The “Chicken Little-like” item in the Wall Street Journal, which actually was a reader’s comment, is not nearly as crazy as one might think. I posted it initially without comments, just to get some debate started. Actually, the “sleeper” in all of this is something either nobody is paying much attention to, or prefers to ignore for whatever reasons; and it is the runaway utility bills materializing this past winter for the first time.

Chances are that Ian Price, who writes saying he “loves economic downturns,” is probably going to get his wish. In such times cash is king, and there is an old, old saying “The only time to buy real estate is when you can pick it up for CASH -- back taxes and pennies on the dollar.”

Ian, you would have loved it here in Billings about ‘87-88. Real estate was in a major slump, HUD/VA foreclosures were on nearly every corner begging to be picked up, and one of my doctor friends was buying with both hands. He is a fine doctor, but also an astute businessman, and today the “business” owns hundreds of rental units. He doesn’t deal with residential tenants, it is all run by a management company, but he and his wife do handle the commercial properties themselves. He’s confessed to me that on a lot of these deals he literally was stealing people’s equity and actually felt badly about it, but if he didn’t buy the stuff, somebody else would. Definitely a case of crying all the way to the bank.

I myself chose not to get into any of this as landlording does not appeal to me; nor does making money off the backs, sufferings and misfortunes of others. It’s just the way I am. Sorry.

My new friend Mark G. who I’m looking forward to meeting soon also makes some good potent statements and addresses the union/non-union issue head on. The union, of course, is the natural enemy of the corporate structure and ruthless, greedy executives who are manipulating to enrich themselves and don’t care about the employees, the company, its stockholders, customers or anyone else.

I’m personally union-neutral these days but have simply said, and will continue to say I don’t think it’s sound business practice to try and 100% run multiple-screen complexes with part-time popcorn shovelers on minimum wage. This is why we have the carmike cinema disaster here in Billings and lots of us don’t go to the movies any more, haven’t for years and may never go again. For much more on this, see our on-going discussions and debate in the “Pearl Harbor” thread.

Successful investors have to develop a knack for visualizing far down the road ahead. Warren Buffett has said, “I prefer simple businesses that I can understand.”

And now... a rough draft of an article I’m writing...

Why a new Great Depression is probably on its way:

In Montana where I live, the price of natural gas which we use for heat, has not just gone up slightly. It has DOUBLED. A 100% increase over last winter.

The $250 heat bill has doubled to $500-600. We have also seen similar runaway escalations elsewhere in the country, with the East hit especially hard.

Many states, including Montana, have restraints on utilities that stop them from cutting off electricity and heat during the winter freeze, to avoid all these disturbing headlines about poor people freezing to death. But starting in about April, the restraints come off and the final disconnect notices go out. It is pay-up or CHOP, off with your head.

In the state of Kentucky, about 18,000 final disconnect notices have gone out, and here, as I have been informed, both gas and electricity are from the same utility, one HUGE bill. These people can’t shuffle the walnut shells around on the table any more... giving the greedy gas company some, and the electric company a little when they haven’t got enough money to pay both. For them, their enemy is a single monster, and it wants its blood money NOW. The party is OVER.

Let’s look at the effects on two groups of people.

For the wealthy, a small group, it doesn’t matter how much the utilities go up. The bills can double, triple, or even increase ten-fold, and it is still less than 1% of their income. So they might grumble a little, but in the final analysis just make out the check and go on with their lives as though nothing happened, as they always do.

The much larger group, which is most households, is heading into severe financial distress. Mortgaged to the hilt, carrying a heavy load of credit card debt at usuruious interest rates, they have up until now been squeaking by from month to month... but still had a little “discretionary income” left over each month. Not any more. The former winter heat bill of, say, $400 per month to heat the house is suddenly now $800 to $1,000; and they have to pay. There is nowhere to run; no wiggle room, no weaseling out. And next winter according to some estimates, the utility bills are going to double yet again.

