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Born at the Crest of the Empire

Friday, June 15, 2007

How afraid should I be?

I am not an economics expert, but this,
Consumer prices shot up at the fastest pace in 20 months in May, fueled by a surge in gas prices, although inflation pressures were moderate in most other areas.

and this,
The percentage of U.S. mortgages entering foreclosure in the first three months of the year was the highest in more than 50 years, according to the Mortgage Bankers Association.

do not sound good.

(Is this creeping reality the final nail in the Bush "legacy?" How much is this guy gonna cost me?)


  • I'm no economist, but as I understand it, the current dollar is worth about .65 compared a 1980 dollar. I have a suspicion that the American dollar may be in for serious problems in the decades ahead, as oil, which used to be the physical backstop for the dollar's value, becomes useless for that purpose. Gold is no longer the standard for value either, which means that the dollar's value, as fiat currency, debt-based currency, is only based on broad general agreement.

    By Anonymous local insurgent, at 10:02 AM  

  • I find it amusing how hopefully you view any negatives as being a way of destroying a president's legacy, as if that were more important than living your own life.

    The dollar is worth less today than it was in 1980 when measured against certain commodities like oil, housing and apples. It has also weakened considerably when measured against many other currencies. If you still earn the same income you made in 1980, then you are definitely feeling a vice-like pinch. Fortunately, a free society allows anyone with ambition to rise above his past circumstances and make more in subsequent years. This certainly is not linear in one direction, as someone praying to his union or the government for a minimum wage hike would like to believe, and on occasions, anyone can be worse off than he was months or years earlier, but at that point, a rational person evaluates what works and what doesn't and improves his lot in the future. Of course, others choose to waste their time complaining instead.

    I believe it was Bono who recently said on a late night talk show that Americans look at a rich man with a nice house on the hill and say to themselves, "One day that will be me," but an Irishman looks a a nice house and says, "One day, I'll get that bastard." I don't think that plays across nationalities as clearly as that joke indicates, but I definitely think it applies to two general philosophies of life. The rock throwing whiners have already sealed their fates, locked in the prisons of their own minds.

    As far as Bush being to blame for the weak dollar, he certainly deserves a share of the blame, if you put funding the war on his shoulders, but it has more to do with thirty years of Americans choosing to buy foreign-made goods compounding to a point where Japanese car-makers are now taking over the manufacturing capacity of the United States, albeit with newer and better plants and more thoughtfully negotiated contracts.

    One other factor for you non-economists to recognize is that the world has changed since 1980, and in most cases, that has translated into better, more advanced products. As far as technology goes, it's not even close. While I paid $899 for my last plasma 42 inch high defnition television compared to $399 for the 27 inch tube television I bought on sale in 1983, the television I bought recently is considerably better. Without it, I wouldn't be watching MOJO. Further, the Beta VCR that had state of the art technology at the time I bought it in 1983 ran me $200, but the DVD player-recorder/VHS player-recorder combo I bought a year ago cost me under $100. As far as computers go, would anyone rather own the $650 box of parts that was a "kit computer" with enough memory to play a primitive version of Pong in 1980 rather than a $1,000 Dell or Mac computer?

    And, as politicians love to remind us, health care costs a lot more now. Then again, people are also living longer as a result of BETTER health care, which compounds the cost of health care. Anyone is free to stop taking the Lipitor or Viagara and live a more holistic life.

    By Blogger Wes S., at 10:39 AM  

  • The Canadian dollar (the "loonie") is essentially at parity with the US dollar, an historic and slightly troubling situation for those of us along the northern border. And isn't the euro much stronger than the dollar at this point?

    By Blogger -epm, at 10:44 AM  

  • Wes, I'll let you know that I'm no longer reading your comments.

    Your credibility has been shredded by the Nazi-Islamofascist argument you tried to push yesterday, and the previous claims that there are 500 million muslim terrorists wanting to kill me.

    Look, I'm not disregarding what you say out of opposition to your point of view, but instead because you have shown yourself again and again to be frightfully misinformed.

    You can keep commenting, but I'm just not going to waste my time anymore.


    Local, Interesting point. I often wonder about the longer term impact of debt, because when the world is no longer willing to support the US, we'll have big problems.

    On the other hand, it's not in their interest to see the US "fail" so they'll keep the game going.

    Sooner or later, though, there will be a point where #1 overwhelms #2.


    EPM, I didn't know that about the Canadian dollar, but yes, the Euro is very strong against the dollar right now.

    By Blogger mikevotes, at 11:22 AM  

  • While I think the economic situation that Bush will leave in his wake will be part of his legacy. I wouldn't say, however, that I'm "hopeful" Americans will be economically strapped just so there will be another negative notch in Bush's legacy belt. I'm more interested in broad, positive, "rising tide" results than I am in who gets the credit.

