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Six Dollars a Gallon and Lenny Bruce
By David Glenn Cox
“That's great, it starts with an earthquake, birds and snakes, an aeroplane -
Lenny Bruce is not afraid. Eye of a hurricane, listen to yourself churn -
world serves its own needs, regardless of your own needs. Feed it up a knock,
speed, grunt no, strength no. Ladder structure clatter with fear of height,
down height. Wire in a fire, represent the seven games in a government for
hire” (REM)
Of course Lenny Bruce was not afraid, he was too wide eyed and amphetamine fueled with comic energy and in his heart of hearts he never actually believed that they would really pull the trigger and destroy him. Even in all his anti power structure rants he naively believed them to be only ignorant and not maniacal. Maybe maniacal is the wrong word but the leadership today is at the very least self-destructive. Lenny was self-destructive but these guys make Lenny look like an altar boy.
As you fuel up the car this week, remember that $4.00 a gallon gasoline is based on $90.00 a barrel oil. Friday’s close was $138.00 a barrel by Labor Day it could be $6.00 per gallon. However, if I buy my groceries at Kroger with $100.00 purchase I can purchase my gas at the discounted price of $3.90 a gallon. Come Labor Day that hundred-dollar purchase might be made through the express lane. Fuel inflation is destroying the airline industry; it has crippled the auto industry and deepened the Real Estate morass. Who can buy a home? When you don’t know how much it will cost to drive to work each month?
The so-called experts predicted that higher fuel prices would keep travelers closer to home, local attractions would benefit. They were right to a point, local meaning the living room. Six flags here in Atlanta is offering discounted admittance and the Braves are offering discount tickets as well. I have noticed many teams MLB playing before thousands of empty seats. Las Vegas is begging for visitors as the traffic from California has slowed to a trickle. Now you must have the money not only to gamble with but double the fuel costs as one devours the other the odds look to be against you.
Nationally travel experts believe that the misery that has become flying has eliminated as much as 12% of travel demand and that was before the fuel cancer hit the airlines. Four American airlines have failed this year and one is in Chapter eleven $150.00 a barrel oil means that their days are numbered. American airlines laid off four thousand employees this week but it only slows the bleeding. The deregulated airlines make their money by higher fares at peak times with full loads. With falling demand and soaring fuel prices the only answer is to get rid of as much as possible as fast as possible.
The automobile industry is caught with a similar dilemma, SUV sales have fallen 42% and really, I’m surprised that it’s not double that amount. A thirty or forty thousand dollar vehicle that costs almost a hundred dollars to fuel up and will cost almost a hundred and fifty before the leaves change color. These owners are brave individuals indeed; fearless in my mind for there is no promise of what Christmas might bring us. The car companies can shed workers but this doesn’t solve their problem. Traditionally when new car sales suffer used cars sales rise.
Today their used car lots are stuffed to the gills with SUV’s, pick-ups trucks and large family sedans that no one wants or will ever want, ever again. The big three make fortunes by financing these vehicles, but today they are no more than scrap steel, unaffordable and inefficient in the new reality. Like the airlines they find themselves in a no win situation, even if they gave the cars away at a loss, who can afford to operate them? With the coming $6.00 a gallon gasoline who can afford a car at all? Legions will switch to motorcycles and thousands of inexperienced riders will die and insurance rates will soar!
$6.00 dollar a gallon gasoline means $7.00 a gallon diesel fuel, which means even more inflation in a stagnant economy. A stagnating economy means a lower dollar values worldwide, a lower dollar value worldwide means higher oil prices. Higher oil prices means a more stagnating economy. (Repeat as necessary)
The banks are still struggling, despite the Federal Reserves bailouts, no, not a bail out. Defribulation is a better word for it, for the banks were in a full cardiac arrest. The Fed opened the discount window and yelled, “Free money! And we’ll let you have it at 5%! No 4%! No 2%!” Demand however is flat in the US, so the banks lend overseas where local banks are charging as much as from 7 to 10%. But the added profits from overseas only offset the rising losses domestically. So the banks have developed a new strategy to remain profitable, Just say no!
Owners of auction rate securities have found banks unwilling to give them their money back. The owners if they do get it back must take a bath to sell them. since mid March at least 24 class action lawsuits have been filed against brokerages over claims that the securities were sold to investors as liquid as cash. But there not, the banks count these as assets and as long as they don’t try to sell them they’re worth what ever the banks say they are. Today the discounts are running around 11% Citigroup says they hold $39.73 Billion dollars in these securities but with an 11% markdown that’s a $4.37 billion dollar loss.
Major US brokerages currently hold almost $200 billion in securities or a $22 billion dollar loss; the answer then becomes simple, Just say no! Bank of America, UBS, AG, Wachovia Corp and at least four dozen other firms that sold $330 billion of securities with rates set through periodic bidding are thwarting attempts to create a secondary market that would allow investors to access their cash, according to investors. The hole in the bucket theory, if they allow investors access to their money the losses will soar, the value of the securities the banks hold will decline. The faster the money flows out of the bucket the larger the hole will become. In other words they’ve written checks that if cashed will ruin them.
A house of cards printed on official looking bond paper, with shiny seals and pretty ribbons. If we give the investors face value as promised, then who will give us face value? The answer to that is the same answer that the big three automakers face when they ask, “Who will buy these big SUV’s? Or the airlines ask, “Who can afford to fly when we double the fares?”
“Six o'clock - TV hour. Don't get caught in foreign tower. Slash and burn,
return, listen to yourself churn. Lock him in uniform and book burning,
blood letting. Every motive escalate. Automotive incinerate. Light a candle,
light a motive. Step down, step down. Watch a heel crush, crush. Uh oh,
this means no fear - cavalier. Renegade and steer clear! A tournament,
a tournament, a tournament of lies. Offer me solutions, offer me alternatives
and I decline.
It's the end of the world as we know it.
It's the end of the world as we know it.
It's the end of the world as we know it and I feel fine.”
(REM)
PS- The "what should be" never did exist, but people keep trying to live up to it. There is no "what should be," there is only what is. Lenny Bruce
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