The economy is going to take another hit, soon.

[MadHound]

Higher Energy Costs Spur Rise in U.S. Consumer Prices

"The Labor Department says the Consumer Price Index rose 0.5 percent in December, the largest increase in 18 months. About 80 percent of the increase was the result of an 8.5 percent rise in the gasoline index, also the sharpest increase in 18 months. Food prices ticked up 0.1 percent in December."

<http://www.nytimes.com/2011/01/15/business/economy/15econ.html?_r=1&ref=business>

Meanwhile, the Fed is continuing to print money like it's confetti, monetizing our debt. This is already starting to bite us, as more and more oil exporting countries switch to a basketful of currencies with which to do trade, rather than the almighty petrodollar.

As gas prices rise, and they will, so does most other prices since everything is effected by oil in this country.

And with the Fed continuing to monetize our debt, the risk of hyperinflation becomes all that more real.

Get prepared, strap in, this could be a very bumpy ride.

[Gman]

1. Allowing oil prices to rise like this amounts to an indirect bailout

for the the energy industry. But don't say that out loud.

[Hestia]

2. Yeah, got to bail them out for the billions lost in the Gulf this past summer.

[Statistical]

3. "Allowing oil prices to rise" Allow falsely implies you can prevent it.

The big oil corporations (Exxon, Shell, BP, etc) control about 5% of worlds oil Supply.
95% of oil supply is controlled by nations or nationally owned oil companies.

Higher oil prices may be bad for us (as oil consumers) but are great for balancing the budget of say Mexico or Venezuala (oil exporters).

"Allowing oil prices to rise" is like allowing the sun to set, or allowing yourself to age.
How exactly would the US prevent oil prices from rising?

Peak oil it is happening. Your grandchildren will likely see $500 oil. Hopefully by then we are only using it in small quantities for the few things there aren't good alternatives.

[Romulox]

45. Oil price are set by an international cartel called "OPEC". It's silly to talk about sunsets

under such circumstances. Oil prices are not set by the free market (or the forces or nature, as in your analogy.) :hi:

[Statistical]

47. Less than half worlds oil production is from OPEC nations.

OPEC doesn't set prices. They use SUPPLY & DEMAND to keep prices higher. Also know as market forces. When demand is high they pump more, as demand falls they pump less. With a goal of maximizing benefit for their citizens.

[Romulox]

49. Market forces play s PART. So does the international cartel formed to set oil prices.

"When demand is high they pump more, as demand falls they pump less."

No. This is not how OPEC works. The members attempt to LIMIT production in order to drive prices up.

"With a goal of maximizing benefit for their citizens."

Ummm, :wtf:

The members of OPEC are not, by and large, social democracies which distribute oil profits are some sort of citizen dividend. Again, :wtf:

[Statistical]

50. All OPEC nations have nationalized oil companies.

profits flow directly into the governments coffers and fund public expenditures and reduce raising public taxes.

[Romulox]

52. "OPEC ministers say world can handle $100 oil"

:hi:

CAIRO — The global economy can withstand an oil price of $100 a barrel, Kuwait's oil minister said on Saturday, as other exporters indicated OPEC may decide against increasing output through 2011 as the market was well supplied.

<snip>

Some delegates even called for exporters to comply better with agreed production limits. OPEC members' compliance with promised cutbacks reached 56 percent in November, according to Reuters estimates.

http://www.msnbc.msn.com/id/40811733/ns/business-oil_and_energy/

[Statistical]

53. Which proves what?

Oil went to $35 per barrel. Did OPEC cut the price?

Oil is based on supply and demand. OPEC manipulates that (just like any company) to maximize profits. GM produces less cars when demand is low to aovid overcapacity and lower unit prices.

[Romulox]

56. "Oil price are set by an international cartel called "OPEC". It's silly to talk about sunsets"

Your claim, upthread, was that OPEC raises production upon news of higher prices. Aside from having the casualty bass-ackward, the article I quoted to you flat out contradicted your assertion. :hi:

[Statistical]

59. I did not.

OPEC attempts to match SUPPLY to match demand to keep prices as high as possible.

