Indispensible Cell Phones

According to Bloomberg, the Swedish cell phone manufacturer Nokia is betting that Africans place a higher value on owning cell phones than food.

"Owning a mobile phone in Africa is viewed as such a 'necessity' that growth won't be stymied by money being diverted to pay record prices for staples."


"People in emerging markets spend disproportionate amounts'' of their income on mobile phones and are likely to continue to do so.

I'm not sure what to think about this, especially since the target is sub-Saharan Africa, which is suffering from a multitude of problems. On one hand, it would be irresponsible of Nokia to market a product as "vital" as food to a region where millions of children are estimated to die this year because of record food prices. On the other hand, if Nokia doesn't do it, some other manufacturer will. Additionally, I know that a reliable communications infrastructure is vital to any chance of political stability in that region.

The Contagion Expands...

One of the things that I find quite annoying is the politicization of certain macro events that I believe can not be created or contained by government policies, but merely influenced. Politicization creates a simplification of the analysis that leads to complacency under the pretense that voting the incumbents out of office will be the panacea. And the biggest economic crises of my lifetime, the current housing bubble, is the poster-child of this myopia. Failure to see the housing crises as a symptom of a much larger systemic problem leads the US to simply apply bandages to the problem; any true solution, other than the assignment or disavowal of blame, would be political suicide. Here, I would simply like to point out that the housing bubble is popping throughout the world, although not as precipitous as in the US (14.1 % in Q1 according to the Case-Shiller Index).

Irish Housing Market Continues to Slide
British house prices post biggest fall since early 1990s
Housing Woes in U.S. Spread Around Globe

More Gas Blues...

As The Blue South points out, lurking behind the increase in gasoline prices are the rises in heating oil and natural gas prices.

I Know Its Almost Summer And All...

Typically, the prices for these heating products decline during the summer because of decreased demand, but instead, the run-ups have been quite spectacular, reaching record highs. Unfortunately, that means that staying warm will be much more expensive this winter. To prepare for these costs, utilities are already seeking regulatory permission to increase consumer natural gas rates; expect many more announcements to come. So far, most of the requests range from 15-25 percent; the more successful the utility has hedged the increased rates, the lower the increase should be (hopefully). Once again, the loser are the consumers. Consumers, unable to afford the increases, will curb demand, theoretically leading to lower wholesale prices; however, the utilities will have already locked in the retail price, thus pocketing the spread. However, because a de facto price floor has been established, speculators and investors in natural gas can bid the price up even as demand decreases.

Gas rates to nearly double
PSE&G seeks 20 percent increase in natural gas rates
Ameren says natural gas rates going up in Illinois
Elizabethtown Gas Requests Gas Cost Increase to Cover Rising
Missouri Gas Energy's Western Missouri rates will rise
PECO to increase natural gas prices