I´ll Bet The BLS Will Miss This One....

I just want to remind you that i´m with Mish on Inflation ( see Inflation: What the heck is it? ). I also want to highlight a world class rant from Aaron Krowne on this topic. The Truth About Inflation .

But when you go with the "official" definition of inflation ( rising prices ) and take the history of BLS calculations or how Tim from The Mess That Greenspan Made has described it "Guantanamo-style torture of the inflation statistics by government economists" into account i doubt that they will adjust for such "complex" things like smaller box sizes .... :-).

Bekanntermaßen sehe ich die Definition von Inflation wie Mish ( siehe Inflation: What the heck is it? ). Darüberhinaus möchte ich Euch diesen wirklich gelungenen Rundumschlag von Aaron Krowne zum Thema ans Herz legen The Truth About Inflation .

Wenn man aber der offiziellen Sprachregelung ( steigende Preise ) folgt und dann die äußerst "kreative" oder wie The Mess That Greenspan Made es ausdrückt "Guantanamo-style torture of the inflation statistics by government economists" in die Betrachtung miteinbezieht habe ich starke Zweifel ob diese Preiserhöhungen "enttarnt" werden...... :-)


Thanks to Wall Street Follies

Smaller Box, Similar Price
WSJ: Many food manufacturers are retooling assembly lines to produce smaller versions of everything from cereal boxes and ice-cream cartons to mayonnaise jars, margarine tubs and cheese packages. By giving consumers less for roughly the same price, food executives hope to keep consumers from moving to cheaper brands.

Consider General Mills Inc.'s Cheerios cereal. When the American Farm Bureau Federation sent members into supermarkets to conduct its second-quarter food-price survey, the 10-ounce box of Cheerios had vanished. So the volunteer shoppers turned to the box nearest in size, 8.9 ounces.

The smaller box cost $2.98 on average, up from $2.86 charged by the stores for the bigger box a year earlier. On a per-ounce basis, the retail price of Cheerios jumped 17% to 33.5 cents in the second quarter from 28.6 cents a year earlier.

General Mills spokesman Tom Forsythe said moves by the Minneapolis company can't alone explain the big retail-price jump. It's possible that supermarkets, which set the retail price, are taking advantage of an opportunity to add some margin of their own.

David Mackay, Kellogg's chief executive officer, said in an interview last week that his company has shrunk about 10% of its U.S. breakfast-cereal boxes by an average of 2.4 ounces. With the company's input costs climbing 9% this year, Mr. Mackay said he doubts grain prices will ever drop back to where they were just a few years ago.

The Biggest Dollar Diversifiers Are American / S. Jen

While i not agree that the US $ is sound Stephen Jen puts up some excellent points why the Greenback is facing some "hidden" headwinds. The obvious problems like a slumping US economy, the diversification from Foreign Central Banks away from the $, deficits etc are well known ... He points out several others reason why the $ is losing faith..... He blames the Fed and its "bailout" mentality under Greenspan and probably under Bernanke.... On top of this it isn´t helping the $ when the Fed is the only Central Bank that is targeting the useless "core rate" when others are fighting the headline CPI. Both are not very successful...... But the key point is that the big guys are fleeing or as Wall Street and others would say "diversifying" out of the dollar holdings at a accelerating pace........Make sure you read also this piece from Brad Setzer

Obwohl ich nicht mit der These übereinstimme das die Fundamentaldaten für den $ immer npch gut sein sollen macht Stephen Jen hier einen sehr guten Job und weist auf einige nicht so offensichtliche Punkte hin die einen Teil der aktuellen Dollarschwäche erklären. Die offensichtlichen Probleme des $ wie eine abschmierende Volkswirtschaft, Diversifikation der Notenbanken aus dem $, Defiizite usw. sind inzwischen selbst auf CNBC angekommen. Jen aber arbeitet andere nicht so offensichtliche Punkte heraus, wie z.B. das die Fed dank Greenspan zurecht eine Mentalität unterstellt das im Falle einer Krise immer die Geldschleusen großzugig geöffnet werden. Dazu kommt dann noch das die Fed die einzige Notenbank ist die lediglich die alberne "Core" Inflation "bekämpft". Der wichtigste Punkt aber ist das die Amis selbst aus dem $raum flüchten oder vornehmer ausgedrückt "diversifizieren"..... Kann Euch in diesem Zusammenhang noch empfehlen das von Brad Setzer zu lesen.

