Deflation - An Economist's Illusion or the Real Deal?

Okay, so the Obama administration says we are in a period of deflation as opposed to the typical inflation we normally see. Deflation, a rather pathetic word that reminds me of a flat tire. But deflation should be great because it means prices are going down, not up. But there is one problem, some major price categories seem to be going up to me.

To understand what people are talking about let us take a look at the Ask.com definition of the term "deflation" and what it really means.

Question: What Is Deflation?

Answer: The definition of deflation is when asset and consumer prices continue to fall. This may seem like a great thing to consumers, except that the cause for deflation is a long-term drop in demand.

Unfortunately, a drop in demand means that a recession is already underway, with job losses, declining wages, and an ongoing decline in the value of your home and your stock portfolio. Deflation is a result of businesses dropping prices in a desperate attempt to get people to buy their products.

Officially, deflation is measured by a decrease in the Consumer Price Index. However, the CPI does not measure stock prices, which retirees use to fund purchases, and businesses use to fund growth. It also does not measure housing prices, instead using rental equivalent. This often lags home price declines, and underestimates deflation in the CPI.

To combat deflation, the Federal Reserve executes an expansionary monetary policy. It reduces interest rates, and increases the money supply in an attempt to jump-start economic growth. In addition, the government can offset deflation with expansionary fiscal policy. It can put more money into circulation by lowering taxes, increasing government spending, and incurring a temporary deficit to do so. Of course, if the deficit is already at record levels, that tool may no longer be available.

Like inflation, deflation is very difficult to combat once it is entrenched. As businesses and people feel less wealthy, they spend less, reducing demand further. Prices drop in response, giving businesses less profit.

I don't know about you but it seems to me gas has started rising again. In fact the price per barrel of crude oil, which impacts on many supplemental products from transportation to fertilizer, has increased 90% since the beginning of this year alone and now stands at about $62.00 a barrel. No wonder OPEC did not reduce the amount of oil produced this week when the price now is above the 2007 prices in place before the outrageous price spiral.

Taxes are certainly up, especially state and local taxes, and you can bet the aftermath of the incredible federal spending will be substantial future price increases. Obama has already set a new record for the annual federal deficit and the stimulus and bailout programs are just starting to spend money with multi-billion dollar bailouts waiting in the wings for a bankrupt Chrysler and General Motors and a teetering AIG insurance giant.

A lot of food prices are up or they have cleverly repackaged items so we are paying the same for less goods, thus really increasing the price. Organic foods are not dropping either even though there has been a push to be healthy and sales are up.

Certainly restaurant prices do not seem to be falling. In fact with the addition of designer coffee in McDonald's some prices are actually going up as well. When there are "specials" it usually means you get a silver dollar sized hamburger instead of the meat eaters delight we've grown to love.

Medical and health insurance rates continue to spiral in spite of the Obama efforts to overhaul the health care industry. After a decade of double digit annual price increases this year prices are expected to drop down to just a 7% increase. Only in our nation's capitol could a 7% increase be treated as a drop in prices.

As the definition said, two of the most important cost factors missing from the deflation figure are stock prices and housing prices. No one will question that these two have dropped with stocks, and your retirement funds, still about 40% less in value than a year ago.

Housing prices have also gone down, a lot in some areas. But the national market tends to be local market driven so one area may have no loss in value over the recent years (2006 - 2009) while a neighboring area could have substantial loss of value.

Take, for example, the case of Coltons Point. The Washington, DC metro area including Northern Virginia and Maryland has suffered an overall loss of value of about 24% the past year. However, a Washington Post survey of all home sales in the metro area the past year shows there are a few locations where prices have actually increased. One of these unique areas is the riverside resort of Coltons Point where values have increased by over 3% the past year.

Still nationwide stock and housing prices have dropped but neither is even factored into the deflation model which makes me wonder just what value is the economic news on deflation? It is distorted since it missed two of the biggest cost factors. The Consumer Price Index which is the basis for determining inflation or deflation is often a lagging indicator of economic performance much like unemployment figures. Conversely the stock market is a forward indicator of economic growth having already factored in jobs reports before they are even released.

The Labor Department figures on new unemployment claims this week dropped well below analysts expectations for the 2nd time in three weeks yet the unemployment rate climbed to 8.9% and the lagging figure could reach 10% later this year even if the economy is in a full recovery cycle as the Coltons Point Times and more recently other financial news services are beginning to predict.

