Sunday, April 6, 2008
Anecdotal but powerful
Yesterday I had the privilege of spending $81.47 to fill up my Ford Freestar MINI-VAN. This is no SUV, and although it has a rather large tank (regular gas @ 3.419 and the van took nearly 24 gallons) even I was taken back with a bit of sticker shock... When, Horrors! I called for a pizza delivery last night and, get this, my usual $11.75 pizza was now $13.75 for delivery, but I could still pick it up for $11.75. At 10PM watching a DVD with the kids in my P.J.'s? I did his business a favor and ordered delivery (nothing more frightening than seeing a middle aged man you don't know in his skivvies... and by the way, real men drive mini-vans).
How will police officers, firemen, school teachers, etc... you know, families making $50k to $100k per year finance their car payment, mortgage, property taxes, and gasoline and feed a family of 4? The short answer is that something just isn't going to get paid for. Remember, America has a ZERO savings rate. Like the poorest of the poor around the world, Americans live completely hand-to-mouth. A salesman that used to work for me called one day last week to complain that he and his wife's (and she is a stay at home mom for their 2 young children) monthly gasoline bill was over $750. That got me thinking... This was your average middle manager at Corp USA, probably making $85,000 per year
Mortgage - 2000
Prop. Tax - 650
Car Payments (2) 700
Insurance - 600
Utilities - 500
Gasoline - 750
Food - 2000
Total $7200 ($86,400 annually)
But where is the line item for taxes? Repairs? The kid's braces? Do they expect to take a vacation? What about roof repairs?
If my pizza delivery guy is any indication, high fuels bills will need to be passed on to consumers that: live too far from where they work to cut their gasoline bill much, can't re-negotiate the mortgage (and they can't sell in order to move to a cheaper home), are not going to receive a property tax cut anytime soon, (maybe they can turn off the lights when they leave a room)... and I doubt they are going to want to eat less, meanwhile food prices are rising significantly... And the Fed Chairman, Congress, Wall Street, the President, the Main Stream Media are trying to convince you they can overcome this with a couple more interest rate cuts or a "change" at the White House? Don't even get me going about the Trade Deficit, Medicare, Social Security, and the rest of the B.S. that the United Socialist States of America has promised to its portly, greying populace (that pretty much describes me, anyway).
But let's face it: If you are reading my blog you are more than likely a member of the "investor" or "capitalist" class, so maybe you are under the impression that this is not a problem that directly concerns you...
Egghh! Wrong! Thanks for playing!
Just what is the source of your wealth? Financial assets in the U.S. markets? A privately held business that relies on the aforementioned "consumers" (G-d, I hate that freaking term)? Are your employees zero saving Americans? Won't they need a fat raise to keep coming to work? Maybe you own some commercial real estate... (HAHAHAHAHA! That stuff is going to make houses look attractive in the near future).
All of these assets are likely to be worth CONSIDERABLY less in a year or 2. Not that I have the answers...
3 years ago I wrote to some South Florida Real Estate investors and told them that the coming energy and housing train wreck would be like a sandstorm that stripped all the skin and gouged out both of the eyes of 98% of investors, and 2% would "only" lose half their skin and just 1 eye... BUT, "the one eyed man is KING in the land of the BLIND".
Yours for a better (optically challenged) world,
Just call me Blinky...
Mentatt (at) yahoo (d0t) com
Posted by The Short Story Man at 5:11 PM