The dollar is very weak relative to most currencies. While cyclical factors have played an important role, I don’t believe that cable is trading at 2.05 and EUR/USD at 1.38 due only to these rather innocuous cyclical factors. Other structural factors may be at play. One possible structural reason for the dollar to have had a gradual downward trajectory since 2002 is, I suspect, portfolio diversification by US real money managers.

Cyclical explanations for the weak dollar
There are ample cyclical reasons for the dollar to have underperformed recently. First, the US economy is weaker than almost every other economy in the world. Though we may have seen the trough in the US business cycle in 1Q, the recovery trajectory is likely to be modest, after a surge in 2Q. The rest of the world, however, continues to surprise to the upside, showing no sign of lagged effects of the softness in the US economy from 2Q06 to 1Q07. No longer do investors doubt the ‘de-coupling’ thesis. Monetary policy between the Fed and other central banks is in direct correspondence to this expected divergence in economic growth. As a result, the dollar may sag as long as other central banks remain in motion.
Second, in addition to these central case expectations of the US and the rest of the world, due to the problems with the sub-prime market and the housing sector, the risk to the US outlook is biased to the downside, with limited spillovers expected for the rest of the world. Investors have the collective memory that the Federal Reserve eased interest rates by 75bp in 1998 in response to the failure of LTCM, despite the fact that the general macro conditions were positive and inflation was drifting higher. With this track record, investors believe that the Fed may have difficulties raising interest rates if the sub-prime problem persists.
Third, higher oil prices are positive for EUR/USD. Not only do oil exporters have a marginal propensity to consume European goods that is twice as high as that for US-made goods, but the fact that the ECB targets headline inflation while the Fed targets core inflation may also have encouraged investors to expect EUR/USD to rise with oil prices. ....

Diversification by US real money accounts
While the cyclical factors I mentioned above may help explain why the dollar has depreciated recently, they don’t give a satisfactory explanation as to why the current level of the dollar is so extremely low. In retrospect, since 2002, the dollar has had its ups and downs, but the underlying trend has been downward. I have long argued that the dollar is structurally sound, and provided reasons (such as the ‘de facto dollar zone’, valuation, geopolitical hegemony, dominance in the global financial markets, etc.) justifying why the dollar’s hegemony will be preserved. I am still convinced by many of my arguments. However, I am now taking more seriously the thesis that US real money investors have been steadily diversifying away from USD assets since 2003. ...The dollar may thus still be structurally sound, but not as sound as I had thought.

US real money accounts consist of four key categories of funds: mutual funds, private pension funds, state and local pension funds and life insurers. The Fed’s Flow of Funds data track the sizes of these funds. As of 1Q07, the total assets under management by these four categories reached US$20.7 trillion, up from US$12.6 trillion in 1Q03. At more than US$20 trillion, real money under management in the US is close to four times the size of the world’s official foreign reserves. Any signs of diversification by these real money accounts would have great implications for the dollar. While I don’t have a breakdown of the asset allocation of all four categories, the Boston Fed’s Monthly Mutual Fund Report shows that mutual funds’ allocation to international equities has risen from around 15% in 2003 to 22.5% now. This trend diversification is gradual but determined.

If we apply this outward investment allocation ratio to the total stock of mutual funds, the cumulative outflows of mutual fund investment since 2003 are around US$400 billion. But if we apply this outward investment allocation ratio to the entire stock of real money accounts, the cumulative outflows since 2003 total US$1.16 trillion: US$190 billion in 2003, US$295 billion in 2004, US$324 billion in 2005 and US$352 billion in 2006. These outflows are indeed massive.

Bottom line
Contrary to popular presumption, US real money mangers are the biggest dollar diversifiers, not the Asian central banks. Controlling assets that are four times the size of the total global official foreign reserves, US real money managers have been steadily diversifying out of the US since 2003. My calculations show that cumulative outflows may have totaled US$1.16 trillion in the past four years. This may help explain the downward drift in the dollar in recent years, and why the dollar is so weak now.

Bernanke Vs The CEO Of Nestle On Food Inflation

Who do you believe? I´ll go with the expert from the world largest food company and not with the spin masters from the FED who eats at the CPI cafe.

Wem würdet Ihr glauben? Ich halte mich da doch eher an den Experten des größten Nahrungsmittelkonzernes der Welt und nicht and den in einer parallelwelt lebenden FED Chef der im CPI Cafe essen geht....

Thanks to Wall Street Follies

This is taken from Herb Greenberg.

