Wednesday, February 15, 2006

Giddy With Joy, Americans Spend Money Like There Is No Tomorrow

By Elaine Meinel Supkis

Thanks to the lopsided weather patterns this year, tremendous cold and snow blanketed Europe and Asia while it was springtime for us in January. Now, the cold zone is slipping over us. Temperatures near zero on my farm this coming week. Recklessly, Americans spent money in an insane carnival of consumption, thinking there would be no winter at all.

From the New York Times:
Shaking off a middling holiday shopping season and fears of higher heating bills, Americans spent freely in January, the government reported yesterday, providing reassurance that the economy is beginning the new year with fresh strength.

Buoyed by the unexpectedly robust spending data and a drop in oil prices, investors sent stocks higher across the board. The Standard & Poor's 500-stock index rose 1 percent, to 1,275.53, and the Dow Jones industrial average closed above the 11,000 level again, climbing 1.3 percent, to 11,028.39. Crude oil prices dipped below $60 for the first time since late December.

"The momentum going into 2006 is clearly healthy," said Anthony Chan, chief economist at J. P. Morgan's private client services group. "We will be able to withstand weaker growth for the rest of the quarter and almost not miss a heartbeat."
All the data is dire. I see no ray of light at all. The wild spending we indulged in last month was foolish in the extreme. It was insanity.

The hidden inflation plays out these days in a new form. Unlike in past eras when unions contended for pay raises and so this made things more expensive so inflation was obvious, now it is shipped to China who takes out the "high wage" element from the nexus and thus, squeezes out inflation. In turn, since interest rates are still (as always these days) below the rate of inflation and the interest offered for "saving" money is woefully behind the rate of inflation, no one saves and everyone spends as fast as possible and combined together, this increases importation of goods that have been scrubbed of inflationary forces and voila, we have a trade deficit of nearly a trillion unsustainable dollars.

Aesop's Ant and Grasshopper Story is one we easily misinterpet. The ant plans ahead for bad times and works in concert with other ants (this is the important part) to insure the ant community can live through the winter of hard times. The grasshopper doesn't cooperate with anyone and happily hops about, stuffing its face and living hand to mouth. Then it dies in winter. Just call it a libertarian or Republican.

The grasshopper imagines the Chinese ants will pity it and feed it when hard times happen. The Chinese assure us that they, themselves, come first and the handouts we are getting right now won't be there. We refuse to understand this and hop around happily, eating everything in our path.

From the Bible which few Republicans ever read:
1 When two full years had passed, Pharaoh had a dream: He was standing by the Nile, 2 when out of the river there came up seven cows, sleek and fat, and they grazed among the reeds. 3 After them, seven other cows, ugly and gaunt, came up out of the Nile and stood beside those on the riverbank. 4 And the cows that were ugly and gaunt ate up the seven sleek, fat cows. Then Pharaoh woke up.
5 He fell asleep again and had a second dream: Seven heads of grain, healthy and good, were growing on a single stalk. 6 After them, seven other heads of grain sprouted—thin and scorched by the east wind. 7 The thin heads of grain swallowed up the seven healthy, full heads. Then Pharaoh woke up; it had been a dream.
First book in the Bible, too. Genesis. What is so difficult about understanding this story? As a child, I thought the dream was painfully obvious and the writers of the Bible were pulling our legs by pretending the sophisticated Egyptians who pretty much invented agriculture couldn't figure out the business of storing seeds?

This was the whole point for growing grain in the first place!

Anyway, the point is only 6,000+ years old and what ails us? We can't figure this out? We have vast grain stores and are actively planning to wantonly turn it into fuel by burning it or distilling it. This is because the great bounty of oil makes growing corn ridiculously easy and seemingly cheap. But when the oil becomes dear in price, kiss corn goodbye!

Mother Nature isn't finished with Winter yet. She is now very lopsided thanks to global warming and the disorder the oceans are in with the melting ice changing salinity and the rate of flow. But bored with plummelling Asia, She is lifting her skirts and coming back to us.

Remember November? It was like January. Brrr. I work outside so I am hyper aware of the weather! Then mid December to now, ridiculously warm, like mid to late spring. Seeing this, people decided to spend money they set aside for fuel, spend it all on junk and fun stuff! Whoohoo.

Now Mother Nature is blanketing us with snow and in the next days, she will be blasting us with ferocious winds and extreme cold. I have seen Marches here when the temperature seldom climbs above zero. I suspect we just might have that this year.

Barnanke is going to tell Congress today that he plans to "control inflation" and if this means higher interest rates, our fragile grasshopper economy will collapse. If he calls for cheap loans so we can continue to eat merrily, this means our society will collapse. What a fine choice.

He will choose "society will collapse" because the GOP want to stay in power as long as possible.

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