Struggling with my Inner Scrooge

It's Christmas Eve, and despite the Clark W. Griswold tendencies among others in our household, we are settling in for a modest Yuletide.

Yours truly is thankful for having young children. You get to see the holiday through their eyes. Their vision can be quite dystopic after a walkpast a Best Buy or a Toys R Us, but more often than not, they get it. Most times they get it better than us old fogies.

I like my Christmas, but I don't go nuts. I seem like a Scrooge by contrast, although I think that this is unfair. There is a difference between being pragmatic and nihilistic. Unfortunately, I make comments that do not reflect well on my point.

Ok, so I put a message out on Twitter that said that $100 a barrel for oil equaled another recession. Clearly not a popular sentiment, and I personally feel bad in saying it, but I can’t help but feel as though we are going to get knocked back two years, and all of the rise in the Dow and so forth will be all for naught. Unfortunately, 140 characters leave great room for interpretation, and little for nuance. That is probably why most of the twitterati stick to commenting on the coffee they drank, the pizza they ate, and the exploits of people called "Snooki" and "The Situation". As an editors note, I have no idea who these people are, but I remember a show called "Jake and the Fatman", and I assume they are similar - solving crimes, and a rotund man driving a large gas guzzling Cadillac, or Lincoln, or whatever, but je degress.

Beyond my modest undergraduate course study in Economics, I do not profess to have any great insight that allows me to speculate in the market and short everything from soup to nuts (although with the way commodities are going, that would be fairly unwise).

My great epiphany comes from the uneasy feeling that smoke usually equals fire.

Consider the recession that we were plunged into during the mid 1970’s – you know, the one a year or so after OPEC turned off the taps and caused mile long lineups at gas stations? Maybe you are old enough to remember the horrible recession that battered western economies in the early 1980’s – the one a year or two after the Tehran hostage taking caused oil to spike.

Maybe you aren’t old enough to remember those, but how about the 1991 Gulf War, and the eviction of Iraq from Kuwait. Remember the spike in oil prices, and remember the unemployment rate for the next couple of years?

I got married in 1999, and I remember at the time wondering why it seemed to cost so much to fill the car. On our honeymoon, we drove through Sherbrooke, Quebec, marveling at how we were on the verge of seeing $1.00 a liter for regular unleaded. That and 9-11, and bingo – recession.

Fast forward to our recent summer of discontent, and $120 a barrel for oil. Within weeks, the stock market was tanking, and the mammoth round of foreclosures was in full swing.

It seems rather simple.

People only have so much money, and they budget it accordingly. They have their rent or mortgage, their car payment, utilities, and various monthly bills. Those are relatively predictable. Same amount on the same day every month.

Some costs vary, like gas for your car, or food for your belly, but they stay within a predictable range – usually.

Then, in the course of a couple of months, the price of oil jumps $20 a barrel, and the price at the pump goes from 98 cents a litre to over $1.20.

First, your family SUV that used to cost $60 to fill now costs nearly $80. If the gas lasts a week, that is roughly $80 a month extra you are spending. Of course, that is bad enough, but maybe you heat with oil, and filling that tank for your furnace is an extra $150. Then, you notice that your milk and bread are each 15-20% higher, on account of all of the transportation costs and such.

All told, about $250 dollars a month extra has come out of your wallet just to afford what you always had. Problem is, you don’t have the coin.

You try to cut back, but not driving a car means not having a job. Not buying bread and milk means malnutrition, and not buying heating oil means chipping icicles off the tip of your nose. Just as birds gotta fly and fish gotta swim, you gotta eat and you gotta heat and you gotta go to work, so you suck it up.

Maybe you start to use up your savings – assuming you have them. Then, you start using those wonderful slivers of plastic that will let you have what you need, and all for a paltry 21 percent interest rate. This lasts until you engage in the time honoured tradition of robbing Peter to pay Paul. Bills go in a hat, and you draw them out, one by one, to see who wins the grand prize of being paid on time.

In the meantime, no extra cash means no shopping, or dining out – no movies, no vacations, no nothing.

Everybody who earns their living selling stuff you can’t afford no finds themselves pounding the pavement.

The virtuous circle of the economy now resembles a death spiral out of one of those World War II fighter pilot epics.

Eventually, as in every correction of commodity prices, when fear overtakes greed, the price drops, and people pick up the pieces. Unfortunately, people’s lives – and finances – don’t find their equilibrium as quickly as the price of crude.

Suburbia was ground zero for the foreclosure tsunami, and suburbia depends on cars. While this does not excuse those dubious lending practices and heavy speculation, it was still the catalyst for collapse. I mean, maybe Uncle Bernie smoked and drank too much, and maybe he was 80 pounds overweight, but sneaking up behind him and yelling “Boo!” was probably not a helpful thing to do, and was the one-way ticket to a gurney in the ICU at County General.

Oil costs $10 a barrel more than it did this summer. That means I pay an extra dime for every litre of gas I pump – and so does everyone else. Double that increase, and you will have transported us back to the summer of 2008.

Recession – part deux.

Anyway, that seems like an inappropriate way to book off the day before Christmas, and yet...

The holiday is about redemption - and second chances. It's also about the important things - friends, family, and the quality of this mortal coil, and not the quantity of the junk we amass.

As depressing as things can be, if you have people in your life who love you and respect you, the ever changing number at the gas pump or the stock ticker is merely background noise - mere milliseconds of triumph or tragedy in the longer marathon of life.

We may see tougher times ahead, but as in the past, people of good will will always find a way.

Merry Christmas and a Happier New Year from the shores of Cole Lake!