OT: Completely OT: Inflation

[Laura Brody]

On Tue, 4 Oct 2005 00:42:36 -0400, John Esak <john at valar.com> wrote:

>
> Why is this hard for people (even smart people) to understand?
[...]
> My question is this. How is it that people (economists, pundits, everyone
> seemingly - except me) feels that there won't be immediate HUGE inflation
> everywhere. With gas at the pumps moving in the $3/$4 dollar range and
> companies like us having to raise manufactured goods costs (petroleum and
> natural gas based as plastic resin is) up by so much to stay in business...
> How in the world will other companies who buy this stuff from us survive
> without raising their prices as well? Do you see where this is going?
> Doesn't everyone SEE it?  What is wrong with this picture.

	Don't forget that about HALF the goods in this country are
moved via trucks. Gasoline prices are going to add to the cost of
everything that needs petroleum to move it, mine it, build it,
paint it, heat it, cool it, etc..... And as John pointed out, plastic
prices are going through the roof -- look around you. How many things
do you own which are made from plastic? These costs touch everything.
Anyone who says that their industry is unaffected is either an idiot
or a liar.

	This kind of massive price increase in our major source of
energy and raw materials WILL have repercussions. I don't know
if the result will be inflation or an economic crash/depression,
but something is going to have to give.

> To hear the stock market analysts on all four networks (and thecable channels) saying over and over again "rising oil priceswill not hurt the stock market"... I stay in a state ofappalled disbelief. It's like these guys (and gals) have
> absolutely zero connection with the real world. Exactlywhere do they live?

	Most live (or have a summer home) in "la-la land".
A few might actually have a degree in economics, but most
appear to be totally clueless and simply read what is on
the teleprompter without a second thought.

> Based on what is happening to us, I would suggest that everyone hold on
> tight. The bottom is about to fall out after all. It's going to be a rough ride, and who knows what will shake out and who will be aroundafter it all comes crashing down.
>
	There are several reasons to expect an economic crash....
First, remember that everything is linked to everything else, sort
of like a group of mountain climbers. If one climber falls, the
others (with effort) can compensate. If several climbers fall at
the same time, the whole group is going to get pulled down.

	Right now we have a rush for people to file for bankruptcy
since the new rules will make it much, much harder to make a clean
start. Foreclosure rates are at a 50-year high. Interest rates are
being constantly nudged up. About 1/3 of all mortgages in this
country are adjustable. Care to guess how much a monthly mortgage
payment increases when you go from 4.5% to 6.5% (and higher)?
Average housing costs are now closer to 50% than 33% of household
budget. Credit card minimum payments are going from 2% to 4% of
the balance, doubling the payments, plus credit card companies are
changing their rules so that if you make a late payment with
ANY another card or loan, they have the right to jack up
your interest rate to 25-30% on their card. Personal savings
rates are somewhere between .5% and -1% (meaning no savings
for people to ride out economic bumps in the road). Banks
giving mortgages and credit lines at 100% to 125% of market
value, and homeowners buying new cars and "toys" with their
credit line. The big car companies have to keep offering
cashback and employee discounts to move new cars (they can't
give away SUVs now) and as a result, car dealer lots are
overflowing with trade-ins. Add to this heating oil and
gasoline prices gutting an already tight household budget
and you have a giant mess brewing in a non-trivial portion
of the population.

	If that isn't enough to bring down the house of cards,
we have a war which is ballooning the national debt at an
alarming rate. So even if your own personal financial house is
in order, you still have your portion of the national debt to
contend with for many, many years. Throw in a couple of major
hurricanes that put New Orleans underwater and obliterated
large sections of the Texas coast, resulting in 1 million
people homeless (no idea how many businesses are gone) and
the future is not looking very rosey.

[...]
>
> In regards to oil, all we can hope is that George Bush's historic move into the Middle East to bring the sanity of civilization and humanrights to the only region of the world that hasn't been able todevelop these ideas on their own for thousands of years...

	The smart money says "it ain't gonna happen". George Bush has
taken every company that he has ever been given (yes, given) to him and
drove every one of them into the ground. Much smarter people than
Bush Jr have attempted to build a real peace in that area of the
world and failed. I think that too many people in the Middle East
would rather fight, kill each other and stay in a victim mindset
than fix what is broken. Coming in, pointing a gun and telling
them "stop killing each other or I'm going to shoot you" to
suicide bombers, isn't a long-term solution.
	
> There is not much time left. We all better get a plan... a world-wide
> plan...

	Don't expect the UN to pull this off. I haven't heard of
a more inept and ineffective group.....

> based on developing a new source of energy... not just for
> ourselves, but for everyone.

	Big oil has our government in its pocket (now more than
ever). There is little chance that substantial government
grants will be available to fund research into new energy
sources. Private investors in the US are not usually known
to fund research that could take 10-20 years to get to market
(and a profit).

-- 
Laura Brody, Publisher of the filePro Developer's Journal
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