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Posted
  On 7/17/2024 at 2:16 AM, jimmyjazz said:

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.

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Not just imagine/ once upon a time I was part of a team managing a product line that brought in a few billion a year at around $500 per unit. The difference is massive because you win by managing the stuff on the right side of the decimal and as you say, the launch is never over.

Seriously, good luck. 

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Posted
  On 7/17/2024 at 2:24 AM, TwiceHorn said:

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.

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Not being intentionally obtuse, but I hear stuff like this and I don’t know what it means. What does it mean to say that sellers “used” Covid to raise prices?

Posted
  On 7/17/2024 at 2:31 AM, Bozo_Casanova said:
Not being intentionally obtuse, but I hear stuff like this and I don’t know what it means. What does it mean to say that sellers “used” Covid to raise prices?

The anomalous event reduced resistance in consumers’ minds regarding price increases. A sudden $5 price hike in normal times? Most consumers would say “fuck that,” and turn away from the product. But when that hike happens during an unprecedented event like COVID? Consumers think “maybe that’s ok, that’s just how it be in these times.” And sellers took advantage of that. They did so in relatively unified - mayhaps even “collusive” - fashion in many instances. That’s my hypothesis for one of the elements that was in play.
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Posted
  On 7/17/2024 at 1:09 AM, jimmyjazz said:

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.

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  On 7/17/2024 at 1:20 AM, jimmyjazz said:

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).

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You lamented very recently about being underpaid as a senior/experienced employee, relative to unskilled young employees.

So is it that the penile-fountainhead corporations are throwing away all of the incremental value they could extract from you, because all of their ivy league whiz kid managers don’t know any better?

Or do you overestimate your own potential, but are seeking more pay because you are a greedy individual. And if so, is that wrong for you to do?

Pls respond. 

Posted (edited)
  On 7/17/2024 at 2:38 AM, Brisketexan said:

The anomalous event reduced resistance in consumers’ minds regarding price increases. A sudden $5 price hike in normal times? Most consumers would say “fuck that,” and turn away from the product. But when that hike happens during an unprecedented event like COVID? Consumers think “maybe that’s ok, that’s just how it be in these times.” And sellers took advantage of that.

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Ok, but part of our response to the anomaly was (among other things) a huge money supply expansion. And when the money supply expands in an environment of constrained supply inflation is the result, 100% of the time. It’s the same thing that has happened over a much longer time span with college education. The buying power was available, and therefore the demand was available at higher price points. 
Of course sellers discovered the higher resistance range. Discovery is the function of the market. 

 

Edited by Bozo_Casanova
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Posted

One more thought on this topic, particularly for @Brisketexan @jimmyjazz @TwiceHorn and @Captainant - I am NOT giving the greed is good speech, or dismissing the role of avarice or the abuse of market power by producers and sellers during and following the covid crisis.  No doubt there was some of that, as there is in any crisis. But those events are typically highly localized to particular places or products or both,  and don't account for large scale monetary phenomena, and inflation qua inflation is a monetary phenomenon. 
I realize I'm taking on some ideological baggage by association when I say that. Obviously the work and words of Milton Friedman have been deployed by all kinds of bad actors for all kinds of bad shit, but contrary to the way it's used to mark yardage lines in politics, to say that inflation is a monetary phenomenon is not a value judgement but an empirical observation. It is simply damn-near impossible to find an example of economic inflation (ie a steady and sustained general rise in prices across the economy) that is not preceded and accompanied by a prior increase or debasement of the money supply. Including this one.
 

Part of why this is difficult to discuss is a failure of language - we are selective about what we call "inflation." When our wages go up due to labor shortage, we don't generally think about that as inflation until the price of things responds to our newfound buying power. When the cost of housing and healthcare and college education go up because the money supply for those things is increased in the form of cheap debt, employer tax breaks and federal profit guarantees to lenders, we don't think about it as "inflation" even though those are very much steady and sustained increase in prices preceded and accompanied by a prior  targeted increase in the money supply for those things specifically. And we don't, because  (and @Captainant this is why I responded to your question the way I did) the money supply increase doesn't have to directly pass through our hands to have an inflationary effect. The monetary expansion doesn't have to offer us a choice or agency in order to have an inflationary effect on our lives. 

