Status of various things

[altivo]

Oil down $4 to under $50? Incredible. They say demand is off so much that the price just keeps dropping. Also incredible. I just bought gas for $1.95/gal and I honestly don't remember the last time it was below $2 around here. Certainly it's been at least three years. The rate of drop is more amazing, and in my entire life I've never seen anything like it. A week ago I paid $2.19/gal. Just one week. That's a 24 cent or 11% drop in just seven days.

In spite of my food price complaints, the Consumer Product Index is shrinking. This is, or can certainly be, deflation setting in. Dropping prices sound good at first glance, but when they drop too fast, too widely, that's deflation and it's a sign of economic disaster. Serious, persistent deflation played a major role in the depression of the 1930s. Cutting interest rates or printing more money is supposed to fight this off, but it's really not that simple. Like the falling stock market, what we are seeing is everyone tightening their belt. (Well, everyone except the CEOs of failing companies, who keep holding million dollar "conferences" and flying their private jets to Washington to ask Congress for money.)

Once deflation takes off, people quit buying things except for absolute immediate needs. After all, why fill your tank today if you can count on the price being lower tomorrow? Why stock up on groceries if prices are falling so fast that you'll save money by buying only a couple of days' worth at a time? The slowing cash flow causes more places to shut down and lay off employees, which in turn tightens the crunch even more. It's a feedback loop, and a tough one to break.

We still have those space cadets wandering around, of course. I mentioned the CEOs flying expensive private jets to Washington when they could have taken seats on commercial airlines or at least all shared one jet. Even at the local level, in Harvard, here's an example. I pass four gas stations between the city limits and the library, twice a day. It's been fascinating watching them change their prices, going down a penny or two between each time I drive by. Except... the BP station has had its price stuck at $2.35 for weeks now. No changes at all. And, now, no customers either. When the station right across the road is at $2.01 and two more a mile north are at $1.99, who is going to pay $2.35? Stubbornly, they persist, refusing to lower their price. I noticed this week that they are now closed in the evening. Presumably can't pay help to keep the place open that many hours. Doomed, obviously, but they just don't seem to get it. There's only one answer: take a loss if necessary, but lower that price to match the competition. No one believes that BP gasoline is that different from Marathon or Shell or whatever that it can justify a 35 cent price premium.

Overall, I'd say things are looking really bad. I've been trying to encourage my mate to stick by his retirement investments and wait for improvements, but yesterday he talked to someone at Fidelity and backed all the way out, splitting his remaining reserves between cash and government securities. He was already in the most conservative funds they offered. They asked him to rate his willingness to take financial risk on a scale of one to six, but before he could answer, they went on to say that he was already invested "like a one" and his only option that would be less risky would be to get out of the stock market entirely. I imagine others are doing the same, which doesn't help the DOW or S&P.

Argos status: Zipper installed this morning. A few straight line seams to be sewn and he's done. Some optional details can be added if I have time yet today.

NaNo status: Still at 21,556 words, but I should be able to start rolling again by tomorrow night at the latest.

MFF status: Weather concerns. My room mate goldenstallion has to cross Indiana tomorrow to get to the con, and currently the forecast calls for as much as sixteen inches of snow between now and tomorrow morning. Not good. No snow on the ground here, but it's darned cold and windy. Good fursuit weather, I guess, though I think in this I prefer to stay indoors even in suit.

Oh, and one other thing. Instead of an artist type character badge for Argos, Gary embroidered a black sweatshirt for me with a white wolf and the name "Argos" on it. My con badge will have "'Tivo" on it, of course.

[Edit 4:20 pm] And the Dow closed down another 444. Enough with the "pep talks" and promises, I say. Time for the supposed experts to either admit that they don't know what's going on or that this really is more than just a "two or three quarter recession." I don't see any way that even half the loss will be recovered in that time. Six years of recovery from the post 9/11 slides have all been wiped out now. I guess I'll go scoop manure and stop thinking about it...

Comments

[wolfgrowl.livejournal.com]

I'm starting to wonder where this will end. Glad I don't have a mortgage.

[altivo.livejournal.com]

LOL! When I saw that the response was from you, I expected either words of encouragement or else a lecture on my pessimistic and unwashed view of economics.

