City, Country, Suburb? It’s Not Where You Live but How…

This is a guest essay by Sharon Astyk, who posts on The Oil Drum as Jewishfarmer. Sharon recently published a book titled: Defeating the Food Crisis on American Soil: A Nation of Farmers. The below essay, (original here) approaches the age old "country/city" question from a unique perspective, that of 'adapting in place'. (if you have your own practical/solutions based essay you'd like to submit to the Campfire series please email the editors)

I’ve had a lot of interesting discussions lately with various people about optimal locations. First, there was the large city dweller who talked about his fear of living without access to land in a city. Then there was there were the two news stories that suggested both outer suburban and rural dwellers were (surprise!) suffering more from high gas prices than those who live in population centers. Finally, there was Kunstler’s latest screed, more gleeful than usual, about the death of the American South due to high energy prices. So I thought it was worth taking on a topic I’ve written about before - whether to live in cities, suburbs or in the countryside in an increasingly energy depleted and warming world. And the answer I’m going to give you is that IMHO, all of the above have possibilities. But a lot depends on how you - and the people around you - choose to live in a place. Or maybe it depends on what kind of person you are - or can become.

Despite much debate on this subject, I’d argue that many, perhaps even a majority of cities, suburbs and countrysides have a future of some sort. What’s important, though, is that in every case, those futures are very different in ways they aren’t right now. That is, right now there are differences between the three, but they are easily overcome. It is perfectly possible, though miracles of cars, delivery trucks and online purchasing for city and country dwellers to have very similar frames of reference. One may live in an apartment, the other in an old farmhouse, but they can vacation in each other’s neighborhoods, share the same frame of reference by seeing the same films, the same shows (one travels for this), wearing the same clothes, eat much the same diet, etc… Now they may have different priorities, and there are distinctions, but the differences are comparatively small, and easily overcome if that’s one agenda.

We are about to enter a period in which the differences in way of life between urban, rural and suburban are going to be magnified dramatically. It will no longer be possible, for example, for city dwellers to have a “country place” far away, or for people to move out to the country and keep the amenities of suburban life. So the question becomes - how do you want to live?

There has been a lot of lively debate about the merits of suburb, country, city - much of it, I think, far too polarized. For example the powerful impact of James Kunstler and the (otherwise excellent) film _The End of Suburbia_ have effectively led a lot of people to simply dismiss the suburbs. And yet many suburbs have approximately the same population density as 19th century large towns that supported considerable infrastructure. Now in many cases, because of the ridiculous zoning laws, there is no such infrastructure, but large suburban houses and garages are appropriately sized to create it - interstitial businesses will spring up rapidly as people can no longer afford to shop, and zoning laws will be overthrown.

Let me be clear, I agree entirely with Kunstler that suburbia was a tremendous misallocation of resources - I think the project of the suburbs was deeply flawed. Where I disagree is in the idea that we should now abandon them - that we must. In fact, I think we must not, simply because industrial agriculture is increasingly disconnected from producing real food for real people. As more and more Americans get poorer and are priced out of food by rising energy prices, we will absolutely require suburbia to keep fed - that arable land, much of it superb farmland - has to be brought back into production. And since we won’t be commuting from the cities, we’ll be living the houses. Yes, it would absolutely have been better to build better houses and design better- but that doesn’t make suburbia uninhabitable.

The same thing is true with cities - cities of 1 million or so have existed for a very, very long time. I have my doubts about whether cities of 8-10 million will be sustainable in a world with high transport costs, but I also have no doubt that most cities, which were established for reasons - because they sit in a useful or valuable place - will continue to be cities, even if their infrastructure changes and their population reduces in the longer term. Manhattan and Chicage and LA all do have a future - but it is important to be able to live within the kind of future they do have, and within the limitations of urban centers.

