A meandering blog with no clear topic. You will find me talking about knitting, building, kids, social and economic issues, Alaska, and lots of other stuff.

Tuesday, December 30, 2008

Are you scared?

OK, so you have to watch ventriloquist Jeff Dunham's puppet, Achmed the dead terrorist on Youtube. My connection is slow, or I would show it here. It is very funny. There is one part on my mind today as I read the news. Achmed turns to Jeff after admitting to being a terrorist, and says, "Are you scared?" Jeff replies, "No, not really." Achmed growls threateningly. "How bout now?" he asks. Jeff replies, "No."

Well, I am. After a year of depressing economic, climate, and other news, I am. I was reading The Automatic Earth (http://www.theautomaticearth.blogspot.com/) and in one of the news clippings there is this qote: "We’re in the midst of a downward spiral and the momentum is building." I know this quote is only part of an article about home prices, but I find it accurate, and chilling. This is how I have been feeling watching the news the past several months. Journalists are talking about how things are looking bad for the first part of 2009 then start talking about a turnaround. Frankly, I think we are no where near bottom, and things are not going to magically get better in the next 6 months. The downward trend is still accelerating, in everything but the stock market. If we were going to pull out of this thing by June, we would be starting to see the numbers slowing their descent, but the opposite is happening.

Home prices are still falling by increasing amounts. Lending amounts are still plummeting, which not only affects home sales, but many businesses rely on lines of credit that are rapidly evaporating. Consumer confidence continues to decline. Unemployment claims are higher than ever. Retailers report the worst holiday sales in almost 40 years. Even Toyota isn't selling cars anymore, never mind the big three lumbering dinosaurs in Detroit that can't see their hands right in front of their faces. This is all bad news for our economy. Our stock market has plunged almost 40% in the last year, the worst since the big crash during the Great Depression.

Economists are still calling this a recession, but I am going to go out on a limb and say we are only in the beginning of a long and deep depression. And we can't climb our way out of this one by going to war... we are already in a war and we are wasting trillions of dollars over there, and it is not helping.

Let's talk about oil. Oil prices are incredibly low, when you compare them to where they were this summer. I don't see it shooting right back up there immediately, but I can't see it staying this low indefinitely. Right now, the price for oil is low because of a precipitous drop in demand, due to the high prices and the tightening economic situation. Now, as prices have fell so rapidly, there are reports that out of the vehicles that are being sold right now, a higher percentage of them are SUV's than when gas was expensive. Toyota is reporting a significant drop in sales of their Priuses. And demand for oil is slowly starting to increase again. China is filling their strategic reserves. I have heard that beginning January 1, we will start doing the same again. I support that. It is much smarter to do it now than when it was costing us close to $150 a barrel for the stuff. But this will increase demand, which will in turn increase the price. Economics 101. I learned about how this works when I was 14 and taking my first economics course. So when prices start going back up, it will just crimp consumers, businesses, governments, everyone just a little bit more. One less thing looking positive for a quick economic recovery.

And then there is the long term aspect of the oil situation. I am not an expert, but I have been paying attention. It is my position that we are close to or perhaps even past a world peak in oil production. What does this mean for our economic recovery? It means that the oil we get out of the ground from here on out will be more difficult, and thus more expensive, to produce. We have already gotten the easy, cheap stuff. The places we are finding new oil now are in places like deep water gulf of mexico or terribly harsh conditions like the arctic ocean. And they are mostly smaller deposits. We are unlikely to find another Ghawar or three. And if the oil we can get is more expensive, then the oil producers have little choice but to shut in the wells that are uneconomic to produce at $40 a barrel. Or, the price goes up. There have already been indications that the less economic wells are being closed, and new projects in hard areas are being cancelled. This bodes poorly for medium term oil production, as it takes a long time to get oil from a new discovery.

There are so many things worrying me right now. I could go on with this post for days, it seems. Lending to business is shrinking, retailers are doing poorly. There are going to be fewer things on the shelves. If that means less cheap plastic crap from China, maybe that is a good thing for us, but not for China. They are having severe economic problems as well. But if less things on the shelves means less potatoes, less rice, less of the essentials, we will find ourselves in a crisis in a hurry. Farmers also need lines of credit. What will next year's harvest look like if the farmers can't get the credit to buy seed? Maybe this isn't critical at the moment, but if credit continues to evaporate between now and April, who knows? I surely don't. But I can tell you one thing for certain. I am planting a garden.

Yes, I am scared. I think things are going to get a lot worse. But I am thankful that at least at the moment, my job looks secure. I have a house that I don't owe a lot of money on. I have room for a garden, and a box full of seeds. I have plenty of wood to keep my house warm. I have health insurance, and a relatively healthy family, and a wonderful husband that can fix or build just about anything. I live in an area that gets plenty of rain and snow, so water is thankfully plentiful. And I was able to give my kids what they felt was a good Christmas, at least this year. My personal angst about Christmas has not dampened their pleasure. I have many things that can help see me through hard times, so I feel blessed. I realize that not everyone has those blessings, and my heart goes out to them, as things get harder.

2009 is looking like it will be one wild ride. Fasten your seat belts.


MeadowLark said...

You're right on all of it. Although I expect another "war" - perhaps on our own population, who knows. I swear I'm not a survivalist doomer, but I'm starting to look a lot like one. Drop by Sharon's - she has a good post on a similar subject. sharonastyk.com

It is better that we have at least THOUGHT about this, rather than being part of the (I think) majority who refuses to see it's even a possibility.

Peace to you.

Knit2dye4 said...

Yep, I am a regular reader of Sharon's blog. I think she is very insightful, and I admire what she is doing greatly.