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Posts Tagged ‘economics’

If one had any remaining doubts regarding the power of money, recent news about SUVs and gas prices should take care of those. In America, since the rise in gas prices, SUV sales have dropped off dramatically, and people are switching to smaller, more fuel-efficient cars. Dealers don’t know what to do with their inventory.

In China, on the other hand, where gas prices are state regulated and fixed to $2.90 a gallon, SUVs are selling like hotcakes.

Money does talk.

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It is happening finally. According to an article in the San Francisco Chronicle, ‘Dollar’s Fall Forces New Standard of Frugality‘ amidst Americans. I could not be more pleased. ‘Squeezed by food and energy prices, tight credit, stagnant incomes and falling home and stock values, many consumers are throttling back.’

‘Ins and Outs of New Economic Order’

Source: Chronicle research, BudgetSavvyMag.com

What puzzles me however, are the responses from the economists:

We are going back to the good old days of living within our means . . . This is not the end of the world. It’s not Armageddon. It doesn’t mean we’re going to have to live in a cave or a hut or an RV. The areas of retrenchment are in areas we can do without, such as cutting out that extra vacation.’ David Rosenberg chief North American economist for Merrill Lynch

‘We are seeing the first pangs of a new economic structure. The next year or three will be about the transition to a new equilibrium. Consumption by households will grow more slowly than their incomes, which is the exact opposite of the last 25 years when consumption grew faster than incomes.’ Neal Soss, chief economist for Credit Suisse First Boston

‘Standards of consumption have to fall. The burden really falls on households.’ Ronald McKinnon, economist at Stanford University

‘The world has become multipolar. Our dominance will decline.’ Barry Eichengren, international economics expert at UC Berkeley

‘We should not look at today’s rising of credit standards as being bad. We’re returning to a more realistic credit paradigm after a period of excess. What people are comparing it to is something that was outlandishly unrealistic.’ Catherine Mann, professor of international economics and finance at Brandeis Business School

‘I see no reason that we can’t continue to enjoy productivity gains and double the standard of living in the next 30 or 40 years. I still sense that there’s lots of excitement for things like solving our clean echnology problem. I don’t see a country that’s down on its luck and out of ideas.’ Joen Shoven, director of the Stanford Institute for Economic Policy Research

You would think these new behaviors from the American people would be the perfect occasion for a paradigm shift in the economics narrative, but no . . .

Being an optimist, I am choosing to retain the good news. People do respond to limits. And in its own twisted way, the market system does work, including for climate protection.

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Lynette Evans wrote a great article, ‘Save the Money by Saving the Planet’, about the win win strategy of buying natural cleaning products instead of the usual commercial paraphernalia. Her maths are pretty convincing:

Commercial products: Windex Original, $4.39; Pine-Sol Cleaner, $4.69; Kaboom Shower Tub & Tile Cleaner, $5.69; Chlorox Disinfecting Wipes, $6.19; Formula 409 All Purpose Cleaner, $4,19; Palmolive Ultra Original Dish Soap, $3.49; Clorox Bleach, $2.29; O-Cel-O Sponges, $2.59; Swiffer Duster, $6.09. Total: $39.61.

Natural cleaning products: Heinz Distilled Vinegar, $3.90; Arm & Hammer Baking Soda. $1.15; Planet Ultra Dishwashing Liquid, $3.49; Mule Team Borax, $4.39; Hydrogen Peroxide, $.59; Old cotton towels, $o; Crumpled newspaper, $0. Total: $13.52.

Lynette did the maths. $26.09 savings for us, and for the planet. I wrote a similar post a while back, where I stated my good intentions. The smell of all those chemicals was getting to me. Yet, I did not take any steps. Our cleaning cabinet is still filled with the same poisonous chemicals. Seems like another item to add to my green to-do-list.

To-do-list: get rid of existing cleaning products and buy natural substitutes instead

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