The countryside suffers most from transportation costs, small tax base and lack of jobs - it is reasonable to believe that high energy prices may eventually result in deliveries ceasing to be made to rural stores, that rural towns may find themselves unable to pay for plows in winter and schools, and that job losses will reverbate more severely here. It become plausible to think that such shortfalls might begin comparatively soon. And for those who live in the countryside and have enjoyed the advantages of city jobs, suburban amenities, etc… this is likely to be a rough transition. But that doesn’t mean we will abandon the countryside - being able to eat creates tremendous incentives to keep some lines of connection open.

In short, I think it is most important to talk about how to live in the suburbs, or the city, or the country in a low energy future. I think that may be more productive than extended screeds against one model or another.

The countryside may be likely to suffer first and deepest from the shortage of fuels and loss of services. Now there are (and I am overgeneralizing here) two broad groups of people living in the country right now. The first is made up of the rural poor and working class, farmers, homesteaders and country and those who want to be countr people - that is, people with ties either to land or other people in rural areas. The other group are exurban commuters who may have hobby farms, keep horses (not all people with hobby farms and horses fall into this category, obviously), or built McMansions out in the pretty countryside when gas was cheap, but who have no particular tie to the area, and strong ties to suburban style amenities. They have either gotten these amenities by encouraging rural towns to use their growing tax base of exurban commuters to provide them, or by driving distances to where they are available.

Now the harrowing process of energy costs, high unemployment and low salaries are likely to drive a lot of group #2, the exurban middle class, back towards population centers. Some will stay and become part of group #1, or find some other way to do well in the rural areas, but most of them will probably pick up and move in the coming few years, dropping tax bases, leaving a lot of empty housing, and in otherwise emptying a large part of the rural landscape. This change is likely to have two big effects. The first is that the exurban middle class (who often moved out as far as they did because they couldn’t afford good housing nearer population centers) will be competing with poorer urban residents for housing now - that is, they are likely to displace lower income people from cities and out into the countryside in a process of gentrification. The second is that the tax and service base of rural areas is likely to simply collapse. Many of these areas were pressed into making changes that won’t be sustainable - large multi-town district schools, for example, are simply going to be impossible to afford busing for.

On the other hand, group #1 probably won’t move, and shouldn’t. They are (not universally, but often) lower in income than the departing exurbanites, but they are also better adapted to their place. The thing that makes it possible for most of the rural working class to get along where they do is that land prices are comparatively cheap - and they are going to become more so for at least a while. In many ways this may be good - some of the buyers for the foreclosed McMansions are likely to be extended families, people who were already living together by necessity in trailers, and who now can live together in a four bedroom house. Universally my rural neighbors are extremely handy, and if they can’t afford the foreclosure, would be happy to help build an addition onto their trailer from the scavenged pieces of the McMansions as well. The un-gentrification of rural areas may actually have some benefits. The same is true as absentee property owners of rural land sell or rent their holdings - some of these may be purchased, others simply reclaimed if left unused long enough.

The other thing that group number 1 often has are family ties - social connections that mean that Grandma takes care of the baby while doing their crappy low wage jobs, and then they take care of Grandma, rather than putting her in a home. These ties are going to become increasingly valuable. Yes, the cost of gas is going to be troublesome, but rising prices for food, firewood and fiber will partially offset this, and in general, these places haven’t even begun seriously economizing. Yes, it is presently illegal to put 8 people in your pickup flatbed and drive to the Walmart for morning shift. How much enforcement do we expect there to be as the rural police departments can barely afford gas? I’m guessing not much. Rural dwellers are suffering now because of high food prices and energy prices, but they have barely begun to use mitigation strategies - in most rural areas, the jobs are all in one or two locations, as are the supermarkets. It will not be hard to put together large carpools and taxi services. The problem is that as yet, no one has figured out that this is a permanent situation, so the adaptation process has not begun.

The same goes with growing food - yes, many rural dwellers don’t grow gardens. But they are often not very far removed from people who did, and they probably hunt, and they often are very resourceful. Living in the formal economy, it is often very hard to do more than just get by - living in the informal economy can actually be much easier in rural areas, where there are natural resources to build upon (or exploit - but hopefully that will be kept to a minimum).

