Everyone's Sad About Money, Says CNN

By Bethany Jones

Sunday, June 1, 2008

After a long absence, yes, I'm back.

Unfortunately, I haven't spent the last year in China or doing anything spectacularly amazing; I've simply been finishing up the last pesky requirements for that English degree, which I received two weeks ago from the University of Hawai'i.

Things in Hawai'i are the same as always: sunny, then rainy, then sunny, then "voggy," which is like smog, but caused by volcanic pollution, and it's a nightmare for allergies. It's swarming season, which means there are termites everywhere. And of course, gas prices are going up here, just as they are on the mainland.

I found a recent article from CNN to be particularly un-insightful about the entire issue of gas, money, and debt:

That's exactly how Chris Ackerman feels. He said that he and his wife, who live just outside Seattle, find that their paychecks no longer cover their rent, student loans and daily living expenses. That is forcing the young couple to turn to their credit cards to make ends meet.

They've already cut out much of their entertainment and trips to visit her family and friends 30 miles away. If gas and grocery prices continue to rise, Ackerman, who works for an importer, said he'll have to stop contributing to his 401(k) plan. He doesn't see many other options.

"The worst part is looking to the future," said Ackerman, 25. "What if everything keeps getting worse. That's the scariest part. Is my grocery bill going to double again? What will we do?"

What will you do?

1) Move to a cheaper apartment.

2) Completely stop eating out and going to movies.

3) Start cooking from scratch.

4) Stop using credit cards.

5) Get another job.

There's always *something* that can be done, but it's usually a matter of whether a person is willing to adjust their lifestyle and habits. There are hundreds of websites and books dedicated to living simpler, less expensive lives. Even reading just one book on the subject can help drastically reduce grocery and electric bills.

I think I'm always a little bit surprised when people freak out at the idea of rising prices and "omg what am I going to do?" No, I don't like paying $4.11/gallon for gas, either, but that doesn't mean the world is ending. Higher prices simply mean that fast food and eating out are quickly becoming things of the past as fewer and fewer people are able to afford going out.

The thing that's most interesting about the news article above is that the author offers no solution at all to the problem. The article simply states over and over again that people are sad that they can't afford things anymore. Another example of a "sad, American family" used in the piece is a couple who had to give their teenager hand-me-down clothes for the summer. Wow. How tragic that someone would have to wear *used* clothes.

I also find it problematic that the author of the article doesn't address the problem of using credit cards to "stay out of debt." Isn't that completely counterproductive? Wouldn't it be better to get another job or cut back in other areas (such as going to the movies or out to restaurants)?

I know it's not as simple as it seems. It's no fun to have to brown bag it to work, or to work longer hours than your peers, or to stay home on the weekends. But wouldn't these options be better than perpetually pushing oneself further and further into debt?

One interesting culture difference between Hawai'i and the continental U.S. is that it's not uncommon for children to live with their parents until they are in their mid-to-late 20s. In fact, I know people who are 30 and still live with mom and dad, simply because it's ridiculously expensive to rent or own a home here. It's not possible to find a 2 bedroom apartment for less than $1200/month on Oahu. When I first moved here, after living in my $500/month apartment less than 100 yards from the KU Campus, no one believed me that I was able to live on my own "without help."

While I'm not advocating living with mom and dad until you're 30, I think that as Americans, we are used to being very comfortable and being able to do everything we want to. Now, as it's more difficult to make money last, we're being forced to reconsider our priorities and what we want vs. what we need, and it's not fun, but it's definitely a wake-up call and causing us to examine our lifestyles vs. those of other cultures.

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Posted by wbabbit (Will Babbit) on June 2, 2008 at 9:16 a.m. (Suggest removal)

...what's with the ' ? Let me guess, us culturally ignorant mainlanders?

Posted by TheEleventhStephanie (anonymous) on June 2, 2008 at 10:50 a.m. (Suggest removal)

Downsize now! Beat the rush!

Posted by DOTDOT (anonymous) on June 2, 2008 at 11:02 a.m. (Suggest removal)

Babbit:

That's Ma'inlanders to you, buddy.

Posted by feeble (anonymous) on June 2, 2008 at 11:40 a.m. (Suggest removal)

"It's not possible to find a 2 bedroom apartment for less than $1200/month on Oahu."

