Some say it is the declining value of the dollar; others blame drought, oil prices, and the mortgage crisis. No matter who or what you blame, the certainty is that the American economy is in crisis. Despite appearances and rhetoric, the depth of the crisis confronting Americans and the world go deeper than many are willing to admit. While economic pundits and politicians are finally using the word “recession,” there are those who are beginning to think depression.

This past weekend we went grocery shopping at the largest retailer in the area, one that is the largest worldwide. What became immediately clear was that there were many wholes in the shelves which, on any normal Saturday morning, would have been stocked to overflowing. In addition to our normal bag of flour having risen from $2.99/5lb. bag to $4.99, it was clear that this commodity was in short supply. The same was true for rice, eggs, meats and many other staple products. The shelves were certainly not bare, but the gaps and low stock was clearly evident. While this could have been attributed to late deliveries, concern rose the next day when a friend went shopping at a different chain and found a similar situation; jacked prices, no flour, little rice and obvious gaps in product stock.

There is no question that rising fuel costs are having a dramatic impact on food prices and availability. Reports are aired everyday about the soaring costs of staples. The truck driver rally in Washington, D.C. could not help but go unnoticed by the media as the plight of drivers worsens. Still not sure how widespread and how deep this problem had reached; I conducted a very informal survey of various writer groups nationwide. Being an author and always watching the world around me for ideas, it seemed that members of such groups would also have their fingers on the economic pulse in the areas in which they lived. I sent a survey to numerous groups and asked what they were seeing at the stores in terms of prices and product availability; whether they were going alter their purchasing habits; if they were going to buy more or less consumer goods; how they would spend their “economic stimulus check;” the price of gas in their area and if they were going to change their eating, driving and shopping patterns. The results, which are being verified by growing news reports on the economy, are frightening. One cannot help but wonder if some of the events that led to the Great Depression of the 30′s are being to be repeated. In the late 1920′s there was overproduction, a growing gap between rich and poor, a large increase in foreclosures and large stock investments by those who were really on the economic margin. Does this sound familiar? Given attempts by the Federal Reserve, Congress and even businesses to try to stimulate consumer buying, are we in a situation where a silent desperation pervades those in the economic know?

The survey spanned the nation. Writers in both cities and rural areas from the East Coast to Alaska to the Mid-West responded. While I will not report every response, I will show the nature of most responses along with some interesting quotes and thoughts from those who sent in the survey. The following are typical responses (by the time this article is published I am sure the numbers will be a little out of date-I am sure they will all be higher):

“Yep, seen it, experiencing it here in farmland rural Pennsylvania where cow manure has become THE fertilizer – the only one that won’t bankrupt. Feeding a household of five including two always hungry teens, it’s glaringly obvious things are going downhill. Our cupboards are dwindling to the barest of bare necessities. Our veggie garden is doubling this year and I’m checking into a chicken coop. Has anyone seen the price of eggs? Eggs for crying out loud! They more than quadrupled in price in just a few weeks here.

I read somewhere that 25% of the US grain has been taken for alternate fuel possibilities – can’t find it again and have to ask if it’s true? If so, whose stupid idea was that? Don’t take it from existing supplies, make it. I’m thinking maybe my hubby isn’t so nuts in busting his behind running his mother’s grain farm along
with his full time job this year. I may pitch in. I’ve got family in all areas, farming (grain and livestock), trucking, construction, and I’ve seen how all of it is being hit.”

“I’m tacking on some things that worry me. I came from California where I made a decent wage. When we moved to TN a few years back, housing was much cheaper here than CA, but that was about all. Everything else was equal, food, clothing, cars, etc. Gasoline was still a little cheaper.
Wages here are 1/2 of what people make in California, and very few companies provide any type of medical or dental insurance. I was shocked to learn that the job I’d done for over 23 years in California required the completion of a master’s degree in TN, which I do not have, yet the salary was 1/2 of what I made. They would not allow me to apply, even though my qualifications were a perfect match for the job.”

“The typical wage here is $8.00-10.00 per hour. My husband is a truck driver for a local company and makes $14.00 which is considered high. Of course, his company provides no insurance or extra money towards such. I noticed today that gasoline has climbed another 2 cents to $3.57 and diesel is $4.72. Already my husbands company is cutting back on runs and trying to combine them, so we’re very worried about our financial future. I wonder how people who make $8.00 can afford the fuel to get to their job. Basically they are working to buy gas to get to their job…where will the money come from for all their other expenses. It’s very scary.”

“It just ticks me off beyond belief that we are paying over a billion dollars a day for a war, borrowing money from China and our economy is going down the toilet, but President Bush, when asked will still claim that we’re in good shape.”

“I live in south central Kentucky where nothing is close. Driving is a necessity. If gas prices get much higher, we are thinking of getting an Amish cart and training one of our horses to be driven. It would take all day to get to town but we could go to the convenience store.

We still have good availability of products but the prices are going up in the supermarkets. I no longer buy beef. Instead I have a friend who raises Black Angus cattle and we split a cow. I have a friend who is raising sheep so I will probably buy a couple of the lambs. I shop at the Amish bulk food store in the county and save a lot over the supermarket prices. I will be eating fresh veggies all summer, grown in our garden or those of my neighbors. Gas prices are $3.59.9 for regular as of last Sunday. Over $4 for diesel! I combine errands and don’t leave my farm unless I have more than one place to go in the same direction. We are eating out less. We are planning on saving the stimulus check. Just an aside, my daughter-in- law is in retailing in NYC and she says we are in a major depression. People are just not buying.”

“In the Seattle area, wild salmon is going for $19.99 a pound, gasoline at
Costco $3.65 at the regular gas stations $3.79 a gallon. People here are
driving less, eating out less, and purchasing food at the lower end stores
such as Grocery Outlet and Cash and Carry. We were in a huge Asian market
one week, rice stacked up as high as an elephant’s eye. Now just try to find
regular rice – many of the people here are purchasing rice to send to
relatives overseas.”

“Unfortunately, I am a volunteer driver for Catholic Charities – IE, I haul people who don’t have transportation to the doctor – so have little control over my gas consumption. I drive 700 to 900 miles a week so buy from 30 to 50 gallons a week. They supposedly pay us for our gas used, but are consistently six months or so behind in updating their prices and the past six months have been the worst ever.”