My expectation is that many of those displaced from cities will probably be recent immigrants, many not very far removed from agricultural livelihoods as well. There are likely to be some difficulties with this transition, and some hostility on both ends, but in the end, I suspect that many rural dwellers will find that they have a considerable amount in common with their new Mexican or Somali or Hmong neighbors. I anticipate some trouble here - and some surprising alliances.

What will not be possible is for rural dwellers to live the way they do now - families will have to do subsistence work, most families will have to go back to one earner status (because they can no longer afford transport costs), which should be possible as property values begin to fall. The shift will be difficult and painful, and particularly hard on the elderly, but it will be possible in many cases. That is not to say pleasant, or that many people won’t be ground up and spit out in the transition, but it is possible.

Living in rural areas will mean being comfortable with a degree of isolation previously unknown to those who went there - you won’t be taking the kids to soccer practice and swimming lessons - you may not be able to afford them. Many of the amenities that once made exurban towns seem like suburbia in the country will disappear. You will *have* to get along with the neighbors - you are going to need to work together to get enough gas to afford to truck your produce into the city. You will have to be very comfortable with fixing things yourself, making do and adapting to shortages. Meeting your own needs becomes more important when every trip to the city is begrudged, and won’t be repeated for a month or more.

The nature of shopping changes - every expenditure of precious cash is begrudged (in the county my great-great-grandfather lived in in Maine, there was the story that the only cash money in the whole county was a gold piece brought home by a neighbor man from his service in the Civil War), and barter and growing/hunting/foraging your own become more and more essential. Because shopping changes, eating practices will have to change. Do you drink a lot of milk, or eat a lot of meat? Well, I hope you plan to milk each morning and butcher your own - or have good relationships with someone who will, because you will not be buying fresh milk and meat regularly.

That’s not to say that rural towns won’t have resources - for example, exurban McMansions will make great home business sites, and rural areas have been known to produce great local culture - many small rural towns had opera houses and theaters, recitation and music groups. The Blues and Appalachian folk music, for example, grew up largely in rural areas where nearly everyone made music. As the urban poor move outwards they will bring urban cultures into rural areas, and the cultures will blend and merge in creative (and probably sometimes destructive) ways. Rural towns did once have thriving cultures - it is not at all impossible to imagine them having them again - or continuing to have them in many cases. But they will be small cultures. It will be necessary to derive one’s pleasures from intense, deep knowledge of a narrow place, rather than broad shallow knowledge. That is, we will have to find culture and diversity in new ways. But while we can imagine having culture, we should assume virtually no *services* in rural areas - we will be on our own for protection, trash disposal, regulation of pollutants, etc… What people don’t band together to do won’t get done.

Access to markets will be intermittent - when you can afford the trip, rather than when you necessarily want to go. Employment may be intermittent and seasonal as well. It may also be strenuous - bicycling for long distances, for example. Eventually new market lines will be built in many places - and some places may die out for lack of them. But while a transition from the habit of being able to transport quickly may be hard to overcome and painful, it is worth remembering that rural life has existed for centuries. Anyone who has ever seen a man walking for several days bringing his flock of sheep to market in a poor country, or a truck full of farmers heading down a mountain on market day, all crammed together, knows that it is perfectly possible to overcome scarcity of fuel - but setting up systems to do so is harder. Ultimately, the ability to adapt and make do will be a fundamental requirement to rural living.

But that’s true of urban dwellers as well. Cities will certainly continue to be centers of trade, but the reality is that as prices for urban infrastructure rise, money, which becomes less available and less important for rural dwellers, becomes harder to come by and more essential for urbanites. Perhaps the defining characteristic of succesful urban dwellers is the same one that defines rural dwellers - the ability to adapt. But the adaptive abilities required are different - while rural dwellers may need subsistence skills, urban dwellers may need the ability to recognize commercial opportunities and fill them, to rapidly shift from one business to another - first importing goods, then auctioning repossessed items, then being the middleman with local farmers. The informal economy is likely to be just as important for urban dwellers as for rural ones, but instead of the subsistence economy subsidizing job loss, scavenging, meeting newly opened needs and taking advantage of short-notice opportunities, and black market activities are likely to be among the biggest sources of jobs in cities. Economic flexibility will probably be key.

