Category — Politics and Economy

Filled up the gast tank with premium gas at $3.65/gallon. I think it was that price sometime last winter I believe. It is about 40¢ off from the peak in the summer time. That works about $4 less per fill-up. Does not seem like much but over a month that works about $30 less for gas for two cars. That means we can eat out one more time for the month.

Not sure how long it will last though. A few more tropical storms in the Gulf of Mexico or more disruption in Nigeria or Iraq and we are back to $140/barrel oil prices again.

Saw the list of the 600 Starbucks location that are closing in the United States over the next several months. With 12 locations scattered throughout the city with most of them opening in the past three years, it was with some surprise that the only location Winston-Salem location closing is the one at Harpers Commons shopping center. When we lived in that area of the city, I used to frequent that location regularly.

As far as shopping centers go, this is a good one. Anchored by a Harris Teeter grocery store, there is a good mix of restaurants and shops and services there that always brings in a crowd. Like many people, a typical time there would be going to one of the restaurants (Japanese, Deli or Mexican), followed by a trip to the grocery store for the week’s groceries then pick up a snack whether it be a coffee & pastry from Starbucks or ice cream for the kids from Cold Stone Creamery to take home.

Not sure why this location is closing because it seems that traffic was always steady in the evening and weekends but there is probably a good reason for it.

Seems typical with the economy in a virtual recession that we are seeing more businesses especially in the food trade closing shop. Higher food prices and the cost of the gas are just two of the factors that are leading to this troubled times. The Cotton Mill restaurant, an upscale restaurant featuring Southern cuisine and located at the Brookstown Inn, is closing shop this week. Run by the same people behind Sweet Potatoes restaurant on Trade St, the Cotton Mill was done in by poor location and timing. People will not go out of their way for expensive meals right now. Had the owners persisted in making a go of it there, it may have cost them Sweet Potatoes as well and that just can not happen as that restaurant is a true gem of downtown dining.

Fabians is gone again, victim of higher food costs. There are others though not closing as of yet, are teetering. It will remain tough in the food trade for awhile here in Winston until the economy turns around. I just hope that for all of the hard -won success that the downtown restaurant program has brought to Winston, that it does not all disappear in just a few months.

No one denies that we are in an economy that is in some difficulty. The degree of difficulty you are encountering depends on where you live in the United States. Here in North Carolina, I figure we are right now in the middle of the pack… not too bad but not the best either. Of course, this situation could change very quickly.

So what would it take for the economy to rebound. The usual solution is that people will get laid off, the government lowers interest rates, companies lower prices and then people start spending again. Yet, that recipe for success is unlikely to work again any time soon. First of all the government through the Federal Reserve has lower the cost of borrowing as low as it can. The effective rate is 0% when you factor in inflation and the key point there is inflation.

Usually, when corrective factors are applied to an economy in recession, it is because inflation as a factor is usually minimal and for the past two decades or so, inflation has been historically low for a long stretch. Not now, though.

Everyone knows that the price of gas is at all-time high times. But slightly less talked about is the price increases at the grocery store. If the cart seems to be getting less for the money, then that is probably true. High fuel prices are responsible for a large part of that, for the transportation costs factoring in along with fertilizers made from petroleum and even the bio fuels which are consuming large amount of corn which would have gone to feedstock for cattle and poultry which means higher costs for meat.

What all of this means is that people in such inflationary times are going to have less to spent on other consumer good which means that the big engine of the US economy, the consumer can not be relied on to get the economy out of the rut.

But getting back to the grocery store.

I do most of the grocery shopping for the family which came out the fact that I used to do most of the cooking for the family. Since Andrea has been home for the past few months, she has done most of the cooking but I still do the grocery shopping.

I have been quite aware that in one way that manufacturers are trying to hold the line on their food prices is making their products smaller. I think the more well known of grocery shrinkage is the ice cream container which has shrunk by 10% for many brands. But not all items lend themselves to shrinkage and that means prices go up.

Beef is nearly impossible to buy now with prices at $8-12/pound for basic cuts. Forgot about steaks unless they are on a sale. Bread costs more. Milk costs more; I recall a 2qt container was about 2.69, now it is 3.19. Produce is out of sight; corn, salad greens and the list goes on.

There is not a lot I can do about the prices. Not much I can do about the grocery items I need every week if I want to keep my family healthy. But I can change the way I shop.

First of all, I have to avoid impulse buying. It is a bad habit of mine that when I am at the store to pick up things that look interesting to try out but ended up in the cupboard or freezer unused for quite awhile. If we actually set down a menu for the week and buy groceries to the menu, I think that would remove unnecessary items. Of course, the downside is that you lose some flexibility in doing something different from what you have planned. Related to this is buying things for a recipe that you would not ever use anytime soon again. Spices are the real offender here. A bottle from the shelf goes for $3-4. That is a luxury that I can not afford anymore considering that like most people, only a dozen or so spices are regularly used. Perhaps, it is time to grow my herb wheel.