The following are snippets of responses from around the country. It is evident that people are frustrated and even frightened. While products are available, the current trend in prices is continuing upward. Recent reports indicate that state governments are cutting back on budgets and employees; tourist destinations are already feeling the pinch and more and more storefronts are displaying “space for rent” signs. Since many plan on reducing driving, this summer does not bode well for that industry. Agriculture reports show late plantings of corn and wheat crops and who knows what summer weather will unleash. It is clear from U.N. reports that the food situation is rapidly declining in poorer nations as droughts and floods destroy staple crops. I am sure many of the comments that follow are a mere shadow of what is beginning to happen in your area as well:

I used to be able to buy a pack of chicken ******* for $3 or $4, now the same pack is $7.
I traveled to Spartanburg where gas was $3.29/gal (middle grade). When I got back to ATL to fill up, it was $3.49/gal. Last weekend, I paid $3.69, now it is $3.79 or $3.89.

Saturday is usually a busy day in Fayetteville, but there were no cars in all five lanes at one of the busiest intersections. Some of the independent stores had no cars in parking lot and it looked like they were closed.

How will you use your economic stimulus check? Put it in savings!

Gas $3.74 Rockford, IL.

Prices, though? Meowza! They are up, and rising! But am I buying what I don’t really need? Not on your life. Not with heating oil where it is, and climbing. I’m trying not to take unnecessary trips, and I’m certainly not eating out very often. I’m using my old lawn mower, which I had thought about replacing this spring.

I haven’t noticed any shortages except the “sale items,” but prices have definitely increased.
I have received mine (stimulus check) as a direct deposit, and it will stay in the bank. I don’t plan on buying anything new, just my usual necessities.
$3.89 for medium grade.

I haven’t noticed a decrease in the availability of basics, but prices have risen considerably here in PA–this includes basic such as eggs, flour, butter….Eating and shopping will all be dependent on what I can afford. I anticipate, if the prices keep rising, having to forgo some of the necessities.

In SE Michigan. Prices, however, are another story. Eggs have doubled, milk, dairy products skyrocketing. Good beef cuts (steaks, prime roasts, etc.) are a rare buy in our household these days because they are so expensive. Fish/seafood products are also beyond reach as a steady diet.

Save those left-overs and use them as part of a creative low-cost menu for tomorrow’s dinner.
Get caught up on a bill or two and treat ourselves to a gourmet (home cooked) dinner.
$3.65/gal.

Less frivolous foods, the munchies, you know. Bulk peanuts and fresh raw veggies make good inexpensive snacks. 86 all the packaged crap. Drive only when and where necessary. Make a list. Plan a driving session in a well-routed circle that accomplishes several chores in one outing. Planning for a vacation now includes high on the list, “how much will it cost in gas to get there and back?” Shorter trips/destinations if you are driving a car.

I’ve noticed the prices skyrocketing – quadrupling in a matter of weeks for some things like eggs… A lot of what I used to get I can’t find local anymore.

It will go toward an alternate heating source, most likely a wood burner in the basement.
Last I looked, diesel was $4.59 a gallon and today’s local report said low grade is now $3.62.
Anything we do over the summer will be local, no major travel.

Rural farmland in the mountains of Pennsylvania where the cost of living is very low and so is the average family income.

I am concerned about stories on the news about Sam’s Club and others
rationing rice. Is there a rice shortage?

I live in Arizona in a town between Phoenix and Tucson. There is no real public transportation in my area, and, with summer temperatures going well into
the triple digits for about 4 months of the year, riding a bicycle really isn’t an option.
Let’s face it. The American people are getting hosed by greedy speculators who are driving the price of oil, (hence food prices) artificially high.

I don’t blame people for not buying. Prices are going out of sight. Yesterday, gas here was $3.79 and I bet it’s up from that today.

Food prices are up varying percentages, from 15-percent to nearly 50-percent on many less expensive cuts of meat. Hamburger (80 percent lean) has risen from about $1.99 per pound a year ago to nearly $4 per pound.

Overall, my daughter said the supermarket tab here for her family of four has jumped from about $130 per week to nearly $200. Also, shortages of some products are starting to become apparent, with some shelves bearing large gaps in mute testimony to lack of availability of rice and flour…
Hope that helps.

As to gas prices: Spokane, WA prices range from $3.50 to $3.70. I live in a small town where our one station is $3.87 for unleaded. More to the point, Diesel in Spokane that has more effect on food prices is about a dollar higher at $4.50 to $4.80.

Unfortunately, I am a volunteer driver for Catholic Charities – IE, I haul people who don’t have transportation to the doctor – so have little control over my gas consumption. I drive 700 to 900 miles a week so buy from 30 to 50 gallons a week. They supposedly pay us for our gas used, but are consistently six months or so behind in updating their prices and the past six months have been the worst ever.

So what does all of this mean? The early warning sign are there and I would strongly suggest that people keep an eye on commodity report, climate calamities, and, of course, the price of fuel. There is little doubt that people will be tightening their belt, going out for meals less, traveling shorter distances and using their “stimulus” checks to keep their head above water this summer. Living in a region that depends on fuel oil, it is scary to hear that contract prices for hearting oil less winter will approach $4.00/gallon. This will surely collapse to the economy in the Northeast. If diesel continues to rise, truckers will be at a loss and food will simply not be delivered to stores. Already, many truckers who deliver saw logs are calling it quits. How long can fishing fleets absorb continued price rises? Summer employment looks bleak. The key is to be alert and be informed.

Is there is bright spot here? If you read my article, “The Mother of All Course Corrections,” you will see that the consumer is now in a position to finally make intelligent buying decisions. You can affect what is produced with your valued dollars. If you stop buying the junk food, stop buying sodas, buy only healthy foods and cereals, the market will have to respond. This is your opportunity to finally make a difference in terms of what is produced and what you consume. Insist on quality and use your power to create a more sensible, sustainable economy. The time is at hand for choices, choose wisely!