While urban centers are likely to be the last places where actual shortages will hit, the high cost of urban living - even urban slum living - is likely to effectively cut many people out of marketplaces. And there is far less space for further consolidation in urban housing - there is some, and consolidation there will be, both because urban owners will only be able to keep their condos and homes by bringing in other people, and also because density is profitable.

Living well in cities will probably involve the ability to live in quite small spaces, and to tolerate infrastructure breakdowns with reasonable good cheer. They won’t happen as often as they do in the countryside, but when the sewer lines break or the gas goes off or the electricity goes out, the consequences are likely to be considerably more acute. While country dwellers may find that many services simply disappear - there is no one to plow the road, there are no police anymore, intermittency is likely to be a characteristic of urban life.

The ability to work with others and self regulate well is also likely to be absolutely essential - urban population densities mean the threat that fairly commonsense responses to breakdown could lead to disaster - for example, if the water stops flowing, it only makes sense to begin bringing human manures out of the buildings - but *everyone* must do this in a way that avoids water contamination and that handles the wastes wisely, or disease spreads and the city stinks. If the gas goes out, the temptation to use a small burner to cook becomes almost intolerable - but the need to regulate these and train people in safety is acute, since a single fire can take out a whole apartment building - or neighborhood.

One of the questions worth asking is whether you will like urban life as it is lived by the poor - because that is probably the reality for most of us, no matter where we live. For those who are comfortably living in cities, this may be a very rude awakening. And for those whose experience of urban poverty is primarily of the graduate student or actor/waitress kind, a similar, if not quite as acute shock awaits.

Job losses are rising in the financial centers, in tourism and tourism tied industries, and will rise further. Without the ability to borrow money to go to college, professors will be laid off. Those who aren’t comfortably well off themselves in cities, but rely on the disposable income of the middle and upper middle class may also find themselves suffering as that class becomes less wealthy. If you presently enjoy all the benefits of urban life with extended trips into the countryside to reconnect with nature, ask yourself how you will like doing without these - in August, during a heat wave. If you have depended on air conditioning to keep cool, and heat to keep warm, think about what happens when the infrastructure fails, or when you simply can’t pay the bills. If you love your job, ask whether you will love the work you are going to be able to get. In fact, I generally speaking would say that if you would be reasonably comfortable living in the poorest and worst neighborhood in your city now, you’ll be fine in the city. Many urban poor already experience most of the dangers of post peak life - health complications because of urban life, insufficient security, insufficient access to food, energy shutoffs, indifferent response from the wealthy.

The two worries most articulated about urban life are security and food. Both of these are real worries - but they apply to everyone else on the paradigm to. Rural areas that don’t produce all they eat risk not getting imports because it isn’t worth bringing in supplies to the outer margins of the supply lines. Rural areas that have poor alliances between neighbors are likely to experience rising crime rates, as poverty provides greater incentives for crime and violence. There is generally more crime in urban areas, but there are also more people - alliances are remarkably powerful in this regard. Again, urban dwellers may be broadly divided into two groups - the kind who politely try not to know their neighbors and who never make eye contact, and those who have strong community ties. Many urban dwellers in poor neighborhoods have been dealing with precisely the same things we are facing for decades - inadequate security, poor police presence or reason to fear the police themselves, high crime rates - and often community groups are able, working together, to minimize these problems. The successful will be those who are prepared to work together in deep ways, and to prioritize the welfare of the community overall.

