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The New Potato Famine
Oct. 3rd, 2008 11:30 am● Chris and I like the Austin City Limits Festival so much that we have already bought tickets for 2009. They went on sale yesterday for those on the mailing list. Here’s hoping there’s some great acts next year, but it’s always a good excuse to get away to Austin. I hope more people will join us!
● Chris is going to Anaheim today to enjoy Miley Cyrus' big birthday bash at Disney. My travel budget is already shot for the year, and I already was close to Miley this year when I was in New York. I don't think I could take any more excitement like that. I was already at Disneyland this year too, but not with the 30,000 gays they are predicting for this weekend. Maybe next year, if everything is good, I might get to go.
● I’d like to give a shout out to Salon.com and the column/blog How the World Works by Andrew Leonard for keeping me informed about the financial credit crisis. Although I work in the financial world (at an extremely low level), I'm not a business major, economist or even an accountant, I have a large learning curve on some of the issues. I was warned about the mortgage crisis a long time ago (a hat tip goes to Trey (![[livejournal.com profile]](https://www.dreamwidth.org/img/external/lj-userinfo.gif)
arkanjil), and I even had to learn about mortgage-backed securities and selling short when taking my licensing tests, but it’s been getting the broader picture, on how this has swelled into a lending crisis that’s hurting businesses that’s been the education lately.
● Again, I’m lucky to work for a company that’s financially strong, but since we aren’t a bank, and our retirement accounts are mostly annuities, not brokerage accounts, we have many callers who are concerned since we’re not FDIC or SPIC insured. Luckily since we’re a not for-profit company, we aren’t leveraged to the hilt. It's tough to re-assure people when their account balances are falling. Still, people don’t understand, even if they have been trough recessions before, that investment in the stock market can and will go down at times. Investment involves risk, plain and simple.
● Even though the House may vote for the $700 billion bailout bill today, that will be just a band-aid for what the economy is going through at this time. Even with the ability for banks to place bad loans at the feet of the US government, there’s severe trouble in lending right now that’s affecting businesses and consumers. Just like the gas shortages in the Southeast, we are a society that is so used to “just-in-time” logistics and deliveries, so when those deliveries don’t come, there’s no inventory to rely on. Many companies now take short term loans to help them meet payroll and purchase equipment, etc. This is done on a very short time table, rather than having a long term financial plan for financing, especially for small employers. When they can’t get the credit, or the small loans they require, business ends up having to curtail growth, laying-off workers and stopping production.
It’s going to be a while before money is flowing as freely as credit has been, if it ever does again. Many banks were far out-leveraging themselves to make these loans happen, and now with fewer big players, and the specter of more regulation on the horizon, both businesses and consumers are going to have to take a hard look at how they spend, and how much credit they will be able to access.
The biggest problem is that American’s have been made to consume everything at a rapid, get it today pace that really shouldn't be allowed. The desire to live beyond your means has been encouraged not only by big business, but by the Bush administration as well, and blame needs to be laid there on his feet. It’s this administration’s effort to not have any American have to sacrifice that has led to big deficits and an economy that was unable to sustain itself as there was no fundamentally sound underpinning. I wonder if Bush was just hoping to get out of office before the bubble burst. He sure looks like he’s just waiting for the bell to ring in January.
I’m wondering how the American people are going to take to a message of tighten your belts when we’ve been coddled so long by a system that says if you want it, get it, damn the future.
What’s interesting is hearing about the far flung suburbs, especially places like the inland Empire in California where tons of expensive McMansions were built and sold for inflated prices to people who couldn’t afford the mortgage payments and now can’t afford the gas prices to commute to and from them, so the houses are foreclosed, the people abandon the homes, and leave all their possessions creating ghost towns out of these suburbs as no one wants to buy them, even at bargain prices. I’m surprised we don’t see more of that in Texas where it seems the cities have grown so far out from the city core, that it’s created more, smaller city cores to compensate, but is that enough to justify driving for miles for everything?
The next president, who ever he, or perhaps she given some odd twist of fate, is, will have the very difficult task of having to pull us along through an economic crisis that may resemble the 1970’s. There’s likely to be some comparisons to Jimmy Carter, who inherited the spiraling inflation, high unemployment and stagnant economy from Nixon/Ford, and he found it very difficult to find a way out of it. Something tells me that no matter whom the president is, 2012 will be a big election year as well.
● Funny thing is that today at work they are feeding us, and passed out a slip of paper with a picture of a baked potato on it that we are to redeem for our lunch. Some people have said that one potato will not be enough, and others have said we should copy the paper in order to get two potatoes. With that there has been talk that we would just create a crisis if there were more slips of paper than potatoes and that the value of the slip of paper would fall as there was no promise of a potato backing the value of these “potato-based securities.” We’ve been having fun with talk of the failure of the potato market and since the delivery of potatoes hasn’t come in yet, the fact that the slips are based on nothing but the full faith that potatoes will appear. There’s also been word of a modern “potato famine” here in the office, but we are waiting for a bailout from management. It’s a funny way to apply the economic lessons we’ve learned these past few weeks.
