2008 "Market Meltdown"

Markets are sensitive to reality, and although individuals or great segments of the population may be temporarily immune to realistic inclination, the market will correct itself. It appears that the supply of money has outstripped the market’s capacity, and is being reflected in the drops in personal wages, durable goods, and prices in general. Although the money supply is artificially controlled, the faith in the money supply can only be influenced so far, and it appears that a tipping point has been reached where faith can heal no more.

In general it appears that #43's statement circa 2005 that we were “not in a recession” seems to have been timed correctly. The key indicator of new homes construction starts to slide in 2005, reflecting a market saturation. From personal experience, the prolonged focus on higher margin luxury home construction has raised profit expectations in the industry, and forced consumers to borrow against future income. Borrowing against the future is workable in the short term or in moderate long term sums, but there is a breakpoint where loans do not work, especially if the total future value of the loans potentially approaches the future potential total income of the borrower. It appears that the home construction slide in 2005 coincides with the increase in sub-prime loans, which more closely mirror the loan breakpoint scenario.

Considering the aggregate personal and government debt load and thin margin of operating liquidity, perhaps the solution the market has found is a breakdown in the cash flow system, vis-à-vis the collapse of loan availability. Without crunching the numbers, personal and government expeditures running at 80% of their pre-collapse level for about 2 years will alleviate the overall economy’s debt load (considering the national debt is about 40% of the overall budget), and thus help reset the clock for those oversold on the future. Those without excess debt will largely drive the market, and there will be a short flash of austerity, financial accountability, and conservation before the institution forgets what happened.

Just saying ...

Thursday night on NJ Transit

For all of the problems that Amtrak causes on the Northeast Corridor, NJ Transit does a great job at moving thousands of people in a dignified and polite manner. Sometimes, however, there are little skips in the beat that are just precious. I like to call this one "Passengers falling between the train and the station platform will be subject to a $5 surcharge."

Political Winds

The next and belated installment of urban humor comes from my weekday ride with NJ Transit. If he wins in November (I'll do my part), then the words of the prophets are written in sharpie marker...

"Moving" to the City

Started a new job in Manhattan this week after a long confinement in suburbia. As a celebration of all the funny things that happen when so many live on such a small island together, I decided to post found humor from urban spaces. The first in this series of undetermined length is titled "Plot Synopsis of 1/3 of all Horror Movies"

Sidewalks Everywhere

Back when I was young, one of the aldermen in my hometown came up with a practical solution to a nagging problem. Our town was a rambling collection of several colonial vintage villages connected by newer suburban infill development, and every year the cost of running school buses in the town increased. It so happened that most of the village areas had a major locus point, either an elementary school, town hall, or the shopping plaza, and all of these places were nice, walkable, and compact. The proposed solution to the school bus expense was to repair or build new sidewalks within 1.5 miles of all of these locus points, and provide school bus service to all points necessary outside of the 1.5 mile radius of the schools.

Truly an idea that was ahead of it's time. Considering that the reaction about 30 years ago was a combination of bewilderment and confusion, I wonder what the reaction would be today. Considering that a large portion of peak hour traffic is generated during the school year, I wonder what would happen if something like this was implemented today and parents did not take up the slack by driving to school twice a day. Exercise, social time, a limited degree of self-reliance, and character building experiences for our children sound like a good investment for the cost of roughly $5 a square foot. Would Bill Cosby have been as popular as he was if he did not have to walk to school, uphill both ways?

Electric Cars

I am on a tear today so I thought I would muse about the electric car. If you have not seen the movie "Who killed the electric car", it's a good flick complete with a Baywatch babe. I can't help but feel for those folks who had an EV-1 and loved it only to have it taken away and crushed. Do the same thing to a little kid and you can scar them for life. Recently, GM has been advertising all sorts of concept vehicles, so many in fact that one blogger (not me) said: "Yawn, since GM's sales are down so much it looks like they are only making concept cars nowadays." (Note to GM: although that last statement is a bit of an exaggeration you have to admit that it's pretty funny)

I was thinking about the situation and I think it takes a big, powerful corporation like GM to take on the big oil companies, who are sure to be the losers if pure electric cars are actually introduced nationwide. From what I have seen on the wires, it looks like the most viable options for electric cars are coming from China, and if this happens I predict that either Ford or GM will fold within a decade if that happens.

Considering that the lead-acid battery used in the EV-1 is heavier than an equivalent modern battery (lithum ion, et al.), I wonder how the EV-1 would perform with an upgraded battery pack - I bet it would blow the doors off most gasoline engine cars. Theoretically, GM could start selling the EV-1 sooner than later with minimal effort. Too bad they crushed almost all of the EV-1's, so now we may never know.

It's really a shame because the wait list for the Chevy Volt is up to 10,000 names(only?), and it would be the bomb to have an Energizer Bunny as a hood ornament or trunk emblem. I think the biggest issue is that except for an accident, a good electric car could run almost indefinitely and be easily repaired. There is simply less aftermarket for car companies and their minions (for lack of a term better than "non-interlocked allied business partners") and although I don't believe in a conspiracy, there is a hint of mutual self-preservation going on here. In the brave new world of increased profits through reduced lifecycle cost, I think this is a business model worthy of a total overhaul.

Global Warming

In my opinion, there are individuals and groups on both sides of the global warming debate that have already made up their minds about what is happening (or not happening), and attempt from time to time to massage scientific data and findings to support their opinions. If we take Pascal's wager on the existence of global warming as caused by humans, one is lead to conserve energy, reduce waste, and live with the consequences of our actions in mind. If global warming is not caused by humans, have we really lost anything? If in one hundred years we have lived by using less and thinking of new and clever ways to conserve, have we really lost anything? The new focus on energy conservation and waste consumption is a means for reducing the overall life cycle costs of the widget (transportation, buildings, etc.), and if that's not a good conservative and competitive business practice then I don't know what is.