Category: Markets, Business, and the Economy

Maybe you’ve seen this show on the Discovery Channel called Dirty Jobs. As you can guess from the title, it features a good natured fellow who goes around the country learning about and doing the sorts of dirty jobs that like it or not must be done in this country.

I don’t honestly see how anybody can watch a whole episode of this show and still think there’s such a thing as “Jobs Americans Won’t Do.”

The current estimate is that there are 11 million illegal immigrants living in the United States — a Senate proposal to allow 87,000 guest workers annually is nothing more than a paper parasol in a hailstorm. Most of the undocumented immigrants do their best to hold down jobs and follow the law except for the fact that they are here at all breaks the law. I have said before that we honestly have no way of telling whether they are just honest tax paying law abiding (except for immigration) folks trying to make a living or evil terraists and/or drug lords trying to do us harm. Nor do we particularly know how many of these people are living in poverty or are homeless — and would such people be included in, or over and above the reported statistics? But that’s not my point today.

My point is that these people hold jobs that could be held by a legal worker. The deliberately optimistic numbers released by the government* show that there are 7 million unemployed people who want jobs and another 1.5 million who are not actively looking for work but would gladly take a job if one came along. This says nothing of the millions of people who have been “retrained” from skilled labor to unskilled labor.

We are told Americans don’t want these jobs because these are low paying, low skill jobs. They involve hard work, long hours, and sometimes deliberately ignoring safety rules. The truth is that some employers want exploitable workers, and workers who fear they will be deported if they say anything are just perfect. Well it turns out that the people who have these jobs don’t much like that either.

The truth is that illegal immigrants are here because they can get jobs. We need to create incentives to businesses such that it’s easier and cheaper to improve pay and working conditions so Americans do “want” the job than to hire easily exploited foreign workers. Molly Ivins suggests jail terms for hiring illegal workers. It might make prices go up in a way that can’t be hidden in the Consumer Price Index, but we all benefit from having safe, decent paying jobs.

In closing: Joe Average can’t be a real voter because that house is owned by Joseph Average; How to Succeed in Retail; Greenspeak v. Bernankespeak, and New! Greenspeak for Kids!; and to paraphrase the classic children’s book Go, Dog! Go!, “Do you like my hat?”

* Under these criteria, just as an example, I am considered employed despite not having been paid to work because I “did at least 15 hours of unpaid work in a family-operated enterprise.” That means every high school kid who helps out after school at the family farm/teriyaki-stand/taqueria/store is theoretically “employed.”

As in, Left Behind

Let’s start with an economic problem so obvious many people don’t think about it: water. We can’t live without it, and neither can people who live in developing nations. It should be but isn’t obvious that if your life is focused on basic necessities like boiling and filtering your water, you aren’t focused on productivity. A thousand million people do not have access to safe drinking water, and the problem is getting worse. Even though there are inexpensive things that can be done to improve water quality and supplies, it is expensive to make an entire country’s water supply safe. Private money, thought to be the solution, is not forthcoming. And forgive me for thinking that is a blessing in disguise. Water is too important for a profit motive to be involved.

Another thing we can’t do without — but you probably think about it from time to time — is healthcare. People who are ill generally have trouble doing their jobs well, assuming they can work at all. Well, there’s good news and bad news. It turns out that most Americans get roughly equal healthcare, regardless of race or status. Unfortunately that care is mediocre. I love these last two paragraphs:

Health experts blame the overall poor care on an overburdened, fragmented system that fails to keep close track of patients with an increasing number of multiple conditions.

Quality specialists said improvements can come with more public reporting of performance, more uniform training, more computerized checks and more coordination by patients.

So the problem is too many departments and too much work, but the solution is another department that makes more work. Right.

Now on to an underutilized resource in the United States, ironic considering how commonly it is found, the female labor pool. The summary: “We’re so far behind the rest of the world in commonsense, pro-women and pro-family policies that we don’t need to reinvent the wheel to figure out what works…. The returns on investing in working families are high.”

It’s hard to have an economy when the world is coming apart. Some people have been saying for decades that ecologically friendly initiatives would hurt the economy. They are wrong. There is a lot of money to be made developing and selling green technology. And besides, if we destroy the planet, there will be no more economy.

