MarkitWacha's  Instablog

I recently searched for and purchased a motorcycle.

I was amazed at the prices for a street bike.  They've gone bonkers, and it's the start of winter!  I've also read that the lease rates for vehicles have gone up, as the supply from the manufacturers has been declining.  My theory is that people can't ignore the 50 mpg from a street motorcycle anymore.  The demand curve is walking, and the people aren't

So, if you have a motorcycle that runs, hold it.  As the energy inflation comes this year and next, even used vehicles with good gas mileage will hold their value, and even rise in value.

I'm in Dallas.  Motorcycles migrate here for the sun.  My uncle started Sturgis (he was the mayor).  It's too bad he didn't become the mayor of Ft. Worth.

Let's face it.  Obama's plan failed.  He approved a massive Keynesian stimulus, like a dufus, and he fell flat on his face, hence the scowl.

Michelle Obama made the headlines for being a brute, according the the Enquirer.  So, my theory is that Barack is a wee bit stressed out between all the failures in his life.  He failed with the stimulus, he failed with his overpowering wife, and he failed with his campaigning for Corzine and Deeds.  HE  FAILED.

That should bring just a little bit of gridlock to that slum called Washington, DC.  That's a good thing.

With gridlock in Washington, there should be economic growth.  With a touch more economic growth, there will be a doubling of oil prices.  I read that the oil consumption of today's vehicles matches the consumption of 1980.  1980, the year of the boats turned into cars.  Imagine how much oil can be pumped out of an oilfield in 29 years.  I imagine that it's no small number.  The fields might just be going dry.  Production might be slowing down.  Supply might be headed lower.  That's why I say there will be a doubling of oil prices.

So, the unemployment rate here has been 10% or higher for some time, and the price of oil is at roughly $80/bbl.  Doubling of the oil price is not a fantasy should employment reach 93-95% again.  Following that logic, there is a transportation cost component to everything.  Even nuclear fuel rods can be measured by how many barrels of oil it takes to produce one and bring it to the reactor.  Think of the people and machinery involved.  Think of the cost of their education, and of the transportation they used to go to classes.  Think of the huge mining equipment running on diesel.

After that, inflation will start, since companies have already cut practically everything.  It will creep up, like a 1983 candy bar.  THAT is what will bring the country it's next growth spurt--the larceny of $1 trillion dollars of Chinese foreign currency reserves.  See, as the inflation rate creeps up, the Chinese stand to lose trillions in their bonds, and the US stands to halve it's inflation adjusted bond payments.

Let the Grand Theft Renmen begin.

This is from a manager at Trinet, an HR outsourcing company similar to ADP.

I asked him what will reverse the unemployment trend, and he responded with the following:

* Hospitality
* Restaurants

Apparently, these industries are doing well.

He also said that these industries were still taking a beating:

* Manufacturing
* Retail
* Construction

His impression was that it will take many years to return to prosperous times.

If the economy is too slow, then it's time to bump up the speed limit.  There's no question that that will improve productivity.

As a matter of fact, here in Dallas, the speed limit on the tollway was increased from 60 to 70 mph.  It reduced congestion tremendously, and I can get to work 16% faster.  Nice.

So, what is preventing the Interstate system from bumping the limit up to 80, so that the productivity of the country goes up?  I'd rather see some more blood on the highway than see people starving in the future.  A GDP growth rate of < 2% will lead to civil unrest and Great Depression conditions eventually.  It's time to look for every means possible to stimulate it.  The clock is ticking before taxes are raised or before the incoming tax receipts don't cover paying the interest on the debt.

The change will happen suddenly, a jerk reaction selling the US Dollar.  That's how it was with the Asian crisis, and that's how it will be here.

So, step on the gas (or the potentiometer in the case of the Toyota Prius) and do your part.

I recently returned from a vacation in Belize (8/2009), and here are my musings on the system there.  To understand the system there, you have to think back to the days where barter and trade ran the world.  You have to expect bankers to deny you credit unless they make enough profit to cover their risk and more.  There are only 320,000 people in Belize.  Most live off subsistence farming.  Here's a link: 

en.wikipedia.org/wiki/Belize#Economy

So, I travel around Belize, and it looks like the government is laissez-faire.  People have plots of land to grow what they need.  The population density is very low.  I saw thousands of acres of unused land.  The Mayans lived here first, and those traditions still exist.

Here's what I didn't see:  I didn't see beggars.  I didn't see gangs.  I didn't see any signs of unemployment.  It's like there was no economic crisis.  Tourists still come and go to visit the ruins and the natural tourist sites.  I didn't see obese people hardly at all.  I didn't see stores closing up.  These are people that can fall back on subsistence farming when financial matters get worse.

Here's what I did see:  I saw evidence of a functioning economy.  I saw a lot of construction, in the form of people adding one room at a time to their home.  The people there seemed to import the used vehicles from the US in the past.  I saw a lot of new vehicles, mainly SUVs, like 4-door Tacoma trucks, or 4-door Isuzu diesel mini-trucks.  Gasoline prices were stable at around $3/gal.  The cities were buzzing everywhere I went.  I saw a lot of bicycles, motorcycles, and small vehicles.  Minivans were everywhere.  The taxis preferred Toyotas, because they put 200K+ miles on their vehicles.  The people keep a clean coat of paint on their houses.  Everyone uses tile and cement blocks for their homes.  In the capital, Belmopan, the land prices were about $30,000 US for a lot to build a house on.  In the restaurants, you could expect the prices to be about half what they are in the US.  This is a place where there isn't really a good Wal-Mart type store anywhere for a thousand miles.  As a result, the people don't have access to buy things like they could.  However, when I went into gas stations, I was surprised to see the stations running on new computers with nice new LCD screens and Windows Vista.  I saw LG and TMG one-room air conditioners everywhere.

Well, there it is.  If Wal-mart were ever to have problems procuring goods for sale from the Chinese due to an exchange rate fluctuation, the US would look a lot like Belize, in my opinion.  It's a different way of life, and it's not necessarily worse.

I recently drove through central Oklahoma, and I was surprised by what I didn't see as much as anything.

First, there wasn't much traffic on the roads, even for Oklahoma.

Second, I didn't see many for sale signs on cars.  I didn't see new cars with temporary placards, either.

Third, there weren't any tractors or farm implements for sale in people's yards like I would expect.


All these signs seem to me to be because the price of NG has tanked.  It's like people are hunkering down to weather the storm.  If commodity prices bounce, this area will feel the positive effects sooner.  Oklahomans need their new cars to replace their old ones.  They might drive 50 miles just to go to church or to buy gas, and their vehicles wear out.

This place has a lot of pent up demand.