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Replaying 1929! |
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What Mom and Dad Didn't Tell You!
Straight Talk About: Sex
Just what the hell do long wave economics have to do with sex? Well, partner, pull up a chair for a spell and let me 'splain it to you nicely. There's a bunch of stuff that Mom and Dad didn't tell you about.
Sex involves people. Usually, a couple of members of the opposite sex (although not even that, lately) and put together a family. Are you with me so far?
This family requires two things that are becoming will probably become more obvious than a bad "social disease" as we get farther into 2001.
Energy. There's been this notion that there are no energy problems in the world that has been floating around for a long time. But, surprise, the energy problem is real and growing. All those millions of jobs and thousands of homes, located a zillion miles, or a 3 hour commute to go 10 miles if you happen to work in San Jose, mean people are spending energy at an unprecedented rate. The national speed limit of 55 went by the wayside in 1995, and with it, the highway fuel consumption began to increase. Add to that the end of fashionable small cars and their replacement by SUV's, and let's throw out a bunch of tires while we're at it and pile on a worst in years winter for good measure.
As 2001 proceeds, the odds of the energy crisis coming to an end will decrease, not increase. While it is possible that thoughtful urban planners (see www.kunstler.com,for example) may be heeded, don't be holding your breath. The stock market is not only dealing with seeing $3 trillion in equity blown off the face of the earth since the March highs in the Crapdaq, but there's the unspoken problem that a Palm plus a desktop getting synchronized takes more energy than some refrigerators. If you don't believe the energy problem is real, consider a chart of natural gas prices for the past year or so and you'll see what I'm carping about.
Money. The other thing a family needs is enough money to buy the food, make the mortgage payment, and maybe fill up the old Ford Wagon with gas. I drive this old Porsche 944 and filling it up has gone from $23 to $30 in a year. Now, I know I haven't finished the dissertation yet, so I can't knowingly argue with the likes of Dr. Greenspan, but $23 to $30 seems to me like a little higher rate of inflation than, what, 4% which is about the party line.
Let me share a little personal history with you. My father was an officer in the Seattle Fire Department, and I may be one of only 3 or 4 real Seattle natives. Back then, when I was going to Cleveland High School, my family got along fine with just one bread winner. My dad was a fireman - and while a dangerous job (Scott Air Packs weren't mandatory let alone widely used back then) he could still buy a lower middle income house, drive a car, buy a rental house and make ends meet.
Today, I think you'll find more single line officers, whether fire or police, have to work two jobs or be married to a spouse with a good income, in order to have enough money to make ends meet.
I can't tell you precisely what day the world changed and required that both spouses in the family unit work, but as best I can recall it was sometime late in the 1950's or maybe the early 1960's. Over my father's concerns, my mother went to work at Seattle City Light as a switchboard operator. That's where the money came from the pay for college for my sisters and what allowed them to put a little bit aside for retirement.
If you have some time, you might want to do a search on any of the big search engines (I like Alta Vista, although I keep hearing they will go by the wayside or start charging one of these days). Look up "single income family" as a search term and I think you will be amazed at what I found. There's a hugely disproportionate number of responses to the query coming from three places: Canada, Australia, and New Zealand.
No, this is not a learned academic thing to notice, because I haven't clicked over to the CIA's fine World Fact Book to see what the populations are, and run out what the expected response distribution based on population ought to be. I can tell you from looking at a few pages of hits in the search that there's a war going on at the margins of Western Society about how many people in those three countries will ultimately get sucked in to the "debt machine" and sell the family in order to buy things we don't need.
I go into this background about families because when we had the last depression, there was a huge dynamic going on with the migration from the farms to the cities having a major impact on people's lives and spending habits.
The way money is starting to work out is very worrisome to me. I'll tell you three markers I watch very closely. One is whether a non-baccalaureate can get along in reasonable comfort on a single income. The answer seems to be no. Just up the street from us is a little apartment. The asking price? $1,400 per month. When my company flew Elaine and I down to the Bay area to look around, the prices were more like $2,400 [per month] for a so-so apartment. Houses were out of the ball park. That's one marker. Takes two to make a mortgage payment.
The second marker is the middle generation. These are the people who will be into their 40's when we're into our 60's. This means they're 20-35 right no Among this group of folks, which happen to include three of my own children, there are some attitudinal shifts that worry hell out of dad. My eldest is happy traveling (mostly to the Cayman Islands) while postponing her entry to dental school in order to be a coffee barista by day and (admittedly) a pretty fair musician by night. My boy / girl twins are going to school to me an EMT (George II) and a chef (Allison). Now, there's nothing wrong with any of these choices. But the shift is huge. Where us oldsters would have sold our souls to get a microwave, these are kids who have never been without TV, never been without a microwave, and cars? They all have cars and friends with cars.
These kids need something NEW. Sorry, a game cube with a 128 meg flash ROM part in it is just a little advance, and it sure as hell won't support the whole "new economy" any more than a new Palm 9 will. there's got to be a fundamental "new thing" that will employ a lot of people to drive it all. Well, I don't see it or any excitement to speak of, in the minds of today's youth.
I'm from a generation that blazed trails, went to the moon, and had a big war. The kids today have been so over-hyped by media that they are insensitive to it - and their spending patterns are starting to change in subtle ways to reflect the shift of values. I admire daughter Denise's band (Wendy Treat) as they make fine music. But there's something more to it than running away from profits. The kids today are looking for meaning in song, in medicine, and in cooking. They're caring much less about "making it" because they have never not been able to make it.
The third marker I watch is valuations of markets. Was Tuesday (1/2/01) a really bad day for the NDX? Sure, but with $3 trillion already gone, the mantra "buy of the dips" is being uttered again. What the Aggregate Index (below) shows is that we could have a rally for a few weeks and still be more or less perfectly in alignment with 1930.
So what does all of this have to do with sex? I'm getting to that. If I read it right, a lot of people will be screwed this year as Bush 2 discovers that he's been handed a hot potato, and there's no place to set it down gently.
But enough of this harsh sobriety. Let's look at the charts and warm our hearts...and enjoy that for at least the moment, the realization that large scale unemployment, driven by energy costs and the dotbust, are still being denied by the less thoughtful masses than you....
(Chart deleted - the latest update is available on the weekly update: http://www.urbansurvival.com/week.htm )
Middle of September, 1930 is up next as we go through the dizzying replay. Will the outcome be the same, a rally? Or, will people's confidence be so shaken that they will come to their senses? Watch the Fed for clues. I still hold hope of a January rally to really make things right. Maybe an overnight surprise rate cut one of these days would fill the bill.
Write when you get rich.
Reader note: 3 days after posting this report, the Federal Reserve announced a "surprise" 1/2 point rate decrease. - GU 1/6/01
All contents (c) 1998, 1999, 2000 by George A. Ure, MBA, except authors as linked or noted