By: Philip Harris

About the Author:

A recent Nielsen survey portrays that Asia Pacific consumers are ready to spend their way out of recession. Renewed willingness to spend as 2010 progresses is found in China, Brazil, India, Singapore and Hong Kong. Stock market investments and increased savings are a result of consumers being more confident in the market, including spending on luxury items such as vacations, clothes and entertainment.

One MasterCard survey portrayed that entertaining and dining is where Asian Pacific consumers will put their money in the next six months, showing extreme resilience in the face of the global recession.

Consumer confidence has surged in the first quarter of 2010, returning consumers to positive territory. In the last 6 months, the majority of consumer sentiment in Asia pacific has shifted their gears from recession into recovery. In this climate of economy, the sentiment is correlated to actual sales. In Australia, for instance, the confidence of consumers rose eleven points in the third quarter of last year.

Strengthening economic conditions resulted in the Reserve Bank of Australia to increase its rates, becoming the first country to do this. This resulted in increased sales of 2% in both August and September of 2009 in FMCG or fast moving consumer goods. Since Nielsen tracked the recession in January 2009, there is a buzz that it is currently at its lowest levels.

Asia Pacific spending has always been a key indicator of confidence in business and has made a rebound faster than analysts have expected. Across many Asian Pacific markets, sales of FMCG has made a significant increase as Asian consumers are starting to purchase items which are discretionary after a long period of spending within the parameters of a budget.

In October of 2009, sixty-six percent of worldwide consumers claimed that their economy was in recession compared to seventy-seven percent in April of 2009. For many consumers in Asia Pacific, however, the recession has become a thing of the past. 87% of Chinese say that their country is out of the recession while 60% of Hong Kong and Australian citizens say the same. Half of Indians believe that recession has ended in their country as well.

According to another survey conducted by the MasterCard Worldwide Index of Consumer Purchasing Priorities, the top spending priorities of Asia Pacific consumers are 49% on fashion and accessories 36% on wellness and fitness, 34% on their children’s private tuition, 34% on extra curricular activities and 34% as well on consumer electronics.

In Hong Kong, thirty percent less consumers say that their country is in a recession. In the most recent survey, thirty two percent of Honk Kong consumers said that they are in a recession compared to sixty percent in June of 2009. After holding back on spending for many quarters, with the Hang Seng property index on the increase, Hong Kong consumers are currently beginning to open their wallets once more.

Increased spending on discretionary items such as home entertainment, technology, holidays and new clothes is on the rise, which is a stark contrast to their cutting back on spending on these items a year before. Consequently, many other sectors of the economy are seeing a fresh recovery, including finance, property and high ticket retailing. A recovery on the FMCG remains to be seen, however as the sales of these goods have remained somewhat unchanging.

Last quarter’s 6-point increase in China was propelled by significant improvements in the personal income and local job possibilities in the country. Six out of ten Chinese describe their job prospects excellent when asked to rate the way they foresee the next 12 months, which is a fourteen percent increase compared to the 2nd quarter. China’s two tier-cities posted up to 22 percent increased consumer confidence compared to the quarter before.

Nielsen witnessed in July that Chinese consumers felt the economy was on its lowest level and was on the way to recovery. In the 3rd quarter, there is an extension of this optimism. Chinese consumers are still hesitating to spend money but there is a willingness to try new products. Thus, the companies which will focus on introducing innovative new products may be the ones to drive consumers to purchase more items throughout the country.

The survey further says that in the last quarter of 2009, Asia Pacific markets emerged to become eight of ten consumer markets that are most confident compared to South Korea, Japan, Indonesia and India, which were the least confident.

Among all the Asian Pacific markets, the highest increase in confidence came from Hong Kong as portrayed by a seven point increase in index in the fourth quarter from 93 to 100 on a 200-point scale. Since June of 2009, a 21-point increase occurred in Hong Kong.

According to Nielsen, local Hong Kong consumers are planning to increase their spending on entertainment, vacations and new clothes in the next six months are overall consumer confidence improved from seventy to ninety-nine point.

However, regardless of a greater overall increase in consumer confidence, ‘saving for a rainy day’ has remained number one of the list of consumer’s priorities in Hong Kong, with seventy-one percent putting their extra cash into savings.

Because of the stock market stability, the confidence consumers have in investments is also strengthened. Over half of the respondents (51%) say that they will invest spare cash in mutual funds and stock.

According to James Russo, Vice President of The Nielsen Company global consumer insights, this is a great sign that the overall global recession recovery is headed in the right direction.

“The Nielsen survey shows that in the past six months, consumers have become more optimistic about their countries emerging from recession with better job prospects and personal finances,” says Nielsen.

“However, while purse strings may be loosening in some markets, there is clearly a big difference in the pace of expected recovery between the emerging and developed markets, and consumers’ increased confidence is not yet translating into a widespread readiness to start spending.” Nielsen adds.

Compared to 90% of Mexican, United States and England consumers who feel that they are still deep in the recession, 60% Singaporean, 73% percent Hong Kong and 83% consumers from China believe that in the 4th quarter of 2009, the recession had ended in their country.

Also leading the way into discretionary types of spending, Asia topped global rankings for mutual funds and stock investments with China topping the rankings. Chinese consumers are ranked 44% in the world for spending on technology products, 57% for spending on mutual funds, 50% for holidays and 53% for new clothes. The survey also found that consumers from Hong Kong are starting to spend on new clothes, new technology and entertainment outside the home.

In India, concerns over the rising prices of food hampers their confidence. Russo says that “although the Indian economy is expected to grow in 2010, India has experienced a bad monsoon season resulting in increased food prices and higher grocery bills for consumers. This has had an immediate impact on consumer confidence and the availability of discretionary income.”

According to a Nielsen Report from the last quarter of 2009, consumers both in China and in the Philippines are intent on spending their cash on new technology. Consumers in Korea and Japan who are tech-savvy do not want to wait much longer to upgrade their current cell phones and PC’s. Alternatively, ten percent of Chinese consumers say that they can wait to delay their technology purchases.

Sensible Singaporeans

Despite rebounding confidence levels in 2008, a MasterCard survey finds that Singaporeans remain conservative with their money.

