Inflation update

Inflation numbers came out today.  Interestingly all the components shown took a little bounce upwards. I wonder if this is due to statistical issues (12 months ago was an interesting time) or the start of a trend.  Bears watching in the future. 

Hey buddy, can you spare a city?

Ran across this on my daily blog troll.  I posted a while ago video by Hugh Hendry showing an empty skyscraper in China.  This video completely trumps such small matters as a single building, here's an entire city.... empty!



I spent some time on Google maps and found satellite photos of empty Ordos.  Wow. Scroll around and you will see just how big the place really is. Notice the new construction with no cars on the road or parked at the homes.   From the shadows it appears around noon time so you'd think there would be some activity, right?

I think there is a little bit of malinvestment going on in China.  When the populous does not have valid and efficient uses for their capital they end up buying apartments in empty cities.  Makes the chinese pig farmer hoarding copper look entirely rational, eh?   Like America property prices only go up in China, right?

Here's an article by the westerner interviewed in the video.

If this isn't a blatant example of a bubble, I do not know what is.  When this bubble finally bursts the world wide ramifications will be tremendous.

ht: zerohedge

Inflation expectations in the bond market

While gold continues powering upwards the US Treasury market is not confirming similiar concerns about inflation.  (If gold is climbing due to uncertainty regarding the entire paper fractional banking monetary system is another matter)  Looking at the comparative yields of nominal versus inflation protected bonds (called TIPS) issued by the US treasury is illuminating. 

As you can see inflation expectations in this market are actually lower now than before this crisis erupted in 2008.  If the bond market was truely concerned with inflation you would see the implied breakeven inflation rate go up, not down. 

US Inventories

Excess inventories in America are being worked off rather quickly as you can see.  It will be interesting to watch this ratio over time and see what industrial production looks like after the ratio stabilizes.  Also note how the ratio has dropped over time.  America has become more efficient in lowering the inventory of 'stuff' needed per unit of sales.

Consumer credit continues falling

In my previous post I discussed all consumer loans outstanding.  The data is produced quarterly so there is a bit of a lag.  (Another possible post, the desire for high frequency data and how it can sometimes trip you up.)  Consumer credit (all debt but mortgage debt) is reported monthly so we can get a feel of whats coming down the pike.  As the chart shows it continues to fall.

The chart is only of recent history but the US has not experienced this since WW II.   Unfortunately the rate of decline continues to accelerate. 

I would personally feel more confident in this recovery if consumer debt at least stopped cliff diving.  Whether credit is falling due to less demand or bank restrictions doesn't matter at this point.  Until the consumer starts borrowing any recovery will be very tepid and most likely artificial.

Total consumer debt outstanding falling, not just revolving credit

After some rummaging around I finally found the data series showing total consumer debt outstanding. This series includes both home and non home debt.  I have blogged before (2009 October 7) about the year over year decline in non-home-debt outstanding but thought it would be prudent to chase down the TOTAL consumer debt outstanding to see if it is falling as well.

Yup, it is.  The data shows the same trend as the subset previously mentioned.  Like all the other credit/loan/debt outstanding I have recently presented the year over year numbers are negative, show no signs of stabilizing, and are unprecedented in their decline.

I usually dislike the term 'It's different this time' but this time, it really is!

Don't bother shopping at drugstore.com

Our family recently made a purchase from drugstore.com online.  No problems with the actual purchase, but somehow we didn't unlick some box during electronic checkout and we were signed up for a $12 monthly recurring bill for a service called 'Complete Savings'.   We didn't want anything from 'Complete Savings' and didn't even know they existed until a bill showed up on our credit card.

After a few minutes on the phone today with our bank and then finally Complete Savings the charges will supposedly be reversed and our 'account' with Complete Savings closed.  I found it ironic how quickly and easily they removed the service. There was even an option on the primary phone menu to remove yourself.  I surmise they get a LOT of requests for removal.   I suggest you not do business with either completesavings.com or drugstore.com.

Some of you may say I should just read the terms of service and be more careful when shopping online, but I'm calling bullsh*t on that.  One should not have to be concerned with accidentally being charged for extraneous external services.  If your company chooses not to act in a respectful manner, so be it, but don't complain when I tell others not to shop at your company.  I only want to watch Ferengi on TV, not interact with them in real life.

If you google 'complete savings scam' you will see other companies have been caught in this scam of tricking their own customers in a desperate attempt for more revenue.