Very few articles I read have as much "fun" per line as this
Bloomberg article. Now you may ask yourself "where is the fun?", believe me its there.
First:
``OPEC should understand that if they can put more supply on the market, it would be help,'' Bush said in an interview with reporters traveling with him in the Middle East. ``I realize there is not a lot of excess capacity in the marketplace.'' Now calling on OPEC to raise output to help out our economy, which of course is just fine and dandy (just ask any politician in power), is laughable. OPEC has lost its ability to control the price and supply of oil. China and India are on the brink of a huge explosion in oil demand. The worlds oil suppliers are producing like crazy to get that $95 a barrel oil to market. The Dollar is losing value and has not yet hit bottom (when the Fed reduces interest rates, the Dollar falls in value). Oil is priced in dollars. No one wants a useless currency, so the producers need more of it to offset the risk of the dollar being worth less in the present and future. It all adds up to a bad situation. Add in the credit market squeeze and the prospects are frightening. The difference between the 70's and 80's oil shocks and this one is that this is demand driven whereas the earlier shocks were supply driven. Oh an FYI. The "extra" 2 million barrels a day that Saudi Arabia supposedly has is wax, yes black/brown waxy sludge which is only good for producing low quality petroleum based products if anything at all, NOT gasoline. No one wants this sludge because of its low utility and high cost to refine and transport.
Next: Bush
``oil prices are very high, which is tough on our economy,''. Well um duh!
Next:
Bush also reiterated that he remains optimistic about the U.S. economy, though he continues to watch for warning signs. ``We're going to watch very carefully,'' he said. -- Um like the price of oil going through the roof, the dollars demise, the current recession, housing, huge/major/colossal/gargantuan counter-party risk in the banking sector, hidden inflation (FYI the gov. decides what it includes in the inflation number which it reports. If it doesn't like a factor, it can discount that factor or remove it completely. Processes are in place so that it can't just wily nilly the numbers each time, but it can change policy to impact the number that is reported. Food and fuel costs were excluded some years ago because the prices were too volatile and swung the inflation number back and forth. I don't know about you but after my house payment, our next biggest monthly expenditures are Food and Fuel.), negative savings rates, etc. I may not be the smartest cookie in the jar but these seem like pretty good warning signs of an impending doom.
Next:
In the interview with reporters, Bush also said he reassured Arab allies during his trip that the U.S. still views Iran as a threat, in spite of the new intelligence report that said Iran stopped its active nuclear program in 2003. ``I defended the intelligence community but I made it clear that they are an independent agency,'' Bush said. ``They come to conclusions separate from what I may or may not want.''
I found this to be the most "fun" of all. Did Bush
want Iran to continue its nuclear program. Why? I have always been uneasy about the saber rattling concerning Iran and this just makes it worse. I always hoped (my Pollyanna side showing through) that intelligence communities were searching for the truth and not something that fit a specified pre-determined scenario. In this case maybe, just maybe, they did that.
By the way, Iran has a huge youth segment (20 to 25 year olds) who don't believe in the current regime. They don't hate the West and see their country being dragged down through bad policy and rhetoric. Iran will solve its own problems in time.
By the way part two :). This whole "Iranian fast boat" incident smells funny to me. The administration made a big deal out of something the financial markets took in stride. To me this has happened before and will happen again. Always take in the whole picture, political/financial (follow the money)/societal, of something that is reported. If this had not happened before or been known by the markets to have occurred before, then the price of oil would have exploded; it didn't, it decreased by the close of the day. The market knew these things happened and didn't see this incident as anything out of the ordinary. When the sun doesn't quite shine the right way on a oil rig in the North Sea, traders use that to push up the price of oil, but a supposedly one time, never happened before, immediate threat to the US Navy registers a daily price drop, I smell political propaganda, fear mongering, and grandstanding.
Now just to clarify, I'm not a conspiracy guru, nor am I worried the gov. is spying on me, nor am I a far right/left winger, nor am I crazy (though that is a nickname I have been given), I'm independent and side with the idea that makes the most sense to me. To me the US is on never before experienced ground. We have the makings of a financial death spiral brewing, it would take extraordinary circumstances to make that happen, but the brew is closer to fruition than I've ever known it. We have political gridlock and wildly out of touch politicians running things. Nothing screws up solid business like a politician and when the two combine nothing good can come. For full disclosure, I have looked at living in other countries and suggest you peruse where you might want to live. My advise, chose somewhere which has rich mineral deposits, access to nearby growing markets, a solid workforce, and a stable government. Minerals are a good hedge against political and financial uncertainty. Till next time keep to the sunny side of life :)
