Food prices are clearly coming under pressure. I guess with 22% total unemployment, that shouldn't be surprising.
You know "Customer Appreciation Day" has been around for a while when the pizza size increases from Medium to Large and the price drops (note the "paste overs"). ...but only 5 large pizzas per customer :)
Damn,
ReplyDeleteI was hoping to buy 10 of those bad boys and just microwave em'.
NOT!
Food affordability is a scary topic indeed.
I guess I didn't phrase my question well on the previous page. I'll try again.
ReplyDeleteDoes a strengthening dollar imply increased demand for treasuries and increasing ablility for the U.S. govt. to borrow?
Thanks
-D
"Does a strengthening dollar imply increased demand for treasuries and increasing ablility for the U.S. govt. to borrow?"
ReplyDeleteYes, we are turning Japanese and then some. We'll see 0% T-bills, probably for as long as we live. There will be a few panics where we experience heavily negative yields for those smart enough to pay a huge premium to save some fraction of their cash.
I don't think we have much ability to borrow more based on our revenue already being smaller than our annual deficit. We will see revenue drop precipitously over the next few years.
This depression is a truly serious threat to our survival; not like the 30s.
"for those smart enough to pay a huge premium to save some fraction of their cash"
ReplyDeleteHow can one save cash when the fed and govt can prevent deleveraging (perhaps indefitely?) while at the same creating commodity and equity bubbles? Savers could get crushed. Fundamentals simply dont matter anymore, its whatever our govt wants. Our thesis assumes a normal, functional market in a democratic state, none of which we have anymore.
"Fundamentals simply dont matter anymore"
ReplyDeleteI heard that a lot at Dow 14.1K, too.
In a debt-based monetary system, you have to have genuinely profitable credit to have currency. The Fed can't do anything to change the amount of cash in circulation, only profitable borrowers can do that.
That's why Bernanke failed to deliver his promise to quickly reverse his "temporary" interest rate cut to 5.5% (Aug 2007) "once liquidity materially improved."
We are still waiting on that 6% Fed funds rate...
Fdr you once said that this deflation would result in a minor bubble in food and energy prices.You see that bubble breaking now? World over food commodities prices have soared over the last couple of years if i am not wrong.Do you think now food prices will also deflate rapidly along with stocks and fall by over 50% or more?
ReplyDelete"Fdr you once said that this deflation would result in a minor bubble in food and energy prices."
ReplyDeleteYes, I do. I don't think it was a bubble per se, just that prices fall in order and proportion to the amount of leverage applied to finance them. Food and energy prices are typically paid in cash, so they'll hold up longer, until unemployment makes the original prices truly unaffordable to many/most.
"Fdr you once said that this deflation would result in a minor bubble in food and energy prices."
ReplyDeleteYes, I do. I don't think it was a bubble per se, just that prices fall in order and proportion to the amount of leverage applied to finance them. Food and energy prices are typically paid in cash, so they'll hold up longer, until unemployment makes the original prices truly unaffordable to many/most.
I also say to watch gas prices as a transparent test of demand. Remember during the boom, when people were clamoring about $70 oil making gas prices unaffordable? Gas prices HAD to rise to compensate the refiners, right? Well guess what, gas prices at pumps around me continue to drop. We are paying less for gas today than we were paying at $35 oil at the beginning of 2009. It's ultimately about demand destruction during deflation.
Got your point!
ReplyDeleteFDR do you share Merediths perception of Goldman Sachs?
ReplyDeletethttp://www.bloomberg.com/apps/news?pid=20603037&sid=aW8qB1zM8swg
What worries me is that even meredith thinks the worst is over (i believe she gave a interfview some time back which reflected her views that the worst is behind us) and you are still bearish.Why?
FDR, where in the world do you live???
ReplyDeleteWhere I live we've got gas prices going north of $3.20 a gallon.
And food prices have remained stable in my area as well.
Where is this price drop you keep talking about?
"FDR do you share Merediths perception of Goldman Sachs?"
ReplyDeleteNo.
"What worries me is that even meredith thinks the worst is over (i believe she gave a interfview some time back which reflected her views that the worst is behind us) and you are still bearish.Why?"
Meredith is the best bank analyst on The Street, which isn't saying much. She has no idea why this is happening. She never understood the event itself. Remember, her claim to fame was putting out a Citi target of $30 when all others were bullish.
"FDR, where in the world do you live???
ReplyDeleteWhere I live we've got gas prices going north of $3.20 a gallon."
You must be in CA?
http://www.gasbuddy.com/gb_gastemperaturemap.aspx
That's an interesting map, right? The strong borders show that the predominant relative price influence is state tax.
It might also be called "intelligence heat map" as the unintelligent states clearly try to tax their way out of the depression, thus creating it.