B4 The Bell Fryday 10/15/04

[twignberries]

Yobob, that is a silly example he gave.

 

On the question of "substitution bias"... His example was that if the price of beef goes up, people will just eat more chicken, thus their cost of living has not increased. This is rediculous IMO. In an environment of stagnant or falling wages and increasing prices, cost of living cannot increase, therefore standard of living decreases. Substitution bias will "bias" this reality right out of the CPI number.

 

Taken to it's logical conclusion, substitution bias means we'll all be eating squirrel stew in a zero inflation economy.

[orvack]

Dec.'04 US DOLLAR INDEX

87.02

-0.63

[Lock Limit Down]

Look at the rats buying FNM

MMs buying that pig deserve to be drawn and quartered

[The brown one]

Yobob, that is a silly example he gave.

 

On the question of "substitution bias"... His example was that if the price of beef goes up, people will just eat more chicken, thus their cost of living has not increased. This is rediculous IMO. In an environment of stagnant or falling wages and increasing prices, cost of living cannot increase, therefore standard of living decreases. Substitution bias will "bias" this reality right out of the CPI number.

 

Taken to it's logical conclusion, substitution bias means we'll all be eating squirrel stew in a zero inflation economy.

Squirrel stew,or beans and rice--makes little difference because GDP will then be increasing exponentially with zero inflation.Hedonic yer way outta that morons

[Guest]

Oil working back to the flat line...it if goes green...we're in bidness.

[machinehead]

Taken to it's logical conclusion, substitution bias means we'll all be eating squirrel stew in a zero inflation economy.

Brilliant quip, twig.

 

And more insightful than some economics papers which won Nobel prizes.

[orvack]

President Bush goes to an elementary school to talk about the war.

 

After his talk, he offers to answer questions. One little boy puts up his hand and the president asks him his name.

 

"I'm Billy, sir."

 

"And what's your question, Billy?"

 

"I have three questions, sir. Why did the US invade Iraq without the support of the UN? Why are you President when Al Gore got more votes? And whatever happened to Osama Bin Laden?"

 

Just then the bell rings for recess. Bush announces that they'll continue after recess.

 

When they return, Bush asks, "OK, where were we? Question time! Who has a question?"

 

Another little boy raises his hand. The president asks his name.

 

"I'm Steve, sir."

 

"And what's your question, Steve?"

 

"I have five questions, sir. Why did the US invade Iraq without the support of the UN? Why are you President when Al Gore got more votes? Whatever happened to Osama Bin Laden? Why did the recess bell go off twenty minutes early? And what the heck happened to Billy?"

[rog]

The criminal part of the substitution fsctors in the CPI is that there are no baselines for comparison. For instance:

 

IF the price of beef goes up, then chicken is considered a substitute. No effect on CPI. A decrease in beef prices relative to chicken is assumed to create a substitution back into beef. Since the price decrease is relative to chicken prices, not an absolute change, the price of beef may actually be higher than the original substitution price. Nevertheless the CPI will record this as a decrease in meat prices due to substitution. Furthermore there is no correlation to actual chicken or beef sales. i.e who is to say anyone actually substituted.

 

I think this is the original point Gross was trying to make. Either way CPI is a useless statistic unless you are looking at decade over decade changes in a retrospective view.

[machinehead]

I think this is the original point Gross was trying to make. Either way CPI is a useless statistic unless you are looking at decade over decade changes in a retrospective view.

One of the original purposes of CPI was to calculate "cost of living" adjustments for pensioners.

 

Capital assets such as houses, stocks and bonds are not a cost for pensioners, since they are usually disposing of capital assets late in life.

 

Government is not much of a cost for pensioners, since they are often net recipients of gov't benefits (Soc Sec, Medicare, etc.).

 

So, excluding inflation in capital assets and taxes is fine for pensioners. But CPI is useless and misleading for working people who DO face these costs.

 

If 40% of your income goes to taxes, and 30% for housing, then only 30% of your spending is indexed by the CPI. It's bullshit ...

[PeakOil]

Dollah doin' da limbo... 86.91

[machinehead]

Say goodbye to the American software programmer. Once the symbols of hope as the nation shifted from manufacturing to service jobs, programmers today are an endangered species. They face a challenge similar to that which shrank the ranks of steelworkers and autoworkers a quarter century ago: competition from foreigners.

 

Some experts think they'll become extinct within the next few years.

 

Endangered species

 

One poor sap, unhinged by panic, jumps from the frying pan into the fire:

 

[John] Miano [of the Programmers Guild] sees such a dim future for programmers that he decided to enter law school. "I saw the handwriting on the wall," he says.

 

if ya can't beat 'em, sue 'em

[tpark]

Dollah doin' da limbo... 86.91

Is the eventual goal to goad furriners into purchasing more ursury notes in the "competitive devaluation" race?

[machinehead]

Dollah doin' da limbo... 86.91

This is a clear break of the July 2004 low.

 

Next target 85.

 

Bretton Woods II cracks ... it's like watching the Hoover Dam collapse in slow motion.

 

A wall of water sweeps off everything in its path ...

[BeerMarket]

Say goodbye to the American software programmer. Once the symbols of hope as the nation shifted from manufacturing to service jobs, programmers today are an endangered species. They face a challenge similar to that which shrank the ranks of steelworkers and autoworkers a quarter century ago: competition from foreigners.

 

Some experts think they'll become extinct within the next few years.

 

Endangered species

 

One poor sap, unhinged by panic, jumps from the frying pan into the fire:

 

[John] Miano [of the Programmers Guild] sees such a dim future for programmers that he decided to enter law school. "I saw the handwriting on the wall," he says.

 

if ya can't beat 'em, sue 'em

litigate don't innovate!

[jstrack]

Today's market shows the power of denial that the bulls have and their confidence that those darn 401k plans will keep on keeping on.... Could also be expirations.... I dunno...

 

On another note, this is the start of Ramadan... I would not be surprised if there is a heightened alert level next week. If there is a hit on the homeland without a heightened alert then Bush will have problems. So, I expect a bit more fear in the market next week. We shall see....