Gasoline prices at the Chevron station at the end of my street and on Summerland Key have dropped to $3:20 per gallon. Chevron must have made a delivery because Mobil on Summerland is still selling gas for $3:56. People are lining up to buy the "cheap gasoline." They are the people who haven't quite grasped what a down cycle we are in economically speaking.
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The good news as always masks a problem, which is known to economists as demand destruction. In a tourist destination like Key West things could get really slow if people can't find the nerve to waste the money to buy the energy to get here even if gasoline appears to be a lot cheaper than previously. Low gas prices aren't low because production worldwide has gone up; prices are slowly dropping because reserves have increased and are projected to increase well into the future. There's only one way that reserves go up if production remains steady. The thing is everybody, including industry, is using less energy. We can no longer burn the energy that is produced because we are not as active economically as we were. Great stuff, huh. Gas gets cheaper but we still can't afford to buy it.
.It seems odd at first glance but I think I am seeing a few snowbirds in the Keys already. I've overheard chatty people in line at Winn Dixie talking about how they are part time residents, I've seen northern tags on cars, Quebec even, and most telling of all, power walkers and dog walkers have re-appeared on the bike paths along highway one. There aren't many but traditionally they don't start to show until the first major snowfall Up North and then they all disappear to plague their families around the Yule log. There aren't many but I wonder if perhaps for some it makes more sense to spend the winter heating fuel bill to drive to Key West and get an early start on ignoring the cold? Maybe I'm just seeing what's not actually there. Silly me.
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Some of my friends still think the stock market fiasco is a temporary derangement of the natural order and I continue to hope so. However if the recession is prolonged and unemployment creeps up one has to wonder how house prices are ever going to attain what economists now say is desirable, which is that prices be proportionate to wages. If that were the case the housing market will never become proportionate until the unemployed are able to buy houses for nothing. Which craziness is not even out of the realm of possibility in this brave new world of ours.
John McCain is proposing the government buy up defaulted mortgages, reset the value of the home to a "realistic level" and offer them back to the defaulters with a low fixed rate mortgage. Luckily I don't see how he can win the election but if he does I guess my wife and I will have to stop paying our mortgage to get refinanced on such favorable terms. McCain really knows nothing about the economy as he once said in an unusually candid moment. Meanwhile Barack Obama the man I voted for in a moment of desperate hope in the primary (my Florida vote never was counted) is chuntering on about programs that never will get funded. We had a choice of blowing up Iraq or funding health care. Now that war has cost us $1.5 trillion, we have a bail out heading easily to $1 trillion and neither of those bills has closed out yet, we owe China $1.2 trillion and by some estimates there are $50 trillion of crazy derivative debts floating around waiting like asteroids to puncture the thin skin of our economic bubble. Our annual GDP is less than $15 trillion. Better start figuring on some serious inflation for the US dollar. I remember 1980 and 13% returns on my Eurodollars in a high inflationary period, so I wonder where we will get all those trillions without hyperinflating the economy like the Weimar Republic managed so spectacularly. I guess that will be how my mortgage evaporates without help from McCain!
I'm thinking of changing my name to Gadarene Pig. From the Philosophical Society definition:
The Gadarene Swine Fallacy is the fallacy of supposing that because a group is in the right formation, it is necessarily on the right course; and conversely, of supposing that because an individual has strayed from the group and isn't in formation, that he is off course. The individual may seem lost to the group but not off course to an ideal observer.
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I got my new eight year driver's license this morning with an eye test, thirty two dollars and presentation of my passport, my social security card and my old license. The clerk cheerfully told me we are scheduled to get a Federal ID card in 2010 and my documents are being stored in Tallahassee against that day. Nobody quizzed me if I wanted a national ID card, I was fine with my Florida driver's license. The clerk assured me it would suppress people who wanted to do "bad things," as if a photo ID will change human nature. I tell you, those fringe wackos are getting more right than wrong and that scares me more than anything.