As for food, it is far more likely that you will go hungry because you can’t afford to buy food than because there is none in the stores. Shortages are a possibility, but again, cities are cities for a reason - they are often at the hub of rail, water, or other lines. Some cities, particularly those with acute water shortages, simply may end up with a comparatively small population by necessity. But for the rest, the food will come in, usually. The question is, will you be able to buy it. My own feeling is that cities will have to produce a large portion of their produce and probably meat - the end of refrigerated shipping is coming, and probably quite quickly for any but the rich. While grains will probably be shipped out by train, things that have to be kept cold, that now come from irrigated farmlands far away, are probably going to go out of the reach of many people. Fortunately, this is possible - even Hong Kong, for example, produces a large portion of its meat and vegetables within the city limits. For the dryest cities - LA, Las Vegas, Pheonix-Tucson, this may not be possible, and that may be their undoing - they won’t go away, but the populations of these cities may contract dramatically. Not coincidentally, these are also tremendously hot places, and without air conditioning, urban dwellings may be nearly intolerable.

But it is completely possible to imagine even Manhattan or San Francisco or Chicago or Toronto producing quite a lot of its own meat and produce, and certainly Cleveland and Atlanta and Ottawa will be able to do so. It will be done in vacant lots, on rooftops, on stoops and balconies in containers, in tiny backyards and by the reclamation of public space - food will have to go wherever there is room, and that includes livestock. Anyone who plans to stay in a city really must take some responsibility for their own food systems, IMHO, not in a light way, but in a commitment to produce as much as possible within city limits. The great difficulty for cold climate cities will be heat - if utilities become intermittent or too expensive, it will be very cold, and there are fewer options for heating in densely populated areas. But cold won’t generally kill you - it will be merely unpleasant, and the heat island effect and the sheer proximity of neighbors will probably keep most people alive as they wait for spring, in worst case scenarios.

And thus we are back to this question of what kind of person you are - there are those entrepreneurial spirits who will take any job, do any work, and can turn anything into gold, and may always be able to buy food. And there are those that simply can’t. It is worth knowing thyself. Again, the merits of strong family and community ties come up - a great deal can be accomplished by self-help groups working together. Food supplies can be bought collectively, slum conditions overcome, community gardens reclaimed from the city, security provided, soup kitchens opened. But one must work together, and be prepared to adapt. In fact, where to live may depend on how you want to work with people.

Both urban and rural life will require community ties - in rural places, because without those ties, things simply won’t happen. In urban ones, to restrain one’s self-interest for the greater good. My own observation is that most people tend to prefer one kind of these regulations to another - they chafe, for example, at the idea that one could restrict their right to do as they want on their property, no matter how stupid or dangerous, or they chafe at the idea that others might be doing things they consider unwise in the privacy of their own homes, and they are not there to observe and stop them. It is useful, I think, to decide which sort of person you are, and thus, where you will be happy - out in the country where you can get drunk and shoot deer through the unopened windows of your trailer or in the city where you can get drunk and lecture a passerby on the evils of public urination ;-).

Then again, many of us prefer a middle ground - and suburbia, of course, is supposed to be precisely that. Whether the ‘burbs are the best of both worlds or the worst depends on your perspective and probably on the kind of suburb you are living in. Many suburbs near where I live actually have long histories as towns with meaningful economies, and now simply have more housing in them. It is not at all improbable to imagine much, say, of suburban Boston reconstituting itself as towns, changing its restrictive zoning to allow the transformation of garages into shops and spare bedrooms into rental housing.

The great advantage of suburbia is that it is often both reasonably proximate to some kind of employment and possible to produce a substantial part of one’s needs on the land attached to it. Most suburban lots won’t enable any kind of self-sufficiency, but most suburbanites could meet a surprising portion of their needs. Not enough to obviate the need for supplemental income - while rural dwellers may have little or no cash to pay the property taxes, and urban dwellers cash but not enough to buy food, suburbanites will struggle on both ends - their houses cost a great deal initially, and they won’t generally have large enough surpluses for sale. Successful suburban dwelling may require more flexibility than either urban or rural life, because it will require the maintence of an income in most cases, while also requiring that costs be absolutely minimized so that people can keep their houses.