Have you ever tried really hard to figure something out — a song title, how to solve a problem, why something works the way it does — only to have the answer mysteriously pop into your head hours or days later, usually while relaxing or thinking about something completely unrelated? You almost certainly knew your body requires regular rest, but it turns out your mind needs rest too! Time you take to relax might be the most productive time of all. And Americans don’t take very much time off at all.

So just maybe the world would be a better place if everybody had access to safe drinking water and quality healthcare, if every family could count on maternity leave, affordable childcare and other support services, if we had access to more “green” technology, and if we could just all take a break now and then.

In closing, How to get a Conservative to Lie.

Bill Fleckenstein has been bearish as long as I have known of his existence, which is going on a decade now. Even he is in awe of the mighty statistical wonkistry involved in unraveling Joe and Jane Average’s dilemma: “The government tells us the economy is fine and unemployment is low, but things sure feel rough from here.” A direct quote from Mr. Fleckenstein: “I have been aware of nearly all the statistical tricks used by the government since they were implemented. Nonetheless, seeing them collectively described in one article is incredibly sobering.”

He thinks this article is so important that he is giving us the short version days before the original — economist John Williams interviewed by Kate Welling — will be available without a subscription. Some of these items are not a shock to those of you who have been reading here a while, but Williams and Fleckenstein have the numbers and methods to tell you the underlying whys and wherefores. Go read how….

* Real unemployment is more like 12%, more than twice the official Department of Labor number.

* The government literally changed the rules of how inflation is measured to get a lower number.

* That still wasn’t good enough so they started changing the items whose prices were measured.

* If they hadn’t tinkered with these numbers, Social Security checks would be 70% higher than they are now. No wonder money seems tight to Granny.

* American’s incomes are lower than reported too, because of some accounting slight of hand that assumes homeowners pay rent to themselves!

So if you would like to think I see the economy as “a glass half empty,” I would like to remind you to pay attention to what’s really in the glass. These things are even more startling when you realize that Income is not keeping pace with the official inflation numbers, and remember both those numbers are tweaked to seem as rosy as possible.

In closing: cause of death, corporate culture; new bankruptcy rules suck, even judges say so; some tips on getting health insurance coverage; and the real Cola Wars.

Last night I was reading this item from Bradford Plumer, but frankly the first paragraph is very meaty:

It’s not a big secret that the developing world suffered a major slowdown in growth starting around 1980, right about the time that the IMF began leveraging Third World debt to force poor countries into adopting its preferred mix of neoliberal policies: devaluation, “free” trade, privatization, deregulation. Among developing countries, per capita income growth plummeted from 3 percent annually in the “bad” old protectionist days of 1960-1980 down to 1.5 percent in 1980-2000. (For the poorest group of countries, things were even worse—per capita GDP growth plummeted from 1.9 percent annually in 1960-1980 to negative 0.5 percent in the heady globalization decades.)

Now think about that for a moment: after the creation of the IMF, economic development in so called “developing countries” was cut in half, and in some places went negative. Here’s one of his sources complete with charts and footnotes, he also has a link to a PDF article. Lest you think this is liberal loony left-wing propaganda, traditional conservatives* like Steve Forbes have for many years been critical of the IMF, saying “the IMF has been guilty of economic malpractice in not promoting growth policies.” As for myself, I remember thinking on September 11, 2001 that it was very interesting that the terrorists chose to target a building that housed the IMF and the World Bank.

Mr. Plumer goes on to discuss “the breathtaking rise of urban poverty” and the resultant rise of slums and super-ghettos around the world, a problem which he sees as only getting worse over the next few decades. It is an excellent item that I recommend reading, but I would prefer to focus on the IMF prescription and what it means here in the United States. So let’s get back to those “neoliberal policies: devaluation, ‘free’ trade, privatization, deregulation.”

Sound familiar?

Devaluation sure sounds like what has happened to the dollar under the Bush Administration. This was aided and abetted by John Snow, our Secretary of the Treasury, who says he is for a strong dollar, and then goes on to say that means among other things that it’s hard to counterfeit.

“Free” Trade is certainly something the Bush Administration says it is for. Now, you can’t give them blame or credit for NAFTA; that was ratified under the Clinton Administration. But you can blame them for CAFTA, the Central American Free Trade Agreement, a document whose ramifications have yet to play out. And furthermore, it is only fair to note that President Bush himself has said repeatedly he is for “free and fair trade”. In theory, this means free trade as long as it doesn’t hurt American interests. In real life it appears to mean free trade unless big American corporations stand to make a lot of money. See also: pissing contest with China, farm subsidies, steel tariffs, etc..

