$4.00 Gas? Get Used To It

Gas has now settled in at over $4.00 per gallon, and if you know in any better, don't expect it to come down anytime soon, if ever.

This is the new reality, and it's changing things as we know them. Truck production lines are shutting down, people are driving less, and everything costs more. The effects are felt differently in different parts of the country, as this article in today's NY Times illustrates.

With the exception of rural Maine, the Northeast appears least affected by gasoline prices because people there make more money and drive shorter distances, or they take a bus or train to work.

But across Mississippi and the rural South, little public transit is available and people have no choice but to drive to work. Since jobs are scarce, commutes are frequently 20 miles or more. Many of the vehicles on the roads here are old rundown trucks, some getting 10 or fewer miles to the gallon.

This article goes on to say

They warn that the high cost of driving makes low-wage labor even less attractive to workers, especially those who also have to pay for child care and can live off welfare and food stamps.

“As gas prices rise, working less could be the economically rational choice,” said Tim Slack, a sociologist at Louisiana State University who studies rural poverty. “That would mean lower incomes for the poor and greater distance from the mainstream.”

It can also mean more crime, as some people do what they have to do to survive, and others take advantage of the current situation, as evidenced by what happened here in Houston last night.

A gasoline tanker driver was fatally shot while delivering fuel at a north Houston convenience store late Sunday night during what police believe was an attempted robbery.

The truck driver, who was approximately 30 years old, was delivering fuel to a Mobil gas station in the 9000 block of North Freeway near West Gulf Bank around 10:45 p.m. when his girlfriend came by to deliver his dinner, said Houston Police Department Homicide Division Sgt. Patrick LeBlanc.

It's understandable that an armored truck needs armed guards, but we're rapidly approaching the point where these fuel truck drivers are going to need the same type of protection. They present too tempting of a target with gas prices as high as they are right now.

I don't know how this situation is going to turn out, but I know the next President will have a huge mess on his hands to clean up. The silver lining is that maybe, just maybe, Americans are slowly warming up to ideas that will break this gasoline addiction, like alternative energy sources, and mass transit.

Did I just say mass transit in Houston, the city built with the pickup truck in mind? Well, if informal surveys of my SUV driving friends are any indication, the idea not only has merit, but some are already implementing it by using van pools. What they are all doing is driving a lot less, and trying to dump their now worthless SUV's for whatever they can get that doesn't leave them in debt. People are also buying small cars and hybrids, or scooters, or riding the bus, all anathema just a few short months ago.

It is truly amazing how fast things have changed, but I have the feeling it's going to get worse before it gets better. After all, summer's just arriving with it's sky high cooling bills for our part of the world. Wait till you see those bills.

So hang on.

Gas Guzzlers And Geos

I drive a mid-size vehicle and gas prices are killing me, having hit an average an average of $3.78 for regular this week here in Houston. That's up .11 from last week. But lately I've been trying not to think about myself so much. Instead, my empathy goes out to the legions of SUV and huge pickup truck drivers here in Houston and the state of Texas. Have you watched the pain on their drivers faces as they fill up lately? It's a terrible thing.

As bad as it has to be paying so much for gas itself, the fact that it's now easier to sell Florida swamp land than to get rid of their gas guzzlers, has to make the mental torture even worse. And it's not just drivers, dealerships are having an equally hard time getting rid of them.

The really large ones with V-8 engines that can get as little as 12 miles per gallon in the city -- like the Cadillac Escalade, Ford Expedition and Chevy Suburban -- are dropping in value by the thousands.

The No. 1 reason for the sales slump is soaring gas prices, says Peter Brown, the executive director of Automotive News, the trade newspaper for the North American car industry.

For the first four months of this year, truck and SUV sales are down a collective 24.8 percent. SUV sales plummeted 32.8 percent while pickups dipped 19.9 percent, he says.

Man, that has to hurt. The article goes on to say that the major auto manufacturers are retooling their production lines away from trucks and SUV's towards smaller cars. To add further insult to injury, a lot of the old cars many of these people got rid of to buy their now unwanted gas guzzlers, have seen their resale values go through the roof. This is due in part to that fact that many of those old vehicles get mileage close to or better than that of newer hybrid vehicles.