It would not hurt if we scale back on the junk food snacks. I think my cart sometimes is half filled with too much snacks and not enough real food. It still come down to setting down a menu and then translating that menu into a proper list.

Another problem we have is that I am a heavy coupon user. Sad to say, coupons have not been useful now as they were in the past. If there is any time for coupons, it is in this sort of economy. Anyways, one problem with coupons is that sometime they like to introduce new things which I sometimes buy. This is called buying to the coupon rather than to the need. I need to stop doing that and I focus on what is on the list.

We are pretty heavy user also of private label brands. Quality is never as good as the most popular manufacturers but the price just can not be beat. Even with coupons, popular brands still are much more expensive than the private labels. There are some things I will not compromise on like laundry degerent but the greater limitation is that there are for the most part, no private label alternatives to many of the things we buy.

A good thing to do so to remain on track is leave all the cards and checkbooks behind and just take cash to the grocery store. You can not spend what you do not have on hand. Far too long, I toss something into the cart with the point it is only $1.25. Thing is ten of those sort of items end up adding $15-20 to the overall cost of the cart. Staying focus on what you can afford requires effort and being constrained by the amount of money you have on hand does help.

One option for us use a warehouse store like Costco or Sam’s Club. For items like paper products, we have found it useful but the problem I have with those stores is typically, I overbuy and get things like puff pastry appetizers that we really do not need and things like 2000ct of vitamins that would take months to go through. If we are going to shop there, we have shop smarter.

All of this will help us in dealing with the grocery bill but in the end, we will have to simply downscale our eating habits. More pasta, less meat. Smaller meals, no more feasts. Less snack and an emphasis on eating healthier. Waste less especially on expensive produce. We probably will not realise a lot of savings or none at all if grocery prices keep rising but at the very least we can keep them under control.

It has been 10 days since gas prices were last raised at the local gas stations in my neighbourhood.  A sign of a price reduction to come?

Well, if there is a price reduction, it will be a small and a temporary one if the past years has been any indication.

Since the era of $4/gallon gas is upon us, people are wondering when $5 gas will come. That is hard to say as there seems to a ceiling of sorts on the price of oil at $140/barrel. People are cutting back here in the United States on their driving but whatever slack on demand is generated is more than offset by increased demand in China and India. Production right now is flat and it does not seem that a large increase in production is going to happen any time soon. The long-term movement on oil appears to be upward.

The wildcard is disruption in supply. A terrorist bombing in the the midde east, civil unrest in Nigeria or a hurricane in the Gulf of Mexico can drive the overnight price of oil by $10 overnight. My biggest concern is a hurricane in the gulf states not so much for oil production but to refineries. When hurricanes Katrina and Rita hit back in 2005, gas prices increased immensely not because of oil supply but diminished refining capacity. Capacity is still tight and one refinery taken off line for any length of time will cause an immediate at the pump.

Going to be tense around August-October.

Note

It’s summer time!

Start Slide Show with PicLens Lite

Well, nearly lost another one the other night. Christen’s television was acting up and started to block part of the screen with a black video box. Could not figure out what was the problem. It was a relatively older television which barely functioned when everything seemed to be working. Given this situation what were we do?

Well, we buy another one. We could have sought to repair it but why bother when you can buy another one for about the price of a repair. At Walmart,a basic television can be for little as $140.

Far too often, when something breaks down, we find it more expedient to just buy another one when a repair could have fix it for far less but generally we rationalise it by believing we get something with more features with better quality at a cheaper price than the one we had previously. Why is this so?

Well, as the centres of manufacturing keep moving to China and other parts of Asia with their extremely low wage rates, the prices of electronics, furniture and other household items keep going down. The quality of the items is just as good as before at prices that from year to year seem only to go down.. In America, relentless materialism requires that we get everything we can to make our lives feel complete otherwise we are failures by whatever standard society feels it needs to judge our success. Hence, the need for the latest and biggest SUVs, big screen TV’s, houses that in other eras would be considered mansions or summer chateaus even to the relatively inexpensive iPod players. Even at the lower prices, people in their drive to get it all NOW become indebted to their second mortgages and credit cards. At some point, the reckoning will become due and with the imploding home mortgage and credit crunch situations in the economy, I think the time has already come.

So we keep throwing out perfectly fine items or fail to repair the items we now because we need to spend more on items we should not be able afford but we get them anyways. When we moved into our new home, I cleaned up the garage of all of the old items we did not need anymore. I think I threw out 5 personal stereos, 2 televisions, 3 VHS machines and 2 DVD players. None of it was very expensive when we bought it and to us it was not worth the while to have it repaired.

I can not begin to think how much we have spent in the past several years on items we keep replacing over and over. We do not save for future needs nor do we consider what to do with all of these things. Goodwill has done quite well by us in the past few years.

