Monday, August 08, 2005
Report from the Midwest
Even here, in the cool, quiet dawn of the northernmost point of Michigan’s Lower Peninsula, major worldwide economic trends make themselves known.
For starters, the daily parade of iron ore ships that first appear on the western horizon heading towards us under the five-mile Mackinac Bridge and then plow inexorably through the narrow channel between Bois Blanc Island and Mackinac Island, are greater in number than I have seen in a decade—and they are always startlingly huge beasts.
Those ships are taking iron ore from mines in Minnesota to steel plants in Hamilton Ontario and the Detroit area—which are having the best years of their lives thanks to booming consumption in China and India.
For another, the woman at the front desk of the hotel—this is a 118 year old hotel in the heart of the Midwest—is from Bulgaria. So is the kid in the coffee shop, and so is the girl who serves coffee at breakfast.
Before they arrived this year, the only seasonal staff was the local kids from the area and the Jamaican men and women who have been handling the dining room for years. Turns out, the Bulgarians responded to a jobs fair and came over here to work.
One more economic trend: inflation, or at least whatever it is you call price increases which the bond bulls wants to pretend don’t exist.
The ferry to the island—diesel fuel costs, you know; the hotel itself—being fully occupied and consuming millions of BTUs of electricity for running the building and gas for cooking the food; and even the local fudge-makers who churn out cubic yards of the thick, fattening stuff—which requires that pesky, ever-present and highly costly thing that the government and the bond buyers deduct from the various inflation indicators as if it doesn't matter...also known as “energy.”
They’ve all raised prices.
Let the bond market beware.
I Am Not Making This Up
Posted by Jeff Matthews at 7:18 AM