Americans seem to absolutely refuse to learn from history. Fuel shortages precipitated by the Arab-Israeli war of 1973 and the Iranian Revolution of 1979 led to the purchase of a lot of fuel efficient vehicles from foreign automakers who were already producing them, and an emphasis on their production by automakers here. However as soon as prices stabilized, American auto production moved right back into oversized vehicles. This lack of foresight on the part of the industry and consumers now has us at a competitive disadvantage, again, to foreign automakers who've never stopped producing smaller, more fuel efficient cars. Not to mention our continued reliance on imported oil and it's wildly rising, 'market-driven' prices.

So what are we going to learn from this crisis? The technology has been in place for decades to produce ultra fuel efficient or alternative fueled vehicles, but between the automobile and oil industries, and the politicians dependent on both no real effort has been made to reduce our dependence on oil as a fuel. I'm hopeful this latest round of super high oil and gas will spur some real movement on that front.

But I'm not holding my breath waiting. Anybody trying to sell their used 1993 Geo? Let me know.

Brother, Can You Spare A Gallon (of Gas)?

I'll bet you wish gas prices were as "low" as those in the picture right about now.

Has there been a disruption in the oil supplies somewhere that I haven't heard about? A drop in production? Maybe consumption has risen so much in India and China over the past few months that the constant increases in the price of gasoline is justified. But somehow I doubt it. Whatetever the reason, the price keeps going up.

The AAA Texas survey found regular self-serve averaged $3.68 per gallon in the 11 cities covered by the survey — 15 cents higher than last week's record high.

Nationally, the average price rose 13 cents to a record of $3.78 per gallon.

Auto club spokeswoman Rose Rougeau said that could mean a change of plans for some drivers who had intended to hit the road for the coming Memorial Day holiday.

Actually, that could mean a change of plans for some drivers planning on going to work everyday. I'll bet every designed for the automobile city west of the Mississippi are dusting off mass transit plans again. I hope so anyway, because something has got to give. As to the rationale, a little over a year ago, I wrote when prices were just settling in over $3.00 per gallon

...the routine seems to be to use whatever reason that's handy to justify jacking up oil prices. Of course the price then "drops" to some point higher than it was selling before the latest crisis, and that becomes the benchmark for the next crisis/price increase. Now, with gas having settled in above $3.00 per gallon on average, we really haven't heard much of a peep from the American consumer.

Well .68 cents later, the powers that be aren't even bothering to invent a "crisis" anymore. Nor has the record profits for the oil companies led to any type of employment boom for regular folks anywhere, and that includes here in oil capital of the world Houston. Contrast now with the boom times of the 70's and you'll see what I'm talking about.

I remember the good old days of 2001, when we first moved to Houston and gasoline was .97 cents per gallon. Since then the price has risen by approximately 350%, and remarkably that rise has coincided with the Bush presidency.

That's really such an amazing coincidence isn't it?

H1B(S)

I don't know about you, but I have a problem with this: High-tech firms playing visa lottery.

On Tuesday, U.S. Citizenship and Immigration Services opened the five-day application period for the H1-B program for the 2008-09 fiscal year. ...The program is designed to import educated and skilled workers for jobs that American companies cannot fill. The visas are generally issued for three years, and renewable for another three.

Nothing against workers from anywhere, but someone please tell me that if this country is importing literally hundreds of thousands of technology workers, engineers, nurses, and teachers from around the world to fill in "gaps," why are there basically no efforts underway to increase the numbers of graduates in those specific fields from within U.S. high schools, universities, and colleges? Apparently I'm not the only one who feels this way.

Some white-collar American workers have protested the proposed expansion of H1-B. John Miano, a 45-year-old programmer who owns a New Jersey software consulting company, testified in Congress in March 2006 that the program lets companies replace Americans with foreign workers at lower wages.

"The H1-B statutes are the best legislation money can buy," he said in an interview Tuesday. "This law has been deliberately written to allow abuse to go on with impunity. This program is a cheap labor program. It contains loopholes that allow employers to legally pay H1-B workers ... significantly less than U.S. workers."

