By Rick Ackerman | 29 September 2007
The silence that has greeted the dollar’s collapse is eerie. You don’t have to be an old-timer to remember when such an event would have been news. Not any more, though. Maybe it’s because no one really understands what a falling dollar means, other than that a hotel breakfast of juice, toast and eggs now costs upwards of fifty dollars in London and Paris.
- [ Normxxx Here: And, shortly, New York? ]
Click Here, or on the image, to see a larger, undistorted image.
Conventional wisdom holds that a weak dollar contributes to inflation, but we believe this quaint notion is about to get turned on its head. That’s because we only confront inflation when we buy things. However, push the price of those things high enough, and who will be able to afford them? Take that $50 breakfast at the Ritz. If the place has been crowded lately, you can bet it’s not with American tourists or even expense-account travelers, since most of them will have long since discovered Frommer’s Guide and buffet breakfasts, or opted for cheaper getaways in the Caribbean. So, if the price of an omelet reaches $100 at the Ritz, will that be "inflationary" for Americans? In theory, yes; in practice, no.
Not Good for Benz
And that doesn’t bode well for European car manufacturers such as BMW, Mercedes, Volkswagen and Volvo. For, let them dare raise their prices to fully reflect the dollar’s decline vs. the euro, and exports will dry up quickly. Does that mean Americans would see the price of Fords and Chevys rise commensurately? Don’t bet on it, not with Toyota and Honda more eager than ever to seize market share.
So where looms the prospective inflation in a falling dollar? The answer is, nowhere. With real wages falling, just as they’ve been doing for decades, and household borrowing power plummeting along with the steep decline in home prices, the American consumer is in no condition to inflate the price of anything with strong demand. In fact, unless Joe Consumer can figure out a way to defy gravity, he’s about to start saving like there actually will be a tomorrow. If so, the inflationary spiral that nearly every bozo with an economics degree seems worried about is as likely as Lindsay Lohan’s father winning the Heisman Trophy.
***
Apple’s Digital Cyanide
Remember what a light-hearted romp Bonnie and Clyde was— until a cop got splattered on the windshield of the robbers’ getaway car about a 30 minutes into the film? Well, fun-loving, puppy-cuddly Apple has just splattered its first victim, its own iPhone customers. Imagine their surprise when, immediately after downloading the latest iPhone software, their nifty little $500 devices went dead as bricks. In fact, that’s what they are calling phones that have been incapacitated in this way: iBricks.
This expensive misfortune did not befall all iPhone owners, only those who had downloaded third-party software or "unlocked" the phone to service providers other than the contractual one, AT&T.
Apple has spun this bit of Microsoft-like nastiness with a "We warned you!" press release. As indeed the company did. But the tactic hardly befits the image of a purveyor so mawkishly adored by its youthful customer base as Apple. They must be feeling betrayed by now, even if some of them remain in denial that Apple meant them harm. "We should have heeded the warnings," says one iBrick owner who called Apple to see about getting it fixed. "You'll have to buy a new phone..." was the company’s Microsoft-like response.
Let it be noted that the hardware and software modifications that prompted Apple’s deadly retaliation were well justified if usefulness is a criterion. For one, AT&T is considered a second-rate wireless provider, offering slower data transmission speeds than many of its competitors. As for the addition of "unauthorized" features to the phone, they included such clever applications as a screen-capture and a voice recorder that evidently were big hits with early adaptors. By sabotaging such enhancements with digital cyanide, Apple has ended the good times. As a result, the company had better mind its step from this point on, since Apple’s customers are not going to be quite as forgiving about the occasional flaws— such as lousy batteries— that occasionally find their way into iHardware. Might a little ill will provide just the opening Amazon was looking for in going head-to-head with iTunes? We shall see.
Normxxx
______________
The contents of any third-party letters/reports above do not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.
The content of any message or post by normxxx anywhere on this site is not to be construed as constituting market or investment advice. Such is intended for educational purposes only. Individuals should always consult with their own advisors for specific investment advice.
No comments:
Post a Comment