Tag: consumer spending

Stuff worth reading between boozing and barbecuing – 07/02/09

Brought to you this one day only in true order of importance

Fly Fishing

  • Despite Economy Tackle and Fishing License Sales Holding Steady [Angling Trade Magazine] – When the going gets tough, the tough go fishing. Just like Lefty Kreh said they would.
  • It’s an L.L. Bean gear review long weekend [Up’North Maine Fly Castings] – You could be boozing and barbecuing, but if you’re reading this you’ll probably wind up hitting at least 762 boats with your backcast this weekend. Relieve a bit of the crowd stress by wishing you had some of this gear: a Double L. Rod and Reel, and/or a bug resistant shirt.
  • Technology

  • Got Ideas? Tech Companies Crowdsource Creativity With Contests [GigaOm] – Whether it’s clever advertising ideas or downright brilliant new business propositions, there’s money involved. And in some cases, big money.
  • Latest Thing To Blame On Google? Koi Thieves [Techdirt] – You can blame Google’s satellite imagery now, and you’ll probably blame Craigslist next. But these guys are the real culprits.
  • Finance

  • Auditing the Fed will Audit the State [Mises Daily] – If Ron Paul gets his way, a lot of dark and dirty secrets will come bubbling to the surface. In other words, Ron Paul probably isn’t going to get his way (and you’ll continue being royally screwed).
  • Starve the Beast [The Market Ticker] – There isn’t much you can do about the 98% tax bracket headed your way, but with consumer spending accounting for 70% of GDP, going on a buying strike would certainly get someone’s attention.
  • MG signing off (not really)

    Oil Watch – 05/07/08

    After hitting a low of $40.85 on February 17th, the contract for June delivery (now the near term) has rallied to a 65 day high of $58.07 as of this morning.

    crudeoilweekly

    Of course, we’re supposedly heading into the summer (read: prime time) driving season, so some jump is to be expected. But what’s strange about this 40%+ rally is that crude oil inventories are rising dramatically:

    Yesterday’s EIA inventory data did not warrant the price developments seen in the futures markets. It is an odd situation indeed when a 605,000-barrel build in crude stocks is interpreted as bullish by a market already awash with 375 million barrels of crude in storage and another 40 million barrels or so anchored out in the Gulf of Mexico.

    We’ll note that some folks are worried about inflation hitting en masse as a result of the arbitrary printing of US dollars to fund fanciful (and unaccounted for) government spending. The Theater O’ Greenback hasn’t yet heard the call to exit stage left, but maybe traders should be looking at this oil stockpiling as an expectation signal.

    No matter – if oil continues its march, consumers won’t be joining the summer of love. And any chance of the recovery the powers that be are trying to convince them is well in hand will be swirling in a tanker parked off the Gulf Coast.

    December Crude: Pretty Picture

    The one shining light in a bleak consumer world:

    december-crude

    At a 13-month low, I guess it’s only pretty if you’re NOT in the oil business. And combined with waning demand for plasma TVs, the US will probably be seeing a shrinking trade deficit too.

    Consumers starring in “Resident Evil: Delirious”

    Leave it to chance

    Michael Milken once said “It isn’t okay to leverage to buy overvalued assets,” and I have been sticking to that adage for a while. Maybe the buying window is about to open, and maybe it is not, but Alan Greenspan has certainly become very chatty about asset price euphoria. I recollect a trader friend of mine saying that houses are trading like bonds, and if you read the article above closely, you’ll see that Greenspan might just think so too.

    What’s the catch?
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    Zero Sum Game

    I was recently involved in a somewhat petty, but nonetheless interesting and evolving debate. While out with a friend for an afternoon of lunch and gadget browsing, we decided to run into BestBuy. An hour later, after perusing big screen plasmas and stereo systems the size of lunch boxes, my companion decided to buy a new alarm clock. You know, one of those GE models with the big buttons on the top, and the huge red LED dsplay.

    Well first I asked why they needed that? The reply was that the old one just didn’t work quite right after the last storm. It seems not so recent electrical activity had knocked out the power, and that the clock had not awakened the owner as it should. I soon uncovered that despite these instruments being battery powered (in backup), the owner sometimes failed to change said batteries, so the outage reset the clock time. I then asked why not use your cell phone alarm to wake – it is kept by the bed at night, as the land line is in another room? A Nokia phone is my alarm clock of choice, on the road, and at home. Well, I would just forget to set it. But you have to set the alarm every night anyway, heh? Well, yea, but alarm clock is so much easier. I see.

    The user forgets to replace a battery, and blames the device. Another device sits in the quiver, perfectly capable of performing the task, but that is simply not convenient enough. So, we buy an item to replace one which likely works perfectly well. Nevermind the fact that we now leave the old item for the landfill.

    Too often, we look at a purchase as solving a problem, a need. We justify that purchase in our heads, back and forth, to buy or not to buy. Most often, we buy. A new “this” to solve “that” problem. I am as guilty as anyone. My latest idea is an Apple notebook to solve a big problem I have….not being able to type this entry while lying in the comfort of my bed. How ridiculous.

    Now, many say “Well buying stimulates the economy!” Sure it does. “You sit there denoucing spending, so you must be a socialist, or worse, a communist.” Not so. In fact, I am as capitalist as they come. I invest in private ventures that create new jobs. My retirement account is full of growth stocks. I speculate in the equity, debt and commodities markets, which provides liquidity, albeit small, to those markets. But no, I do not give in to the hype.

    What hype, you ask? The hype is that consumer spending accounts for 2/3rds of our economy, and that participation benefits us all, so we must participate. “We must buy products, because that creates jobs! Who cares where the jobs are, your spending helps a lot of people out!” Sounds a little socialist to me. I’d rather buy some distressed corporate bonds, put my faith in management to turn the situation around, and reap the benefits. “But I am not a financial genius”, you say. “I don’t have time to invest.” What you aren’t then, is a thinker, and what you don’t have time for, is thinking.

    No, saving and investing is not clipping coupons. It is entirely more difficult to invest, even if just on gut instinct, than to buy a new television and decide that is you contribution to our economy. You certainly will reconsider, when that newfangled electronic gizmo is obsolete or on sale at half price a week later. And that brings me to my final point.

    The wealthy in the US invest in financial assets – they provide capital. That capital provides the means for production, and the contribution appreciates in value. The wealthy become wealthier. Meanwhile, the tiers below continue to purchase assets that are not only unncecessary, but often useless. Those assets depreciate in value. In the case of that new TV or laptop computer, obsolete in a few years. Worse yet, that new car, worth 70% of its purchase price the moment it pulls out of the dealer. The rich often (more often than you might think) live modestly, and get richer. The rest of us live frivolously, and get poorer.

    Sounds like a zero sum game to me.
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