Predictions review; How am I Doing?
Good Morning
I wrote this article back in February. I thought it would be fun to see how I was doing on my predictions.
Reader and often commenter Billy B, whose day job is that of an engineer for Aleyeska Pipeline, has said for some time that this is a Cinderella year. In other words, get your house in order before you turn into a pumpkin; as next year will be too late. I agree. Enjoy the rewind.
The FED announced yesterday that they have revised their estimates and now believe that inflation will be elevated, unemployment will be higher, and housing and credit woes will drag on a little longer. No kiddin’?
If you lower interest rates, print a bunch of new money, continually ship our jobs to low cost foreign nations, raise lending standards and overbuild housing; what results do they think may occur? Well duh!
What is real scary, is that none of the presidential contenders get it either (except for Ron Paul, who completely gets it.) I should have said that the presidential candidates pretend not to get it. Otherwise they would have to tell the same story that Ron Paul and our Chief Comptroller General, David Walker, tells. And most Americans don’t like that version of the story.
In other connected news, oil passed a hundred bucks yesterday like a freight train passing a bum. That’s not good news for a bunch of folks already in recession. Oil prices won’t get better any time soon. Expecting anything different would be similar to waiting for discount tickets to go on sale to a sold out Super Bowl.
Oil is finite; all there is, is all there is and the other 95% of the people in the world have taken up a keen interest in using their share.
Higher end retail outlets are having issues. I wrote in my first article that Macy Department Stores had laid off 2300 management people. Yesterday, Sharper Image filed for bankruptcy protection. Even Sears and Penny’s are circling the drain. GM lost $38 billion last year and I personally don’t believe that Ford and Chrysler can survive as stand alone companies.
In light of all this bad news, the stock markets went up! Why? Bronco Ben Bernanke promised to saddle up ol’ Hyper-Inflation and make as many rate slashing raids on
I promised to give a few suggestions that could help out in times like these. The best suggestion that I can make is, don’t wait to see if I’m right before you act. Today is a good day to start.
Get rid of extra vehicles and those that get poor gas mileage. The age of the SUV and Mega truck is over. Fuel will never be cheap again and the prices of these type vehicles will continue to fall. I had a friend call yesterday and say he saw a dealer add offering $17,000 off sticker on a new diesel pickup!
Consider that if you purchased a vehicle that gets 30 MPG and sold one that averaged 15 MPG, you would effectively cut your fuel cost in half. That would be akin to rolling the pump price back to $1.50.
Buy a used vehicle no matter what the claims of new car salespeople are. Many older cars got 30 MPG. I drove a Buick Regal for years that averaged over 30 MPG. Reap the reward of lower sales tax, license fees, insurance, and depreciation of a used car. It’s huge.
Lastly, cut back on driving. I know that it is an American past-time to just get out and drive, but we are talking about preparation and adjustments for a difficult period of time in this country and it’s up to you to prepare. Government is not going to come to the rescue nor are “They.” It’s “you” that is charge of change at your house.
Wake up
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You have to wonder why winning an election; any election; is more important than saving our nation; our planet? -bb
Billy b,
Few understand the consequences of continuing our pursuit of unbridled capitalism. The reason for this is that few care to hold that knowledge.
Economics is just a dry dusty boring subject full of that awful villain “reality” and certainly not worth worrying about.
We don’t see seven years of payments and depreciation, we see a new car…right now.
We don’t look down the road for 7 generations, we look down the road until next week. If we can make it, the heck with those who will come later, after all, technology will save them. What a cop out. After all, what can we do?
I’ll produce some longer term outlooks for all of us to discuss or perhaps, cuss.
Hi Mike,
You’re doing great! Feels good to seem prescient, doesn’t it. Others have warned about Peak Oil (e.g., the site “From the Wilderness” when it was still active), but you’ve put the big picture in place.
I guess it makes sense that engineers from the oil industry have been sounding the alarm and seeing the consequences down the line. Our mutual correspondent, RR, has been sounding the warnings for some time, too. I think, in part, it’s the way engineers have been trained to think. (I say that with admiration, and personal knowledge. My dad was a mechanical engineer.)
The short sightedness of our elected officials is nothing short of appalling, but it probably just reflects the mindset of the citizenry who are thinking of what cheap junk they can buy from Wal-Mart with their next paycheck or who’s going to survive the next episode of some inane “make a fool of yourself” TV competition.
My husband got rid of his gas guzzling Ford Explorer four years ago in anticipation of rising gas prices. (Same year I purchased my Honda Civic hybrid.)
