On Jan 29, 11:57*pm, " wrote:
On Jan 29, 2:03*pm, Ignoramus7752
wrote:



http://online.wsj.com/article/SB1000...57503289330141...

Two quarters of consecutive growth: in Q3, followed by 5.5% GDP growth in Q4.
There are some who say that because a large part of it was due to
inventory adjustment, that adjustment should be "counted out", but it
is not true: inventories are increased in anticipation of greater
future sales.

I believe that this ends the 2008 recession officially.

But here's an interesting factoid:

Q3 inflation: 1.2%
Q4 inflation: 1.4%
Interest rates: close to 0%

Guess what this portends for interest rates.

If I did not refinance last summer for 30 years @4.875%, I would be
refinancing now (5.22% on average last week).

I do expect that we will collectively become poorer (more exactly, our
actual wealth as a nation will not change or will grow, but the number
value placed on our wealth will become less), but that will occur
through inflation, as opposed to deflation. This is my personal
expectation that may prove wrong.

i

Inventories being increased are a result of many more market pressures
than anticipation of future sales. Currently many things a company
buys are only available in larger lots. Before the recession,
components and material could be purchased as needed, in smaller
quantities. Remember "just in time" inventory control. That isn't
working anymore.

My electronic assembly company now has to buy reels of 1000 components
if we want even one component. A year ago we could buy 100 or 200
crystals to build a circuit board for a customer. Recently, we had to
buy an entire reel of 1000 and had to get ones made with leaded solder
when we really wanted 100 with lead-free solder. We bought the last
reel available anywhere. The correct crystals won't be available until
June. The customer can't wait till June/July.

Last year we had to buy 2000 hand held push button switches with a
custom plastic housing in order to get the 300 we needed for a custom
product build. Since I don't do the purchasing and only hear about the
horror stories, I am sure there are many more components that the
minimum purchase quantity has gone out of sight.

I am sure the same problem is present in all types of manufacturing.
So, do not put much weight in the increased inventory figures.

Paul- Hide quoted text -

- Show quoted text -

The customer can wait...you can't.

What goes around, comes around.

The JIT effort just pushed the cost of inventory down to the suppliers
with the customers dictating the prices..

And it left only a few suppliers standing.

And now those suppliers being the only ones around can dictate price
and quantity to their customers.

Couple that with the fact that crystals are a custom part...always has
been.

The solution is to charge the customer the extra cost...and likely
lose the contract.

And the cycle continues on....

TMT