Forum

Un petit compte-rendu en anglais de la situation financiere aux USA vu de ma ville a Houston (je ne vis plus a Las Vegas):

Some financial analysts predict we have a chance of 50/50 to be in an economic recession (seen on Fox News).

If you think 2007 was a bad year for the economy, then wait the end of 2008 to see how painful the financial squeeze in your wallets will be. We are in an economic recession for sure, but we are in an economic recession at the wrong time.

There are many tools to measure any economic performance, the unemployment rate is an economic indicator, the CPI (Consumer Price Index) is another tool to measure the dynamism in economics and social disparities. The inflation rate is also another interesting tool but for some economic and disguised capitalist reasons (the US inflation tool does not take into account the forty first values) this tool is often forgotten in the US mentalities because keynesian economists prefer to deal with it in terms of economic activity and wealth accumulation. Mainly for the american case people think first in rational terms with their wallets, wealth, and purchasing power. Of course we can dissert at length about accuracy of these economic tools, especially with the CPI, because they do not translate the reality for many products based on raw products, but the consumer is really going to feel the pain during the course of the year 2008.

The CPI - The cost of food:
For instance, the price of wheat has been rising to 92% the last 12 months, and the the price of corn has been rising to +44% the last 15 months. That’s a whole lot of inflation when everything’s going to be translated to the consumer’s wallet within the end of the year. So far, inflation was not really visible last year, but if you think in terms of numbers you should be able to see that basic food products won’t be cheap anymore. For example walmart that used to roll back its prices had to raise its prices by 10% at least from December to January, up to 25% for some products (bread). It’s only for 1 month, and it’s only for the beginning of the year.
Ethanol is produced with corn and as a gasoline substitution there is a downfall in this so-called “green aspect”: we need more fields to produce more corn to reduce our dependence on oil and oil prices. Sounds good? But oh oh wait we forgot something here: we are focusing on feeding our cars with ethanol but are we that sure we are going able to feed Americans too? Agricultural performance is good but like the US army troops it’s not stretchable. Are we going to be able to feed Americans? What about foreign aid (wheat, corn) to the poorest countries in the world? Didn’t the UN report overestimate that the industrialized countries could easily feed all these people on the planet? What are we going to do when we have to make choices between feeding our cars or giving aid to the poorest countries, especially when we need desperately to re-establish an international image?
Get your garden ready if you can, go to wallyworld to buy your tools (made in the USA) and start planting veggies all over the place, because there is no word yet from the presidential nomenklatur (candidates) about this issue. Nobody foresaw the risks, and social problems may be bigger than we think.

The rising oil price and new energies (biofuels):
The oil barrel price has been hitting $100 a few months ago. The days when people had to pay for cheap oil are over, finito. Consequently we are trying to find new sources of energy. Solar energy is a good alternative. It’s an infinite source, it’s not situated on our planet so we won’t destroy it, and for once it breaks the economic cycles between producers and consumers. All we have to do is buying some solar panels and batteries and we can run basically anything we want in our house. The sunnier, the more energy we will supply. With these new technologies we are even able to run solar panels in countries whose sunshines are limited during the day. The problem though is we can’t apply these new technologies in all the domains (cars, airplanes, boats…etc) so we are still and will be dependent for a very long time on oil energy. The main idea consists to reduce our energetic dependence, because the oil prices won’t go down, unless they decide to open new oilfields in Iraq (I was told there are 17 oilfields that have never been exploited over there), but it bad enough with a war in Iraq, that we should not even hope for that if we want the Iraqi people to be free.
By 2030 if everything goes well and if we are still here in this world, we should be able to see new technologies with power plants whose energy would be unlimited: no need anymore to refuel a nuclear plant, it seems an attractive idea, and if it would be a good alternative to reverse the globalization process: once oil prices will reach unaffordable prices, we’ll have to go back to the local economy to produce goods instead of importing them.

The mortgage crisis:
2008 will be another bad year for the mortgage crisis. Disruptive economic policies from Greenspan inflated the house market, and people thought it was going to last forever. While people were able to have positive equities on their house, the housing market crashed, and now people are finding themselves with negative equities. As a result people are giving up on their house payment for this main reason, but also these people lost their jobs or they contracted an ARM and the lenders shot up their payment. In some minor cases, their house payment went from $851 a month to $1,300, which is nothing compared to other people whose house payment doubled up, but enough to make you yell and forget about the american dream. This stuff is happening all over the States, although some states are more devastated by this economic tsunami. If you wanted to move to California, Arizona, Nevada or Florida, then forget about that and chose another state. Coincidentally there is a huge number of people who lost their house because they lost their job, but they lost their jobs because they were working illegally or under fake papers in the country. The percentage rate of those people inside the mortgage crisis is high enough to give you a vertigo or a head spin. How in the hell have these people been able to contract a loan without proper documentation and guidelines? And who is responsible in this story? Brokers? Lenders? The government? All of them. Too often, too many times, these people contributed to the dynamism of our economy, but the anti-immigration RAID from ICE worsened the mortgage crisis. We’ve been shooting our own toes again, and we’ll have to make a choice between illegal immigration and mortgage crisis. Actually the percentage of illegal people who contracted a loan in some american banks is higher than 50%.

Conclusion:
These are some ideas only, at first glance, but the economic recession is here, and I do not expect it to be solved from one day to the next. Worse, there is no bandaid yet because this crisis is different from the previous ones: with soaring oil prices we have to make choices between revitalizing our economy and finding other alternative energies while we have to make sure at the same time we don’t reach a brand new crisis, a food crisis this time. 2008 will emphasize the crisis so be prepared for the worse. Finally after 8 years of Bush, the country is in bad shape, and we’ll need somebody with talent, whether it is a Republican or a Democrat, but the choices, once again, are limited. We need more people like Kucinich or Ron Paul that emphasize on american economics policies instead of diverting us with their foreign policies in the Middle-East. If most Americans think that going to war is the only resource to take care of our country, then please don’t count on me.