Focusing more on saving their income compared to just six months ago (34.2%), 45.8% of the survey participants said that they plan to increase the amount they save in the first six months of 2010. Compared to 54.4% in the last survey, 45% currently say that they plan to save an equal amount of cash.

72.8% respondents who claimed they plan to save the same amount if not more said that the reason for this was to save for emergency expenditures that were unforeseen, due to an ‘uncertain economic outlook.’ 35.3% said they plan to save for personal international air travel and 37.9% for purchasing consumer electronics.

In the next six months, 28% of Singaporeans plan to save approximately 11-20% of their income and 21% plan to save approximately 21-30%.

The Kospi index of South Korea has increased almost fifty percent since the beginning of 2010 and its weak Won has given quite a boost for its export and manufacturing industries as well as for its sectors of key export products which is cars and consumer electronics.

Economic adviser of Africa, the Middle East and Asia Pacific Dr Yuwa Hendrick-Wong stated that “consumer sentiment here fell precipitously in 2008 and early 2009, but it is now seeing a V-shaped rebound. Persistent uncertainty in the outlook of the global economy, however, continues to affect consumers’ savings and spending behavior, which show that most consumers are still saving for precautionary reasons.”

He adds that “For the Asia Pacific region as a whole, the robust recovery in both economic conditions and consumer sentiments can therefore be characterized only as a ‘partial decoupling’ from the rest of the global economy.”

By: Jennifer Cosculluela

About the Author:

Some say it is the declining value of the dollar; others blame drought, oil prices, and the mortgage crisis. No matter who or what you blame, the certainty is that the American economy is in crisis. Despite appearances and rhetoric, the depth of the crisis confronting Americans and the world go deeper than many are willing to admit. While economic pundits and politicians are finally using the word “recession,” there are those who are beginning to think depression.

This past weekend we went grocery shopping at the largest retailer in the area, one that is the largest worldwide. What became immediately clear was that there were many wholes in the shelves which, on any normal Saturday morning, would have been stocked to overflowing. In addition to our normal bag of flour having risen from $2.99/5lb. bag to $4.99, it was clear that this commodity was in short supply. The same was true for rice, eggs, meats and many other staple products. The shelves were certainly not bare, but the gaps and low stock was clearly evident. While this could have been attributed to late deliveries, concern rose the next day when a friend went shopping at a different chain and found a similar situation; jacked prices, no flour, little rice and obvious gaps in product stock.

There is no question that rising fuel costs are having a dramatic impact on food prices and availability. Reports are aired everyday about the soaring costs of staples. The truck driver rally in Washington, D.C. could not help but go unnoticed by the media as the plight of drivers worsens. Still not sure how widespread and how deep this problem had reached; I conducted a very informal survey of various writer groups nationwide. Being an author and always watching the world around me for ideas, it seemed that members of such groups would also have their fingers on the economic pulse in the areas in which they lived. I sent a survey to numerous groups and asked what they were seeing at the stores in terms of prices and product availability; whether they were going alter their purchasing habits; if they were going to buy more or less consumer goods; how they would spend their “economic stimulus check;” the price of gas in their area and if they were going to change their eating, driving and shopping patterns. The results, which are being verified by growing news reports on the economy, are frightening. One cannot help but wonder if some of the events that led to the Great Depression of the 30′s are being to be repeated. In the late 1920′s there was overproduction, a growing gap between rich and poor, a large increase in foreclosures and large stock investments by those who were really on the economic margin. Does this sound familiar? Given attempts by the Federal Reserve, Congress and even businesses to try to stimulate consumer buying, are we in a situation where a silent desperation pervades those in the economic know?

The survey spanned the nation. Writers in both cities and rural areas from the East Coast to Alaska to the Mid-West responded. While I will not report every response, I will show the nature of most responses along with some interesting quotes and thoughts from those who sent in the survey. The following are typical responses (by the time this article is published I am sure the numbers will be a little out of date-I am sure they will all be higher):

“Yep, seen it, experiencing it here in farmland rural Pennsylvania where cow manure has become THE fertilizer – the only one that won’t bankrupt. Feeding a household of five including two always hungry teens, it’s glaringly obvious things are going downhill. Our cupboards are dwindling to the barest of bare necessities. Our veggie garden is doubling this year and I’m checking into a chicken coop. Has anyone seen the price of eggs? Eggs for crying out loud! They more than quadrupled in price in just a few weeks here.

I read somewhere that 25% of the US grain has been taken for alternate fuel possibilities – can’t find it again and have to ask if it’s true? If so, whose stupid idea was that? Don’t take it from existing supplies, make it. I’m thinking maybe my hubby isn’t so nuts in busting his behind running his mother’s grain farm along
with his full time job this year. I may pitch in. I’ve got family in all areas, farming (grain and livestock), trucking, construction, and I’ve seen how all of it is being hit.”

“I’m tacking on some things that worry me. I came from California where I made a decent wage. When we moved to TN a few years back, housing was much cheaper here than CA, but that was about all. Everything else was equal, food, clothing, cars, etc. Gasoline was still a little cheaper.
Wages here are 1/2 of what people make in California, and very few companies provide any type of medical or dental insurance. I was shocked to learn that the job I’d done for over 23 years in California required the completion of a master’s degree in TN, which I do not have, yet the salary was 1/2 of what I made. They would not allow me to apply, even though my qualifications were a perfect match for the job.”

“The typical wage here is $8.00-10.00 per hour. My husband is a truck driver for a local company and makes $14.00 which is considered high. Of course, his company provides no insurance or extra money towards such. I noticed today that gasoline has climbed another 2 cents to $3.57 and diesel is $4.72. Already my husbands company is cutting back on runs and trying to combine them, so we’re very worried about our financial future. I wonder how people who make $8.00 can afford the fuel to get to their job. Basically they are working to buy gas to get to their job…where will the money come from for all their other expenses. It’s very scary.”

“It just ticks me off beyond belief that we are paying over a billion dollars a day for a war, borrowing money from China and our economy is going down the toilet, but President Bush, when asked will still claim that we’re in good shape.”

“I live in south central Kentucky where nothing is close. Driving is a necessity. If gas prices get much higher, we are thinking of getting an Amish cart and training one of our horses to be driven. It would take all day to get to town but we could go to the convenience store.