Sounds comparable to prices in DC, NYC, LA, SF, etc. I know we have friends who are happy to pay $1500 for a 2 bedroom in the Georgetown area, and my brother, who lives in Greenpoint, pays something similar for a 1 bedroom.

Posted by BadEnglishMajor (Bethany Jones) on June 2, 2008 at 12:55 p.m. (Suggest removal)

"Sounds comparable to prices in DC, NYC, LA, SF, etc. I know we have friends who are happy to pay $1500 for a 2 bedroom in the Georgetown area, and my brother, who lives in Greenpoint, pays something similar for a 1 bedroom."

Yeah, makes sense. I think most coastal cities or any major city, really, has the higher prices. Makes me miss the midwest, though.

Posted by alm77 (anonymous) on June 2, 2008 at 2:27 p.m. (Suggest removal)

Bethany, glad to see you back!!

Yeah, it is interesting that suddenly the sky is falling when we all can't have our luxuries. We're still better off than the majority of people on the planet in our well constructed homes with central A/C, and our 2 vehicles per family. Not to mention the readily available supply of food, clean water and medicines. But nobody wants to talk about that...

The other day my husband and I were discussing gas prices and globalization and as I understand it, the prices of food and gas are going up due to demand. Who's demand? The demand of countries who are experiencing a steady increase in their quality of life. Growing up we always heard about third world countries and feeing poor children. Well, now, those children are growing up, getting jobs, becoming productive and providing for their families. We should all be happy about that, right? So, if I have to pay $4 a gallon for gas because of some family in India gets o live a lifestyle not unlike my own, then so be it. I'll happily pay the price.

Posted by godjilla (Jill Ensley) on June 2, 2008 at 7:11 p.m. (Suggest removal)

I'd wager it isn't merely demand, but gas prices affecting food prices, weather affecting food production, overpopulation, and a general sense of the desire to emulate our Western lifestyle of consumption, which cannot be sustained. Rest assured you're not paying $4 a gallon because the world's poor is getting a giant raise in their standard of living.

That said, on a global scale, we've enjoyed low gas prices far longer than most nations. It's good that you're willing to "sacrifice", but don't think of this in terms of martyrdom.

Posted by godjilla (Jill Ensley) on June 2, 2008 at 7:12 p.m. (Suggest removal)

That was in response to alm77.

Posted by alm77 (anonymous) on June 2, 2008 at 8:08 p.m. (Suggest removal)

"Rest assured you're not paying $4 a gallon because the world's poor is getting a giant raise in their standard of living."

Really?

From British news "The Guardian" ( http://www.guardian.co.uk/business/2007/... )

"Reporting an 80-million drop in extreme poverty in the two years to 2004, the Bank said the improvement was entirely due to the rapid expansion in Asia's two most populous countries.

It said that since 1990, there had been a 260 million drop in the number of people living on less than a dollar a day, but this was more than accounted for by the 300 million taken out of extreme poverty in China."

Or an article linked from NPR to foreignpolicy.com

"The middle class will almost double in the poor countries where sustained economic growth is lifting people above the poverty line fast."

Here's the whole article which deals with the subject of both food and energy. I particularly like the final paragraph: http://www.foreignpolicy.com/story/cms.p...

Posted by CarterFaucheaux (anonymous) on June 2, 2008 at 11:07 p.m. (Suggest removal)

It doesn't matter since the world is ending in 2009 anyways. The Mayan calendar says so and primitive people didn't even have a word for lying.

Posted by El_Borak (Bill Hoyt) on June 2, 2008 at 11:59 p.m. (Suggest removal)

"In fact, I know people who are 30 and still live with mom and dad"

Don't even think about it...

Posted by godjilla (Jill Ensley) on June 3, 2008 at 12:43 a.m. (Suggest removal)

Yes. Really.
The World Bank isn't exactly the most upstanding of organizations. And then there's this bit, "but masks entrenched poverty in Africa and Latin America" and this "In sub-Saharan Africa, extreme poverty had risen by 60 million" That's the problem with commerce and statistics, you can pick and choose whatever suits your line of thinking. Business pages be damned.

In my book, "rapid expansion" doesn't equal a higher standard of living...but maybe I'm just using the term wrong, or not in the classic economist sense. Teaching the world to consume won't solve problems but create more. Until there is a globally accepted (and used) indicator of actual life improvement/happiness over mere wealth accumulation, we'll all just continue to run the ship into the ground.

