Yikes: $2.85 a gallon (unemployment rate, living, prices)

[ff18wife]

Not to sound stupid but what is a CSA? Fairly new to the area, just curious.

[MermanMike]

CSA stands for community supported agriculture. It is where a farmer will take subscriptions for produce, and then you go to their farm or to some pick up spot to get your stuff. They usually already have it in a box for you, but sometimes there is harvest work involved. You pay a yearly fee, and they usually have produce from May-October. It is like a more organized farm stand, and allows the farmer to count on the income and allows the consumer to count on getting as many of their fruits and vegetables from a fresh, local source as possible.

[businezguy]

Originally Posted by mathjak107

yes i agree a slow down in our growth will effect world demand as well, without us going full steam the emerging markets will hurt as well. the point is that when we go thru these economic cycles we tend to get higher highs and higher lows each time. the bar get raised in price each time. and while the last downturn in the 90's we saw 10.00 oil our low may be some rediculiously high price. . but as the markets so typically do , they rarely play out the same way. our markets have telegraphed 67 of the last 11 recessions. we would all think a plunge in price was a given especially in a recession but my feeling is some economic or political events throw a spin on that. im just guessing here, boy i wish i knew but one thing i did learn from my 20 years of being in the markets is never count on anything playing out the way you think. so i think the whole point was that an etf holding a commodities index was at least a way to hedge against these price increases at least short term. because regardless of whats ahead these increases are real right now.

i just happened to notice that since jan 1st the deutch bank liquid (tracks food )index is up an incredible 18.1 % it tracks major food and farm products. that i got a feeling is going to be another rough area for price increases.

We really haven't had a higher high then in the 1970's. Today we pay less out of our paycheck then we did in the 70's and 80's, and the high we are having today is only slightly higher then it was in the 70's, when inflation is taken into account.

[businezguy]

Originally Posted by MermanMike

It's interesting to read your perspectives on this topic. It is clearly so important and I'd venture to say that most of us do not really have the kind of academic awareness of the markets that you both do, so I am interested to hear this discussion go on! And if possible, dumb it down a little for me! ;o)

I saw a youtube video of Glenn Beck talking to some financial guru about how our country is already bankrupt and that the recession has already started but most won't acknowledge it until it becomes more intense.

I have heard opinions ranging from slightly pessimistic to downright apocalyptic in terms of where we are headed over the 4 or 5 years and I always like to be prepared!

Hey, on the topic of rising food prices...is anyone in Wayne county part of a CSA that they like? I have heard of a few different ones around but don't know anyone participating so would like some feedback if you're out there.

I'm not going to claim to have a high acedemic understanding of the market, but I'll try to communicate what I'm saying better.

It's really HARD to say how bad this decline in the market will be. With the housing market, preditions where for slower growth, prices staying even, a slight decline, a moderate decline, and then by the time those predictions came, final numbers for 2007 showed a historical decline.

You can probably use that as a yard stick when you listen to experts who state predictions. I currently don't have a handle on how hard this downturn is going to be because there are too many factors. When it comes to the general economy, and the cost of gas, we need to watch too very interesting forces. First, when the fed declines the interest rate, will the value of the dollar go down further, making the cost of oil more expensive, or stay around the same? And even if the dollar does decline, will unemployment go down far enough to decrease demand for oil enough
that the cost goes down anyway?

Basically, signs are pointing to two historical events. The first is a decline in the median cost of housing at a historal rate, something that is currently happening. What may happen further is we'll have a historical decline in demand for oil because consumers are losing their jobs, their cards are maxed out, they are unable to get credit, and because they have common sense and stay within a smaller budget. If both of those things happen, unemployment will be dragged down further, and watch those gas prices really begin to plummet.

The bad news is times will be tough. The good news is housing costs, and oil costs will go down, and this will eventually recover the economy.

One other interesting thing to note. There may be a third historical even that takes place if things get bad enough. We may see a historic decline in government spending, and education. This could be forced down by the brute force of the free market.

Why is all of this happening? Because the cost of employees in the US relative to competent employees in the rest of the world is too high.

Europe will be next to experience issues, so they can enjoy their insulation for the time being.

[mathjak107]

my feeling is we still have quite away to go to a bottom as credit card defaults while increasing are still not at levels that indicate peaking out. past housing declines have shown that right after mortgage defaults credit card defaults peak. very few will default on their mortgage and pay their credit cards.

[businezguy]

Originally Posted by mathjak107

my feeling is we still have quite away to go to a bottom as credit card defaults while increasing are still not at levels that indicate peaking out. past housing declines have shown that right after mortgage defaults credit card defaults peak. very few will default on their mortgage and pay their credit cards.

So part of the question is, will folks who default on their houses, and then their credit cards cause a further issue with finance, and a further tightening of credit, a weakening of the dollar, and more issues for the economy. It will certainly mean a reduction in consumption, and therefore a reduction in demand for oil. For now this seems like it could become a bit of a cycle.

[businezguy]

Incidentally, here's an interesting article. Analysts predict a decline by 300,000 barrels, but instead the stores of oil increases to 4.3 million barrels. Remember, there may be enough force for oil prices to go back up in the summer to maybe even higher prices then in the winter (not by much), but that would pretty much be the end of these very high oil prices, and in fact we could have quite a crash in oil prices coming up.

Here's the article:

Oil falls on surprise supply increase - Jan. 16, 2008

[mathjak107]

sure looks like thats how it should play out. heard an interview on blumberg radio tonight , thats nyc's top wall street station. they had a senior analyst on from bear sterns who felt that even with the slow down there is still to much demand from the world with china and all the emerging markets which were never a factor in our recessionns to substantially bring energy prices down. guess time will tell. in the mean time im getting tired of getting poorer every day with this market. ha ha ha

[businezguy]

Originally Posted by mathjak107

sure looks like thats how it should play out. heard an interview on blumberg radio tonight , thats nyc's top wall street station. they had a senior analyst on from bear sterns who felt that even with the slow down there is still to much demand from the world with china and all the emerging markets which were never a factor in our recessionns to substantially bring energy prices down. guess time will tell. in the mean time im getting tired of getting poorer every day with this market. ha ha ha

That may be true for now, but the way they are communicating that makes it sound like China is an isolated consumer of oil. What's not really understood is that in a manner of speaking, WE are China, because we are the ones consuming the products. All that's going to happen is China will continue to manufacture for the time being, and then find that their inventory doesn't have as much demand, and have a high supply of products they can't unload.

They'll eventually catch on, and their production will go down, and demand for oil will decline.

[mathjak107]

we are manufacturing our own line of water pumps in china. we have a state of the art factory we contracted to make them for us. although its been getting better the quality has really been an issue. we are in the process of getting a local engineer to ride herd and hopefully improve their quality. most facories over there have state of the art machines and yet produce such crap. we are looking into maybe moving operations to mexico instead.


if this is a sign of what they will produce in china they may end up back in the stoneage.