Global Commodity Inflation

David Ignatius - Perils in The Price Of Rice - washingtonpost.com

With so much turmoil in the financial markets (both globally and domestically) I feel as though I'm missing so much. Here's one that you just can't not consider in every economic related conversation you have. Global commodity inflation. It's rice over there (and sure it will come here), but Americans will settle for oil "complaints today.

And indeed, expensive Cuban Cigars (when the embargo lifts). And what else is a commodity, technology? How does that inflate, or does it, and have I now deviated from my thesis.

Best Quote from Ignatius' piece:

Independent truck drivers in Pennsylvania, New Jersey and other states staged protests against high fuel prices this week. What do they have in common with rice consumers in Vietnam and soybean buyers in Indonesia and pasta aficionados in Italy? More than they probably think.

Brooks Breaks the Credit Crunch Down

The Bailout Artists - New York Times

Brooks always does a great job of presenting a very complex topic in a very simple to understand manner. Essentially, he is discussing the role the government should play in facilitating a free market. Is it a free market if the government facilitates it? I say so, and as much as I believe in Ann Rand style objectivisim when panic and irrational behavior positions to do deep economic damage the government should take steps to bring everyone back to reality.

In Brook's words:

We do seem to have reached some Bernanke-era consensus. In normal times, the free market works well. But in a crisis like this one, few are willing to sit back and let the market find its own equilibrium.

David Ignatius - Wall Street Bank Run - washingtonpost.com

David Ignatius - Wall Street Bank Run - washingtonpost.com

Ignatius does an amazingly concise job of summarizing the problem in the Credit market right now. Banks aren't trusting each other and valuing a grouping of 10,000 home loans is near impossible. Further, the bail out is coming from the sovereign wealth money.

What I want to know is what do we think happens next? Naturally all speculation, and I think the American Economy will remain the most resolute innovative actor in the globalized marketplace, but boy, there is a lot of money in these credit markets.

70's, 80's and today, in terms of rescission

Calculated Risk: Feldstein on the Recession

Reading the Calculated Risk blog often equates to some rather deep economics, but this particular post does a great job of explaining why the current recessive trends don't mirror that of the 70's and 80's, because at the end of the day, so much has to do with the fed TARGET interest rate. (Remember the fed doesn't set the rate, it controls the money supply that results in the rate)

So what this calculated risk post does in analyze the WSJ and the NYT economics columnists and their general agreement that housing prices wont pop back as was seen from the high interest rates (and their reductions) in the 70's and 80's as the housing market simply cant respond to the Fed's current fire sale.