. Why not let the new guy do it. A typical day for me went something like this. An incomprehensible ream of data was dumped on my desk. I was instructed to flatten and comment. The trading managers are quite skilled at deception and experts in the game of hide and seek. The data I was given was on average about 10% complete. Combined with the byzantine web of accounting entities and trading books, I was left guessing most of the time as to what was on a book or off a book, and just what the hell “it” was. Mr. CFO is having lunch again with this or that millionaire in town for a game of golf, but I know he is actually from Krypton and assumes super human powers of intelligence. He has a perfect grasp on the accounts, I’m sure. So there I went with my team slashing and hacking and writing my vague comments all over the place. The product controllers were earning about 50,000USD down there.

My theory is this. The TARP people went in and saw the same impossible mess that I got a glimpse of and said forget about it. I don’t think it has anything to do with how to value complex securities. What we are talking about here is how to value smoke mirrors lies and deception. With Citi axing 52,000 jobs this week I'm left to wonder whether those people might be worth saving. At an average of 50,000/year, the total savings to the company in annual salaries is pretty close to the amount that could be saved axing about 20 or 30 directors and execs. I know these Kryptonian white shoe Ivey leaguers at the top have superhuman powers, but I’m still thinking that the 52,000 workers would be more useful to the company and society.