yup, that will really help out the economy

Post #322,266 by boxley 3/3/10 8:45:58 AM Reply	yup, that will really help out the economy http://dotearth.blog...-researchers-say/ To meet the Obama administrationÂs targets for cutting greenhouse gas emissions, some researchers say, Americans may have to experience a sobering reality: gas at $7 a gallon. If we torture the data long enough, it will confess. (Ronald Coase, Nobel Prize for Economic Sciences, 1991)
Post #322,269 by drook 3/3/10 9:47:26 AM Reply	Yes, it probably would We currently pay 77% of the worldwide average for gas: http://www.nationmas...ine-prices?=-1%29, Look at who has it cheaper than us: Bangladesh, Ethiopia, Romania ... The only major economies on that list that have cheaper gas than we do are China and Russia. Russia produces their own, and China buys from everyone we've pissed off. If gas cost more, we would rearrange the way we live to favor mass transit and higher-density living. Yes, that would cause a problem for people raised to believe the American Dream was a house in the suburbs with a large yard and a 2 1/2 car garage. -- Drew
Post #322,272 by boxley 3/3/10 10:00:01 AM Reply	My american dream involved a roof and regular meals the fact that there is no public transport in rural areas and most of the US is rural doesnt change because you tell everyone to move to the big city. The big cities dont want poor people. They make it very clear. If we torture the data long enough, it will confess. (Ronald Coase, Nobel Prize for Economic Sciences, 1991)
Post #322,274 by drook 3/3/10 10:18:49 AM Reply	Rural is fine. Urban is fine. Suburbs are the problem. Suburbs are the reason everything is designed around cars now. And cars are the reason suburbs are practical. (Chicken and egg.) And that system only works when you've got cheap gas. We keep spending general fund money to keep driving cheap. That's going to keep working right up until someone else wants the gas as much as we do, and China is coming on strong. When there's more demand than supply, things will go pear shaped in a hurry. Economies that depend on cheap gas will be hurt first and most. Hell, we can't even grow and distribute food without huge inputs of fossil fuels. Most of us (in the suburbs) can't get to work without cars, and there are no public transit options to switch to. -- Drew
Post #322,308 by static 3/3/10 5:28:19 PM Reply	Aussie Dream was similar. At the moment, Sydney is the most expensive place in Au to try to fulfill that dream. Especially as for many people, it means a 70 minute commute. In a car. Or 90 mixed mode. Ouch. Having lived (briefly) in a house on a largish block with 2 cars et al... no, I don't want that. It's too much work, and it's too much money. To do that effectively means moving away from the city. Problem is, my job is (currently) in the city. I'm happy with a 40 minute train journey, so what works for me is a unit or townhouse within walking distance of an outer-suburb railway station. That way I spend even less on petrol because the car isn't used most days. :-) Wade. Q:Is it proper to eat cheeseburgers with your fingers? A:No, the fingers should be eaten separately.
Post #322,310 by drook 3/3/10 7:06:15 PM Reply	If only we had decent rail coverage Or even good bus connections. And I'm not talking about out here in the suburbs. There's a total of 2 train stops in downtown Cleveland, and one of them is at a Park-and-Ride lot. Yes, that's right. You can drive all the way downtown to park in a lot, from which you can then take a train the last quarter-mile into the city. And let's not talk about the fact that most of the outlying stations are located in neighborhoods where you wouldn't want to leave your car unattended all day, nor come back to late at night. Trains are for poor people, donchya know. Why would middle-class people care about access to a train? -- Drew
Post #322,323 by static 3/3/10 9:19:04 PM Reply	I hear ya. A lot of car-oriented urbanisation has largely taught its residents that you use the train when there is little or no other choice. That varies from parking in the city being too expensive (i.e. commuters) from simply not having a car (i.e. the less well-off). Travel outside peak hour and the variety of travellers can be disturbing. I also saw it when I got long-distance trains in the US: many patrons were those further down the economic scale than the average. I think cities like Cleveland have an additional problem. It's local government reluctance to invest in public transport. It's even more obvious in Detroit (look at a map!). Or ask Greg about Grand Rapids: plenty of rail, yet no commuter stations. WTF? Sydney has a subtly different problem: there once were people who championed rail et al, and had some significant successes. We one had one of the largest tram networks in the world, for instance. But for too long, successive governments look short term with no vision or recognition of long-term need. We had a visionary in John Bradfield http://en.wikipedia....adfield_(engineer) - we need another one and there's just no-one in Macquarie Street like that. Wade. P.S. I couldn't make the weecode to do a URL work. :-( Q:Is it proper to eat cheeseburgers with your fingers? A:No, the fingers should be eaten separately.