Privatization has been going strong in this country. It brought us Enron. Proponents say that privatization and breaking up monopolies in telecom has worked, but can you really choose who runs phone lines to your house? We still hear talk of privatizing Social Security, but thankfully most people have realized that you can’t solve “not enough money” by giving the system less money. A very scary prospect indeed is those who favor water system privatization. The TSA would like to privatize frequent flier security, a bad idea several ways. The core idea of privatization is the old Reagan idea that government always does things badly and companies always do things better. Yeah, remember that next time you get bad service at some company. Proponents say it works better because there is profit motive. Some things are too important for “profit” to be a prime motive, particularly since that profit is not evenly distributed to the people who helped make it possible.

Deregulation is another thing that has been going on in this country for a lot of years. The underlying premise is that companies would do more stuff that stimulates the economy if it weren’t for pesky government rules. I suggest we ask the survivor of the Sago mine incident how he feels about that. There has been a lot of deregulation from the USDA, and if you’d like to read about the effects, I recommend “Fast Food Nation” or “Bushwhacked.” Speaking of the USDA, did you know that they predicted that “Electric utility deregulation could cause 19 states to have higher electricity costs, especially rural customers in those states…”? Yes, it costs money to comply with regulations, but the bottom line is that the regulations were put in place for a reason; often that reason is to protect real human beings and the environment they live in. Just a friendly reminder, Earth is the only place we know of where humans can live at all.

So, these things being so right here in the United States, we can hardly be surprised when the Guardian reports “37 million poor hidden in the land of plenty.” Nor can we be shocked to learn that wages are not growing relative to inflation. And that’s inflation as measured (or undermeasured, if you prefer) by the government.

Our old friend Ben Franklin once said that the definition of insanity is doing the same thing over and over and expecting different results. Our government is doing here the same things the IMF is forcing other nations to do, and getting the same results. Either our government is insane, or it is their goal to have a large, impoverished class of virtual serfs.

In closing, an excerpted scene of Security Theatre: 9700 items of checked baggage lost on average each and every day. They can’t even figure out where your bag is, and they want to tell you that’s because they want to make sure there’s not a bomb in it? And they want to poke through your underwear — that is with you, on the plane — but not all the cargo below, when the shipper is miles away? It sure would be nice if we could apply some good old fashioned logic and common sense to this airplane security thing.

* You remember them: the guys who are for things like small government, low taxes, and reducing the federal deficit.

We keep hearing that the economy is just fine. No, really. If the economy is so great, I have a few questions:

Why is Porsche actually having to advertise?

Why is Ford having to announce that they will lay off (another) 30,000, not long after a similar announcement from GM? Oh, and Daimler Chrysler is laying off another 6000 worldwide.

Why has Target started carrying hair shears, putting them right next to the barrettes and hair color?

Why do we keep hearing stories about wages going down and things being tough all over?

Why is CNBC running commercials for temporary health insurance?

Why is my mail box overflowing with information on investing in precious metals, a traditional safe haven for times with the economy is in a tailspin?

Why are commodities such as oil, silver, and gold at or near record levels?

Why has Bank of America, one of our biggest banks, missed their earnings target?

I would just like to know how much information we need before we start questioning the validity of commonly circulated economic statistics.

Maybe you don’t pay too much attention to Wall Street and the Dow Jones Industrial Average. That’s ok. You might not know that the big question for a while has been “Will the Dow hit 11,000? Will the Dow end 2005 over 11,000?” Many analysts say yes, because the economy is going great and oil prices are coming down. Some of the big brokerage houses are behind this analysis. You can tell when an article supports this theory by the lists and bullet points. Others point out that the Dow hasn’t been at those levels in almost 5 years and there’s a lot of resistance just under 11,000. These folks give the caveat that should the Dow actually get over 11,000, it will continue to rise from there. An article supporting this theory usually has lots of charts with technical indicators and annotations.

At the risk of pointing out the obvious, this is the last week of 2005. The one thing that neither side in this debate is taking into account is the one thing that can change the balance. Options.

There are two basic kinds of options and many strategies for using them. A “put” gives the holder the right to sell something at a given price, regardless of what that something normally sells for. Someone who buys a put is expecting that prices will go down. Some put buyers see it as an insurance policy for their portfolio; if prices drop unexpectedly, they exercise the put and minimize their losses. A “call” gives the holder the right to buy something at a given price, regardless of current value. The call buyer expects prices to go up. A great use of calls is airlines buying options to buy fuel, insulating themselves from spikes in prices.