Perhaps with this recession we are now in, we can take a breather on our rampant consumerism. If something breaks or becomes damaged, just let it go and do without it for awhile if it is not that important. Perhaps by doing without something we can discover something else which we may have forgotten. We neeed to take stock in what we have. Indeed, by any criteria, even the poorest of us now have items that our parents and grandparents could only dream of having. perhaps we should consider ourselves fortunate that we are so rich as a society that we can dispose of such things that others in the world could only dream of.

So much waste.

No question this is a rough time for home sellers. A recessionary economy, tightening lending requirements along with declining consumer confidence are all making for a definitely marketplace.

While Winston is not Florida or California in terms of a collapsing housing market, it has been affected by the broader trends in the current economy. Which makes me think that some people just do not realise that perhaps their homes may not be worth as much as they think it does and that whatever price they set it at does not reflect market reality.

I say this because I am still getting daily updates from our realtor through whom we bought the house we are now in. If a new listing comes onto the market or there is a price change then I will see it listed.

First off, I am seeing some price reductions in the listings. Homes that were originally $174,000 are now selling $10,000 to $14,000 below their original selling price.This is probably right as it is going to take a lot now to get people interested in seeing and buying a home now. What surprises me though are those people who just take $100 or $400 off the price. I am not sure what they are trying to accomplish. Any vigilant house hunter will know the history of a listed property and trying to fool people with a different price point like the old $7.99 prices in the store which is suppose to make you think that an item is $7 and not $8 in value just is not going to work.

Then there are those who establish listing prices without checking what other properties are selling for or are ignoring the advice from their selling agent who should know what houses sell for in the area.

While I think I could have gotten our house for a bit less if I held out for a bit longer, I think the price we paid and the deal we got was a good one. Looking at the listed homes that are selling at the price we paid makes me think people have an inflated view of their house’s worth or I have gotten a better deal than I thought. Thirty year old ranch houses on the outskirts of town should not be the same price as my recent two-story home located in a well-developed neighbourhood. Same for three bedroom homes with 30% less square footage in some of the new subdivisions. They are going to have to do better when it comes to selling their home if they want to do it right now.

Then again, they may not have to reduce the price of their home. If there is no compelling need to sell the house like a job transfer, it may be to their advantage to hold out for more because at some point the housing market will recover. If the house fits their current living needs then why sell in a declining market? In many ways, these sellers will help contribute to setting a floor for the market. Just down the road from us, there was a house that was listed at the same time are our house was.From the time we first saw it and then after we bought our home, the price never changed which was just a bit less that we paid for our home. At some point, they must have given up on selling it because the For Sale sign is no longer there. But whatever compelled them to list the house in the first place, it should compelled them to re-list the house once more when the housing market improves.

Still, if you want to sell a house right now, you have to make some serious decisions on what the market will allow you to list the home in order to make it move not what you think the house is really worth. Otherwise you ar setting yourself up for a big disappointment.

It is a long stretch til the Pennsylvania primary on April 22nd but I feel that somehow this Democratic presidential process should be wrapped up before then. Things are getting too ugly right now between Hillary Clinton and Barack Obama and the collateral damage to the party’s chances in November may be too hard to overcome to secure the White House.

Thing is though as that piece by John Vandrei and Mike Allen at Politico.com amply demonstrates, there is no real way for Clinton to win the nomination through the normal process i.e. through delegates. Obama’s overall lead in delegates may not be overly great but it is substantial enough that winning just a few of the primaries still on the calendar like North Carolina and Oregon will be enough to deny her the delegates she needs to overcome the deficit. Yet she soldiers on and through her surrogates keeps tossing grenades at Obama to the effect that one wonders if she is thinking that if she can not get the nomination, then she will make sure that Obama will never occupy the White House.

The personal attacks along with the Reverend Wright controversy has brought up Obama’s negative ratings though it seems from the NBC/Wall Street Journal poll released yesterday, the after effects of Obama’s rough week has been limited to some degree. But just as the controversy starts dying down, Clinton brings it up again to draw away attention from the issue of her creditability when she highly exaggerated the circumstances of her trip to Bosnia in 1996.

Then there is all of the other noise going on around the campaign like prominent Clinton supporters sending off a letter to House Speaker Nancy Pelosi generally to the effect that if she did not play ball with them, then they will pull their support from the party in the fall. Needless to say, when this letter became known, it did not cast the Clinton campaign in a good light.

… and the Pennslyvania primary is still several weeks away.

Not sure how much more the Democratic party can take of this. The media is somewhat complicit in this as it needs to talk about something during this quiet period. Consequently, every mis-statement, gaffe, or controversy will be played up as a significant turning point in somebody’s campaign.Yet as seen in polls released this week, the Wright controversy has only mildly damaged Obama among Democrats. How the fall campaign from Republicans handle this remains to be seen.

Wish she would just go away by graciously conceding and leave the nomination in Obama’s hands giving him opportunity to build his case for the whole nation on why he is a better candidate than John McCain. But it looks like she will not and will fight to the bitter end, Democratic party be damned.