These families cannot wave a magic wand and suddenly increase their income by an additional $500, or next year $1,000 to pay these utility bills. Indeed, they’d better hope a job is not lost, for if it is, they will be even worse off.

The process has already started, and we will see the cumulative effects of all this begin to set in with a vengeance this summer. Here is what is happening RIGHT NOW in families across America:

-- No more money to go out to dinner in a restaurant.
-- No more money to call up and send out for pizza.
-- No more money to buy new clothes.
-- No more money for the new car payment. It will be repossessed.
-- No more money to go out to the movies.
-- No more money for lunch at work. It’s back to fixing peanut butter sandwiches at home and bringing lunch in a paper bag.
-- No more money for the summer vacation drive in the car to Yellowstone Park or elsewhere. Plans CANCELLED.
-- No more money for motels, restaurant meals, knick-knacks or whatever else might have been purchased on the trip. All CANCELLED; no longer affordable.
-- No more money for airline tickets. Vacation CANCELLED.
-- No more money to buy a new car. Planned purchase CANCELLED.
-- No more money to even fix the old car.
-- No more money to remodel the house. All renovations CANCELLED.
-- No more money for needed medical care.
-- No more money for needed prescription drugs.
-- No more money to heat the house at a comfortable level; the thermostat has to be set at 55-60 degrees and so the whole family is shivering and sneezing. Since there is no money to pay for medical care or medicine -- which unless you have insurance has all become CASH IN ADVANCE OF SERVICES, a family member gets sick and dies, leading to another crisis:
-- No more money for a Funeral, and all the credit cards are already maxed out. So the family has to dig a hole in the back yard and bury Gramma themselves.
-- No more money for holiday gifts, parties and celebrations. Other than the wealthy, most people haven’t much to celebrate about anyway. Thanksgiving dinner CANCELLED. Christmas 2001 CANCELLED.

January 2002: Having held off as long as possible hoping Christmas spending would save them [didn’t happen,] stores start to close en masse, like rows of dominoes tipping over. Hundreds of thousands of workers are laid off. Unemployment figures begin to rise steadily, heading towards 20% and then, during 2003, to 30%.

With their utilities finally cut off completely and huge balances owing, thousands of people freeze to death in their homes as Winter 2002 sets in with a vengeance. The quantity of dead bodies lying about as a result of people being unable to afford funerals begins to become a health hazard in many cities, and the authorities are forced to have pickup trucks drive slowing through neighborhoods, with loudspeakers proclaiming: “BRING OUT YOUR DEAD! BRING OUT YOUR DEAD!”

To Be Continued.

Right now I worry about this about as much as I worry about postage stamps going up. You know the great depresion started because people talked too much and started drawing there money out of the banks. Plus the big dust bowl that killed all the crops and put the farmers in the worst of times. A lot of lessons were learned back then to help prevent that from ever happening again.

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I respect the men and women of this forum for their technical expertise and experience, and am very grateful to all of them for their advice in matters pertaining to projection equipment and practices.

That said, to be perfectly honest, if I want an economic forecast, there are lots of web-sites that have their own breed of experts that deal in financial matters.

While I have no problem with anyone expressing an opinion about anything, I tend to agree with Darryl that perhaps this should be moved to the "Yak" forum. I often use this site to reference past posts and find non-projection posts an annoyance.

If I may, a very short observation on unions. I was a union projectionist and am a union technician. I have served as president and business agent of a small, now-defunct local. Unions came into being to correct some unfairness as well as dangerous conditions existing in booths handling nitrate film. At the time they were conceived, they served a usefull purpose.

Back during the days of two-projector booths with change-overs and carbon arcs, it was necessary to have a person to oversee the operation constantly. Highly flammible film made it even more necessary.

Xenon lighting, automation, safety film, even tape splicers, combined with severe competition for the entertainment dollar, have changed theatre economics and projection-room practices beyond what we could have imagined back then.

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