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2023-11-17 07:19 by Karl Denninger
in Consumer , 1426 references
[Comments enabled]  

It seems the market is more than a bit unrealistic the last week or so as it has rocketed higher on alleged-"cooler" inflation figures.

We stand roughly 400 points in the SPX -- or nearly 10% -- higher just in the last couple of weeks, leaving gaps all over the chart on the way up.  But stocks are supposed to represent an income stream from operating profits, so this begs the question: What profits?

When I go to the grocery store the register tape -- and my Quicken -- says I'm spending a lot more money there.  Not a couple of percent over the last 12 months, an obscene increase.  Shelf prices are one thing, but actual paid prices are truth -- and those involve discounts, coupons, BOGOs and similar.  I, like most people, buy pretty much the same things to eat.  Spending over the last 12 months is in fact up more than 30%, not 2%.

Car insurance is claimed to be up about 20% -- and it is.  That's real, and everyone with a car has had to pay it.

But the government also claims that health insurance has been down in price by roughly 30%.  That's nonsense, and we all know it, but there it is.

There are some who think the answer is "higher wages!"  But its not; you can't keep up any more than you can with a "roaring" stock market.

The simple reality is that you cannot have Congress emit eight percent, more or less, of the economy in newly emitted credit and not have prices go up by about 8% unless there is somewhere that absorbs it which you do not have to cover.  For roughly two decades there was -- the increase in global trade, most of which is settled in dollars, buffers that by temporarily capturing the money while goods are in transit.

Note however that a permanent change in trade doesn't result in this remaining captured; it is the change in level of global trade that does that, and only while the change is taking place.  We've offshored basically everything we can offshore at this point and thus the available increase has dwindled to essentially zero.

The problem is that during that 20 year period of time we "trained" Congress (and both political parties) that they can run 30% deficits and not have it show up as 8% inflation on a permanent basis.  That's flat-out false.

This in turn means that either we're going to absorb about 8% inflation (no matter what the government claims), spending must come down by about 30% at the federal level and that is only to stabilize prices, not return them lower, or taxes must go up by about 40% which of course is another expense in the household and reduces disposable income.  The latter is politically impossible.

How does this resolve?

I don't have that answer -- but what I'm seeing on the ground is a profound decrease in consumer activity.  Yes, there are places where everything is "happy time" -- but that's not the country as a whole.

WalMart has noted it, and when it hits WalMart that's the people up to perhaps the top 10% of earners.

That's real.

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Here comes (much) higher auto insurance rates... and this should result in heavy consumer-protection related prosecuting aimed at carmakers -- but it won't.

If you own a new car, there's a good chance that it features some form of keyless security. Whether it helps unlock your car or lets you start it with the push of a button, it makes driving all that bit easier. That's unless it's the reason your car gets stolen. Police forces all over the UK are reporting a rise in keyless car thefts, but a new report released by the Metropolitan Police today suggests that it now accounts for over a quarter of all vehicle thefts across London.

How are they getting in the door?

The claim is that they're breaking in physically and then accessing the ECU via the OBD port, allowing cloning of the key.  I'm not sure I'm buying that, although with some vehicles it is probably possible.

Specifically, it is known that certain older VWAG vehicles can have their cluster broken into via a piece of software that is available from various places in China.  This results in returning the "secret key" necessary to program new keys into the cluster, and then Bob's Your Uncle.

I think it's reasonable to assume that our "friends" with "most-favored nation" status over in China have this software for other makes as well.  In fact, I'd bet on it.

But the simplest way to steal a car with so-called "advanced keys", that is those that you don't have to press a button on a fob to unlock the doors and which has keyless start, is as trivial a paired set of radios and a confederate that gets close enough to you (5' or so) to be able to excite your key in your pocket while his "buddy" stands outside your car's door and pulls the handle.  The car thinks the key is next to it and the key thinks the car is next to it; they transmit their coded handshake and voila!

Next said thief sits in the car and hits START.  Same thing -- the key talks to the car, the car starts.  So long as you don't turn it off you can drive it.

The ugly part of this is that the frequencies aren't secret -- nor can they be, since the fobs and the cars are both intentional transmitters and thus have to operate on specific authorized frequencies.  The coding can be secret but that doesn't matter since you don't need to break the code -- just make the key think it's next to the car and vice-versa.

I'll lay odds this is how they're being stolen and it's why when I bought mine I was ok with keyless start but not with a fob that didn't require a press of the button to unlock the doors.

If you have to bust the glass to get in, or use an airbag or other conspicuous tool, it gets a lot harder and greatly increases the amount of time that the confederate has to be near me while the other guy works my car over before he can start it and drive off.

This is what your "convenience" has gotten you folks -- a car that is trivial to rip off for anyone with a modicum of technical ability.

Oops.

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