Indy Telecom & Industrial Media

NASDAQ has an interesting article on how government accounting works, and how (they claim that) inflation was low because oil prices surged.

To quote from the article:

As odd as it sounds, the government reported that inflation was at a four-decade low in the third quarter, primarily because import oil prices rose so much.

…

Because of the way the government counts and reports the numbers, real-life inflation was understated and growth was overstated.

And of course, they go on to provide a more detailed explanation on how that was made possible by the accounting geniuses working for Uncle Sam (were these guys taking lessons from Chidambaram or something? Or Andrew Fastow maybe?).

The accounting is right. But it’s not reality.

You bet.

As a lot of people predicted, the Feds have lowered the rate yet again by 25 bps.

While this may help the sub-prime and housing markets, it is probably going to be detrimental to other consumer-lending operations. And I think that this move is likely to have some rather severe ramifications for the US economy in other ways, as well.

For one, the USD slid to all-time lows against the Euro, with the Euro hitting 1.45 for the first time. On top of this, the cost of oil has hit all-time highs at close to $96/barrel.

Both of these are bad enough by themselves. But with the new rate cut, what’s likely to happen is that there is now more currency being pumped into the economy. This is only going to drive up the inflation further.

And given the state of the financial sectors today and given that every other i-bank (with the sole exception of my dream-company, Goldman Sachs, of course) is down in the dumps, this is probably not a good thing for the economy.

The other thing that I feel rather strongly about is that the economy probably needs a 10% correction that needs to happen. Now, you can artificially curtail that from happening, but doing so will work for only so long. Eventually, the numbers catch up with you.

Also, it’s been known that it takes longer than just a couple of months for such rate-cuts to seep through the market (I’d love to work on building models for this - ah, some day, when I have the time). So, it is probably too early to see an impact of September’s rate cut, leave alone the new one.

Given all this, the rate cut may help bail out the stock market for now, but it is probably going to be very short term. And since the feds don’t want to be seen to be bailing out the stock market every time, a rate cut will probably not happen in December (speaking of which, Business Week has a rather interesting list of reasons for this, as well).

But what does it mean for the consumers today? That’s the more important question, and the answer to that will probably not be known for a while.

So, my folks were supposed to fly back to India today through Air France, via Paris. But as it turns out, there was a five-day Air France strike, targeted particularly at the Charles de Gaulle & Orly airports in France.

Of course, we were blissfully unaware of this and when we checked the status online, we had a scare. Rather than inform the passengers that there was a strike, the website just said that their reservations were on a waiting list. The whole thing was so confusing that we finally gave up and just called them. You all know just how much I love talking to Air France.

This time, we decided to call Air France India in the hope of better service. Their Chennai counterparts said that their complete system was down and gave me a number in Delhi to call. I finally called Air France in Delhi, and a surprisingly friendly guy named Suresh helped us out.

Now, it turns out that they may fly out tomorrow, but nothing is certain yet.

And oh, this has cost Air France a rather pretty penny and so apparently, everyone is busy suing everyone else over the strike. The travel agents are suing Air France and in turn, Air France is suing the three unions that were responsible for the strike.

Nice.