Wednesday, May 21, 2008

Its the Economy Stupid?

Yeah I get it. But do our young people?

I got into a little discussion at the coffee shop this morning with some younger folks who were discussing the state of the economy and the upcoming General Election and for all the points and rationales I learned a bitter lesson.

Our young people today either have no real sense of reality or have been blindsided by the best public relations campaign ever perpetuated upon an electorate.

Thankfully, this discussion really had nothing to do with personalities but more with economic tidbits and just everyday things people are may be hearing on TV. What I learned was we have somehow managed to move into the direction where our politcians and platforms are becoming our educators and thats very scary.

Why? These very educated young folks have no real barometer to base the very criticisms being placed upon the current state of our economy and have no grasp as to the reality of the ecomomic data outside the rhelm of politcis and of course "spin" that is being thrown upon them by the wrong sources. Frankly, Fox or MSNBC ought not be "educating" anyone on economics except how to run a network "entertainment" company for the bottom line.

A couple points came about.

The Mortgage Crisis is George Bush's fault. Really? Were they aware that the mortage rate upon Bush taking office in 2000 was higher than it is today and in fact back in the mid 90's it was 9% and back in 1983 it was 12%. Today its around 6%. Was it a particular Bush policy that created all the defaults and foreclosures? No one could point to one such policy but it was expressed that Bush's overall economic policy has failed.

Failed? By what measure I asked? ( Again Devil's Advocate is my strong suit, ask my wife)
Mortgages, Gas Prices, and Inflation. Impressive. They got the code words that get spun across the mainstream media on a daily basis but failed to get the real ecomomic indicators used in forecasting but I endeavored to work with those.

Gas prices? Reminding myself I just filled up for 3.67 a gallon I asked why it was they thought that gas was so high. Bush and the War was the concensus. Really? To be sure there some truth to it but what about the global demand strain(the ga-billion Chinese and India coming on line) and the speculators in oil that add about thirty or so dollars to the price of a barrel and then there is the issue of taxes we have in place directly on each gallon.

Taxes? I asked if they knew the tax rate on gas. They did not. I informed them its roughly 37 cents per gallon (18.5 or so to the Feds and 18 or so to States some lower) hence the gas tax rebate idea being bounced around lately. Also, I asked what they thought gas would be by September and consenuc was north of 4 bucks.

I reminded them that gas in the following countries, Norway (6.82), Belgium (6.16) England (5.96) Italy (5.80) Japan (5.25) Hong KOng (6.25) were all higher than the US. Compared to the world our prices are still cheaper than non-exporting oil countries. I mean who can compete with .12 cents a gallon in Venezuela or .78 cents in Kuwait?

I also ask them their coffee preferences. I then followed up by simply making the point they just spent more on that Grande White Chocolate Mocha then a gallon of gas costs. How can the economy be in such bad shape and yet all of us were willing to drop four bucks on our coffee. I doubt coffee in 1980 was four bucks, though you could probably then only get it at a 7/11 I think.

Mortgage rates and Gas knocked out. Now there is Inflation?

First of all I have to admit I was astonished that these folks had no clue as to what real inflation is or feels like. Apparently its simply rising prices and cost of living but compared to what I wonder? Inflation over the course of the last eight years is still lower than it was in late 70's throughout mid-80's. In fact inflation has not risen on a yearly average over 3.39%. In 1980 it was 13.5% after our first major gas crisis. In 1979 it was 11.22 under Jimmy Carter.

Were they actually saying that 2008 feels like 1980? Of course not. They were not even alive then to experience real inflation or to even feel what a really bad economy truly feels like.

I was provided some insight as to just what it is that the younger generation is seeing, whether real or not, compared to their lives and experiences maybe 2008 is not the best of times but is our economy really as bad as the pundits (politically motivated ones) would have us believe.

So we have rates at very low levels, remember we had 9% in 1995 for mortgages and our inflation levels historically are fine (say 3.8% projected)and our gas prices when balanced within the context of the global economy seem relatively lower than most countries.

So what is it about this economy that make people believe that it is so bad? Is it unemployment? Those as well are better than the historical average. So what is it?

Well sadly, I think it just simply that the opposition has a better public relations team out there doing their bidding.

And we did not even get a chance to talk about Wall Street and the Stock Markets.


Anonymous said...

It is no wonder when presented with such questions would some younger voters fall back on the programed rhetoric of a political nature. Afterall, it seems as if the political movement,and the left in particular, is the only one speaking to this generation.
My issue is the message. Our country is being portrayed as having something to be ashamed of or has something it needs to apologize for in th world while at the same time never showing the backdrop of what life is like outside the borders of this country. Liberals appear so concerned with the rest of the world in this global economy and the social standing of other peoples that they never like to address any of the facts with regard to the economy.
Everything is put in the context or box concerning political expediency. We want our young people to feel as if they have to be all things to all people and yet at the same time instill a belief system that someone else like the wealthy should be the only ones to have to pay for it all.
I have had my frustrations like everyone else with aspects of our economy and government , but have enough seasoning to know that it all does not fall on one mans doors. Apparently it is okay to portray our standing President a some great evil and the root cause of every problem in America but us older voters know the real truth behind what is happening. Sure foriegn policy falls in the arena and Bush is an easy and often rightful target on that score, but the economy is not solely the Presidents issue.

