I’m reluctant to sound alarmed, but with the apparent shape of an impending economic Katrina moving over North America, it is getting harder to grant the benefit of the doubt. The dollar is sinking, exposing this import-heavy nation of ours to price increases in nearly every sector. The petroleum resources that energize global production and grease all economic skids is generating considerable doubt and turmoil in financial circles.
Oil production is flat in many key regions but the demand for consumer goods by the global middle class is expanding. Our television-enchanted population, brains scrambled to numbness by chronic exposure to American Idol, are seeing only what the media powerbrokers want us to see. The eternal message that comes from TV is spend, spend, spend.
The popular economic indicator is the stock market. The DJIA up- good. The DJIA down- bad. It is a sort of pallative. We’re lulled into a false comfort zone by the meta-stability of todays stockmarket. Other dots are beginning to line up into a harmonic convergence, however.
Yesterday, as a humorous conversation starter, I asked a senior colleague well placed in the petroleum industry this question- “when will crude oil hit $150/bbl?”. His reply surprised me. He estimated that it would happen this summer. Later, tempering his answer somewhat, he suggested that it would be more like $130/bbl, and mostly on the strength of nervousness in the market. He added that at present, crude oil stocks in the USA were in ample supply.
The extended weakness in the dollar seems to favor American exporters and disfavors import consumers. Hmmm. Does gov’t inaction on the weakness of the dollar amount to bias for corporate constituents and neglect of unincorporated citizens? Curious.
Advice- payoff as much debt as possible. Insulate your house. Get rid of that gas guzzler. Accumulate greater savings. A lot of the soon-to-be-unemployed are going to face higher higher gasoline prices for their commute to the new job at the auto salvage yard. And when they get back to their trailer at night, the thermostat will be set low due to higher heating costs. Beans and weenies, Mac-n-Cheese. Bon apetite!
Lamentations on Chemistry 
NYTimes – $4/gal gas by this summer.
I have a house in the city to sell, I expect its value will go up when some SUV drivin suburb dweller decides his commute is too long.
Today in Toronto, gasoline costs C$1.07 per litre = US$4 per gallon.
I would suggest you not pay off debt that is locked in at a fixed rate. Rather you should use your savings to purchase appreciating assets such as gold silver, even ag product options such as Corn/Wheat (difficut, but there are some ETFs).
I would stay away from stocks unless you really know what you’re doing. Consider buying some foreign currencies (New Zealand, Canada, etc.).
Probably the biggest threat we face is a destabilized China. No more cheap goods spells mega-inflation.
We are heading into a CATASTROPHE. The commodity bubble will crush the world economy. I really hate the bone head commentators I hear on TV acting like there’s no recession and that everything will be fine in 5 months after we all get our diluted rebate checks.
Prick head politicians only know how to stimulate shopping.
Actually, now might be a good time to buy petroleum producer stocks- ExxonMobil, etc. The crude they’re pumping is going to get a lot more valuable.
Bush II economics can be explained like this- if you want to make your blanket a foot longer, you cut off the top 1 ft and sew it onto the bottom. Thus, you’ve lengthened the end of your blanket.
Jesus H. Christ! We’re 5 years into the most expensive war in the history of the solar system and we’re going to reward ourselves with a $150 billion spending spree??!!?? From what pile of money??
All of you are making too much sense. Go back to sleep America, everything is fine. When you wake up this morning you’ll have a beautiful new job with a great view! (out of your car’s dashboard because you’ll be living in it too!)
Since we’re talking doom an gloom. I wonder what’s the most nutritious bulk storage food? Rice, Pasta? Soy? I was thinking of buying a couple of 20 pound bags of rice. Yep, I might be laughing at myself one day but I’m not sure how long the stuff can last. I’m a thinking there is going to be a run on the dollar at some point. Too much friggin optimism about how this will ‘all be over in a few weeks’. I very much doubt a new democratic president will be prone to fiscal restrain (not saying Repulicans are any better). And if we pull out of Iraq, the price of crude will further surge. In many ways today’s market volatility is ‘the market’ grappling with how to price these future events in’ (since the market prices today generally reflect a 6 to 12 month time horizon).
I’m thinking I could sell freeze dried ice-cream at a mega premium.
Soy Protein. Yeah, I might be indulging in excessive doom and gloom. True enough. But I don’t believe that any of our national leadership is smart enough to steer the boat to calmer waters. There is too much loose talk of further hostilities. The next president may have to live with quite a bit of trouble that Bush II has gotten us into by way of public law or precarious international arrangements.
The Big Tax Rebate coming up should have been spent on infrastructure- electrical transmission lines, power plant upgrades, harbor upgrades, bridge repair, highways, etc. At least American firms could have a chance to bid on the work. How much of the rebate is going to China by way of Wal-Mart for non-durable goods? I’ll wager 1/4 will go towards foreign made goods. .
One day China will buy Walmart and the circle will be closed.
Your arguments are far too logical. You see we’re engaged in class warfare here.
It’s the executives vs the rest of us.
When IBM recently stated it would buy back 15 billion in shares -an enormous sum- it was doing so to insure its executives stock option compensation. You’ve seen these share buy backs across the board in the last several years. Why should ‘Mr. Steve Wins’, our hypothetical executive take a chance on risky R&D or compensating his employees, when he can GUARANTEE his stock will rise, because he’s buying it! IBM is no longer a company to aspire to work for. It uses short term contracts or less, recruiting heavily via h1b and L-1 visas.
This is happening in every major company. Replace the American with a cheaper, faster better foreigner on a temp visa. Our government is allowing in foreigners over double the quotas approved by congress in order to suppress inflation.
Temp-employment is the favored business model for Mr Wins. He sees the bottom of the economic tier as an exploitable resource.