Of Barbie Dolls, Swiffer Dusters and Alan Greenspan

“Oil’s Surge Ignites Cost Increases,” the Wall Street Journal reports alarmingly today, “For Products From Plastics to Shoes.” Not only has Mattel raised Barbie Doll prices, the Journal reports, but “rising oil is boosting the cost of raw materials for diapers, pantiliners, Swiffer dusters and other consumer products….”

Gee, who’d have thought the tripling in oil prices would have such an impact? Alan Greenspan certainly didn’t–I suppose his infinite faith in the power of productivity prevented him from seeing beyond the fake “ex-food and energy” inflation calculation both the Fed and Wall Street like to use.

Today’s CPI won’t help either–whatever way you look at the data–and the bond market finally gets it: the 2 year yield has spiked to 3.87% this morning…a far cry from the “1” handle on the 2 year not so very long ago.

Perhaps its distance from Wall Street and Washington is what allowed a certain very smart commercial real estate landlord, the privately held Shorenstein Company, to see through the fake CPI data of yore and be a seller of San Francisco real estate for the last year and a half.

Quoting the New York Times: “Prices are staggeringly high relative to the returns and the underlying fundamentals,” said Douglas W. Shorenstein, the chief executive of his family business, in an interview in his 49th-floor corner office at the Bank of America Center overlooking San Francisco Bay. “If somebody is willing to pay a lot more than I would pay, then we’re a seller.”

Yesterday’s Fed moves, today’s CPI and tomorrow’s bond yields will likely prove the Real-Estate-Happy-Little-Guy, who got left holding the dot-com bag, wrong again.

Jeff Matthews I Am Not Making This Up