Housekeeping + miscellany:This blogger is about to do a switchover for ISP connection and may be underwater for a while. In the meantime:
- How about Bill Frist's proposal to give folks a $100 tax break in the wake of the high gasoline prices? That sure confirms the stereotype of Republicans: only think in terms of money and taxes, plus unconditional faith in the market and no government action to mandate changes. That's not entirely true. There were some policy issues the Republicans were tossing around, but the predominant message was "money is the solution". As Kevin Drum remarked, "bad optics". No question about it.
- On the gasoline front again, saw an ad for a Ford truck that extolled the high mileage ("best in its class"). Expect more of that. For those who were around in the 70's, it sounds familiar. If the gas prices stay high or go higher, be fully prepared to see large used vehicles being sold for cheap. Thirty years ago, giant cars with all sorts of cool things (back then it was power seats) were going for incredible discounts. Maybe a similar thing will take place again.
- Related to high gas prices: Folks like to point out that the prices are similar to those post-Katrina, which lasted a month but didn't seem to hurt the economy too bad. But now, for a lot of people, the high gas prices are a problem because in the last six months there has been inflation in other goods (food and rent the most notable) which combine to make it a major squeeze for those on the lower end of the economic ladder.
- Related to above: In Los Angeles we've had the first report on television about how people are heading to pawn shops to get money in order to pay at the pump. Sure, it's small scale and might only represent a short-term phenomenon of failure to plan for higher expenses, but it's not a good-news story, that's for sure. Guy interviewed pawning his silver chain to pay for gas in order to be able to drive to a job interview. And Republicans wonder why many Americans are worried about the future? There's definitely a sense of unease.
- The American consumer: Still spending. You thought the end of low interest rates meant less refinancing and therefore less cash being taken out and then spent? There is less refi action but according to blogger Calculated Risk:
Homeowners continued to borrow substantially against their homes in Q1 2006 according to the BEA. Hence the strong increase in Personal Consumption Expenditures (PCE) and GDP in Q1 ... and the negative savings rate.
It's not REFI anymore. It's MEW (mortgage equity withdrawal). Looks like the American consumer will keep on spending until literally there will be no more money to borrow or extract from homes.
UPDATE: Read the
Washington Post's
Reasons Change for Refinancing - With Low Interest Rates Vanishing, Homeowners Take More Cash and be amazed.
posted by Quiddity at 5/03/2006 05:43:00 AM 
