“Took a shot to the chin. Looks like it’s hard to win. In this do or die situation.” –from the song “Hang Tough” by Tesla.

Here we go: the bad economic news is starting to pile up now, much the way a tidal wave slowly gains momentum and force as it heads towards land.

Ben Bernanke, chairman of the Federal Reserve, presented his market outlook before members of Congress this morning and pretty much everything he said points to inflation and a possible economic recession for the U.S. in the months ahead. While everyone in trucking knows it’s bad out there, it makes it all the more grimmer when the top money man in Washington D.C. backs that feeling up with stark facts.

Bernanke said that while the U.S. economy performed reasonably well over the last two quarters, with real gross domestic product (GDP) growing at an average pace of nearly 4%, the ongoing trouble in the housing market coupled to skyrocketing oil prices doesn’t bode well for the near term.

“In particular, prices of crude oil and other commodities had increased sharply in recent weeks,” he said [they topped $97 a barrel today]. “And the foreign exchange value of the dollar had weakened. These factors [are] likely to increase overall inflation in the short run and, should inflation expectations become unmoored, have the potential to boost inflation in the longer run as well.”

That’s putting it mildly: in downtown Washington D.C. today, diesel fuel prices reached $3.55 per gallon – and we’re only at the beginning of the fuel price run-up here. Winter hasn’t really set in yet, so when it does, the corresponding jump in home heating oil demand is going to make things at lot more expensive at the pump.

The meltdown in the housing market continues aggravating things as well – especially in terms of drying up credit, which is the lifeblood of any business. “The economic outlook has been importantly affected by recent developments in financial markets, which have come under significant pressure in the past few months,” Bernanke said.

“The financial turmoil was triggered by investor concerns about the credit quality of mortgages, especially sub-prime mortgages with adjustable interest rates,” he noted. “The continuing increase in the rate of serious delinquencies for such mortgages reflects in part a decline in underwriting standards in recent years as well as softening house prices. Delinquencies on these mortgages are likely to rise further in coming quarters as a sizable number of recent-vintage sub-prime loans experience their first interest rate resets.”

In the area of business credit, investors are shying away from financing leveraged buyouts and from purchasing speculative-grade corporate bonds. And some larger banks, concerned about potentially large and difficult-to-predict draws on their liquidity and balance sheet capacity, are less willing to provide funding to their customers or to each other, he said.

“To be sure, the recent developments may well lead to a healthier financial system in the medium to long term,” Bernanke added on a positive note. “Investors have also become more cautious and are demanding greater compensation for bearing risk. In the short term, however, these events do imply a greater measure of financial restraint on economic growth as credit becomes more expensive and difficult to obtain.”

In short, it’s looking like the rough times are going to stretch out even longer than previously thought, though I for one am hoping things settle down soon. It’s that or start busing my kids to school by bike.

“Forewarned is to be forearmed.” –Benjamin Franklin

We’ve spent a good part of the year in the trucking industry arguing about the impact of trade with Mexico, specifically the fallout from letting Mexican truckers cross into the U.S. and operate on U.S. roads. But there’s a much larger probelm afoot than what’s going on with Mexico, and while this does NOT mean we should cease debate on Mexican-related issues, we need to start looking at the bigger free trade picture — and what that means not only for the U.S. but the world as a whole.

A recent newspaper column by Irwin Stelzer, a senior fellow and director of The Hudson Institute’s Center for Economic Policy, really crystalized the issue for me. To his mind, trading and immigration issues with Mexico, the housing market meltdown in the U.S., tighter credit, etc., don’t come close to the equaling a much more serious long-term issue — the shift of wealth occuring right now via trade to the nations in Asia and the Middle East, specifically those that are ruled by what amounts to dictatorial oligarchies.

Saudia Arabia, Iran, and Russia in particular are stockpiling wealth by the billions as oil prices inch ever closer to $100 a barrel, while China continues to benefit from its low cost manufacturing enterprises — kept low cost by the still-in-power Communist party. Much of this is helped along with funds from our trade imbalance with these nations, as the U.S. trade deficit topped $763.6 billion last year. We haven’t had a trade surplus since 1991 by the way — and it doesn’t look like we’ll see one again anytime soon.

Now, free trade ostensibly helps countries open their borders to the rest of the world and — hopefully — acts as the springboard to freer, more democratic societies. To this day, however, China, Saudia Arabia, and Iran have all managed not only to stifle the societal benefits free trade is supposed to bring, they are managing to reap ever larger amounts of cash from the world markets at the same time — about $10 TRILLION worth, according to the International Monetary Fund. In the words of Ken Rogoff, former chief economits for the IMF, with that kind of money, those nations aren’t part of the world’s financial system … they ARE the world’s financial system.

China, let it be known, is not only the second largest trading partner now with us — supplanting Mexico — they are the NUMBER ONE trading parter with Iran: the same Iran that is trying to get a nuclear energy program off the ground. Iran is a country controlled by a cabal of mullahs — religious leaders that control not only the political and judicial sinews of that country, but the military as well. Mahmoud Ahmadinejad, Iran’s president, is only a figurehead — the real power in his country never goes up for a popular vote, even a rigged one.

Saudi Arabia, ostensibly a U.S. ally, is another danger — it’s ruling royal family brokered a deal several decades ago with the radical Wahhabi Islamic sect, handing over control of the nation’s religious schools to quell domestic opposition — in effect buying them off. Oh, but at what a price. It’s no wonder that the bulk of the 9-11 terrorists were Saudis when you think about it: they’d been indoctrinated from a young age in jihadist philosophy, if such rank beliefs can even be remotely dignified by the word ‘philosophy.’

