The I Word is Coming to a Town Near You

Hello Inflation, it has been awhile, I see you on your way back again. Inflation? What inflation? Oh things like; Energy, diesel fuel, Aviation Fuel, Gasoline, Natural Gas, Milk, Wheat, Corn, Beef, Poultry, Hogs, Soy Beans, Building materials, paper, housing, Auto Prices, Health Care, Insurance, etc. You know the basics. Also considering the wholesale inflation, which comes from fuel costs being passed on, government regulations infringing on productivity and additional fees and fines to replace the taxes and incentives. When wholesale prices go up, those are passed onto the consumer.

How do we know all this? This is not a guess by any means. We have studied these issues for quite a while. Here is why we think this. Well as far as agriculture, we know from the droughts in the major farming regions and we can tell by the commodities market. We have seen the high temperatures and lack of water with Wheat and Corn in ID, MT, ND, SD, NE, KS. In other markets floods have hurt some crops. Also drought hurting the growing of feed for Cattle, meaning beef prices will go up. Canada MAD COW now our Mad Cow problem, problems with Japan's increased tariffs on beef. Hogs and Beef in KS cannot get the water they need. Also in farming we have seen areas where the Sierra Club is suing so many projects to stop or slow building of new reservoirs in NM, ID, CO, AZ, NV, OR, CA. Also the specialty crops are running low and not enough to meet demand, things like berries (see bear lake issues) and issues in Winnepeg and BC, grapes (2 buck chuck run supplies low), etc as well as issues with depleted soil in Central Valley CA, Desert Farmers along the AZ and CA border cannot use that amount of water since CA and AZ will need it for new housing areas, golf courses and other uses (see the Colorado river situation) Farmers VS Developers and housing in PHX, Tucson, Las Vegas, San Diego, San Bernardino, Riverside, many are predicting a bubble burst, we have seen issues in the REITs which was a little bit of a shake up.

Natural Gas from the lack of new wells being drilled, for instance off the coast of Maine and the Gulf. Lack of ability to gear up in infrastructure fast enough to supply this winter's need even though it should be a relatively non-violent winter as far as that goes-however few Hurricanes on West Coast last year showed us a lowered Jet Stream and lower latitude airflows, La Nina comes next and that means drought continued and water prices will go up and many business which use water will be worried and charge more too for their services. I have also been studying the EU droughts and heat and the issues with their exports meaning supply will not equal demand. Humanitarian needs are at issue as well. Meanwhile the Super Crops are being blocked by EU and WTO and much of those crops may not be able to be used in all markets. Some really bad deals here for humanity. Fruit in FL and the everglades issues are getting to be a bigger deal.

Dairy Farmers in ID are up 12% but they want more money and the National Dairy Association is also pushing forward. Increased demand is putting the dairy farmers feeling that they can charge more and will soon need to upgrade. The fires in ID, MT are using up much water supplies very early and fire season has another 2.5 months left. Also CO, NM, WY not out of the season yet. What about the threat of Bird Flu?

With Building materials we are seeing increased government regulation, timber tariffs on imported from Canada. Paper industry is in trouble and the replanted forests and forest farms are usually fast growing trees good for paper, not building grade timber. Housing spikes caused this, many areas growing fast.

Oil prices up due to manipulations in supply, Middle East issues, China coming on strong with needs of her own, Military needs effecting supply and demand issues, International Terrorists screwing with infrastructures, South American trade war paybacks, oil pipelines too few, Nimby-ism slowing output and inflows while the demand has increased, Airline fuel down and therefore price has too increase to pay for the direct cost loads. Our growth and consumerism has outpaced our supply and infrastructures. With energy the Blackout of 2003, rolling CA issues, generation plants being shut down, slowness of building new Nuclear Power Plants, issues in OR along the major Columbia River with Bonneville Power, issues with CA and SMUD, issues with upgrades needed in Coal Plants to meet EPA upgrades also same problems in VA, NC, SC, and the Tennessee River Valley Authority. Pipeline break in AZ and Phoenix they were paying nearly $2.00 per gallon, but now in CA they are at $2.65 per gallon. Sabotage in Iraq screws up supply for worldwide market. We are seeing OPEC moving forward to keep prices high, China coming online with needs, world demand is going up, takes too long to ramp up our own production and few companies wish too, for fear of dropping of prices too quickly, meanwhile we are seeing $2.46 gasoline on West Coast and $1.90 in San Antonio, no one expects these prices to come down, recessions follow high fuel prices by 6 months? So these are all issues and everything we buy has these high costs figured in. Construction, farming, transportation. Some school districts complaining about cost of buses and kids hurting budgets and at the same time increased prices mean more monies to state coffers which charge percentages of fuel prices as tax.

This article is in no way a doom and gloom showing, because I do see increased economic sunshine in many markets, but not all, those which have the burdens of drought, fires, shortages and manufacturing are going to see some more tough times. When energy goes up, some businesses running redline on low margins with lots of competition will see harder times and layoffs in the near future, while other sectors will be continuing the recovery.

These companies must raise prices, nearly all airlines have announced even additional higher fares this week, 14 of the largest trucking companies; the ones which haul the food, building materials, cars to dealerships and everything on every shelf in America. Railroad is increasing rates too. And Independent truck drivers holding on by a thread with insurance costs up too. We are also not going to be able to release the Military reserves in such uncertain times. So Inflation, there she blows and meanwhile interest rates will increase and money flows continue offshore.

What is of concern is that without increased wages, higher percentages of consumer incomes will be spent on food, gas, energy and other artificially inflated or supply and demand driven goods and services, yes that includes many sectors.

Now is a very important time in our nations history and in the business cycles at hand. We will get through this as it also hits other nations who sell to us, the trick is to come out of this present period with after burners blazing and set a course to the future prosperity and into the annals of destiny. Which we may write thru our human spirit and will.

"Lance Winslow" - If you have innovative thoughts and unique perspectives, come think with Lance; www.WorldThinkTank.net/wttbbs

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