These options don’t exist in a vacuum. Somebody has to take the other side of the deal. The person who sells options is betting the buyer won’t exercise his options. He is prepared to buy if the put is exercised — meaning he has cash on hand or can have it in short order. He is prepared to sell if a call is exercised — meaning he has the thing or is prepared to get it in short order. If someone sells a call but does not have the thing he is agreeing to sell, that is called a “naked” option. Doing this is like sitting down to play poker with Wil Wheaton and his close friends; you don’t do it unless you are really good or really stupid.

So what the heck does that have to do with what the Dow is doing this week?

Where the Dow goes is going to boil down to what options are written and exercised on the Dow itself and each of its 30 components. Who has exercised puts on GM as it sits near 20 year lows? Who is betting that Wal-Mart had a good Christmas? Who is poised to sell should we near the resistance around 10940? It is possible to know how many options there are out there, but it is impossible to know how many of them will be exercised, let alone when. Keep in mind that actual trading may be light because of people taking the week off — not only is it the week between Christmas and New Years, it’s Hannukah. Light trading means that the people who are actually there can move the markets more easily, whether accidentally or deliberately.

Sit back and enjoy the show. I’m one of the folks that thinks the Dow will not hit 11,000 this year. As for next year, Jim Jubak has some interesting theories.

In closing, two articles about schools trying so hard to bring the lowest performing students up to a level they can fake their way through standardized tests that they are failing to meet the needs of middle class and academically gifted kids; what was that I was saying last week about people not being able to retire; and they make pills for everything else, why not for dieting.

[I]f we go by the book… hours could seem like days.
— Spock, The Wrath of Khan

Much thanks to the folks at MaxSpeak* for pointing out this set of figures from the Economic Policy Institute. Basically, they have the Degrees In Economics and the wonk-fu to compile actual statistics confirming what most of us have thought at some point in the last 2 years: “If the economy is so great, how come money is so tight?”

The figures show on a regular basis that wages are not rising despite the fact that profits are. The only way that economists can make it seem like wages are so much as keeping up with inflation is to figure in the CEO’s salary when they make the “average” figures. Frankly, this situation may be even worse than I thought, judging from some of the stuff in the description of Jack Bogle’s new book. Mr. Bogle is the fellow who invented the index fund. He knows what he’s talking about when it comes to business and the markets.

Debt is up and savings are down. And what’s even worse is that with interest rates this low, there is incentive for things to remain this way. Bernanke is going to need brass balls to steer the economy over the coming years. Frankly, maybe we don’t need to worry about Social Security solvency when the baby boomers start to retire, because a large percentage of them won’t be able to leave the workforce.

Of course that impacts the next fact, that job creation has not kept up with population growth. In last year’s elections, this fact was glossed over by both parties, much to my disgust. The headline unemployment number has remained low because of the semantic games that keep people from appearing in the workforce: people are going back to school or staying in school; people are becoming “contractors” or working “commission only” jobs or taking part time jobs because it’s better than nothing; formerly two-income households are scaling back to a single income. All these things keep someone who would really like to have full time paid work from appearing “unemployed.”

Poverty is rising. Every year since 2000. Not just in raw numbers, but as a percentage of the population. One out of every eight Americans lives in poverty. Think about that the next time you are in a crowd. I bet you a nice shiny quarter that in your local newspaper or newscast, there has been a story in the last 6 weeks about how donations to local charities such as food banks are down over previous years, yet the number of clients they serve is up.

Finally, keeping all this in mind, health care costs are rising. The insurance premiums are rising. The amount that people are paying out of pocket are rising. The number of people who decide that insurance costs too much and they will chance going without it is rising. The number of people who simply can’t get it or can’t afford it is rising. As the nice folks over at The Mess That Greenspan Made pointed out some weeks back, the fact that healthcare costs are rising is under-calculated in the official inflation number.

Oh and don’t forget, the durable goods sales were up because Boeing had record orders. Joe and Jane Average aren’t buying airplanes. They buy things like cars and houses and refrigerators. Sales of all those things are down. So “how the economy looks” all boils down to which numbers you want to use. The old saying about “lies, damn lies, and statistics” comes to mind.