● Chris is going to Anaheim today to enjoy Miley Cyrus' big birthday bash at Disney. My travel budget is already shot for the year, and I already was close to Miley this year when I was in New York. I don't think I could take any more excitement like that. I was already at Disneyland this year too, but not with the 30,000 gays they are predicting for this weekend. Maybe next year, if everything is good, I might get to go.
● I’d like to give a shout out to Salon.com and the column/blog How the World Works by Andrew Leonard for keeping me informed about the financial credit crisis. Although I work in the financial world (at an extremely low level), I'm not a business major, economist or even an accountant, I have a large learning curve on some of the issues. I was warned about the mortgage crisis a long time ago (a hat tip goes to Trey (
arkanjil), and I even had to learn about mortgage-backed securities and selling short when taking my licensing tests, but it’s been getting the broader picture, on how this has swelled into a lending crisis that’s hurting businesses that’s been the education lately.● Again, I’m lucky to work for a company that’s financially strong, but since we aren’t a bank, and our retirement accounts are mostly annuities, not brokerage accounts, we have many callers who are concerned since we’re not FDIC or SPIC insured. Luckily since we’re a not for-profit company, we aren’t leveraged to the hilt. It's tough to re-assure people when their account balances are falling. Still, people don’t understand, even if they have been trough recessions before, that investment in the stock market can and will go down at times. Investment involves risk, plain and simple.
● Even though the House may vote for the $700 billion bailout bill today, that will be just a band-aid for what the economy is going through at this time. Even with the ability for banks to place bad loans at the feet of the US government, there’s severe trouble in lending right now that’s affecting businesses and consumers. Just like the gas shortages in the Southeast, we are a society that is so used to “just-in-time” logistics and deliveries, so when those deliveries don’t come, there’s no inventory to rely on. Many companies now take short term loans to help them meet payroll and purchase equipment, etc. This is done on a very short time table, rather than having a long term financial plan for financing, especially for small employers. When they can’t get the credit, or the small loans they require, business ends up having to curtail growth, laying-off workers and stopping production.
It’s going to be a while before money is flowing as freely as credit has been, if it ever does again. Many banks were far out-leveraging themselves to make these loans happen, and now with fewer big players, and the specter of more regulation on the horizon, both businesses and consumers are going to have to take a hard look at how they spend, and how much credit they will be able to access.
The biggest problem is that American’s have been made to consume everything at a rapid, get it today pace that really shouldn't be allowed. The desire to live beyond your means has been encouraged not only by big business, but by the Bush administration as well, and blame needs to be laid there on his feet. It’s this administration’s effort to not have any American have to sacrifice that has led to big deficits and an economy that was unable to sustain itself as there was no fundamentally sound underpinning. I wonder if Bush was just hoping to get out of office before the bubble burst. He sure looks like he’s just waiting for the bell to ring in January.
I’m wondering how the American people are going to take to a message of tighten your belts when we’ve been coddled so long by a system that says if you want it, get it, damn the future.
What’s interesting is hearing about the far flung suburbs, especially places like the inland Empire in California where tons of expensive McMansions were built and sold for inflated prices to people who couldn’t afford the mortgage payments and now can’t afford the gas prices to commute to and from them, so the houses are foreclosed, the people abandon the homes, and leave all their possessions creating ghost towns out of these suburbs as no one wants to buy them, even at bargain prices. I’m surprised we don’t see more of that in Texas where it seems the cities have grown so far out from the city core, that it’s created more, smaller city cores to compensate, but is that enough to justify driving for miles for everything?
The next president, who ever he, or perhaps she given some odd twist of fate, is, will have the very difficult task of having to pull us along through an economic crisis that may resemble the 1970’s. There’s likely to be some comparisons to Jimmy Carter, who inherited the spiraling inflation, high unemployment and stagnant economy from Nixon/Ford, and he found it very difficult to find a way out of it. Something tells me that no matter whom the president is, 2012 will be a big election year as well.
● Funny thing is that today at work they are feeding us, and passed out a slip of paper with a picture of a baked potato on it that we are to redeem for our lunch. Some people have said that one potato will not be enough, and others have said we should copy the paper in order to get two potatoes. With that there has been talk that we would just create a crisis if there were more slips of paper than potatoes and that the value of the slip of paper would fall as there was no promise of a potato backing the value of these “potato-based securities.” We’ve been having fun with talk of the failure of the potato market and since the delivery of potatoes hasn’t come in yet, the fact that the slips are based on nothing but the full faith that potatoes will appear. There’s also been word of a modern “potato famine” here in the office, but we are waiting for a bailout from management. It’s a funny way to apply the economic lessons we’ve learned these past few weeks.