In light of all this conflicting information and simultaneous upward and downward economic pressure my advice is for you to ignore deflation and inflation reports and the endless speculation about them as it is something the Federal Reserve must manage and we the people have no role in what the Federal Reserve does with our money anyway.

The New Country Kid - Taylor Swift - Savior or Destroyer of the Country Music Genre?

Believe it or not the first country music recording session in history took place just 88 years ago although the musical genre had much deeper roots. In 2007 country music hit a peak in album sales which fell off the chart in 2008 when sales dropped 24%. Did this signal a death knell for the industry? Hardly.

But it did signal that once again it is time for country music to rediscover itself so it can be discovered again by the people of America. As sales were plummeting in 2008 there was a glimmer of hope with Taylor Swift, the new kid on the block, selling four million albums.

There are a lot of complications facing the country industry just like many other industries. Greed has been a dominant force. As people get more sophisticated and the Internet more accessible and more powerful our world has changed. Newspapers are rapidly becoming a dinosaur of the past as the publishers forgot about journalistic integrity and became servants to the advertisers.

Television and radio stations and networks face the same dilemma as Internet choices for news, entertainment and movies caused traditional stations to increase ad rates and frequency to the point the public got fed up. Formula TV shows and radio music came to dominate the airways and quite frankly, people know better and expect more from the industries.

Just a couple of years ago the major record labels paid over $35 million in fines for the newest form of payola to radio stations and 600 stations have been under investigation for taking the bribes. Does that sound like a formula for a healthy industry?

But worst of all the massive mergers and acquisitions in the radio industry have left us with a vast number of people-less radio stations as computers send pre-recorded play lists to their automated network affiliates meaning there is no chance for relating to a local audience which is what made radio popular in the first place. When greed dominates destruction is not far behind.

Radio managers are under pressure from advertisers to play certain types of songs because holding the audience is all about big bucks. Thus the top forty have little relationship to consumer desires nor to the quality of the music but simply to the latest fad on the air. When people have no choice they find a new way to get control and that way is the Internet.

So far the Internet has provided the creative and experimental pool of talent shunned by the record labels and radio stations and the Internet set in motion the practice of giving away music to get people to buy music. The Internet also did what the labels refused to do which is price single records so people could afford them like in the 1960's and thus the iPod generation and music downloads was launched.

Think about it. The albums being released by labels contained maybe one or two hits and a bunch of junk yet were priced in the $12.99 to $15.99 range, an equivalent to selling singles for $1.29 TO $1.59 except you had to buy every single, good, bad or otherwise on the album to get the one song you wanted. The record labels gave away the market to Apple and their iPod who priced a single song at .99 cents and you only paid for what you wanted. Even more, the Internet allowed you to sample the songs and see videos.

Duh...

So what does this have to do with our country kid, Taylor Swift? Right now she is the dominant new face in the music world and Taylor has become a superstar in the world of pop as well as country. I mentioned she sold more albums last year than any artist in any genre. Taylor fought her way up through the country music industry to make it unlike stars such as Carrie Underwood who was the product of the TV sensation American Idol demonstrating that in spite of the collapse of the broadcast industry there are still ways to become known overnight. Most significant, neither was a product of the controlling force in music and radio, the major record labels.




Taylor Swift belies her age, beauty and perceived vulnerability with a wisdom and sense of adventure not seen in decades in the industry. She took the hard route from a small town in Pennsylvania to the studios of Nashville thanks to her own determination and the dedication of her mother. She spent two years working with song writers in Nashville after being the youngest writer ever signed by Sony at just 14 years of age. She peddled demos to major and independent labels constantly on her own.

When she was performing at a writers showcase at the legendary Bluebird Cafe she was spotted by Scott Borchetta who was considering forming a new record label, Big Machine Records. She became the first and most successful artist of the label after turning down an offer from a major label that refused to let her sing her own songs.

Now, that brings up one of the many flaws in the Nashville scene. Greed has become such a dominant force that there is a practice that made a mockery of what used to be a good Nashville thing. Once upon a time there was really a style of collective song writing where several people would contribute to the development of a new song. This collaboration technique brought many great minds and talents together.

