Well, it certainly looks like we are entering a period of lovely “stagflation” where inflation goes up but where the economy goes nowhere (but down). I’m seeing costs go up across the board. Food is way up, gas is way up, shipping costs are up, postage going up (again), and my suppliers are raising prices. Heck, the difference between printed catalog prices (from less than 6 months ago) to now are huge. Tools that went for $77 are now $85. Other parts have jumped 20% and I just don’t see it getting better.

For the past 12 months, wholesale prices are up by 6.9 percent and core inflation is up by 2.7 percent, the biggest year-over-year increase in nearly two years.

The Labor Department reported Tuesday that wholesale prices rose by 1.1 percent last month, the largest increase since a 2.6 percent rise last November, which had been the biggest one-month jump in 33 years. Analysts had been expecting a much more moderate 0.4 percent rise in wholesale prices for the month.

This really sucks, because what I would have been able to sell at $25 now has to be priced at $30, or more. But what can I do? I can only absorb so much before I have to “pass on” the costs.

And that’s the next bubble we are beginning to see. Up to now, many larger companies have been trying to absorb the rising costs of fuel and raw materials. (This is a reason why my Kraft stock hasn’t been too hot, since it’s been absorbing too much cost, which eats away at any profits.) Now, we are at the point where they can’t absorb any longer. What do you see? Higher costs across the board.

In fact, I think that this core-cost bubble is a far bigger threat to the overall economy than the current banking/housing/mortgage bubble. I say this because rising core-costs affect everyone, and the less “disposable” income you have, the bigger the hit on your budget.

An aside: When you think of costs it’s important to think in terms of percentages. Saying a gallon of milk is $4 is not an effective measure. You need to see what the $4 gallon of milk costs you in relation to your overall income. Same goes for gas, housing, etc. We think that things “cost” more today than they did 50 years ago, but many things actually cost much less, when you look at it from a percentage standpoint. This is where housing has gotten completely out of control. Whereas before people would spend no more than 20% of their income on a mortage, now many spend far, far more. It used to be pretty typical for people to put 10 or 20% down on a mortgage. How do you put 20% down on a $400K house, even if you are making $100K a year? It’s possible, but requires a lot of fiscal fortitude.

I’ve talked in the past about how most recessions are self-made, with people worrying about what might happen instead of what’s really happening. The Motley Fool had a good writeup on why recessions can be good:

1. Recessions correct economic imbalances
Like it or not, our economy is not built to go on growing indefinitely without hitting any bumps in the road. Over time, excesses tend to build up in our markets, and these excesses have to be worked out for the economy to get back to a healthy, realistic, and sustainable rate of growth.

2. Stock market drops that accompany recessions provide new opportunities
Since the stock market is one of the primary indicators of the health of the economy, recessionary periods are frequently accompanied by meaningful drops in our stock market. Though most people panic when they see the market heading into the red, what they don’t realize is that market downturns constitute a giant fire sale.

3. It won’t last forever
It’s true. Recessions don’t last forever. The economy has lived through 10 recessions since World War II, and it has rebounded every single time. And although it may seem that there’s always another piece of bad news being trumpeted in the media, the average post-WWII recession has lasted a mere 10 months.

What scares me isn’t recession, it’s inflation. Recessions come and go, but inflation, like taxes, never seems to go away. It’s super easy to raise prices (and taxes) but it’s really damn hard to lower them.

Risky times usually illicit two different responses: Either hunker down or innovate. I have a feeling that a lot of people are getting into a “bunker” mentality, but I suggest taking the innovation route. Why? Because it’s a perfect time. While everyone else has their head in the sand you can be sweeping in and claiming new markets. You don’t make money by “doing your job”; you make money by being bold.

There has been a lot of hoo-haa about the Missing Honeybees. Well, if you are missing any bees, come down to Austin. I’ve had to kill / shoo away 6 bees from the apartment so far. (I leave the front door open for light, but we don’t have a screen door. I like early spring, when the bugs aren’t out yet. Oh, well.)

Maybe I should become a bee wrangler and sell them for a profit.

Another week, another plant closure in Puerto Rico. This one is Tyco Safety Products in Aguadilla, with the loss of some 600 jobs.

Evelyn and I used to drive by there all the time, it’s right across from the HP plant, and is one of the few areas which actually look like a “normal” corporate campus you’d see on the mainland.

The cause of the shutdown? The nebulous “high operating costs”. Though, to be fair, I don’t think this is a euphemism for “high labor costs” because labor down in PR is still pretty cheap. Yes, they have to meet U.S. minimum wage laws, but much of the workforce is at that level, or not much higher. (You can’t compete with 12 cents an hour in China, but even that is changing. Look here: Era Of Cheap Chinese Products Over.)

No, in this case “high operating costs” is pretty clear. It just costs too much to run a business in PR. Fuel costs, high. Electricity costs, high. Shipping costs, high. Bureaucracy, high. It’s a mess all around.

And then we have the god damned silver bullet syndrome.

Every time the government on that island wants to improve things, they always go looking for the damned silver bullet. That one industry that will save them. Sugar cane. Coffee. Pharmacetucals. Tourism. The huge problem, of course, is that your entire economy gets locked up in one area, and any decent competitor (or competitive country) can destroy you. Because, quite simply, there is always someone who will do a job more cheaply than you.

Sugar cane! It’s great, until the sugar beet comes into play. Coffee! Still an industry in PR, but only for the locals (and they have net imports of coffee to the island, which is stupid). That industry got destroyed by the cheaper, and larger, plantations in Central America. Pharma? Sloppy employees, and the elimination of tax benefits, without a reduction in over-the-top energy expenses, is killing that industry. Tourism? Still has a long-term shot, but it’s not going to grow without a lot of cleanup and incentives for small businesses.