And, for the record, inflation isn't necessarily bad. A low level of inflation can be beneficial to the consumer, in that is lowers the effective cost of things that appreciate over time, and it generally means that the economy is speeding up. That's what I meant about people forgetting what a recovery felt like. 21-23 was the feeling of the economy returning to normal. 

So I keep using words like "liquidity"  and "slosh" for a reason. If you pour a bunch of money into the economy, everything gets soaked. Over time that's expanded production of stuff we want. Near term, it means higher prices. Those aren't political choices or ideological positions. We do not make the political choice to get wet when we step out into the rain. 

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Posted (edited)
  On 7/17/2024 at 5:58 PM, Bozo_Casanova said:

One more thought on this topic, particularly for @Brisketexan @jimmyjazz @TwiceHorn and @Captainant - I am NOT giving the greed is good speech, or dismissing the role of avarice or the abuse of market power by producers and sellers during and following the covid crisis.  No doubt there was some of that, as there is in any crisis. But those events are typically highly localized to particular places or products or both,  and don't account for large scale monetary phenomena, and inflation qua inflation is a monetary phenomenon. 
I realize I'm taking on some ideological baggage by association when I say that. Obviously the work and words of Milton Friedman have been deployed by all kinds of bad actors for all kinds of bad shit, but contrary to the way it's used to mark yardage lines in politics, to say that inflation is a monetary phenomenon is not a value judgement but an empirical observation. It is simply damn-near impossible to find an example of economic inflation (ie a steady and sustained general rise in prices across the economy) that is not preceded and accompanied by a prior increase or debasement of the money supply. Including this one.
 

Part of why this is difficult to discuss is a failure of language - we are selective about what we call "inflation." When our wages go up due to labor shortage, we don't generally think about that as inflation until the price of things responds to our newfound buying power. When the cost of housing and healthcare and college education go up because the money supply for those things is increased in the form of cheap debt, employer tax breaks and federal profit guarantees to lenders, we don't think about it as "inflation" even though those are very much steady and sustained increase in prices preceded and accompanied by a prior  targeted increase in the money supply for those things specifically. And we don't, because  (and @Captainant this is why I responded to your question the way I did) the money supply increase doesn't have to directly pass through our hands to have an inflationary effect. The monetary expansion doesn't have to offer us a choice or agency in order to have an inflationary effect on our lives. 

And, for the record, inflation isn't necessarily bad. A low level of inflation can be beneficial to the consumer, in that is lowers the effective cost of things that appreciate over time, and it generally means that the economy is speeding up. That's what I meant about people forgetting what a recovery felt like. 21-23 was the feeling of the economy returning to normal. 

So I keep using words like "liquidity"  and "slosh" for a reason. If you pour a bunch of money into the economy, everything gets soaked. Over time that's expanded production of stuff we want. Near term, it means higher prices. Those aren't political choices or ideological positions. We do not make the political choice to get wet when we step out into the rain. 

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It's ok by me.  I have had some experiences with the stock market where some of my assumptions about price information and discovery were shaken.  It didn't involve manipulation or anything, but it did shake some of the faith I had in markets.  So I am more willing than ever to accept that markets often don't get it right and hurt people in the process.

I'm still finding my way as a recovering conservative.

Even when I was an unabashed conservative, I had some reservations about corporate behavior.

Edited by TwiceHorn
Posted
  On 7/17/2024 at 5:58 PM, Bozo_Casanova said:

One more thought on this topic, particularly for @Brisketexan @jimmyjazz @TwiceHorn and @Captainant - I am NOT giving the greed is good speech, or dismissing the role of avarice or the abuse of market power by producers and sellers during and following the covid crisis.  No doubt there was some of that, as there is in any crisis. But those events are typically highly localized to particular places or products or both,  and don't account for large scale monetary phenomena, and inflation qua inflation is a monetary phenomenon. 

