2021 - Is inflation finally back in the conversation?

[Bozo_Casanova 26579]

1 hour ago, Captainant said:

Because they're still part of the overall energy market through resellers wether I like it or not. The state converted a public utility into a private asset then sanctioned the monopoly and justified it with the lie of it being moderated by free market forces. Straight outta post soviet Russia, with the same outcomes for shareholders of goosed profits and shittier customer experience that doesn't matter because of monopoly power

But what does that have to do with market pricing or capitalism? 
I think I’ve posted here before (and you would probably agree) that the greatest threat to American capitalism is not socialism, but rent-seeking by powerful incumbents.  
I see literally nothing in common between the power of a state-sanctioned monopoly producer of an inelastic product (a price maker) and fast food companies, who operate in a highly competitive environment with high elasticity.

[Incredulity 11683]

2 hours ago, TwiceHorn said:

which may or may not have actually increased their prices, as an excuse to raise prices across the board, contributing to inflation

1.) you mean increased their costs.  

2.) Pricing is in large part a guess on what the circumstances(costs, demand, supply...) will be in the future.  All of the signals for the previous 4 years have been higher.  Yes, many have overshot and a portion was due to "greed".  I assure you there are not broadly the stereotype of devil corporate masters twirling mustaches as they try to kill the golden goose.  Much of the overshoot will be competed away.

[TwiceHorn 31565]

2 hours ago, Bozo_Casanova said:

What I’m feeling when I read this must be what you feel when lay persons talk about the legal system. 
😉

Well, kindly elaborate?  

[TwiceHorn 31565]

3 minutes ago, Incredulity said:

1.) you mean increased their costs.  

2.) Pricing is in large part a guess on what the circumstances(costs, demand, supply...) will be in the future.  All of the signals for the previous 4 years have been higher.  Yes, many have overshot and a portion was due to "greed".  I assure you there are not broadly the stereotype of devil corporate masters twirling mustaches as they try to kill the golden gootuse.  Much of the overshoot will be competed away.

Yes, COGS. 

There is some small evidence that recent pricing is being competed away, but I'm not sure I share your confidence that it will be.

And, sure, there's no individual devils in most cases, but the "corporate sentiment" in recent years and decades is to maximize that share price or owner return to the maximum extent possible, rather than doing something "civic minded" like absorb a few quarters of lower profits, or make price hikes temporary and announce them as such.

[Bozo_Casanova 26579]

This whole discussion presumes a world where producers of goods with lots of differentiated substitutes, commodity inputs and robust competition are price makers. They aren't. The "overshoot" doesn't exist. If producers "overshoot" the price signal they aren't maximizing profit. 

In fact, you can get closer to maximizing profit and value by undershooting the price signal, and they know this, which is why the most common strategy for a market leader in that kind of market is to lower prices when their costs rise because it's an opportunity to consolidate leadership. 

[jimmyjazz 46230]

No shit they aren't maximizing profit if they overshoot.  They aren't doing so if they undershoot, either.  It's an optimization process, with a local maxima, and I can't be convinced they aren't trying to find that maxima.  In the last few years, I think greed led them to believe it was farther out than it really was; hence, the "value" meals and price rollbacks.

[hornmpa96 2621]

7 hours ago, Captainant said:

Well using centerpoint as an example... They took in $6.5B in profit last year, but spent evidently nothing on infrastructure hardening or disaster prep. But they raised our rates nonetheless and goosed their profits to all time highs

A state sanctioned monopoly gouging customers and then leaving them in the dark, while raking in beaucoup bucks is a decent starting point of example

Can you please stop citing this bullshit?

Centerpoint had net income of $917 million in 2023. Centerpoint generated net cash flows of $18 million in 2023 after considering capex of $4.4 billion and dividends of $535 million.

Learn the difference between gross vs net.

You’re basically citing a 2000 dot-com financial metric - “EBE” or Earnings before expenses.

