Six Days and counting...
In six days most of the political ads will be gone from my life. I could not be happier over such a thing. I am so tired of them. Not one candidate is now saying what they are going to do for us; they are too busy pointing fingers at their opponent - "Look at what he did!" It is nauseating.
Hurricane Ike is gone and most of the overt signs of damage are being slowly repaired. There are a few signs still broken, a few street lights still out and a few trees still down. The most glaring thing is the number of roofs covered in blue tarps awaiting their repair. Images from the coast are nowhere near as positive. The two weeks I spent without power pale in comparison to those who are still without power or worse, without a house at all. FEMA has decided to stop paying for a shelter even though there are still hundreds of families without homes. I am sure part of this is motivated by the downturn in the economy and how the government will now need every penny to bail out banks who greedily made bad loans to people. Soon those people too will be without homes.
And that is today's rant. We had a "phantom" spot in our economy where we all thought it was candy and cake. People were owning homes at a rate never seen before. House values were sky high. America was living the high life! Only it was just an illusion. People who really couldn't afford houses were being given loans by banks so they could repackage those loans into a "security" that they could sell to investors and make money on it whether it was a good loan or not. As housing values rose, these borderline buyers were suddenly unable to cover the escrow on their property taxes, or in the worse cases borrowed against their new found "equity", thereby adding yet another note to their monthly expenses. In our society of spend, spend, spend (inspired by our government who thinks you can spend against money you owe) it was only a matter of time before there was not enough left in the jar to pay the bank at the end of the month. Now the banks have literally hundreds of thousands of homes in default. They can't foreclose on them as there are no buyers for them and that crushes the cash flow. What a quandary they find themselves in at this point. Truth is, we are now doing worse than our parents/grandparents did financially. We just don't have the strength to admit it. We allow our children to dictate to us that we WILL buy the things that really are not necessary (don't get me started on non-emergency cell phones), we feel compelled to keep up with the appearances of our neighbors (yes, they are as far in debt as you are- maybe farther), and we allow ourselves to be convinced by the marketing machine that we just HAVE to have all those things we see on TV, in the magazines, and on billboards everywhere. Well, the bubble has burst and things are starting to normalize. Yet, we are told that this correction is a RECESSION and we are all going to have to "tighten up our belts" as we will no longer be able to live so far beyond our means. Look at the history of the stock market, the housing market. We were in the midst of another bubble but we are acting as if it were the way it should be. Whenever prices far outstrip salaries it should send up a huge red flag that something bad is on the horizon.
Now for my other rant of the day. Modern companies (I include OPEC in this) have become addicted to the record profits and prices they could charge just a few months ago. The world has tasted the "prosperity" that these grossly inflated prices created and have decided they liked it. OPEC is talking about again working to raise oil prices. Wake up! The world is teetering on the brink of collapse in some places and you are trying to maneuver your commodity to a price that really was not justified? Supply and demand goes so far but the prices on oil were created by speculation in a market where very little of the trades value has to be covered in real money. Those prices were no more real than the tooth fairy but you have tasted it and still want it to be like that. Well, the same market forces are driving the price down. You should have enjoyed it while it lasted. You did VERY LITTLE to keep the prices down at a reasonable level so now you get to reap what you have sown. But no... you will just cut production to try to elevate the price. Your last 5% production cut did so well. And heading into the winter months your price usually goes up anyway as people need heating oil in the northern hemisphere. But you want $90 a barrel. Good luck getting it. As for the other companies- have you seen anyone PERMANENTLY cutting prices yet? I doubt you will. Groceries are still going up. Gasoline prices are falling but nowhere near as fast as they shot up. The last time oil was as low as it is now the gas prices were about 70% of what they are now. Oil companies don't want to lose a dime of profit. Independent stations, who took a hit when gas was almost $4.00 a gallon are trying to maximize their profits now to make up a bit. And some of this is hedging against the next mandated increase in minimum wage. IF you don't understand that feel free to ask me- there is no such thing as a "livable wage" country-wide and anyone with any business savvy will tell you that. All it does is drive up the prices for goods and services- and usually more than the pay increase nets the workers.
Well, that is the end of this installment. On a lighter note- I was in Canada earlier this month and can honestly say that BC has some of the most beautiful country I have seen. It doesn't hurt that the people there are also genuinely nice, friendly and polite. And I am addicted their style of breakfast sausages- I can't eat the american style "chunky" sausage anymore.
