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September 07, 2008

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energy analyst

no just gas prices fall, but prices on plastics fall as well as do other petro based products. a lot of factories energy costs decrease if oil becomes cheaper, also decreasing cost of consumer goods. so the consumer saves $1K a year on personal gas, but that savings excludes a multiplier as well as the greater affect on industry cheaper gas, but mainly energy will have.

Anal_yst

@ energy analyst

Forgive me for leaving out that important point from my admittedly incomplete critique. Believe it or not it was somewhere on the original outline but between football and Entourage last night, well, uh, whoops?

Regardless though, the main intention of the post was to reject Kudlow's theory from the very base of its foundation. Cheaper gas (or energy) isn't going to single-handedly save America, and we're only postponing the inevitable if we pretend it will.

Naturally cheaper inputs throughout the supply chain (most importantly as you've pointed out in the form of energy), should make goods/services more affordable. Another point I wanted to cement is that while we'd expect to see increased demand at lower price points as you point out, now might be a good time to pull our collective heads out of our asses and actually, ya know, save instead of spending like its going out of style.

As always we appreciate the insightful commentary, thanks!

Auberon

You can't blame people for not saving when Helicopter Ben has promised to make their savings worthless anyway.

Lowly Assistant

Read the blog more often than not, and thought this post (in particular) was extremely well done. Not that I whole-heartedly agree with the ideas being expressed; rather, the writing was quite coherent, and the information you delved into was nothing short of insightful. Always been a fan of 1-2 Knockout, but figured this would be an opportunity to express it. Well done, Anal_yst.

Anal_yst

@ Auberon

True, I should have clarified, the umbrella term "save" includes things like reducing dependence upon - or even better - actually paying down debt (mortgage, auto, revolving, etc). Yes, yes, your point still stands, alas!

@ Lowly

Thanks mate! Every once in a while we attempt something approaching legitimate analysis. Unfortunately several posts I'd started over the past month or two went unpublished, such as a delicious little number about the sticky mess going on with the vivacious Mrs. Fields, those inescapably annoying Sonic commercials, and Stevie Cohen's new hobby.

Hopefully we'll get back to pounding out the goodness over the next few weeks.

Lowly Assistant

Keeping Stevie's interests hidden from the public eye??? You may as well be the reason behind keeping the Liberty St. Bridge closed on Thursday! Pray, divulge your take on his perversion!

---drinking, and feeling Pilgrim's Progress take a'hold of me.

~SEG

Sir Anal,

Well said... on a side note, its moose season in Alaska and some dumbass hunter shot one in the mining camp I am visiting on a DD trip.

We have a pissed off moose hiding in the bush... everyone is either armed or staying in camp... Bullwinkle is not happy...

Best to the gang,

~SEG

via sat connection at the arctic circle...

Anal_yst

@ SEG

I don't have much experience with Moose (Meese?), but I can tell you that it doesn't appear to be a good time to sport your antler-fied winter hat.

Stay warm (if thats even remotely possible?)

Calgary Schmooze

@SEG,

Helping out with the salting of the assays?

--CS

~SEG

-CS

They don't need to be salted... I helped run the clean up jig today... its a placer operation... basically a mud pit... 60-80 ft deep... 1000ft x 1500ft or so...

They were stupid enough to let me run an excavator for a few hours lately... lots of divots... looks like Paul Bunyan was playing golf where i was told to dig a trench...

They actually left me alone with the machine after a few minutes of some serious heavy metal banging... I am trying to talk them into letting me take the D-11 Cat Dozer for a few laps around the pit...

~SEG

Calgary Schmooze

SEG,

How come you get to have all the fun?

Unforch, Anal_yst believes that sites like that are meant to be viewed from Google Earth. Personally, I go do industrial tourism whenever I can.

--CS

Think On The Margin

I concur with the first commenter that petro-reliant goods will become cheaper, leading to additional savings.

But also, we should think "on the margin". Staying with your numbers, $90 might not save the person too far in the hole but it does make a difference for those on the margin. The small savings leads to small economic boosts.

Anal_yst

@ TotM

Agreed, and if it were something like $500, I'd absolutely agree with you, but lets arbitrarily say the purchasing power (with cheaper goods) increases to a relative $100 or even $150/month. Even at the margin, if that small an amount is the difference between making your mortgage and default, as I said earlier, its unfortunately, but highly likely that you're just delaying the inevitable until its time to pay the piper.

Ass_ociate

Although I agree that it won't save us from the real problem that American's will always spend more than they make, even if they make a boat load - it will help keep loot from going overseas into the pockets of bad men and hopefully instead be spent here and help the economy - also w/o money from oil, what will all of our enemies use to finance thier badness?? That may also end a lot of gov't war spending and maybe give our next moron president no excuse not to start paying off our debt.

Ass_ociate

Oh, and kudlow is the man

j

Miss the days when he was drunk all the time ....


he was really nuts then

Ass_ociate

I wish i was right now

1-2

Wasn't LK all hopped up on Coke for the entire 80s?

Von Mises's Shirt

Larry Kudlow is a Communist. He's all for the corporate socialist bailout, which is hilarious considering what a "free market" guy he claims to be.

Wonder what Reagan would say about Kudlow the Kommie if he were alive today?

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