They can't control demand and can only partially control supply but they issue quotas in an attempt to avoid supply exceeding demand and lowering prices.

When demand rises they raise supply quotas. When demand falls they lower supply quotas. The belief they set prices is silly and naive.

[Romulox]

60. " When demand is high they pump more"

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=439&topic_id=199525&mesg_id=201067

Now tell me what you REALLy meant by that statement! :ridiculous:

"OPEC attempts to match SUPPLY to match demand to keep prices as high as possible"

Nonsense. They restrict supply to increase the PRICE. Your arguments to this thread are circular, self-contradictory, and attempt to deny basic reality. :silly:

[Statistical]

61. And when demand is high they raise quotas to maximize profits.

By your logic they only restrict supply. So supply only goes down, it never goes up.

Supply goes up when demand goes up.
Supply goes down when demand goes down.

All with the goal of maximizing total profit (unit per price * units sold) just like any other business entity does.

Now their methods are far from perfect otherwise we wouldn't have seen $35 per barrel oil.

[Romulox]

64. The point is, OPEC manipulates the price. It's not set by the "free market".

I don't care about the minutia of HOW they manipulate the market. My only point was to get you to admit they indeed do so.

Gracias.

"By your logic they only restrict supply. So supply only goes down, it never goes up."

Stick to refuting the points I've made before you move on to points that I have not, ok? Nobody is arguing that OPEC has perfect control over prices (or perfect member compliance, for that matter.) Simply that OPEC manipulates the price of oil higher by (wait for it!) LIMITING production in the face of increasing demand in such a way that independent actors, acting in a truly free market, would not. That is, after all, the entire purpose of OPEC. :hi:

[Statistical]

65. Of course OPEC manipulates prices.

GM manipulates prices too.

When cars aren't selling they cut prices, offer discounts, slow production.
When cars are flying off the lot they raise prices, cut discounts, and ramp up production.


"Simply that OPEC manipulates the price of oil higher by (wait for it!) LIMITING production in the face of increasing demand in such a way that independent actors, acting in a truly free market, would not. "
Where is your evidence that they are cutting production into rising demand. Profits are maximized by the reverse (as long as you don't raise production too much).

[Romulox]

67. "Qatar's Minister Abdullah al-Attiyah said he did not expect OPEC to increase production in 2011."

"Where is your evidence that they are cutting production into rising demand. Profits are maximized by the reverse (as long as you don't raise production too much)."

http://www.msnbc.msn.com/id/40811733/ns/business-oil_and_energy/

a) I said LIMIT (in big letters, no less!)
b) you simply don't understand how a cartel operates. :shrug:
c) I find it hard to believe you are arguing your position seriously at this point. :shrug:

[Statistical]

71. If they believe demand can be satisfied w/ current production why would they raise production?

GM isn't raising production of vehicles to peak levels. Why? Oh yeah because there isn't demand. They could but to move so much inventory they would need to cut prices and although they would sell more total profit would decline.

Say country x can sell 1 billion barrels @ $100 per barrel. = $100B. Instead they raise production 10% to make more $$$, however rising supply causes price to falls 10%. They sell 1.1 billion barrels @ $90 per barrel = $99B. Why would they do 10% more work to get the same amount of money? Why would anyone?

[GliderGuider]

70. My layman's take on OPEC behaviour

Their policy is to try and maintain a stable world oil price that's high enough that everyone makes a lot of money, but low enough that it doesn't tip the world into recession. Economic theory says that to do that they should open the taps when the world price rises and close them as the price falls. There are a few problems, though:

1. They only control about half the oil production in the world, and the production decisions of other nations aren't under their control.

2. They can always close the taps, but they apparently can't open them at will - brave claims of "excess capacity" notwithstanding. If they actually had the excess capacity and wanted to keep the price from rising, they would have done it in 2008 and the price spike to $147 wouldn't have happened.

3. The world’s net oil exports are falling, and have been for the past few years. As the supply on the world market falls that puts even more upward pressure on prices that OPEC couldn’t control in the first place.

