thoughts about the economy

I was thinking about the economic collapse, this morning, but I know there won't be enough time to write about it. It's complicated. So this will be just a jumble of thoughts that might not be very coherent.

Paul Volcker is back. If anybody doesn't know who Paul Volcker is, he's the guy who used to work for the government back in the eighties - I forget whether it was the Treasury or the Federal Reserve or who it was. But he's the one who was responsible for raising interest rates to stop the inflation of the seventies. Well, he has now literally been re-hired and put back on the job. I thought it was a joke when I read the article, but it's the truth, Paul Volcker really is back.

On North Atherton Street my ex-boyfriend used to have a trailer. There were several trailer parks there, and one by one, they've been bulldozed. They had cheap rent for like $200 a month, and it was the best thing you could find anywhere.

Where his trailer used to be, there are now 'Habitat For Humanity' houses - at least, somebody recently told me that's who built those houses. And, they told me, the rent is now like $1000 a month there. I didn't verify those facts.

The people who originally owned that land decided to sell it because of the real estate bubble. The land became really expensive and they became millionaires by selling it, if I understand correctly.

So nobody can afford to live in this area as well as they used to. In order to be profitable, the rent is really high on that piece of land.

But now, land prices and house prices are supposedly collapsing. (Is it just house prices, or land as well?) This is the part that I don't really know how to explain. I understood it briefly while I was driving my car this morning on the way to the gas station.

We still need cheap houses (like trailers) really badly. That was what I had been expecting to buy, realistically - I thought sooner or later I would probably buy a trailer. So you'd think that since people still NEED lots of houses really badly, then you could build lots of houses and make them really expensive and make the rent really high, because people need them so badly. But that's not happening. Nobody in real life can afford those houses or that rent. They borrow money and they get a mortgage and they go bankrupt, and meanwhile, their factories are shut down and they lose their jobs. And the government puts ethanol in our gasoline and it ruins our engines, so we're spending all our money on car repairs. (Yes, I assume that was caused by genuine stupidity and not malicious intent. But now that I've heard about ethanol damaging engines, I get angry every time I fill up my gas tank, and I feel dread for the day when my reliable Honda starts having one miscellaneous problem after another, and I can't do anything about it. It was particularly damaging to small engines like lawnmowers, weedeaters, etc, and not as severe in things like car engines - but still.)

People haven't adjusted to this new situation. They haven't accepted that they are now taking a huge loss on the land that they bought at a high price. They can't build houses or businesses on it and they can't profit from it and they can't sell it.

What I'm trying to say is that we will soon have a situation where lots of people desperately need houses, and there are lots of really expensive houses sitting around empty, but there aren't ANY small, cheap, simple, realistic houses that people actually WANT and can afford, that are minimal and basic instead of huge mansions. Or rather, we already have that situation - I shouldn't say 'we will soon.'

When the homeless people try to squat in the abandoned mansions, the police will come in and throw them out. And these are going to be middle-class homeless people who saw themselves as 'respectable' just a couple years ago. Meanwhile, I read that even businesses are having trouble meeting their mortgage payments, and the article said that even things like hotels were going bankrupt and shutting down. But in places like Detroit, they have been using the hotels as temporary housing for people who were evicted because they couldn't pay their mortgages. So the hotels will be shut down too?

I read an article saying it wasn't just the McMansion owners that were having trouble paying their mortgages. New businesses are having that problem too. I've seen them all over the place. There are these recently-built retail stores, which appeared only in the past couple of years. It's expensive clothing and things like that. And they are putting those little strip malls everywhere. Those places are now having the same problem with mortgages. They can't afford the changes in the future payments - the payments will suddenly become much higher, just like the adjustable rate mortgages and their sudden increases in interest payments.

There will be these empty buildings at the little strip malls, but the zoning laws say 'You are not allowed to let people live in these buildings.' They are REQUIRED to be run as a business according to certain rules. There's all that space, all that shelter, where people could live, and it could be cheap, and it would be better than nothing. And it would be conveniently close, within walking distance, of other places like grocery stores and fast food. But zoning laws make it so that there is no such thing as 'walking distance' in some areas. You're not allowed to just let people live right next door to a business - in some places. It's not that bad everywhere, but it does affect where things are located and it does make it more difficult to just walk wherever you want to go. It might not really be like that here in State College, but I think it's more like that in some parts of big cities, where everything is required to be a skyscraper-type building. I don't know enough about this topic.

There is this situation where huge numbers of people need things really badly, but can't afford them, and there's this surplus of really expensive stuff sitting there that can't be sold because when it was built it cost a lot. It's not just houses, it's going to be other things, like cars, and land, and factories, and businesses, and everything.

