patrick.net

The Economist poem

If you do some acrobatics
with a little mathematics
it will take you far along.
If your idea's not defensible
don't make it comprehensible
or folks will find you out,
and your work will draw attention
if you only fail to mention
what the whole thing is about.

Your must talk of GNP
and of elasticity
of rates of substitution
and undeterminate solution
and oligonopopsony.

I'd add that we really only care about the inflation rate we face as individuals as it locally compares to the relative inflation rates affecting us as consumers and savers. There's a lot of discussion on this board about "low cost" areas versus "high cost" areas, especially regarding home prices. If you live in say, Evansville, IN, then you have one of the lowest overall local inflation rates in the country. Is this good for you? Yes, when you buy local things locally priced (houses, gardening supplies, most groceries, etc.). No, when you buy things that are nationally priced (cars, long-haul airline tickets, cruise vacations, etc.). The same is true internationally. If the US inflates at a certain rate (overall), we don't care except for the effect it has on the value of the USD vis-a-vis other currencies. This creates a conflict. Inflation affects the USD exchange rate because inflation is tied to nominal interest rates (see previous threads for the theory that drives this--every 1% rise in inflation must result in 1% rise in real interest rates and eventually nominal interest rates).

So, if the USD devalues because of deficits caused by debt spending then we become a *more* price competitive global labor market, better exporters and worse importers. But, inflation will raise rates eventually, forcing the USD up against other currencies, reversing all the above. The problem we're in now is we're in a period of rising inflation but with low interest rates. Rates will go up, they have to eventually. But until then we are getting the worst of all worlds in a macro sense, but consumers are getting away with a lot they don't have to really pay for (yet). They will pay, though, eventually; probably with stagflation.

**Not economic advise. Consult your local neoclassical economist.

And don’t forget economic substitutes. You don’t have to eat foie gras, duck liver is just as good!

But they call duck liver foie gras here...

I will see if I can get peking duck foie gras. :-P

Peter P is probably in favor of a planned economy.

Huh?

You can't have set in stoned inflation figures without planning the economy to go with the inflation.

(what I just said is not true, all you have to do is get a head in the sand government...which we have!)

You can’t have set in stoned inflation figures without planning the economy to go with the inflation.

Just put the spin on and the "2% definition" will apply even to Weiner Germany. :)

Post-bubble investment ideas.

1. Booz, cheap booz. Alcoholics don't just quit it, they substitute the expensive stuff with cheap stuff, more two buck chucks, screw the french winemakers. I am thinking about bringing in Radler as a bottled drink in the US, lemonade watered down beer, yeah!

2. Casino, not the Vegas big player stuff, but the cheap Indian reservation casino outfits, just like pachinkos in Japan.

3. Anti-depressant.

4. Payday loans - any of those already public yet?

5. Yoshinoya - Yoshinoya is considered the ultimate counter-boom index in Japan, whenever Yoshinoya does well, the general economy sucks, whenever the general economy picks up, Yoshinoya becomes less popular. What's our Yoshinoya equivalent? McDonald's? YUCK!

any more to add?

why am I getting moderated again?

Astrid:

Thanks for the descriptions. I seem to be following the threads pretty well so far. Just haven't advanced to a level where I can make an educated guess that I am comfortable with. I will keep plugging away at it, I've learned stuff before and not afraid to again ;)

That exchange rates topic on this thread hit me where it hurts, I'm off to Korea this weekend. Their currency has been going haywire against my USD$ over the past 5 years I have been going there.

Just one perspective on Dent: He likes to derride economists for either getting predictions wrong or not making detailed predictions. I maintain that no economists make specific predictions, only fools do that.

Well, Dent made very specific predictions about the stock market hitting 40,000 (DJIA) by 2007. I offer this quote from one of the economists he has lampooned:

A devasting objection to Dent's theory, however, is that is has been for all intents and purposes been falsified. For the market to reach 40,000 in the year 2007 from this point today, the market would have TO HAVE AN ANNUAL RATE OF RETURN OF AT LEAST 25 PERCENT FOR THE NEXT FIVE YEARS. The odds of that happening are astronomical and has no precedent in stock market history.

Oh, by the way that was written in 2002. We're less than a year from 40,000 now, and what rate of return does that imply?

Owneroccupier,

"Yoshinoya - Yoshinoya is considered the ultimate counter-boom index in Japan"

That's really interesting psychological insight. The fast food group makes a lot of sense in hard times because people are more stressed and less careful about their diet. Fatty foods are a good therapeutic reducer of stress. Also, most people aren't responsible enough to cut out eating out altogether, so they'd probably just substitute with cheaper places.

Ramen and malt liquor will be huge.

And as much I dislike the fact, Walmart may also make a comeback in a bad economy. For most Americans, Walmart seems synonymous with cheap.