[Bozo_Casanova 26579]

23 minutes ago, jimmyjazz said:

No shit they aren't maximizing profit if they overshoot.  They aren't doing so if they undershoot, either.  It's an optimization process, with a local maxima, and I can't be convinced they aren't trying to find that maxima.  In the last few years, I think greed led them to believe it was farther out than it really was; hence, the "value" meals and price rollbacks.

Agree except for the greed part- if the demand signal is telling them that prices are below what the market will support, what choice do they have? Fundamentally I think the problem here is the problem with the economy for most people- the slosh of stimulus injected liquidity disconnecting buying power from income, following four decades of labor not sharing in productivity gains.

[jimmyjazz 46230]

2 minutes ago, Bozo_Casanova said:

the slosh of stimulus injected liquidity disconnecting buying power from income, following four decades of labor not sharing in productivity gains.

Do you think that explains the entirety of record corporate profits in a time period where the average American is taking it in the shorts?

[Bozo_Casanova 26579]

54 minutes ago, jimmyjazz said:

Do you think that explains the entirety of record corporate profits in a time period where the average American is taking it in the shorts?

Oh absolutely.  Broadly speaking, that was a major target of stimulus. Before that the target was support for asset prices, especially real estate. And not for nothing, I don’t recall you complaining about record home prices while the average American was taking it in the shorts. 

Edited July 16 by Bozo_Casanova

[jimmyjazz 46230]

Well, I'm still in the same home and it has peaked and dropped probably 20% or more and you don't see me complaining about that, either.  Home prices aren't controlled by corporations, except to the extent that corporations (firms) are buying up homes and setting the market.

I think you're being naive when it comes to pricing practices during the pandemic, but it's not the first time we've disagreed on something.

[Captainant 27828]

1 hour ago, Bozo_Casanova said:

Agree except for the greed part- if the demand signal is telling them that prices are below what the market will support, what choice do they have? Fundamentally I think the problem here is the problem with the economy for most people- the slosh of stimulus injected liquidity disconnecting buying power from income, following four decades of labor not sharing in productivity gains.

 

1 hour ago, jimmyjazz said:

Do you think that explains the entirety of record corporate profits in a time period where the average American is taking it in the shorts?

 

32 minutes ago, Bozo_Casanova said:

Oh absolutely.  Broadly speaking, that was a major target of stimulus. Before that the target was support for asset prices, especially real estate. And not for nothing, I don’t recall you complaining about record home prices while the average American was taking it in the shorts. 

Wait Bozo, so it's your view that the one-off stimulus payments to individuals are the main contributing factor to the long-term sustained inflation that we observed post-COVID? I'm not sure I can see how giving American citizens an extra 3% of the median pay ($1400 stimmie) in a single payment is meaningful leg of support for long-term >50% cost increases.

[Bozo_Casanova 26579]

11 minutes ago, jimmyjazz said:

Well, I'm still in the same home and it has peaked and dropped probably 20% or more and you don't see me complaining about that, either.  Home prices aren't controlled by corporations, except to the extent that corporations (firms) are buying up homes and setting the market.

I think you're being naive when it comes to pricing practices during the pandemic, but it's not the first time we've disagreed on something.

Excess buying power has to go somewhere, even when or especially when it’s disconnected from income. The  21-23 surge of inflation was the most predictable event in the history of our economy.
The irony is that people were so used to an artificially flattened business cycle they forgot what recovery felt like and spent 2022 imagining dark clouds on the horizon that never rolled in. 

[Bozo_Casanova 26579]

5 minutes ago, Captainant said:

Wait Bozo, so it's your view that the one-off stimulus payments to individuals are the main contributing factor to the long-term sustained inflation that we observed post-COVID?

 No. Our entire fiscal and monetary policy going back to 1983 has been stimulus.
My view is that liquidity expansion created the conditions for inflation, and combined with pent-up demand and a supply shock created a predictable and short term surge of inflation that is pretty tame by the numbers but hurts more than it should because our middle class is so squeezed.