On the other hand, this may actually be possible. If people are willing to consolidate housing, and bring extended families (biological or chosen) together, keeping the roof over one’s head should be manageable. Meanwhile, there probably will be some empty lots across the road, and a few foreclosed buildings to take down and scavenge. We have essentially been filling suburbia with a large chunk of our wealth - it is no longer worth what we thought it was, of course, but that doesn’t mean that boards and reclaimed insulation, copper piping and shingles have no value. That wealth will probably keep a surprisingly large number of people going, while they also grow gardens and commute, crammed together, into population centers.

The transition from nuclear family to extended is unlikely to be easy - and less easy on middle class suburbanites than on the poor in both rural and urban areas, who already require social ties to keep lives going. The distances between suburban families will also be a problem as people begin to negotiate - which set of parents do you live near or with? Who moves? Whose house goes on the block and who keeps theirs. In many cases, this will be shaped by sequence of events, rather than intent, but I suspect it will go better if intent is involved, if the conversations required for this begin sooner, rather than later.

The anomie of suburbia is legendary, and probably wildly overstated. Some neighborhoods are better at ties than other. But what is true is that these ties are generally recreational, rather than practical. That is, neighborhoods are having barbecues and commercial parties (cooking equipment, sex toys and lingerie being the most popular, an alliance I’ve always admired), playdates and PTA meetings, not organizing for survival. That is true elsewhere, but suburbia has tended to have fewer self-help groups (by which I mean not emotional self-help but practical) than cities or the country. That will have to change for suburbia to be successful.

And this, I think, may be the root shift that has to occur in suburbia - what must finally change is the perception of what constitutes “a good life.” The suburbs were the good life for millions of Americans and Canadians - and what may ultimately hurt us most is what Kunstler calls “the psychology of previous investment” - our inability to let go of what we expect a particular life to be. I think that Kunstler and others are right that this is particularly acute for suburban dwellers, who have had in their midst many fewer people showing alternate visions. Zoning regulations, for example, will have to be rapidly overturned to allow people to survive in many suburbs - and that is likely to be contentious, simply because disaster never hits everyone equally.

But the psychology of previous investment has another side - it may prevent us from abandoning the suburbs, but the sheer psychological weight of our investmen in the suburbs may ultimately enable us to make that shift - that is, people are attached to their place, to the idea of their place, and it may be possible for them to make that space mean something else, in order to keep it. The question of whether the suburbs are the best or worst of both worlds will depend, finally, on whether our attachement to our previous investment is to the place, or the idea of suburbia. If it is to the place, to the actual land and soil beneath our feet and if we can become attached to our houses, stop moving so much and settle in a place, it is possible that suburbia could thrive in many regions. If it turns out that what we wanted was a dream of Eden, only without the snakes, suburbia will fall apart.

Suburbia is so tied up with children and family life that I feel like I should say something about that. The suburban model of childhood will simply have to come to an end. Many more children will probably be homeschooled, many more children will probably be put to work sooner helping out at home, and the child-centered model will probably disintegrate, replaced by a family-centered model in which children are expected to pitch in, listen and are not treated always like visiting heads of state to be deferred to and offered the best. For those who moved to the suburbs for their children, the loss of the way of life and the hopes of giving them the best they can will be painful - and it may be here we are most unable to adapt. This will apply to some rural and urban dwellers, particularly the wealthy ones now made poorer, but it will be most acute in suburbia. Some people may actually leave, seeking the pleasures of urban or rural life now that the suburbs can’t offer them a fantasy-perfect childhood picture. For others, a new vision of family life may grow up.

Suburbanites will always be more at risk in the general economy than those who are closer to economic centers, and they will always be more at risk in terms of food security than those who can meet their entire dietary needs, but most suburbs offer enormous potential to allow people to live with one foot in the formal economy and another in the informal economy (or both feet in the informal, but in different branches thereof). Dmitry Orlov observes that most post-collapse soviet gardens were very small - smaller than the average suburban lot. Now grains kept coming in - but except for the very outermost suburbs, the lines between city and suburb are fairly strong. Even if public transport doesn’t exist. there are enough people, a large enough market to justify moving food and fuel and goods out to many suburs. Houses are large enough for suburban dwellers to stockpile, just as rural ones do - both the produce of their gardens and food bought on infrequent trips to supply centers by shared vehicle.