I think OPEC is as helpless as the rest of the world in this situation, they just haven’t admitted to it yet.

[Statistical]

73. #2 is a big point.

There was a lot of speculation that Saudia Arabia has been lying about excess capacity for some time. However it became apparent in the summer of 2008. OPEC raised quotes and then some nations "cheated" and exported beyond their quotas however big SA didn't even hit their quota. Oil was at $147 everyone knew it wasn't sustainable. At that point the smartest business decisions is to sell as much oil as quickly as you can. Take advantage of moving the most units at the highest possible price. Cheating was rampant but S.A. not only didn't cheat they exported something like 4% less than their quotas allowed.

So either SA had no problem with leaving tends of billions in profits on the table for no reason or THEY COULDN'T raise production. They were capacity constrained.

[GliderGuider]

75. That's how it's looked to me for some time now.

I haven't trusted a word out of SA's mouth since I read "Twilight in the Desert".

Oil price gyrations due to supply limitations are going to be a big factor in the coming downward economic spiral. I figure we're going to see a series of price spikes as the world economy repeatedly tries to climb to its feet and gets knocked flat each time as the price of oil spikes in response.

[ProfessorGAC]

77. Only Partially True

They cut back on production at times to spur price increases, and then sell part of reserves already in storage. It's been happening for 30 years.
GAC

[Gman]

48. Speculation (at least in the US) can be regulated

Speculation is one of the biggest drivers of oil prices along with a devalued dollar. Supply and demand are in there but the true demand price is distorted because of the speculation. Oil went from $145 - $35 a barrel at the end of 08. Oil dropped to $9 a barrel in the 80's. So the myth that oil prices are bound to increase is dishonest at best and bogus at worst. The big oil companies do their own speculating to drive up prices and they do it along with Saudi Arabia and other OPEC countries. At least that much we know from 2007-2008. This should be considered a national security issue and treated accordingly because oil is the lifeblood of the economy. Any actions by individuals or companies that cause the price of oil to go up should be considered a threat to national security.

Peak oil may or may not be here but supply and demand should be the primary driver. We were told in 07-08 that China was causing a huge shortage which was why oil prices were rising so high. Then we got news of some speculator that was extremely proud of himself when he did the trades that caused oil to rise above $100 a barrel. When it reached $145 we knew it was speculators causing that price because the world demand, while declining severely due to economic crashing in 08, was not supporting anywhere near that price. But the speculators were driving up prices that actually caused a bubble that busted.

So we know speculators manipulate the price of oil and there's no reason to think it's not happening again. Obama wanted to impose a condition on oil trades that you had to intend to physically take possession of the oil if you do the trade. Later they gave some (IMHO) lame excuse why they wouldn't do it which included the speculation done by international oil companies and OPEC nations. Probably the oil lobby at work.

Speculating and subsequently taking possession of oil or fuel is not a bad thing. That's why SW Airlines had relatively dirt cheap prices for flying in 08 as they were using fuel that they paid a cheaper price for by speculating. But the speculators have no intention of taking possession of the oil. It's just their arbitrage they are interested in. Of course when the bust happened they had a bad quarter where they lost money for the first time ever. They got stuck with more expensive fuel, but also air travel declined dramatically.

Sorry, but it is very naive and simplistic to say it's all supply and demand.

[BzaDem]

4. Actually, there isn't a single progressive economist that believes there is a risk of hyperinflation

and to the extent that we might face moderate inflation, they think that would be a good thing.

http://krugman.blogs.nytimes.com/2010/11/09/inflation-delusions-2/

http://delong.typepad.com/sdj/2009/04/future-inflation-the-least-of-our-worries.html

[Statistical]

5. Now this we agree on.

10% unemployment, 67% industrial utilization = far too much slack in the economy to for hyperinflation to take hold.

Hyperinflation has never occurred in any country in the history of economics under this type of scenario. Hell without the actions of the fed we likely would be facing crippling deflation.

[BzaDem]

9. "Hell without the actions of the fed we likely would be facing crippling deflation."

Exactly.

