It is sometimes difficult to think about deflation, while prices for education, health care, food and other necessities appear to be rising. In December, I wrote Tis’ the Season for Deflation. Half in jest I created the Single Malts I Like Every (“SMILE”) day index. Two more harbingers of a deflationary economy now clearly present themselves.
The Prophet’s SMILE Alert
Lagavulin is my favorite single malt. And as far as I am concerned, the best of the best is their Distiller’s Edition, also known as “double matured” Lagavulin. Since Laphroaig 30 is no longer available, this Distiller’s Edition may be the best scotch in the world.
Until recently, a cozy relationship with one’s local beverage purveyor might get you a bottle or two each year at $100 or more. I was shocked to learn recently that Park Avenue Liquor Shop in New York City (one of the highest end purveyors) was offering this special edition for $65, discounted from $105. Until recently, Lagavulin has been “on allocation,” meaning that there was an extremely limited supply. Doing some checking, I found that a large New York discount store which had never carried the “double matured” because of lack of availability was now offering this scotch for $59.99. We can surmise that Diageo, Lagavulin’s parent company, suddenly has a worldwide surplus of one the most sought after single malts anywhere.
Toyota to Reduce Car Prices 30%
Faced with increased competition from Volkswagen, Hyundai and other producers, Toyota announced that it:
…seeks to strengthen its leading position among the largest global producers of vehicles with a strategy to be implemented in coming years. Japanese manufacturer intends to adopt a new strategy to reduce costs, able to lead to a reduction in the price of its models by around 30% no later than 2013. See Toyota Seeks to Reduce Prices of Its Models by 30%
Of course, Toyota is seeking a 30% price reduction from its suppliers.
Other Straws in the Wind
- M3 money supply, the broadest measure of economic activity and money, recently declined at the greatest rate since the Great Depression. See Money Supply
- The Philadelphia Federal Reserve’s Business Index showed a recent dramatic decline. See US Stocks Turn Negative After Philly Fed, Leading Indicators Data
- Texas state sales tax collections stagnating. See Texas Sales Tax Collections Stagnating
- New claims for unemployment benefits remained stubbornly high. See New Claims for Jobless Benefits Rise Sharply
- Lumber price decline 30% in May.
Draw Your Own Conclusions
Economists and pundits debate whether deflation or inflation is the dominant economic trend. Bill Bonner once said there will be inflation in things that you need like health care and deflation in things you do not need like DVD players, flat screen televisions and single malt scotch. I side with Michael Shedlock and Karl Denninger who believe that with too much outstanding credit, an army of unemployed workers, millions of empty houses and excess industrial capacity, we should be looking for deflation to prevail.
For me, I am going to SMILE, sit back and sip my newly reasonably priced Lagavulin “double matured” and contemplate the universe.
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Related posts:
- Tis’ the Season for Deflation
- Single Malt Scotch Index Redux
- Bailout Nation Lives: Revisited, a Short Update
- Ben Bernanke is a Dinosaur
- Pension Insecurity
Tags: Lagavulin, lumber, Philly Fed Index, Texas sales tax, Toyota, unemployment benefits
