Tuesday, February 26, 2008

Economics and politics

That's Economics with a capital "E" and politics with a small "p." The degree to which our politics is driven by Economics is familiar already to those in the know, and will become very clear for everybody in the next few months, especially after one or two of our major banks (CITI for sure) default.

Home foreclosures shot up dramatically in January, increasing by 57 percent over the January '07 rate. Lenders are more frequently forced to take possession of the abandoned homes than in the past. These vacant properties blight suburban neighborhoods if they're not minimally maintained.

The AP story covering this development says that "The worsening situation came despite ongoing efforts by lenders to help borrowers manage their payments by modifying loan terms..." but of course sweetening the monthly doesn't remedy a situation in which the homeowner owes more than the property is worth.

Anybody who can read a bar graph saw this coming. A record number of adjustable-rate mortgages were scheduled to reset in the first three months of this year. We're in the fat part of the perfect storm, and once we've gotten through March we can begin to assess the damage, which will include bank failures, so keep a close eye on your money, if you've got any.


Wholesale prices rose one percent in January, which is the most radically steep ascent in the inflation graph in sixteen years. Increases in the prices of food, medicines, and fuel led the charge. Speaking of fuel, the price of oil dropped today, but it fell only slightly after rising above $99. The current price of crude is $98.85. A hundred bucks a barrel is the new normal. Happy motoring.


I'm all done with Clinton vs. Obama, which has now assumed the gravity and ambience of an election for student body president in a junior high school. I will neither read nor comment on any more of the charges, counter-charges, or ridiculous characterizations these two clowns are hurling at each other. This travesty of a campaign is the degenerated legacy of politics "as seen on TV," i.e., politics as show business. The 30-second television commercial is now the paradigm of political discourse, and even the "debates" consist mostly of traded insults and slogans rather than carefully articulated policy positions. I've decided I "deserve a break today," so I'm gonna "get up and get away." I'll come back in November and vote for either Tweedledum or Tweedledee -- whichever is left standing.

As for the portion of the American public which takes this twaddle seriously, "You asked for it, you got it."

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