Here is a link to a video from the Harris County Violent Offenders Task Force. Some find this offensive because of the way they talk about hunting fugitives…
http://www.hcso.hctx.net/fieldoperationscommand/detectivebureau/warrants/
Why Beer Cost More
May 28, 2008 by bernerfOK this whole price of gas thing is getting out of hand….
$4 a gallon means more for a beer
A pint is among the many things that cost more because of soaring gasoline prices. Also: Why lower prices for stocks and homes are a good thing.
Oil reached more record highs last week. Hopefully, that gave pause to the folks who drive to their jobs at the U.S. Commerce Department, where they are enjoined to ignore the spiraling price of gas when calculating inflation.
That absurdity has been captured by a geologist friend named Brent Cook. In a recent article on the Web site Exploration Insights (subscription required), he discussed how the exploding cost of energy has worked its way into everything, including mining and beer.
Life runs on oil
“Despite official CPI (Consumer Price Index) figures claiming ‘inflation’ at only 3% to 4%, most of us who work and live in the real world recognize that cost escalation is rampant virtually everywhere,” he wrote. “These costs are affecting nearly all businesses that make and use stuff. The folks making up the CPI figures obviously don’t use stuff.
“Mining, unfortunately, does. In most mines, fuel for running all the equipment, trucks and often power plants is a significant expense. . . . There is a direct relationship between driving speed, load weight and the quality of tires. This relationship determines how hot the brakes get and therefore how much ore can be safely hauled per hour. . . . By switching to the more expensive $70,000 radial tires, they can load more ore into the trucks and drive faster, meaning fewer trips from the pit to the heap pile.
“This also eliminates one work shift — another cost saving. With fewer drives around the pit, better tires and more ore per trip, the fuel savings are expected to shave up to $40 per ounce off their production costs. . . . Higher fuel costs are not limited to mining, of course. Hourly costs to operate a 250-horsepower farm tractor in the nation’s heartland have gone from $10.26 per hour in 2003 to $36.43 per hour this spring. This is directly attributable to diesel cost increases.
“If you’re wondering where I’m going with all of this: One acre grows about 2,000 lbs. of hops. Hops prices have risen nearly tenfold recently due to these higher fuel costs, plus a bit of nasty weather in Europe. . . . The really demoralizing downside to high fuel costs is that your local brew pub is going to ding you, on average, an extra 25 cents for a pint of beer.”
Why lower is better
Now for a turn of 180 degrees, as I lay out the benefits of lower prices in stocks and housing. As everyone knows, both markets experienced bubbles (the latter fueled by a collapse in credit standards). Yet even as the economy has suffered the ill effects of the demise of the housing ATM, Wall Street participants have continued to bid up stocks, in what I believe has been a bear market rally.
Bear market rallies are the stuff of folklore, whether we want to talk about the amazing rally of the Nifty Fifty in the summer and fall of 1973 or the enormous bear market rally in the spring of 1930, which sucked in so many professionals who had seen the 1929 crash coming.
A market writing the wrong news
That brings me back to the spring of 2008. There is some possibility that May 19 marked the exhaustion of the current bear market rally, though only in hindsight will we know for sure. If that turns out to be the case, it will vividly demonstrate how the market writes the news — i.e., because the market managed to rally, many people concluded that all was well, the bottom had been seen, etc.
I am not rooting for pain for everyone beguiled by this bear market, but I am rooting for some semblance of sensibleness to prevail, which would purge the system of risk. Further, it would set the stage for a much better, more substantial economic recovery down the road. Thus it is in the hopes of clearing away the excess risk taking and bailout mentality that I am rooting for lower prices for stocks and housing, and a weaker economy.
If they’re going to lie to us about inflation, shouldn’t they make the lies believable? MSN Money’s Jim Jubak says there’s no way gas prices fell during April, as the government claims.
Someone who sees it my way (or should I say, I see it his way) is George Soros. Last week, in reading his latest book — “The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means” — I came upon a couple of paragraphs that are pertinent to the current environment. (I can’t imagine these thoughts are more than 2 months old because the book was finished after the Bear Stearns (BSC, news, msgs) debacle.)
Here were his comments on the unwinding of the structured-finance mania:
“Both the financial markets and the financial authorities have been very slow to recognize that the real economy is bound to be affected. It’s hard to understand why this should be so. The real economy was stimulated by credit expansion. Why should it not be negatively affected by credit contraction? One cannot escape the conclusion that both the financial authorities and market participants harbor fundamental misconceptions about the way the financial markets function. These misconceptions have manifested themselves not only in a failure to understand what is going on; they have given rise to the excesses which are at the root of the current market turmoil.”
As for our central bank riding to the rescue, Soros states: “The Fed is constrained in its ability to protect the economy by the fact that it’s done so too often. In my view, this financial crisis is not like the others which have occurred in recent history.”
To me, the conclusion is unavoidable: The economy is headed for serious problems, and the Federal Reserve will not save the day. It was only the housing bubble that bailed out the equity bubble. Now there’s nothing to bail out the unwinding of the housing bubble. In addition, deleveraging will create a mighty undertow for the economy, stocks and house prices. That, as I noted above, will ultimately eliminate the excesses that had masqueraded as prosperity.
My Blog
May 28, 2008 by bernerfThis is my blog. Hear me rant.
That is all,
Fredrum!
Hello world!
May 27, 2008 by bernerfWelcome to WordPress.com. This is your first post. Edit or delete it and start blogging!
