On Wednesday, Dow Chemical Chief Executive Andrew Liveris made a high-profile announcement that Dow would
increase its prices by as much as 20%, starting June 1. Dow, the top
U.S. chemical company, said the plan was necessary to offset the impact
of rising costs for energy and related raw materials. Over the past
year, Dow has already increased its price by about 12%, but
those price changes have been phased in gradually rather than
implemented all at once.
In the interview, Liveris said he thinks the U.S. is underestimating
the level of inflation in the economy and he expects the rise in energy
costs is beginning to destroy demand. Liveris expects the price increases his company made will eventually be passed on to the consumer:
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Click for video
Andrew Liveris on CNBC
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Excerpt:
"I do think we’ve hit a raw nerve," Liveris said in an interview on
CNBC’s "Squawk Box." "I do think, out there in the world that we all
are living in, I think the consumer is screaming, and I think it’s the
topic du jour, and every company is in a different part of the value
chain.""We’re in a part of the economy that is very elastic," he said. "So unlike electricity, or unlike transportation, which up until now has been relatively inelastic, we’re getting demand-destroyed."
Liveris estimates Dow uses about one percent of the U.S.’s electricity to make its products, which become components of other consumers goods, and the equivalent of about one million barrels of oil a day.
"We’ve done everything at Dow to be cost-efficient, energy-efficient," he continued. "We’ve diversified our mix. We’ve gone overseas for low-cost joint ventures. I think everyone has to bear some of this out-of-control energy policy."
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Source:
Dow Chemical CEO Says US Underestimating Inflation
CNBC.com | 30 May 2008 | 08:14 AM ET
http://www.cnbc.com/id/24888493
Here is the ‘Economist’ story about emerging market inflation.
http://www.economist.com/finance/displaystory.cfm?story_id=11402856
Notice the chart: Brazil 5%, China 8.5%, Russia 14%. etc… Even Euro zone inflation is nearly 4%.
http://www.iht.com/articles/2008/05/30/business/euecon.php
Now our currency is either way down against the currencys they discuss, or fixed to it. How on earth can we have lower inflation if our currency is down, say 60-70% as it is against the euro where inflation is 3.6% and fixed to nations like the Middle East with 10% plus inflation and China?
Oh, and our inflation-adjusted GDP number GREW at 1% in the first quarter. Every business, in aggregate did 1% more business, annualized, last quarter.
So… the ‘Price is Right,’ right? Is there a Scott McClellan in the BLS? Come on down.
“Is there a Scott McClellan in the BLS?”
Apparently, we’re not there yet. In the mean time, we’re stuck with the likes of Dana “Blondie da Spin Sweetpea” Perino.
There was an interview with someone not long ago, I don’t remember who, but at the time his vision of America was that we had a “cold, dark future” with the energy policies that we are following…can anyone remember who this was? I know it was relatively recently, and this was poo-pooed by the mainsteam media, but it appears to me that unless we can afford energy his predictions will be spot on.
Bruce in Tennessee