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I don't disagree with your take, broadly.  What I am suggesting -- and clearly, this is a hypothesis still, as it will take years/decades to tease out everything that went on -- is that we all need to use our imagination a bit more and open our mind to the fact that COVID presented an economic situation that was unprecedented, chaotic, had multiple very influential inputs, and thus is really hard to model/pigeonhole.  In shorthand, COVID fucked with our collective brains, and decisions were made on the seller and buyer side that don't necessarily match up with prior/expected patterns of conduct.  And, they were widespread, so they were the opposite of "localized."

I don't disagree that a lot of the expected factors were ALSO in play (supply constraint of goods + increased supply of money, etc.).  It's a complex picture, I just think that some human greed factored in more than we might expect because 1) the opportunity was there, 2) the opportunity was on a massive (truly global) scale, and 3) the other side of the equation (consumers) had so much unprecedented info to process that they weren't as resistant as they otherwise would have been to such upward volatility.

All of that is to say that 10+ years from now, when enough trend lines have settled and an objective post-mortem can be done, I hypothesize we'll find that some unusually broad-based greed, met with little resistance from confused consumers, which begets even more predatory pricing to take advantage of it, played a larger-than-usual role in overall inflation.

Posted
  On 7/18/2024 at 12:02 AM, Incredulity said:
Thats the stupidest post you have ever made.  Christ, what a middling piece of half assed mushy lawyer bullshit.

Fair.
But it actually fits with my point - economic behavior is a half-assed mushy thing (the dismal science and all that), particularly in this case. The economic event that was COVID doesn’t lend itself to hard and fast proven rules across the board, because it was pretty damned black swan-ish. Weird things were in play, human psychology on a large and unusually monolithic scale among them.
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Posted

my MIL is bitching that Biden is causing her grocery bill to go up.

She shops at Publix.  Their profits are up 50%.  Did they do something to increase efficiency to improve their profits?  Fuck no, they jacked up their fucking markups. 

Posted (edited)
  On 7/17/2024 at 1:02 PM, Bozo_Casanova said:

Ok, but part of our response to the anomaly was (among other things) a huge money supply expansion. And when the money supply expands in an environment of constrained supply inflation is the result, 100% of the time. It’s the same thing that has happened over a much longer time span with college education. The buying power was available, and therefore the demand was available at higher price points. 
Of course sellers discovered the higher resistance range. Discovery is the function of the market. 

 

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PQ=MV, so, no, it does not necessarily follow that an expansion of the money supply leads to increased prices on a constant or even falling stock of goods/services. the big jump in the money supply happened in the first half of 2020. V fell 21% in the first quarter of 2020. inflation didn't really start firing off until spring of 2021, when real economic factors such as demand for oil rebounded from pandemic lows (while supply was slower to rebuild).

iirc, friedman thought V was static.  it's down 38% from its high in 1997

Edited by elfenix
Posted
  On 7/18/2024 at 5:17 AM, elfenix said:

PQ=MV, so, no, it does not necessarily follow that an expansion of the money supply leads to increased prices on a constant or even falling stock of goods/services. the big jump in the money supply happened in the first half of 2020. V fell 21% in the first quarter of 2020. inflation didn't really start firing off until spring of 2021, when real economic factors such as demand for oil rebounded from pandemic lows (while supply was slower to rebuild).

iirc, friedman thought V was static*.  it's down 38% from its high in 1997

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I don’t disagree with any of that. An expansion of the money supply doesn’t necessarily precipitate inflation, but it’s observable that a steady and sustained general (ie, across the economy) rise in prices is preceded by an expansion of the money supply. 
In the example above, V fell, the money supply expanded, things opened back up and the supply rushed in to compete for goods and services that hadn’t caught up. Pretty straightforward.
 

