Two years ago in this blog, I wrote a futuristic column  from April 20, 2009. The title of the column was “Remember When Gas Was Cheap?” At that time I predicted that the price of oil in early 2008 would reach $125 and that in April 2009 it would be $137.
In January of 2007 I was invited on the “First Business” syndicated business program to discuss the price of oil for the remainder of the year. At the time the price was $53 a barrel. I basically told the flabbergasted reporter that I thought the price of oil would most definitely cross $80 a barrel and would approach, but not reach the $100 a barrel price. The counterbalancing view was some “oil industry expert” who said the price range for the year would be $50-70 a barrel. Of course we know what happened.

Last fall I wrote a column predicting that the trading range for the price of oil would be $80-125 for the next two years. I now want to revise that forecast. When I made that prediction, the price has recently crossed $80, charting new territory. While obviously not surprised, I did let all the disbelief I had been subjected to in my predictions to give me a sense of caution. Since $80 was the new high, and I was saying that it would be the price floor for the foreseeable future I thought it would be a correct floor. I did say in that column that …

[Note to readers:  this column was written a number of weeks ago, but was in holding as I wrote columns about some more immediate travel related subjects.  With the turmoil in Tibet this past week, it is clearly a topic in the news.  I have updated the prior column to include the recent upheavals.] 

When countries or cities submit bids for hosting the Olympics it is usually done with a great sense of pride and boosterism.  The governments and economic vested interests all look to hosting the Olympics as a way to showcase their “world class city”.  In the case of the upcoming Olympics in Beijing, it is clearly the goal of the Chinese government to make clear to the world that the formerly communist country is now a major player on the world stage.  The world has recognized and accepted the growing economic might of the country.  The Chinese government wants to make a further impression on the world that they are culturally and architecturally a world class nation.

I have written here about what has occurred in China over the last 20 years.  Basically they have collapsed the 200 year timeline of the U.S. to move from an agricultural economy to an information economy to a period one tenth in length.  This has never been done on such a magnitude, and as a result there have been many problems, as written here.  I think that this will be the reason that the 2008 Beijing Olympics may turn out …

There is a lot of pessimism in the air.  As we come to the end of the first month of 2008 it seems that many are in a negative, hunker down state of mind.  The stock markets are being fueled by fear.  The commentators are speaking as though a major recession has begun. Casualties continue at too high a level in foreign combat, and of course it is cold and dark outside for much of the country.  All this in a country that seems to have optimism in its national fiber. 

The Pew Research Center just published a study that basically states that people are more pessimistic than usual coming into 2008.  The Pew Center has consistently polled Americans in December about whether they think the following year will be better or worse that the year just ending.  The numbers for December 2007 were that 50% of the people thought 2008 would be better, and 34% thought it will be worse.  This compares to 57% and 28% in December 2006.  In December 1998 the numbers were 59% and 25%.  Finally, in the middle of the Internet bubble, 66% thought that 2000 would better than 1999 while only 19% thought it would be worse (in spite of the looming Y2K fear that was rampant that month).

 Fear seems to spread virally …

Debt is one of the primary underpinnings of the economic turbulence we are now experiencing.  In the last 50 years debt has gone from something occasional to something universal, embraced and now endemic. Borrow against the future to pay for today.  Debt, debt, debt, debt is like the drip, drip, drip, drip of a faucet that slowing fills up a sink and overflows.  The four debts referred to here are personal, corporate, city and state and federal.  All of them feel as though they are beginning to come home to roost and the outlook, if not faced and dealt with, will come together with dire consequences.

Personal or consumer debt is a relatively recent phenomenon.  Diners Club launched the first widely used credit card in 1950.  Before that, consumers paid cash or made a down payment and had a short term low interest payment.  The idea of the Diners Club card and then seven years later the American Express card was to allow people who entertain or travel to not have to carry large amounts of cash.  It was expected that bills would be paid in full every month.    Up until this point, consumers bought goods when they had the money to pay for them.  Now of course people buy things with cards as they often don’t have money to pay for them.  Immediate gratification in a materialistic society that bombards consumers with literally hundreds and thousands of advertising messages a day.

Companies have long used credit and debt to build enterprises …