Suburban dwellers will probably need a wider balance of skills than either their city or country counterparts - they will simultaneously need the skills to minimize dependence on the public economy and the ability to function well there. They will need to be able to grow their own, fix their own and make do, and also to run businesses or find work when old sources dry up. And like everyone else they will require strong community ties to keep back the forces of collapse, and to create a local economy and culture worth having.

Moreover, while rural dwellers may struggle to get their pigs or their fruit to market in an era of reduced transportation, suburbanites who can produce moderate surpluses will have hungry and relatively proximate markets for what they own. I recall someone telling me about their cousins who became “dill millionaires” growing dill on an 1/8 acre suburban lot outside of Moscow, simply bringing their herbs into the city. For those in the areas around cities, the old system, where suburbanites shuttled in to work in city businesses may continue - and those going to work there may be bringing in their eggs and apples to sell to coworkers. Or the jobs themselves may disappear, and the eggs and apples become the point of the trip. In this sense, the more proximate suburbs, despite (often) greater density, may have an advantage.

In short, I don’t think it is easy to generalize about where the best place to live is. In all cases, flexibility, adaptability, self-sufficiency and practicality will matter a lot. And in each case, it isn’t that any choice is inherently bad, it is that it depends on what we are prepared for, what skills we want to emphasize, what balance we hope to find. It is easier, of course, to generalize about one choice or another, but ultimately, IMHO, less productive.

Sharon

Support Response Email Problem Fixed – Please Resend Recent Requests

Today, to our shock and dismay, we discovered that because of a technical screw-up, for the past 10 days many of our responses to customer service requests have not been going out in email like they were supposed to.  Our customer service team was working hard (as always) answering everyone's support requests, but those answers weren't being sent out by the email server!

Our sincere apologies to everyone who has sent us a support request anytime after August 9th.  We weren't deliberately ignoring you!

As soon as we realized that emails weren't going out, we were able to find and fix the problem.  Support responses are now being emailed out again like that are supposed to be.  We are now working hard to re-send out our responses to requests we got during the past 10 days however, if you sent us a question and we did not get back to you, please re-send us your question so we can help.  You can use the form on this page to send us your question.

Forecasting the S&P 500; Dusting off the crystal ball

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If you are like just about every other stock investor out there, you are asking yourself the question, "Can the market keep going up, or am I going to have to suffer through another decline?"

Well, while there is no sure fire way to know exactly if and when the stock market is going to turn around, there are some tools available -- semi-cloudy crystal balls, if you will -- that can give you a heads up when a turnaround may be just around the corner.

Let me show you one of my favorites: the NYSE Bullish Percent Index.

Continue reading Forecasting the S&P 500; Dusting off the crystal ball

Forecasting the S&P 500; Dusting off the crystal ball originally appeared on BloggingStocks on Wed, 19 Aug 2009 17:15:00 EST. Please see our terms for use of feeds.

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Dropping the ‘public option’ could insure some stocks’ health

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Regardless of how you feel about a public health insurance option offered by the government, interest at the policy level seems to be waning recently. If Democrats drop the idea of a public option as a component of health care reform, health insurance companies could benefit.

The way I see it, if the government starts offering health insurance as a public provider then new supply will have entered the market. According to my college Econ 101 text book, that new supply would have shifted the supply and demand curves towards lower prices and maybe lower profits.

Continue reading Dropping the 'public option' could insure some stocks' health

Dropping the 'public option' could insure some stocks' health originally appeared on BloggingStocks on Wed, 19 Aug 2009 17:00:00 EST. Please see our terms for use of feeds.

