crap the credit contraction continues

CRAP THE CREDIT CONTRACTION CONTINUES
Let me start right off by sourcing this idea so that the trolls don't wake up from their slumber they fell into after violating their blow up dolls and start making asinine comments about how I don't know anything about economics. As if economics was all that difficult, essentially being distilled into not much more than supply and demand. George Ure over at www.urbansurvival.com led off this mornings writing with the comment that the latest news was a huge deal, indeed. February's credit use fell at an annualized rate of 9%. Now,whether this was the banks shrinking cardholders debt limits or consumers deciding that with pink slips liable to pop out of a pay envelope at any time it just might seem like a groovy idea to stop visiting the strip clubs where they have been buying the girls thirty dollar "super pink lady" drinks and paying four hundred dollars for a private lap dance, or both, it doesn't really matter. The point is that in our economy, a shrinking credit market spells death. Not, oh how I wish I was dead. Not, I feel like death warmed over. Death, as in a putrid corpse sitting in an E-Z Boy recliner and making all the cocktail party guests slightly uncomfortable ( should we say something about the smell, Fred? ).
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Credit contraction isn't the worst of our problems. Peak Oil is. But one feeds on another. Without cheap oil the economy loses its base. Without cheap credit, firms don't continue to explore for oil. As the global economy drops into the toilet, less oil use results, which added to lack of cheap money to explore shuts down potential future supply. Oh, don't think there is any cheap abundant oil left. There isn't. The last super field was discovered over forty years ago. And those are all starting to decline in production ( even, especially, Saudi Arabia ). But the present lack of new wells being put into production will just worsen our future oil problems. I've said before that it is a bit of a coincidence that our economic troubles started about the time global oil hit its bell curve plateau. I can't say for sure if the contracting oil supply killed the economy but it sure seems plausible. But at the very least it will keep the economy from recovering.
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So, less credit means less oil supply. Less credit means less consumption. Which means retail jobs start disappearing. Remember, every other recession saw the retail sector absorbing lost manufacturing jobs. In more than one casino I've met advanced degree college graduates working alongside me for gratuities ( which always made me feel pretty happy I didn't waste time or resources continuing school, the same happiness I now feel for never having taken a mortgage ). You had to downsize and see your dreams crushed and have the spouse leave you when she discovered her gold covered loins had opened for a commoner, a POOR person. But at least you could still continue working. Today, all jobs are shedding workers, especially the retail sector. Without cheap credit their business plans ( continued growth ) are hobbled. Without cheap credit their customers were spending less. It doesn't take a huge drop off in business to put them out of business. Especially since they had already laid off past the point where it was healthy for business, all in the name of increased profits and CEO bonuses. When a real emergency started there was no one left to lay off ( at least not enough to stay open ).
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Commercial real estate is projected to be the next huge domino to fall. With retailers closing down, less and less stores get rented. And while a few giant corporations that own millions of square feet of retail space going out of business won't effect the unemployment picture much, it will send ripples through the economy. Joy, another bail out target. And speaking of which, Prudential and another insurance giant are asking for bail outs. I won't say anything about my article a few weeks ago on insurance companies going out of business and stiffing you. And, speaking of predictions, Rawles is still warning of state pension bail outs. Seems reasonable. California's system had heavily invested in toxic real estate. And speaking of Rawles, today is his Book Buying Bomb. We are all supposed to buy his book today to jack it up in Amazon's ratings. I'm going to do it myself. The least we can give back after years of his daily blog. I wouldn't do it if it was still $25, but $11 is more than reasonable. Okay, this paragraph went to pot quickly.
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There is a lot to worry about. Peak Oil. Potential global famines. Changing weather ( ice age or global warming doesn't matter, both will wipe out six billions food supply ). Today's point is that the immediate problem is the economy is going down hill fast and it would be silly to expect job security much longer. Don't plan around continuing employment. I know you will anyway. Most are addicted to luxury and convenience. If not you, your spouse who pulls your puppet strings. I can't say I blame you overly much. Living this kind of way pretty much sucks. But, hey, look at it like exercise. It hurts at first so it doesn't hurt much later. You've been warned. Don't come crying to me when you and your trophy wife are living out of your SUV trying to stay ahead of the repo man.
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