What the hell is he going on about, you are asking yourself. Well, I'll tell yourself. From today's New York Times, comes this article:
Markets and Dollar Sink as Slowdown Fear Increases
It seems that the high cost of crude oil, coupled with a downturn in the housing market, is likely to adversely effect the average American's quality of life. I know, that's a real shocker... I'll let you catch your breath for a moment.
Oh, you're back? I hope you were able to get over the shock. Anyway:
Stock markets plummeted and the dollar sank to a record low against the euro yesterday as investors worldwide grew skittish over rising oil prices and the prospect of a substantial economic slowdown in the United States.
The Dow Jones industrial average fell 360 points and the broader stock market dropped nearly 3 percent, driven down by fear that the troubles in housing are likely to continue well into next year, contributing to further losses in credit markets and spreading pain to the rest of the economy.
Here's the cutting, in depth, no-holds-barred, why-didn't-I-think-of-that, people-get-paid-
Hold on to your bonnet, Etheline, 'cause that ain't all. Have you heard about all that US debt that is being held by China? Well...
The most immediate trigger for the sell-off in the dollar, traders said, was a jarring signal that suggested China might shift some of its enormous hoard of foreign currency reserves — worth more than $1.4 trillion, primarily in dollars and dollar-denominated assets — into other currencies to get a better return on its money.
“We will favor stronger currencies over weaker ones, and will readjust accordingly,” Cheng Siwei, vice chairman of the Standing Committee of the National People’s Congress told a conference in Beijing on Wednesday. A Chinese central bank vice director, Xu Jian, said the dollar was “losing its status as the world currency,” according to Bloomberg News.
Mr. Cheng later told reporters he was not saying China would buy more euros and dump dollars. But as markets opened across Europe, those words echoed as an invitation to sell the American currency.
Yep, the millions of Americans who drive SUV's that average what, 12mpg, and who purchased homes with an ARM, the payments on which have grown exponentially, have fought the War Against Terra just like Dubya told them to - spend, spend, spend. Use as much gas as possible to drive to the corner market for a pint of half and half! Buy a McMansion, mortgage rates will never be this low again!!! Bad credit? No problem, have I got a deal for you! Hell, we can put the downpayment on your Visa card!
Umm, what was I saying?
Right, spend, spend, spend. It's Teh Murrikan Way!
Meanwhile, the fed floods the market with cash (the better to spend with, my dear), which is bought up by nations around the world, because the US dollar is the benchmark currency. Suddenly, and (as Condi would say) "no one could have foreseen people who got mortgages at the limit of their payment ability would default on those mortgages when the interest rates increased", thousands of people are losing there McMansions (and lesser homes as well) - and the lenders are getting bailed out. The lenders, not the people who are now scurrying to find an apartment or a tent to live in. This puts a serious crimp on the construction trade, cause there's a bunch of houses sitting empty, so why build new ones!
And all those empty homes aren't just a problem for the (former) owners and whomever is holding the (now worthless) note. They are also a drag on home values for those who managed to hold on to their homes - and are now stuck because the value of the home is less than what they owe.
Then, due in part to the Current Occupant threatening to start WWIII by attacking Iran, the price of oil shoots up to all time highs , which no one could have foreseen either. This raises the price of gas, heating oil, and, well, basically everything because our whole economy is predicated on cheap oil - and lots of it!
Yeah, we're pretty much fucked.
What can I do to protect myself, you may ask? Well, for starters, you might want to follow the advice here. And here. And especially here.