The next battle this country is going to take in this never ending recession has to do with margins. Profit margins. Due to the idiotic QE2 policy of our favorite person at the Fed, Bernanke, commodity prices are going through the roof and I see no stop to it. The part of the problem that we are just getting into has to do with food prices. Due to the inflationary tendencies of the people in Washington food prices are on a rocket ship.
http://www.caseyresearch.com/editorial/3791?ppref=FCB175ED1010A&ref=nf
This is going to cause food companies such as Kraft and General Mills to do one of two things: either they can eat the cost and not raise their prices or they can raise their prices into lower national wages and high unemployment. Neither of these are good choices, but they will have to do one of them. If they eat the cost then they will be forced to lay off workers, if they raise prices then there will be falling sales, which again leads to layoffs. But people have to eat you say? Well that's right!! That's why its not going to be falling sales in their company, but in other companies. The luxuries will be gone, no money for new computers, cars, T.V.s, Cell Phones, etc. etc. etc......
Here is where the problem is. Food companies will survive off of low profit margins (for a while anyways), but those food products will eat into any spending that is for the fun stuff. When you eat into that spending everything collapses. This country is a consumer driven market and without the consumer spending there is no market. It's done. Finished. Gone. Especially when all of those fun tech toys take silver and lithium. Which are both on the rise. So we are going to have higher food prices, leading to less consumer spending on goods that now cost even more..... and apparently this makes perfect sense to people in Washington?!?!?!
$#%! Them!!!!
No comments:
Post a Comment