The answer ... is no.

So what's the "stag" part of stagflation look like as we begin 2008?

The economy seems to be decelerating rapidly:

* According to the latest data, released Dec. 27 but dating to the end of October, home prices are falling at a record rate. The S&P/Case-Shiller index of home prices in 10 major metropolitan areas dropped 6.7% from October 2006. That's a record year-to-year decline, beating the old record of 6.3%, set in April 1991.

* That decline is feeding into a whopping increase in credit card delinquencies. The dollar amount of credit card debt at least 30 days late jumped 26%, to $17.3 billion, in October 2007 from the same month of 2006, according to an Associated Press study of 325 million individual accounts held by the 17 largest credit card trusts.

* Retail sales in the just-concluded Christmas shopping season appeared weaker than projected, with growth in same-store sales running below estimates of 2.5%, according to the International Council of Shopping Centers. All this is starting to hit the real economy where it counts: in the unemployment numbers. Initial claims for unemployment, a good gauge for what's going on in the job market, rose to 350,000 in the week that ended Dec. 22. That left the four-week moving average for initial claims at 343,000. That's getting worryingly close to the 360,000 level in the four-week moving average that has accompanied recessions in 1990 (362,000) and 2001 (373,000).

But as bad as this news is, it doesn't add up to the "stag" in "stagflation."

Is '70s-style stagflation returning?

Are We in a Recession?

Six experts assess the current state and forecast the future direction of the American economy.

Here's Morgan Stanley's Stephen Roach:

Home prices are likely to fall for the nation as a whole in 2008, the first such occurrence since 1933.

Here is Laura Tyson, former chair of the Council of Economic Advisors:

The economy faces a vicious downward spiral of foreclosures, declining property values and mounting losses on mortgage-backed securities and related financial assets.

... huge waves of foreclosures will depress the price of residential real estate still further. Plummeting real estate values and escalating foreclosures will cause further losses on mortgage-related securities and will further burden American consumers already dealing with higher energy prices and substantial debt.

Here's the current president of NBER:

There is a substantial risk of a recession in 2008.

More:

Even if the economy avoids a recession, the road ahead will be rocky.

And more:

Easy money, it seems, was an illusion. Society was not so rich as it seemed.

You Can Almost Hear It Pop

The sacrifice of human life for the sake of a cup of coffee is nothing new.

What is new, and new to the past two decades, is the huge rise in the quality of Anglo-American coffee represented by Starbucks et al, after decades of ersatz, instant and stewed coffee. For most of the twentieth century, British coffee wasn’t black gold; it was black dishwater. Coffee had been bad for a long time. The chunk of history which usually gets missed out from the story of coffee is the nineteenth century, the century par excellence of free trade and adulteration, which laid the groundwork for the willingness of the public to accept a pretty unpleasant beverage under the name of coffee.

... The average British consumer of coffee in 1850 was getting a terrible deal.

Now, we are still getting a terrible deal (two pounds for something that costs next to nothing to produce) but no one can claim they are being ripped off. If anything, the situation has become reversed. The consumer, assuming he or she has two pounds to burn, can buy themselves a cup of coffee which is wonderfully pure, pre-selected for taste by hundreds of nasal coffee-swillers, and brewed to perfection by a highly trained barista. Their two pounds will also buy them the use of a comfortable chair in a well-lit, air-conditioned room, for as long as they wish. We have moved from a nineteenth-century market in which the consumer was systematically ripped off to one where the consumer is king. If only the desires of this consumer could finally be made to collide with the needs of the coffee producers, we would be living in a kind of caffeinated paradise.

Smell the coffee

Although the concept of milieu does not necessarily include a spatial dimension, I argue that in the case of information technology industries, at least in this century, spatial proximity is a necessary material condition for the existence of such milieux because of the nature of the interaction in the innovation process. What defines the specificity of a milieu of innovation is its capacity to generate synergy; that is, the added value resulting not from the cumulative effect of the elements present in the milieu but from their interaction. Milieux of innovation are the fundamental sources of innovation and of generation of value added in the process of industrial production in the information age.

See also:

Atlanta is just as hosed as Munich.

Now this is what I call a "No Parking" sign:

No Parking!

SOA you thought you still had a soul, eh?

In an economy more and more populated by "knowledge workers", one would expect the productivity and real income of employees to move upward together, as an increasingly skilled workforce benefits from its own improved efficiency. But since 1995, the year when the "new economy" based on information technology began to take off, incomes have not kept up with productivity, and during the past five years the two have spectacularly diverged. Between 1995 and 2006, the growth of employee productivity exceeded the growth of employee real wages by 340 percent. Between 2001 and 2006, this gap widened alarmingly to 779 percent.