The head of Nestle doesn't see food inflation as a short-term issue, but part of "structural" changes in his world. So much for this "core inflation is in check" mumbo jumbo. Check, please.

At the same time Bernanke is living in his own "core world" and wonders why the inflation expectation are imperfectly anchored.....

Zur gleichen Zeit fabuliert Bernanke weiter über seine eigene "core" Welt und wundert sich das die Inflationserwartungen nur suboptimal verankert sind....

"Delivering a speech to the National Bureau of Economic Research, the Fed chief said "changes in energy [and food] prices should have relatively little influence on 'core' inflation, that is, inflation excluding the prices of food and energy."

Make sure you read Barry Ritholtz nice rant Un-frickin-believable

PIMCO-Gross "How We Learned to Stop Worrying (so much) and Love “Da Bomb”

good and long ( this is already a summary) piece from pimco. please keep in mind that when you read this "bullish" (except for us asssts....) piece from gross that he is a bond guy. we will see how the outlook will be when we will see "events" like (hedge funds, derivatives, failed lbo´s , popping bubbles in almost every credit market etc) .... we havn´t seen a real stresstest yet.....

guter und langer beitrag von gross. bedenkt bitte bei der lektüre das er die sicht eines anleihemanagers hat. zudem könnte einige der annahmen einem ernsten test unterzogen werden wenn wir wohl nicht zu verhindernde "ereignisse" im kreditmarkt (hedge fonds, derivate, unternehmenspleiten etc) gegenüber stehen. ..den wirklichen stresstest haben wir bisher noch nicht gesehen.....

...For the purpose of this Outlook, “da bomb” is globalization and all of its wondrous benefits – high growth, low inflation, accelerating profits, and benign interest rates. For that matter, you can compile a short list of critical factors that have aided and abetted globalization’s surge during the past decade or so: the information technology revolution, favorable government policies including inflation targeting and lower taxes, a shift to freer low cost markets in China and India, as well as moves towards deregulation and lower trade barriers worldwide. ......


These have been PIMCO secular themes for years now, but somehow after correctly analyzing the evolution of “da bomb” we never stopped worrying about it and how it might end; like Slim Pickens headed for his mushroom cloud destination 20,000 feet below, we were giddy, but subconsciously pretty darn worried. We foresaw rising global growth, but said it would be “moderate” due to a lack of aggregate demand. We spoke to a “stable disequilibrium” which referred to good times now, but maybe bad times on the horizon, and emphasized not the stability but the potential downside arising from trade deficit imbalances, U.S. debt buildup, and resultant financial flows. Those worries were enough to tilt portfolio constructions towards a more U.S. centric housing led slowdown which we hit right on the money, but they steered us away from a more global orientation where the rest of the world continued to experience 5%+ growth rates and to dominate financial market trends. ........

Secular Review
Globalization. Technology. Freer markets/financial innovation. Favorable public policy. These are “da bomb’s” critical components and we could spend paragraphs expounding on the influence of each. ....... accelerating global growth; disinflation; increasing returns on equity capital; and low real interest rates

......Interestingly, each of these trends has a common thread, as do the components of “da bomb”: The ascendance and dominance of capital vs. labor. Add a billion or so potential workers to the global labor force, blend in a technology S curve acceleration, combine these with deregulation, lower taxes, and free trade, and you have a recipe for accelerating returns to capital and diminishing returns to labor. Higher stock prices, lower inflation, declining interest rates and importantly a rather low volatility environment for both economic growth and asset prices have resulted. It’s known as the “great moderation” in economic circles, assisted not insignificantly by what has been called Bretton Woods II, a recirculation of surplus reserves into consuming nations that has promoted growth and lower interest rates – no mean feat in historical context.


What’s New?
Does this virtuous circle favoring capital at the expense of labor continue? We see nothing to stop it absent a global financial bubble popping of sorts, an accelerated decline of U.S. housing in the short run, or a U.S.-led trade policy reversal that could precipitate counter-attacks from Asian exporters. These three are not “black swans” as they say. Asset bubbles are a near inevitable result of attractively financed leverage in search of a limited array of financial assets – and the exuberance that inevitably accompanies them. In turn, if U.S. housing declines soon morph into the consumer sector, the belief in a U.S.-centric global economy will reemerge, and a cyclical argument for slower global growth will accompany it. Anti-trade legislation may or may not become a reality.....


