U.S. November Consumer Prices Rise More Than Forecast

[Neil D]

By Shobhana Chandra

Dec. 14 (Bloomberg) -- U.S. consumer prices rose more than forecast in November, driven by a jump in energy costs that may raise concern inflation hasn't been tamed.

The consumer price index increased 0.8 percent, the most since September 2005, after a 0.3 percent gain in October, the Labor Department said today in Washington. Prices excluding food and energy, known as the core rate, climbed 0.3 percent, also more than anticipated.

The figures may reignite concern that inflation will accelerate as higher energy costs filter through to other goods and services. That leaves less room for the Federal Reserve to cut interest rates should the credit crisis intensify and the economy falter, economists said. Treasuries dropped.

``There is no question inflation is going to remain a concern for policy makers,'' said David Resler, chief economist at Nomura Securities International Inc. in New York, who correctly forecast the increase in core prices. ``This certainly will give some policy makers pause about the advisability and desirability of further rate cuts.''

Economists surveyed by Bloomberg News forecast consumer prices would rise 0.6 percent, according to the median of 80 estimates. Estimates ranged from gains of 0.4 percent to 1 percent. Prices excluding food and energy were forecast to rise 0.2 percent, according to the Bloomberg survey.

Ten-year Treasury yields climbed to 4.25 percent at 8:44 a.m. in New York, from 4.20 percent late yesterday, reaching their highest in a month.

Annual Increase

Consumer prices increased 4.3 percent in the 12 months to November, the most since June 2006. The core rate increased 2.3 percent in the 12 months to November, up from a 2.2 percent October year-over-year gain.

``Readings on core inflation have improved modestly this year, but elevated energy and commodity prices, among other factors, may put upward pressure on inflation,'' Fed policy makers said in a statement this week announcing a quarter-point reduction in the benchmark interest rate to 4.25 percent. Policy makers also inflation risks remained.

Inflation also accelerated in Europe. Prices in the 13- nation area rose 3.1 percent in November from the same month last year, the most since May 2001 as food prices soared.

Today's U.S. consumer-price report showed energy prices jumped 5.7 percent, after a 1.4 percent increase in the prior month. Gasoline prices climbed 9.3 percent and fuel oil costs jumped 14.2 percent, the most since February 2003.

Oil Prices

Crude oil prices on the New York Mercantile Exchange averaged $94.63 a barrel last month compared with $85.66 in October. The cost reached a record $99.29 a barrel on Nov. 21. Regular gasoline at the pump exceeded $3 a gallon for most of November, according to the American Automobile Association.

U.S. carriers boosted ticket prices seven times since Sept. 1 to combat rising jet-fuel prices. The latest attempt was rolled back Dec. 3 after Continental Airlines Inc. decided against an increase, suggesting a slowing economy may rein in prices in coming months.

High oil prices are ``one of the top challenges facing the industry today,'' Tom Horton, chief financial officer of AMR Corp., parent of American Airlines, said last week at a conference.

Others are making increases stick. Kroger Co., the biggest U.S. grocery chain, this week said it charged shoppers more to recoup higher costs for cereal and cheese, helping boost third- quarter profit by 18 percent.

The consumer price index is the government's broadest gauge of costs for goods and services. Almost 60 percent of the CPI covers prices that consumers pay for services ranging from medical visits to airline fares and movie tickets.

Broad-based Increases

Apparel, prescription drugs, hospital services and airfares led the increase in the cost of living last month.

Food prices, which account for about a fifth of the CPI, increased 0.3 percent for a second month.

Rents which, make up almost 40 percent of the core CPI, also rose. A category designed to track rental prices for owner- occupied homes rose 0.3 percent, compared with a 0.2 percent increase the month before.

Slowing growth will help damp price pressures, economists said. The Fed's preferred gauge of inflation, which is tied to consumer spending and excludes food and energy costs, will rise 1.8 percent in 2008 after a 1.9 percent gain this year, according to the median estimate of economists surveyed by Bloomberg this month. The measure would be within the range forecast by policy makers.

Growth to Slow

Economic growth will slow to a 1 percent pace this quarter, a fifth the rate of the previous three months, the Bloomberg monthly survey said. Economists also trimmed estimates for the first quarter of 2008 to 1.5 percent.

Other price reports also reflected surging fuel bills. Wholesale prices rose 3.2 percent in November, the biggest jump in 34 years, the Labor Department reported yesterday. The increase was driven by a record one-month gain in energy costs. Excluding food and fuel, producer prices rose 0.4 percent.

The two reports reflect differences in timing. In calculating wholesale prices, the government asks survey participants to report costs as of the Tuesday of the week that includes the 13th. Consumer prices are based on average costs over the entire month.

