Monday, February 6, 2012

Desperate Krugman Turns to Diaper Economics

How desperate is Paul Krugman to find deflation? He thinks he has spotted some in the price of diapers.

In a post titled, Diapers and Deflation, he quotes from a Bloomberg column:
Kimberly-Clark Corp. started offering coupons on Huggies after resistance to the diapers’ cost.
First, this in itself doesn't sound like deflation, but resistance to part(?)of a price hike.

Second, is Kimberly-Clark, the makers of Huggies, facing some kind of deflationary spiral across their product line? Not quite.

Here's what Mark Buthman, Kimberly-Clark Senior VP and CFO had to say, in last weeks earnings conference call:
Organic sales rose 3%, driven by higher net selling prices of 2% and increased sales volumes of 1%.
Got that? Overall, Kimberly-Clark prices were up. No deflation there.

In fact, here's what Chairman and Chief Executive Officer Thomas J. Falk had to say about the prices Kimberly-Clark was facing:
...on the full year, bottom-line results were somewhat below our original goal for the year, mostly due to higher-than-expected cost inflation
Krugman is desperate and may need a diaper when he sees the price inflation that is coming.

8 comments:

  1. As someone who is near the end of having to purchase diapers, (and can't wait until it's over) this is one of the instances where I wish Krugman was right!

    Diapers are one of the biggest expenses of having children. If I had the time to look into it, I wouldn't be surprised if there was serious crony capitalism at play in that industry. There must be!

    In any case, neither real deflation (which is a decrease in the money supply), nor Krugman's deflation (which is a decrease in prices) exist.

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  2. God knows I don't want to be on the side of Krugman, but could you explain why the BDIY falling off a cliff does not indicate a new slow down? You have to admit, its insanely low right now. Secondly, what about the huge declines in Petroleum Distillates and Gasoline usage? We are at levels not seen since the week after 9/11/2001? I have to admit I am impressed by your calls to date, but how are you able to ignore this kind of data? Tell me what I am missing.

    Please understand I am not trying to be rhetorical in my questions, I am really serious about trying to understand what is going on.

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  3. Krugman's studying diapers because he knows that's where Keynesian theories are headed and he's looking for a way out once they get there.

    Call it "Pooponomics 101".

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  4. Klueless Keynesian Krugman!

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  5. "This is basic economics; prices tend to fall, or at least slow their rise" ..... I guess this quote from Krugmans article was over looked

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  6. Why does that guy still have a job?

    And why does his predecessor still have a job?

    If my work performance was as pathetic as Krugman's or Bernanke's, I wouldn't have a job.

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  7. lol, I love how he says, "where's my hyperinflation" mocking critics of Fed policy who have raised significant inflation concerns - my response is patience...Krugman. True, it may not get so bad as hyperinflation, but, at the very least, we're going to see bad inflation from what's been going on. I'm actually writing an ebook about it now, so I know what I'm talking about! Of course using the old methodology of calculating inflation, pre-1980, we're already at over 10% - see shadowstats.com. Anyway, we may not be seeing extreme inflation now, but we certainly are not seeing deflation. Krugman is a joke.

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  8. In Krugman's world the 90% reduction in prices for TV's can be baked in together with the deflationary crash of 2008. Then print insane amounts of money to the cartel banks and government and we have very little inflation in aggregate. Excl of course gasoline at 3.8 dollars and food.

    Why doesn't he ask how the hungry fathers in Cairo liked that? Or the victims of the next hunger catastrophe in Africa?

    Doesn't he see that this money printing is hurting the poor and not the rich? Is he blind?

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