Thursday, June 30, 2011

The Other Kind of [Inflation]

Grade inflation has been a growing problem through the Anglo-Saxon world for decades now. From the ridiculous "Everyone is a Winner" meme, to the intense distaste for grading on a curve it has become easier-than-ever for EVERYONE to do better [or at least appear to do so]. Perfection, it would seem, has become more ubiquitous, something to be cheered were it not for the total utter bullshit of the supposition. This is perhaps related to the divergence between a society's perception of reality, and that which resembles objective reality (at least that which can best be triangulated through the intersecting vectors of others experience and tangible comps). Even France has suffered from a lowering of the bar, where historically the perfect 20/20 was virtually unobtainable as an example of the belief that no one is perfect - least of all a novice. 'Tis a shame from my curmudgeonly chair.

"Free-ranging, massaged spring-veal milk-fed from the udders of organic mountain-raised cows, triple-lacquered in a traditional slow-cooked three-nation-three-fortified wine reduction emollient, served on a bed of  a trio of hand-picked high-altitude wild mushrooms scoured from pastures and surrounding woodland of the Haylesdaleford organic farm paired with a duet of Egyptian-garlic-braised Spinach from the Franciscan Monk's Abbey's Farm grown between 700 and 900m in altitude for the perfect tenderness, and hand-crushed Blue-potato mash...."  Errrrrr ......yum???!?? No, rather the opposite - as the embellishment upon more honest "Veal & Potatoes - let the prep speak for itself" nearly makes me vomit.

There has been, needless to say, inflation in humanity's waistlines, which is plain for all to see, perhaps related to inflation in portion sizes as well as calorific value. And there has been a grand inflation in expectations - not the traditional form that refers to future price expectations, but rather expectations of what the life will and should offer, and more importantly, in what they deserve.  This is not universal, though I put to you it is more prevalent in the Anglo-Saxon countries, where the divorce between expected effort and expected reward has inflated the most. Of course, no one can fail to have witnessed the rather frightening inflation in bullshit itself, evidenced chiefly by the rhetorical vacancy of the populist American Right and the "news" and information service pandering to its customers, though it must be said that they have no monopoly given the left's increasing drift from reality-based tethers such as confronting the ability to finance their initiatives without doing an electoral "Mondale". One could see this - across the tax-paying electorate as inflating selfishness - now in its third decade.   

The financial world is not immune, and in many respects, is the champion of inflating hyperbole. From Fund complexes stroking the virtue of their single top-quartile fund with a short history in a stable nexto to thirty-losers, to the near-universal confusion of beta for alpha, inflation is prevalent. Perhaps most notably has been the inflation in the boundaries of what grey-areas are SOP, be they front-running, cynically-bent research, or what BS is required to move the financial merchandise du jour out the door.   My own pet peeve, the one that makes my eyes roll in their sockets is the inane claim of the budding partnership of still-green MBAs in Get-Rich-Mode reaching for respectability by claiming "100 more than years of combined experience...." or whatever number in whatever permutation of ridiculousness. In any form, be it the Tear-Sheet of an emerging fund manager trying to raise money, or the bio of the management team of any start-up, this singularly bogus over-reaching phrase transmutes a potentially slick and informative presentation document into scrap-paper for utilitarian shopping lists, children's colourful doodles or electronic trash-basket-filler.   

So while markets remain on inflation watch, we, as citizens, should be more vigilant in fighting tooth-and-nail against the arguably more pernicious and endemic [other] inflation...

Friday, June 24, 2011

Limey Beans

The English are moaning about how expensive things are. They don't know the half of it. A small Bag of Starbuck's Italian Roast Beans at my local (ground at 4-1/2 for my lovely, well-machined stainless Alessi stove-top expresso device) in Switzerland sets one back CHF8.50 (more than USD$10 for American readers). Same bag (though sometimes I go for the even-darker Sumatra or French-Roast) in "high-priced" London is GBP3.70 (more or less USD $6.00. ). For the operationally challenged (who shouldn't have a CMC or ForexPro account nor be trading currencies in any event), this is a 66% premium for the Helvetian-sourced variety of Starbucks finest, deliciously-oily beans.

The Baristas in London, I can tell you, seem only to keen to ground the purchased beans, and it is also unlikely that Starbucks is magnanimously selling their bags at a loss there (though I read this week their >600 outlets are just breaking even). Yes, there are VAT differences, and labour-market differentials, but my bag'o'beans from Geneva was more or less the same price three years ago (as are the Limey Beans). Prices, evidently, are indeed sticky downwards, and profit margins evidently variable at the other end of the spectrum.

Firmly ensconced at the small end of the vanity spectrum, sporting an ancient anorak, failing footwear, tattered trousers, and a seriously-old-and-simple early-generation Swatch, I must confess to having  modest needs when it comes to trimming my locks - not because I resemble James Carville, but primarily - because I just do not care. A quick run through with a Number-3 razor and I'll be out the door five minutes later - perhaps ten minutes with a shampoo and a straight-blade scrape. The median in London (from my non-scientific experience) is GBP17.50 (USD$28) though the truly brave can do better at the risk of emerging a butchered Mohican.  Median men's price to be quickly coiffed in Geneva is CHF50 (USD$60). When in the dollar-zone, I used to pay $10, though admittedly I had to endure the incessant complaints and xenophobic right-wing politics that was part-and-parcel of the service.

There are no shortage of decent Pizzerias in London replete with iconic red-chequered table-cloths, wood-burning ovens and genuinely-accented servers. The median price for a reasonable fresh-cooked bubbling edible disc is somewhere in the GBP7.50 (USD12-) though this can rise to USD15 depending upon the venue and extras.  Our favourite (and we are not alone as it can be annoyingly busy and raucous) Geneva-based pizza fabricator, Luigia, will spin and prep his freshly-made offerings for CHF16.50 (nearly USD$20) with a topping or two taking you to CHF22 (USD26). Two glasses of Nero d'Avola (USD13ea) , a shared generous plate of Calamari (USD35!!!!), and departs significantly poorer than one entered. I would pity the Swiss, except most of the patrons are NOT local Helvetians. For they, I can tell you, are all in France shopping.

One could reasonably argue these examples have been cherry-picked. And they might be right. But they are the most obvious every-day manifestations of The Wrong Price I see in my weekly travels. One could of course, go on: UK airport sandwich $5; Swiss airport sandwich $9; Swiss modern italian chaise USD1,500, indentical in UK USD800. And so on. Switzerland is - in its entirety - the The Wrong Price. And not by a little. Perhaps sterling is cheap. Perhaps the dollar is VERY cheap. Yet Americans seem more than willing to supply both labour and goods as well as services at what seem like - on a relative basis - to be absurdly cheap prices and rates. And for the most part, this does not look set to change dramatically, not on the scale discrepancies. Granted taxes, energy and social costs are much diminished, but this is not so in the UK. It seems to be purely a matter of the Wrong Price, driven by financial flows, with the real economy apparently ignorant of these flows - excepting those who live on borders.

I am not saying the specs seeking a turn, the fearful who are paranoid, sovereign accumulators who are unspoiled for alternative choice-of-stores, nor the unsavoury who are delivering bucket-fulls as a patrimony for posterity into hopefully-safe-and-untouchable coffers are wrong to be doing WHAT they are doing. It is however worth scrutinizing whether WHAT they are doing, is being done at a decidedly WRONG price....