Really? No wonder so many of the major U.S. companies are all for it then. But while their profits soar, we're writing off American kids who should be more than capable of filling these jobs with the right education and training. Obviously, that's not the case. Not to mention that the end result of this process will eventually simply push more and more U.S. jobs and companies overseas, further limiting the options for our kids futures.

There are worthy programs that prepare young people for employment in the technology workforce that are basically being starved to death due to lack of funding. For those students that do things the right way and complete their educations, what assurances do they have that the industries in which they plan to work will hire them if the abundance of cheaper talent from overseas continues to be offered as basically a government subsidized alternative?

I'd sure like for someone to tell me how this ultimately benefits the American economy. The day may soon arrive when workers from this country will have to emigrate in large numbers to other places in order to sustain their families at home, much like what's happening here now.

Talk about the flipping the script.

So What Gives THEM The Right?

The volley has been sounded. Get ready, Executive Directors and Board Members, the war on small nonprofits has started. They plan to cut the money off. From today's Houston Chronicle.

A set of 33 guidelines issued by a committee convened by Independent Sector seeks to make bad boards good. In its Principles for Good Governance and Ethical Practice report, the Washington-based coalition of charities and foundations lays out a blueprint of what nonprofits must and should do to avoid legal and ethical improprieties. Six of the 33 rules are required by law. The other 27 are up for discussion within the nonprofit industry.

Please note that the "principles" the Houston Chapter of the Association of Fundraising Professionals and Dini Partners signed into their "statement" were not supported or endorsed by the Panel on the Nonprofit Section who wrote the Pension Protection Act of 2006. As noted in the last paragraph, THEY are the ones that drafted the "principles" that were signed into law in August, 2006. The Philanthropy Roundtable and the Association of Fundraising Professionals also disagreed with the Houston Chapter of the Association of Fundraising Professionals and their for-profit subcontractors.

...although far from a call for immediate adoption by every charity, the statement goes too far for the Philanthropy Roundtable, which issued a public rejection of the principles. The Washington-based association of individual donors, corporate giving officers and foundation trustees and staff cited three reasons for its refusal to sign the statement.

• "The principles take an arbitrary and one-size-fits-all approach to setting standards for a very diverse sector."

• "The principles imply improperly that foundations act unethically or practice misgovernance unless their boards include members from diverse backgrounds."

• "A number of the more problematic principles could be written into law or regulation if it is perceived that there is a wide consensus behind them in the nonprofit community."

Not to mention that their recommended "guidelines" also appear to speak to a Conflict of Interest on their part, for example:

...the guideline to not compensate internal or external fundraisers based on a commission or a percentage of the amount raised is a tenet of the national fundraising group's code of ethics and requirement to be a member of the organization.

Yet they offer to provide those very services for a cost, of course. How in the hell did that little hitch make it past their "Principles for Good Governance and Ethical Practice" report. Why all of this attention? Check out who's out there causing trouble. They want complete control to ensure they keep all of the money.

To get the report, go to www.nonprofitpanel.org.

Recession Anyone?

As if you needed someone to tell you that it's getting rough out there, here it is from Bloomberg:

Retail sales in the U.S. unexpectedly fell in February, indicating that declines in payrolls and home values and a surge in energy costs have pushed the economy into a recession.

But wait, here's some actually evidence of "trickle down" economics.

The government's retail sales report also showed how the housing slump is filtering through the economy. Purchases of furniture, electronics and building materials all dropped. The rising price of gasoline, which yesterday reached a record $3.27 a gallon for unleaded regular, is prompting Americans to cut back. Purchases at restaurants and bars fell 0.4 percent in February, the most since January 2007.Consumers are even spending less on gasoline. Receipts at filling stations fell 1 percent last month, the most since August.

Man. This has been coming for a while. Y'all know we're always the canary in the coal mine, so the national heads up came back in October when a report came out stating that:

Growing numbers of blacks say they’re worse off than five years ago and don’t expect their lives to improve, a study released Tuesday shows. In addition, fewer than half of all blacks, or 44 percent, said they expected their prospects to brighten in the future.

