CHARTS OF THE WEEK: Cities Use This Accounting Trick To Hide Massive Unfunded Pension Liabilities

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chart of the dat, pension system, oct 2010

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  • This Creeping Inflation Measure Is Keeping Bernanke Up At Night
  • Cities Use This Accounting Trick To Hide Massive Unfunded Pension Liabilities
  • The Link Between Corporate Profits And Investment Is Dead
  • The Trade Deficit Ripped Higher In August
  • The Good News Is That Hyperinflation Is AMAZING For Stocks

This Creeping Inflation Measure Is Keeping Bernanke Up At Night

It's easy for Ben Bernanke to pump more money into the system as long as official inflation measures remain subdued.

But trouble is looming. Commodities are heading up. Rents are heading up. And quietly capacity utilization is heading up. That means that the slack in the economy is disappearing, and as Morgan Stanley notes, a hike in the CPI can't be far behind.

When this happens, Bernanke will be in a serious bind because there's a good chance the labour market and housing market will still be weak. But a higher CPI will make it much more difficult to keep pumping.

Cities Use This Accounting Trick To Hide Massive Unfunded Pension Liabilities

The Link Between Corporate Profits And Investment Is Dead

What are companies doing with all their cash. Not investing.

This chart clearly demonstrates what a lot of people have been complaining about: that companies are spending money on buybacks and mergers and not anything that will create new business or jobs.

Specifically, as this chart form the New America Foundation equipment and software spending seem pretty delinked from profit.

The Trade Deficit Ripped Higher In August

Dreams of a global rebalancing continue to fade, as the trade deficit ripped higher in August.

Analysts were looking for a $44.5 billion deficit -- -- up from $42.8 billion in July -- but instead we got a $46.3 billion deficit.

Quick, China, revalue your currency already!

The Good News Is That Hyperinflation Is AMAZING For Stocks

Israel, from 1972 to 1987, averaged inflation of 84%, according to Dylan Grice of Societe Generale. The country printed more money to keep up with its pace of military and social spending and inflation went as high as 500%, annualized.

In nominal terms, stocks on the Israeli exchange surged during this period, 'rising by a factor of 6,500,' according to Grice. Real gains, however, weren't there to be had.

So if we ever have hyperinflation in America, at least the Dow will go to the moon!

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