from the Wall Street Journal yesterday. The piece describes in some
detail how US companies are buying up raw materials in anticipation of
prices rises in the immediate future.
Some bits from the WSJ:
McCormick
bolstered its purchases as spice prices spiraled upward. Dehydrated
garlic powder more than tripled and black pepper more than doubled since
March 2009.
John
Anton, Anton Sport's founder, saw the price of cotton shooting up, and
decided to act. Mr. Anton typically has about 30 boxes of shirts on hand
at one time, but now has more than 2,500."It just kind of clicked that I can borrow at 2.45%, and if cotton
is going to go up between 10% and 12%, why wouldn't I do this?"
There are more examples provided in the article. You get the drift.
Companies are stockpiling stuff because they think prices are going to
rise. Not surprising at all. Cheap money is the fuel for commodity price
increases. This is what the Fed has said time and again that they want
to see happen. Bernanke is delighted to read that some guy is stocking
up on shirts with ZIRP financing. It “proves” that his policy is working. It also proves that his policy is stoking food/commodity inflation. That crosses a very big line when countries are falling.
The article drifted from just the facts to some editorial connections
between the Fed and inflation. The author made reference to a recent WSJ
interview with J-C Trichet who made a thinly veiled threat to “central bankers” who are pursing monetary policies that have “second-round effects" on domestic prices. That arrow was a clear shot in the direction of Ben Bernanke.
The WSJ has been over the top in its support of Bernanke and QE. I
think the paper let itself be used by the Fed on numerous occasions in
the past half year. A significant part of the Fed’s QE2 propaganda sell
job was delivered through the pages of the WSJ. But now the WSJ is
publishing a steady stream of news how inflation/inflationary
expectations are rising fast. And the pain/turmoil that this is causing.
The Editors of the paper are not dopes, and they read their own
newspaper. The dots between ZIRP/QE and global commodity inflation are
firmly in ink. I wonder when the editorial page will pose the question: “Is QE backfiring? Should the Fed continue?
I doubt that the Journal will be the first MSM to criticize Fed policy.
That editorial will come from either the NYT or the WAPO. The WSJ can’t
be too far behind. After all, as of today the editors are as aware as
Bernanke and the other Fed members that QE was a poorly timed/executed
policy. One that could now bring devastating consequences.
Note: An interesting interview today with Jim Rogers and the Swiss newspaper NZZ.
Jim does connect the dots and blames Bernanke for food inflation. This
is no surprise. What is surprising is that NZZ is asking the questions.
It is just a matter of time before all of the press starting asking
this question.
The shitbrew at 711 costs me $0.10 more a cup in the new year.
This is a great follow-up to your article in oilprice.com, Bruce: "You Can't Blame Bernake..."
Except, you say the opposite of what you are saying in here.
Why does this strike me as being an ethical problem? or, if you don't have ethics a professional problem? Or are you just a phony piece of shit?
Actually I don't submit articles to oilprice.com so I'm not quite sure what you're referring to.
I think I might have had a piece that said, "You can't blame Bernanke for ALL of the recent price rises. But you can give him credit for half of them". Half is enough for me.
I've got no ethical problem. I have been apposed to QE as long as onyone. I have dozens of articles to back that up.
You're barking up the wrong tree with this one.
bk
Another awesome article, Bruce.
Mr. Anton's strategy is brilliant ... until demand collapses and/or interest rates soar. He is following in the footsteps of:
Mr. Bernanke's strategy which isn't brilliant but with the full faith and unlimited credit at his disposal it will continue to deliver diminishing returns (which justify QEn) until negative returns (collapse of international trade, mass starvation, war) cause the collapse of the most over-inflated markets (S&P, DOW, Nasdaq, etc) ... at which point, he will resign.
S&P at 440 is a pipe dream - when this situation rolls over there are going to be a lot of the 500 with stock values of zero.
barliman
You guys are all out of touch. The BLS says that you will avoid price increases by substituting lower priced items for the food items that you are no longer able to afford. For example, grass clippings, wood shavings, peat moss, and smelter dross have barely gone up at all this year. So consider substituting:
Grass clippings for Raisin Bran
Perlite for Rice Crispies
Used motor oil for Canola Oil
Mud pies for hamburger
etc.
Now, quickly order the BLS book: "Bernanke's Favorite Inflation Fighting Recipes", get to cooking and quit your complainin.
Bernokio is a criminal and a pathological liar.
His mindless prattle about recovery is always a combination of outright lies and wishful thinking.
For unleashing inflation upon the world, Bernokio should be tried for treason, convicted and executed.
Super post Bruce.