But somewhere along the way the industry got lazy and greedy and the publishing rights and song writing rights that used to go to the writer were taken away if they wanted their record to be used. Co-writing and publishing credits and royalties were demanded as a price for being on the record and still are being demanded to this day whether the co-writer makes any significant contribution to the creative work or not. It is a form of legal corruption that has left many a talent the victim.



Another corrupt practice that flourished was hiring A&R people as consultants when submitting demos to the major labels including their own. This conflict of interest was no less disgusting than the payola being undertaken by the labels and stations.

Taylor did not wait for things to happen as at age 15 she launched her career by becoming the most successful country artist to use the Internet and MySpace to introduce herself to the world. She now has over 230 million plays on her web site and that was critical to her success. Apparently young Taylor Swift was not seduced or caught up in the world of Nashville and major label practices and she joined forces with Scott at Big Machine Records to put them on the map.

Every step of the way she defied the odds, stayed free of the traps and preserved her own integrity as she exploded to the top of the charts. By all standards this curly haired country chick should be classified as one of the modern country outlaws for breaking the mold like Willie Nelson, Waylon Jennings and Jesse Colter did nearly 50 years earlier. Fed up with the Nashville establishment, they did their own thing.

If Dolly Parton and Reba McEntire have been the innovators and early rebels of contemporary country music then young Taylor Swift is their new standard bearer and should be the poster girl of the country music industry. All three have refused to give up to the temptations of formula music, the conventions of major labels and the control over artistic creativity by the labels and producers.

To survive country music always has to change when it becomes stagnate. From the old time music at the beginning of the 20th century hillbilly became hillbilly boogie then bluegrass. Boogie, honky tonk, blues, singing cowboys and gospel all became elements of country music as it evolved. Once it was called folk then country and country western.

Elvis ushered in rockabilly which spawned Buddy Holly's Lubbock Sound. Ray Charles introduced country soul while out west Bob Wills and Lefty Frizell merged honky tonk and western swing and brought us the Bakersfield Sound. After the British invasion the Nashville Sound merged with rock 'n roll to give us another new genre called Country Rock with The Byrds, The Marshall Tucker Band, The Allman Brothers and The Eagles.

The Country Outlaws kept it growing as Country Rock and Country Pop traded leading roles as stars like Dolly Parton, Rosanne Cash, Linda Ronstadt, Juice Newton, Alabama, Hank Williams, Jr., Brooks and Dunn, Garth Brooks, Dwight Yoakum, Shania Twain, Faith Hill and Keith Urban kept expanding the genre by bringing it back to rock. At the same time Olivia Newton John and John Denver were folding Country Pop into the cross over arena for country stars.

Today exceptional stars remain extremely powerful. Last year six of the top ten artists on radio were diverse country stars. With Rascal Flatts 2nd, Toby Keith 3rd, George Straight 5th, Tim McGraw 6th, Taylor Swift 8th and Alan Jackson 9th country music dominated the radio airways. Add to them Kenny Chesney, Brad Paisley, Sugarland, Keith Urban, Carrie Underwood and Faith Hill with their concert success and you find an industry with potential to make the changes necessary to survive.

You see, country music remains strong when it is vital, when it is creative, when it pioneers new sounds and when it is relevant. Taylor Swift now stands as a young but seasoned survivor who can once again breathe new life into the industry and help lead the natural change in the genre as worn out record labels and radio give way to the new technologies and techniques of the future. Four years ago a 15 year old kid created a web site on MySpace that has now produced over 230 million plays of her music. At just 19 she is a pioneer of the future of country music.

Whose Next To Be President?

Okay, we have now settled in to Obama being our president so whose next should something happen to keep him from performing in office? Well the Presidential Succession Act of 1947 plus amendments addresses that issue and the line of succession is established.

Of course everyone knows Joe Biden is 1st in line but what about after him? Well next is our Speaker of the House Nancy Pelosi, the first woman to ever be second in line for president. Of the 18 established successors five are women which is probably a new record.

After Biden and Pelosi comes Robert Byrd, President pro tempore of the Senate and the oldest living member of the Senate at 92 years old.

Then comes Secretary of State Hillary Rodham Clinton meaning two of the top four are women with one nonagenarian (Byrd) between them. I think two of the top four being women is also a first.