In closing: How to make your credit cards pay you. Say, has Daschle found his backbone at long last? Not Necessarily the New TSA carry-on guidelines. And this last tidbit I am calling a rumor, since I can’t substantiate it anywhere — a nationwide voucher bill may have gotten through Congress. It’s possible, since they have done so much stuff this week there’s no way they have even read it all. School vouchers are one of the first subjects I wrote on here at ShortWoman.com, and I stand by my opinion that they are not a good thing. In short, they underestimate the cost of education, they ignore the incidental costs of private schools, and they pave the way for state control of private schools.

*As I write, MaxSpeak’s top story says there is a possibility of negative GDP growth in the fourth quarter. I wish he would share whatever data leads him to this conclusion, as it is a fascinating hypothesis.

Follow up: Seattle Times columnist correctly points out “If car-camping colony isn’t news, then times are worse than we think.”

Second Follow Up: I was just listening to a fellow on CNBC named David Rosenberg. He’s an economist over at Merrill Lynch whose research suggests that “the wealth effect from rising home values and the boost to spending from mortgage-equity withdrawal, and housing accounted for an astonishing 50% of GDP growth in the first half of this year….” He considers this a conservative number and cites studies by Greenspan himself suggesting the number is closer to 75% — no luck finding that online unfortunately. Now if these numbers are right, then the drop in new housing sales might explain MaxSpeak’s hypothesis. More importantly, if these numbers are right, we are all in trouble if/when the big housing boom is over.

Today, we learned that 3rd quarter GDP grew 4.3%. Or perhaps more accurately, TheStreet.com informs us that’s what the “Government Says.” Noting a source, or being skeptical? Nobody can blame them for the latter, since “The growth came despite two major hurricanes that slowed economic activity in the quarter, energy price shocks, higher interest rates and a record trade deficit in September, which subtracts from GDP.”

Many seem surprised by the fact that the “Economy Expands in 3Q Despite Hurricanes.” Nobody seems to have considered that the hurricanes may have boosted the economy.

How the heck does that work? A major metropolitan area is almost wiped from the map, three states are devastated, energy costs reach record highs, and I think that might have improved the economic numbers?

All those people who were displaced by Katrina and/or Rita still needed a place to live, and food. Many of them had to replace most of what they owned, and that meant spending money. Add the money that was spent by FEMA and the Red Cross and other aid organizations. Add everybody who spent money helping hurricane victims. The money being spent to clean and rebuild the gulf coast. All the insurance settlements being spent replacing that which was destroyed. The money being spent on security goons who might otherwise be overseas.

And finally, add any money that Joe and Jane Average spent trying to save on energy: a more efficient car; better insulation for the house.

Despite this better than expected showing for the economy, stocks and the dollar are in mixed trading — some things are up, some down. And gold is still trading at levels associated with “a safe haven when the dollar drops, inflation rises and economic calamity looms.”

Why aren’t the markets reflecting this great news? MarketWatch tells us it’s several things. Because there is still some inflation, the Fed will almost certainly raise interest rates. Happy New Year. Oh, and the consumer — whose spending resulted in the good news — cannot be counted on to spend even more money this quarter. After all, wages have risen less than 1% in the last 2 months and job growth is barely keeping up with new entries to the workforce. In fact, in the 3rd quarter, real disposable income fell The purchasing manager’s index is down. Government spending was up.

And finally, it seems that there are other areas of the world with much, much bigger rises in economic activity.

So when Larry Kudlow wonders why the Bush Administration is not shouting about how great the economy is, it might just be because it only looks great from a distance.

Somebody smarter than myself once said that anybody could learn from their mistakes, but a wise man could learn from somebody else’s mistakes. In that spirit, I present some humble tips gleaned from experience and observation. Remember, my definition of “investment” is “spending money with the reasonable expectation of receiving more money in return at a later date.” So life insurance and lotto tickets are specifically not investments in my book.

Be honest with yourself about what you expect your investments to do. Have two exit plans: one for if all goes as expected; one for if things don’t go as expected. Write your goal and plans down before spending money if you have to. There’s no such thing as a “sure thing,” so you need to be prepared for the idea that the hot stock of the day might be going down. Or maybe there isn’t as much market for collectable action figures as you thought there would be. It is alright to cut your losses rather than following a bad investment down the drain.

Investments are not cuddly. You may dearly love your collection of dolls or teacups or what-have-you. That does not make them investments.