In essense, mo' money, mo' problems.

Bethie's right (betcha thought I'd never say that). It's going to take some major adjustments from all of us, especially those of us living in countries who've had the lion's share of consumption (energy, resources, materials, etc). And that means much more than simply paying $4 for gas.

Thanks for the links though. The last one was interesting. Seems the last paragraph is meant less as soothing "It Will All Work Out" and more, "It's Worked Out In The Past, It Might This Time Too...with some adjustments from everyone."

Carter, I thought it ws 2012. Shit...I've gotta get some things done!

Posted by BadEnglishMajor (Bethany Jones) on June 3, 2008 at 1:34 a.m. (Suggest removal)

"Bethie's right (betcha thought I'd never say that)"
Woohoo :) Maybe next time I come to Kansas we'll even go out for drinks...or stay at home and make our own.

Posted by godjilla (Jill Ensley) on June 3, 2008 at 9:27 a.m. (Suggest removal)

Sorry about the Bethie stuff. I should really learn people's names. Heh. Funny, I was just thinking...how the hell am I gonna learn how to make my own bourbon?! Might just have to deal with bathtub gin. Also, I'd be down with a drink or two. Maybe we could get into a raucous fake fight and make the news! ;)

Posted by alm77 (anonymous) on June 3, 2008 at 11:29 a.m. (Suggest removal)

"we'll all just continue to run the ship into the ground."

Unless we don't... which I don't think we will. The more kids being raised with food in their bellies and working parents, the more brains working to solve the problem of sustainability as they grow up.

Even with the 60 million increase in African poverty, there was still a net gain overall. (and this particular region is on the radar of activists everywhere)

My point is that when I go to the pump, it's easier to accept if I remember that 260,000,000 less people are living in poverty than when I was paying $2 a gal.

I understand that it's not sustainable and if we were to flip a switch to cause everyone to be middle class all at the same time, then yes, there would be a problem, but so far the only problem, as Bethany points out, is that we (something like the world's richest 3%) have to give up a few luxuries. In the grand scheme of things, BFD. That's all I'm saying.

Posted by godjilla (Jill Ensley) on June 3, 2008 at 6:45 p.m. (Suggest removal)

By that rationale, you'd have to consider there will also be more kids being raised with unhealthy, highly processed, pre-packaged, sugar-laden food as well as being drugged with television and rampant wants and desires for useless things. More people does not necessarily equal more intelligence or thoughtfulness. And who's to say that all those raised-up masses are going to focus on sustainability anyway? Just because it's a hot topic now, doesn't mean this is the new world order. What about the sustainability of Sustainability?

Sure, let the activists take care of Africa. Shit, didn't Bono fix it already?

And again, I applaud your selflessness, but don't see the DIRECT correlation. The switch is being flipped, not suddenly but just slow enough for us to adjust, and maybe we will. Or we won't notice and it will be too late when the massive food, energy, water shortages hit. It's going to take more than "a few luxuries". You can't raise the global population up to middle-class (whatever the hell that means in context of various countries/cultures) and not expect some serious reprecussions. I know you know that, but the problem lies in thinking it will be sudden. That 3% you speak of is going to have to do some major adjusting, and I don't think many will be willing to be so altruistic. I'm talking upper class here, super rich. Maximum wage cap? Why, that's not the 'Merican way.

So, my point is, stop thinking about who you're helping when you go to the pump and think about who (and what) you're hurting. It's not the slap to the wallet we need to be thinking about, but a whole new way of living. Paying more so people can buy more, so we can pay more to buy more is not a long-term fix.

Posted by DOTDOT (anonymous) on June 3, 2008 at 9:52 p.m. (Suggest removal)

"What will you do?
1) Move to a cheaper apartment.
2) Completely stop eating out and going to movies.
3) Start cooking from scratch.
4) Stop using credit cards.
5) Get another job."

Well, the Ackermans are lost, but even if your situation doesn't call for 1 and/or 5, everybody can do 2, 3, and 4 if they haven't already. The results not only save you money, but they facilitate longer erections and frequent orgasms.