On my other blog a post by a cool guy ref: The Bernank fiasco.
"Why do I get the feeling N. Bates is talking to his mother." Gotta luv it.
Grocery stores will be hurting. They have little pricing power. Their loss leaders went for New York steaks last year at 2.99/lb to 2 liter bottles of soda (which have almost no commodity in them). Low grade hamburger is now 2.99/pound (or more). If one shops closely, the stores have removed the 'bargains' and are trying to survive without sales and without noticable price increases. Without employment, their pricing power is under pressure and their margins get squeezed. This is true many industries and was the topic of an article in zerohedge yesterday. Thank god cloud computing stocks are immune to the boom/bust cycle as are members of the Fed. If you have a few minutes look up pictures of ben bernake as a youth. Like they say, 'a picture is worth a thousand words'. Poor little Ben had to be last pick at the school yard if he ever went outside.
19 This is the verdict: Light has come into the world, but people loved darkness instead of light because their deeds were evil. 20 Everyone who does evil hates the light, and will not come into the light for fear that their deeds will be exposed.21 But whoever lives by the truth comes into the light, so that it may be seen plainly that what they have done has been done in the sight of God.
Point being ?
That the Bible contains some pretty excellent descriptions and prescriptions regarding human behavior.
Excellent article.
Rudolf Havenstein policy. I cannot believe it!
Stop harping on Ben-his policies have been highly successful. QE has gone into risk assets and saved the capital class-lots of cheap refinancing of almost dead assets have made this class immune to default. So what if peasants go hungry and savers suffer? The financial elite believe this is the price the state has to pay for economic stability. Any pulse of Democratic capitalism died in 2008 along with the US Republic. The future is state capitalism and full support of empire and anyone who was aware of this transition has done well in their investments.
Benny etal are monetarists. They see this type of activity as increasing the velocity of money which is good for the economy.
It is a math equation to them and the fallout like dead people, riots, food hoarding and starvation are not variables in this equation.
It is the work of satan himself.
sschu
I wonder what Benocide's bodycount will be when this is all over? My guess is 10s of millions.
That was during the 50's WB7 when family discourse was more respectful. So the caption should read as follows.
"With all due respect Dad, I think you're just another one of those double talking PhD douche bags."
Great post, but I'm picky. It is not "countries" falling, but Arab dictators. That's a good thing. I know hell will freeze over before Bush gets any credit for that, but Iraq has to have an impact.
As to food inflation, it's mostly a function of energy prices, which are mostly driven by incompetent energy policy in the US and Europe. Aside from PMs "investment" in commodities is a fool's erand. The idiots playing this game will have their heads handed to them.
I cancelled the WSJ after decades of subscriptions.
The final straw was when Stewart bragged about his American Home Mortgage gains and 'must own' scenario.
It went bankrupt about two weeks later.
Sigh a Nora
Bernanke, using QE2, is spreading food and energy inflation around the world. Bernanke is saving slimy Wall Street crooks, at the expense of world stability. President Obama, please get your head out of your ass, stop Bernanke before he kills us all.
He is trying to save us all. Think through this thing clearly. You can shear a sheep twice a year but you can only kill it once.
the wsj is a mouth piece of the fed and banksters everywhere....bernankrupt should be tried for murder and executed like a criminal....
i predicted in october / november 2008 that we would have massive inflation in 18 - 24 months from the beginning of tarp and it has arrived on schedule....there has been a 3-6 month delay in reporting its ferocity but it showed up on schedule....
and for all of you fucktards who think inflation is good, go fuck yourselves....distortions in price signals cause economic activity to warp and fail....which is leading to misery, rioting, and death....
double post
so what should we call the WSJ, a trade paper? interesting that American businessmen are doing what the Chinese have been doing for a few years now. Makes you wonder who is late, or early to the party?
But the Americans have long had confidence that Bernanke would prick the commodity bubble before it got out of hand, by raising interest rates. to say WSJ isn't concerned with the macro implications? Who cares? a few years ago the major brokerages closed their technical analysis departments, and dropped coverage on a wide range of stocks. none of it matters. all that matters is the fed running liquidity into the system, and should that stop, no one will know how or when. yes its made everyone short sighted and narrowly focused. but the big picture is out of our control, egypt? not that big. Korea, who cares, we muddle along until we don't and then everyone is in the same boat, economically speaking.
QE is a fact like the sun and the moon. is the world going to end? then we all go down together, your charts and your balance sheets don't matter, it's the all in one market. buy the dip, (bitchez) Bernank has your back, as we march to our streets of Cairo moment. because imbalances gradually overwhelm the system, when you proceed in a linear direction. there's no way out now
Buy the dips?!!? Dips no longer permitted.
