Now the government has this thing I love to talk about called the substitution effect; put simply when the cost of steaks gets too high they assume you move down to hamburger - so they substitute steaks for hamburger in their measure (seriously) and hence inflation disappears. So in the government's eyes we are going to be a world of bicycle riding, barefoot, and beltless (or using string to keep pants us) people. Because otherwise, inflation would go up. You think I am exaggerating right? Well the most respected man on the globe in terms of bonds is named Bill Gross - he works for a small firm called PIMCO. I'd like to directly quote him from this story about the farce that are government numbers that more and more people are waking up to each week. He calls the numbers a "con job".
I can only wonder what seniors on fixed income are wondering when they get their 2.3% cost of living increases in today's day and age. Gross is back out chirping today... via CNBC
- Americans are fooling themselves if they think U.S. inflation is under control, the manager of the world's largest bond fund said.
- Bill Gross, chief investment officer of Pacific Investment Management Co (PIMCO) said in his June investment outlook that he has been arguing for some time that inflation statistics "were not reflecting reality at the checkout counter."
- He said statistical practices in calculating price growth had favored lower U.S. inflation over the last 25 years and called for change. "Being fooled some of the time is no sin, but being fooled all of the time is intolerable," Gross said.
- "Join me in lobbying for change in U.S. leadership, the attitude of its citizenry, and (to the point of this Outlook) the market's assumption of low relative U.S. inflation in comparison to our global competitors."
- He added that Treasury Inflation Protected Securities (TIPS) were difficult to value because of the "artificially low inflation number" arising from statistical quirks. (yes, "quirks")
- High food prices will continue for at least a decade even if they drop from the levels that sparked street protests or riots in Africa, Asia and the Caribbean in recent months, government-backed international agencies say.
- High prices, caused primarily by demand from fast-developing countries such as China but also by rising investor interest in food commodity futures markets, will hurt the world's poorest countries most, and also the poor in rich countries.
- Though the outlook for crop harvests in 2008 was generally positive, the OECD and FAO experts said supply and reserve stocks will still not be enough to satisfy needs this year, and likewise in the forecast period, up to 2017.
- As for the impact on developing countries, the conclusion of the FAO and OECD in the document was grim: "For the urban poor and the major food-importing developing countries, the impact will be strongly negative as an even higher share or their limited income will be required for food."
- Every 10 percent rise in the price of all cereals including rice added $4.5 billion to the food bill of countries that are net importers of such basic food commodities, the document noted.
- Overall, joint OECD/FAO report forecasts the nominal prices of cereals, rice and oilseeds heading between 35 and 65 percent higher between now and 2027 than the average in the past 10 years, the document said.
- The impact on richer, developed countries would be more modest because agricultural commodity prices amounted to a smaller amount of final retail prices for food. "Of course, these averages mask the much more significant impact on lower-income consumers. In addition, and to the extent that high prices persist and hence do not reduce the future rate of inflation, indirect economic impacts might also be important," the document said.
Long Powershares DB Agriculture Fund, iPath DJ Livestock ETN in fund; no personal position
6 comments:
Gross scorches the American public when he states:
We, as a people, are overweight, poorly educated, overindulged, and imbued with such a sense of self importance on a geopolitical scale, that our allies are dropping like flies.
sounds vaguely familiar to a certain blogger I know....
This is why I like to say, if it does not happen here it does not matter to Americans. Unfortunately our leadership which is supposed to be the "higher class" (right Ben Franklin?) and know better, also seems to be in the same boat of ignorance and/or living in the 1960-1980s superpower mindset
Note: I accept fund investments from overweight, poorly educated, overindulgent, self important Americans. ;)
"Note: I accept fund investments from overweight, poorly educated, overindulgent, self important Americans. ;)"
wrong - they have to have enough intelligence to recognize the need to join & invest in & for the Rising Tide
:)
I think below a certain IQ, this blog would bore the heck out of people - so maybe it polices itself that way. ;)
Most people need a sound bite in 30 seconds or less, so I probably will never draw those people - we'll send them to Fidelity ;)
Gross is the guy who was pounding the table last August for the Fed to lower interest rates to 2%... coz he needed a bailout for all the mortgage-related crap he was holding. Keep in mind, he manages half a trillion of fixed income garbage, and talks his book all the time. I would probably do the same in his position, just take his opinions with a grain of salt thats all I am saying...
shax, I agree, but we all talk our book
the difference is when HE talks about HIS book he moves markets
same as T Boone
or Icahn
etc
But he is accurate on this one. In fact I think he is understating how bad it is.
Post a Comment