Russia, another supposed ally, is rapidly slipping back into the ways of its Soviet past — in fact, Russia’s president Vladimir Putin is a former KGB officer — the KGB being the former Soviet Union’s spy agency and secret police all rolled up in one. He’s been trying to forge ever-closer ties with Iran, too — and both his country and that of the Shiite mullahs controlling Iran are banking billions from the run-up in oil prices.

And then back to China: A nation with about two billion people, with probably the largest military force on Earth. They are beholden to no clean air treaties, no worker safety regulations, nothing. In fact, when the storm broke over defective vehicle tires, tainted seafood, and lead-coated toys, the Chinese executed — you heard me right, EXECUTED — the head of their equivalent to the food and drug administration as a way to say, ‘See? We are battling these problems.’ Talk about the cure being almost as scary as the disease!

So, what do we do? Scrap free trade? Embark on a protectionist economic strategy? I don’t think so, because that would trigger more trouble — and besides, we NEED export markets to help our own economy thrive. But I do think that it should be proof positive that we should begin rethinking just who we do business with and how we do it.

“Voting is one of the few things where boycotting in protest clearly makes the problem worse rather than better.” –Jane Auer, novelist and playwright, who wrote under the name Jane Bowles.

You really can’t beat Jane Auer’s words when we talk about why voting matters — something much of our country will be doing tomorrow. You’ve got to get out there and vote … period. For those of you who say your vote doesn’t matter, need I remind you that the last two presidential elections were decided by less than 100,000 votes — the equivalent of one county. In short, your vote DOES matter, it DOES count, and you DO decide who governs us all … even if you do NOT vote, for even by sitting on the sidelines you change the election dynamic.

You’ll hear all the usual stories tomorrow as well, from about how less than 40% of the general population votes to how some disreputible campaigns pay people NOT to vote, trying to supress demographics that migh tfavor their candidate’s opponent. Listen, ignore all that — go and vote. It’s free, it’s what makes our society work, and it doesn’t take too much of your time.

If you’re a driver and can’t get home in time, you should have voted by absentee ballot. For those drivers that say it takes too much time to do so, I remind you of this: there are three MILLION commerical driver license holders in this country, a rather sizable population. If drivers as a group rally around a candidate or two, you very well may change election dynamics. And find that politicians might start listening to your concerns and needs for once.

If you are an executive, you should find ways to make it easy for everyone in the company to vote: help drivers get absentee ballots, make sure people’s work schedules can be modified so they can go to the polls in the morning, afternoon, at night, whenever. And lead by example — encourage them to vote, but try to leave your personal leanings out of it. My parish priest encouraged the whole congregation to vote last weekend … and did not breathe one word of the Catholic Church’s position on any of the issues. He simply said it’s our duty and moral obligation to vote as a way to improve the common good — that’s all. You can do the same: and I’ll bet your workers will take a whole new view of you as a person by doing so.

That seems to be the big question today as engine makers focus on the 2010 emission standards: do you incorporate selective catalytic reduction (SCR) into your emission solution … or not?

International Truck & Engine Corp. joined Cummins Engine Co. in the ‘No SCR’ catergory today, announcing that it won’t use SCR at least for its highway products. Cummins said Sept. 24 that it would use SCR only for its medium-duty engines, not its big bore units. Meanwhile, Volvo and Detroit Diesel Corp. are both adopting SCR to meet 2010 emission regulations — and may be joined by Paccar, which is bringing its European-built MX heavy-duty engine line to the U.S. sometime in 2009, after it opens a new $400 million engine plant in Missouri.

Paccar’s MX line uses SCR to meet European truck emission regulations, as do Volvo and DDC’s products, so it’s a no-brainer to do the same in the U.S. as all three build “global engine platforms” designed to be tweaked only slightly for the specific regions of world they are sold in. For example, DDC — which unveiled its new DD15 in mid-October — said only 10% of the components in its new global engine platform change from market to market; the rest remains the same.

Though Caterpillar as yet hasn’t committed to a 2010 solution, it’s already on-record against SCR. In 2005, J. Parker — then-VP at Caterpillar Power Systems Marketing — issues a statement urging the on-highway market to keep the technology options open regarding 2010 emissions. “Several engine manufacturers have indicated that SCR is the only viable path for meeting the 2010 EPA standard—however, our research indicates SCR might not be the best choice for on-highway applications,” he said two years ago.

What’s the hang up with SCR? Basically, it’s an emissions after-treatment technology that relies on injecting urea — an amonia compound — into the exhaust stream to reduce NOx emissions. Not only does such a system require its own complex array of sensors and electronic controls, it needs a tank or urea solution on board that must be refilled as the truck travels down the highway. Dan Ustian, chairman, president nand CEO of Navistar (International’s parent company) said that means North America’s highways would need a urea distribution infrastructure to be operationally mature when 2010 vehicles hit the road.

Also, while International found SCR to be a way to effectively meet 2010 emissions standards, it adds to the cost and complexity of use of commercial vehicles for truck and bus fleet operators. I’ve heard that “extra cost” could be another $10,000 above what truckers are paying for 2007-compliant engines, but I caution that this is only an estimate. Urea itself is a cheap chemical compound and requires no special storage — a simple plastic tank will do. Even if it freezes, it’s still good — once it thaws and becomes liquid again, it’s ready for use. And DDC and Volvo both believe using SCR can help boost fuel economy, recovering MPG lost to the technology demands of 2007.

The upshot is that 2010 is already looking very different that 2007, as the engine makers are going to be offering different emission compliance solutions — something that didn’t happen this year. How that affects trucking’s bottom line, however, remains to be seen.