Real Estate Market / Inflation / Recession / Depression

[jazzlover]

Our friend Kunstler has another pithy blog this week (November 10th James Howard Kunstler). I can spare myself some of his political ranting, but two paragraphs in this must read entry bear repeating here. While I don't always like some of his "over-the-top" hyperbole, he nonetheless has a better vision of the problems this country faces than most any of our leadership, and--sadly--most of the American public.

A case in point: the car industry. The Big Three, all functionally bankrupt, are now lined up for bail-outs from the treasury's bottomless checking account. Personally, I believe the age of Happy Motoring is over. Many Americans have already bought their last car -- they just don't know it yet. The current low-ish price of oil is a total fake-out, having to do much more with asset-dumping in the paper markets than the true resource supply-demand equation. Most of the world (the media for sure) has ignored preliminary leaks from the International Energy Agency's (IEA) forthcoming report which forecasts global oil depletion to be 9.1 percent in 2009. This is a staggering figure, very likely to offset whatever slack we see in global demand from the worldwide economic crisis. In fact, the global oil markets are poised for the most severe dislocations ever seen, meaning it's a toss-up what happens first in the USA: a major leg back up in oil prices, or shortages, hoarding, and rationing.
For my money (literally) there are only two main reasons that any portion of the car industry should be rescued at the present time: one, because we need somebody to manufacture engines for military vehicles, and two, because we need somebody to manufacture rolling stock for the revival in passenger railroad service that will have to be a centerpiece of the future economy if we want to remain a civilized nation.

If you read the rest of his blog from Monday, you have to ask the question, "Just how well prepared is Colorado for the new realities we face?" The answer for Colorado and Coloradans is pretty damned poorly--as poorly prepared, and maybe MUCH more poorly prepared, than the rest of America. It is a pitiful spectacle to see much of America's "wealth" disappearing before our eyes every day now, but the truth is that it was illusory and unreal from the start--a vaporous cloud that is evaporating, revealing something much less grand and sometimes downright ugly underneath.

[Shuffler]

Everybody's pretty happy-go-lucky with the cheap gas, though! Hummers are prowling the streets again..

I think it'd cost the auto industry billions to re-tool their lines to produce railcars or military vehicles...and I suppose we're gonna bail them out, too!

Let them go bankrupt and refi with all that bailout money we've already floated.

Who's next, the housing industry? I think the lines for bailout $$ are starting to form at Pelosi's office...

[POhdNcrzy]

Shuffles said: "Everybody's pretty happy-go-lucky with the cheap gas, though! Hummers are prowling the streets again.."

Shuff, I have a heard time believing this. Gas is not cheap at $2.50/gal. Also, is this a personal observation of yours of Boulder County auto traffic recently?

Here in RI, based on my personal observation, traffic around here has been about 15% less than "normal" for the past 9 months.

In recent weeks, traffic has dropped off quite noticeably to about 25% - 30% below "normal".

[Shuffler]

Originally Posted by POhdNcrzy

Shuffles said: "Everybody's pretty happy-go-lucky with the cheap gas, though! Hummers are prowling the streets again.."

Shuff, I have a heard time believing this. Gas is not cheap at $2.50/gal. Also, is this a personal observation of yours of Boulder County auto traffic recently?

Here in RI, based on my personal observation, traffic around here has been about 15% less than "normal" for the past 9 months.

In recent weeks, traffic has dropped off quite noticeably to about 25% - 30% below "normal".

Apparently <$3/gal gas is big news in Colorado, worthy of TV news reports and the front page of the local paper. The commuter traffic is no less from what I've seen. Maybe the mall parking lots are less crowded though.

The Sheeple can feel good as they feed their guzzlers this holiday season!

A pretty pathetic display of the psyche of the average consumer...to be joyful and merry about gas prices.

[Bob from down south]

Originally Posted by sterlinggirl

Are the banks going to create new preferred stock, or is Paulson planning to buy the existing shares?

