My friend and I go to the mountains this weekend and he pays 3.95 per gallon for gasoline on the trip up and 4.04 per gallon on the way back just two days later. Interesting how fast the emerging nations being blamed for the high prices are increasing their use of gasoline. I mean, it isn’t that the gas has ratcheted up over a period of ten years. It is going up all at once and in perfect alignment with our presidential election. I wonder if anyone in the middle east that controls most of the world’s oil has a reason to want to influence our elections? Just a thought. I suppose it is just as plausible that suddenly everyone in India and China are lining up at the local Honda dealer for a 36 month lease. I wonder how they are doing that while earning $3 per hour?
The interesting part of gasoline rising is the fear that it has put into the economic hearts of us Americans. Couple gas prices with the mortgage meltdown and the falling value of the housing market in general and many people are downright pessimistic about our economic future.
I visited with a friend over the weekend who owns an expensive home in an exclusive development in the Lake Tahoe area. This development is full of multi-million dollar homes and a Ritz Carlton hotel is being built on one of the ski runs. She told me that a friend of theirs is the top selling real estate agent in that development. This man told her that he has shown two homes this year so far, yes shown two, not sold two, not taken offers on two, simply shown.
The interesting part of the real estate market being slow at that income level is that this development caters to the very, very wealthy. There are 3.5-6 million dollar condos under construction there! Not for the average slob like me who gets excited about a 1 cent per gallon difference in the price of gas. The people buying these homes are still driving luxury SUV’s in wedgie haircuts. Their SUV’s use more gas in a month than my car uses in six. So why aren’t these wealthy people buying vacation homes? Is it that they are nervous too, or that they are already feeling the pinch on their incomes?
So if the rich people, the people who have money and understand how to make it are already hunkering down, when will it become painfully obvious to the rest of us that the problem extends beyond a gallon of gas? What event will tip the first domino and create a run on the banks? When will we begin to stuff our mattresses and empty our accounts? Are the rich already taking steps to shelter their assets from a coming crisis. Is this the calm before the storm? Are we average schmoes simply too far away from the inner-circle of financial knowledge to hear the sirens?
I wonder at times about the press and their veracity in times like this. I am uneducated about their responsibilities. I do recall reading about the broadcast in 1938 when Orson Wells directed “War of the Worlds” which presented a fictionalized invasion by murderous “Martians”. It created a minor panic. Would the decision makers and the power brokers withhold information from the general public about a financial crisis if they thought that the truth would create a panic? I wonder. Is that why the government imposed single day limits on the movement of the stock markets a few years ago? Is our free market so regulated now that only a truly uncontrolled financial emergency will ever be felt? Have we so regulated the natural corrections that we are bound to have a collapse?
My education in the fundamentals of economics is lacking so please take my musings with a grain or two of salt. If you can better illuminate the topic, please comment!