in the last few days, a thought has stuck with me like an earworm:
they want to deliberately tank the dollar to lay ground for the amero currency with a view toward some north american union.
as if invading iraq was as much about that as anything, and if not iran in the future as well, then other countries, to fill coffers to be later liquidated...
i figure i'm ill-informed, simple and naive, broadly speaking, but still have such views that assert themselves inescapably to me and this is such, and a large one at that...

We are about to enter a recession that is not based upon a cyclical correction. And because of the systemic nature of this downturn, it may be much much harder to recover from it.

The financial community makes a fundamental error in their thinking. Available energy has flatlined after nearly 150 years of growing at whatever rate the economists want it to (4% annually for the twentieth century equal to the rate of economic growth). If energy has flatlined, not because demand has flatlined but because the supply of energy is finite, what happens to economic growth?

The world has made a fundamental shift as it has crossed to the other side of growing energy, to a world of declining energy. If the financial community lends as if it is business as usual, they will set their rates to low, because if peoples earning power stops growing their ability to pay back loans will be harder and more risky.

Oil is expensive today because the supply of oil is running about 1 million barrels short of supply each week in the developed world. Day in and day out we are draining our reserves and have for nearly one and half years. And this shortage is getting worse. The drain in the United States alone last week was one million barrels per day more demand than the markets could supply. Hence $100 per barrel oil.

The pressures of shortage and rising prices for oil creates a slowdown and decline in economic growth that the financial community is not recognizing. Further, this is a bias that most negatively impacts the suburbs, or car culture, with large houses at great distance from jobs and everything else. Imagine a family buying a $200,000 house with $1,200 ($15,000 per year approximately) mortgage and salary of $50,000. The mortgage is 30% of wages, and the additional assumption of the financial community is that those wages should grow at 2.5% per year or just under the rate of economic growth. (Lets leave inflation out of it). So $50,000 in five years will be $56,500 and the mortgage will be 26% of the salary.

But what happens if growth flatlines, the salary flatlines, and energy gets more expensive. What happens if gas costs go from $1,000 per year to $2,000 per year (from 2% of salary to 4% of salary). What happens if heating bills go from $1,500 per year to $3,000 per year. What happens if healthcare costs go from $4,000 per year to $5,000, and food from $$5,000 per year to $6,000 (also because of higher energy costs). This family in five years is underwater and defaulting on their mortgage. It does not work, especially in the suburbs where all these energy costs are compounded.

In a declining energy environment, it is becoming more and more difficult for families and businesses to pay back their loans, because a flatlining energy environment removes the ability to grow the economy and wages, while simultaneously raising the costs of gas, home heating and food.

Worse. This situation is related to the fact that energy cannot be readily increased so the problem cannot go away with the usual financial incentives, like lowering taxes, government rebates, or lower interest rates.

In fact, it is certain to get worse in years ahead, as oil, natural gas, metals, wheat, corn, sugar. All commodities become more expensive because EVERYTHING is dependent on energy. Gas prices will probably go to $4.50 per gallon this summer. Meat and milk and butter is forecast to rise another 30%. Electricity is forecast to rise over 20% over the next two years.

The only answer is reduced reliance on a declining energy base, and that means - can only mean - economic retrenchment.

But it was a 200k house and 50k salary. This is a norm in the lending industry as a ratio of four times annual earnings. It used to be three.

http://www.msnbc.msn.com/id/22592939/

WASHINGTON - Federal Reserve Chairman Ben Bernanke pledged Thursday to slash interest rates as needed to prevent housing and credit problems from plunging the country into a recession.

The Fed chief made clear the central bank was prepared to act aggressively to rescue a weakening economy. “We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks,” he said.

Bernanke showed his hand in terms of the Fed’s likely next move amid mounting concerns that the economy may be in danger.

more

I did inhale.