Is It Depression Yet?

As we start moving into summer I thought it might be interesting to take a look at some economic predictions made way back in 2007 by an “informed” opinionator over at Sustainable Living’s Natural Hub, a Q&A piece entitled Timing of a depression triggered by high oil prices.

An Overview of unfolding recession as the oil economy fades was published in 2006 explaining the various factors that would mark a worldwide recession due to increasing oil prices. Some of its indicators have long since come and gone, others have been with us for years already, and some of the predictions have come true in these last few months. For those of us living in the real world, recession and ‘stagflation’ have been facts of life for years despite the mainstream news media’s reluctance to actually use the word when reporting on where speculators have taken futures on oil and food supplies lately. They won’t use the ‘D’ word either [depression], but here’s a list of signs that it’s already upon us.

Sign 1. “For there to be a deep recession, there first has to be a credit bubble – a high level of personal indebtedness in the community.”

Well, this one’s sure a no-brainer! Hopefully most readers of this blog have made real efforts to minimize or get out from under personal debt over the past few years (exempting mortgage issues), or were never deeply in debt in the first place. Those who consolidated credit card and other installment loan debts by refinancing when the mortgage boom was on may be facing serious issues with that mortgage now, but that’s such a huge issue that if mortgage debt is the biggest of your worries, you’re doing pretty well.
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Wall Street “Crisis” Double-Speak

What it Means to the Home Mortgage “Crisis”

Many of us watched with serious confusion the strange financial market machinations that led to the Fed bailout of investment bank Bear-Stearns, taxpayers taking on bad debt paper held by speculators rather than any actual member of the central banking community. JP Morgan bought B-S for mere pennies on the dollar, ending up buying for just a 5th of what B-S’s Madison Avenue headquarters building is worth – the rich folks have taken their hit. What matters now is how much of a hit the average cash-strapped citizen will have to take.

Government bailouts of junk paper speculators is outrageous, and does not a thing to help homeowners whose mortgages far outstrip the current reduced value of their homes – while the price of every necessity is going through the roof. Yet at the same time Fed chair Ben Bernanke pledged to “do all that is possible” to help struggling homeowners. There actually may be hope on the horizon, though nobody should bank on Fed “pledges.”

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Ways to Live On Almost Nothing – 4

Part 4: Items 16 – 20

In this last entry on our 20 ways to live on little-to-nothing, some further ways to take honest stock of your situation and prospects, plan accordingly, and make use of systems already in place to stretch the dollars you’ve got left.

16. Who Are You Supporting?

If your habit is to always buy new, who is that supporting? In a serious recession, it’s probably not supporting some skilled worker in a factory in your area, since the US has already stripped its manufacturing capability to almost zip. Are you supporting the call center bill collectors? Do you really WANT to support them?

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Ways to Live On Almost Nothing – 3

Part 3: Items 11-15

NYC Bread Line

Installment three of this series of 20 ways to live on little-to-nothing. In these we’ll look at some basics about food, using all of your abilities, and taking honest stock of exactly what you need to do in your life to get through the hard times. If you get hit hard by what’s happening – and cutting back on luxuries just won’t fix the problems – you’ll need to learn to rely on yourself.

11. Taking Honest Stock

If you don’t want to go all Gypsy (and have a family to support), you can still take control of your situation. Keep a careful record of where the money goes over a month. Examine your ‘necessary’ expenses (home, utilities, car, insurance, food, gas, any other fixed expenses). If the ‘necessary’ expenses are larger than net income, it’s time to get out from under the big ones and take a good look at less expensive ways to live. You can live through hard times, but first you have to acknowledge you’re in hard times.

Housing markets are bust right now, so it’s difficult to sell your house even if you were willing to take an equity loss. Same is true for cars and light trucks. It can be the best option to make a clean break and declare bankruptcy, which can allow you to start fresh with a whole different way of approaching life.

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Frugal Youth: Stuff Does Not Equal Happiness

Age Counseling Youth

Once Upon a Christmas… my Mother-in-Law gifted my children with some thickly quilted fuzzy slippers to put on in the morning when the wood stove in our little cabin had gone out and the water in the dog dish was more often than not frozen solid. Unfortunately both of the pairs of slippers she’d bought consisted of two right feet. So off she went right after Christmas to the store where she’d bought them, and let the kids pick out new pairs that they could wear on both their feet.

The saleslady remembered when Mom had bought them, and the story she told about the kids living in the cold mountains without automatic heat. She asked the kids how they could stand living in a house with no heat. The kids looked at her quizzically, my daughter answered that of course we had heat, we just didn’t have electricity. That really threw the young woman for a loop, so she just had to ask…

If you’ve no electricity, how can you have heat? Daughter smiled. “Fire,” she answered calmly. “Fire is hot.”

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A Non-Consumerist Way of Life

Habits of thought that won’t cost you a thing…

My last post offered some Tips for Avoiding Pressure to Shop, mostly in the context of getting out of the usual “girls’ day out” type of expensive, mall-hopping, credit card fueled frenzy that way too many people in the modern world view as entertainment. At least, until the bills come due. Sad statistics demonstrate that if medical costs from an accident or illness in the family don’t lead to bankruptcy, credit card debt will. These are the two biggest contributors to middle class bankruptcies in the U.S. at this time, and as the mortgage crisis becomes ever worse, it’s not going to get any better.

In this post I’m going to offer some ways of thinking that can become habitual without too much trouble, that will help keep you out of debt by not going into debt in the first place. Not everyone can put these to good use, but those who can will find that their shoestring budgets go a lot farther in covering necessities.

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Free Yourself from Debtor’s Prison

I was in my late twenties when I finally grasped a tiny bit of the Mystery of Mammon – the magic of money. It occurred to me while awaiting a payment for services rendered that the person who owed me money was waiting on someone who owed him money too. I realized that among the full-time residents of that small New Mexico town there was never more than about $5,000 in circulation on any day of any month. That money made its rounds every month starting at the top and ending right back there when the month was over. The only new money anybody ever saw came in by way of tourists from Texas, but that got immediately swallowed up by big bank accounts in somebody else’s town.

Many regular people have a certain psychological aversion to money, or to the idea of allowing money to rule their lives. The capital class depends upon this deep psychological aversion to empower the “money myth” they depend upon to amass ever more of it in their own coffers. Terms like “filthy lucre” and traditional religious prohibitions of usury speak to this deep uncomfortableness with artificial value, yet it is the general public’s uncomfortableness with artificial value that allows the capitalist system to operate.

People who are not comfortable with artificial value don’t tend to amass much money and are prone to use the artificially valued paper to purchase things that for them have actual value. A home. A reliable means of transportation. Nice clothes, big televisions, enough food to make themselves obese, computers, entertainment, toys… it’s what makes our consumerist lifestyles hum and it’s every bit as unsustainable – both personally and economically on the national level – as chemical-intensive force-farming. These days a college graduate begins his or her working career deeply in debt and remains deeply in debt for most or all of his or her life. And it never seems to matter how deeply in debt you are, there are at least 10 new credit offers in the mailbox every week to dig you deeper.

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