[jimmyjazz 46230]

My views are wholly observational, but I feel like economic swings seem to be quickly reactive to recent events.  Saudi increases supply by 2%?  Price of oil drops 20%.  (I made up those numbers.)

I struggle with the concept that we've been building this pressure towards inflationary prices since 1983, especially given the fiscal shocks that happened in the meantime w/o similar spikes.  Perhaps the driving forces during those shocks weren't as strong.

[Incredulity 11683]

3 minutes ago, jimmyjazz said:

My views are wholly observational, but I feel like economic swings seem to be quickly reactive to recent events.  Saudi increases supply by 2%?  Price of oil drops 20%.  (I made up those numbers.)

I struggle with the concept that we've been building this pressure towards inflationary prices since 1983, especially given the fiscal shocks that happened in the meantime w/o similar spikes.  Perhaps the driving forces during those shocks weren't as strong.

Supply hadn't been as messed up since WWII.  On top of constraining supply(stay at home orders) demand got goosed with multiple rounds of stimulus at all levels AND in dealing with the constrained supply/goosed demand a feedback loop was created as all along the process of making goods as manufacturers ordered more hoping to have materials to satisfy goosed demand.  It was a nearly perfect inflation creation scenario.

[jimmyjazz 46230]

Supply constraint wasn't wholly due to stay at home orders, not by a long shot.  I'm not saying supply wasn't constrained, but there were multiple inputs.

[Incredulity 11683]

10 minutes ago, jimmyjazz said:

Supply constraint wasn't wholly due to stay at home orders, not by a long shot.  I'm not saying supply wasn't constrained, but there were multiple inputs.

Stay at home orders are the direct cause of:

1.) factories not manufacturing or manufacturing at limited capacity due to labor availability.

2.) materials not moving because of labor availability

 

Please share what other factors constrained supply more?

[jimmyjazz 46230]

14 minutes ago, Incredulity said:

Please share what other factors constrained supply more?

More?  I'm not sure where they all rank.  There were infrastructure logjams in California that had nothing to do with personnel.  Ships stacked up because they couldn't cram their cargo through the ports due to lack of trucking capacity.  One example.  EDIT:  let me clarify, this was due to a spike in import volume, not so much a reduction of labor or hardware.  The ports were overwhelmed.

I'm not sure what any of this has to do with the other discussion (corporate malfeasance).  Inflation was bound to happen regardless.

Edited July 16 by jimmyjazz

[Incredulity 11683]

2 minutes ago, jimmyjazz said:

There were infrastructure logjams in California that had nothing to do with personnel. 

Example please

3 minutes ago, jimmyjazz said:

Ships stacked up because they couldn't cram their cargo through the ports due to lack of trucking capacity

Trucking capacity was limited because of lack of truck drivers.  Trucks and trailers didn’t disappear.

[jimmyjazz 46230]

1 minute ago, Incredulity said:

Example please

Trucking capacity was limited because of lack of truck drivers.  Trucks and trailers didn’t disappear.

I just edited my post to clarify.  Import volume swelled.  This is a fact.  I'm not arguing it any more, it's not germane to the topic I've been trying to discuss, which is corporate price-gouging.  Go do your own homework, it's all out there.

[Incredulity 11683]

8 minutes ago, jimmyjazz said:

I'm not sure what any of this has to do with the other discussion (corporate malfeasance).  Inflation was bound to happen regardless

What?  The discussion was inflation.  You and Comrade Doesn’t Know The Difference Between Revenue and Profit have repeatedly asserted its because of corporate greed.

[Incredulity 11683]

7 minutes ago, jimmyjazz said:

I just edited my post to clarify.  Import volume swelled.  This is a fact.  I'm not arguing it any more, it's not germane to the topic I've been trying to discuss, which is corporate price-gouging.  Go do your own homework, it's all out there.

Lol.

so you’re crawfishing from your claim of supply constraints being caused by stay at home orders, “not by a long shot”. 
 

