Desktop Dynamo

Are we on the edge of a great precipice?

For years we were told by the talking heads and gov'ment experts that the American consumer, empowered by the wealth generated through rising home prices, was the key pillar of the American economy.

They also told us inflation was not a concern; gasoline prices were inconvenient but not harmful to the economy; the housing market couldn't collapse; the Patriots were a sure thing to win the Super Bowl. (Ooops on the last one...wrong talking heads, but the point is the same: Sometimes things ain't what they appear to be, kids .)

I've been worried about inflation for a while. The gov'ment likes to talk about "core inflation" which excludes "volatile energy and food costs."

Uh-huh.

I don't know about you folks, but those two areas take up huge chunks of the shrinking buying power of my paycheck. Whether the price of widgets and whatnots are affected by inflation is of secondary importance to the average Joe or Jane. With gas prices and rising food costs soaking up more and more of their meager paychecks, all those widgets and whatnots will sooner or later start rotting on store shelves.

I'm no expert. I can't cite trends, statistics, and expert opinions. I just look at what's happening, and I have the same feeling of impending disaster I had a few days before Katrina, when anyone in gov'ment who may have taken a few seconds to glance at a weather map might have said "Uh-oh. Mega-disaster coming."

So what do I see??

A housing market with no bottom. Oil prices with no top (I still think we'll see $150 a barrel somewhere in the next year or so).

Vanishing real income for Americans. Folks, for the first time since the 19th century the average Brit is "richer" than the average American. Couple this with the tendency of Americans to work longer hours and take fewer vacations, and it's apparent we're working more for less money so we can buy food and gas which are both rocketing upwards in price with no end in sight.

Remember the term "new economy?" Here's what I call it: The Hollow Economy. Poke it with a stick, and you'll see the shiny exterior conceals a mass of hot air.

Meanwhile, the Fed keeps cutting interest rates to keep the stock market afloat.

Now this ticked me off at first, because the stock market isn't the whole danged American economy. With every big rate cut, Mr. Bernanke has less and less ammunition in his quiver.

So why waste all the interest-rate arrows to prop up the market? Well, perhaps if the market falls far enough, folks might stop contributing. They may grow anxious that they're pouring money down a rat hole. Worse, some folks may start tapping that moolah early (despite the huge tax whacks) because they need the money to avoid foreclosure on homes that are "upside down" (meaning they've fallen so far in value that more is owed than the house is worth...an especially painful condition if the mortgages are adjustable or interest-only loans that have "reset").

We're talking big money, folks. American workers have nearly 3 trillion bucks invested in 401K's. If you laid 3 trillion chicken wings end to end, they'd stretch...well, they'd stretch pretty danged far (even with me trying to eat them as you laid them down) .

If Americans stop feeding that 401k cow, it won't be a good thing. If they put it on a diet, it will get scrawny fast.

Maybe I'm overreacting...but I, for one, do think we're on the edge of a major and massive economic disaster. We tend to think economic panics and depressions are strictly for the history books. We think they can't happen. We think it's impossible...and all the talking heads tell us it's impossible...for a major collapse to happen these days.

How much you want to bet most of these folks put their money on the Patriots in the Super Bowl?

Here's something else which ticks me off: I'm tired of our "disposable" lifestyle.

When I was growing up, there were two appliances in the kitchen I knew would last a decade or more: The fridge, and our electric oven. Once in a while we might have to replace a burner on the electric stove, but that was about it.

In November of 2004, we bought a range at Sears for $455.78. At the time, they tried to sell us on a costly extended warranty. I don't like these for major appliances because over time you could easily have replaced them a couple of times with new appliances for the cost of all that peed-away warranty money.

Now this wasn't a fancy-schmancy super oven. It wasn't chock full of widgets, gadgets and features. It was just your basic self-cleaning Amana electric range.

Last year, the oven started going funky. I used to self-clean it regularly, and after one self-cleaning the lock light started flashing. The oven wouldn't work unless you cut power for several minutes then turned it back on. It would heat a few minutes, then shut off, but if you immediately turned it back on it would work. We put up with this (as per the shrinking buying power of my paycheck) until the oven stopped working all together about a month or so ago.

When the repairman came out, the estimate for repair was more than $560. My theory is the self-cleaning cycles messed up the electronics (ovens get very hot during a self-cleaning). Which is absurd because the primary function of an oven is to get hot.

We sent him away, and we're relying on the burners and the microwave until we scrimp up cash for another oven.

Folks used to ask me what it would cost to "fix their broken keyboards." I told them to simply replace them. Assuming I could fix it, my labor charge would cover the cost of several cheap keyboards. Keyboards, I told them, were disposable technology.

It's a sad state of affairs when major appliances are so poorly made that it's cheaper to toss them then fix them.

Don't even get me started on crappy staplers....