A bigger threat to asset markets however, comes not from slower economic growth in the short-term, but inflationary pressures towards the end of our secular timeframe. Note first of all the increasing influence of non-core food and energy prices in G-7 nations over the past few years as illustrated in Chart 5 for the United States. Since 1967, average differences in headline vs. core inflation have essentially been zero, despite distinct periods of cyclical variation. Now, however, with globalization so dominant and Chinese/Asian appetites for oil, soybeans, and iron ore amongst other commodities so voracious, it’s hard to envision an extended period of lower headline U.S. increases.

thanks to http://www.wallstreetfollies.com/

This may bias more central banks to begin considering headline numbers in their policy decisions like Japan and the ECB do already.

There are other global threats to the disinflationary character of “da bomb.” Chart 6 outlines an increasing trend of import prices from mainland China through Hong Kong and then outward. Admittedly, the appreciation of the Yuan has played a part, but that, I suppose, is the point. As the Yuan inexorably revalues, China’s ability to export deflationary impulses to the rest of the world becomes questionable, especially as it itself experiences internal inflation. China may still be exporting deflation to Asia and Euroland, but it clearly is beginning to export mild inflation to Japan and the U.S. ....


All of this will make interesting discussion points at Central Bank policy meetings for years to come. Over 20 CBs (Central Banks) are officially on the “inflation-targeting” bandwagon with the U.S. a de facto member since the appointment of Ben Bernanke. Yet even if the magic 2% inflation target is agreed on by nearly all G-7 policymakers, and a 3-4% target by many developing nations, once-reliable short-term rate targeting levers may not work as effectively. The abundant liquidity of today’s financial marketplace may be another way of describing the ability of private agents – be they hedge funds, private equity, or simply old-fashioned banks – to create credit on their own given satisfactory reserve levels which are now more than ample.
Unwillingness to employ increased margin requirements by the Fed during the NASDAQ bubble, and near 0% margin downpayments accepted by mortgage bankers during the housing bubble, give evidence to the diminishing influence of CBs and the growing influence of private agents in the credit creation process. ...


Financial Markets
These portents of higher inflation and still strong global growth may seem negative for global bond markets and indeed they are, but cyclical countertrends as evidenced currently in the U.S., Japan, and elsewhere suggest caution in overreaching just yet into bearish secular territory. ..... Following the flows (if you can) has been key in determining G-7 yield trends both short and long-term. Government intermediate and longer curves have been pushed down, and to counter the stimulative effect, short policy rates have been set higher than might otherwise be the case. To illustrate, “10-year real rates” throughout most G-7 curves have been lower in the past few years than they have been over the prior two decades as shown in Chart 7, part of a study done by PIMCO’s Ramin Toloui.

Now, however, a growing number of investors are trying to “be like Yale or Harvard” by moving toward more diversified asset allocations, and that includes the holders of over 50% of outstanding U.S. Treasuries, Chinese and Petrodollar central authorities among them. A day after our Forum’s conclusion, for example, China eased investment restrictions in order to allow its commercial banks to buy stocks abroad. Even without a buyers’ strike or a dramatic reversal of the U.S. current account deficit though, Treasury yields (and other widely held G-7 government issues) will lose some of their caché over the next few years and real yields may rise somewhat. .....

As an additional statement of fact, although without firm conclusion, it is striking that real global growth as shown in Chart 8 is advancing at a 5% potential rate while G-7 countries are mired at levels just above 2%. Low policy and term real rates reflective of this 2% growth are in effect financing global growth at 5% – an unprecedented spread for at least the last several decades. Investment managers and economists are fond of speaking of the Yen carry trade – borrow near 0%, invest much higher – as being the dominant liquidity lever in today’s marketplace. Chart 8 speaks to a broader more significant carry trade which admittedly cannot be efficiently employed due to capital controls and relatively immature capital markets (China, India, etc.). Still McCulley’s demand thesis can only stand in awe at the G-7 real yield/global growth rate gap, where G-7 yields in effect stabilize their own economies but serve to encourage attractive arbitrage opportunities into investments in the BRICs and other developing economies. One wonders if there may be some move towards closure in future years, a move that in turn would increase real yields, lower global growth or both.

