Tuesday, February 5, 2008

Peak Patsies - is here-

Sorry, got another one of those "I can't help it, the news is driving me crazy" posts today-

Everybody is commenting on "the economy" these days. It ain't looking good, as everybody knows. Oodles of people blame it on- oodles of things. I need to add an oodle.

We know about Peak Oil - in spades. Yep, sooner or later, we DO have to hit the end of oil- because we do, after all, have just one planet we can stripmine. Lots of quibbles are possible - oh, we'll find another Prudhoe Bay soon - probably under the Greenland icecap, or the Ross Ice Shelf. Ha ha.

Today, though, we have clear evidence of an unreported, unrecognized "peak" - the actual cause of all the credit collapses going on. And you heard it here first.

We have hit the peak on readily available - fools. Idiots. Patsies. Dupes. Consumers.

Take a look here; NYT- end of spending. Basically - in the USA, in 1989, most of us were "saving" around 10% of our income. The rate is currently - negative.

There are no more savings to stripmine- which is what the credit guys have been doing for decades ("hey, borrow a little more-cheap!- you can always pay it off if you get in a crunch...")

And, to everyone's astonishment- people are reacting. By - not using their credit cards anymore. Living within their income.

The ramifications, for "business as usual" are HUGE.

Even the analysts are starting to get it.

Also today - NYT Markets fall... did you know something like 2/3 of our economy is in the "services" sector? That means stuff where no physical goods are made, or change hands - it's things like the barber, your accountant, the dry cleaner, restaurants- where someone is doing something for you that you COULD do for yourself. Guess what? More people are doing stuff for themselves. (Because they have no money- you think Exxon Record Profits of $40BILLION AGAIN could have anything to do with that? We've talked about their record profits in this blog before- here.)

I've always suspected there was a limit to the "taking in each other's laundry" economy. Something very much like Doug Adams "Shoe Event Horizon." Doug was not dumb.

What it truly amounts to - is a catastrophe for the business world that has so long relied on sales of hyper-inflated real-estate with only imaginary value; SUV's which fill a need -oh, that NO ONE has; and plastic gizmos (thanks Colin) with a) no concept of physics, and b) no concept of human behavior - it's the loss of the target market. Suckers. Ok, not the loss-

But quite possibly the Peak. Sooner, and more certain, than Peak Oil - and with no imaginary new resources under ice waiting to be exploited-

Peak Patsies - is upon us. The end of constant growth; the end of expansion.

Peak Fools. Peak Chumps. Peak Suckers. After decades of uncontrolled strip-mining of this limited resource- the veins have finally given out. The great Patsy Mines are in trouble.

Peak Consumption - perhaps is a phrase that will fly, in the long run. Or Peak Gullibility, if we're feeling cranky.

Wow. Buckle your seat belts.

SGL's comment made a point I'd intended to put in here, and forgot in my hurry to zip off to a chore-

The Patsy Pool has long been considered infinite. We'll never run out of fools - is a favorite saying of pundits across the ages.

Ah, but you see- that's exactly what we've always said about... oil....... North America........ oceans..... and the atmosphere. They're too big to ever be affected by our tiny actions.

It's one more "infinite" resource where we've hit the end; and the ramifications are huge.

And- we need to differentiate between "stupid" - and "fool". I ain't dumb; but I've for sure been a fool, and been fooled; more than once. :-)


DC said...

Yup, the middle class -- what's left of it -- is pretty much tapped out here in the good ol' U.S. of A. The wealthy elite still have plenty of cash to drop on wasteful, luxury items, but they alone can't keep the economy going. Not to worry, though: Bushie is coming to the rescue with a tax refund for middle America to stimulate consumer spending. Yeah, people will spend alrighty -- the nation's 50 million uninsured will pay off some of their medical bills, people getting their meals from soup kitchens will be able to buy a few groceries, and people who have lost their homes to the subprime mortgage debacle will be able to pay their rent for a couple months. Swimmin’ pools, movie stars. The good ol' trickle down, Ronald Reagan, "screw the less fortunate than you" 1980's are coming back with a roar -- I can just feel it. Let the good times roll!

Anonymous said...

It's Bush and Reapublicans again! They've been BURNING fools and dupes like there's no tomorrow! Just look at the scraps left in their own party!

Anonymous said...

well, if ever there was a renewable resource, it would seem stupid people would be it! ;-)


from DECEMBER 19, 2005,
Bubble, Bubble -- Then Trouble
Is the chill in once-red-hot Loudoun County, Va., a portent of what's ahead?

last sentence:
There's another explanation, says insurance agent Joe Kelly over lunch downtown at the Leesburg Restaurant. "They ran out of stupid people."

and more recently, in Barron's, Jan 14, 2008, "Roundtable"

"The consumer went off the cliff without even tapping on the brake lights." -- Mario Gabelli



Greenpa said...

Anon - sure, that's always been the foundation assumption! "There's one born every minute!" and all - but remember; we had the exact same beliefs about the limitless oceans- and atmosphere...

Beelar said...

I think that fools themselves could probably be classed a renewable resource. Two things to note about that, though:

1) It is possible to overexploit and destroy a renewable resource.

2) Fools' money may be less resiliant (i.e. be more easily overexploited and destroyed) than the fools themselves.

(1) Is something humans have in general made a good job of demonstrating. (2) Is a fine but important distinction. You might not lose money "underestimating the intelligence of the American populace", but you can sure lose money if the dupes don't actually have the cash to spend on your snake oil. For those of you who might try applying calculus to this problem, consider also that any one fool might be transformed into a non-fool by lack of money or other hardship (or, if you prefer, "presentation of reality"), either temporarily or permanently.

Anonymous said...

you can fool some people all of the time
you can fool all people some of the time
you can't fool all the people all of the time

enjy the ride ;)