Tuesday, October 14, 2008

News and Notes: October 14

Oregon's Economy: Heavy job losses in September. This is why I had a hard time with the "burn baby burn" crowd that opposed government action in the face of a financial crisis. The truth about all economic crises (both in high and low income countries) is that it is always the most vulnerable - the poor and the working class - that are the hardest hit. No matter how bad it gets on Wall Street, the CEO of Merrill Lynch is going to do just fine, thank you very much. We can let it burn but those that will suffer most are the poor, children and the elderly.

Credit Crisis: so far so good for coordinated intervention, but don't take the rally on the world's markets as a sign that we will escape recession. We are most certainly in it now and it will be quite a while before we return to robust growth.

Commodities Prices: And now the good news/bad news. The good news for consumers and the Fed is that the possible bubble in commodities prices has burst, suddenly that insatiable demand doesn't look so insatiable to commodities traders now that the world is in recession and so prices are falling precipitously. This means cheaper prices at the grocery store and at the gas pump. The bade news is the ag and resource extraction-based industries are seeing a free-fall in prices and profits which will certainly lead to a painful contraction. Here in Oregon, the wood products industry, already hit by the housing slump looks like it is in for a even bumpier ride. Also ban, in my opinion, is the retreat in gas prices. Yes, I know that I just said the the poor and working class are most vulnerable to downturns and they are also most vulnerable to gas price spikes, but this is one area where pain=gain. High gas prices have led to a plummeting market for big cars, a boom market for hybrid and fuel efficient vehicles and have brought about a huge change in behaviors that are all good for the future sustainability of our economy and our climate. For example the 90% rise in Tri-Met ridership.

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