The fifth in line is our troubled Treasury Secretary Timothy Geithner. The rest of the list is as follows. As you can see, nothing better happen to President Obama.

Constitutional Order of Presidential Succession

1. Vice President & Speaker of the Senate Joe Biden
2. Speaker of the House of Representatives Nancy Pelosi
3. President pro tempore of the Senate Robert Byrd
4. Secretary of State Hillary Rodham Clinton
5. Secretary of Treasury Timothy Geithner
6. Secretary of Defense Robert Gates
7. Attorney General Eric Holder
8. Secretary of Interior Ken Salazar
9. Secretary of Agriculture Tom Vilsack
10. Secretary of Commerce Gary Locke
11. Secretary of Labor Hilda Solis
12. Secretary of Health & Human Services Kathleen Sebelius
13. Secretary of Housing & Urban Development Shaun Donovan
14. Secretary of Transportation Ray LaHood
15. Secretary of Energy Steven Chu
16. Secretary of Education Arne Duncan
17. Secretary of Veterans Affairs Eric Shinseki

18. Secretary of Homeland Security Janet Napolitano

Take Me Now God! - Excerpt #2

Epilogue

She’s right you know. I’m not compatible with humans. Hell, half the time my damn dog even loses it’s loyalty. Every time I try to relate to anyone, I just seem to blow it. Guess the only thing compatible with me is my cactus, and lately some of them have even taken to dying.

She once asked me if I ever considered suicide. Who wouldn’t after what I’d seen. But I said no. So she rephrased the question. Maybe I should consider suicide. That’s why I decided to end it. Seems the only way to protect the human race from further contamination by me. What did she call me? Oh yeah, the Devil Incarnate. Better known as the evil Prince of Darkness.

Once wrote a book that talked about the Prince. Guess she finally figured anyone that knew as much about the Prince as I wrote about must be speaking from first hand experience. She might be right I reckon. Stands to reason that the Prince would know all the details of Jesus’ life. He was there tempting him in the desert, trying to seduce him with riches, power and women. And finally, when he gave up on Jesus, he was there nailing him to the cross.

That could explain what I saw. All the time I thought I was the reincarnation of Joshua, the friend and scribe of Jesus. Never crossed my mind I might just be the Prince of Darkness. Took the Ex to wake me up. Her insights take all the fun out of the end of the world.

So this must serve as my final will and testament. My great escape. This world has hit such a subterranean level of degradation, that anywhere can only be better. The final plane ticket to Neverland. More like a subway death ride in NYC. Yes, final ticket out. They might call it a “Living Will” or something like that, but how could a living will be serving the dead? Never did figure that one out.

That might have been my problem, always trying to figure things out. Got me in more trouble than I could ever imagine. That and telling stories. When I was a kid, my grandfather and a bunch of other old men used to tell me stories, for hours.

They made me laugh. They made me cry. They even scared the shit out of me. But they always made me feel. Nothing else ever did I guess, except those old stories. It was a gift. Made people feel good. Made some like me feel for about the only time.

So there I was, just a kid, and already burdened by twin curses. Curses, by the way, that would haunt me the rest of my life. Figuring things out and telling stories. Yes, maybe she was right, maybe I was the son of Satan.

DON’T SEEM RIGHT TO ME

I don’t want the world to know
that I’m tired and feeling low
after all the miles I’ve seen along the way

For I’m not proud of the role
that I played as I did go
and I can’t imagine this is how it’s supposed to be
somehow this don’t seem right to me

But then I’m just a fool and fools
don’t really know what they’ve got
seems like they’re blinded by the moment
it don’t matter what they’ve sought

When they finally take the time
to stop and see just where they are
seems they never really
got so very far

Here's Susan Boyle Again!

Susan performing in the semi-finals of the Britain Idol program. She made it to the finals with this performance. Go Scotland...

Summer Comes to Coltons Point

As the last lingering effects of the long cold winter and spring fade away it is the beginning of summer here at Coltons Point and we are well on our way to enjoying one of the most beautiful transitions to summer in years. For the past week it could not have been more beautiful as you can see from the photos shot around Coltons Point this Memorial Day weekend.

It is a time to remember our veterans, those who fought to give us freedom, and that fight began right here in Coltons Point when the two ships arrived from England 375 years ago and set in motion events that would result in a war of independence from England.

