We haven’t given you much of a view of how the economy here looks in Colorado. Sorry. We’ve been too busy eating massive portions of food while fending off rubber-band toting nieces and nephews. But since we’re on our way back to Melbourne tomorrow, how about a few parting observations from Colorado?

If you want free market commentary today, go over yonder to our colleagues at Money Morning, who have it all under contrarian control.

Back here at the western edge of the Great Plains and at the foot of the Rocky Mountains, there is a lot of empty retail space. Maybe it’s early in the summer shopping season. Maybe people are flying and driving less for vacation. Or maybe there’s just way too much retail space in America.

Either way, the whole geography of America’s strip mall retail network lends itself to huge booms and busts. And since we’re coming off a boom, this could be the bust. The architecture of the retail network offers you clusters of stores selling linens, patio furniture, $20 shoes from China, and huge quantities of chocolate. It all comes via truck, rail and container ship. And with global fuel prices high, it’s expensive to get things to the middle of the continent, a mile up from sea level.

But cheap energy convinces you that long logistics tails are merely matters of proper inventory management and just-in-time delivery. For the last fifty years, energy has trumped distance. That’s why America’s malls and stores are located in large residential developments which are themselves miles outside city centres. Fortress Wal-Mart.

Most of these future feudal outposts here on the Front Range of the continental divide were built by large national developers like KB Homes and Lennar. The homes are nice enough, with great views of the mountains. And they are conveniently located near grocery stores and shopping. But there are probably too many of them, and more still are being built.

They are not, we reckon, particularly well made. On the way to lunch today, our brother told us the Chipotle (a Mexican fast food joint serving enormous burritos stuffed with cheap calories) at Flat Irons Crossing Mall was vacant because the foundation had cracked. Other stores in the massive mall suffered the same fate. The mall is less than ten years old.

You wonder, with all the “For Sale” signs out front of these cookie cutter houses what these cul de sacs and neighbourhoods will look like in twenty years. Will people still live here and commute to work? Or will the whole economy of this particular living arrangement become a casualty of more expensive energy?

The word we used for it about six years ago was simple: Suburbistan. A place where the parts (copper wire, plumbing, wood frames) are worth more than the whole…empty tracts of houses built for people who couldn’t afford them with real money and which, in any case, are the ticky-tacky icons of a giant mis-allocation of the nation’s capital.

Right now, though, it’s not that bad. Times are tougher for sure. Good paying work is harder to get. This is a function of the globalisation of labour and free trade agreements. Jobs are created. But they aren’t the same jobs America created in the post-War boom of the 1960s and 1970s. They aren’t in manufacturing with high wages, lifetime employment, and defined benefit pensions (think General Motors).

The jobs created in America today pay lower wages and don’t come with a pension at all, unless it’s defined contribution scheme. New jobs come from services and retail (think Wal-Mart) and reflect the nation’s shift towards debt-based consumption and asset-based saving, neither of which lead to long-term capital formation. America is becoming a nation of window shoppers.

In fact, it’s evident now that capital is being either exported (as factories) or sold (as equity) to pay the bills (as debt). And that’s for the capitalists! For the workers and wage slaves, there is more job mobility, but less job security. Do you think it’s a good trade? How long before a clever politician begins appealing to the growing sense of resentment…and a desire for something “to be done” to someone?

The time is ripe on the national scene for a demagogue who appeals to America’s sense of injured pride and national greatness. That should be interesting to watch. Both Obama and McCain would fit the bill nicely, despite coming from opposite ends of the political spectrum. They share at least one belief in common: that State power should be used to shape people’s lives in whichever way the State chooses. America will be worse off with either way.

The country has huge fiscal and geopolitical challenges. It also still has a lot of nuclear weapons and, at least in Washington D.C., an exalted sense of its place in the world order. So much for American modesty, or walking softly and carrying a big stick for a rainy day. Watch out the anti-anti-American backlash.

Here in the mountains, Colorado has always been a bit of a boom-bust state. In the late 1970s and early 1980s it boomed with high oil prices. Natural gas drilling on the Western Slope boomed. Exxon Mobil opened a refinery in Parachute to turn oil shale into something like crude oil (kerogen). The U.S. Department of Energy even exploded a nuclear bomb underground near Rulison in Western Colorado to try and liberate stranded pockets of natural gas.

Nuclear mining! Lang Hancock would have loved it!

When oil prices crashed in the early ‘80s, Exxon shut the whole oil-shale retorting plant down. Who needs an alternative to crude when you have Prudhoe Bay, the North Sea, the Gulf of Mexico and Saudi Arabia? Oil prices stayed low for years and people resumed carefree consumption. National law makers went on a long holiday from serious thought and a realistic energy policy.

But hey, these things go in cycles. People have always been thoughtless and unprepared in the midst of great luxury. Same species, different century.

If you’ve lived through a bust, you don’t forget it and you never quite behave the same way because of it. The locals still refer to the day Exxon pulled the plug at Parachute as “Black Monday.” The massive housing development Exxon built for all the future employees at the facility became a retirement community known as “Battlement Mesa.”

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