Financial fear reflected in kitchen cupboard

Here's another unsettling leading indicator for the stock market: a large 50.8 oz. bottle of organic, extra virgin, first cold pressed olive oil that I managed to cram into our cupboard with about 1/8 inch to spare.

I usually buy another brand. In a smaller bottle.

But yesterday, on my weekly natural food store shopping expedition, I noticed that Napa Valley Naturals was on sale. I figured I could save almost ten dollars by buying super-sized olive oil.

This isn't like me. Not to that extent.

Laurel is picky about the taste of olive oil. We'd settled on Spectrum as a brand we liked. When I brought home the Napa Valley Naturals bottle, she said "Maybe it won't taste as good."

"But we saved ten bucks," I told her.

All over the country, I'm sure, people are acting similarly. I've always looked for a good deal, but never before have I felt so anxious about preserving our money -- because the stock market and housing bust has taken away such a big chunk of our net worth.

When I go to Starbucks now, usually I ask for a grande Pike Place cup of coffee rather than a venti skinny vanilla latte, my habitual drink. I'm saving $1.50 or so every time I feel a need for a caffeine fix.

That doesn't make a huge difference in our household budget, but it gives me a sense (illusory though it may be) of having some control over our financial future when I read headlines like today's "Markets dive in last hour, carving new lows."

Checking the New York Times web site a few hours later, I saw that the story had been replaced with "Stocks drop sharply and credit markets seize up."

Oh, thanks for the news. I was under the impression that the $700 billion bail-out was doing something to reassure the credit markets. Guess not.

As a new bout of fear gripped the financial markets, stocks fell sharply again on Thursday, continuing a months-long plunge that has wiped out the gains of the last decade.

The credit markets seized up as confidence in the nation’s financial system ebbed and people rushed to put money in Treasuries, the safest of investments. Some markets are now back to where they were before Congress approved the $700 billion financial rescue in October.

Not to depress the spirits of the auto industry further, but I'm rethinking our car purchase plans.

A three-year lease on our Toyota Highlander Hybrid is up in January. We'd envisioned turning the car in and either leasing or buying a 2009 model, maybe the spiffier Limited version this time.

However, now I'm not sure that even 0% financing (which isn't available on Toyota hybrids, but is on other models) would entice us to get a new car.

The financial meltdown is just too damn scary. I feel like circling the household budget wagons, not going out on any unnecessary limb.

Our current car is fine, just not ideal.

"Fine" is sounding, well, just fine -- compared to forking out the bigger bucks that it would take to do anything other than keep our present vehicle. Multiply us by millions of other scared shitless consumers, and you've got the makings of a dismal selling season.

I've been investing, seriously and semi-seriously, for over twenty-five years. I've never felt so uneasy about our portfolio -- and we're not major risk takers.

Retirees that we are, we're about 50-50 in equities and fixed income, with a healthy percentage of index funds in each category. So however much the stock market has dropped, our investments are down only about half as much (bonds and Treasury bills are increasing in value, as investors snap them up).

"Only," though, is still a hell of a lot.

Amazingly, I read in the first NY Times story about the market decline:

And a new report that jobless claims had crested to their highest levels in 16 years reminded investors that the frail economy continues to weaken.

“We think it’s going to continue to go lower,” said Ryan Detrick of Schaeffer’s Investment Research. “We don’t think people are scared enough. They’re just not showing enough fear. People are numb to this, they’re almost immune to it.”

Well, I beg to differ.

It's more that people know they can't do anything about it, so when I learned that yesterday the market was at its lowest point in six years, and today it's down to the 1997 level (below earlier bear market lows), I was as much resigned as fearful.

What will be, will be. And whatever happens, I can buy cheaper bottles of olive oil and less expensive coffee, plus hold onto our car instead of getting a new one.

I just wish that somebody competent was handling the federal government's response to this crisis, instead of the Bush administration bunglers.

Where is George, by the way? Has he headed off to his ranch early? He sure isn't doing anything to reassure people that the economy won't be completely melted down by the time Obama takes office.

Which can't come soon enough for me. And, I suspect, for the stock market.