 

 

 

*Friedman was wrong, obviously 

Posted
  On 7/18/2024 at 2:42 AM, Gil Bang said:

my MIL is bitching that Biden is causing her grocery bill to go up.

She shops at Publix.  Their profits are up 50%.  Did they do something to increase efficiency to improve their profits?  Fuck no, they jacked up their fucking markups. 

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Publix has had net income around 7% of revenue every year since 2017.  That is OUTSTANDING for a grocery retailer.

They had a huge outlier "net gain on sale of equity securities" in 2022 which made 2022 an outlier at 5%. In the spoiler is the relevant section from their annual report and a link to the report. 

It has nothing to do with "jacked up their fucking markups".

  Reveal hidden contents

https://www.publixstockholder.com/financial-information-and-filings/annual-meeting-and-proxy

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Posted
  On 7/18/2024 at 2:42 AM, Gil Bang said:

my MIL is bitching that Biden is causing her grocery bill to go up.

She shops at Publix.  Their profits are up 50%.  Did they do something to increase efficiency to improve their profits?  Fuck no, they jacked up their fucking markups. 

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Oh boy, here . . . we . . . go!

Posted
  On 7/18/2024 at 5:22 PM, Bozo_Casanova said:

Employees own like 80% of the company right? 

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Publix Super Markets, Inc., commonly known as Publix, is an employee-owned American supermarket chain headquartered in Lakeland, Florida.[1] Founded in 1930 by George W. Jenkins, Publix is a private corporation that is wholly owned by present and past employees and members of the Jenkins family.[5] 

 

Publix - Wikipedia

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Posted
  On 7/18/2024 at 6:12 PM, ChickenSandwich said:

Publix Super Markets, Inc., commonly known as Publix, is an employee-owned American supermarket chain headquartered in Lakeland, Florida.[1] Founded in 1930 by George W. Jenkins, Publix is a private corporation that is wholly owned by present and past employees and members of the Jenkins family.[5] 

 

Publix - Wikipedia

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So...it's not publixly owned?

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Posted

Re: when is a company crossing the line? Probably when they're shifting their business strategy to ensure more outages happen so they can continuously increase rates

https://www.khou.com/article/news/investigations/centerpoint-bill-hurricane-beryl/285-9ae6118f-51f6-40b4-bd75-a9d8894cff11

"If I spend $1 on prevention, tree maintenance, cutting the trees down, I make two or three cents," Hirs said. "But if I spent $100 on disaster recovery, I'm going to make a significantly much greater profit. Therefore, we (utilities) kind of wait for disaster to strike."

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Posted
  On 8/13/2024 at 10:53 PM, LCHorn said:

What I keep reading is that the market is betting on 25 in Sept and another 25 in Dec

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I’ve been reading that too, and I don’t understand it in the same way I didn’t understand all the people who said 6 cuts in 2024. It seems like wishcasting.

i mean I guess they could, but why would they?

Posted

 

  On 8/14/2024 at 12:06 AM, Bozo_Casanova said:

I’ve been reading that too, and I don’t understand it in the same way I didn’t understand all the people who said 6 cuts in 2024. It seems like wishcasting.

i mean I guess they could, but why would they?

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I am with you. I am in the camp that we might see only 1 rate cut this year. Until unemployment numbers really start to move they are going to keep interest rates high as long as they can. 

Posted

Fundamentally, I agree a cut should not happen.  ZIRP isn’t healthy.
 

Seems to me the market set up for a freak out(short term sell off) either way.  If they cut it’s dog that caught the car, if they don’t it’s a temper tantrum.

 

 

 

 

Posted

I think a total cut of 1-2 points over time (18 months to 2 years) could be good, but the key is to then stay put. Zero rate policies are dumb (even if real estate focused businesses like ours benefit). 

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Posted (edited)
  On 8/14/2024 at 12:47 PM, Storm the Field said:

Headline CPI at 2.9% YOY. First time at 3.0% or below since March '21.

