Last week’s initial unemployment claims were up again and according to the Chairman of the Federal Reserve we can expect high unemployment to become the new normal for the long term. Even though the Federal Reserve is mandated by law to maintain low unemployment, not only have they have thrown in the towel but they are implying there is nothing to be done. Chairman Bernanke has also claimed to be surprised at the high rate of inflation we are seeing. The Fed is surprised that when they printed a trillion dollars and pumped it into a 15 trillion economy and that would produce inflation. (Mon Dieu! There’s gambling at Rick’s? I’m shocked, shocked!)
In the meantime the hero of the movie has been doing other things besides killing Major Strasser (I mean Bin Laden). The President has obtained a commitment from our allies to pump 60 million barrels of oil from strategic reserves to break the stranglehold Wall Street speculators have on the market and more as needed. This produced an immediate and blistering response from the Congressman representing Wall Street who is currently serving as Speaker of the House. It’s his opinion that we don’t have an emergency, Wall Street is doing just fine. We just need to drill more, [sob!] Obama is blocking all drilling you know. [sob!] The twin finds in the Gulf of Mexico of 700 million barrels each announced two weeks ago not withstanding. Each of these is equal to the US Strategic Petroleum Reserve.
What Boner really doesn’t like is that Obama’s maneuver might actually work. Gas prices had already begun to slide which indicates that Wall Street is unable to hold them up and further pressure should pop the bubble. If it works it also proves that the proposed rules to ban oil speculation should be implemented and Obama can use this against Republicans who have been predicting the end of the world if Wall Street was ever to be regulated.
Anecdotal reports of large new factory expansions suggest the economy is in recovery and a sharp cut in oil and gas prices would add significant stimulus. The position of the Fed that there will be inflation also forces the big corporations who are sitting on more than 2 trillion in cash to think about actually putting that money to work or watch it erode from inflation.
These corporations were holding onto cash as a war chest or more accurately a pirates chest. Ever since 2007 the economy has been teetering on the edge of runaway deflation and a general collapse. They were all positioning themselves to loot and pillage the economy for ten cents on the dollar. If a more traditional rate of inflation can be cooked into the economy that strategy falls apart but runaway inflation must be avoided on the other hand and Obama taking an active role in controlling oil prices is required.
To be clear we are a long ways from having a happy ending to our movie since we still need a manufacturing policy, a trade policy beyond tactic cooperation from China and 80% of Wall Street needs to be eliminated. But, we do seem to have an inkling of an energy policy at least when it comes to the Wall Street parasites. Maybe “this is the beginning of a beautiful friendship” after all. [Rick and Captain Renault stroll into the night] www.prairie2.com