Inflation hits, part II: say goodbye to the TruCoat money

Heh – TruCoat. On the off-chance that you’ve never seen Fargo, it isn’t real.

The news! This one is a manner of update on the iron ore stories (or, for this semester’s Economics class, mid-term exam). Short version: the price is going up. Longer version: so is every we use it for, you poor bastards:

General Motors Corp., the world’s largest automaker, is raising prices as much as $1,500 on its cars and trucks to help recover increasing costs for metals and other commodities.

Prices will go up an average of about 1.5 percent on most 2008 models, the Detroit-based automaker said today in a statement. The increases take effect tomorrow on vehicles shipped to dealers. GM last boosted prices because of material costs in November 2006.

Honestly, who’d be an auto-manufacturer, these days? With steel, health care, pensions. Even the price of instant coffee for the tea-room (or whatever they call it here) is appreciating.

Economics students:

“While most cars and trucks in our portfolio will go up between $100 to $500,” some vehicles “in hotly contested segments,” such as the Saturn Aura and redesigned Chevrolet Malibu sedan, will stay the same, Mark LaNeve, GM’s North American sales and marketing chief, said in the statement.

“Hotly-contested” means many substitutes, and much heavier price-based competition: i.e. relatively higher price-elasticity of demand. See if you can sketch out the neo-classical markets that explain why GM won’t be shifting up its Supply curve in that market, any time soon (yes, yes – boring. You’re all under 21: it isn’t as though you can go out and drink).

“Fed shrugged” – excellent allusion

The New York Times – via the Big Picture – had a super critique (including this splendid graphic – click for larger version) of Greenspan’s Federal Reserve, his incurious attitude towards subprime and adjustable-rate (and stated income, and piggyback, and…) mortgage lending, and his orchestra.

Nice, eh?

Today, as the mortgage crisis of 2007 worsens and threatens to tip the economy into a recession, many are asking: where was Washington?

An examination of regulatory decisions shows that the Federal Reserve and other agencies waited until it was too late before trying to tame the industry’s excesses. Both the Fed and the Bush administration placed a higher priority on promoting “financial innovation” and what President Bush has called the “ownership society.”

On top of that, many Fed officials counted on the housing boom to prop up the economy after the stock market collapsed in 2000.

The article is mostly a list of qualified observers who warned the Fed that shit was piling up and the fans were being turned on. It also criticises Greenspan for his (as we saw in a previous post, ongoing) defense of his policy, based upon the salvation of appreciating house values.

People are piling on, back over on the Big Picture. The comments are worth the few minutes’ read.