Sunday, March 16, 2008

Has the Fat Lady Sung Yet?

I sat in DC for 2 weeks, watching the dust rise ever higher. It's been said that "it's not over until the Fat Lady sings" and I don't hear her warbling just yet. In fact, if The Wall Street Journal is correct, she isn't even in the wings warming up.

WSJ posted this article about our current financial ailments. We are living off the largess of foreign investors, and that has serious implications:

"Clearly, the whole world is focused on the financial crisis and the U.S. is really the epicenter of the tension," says Carlos Asilis, chief investment officer at Glovista Investments, an advisory firm based in New Jersey. "As a result, we're seeing capital flow out of the U.S."

That is a troubling prospect for a savings-short, debt-heavy economy that relies on $2 billion a day from abroad to finance investment. It is raising the specter of the long-feared crash in the dollar that could further rattle financial markets and boost U.S. interest rates.

Jeffrey Brown (westexas at The Oil Drum) has long lobbied for ELP: Economize (get out of debt), Localize (learn to live off the local economy) and Produce (become indispensable at something so you'll have a roof and food). It is possible some of us will be taking a crash course in ELP.

Jerome a Paris explains it all for you, just in case the article itself is too technical. Along the way, the commenters pop this article about the Bear-Stearns debacle, which is sounding more and more like the canary in the coal mine. Stoneleigh offers this assessment over at TOD and it sounds like the most vulnerable among us will be in even worse shape.

As for the price of oil: between the financial shenanigans with a sinking dollar, the price is going up, and I ain't talkin' at the pump.

The Rotund One is nowhere to be found at the moment. Hitch up your suspenders, buckle your seat belt and remember to breathe. It's going to be a bumpy ride.

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