No Runny Eggs

The Labor Department released the latest Producer Price Index (PPI) today.   The PPI shows what is happening to prices at the wholesale level.   The latest results showed that the PPI had decreased by 2.8%, the sharpest decline ever recorded.

While the full PPI declined, the core PPI (they remove price changes for  energy and food) rose this month by .4%.

I’ve always thought this notion of “core” PPI to be utter nonsense.   As energy prices were soaring and food along with it, during late last year and early this year, various economists pointed to the lower core PPI as evidence that inflation was still under control.   I don’t know about the economists but my household gets pretty severely impacted by dramatically rising energy and food prices.   Those two items don’t have significant elasticity of demand in our checkbook!   For this and other reasons, I don’t tend to pay a lot of attention to the “core” changes of PPI.   In today’s report however, I say an anomaly that caught my eye.

At the very end of the report was this explanation of why the total PPI went down while the core PPI continued to rise:

The 0.4% increase in core PPI was driven by a sharp 2.6% jump in light truck prices, which include sport utility vehicles, and higher prices for other capital goods.   (emphasis mine)

You’re kidding right?   We’re supposed to believe any of these statistics are meaningful?   The reason the core PPI increased was because of an increase in costs of SUVs?   First, isn’t Detroit complaining that they aren’t selling any vehicles and thus need a bailout?   Does anyone really believe that SUV prices have increased?   I don’t mean the sticker price, I mean the price you actually pay!  

Second, does anyone know someone who purchased a brand new SUV in October?   Weren’t there just stories saying that October was the worst car sales month in 30 years?   Haven’t we seen stories telling us that SUV sales have dried up?

Definition of Statistics:   The science of producing unreliable facts from reliable figures.   Evan Esar

The saddest part about all of this is that our taxes are paying for someone to put out this drivel.   I think I’ve found one place where Obama could trim the Federal budget!

Hank Paulson found Bank of America worthy of a $25 billion investment via his “Anything goes” TARP program.

You remember that TARP program? Those funds were supposed to be used to shore up the US financial system? You also remember how Congress, after having been burnt by Freddie and Fannie assured us that TARP would have significant and stringent oversight?

Um, not so much.

Bank of America was in such dire need of the capital infusion, money that was supposed to assist loans in the US, that they thanked the US taxpayer by investing  $7 billion to increase their stake  in a Bank in China!

Is it any wonder why the vast majority of Americans believe the country is going in the wrong direction?  

Are there anymore questions about whether Congress should ever do another “bail out?”