Fed's Inflation Analysis Ranks With Zimbabwe's: Caroline Baum

harsh words..... to the defense of bernanke and the fed one can argue that they are not alone. the liquidity is exploding around the globe. even in the eu were the ecb watches (unlike the fed) the money supply very closely the growth is close to double digits and far above the ecb taget. and it looks like the central banks have lost control over the creditexplosion that causes inflation. but that should be enough of fed defense from this writer...... :-)

i highly recommend what congressman ron paul has to say on this topic! (thanks to mish
Monetary Policy and the State of the Economy - Ron Paul http://forum.themarkettraders.com/read-m/26/1803/1814#msg-1814

ziemlich harte töne.....zur verteidigung der fed kann man anführen das die weltweit nicht allein sind. nahezu überall explodiert die geldmenge. selbst die ezb die ja im gegensatz zur fed die geldmenge als wichtig einstuft wächst diese fast zweistellig und damit deutlichst über dem gewünschten level. mehr wird man von mir in sachen fedverteidigung aber nicht hören..... :-)
empfehle den o.g. link von einem kongressabgeordneten zu diesem thema.



Feb. 20 (Bloomberg) -- Maybe it was the repetition, the iteration of the same monetary policy testimony on back-to-back days last week, that did it, that left the words grating on my consciousness.

Here was Federal Reserve Chairman Ben Bernanke, one of the outstanding monetary economists of his time, talking about inflation as if it were the result of some pesky exogenous forces.

``A waning of temporary factors that boosted inflation in recent years will probably help foster a continued edging down of core inflation,''.......

What's more, the contribution ``from rents and shelter costs should also fall back,'' he said.


There's a big difference between an inflation measure, which Bernanke was talking about, and the inflation process. Policy makers -- Bernanke, Alan Greenspan before him, the Fed governors and bank presidents -- talk about the effect oil prices or imputed rental costs have on inflation gauges, such as the consumer price index. That's not the same as the inflation process, which is always and everywhere a monetary phenomenon.

If oil prices rise because cold weather boosts demand, the relative price increase may manifest itself as a rise in the CPI in the short run. But with appropriate growth in the money stock, the demand for, and price of, something else should fall. (unfortunately the fed has "created" some methods to suppress this number (hedonic, core, substitution, oer etc......)/ zudem hat die fed in kreativer weise ganz eigene wege gefunden selbst den cpi zu drücken..... thanks to http://www.wallstreetfollies.com/ )


Cause and Effect
So when Bernanke talks about temporary ``factors'' boosting inflation, he is really talking about temporary ``effects'' of higher oil prices on the CPI. Oil prices don't cause inflation. Nor do wages, even though you'd never know it from discussions on the subject. The Fed causes inflation all by itself, creating too much money relative to the supply of goods and services.

If the inflation-as-effect posture is just a shorthand way of communicating with Congress, that's one thing. If it's the Fed's analytical framework for inflation, then we're in trouble. The tenor of the discussion of inflation in the minutes of the Fed's policy meetings, which are in line with the comments in the testimony, makes me wonder.

To his credit, Bernanke did give members of Congress a rudimentary lesson in the inflation process: not the Fed's role in it but an intermediate step along the way.....

Out-of-Everywhere
For example, anyone reading the Feb. 7 New York Times article http://tinyurl.com/2ebq5e on the ravages of Zimbabwe's hyperinflation (1,594 percent in January, and that's month-over-month) would be confused about what causes inflation. After stating that hyperinflation is ``eroding the government's control over every aspect of public life'' -- as if it were the control, not the lives, that mattered -- the Times quotes Harare economist John Robertson on the problem at hand.

The government says ``they can fix prices, but the things that cause price increases come from so many different directions that the government can't control them all,'' ...

Funny thing about those multidirectional price-increase emanations. They may come from so many different directions, but they all originate with one source: too much money.

Mute On Money
The Zimbabwe government recently outlawed inflation, arresting a number of senior executives in recent months for breaking the law: raising the price of flour and bread without the express approval of the Ministry of Industry and International Trade.

Venezuelan President Hugo Chavez adopted the same inflation- fighting tactic, threatening jail sentences and even nationaliztion if grocery store owners defy price controls.

The 1,331 word New York Times article on Zimbabwe's economy never mentions money. Rarely does the Fed refer to money -- in its public statements and apparently in its internal discussions. There are no mandated targets for the monetary aggregates, fewer aggregates (reporting on M3 was discontinued last year much to the chagrin of conspiracy theorists), no agreement on how to define money and no good way to measure it, we're told. thanks to john williams shadow stats http://www.shadowstats.com/cgi-bin/sgs


But excess money creation is the cause of inflation, and it would be better if the Fed could make the public understand that the rise in the price level is not a result of higher commodity prices, aggressive labor union demands for wage increases or greedy businessmen trying to milk the public.