Yeah. We don't have a mortgage any more either and we're really glad. If things keep sliding, I sure hope our real estate taxes slide with them or we'll still have problems.

We could eat the sheep and remaining ducks I suppose... Well, maybe not. I don't like mutton at all, and both are just loaded with cholesterol which neither of us needs. ;p

[wolfgrowl.livejournal.com]

Greenspan admitted his models were flawed. He is a genius but economists are only as good as their data. And how good is that data? A one in a hundred year event won't necessarily show up in 30 years of modern economic history!

We can only say why things are happening but it all the models are out the window and we can't honestly say how and when this will end. Hard or soft landing?

There are a lot of things out there that seem undervalued. But I would have said that quite a while ago. Throw deflation, and a big loss in GDP into the equation who knows? We've gone from a record run for commodities to prices we never thought we would see again. Currencies are flying up and down as bad as penny stock. Major companies start to slide below liquidation values.

My solution is to hold what's in the retirement funds, buy a small amount more each month to average down a bit to benefit by a recovery when and if it happens, and keep the rest in cash.

[quickcasey.livejournal.com]

My room mate(s) must run the Indiana snow gauntet also.

[altivo.livejournal.com]

I imagine they'll all get through, but it's likely to take longer than they planned or will appreciate.

[saythename.livejournal.com]

I guess the bubble has burst.

Now its Walmart or Aldis or friends sharing
food at the church.

Welcome to my world everyone.

Except for the guys flying in on the
private jets.

I like the guy that said;

"These guys fly in on private jets, get
off, and rattle a tin can for change"

XD

Let them burn.

[altivo.livejournal.com]

I wish it were so simple, I'd certainly agree with burning CEOs at the stake. And that's a big one, coming from me. But these jerks are the ones who really made this effing mess, and they aren't really feeling at at all except maybe that they'll have to let one or two household servants go.

I think any "bailout" to private industry should absolutely require an advance plan of how every penny will be spent, and accountability to prove that it was really spent that way. It should also require replacement of all the top management and board of directors, and NO golden parachutes.

The trouble with Walmart is that they're part of the problem. They don't pay employees a decent wage, they don't give them full time work because then they'd have to also pay for some benefits, like a minimal health care plan and a few days of paid vacation, and most of what they sell is produced cheaply overseas. When we buy from Walmart we are simply paying interest on our own captivity. Unfortunately, in towns like Harvard where they've already run all the locals out of business, there's no option unless you drive twenty miles to another town that still has other retailers. When gas was $4 and up, no one was driving any more than they absolutely had to, so Walmart got even fatter. They admit it themselves. However, the economy they helped to bust by encouraging people to borrow and spend but not giving anything back is now ready to bite them in the ass too. This is shaping up to be a dismal holiday season for retailers.

[doco.livejournal.com]

It's always amazed me to see that there is so much variation between the local stations in the US - over here, the gap between 119.9 at BP and 114.9 at ConocoPhilips' brand of the day is considered *huge*.

OTOH, interesting times we're living in. Our economies may tank a bit, but I guess there'll be no real -crisis- per se - a war is a crisis, an economic downturn is merely a disturbance. My parents and grandparents have escaped the horrors of WWII unscathed, and they've always said how the recession in the '70s was just peanuts. I think the 2010s may well become the decade of the return of the politician as the strong man, after they pretty much were stripped of their power in the late 80s by the common CEO. Also, probably more ordoliberalism, at least here in Europe. Dunno if America's going to get the curve... but with the few options left, they'll have to.

I still will have 50 to 70 years to live and see how it all ended up. :D

[altivo.livejournal.com]

I'm fully expecting something as serious as the depression of the 1930s now. You might not call it a "crisis" but it's a disaster just the same, and for a lot of people.

[doco.livejournal.com]

My grandfather, who was born in 1908, said the times of hyperinflation in late 1923 (with inflation at 1000% per day) were only noticeable because you had to carry your pay home in a wheelbarrow, rich farmers were stockpiling pianos and expensive carpets, and the occasional guy was dangling from the nearest chestnut tree... hello, dot-com bubble anyone?

However, what he also said was that after the brief recovery in the '20s and the deep recession that came around by the mid-30s, a lot of angry people started voting the wrong way, with known results. (He was a low-profile member of the Social Democrat party at the time and only survived because of his duck-and-cover skills and because he was working in shipbuilding, where they needed everybody for the war effort.)

