Comments for "Consumer Prices Decline Slightly in March"

bobnbot (member) wrote on Wed, 04/15/2009 - 8:02am. CDT

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Max (member) wrote on Wed, 04/15/2009 - 8:02am. CDT

Enter California, uber welfare state:

California asks feds to back its IOUs

Facing what could be the largest cash flow problem in state history, California officials are asking the federal government to back billions of dollars in short-term loans the state must seek in July.

"We're going to need cash-flow borrowing the likes of which California has never seen, at a time when market and economic forces are stacked against us," said Tom Dresslar, spokesman for state Treasurer Bill Lockyer. "That's a recipe for calamity."

While the state routinely borrows money at the start of fiscal years on July 1 by issuing interest-bearing Revenue Anticipation Notes, or RANs, a combination of factors have conspired to form a mountainous hurdle this time around.

Those factors include the sheer size of the amount needed – at least $13 billion – the state's woeful credit rating and the generally sorry state of the nation's financial markets.

------------------
sacrealstats

Johnny Lee wrote on Wed, 04/15/2009 - 8:04am. CDT

Must borrow more, must rollover massive debt.

Not to worry, it will all work out well.

We'll print more IOUs to buy our own debt to pay past IOUs. This is a highly sustainable model. It made this country great.

Arbitrage Macht Frei wrote on Wed, 04/15/2009 - 8:05am. CDT

The cost for each and every country to print their banknotes is a tiny fraction of the face value, so why would having a 1-world currency be advantageous to anybody?

And as far as counterfeiting goes, your computer contains around $250,000 worth of complex printing options. (or that's what it would have cost if you were a counterfeiter, circa 1975)

Rajesh (member) wrote on Wed, 04/15/2009 - 8:06am. CDT

Does any one know what happens to the COLA when the year over year number is negative? I hope they don't reduce social security payments as a result.

dr munch (member) wrote on Wed, 04/15/2009 - 8:09am. CDT

Funny how the core number was relevant only when the headline number was bad.

Kevinusma wrote on Wed, 04/15/2009 - 8:10am. CDT

Sounds like owners are trying to minimize their losses in the housing market by keeping rents at housing bubble rates. Once I'm out of my lease I'm buying.

Wicked Lad wrote on Wed, 04/15/2009 - 8:14am. CDT

Say, CR, would you be interested in slapping together a chart comparing a Case-Schiller index, OER and perhaps some other rent index over the last couple of years? It does seem strange that OER isn't making like a lead balloon.

wally wrote on Wed, 04/15/2009 - 8:14am. CDT

When wages are going down and prices are going down it is deflation. No mincing words anymore.

The treasured Fed belief that interest rate policies start to kick in about six months after they are enacted is another casualty of the misdiagnosis of our financial situation. That one is now blown to hell. They have had no effect. They were the wrong tool because the Fed did not understand - and still does not understand - the current credit collapse and debt deflation.

Jay D.. wrote on Wed, 04/15/2009 - 8:14am. CDT

........SEC to consider the future of credit raters..........

http://www.marketwatch.com/news/story/sec-consider-future-credit-raters/...

........quite interesting , they say it's a new regulation ............

Arbitrage Macht Frei wrote on Wed, 04/15/2009 - 8:15am. CDT

Ever wonder why there is oh so little actual currency in circulation, as most every transaction is done with plastic?

Computers have made it so easy to counterfeit currency, that the idea of an "Operation Bernhard" (the nazis printed up gobs of near perfect UK banknotes, planning to destabilize the English economy during the war) on a mass scale, pushed everything towards digital transactions.

Stuart (member) wrote on Wed, 04/15/2009 - 8:15am. CDT

Much like employment and other releases, the CPI data is as much, if not more, a political figure as it is any attempt at being a fair and balanced economic figure. It is what you want it to be. You want it lower, you have embedded within it's calculation the means to make it lower....or higher, if that serves your purpose at the time. Only fools accept reported data at face value.

ac wrote on Wed, 04/15/2009 - 8:17am. CDT

Facing what could be the largest cash flow problem in state history, California officials are asking the federal government to back billions of dollars in short-term loans the state must seek in July.

This illustrates problem with a nation that runs deficits chronically for decades:

It becomes structurally adapted to debt and can only continue operating via a growing debt pyramid (i.e. ponzi finance).

Another 2008 style financial collapse is likely coming, only this time in the public sector.

Hysterian wrote on Wed, 04/15/2009 - 8:19am. CDT

Hey Stuart, you have to want to believe! Clap your hands and a pony will appear, just for you! And the fiat bux in your wallet will increase in value for ever and ever!