State and local governments can rape a citizens wallet just as easily as Washington and often times without much notice or blame.

Jan said...

It's a simple matter that we do not teach our children nor does the school system anything really related to how the economy works or even effects them.

Most people never get a lesson on economics until Econ 101 in college. We are not even really teaching our children how the Government works or even what the Federal Reserve is either.

It should not be surprising then why most voters under twenty-five these days tend to be more liberal on issues like the environment.

Everyone cares about the Environment but those of us who understand the ramifications and have experienced these things before know better. They will have to go through a period of hard times while their guy is at the helm before they will truly realize its not just about the President.

Mind you these are the same young voters who support everything Green, no matter proven or not, which into itself will lead to even higher oil prices and inflation.

Bill Clinton was stated as saying that we would need to bring our Economy to a halt in order to make these changes. Well, this Congress is well on their weay. Remember this has been a Democratic COngress since 2006 for the most part. What have they succeeded in passing?

If forbidding any drilling in Anwar, the coast of California or Florida, or even parts of teh Gulf of Mexico at the same time not passing legislation to permot the constrcution of new refineries and at the same time want to wean us of coal our greatest natural resource that leaves us with having to buy whatever oil we use 100% from someone else twenty years from now. And lets not forget these people do not want to build any more power plants powered by coal or god for forbid nucluer energy.

So what we get is a generation who thinks we can stimulate our economy or at least grow it by using wind power and renewables, one which in ethanoyl is rising in prices as well while we end coal mining because its not clean and yet we know that coal can be made into liquid fuel. Liquid fuel? We could actually leverage our coal capacity to produce a fuel that would allow us to wean ourselves off foriegn oil?

Instead we are left with a generation that if successful will wreck this economy from within through policies that are irrational.

Ever wonder why they never show you any pictures of Anwar, except the plar bear searching for food on the outer rim? Its because there are NO trees there and there are very few Caribou that the movement says they are seeking to protect. None. Zero trees. Just wide open spaces sitting there waiting to be drilled to offset demands.
And next time remind this generation that the world consumes 87 million barrels off while only 85 million is being produced now and we are determined to limit the amount of oil we produce and refine from mour own soil.

I had heard that the Far Eastern children are out pacing us in terms of education and its no wonder if this generation it blinded by one issue that shapes its reality.

Its no wonder the Chinese must be smiling.

Jim said...

After Barrack Obama' speech last night in Iowa I am even more convinced that he has no idea how to address the economic situation we are in.
"Tax wealth and not work"? Who provides th work? Small business does that who.
Obama is not Bill Clinton nor is his policy positions. Obama is more like Howard Dean and other ultra-liberal Democrats who really either do not understand capitalism or simply favor socialism.
Its the oil companies fault that the profits are at record levels. As if oil companies or the refiners set the price standard. Oil companies are not run like Walmart. Gas station are usually independent small business owners who are getting squeezed every bit as much as the consumer.
Have you seen the Cash Price Credit Price scenario playing out Obama? And Alter your point on gas taxes is interesting. People do not even know that State taxes gas for the most part.
Well get ready Virginia, Gov. Kaine wants to raise the gas tax and so does the Democrats in the Gneral Assembly.
Evidently 18 cents per gallon tax is not enough.

Jim said...

The mainstream media is doing the bidding here. They always want to emphasize that which in the market is at lows and not what is doing extremely well.
I worked in the rail industry and our industry is seeing levels in volume it has never seen before. We are booking more tonage and our earnings are proof that all these nay sayers are not looking at anyhting other than what they want to use to distort the overall picture.
The stock market has rebounded almost 15% from the first break of news regarding the banks and the bailout of Bear Sterns. I realize there is the mortgage issue but markets work these things out over time. There is relatively low inflation compared to other so named "recessions" so at best this is a sift one and unemployment is still doing better historically as well.
The old tried and true "Are you better off today than before" in terms of campaigns of course will be used but I wonder for all the people who did the right thing by way of housing and did not overbuy or did not get sucked into the sub-prime mess, 6.5% interest is not so bad compared to other periods as Alter points out.
People need to stop looking for a handout from the government, which of course the Democrats pledge to deliver and take some personal responsibility for actions that were undertaken, like contracts, by them.
I love how the case is always made that someone else is to blame. This logic is why the Democrats feel big government is required so that it can keep the power over the common citizen in Washington and not in the pockets of working families.
They will tell you that everything that has happened in the economy that is bad is a result of less government.