I think the events will pretty much work the same way, although not as drastic - I can't see people starving in the streets in the civilized world, but I'm expecting there'll be a massive backlash in the public during the next few years. Maybe now it's a good time to become a liberal politician. :)

[songdogmi.livejournal.com]

I was watching Jim Cramer's show Mad Money on CNBC a few weeks ago, and his advice then was to keep the money where it is, unless you need it soon. His example was, he has a 17-year-old daughter who will going to college very soon, so he's taking money out for that now and putting it somewhere safe. For his 14-year-old daughter, he's leaving the money invested because he expects things to improve before she needs it. So Gary probably did just the right thing, if one accepts Cramer's advice, but ... yes, it's still very frightening.

At the rate the stock market is going, it'll be worth zero by Christmas. Then in the new year, we can start something new. Maybe a barter economy.

[altivo.livejournal.com]

In that barter economy, I hope the scalps of CEOs and Republican economists are highly valued.

We have seen Reaganomics through to the bitter end. It didn't work. Or at least, if it worked then it was advertised falsely. It makes a few already rich people obscenely wealthy at everyone else's expense, and that's the end of it. This has been obvious for nearly 30 years now, but for some reason the American public is really, really slow to catch on.

[atomicat.livejournal.com]

Last month gas was $1.35 a L here. Today it was 85 cents at the co-op. I wish people could make up their minds! Oil prices high = bad. Oil prices plummet = bad. Ahh, financial markets are a mutually assured fantasy.

[altivo.livejournal.com]

Oil prices alone going down would not be such a big issue. But the large drop in the latest CPI suggests that everything is going down. That can be a sign that the entire economy is locking up. No demand and excess supply means lower prices. But persistent no demand, either because buyers have no money or because they simply refuse to part with it... that's bad news for everyone. More people lose their jobs (big noisy example right now is the auto industries, following on the heels of financials and tech) and the more people who are out of work, the less they have to spend, so more businesses cut back on production and spending, laying off even more people... It becomes an avalanche, a positive feedback, or a chain reaction. That's what the depression was, that's what a recession is but on a smaller scale.

Lowering interest rates doesn't help if no one can qualify to borrow because they have no income. Handing out cash rebates (the "economic stimulus" of last year) doesn't help either if people just stick the money in their savings account or under a mattress, or use it to pay debts for goods and services already purchased and used, which is what they did with the last stimulus check.

The US government can only do so much. The absurd Paulson bailout package already busted the piggy bank and then some. Bush's wars and tax cuts for the rich have created huge deficits already, and this on top of them, well... Let's just say we may see the rating of US government bonds being lowered if it keeps up.

[alaskawolf.livejournal.com]

gas has finally dropped under $2.99 here in my town but food prices and electric rates are staying high x(

[gabrielhorse.livejournal.com]

Dropping prices sound good at first glance, but when they drop too fast, too widely, that's deflation and it's a sign of economic disaster.

As I said, at this point disaster is inevitable. People have been throwing rocks in their glass houses far too long, and now with every proverbial window shattered, they're losing all the heat as the cold weather moves in. (pardon me for the metaphor)

Edit 4:20 pm] And the Dow closed down another 444. Enough with the "pep talks" and promises, I say. Time for the supposed experts to either admit that they don't know what's going on or that this really is more than just a "two or three quarter recession."

Kudos to you for being able to buck up and express a desire for cold harsh realism, Alt- but I assure you it will never come from such people. Straight talk will NOT come from people in any kind of financial market, and even with the presidental change, I seriously doubt it will come from politicians, either.

Survival depends upon focus, determination and knoweldge gained from experience- and as I see it, they're in for a world of hurt.

[cabcat.livejournal.com]

Petrol here has almost hit the $1/litre mark which is amazing considering it was at $1.60 not that long ago.

It must be hard on people who's retirement funds are based in stocks and shares. However if you earn more on dividends now is a good time to increase your share in good companies.
As Warren Buffet would say, "You are not buying shares you are buying a piece of a company"

[altivo.livejournal.com]

No increasing shares for me. I've seen too much and have a very jaundiced view of American businesses and management. This whole fiasco has only increased my negative feelings about the people who run corporations, clearly for their own personal benefit and nothing else.