A Solar Panel: The Neutralizer

The real reason that oil consumption has slowed down is once again – the housing market. Think about how much less oil is needed to move all those materials (wood, steel, concrete, appliances, etc.) as well as construction laborers for all those houses and condos we were building. All that consumption from our housing construction has come to a stop, and with it the end of a major consumer of oil. The next oil demand decrease is on its way from both China and India. Continued »

Recession Smession

Dramatic unemployment increases in financial services, construction and autos will be the real shoe to drop. Who will pay for all these billions of dollars of writedowns? Oh, I forgot, the Fed has the ability to actually print more food and oil – yeah right, was Bernanke ever taught the first rule of Economics: Land is Scarce.

So how much of our newly printed paper is currently being bought by our social security system – talk about drinking your own blood. The welfare state will inevitably be forced to solve their huge inefficient costs of entitlements and armed forces. Continued »

Subprime is a Fancy Word for Too Much Debt

Subprime is a fancy word for too much debt. Adam Smith would actually say that housing over and above shelter has no utility value. If that is true, we are in for some serious additional write downs (think second homes).

On another note, Subprime could have worked if the loans stayed true to their risk and were made at “loan shark” type rates (5% “money-down” should have warranted a 20% rate; instead we were lending it at 7-10%). As a result, we were only realizing less return on a greater expense in the form of lower and lower investment rates (Menger, Say, Smith, Jevons and others), but more risk. Continued »