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World Markets Rebound; Natural Gas Below $3

World market indexes closed higher after indexes in Asia, North America and Europe rebounded. Commodities prices edged higher but natural gas dipped below $3 mBTU. World steel production fell at a slower pace in July. AIG surges on tough talk by the newly appointed chief. Sears reports wider loss.

Five Years Later, Google Proves the Skeptics Wrong

It is time to wish Google a happy anniversary. Five years ago today, Google went public.

Given the impressive returns over the years, it would be easy to forget the stumbles, the criticism and the questions that marked what is now the decade’s most notable IPO.

In 2004, Google tried to reshape the IPO process. Instead of the conventional form, Google poked a stick in Wall Street’s eye by opening the bidding process to an auction in an attempt to put more of its shares in the hands of small investors.

For its intransigence, Google’s IPO was roundly criticized. The process was marked by several public missteps–the Playboy interview for one–tepid interest by big institutions and small-investor aversion to the IPO’s initially high price range. In the end, Google had to lower the offer price 37%. A WSJ article on the day of IPO quoted one hedge-fund manager as saying, “They managed to tee off the broader constituency of Wall Street, and it’s obviously hurt them. Wall Street wins again.”

The process wasn’t only thing stirring skeptics and critics alike. Many an investor and market commentator found fault with the offer price and questioned Google’s growth prospects. And who could blame them. The bursting of the tech bubble was still fresh in the minds of most.

Allan Sloan wrote for the Washington Post in early August 2004:

“I’ll offer up a piece of advice as I head to the beach: Don’t buy Google at its initial public offering.

If you want to own Google, wait until the dust has settled and the hype machine has moved on. Before the year is out, I’m sure, you’ll have a chance to buy Google for less than its IPO price. Possibly much less. So be patient. You’ll have to pay a brokerage commission on any shares you buy post-IPO (the initial distribution will be commission-free), but you’ll still come out ahead by waiting.

Why do I say this? Because Google’s IPO price is just too high to be sustained. The price, $108 to $135 a share, assumes that things will go swimmingly for years and years–and that almost never happens. That’s especially true when it comes to something like Internet search engines, where competitors can spring up like mushrooms overnight. Say, the way Google did.”

Sloan offered up his view before Google lowered its offer price, but he was hardly alone in advising investors to sit on the sidelines. Plenty of big investors said much the same thing, and the WSJ cautioned:

“IPOs often trade below their offering price within six months or a year after their launch and generally trail the market during their first few years. Yet many fund managers say that because Google used an auction to set its price, the company’s shares may not jump once trading starts.”

Less than a week after the IPO, Sloan was back from vacation and arguing that Google’s share price–at just over $109–was “insane.”

“At Monday’s closing price, the stock market is valuing Google at almost $30 billion, or almost 87 times the $1.26 per-share profit it reported for the 12 months ended June 30. Google earned $7 million on $86 million in revenue in 2001, its first profitable year, and $191 million on revenue of $2.26 billion in the 12 months ended June 30. But the company’s not a small start-up anymore. To keep up this growth rate, Google will have to earn $5 billion on revenue of $60 billion in 2006. That’s clearly not going to happen.”

Again, Sloan was hardly alone. A Janco Partners analyst slapped a sell rating on the company just a week after its IPO, raising concerns about how much cash the Web search firm would generate.

Today Google’s shares trade north of $440. That is a nearly 420% return over a time period during which the Nasdaq is up only 8%, writes Paul R. La Monica. So while Google’s IPO didn’t revolutionize the IPO process, there is little doubt that five years later Google’s IPO was a success for those that bought early.


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Oil jumps on inventory report

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rising oil pricesOil prices are moving strongly higher today following a government report that showed inventories dropped dramatically last week.

Today's report from the Energy Department indicated that oil inventories fell by 8.4 million barrels last week, in stark contrast to the increase of 1.2 million barrels that analysts had been expecting to see for the precious crude.

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Oil jumps on inventory report originally appeared on BloggingStocks on Wed, 19 Aug 2009 16:45:00 EST. Please see our terms for use of feeds.

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