The Business Flow

This article says it all, if you read between the lines. The ISM numbers indicate a Contraction. Their Inflation index is down solely because Businesses have already raised their Prices, and still is so high as to indicate further Inflation in Our future. The important number for Construction is the year over year decline in Construction Spending of 4.7%. The rise in Public Construction of 1.4% only clouds the real loss in Private Construction Spending. Reality Investment Spending for non-Home speculation purchase of Housing did not seriously diminish the glut in unsold Homes. One must realize that ISM readings presage next Quarter earnings more than current position, so they indicate We have much more trouble coming in the months ahead.

Oil is still on a downward trend, but no one expects Business prices to quickly follow the Oil. One of the irritating elements of the current environment is the disconnect which is starting to appear between Crude and Refined Oil products, which are beginning to slow their decline in Price. Part of the Problem lay in the increased Operating Costs to Refiners caused by the hurricanes, with their reorganization Costs. The withdrawal of Investment funds from the Commodities markets is another real cause of the disconnect between Retail Prices from Crude. Students should realize this is a major indication of Inflation, where internal Business operational conditions counteract the lowering of Input Costs.

One has to have a sound business environment, if One desires to induce Investment. Beefing up Creditor rights is mandatory to achievement of such efforts to stabilize internal markets. One cannot expect major Investment in a Wild West atmosphere. The Paper cited simply does not understand Business risk aversion practices are at fault in the first place. This means a Justice system which is not influenced or controlled by internal Business Interests. Times will not improve until International standards are introduced into the domestic Courts. Investors must be able to understand the Risks, before the funds will flow. lgl