Hurricane Ike is gone and most of the overt signs of damage are being slowly repaired. There are a few signs still broken, a few street lights still out and a few trees still down. The most glaring thing is the number of roofs covered in blue tarps awaiting their repair. Images from the coast are nowhere near as positive. The two weeks I spent without power pale in comparison to those who are still without power or worse, without a house at all. FEMA has decided to stop paying for a shelter even though there are still hundreds of families without homes. I am sure part of this is motivated by the downturn in the economy and how the government will now need every penny to bail out banks who greedily made bad loans to people. Soon those people too will be without homes.
And that is today's rant. We had a "phantom" spot in our economy where we all thought it was candy and cake. People were owning homes at a rate never seen before. House values were sky high. America was living the high life! Only it was just an illusion. People who really couldn't afford houses were being given loans by banks so they could repackage those loans into a "security" that they could sell to investors and make money on it whether it was a good loan or not. As housing values rose, these borderline buyers were suddenly unable to cover the escrow on their property taxes, or in the worse cases borrowed against their new found "equity", thereby adding yet another note to their monthly expenses. In our society of spend, spend, spend (inspired by our government who thinks you can spend against money you owe) it was only a matter of time before there was not enough left in the jar to pay the bank at the end of the month. Now the banks have literally hundreds of thousands of homes in default. They can't foreclose on them as there are no buyers for them and that crushes the cash flow. What a quandary they find themselves in at this point. Truth is, we are now doing worse than our parents/grandparents did financially. We just don't have the strength to admit it. We allow our children to dictate to us that we WILL buy the things that really are not necessary (don't get me started on non-emergency cell phones), we feel compelled to keep up with the appearances of our neighbors (yes, they are as far in debt as you are- maybe farther), and we allow ourselves to be convinced by the marketing machine that we just HAVE to have all those things we see on TV, in the magazines, and on billboards everywhere. Well, the bubble has burst and things are starting to normalize. Yet, we are told that this correction is a RECESSION and we are all going to have to "tighten up our belts" as we will no longer be able to live so far beyond our means. Look at the history of the stock market, the housing market. We were in the midst of another bubble but we are acting as if it were the way it should be. Whenever prices far outstrip salaries it should send up a huge red flag that something bad is on the horizon.
Now for my other rant of the day. Modern companies (I include OPEC in this) have become addicted to the record profits and prices they could charge just a few months ago. The world has tasted the "prosperity" that these grossly inflated prices created and have decided they liked it. OPEC is talking about again working to raise oil prices. Wake up! The world is teetering on the brink of collapse in some places and you are trying to maneuver your commodity to a price that really was not justified? Supply and demand goes so far but the prices on oil were created by speculation in a market where very little of the trades value has to be covered in real money. Those prices were no more real than the tooth fairy but you have tasted it and still want it to be like that. Well, the same market forces are driving the price down. You should have enjoyed it while it lasted. You did VERY LITTLE to keep the prices down at a reasonable level so now you get to reap what you have sown. But no... you will just cut production to try to elevate the price. Your last 5% production cut did so well. And heading into the winter months your price usually goes up anyway as people need heating oil in the northern hemisphere. But you want $90 a barrel. Good luck getting it. As for the other companies- have you seen anyone PERMANENTLY cutting prices yet? I doubt you will. Groceries are still going up. Gasoline prices are falling but nowhere near as fast as they shot up. The last time oil was as low as it is now the gas prices were about 70% of what they are now. Oil companies don't want to lose a dime of profit. Independent stations, who took a hit when gas was almost $4.00 a gallon are trying to maximize their profits now to make up a bit. And some of this is hedging against the next mandated increase in minimum wage. IF you don't understand that feel free to ask me- there is no such thing as a "livable wage" country-wide and anyone with any business savvy will tell you that. All it does is drive up the prices for goods and services- and usually more than the pay increase nets the workers.
Well, that is the end of this installment. On a lighter note- I was in Canada earlier this month and can honestly say that BC has some of the most beautiful country I have seen. It doesn't hurt that the people there are also genuinely nice, friendly and polite. And I am addicted their style of breakfast sausages- I can't eat the american style "chunky" sausage anymore.