» Posted by Martin Weil on May 27, 2006

What's the difference between the Titanic and the State of California? At least when the Titanic went down, its lights were on.

As one of thirty-six million Californians still paying the price (in under-funded schools, unmaintained highways and downgraded credit rating) for the multi-billion dollar swindle of our state by Enron's executives, I take small cold personal comfort that the utterer of the above will be going to prison for his company's actions.

» Posted by Martin Weil on May 18, 2006

As we have been saying, core inflation is going to blow through the top of the Fed's comfort zone over the next few months.

Some ten years ago, the CPI was substantially reconfigured and these changes may have helped keep the official measure of inflation subdued. That appears about to change. CBS Marketwatch has a good explanation of an important, but overlooked, aspect of the CPI measure.

» Posted by Martin Weil on May 16, 2006

A May 15 commentary by Paul Kasriel at Northern Trust posts the chart above, illustrating the role of housing demand as a leading economic indicator. Downturns in housing demand have predicted three of the last two recessions. The recent slide in this Association of Home Builders index will certainly give the Federal Reserve pause as it contemplates whether to raise interest rates a seventeenth time next month. What makes their job a bit more challenging is the gradual up tick in inflation occurring at the same time as the economy may be poised to slow.

» Posted by Martin Weil on May 12, 2006

"It is not because of a few thousand francs which would have to be spent to put a roof over the third-class carriage or to upholster the third-class seats that some company or other has open carriages with wooden benches... What the company is trying to do is to prevent the passengers who can pay the second-class fare from traveling third-class; it hits the poor not because it wants to hurt them, but to frighten the rich."

Ever wonder why a Starbuck's latte costs as much as it does? Tim Harford, in his sensational The Undercover Economist, employs the illustration above to explain how a core economics principle - price targeting - affects most everything we buy.

Highly recommended for anyone with even a mere passing interest in economics. As good as a business school course but a lot more entertaining and very-well written. Read this book and you will become a smarter consumer, voter and investor.

» Posted by Martin Weil on May 05, 2006

"A wide array of businesses are using extra fees and fuel surcharges to shift some of their rising energy costs to consumers." So writes Rick Brooks in the May 4 Wall Street Journal. Among companies adding fuel surcharges to customers' bills are the predictable, such as airlines, FedEx, UPS, and other shippers. But exercise equipment-maker Nautilus or fast food joint Papa John's?

The truth is, we are a nation that relies on goods getting shipped here from overseas and all across the country once here. Just about every product in our marketplace and most services have an energy or a fuel-related cost component. And regardless of what "official" measures may show, these costs are inevitably sneaking into higher prices at the consumer level.

Thanks to Daniel Gross for the article pointer.