We still have good availability of products but the prices are going up in the supermarkets. I no longer buy beef. Instead I have a friend who raises Black Angus cattle and we split a cow. I have a friend who is raising sheep so I will probably buy a couple of the lambs. I shop at the Amish bulk food store in the county and save a lot over the supermarket prices. I will be eating fresh veggies all summer, grown in our garden or those of my neighbors. Gas prices are $3.59.9 for regular as of last Sunday. Over $4 for diesel! I combine errands and don’t leave my farm unless I have more than one place to go in the same direction. We are eating out less. We are planning on saving the stimulus check. Just an aside, my daughter-in- law is in retailing in NYC and she says we are in a major depression. People are just not buying.”

“In the Seattle area, wild salmon is going for $19.99 a pound, gasoline at
Costco $3.65 at the regular gas stations $3.79 a gallon. People here are
driving less, eating out less, and purchasing food at the lower end stores
such as Grocery Outlet and Cash and Carry. We were in a huge Asian market
one week, rice stacked up as high as an elephant’s eye. Now just try to find
regular rice – many of the people here are purchasing rice to send to
relatives overseas.”

“Unfortunately, I am a volunteer driver for Catholic Charities – IE, I haul people who don’t have transportation to the doctor – so have little control over my gas consumption. I drive 700 to 900 miles a week so buy from 30 to 50 gallons a week. They supposedly pay us for our gas used, but are consistently six months or so behind in updating their prices and the past six months have been the worst ever.”

The following are snippets of responses from around the country. It is evident that people are frustrated and even frightened. While products are available, the current trend in prices is continuing upward. Recent reports indicate that state governments are cutting back on budgets and employees; tourist destinations are already feeling the pinch and more and more storefronts are displaying “space for rent” signs. Since many plan on reducing driving, this summer does not bode well for that industry. Agriculture reports show late plantings of corn and wheat crops and who knows what summer weather will unleash. It is clear from U.N. reports that the food situation is rapidly declining in poorer nations as droughts and floods destroy staple crops. I am sure many of the comments that follow are a mere shadow of what is beginning to happen in your area as well:

I used to be able to buy a pack of chicken ******* for $3 or $4, now the same pack is $7.
I traveled to Spartanburg where gas was $3.29/gal (middle grade). When I got back to ATL to fill up, it was $3.49/gal. Last weekend, I paid $3.69, now it is $3.79 or $3.89.

Saturday is usually a busy day in Fayetteville, but there were no cars in all five lanes at one of the busiest intersections. Some of the independent stores had no cars in parking lot and it looked like they were closed.

How will you use your economic stimulus check? Put it in savings!

Gas $3.74 Rockford, IL.

Prices, though? Meowza! They are up, and rising! But am I buying what I don’t really need? Not on your life. Not with heating oil where it is, and climbing. I’m trying not to take unnecessary trips, and I’m certainly not eating out very often. I’m using my old lawn mower, which I had thought about replacing this spring.

I haven’t noticed any shortages except the “sale items,” but prices have definitely increased.
I have received mine (stimulus check) as a direct deposit, and it will stay in the bank. I don’t plan on buying anything new, just my usual necessities.
$3.89 for medium grade.

I haven’t noticed a decrease in the availability of basics, but prices have risen considerably here in PA–this includes basic such as eggs, flour, butter….Eating and shopping will all be dependent on what I can afford. I anticipate, if the prices keep rising, having to forgo some of the necessities.

In SE Michigan. Prices, however, are another story. Eggs have doubled, milk, dairy products skyrocketing. Good beef cuts (steaks, prime roasts, etc.) are a rare buy in our household these days because they are so expensive. Fish/seafood products are also beyond reach as a steady diet.

Save those left-overs and use them as part of a creative low-cost menu for tomorrow’s dinner.
Get caught up on a bill or two and treat ourselves to a gourmet (home cooked) dinner.
$3.65/gal.

Less frivolous foods, the munchies, you know. Bulk peanuts and fresh raw veggies make good inexpensive snacks. 86 all the packaged crap. Drive only when and where necessary. Make a list. Plan a driving session in a well-routed circle that accomplishes several chores in one outing. Planning for a vacation now includes high on the list, “how much will it cost in gas to get there and back?” Shorter trips/destinations if you are driving a car.

I’ve noticed the prices skyrocketing – quadrupling in a matter of weeks for some things like eggs… A lot of what I used to get I can’t find local anymore.

It will go toward an alternate heating source, most likely a wood burner in the basement.
Last I looked, diesel was $4.59 a gallon and today’s local report said low grade is now $3.62.
Anything we do over the summer will be local, no major travel.

Rural farmland in the mountains of Pennsylvania where the cost of living is very low and so is the average family income.

I am concerned about stories on the news about Sam’s Club and others
rationing rice. Is there a rice shortage?

I live in Arizona in a town between Phoenix and Tucson. There is no real public transportation in my area, and, with summer temperatures going well into
the triple digits for about 4 months of the year, riding a bicycle really isn’t an option.
Let’s face it. The American people are getting hosed by greedy speculators who are driving the price of oil, (hence food prices) artificially high.

I don’t blame people for not buying. Prices are going out of sight. Yesterday, gas here was $3.79 and I bet it’s up from that today.

Food prices are up varying percentages, from 15-percent to nearly 50-percent on many less expensive cuts of meat. Hamburger (80 percent lean) has risen from about $1.99 per pound a year ago to nearly $4 per pound.

Overall, my daughter said the supermarket tab here for her family of four has jumped from about $130 per week to nearly $200. Also, shortages of some products are starting to become apparent, with some shelves bearing large gaps in mute testimony to lack of availability of rice and flour…
Hope that helps.

As to gas prices: Spokane, WA prices range from $3.50 to $3.70. I live in a small town where our one station is $3.87 for unleaded. More to the point, Diesel in Spokane that has more effect on food prices is about a dollar higher at $4.50 to $4.80.

Unfortunately, I am a volunteer driver for Catholic Charities – IE, I haul people who don’t have transportation to the doctor – so have little control over my gas consumption. I drive 700 to 900 miles a week so buy from 30 to 50 gallons a week. They supposedly pay us for our gas used, but are consistently six months or so behind in updating their prices and the past six months have been the worst ever.

