I suppose it's just an old, harmless clich', but I have long joked
with my wife about women using shopping the same way an alcoholic might use a
bottle of whiskey: as a coping mechanism.
I remember an episode of the Flintstones when Wilma and Betty were
trying to deal with their grief from the latest harebrained actions of Fred and
Barney. Rather than drown their sorrows, the girls climbed into their
four-feet-drive convertible and headed for the mall, with a military-like battle
cry: 'Chaaarge ' it!'
Were they from Bedrock or Berlin?
Had Wilma been born a few thousand years later, she might have
been a candidate to become Chancellor of Germany.
German Chancellor Angela Merkel just introduced a new budget that
includes a deficit that exceeds the Eurozone's agreed-upon limit of 3 percent of
GDP. Badly needed corrections to the government's ramshackle budget, including
tax cuts, were postponed, continuing a regime of bloated pensions and poor
productivity.
How did Ms. Merkel propose correcting the economy's ills? With a
Wilma and Betty plan. She is encouraging Germans to go out and spend more money.
No matter that the consumer may be the only segment of the German
economy showing any restraint. If consumers will just dip into their savings and
buy more TV sets or blue jeans, the government won't have to make any hard
decisions about its own finances. Ingenious.
For the sake of my marriage and email servers, I will resist the
temptation to make a sexist tongue-in-cheek remark. Feel free to provide your
own.
You should also feel free to make fun of your own government for
the way it reports inflation statistics in this country.
When the Labor Department reported that the January Consumer Price
Index increased 0.7 percent, the magnitude of the increase was more than a bit
disturbing. But don't worry. The government experts, along with their willing
accomplices, private analysts and commentators, were quick to point out that the
'core inflation rate,' that is the rate of increase in prices of things other
than food and energy, increased a quite modest 0.2 percent. And if you ignore
changes in construction costs, there were hardly any increases in consumer
prices.
Food and energy are the most volatile components of the CPI calculation.
Excluding these items provides a smoother look at changes in prices. This is
probably useful for economists or academicians to do macro or theoretical
analysis.
But it is not useful in trying to analyze the real-life effects of
changing prices. Most people buy groceries every Tuesday, not on a 72-week
moving average.
Looking at the CPI excluding food, energy and construction costs
does very little to explain your real-life experience if you are try to build a
new high school in Hardin Valley and your construction costs increase to the
point you can't afford to put desks in the school. The folks at my neighborhood
gas station apparently didn't get the memo about low
inflation.
Governments are useful for many things, I suspect. But giving financial
advice is not one of them.