Good Intentions Aside, Are We Killing the Patient?
What is President Obama doing about it? Perhaps too much. And, possibly, his efforts are too diffuse. When I think about the economy I think about a plump man who has just been hit by a truck while crossing a street and is in severely critical condition with internal bleeding. Instead of just stabilizing his hemorrhaging, the doctor decides that while the patient is unconscious, he might as well also do a face lift, some coronary bypasses and a stomach-stapling to keep him from gaining weight while he is recovering (if he does recover). After all, a crisis is not to be wasted.
The problem is that all these ambitious operations create too much of a burden for the human body to bear.
Similarly, we have an administration that is simultaneously seeking to end the recession, discussing drastic changes to laws on foreclosures and energy use and completely changing the health care system. I respectfully question whether all of this makes sense.
Speculators ‘R’ Us: The G8 And Energy Prices (via Marginal Revolution)
…the G8 – and its members this week – are disingenuous when they speak about energy prices, in three ways.
1) They are trying hard to talk up the market, with regard to global growth. At the same time, the hard data continue to disappoint. Naturally, this causes volatility in oil prices.
2) They claim to see no link between their failure to converge on climate change/environmental policies and what happens to energy prices. The extent to which industrialized countries’ effectively control carbon emissions will have a big impact on the longer-run demand for oil. Flip-flopping on this issue discourages investment in the energy sector (regular and alternative), and thus directly and indirectly contributes to oil price volatility.
3) The very cheap money policies of leading central banks, including the Fed, the Bank of England and arguably also the European Central Bank, lower the funding costs for big players who want to take large positions in commodities markets. Essentially, we are providing the credit that makes big speculative positions possible. Add to this mix a “too big to fail” attitude and a “yes we can, recapitalize through trading profits” deal with policymakers, and you see why major financial firms are likely to place huge commodity bets in the months ahead.
…The true speculators here are your elected representatives.
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