The U.S. banking system nearly failed, and it nearly dragged the entire world banking system down with it. Americans, being Americans, tend to view the cause and the culprits through the prism of their politics. Above all, they never see themselves within the vision.
It was the Fed's fault. It was GWB's fault. It was Greenspan's fault. No, wait... it was Bill Clinton's fault... Bull S%$t!
The seeds for this near miss of a major Depression (and we will likely miss it - for now) were sown in the last Great Depression, watered and cultivated through the creation of Medicare, Social Security, Student Loans, Medicaid, Fannie Mae, Freddie Mac, etc... and last but not least, the Department of Defense. These are the entities and programs that have led America to the rim of the volcano, and the Great Oil Crisis of 2010 (or 2011) is going to push us into the burning lava.
If you think the U.S. is addicted to Oil... think again. THAT addiction PALES in comparison to our real addiction - cheap Social Services financed with borrowed money that NONE OF US has ANY INTENTION of paying back. The concept that this was a good, just, and fair idea comes courtesy of the LOOOOOONEY Political Left, with plenty of help from the nose picking Right.
Talk about HYPOCRISY!!!!!
But now it all comes down to PERSONAL RESPONSIBILITY. The U.S. is experiencing a rapid decline in the availability of IMPORTED OIL. This trend WILL CONTINUE. If it continues at the pace of 2008's decline, we will be in ARMAGEDDON mode in less than 5 years. Pray that the 9.2% decline in Oil imports for 2008 from 2007 does not continue next year (and I don't THINK it will, but...). The rest of the world is not experiencing recession - just the U.S., the Euro zone, and the Anglo world. China, India, Viet Nam, Brazil, etc... are EXPANDING their economies, growing their vehicle fleet (burning more oil) and their populations (eating more food and consuming more commodities). By mathematical NECESSITY the U.S. will import less oil as these nations import more oil, because the TOTAL supply of Oil in the world has not increased. Does your job depend on transportation (commuting). Do your customers/clients? Doesn't the value of your home DEPEND on you being able to get back and forth to it?
Maybe you think the $%^#@!! government will DO SOMETHING...
THE EMPEROR HAS NO CLOTHES!!!!! You can mail out checks with as many zero's on them as you wish - as long as you are the government. The checks won't bounce, but the currency will.
The U.S. economy nearly collapsed twice in the past 2 weeks, almost taking with it your life savings, your job or business, and your future. The energy crisis WILL DO all of those things to you, unless you make a number of VERY smart decisions. This is a lot like surviving the FIRST wave in a tsunami. The first wave, though devastating, is nothing like the main event, which is catastrophic.
The World Economy is going to hit an air pocket, without question. That air pocket may well cause a temporary decline in Oil demand/price (and it MAY NOT, too), so don't be fooled, or lulled into a false sense of security. You have some time to act, so make your moves now. The Oil import recession to come will make this one look like the good old days.
Good Luck!
Mentatt (at) yahoo (dot) com
7 comments:
I'm not yet convinced this one has been licked as you seem to suggest. Bottom line is people (aka the consumer) still has zero faith in our government, little faith in the financial system, a less faith in continued use of credit.
I think we avoided a massive melt down. But the recession/depression has not yet been side stepped.
I did not say this one was "licked". This recession likely started 12 months ago, and may last 20 months, more or less. MUCH more if the Oil import decline rate remains, less if not.
We have most likely side stepped the FINANCIAL meltdown. We will not be able to do so in a few years when the Oil import crisis is really on us.
BTW, we WILL survive that, too. In every societal upheaval there will be winners and losers.
Mr.Jeffers,
I have been following your blog for the past few months.Thank you for your insight, very informative. I knew of the eventual decline in oil, but it was suppose to happen in 2050 AD. Okay, you mentioned VERY smart moves. Could you expand on those ideas? Thank you!!!
Speaking as one of the "hated" Federal bureaucrats, I would say that #1 there is tremendous faith in the Fed. Govt. (you all think you look so cool bellyaching, but in reality, you like having those aircraft carriers sailing around), #2 there is plenty of faith in the financial system (go to your bank tomorrow, and withdraw half your balance, and see how easy it is), and #3 there is still plenty of use of credit (Jeffers points out our system now relies on it, and it is still mostly available. I bought a full dinner tonight for $107 on my Mastercard.) As to a depression -- what caused the Great Depression? Lots of things, but mostly a lack of cash and credit. Bernacke knows this, and that's why he's flooding the system with it. But, sadly, this time around, the borrowing required to do it may be more than this nation can take ...
Bureacrat:
The markets were not hallucinating the credit crunch. Buying dinner on your Mastercard hardly means a smooth and functioning interbank market...
Still, I think the world governments have made the right moves to avoid immanent disaster.
>BTW, we WILL survive that, too. In every societal upheaval there will be winners and losers.<
Jeffers- this country has 90% of our total infrastructure after WW2 with the assumption that cheap oil would be forever. What is that- 50-100,000,000,000,000 US$? 50-100 Trillion$ in other words.
Now just how do we start replacing that much cheap oil infrastructure and reorganize the whole society when the oil lifeblood is dropping year after year. We will be just holding on to keep the basic services chugging along ie ambulance, sewer, water, food.
And you have to figure in replacing 70% of the US housing stock and ALL transportation systems- all in an environment of radically collapsing energy production.
AND printing $$ may be OK with Americans but it AINT OK with our foreign creditors.
I think the consumer has spoken. And it ain't good.
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