The Tycoon Report

Rising gas prices have sadly turned Pat Robertson into Tony Soprano and some Americans into "criminals."

THIS WEEK I SAW TWO NEWS ITEMS THAT TRULY HORRIFIED ME.

Reports so frightening, so disturbing, that it made a lot of things suddenly very clear to me. The first news report covered the effect that rising gas prices were having on average Americans. In one segment, cameras placed at a gas station showed people filling up their gas tanks and taking off without paying for the gas.

Now, I'm not talking about pimply-faced teenagers driving to pick up their dates for a trip to Blueberry Hill. I'm talking about ADULT working class Americans - the people who are the backbone of this economy - actually breaking the law to get gas.

Over the course of one 24-hour period, four adults pulled out of the gas station without paying their bills! And that was at one gas station! Unfortunately, it gets worse.

The news crew then went to the local supermarket and began to interview people shopping for groceries. Normally, during the past year when news crews ask people how they feel about rising gas prices, you get your normal grumblings. But this time was different.

This time several people interviewed said that rising gas prices were "Killing Them." As soon as I heard the word "killing," I knew we had reached a new level of pain at the pump.

Speaking of "killing," the second news item I heard this week was even more shocking. It seems that Christian leader Pat Robertson wants to take out a contract on Venezuelean President Hugo Chavez and have him whacked Tony Soprano style.

At first, I was stunned to think that a man of the cloth could get so upset that he would want to kill another man. But then I started to think about it. Even though he's a lunatic, Chavez does control the largest gas reserves in the Western Hemisphere, and he makes a great scapegoat for Pat's people who are feeling the pain of higher gas prices.

So, why would I bring up two reports like this? Because they both will have profound implications for us as investors.

Let me explain:

The average family of four who lives down your block and is leveraged to the hilt on credit card debt has some painful decisions to make. And these painful decisions can have painful consequences on the economy and the stock market.

For starters, that brand new gas-guzzling SUV they bought three years ago just added a $200 monthly "gas tax" to their monthly expenses. Let's explore the economic consequences of that "gas-tax":

Since most people are living on a fixed budget, they're going to have to make some distinctions between luxuries and necessities. Necessities are things like the mortgage and phone bill. Luxuries are things like restaurants and movies.

Obviously if the choice is between paying your phone bill and going to the movies, you're gonna pay your phone bill (unless you want to avoid your creditors.) That's the real reason that Hollywood reported an 11% drop in box office receipts this year. (It has nothing to do with the "quality" of their movies this season. They've been making bad movies forever!)

The second "luxury" that gets eliminated is restaurants. Now every time these "luxuries" get eliminated, the people who work in those industries start to get eliminated. And when they begin to get eliminated, the unemployment rate shoots through the moon.

When that happens, the bad news really happens. That family of four we were talking about now has to look for a new jobs. Then the decisions about "necessities" versus "luxuries" are out the door. Now they're debating which "necessity" to pay this month and which to pay next month. Add to that mix rising gas prices and healthcare costs, and you could see why most families are getting nervous.

(Even more disturbing is that this is all happening against the backdrop of a major change in the bankruptcy laws. God forbid a family member gets sick between jobs, and you don't have health insurance. You'll be working for VISA/MASTERCARD/AMEX for the rest of your life.)

All of this obviously affects the stock market which will likely stay stuck in the mud for the forseeable future. To determine the full economic consequences of all of this I tried to look to history as a guide.

Unfortunately, I couldn't find any other instance when Pat wanted to have anybody whacked. So I'm not sure if this is a bearish sign or a bullish sign. Hopefully, the "Pat Robertson Economic Indicator" isn't as bearish as I fear it may be.