December’s data for consumer price inflation shows that inflation rose 3.3% from the previous year. Without food or energy, the figure would have been 2.2%. Even after a series of rate hikes, the Fed is still giving away money. The real Fed Funds rate — after inflation — is approximately zero.
One way or another, the real rate will have to rise, says Stephen Roach. Most people expect a rise in nominal rates. Bonds, they say, should fall.
But so far, the bond market has not been willing to go along.
Of course, real rates could fall in another way; if CPI numbers were to fall, the effective real interest rates would be higher. In December, CPI numbers went negative — prices actually fell, led by energy. A harbinger? Or just a fluke? We wait to find out.
u2022Not one, but two. Before we had our café latte at Starbucks this morning…we had already been asked to believe two more impossible things. One, recited above, was that the nice people in Brazil, Russia, India and China were eager to share their investment gains with the nice people of Peoria and Philadelphia. The other was that not everyone who has anything to do with the world of modern art is a fool, a charlatan or a buffoon.
“Export bans would be placed on works of modern art to protect Britain’s heritage,” begins an article in the Times.
The issue arose after one of the richest, and most famous hustlers in the art world, Charles Saatchi, made a big score. He managed to offload a pickled fish, for which he had paid an absurd 50,000 pounds in 1991, to an unnamed rich mental defective for 7 million pounds. He could scarcely have done better on Microsoft.
The fish was put in a tank by Damien Hirst and given a title: ‘The Physical Impossibility of Death in the Mind of Someone Living.” Saatchi hyped it to the museum world…and managed to persuade curators that the thing was more than just a dead fish. They had no way of knowing, of course. There was no technique to judge. No expertise to study. None of the traditional standards for appraising art seemed to apply.
There is value…and there is price. When your daughter gives you a kiss on the cheek in the morning — it has great value, but no price. Modern art is just the opposite; it has price, but no value. And so buyers, investors, collectors and curators all stumble forward — tricked by each other’s extravagance. Word on the streets of London is that Hirst’s pescadillo will end up in the Museum of Modern Art in New York, where poor schoolchildren will gape…and believe it is the best art in the world.
But what is really impossible to believe is that here in London the Conservative Party is proposing to ban exports of things such as the dead fish. We’d think they would be glad to be rid of them.
u2022A comment from a disgruntled reader:
“As to the second, there is another essential rule — recognized for thousands of years by almost everyone — ‘Thou shalt not kill.'”
“If, as is apparently your wont, you are going to bring occasional Scriptural admonitions into your daily missive, please be aware that you take the risk of proclaiming a defective theology. (I know that in your humility you know you do not have a good grasp on it, so I trust I am addressing a humble soul with a teachable attitude.)
“In this case, you have slipped up in the way you used the above quotation to apply to the war in Iraq. The referenced command from the Decalog is actual quite specific in its original Hebrew: it means, “Thou shalt not MURDER.” Killing per se is not in view, so you cannot simply apply this commandment to what takes place during warfare. The same Scriptures that contain this commandment of God likewise quote Him as sanctioning capital punishment, judicially exercised by properly constituted authorities. It is one of those rights that God in His wisdom has given unto Caesar to discharge for the good of society at large, and is exercised in the spheres of both law and war, since the armed forces are a part of the government.
GENESIS 9:6: “Whoever sheds man’s blood, by man his blood shall be shed, for in the image of God He made man.”
EXODUS 21:12: “He who strikes a man so that he dies shall surely be put to death.”
“Hopefully you will see the difference between killing which is a Biblical principle reserved for a properly function system of authority, and murder carried out by individuals.”
We are blessed — or cursed — with smart readers. Here, another reader blasts the aforementioned reader over what God meant when he said (according to the King James Bible): “Thou shalt not kill.”
“I have a message for the poor deluded individual who wrote that it’s OK, godly even, to kill as long as your government approves. Which God is it that gives you the right to go bomb 100,000 innocent civilians, after having wrecked their country with a previous bombing campaign and starving them out with a blockade? And for your information, maybe you should get your theological facts straight — the Aramaic words given by Moses which we know as ‘Thou shalt not kill’ are ‘laa tirtzach,’ which simply translated mean ‘Do Not Kill,’ not do not murder, or do not kill unless you are a so-called Christian hypocrite who feels like blowing some people up, or do not kill unless your name is Bush in which case make it as bloody and terrifying as you please.
“Love your neighbor as yourself, do unto others as you would have them do unto you, turn the other cheek — these are real Christian principles, as well as universal laws. Jesus wept — I’m not surprised! If people were doing such nonsense in my name I would reach for the thunderbolt. The American fascist regime is digging its own grave, like every arrogant tyrannical empire in history, because as the good Lord said, we reap what we sow. And the U.S. government, overt and covert, has tortured and murdered its way through Asia, Latin America and the Middle East for many a year. Need I remind you of the friendship between the Bush and bin Laden families? (all oil barons together). Time’s nearly up boys, enjoy the bloodlust while you can. I wouldn’t trade places with George ‘Dumbass’ Dubya for all the gold in Dubai (or oil in Iraq) — what profits a man if he gains the whole world but loses his immortal soul? And think again before you quote the Prince of Peace as your justification for senseless wholesale killing. harih om tat sat.”
Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century.