 

Edited July 16 by Incredulity

[jimmyjazz 46230]

11 minutes ago, Incredulity said:

Lol.

so you’re crawfishing from your claim of supply constraints being caused by stay at home orders, “not by a long shot”. 

Are you really this thick?  Read the sentence, and emphasize the key word "wholly":

Supply constraint wasn't wholly due to stay at home orders, not by a long shot.

 

Can you fucking read?

16 minutes ago, Incredulity said:

What?  The discussion was inflation.  You and Comrade Doesn’t Know The Difference Between Revenue and Profit have repeatedly asserted its because of corporate greed.

You're a liar.  I for one have never asserted that corporate greed was the only cause of inflation.  For fuck's sake, you are a beating.  Go away.

[Incredulity 11683]

Just now, jimmyjazz said:

Are you really this thick?  Read the sentence, and emphasize the key word "wholly":

Supply constraint wasn't wholly due to stay at home orders, not by a long shot.

 

Can you fucking read?

Yet you can’t provide a single example, then went with the old take your ball and going home schtick.  Only to linger at the end of the field peeking around the bushes.

Really good.  Nice job.

[jimmyjazz 46230]

Just now, Incredulity said:

Yet you can’t provide a single example, then went with the old take your ball and going home schtick.  Only to linger at the end of the field peeking around the bushes.

Really good.  Nice job.

I gave you an example.  Imports into the ports of LA and LB surged by 50% and they couldn't handle the volume.  It caused a cascading logjam which diminished supply into the US in the face of increasing import demand.  Do the fucking math, Milton.

[Incredulity 11683]

3 minutes ago, jimmyjazz said:

they couldn't handle the volume.

You’re right there.  You can say it.  Why couldn’t they handle the volume.  I’ll give you a hint, it wasn’t lack of cranes, trucks, docks,…etc.

 

[jimmyjazz 46230]

Just now, Incredulity said:

You’re right there.  You can say it.  Why couldn’t they handle the volume.  I’ll give you a hint, it wasn’t lack of cranes, trucks, docks,…etc.

 

Holy shit.  It was because the volume INCREASED.  In a world of full capacity (personnel + infrastructure) they couldn't have handled the volume.  Part of the reduced infrastructure capacity was due to maintenance issues, which could surely be traced back to personnel issues, but don't think for a minute that the 50% surge in VOLUME didn't have an effect on prices.  Do you deny this?

[Incredulity 11683]

7 minutes ago, jimmyjazz said:

Do you deny this?

Go read my post that started this exchange.

No I don’t deny it.

Demand got stimulated and supply got constrained at the same time.

Labor shortages, caused directly by stay at home orders(globally), fucked supply.

[jimmyjazz 46230]

2 minutes ago, Incredulity said:

Demand got stimulated and supply got constrained at the same time.

Yes.  Finally.  We're on the same page.

My part in this discussion has been my concern about corporate price-gouging.  I believe it has happened.  You don't.  That's fine.  Not for a minute do I ascribe that as the only source of inflation.

[Captainant 27828]

51 minutes ago, jimmyjazz said:

Not for a minute do I ascribe that as the only source of inflation.

It's not that price gouging was THE SINGULAR SOURCE of inflation - there absolutely were demand spikes and a lack of capacity to satisfy that spike. But gouging is a completely optional piece, that has been a pretty significant portion of inflation. 

 

However, incredulity is not someone capable of holding that thought in his head, and he calls anyone a communist who disagrees with him.

[Incredulity 11683]

2 minutes ago, Captainant said:

However, incredulity is not someone capable of holding that thought in his head, and he calls anyone a communist who disagrees with him

ThEy MaDe 6BiLlIOns.,.!!!!! 
 

 

 

[Bozo_Casanova 26579]

1 hour ago, jimmyjazz said:

My part in this discussion has been my concern about corporate price-gouging.  I believe it has happened. 