Now, to be fair, that report was about the overall state of the Black condition in America, economics included, but y'all know what I'm saying. It seems like everybody is having, shall we say, financial difficulties as of late. And while I don't have any statistical data, it sure looks to me like there are a hell of a lot more homeless people on the streets lately. You'd have to be blind not to notice that. But I guess the real question is: What are you doing with your tax rebate check that's not going to solve the country's economic trouble at all, but instead put us further into debt (and by extension, deeper into recession)? Spend it, save it, or pay a bill? Yeah, that's what I thought.

Additional reading:

http://therealready.blogspot.com/2007/10/aint-nothing-free.html
http://therealready.blogspot.com/2007/10/mo-about-money.html
http://therealready.blogspot.com/2007/10/bling-bling.html

Could've Just Asked Me

Well, it's confirmed, Black folks aren't feeling to great about the way things are going in this country.

Really.

They conducted a study and found out what your average brother or sister on any street could have told them for free. I mean, Sometimes, you just don't need an expensive survey.

Anyway, I'm sure other Afrosphere bloggers are all over this, but just in case you hadn't heard:

From MSNBC: Growing numbers of blacks say they’re worse off than five years ago and don’t expect their lives to improve, a study released Tuesday shows. Black pessimism about racial progress in America, according to the study, is the worst it’s been in more than two decades. The survey by the Pew Research Center, a Washington-based research organization, paints a mixed picture of race relations following Hurricane Katrina and the Jena Six case…

…It found that just one in five blacks, or 20 percent, said things were better off for blacks compared with five years ago; that is the smallest percentage since 1983, when 20 percent also made that claim. In-between, the percentage of blacks who said things had gotten better had grown, only to drop back to 20 percent. Another 29 percent of blacks said things had gotten worse as opposed to staying the same, the largest number since 32 percent made that claim in 1990.

In addition, fewer than half of all blacks, or 44 percent, said they expected their prospects to brighten in the future. That’s down from 57 percent in 1986, during the height of the Reagan administration when the Justice Department actively sought to curtail affirmative action in favor of race-neutral policies.

Before anyone starts looking for the nearest bridge to jump off of, wait, because there's an opposing point of view, according to the same survey.

Whites have a different view about black progress, according to the survey. Whites were nearly twice as likely as blacks to see black gains in the past five years. A majority of whites polled, or 56 percent, also said they believed prospects for blacks would improve in the future.

Well, this is one time where I have to agree with the majority population. With the benign neglect displayed during Hurricane Katrina, blatant disregard of safety concerns in our cities, inadequate funding for education and any other programs not involving war or prison building, and the unequal justice dispensed upon our communities, I have to believe that things can't help but to get better.

Right?

Who Needs IT?

From MSNBC: NEW YORK - The United States is starting to look like a slowpoke on the Internet. Examples abound of countries that have faster and cheaper broadband connections, and more of their population connected to them.

...In a move to get a clearer picture of where the U.S. stands, the House Energy and Commerce Committee on Tuesday approved legislation that would develop an annual inventory of existing broadband services — including the types, advertised speeds and actual number of subscribers — available to households and businesses across the nation.

The bill, introduced by Rep. Ed Markey, D-Mass., is intended to provide policy makers with improved data so they can better use grants and subsidies to target areas lacking high-speed Internet access. He said in a statement last week that promoting broadband would help spur job growth, access to health care and education and promote innovation among other benefits.

It's really not a surprise that the U.S. is lagging behind in both access and quality of service. During the Clinton Administration annual reports entitled "Falling Through The Net" were issued detailing the countries progress towards digital inclusion. In 2001, the name of that report was changed to "A Nation Online".

In other words, politics. From one administration to another the role of the federal government in American broadband policy changed from serving as the catalyst for digital inclusion to that of a bystander.

Efforts at digital inclusion in this country are usually met with suspicion or outright opposition, because they are typically framed as a social program instead of as a necessary part of our economic infrastructure, like rural electrification. In its day, that effort was panned as bringing America one step closer to socialism, but in actuality;

"When farmers did receive electric power their purchase of electric appliances helped to increase sales for local merchants. Farmers required more energy than city dwellers, which helped to offset the extra cost involved in bringing power lines to the country."