It may not sell in Zimbabwe, where anyone trying to explain the roots of inflation might be arrested on the spot. But in the U.S., with inflation running at about 2.5 percent ( watch the alternative inflation number from john williams shadow stats http://www.shadowstats.com/cgi-bin/sgs, the public can handle the truth. (well maybe the fed should start to report a honest cpi number ...evtl. sollten die zumindest mal den anfang machen und ehrliche cpi nummern veröffentlichen)

"China Consumer Prices Rise Most in 20 Months on Food "

"core" rate excluding the 30% foodportion of the basket sound like the fed. add to this that china controll the eneryprices and you wonder why anybody looks at the "inflation" numbers and the all the talk about low inflation etc.

kerninflation die satte 30% des warnekorbes (essen) ausklammert und zudem noch energiepreise die staatlich festgesetzt werden.... warum nimmt überhaupt einer diese niedrigen "inflationszahlen" ernst.

Dec. 11 (Bloomberg) -- Inflation in China, the world's fastest-growing major economy, accelerated more than expected in November as food costs increased at the quickest pace in almost two years.

Consumer prices rose 1.9 percent from a year earlier, the National Bureau of Statistics said today. That was the biggest gain in 20 months, ....topped all estimates among 21 economists surveyed .....

Chinese stocks and bonds rose as non-food inflation held at 1 percent (the chinese "core"?!/die chinesiche "kerninflation"?!), damping expectations that the central bank will respond by raising interest rates. Central bank Governor Zhou Xiaochuan last month said pressure to add to two lending rate increases since April has lessened. (what a rational..../was ne logik....)

``There's nothing major to worry about,'' ........ It's mostly driven by food prices.''

Food costs, which account for a third of the consumer price index, jumped 3.7 percent after climbing 2.2 percent in October, driven by a 4.7 percent surge in grain prices. Clothing prices gained 0.1 percent, the first increase since at least 1999. For the first 11 months, consumer prices rose 1.3 percent from the same period last year.

Food prices are ``volatile'' (sound like fedtalk...) and aren't likely to cause inflation to skyrocket, .....

Trade Surplus
The Shanghai and Shenzhen 300 Index rose 2.3 percent as of 1:01 p.m. local time. The yield on the 3 percent local-currency bond due in December 2008 fell 5 basis points to 2.95 percent

As China today reported its second-largest trade surplus ever, the central bank sold 120 billion yuan ($15.3 billion) of one-year bills to lenders in the biggest sale this year, draining cash from the financial system. The November surplus was $22.9 billion.

http://immobilienblasen.blogspot.com/2006/12/china-is-putting-on-breaks-bank-reserve.html

``Headline inflation is not much of a problem right now for ...... ``It is quite benign and mostly affected by agricultural products.''

Energy Prices
The central bank last month forecast consumer inflation will ease to 1.5 percent for 2006 from 1.8 percent in 2005.(good call with the 1,9% number reportet..../hat ja wunderbar hingehauen....)

Even so, it said inflation could quicken as China deregulates energy prices and boosts welfare spending. In addition, a possible rebound in investment could send raw material costs higher, the bank said. (how do you than come up with an low inflation estimate? could only be if the yuan wil strenghten significantly/ wie kann man da mit ner niedrigen inflation rechnen? geht wohl nur wenn der yuan weiter deutlich aufwertet.)

....China, which controls gains in the yuan, should allow faster currency appreciation to prevent export-driven money inflows from fanning inflation, .....(china is not alone with this kind of problem. watch the problems in the middle east oil exporters "prices are rising in the UAE at an annual rate of 7%, but independent estimates put it at 15%."

``By allowing the currency to appreciate, China could help lower the import cost of food,'' (and of course oil!!)

Interest Rates
Zhou raised interest rates in April and August and has ordered lenders to set aside more money as reserves three times this year. http://immobilienblasen.blogspot.com/2006/12/china-is-putting-on-breaks-bank-reserve.html

On Dec. 7, Zhou and his colleagues said they plan to achieve a ``stable'' monetary policy and ``adequate'' money supply growth next year and seek to balance international payments. M2 money supply rose 16.8 percent ( always a matter of perspective what "adequate" means. / alles ne frage der definition von "adequat" )

China's stocks had the biggest fall in almost five months on Dec. 8, after state media suggested the government may raise rates to cool the property market. ( sound familiar/ klingt vertraut)