Ok, but I think it’s important to distinguish between markets where price gouging is possible (price inelastic necessities where supplies are short of demand and limited and sellers are few) and markets where they aren’t, which is most of what yall are talking about. 
In most markets (burgers and fries, for example), producers simply don’t have that much power and when they find themselves in the position where the are pressured by cost they often go the other direction. 

Edited July 16 by Bozo_Casanova

[Captainant 27828]

3 minutes ago, Incredulity said:

ThEy MaDe 6BiLlIOns.,.!!!!! 
 

You're right, growing EBITDA by 13% YoY while failing to power a city is the hallmark of a healthy private public partnership

[Incredulity 11683]

6 minutes ago, Captainant said:

You're right, growing EBITDA by 13% YoY while failing to power a city is the hallmark of a healthy private public partnership

Notable, but completely unsurprising,  that you didn’t pivot to the Net Income tab.  Here is a visual to help you out.  

[jimmyjazz 46230]

21 minutes ago, Bozo_Casanova said:

Ok, but I think it’s important to distinguish between markets where price gouging is possible (price inelastic necessities where supplies are short of demand and limited and sellers are few) and markets where they aren’t, which is most of what yall are talking about. 

Well, I said I'm not particularly fond of the fast food example.  I just find the "value roll-back" amusing.  

[Bozo_Casanova 26579]

8 minutes ago, jimmyjazz said:

Well, I said I'm not particularly fond of the fast food example.  I just find the "value roll-back" amusing.  

What’s a good example of inflation caused by gouging, in your opinion?

[fattyflattie 4638]

9 hours ago, TwiceHorn said:

but the "corporate sentiment" in recent years and decades is to maximize that share price or owner return to the maximum extent possible, rather than doing something "civic minded" like absorb a few quarters of lower profits,

In what interest is it for a company to “absorb a few quarters of low profits”?  That’s a govt function, at best. 

[TwiceHorn 31565]

16 minutes ago, fattyflattie said:

In what interest is it for a company to “absorb a few quarters of low profits”?  That’s a govt function, at best. 

The general welfare.  Because if they don't do it, the government will.  And they will tax you.  And you'll be mad.

Someone has to fucking do it.

Enterprises do things that reduce profits with some frequency (less now than in the past it seems), like invest in R&D, etc. because it's good for the company in one way or another.  The good of the company is not solely measured in terms of the quarterly income statement, balance sheet, and share price.

Edited July 17 by TwiceHorn

[jimmyjazz 46230]

18 minutes ago, Bozo_Casanova said:

What’s a good example of inflation caused by gouging, in your opinion?

I know you know this, but I'll play along.  Egg prices well more than doubled in one year post-pandemic.  Some farms insisted it was collusion and price-gouging, but of course industry insiders denied that and blamed it all on bird flu, which didn't explain the prices, but whatever.

I'm sure you're ready to hand-wave that away.

[fattyflattie 4638]

14 minutes ago, TwiceHorn said:

Enterprises do things that reduce profits with some frequency (less now than in the past it seems), like invest in R&D, etc. because it's good for the company in one way or another.  The good of the company is not solely measured in terms of the quarterly income statement, balance sheet, and share price.

Yes, I understand. R&D abs capex is not taking a beating on profits for civility. It’s to grow further, in turn making more revenue/profit.  General welfare is not and should not expected.   If a business wants to run that way, ok, they can take that gamble with the goodwill they may or may not receive.  

[TwiceHorn 31565]

1 minute ago, fattyflattie said:

Yes, I understand. R&D abs capex is not taking a beating on profits for civility. It’s to grow further, in turn making more revenue/profit.  General welfare is not and should not expected.   If a business wants to run that way, ok, they can take that gamble with the goodwill they may or may not receive.  

If corporations are citizens, they need to start acting like them.  Sure, we're all looking out for number 1, you especially, apparently.  But to totally ignore the interests of your fellow citizens in pursuit of your own gains is not good citizenship.

