July 30, 2008
A bit of interesting/good news on the political front. I wrote a few months ago about the ongoing efforts to promote the ‘Security & Prosperity Partnership’ of North America, or SPP. The SPP is/was an unelected bureaucracy set up to explore ways for Canada, the USA and Mexico to work together on a number of issues ranging from immigration & border security to economics. Some pundits in the press and blogosphere were warning that this was the first step in setting up a North American version of the European Community, with all three countries surrendering at least part of their sovereignty to an unelected power structure. While the denials of such activity were frequent, promoters of the concept also admitted that they thought such integration would be a good idea, adding yet more gas to an already burning fire of speculation.
Well, the SPP backers have apparently thrown in the towel for now. I found a link to a short article on World Net Daily regarding the death of the SPP. Seems neither incoming president would favor the process, and it’s gotten a ton of bad press regarding the “The strategy of acting on technical issues in an incremental, bureaucratic way and keeping the issues away from public view..” No shit, sherlock. Not everyone in this country is asleep at the wheel, and when bureaucrats start meeting in private and signing agreements that our elected representatives cannot oversee, some people get nervous, and others get mad. Secrecy in government is usually a bad thing, and is makes people suspicious. If things are truly above board, then why operate in the shadows?
The SPP backers will continue to push the concepts of cooperation (a good thing, if properly supervised) and integration (not so good in my opinion). Hopefully the new administration, regardless of party affiliation, will not have the same zeal for secrecy and ideology that the current one has. One can dream, right?
NB: I believe that most of my readers are of a more-or-less liberal mindset. Maybe I’m mistaken… In case anyone thinks I’m off my rocker for hitting sites like WND, I generally try to read news sources from multiple viewpoints. Spin is pretty much universal, and some news like this is only accessible via more ‘fringe’ media sources. No one has a monopoly on the truth, and by browsing sites with a wide ranges of viewpoints I like to think I’m engaging my critical thinking skills more.
July 29, 2008
For those of you who are still unclear about the economic situation in the USA, or for those of you who are looking for a one-stop site to show others, here’s a good one.
Charles Hugh Smith has a good blog post up right now titled “The Grand Summary: Our Empire of Debt is Collapsing.” Mr. Smith’s post is a good, if depressing overview of our current quandary. He paints a grim economic picture, and then ties in the coming effects of peak oil, which will only further exacerbate the issue. Lots of charts help to illustrate his position.
Read the rest of this entry »
July 21, 2008
If you’re the type that likes to stock up on food, I wouldn’t delay any major purchases for too long. A story in the Financial Times is reporting that US food manufacturers including Kraft, Sara Lee, Tyson, ConAgra and Kellog’s will be jacking up prices this fall in response to rising commodity and production costs.
“Price increases vary a lot by type of products but the increases will be as low as zero and some products we will decrease on and other increases [will be] in excess of 20 per cent.”
Prices for meat & dairy will take the lead in inflation from the looks of it. The positive side of all this is that US meat consumption is expected to decline this year for the first time 27 years. How wonderful for us that the food conglomerates are helping us eat healthier…
In all seriousness, most of us could probably do with eating better. I addition to eating less meat, though, we’d also be better buying less nutrient-dead, over-processed crap in a box, but you don’t see Kraft or Kellog’s touting that idea too much.
HT: Urban Survival
July 20, 2008
Peak oil will spell the long-term death knell for the current definition of modern society. We still have a few more years of bumbling along the ‘plateau,’ where supply & demand engage in an awkward waltz of sorts, with neither gaining the upper hand. Eventually, though, supply will start slipping fast enough that new production cannot back-fill the resultant gap. That’s when the economic vise will really start to tighten… assuming we don’t do something to screw things up before then.
Speaking of which, if you haven’t been paying attention recently, the financial excesses of the last few decades are finally starting to pay negative dividends at home. Economic forces are playing whack-a-mole with US banks & GSE’s, and it’s getting harder to paper over the gaping holes in our economic fabric. An article in the Economist has brought up an idea that months ago would have seemed ludicrous: that the USA may default on it’s debt.
The GSEs are not the only liability for the government. IndyMac’s recent collapse is the latest call on the Federal Deposit Insurance Corporation (FDIC). The FDIC has some $53 billion of assets, so it is better funded than most deposit-insurance schemes. But if enough banks got into trouble, the government would be on the hook for any shortfall. The same is true of the Pension Benefit Guaranty Corporation, which insures private sector benefits, but is already $14 billion in deficit.