Black Star Ranch (member) wrote on Wed, 04/15/2009 - 8:19am. CDT

.....the FedGov continues to juggle more and more chainsaws above its head. Now that Obama has made plain the REAL reasons for the Stress Tests, everything becomes much clearer.......

"The stress test is designed to determine how much more money is necessary to prop up the banks."

- - - - -

Black Star Ranch

Yearning to Learn (member) wrote on Wed, 04/15/2009 - 8:20am. CDT

Interesting that CPI is hinting at deflation.

I try not to get to upset about these numbers, especially when they make no sort of sense whatsoever.

everybody on Earth knows that OER should be dropping.

it's kind of like the BLS birth/death models that had continuing increases in employment in the construction fields while we were having massive layoffs in the RE fields.

I'm guessing there are either structural issues (or collusion) that tries to "smooth" the data. understate inflation, then understate deflation

krid wrote on Wed, 04/15/2009 - 8:22am. CDT

Another 2008 style financial collapse is likely coming, only this time in the public sector.

Yup... and that one might get ugly. I'm not sure I like the picture of a bunch of unemployed state and local employees. We are starting to see the coming unravel. Saw an article about the NYC schools laying off 4,000... uh oh. And there is no way for these places to raise money... credit rating aside, they are going to be crowded out by the Treasury, no? I guess at the end of the day, if I'm so inclined, I'll park my money with the group that can print money... California can't.

mark wrote on Wed, 04/15/2009 - 8:22am. CDT

Industrial production down 1.5% in March. I believe the estimates were for a 0.9% decline. It must be a lagging indicator...

popeye (member) wrote on Wed, 04/15/2009 - 8:22am. CDT

theme music
http://www.youtube.com/watch?v=TRfSbtCFKQ4

.............................

If you don't take your profits, someone else will.

MEL wrote on Wed, 04/15/2009 - 8:23am. CDT

Wally said--"When wages are going down and prices are going down it is deflation. No mincing words anymore."

When employment also goes down, the correct word is "depression." Now, when a woman goes dow............, I'm not depressed. Sorry--too easy.

Rajesh (member) wrote on Wed, 04/15/2009 - 8:23am. CDT

As long as they use the same methodology consistently, however flawed, there is some information in CPI. The absolute value is not necessarily reflective of the real value of inflation but the relative value will tell you if inflation is moving up or down. Remember inflation is supposed to reflect the movement of all prices, so even if you pick and choose what prices you want in your index, eventually inflation will show up.

ac wrote on Wed, 04/15/2009 - 8:24am. CDT

I hope they don't reduce social security payments as a result.

Government spending is only reduced via collapse of the government.

Black Star Ranch (member) wrote on Wed, 04/15/2009 - 8:24am. CDT

And lets not forget about the $400-800 billion Freddie & Fannie will need this year before the FedGov cuts their rope....

"Say Good-Bye to Fannie, Freddie as Housing Woes Wreck Status"

http://www.bloomberg.com/apps/news?pid=20601109&sid=abdBONxO8dMA&refer=home

- - - - -

Black Star Ranch

burnside (member) wrote on Wed, 04/15/2009 - 8:25am. CDT

Yogi, I posted an answer to your request, end of last thread.

peasant wrote on Wed, 04/15/2009 - 8:26am. CDT

From CNBC: Treasury is calling 30 yr treasuries due ~2015 to reduce borrowing costs.

How can they possibly be calling bonds when we are running massive deficits with no end in sight? I guess these bonds were inconvenient for the masters of the universe.

Arbitrage Macht Frei wrote on Wed, 04/15/2009 - 8:27am. CDT

You'll get your Social Security payments, no problem.

The only slight problem could be that $1131.48, might only buy a few bags of groceries.

Rajesh (member) wrote on Wed, 04/15/2009 - 8:28am. CDT

Peasant,

If they call (retire) bonds playing 5% and issue new bonds paying 3%, then net interest costs go down.

Yearning to Learn (member) wrote on Wed, 04/15/2009 - 8:28am. CDT

The treasured Fed belief that interest rate policies start to kick in about six months after they are enacted is another casualty of the misdiagnosis of our financial situation. That one is now blown to hell. They have had no effect. They were the wrong tool because the Fed did not understand - and still does not understand - the current credit collapse and debt deflation

not sure I totally agree.
I agree that the Fed did not understand what's going on (at least not the full effect)
however, I do think that they knew that there is credit collapse and debt destruction.
that's why Ben B has initiated and used almost every tool in his famous "helilcopter" list.

unfortunately for the Fed and for us all (I think) the credit destruction is too great, and has overwhelmed the Fed and Treasury to date.

