Sep 10 2008
Where the economy is headed next.
We’re located in the center of Minnesota, and talk on the streets is all about the economy. No one is talking about the falling price of oil. Everyone is talking about the rising price of natural gas.
In a small town Salvation Army sits an oil burning stove. “It’ll be there a long time,” sighs the check out clerk. “Not many people burning oil any more.”
The director sat chatting with a few of the women who have come in. “We’re starting a ‘Keep the lights on’ fund for the people in this town who can’t keep the lights on,” she said. “We’re asking everyone who can afford and extra $5 to put it on their own utility bill at the end of the month for the fund to help people who can’t afford to pay theirs.” She then proceeded to tell the story of the couple who couldn’t pay their light bill last spring. As the tale proceeded the names of kind strangers began to tumble out as she explained how the money was raised. “People have to do that for one another in a small town,” she said emphatically. “We’re all in this together.”
There are some block-headed people who might spend lots of time analyzing how many children the couple has, or who is working. They might cite the fact that sometimes people struggle and then it’s over. They spout off about how some low lifes never can keep a dime.
But they miss the point.
This isn’t an isolated case. Getting money from government welfare plans to pay utilities in this part of the country is so entrenched that it is unbelievable. Why? Many of the homes are old; that’s all young families can afford. They insulate as they can afford to, but sometimes they can’t get a grant to do thatt. Children are thoughtless users of energy. I, myself, can not tell you the number of times our children have left on a light all day, and it doesn’t matter how many times a day I tell them to turn out the lights. Parents face fuel bills of hundreds of dollars a month, and these are people who work one or two jobs and can not make ends meet at all.
The problem? These government safety net programs, the ones that give fuel assistance are being cut back. The poor, elderly, or those just making enough money to not qualify but not making enough to pay large bills are all slipping through the cracks. Foreclosure may not just happen because of being unable to pay the mortgage, but now there may be people walking away from their homes because they can’t pay the heat.
The city clerk told us the other day that the price of natural gas is going up by the double digits. That is something we investors watch. I searched for some good value stocks that are in the natural gas industry, but have not found any that I believe are worthy of your investment. I’ll be watching this special area of investing closely. It wil be the only bright side of the upcoming expensive year.
Last year restaurants in the air closed in droves. They were mostly the ones that were poorly managed or the ones that didn’t have very good food. If there are higher bills, expect oddball closings now. Theaters, financial planners and insurace brokers that are new in the business, might bite the dust. So might department and novelty stores. Retail will hurt, with the exception of Walmart. Only stores that focus on specialty item such as gamers, knitters, quilters, etc. will thrive. Even these may struggle if they are not owned outright. Beware of putting your money in any partnerships that could be hurt. And if you are in a business right now, be careful in taking on new debt.
It may all turn around with a a new president. And it may get better if we are not spending so much money in Iraq now that we are bringing troops home. Hopefully we will see some changes after the election that will help make our country’s financial picture look beter.
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