    I think your point that "anyone with ambition to rise above his past circumstances" is true as far as it goes. Of course it's better to be ambitions that apathetic, but I think this hackneyed Algerism has more to do with simplistic truthiness than a functional plan for success.

    You ran into a mish-mash of ideas, cheering the general downward curve of the cost of technology, but deriding fact we buy then from foreign manufacturers. You seem to be the kind of person who hates American Labor, but loves American corporations. Quite the paradox.

    The real challenge to the American working class is the cost of housing, food, transportation, and health care. What good is it that the cost of plasma TVs have come down in price. What an absurd and incongruous argument. It's a bit of "let them eat cake" reasoning. I also find it interesting that when we measure inflation, we remove food and fuel out of the equation in order to get better numbers. Just as we remove deaths from car bombings from our Iraqi violence metrics to get the statistics to look good. Weird.

    Americans are not living longer. In fact, on the other end of the spectrum, the infant mortality rate is increasing. We Americans have the best health care facilities no one can afford. The American system of health care is a ridiculously inefficient system whose focus is profit not health. On the other hand, we Americans have are hypochondriacs who do little to prevent health problems, as we pump "poisoned" food into our faces in obscene serving sizes and drive the car to the mailbox.

    I will give you this: Americans should cut up every credit card, toss out the cable and satellite TV, and bump every cell phone. The best way to improve ones individual financial position is to stop consuming unnecessary toys and services. Ironically, these same self destructive spending habits that give the statisticians data to judge the economy as healthy.

    By Blogger -epm, at 12:22 PM  

  • I agree with that first sentiment fully, but with immigration floundering in Bush's own party, I've been thinking alot about "the legacy."

    Pretty much at this point, Bush gets positive reviews from two camps, 1) the rapidly dwindling prowar crowd, and 2) the people who the tax cuts and top first economy have benefitted most.

    (And, trust me, I would probably get hammered in a significantly falling economy or housing collapse, so that's not my cheer.)

    And, EPM, thanks for the defense/argument, but I'm telling you, it's not going to yield anything.

    By Blogger mikevotes, at 1:38 PM  

  • Mike,

    I suspected I was spitting in the wind in replying to Wes's arguments, but I felt the need to address at least some of what I found absurd.

    (And re-reading my lengthy post I realize I should compose my thoughts and writing OUTSIDE the little comments area to prevent so many jarring typos and editing artifacts!)

    I could probably sustain a hit to the housing market, as I'm personally in a pretty good equity position. But if the Fortune 100 paycheck disappeared... who knows. Most of my savings is locked up in retirement accounts. Could get ugly.

    By Blogger -epm, at 2:18 PM  

  • You really do need to get a life if you think a lot about the legacy of someone other than yourself. Ignoring the other side of an issue is at its essence ignorance. That should be obvious from looking at the identical base of the words. That's why I always try to learn as much as I can about all sides of any issue.

    As for EPM's comment about me being anti-labor in my "mish mash" of ideas, I believe he has me confused with some straw man of his own imagination. Personally I drive a Ford, and most of my life I have driven American cars. I will pay extra for a product that employs Americans, even though paradoxically I know that as part of a broader economic model, that makes little economic sense. That being said, some items are no longer manufactured in the United States at any price, and the fact that I purchase them, whether that be a plasma TV or anything else, does effect the value of the dollar, because I have put more dollars outside of the country which must be re-patriated eventually. The more dollars in circulation out of the country, the less valuable they will be relative to other currencies. It's nothing more than an economic fact whether anyone chooses to hear it or not. The same applies to dollars used to finance war machinery which blows up and becomes worthless. As a result, more dollars are in ciculation chasing fewer goods, reducing the value of the dollars. Denying it or refusing to listen doesn't make it any less true.

    Since you have difficulty distinguishing the point I was making about the value of a dollar, let me just state again that while a dollar may be worth half as much, if you have twice as many dollars, then it makes little difference to your spending power. Some items cost more, and some items cost less in the "basket of goods." However, the basket of goods is not the same today as it was in 1910 or 1660 or 1190, which is obvious. Less obvious, however, is that it isn't the same as it was in 2002 or 2005.

    By Blogger Wes S., at 2:51 PM  

  • Wes, I'm not reading that. Nothing to do with opposition, you just have no credibility with me.

    (See, EPM, you just encouraged him.)

    By Blogger mikevotes, at 3:08 PM  

  • sorry mike... :)

    By Blogger -epm, at 3:36 PM  

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