But I do think that the nominal economy would look much worse were it not for Ben B's plans.
(without those we would have complete banking collapse last fall as example, which would have overrun the FDIC and paralyzed our entire banking/financial community).

these banks are mainly zombies now, and I'm not saying the Fed/Treasury have done the right thing (they haevn't), I simply disagree that the interest rate policies haven't "Kicked in"

Wells was able to report "record profits" for precisely that reason. same with all the Banks. it's pseudo-stealth recapitalization.

the man from nantucket wrote on Wed, 04/15/2009 - 8:29am. CDT

Max:
with the stranglehold of one party rule for decades in california, i thot it would be a workers paradise/utopia...but it's just bankrupt. that's weird. oooooohhhhh,....that will get the comrades fired up and attacking.

bobnbot (member) wrote on Wed, 04/15/2009 - 8:30am. CDT

NEW POST at Calculated Risk.

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Yearning to Learn (member) wrote on Wed, 04/15/2009 - 8:30am. CDT

Fiji just devalued their currency by 20%.

we should just do that.

Arbitrage Macht Frei wrote on Wed, 04/15/2009 - 8:31am. CDT

Instead of always reacting to cooked books numbers supplied by our government, a better tack is to go out and amongst the public as much as possible, to see what's really happening.

Those with eyes wide open tend to see more.

MEL wrote on Wed, 04/15/2009 - 8:33am. CDT

Yearning to Learn (member) wrote on Wed, 04/15/2009 - 6:30am.

Fiji just devalued their currency by 20%.

we should just do that.

How? I agree--except 40% would eliminate most foreclosures and set us free.

Jas wrote on Wed, 04/15/2009 - 8:35am. CDT

--
"Labels: Inflation"

Wrong label, CR. If you wish to be ahead of the crowd you should start a label Deflation.

Fearless forecaster of Deflationary Deprerssion despite Helicopter Burn-ass-ke,

Jas

Jas wrote on Wed, 04/15/2009 - 8:36am. CDT

--
The Worst Lies Dead Ahead As Per Martin A. Armstrong

Some people have pointed me to Martin Armstrong Cycle. FWIW, here are some relevant dates.

Last Cycle:

Begin Down (Primary): 07/20/98
Begin Down (Secondary): 09/13/00
End Down: 11/08/02 (50% Decline In S&P 500)

Current Cycle:

Begin Down (Primary): 02/27/07
Begin Down (Secondary): 04/23/09
End Down: 06/18/11

Source: The Business Cycle And the Future By Martin A. Armstrong

I think that the decline during the next two years would be far greater than during 2000-02 as the US grapples with the Greater Depression. Deflation is here in spades! Poor Burn-ass-ke following Greed-scam, the master manipulator!! Fighting deflation at all costs and forever never works. It is only a matter of time before deflation brings down the hammer.

Jas

Jas wrote on Wed, 04/15/2009 - 8:39am. CDT

--
"Those with eyes wide open tend to see more."

Really? Dopes tend to 'see' what propagandists want them to see. That is why they are bred to be dopes!

Jas

black dog wrote on Wed, 04/15/2009 - 8:49am. CDT

I just finished leafing through this week's Lowes circular. There are dozens of items touted as - not being on sale - but new low price.

That's inflationary, right?

Comrade Scott (member) wrote on Wed, 04/15/2009 - 9:20am. CDT

with the stranglehold of one party rule for decades in california, i thot it would be a workers paradise/utopia...but it's just bankrupt. that's weird.

Ok, I'll bite...

I think you mistake the cause of the problem: it's the anti-tax, anti-gov't greedmongers (ie, Raygun, Jarvis & Gann - GOP) who refuse to pay for anything needed to run civil society that bankrupted the government by 'drowning it in the the bathtub' with structural revenue and spending limits - we see what we get for that.

By all means: bankrupt public education. The elites can safely pack their children off to private schools. Cali taxpayers can continue to be captive to the prison guard unions where the costs of dealing with that massive unemployed and unemployable population of uneducated unskilled labor are something like 10:1 compared to the costs of the public schools. At least you will only be captive to a 'conservative' union (law enforcement) and not a 'liberal' (egads!) one.

After you shut down the public schools, and teach those pesky teacher's unions a lesson, you might buy yourself another 4-5 months before the prison system goes bankrupt. Then they'll be turning the hardened version of those little thuglets loose on the streets. Enjoy that...