In the end, the turtle at the bottom of the pile is the American taxpayer. But that suggests that, if Americans are losing money on their houses, pensions or bank accounts, the right answer is to tax them to pay for it. Perhaps it is no surprise that traders in the credit-default swaps market have recently made bets on the unthinkable: that America may default on its debt.
The US Dollar is the world’s reserve currency right now. Most of the debt floating around the world is denominated in US dollars. Were the dollar to become essentially worthless, global fortunes would be wiped out, major economic havoc would take place in all of the world’s national economies, and the cost of all global commodities would skyrocket.
We’re not close to defaulting yet, but the fact that a major economic magazine like the Economist would discuss what previously was an unthinkable act should be a sobering alert to all of us. We are entering a very dangerous period from an economic standpoint; one that could drastically alter the future for all of us. Pay attention, folks.
July 16, 2008
So much for me having more time to blog last weekend… my plans ran afoul of house chores & tending to children. Ah well…
Good find courtesy of the Ticker Forum this morning on the “Frozen Economy.” More & more folks are having to make ugly choices… food or fuel? Heating bill or medicine? Maybe only one of the four? Many folks are scared to go out on a limb and do more than the bare minimum needed to get by.
2008 is shaping up to be a very, very interesting year. The presidency is open, so both main candidates are trying their best to sell hope to a desperate American public. How much of that hope turns out to be vaporware reamins to be seen. It’s easy to talk a lot about solutions to big problems. The hard part is actually figuring out how to implement and pay for them.
The theme of this years’ electoral race might as well be ‘failure.’ Major banks are failing; people are failing to retain their houses or pay their bills; Wall Street is failing to maintain stock prices; the Federal Reserve is failing to either keep inflation in check or the economy vibrant. Our money is worth less; many major stocks are worth a lot less than they were a year or two ago; the economic bite of higher gas prices is only starting to trickle in to the consumer economy.
People are desperate for hope. They will likely vote in anyone who will tell them they have a plan to fix things and bring us back to the go-go 90’s or whatever. The major stumbling block is pain avoidance. We have run up huge debts, both private & public. The only ways to pay them off are to either inflate the debt away and vaporize the dollar (very unpopular with our foreign debt holders), or to get used to to idea of higher taxes, less services, and a lower standard of living (very unpopular with voters). As Walter Mondale proved in 1984, telling Americans you’re going to promise to raise their taxes is a sure way to get one’s ass kicked in the general election. Odds are very good that this will happen this time round, it’s just that the pols will obfuscate & avoid these questions during the campaign.
Voters have gotten used to the government helping themn in many ways without raising taxes… mostly this has been financed via debt. The problem is that we’ve done this for such a long time that most buyers of that debt have more than they care to already… so what are we going to do?
That is a question that will be answered later this year, and then answered truthfully some time in 2009.
July 11, 2008
My beautiful bride has abandoned me this weekend to head out of town on a short-ish road trip. So yours truly is playing Mr. mom at home watching the kids. This will hopefully give me a little more time to blog this afternoon and over the weekend.
For the moment, though, I’m very interested in what’s going on in the markets this morning… Oil is up, the Dow is down, and both Fannie Mae and Freddie Mac are being drawn & quartered on Wall Street right now. Anyone who thinks we are close to a bottom of either the housing market or the U.S. economic downturn must not be paying attention. The government will bail out Fannie & Freddie if they have to (and it looks like they just might have to), and U.S. taxpayers will be left footing the bill. Private profits but public bailouts appears to be the preferred method for helping large corporations through this mess.
Anyone who thinks that the USA doesn’t have socialist tendencies isn’t watching what’s happening in Manhattan these days. We have no problem telling individuals who got themselves into a financial mess to stop crying for help and get themselves out of the hole they dug, but the large banks that recklessly chased bad paper over the last four years or so are ‘too large to be allowed to fail.‘ If only we could all follow that policy: making extremely bad long-term decisions in pursuit of short-term profits knowing full well that the gub’mint will keep us from going under.
That’s all for now… the short boys on the Ticker Forum must be rubbing their hands with glee at all the bad news coming today. When CNBC talking head Jim Cramer tells everyone to sell everything and either wait on the sidelines or start shorting, you know the economic outlook ain’t good.