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  On 8/14/2024 at 12:53 PM, hornbri said:

 

I am with you. I am in the camp that we might see only 1 rate cut this year. Until unemployment numbers really start to move they are going to keep interest rates high as long as they can. 

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Yep- 2.9% is good enough for a symbolic move to loosen up real estate a little, but won’t get us to a second cut in 24.

  On 8/14/2024 at 1:02 PM, Incredulity said:

Fundamentally, I agree a cut should not happen.  ZIRP isn’t healthy.

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Word!

 

Troph agree with your second point below, but personally I’d like to see rates normalize for an extended period and we’re in a normal range already. I don’t know what the Fed will do, but assiming inflation continues to decline slowly it would be much better to have 400-450bps to play with in the event of a recession down the road. 

  On 8/14/2024 at 1:12 PM, troph said:

I think a total cut of 1-2 points over time (18 months to 2 years) could be good, but the key is to then stay put. Zero rate policies are dumb (even if real estate focused businesses like ours benefit). 

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Edited by Bozo_Casanova
Posted
  On 8/14/2024 at 1:22 PM, Bozo_Casanova said:

I don’t know what the Fed will do, but assiming inflation continues to decline slowly it would be much better to have 400-450bps to play with in the event of a recession down the road.

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I disagree (at least by degrees), but I’m also weary of using monetary policy in an attempt to steer the leviathan.  

Posted
  On 8/14/2024 at 2:40 PM, LCHorn said:

I disagree (at least by degrees), but I’m also weary of using monetary policy in an attempt to steer the leviathan.  

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But that’s what we have been doing. Look, I realize this is maybe not orthodox thinking at this point, but I view the last 15 years as an aberration. I just don’t see what’s healthy about the long term use of monetary stimulus to prop up or inflate asset prices. Historically normal interest rates will do us all some good I think. 

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Posted
  On 8/14/2024 at 1:22 PM, Bozo_Casanova said:

 

Yep- 2.9% is good enough for a symbolic move to loosen up real estate a little, but won’t get us to a second cut in 24.

Word!

 

Troph agree with your second point below, but personally I’d like to see rates normalize for an extended period and we’re in a normal range already. I don’t know what the Fed will do, but assiming inflation continues to decline slowly it would be much better to have 400-450bps to play with in the event of a recession down the road. 

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I would agree with you but the differential between before times and now is too great. We have to be closer to the before times to allow for the market to release some. I think you hold still at a max of 2% decrease over 2 years and then look to re-balance up a tad if needed so that you can cut later. My guess is we get 1.5% over time and then further declines in another recession but no additional increases. I think the fed has created an expectation of no increases absent extenuating circumstances. It's absurd but I think it's where it is.

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Posted
  On 8/14/2024 at 5:10 PM, troph said:

I would agree with you but the differential between before times and now is too great. We have to be closer to the before times to allow for the market to release some.

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Too great for what, though? With 5-6 months of inventory it’s a mild buyer’s market in Austin after how many years of being a seller’s market? Again I’m genuinely sympathetic to people who aren’t able to print money like they have for the last several years but this like a pretty smooth correction to me. 

Posted (edited)
  On 8/14/2024 at 6:11 PM, Bozo_Casanova said:

Too great for what, though? With 5-6 months of inventory it’s a mild buyer’s market in Austin after how many years of being a seller’s market? Again I’m genuinely sympathetic to people who aren’t able to print money like they have for the last several years but this like a pretty smooth correction to me. 

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where did I say print money?
 

I think a longer term rate differential (conventional 30 year fixed) between 2.75% and 7% is too much for the real estate market. Maybe I’m wrong. I think 5.5% to 2.75% is better. I realize fed funds is not directly related to mortgage rates but it kinda is. 

smooth correction for now but CRE isn’t in the best shape. I also think more mobility in the residential sector isn’t a bad thing. 

overall I’m not suggesting much to change now but I don’t think where we are is good for two years from now. 

 

Edited by troph
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