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Peak Everything?!?

Are we...

In my last couple of blog entries I have suggested that data from past commodity driven recessions, as well as strongly supported evidence from the yield curve indicate that we may be near an inflation peak, and that as a result there might be a respite from this recession by the end of the year.

In a number of places on the econoblogosphere this position has been criticized, and in general the criticism comes down to two words: "Peak Oil!". I put that in caps and with an exclamation point because the argument is that "Peak Oil!" explains everything.

Hillary and Obama on Trade

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Originally posted on the NoSlaves.com blog. Today is the Pennsylvania Primary, so reviewing actual positions is relevant

While the choices for President slim down to next to none, one might evaluate positions instead of joining the various cheer leading camps. Who, overall has the best trade, economic positions to stop this global train wreck?

Firstly any group name calling someone protectionist because they acknowledge the obviously massive ~5.6% GDP trade deficit, is obviously not basing their economics on anything remotely resembling reality. The reason I link to this Pro Obama group is because they want more bad trade agreements. They assessed Obama as more of a corporate free trader than Hillary. Below are some statements from the two for easy comparison contrast.

What's Wrong with Taxing Capital Gains?

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Capital Gains taxes were asked about in the last Democratic Presidential Primary Debate.

Capital Gains are the profits someone makes from investments on Wall Street. Reporter Gibson asked both Obama and Hillary on raising these taxes.

Here is the exchange:

GIBSON: All right. You have, however, said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, "I certainly would not go above what existed under Bill Clinton," which was 28 percent. It's now 15 percent. That's almost a doubling, if you went to 28 percent.

But actually, Bill Clinton, in 1997, signed legislation that dropped the capital gains tax to 20 percent.

OBAMA: Right.

GIBSON: And George Bush has taken it down to 15 percent.

OBAMA: Right.

Round Two of the Housing Bust

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After more than a year of a housing bust, and eight months of a credit crunch, its hard to believe that the real estate market could get much worse. With suburbs turning into ghost towns, major Wall Street banks going under, and people losing their homes right and left, you would naturally think that we must be near the bottom.

And yet, if you look at the raw numbers you realize that the real estate market could get much worse. In fact, it is likely to get much worse in the coming years.

You don't have to believe me. Look at the numbers for yourself.

Will the Recession be Over by Election Day?

The economy is always a yin and yang, with one thing tending to counterbalance another. In the past I have frequently differentiated one such tension between the "Kudlow economy" for the top 20% (actually more like top 5%) which prospered mightily during the Bush/GOP malAdministration, and the "Bonddad economy" of the bottom 80%, which saw little or nothing of the alleged prosperity.
Until late last year, consumption in the Kudlow economy more than balanced the distress in the Bonddad economy. Then, the balance changed.
I am here to deliver a message which I fear will be as welcome as a skunk at a wedding reception: I believe the balance is about to change again, at least briefly, back in favor of the Kudlow economy. Even if you disagree strongly, I hope you take the time to consider the evidence I amass below.

Is the inflation rate peaking?

With stories of food riots in third world countries and $4 a gallon gasoline by this summer, inflation certainly seems to be rampaging. Whether this continues or not is not just of concern to market watchers. Aside from the incredible pain food inflation in particular puts on the poor worldwide, domestically US workers are never going to get raises to match inflation rates much in excess of 3%. So, the more necessities like food and gasoline go up in price, the less Americans have to spend on other things, like mortgage payments, health care premiums, or educating their children, let alone retirement savings. In short, the worse inflation stays, the more severe our recession will be.
I addressed this issue previously in a post entitled Why Inflation isn't the problem in which I said:

Health Care Systems of other Nations

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I want to bring your attention to a Frontline documentary called Sick Around the World. It is an interview, comparison/contrast of other health care systems in most assuredly capitalist nation-states.

Frontline allows all shows to be watched on line, in full. Journalist T.R. Reid documented an exceptional overview of other health care systems from capitalist economic nation-states. I hope others watch and we start analyzing health care policy proposals from an economics and populist viewpoint.

What astounded me is the lower costs that other nations have in comparison to the United States.

A note on today's CPI

You probably heard that the "headline" (i.e., including food and energy) CPI number today was +.03. You may have scratched your head, wondering what planet these guys are on.
Well, they were on the "seasonally adjusted" planet. Generally speaking, inflation runs hotter in the first part of the year, and cools down dramatically towards the end of the year.

So, for the best year over year comparisons, turn to the non-seasonally adjusted CPI number. And that number today was +.09. Much closer to our actual experience, no?

And yet, as the below table (from the Bureau of Labor Statistics) shows, inflation so far this year is running on the non-seasonally adjusted basis, at exactly the same clip as last year: +1.7 for the first quarter. Here's the table:

Jan 07 0.3
0.5
0.9
0.6
0.6
0.2
0.0
-0.2
0.3
0.2
0.6
-0.1
Jan 08 0.5
0.3
0.9

The year over year numbers for the last 6 months including today look like this:

Oct 07 3.5

What is a Populist?

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All of a sudden, Populism has become a popular term. But like so many political labels representing some sort of philosophy, the word is already being co-opted to mean something else.

From Progressives to Corporate representatives, everyone wants to be a Populist these days. Now John McCain is supposedly touting a Populist Message....in the form of corporate tax cuts.

Let's be clear here, more giveaways to the super rich and multinational corporations is Corporate Corrupt and most assuredly not addressing the needs of working America.

Then, we have those claiming Barack Obama is a Populist.

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