Posted by alm77 (anonymous) on June 4, 2008 at 10:48 a.m. (Suggest removal)

"And who's to say that all those raised-up masses are going to focus on sustainability anyway? " - Necessity is the mother of invention. It's coming and will continue to come to a point where we *have* to think that way. Maybe I have too much faith in humanity.

Okay, Jill, I'll concede. I'll sell my house and cars, buy a few acres for my grass hut, chickens and garden and get a horse and buggy, so that the rest of the world can simply live. And I'll make sure to spread the word so all my friends do to. ;)

Posted by OtherJoel (anonymous) on June 4, 2008 at 1:02 p.m. (Suggest removal)

"The results not only save you money, but they facilitate longer erections and frequent orgasms."

I almost shot spaghetti through my nose reading that.

This whole thing just plain sucks. If we're responsible and reign in our spending, jobs will go away. And it won't be the CEOs. It will be the restaurant, retail, and manufacturing folks -- who have a genuinely rough time already.

The world economy is so dependent on consumption, the West just plain screwed either way. We either prop up this shell of an economy with more debt like we have for the past three decades, or we let it fall apart by exercising common sense with our personal finances.

In the long run, I do believe it needs to fall apart. Recessions/depressions are a natural and necessary evil of capitalism. Markets must correct themselves, but I also believe there are some social benefits. More attention is paid to corruption, governments are reminded that some sensible economic controls are actually necessary (people suddenly remember that Adam Smith was against extreme concentrations of capital! -- not that his word is scripture anyway, but that's another topic altogether...), and people spoiled by general affluence suddently have to learn restraint and start thinking long-term (generally as a means to get out of the mess they're in).

The biggest silver lining I see here is that maybe we'll actually make real progress in terms of renewable energy. I do not think we've reached the point where we have real, practical solutions. Ethanol and biodiesel aren't working out so well since it requires so much energy (and farmland) to produce. Fuel cells are insanely expensive still, and the infrastructure will take decades to put in place. Electric cars still run on non-renewable energy, largely from coal and nuclear sources,* and batteries are just now getting to where they last long enough to be practical (I do predict this is the best option we have for the short-term). Wind and solar haven't really caught on, but could probably be improved if we make it a priority.

But if it gets bad enough, we'll (hopefully) start allocating more resources towards research in this area, and it may push us into finding real solutions. There's still a bit of a belief in human ingenuity left in me -- it's gotten really small, but it's still there for now.

*A lot of people consider nuclear energy "clean," which baffles me. We can't go on indefinitely creating all of that waste. Hiding it in barrels underground near fault lines or slipping traces of it into consumer products can only last so long.

Posted by godjilla (Jill Ensley) on June 4, 2008 at 2:47 p.m. (Suggest removal)

alm77, I know you meant that as a joke, but sounds like a damn good idea to me.

Posted by alm77 (anonymous) on June 5, 2008 at 9:25 a.m. (Suggest removal)

I have a question. What about dams? Do they not produce electricity anymore? I never hear anyone talk about it anymore.

Posted by RobMartin (Rob Martin) on June 5, 2008 at 11:57 a.m. (Suggest removal)

Few comments.

Dams are ugly and destroy ecosystems. Hoover is one example. The Colorado River is now so cold below the dam, whole species of fish (fishes?) no longer live there.

As a commuter to OP, I am fairly sensitive to gas $, even if I do get 25 mpg. I also work for one of the top 3 trucking companies in the US, so diesel costs is our single largest cost of business.

If I could provide a link to this article from Transport Topics I would, but you have to be a subscribed member to view it online. It is about the growing gap between diesel and gas costs. Every single thing you own was carried on a truck at some point (with the only exception of natural gas in your home - pipelines). Some of this article is highly interesting. It states:

"There's a lot of excess gasoline in the world, but there's not an excess of diesel" Bob Costello, chief economist of American Trucking Assoc.

Dept of Energy statistic: Per 42-gal barrel of crude, 19.4 gallons of gasoline is made and 7.8 gal of diesel. 14.7 other products (jet fuel, LPG, heavy fuel oil), and 2.7 other distiallates (heating oil). Yes, the total is greater than 42 because of processing gains. This mix is fairly fixed unless oil companies COMPLETELY change their processing techniques. They won't do that because:

"A refinery has to look at what profit can be made by refining crude at their record high prices" Douglas MacIntyre analyst for DOE's Energy Information Admin.

