I don't expect any kind of "recovery" that any person old enough to remember the last recession (in real terms) would recognize. Expansion of consumer debt, mortgage debt, industrial output, loan securitization, Oil consumption, ertc... WILL NOT "recover" - i.e., grow in real terms from here.
Aggregate travel, whether for business or pleasure, will contract from now on. So, too, vehicle production, advertising, retail space, and shopping as entertainment. Speaking of entertainment... the family budget for that endeavor will shift dramatically - from endless expenditures on infortainment to simpler accessories - like a ball and glove.
I was a child in the 1960's. After moving to the burbs I remember being a 1 car family (7 kids, we walked everywhere - and we lived 2.5 miles from town and the train station that led to Manhattan), vacations were at my grandmother's tenement in South Philly, we had 1 phone line (long distance calls only on Saturdays, with the family gathered around the phone to talk to our HUGE extended family), rabbit ears T.V. (6 channels, WPIX had the Yankees and WOR had the Mets - these were the only necessary stations as far as I was concerned), and was 16 inches (tops). We had 3 bedrooms and 1 bathroom, so their wasn't much of an expectation of privacy, except for my sister... By 2020 most Americans will be living in small homes, with ONE car, lots of walking, and modest consumer infotainment...
We are going back to 1960, not 1999 (the GOOD news is that we are not going back to 1910, when the average American took one bath per week and deodorant had not been invented yet). There is absolutely no shot that we are going to "recover" to the late 1990's. This not a terrible thing, but it does mean that certain business and investment activities and ventures are fool's errands.
It will be generations before Western consumers are inclined to spend 110 % of their income. It will prove impossible to re-inflate in this environment without taking on significant risks in over doing it, and it appears that, at the moment, the Federal Reserve is willing to take that risk. The problem for us is figuring out whether or not they will follow through - or get cold feet. Neither path is without its benefits and drawbacks.
And "at the end of the day"...
The Fed does not take into consideration OIL, for reasons that are unfathomable to me... not that doing so would lead them to the correct decision, either...
But just click this link and scroll down to table 1. Notice that while gross imports fell 6% year over year to date, net imports are fell only .6%. That is because the U.S. imports OIL from and exports products (gasoline & diesel) to MEXICO, and the U.S. has decreased its exports to Mexico by the amount of the difference. MEXICO is close to collapse; the CIA and DOD both say that the risk of MEXICO devolving into a failed state is the U.S. foreign affairs' greatest risk at the moment. Because MEXICO needs U.S. currency, it will export its OIL. Because the U.S. would find itself near collapse if it had back to back declines in NET imports of 7% or 8% in 2008 AND 2009, the U.S. is incapable of exporting to Mexico what it had in the past.
How this little conundrum works out should prove very interesting.
Mentatt (at) yahoo (d0t) com
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A couple of years ago I read an interesting futurist scenario of a possible future break-up of the USA. I didn't agree with it's proposed storyline but do think that the USA is a fractured society which has only been held together by the American Dream of the possibility of wealth for anybody. With The Dream now out of reach, what else do you share as a common ideology?
For example; for the substantial (majority?) Spanish-speaking population in the south, an economic collapse of the US coupled with a societal collapse of Mexico would seem to rewrite the de-facto southern/south-western borders. One could imagine, for example, the US government being forced (by circumstances and budget) to draw a new line of defense against unrest and drugs further north.
What do you think, Greg?
I think the risk lies more in our system of Senatorial representation.
California, with 12% of the U.S. population, has the same 2 Senators representing all those people as Wyoming, with less than .2% of the U.S. population. California has more people than our 18 smallest states added together.
Since Senators come with the ability to stop any and all legislation with their power of filibuster - this is a disaster waiting to happen.
I am a hardcore libertarian - Liberal on the social issues, and hands off on taxes and fiscal issues and business. I don't care who you marry, what you smoke, etc... and I don't want to pay for problems of your creation. Our system as currently constituted ensures a continual battle over issues that just don't matter but do mask the issues that do, and our political operatives are LEGION in accomplishing this smokescreen.
DNA wins all wars and political outcomes.
China was invaded 20 times in history, and in each case the conquerers were bred out of existence.
Ever met a Shaker? Me neither, because they practiced celibacy they died out. In the long run the breeders win.
The southern border issue will be settled in the bedroom, not the war room.
In my opinion...
That's the long view and I agree, and i agree with your libertarian sympathies too.
But in the short term its economics, the DNA is already written into future history. But right now Mexico is effectively being run by drug cartels, California state is bankrupt and, as you've pointed out, it has a Federally-unrepresented Spanish population, .......?
The U.S. isn't going to break up and all this other doom stuff isn't going to happen either. Why is it so hard to believe that people who have lived the good life (houses and cars too big and new, the best clothes, entertainment every weekend, granite countertops) are incapable of downsizing their lives, cutting out spending that isn't even necessary in the first place? This morning I walked to Ace Hardware to get a door closer, and passed by several dozen people waiting outside an over-the-top fancy Sunday brunch place. If I can act like I have no money, and do my errands by walking, lets give some credit to the "top 20%" for being able to change their lifestyle too when it will be required (the other 80% have already been downsizing their lives). In the meantime, I make money by reducing "fat living" exposure and by investing in energy and metals. I can stick my tongue out at the 99% who would rather be eating brunch this morning than reading what it says in "The American Energy Crisis." :)
Bacteria in the wine bottle, algae in the bloom.
DNA used to win.
It remains to be seen whether that is still true.
DNA been leveraging a whole lot lately in terms of some fixed planetary assets.
Who's gonna cover that credit default? AIG?
It seems this time is so different, because it is such a truly gloabl hit across all sectors and any comparison with the past is going to be sketchy at best. I keep thinking about getting back into oil, but the decline in manufacturing, unemployment numbers and everything else has held me back so far, so I completely missed this rally. I guess the question everyone wants to know the answer to is when will the drop in supply catch up with the drop in demand. If you dont see any foreseable rise in oil demand, does that mean you also dont believe oil prices will take off anytime soon? I guess the value of the dollar has a lot to do with it too, but trading with so much uncertanitly seems like a sure way to get nailed.
My fear is that we devolve into a statist dictatorship. Venezuela, perhaps. I'm not as worried about the Mexicans in California as the Americans in DC. I'm seeing nothing that resembled responsible government.
Regards,
Coal Guy
thanks for sharing.......
___________________
Sharon
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