The key to investing in assets is realizing that it’s a good deal before everybody else does. The Motley Fool used to talk about finding good quality small capitalization stocks before fund managers and the rest of Wall Street. When institutional interest finally comes, it should cause the price of the stock to go up. Of course, the opposite is true too. When you accidentally overhear multiple people in multiple places talking about a particular, a reversal is likely coming. Everyone who wants the action is already in.

The trend really is your friend. While it is a bad idea to go chasing the latest hottest trend unless you have nerves of steel and are poised to get out of your investments at a moment’s notice, it is a good idea to notice where things are headed. You may never be an expert reading stock charts, but it doesn’t take much to figure out that if prices keep going down, they are likely to continue. Somebody has to be the guy who buys at the very bottom, but chances are it’s not you. At least wait until prices stop going down. The only asset this advice does not apply to is bonds. That’s because as the price of bonds go down, the effective interest rate you earn on them goes up.

Never buy something without knowing what it is going to cost. Never ever place a market order for a stock that is not trading at the moment. If a fast-talking salesdude tells you to act now without telling you exactly how much money it is going to cost, don’t walk away: run! “I have to have it and I don’t care what it costs” is fine when ordering lobster at market rate, but it’s no way to buy a house or a stock or much of anything else that costs more than you are apt to have in your wallet in cash.

If you are going to invest in stocks, learn to use stop and limit orders. Stop orders — aka stop-loss orders — are designed to keep you from losing money. If a stock drops below the price you set, it sells. Or if a stock rises to a price you set, you can buy. Limit orders work the other way around: a limit buy order says you will pay no more than your set price; a limit sell order means a stock you own will be sold when the price rises to the set price. Each is valuable.

Finally, ask yourself why. Sometimes an investment serves more than one purpose. For example, if you buy a house it is both the place you live and an asset. If you put money in an IRA you hope to make money as well as get a tax break. When you invest money, you should be able to say why you think it’s a good investment to people like your spouse or financial advisor. Now and then, you should revisit this answer to see if it’s still true.

In closing, an interview with Yukio Hattori. House of Representatives defeats spending cut measure showing both that decency is a family value and that Republican House Leadership can no longer force obedience. Two good reasons why the GDP seems so much better from the top than from where we are. And three times as many people believe in ESP than believe Dick Cheney is a good Vice President.

Inflation is not a risk to the economy: it is happening to the economy right now.

Friday, we learned that consumer prices made their biggest jump since John Lennon was alive. This has resulted in the biggest Social Security COLA increase (Cost Of Living Adjustment) since the Original Bush Administration. As if that is not bad enough, wages are “lagging.” In fact, in inflation adjusted dollars, wages fell. Things get even worse if you have the math at your disposal to factor in the cost of housing — and we all need a place to sleep as much as we need food and fuel. It turns out that they took housing out of the CPI in 1983, and if you add it back in the inflation rate is more like 5.3%. I don’t think CPI includes rising college costs either.

Now, some pollyannas point out that this is the CPI (Consumer Price Index), which is relatively volatile, and was pushed up by food and energy prices, the core rate wasn’t nearly that high, and besides which fuel prices are a one-time blip so everything will be back to normal soon please Mr. Greenspan don’t kick our butts and stifle the economy with rate increases. This view completely discounts the fact that an increasing amount of the household budget has been going towards fuel lately. Various state Governors have been rethinking their travel arrangements because of fuel prices; they are cutting travel and switching to higher efficiency vehicles where possible. Maybe you don’t think much about the effect of gas prices on Joe and Jane Average when you are working on Wall Street; after all those folks probably took the subway.

This view was further crushed by today’s economic news: the PPI (Producer Price Index) has shown its biggest leap since the Original Bush Administration. Energy prices alone had the biggest increase since Iraq invaded Kuwait. Gasoline increased 17.9%. Even the core rate — excluding food and energy that we arguably can’t live without — increased a “worrisome increase of 0.3%….” Since goods just can’t be produced and transported without energy, expect the energy price increase to have a lasting effect on the PPI and CPI in general. The L.A. Times helpfully adds: “Businesses have the option of passing along the higher wholesale prices to consumers or reducing their profits, two alternatives that can eventually undermine economic growth.”

So there you are. Prices go up, or profits go down. Or, of course, companies find ways to cut costs — probably involving laying people off. In any event we lose. What a perfect time to tighten bankruptcy rules.