Question of the Day

I trekked about in Guatemala one time pretending to be a Canadian. It wasn’t my idea, I met this Canadian who was also traveling alone and he suggested the idea. His contention was that it would allow me to see my country in a more honest light, and he was right about that. But what he really wanted was someone to pursue European girls with, and he knew that they were not fond of Americans, and he was right about that too. My luck improved shortly thereafter. And we had a time that would have made Hemingway envious; in a place as dangerous as what Guatemala was then, European girls on the ‘gringo trail’ really appreciated the company of a ‘pair’ of strapping Canadians.
     So it occurred to me that I should allow my Canadian alter ego answer your question. But it is a little more complicated than that, I left home at 15 and I traveled for what turned out to be 15 years and somewhere in there I stopped being an American, and I became just a human. But my views illicit some responses that I have come to recognize as territorial, and so maybe by explaining this, my ‘human’ response may make more sense.
     To begin with the US jammed the dollar down the World’s throat. Then the US interfered in the affairs of any nation that stood in the way of ‘national interests’. Then the US allowed corrupt leaders to aid in the theft of resources at the expense of the World’s poor. While all of this was underway the US solicited its diet-related-disease causing culture by creating trade dependencies via ag subsidies. These trade arrangements included low interest loans to the US, from poor countries, in exchange for loans at higher interest rates to the same poor countries that were lending to the US. Then when the whole world was almost as the US wanted it to be, with so many US citizens being so well paid while producing little of value, all so smug and superior, the US banks sold fraudulent securities on the world market. Then US economists began to advocate a devaluing of the dollar, which, would of course come at humanities expense, but little was said about that.
     So, what does this human think about all of that inventory? I think the US is using its only remaining option, it is stalling while using a PR ploy to unleash the paradox of thrift reserves. And we all know what happens when inventory becomes oversupply. The US economy is dangling by a thread over a liquidity trap, and it is surrounded by adverse feedback loops, and humanity would be better off without US influence, so be it, is what humankind must say. And eventually we will all be better off because of it.

Jay,
What about the 7% drop in holiday sales as compared to 2008? Where do you get ‘as consumption began to grow”? What about the discounts and the lower revenues. What about all of those large construction projects ending with none coming on line. And what about China’s new trade agreement with the ASEAN, are they missing the ‘reasonable assumption’ about the EMH too? Or did they maybe lose faith like so many others?

Love: I’m looking at seasonally adjusted numbers on a quarter on quarter or month on month basis. See Jaun’s link below for this quote on page 2. The only reason durable goods fell in the fourth quarter was because of Obama Messiah’s Cash for Clunkers in teh third quarter.

“Real personal consumption expenditures increased 2.0 percent in the fourth quarter, compared with an increase of 2.8 percent in the third. Durable goods decreased 0.9 percent, in contrast to an increase of 20.4 percent. Nondurable goods increased 4.3 percent, compared with an increase of 1.5 percent. Services increased 1.7 percent, compared with an increase of 0.8 percent.”

Monthly data can be found here…. http://www.census.gov/retail/marts/www/retail.html

December retail sales were above 2008 levels (see how I provide source data to back up my claims). Note the December m/m decline is not statistically significant. http://en.wikipedia.org/wiki/Statistically_significant

Jay,
      Here is the question that Ken asked:
“Is it really Good News that changes in Real Private Inventories were 3.4% of that 5.7% Q-on-Q GDP in Q4?”
     So the question, given the context of our circumstances, suggests that the answer should include a prediction regarding jobs. Your answers to this question are long on insults and bias, but short on answers to the question at hand. In one instance you say:

“EMH would suggest that if private inventories become bloated they will correct rapidly.” This ‘sort of’ applies to the question, but then the only thing you provide that might suggest a conclusion seems to contradict your: ‘correct rapidly’ (or job loss): “Privave consumption will grow from this point forward, albeit at a sluggish pace.” And so it seems, that insofar as answering the question is concerned, it is you that lacks ANY relevant support, because whether inventory levels are balancing as you say, or if levels do become ‘bloated’, that still leaves your not-quite-a-conclusion without any foundation of support. That of course due to fact that inventory on the shelves is one thing, and the selling of that inventory is another thing.
     And as for my lack of support, over the past few weeks I have written extensively here about my positions, so, must I continually support every last thing just in case someone like you, drops in? Someone quick to presume that all conversations begin when they appear. Someone quick with the insults and presumably in need of a little ego boost. And also presumably desperate for confirmation of a theory that fails to apply to a simple question, but does apply so long as the question is ignored.
     But I suppose if by ‘good thing’, one is mostly concerned with one’s ability to impress himself; and to define not a ‘good thing’, but an ‘accounting thing’, then perhaps the insulting of someone who was so obviously just trying to provide some much needed entertainment, to an otherwise dull field of study, a field of study that has so clearly lost its way, with so many so unable to see the forest for the trees, and in part because they lack experiences like the one I described in my original comment, then perhaps we just have a vastly different opinion of what is meant by ‘good thing’. ~ ray

Jay,
     You would be correct if you were to assume that I have no formal education in economics, I do however have a general idea of what an ‘algorithm’ is, and I have owned and operated a small manufacturing business for 20 years so I most certainly know how ‘inventory’ applies here.
     So, now, you seem to think that changing your premise to be about my ‘struggling’ to understand — that your being rudeness, and the fact that your ‘good thing’ has more to do with vindicating the EMH than it does the question in play, somehow explains the hypocrisy of your initial insults. But this actually explains why you need to insult people from behind the safety of your computer screen in the first place. You lack the courage to admit to your mistakes and have therefore come to rely on your ability to deceive yourself. But I am not the one struggling here. The question was never: “is the EMH the best way to analyze inventories”. Nor should the broad view be discouraged in the midst of so many narrow views. I was just trying to share what I have to share, and your EMH, will never change that one simple fact. ~ ray

iow most, not all, the build was involuntary, representative of glut.

once gain and rather than census –

http://www.bea.gov/newsreleases/national/gdp/2010/pdf/gdp4q09_adv.pdf

Juan: Yes they are competing firms. There is this thing called price that clears the markets. Now in places like Venezuela, where your boy Hugo sets the prices, then yes inventories are cleared and built at the whim of a central planner (I sense what Hugo intends and what really happens are usually polar opposites).

If Q4 was an involuntary build, then how low are businesses going to volunatrily let the I/S ratio fall to? 1.2? 1.1? 1.0?

ever meet the late bishop juan jose gerardi?

and sure enough german tourists stood out in a positive fashion.