In all fairness, there have been many recent efforts to address the issue of broadband access, including through municipal wireless initiatives. It's too early to determine how successful any of these efforts will ultimately be. We do know that some have never got off the drawing board.

We are behind the world in this respect however as other countries like South Korea and Japan have realized the potential of the internet to spur innovation and change, and made massive investments in the technical infrastructure of their societies. For example:

"In 2001, Japan was well behind the United States in the broadband race. But thanks to top-level political leadership and ambitious goals, it soon began to move ahead. By May 2003, a higher percentage of homes in Japan than in the United States had broadband, and Japan had moved well beyond the basic connections still in use in the United States. Today, nearly all Japanese have access to 'high-speed' broadband, with an average connection speed 16 times faster than in the United States -- for only about $22 a month. Even faster 'ultra-high-speed' broadband, which runs through fiber-optic cable, is scheduled to be available throughout the country for $30 to $40 a month by the end of 2005. And that is to say nothing of Internet access through mobile phones, an area in which Japan is even further ahead of the United States."

Is there any doubt that this will ultimately promote economic development, much like space exploration and rural electrification did for the American economy?

Ain't Nothing Free

Not that this will come as a surprise or anything but; Bush Wrong at UN on Benefits of Free Trade

“In the long run, the best way to lift people out of poverty is through trade and investment,” Bush said. “During the 1990s, developing nations that significantly lowered tariffs saw their per capita income grow about three times faster than other developing countries. Open markets ignite growth, encourage investment, increase transparency, strengthen the rule of law, and help countries help themselves.”

As in so many of his other pronouncements, he’s wrong.

In the past few decades, as the gospel of free trade has spread, growth in the developing world has actually slipped. Mark Weisbrot, Dean Baker, and David Resnick of the Center for Economic Policy and Research (an organization that does great work in demolishing conventional shibboleths) have done research that reveals quite the opposite of what Bush contends.

“Contrary to popular belief, the past 25 years (1980-2005) have seen a sharply slower rate of economic growth and reduced progress on social indicators for the vast majority of low- and middle-income countries,” their paper says.

In a little-noticed portion of his speech to the United Nations on September 25, President Bush repeated a favorite hymn of his.

“Overall, in the 1990s gross domestic product (GDP) per capita grew by 1.6 per cent a year in developing countries,” says the United Nations Population Fund, buttressing the CEPR analysis. “But these slow gains were unevenly distributed. The per capita GDP growth of the poorest countries in the 1990s was slower than in the 1980s.”

Bush doesn’t believe the folks over at the Center for Economic Policy and Research? How about Joseph Stiglitz, Nobel Laureate in Economics, onetime chief economist at the World Bank, and the former chair of the Council of Economic Advisers?

“The sad truth, however, is that outside of China, poverty in the developing world has increased over the past two decades,” Stiglitz writes in his 2006 book, “Making Globalization Work.” “Some 40 percent of the world’s 6.5 billion people live in poverty (a number that is up 36 percent from 1981), a sixth—877 million—live in extreme poverty (3 percent more than in 1981).”

So, what works? Ha-Joon Chang, an economist of Korean origin teaching at Cambridge, provides some answers. In books such as “Kicking Away the Ladder” and “Bad Samaritans,” Chang demonstrates that what will succeed best for the developing world are strategies that helped the West in the past: an activist state engaging in a mix of policies to protect and encourage infant industries, rather than orthodox free trade.

But to listen to people like Chang, Bush would have to stop repeating, zombie-like, the free-trade mantra he carries around in his head.

Ouch.

Mo' (About) Money

Just in case that last post didn't get you thinking about the real state of the economy, here's a couple of more articles to provide some additional food for thought.

The Devil and Alan Greenspan

If Americans have to learn the hard way that they cannot surf the wave of the world's savings forever, it will be a painful but beneficial lesson. If Asians learn that they cannot avoid risk by placing their savings in America, it is worth the cost, although it may be substantial. The fate of 3 billion Asians is the risk to the world economy, and it is delusional to think that it can be insured. Asians must find the means to invest in their own future and buy their own risk. Who started the global credit crisis? I don't mean to wax mystical over mundane issues in the markets, but I think that the devil did. He is just doing his job.