[Dr. Shane]

I don't understand why we haven't started making oil out of coal. We can convert coal to oil for $40/barrel - including the cost of the coal. The reason, I have been told, is that the industry fears the cost of oil will drop below $40 a barrel at sometime in the future. I can't see that happening. The price of oil does run in cycles that go up and down buy a large part of what is driving the price of oil up now are the developing economies in China and India. Those economies are going to continue to grow. China has abundant coal reserves, as does the US. So why are we so dependent on pumping crude out of the ground?

[Bravus]

Sasol does this in South Africa, very successfully.

And man, the US economy is shaky at the moment: the Fed is cutting interest rates to try to contain the subprime mess and at the same time risking inflation rising... and the last two days have signalled that inflation may already be here. Slowing growth and rising inflation... precarious in the extreme.

(I have investments in US shares, so I'm definitely not cheerleading for the US economy to have problems. They'd flow on to the world economy too.)

Bush's claim to have presided over a strong economy is looking shaky in the leadup to the election. In Australia we saw Mr Howard wanting to claim all the credit for the good times on his 'sound economic management' but to blame the bad times on 'economic cycles'. I'm sure we'll see some of that in the US too, but a big part of the picture is the deregulation of banks that allowed the subprime mess to grow, and the reluctance to contain it when it's been clear for a year or more that it was an economic disaster waiting to happen.

[Dr. Shane]

Economic cycles are going to happen. That is a given. How government handles the downturns determines to a large extend how bad a recession becomes. Presidents Hoover and F.D. Roosevelt did a lot to worsen the Great Depression. Government cannot spend its way to prosperity. President Carter also made the recession started by the Mid-East Oil Crisis much worse than it had to be. Presidents Kennedy, Reagan and G.W. Bush all used tax cuts to help pull a sick economy out of recession.

What I am not sure of, and only time will tell, is how much different the impact of this present sub-prime crisis is than the Savings and Loan crisis we had some years ago.

[Neil D]

In a NPR interview, Mike Hucklebee said this about the home mortage crisis-

[NPR] In an interview on Fox News recently, you said that the government should not be bailing out people whose mortgages are about to reset to interest rates that they can't afford. Foreclosures are at record rates right now. Wouldn't doing nothing — as millions of Americans risk losing their homes — smack of Herbert Hoover deferring to the market as 25 percent of Americans were unemployed in the Depression?

Not at all. What you have is a situation where you have culpability on the part of the lenders and the borrowers. The fact is you need to encourage the lenders to try to work with those who have borrowed to keep from foreclosure because ultimately nobody wins. The banks don't need an enormous inventory of property on their hands that they can't move any more than the market can. The lender doesn't need to be in default and ultimately bankruptcy and out of a home.

But what we don't need is a government bailout. That is not the purpose of government, to prop people up from every poor decision they make. In fact, when you do that … whether it's in the world of finance or the world of drug addiction … it creates an enabling codependency. It's the last thing that really helps people.

Is there some way to bring some resolve to it? Yes. But it needs to be handled by the … people who made the mistake in the first place: overambitious borrowers and greedy lenders, who saw a way to suck people into interest rates that they should have known they couldn't afford in the long term.

But apart from assigning an ethical or moral responsibility to the players in this problem, where does the government step in? What's the role of the federal government, and if you were president and this crisis were deepening, what would be the role of the Huckabee administration in approaching it?

I think you would do similar to what the Bush administration has done. You wouldn't bail people out with other people's taxpayer money. You would ask those parties to sit down and find out is there a way they can resolve it. And the reality is, in some cases, yes, they can work it out. In some cases, they cannot. And there are consequences for people's actions. If I drive 95 miles an hour and drive on icy roads, there are consequences. And there are a lot of consequences that the government can't fix. And a government that can do everything for you is a government that can take everything from you. We don't want that kind of government.

But there's a different degree of danger in somebody who takes the risk of driving 95 miles an hour on icy roads and somebody who notices that real estate prices are going up all around them and buys a house one size too big. To your mind, moral hazard is still at work — you don't want to encourage that kind of decision?

Well, the question still comes: If you're a taxpayer, and you've responsibly made financial decisions, should you be made to involuntarily pay your house payment and that of your neighbor, who bought more house than he could afford, even though you acted prudently?

NPR interview

Here is what Alan Greenspan says about mortages crisis-

Greenspan Favors Government Bailout for Homeowners (Update1)

By Steve Matthews

Dec. 16 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said he favors spending U.S. government money to bail out mortgage borrowers who risk losing their homes because they can't make payments.

Greenspan, speaking on ABC's ``This Week'' program aired today, said cash bailouts, while creating a larger budget deficit, have the advantage of helping homeowners without distorting property prices or interest-rates on mortgages.

