My kids are on spring break for the next couple weeks and I was walking them to the park yesterday afternoon when I was suddenly surrounded by riot cops and TV cameras. Admittedly I was looking down at my phone and not paying attention, but it was surprising how quickly it happened. I looked up and saw I was in front of the Peugeot headquarters on Grande Armée, and the riot cops were bracing for another massive protest over the closing of another plant.

A few minutes ago the Eurozone unemployment numbers were posted, and they went over 12% (ticked up to 12.1%) for the first time in Eurozone history. Greece led the pack with a staggering 27.2%, followed closely by the arguably more dire situation in Spain with 26.7%. Things are tough all over, as they say, and a Zone-wide unemployment rate well into the double digits does not bode well for economies struggling to get back on their feet.

Here in France the lack of jobs has been Hollande's biggest hurdle, and his approach to the problem has been less than inspiring. At some point the French are going to have to wake up and realize that it's a global economy and they're going to be the perennial victims of it if they don't get with the program and stop being so anti-business.

You hear it all the time, maybe even every day: the Fed’s never-ending quantitative easing program led by $85 billion per month in asset purchases, will eventually cause hyperinflation.

This will eventually lead to a devaluation of the dollar, skyrocketing prices for everyday goods, and death, destruction and doom of all kinds. Some very smart people subscribe to this, including many that WSO admires: Peter Schiff. Jim Rogers. Kyle Bass.

But here’s what’s probably driving them all nuts: despite no signs of letup from the Fed, inflation remains quite historically low, well within the 2% y/y benchmark sought by that institution.

Last week I posted about the history of the Drachma and Greece.
Thought it would be interesting to share the history of the Roman empire and its currency. The following is based on a speech by Joseph R. Peden given in 2009.

Scholars have devoted a great deal of energy to examining the problem of how the Roman Empire lasted so long? And did it decline, or was it simply transformed into something else?

Monetary policy always serves, even if it serves badly, the perceived needs of the rulers of the state. If it also happens to enhance the prosperity and progress of the masses of the people, that is a secondary benefit; but its first aim is to serve the needs of the rulers, not the ruled.

There are many different ways to determine the value of a company during an M&A transaction. Most of the time, the purchasing price is based on some sort of multiple (such as Firm Value / EBITDA). But what is a company’s real EBITDA? Let’s assume that the buyer’s investment bank decides to evaluate the target at 7 times its EBITDA. In order to accomplish a low transaction price, the buyer normally hires financial advisors from the transaction advisory department of a big4 company. Their role is to adjust the target’s EBITDA and to calculate a normalized EBITDA.

We are all familiar with the term inflation. Most of the time it refers to prices and money supply, and is discussed on a regular basis. But few mention inflation's ugly stepchild, "panflation".

Panflation, as coined in an article in the Economist, refers to the inflation of nearly anything besides prices. For instance:

The recent back-and-forth between Paul Krugman and Ben Bernanke illustrates that there is no definitive answer to this issue. Krugman argues that Bernanke is unwilling to try any policies that aren’t absolutely guaranteed to work. In other words, he’s shielding the Fed from criticism and political backlash.

Krugman’s answer to the problem? Raise inflation expectations.

I agree, to an extent.

Here are some key points supporting and criticizing the case for greater inflation, followed by my own analysis of its possible effects:

I usually spend most of the US winter here in Argentina, something I have done for the last six years. During this time, I have seen local prices skyrocket, the peso become overvalued, and what used to be “cheap” by US standards, become barely affordable. I’ll give you some examples: maintenance in my apartment, from Ps 600 to Ps1400 in five years. Mate prices just doubled, from Ps 14, to Ps 28. I used to pay Ps 14/hour for my housecleaner, now I don’t pay Ps 25. Of course I’m not really complaining too much, because the value of my apartment, in dollars, has tripled at the same time, and the lousy little car I bought three years ago has lost little, if any of its value.

My Argentine friends and relatives complain a lot about rising price but seem to be living la vida loca, almost careless or carefree about their money. People treat money like dirty paper, which is actually what pesos look like here, peso bills are so thin that they break apart in your hands!

Well, I polled some locals about dealing with inflation and they gave me a few pointers in case it ever hits the US.