Walmart will be replaced by dollar shop. It is simply not cheap enough.

"Intel hired 14,900"

Good grief! Were all those hires in the SE and in India?

"Walmart will be replaced by dollar shop. It is simply not cheap enough."

LOL, good point.

I do find your original insight really interesting. From the mass consumer stand point, people do things not because they're optimal for economic reasons, but because they've been mentally trained by this culture to think in certain pathways.

One of the reasons why I don't shop at Wal-Mart is that I don't find it cheap, especially for the quality of goods they offer. Yet for most people, Wal-Mart and the Dollar Store are bywords for cheapness. Ditto the ramen and PB&J diet. Arguably, a bean and rice diet is much more healthy and even cheaper, but that sort of thinking wouldn't appear on most American's minds.

Ha Ha,

Maybe she's like me and never watches TV. Or maybe she DV-R her programs. (I'm grasping at straws here)

Another business opportunity would be doomsday money shelters. Be the person who peddles gold on late night TV.

This is the first time I saw that ad.

OK, as a marketer myself, two points here. Either they are trying to make it controversial (bad choice politically!), or they've hired someone who's got his head flushed down the toilet. It is very representative of the reality, but, it totally rubs your target audience the wrong way.

The wife looks too bitchy, the husband too chubby. When people buy homes, they are buying a dream, so focus on the dreamy part, not the bitchy part. As a guy, if I have a wife like this, I will be doubly pissed off watching this ad.

A better ad will be some kind of wild sex on the kitchen floor with the wife while kids sleeping tight upstairs, with a sold sign in the front lawn. That is what gets guys off our butt buying a home.

hate to rent,

Give this bad weather cycle another year or two and the CEOs of big tech companies will head for NC, SC, TN, etc.

Or, if an ad is targeting the women audience, it should highlight the competitiveness among women. Perhaps a scene between two women having a casual afternoon tea in a nicely decorated, warm sunroom / family room, engaging in a subtly competitive conversation, highlighting their past as arch rivals from homecoming queen to college boyfriend and all the way to a home, with the homebuyer woman winning a clear upper hand.

That will get you women off your butt buying.

Weiner Germany

Don't you mean Weimar, heh

For most Americans, Walmart seems synonymous with cheap.

Perhaps Walmart will sell homes. :)

Don’t you mean Weimar, heh

Yes. I was thinking about Wiener (the sausage). Sorry about the typo. :)

No, whiner germany. Weimar Germany is destined to become whiner Germany.

An economist is a gentle man,
with neither sword nor pistol.
He walks along most daintily,
because his balls are crystal.

Different Sean, I have misunderestimated you.

repo outfits and pawn shops will be everywhere

Wiener actually means 'from Vienna' in German, funnily enough, which is in Austria (not Australia)...

As distinct from Weener, Weezer, Ween, etc....

I am against Walmart in principle, so I won't buy anything there.

90% of the stuff in Walmart can be classified as JUNK, junk made in China that does nothing for you except for killing mother earth. Especially around Xmas time, all those useless cheap "handicraft" or decorative bulbs just piss me off so much, mainly made of plastic, entirely disposable, have 0 artistic or practical value. China is just making whatever the stupid American consumers are willing to buy.

Buying Walmart junk is a psychological sickness.

now that is one thing that i will buy from walmart.

Walmart has the uncanny ability to squeeze lower prices from its suppliers... if it starts selling homes...

owneroccupier,

THAT is an effective ad, playing to middle America's class aspirations.

Buying Walmart junk is a psychological sickness.

I do not buy from Walmart either. I like target better, because it is red. You cannot escape junk made in China.

Target is better in a lot of ways. It treats its workers much better and it actually cares about design.

I would not buy any junk from walmart. but if they would sell cheap house make out of cheap plastic, imported from china. i will buy it.

No plastic homes please. Glide house imported from Canada is so much nicer.

tell me how to find a rich lady

oh, that's easy....

Century 21 ad criticism

You can thank the behaviourist J.B. Watson for more or less creating psychologically manipulative advertising, after he got kicked out of practising psychology. This was the guy who conditioned an orphaned or abandoned baby called 'albert' in the 1930s by striking a metal bar with a hammer next to him to frighten him in conjunction with some other stimulus as an experiment. He meant to 'uncondition' him later, but lost track of him in the system...

No, buy from New Jersey. QuikHouse for half the price of Glide house.

No, buy from New Jersey. QuikHouse for half the price of Glide house.

Is there a web-site? Do they ship to the Bay Area?

I don't particularly have a problem with made in China, I have a problem with JUNKS made in China.

I salute China for making things of lasting value, just not those Xmas ornamental lightbulbs that won't even last through NY.