I see more people around here putting their big trucks and SUVs in storage because they can’t get a decent sale price for them. 50-75 years from now there might be some “mint condition” SUV and big truck antiques in pole barns for collectors nostalgic for the old days.
It’s been interesting to see our boating friends finally wake up to the high gas prices. One friend (who can’t have been paying much attention) recently returned from a cruise to “The Soo” (Sault Ste. Marie, MI), which is about a 200 mile round trip. Suddenly, he’s talking about getting a part time job to support his gas dependent lifestyle. IMHO, he’d be better off getting a sailboat if he could get rid of his SeaRay 40.
Enough ruminating. Keep up the wonderful posts, Mike. They’re not only enjoyable, they’re wonderfully insightful.\
Kathy
Kathy,
Thanks so much for kind words and encouragement. My brother was in the auto business nearly all of his life. We were recently talking about the absolute end (forever) of the SUV craze.
My nephew who was laid off from Fleetwood mentioned that the large RV business was a dying industry. I don’t think our minds allow us to imagine that eras, truly end.
As habits change, those who made a living supporting those habits find themselves unemployed. The boating industry is a prime example. What will those who depended on that industry do?
The end of an era is at hand. How we deal with that fact will determine the level of chaos.
Hi Mike,
Thanks for the response. As I reviewed my comment, I was uncomfortable with my tone of smugness relative to doing a few things in a timely manner. Truthfully, I am as clueless as my friends about how to really go about preparing for a very uncertain future. My only advantage is realizing that the future will indeed be different. However, imagining the next era, and what specific steps to prepare for it is a daunting task.
I don’t remember who recently pointed out the irony of going out and buying new things (e.g., a hybrid automovile) as a response to future conditions, pointing out that such behavior just continues the patterns of consumption that put us in this mess to begin with. I guess that buying stuff continues to be a default behavior.
For example, I’ve been thinking a lot about plastic products, and how they’re increasing in cost, and will probably need to be phased out. But, preparing for this???? How many plastic toothbrushes will I need for the rest of my life? How many plastic food storage bags will I need for my remaining years? Should I stock up now, or try to remember how teeth were cleaned and food was stored before plastic? Stocking up? Here I go again with the consumption response. See what I mean? It’s darned hard to abandon this mindset!
I’m hoping that you and your highly intelligent commenters will contribute some insights into their thinking about abandoning defaut mindsets. I’d sure appreciate it!
Kathy
The first thing our country has to do is to change it’s present economic policy of exponential growth!!!! Nothing else matter if this does not begin now. Having been in the industry as long as I have, there is no doubt we will change; soon. If we wisely plan this change, the pain will be small. If we do not plan this change and keep our ever expanding train rolling, the options we have available today will be gone tomorrow, forever. That is when handle comes off the skillet, and our choices fall into the fires of chance.
once we decide to abandon exponential growth as the flawed policy it is, our nation needs to convert to natural gas (in place of gasoline) over the the next few years until we can work into a more sensible way of living (I have many thoughts on this). We cannot however convert to natural gas with the idea that this will be a way to keep our ever expanding growth based economy running for a while longer. Consumption is part of the process of transition. The key is to keep the consumpton planned, in check and sensible.
It could never hurt to keep a year’s supply of food on hand and some of the other esentials I saw listed in the posts above, to ease the transition period. It’s a whole lot easier to plan and to think if you are not starving. There is a lot out there on this topic; not all extreme either. Just my two cents worth this morning. -bb
Kathy,
Over the week end I’m going to try and organize some of my longer term predictions and the actions that should be taken to deal with their outcome.
Anyone who would care to weigh in is welcome. The time for immediate action is upon us.
I recommend taking the most conservative posture possible for the next year. More on that later.
Thank you, Billyb. Your two cents are worth a goldmine. I keep second guessing myself, wondering if I’m engaging in overly catastrophic thinking. I am closely following the suggestions on various websites on stocking up, and am following through on many. I actually felt very self conscious about ordering a year’s worth of food, but went ahead anyway. However, I felt compelled to devise a cover story when the motor freight delivery blocked a lane leading to my no-outlet street. (For both the driver and the neighbors) Nonetheless, I felt a profound sense of relief after storing the stuff, and believe it has given me room to think about other preparations.
It really helps to know that others are preparing, too.
Mike,
I’ll be looking forward to your thoughts on predictions and actions. You’ve been such an accurate prognosticator that you now carry the burden of being asked for more.
Now I’ve got to run out and buy a new suit of mylar sails for my boat before the price goes up anymore.
Kathy