It's the Gas Prices, Stupid!

I saw things within my personal economy starting to go south back in 2004 when gas prices following Hurricane Ivan shot up 50% within a month after the storm hit. Most people did not seem to care back then because it was seen as a marginal increase, like the cost of milk and bread going up.

Then came Katrina in 2005 and gas prices went through the roof. Even back then, no one seemed really to care. They bitched, of course, but paid the $3.00 plus per gallon. I should actually say they charged their gas. After all they needed to get to work, to play, and to the soccer fields with their ungrateful children. These higher gas prices stayed around for a few years reaching their peak in 2008. By then the damage was done.

Meantime, food prices soared, cost of living soared, adjustable rate mortgages adjusted up, and suddenly, almost overnight it seemed, the economy began its free fall.

Why? Well, people had maxed out their credit cards buying gas for themselves and their ungrateful teenage/college age children; they maxed out their credit cards to buy groceries; some even maxed out the available equity in their homes for non-essentials such as cellular phone bills, eating out, going to the movies, etc...

As a result of all this "on-time" expenditure, mortgages went unpaid, credit card bills went unpaid. When people started losing their homes then they screamed. Only, they screamed for mommy and daddy government to come to their rescue. What they should have been doing was dropping non-essentials, like cellular phones, eating out, and going to the movies for starters. But the majority of the American people were unable to so they asked for a handout.

You see, Americans think that a cellular phone is now an entitlement. Something they have to have. I never thought of a land line phone this way and I'm sure they didn't either.

Also, Americans couldn't stop eating out because the majority don't even know how to cook at home anymore. Unless its something they can pop in a microwave, but they'll tell you that gets old and boring after awhile.

Recently, a certain media mogul stated as one of his indicators that we are passed the low point in this so-called recession was that the movie industry has boomed throughout this bad economy. Well, Sir, I recall the Romans enjoying their bread and circuses as Nero fiddled while Rome burned. No, people going to the movies is not a sign of an improving economy. It is a sign that people need to escape from the reality that this economy is going to tank even further.

I, for one, do not believe we are in a recession. I believe we are in a depression, unfortunately most will not agree with me until they see bread lines rather than lines at your local electronic store for the latest gadget.

Now, here we are approaching the summer of 2009, and gas prices are rapidly rising again. As bad as our economy is right now, and even if it wanted to improve, it cannot, it will not survive $3.00/gallon gas come Memorial Day. Oh, there may be just enough available credit to get people through this summer by charging gas again, and if they do I expect that by October we will see the Stock Market plunge to below 4000, and only then will America learn that she is in a full blown depression.

What a shame it is that our country has to go through that again. Remember, government throwing money at the last depression DID NOT get us out of it World War II did. Unfortunately, most of us do not have the guts to fight another world war.

So I ask you. What will bring us out of the next depression?