Tuesday, March 11, 2008

Market Forces Come In To Play


We have asked for help. We have asked for leadership. But for all our asking, the asking has fallen on deaf ears. Now the forces of the market will take over. Many people and families will suffer, but seeing Americans suffer on TV is something we have gotten used to. From Katrina to the forest fires out west, from the droughts in the South to the floods in the west, Americans have seen and some have felt the pain of disaster. These are not man made, but as we say, acts of god.

The economy and the way we run it is no act of god. People and families will suffer from the lack of leadership in Washington over the last 35 years. The energy crisis will now effect us all. With the price of oil pushing $110 a barrel and the price of gas on its way to $4 a gallon, market forces will now step in. Over a year ago I wrote to a friend in the investment business, that I wrote to about the economy, that the price of oil and gas was going to bring this economy to its knees. That because there was no leadership with regards to our energy policy, many people and families were going to suffer. Many will survive, but many will be lost to tragedy. Man made disasters take lives too.

The mortgage loan crisis is a whole book all by itself. True people made some unwise decisions about the size and expense of their home. Add to that a variable rate mortgage, and you have enough fuel for a disaster. I have had people ask me, " why would anyone take a variable rate mortgage?" There are some good reasons to do so, but they involve some very defined set of circumstances. Those people that were gambling with the movement of mortgage interest rates, thinking they could pick the bottom, may have missed their opportunity waiting for the last basis point. Greed takes its toll. There is an old expression on Wall Street, and it goes like this, “the bulls make it and the bears make it, but the pigs get slaughtered."

Necessity is the mother of invention. An old saying, but true. I look for Americans to start coming up with clever and not so clever ways to save on using gas. Perhaps this will be a blessing in disguise. Perhaps this crisis will force people to come together as a community, the way communities were years ago, and start working together to help each other out. When I was a teenager, in the 1950’s, I would drive my Dad home from the hardware store on I-75. He would point to all the cars with just one person and say, “ someday America will be sorry for such waste.” He knew that some day we would suffer from our wasteful practices at a time when his ideas seemed crazy. They seemed crazy even to me at the time.

Everyone can read the comments from the pros about the change over from winter to summer gas and the margins that are not there for the refineries, and the lack of incentive to produce more gas, but the bottom line as far as I am concerned is the lack of leadership in Washington, D.C. So, I will mention my favorite book about the situation we all find ourselves in today about oil. Go the the library or buy a copy on Amazon dot com, but please read Sleeping With The Devil: How Washington Sold Our Soul For Saudi Crude by Robert Baer, 2003. Perhaps if enough people know the score, we can get some real change in the game. Stay tuned.

4 comments:

URBAN BLONDE said...

Hi Moneythoughts!

Thanks for visiting my blog. Your blog offers intriguing reading and visuals, all things I'm interested in. I look forward to diving in and seeing what you have to say.

Ciao,
Blondie

Kathryn Brimblecombe-Fox said...

Hi Fred,
Sombre reading. Many of my friends here in Australia have chosen cars for fuel economy reasons. In our schools our children are exposed to all kinds of lessons on environmental issues. I think a lot more about how much I use the car...and this is for $ reasons. However, there is still so much waste. Leadership is not coming from the front on these issues...it come from the people I think.

Have you ever visited places such as the UAE? The huge numbers of large V8 4 wheel drives is astonishing. I had reason to borrow a V8 landcruiser recently and it was horribly astonishing how much fuel it guzzled.

The subprime problem in the US and the reasons for the disaster defy logic...but then greed is not logical especially in hindsight.

I just hope my faith in human nature finds the solutions...economic and from within.

Thanks for your comments on my last painting 'Collective Memory'. it does look a bit like an eye. When I read that I immediately thought of the 'eye to the soul'...and I suppose the soul carries collective memories too.
Kathryn

Peter V. Bella said...

Thanks for visiting. I put a link up to your blog.

WetPaint said...

Hi Moneythoughts!

OK, I'll get it from the library!

So you want to hear innovative solutions on how to save gas? Ban leaf blowers.

Speaking of gas, and summer- I watched my last next door neighbor get a landscaping service (everyone on LI uses one). Instead of raking and mowing, and pruning, the service uses blowers, and blasts your ears out at 7am the day after Thanksgiving! They use gas, where once he had used a rake. "Lawn Guy", put on about 30 pounds, and then bought exercise euipment, and probably a gym membership. So he ended up paying twice, and a third time with his health, also polluting the neighborhood with noise and fumes. His daughter walked by one day while I was raking, and laughed at me, snidely saying- why don't you get a leaf blower? I dryly said- Because I don't want to annoy my neighbors with the noise. OK, I should have tried to educate her, but I was ticked off. They also parked their insanely large SUV (that he drove alone) half on my lawn.

I have hope that the price of gas will be the demise of leaf blowers! That would be the only good side effect. Oh, and free rakes and a box of hefties for everyone who turns one in!

I am trying to get the family on board for walking or biking to any destination under 2 miles away. (Except for big grocery shopping). It's just healthier. I think most people would end up liking that if they tried. It would be nice to see more people on the sidewalks.

Money,
What do you think of the stock rise today? I think this whole bond offer reeks of disguised bailout- Want to hear your take on it.