Re: Bank sees 6.5 million foreclosures

Rumpelstiltskin wrote:

On Sun, 27 Apr 2008 15:33:35 -0400, Alan Lichtenstein <arl@xxxxxxxxxx>
wrote:


Rumpelstiltskin wrote:


On Sun, 27 Apr 2008 11:28:38 -0400, Alan Lichtenstein <arl@xxxxxxxxxx>
wrote:



Rumpelstiltskin wrote:



<snip>



That's not what I see when I walk along the street. Closed
up businesses everywhere.

Main streets have been declining for over 20 years. For every decline of a main street, there is a new suburban mall.



I don't think there have been any new malls to speak of
opening around here. I do know of malls that have pretty
much closed down due to lack of business, though that
is something that's been going on for a long time, not just
for the last couple of years.

Whether they are or not around you, the aggregate for the country says they are. True, corporate profits are down somewhat for some industries, but not for all.


In the town where I was brought up, where my sister
still lives (Swansea, Massachusetts), there are two major malls. They used to be full, but both are now half vacant.

But by me, space is at a premium. Its the overall average, not what one particular location says.


A positive return on balance of trade is very poor compensation for the loss of purchasing power of Americans,
which affects their daily life.

Americans have been living beyond their means on credit for too long, and it's unhealthy and has got to stop. I've said that frequently, and the reason is that we don't manufacture anything here anymore. America needs some pain so that they tell their government to do something about it. I see this near-recession as a positive step in that direction.

It's such poor compensation,


that "trivial" is not too strong a word. I see why this
happened, and so should everybody else. If they don't see why, they're severely limited in their ability to take effective
steps to stop it (by which I certainly don't mean temporarily
eliminating gasoline tax), or to prevent it from repeating.

And just how will you lower the cost of a disappearing and unreplenishable resource, assuming that normal supply and demand theory operates?

(remainder of post snipped-follow thread )

Diminishing supply will eventually be the cause of rising oil prices, but it isn't the cause yet.

Really? Data says otherwise. Our consumption is increasing, while supply remains relatively constant( OPEC hasn't increased production, while the US Government is taking supply off the market to replenish the strategic reserve ).




I should have said "diminishing reserves". The supply is based on how much providers want to pump (assuming there's still enough gas to be pumped), not directly on the reserves.

Semantics, Rumple. The operative issue is that the resource is disappearing and cannot be replenished.

The diminished dollar is a major factor in the rise
of oil prices in America.

That is part of the reason, but not the entire reason. Prices are also rising in Europe, where the Euro is stronger than the dollar.

The Saudi price to Europeans and to Americans is about the same number of riyals to each, but the US now has to pay nearly twice as much as Europeans for riyals. If oil is not priced in riyals, but in dollars or euros, that makes no difference to the ratio as long as everybody is still charged the same, of course.

Good theory, except oil is priced in dollars, not riyals.

In America, of course, gasoline has much more than doubled lately. One would expect that the cost would increase in Europe by whatever is not accounted for by
the weakened dollar.

Here's a chart of oil prices in dollars, euros, and gold:
http://tinyurl.com/6keb94
Note that the oil price starts out about at about 30 dollars or euros in 2001 on this scale, but in 2008 the price is 110 dollars whereas it's only 70 Euros. That means the increase in price in America has been 80 units whereas in Europe it's only been 40. Oil is getting more expensive twice as fast in America as in Europe, just as would be expected from the collapse of the dollar. In gold, the price of oil is fairly flat over that period.

There's no question that a weakened dollar accounts for some of the additional cost to Americans. But the major reason for the increase in cost is not the dollar, but supply and demand.

Canada, Australia, and

Europe have not seen as dramatic a rise, because
their currencies have held their value so far.

Agreed that the rise has not been as dramatic as elsewhere, but then again, prices elsewhere were more than triple ours in some cases. We're just catching up.

There is a difference, since in Europe the price is largely tax which is used for road maintenance or just as general revenue for the benefit of the government. More taxes for government is good. It helps keep the government from running debt up to the level at which the taxes can no longer even pay the interest. When that happens, we
spiral helplessly into a whirlpool of destruction unless we take drastic measures by greatly devaluing the dollar abruptly. Devaluing the dollar screws everybody in America who has savings and everybody overseas who has invested in America. After further devaluation, of course, it will be very hard to sell American dollars to the countries overseas who already got screwed on the deal,
just when we need their help the most.

Devaluing the dollar screws American tourists more than anything. If prices increase because of the diminished value of the dollar, the FED will see that as inflationary and take appropriate steps. I think the taxes have little to do with anything.

In America, The tax on gasoline is per gallon, not per dollar, so the tax on gas doesn't increase because the price increases. The tax collected will actually go down if people use less gas.

.

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