Post #322,342 by drook 3/4/10 10:04:28 AM Reply	They even passed a law in Cleveland once By referendum, the people said they wanted a subway built from Tower City (downtown) to University Hospital (several miles south-east). But the county engineer preferred freeways, so he tied it up in red tape until after the next election and the whole thing just died. There are pages and pages of plans for subways in Cleveland, but the most amazing part is that there used to be one. It was supposed to be the first phase. But it ran on the lower deck of a bridge. And the upper deck was getting a lot of traffic. So the county engineer (yes, the same one) had the tracks ripped out and paved the lower deck to relieve congestion. http://www.urbanohio....php?topic=2726.0 Cars kept crashing into the support piers, so the lower deck was sealed. Yes, they killed the subway to relieve congestion on one bridge, and it didn't even work. -- Drew
Post #322,284 by SpiceWare 3/3/10 12:31:32 PM Reply	depends on how they do it if they raise taxes overnight to make it $7 then yeah, it would be very detrimental. if they put forth that the increase will happen at say $0.25 per quarter over the next 4-5 years, then people have time to replace their vehicles, which would help the economy, with more efficient ones.
Post #322,287 by boxley 3/3/10 1:13:15 PM Reply	thats one way to do it that would work as in 5 years $7 will be about $3.50 in todays money If we torture the data long enough, it will confess. (Ronald Coase, Nobel Prize for Economic Sciences, 1991)
Post #322,288 by Another Scott 3/3/10 1:30:29 PM Reply	You're expecting average 15% inflation? You're dreaming. The economy is going to be very weak for years. There's no risk of inflation like that. "But the deficit! But the debt!" That's not correlated with inflation. Look at Japan and the Bush years if you don't believe me. http://www.nytimes.c...on/29krugman.html Cheers, Scott.
Post #322,291 by drook 3/3/10 1:46:16 PM Reply	Not 15%, but we need some Flat prices encourage people to stuff money into mattresses. Tiny interest rates make government bonds unattractive. Neither one of these is good. The Fed should be trying to increase inflation from where it is now. -- Drew
Post #322,294 by Another Scott 3/3/10 2:12:29 PM Reply	Agreed. Nobody saves when they're getting 0.5-2%.
Post #322,309 by beepster 3/3/10 6:45:30 PM Reply	But they have been... but we need to get back from the 4-5% range we've been "up to" to where it was in the 7-8% range we were at in the 60s. I will choose a path that's clear. I will choose freewill.
Post #322,312 by Another Scott 3/3/10 7:42:39 PM Reply	Banks love it. (I'm not sure whether you're talking about interest rates or economy-wide savings rates or inflation rates or what. More words would be helpful. :-) Big banks can borrow from the Fed or the Treasury at 0% and buy Treasury bonds that pay 3%. Can't lose. Scared people with lots of money have been happy to throw it at the government bond market, and have even paid for the privilege. The rest of us mere mortals have been getting 0.5% on passbook savings or maybe 2% on a 1 year CD for a long time. As Drew says, higher inflation would be would be good for the economy at this time. The Fed trying to stay at or below 2% inflation even when the economy fell off a cliff and millions are out of work is dangerous. The CPI numbers that were 3-5% recently were an anomaly and not a long-term trend from where we are now. As Krugman says, disinflation and possible deflation is a much bigger risk than moderate inflation. http://krugman.blogs...on-in-recessions/ http://krugman.blogs...tion-perceptions/ If normal people can get 5% interest on their savings, they'll save more. The banks may not like it as much as they do now, but the economy will be much healthier. What it'll do to the economy-wide savings rate is hard to say - there's going to be a lot of investment required over the next 20 years... FWIW. Cheers, Scott.
Post #322,315 by boxley 3/3/10 7:51:52 PM Reply	just a matter of time before they start printing money If we torture the data long enough, it will confess. (Ronald Coase, Nobel Prize for Economic Sciences, 1991)
Post #322,334 by beepster 3/4/10 8:02:39 AM Reply	Personal Savings Rate It is up. People are saving. Still not as much as they used to. Yes, a bit of inflation would be helpful..will get money from other places on the globe than just the ones that simply need dollars for liquidity purposes. I will choose a path that's clear. I will choose freewill.
Post #322,339 by drook 3/4/10 9:22:33 AM Reply	I don't really think so Lots of people who would like to be going deeper into debt aren't able to find credit like they used to. The nets out to "increased savings rate". I think the reality is "decreased indebtedness rate", which is a qualitatively different thing. -- Drew
Post #322,369 by beepster 3/4/10 9:59:10 PM Reply	or the alternative view which I've heard from several sources... the sudden realization that the savings/retirement account that you >thought< you had, which was your house...is NOT what you thought it was...and the corresponding reaction of many to raise the percentages placed in 401k, IRA accounts etc..coupled with the drying up of the ability to put yourself under using second mortgages and HELOCs I will choose a path that's clear. I will choose freewill.
