Update

Hum… another month or so has passed by since my last post. Apologies again for the lack of new material, folks. I’ve started a new job, and between the fun & games associated with a major change like that that and the generally increasing level of activity in my household with the advent of spring, I’ve been pretty busy. I’ve also recognized that my writing has been sounding more like a broken record, and I don’t know that I would be adding a whole lot of value to anyone’s life by repeatedly harping on the same few themes over & over.

Briefly, here are a few of the things I’ve been watching over the last few weeks.

• Oil is rising… fast. $120 per barrel is within sight… nearly double the price we saw last year at this time. People can argue ad infinitum about the causes of this price spike, since there are a number of them. The fact of the matter is, though, that pump prices are finally starting to catch up with the pace being set by crude oil. I gassed up my 4-cylinder passenger sedan this morning and paid nearly $50 for the privilege of doing so. I guessing it will cost my wife around $60-$65 when she fills up her minivan soon. When I first bought my current vehicle, I was able to fill it up for around $20 per tank, and soon I will be paying three times that. I paid $3.45 per gallon this morning to fill up. This is close to the peak of the post-Katrina price spike in 2005 and at the time was met with horrifying reactions. Now, it’s met with glum acceptance and people are just happy it hasn’t hit $4 yet. How easily we adapt to events…
• Food prices are starting to get more play in the major media. If you’re not familiar with what I’m talking about, search for ‘food riot’ or ‘food prices’ in Google news. There are so many stories popping up that it makes little sense to try and highlight the important ones, since there are so many of them. So far, those of us in the first world haven’t been affected too badly by this process, but I think that’s coming. As with most other things, when the shit hits the fan, the fecal matter is not evenly distributed, and the world’s poor are being affected most right now. I find it hard to complain about my grocery bill rising when poor folks in Haiti are forced to eat ‘biscuits’ made up mostly of yellow clay.
• Commodity prices have skyrocketed over the last year or so, but recently there seems to be a decoupling between the price of oil and that of other commodities (gold and other precious metals, in particular). The US dollar has found a level of support it seems, and I’ll be curious to see what events will finally force it below the 70 mark for good.
• The US financial market is continuing to get shredded.
• As is the US housing market.

The Decline of Suburbia

MinnPost (a new online Minnesota news site that is quite good) ran an article today on the growing malaise spreading throughout suburbia nationwide.

To most readers it will be just another in a growing corpus of economic gloom & doom stories that have been popping up over the last year or so. When read through the lens of peak oil and energy scarcity, though, it can be seen as confirmation of what Kunstler, Ure and other such folks have been saying for years now. Housing values down, tax receipts down, crime up, etc.
Is this the start of the decline of the burbs? I suspect the answer is ‘it depends,’ since the pain isn’t being distributed equally right now. Some areas are definitely suffering more than others depending on what state you live in, what businesses support the local community, and so forth. The fact that energy costs are being cited as one of the reasons for the problems affecting these areas is significant to me.

If this trend does continue, I think we’ll see more stories like this, this and this. As a kid born & raised in the burbs, the thought of seeing my former & current neighborhoods transitioning to slums is unsettling, but as energy prices continue to rise, I think it may also be inevitable.

“You are going to cause a riot, a revolution, and this time, it is going to be bloody.”

I expect to see more stories like this as the year moves on.

The spring thaw is coming, and I plan to get my veggie garden in by the end of April.  Not only is it a healthy choice, but it will also likely make economic sense.
HT: Urban Survival 

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Welcome to Squanderville

Here’s an interesting article from Time Magazine regarding the current financial mess we are in. The end of this story isn’t particularly pretty if you’re an American citizen, but not so bad if you’re Chinese, Korean, etc.

I’ve been watching the financial crisis develop for a number of months now, and while I’d like to believe differently, I am pessimistic about the way the American economy is heading. Gas prices are still relatively stable, but I’m seeing more and more evidence, both concrete and anecdotal, that food prices are rising, and doing so at a fast clip in some cases. My family’s food bills seem to be creeping up… thankfully spring is on it’s way and with it the re-opening of the farmers’ markets and my nascent vegetable garden.

While I think the US economy is slowing down and may truly go into a depression at some point, I don’t think the wheels are about to fall off. I’ve thought that we were in major trouble several times in the past, and the resiliency of the system has continued to amaze me. Some of this is psychological, I think. The US dollar, like other fiat currencies, is worth what people think it’s worth, and a large mass of people fervently wish that it keeps as much of it’s value as possible. Many global fortunes will be destroyed if the dollar becomes more useful as toilet paper or heating fuel rather than as a medium of exchange. The power of positive thinking in action, I guess. Or, it could be that on the deep political level, a number of decision makers around the globe also understand that the “full faith & credit” of the US is also backed up by a large arsenal of weaponry, both conventional and nuclear.

A possible ray of hope: housing prices in my neighborhood have dropped far enough that some houses are starting to sell. A rough estimate so far is that housing prices have taken around a 20% haircut in my immediate neck of the woods. YMMV, of course. My one neighbor a few houses up is doggedly sticking to something close to a 2005 price for their home, and are swinging in the wind as a result.

The rest of this post deals with some personal & health issues. If you’re not interested, then thanks for visiting.

That Was Quick…

JP Morgan has acquired Bear Stearns today, with fast-tracked approval from the Fed.

Morgan is acquiring Bear for a measly $2 per share;  a nice piece of business for them considering Bear opened Friday’s trading at $54 and has a book value of $84 per share.

A Real Bear Market

Bear Stearns, the investment bank & Wall Street icon, is in talks to be acquired… quickly. As I wrote about a few days back, Bear is in serious trouble and is on life support thanks to the quick intervention of JP Morgan and Fed. After a week’s worth of posturing about the strength of it’s portfolio, Bear quickly reversed course on Friday and was promptly rewarded by having it’s stock price knee-capped.

If It Sounds Like Failure, Is It?

We usually don’t hear about bank failures too often. If one does go under, it seems like it’s usually a small, rural one. The bank gets into trouble, it goes illiquid, is closed by the local state banking commission, and it’s assets are taken over by a larger institution. No one outside of the affected parties worry if the East Overshoe Savings & Loan goes under… it’s a different story when the dying institution is one of the bulwarks of Wall Street.

Quick Post on Gas & Oil

How quickly our perspective changes…

According to CNN, oil prices have ‘retreated’ to only $107 and change on news of a surprise jump in oil inventory. A few months back oil at over $100 was a sign of economic doomsday… now it’s just business as usual. The number 100 is one of those big psychological barriers that looks really nasty, but once breached it loses a lot of its ability to inspire fear.

In a related news story about spiking gasoline prices, this article notes that prices will spike in late spring, and then return to a more normal level of around three dollars per gallon. The underlying message: $3 gasoline is now the new baseline for gas prices in the eyes of economists… it is no longer the high end of the price spectrum.

A quick plug as well… a friend of mine works for a company that has put out a new website that collects opinions about pretty much everything. I’ve registered and have been polluting the meme stream there with stuff related to energy, economics and the like. If you’re bored and have some time to kill, check it out. It could use more voters and more opinions. Here’s one of the opinions I’ve put out there… I’d link it here, but WordPress strips javascript code out of their websites.

Sorry For the Lack of New Posts…

Life has been hectic, and I haven’t had the time or excess brain cells to write anything worth posting recently.   I hope to be back with something worthwhile soon.