In the first case, the bankers holding voting shares would have their risk diluted. In the second case, the bankers would have their risk completely ablated with an option to buy back the voting shares if the pyramid doesn't implode.

To answer this would require honesty and transparency...two things in serious short supply in DC and on Wall Street. Paulson and Bernancke are manipulating things furiously from behind the curtain like the Wizard of Oz, praying that Toto doesn't pull back the curtain and chew their legs off.

[CosmicWizard]

Even though gas has dropped to $1.89 a gallon, I'm experiencing little joy from my less costly fillups every 3 weeks. Big deal, I'm saving $20 a tank on the one hand and watching my 401K ( what's left of it ) decrease in value about a $1000 a day on the other hand. Hurrah for cheap gas! I'm saving lots of money.

I wish there was a way for Obama to assume office this afternoon. With the inept bush gang hooligans running things for another 68 days, will there be ANYTHING left of the economy? But how about the cheap gas prices! What the heck, maybe I'll buy a hummer and move 50 miles from town since gas will ALWAYS be cheap from this point on.

[Bob from down south]

Originally Posted by CosmicWizard

Even though gas has dropped to $1.89 a gallon, I'm experiencing little joy from my less costly fillups every 3 weeks. Big deal, I'm saving $20 a tank on the one hand and watching my 401K ( what's left of it ) decrease in value about a $1000 a day on the other hand. Hurrah for cheap gas! I'm saving lots of money.

I wish there was a way for Obama to assume office this afternoon. With the inept bush gang hooligans running things for another 68 days, will there be ANYTHING left of the economy? But how about the cheap gas prices! What the heck, maybe I'll buy a hummer and move 50 miles from town since gas will ALWAYS be cheap from this point on.

I hate it when you make me agree with you!!

[CosmicWizard]

Bob from down south wrote:

I hate it when you make me agree with you!!

Bob...we live in strange times!

[katzenfreund]

Originally Posted by CosmicWizard

Even though gas has dropped to $1.89 a gallon, I'm experiencing little joy from my less costly fillups every 3 weeks. Big deal, I'm saving $20 a tank on the one hand and watching my 401K ( what's left of it ) decrease in value about a $1000 a day on the other hand. Hurrah for cheap gas! I'm saving lots of money.

I wish there was a way for Obama to assume office this afternoon. With the inept bush gang hooligans running things for another 68 days, will there be ANYTHING left of the economy? But how about the cheap gas prices! What the heck, maybe I'll buy a hummer and move 50 miles from town since gas will ALWAYS be cheap from this point on.

I agree 100%. Ad to that the fact that our property values are falling with no end in sight yet... those that are close to retirement age are really in bad shape... having counted on their equity and 401K's.

[jazzlover]

I don't think anyone should be deluded into thinking that the new administration will "save" us from the economic debacle mostly of our own making. It should not be forgotten that many of lax credit policies, lack of oversight of the financial industry, debasing of the dollar, lack of coherent energy policy, and a whole lot of other stupidity was encouraged and permitted under the Democratic Congress of the last two years, the Clinton Administration before that, Bush I, etc., etc. Certainly, the current administration holds its share of blame for this, but it's a big tent, and there are plenty of others equally or more culpable. Probably the most culpable is the majority of the American population, who actually convinced themselves that there really was a "free lunch"--and then elected people for nearly a generation who would tell them that it was true. Truth is, we got exactly the government--and the catastrophe--that we asked for.

I predict, sadly, that the new Obama administration may fail as miserably as Bush has in its economic policies. Why? At the very root, there is no backbone in most anyone in Washington--Obama included--willing to tell the American people that ugly truth: We have squandered our natural resources, encumbered ourselves and future generations with a nearly unfathomable debt, debased our currency, and exported our economic power in a drunken binge of consumption and speculation that we could not afford. To correct those sins will take a massive downsizing in the material living standard in America for a very long time. The American people don't want to hear that--and almost no politician wants to rub Americans' noses in that truth and thereby end his or her political career.