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Crisis of Confidence
The BBC has an interesting article titled Is the American Dream in Business? which takes a brief look at the not-so-bright prospects of contemporary Detroit.
I left the US in late 2006 for the brighter skies (economically speaking) of the Old World. At the time, things were still going pretty well in the US but you could see the gathering clouds on the horizon. The dollar was already sliding, oil prices were creeping up, and there were some signs that the house price bubble was going to burst.
Things have clearly taken a turn for the worse since then. People fear a real economic crisis, and the American Dream does not seem quite as bright and shiny as it used to. What's it looking like from where you are?
I'm really wondering how this will play out in the general election campaign. Will it be all about the same old irrelevant nonsense? Or will things get so bad that it will be simply impossible to ignore the harsh economic realities? And if so, will that play into Obama's hands, since the Republicans will have very hard time arguing that they're not responsible for the current state of the economy?
Comments (20)
I live in New England. The increasing costs of gasoline, heat, and food are already sinking many families. The next two years will be a bloodbath.
Many voters will vote for the candidate they believe will help. But voters who rely on mainstream media for their opinions will be misinformed voters. Therefore I'm guessing that neither candidate will gain much of an advantage from the economic mess.
July 2, 2008 8:49 AM | Reply | Permalink
You don't specify where you are, but I've been reading very dismal news about the UK:
Riches to Rags: UK oil and gas surplus turns to crippling deficit
http://europe.theoildrum.com/node/4188
I work/live in Baltimore. I've already posted that I'm cutting back, but no one at work is openly complaining yet.
This morning's WSJ shows an upwards asymptotic curve of US construction loan delinquencies. From lows of around 1% in 2005, residential delinquencies are around 10% - 13%, commercial around 3%.
Murders are down this year, but I've noticed a few more street people. Night before last there was shouting outside our windows. A street guy I had seen before was holding a 24 pack of Pepsi and the owner of the Chinese takeout around the corner (they stack cases in the front of the store) wanted it back. The street guy claimed he had bought it at the 7-11 (they only sell 12 packs) but the other guy wasn't having any. The street guy eventually gave it up. My wife hates it here because of this sort of thing.
July 2, 2008 9:43 AM | Reply | Permalink
I'm in Germany. It's on a different economic cycle than the UK. One thing I can tell you is that it is currently hard to find builders here because there's so much construction going on.
July 2, 2008 10:48 AM | Reply | Permalink
Interesting story, but Detroit is not the posterchild of the current economic decline. Detroit's economy has been in a sh*thole for a lot longer than that.
Driving through Detroit is so depressing. Huge swaths of the city are abandoned (1960 population- 1.67 million, 2008 population, about 940,000). The local government is both incompetent and corrupt and is headed by a mayor whose morals make Marion Barry's look good by comparison.
July 2, 2008 11:16 AM | Reply | Permalink
Is the local government corruption in Detroit a cause of the city's problems, or is it rather a consequence of its economic decline?
July 2, 2008 12:16 PM | Reply | Permalink
chicken or the egg.
It wasn't in great shape even before the decline, but with the decline a lot of the people that would have cared moved out.
July 2, 2008 12:50 PM | Reply | Permalink
I'm in DC suburbs. I think that people feel the squeeze, but as long as we're employed, we are hopeful that we'll get by. But, if employment starts taking a big hit, it will be a very different story.
July 2, 2008 12:45 PM | Reply | Permalink
Do you have any feel for where things are going? Is there still enough work?
FYI I work for a largish US tech company and the US market has definitely taken a hit in the last 3-6 months. So now the question is whether customers are delaying purchases because bad times may be ahead, or if the bad times actually arrived. No significant layoffs at the moment though.
July 2, 2008 1:00 PM | Reply | Permalink
From my perspective, I work as an analyst for a Fortune 50 company, and we are hiring like crazy. Some sectors are hit harder than others. My company has virtually nothing to do with construction, so the downturn has not hurt us at all.
July 2, 2008 1:54 PM | Reply | Permalink
In the DC burbs, of course, much of the job market is supported by the Feds (either directly or by contract). It tends to act as a buffer. Until the job market tanks nationally, DC tends to do alright, employment-wise. I have noticed that people in home contracting business are slow. Effect of the slower housing market. They were busy, busy when people were buying houses and flipping them. Now, not so much. Otherwise, I'm not hearing any complaints. People are worried about prices of gas and worried about the plummeting values of their precious real estate. There were also those who jumped into being real estate brokers and made big bucks, who aren't able to do that now. But, otherwise, it appears if you have your job, there's no panic for now.
That's just what I'm seeing.
July 2, 2008 3:05 PM | Reply | Permalink
The Fed Gove is recession proof -- you always need people slopping money around. ;-)
July 2, 2008 9:11 PM | Reply | Permalink
I'm still buckling under the burden of $150,000+ in student loans for me and my wife.
Bring on the hyperinflation!!!
July 2, 2008 6:57 PM | Reply | Permalink
What on earth did you study at $150K of loans??!?!?
And how long did you study...?
Most loans like that are associated with medicine and law... where there is a decent shot of paying the money back.
July 2, 2008 9:12 PM | Reply | Permalink
$150K for two people doesn't seem like that much to me... it's what, about $40K/year for private undergrad tuition, $20-30K/year for public out-of-state tuition, and maybe $10K/year for public instate tuition. So it would be easy to pay $30K/year, which, at four years of undergrad for two people, works out the $240K, even without an advanced degree.
Then again, I just looked at Allsburg's profile, and it lists three advanced degrees.
July 2, 2008 11:51 PM | Reply | Permalink
That's assuming *all* loans. But usually if you are that poor, the school helps with work-study, etc.
Also, it leads to an important point: go learn something valuable at college -- it's not a place to "find yourself". There are cheaper ways of doing that!
July 3, 2008 12:20 AM | Reply | Permalink
If total expenditure is $240K and total debt incurred is $150K, that's not assuming all expenditure is covered by loans. Just to be clear.
I think the most important things someone can learn in college are:
Anything beyond that, including subject-specific knowledge, is less important, unless you're planning to go into academics. In my opinion, which apparently is not humble tonight.
July 3, 2008 3:56 AM | Reply | Permalink
Oh, just realized I should probably bring this back to Codegen' main point, so here's how I'll do that:
How does education relate to longer-term economic health? As a society, what can/should we do?
July 3, 2008 3:58 AM | Reply | Permalink
The environment isn't low-risk... it's costing a helluva lot of money!
July 3, 2008 4:02 AM | Reply | Permalink
I feel Allsburg's pain and don't understand why he's praying for hyperinflation. Could it be he's insulated with all that drool?
Would that I could produce drool in those quantities.
July 3, 2008 1:01 AM | Reply | Permalink
Apparently the baby flunked economics!
July 3, 2008 4:03 AM | Reply | Permalink
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