[Incredulity 11683]

6 minutes ago, TwiceHorn said:

If corporations are citizens, they need to start acting like them.  Sure, we're all looking out for number 1, you especially, apparently.  But to totally ignore the interests of your fellow citizens in pursuit of your own gains is not good citizenship.

There are a shit load of common good rules and regulations placed on businesses.

 Something like 60% of GDP is from family owned and run businesses, which by and large are not run as the soul sucking profit at all cost entities leftists and the msm love to portray.

[jimmyjazz 46230]

9 minutes ago, TwiceHorn said:

If corporations are citizens, they need to start acting like them.  Sure, we're all looking out for number 1, you especially, apparently.  But to totally ignore the interests of your fellow citizens in pursuit of your own gains is not good citizenship.

You obviously understand this, but fatty looks out for NOBODY but himself.  Mapping citizen-like expectations to corporations means, to him, that corporations should be able to act in the most self-centered manner possible.

[Bozo_Casanova 26579]

18 minutes ago, jimmyjazz said:

I know you know this, but I'll play along.  Egg prices well more than doubled in one year post-pandemic.  Some farms insisted it was collusion and price-gouging, but of course industry insiders denied that and blamed it all on bird flu, which didn't explain the prices, but whatever.

I'm sure you're ready to hand-wave that away.

I am! Eggs are a highly price inelastic commodity, in short supply in 2022, produced by specialist operations. For that reason the price is highly responsive to supply shortfalls.

The data tell the story.

Quote

The Egg Prices dashboard shows the well-documented increases in prices starting in fall 2022, peaking in early 2023, and returning to pre-spike levels by July 2023. The dashboard also reveals some new insights. For example, the largest price hike occurred for cage free and conventional eggs, as these egg-laying hens were the most impacted by the avian influenza

 

[jimmyjazz 46230]

I remember looking at those numbers and to me the price to cost leverage seemed outrageous.

That said, I'm only barely interested in any of this and I have a bunch of shit to do, so you win, no price-gouging, everything was on the up and up and none of y'all are sucking corporate dick.  Have a great week, I'm gonna work on our product and product launch (which happened months ago but seems to be a never-ending process).

[Bozo_Casanova 26579]

Godspeed!

[Bozo_Casanova 26579]

20 minutes ago, jimmyjazz said:

so you win, no price-gouging, everything was on the up and up and none of y'all are sucking corporate dick

One more point on all this- people throw around the term “price gouging” to describe a situation where they simply don’t like how much stuff they want costs but pay it anyway, but usually that’s just a price the market will bear.
Real price gouging is almost impossible to pull off in anything but extreme circumstances, like the aftermath of a disaster where someone is the only player on scene with lumber, plywood, dehumidifiers, distilled water etc.

And not for nothing, rising prices lower barriers to entry and in general make life harder for big corporate players, because they are an invitation to jump in.
 

As usual, progressive leftists get lost in the trees of this forest because they are generally affluent enough to avoid any consequences for being wrong.
The market power of large corporate producers is generally deployed to lower prices, not raise them. That’s where scale matters, and the proliferation of cheap shit is where the greatest damage has been done to our middle class. 

Edited July 17 by Bozo_Casanova

[jimmyjazz 46230]

57 minutes ago, Bozo_Casanova said:

Godspeed!

Thanks.  I spent a good portion of my career developing and selling a low-volume, $60K-$3M product.  Now I've been developing a $600 (hopefully) high-volume product, with lower price follow-ons.  The differences in everything from mfg to mktg to sales to shipping are, as I'm sure you can imagine, massive.  I'm not quite a fish out of water but I am dangerously close to the beach.

Edited July 17 by jimmyjazz

[TwiceHorn 31565]

I had heard a number of halfway reasonable economists positing that sellers used the anomaly of Covid to raise prices, whether that was justified by the costs.  And, while not solely responsible for inflation, a contributor.

But now the STL Fed says not a contributor.