[MadHound]

6. Perhaps not,

But the fact of the matter is that even if we have normal inflation, ie gas prices cranking back to that 4-5 dollar a gallon level, that is still going to be a huge hit on our economy. And prices rising that high is a distinct possibility, since more and more oil exporting countries are switching to a basketful of currencies and off the petrodollar in order to conduct their trade. Why are they switching off the petrodollar? Oh, yeah, because the Fed is printing dollars like they're Monopoly money.

While you might be able to handle "moderate" inflation, those of us who are just holding on, who don't have jobs, we can't afford such inflation. As people spend more and more on gas, and food(whose prices rise and fall in tandem with gas prices), the less we'll have to spend on other things, insuring that demand remains down, a deathblow in a consumer based economy.

[BzaDem]

8. Here is an actual explanation for the rise of oil prices. Hint: it isn't "inflation."

"What about commodity prices as a harbinger of inflation? Many commentators on the right have been predicting for years that the Federal Reserve, by printing lots of money — it’s not actually doing that, but that’s the accusation — is setting us up for severe inflation. Stagflation is coming, declared Representative Paul Ryan in February 2009; Glenn Beck has been warning about imminent hyperinflation since 2008.

Yet inflation has remained low. What’s an inflation worrier to do?

...

Inconsistency aside, however, the big problem with those blaming the Fed for rising commodity prices is that they’re suffering from delusions of U.S. economic grandeur. For commodity prices are set globally, and what America does just isn’t that important a factor.

In particular, today, as in 2007-2008, the primary driving force behind rising commodity prices isn’t demand from the United States. It’s demand from China and other emerging economies. As more and more people in formerly poor nations are entering the global middle class, they’re beginning to drive cars and eat meat, placing growing pressure on world oil and food supplies."

--snip--

http://www.nytimes.com/2010/12/27/opinion/27krugman.html

Now, once we actually get moderate inflation (which we do not have now), then oil prices will obviously go up some. But most of the oil price growth won't be due to inflation -- it will be due to other factors in global demand. Worrying about inflation in such a scenario is like worrying about cyclical climate effects when the dominant source of global warming is man-made.

And while you keep talking about a single (and overstated) negative consequence of inflation, you completely ignore the good aspects. Inflation reduces the real value of debt, and debt is a huge factor holding back our economic recovery. When people are in debt, they won't start consuming again (creating demand and incentive for businesses to hire). Reducing the real value of that debt (even slightly year-over-year) is key to the recovery. On the other hand, disinflation (a reduction in the inflation rate) would hurt the economy, and deflation would cripple the economy (RAISING the real value of everyone's debt each year). See the effects of monetary tightening in the 30s.

Furthermore, moderate inflation would signal that demand is increasing, which means unemployment would be reduced. It would signal that big companies with trillions on their balance sheets will finally be forced to do something with that money rather than sit on it and lose more and more of it due to inflation.

And you also forget to mention that even during periods of inflation, interest rates are generally positive and are set to limit it. So while prices might be going up, so will the balance of your bank account.

[Yavin4]

7. Higher Gas Prices Is A Good Thing

Why? Because finally, policy makers would have to do more than just pay lip service to alternative fuel. Also, they'd have to invest and spend more on modernizing our transportation system and build bigger mass transit systems.

[MadHound]

10. And in the meantime, the poor and working class takes a huge hit

I agree, we need to switch to alternative fuels and energy sources. But we shouldn't be taking it out of the hides of those who can least afford it.

[hobbit709]

11. Which will take years and tons of money. Infrastructure isn't built overnight.

Meanwhile what are the working poor to do? Buy gas to get to work and go hungry. Eat and not be able to buy gas to get to work and lose their job?

[Statistical]

12. Then maybe we need energy assistance for the poor?

However to think the US can prevent rising oil prices is silly.

[MadHound]

13. Do you honestly think that will happen?

It didn't happen the last time gas prices got sky high, what makes you think it will happen now?

[Statistical]

16. Even if it doesn't happen there is nothing the US can do to prevent rising oil prices.

Nothing.

So people making claims like "US is allowing oil prices to rise" are living in a fantasy land.