So what does all of this mean? The early warning sign are there and I would strongly suggest that people keep an eye on commodity report, climate calamities, and, of course, the price of fuel. There is little doubt that people will be tightening their belt, going out for meals less, traveling shorter distances and using their “stimulus” checks to keep their head above water this summer. Living in a region that depends on fuel oil, it is scary to hear that contract prices for hearting oil less winter will approach $4.00/gallon. This will surely collapse to the economy in the Northeast. If diesel continues to rise, truckers will be at a loss and food will simply not be delivered to stores. Already, many truckers who deliver saw logs are calling it quits. How long can fishing fleets absorb continued price rises? Summer employment looks bleak. The key is to be alert and be informed.

Is there is bright spot here? If you read my article, “The Mother of All Course Corrections,” you will see that the consumer is now in a position to finally make intelligent buying decisions. You can affect what is produced with your valued dollars. If you stop buying the junk food, stop buying sodas, buy only healthy foods and cereals, the market will have to respond. This is your opportunity to finally make a difference in terms of what is produced and what you consume. Insist on quality and use your power to create a more sensible, sustainable economy. The time is at hand for choices, choose wisely!

By: Philip Harris

About the Author:

Chile has been historically isolated as a result of its geographical and economic characteristics, with roughly 98% of all its imports arriving via ports. However, in the past 30 years the country has undergone a massive change, finding itself now in the vanguard of the Free Market movement – being a world leader in the signing of Free Trade Accords – and shedding its former protectionist economic policies.

As a result Chile has been at the forefront with respect to many Latin American countries when it comes to globalization and accessing worldwide markets. This in turn, has led to Chile sustaining economic growth similar to other emerging economies.

As part of this opening of the country to foreign markets the Chilean government recently redistributed political power on a regional basis with the incorporation of two new regions, the Arica-Parinacota and Los R?os. The idea behind the creation of these two new regions was to foment revenues in tourism, mining, agriculture and communications, while at the same time aiming to empower the regions and decentralize power from the capital. The new regions were approved Mar. 15, 2007 by President Michelle Bachelet.

The government’s policies have translated in strong economic growth, with the GDP in 2007 coming in at 5.2% versus 4% in 2006. On the downside, the country is feeling effects from the current global economic malaise, with unemployment hitting 7.2% in 2007. Strong economic growth has also led to a sharp rise in inflation, up from 2.6% in 2006 to 7.8% in 2007 on the back of higher petroleum prices and the ripple effect on food prices, coupled with adverse weather conditions.

It should be noted that Spain’s economy is also going through a rough batch, with unemployment hitting 9.6% for the first quarter of 2008 – the highest it’s been in three years – the third consecutive quarter of rising unemployment. This sharp increase in unemployment has even stoked concerns the Spanish government may run-out of funds to pay unemployment benefits in September.

Still – and despite the domestic nature of current Spanish press with respect to the collapse of its construction sector and rising unemployment – the general perception of Chile in Spain is one of a Latin American country that has undergone a rigorous economic policy that has led to its being considered as an emerging country with a relatively low country risk.

In a roundabout way Chile could benefit from a struggling Spanish economy – which has been built on EU subsidies and a booming construction sector – as many Spanish companies feel they must diversify and look outside their borders for growth. Of particular interest are Spanish construction companies which have been heavily diversifying in Spain into the energy sector. Spanish companies are particularly interested in projects in Latin America, Middle East, Eastern Europe and Asia.

In Spanish business circles it is commented that Chile’s economic stability – in sharp contrast to that experienced in other Latin American countries – has made the country attractive for investment. While mining remains a sector of interest, Spanish companies are also attracted to the banking, telecommunication and electricity sectors.

Despite the strong rise in Chile’s inflation, Spanish analysts see continued economic stability in that country, with sustained economic growth, albeit at lower rates than in previous years given the current global economic downturn.

In general, it is viewed, however, that growth will most likely come from Chile’s continued emphasis on exports and a drive to entice foreign investment. To further encourage foreign investments Chile must continue to ensure not only the liberalization of its markets and financial transparency, but seek to optimize its Free Trade agreements.

That said, it is often mentioned in Spain that the downside of Chile’s economic growth is that wealth is not being equally divided among the Chilean population. More concretely, the difference between Chile’s wealthy and its poor is becoming increasingly pronounced. In this age of corporate responsibility, and with its growing importance in the Spanish corporate world, such discrepancies in wealth distribution could come into play with respect to future investments, either in positive or negative light.

With respect to Trade, Chile exports more than it imports, with energy representing around 63% of Chile’s exports in 2006, while it only imported around 25% in the same period.

Those figures are misleading, however as Chile has limited domestic energy resources, with the country importing the majority of its energy needs. Chile has shown a reliance on natural gas exports, in particular those coming from Argentina. Since 2004 – when Argentina began restricting its natural gas exports – Chile has been revising its energy policy.

Outside of energy, Chile also exports significant agricultural goods (fruits and horticultures), representing around 20% of all exports in 2006, while it only imported 7% in this category for the same year. In 2006, manufacturing goods represented around 10% of all of Chile’s exports, while it imported close to 60% in the same category of goods.

Or in other terms, Chile’s export structure is basically divided equally between industrial (45%) and mining (45%) and the remaining 10% in agricultural goods.

Within the industrial products, the largest export items are cellulose, methanol and chemical products. Of increasing importance in the last decade are forest products, salmon and wine.

It should be mentioned that while Chile is attempting to diversify away from its dependence upon the semi-manufacturing of copper – a product that represented 60% of the country’s exports in the 1970s – to 35% in 2004, this product is still overly represented in the country’s export basket and the Trade Balance as a result of global demands and rising market prices for this commodity.

Copper exports in 2007 represented roughly 45% of the total exports on a Trade Balance basis.

Chile exported $1.3 billion to Spain in 2007, down slightly from almost $1.4 billion in 2006. By comparison, Chile exported $8.4 billion in 2007 to the United States, slightly down from $8.9 billion in 2006. With respect to imports, Chile received $845 million in goods from Spain in 2007, up from $708 million in 2006. With respect to the U.S., $7.3 billion of North American goods were imported in 2007, up sharply from the $5.6 billion Chile imported in 2006.

