This is the quiet time in Jackson Hole. The motor homes have long since departed down the winding road in Hoback Canyon, the hotels are empty, the restaurants slow. The recession is starting to show. The local paper historically had pages of want ads to a few columns of rentals and that ratio has reversed with pages of rentals. Rents appear to be off 20%. There is talk of falloff in visitation of perhaps 25%, the local GM lot is full of unsold Suburbans and Tahoes. The ski area at Teton Village has spent a fortune replacing its old Tram with a new 100 passenger module made in Switzerland complete with new towers and buildings. I have no knowledge of the financing involved but it is a business model that caters to only the well to do and in a world where trillions of wealth has vaporized, one wonders how long that business model will continue.
A large real estate development, the Canyon Club has gone bankrupt and we are starting to see a few residential foreclosures.
Over in another snowy part of the world in Iceland, the unraveling continues. The NY Times ran an article last week highlighting layoffs and inflation in Reykjavik:
http://www.nytimes.com/2008/11/09/world/europe/09iceland.html?hp. Some of her generous neighbors: The Faroe Islands, Poland and Norway have sent offers of help but I have read no significant help from the US which is odd considering that the US military long used Iceland as a North Atlantic aircraft carrier. I landed there on numerous occasions when I wore the uniform. The Times article mentioned the fall of the Icelandic Krona from 65 to the dollar earlier this year to 130/dollar. On Yahoo finance the rate this morning was 225/dollar. I get the impression reading blogs and the Icelandic press that no one has been punished and the government is unsure what to do. There are allusions to the spoiled indolent youth who couldn’t be bothered to work during the recent boom in jobs that required getting up early and going home tired such as agriculture and construction, jobs that went to laborers from Eastern Europe The layoffs have just started, but Iceland’s employment safety net precludes immediate layoffs for 90 days after which unemployment kicks in. One wonders where the money to pay these benefits will come from with an insolvent government making payments in a plunging currency. Fortunately Iceland made some really sound decisions within the past 3 decades which will at least keep them warm and help them cope. The US could learn from their prescient planning. In the 1970’s Iceland used imported coal for 3/4 of its energy yet in 2007 over 82% of its energy was met with hydro and geothermal sources. Iceland has no petroleum resources of its own yet 16% of its energy is met with imported oil , chiefly to power cars, trucks and buses and of course its fishing fleet. Paying for that oil in the krona will get increasingly expensive especially world oil prices rebound which they almost certainly will. I regard the current plunge in the world oil price as an unfortunate event which will impede US and world planning to lessen dependence upon petroleum. Renewable energy is more than competitive when oil is $150 barrel but with a drop of 50% in all the major fossil energy prices, the incentive to conserve and switch to renewable energy vanishes. I am not a conspiracy theorist but if I were a Middle East oil producer I would be doing exactly what they are doing. Keep oil high enough to continue the transfer of trillions of western wealth but not so high that those same western economies start switching to energy sources that might eventually end up bypassing their sun baked sandstorm paradises.The US citizenry is starting to get it. They for a while were using less petroleum, and the impending recession will continue that reduction in energy use, but the reduction is nowhere near enough to make a significant difference. Oil and gas supplies 65% of US energy and 16% of Iceland’s energy. Iceland uses 25% of the Oil per capita that the US uses. If the US could get to that figure we would be using 5 million barrels per day instead of 20 million per day. At 5 million barrels per day we would be Energy Independent in oil. 5 million barrels per day is our domestic production. But 5 million barrels per day is still a lot of oil use compared to most of the rest of the world.The US could get to this number if it embarked upon massive electrification of its transportation as the Swiss did 70 years ago. Now here is an amazing statistic: The US today consumes 400 times the oil per capita that Switzerland consumed in WW2. We consume about 20 million barrels/day. If we were to consume at the rate of Switzerland in the second world war we would be consuming at a rate of 1/4 of 1 % or only 50,000 barrels per day! Could the US ever get to that figure? Of course not. But I think it could get to a consumption rate 100 times that figure if we made massive investment in electrification and upgrade of our electrical grid. Of course to get to that figure we would as a nation have to end our sprawling suburban missallocation of national wealth and begin to live and work locally. But that will have to be the subject of another blog.