Lord knows we love our quantitative easing here in the good old U.S. of A., so why should Europe be any different? Or so went the thinking yesterday when the ECB opened a credit facility that quickly reached the level of our original TARP scheme. Now it looks like the Euro is in for the same drubbing the dollar took. BNY Mellon's Simon Derrick explains that the only way to pay for this new QE is to print more money. Europe becomes more American by the day:

Chalk this one up to, "Why didn't I think of that?" Ron Paul has proposed a novel solution to the debt ceiling crisis, and I'm having a hard time figuring out the downside (though I know there has to be a downside). Paul's proposal is that we simply erase the $1.6 trillion in debt created by the various rounds of quantitative easing.

You read that right. Just tear up the debt like it never happened, thus buying the government another couple years before the debt ceiling looms again. How could we possibly do that? Well, it turns out we just kinda owe the money to ourselves. So it's like moving the money from your left pocket to your right. Any interest owed by the Treasury Department to the Fed gets refunded anyway, so it's a net breakeven.

In the olden days, before indoor plumbing folk would hoof it to the nearby well for a bucket of water. Being that we overlook how necessary water is for every day function, trips to the well must have been plentiful. I imagine that this is where the expression going to the well once too often came from.

Well, if you are looking for a post about water commoditization or where to get the best overpriced bottled water…look elsewhere. This topic is just my personal well, the one that I like to go back to ever so often. The one that keeps me coming back in genuine thirst, when all the beer, liquor, soda, juice and tea will no longer do. That’s right, it’s time for another housing market rant.

With food prices growing in correlation to various commodities on the rise, American companies are reacting in turn by shrinking packages while keeping prices level. Surprisingly this has not created as great an uproar as I expected amongst the citizenry of the fattest nation on the planet.

We have reached the oversaturation point of politically correct lunacy, it is only natural to expect a hoard of blubber laden populists to scream bloody murder while claiming that their jelly roll and FUPA rights have been violated. Yet, I have hardly heard a peep about it. In fact, I think this could wind up being really good news. Considering how fat and nasty looking we have gotten as a nation a few ounces less in our Doritos and Dunkin Donuts bags could be the penultimate blessing of today’s troubled financial times. But how does this apply to those of us on The Street?

With the summer fast approaching it is once again time to play guess the gas price. Though financiers generally look to WTI or Brent prices, the numbers at the pump can make just as much of interesting market. With not too long ago attempts to create a futures market on Hollywood box office takes, why hasn't anyone begun the organized speculation of prices at the pump?

Here are two converging counterpoints addressing the issue in recent real time. Which one makes more sense to you? Better yet, what's the price of a gallon going to be at your neighborhood pump by the end of August?

The Bear Necessities

I wish I woke up to great news like today's every morning. Osama bin Laden finally caught the high hard one, and it was up close and personal with a bullet to the brain pan instead of a Tomahawk missile fired from hundreds of miles away. I hope he died afraid and in great pain like the vast majority of his victims over the years.

But this isn't another post about bin Laden. This is a post about how the rumors of the untimely demise of the dollar have been greatly exaggerated. Because as long as the U.S. has black helicopters full of SEALs delivering fiery death in 30 minutes or less anywhere in the world, the greenback will be the world's currency.

It's being reported that Canadian households will pay an extra $950 for gasoline this year, and since the Loonie and the greenback are at virtual parity and fuel prices are rising a like percentage, American families can expect to fork out an extra grand this year to put gas in their tanks.

Experts are calling for $5 a gallon gas by summer (gas prices have already hit $5 a gallon in D.C.), and that mean Americans will have to cut back elsewhere, because they sure won't drive less if history is any indication.

We know that $5 a gallon for gas is a hardship for most families, but not enough to cause a major shift in consumer habits. People cut back on dining out, vacationing, and SUV purchases, but it's mostly business as usual.

Sorry to deviate from Man Week, but the guy who gave you the Ben Bernank is at it again... and it’s gold.

Everything's up for debate in the new normal. One day we're up, one day we're down. One day I'm asking about a 6,000 Dow...today, I'm pondering it at 15,000. It seems the world has become inherently volatile, but then you talk to a trader and he tells you that there is no volume. One day it's $40 to fill up your gas tank, one day it's $65. Everybody is feeling the shocks and jolts of the changes around us but nobody can say why for sure.

Here's an interesting discussion on austerity vs. stimulus using the UK and the U.S. for examples. The UK has opted for reduced government spending and higher taxes to get their economy back on track, and it appears to be having the opposite effect so far. Conversely, the U.S. has been on a steady diet of stimulus and is weathering the global recession far better than the UK by most measures. Is this a vindication of the Keynesians? I think Dan Gross is way off base by discounting the food and fuel components of the CPI so heavily, but I'm interested to hear what you guys think.