PRESS ANALYSIS

Despite Chile’s positive economic story, that news isn’t hitting Spain – in fact, news coverage of Chile in Spain is close to non-existent. As an example, when several Spanish businessmen were asked to mention a current article that they had read about Chile they couldn’t name one. Almost invariably the response had something to do with the Dictator Pinochet or the current president, Michelle Bachelet, who is seen as a something as a novelty, in line with Argentina’s Cristina Kirchner.

Other recent news items related to Chile include: reports a **** “Doctor of Death,” could be hiding in Chile; the closing of an investigation in the death of popular actor and singer 35 years after his death; Chile and Hawaii are both trying to get a contract for a giant telescope; A Chilean gang was busted with objects stolen from Europe; Ongoing news coverage of Peru’s ex-president Fujimori who is being held in a Chilean prison; and the widespread access of internet in Chile.

There was widespread coverage of the EU-Latin America Summit in Chile, but again the coverage was geared for Spain’s domestic audience, with the primary news being whether or not Venezuela’s Chavez had apologized to Spain’s King Juan Carlos I – or vice versa – after the Royal told the President to “shut up” at a summit last year in Chile.

When Chile is covered in the press, it is almost always in terms related to Spanish businesses that are operating in that country. Specifically, there are repeated stories related to various Spanish energy and telecommunications companies, but in general they lack depth and are not in and of themselves the types of articles that would entice investors.

There have also been recent articles about threats to Spanish companies.

Specifically, there has been negative press regarding the US businessman Douglas Tompkins (owner of Patagonia and North Face) who it is reported is buying up land in Chile. Reports in Spain claim Tompkins is trying to buy enough land to create a wildlife preserve in the south of the country – and which would run from the Andes to the sea, effectively cutting the country in two. There are concerns this could affect Spanish company Endesa which has plans to build hydroelectric dams near the project. In typical Spanish fashion of looking for extremely bizarre details, the ABC newspaper reported speculation is rife in the Chilean region that Tompkins could be planning on exporting water or even building a new promised land for some Jewish sect.

There are occasionally articles related to tourism, but these are most often related to trade publications. In general, the perception is that there are more articles on the Caribbean, Mexico and Peru than those published on Chile. One person interviewed for this report, said they were shocked that a family member was thinking of going to Chile for holidays instead of some place more “exotic.”

There is next to no coverage of Chilean imports, although there is a moderate knowledge of the quality of that country’s wines – but this is covered in select media aimed an even more select reader, which is perhaps not surprising given Spain’s own personal, and abundant, history with wine.

This lack of knowledge is also backed up by a 2006 survey by the Spanish state agency CIS that noted that of those individuals polled on their viewing news habits, only 7.8% of the respondents said they watched “A Lot” of news related to Latin America, and 49% “Quite A Bit.” The most popular items in Spain are related to news about the European Union, followed by those about the North Africa. News items regarding Latin America were the fourth most popular items (EU, North of Africa, US, and Latin America, in that order). In general, Spaniards identify more with European countries, and North Africa, although there are some indications of change. In a late 2007 CIS survey, 31% of those Spaniards polled thought that Spain should develop programs in Latin America to foment economic growth.

However, just the previous year the CIS noted that in terms of international politics, 56% of the respondents thought European Integration was extremely important, with only 8.6% showing concern about relations with Latin America.

It is interesting to note that this shift has also been accompanied with a rise in Latin American immigrants in Spain, accompanied with rising unemployment.

Amazingly, despite 85% of those polled saying they had never travelled to a Latin American country the vast majority believed the principal problem in Latin America was a lack of democracy, weak economies and corruption. Of those who had travelled to Latin America, the vast majority visited Mexico (24.5%), while only 5.7% went to Chile.

With respect to the perception of which Latin American politicians are implementing measures to further their economies, there has been recently a dramatic shift in favor of Chile. In a CIS report released May 29, 2008 (administered in Nov. 2007), on a scale of 1 to 10, Spaniards rated Chile’s Bachelet as being the most effective Latin American leader with a 4.93 ranking. The next most highly ranked Latin American leader was Brazil’s Lula with a 4.61 out of 10 ranking. Bolivia’s Morales had received a 3.42 rating, while Cuba’s Fidel Castro got a 1.82 out of 10.

While this recent survey is not exactly measuring the same criteria, it is interesting to note that of those polled in a 2006 CIS survey, 19% of them gave Brazil’s Lula high marks, followed by Bolivia’s Morales (16%). Only 6.6% of those Spaniards polled in that survey valued the job done by Chile’s Bachelet, which in relative terms was only slightly higher than the 3.7% who amazingly thought that Cuba’s Fidel Castro was doing a good job.

Despite the improvement in the perception of Chile’s government, it remains clear that country’s message is not reaching the Spanish public, but then this is a public where 35% of the population has never heard of the Latin American Summits.