Just 125 years ago Coltons Point and St. Clement's Island were being hailed as one of the best resorts on the East Coast as the steam boats brought holiday seekers from Baltimore and Washington, DC. Now they drive in cars to transform this ancient old fishing village into a summer resort that at times seems to be like the Long Island shore of the Hamptons.

Nearly four centuries have passed since the ships arrived yet life here at the Point is as vibrant, hopeful and protected as when it began. Sir George Calvert, Captain John Smith and Father Andrew White all shared the same dream to build the New World of America into the best nation in the world and the basis for being best was the freedoms guaranteed to our citizens.

No freedom was more important than the freedom of religion which was the foundation of the St. Clement's and Coltons Point landings. No where in the world offered such guarantees to all citizens and to all religions.

This freedom was incorporated in the grant given to the Calvert family to settle Maryland. It was first tested in George Calvert's first colony at Avalon in Newfoundland which he acquired in 1621. It was refined in 1634 when the Calvert ships, the Ark and the Dove, brought the English colonists to America. The dream continues to this day.

We hope you join us in honoring those brave men and women who offered and often gave their lives so that we could enjoy the life, liberty and pursuit of happiness we now take for granted.

Rapping with VP Biden - Next in Line for Presidency

In order to protect the Vice President from making one of his legendary blunders we are going to conduct our interview by asking him questions but only allowing him to respond with facial expressions, no words can be used. The White House should be much more at ease with this technique as no international incidents should result.

Mr. Vice President, what do you have to say about your connections to the credit card industry?

No comment huh. Well how about the fact your son is on their payroll and was when you were championing the bill to strip consumers of their rights on behalf of the credit card giants?

Well excuse me. So how is it being in the shadow of the much younger Barack Obama?

Do you feel the same way about most other Obama appointees?

Could you pelase help us understand how you are communicating with the President when you two always seem to be passing in the night?

What do you think about your predecessor Dick Cheney?

Do you have the ear of the president when it comes to our nation's business?

How do you get along with Hillary now that she travels the world grabbing headlines and you seem to have vanished?

Since you no longer have to commute from Delaware how long is your commute to your office now?

What do you think of that French President's wife?

2009 Preakness Update

She came, she saw, she conquered, but not by much in the 134th running of the Preakness. The race was all about the fabulous filly Rachel Alexandra who became the first filly in 85 years to win the Preakness. Under Derby winner jockey Calvin Borel she became the first horse to come from the 13 post position to win.

But the little colt Mine That Bird, the 50-1 upset winner of the Kentucky Derby once again came from last place and nearly caught Rachel losing by one length even though the Bird got caught behind a bunch of horses heading around the last turn. The little guy has the heart of a lion.

As we said in our preview article the change in the rules to not allow fans to bring their own booze could have a dramatic effect on the crowd. It did. In 2007 attendance was 121,263, in 2008 112,222 and in 2009 it dropped to 77,850, the smallest crowd since 1983, 26 years ago.

On the other hand betting was up from last year with $59 million wagered compared to $45 million last year. In other words, the attendance was down 30% while the betting was up 30% and in the end it is all about betting for the track to make money so it looks like driving out the drunks was a good thing.

Now compared to the Kentucky Derby the Preakness atendance and betting are about one half of the Derby numbers with the Derby drawing 153,563 fans and $104.6 million wagered this year.

Mine That Bird, the Derby champion had a different jockey on it than the Derby as the jockey chose to ride Rachel instead. Calvin Borel did the unthinkable, not riding a Derby champion and jumping to the filly. This has never happened before. Now he may not ride any horse in the Belmont.

Mine That Bird again suffered a humiliation as the replacement jockey who almost won the Preakness, Mike Smith, now says he will not ride the Bird in the Belmont. Since the original jockey, Corel has to wait and see if Rachel is going to enter the race he may get shut out when he could have become the first jockey to win the triple crown on different horses.

Once again there will be no triple crown champion. It will now be at least 32 years since the last champion, Affirmed, back in 1978 edged out Alydar in all three races, the most exciting finishes in history.

In Coltons Point the Preakness party moved to the Emery waterfront from the Gass Gang and after the spectacular display of hats on Derby Day, the black eyeed Susans were prominent on Preakness Day hats as the pictures show.

