Thursday, June 23, 2011

Play it again Sam

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

6 comments:

ronmac said...

I can't wait to download that movie.

ronmac said...

As long as we're on the subject of movies I would like to suggest another. How about the Exorcist. In which Fr. Obama is called in to perform the exorcism.

When we get to the climax with the girl's face is twisting and contorting in a final agony, we start hearing not demons, but the cherry voice of Ronald Reagan in happier times, reciting a speech about the virtues of the free market.

John said...

P2:

I note that we consume 20 million barrels per day.
Would you kindly explain to those of us incapable of (or viscerally resistant to) understanding Wall Street, how the pumping of three days worth of oil actually breaks the "stranglehold" of the speculators on the price of oil. (I do note that a futures contract involves 1000 barrels of oil, so 60 million barrels is equivalent to 60 thousand contracts. Also, in Feb oil futures trading hit record levels at nearly 4 million contracts per day. http://tinyurl.com/5teb8n7)

In regards to: "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."

Does this imply that our STRATEGIC oil reserves is not on (under) US soil?

As to: " ... 80% of Wall Street needs to be eliminated."

Which 20% should remain? Do you refer to quality or quantity of trafing?

Thanks,

John Puma

prairie2 said...

Most oil isn't traded, the price is set on the margin. A practice that should be illegal.

We have 720 million barrels in reserves and are putting up 30 million. Our allies have sizable reserves and are putting up another 30 million. For this to work requires timing and cooperation.

The 80% reduction of Wall Street is the opinion of the vice chairman of Berkshire Hathaway (see past posts or the video on the sidebar labeled 80% solution)

Anonymous said...

3 days worth of oil consumed in the USA? Not even worth the effort. It sounds like some phony political ploy to hoodwink the public. Should of waited until the day before the Nov. 2012 election for this little oil reserve release SURPRISE. Ha. Suckers.

prairie2 said...

We had a right wing troll come through and post talking points. I went ahead and posted these even thought they are stupid. I don't feel like posting responses. Is everybody okay with just assuming everybody gets it or would somebody like to write a response.