I look at the talking heads on the financial networks and websites and like a bunch of high school cheerleaders before the big game they continue to rah rah while all the fundamentals are collapsing like one of our undermaintained bridges. Is there an comparison to Nero here? I think so. Oil is expected to go to $200 a barrel in the next year and at the rate it's going that could be sooner. Corn, wheat, soy beans and other comodities are at an all time high a real yipee if you are an investor but not so if you have to eat. Oh, that's right investors have to eat as well so are they just paying themselves? They're just making a temporary profit at the expense of others, supply and demand be damned.
I keep hearing some of the heads say we're not in a recession while others say the opposite. Of course you can't fool anybody here of course we're in a recession. Check around your neighborhood. How many have had their hours cut or been laid off in the last four or five months? You can watch the usual weekend crowds at the mall but notice how many bags they carry. It's become a recreational people watching past time.We look at all the pretty things we can't afford to buy and aren't going to buy because we're not sure if there's work next week and this weeks' check was a little light. Uncertainty is the deal killer at present. Forget the rebate (loan on future taxes) checks, gas and food prices eat that up before they got to us. We didn't even get the crumbs from the great Bush tax cuts. That went to some CEOs new multimillion dollar vacation home. I hear you can pick up some really nice places in Miami fairly cheap if you're hidden in the bowels of a large corporation and making a 6 or 7 figure income.
The only bright spot I've seen in all of this is that the process (economy tanking) is moving very fast. Much like having the choice of quickly ripping a band aide from a wound or peeling it off slowly I'm hoping that happens quickly rather than slowly. Even still I think that there will be lasting effects this time around. Those will be in the area of mortgage rules and the cost of energy. There was a time when you had to list every penny of income when applying for a mortgage. There was a time when (according to my father) that banks would actually ask about your personnel habits. Things like do you drink? Do you have any dangerous hobbies? Energy will be an issue because we haven't gotten around to changing the ways we deal with it. Car companies tout their green and energy efficient cars, but these hybrids are still an oddity on the streets. Public transit would have been a great option 20 or 30 years ago when there wasn't a shift in the work schedules and locations of the work. We are a mobile workforce now not tied to one place or fixed start time.
So when will this recession (depression) end? Good question. The bulk of the subprimes is still working its way through the system. The damage from that will be felt in the future as empty forclosed houses sit unsold lowering the tax revenues of governments. And then there are the companies that invested in this risky paper that is just now showing up on the financial news. Estimated to be nearly $1 trillion it will take a while to swallow that chunk of change. Then there are the mortgages just above sub that are variable and will come due in Jan 09. What percent of these will fail is anyone's guess but if the economy keeps sheding jobs well you get the picture. So, I'm figuring at least two years to get on even marginally stable ground that is if we get an adult in the white house who will tear up the credit cards and make every one pay their fair share.