Guests travelled from as far as Mexico while Homeland Security Border Agents were brought in to maintain order. A good time was had by all as the two pools paid out to 12 winners, a new record. Stay tuned for a Belmont preview.

Take Me Now God! Review

What A Novel Idea.

Now I figured since this is the only ad free Internet newspaper making it either a far sighted business plan or just plain stupid, maybe you wouldn't mind if I deviate from my usual objective hard news and give you a sneak peek at one of my recent but not published manuscripts. If I am not overwhelmed with bad comments after this peek I will be posting excerpts in the CPT and you can be like a focus group if you dare to send in comments. Here is a reviewer's look at my latest book, Take Me Now God!.

TAKE ME NOW GOD!
a novel by Jim Putnam

So what happens when one pursues every course of self-enlightenment and discovery available to people with too much time on their hands? And what happens when they have exhausted their search through religion, cults, mysticism, spiritualism, Native American cultures, prophecies, politics, the psychic world and beyond?

At the journeys end they have only one option left. "Take Me Now God!" A demand to the Creator, Source, or God, no matter what you choose to call him or her, for immediate salvation. As the author says, "In the beginning was the Word, and no one listened."





In the first chapter of this "unauthorized autobiography", he laments; "She's right you know. I'm not compatible with humans. Hell, half the time my damn dog loses it's loyalty. She once asked me if I ever considered suicide. Who wouldn't after what I'd seen. But I said no. So she rephrased the question. Maybe I should consider suicide. That's why I decided to end it."

Beginning with the opening Post Mortem, the author rushes to dispose of all that is important in his life so God can take him now. And the reader is taken on a hilarious journey through the world of religions, the metaphysical, spiritual and more leaving a trail of shattered searches for inspiration and failure to find the hidden meaning in life.







Excerpts:

True love: "I was star crossed from day one, double crossed by day two, and nailed to the cross by day three."










The Illuminati: "The New Age of enlightened beings - the Illuminati. Often caught up in their own delusional hysteria. Demanding to be heard. Demanding to be followed. Judging others as they don't want themselves judged. Know how to tell the difference between a fraudulent Illuminati and enlightened one? You can't."

The Rapture: "There are a lot of interesting things in the spiritual world, but of all of them, the Rapture wins hands down. Think about it, the optimum lift off. The ultimate high. No more bills. No more taxes."

Creation: "Ever wonder about creation? I do all the time. Seems the Bible can account for about 6,000 years, back to the time of the big surf, or flood. The Hopi and Mayan Indian can account for another 250,000 years, including the mystic kingdom of Atlantis. Dinosaurs are 60-120 million years old. The Grand Canyon is 2 billion years old. Earth 4 billion, while the universe as we know it is 26 billion years old. I figure that is more than enough time to accommodate just about every version of creation there can be."






Psychic Channels: "I want real proof. Give me the winning numbers to next week's Powerball lottery and I'll be a true believer for the rest of my annuities. Those damn lotteries. Why is it there are only a few thousand possible combinations of winning numbers, yet the odds of winning are 12 million to one? Where does that math come from? Pythagoras in a drunken stupor?"

Native Americans: "I always had an affinity for them. Was the only kid that ever volunteered to be the Indian. Didn't bother me to get killed in most battles. Every once in a while we played Little Big Horn and I kicked some white ass."

Genetic Manipulation: "I've had suspicions about it since I was 5 years old, when I first tasted cooked spinach. That shit had to be genetically engineered poison. And don't you think it made me more than a little suspicious about my mother, who was trying to kill me with it?"

Ancient Prophecies: "There is nothing I want more than to believe the ancient prophecies. After the mess we have made of the Earth, we deserve no less than the catastrophic earth changes that have been foretold. It would be a fitting tribute to our self-aggrandizing ego trip."

The Past: "I'm with Einstein, like I said before, on that time - space continuum bending time. Past, present and future all take place at the same time. I haven't even committed all my sins of the past. They're happening as we speak. Same with the sins of the future. Don't need to wait, I'll just do them all together. Things get complicated when you are a free thinker."

From dogs to demons, Christians to pagans, Take Me Now God! takes one on a wild ride through the life of a searcher, albeit, one who came up empty handed but with no regrets.