Why The Dollar is a 98-lb Weakling

Currencies rise and fall over time because countries really do get richer and poorer. Dig something valuable up from under the ground, or devise products or services that people value, and your money will be worth more. Let your industries fall behind, or allow inflation to debase the value of your money, and its global standing will decline.

The puzzle is that there's no real evidence that the economic prospects of Western Europe have suddenly improved 40% compared with the U.S. This makes it tempting to assign the dollar's drop to the customary moodiness of currency markets, in which traders make guesses about the future and inevitably get things wrong for years on end.

Why haven't these countries' currencies been gaining on the dollar? Because their governments won't let them. China's dollar peg, established in the mid-1990s, is often portrayed in the U.S. as a mercantilist attempt to sell more stuff here (if the Chinese yuan is cheap relative to the dollar, imports from China are cheaper too). But there's much more to it than that: by reining in the often pointless fluctuations of currency markets, countries can bring stability and encourage trade.

That's what the U.S. and the world's other big economies did during the 25 years after World War II. Up to now they've been content to recycle most of them (dollars) by buying Treasury bills and other U.S. securities. The U.S. has enjoyed the low interest rates that have resulted, while China, the Gulf States and Japan haven't wanted to face the consequence that by selling dollars, they would decrease the value of their remaining dollar holdings.

This is an arrangement that can't go on forever. It should unravel; that's the way of economic change and progress. But there's no plan in place to make it happen in an orderly fashion. The fear that the ensuing adjustment might be even more chaotic than in the 1970s probably explains most of the dollar's recent decline. It's not that we Americans have gotten a lot poorer. It's that we might be about to.

Bling, Bling

Dollar Crunch Puts Gold Centre Stage

The dominoes are toppling. What began as a credit crunch has turned into a dollar crunch. We are witnessing a run on the world's paramount reserve currency, an event that occurs twice a century or so, and never with a benign outcome.

The US dollar has fallen through parity against the Canadian dollar and plummeted to all-time lows against a basket of currencies. This is dangerous. None of the mature economic blocs seems able to take the strain, let alone step in to restore order. Ultimately, Europe and Japan are in worse shape than the US. A mood of sauve qui peut is taking hold.

Is this what gold is sniffing as it breaks out against all currencies, smashing through €500 an ounce against the euro, and vaulting to a 28-year high of $743 against the dollar?

"Central banks have been forced to choose between global recession or sacrificing control of gold, and have chosen the perceived lesser of two evils," said Citigroup in a fresh report. This could take gold to $1,000 an ounce, or higher."

Until now, the euro has served as the "anti-dollar", the default choice for Asians and petrodollar powers wary of US assets. This cannot last. Eurogroup chair, Jean-Claude Juncker, has stopped pretending that all is well. "We have begun to have great concern about the exchange rate of the euro," he said.

Europe will not let America export its day of reckoning to the rest of the world. It will counter with its own devaluation.

No doubt Ben Bernanke will use all means to avert disaster, including the "printing press" he invoked in November 2002. By this he meant that the Fed could inject unlimited stimulus by purchasing as many bonds and assets as it wants. He believes the Fed could have avoided the Depression if it had been more creative in 1931. Even so, I am not sure that the Bernanke Fed will move fast enough, given fears of moral hazard, or, indeed, whether the rate cuts on offer are enough to head off an insolvency crisis. The chart of S&P 500 looks eerily similar to October 1987, the last time a tumbling US dollar set off a crash.

Large parts of the global credit system are still shut. The $2.2 trillion market for commercial paper has shrunk by $368bn over the past seven weeks as lenders refuse to roll over loans. The $2.5 trillion market for "structured finance" remains frozen.

We wait to see what happens as "teaser rates" on some $1.5 trillion of mortgages jump with a venomous kick in coming months. The Fed should have thought about this three years ago when rates were 1pc. It is too late now.