I don't really care either way: I don't have to live in that sh*thole. I'm sooo glad I live in a State, where, despite being home to Falwell and Robertson, we have not been completely overrun by fringe ideological whackjobs on the right or left; most recently, Gilmore and Allen gave us a run for our money on that score.

Get over it - the Cali disaster is hardly due to one party rule or malfeasance - both parties seem to have been remarkably effective out there.

calmo wrote on Wed, 04/15/2009 - 9:38am. CDT

OER accounts for 25% of the CPI compilation...it reflects what chunk the house takes out of the consumer's budget based on a proxy rather than actual mortgage payments...thereby taking the "investment" portion of that spending out ...and creating a series that is less volatile (one of the key values for the polling profession that wishes to say something with more duration).
Key is to forget that the volatility issue can be treated in the same manner as GDP and provide a settling period (the advance, the preliminary, ....and for the UE the final to be revised, the final, the rebenchmarked final), but there is no will to do it. Government likes to protect your "investments" (those tbills ) with what it says is the inflation rate.
If this consumer item was handled in a more honest manner, there would be no gap between 20% annual house price inflation and the maestronic inflation rate.
It is also a weighted factor...that should reflect the number of houses with mortgage payments and record defaults but despite this significant change in the last year, the weighting has not changed....the maestronic inflation rate is maestronic. It might take years before "revisions" are published to acknowledge this deflation...in the meantime confidence in authorities continues to ebb ...met with Cheshire Cat smiles on 60 Minutes ...efforts that continue the subpriming, I make it.

Anonymous wrote on Wed, 04/15/2009 - 9:41am. CDT

For better or worse, I own TIPS. Are they going up 0.2% this month, down 0.1%, or something else?

All I know is I'm not seeing any deflation when I buy groceries. Empty shelves more often than I used to.

some investor guy (member) wrote on Wed, 04/15/2009 - 10:10am. CDT

The index for LA/OC shows its first decline since the 1990s, but it's a tiny decline. For Detroit it's still rising. Here are the LA numbers.

CUURA421SEHA 2008 Jan 271.836
CUURA421SEHA 2008 Feb 272.321
CUURA421SEHA 2008 Mar 272.145
CUURA421SEHA 2008 Apr 272.234
CUURA421SEHA 2008 May 273.283
CUURA421SEHA 2008 Jun 274.769
CUURA421SEHA 2008 Jul 276.114
CUURA421SEHA 2008 Aug 276.586
CUURA421SEHA 2008 Sep 278.027
CUURA421SEHA 2008 Oct 279.659
CUURA421SEHA 2008 Nov 280.479
CUURA421SEHA 2008 Dec 280.693
CUURA421SEHA 2009 Jan 281.000
CUURA421SEHA 2009 Feb 281.005
CUURA421SEHA 2009 Mar 280.723

Anonymous wrote on Wed, 04/15/2009 - 10:19am. CDT

But we're going to turn into Zimbabwe!!!!!1111!!1111111!!1111!!111!!

Actually, Zimbabwe is experiencing deflation now too, now that they use the US dollar for everything

Hangtown wrote on Wed, 04/15/2009 - 10:49am. CDT

Don't know where you buy your groceries, but, yes, prices are coming down, and I buy in bulk at ervery sale.

wally wrote on Wed, 04/15/2009 - 11:10am. CDT

Yearning,
I understand what you are saying. I'd make this observation: credit must collapse when it gets overlarge for the carrying capacity on which it is based. There is no alternative. If Bernanke knows that then he has chosen not to allow that or ease it, but to draw it out and redistribute the effects. He has deliberately lightened the effects on the financial elite at the clear price of an immense continuing credit load on taxpayers, whomever they may be. The end claims of consumer debt, corporate debt and taxes (deficits) fall ultimately on the same party: an employed, taxpaying citizen. Bernanke's deliberate redistribution of the effects of the collapse to reward the elite by keeping the burden in place on taxpayers is social engineering of a completely irresponsible nature.

DeeperDepression (member) wrote on Wed, 04/15/2009 - 12:35pm. CDT

The Deeper Depression comes after the Deeper Deflation..and the beginning of deflation is upon us now..only to get deeper and deeper.

Charles J Gervasi wrote on Wed, 04/15/2009 - 1:09pm. CDT

Inflation is coming. I have not the slightest concern about deflation. Maybe accepting modest inflation in exchange for positive real growth is a good deal. Either way, we're heading toward inflation.

Done