SWOT ANALYSIS

Strength
As a result of its having the jump on other Latin American countries with respect to liberalizing its markets there is a generalized perception that in Chile there is an elevated sophistication and professionalism when dealing with Chilean businessman. The Chilean telecommunications and software sectors are viewed as being consolidated and highly respected. Tourism is a definite strength with not only majestic views, but also the added benefit that it’s viewed as safe to travel to remote locations, unlike in several other Latin American countries. After all, what good is a vacation if you can’t come home to develop the photos. As mentioned repeatedly in this report, Chile’s economy is seen as a definite bonus, with the government fully seeking to follow a Free Market model, and entice foreign investors. A willingness – and business code – to allow foreign investors buy or create businesses in Chile without any type of restriction of discrimination toward foreigners. A favorable tax regime, which avoids double taxation with Spain. Direct tax on Companies/Societies is 17% on profits; Indirect tax of VAT 19%. Patent protection: Chile subscribes to strict patent protocol, including that of the Paris accord and recognizes those patents that were issued in other countries. Patents should be registered also in Chile to receive full protection. Common language – Spanish – and in many respects a common culture and religion. This is not to be downplayed as Spaniards are notorious for there horrible grasp of foreign languages. o The current strength of the Euro also makes investments in Latin America attractive.
Weakness
As mentioned previously, one area that will increasingly draw criticism from stakeholders and activists is in the area of distribution of wealth. In Chile the lines between those who have and those who don’t have are increasing. Chile’s energy network/grid has shown signs in the past (1999) of needing further investments to avoid shortfalls in production and supply. Chile’s energy portfolio is certainly a weak point, which while the country does have some renewable energy sources – most notably in the area of hydroelectricity – there is a deficit with respect to gas and oil, the result lending to supply shortages. While Chile is “an open market” there is actually tight control on the distribution channels – roughly 80% of retail distribution is handled by 20% of the distributors, which would suggest that this area needs to be liberalized. With respect to the above point, when introducing some consumer products distributors will demand additional support for publicity and promotions, for which the foreign companies will have to be willing to provide. Given the tight control on the retail supply chain and distribution at times it is viewed that certain participants hold too much power when it is time to negotiate business terms. While taxation is generally lower – except for alcoholic beverages (27%), there are also some barriers for the importation for motor vehicles and parts. There have been some reports tighter controls on press freedom. In Spain there was coverage recently of a Committee to Protect Journalist report (May 23) that Chilean photographer V?ctor Salas suffered a serious eye injury on Wednesday when he was struck by a police officer as he was covering a protest outside parliament in the southwestern city of Valpara?so. Salas works for the Spanish state news agency EFE. While Chile’s economy is a positive, it is also showing some signs of growth slowing down, and unemployment and inflation both rising. For the most part Chile has avoided political financial scandals, although that has recently changed – and which oddly seems to be the product of a stuffy government process inherited from Dictator Pinochet. o Indeed, Pinochet remains a weakness in terms of branding and marketing, perhaps not helped by the ongoing leaks, trials and reports. On the other hand, Spain has something to offer in this area as it also seems to have recovered from a similar situation under Franco. Some Spanish businessmen said they cannot understand why there isn’t a full agreement between Chile and Mercosur, rather than just being an Associate Member.
Opportunities
Given the current makeup of Chile’s energy sector – its dependence upon gas and oil, etc – this should provide the country an opportunity to invest in renewable energies, such as in solar and wind-power, areas in which Spain has several leading companies. Iberdrola, Acciona, Endesa, Gamesa, ACS amongst others are more than qualified to bring their technology and know-how to Chile. Chile is also diversifying into the LNG market, an area where Spanish companies are world leaders. Chile can be a platform to enter other countries given its vast Free Trade agreements. Specifically, foreign investors can take advantage of a Law signed Nov 23, 2002 that seeks to foment foreign investors to use Chile as base to enter other Latin American and global countries. Spanish companies and investors are especially suited to take advantage of such legislation given the cultural similarities and common language in the region. Chile offers growth and investment possibilities in the construction sector, especially in the area of building second homes. Chile continues to offer important investment possibilities in the area of tourism. Chile offers a stable and dynamic market that is supported by a professional manner of doing business. One sector that is currently undergoing spectacular growth, and which Spanish companies can bring their know-how and investments, is in the area of “green” projects, related to sustainable growth, corporate responsibility and environmental protection. The Chilean market is extremely competitive in terms of the relationship between price and product, which means that there is room when negotiating for value-added services or products when seeking positioning in the market and client-customer loyalty – something that Spanish companies can provide. The Spanish government has made it a priority to invest in science and technology, meaning there could be clear opportunities to do business in Chile given that government’s economic policies that also seek to foment investments in this sector.
Threats

There are continued supply concerns with respect to not only electricity, but also in the area of agricultural products. Chile must resolve its outstanding border disputes with Peru and Bolivia. There does exist the threat of the influence from populist Latin American governments in Chile’s politics, most notably from Venezuela, Ecuador and Bolivia. Given Chile’s geography there does exist the constant threat of earthquakes. Environmental concerns:
Significant threats to Chile’s freshwater and marine habitats are caused by the ever growing aquaculture industry – primarily salmon farming. The establishment of non-native tree plantations is considered by many to be the greatest threat to Chile’s native forests. The primary environmental threats to Chile are air pollution from vehicle and. industrial emissions, water pollution from untreated industrial sewage.
COUNTRY PERCEPTIONS

With respect to what most positively affects a country’s perception in Spain it must first be stated that Spain is very nationalistic. There is a love-hate relationship – some would say envy – with various countries based on historical incidents.

In addition, Spaniards love rankings and continually are publishing articles to show that they are in the vanguard. This at times is extreme, to the point where there have been articles comparing how many cigarette butts, or trees – or worse – can be found on the streets of various European capitals.

More specifically, Spaniards might admit that certain products from the U.S. are top-quality, but they won’t let that sway them from still dredging up the Spanish-American War of 1898 and complaining of the loss of territories. Americans are consistently portrayed as being na?ve and religious fanatics, while at the same time being hypocrites. It is a common game in Spain among American ex-pats to look for the “strange or bizarre American news story” that Spanish media routinely publish.

In the same way, there has been extensive news coverage this year to celebrate the 1808 war again France – which while it freed Spain from the French was also the beginning of its decline in influence in Latin America. A weakened Spain subsequently found itself facing Wars of Independence in Venezuela and Argentina.

All to say, that Spain – and Spaniards – have a long memory, and some would argue an inferiority complex.

Spaniards, besides being nationalistic, are also idealists. Countries with the most positive image perceptions in Spain have a strong record in Human Rights and Democratic ideals, fortified by solid economic models. In this respect of equal importance are countries that can contribute in the areas of Culture and Art, and High Technology. Spaniards are big spenders who love the latest high-tech gadget, and in that vein luxury goods.

With this in mind, it is interesting that according to a recent study by BBC, only 31% of Spaniards consider it a positive factor that China is an economic powerhouse. Indeed, according to that study out of all European countries it is Spain that holds the distinction of having the most negative image of China.

On the backdrop of the above information, the typical Spaniard tends to associate his spending by what is popular and trendy, rather than as being related to a specific country.

By Robert Steven Duncan

By: Robert Steven Duncan

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