Thursday, May 29, 2008

Inflation Ouch

I'm always baffled when I read that inflation is under control because the CPI reported a moderate increase. The CPI is a complete sham and Bill Gross, the Founder of PIMCO, the world's largest Bond Manager exposes the different shams that conspire to hold it down.

Even more baffling is when the Fed talks about how "Core CPI" which takes out Food and Energy costs, only the two most important things we spend money on, is under control. Well this type of stuff is finally starting to be exposed. On Wednesday, Dow Chemical, the world's largest chemical maker announced across the board 20% price increases on everything they make. Then they pointed the finger at Washington.

Consumers hit hard in recent months by sharply higher prices for gasoline and food should prepare to start paying more for various household items following Dow Chemical Co.'s decision to raise its prices by up to 20 percent to offset the soaring cost of energy.

The company, which announced the price increases Wednesday, took the unusual step of directing blame at the nation's energy policy makers.

"For years, Washington has failed to address the issue of rising energy costs and, as a result, the country now faces a true energy crisis, one that is causing serious harm to America's manufacturing sector and all consumers of energy," Andrew Liveris, Dow Chemical's chairman and chief executive, said in a written statement.