When you start to look at the financial implications of high oil and
gasoline prices on the individual consumer, it becomes obvious that
there are many subtle factors contributing to the problem. Because
they're so subtle, consumers may not realize for a while what a bind
they're in.
For example, peakguy notes on Peak Oil NYC today
that the reason that people—and the economy—seem to be putting up with
$3/gal gas is because they don't have another choice. As the Slate
article that peakguy refers to argues: "The rule of thumb in economics
is that people react to price increases only when they can turn to
substitutes...people can't change the type of fuel they put in their
cars, and they can't stop going to work."
If people can't stop using gas, what happens? Well, they charge it on their credit cards, of course. But this AP article
reports that as a result of this credit card activity, Americans have
fallen behind on their ability to pay off their credit cards. (In fact,
this topic seems popularin the news today.)
"The rise in gas prices is really stretching budgets to the
breaking point for some people," the [American Bankers] association's
chief economist, Jim Chessen, said in an interview. "Gas prices are
taking huge chunks out of wallets, leaving some individuals with little
left to meet their financial obligations."
Couple this with some other problems we've seen lately in the financial
realm, and we should be scared. Remember the talk about the
relationship between the new bankruptcy regulations and the Katrina
(and Rita) evacuees? Well, now Rep. Sensenbrenner, who's the chair of
the Judiciary Committee, has said that he will not hold hearings
to determine whether the new, strict regulations should be waived for
those affected by Katrina. This, despite the fact that these people are
already running into just the kinds of problems you might expect:
Katrina survivors are already starting to run up huge debts
on their credit cards as they struggle to find new jobs, new homes, and
new lives. Although many banks and credit card companies have offered
leniency on payments and loans in the short term, the long-term effects
of their displacement and loss of finances may put them hopelessly in
debt.
Also, in case you missed it the other day, Spooky left the following scary story in a comment:
Fractional banking now retains just .08 of each dollar in
their central vaults. I recently tried to get $5000 from my bank. I was
told I would have to "place an order" for that much cash.... credit and
lending is not just out of control, it is the only game in town, and
every single bank in the world is built of nothing but debt.
Peak Oil and all the storms and all the other crazy government
expenditures going on today are pushing us all closer and closer to the
brink. When the stock market finally begins to slide, the banking
system will not be far behind.
As if this doesn't seem scary enough, I'll leave you with one last thought. The Reserve Bank of Australia is warning of an impending global financial meltdown.
Their analysis is based primarily on the unrealistic housing market in
many countries, but also says that the financial situation is
exacerbated by increased oil prices and growing personal debt. While I
can't necessarily assess the validity of this article, it seems to me
that even the other subtle signs—when all of them are added up—should
be making us all pretty edgy right now.
When you start to look at the financial implications of high oil and
gasoline prices on the individual consumer, it becomes obvious that
there are many subtle factors contributing to the problem. Because
they're so subtle, consumers may not realize for a while what a bind
they're in.