I don't know how bad it's going to be. The collapse is dragging out, longer and longer, and we see one thing after another falling, but still, as you walk down the street, it looks like normal life. (The world isn't black and white - everything is still in color - that's why it doesn't LOOK like the old photos of the Great Depression. :) It seems to take a long time for the economy to collapse. You don't notice it happening all of a sudden. You might not recognize it if it were happening. Mainstream media news is still writing things like 'on the brink of a recession.' We're always 'on the brink' of something, but not there yet. I see phrases like that everywhere - it's almost a recession, on the brink of one, we're expecting one in the future, etc.

Oddly enough, I'm not joking when I say that I plan on learning how to eat worms and whatever insects are edible. I was thinking about agriculture, and hunting, and how it's relatively easy to grow a garden but it's difficult to own livestock, because you need lots of land and you need the government's permission to have farm animals. Zoning laws won't let most of us do that. So meat will disappear from people's diets as it becomes too expensive. This is already happening. I was reading an article about the price of food going up and how people are adjusting their food budgets, and meat is the first thing to go. Yet meat is one of the most essential and healthiest things that we need the most, especially the saturated fats.

You feel foolish whenever you call a false alarm. Isn't it ridiculous to learn how to forage for food?

If you get pregnant on a low-budget diet with hardly any meats, and nothing but ramen noodles or whatever it is that people are eating nowadays, then your children will tend to have more health problems. You have to eat really healthy foods while you're pregnant and nursing. (I never had anything against Ramen Noodles, except that for a year or two, it was all I had available while I still lived with my parents - that, and peanut butter and jelly sandwiches, and Campbell's soup. So I dislike all of those things because I got sick of eating nothing but that.) (I personally am not worried as much about whether I can get healthy foods, but whether I can get all my belongings decontaminated so that my developing children aren't getting a constant dose of poison all day long. Growing medicinal herbs was my attempt to get out of wage slavery and it went very badly wrong.)

Anyway, as people watch this housing bubble and economic collapse, sooner or later somebody is going to say 'Everything would be okay if we just ignored the laws.' It's only 'the law' that made those mortgages too expensive. It's 'only the law' that evicted people from their homes when they couldn't pay anymore. It's only some imaginary paperwork that made it so businesses had to shut down because they were no longer profitable, and they went bankrupt, and they couldn't afford the mortgage payments. People are going to start saying that if only the imaginary paperwork would stop being so harsh, we wouldn't have this problem and it would all go away.

So the next step will be that we start trying to ignore things like foreclosures and mortgages and how much things cost and how much they used to cost and whether we're profitable or not. And it seems like that would be a wonderful solution to this problem. But that's where it starts getting really scary. Because something called 'Reality' is underneath all of that imaginary paperwork, and we're going to start finding out which commodities REALLY ARE scarce and hard-to-find in REALITY, after we start ignoring all the silly paperwork and stop enforcing all those silly contracts.

I'm not saying that we SHOULD continue enforcing the foreclosures. In some cities they've decided that they will stop enforcing them, and they're no longer evicting people from their homes when they go bankrupt. I feel okay about that. Something needs to be done, and I don't have a solution. I haven't thought about it, and my solutions wouldn't be used anyway, since I'm not in control of that situation.

But I have a feeling that's not the end of it. That's not the only 'harsh paperwork' that will be ignored and not enforced. More and more things will be treated as though you can wave a magic wand and make it all go away if only you ignore contracts, and ignore bookkeeping, and ignore those numbers written on the paper, and ignore who owns what. On the surface, more and more things will seem silly and artificial - if only the paperwork was gone, we wouldn't have all these problems.

Some of it is true - a lot of the paperwork represents 'imaginary' and 'artificial' things, like derivatives and all those other strange abstract financial things that nobody understands. But sooner or later, reality COSTS something. This economic collapse is really a few quadrillion pieces of paper being crumpled up and thrown in the trash. Everyone's still trying to adjust their numbers to find out how much reality really costs.

I can't predict who gets hit the worst or which locations will be the best places to live in.

I wish I could explain it better, but I still don't understand it. It's still very vague to me. I wish I could understand Antal Fekete, because he seems like he knows what he's talking about, but whenever he explains things, he skips a step, and jumps from one idea to another, and sometimes he seems to be saying the exact opposite of what I thought he meant, and it's confusing. He really seems to know something. He talks about the destruction of capital, for instance, and how this is caused by decades of falling interest rates. It seems like it means something, but I can't get it and I can't explain it to anybody else. It's frustrating.

I just want to know how bad the future is going to be, that's all. Is it going to be so bad, that even the burger-flipping jobs will be shut down? It's hard to imagine the burger-flipping jobs collapsing, but I want to ask about that possibility anyhow. It just seems like there are going to be lots and lots of unemployed people all trying to flip burgers at the same time. That's why I anxiously wonder about things like what kinds of foods you can eat if it becomes necessary to forage for survival. I really, sincerely don't know how bad this economic collapse is going to be.

I have to just post this since it's time to go to work.