Comments

[condor]

This financial crisis had its origins long before Bush, Barney Frank, Chris Dodd, Cox or even Greenspan had any power or appeared on the scene and it is the result of the mass consciousness perception that debt and leverage are the way to run an economy and your life.

What? The real estate market was going to keep producing double digit returns forever? The median house value in the U.S in 2020 was going to be 4.75 million? It had to end one day. Everybody could feel it coming, a few saw it coming, but only a few acted on it.

The next debacle will be the commercial mortgage backed securities meltdown and then credit card debt defaults and auto loan defaults.

I think this is the beginning of the Greatest Depression and we ain't seen nothin' yet.

Get ready.

[Harry Vanderpool]

In my profession, much time is spent alone, working in farmers fields across the PNW.
I take a small "boom box" and listen to the radio for company.
On the weekends, there are a few talk shows about financial issues that have been belly laughing, "You depression era mentality fools that have paid off your mortgage and had the mortgage burning party; HEE-HEE-HAW-HAW!!!!"
"You need to mortgage that house to 125% and put it all in stocks, Blah Blah Blah..."
I always have given the radio the finger at that point.
You sure don't hear that TERRIBLE ADVICE lately.

ZERO DEBT WILL ALWAYS SERVE YOU WELL!

"Well you can't eat your house!" is one unbelievably lame comments I have heard on those "wealth" shows.
Guess what? You cant sleep in a Big Mac either, knuckleheads!!!
Oh, and they also push the listener to go out and drop a couple of grand for a financial plan.
Give me a second here.....
.....sorry! I was just moved to give my radio the finger again.
If things go as bad as you and I are thinking Brian, all of those financial planners will be out of work and crawling up our drives begging for food.
I may be a Dumb-ocrat (not for long) but I sure treasure the conservative, depression-era mentality that has served me VERY WELL!

>>>I think this is the beginning of the Greatest Depression and we ain't seen nothin' yet.<<<

Agreed. And how much importance will we place at that time on global warming, welfare, No logging, fishing, mining, hunting, drilling, firewood burning?

Heres' two options for the Ultra Ultra Ultra Ultra Liberals:
Embrace reality now, or reality will embrace you all the hard way.

[Rain]

We have to remember that neither political party as such got us here. It took them both and us combined. It's a lot of people who thought we could have retirements that would be filled with the same thing as working years. The stock market would deliver and a rate of return of 7% was considered to be reasonable and not greedy while many expected 20% which they got for awhile-- or so they thought. One thing Obama has said all along is that it won't be easy fixing this and that was before the latest failings. All those people who said he promised pie in the sky were thinking of McCain who said he could solve it all with more tax decreases. We are on a dual path of trouble because the government is in as much trouble as we are with the deficit spending.

Being 65, I grew up through several recessions and times that my father was either on strike or laid off. I have always seen being careful with a buck to be good and still can't get to where $20 isn't something to think before spending on anything. Times have been better and times worse but if people think thrifty through them all, don't expect too much, we will come through this. I have never seen a depression but might well although I doubt it'll be as bad as the Great Depression unless our government totally fails. Social Security, which so many Republicans would have liked to end, will give money out there for the basics which will keep many businesses going if not as well funded as they would have liked. I do not think we have seen the worse yet.

I just hope that the Democrats stick to their guns on the auto manufacturers. Come with a plan. Tell them and us the people what will change anything with this bailout, and don't do like Paulson just did with throwing money at a problem and hoping some sticks somewhere. I am sure some did and some who got it are enjoying their winter vacations in the Bahamas just fine...

[Brian]

Update: gosh, who knew? It turns out that atheists are responsible for the financial meltdown. If I'd known that before, I would have started going to church. I'd be happy to sleep through the sermon if I could have my lost money back. See:
http://online.wsj.com/article/SB122714101083742715.html

[Rain]

Coming from the WSJ, that article made perfect sense. No Christian would be wasteful of money, and the most secular holiday of the year naturally threatens the spirit of Christ... Their world is getting kookier and kookier.

[Randy]

You have to listen to the right people.

http://news.goldseek.com/EuroCapital/1227288107.php