Post #322,371 by boxley 3/4/10 10:38:15 PM Reply	never! I pay rent to a bank who as a landlord doesnt give a rats ass if I have pets, paint the place in weird colors or dont mow the lawn If we torture the data long enough, it will confess. (Ronald Coase, Nobel Prize for Economic Sciences, 1991)
Post #322,372 by drook 3/4/10 10:45:01 PM Reply	Here's a thought, for anyone looking to do an econ thesis Let's treat individuals like corporations. Assume that they treat their house as just another item on the balance sheet. (So many econ arguments already assume people act this way, it shouldn't be much of a stretch.) So my balance sheet shows $x in "savings", defined as savings accounts and T-bills. It also shows the house "marked to market" at whatever the hell I feel like calling it. You know, just like corporate accountants do. Until I actually try to sell it, who's to say different? Those values are added to create what, in my mind, is my personal savings. If the market tanks so convincingly that I can't tell myself that my original "mark" was reasonable, I have to add savings somewhere else to keep my personal savings where I want it. I wonder if people are actually increasing their net savings rate, or simply increasing the values in other columns to compensate for decreases in the "house" column. For what it's worth, I still think the number being reported is reflecting less debt more than it's reflecting increased savings. -- Drew
Post #322,373 by beepster 3/4/10 10:48:40 PM Reply	I know there's a semantic piece to that... ...but less debt is more savings... still, I know what you're saying...that it isn't by choice. There's probably alot of both going on. I will choose a path that's clear. I will choose freewill.
Post #322,374 by drook 3/4/10 11:03:26 PM Reply	Yes, some But "average savings rate of 4%" suggests that the average person is saving 4%. Probably it's more like a bunch of people deeply in debt -- second mortgages and maxed-out credit cards -- some people current on their bills but no real savings, a few with savings, and a very small group with very large savings. When the largest group finds it impossible to keep borrowing, their indebtedness levels out. The "average" then goes up, but the median probably hasn't changed. -- Drew
Post #322,383 by Another Scott 3/5/10 7:45:25 AM Reply	Some comments by CalculatedRisk http://www.calculate...-to-exceed-8.html [...] And here is a graph of the annual saving rate back to 1929(1). Note: 2009 is through Q2. Notice that the saving rate went negative during the Depression as household used savings to supplement income. And the saving rate rose to over 25% during WWII. There is a long period of a rising saving rate (from after WWII to 1974) and a long period of a declining saving rate (from 1975 to 2008). Some of the change in saving rate was related to demographics. As the large baby boom cohort entered the work force in the mid '70s, the saving rate declined (younger families usually save less), however I expected the saving rate to start to rise as the boomers reached their mid-40s (in the late '90s). This didn't happen. Perhaps the twin bubbles - stock market and housing - deluded the boomers into thinking they had saved more than they actually had. It definitely appears many families treated mortgage equity extraction as part of their income during the bubble years - and the Home ATM is now closed. Whatever the reason, I expect the saving rate to continue to rise over the next year or two. And that raises a question: what will be the impact on PCE of a rising saving rate? [PCE = Personal Consumption Expenditures] I created the following scatter graph for the period from 1955 through early 2009. This compares the annual change in PCE with the annual change in the saving rate. Personal Saving Rate vs. PCE Note that R-squared is only .125, so there are other factors impacting PCE (like changes in income!). But a rising saving rate does seem to suppress PCE (as expected). If the saving rate rises to 8% by the end of 2010 (as PIMCO expects), this suggests that real PCE growth will be about 1% below trend per year. So with wages barely rising, and a rising saving rate suppressing PCE, I'd expect PCE growth to be sluggish for some time. And since PCE is usually one of the engines of recovery (along with residential investment), I expect the recovery to be very sluggish too (what Clarida calls "choppy"). (Emphasis added.) IOW, if people save more during a recession, then the recovery takes longer to take hold. It's a natural reaction, but illustrates (again) the need for the government (the only institution capable of generating substantial additional demand now) to do more. As to what gets counted as "savings" and what gets counted as "reduction in debt", I'm not sure of the details. The BEA should have more.... E.g. "Personal saving is the portion of personal income that is not spent on current consumption but that is instead used to provide funds to capital markets or invested in real assets such as residences." - http://www.bea.gov/s...onalSavingBox.pdf So, the devil's in the details. (So buying a house is savings??) Cheers, Scott.
Post #322,386 by boxley 3/5/10 9:15:24 AM Reply	PCE should be stabilized and shrink as folks age You can only eat one steak at a time and preferences are well set by then. This I know from observing others of course If we torture the data long enough, it will confess. (Ronald Coase, Nobel Prize for Economic Sciences, 1991)
Post #322,660 by SpiceWare 3/10/10 7:46:48 PM Reply	the debt's was written off http://www.google.co...7sbxP_AQD9EC2K5O3 The study found that the $83.27 billion in credit card debt that banks wrote off in 2009 accounts for the bulk of the of $93.2 billion drop in consumer card balances.

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