Archive for the ‘inflation’ tag
Federal and State Deficits – Out of Sync
This 17 carat gold railroad spike was pounded into the ground by Leland Stanford at Promontory Point, Utah on May 10, 1869, to commemorate the joining of the Union Pacific and Central Pacific Railroads to complete the first Transcontinental Railroad.
America was built on Infrastructure. Take the Railroad Era, for example. Infrastructure represents a short term economic boost and long term economic investment. Just ask your average railroad baron. So If you agree that infrastructure spending is a keystone of economic recovery in the United States, then you’re likely to agree that, a) both the Federal and State Governments are critical to infrastructure spending, and b) that concerns about the deficits have to take a back seat to economic recovery.
That is clearly already true about the Federal Deficit. We’re going to hit a trillion a year pretty soon, and we’re going to be spending way more. The economy is so bad, and deflation such a risk, that printing money seems like a very attractive option. Sheets of the stuff will be churned out. The Mint will be working overtime.
But what about the states? Many States are constitutionally mandated to balance their budgets, including California. And none of them print their own money. States have to raise money from taxes, borrow it, or sell bonds to finance themselves. The first of these is a nasty option politically, especially during an economic squeeze, the second is tough sledding, and the third is deeply unattractive for investors. Which leaves the States in a terrific crisis. Among the many things that suffer are – guess what, infrastructure projects, the very lifeblood of the Keynesian (boy, is he back with a vengeance) recovery.
Problem? Uhh, yeah. Read the rest of this entry »
Fuel Surcharges…They’re still Here!
them trucks sure is thirsty
We tend to associate fuel surcharges with airlines but they are a very convenient concept for big business across the board. The shipping industry is a major user of the concept. Businesses get to separate the surcharges from their core pricing, and tack them on as a bait and switch at the end. Not only that, but they also tend to be very ’sticky’. Oil prices are around $45 a barrel right now, down from $147 in July, but big surcharges are still being charged all over the shop, and passed on down the supply chain, ultimately to the consumer.
I recently ordered a product online, and had to pay a “fuel surcharge” for shipping. Never seen that trick before, but it might have something to do with a surcharge trick from, say, UPS. UPS make a big hoo-hah about green vehicles, but diesel fuel is still their staple, and right now it’s a nice earner for them too. All figures are from the UPS website.
Let’s start with the good news.
UPS recently changed the fuel surcharge to its customers for ground shipping. From November 3rd through November 30, 2008, the surcharge was 8.25%, triggered, according to UPS, by an average diesel fuel price of between $3.98 and $4.05 per gallon. On December 1, 2008 the surcharge went down to 6.75%, triggered says UPS by a diesel price of between $3.50 and $3.58 per gallon.
These numbers seem a little high to you?
Well, US Energy Information Administration figures suggest UPS accidentally got its numbers wrong. Read the rest of this entry »