Of course, it’s not just the government of PR that loves the silver bullet. We all do. Take a pill, get thin. Parrot tapes, learn a language. Give everyone a check, pull out of recession. And on and on. The problem is that short term easy fixes are simply patches, not solutions. Sometimes that’s okay, if you need to get past some immediate problem. But it’s not the way to run an economy, or your life.   

It’s unfortunate that many of us live in major cities, with endless light pollution. Heck, many people are lucky to see a handful of bright stars in the night sky (and some of those are probably planets, not stars).

With our need to feel “safe” we install lights everywhere, most of them grossly inefficient. If you can see a security light along a horizontal plane, then it’s wasting light. Remember, you’re supposed to be lighting the immediate area with a pool of light, anything else is junk photons.

Why bitch about light pollution? Because of photos like these:

Click Here For Larger View

What you are seeing is an untouched photo taken at Big Bend National Park in southwest Texas. The band of brightness along the horizon is the Milky Way, rising. That’s not city light you are seeing in the distance. That’s the light of billions of stars from the center of our own galaxy. Two hundred years ago anyone on the planet could see a sky like this, now you have to travel great distances to find dark skys, if you can find them at all.

You can read more about the photographer here: Standing Tall In The Universe by Tyler Nordgren.

I’m really beginning to think that the level of usefulness of the Internet can be plotted on a bell curve. And that we have passed the peak.

It seems as though my searches are becoming more and more useless. I look for instructions on how to replace the back of my watch, and I get Q&A sites with people replying with stunning comments like “very creative butt useless” [sic] and “Throw watch in trash and buy an Eco Drive.”

I go to my sources of inspiration, like the Make Blog, and I see people complaining about the t-shirt a guy is wearing in a photo. Or I’m presented with such insights as “this is dumb”.

And don’t even attempt to find a rational comment on most any “shared content” sites (ex. YouTube), unless you want to read about 12 year olds enjoying their first use of the word “fuck” in a sentence (and often misspelling it).

I hear about the “web 2.0 mashups” and the power behind the “collective genius” and I just want to laugh. You know what you get when you put together a group where everyone is at the same level? A fucking disaster.

And all of this is a real shame, because there is a lot of useful stuff out there. There are a lot of people trying to learn, build, improve, and help others. The problem is that there are 100 million douche bags who get in the way.

Instead of all the “collective” bullshit, I really believe that the web needs to evolve into a more, not less, rigid format. There have to be clear demarkations to grade things as fact or crap. What does this mean? Perhaps good old peer reviews. Doesn’t pass the experts, doesn’t get graded well, doesn’t show up in my search results. It probably also means the elimination of anomonity. You want your comment to show up, or be graded well, then you have to prove who you are. Places like Amazon already do that for their reviews. No more hiding behind a monitor, Internet Tough Guy.

I’m not saying that Donnie Dickhead can’t post his idotic “this looks like ass” comments on a blog. Go right ahead. Instead, it means that Donnie doesn’t get a good grade as an Internet Citizen, so other citizens can block him with ease. Imagine how much nicer the Internet would be if you could say “Show me only results from Grade B or higher Internet Citizens”.

Of course, what you’ll see on the Internet is exactly what you see in real life. There will be the slums, full of bullies, thugs, and the general low lives. There will be the middle class, with people getting on with their lives. You’ll have the intellectual elite. The upper class, and so on.

The beauty is that since everything is virtual, your ability to move up (or down) the ladder is that much easier. And, you can maintain one of the really cool (or really awful) attributes of the Internet: It erases age boundaries. Having a grading system would still allow the brilliant 10 year olds to interact with the adults.  It would also allow people to clean up their act, move out of the ghetto, and move up in the hierarchy.

And I’m not talking censorship here. You go right ahead and say what you want. The beauty of this country is that you can. And that also means I have the right to not listen to you. That’s a right I have a hard time exercising on the Internet today, and it needs to be fixed if the web is to continue to be useful.

Congress is trying to push through a bill called the SAVE Act (Secure American through Employment Verification–so much for accurate acronyms). On the surface this appears to be a moderately reasonable piece of legislature. It would require employeers use the E-Verify program (designed to verify a SSN to the Social Security database). Currently this is optional, and this bill would make it required.

There’s a problem: the 5% error rate.

That’s right, under the expanded program up to 12 million legal workers could be prevented work through no fault of their own. As an added kick in the pants, it’s up to the worker to prove that they are legal. We are guilty until proven innocent.

It won’t happen to me! Well, maybe. But, guess what? It happened to me. When getting my first job down in Austin they couldn’t verify my SSN. It came back as invalid. That’s after 20 years of jobs and tax returns which all went through fine. It took weeks for them to figure out that someone along the line had transposed a digit!

Lucky for me the program was optional, and I’m a white man, otherwise I would have lost out on a job. I’m sure I would have had a much harder time if I was a person of color and if this program was manditory.

We like to think that searching through big databases is an easy way to solve problems. It isn’t. You know why? Because the accuracy rate within most databases is no where near 100%. Mistakes happen all the time. Ask me, who came up as “illegal” after 20 years of work. Ask my brother, who’s one of the 900,000 names (not people, names) on a govenment ‘no fly’ list.

As the lists get bigger, they get more and more useless. It’s the nature of the game. On the bright side, I look to the day when all 300 million Americans are on the watch lists, so none of us can fly. Or buy a car. Or a home. Or live in peace. You see how stupid these lists are?