He goes onto say that the profit margin for gas is very low, therefore to produce more diesel, they have to produce more gasoline which would have the affect of drive the selling price of gasoline below cost due to higher supply. Currently refineries are running at 85.7% capacity

more...

Posted by RobMartin (Rob Martin) on June 5, 2008 at 12:05 p.m. (Suggest removal)

...continued

alm77 is not that far off. The growing economies, especially China, require more diesel. My company is actively expanding into China and buying state-run trucking companies. 50% of all cars sold in Europe in the last few years run on diesel (it's more efficient). The US actually EXPORTS diesel to these markets which is increasing demand here. The weakness of the USD ($) makes exporting diesel attractive. While we would like to think we are sharing our wealth with the poor, in fact BP, Amoco and others are just really smart business centers.

"Refineries, especially on the East Coast, have found that they could make more profit exporting diesel in recent months to Europe, Asia and South America" Laurie Falter, EIA analyst.

Our fuel problems are a result of at least these three things. Our economy finally getting a correction due to our (everybody's) over consumption and debt. Second, our own demand, justified or not, for fuel. And third, the profit savy oil companies.

I believe hybrid and all-electric is the way to go. Eventually the demand for electric would shift production away from coal and towards wind, solar, etc.

Posted by alm77 (anonymous) on June 5, 2008 at 12:24 p.m. (Suggest removal)

ROBERTO!! Como estas? ;)

Hybrids? What about the battery disposal problem? And electricity is produced by coal.....

And Jill, one more thing, doesn't the prohibitive cost of gas (and everything else) figure into sustainability? Most people are consuming less because they cant' afford to keep it up.

Posted by RobMartin (Rob Martin) on June 5, 2008 at 12:35 p.m. (Suggest removal)

With an increase in all-electric and electricity demand in general, non-coal electricity will become financially more attractive to the masses that don't care about the environment.

Batteries, well, we need to get better at recycling technology.

Posted by OtherJoel (anonymous) on June 5, 2008 at 5:22 p.m. (Suggest removal)

And the I've heard the latest and greatest lithium batteries (check out Phoenix: http://www.phoenixmotorcars.com/vehicles...) can have a life of over 100,000 miles, so that cuts down drastically on the overall waste. When these cars come out, however, you're looking at $50K, but hopefully competition and technology will drive the prices of hybrid and electric vehicles down. It's already starting to happen. Toyota plans to both increase gas mileage and decrease the sticker price on the 2009 Prius.

And the better these batteries get at holding a charge (there are prototypes that go as far as 250 miles between charges), the less overall energy needs to come from your electrical socket.

Plus electric motors are WAY more reliable than internal combustion engines. Only one moving part, no grease, very little wear, etc. -- virtually no maintenance is needed for the motor.

We have a LONG way to go before electric vehicles will be able to haul as much as an 18-wheeler though.

And there do seem to be more viable clean options for the commercial electrical industry than biofuels, fuel cells, and the like.

Posted by RobMartin (Rob Martin) on June 6, 2008 at 3:45 p.m. (Suggest removal)

UPS is already testing hybrid diesels in some large metro markets.

Posted by DOTDOT (anonymous) on June 9, 2008 at 8:52 a.m. (Suggest removal)

"With an increase in all-electric and electricity demand in general, non-coal electricity will become financially more attractive to the masses that don't care about the environment."

Energy independence and environmental concerns can possibly meet somewhere at sustainable alternate power, but I'm not sure. Seems counterintuitive that increased demand in electricity will drive more expensive and experimental energy programs, rather than expedite permits for cheaper coal plants, but I suppose anything can happen.

And the mongo "carbon" footprint left by the manufacture of these batteries might be tolerated as long as they are being produced in somebody else's country by somebody else's children.

Anyway. Interesting article in this month's Atlantic on the GMC Volt program.

Posted by OtherJoel (anonymous) on June 9, 2008 at 9:44 a.m. (Suggest removal)

DOTDOT, I read that Atlantic article -- cool stuff. That same issue has a great article on the psychology of speculative bubbles, and the staggering parallels between now and 1929 (yes, it's depressing, but an interesting read nonetheless). They haven't updated the online content yet, but hopefully they'll post the full article for that one soon.

Everyone's Sad About Money, Says CNN

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