The WSJ, like every weekly shopper rag, knows who their advertisers are. They will be among the last to reach the obvious conclusions.
2 yellow onions ( couldn't find any white ones) were $2.51! Is that normal?
If you're shocked by the onion pricing I'd suggest you steer clear of the tomato department lest you have a coronary infarction.
sangell: you must have some pretty big onions, there.
(t,y,. mr. bones!)
try the mexican/hispanic grocery.
where the men have jobs, and the women know it.
hava BANANA with the rest of the REPUBLIC!
my store is running a 5bag of potatoes for 75 cents. whole FF chickens came down to 69. but i think the local mexican markets are pressuring them. i think maybe they are buying direct from below the border, and selling here (to the mexican clients at a markdown). just guessing but i have seen this before, mexican shop owners charge their customers according to what they think they can pay. and they charge everyone else full price. just guessing, but the mexican super has more and better produce than the chains.
The WSJ editorial page is NOT conservative.
They are Wilsonian Interventionists.
The Board lives on Olympus and has contempt for Americanism.
It was libertarian under Bartley. Now I ignore the WSJ in its entirety.
It was libertarian under Bartley. Now I ignore the WSJ in its entirety.
There was another comment piece in the WSJ about the effect of inflation on equities.
http://blogs.wsj.com/source/2011/02/02/equities-dont-like-inflation-either/
'm getting tired hearing that equities are a good hedge against inflation, then offering Zimbabwe and Weimar Germany as examples.
Ben Banana Bernanke doesnt care about inflation, he only cares about his bankster buddies. So expect QE3, QE4 .... QEn
Cnbc is all over the inflation hysteria even kudlow was asking if qe should stop. When people cant get wage increases in the usa then the rebalancing starts getting stressful again, but we arent going to see any wage push inflation. Without wage increases final demand wont be there and everybody starts getting squeezed and stressed again. We are entering a new phase of the great rebalancing. We need some good productivity numbers over the next year. Sparks are going to fly when high prices collide with relatively lower demand.
Maybe they are stoking the fire to get people out and clearing inventory? I reckon the biggest fear is no follow through from the consumer to take all the stuff off the shelves. Only trouble is, if people start worrying about higher gas, higher food costs and higher interest rates, they're not going to be desperate to pick up consumer durables....
Ask Mr. Lederhosen. I am just a troll. Where is my herbal headache pillow you swiss cheese eating lederhosen wearing gold stealing dude?
Oh and i forgot to add please....
For all of you who dont know in some of the cantons they sell headache pillows legally. They are stuffed with fine ganja. Long live swiss freedom, but seriously you shouldnt have let the jew trains use swiss territory. You all knew where they were headed, but nobody is perfect.
You really should refrain from posting while stoned.
bruce, the wsj is part of the machine. they're in the tank with the fed, washington dc and all the big corporations. they'll cover for the fed until it's way too late for mainstream america, and the world at large. they're still bashing gold at every chance.
keep in mind that the stock portfolios etc ... of the dandies at the wsj were the primary beneficiaries of the bailouts, printing etc. afterall, they're in the top 1%. it may be a while before they complain since they benefit to this day with fed policies - financially speaking.
the wankin, tankin, frankin priv.
tyler, keep that ZH revenue stream goosed, 4 us.
we understand.
quick: register for the pkrStarz vip freeroll, it's almost full to 40K.
push on the first hand, no-peeky, and see if you can get something started, or maybe just get to the laundry.
finally.
You do realise that adverts are directed specifically to your computer...
Don't you?
The WSJ is the mouthpiece for WallStreet's best frauds. It used to actually have merit, now we read it as a joke, or guide on what to avoid.
The frauds on Whore Street love blue horseshoes.
rogers (basically) ripped 'home-boy' a new asshole!
JR shows his sentivity about making tons of money speculating in commodities. He fails dismally to argue higher commodity prices better the lives of subsistence farmers in India and Africa. (Truth is higher prices enrich him and other commodity speculators like him.)
What will improve the lives of those farmers Roger appears to care so much about is to indict and jail criminals running agricultural companies like Monsanto, who sell the farmer genetically modified seeds designed to transform said farmers into perpetual debt slaves to the sellers of seeds, fertilizer, and herbicides.
More here: Good News - Evil Monsanto Finally Reaping Its Just Desserts
http://www.nafwa.org/general-nutrition/alternative-nutrition/24918-good-news-evil-monsanto-finally-reaping-its-just-desserts.html
How does one rip a new asshole on someone who already is a complete asshole?
Think about double lobotomy vs. single lobotomy