``Cash is available and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this,'' Greenspan said. ``It's far less damaging to the economy to create a short-term fiscal problem, which we would, than to try to fix the prices of homes or interest rates. If you do that, it'll drag this process out indefinitely.''

Greenspan's suggested approach differs from that of Treasury Secretary Henry Paulson, who negotiated a freeze on the interest rates of some subprime mortgages without pledging any government money to help homeowners or banks.

Greenspan, who was Fed chairman for almost two decades until Ben S. Bernanke took over early last year, repeated that recession risks are rising.

``The probabilities of a recession have moved up to close to 50 percent -- whether it's above or below is really extraordinarily difficult to tell,'' Greenspan said.

In a Dec. 13 interview with National Public Radio, he said the economy is ``getting close to stall speed.'' On Nov. 7, he told a conference in Sao Paolo that the chances of a recession were ``less than 50-50.''

Bloomquist Report

[Bravus]

Still think that Huckabee's perspective there is right (and lots of other people are saying the same thing) but only half the story. It's true that it's not government's responsibility to bail out either individuals or banks who made bad decisions. But it *is* government's responsibility to make good financial laws and regulate the banks, and it is massive deregulation that allowed the banks to (a) write a bunch of mortgages to people they knew had no chance of paying them and ( then 'securitize' those mortgages and sell them off as being much less risky than they really were. Good oversight from the government could have avoided the whole mess, so it's a bit rich to now sit back with arms folded and watch people try to extricate themselves from it and tsk tsk about the morality of it.

[Dr. Shane]

The government has to look out for the general welfare of the entire country. If letting a number of people that deserve to lose their homes lose them will cause a ripple effect on the entire economy, it may be best to bail them out. I have more respect for Greenspan than I do anyone that has an R or D after their name. I am inclined to trust him before the politicians.

[fccool]

Economic cycles are going to happen. That is a given. How government handles the downturns determines to a large extend how bad a recession becomes. Presidents Hoover and F.D. Roosevelt did a lot to worsen the Great Depression. Government cannot spend its way to prosperity. President Carter also made the recession started by the Mid-East Oil Crisis much worse than it had to be. Presidents Kennedy, Reagan and G.W. Bush all used tax cuts to help pull a sick economy out of recession.

What I am not sure of, and only time will tell, is how much different the impact of this present sub-prime crisis is than the Savings and Loan crisis we had some years ago.

I don't think people understand that MONEY STRUCTURE IS THE PROBLEM behind the unsound economy and thus creates this endless cycle of booms and busts, and constant inflation. I'm sorry to disapoint anyone here, but US economy is done. There's no slightest prospect of ever recovering without a complete do over of the economic system of the world or forgiveness of debt to bunch of people. When you let any institution print money... you are not only devaluating the total supply, but in fact STEALING savings of people. And that's what banking institutions do. The CPI is pretty well manipulated to conceal the real inflation effect on prices, but dollar is worth 5 cents of the original value... and dropping. Gold risen near 20% in past three months ! And I guess it has nothing to do with banks pumping near trillion dollars worldwide of unbacked currency (not that anybody backs the currency anymore). Nobody can turn this tide mainly due to people first unaware of the problem because economists are trying to be "intelligent" talking about the subprime market problems and telling it's not all bad while flashing CPI and GDP.

As an example of what is really going on... I'm from an ex soviet country and my parents purchased an apartment for $10k in 1995. Ten years later this apartment is valued over $70k. Why? Is the apartment better? No... Is there lack of the apartments now? Now... so what happened? What happened is that western way of living entered the whole world. Banks are not creating credit out of nowhere, and the realtors jack up the prices to get their cut. Young people are attracted to mortgaging their lives away because it's the easy way out... so it seems... and end up trapped for the remainder of their lives slaving away. When they are in trouble, they borrow more to pay old debts with new. And round it goes. This is the way of the world now, but it all started when US was handed the dollar as the leading currency.

I really appreciate Ron Pauls' efforts. But it's a bit too late. The mechanism has been set in place and motion for the purpose of bringing the world into chaos... and then the "savior" will arise and solve this problem but proposing the way it should have been. I just hope that most of us will see through that and God gives us enough sense to say no to what's about to happen. But the world will perish for the lack of knowledge unfortunately. I can only speculate when or what will happen, but I think that US and the World are on slowly accelerating decline towards global government.

So with all this being said. Instead of trying to fix the unfixable and way out of our control... we need to focus on getting as many a possible on the board "of the ark" before the door is shut. I know it's not easy, but sometimes showing simple facts to people like facts about money really makes them rethink their attitudes towards God.

[Neil D]

And who benefits from all this chaos? ......

Conspiricy theory...that is all this is....some sort of conspiricy theory....