...

Nowhere have "Enterprise Systems" technologies been more rigorously applied to the white-collar workplace than in the health care industry. The practices of managed care organizations (MCOs) have provided a chilling demonstration of how enterprise systems can affect the work of even the most skilled professionals, in this case the physician.

For-profit health care providers that relied on this kind of standardization, such as Aetna and Humana, performed significantly worse than their counterparts in the treatment or prevention of cancer, diabetes, and heart disease. But many of these health care companies think that ES technologies have made them profitable, and it seems unlikely that these practices will be discarded anytime soon.

In The Culture of the New Capitalism, a book based on a series of lectures given at Yale in 2004, Richard Sennett describes how the widespread use of enterprise systems has given top managers much greater latitude to direct and control corporate workforces, while at the same time making the jobs of everyday workers and professionals more rigid and bleak.

The spread of ES has resulted in a declining emphasis on creativity and ingenuity of workers, and the destruction of a sense of community in the workplace by the ceaseless reengineering of the way businesses operate. The concept of a career has become increasingly meaningless in a setting in which employees have neither skills of which they might be proud nor an audience of independently minded fellow workers that might recognize their value.

...

The evidence suggests that from an executive perspective, the most desirable employees may no longer necessarily be those with proven ability and judgment, but those who can be counted on to follow orders and be good "team players."

Here the purpose of the personality tests administered by career coaches becomes clear. They are useless as measures of ability and experience, but they may be reliable indicators of those who are "cheerful, enthusiastic, and obedient." The dismal experiences of many middle-aged job seekers suggest that corporations would rather find conformists among younger workers who haven't been discarded by employers and aren't skeptical about their work.

They're Micromanaging Your Every Move

In response to w1ld's post, "Jim Cramer Blows a Head Gasket", Decius asked:

Why didn't he blow a head gasket a couple years ago when this bubble started?

In a word: self-interest.

Here is why:

Until a few weeks ago, life on Wall Street was as good as it gets, with a nearly 5-year-old bull market, takeover deals galore, record profits and jaw-dropping bonuses. America's financial princes once again lived up to their image as Masters of the Universe.

But after a market upheaval that has hit like a bad case of whiplash, the fear on the Street is that the good times are coming to an abrupt halt.

You heard Cramer calling for the Fed to "relieve the pressure" ...

Some of these firms have been stuck with billions of dollars in risky debt used to finance corporate buyouts because investors have been unwilling to assume the loans.

... what he really wants is for investors to start buying these loans again, so that the firms who find them so profitable can keep selling them.

Coming back to the "why not three years ago" question for a bit of reflection:

The financial industry has endured many a bust following a boom, but today's looming troubles stand out because Wall Street was doing so well and the reversal was so quick.

"There are people who have gotten used to the lifestyle that comes along with the boom years, and some of those people are going to be in for a rude awakening."

Woes hitting Wall Street pocketbooks

In hopes of capturing the power of this new platform while avoiding potentially embarrassing incidents, IBM is taking the unusual step of establishing official guidelines for its more than 5,000 employees who inhabit "Second Life" and other online universes.

"Building a reputation of trust within a virtual world represents a commitment to be truthful and accountable with fellow digital citizens," IBM states. "Dramatically altering, splitting or abandoning your digital persona may be a violation of that trust. ... In the case of a digital persona used for IBM business purposes, it may violate your obligations to IBM."

"We don't want to be sheriff."

Intel also is drafting a tip sheet and plans to offer a voluntary course this year for employees who use blogs, social media sites and virtual worlds.

IBM guidelines govern workers' avatars

"New technologies are becoming so complex that many are beyond the possibility of democracy playing a role in their development," said Thomas P. Hughes.

The cliché that committees can’t create great ideas, or art, still seems to be true -- though whether or not that is the best way to innovate remains an open question. Who knows how much longer?

In a Highly Complex World, Innovation From the Top Down

A recent post reminded me of this; it seems I've never recommended it.

If today were half as good as tomorrow is supposed to be, it would probably be twice as good as yesterday was.

Ninety percent of the time things will turn out worse than you expect. The other 10 percent of the time you had no right to expect so much.

One-tenth of the participants produce over one-third of the output. Increasing the number of participants merely reduces the average output.

Most projects start out slowly, and then sort of taper off.

A few more of the laws are listed here. See Google Books for a preview.

Augustine's Laws