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A third of the population lives below the poverty line. As in thousands of American towns across the country there’s no slack in the family budgets here to accommodate a fuel bill here that’s suddenly shot up 300 per cent.
A family of four that decides, as many will this summer, that it can’t afford to drive 1,200 miles down Interstate 5 from Seattle to Disneyland is making a decision that spells slim business for motels, roadside restaurants and the tourist industry overall. Americans routinely drive huge distances, starting with the long distance truckers. It now costs well over $1,000 to fill the tanks of an 18-wheeler with diesel fuel averaging around $4.20 a gallon. Over 1,000 trucking firms have already gone bankrupt this year and the independent drivers – about a fifth of the industry overall – face imminent ruin.
Across the past generation American incomes, below the very rich, have remained essentially static, or have actually gotten worse. Year after year Americans work harder, longer, for less money in real terms. Political tranquility has been maintained by cheap gasoline, cheap food and, in recent years, the seemingly easy credit and tax deduction on home mortgage interest allowing middle-income families the illusion they owned a home. Gasoline is no longer cheap. The cost of food is going up. The subprime crisis has pitchforked thousands of Americans into forfeiture.
There’s worse to come. Since the subprime meltdown there’s been a lull. But now the so-called “Alt-A” loans, made to supposedly more credit-worthy borrowers and amounting to a trillion dollars, are allegedly about to go down the tubes, carrying banks and insurers with them. And this time Ben Bernanke, chairman the Federal Reserve, has no bail-out strategies left. He can’t lower interest rates to banks below the current 2 per cent, a level partially responsible for oil costing almost $130 a barrel. Round the corner looms hyper-inflation.