Dubbed as the only way that gas will stay below four dollars a gallon, US papers have picked up on an interesting story that has arisen out of the huge increase in Oil prices over the last few years.
As gas prices rise, some stations with older pumps are encountering an unexpected challenge: They can’t be set to charge more than $3.99 9/10 per gallon.
For example, take the three pumps at Vashon Island’s Engels Repair & Towing — please, said Lou Engels, 68, who has owned the garage for 41 years.
"When I bought these brand-new in 1995, nobody could imagine gas would ever be higher than $3.99 a gallon," he said.
"Now, it would cost thousands of dollars to replace them, and the upgrades for the pumps are back-ordered.
Back-ordered?! Who says recessions aren’t good for (very, very few) businesses? But seriously, this is exacly the kind of real-world problems that occur due to currency inflation. In the abstract it hardly matters what number is assigned to what value, but when it comes to having to use a wheelbarrow to transport your wages home the economists have to take a break from the ivory-tower-thinking.
Early evening on the April 14th 1912 and a passenger on the first class deck of the Titanic would be, no doubt, enjoying the opulence of their surroundings, and the wealth that the British Empire had created. More recently, the “Celtic Tiger” has created new wealth in Ireland so that one can now enjoy a similar fine dining experience as the passengers of the Titanic as the menus show. Yet, we know that the very next night it all lay at the bottom of the Atlantic and no amount of Edwardian engineering could save the ship. One of the key lessons learnt from the Titanic tragedy was that there weren’t enough lifeboats for all the passengers. Today, we are in the midst of a Global crisis and potentially face a new breakdown in the established world order. Just as the death of Queen Victoria in January 1901 at the peak of the British Empire was followed by two World Wars and the emergence of the United States as the dominant Global Hegemonic Power, many commentators such as Paul Kennedy in his bestseller The Rise and Fall of Great Powers, are claiming that Global Hegemony is in the process of shifting. It is possible if not probable that even within our lifetimes, this power will shift east to China or India and just like the situation faced by Great Britain at the turn of the Twentieth Century there is nothing the United States can do about it. This time it isn’t Edwardian engineering that is failing to save us, but financial engineering. Of course nobody knows for sure how events will play out or if we are heading for a recession or even a depression.Continue Reading »
It might not be morning again in America but Bush hopes to wake up the economy via his Economic Stimulus Act of 2008. The stimulant – pumping more than $152 billion (or about 1% GDP) into the economy via tax rebate cheques - will start arriving in the mailboxes of Americans over the next three weeks.
The plans proponents are optimistic. Hank Paulson, in a speech confirming that no second stimulus plan would be undertaken, believes the $152-billion stimulus plan could create 500,000 jobs this year. Americans would have to spend their money wisely for the plan to have maximum impact. But what if the rebate money is already owed? Continue Reading »
“We know we’re already in negative equity,” said Emma Linnane, a 31-year-old university administrator. She bought a cozy, one-bedroom apartment in the Dublin suburbs with her fiancé, Paul Colgan, in May 2006, at the peak of the market. They paid €365,000, or $575,000 - at least $100,000 more than it would fetch today.
The bad news regarding the American housing market continue apace. BusinessWeek are reporting that Existing Home Sales Drop for Seventh Straight Month with the national median existing home price dropping 7.7% from a year earlier. That a bubble has burst is clear.
What is not so clear is how much of the contagion has spread worldwide.
Jim Rogers was his usual outspoken self when interviewed on Bloomberg’s Morning Call. Breathing fire from the start he stated his disdain for the Fed’s supposed ’strong dollar policy’ (”Do you even bother reporting that anymore?”):
Anyone who is watching or listening to this should get out of the dollar because the Fed has given up
Interviewer: Where do we go from now?
Throughout history the place to be when a currency has been under duress is to be in real assets…I own gold, I own Oil, I own all the stuff
He also has a few choice words for Ben Bernanke and the Bear Stearns bailout. Watch the video here.