[fccool]

Once again, the "taught" responce of dismissing the argument as "conspiracy theory" prior to actual evaluation of the subject.

Do conspiracies exist? Didn't Satan conspired with a third of the angels? Does not he work behind the scenes to bring about his way of things to be? So why would it be so unbeliavable that he would take control of the substance that controls this world --- money? Does he have means to do it? Would he have desire to do it? I think we know the answer to that one.

Now who would benefit from the chaos? HE WOULD! In the last days he deceives the whole world to follow a leader who would bring an end to chaos. Is financial chaos one of those?

If you think that major events in history were coincidental without Devil's hand in them... then what is it that he is doing on this planet? Causing people to become alcoholics and sex addicts? Money system is one of the things that keeps people occupied to maintain their lifestyle. Is this accidental? I guess if history is accidents all over the place that result in total depraved humanity... then why do we even believe and are concerned about Satan at all?

I hope you can see where I am going with this. Being a Christian is incompatible with rejection of "conspiracy theories". I understand that there are crazy ones out there, but understand that dismisal of things prior to evaluation is way of ignorance that does not lead to discovery of the truth. If I claim to seek truth... this is not attitude that I would adopt.

[Neil D]

Once again, the "taught" responce of dismissing the argument as "conspiracy theory" prior to actual evaluation of the subject.

[fccool]

Why Satan needs money? To come into town and set up a shop of course. He needs to buy things too... food, clothing, transportation...

I don't think you really understood what I'm trying to convey. Satan does not need money. He uses it to make you think that you need it more than you need God, thus we have generation of people chasing money as means of survival, while ironically money is only representation of the real wealth.

PS. That Satan didn't conspire to decieve the angels, but that they went to his side willingly...

I don't think you understand definition of conspiracy Conspiracy by definition require two or more persons for it to be one. Two criminals for example may conspire to commit robbery. Then a detective when solving a crime will come up with a conspiracy theory, which will no longer be a theory when he solves the crime. In Bible God solves the crime and the Devil did conspire with angels and he did deceive them. Deception by definition is never forceful... so yes the angels joined willingly. Yet it was that conspiracy of angels that caused them to be kicked out of heaven to earth, and it is still the angels CONSPIRING TOGETHER (here's that word again) to be SATANS (which means that which oppose) to Gods plan. Hence we get the term Satanic conspiracy. Hope it clears it up.

[Neil D]

From The American Heritage Dictionary -

conspiracy theory

n. A theory seeking to explain a disputed case or matter as a plot by a secret group or alliance rather than an individual or isolated act.

con·spir·a·cy n.

1.] An agreement to perform together an illegal, wrongful, or subversive act.

2.] A group of conspirators.

3.] Law An agreement between two or more persons to commit a crime or accomplish a legal purpose through illegal action.

4.] A joining or acting together, as if by sinister design: a conspiracy of wind and tide that devastated coastal areas.

People, who repeat a word to define it, need the help of a dictionary. Which of the definitions were you needing to get your point across?

[fccool]

Hehe

Ok, I'll make it easier for you. I'll copy and paste the post, and every time the word pops up... I'll use definition that you yourself found and see If my post is illogical in any way.

I don't think you understand definition of conspiracy

conspiracy theory

n. A theory seeking to explain a disputed case or matter as a plot by a secret group or alliance rather than an individual or isolated act.

\:\) Conspiracy by definition require two or more persons for it to be one.

conspiracy theory

n. A theory seeking to explain a disputed case or matter as a plot by a secret group or alliance rather than an individual or isolated act.

Two criminals for example may conspire to commit robbery. Then a detective when solving a crime will come up with a conspiracy theory,

conspiracy theory

n. A theory seeking to explain a disputed case or matter as a plot by a secret group or alliance rather than an individual or isolated act.

which will no longer be a theory when he solves the crime. In Bible God solves the crime and the Devil did conspire with angels and he did deceive them.

conspiracy theory

n. A theory seeking to explain a disputed case or matter as a plot by a secret group or alliance rather than an individual or isolated act.

Deception by definition is never forceful... so yes the angels joined willingly. Yet it was that conspiracy of angels that caused them to be kicked out of heaven to earth, and it is still the angels CONSPIRING TOGETHER (here's that word again) to be SATANS (which means that which oppose) to Gods plan. Hence we get the term Satanic conspiracy.

conspiracy theory

n. A theory seeking to explain a disputed case or matter as a plot by a secret group or alliance rather than an individual or isolated act.

So Here it is. Are angels acting secretly? Are they cooperating together in alliance? If both of these are true... we have a conspiracy. Now how do you know about these? Because we have a "theory" that explains the nature of conspiracy... so we have a conspiracy theory.

Hope it clears it up.