« A Leopard changes his spots | Main | Rest in Peace, Indigo »

May 21, 2008



I've got to say that I don't see the rise of gas prices as causing lots of folks to give up on their vacation plans. Even if you're driving a thousand miles in a car that only gets 20 Hwy MPG, and you're paying a buck a gallon more than last year at this time....carry the one...that's only an extra $50 added to your total vacation price. Virtually anyone can absorb that into other vacation expenses.

By the same token, if the average person drives 12,000 miles/yr (as the Blue Book people assume) and their car averages 20 MPG overall that's again $50 a month in extra gas money. Sure, there are a number of people whose budgets are tight enough that this will cause significant pain, but not most people. How much have you and your friends reduced their driving due to the higher gas price? Most people have little, if any, cutting back on how much they drive.

Granted, as the rising price of gas causes everything else to go up, there are going to be more people that fall into the "going to have cut back somewhere in order to buy gas this month" category, but the cost of gas itself isn't really going to do it for most folks.

The first thing most families will do is switch to using the car that gets better mileage more than the one that sucks it down quicker. Husband and wives will switch cars because one of them drives more and when they go out together they will drive the one that uses less. That alone may be enough to offset the higher price.

WalMart may have lots of people in their marketing department, but I think they are really missing the point by promoting themselves as the place to shop because their lower prices will help you pay for the more expensive gas we have now. They should be promoting the fact that you can keep from buying that expensive gasoline in the first place if you go to WallyWorld because you can do all your shopping in one place and cut down on how much driving you do.

Look back at WWII. Granted, there was a lot of economic activity going on because of the war and all, but it wasn't an issue of how much gas cost- you just plain could only buy so much of it. What did people do? They carpooled and did all their business in as few trips as possible. They didn't stop buying things or going to the movies or whatever. "I can't afford to buy more than 40 gallons of gas a month" is not significantly different than "I'm not allowed to buy more than 40 gallons a month". You figure out how to get done what you need to on that 40 gallons.

In every conversation I've had with people that had to live through gas rationing, they all said that it really made no difference to what they were able to do, just when they did it and how many people came with them when they did.


One indispensable site:

http://shadowstats.com (this economist debunks current .gov econ stats; read ALL of the primers on the right margin; scroogle "John Williams shadowstats" for more from him)

and an important interview with an economist (Nouriel Roubini) that has been calling the ball correctly for two years:


Brick Oven Bill

At the risk of pimping my ramblings; Bloomberg’s site states that there was $1.4 trillion in outstanding mortgage debt in 2006. That is crap; there was $10 trillion. Bloomberg has selfish reasons to minimize things.


I agree with investments in rural real estate with good soil.

Aaron Neal

I posted a reply a little while back arguing that the recession was an invention of the media, meant as a political tool to smear the current administration and by extension McCain.

After more study, I'll stand by that - by DEFINITION, still no recession. No two consecutive quarters of negative GDP growth.

But as I said, that's after more study - and after more study, I'm convinced that the DEFINITION involved has become meaningless, due to the ever-moving goalposts and redefining the measures we use to look at the economy as a whole.

The measure of inflation doesn't take into account energy, fuel, or food... WTF?!?!?

GDP has replaced GNP - and I forget off the top of my head what the difference is, but it was a monkeying with numbers to make them look better than they really were.

To paraphrase the Princess Bride (against myself, unfortunately) I've come to realize that "These words, I think, do not mean what you think they mean".

Sorry it took me this long to quit looking at the trees, and notice the freakin' forest... but yeah, I think we're in some fairly deep kimchi.

Will we survive? Sure. Will it hurt? OhYouBetcha. There's going to be a long and painful unwinding of the derivatives market, where debt has been sold (securitized) as an investment, and the underlying foundation ain't there. NOBODY knows how deep that worm's going to go; general thoughts are that it's going to take a LOT of digging to find the end of it, though.

The subprime mortgage crisis (and more widespread credit crisis in general) hasn't finished; I don't think we're even halfway through yet. People in heavy debt are being, and will be, hurt. Lenders will probably be hurt more; investors in those lenders are going to take it in the shorts. Mortgage lenders will wind up being HUGE property holders; those properties will be sold at a loss, driving down other property values.

If you have cash, this is, and will be for a while, a GREAT time to get real estate ON SALE.

If you, like me, owe money against your home... pile up some spare cash, and get out of other debt. This will get worse before it gets better.

The comments to this entry are closed.


Blog powered by Typepad