Oil prices will rise. You can accept that and lobby for low income assistance or you can gnash your teeth and complain about rising oil prices. We are past peak oil. Oil prices will ONLY rise in the future. Eventually you will look back at $100 oil and remember it as the "good ole days".

So we either accept it, and rapidly face the coming effect or we get annihilated by it.

[Yavin4]

21. Precisely. The Correct Response Is To Encourage Fuel Conservation

Imagine the number of jobs created to make sure that federal buildings and automobiles are fuel efficient. Imagine the number of jobs created to build high speed rails and modern transportation.

Making our economy dependent on fossil fuels is a huge mistake.

[MadHound]

29. So you think that the transition away from the petrodollar has nothing to do with this rise?

Really?

And you think that the monetizing of our debt has nothing to do with the transition away from the petrodollar?

OK?

Yes, oil prices are going to rise, but the actions of the Fed are indeed causing them to rise further and faster than what would normally happen. The dollar is quickly losing its status as the reserve currency of the world, due to all of our debt. This is going to have grave, even catastrophic connotations for our economy moving forward.

But hey, if you wish to continue to believe that it is all about supply and demand, be my guest.

[Statistical]

31. US isn't losing status of reserve currency.

Only in the mind of people who fantastically want to see our economic system collapse, in some naive hope that what emerges from the chaos will be better.

[MadHound]

33. Then tell me,

Why have Russia gone off the dollar for bilateral trade? Why are more and more oil exporting countries going to trade in a basketful of currencies rather than the once mighty petrodollar? Why is Moody's threatening to downgrade US credit rating?

Reality.

Oh, and as far as wanting to see our economic system collapse, are you accusing me of that? If so, you're dead wrong. But hey, keep shooting the messenger, reality will still catch up to you.

[Statistical]

34. Russia hasn't gone off the dollar. They talked about it.

Oil exporting countries haven't traded in a basket of currencies they have talked about it.

Moody didn't downgrade US credit rating it talked about it (and the only reason was due to excessive deficits relative to GDP not hyper inflation).

China continues to buy those "worthless" treasury bills as does every member of G-20. Oil continues to be traded in dollars and with the Eurozone crash that isn't going to change anytime soon.

[MadHound]

35. Wow, do you not keep up with the news?

<http://www.marketwatch.com/story/china-russia-to-drop-dollar-in-bilateral-trade-2010-11-23>
<http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html>
<http://www.bloomberg.com/apps/news?pid=newsarchive&sid=affCa25VtRhU&refer=home>
<http://www.portfolio.com/views/blogs/daily-brief/2010/11/24/as-the-dollar-loses-reserve-status-fiscal-and-political-challenges-lie-ahead>

But wait, China isn't continuing to buy T-Bills, certainly not at the rates they were before. For the first time last year, the rate dropped, significantly.
<http://www.bloomberg.com/news/2010-08-15/china-favors-euros-over-dollars-as-bernanke-shifts-course-on-fed-stimulus.html>

Your blind faith in the strength of the dollar is touching, but misplaced.

[hobbit709]

15. you think the repukes are going to do that.

the main cause of the recent rise in oil prices is the usual gang of suspects, the speculators.

[Statistical]

18. Your right. It has nothing to do with rising demand of a highly valuable commodity

with limited production capacity and finite non-renewable supply.

Price is all relative. $5 gasoline to American wasteful lifestyle may seem excessive but $5 gasoline in a new bus in China beat walking (which is what a large portion of the country still does).

So China demand for oil won't be slowed by "high" oil prices. $5 a gallon gasoline is an amazing deal for China. They will continue to grow and grow and grow demand. That trend is going to last a couple decades.

[Yavin4]

22. Preach It.

I still see this as a positive. Anything that makes us use less fuel and pushes us faster towards renewable energy and conservation is all right by me.

[Broderick]

39. It all helps big business

and hurts the ones at the bottom the most. How many can afford a new hybrid? How many folks live near public transportation around the country? I see the elderly starting to count change again to get to the doctors office. I see folks not being able to afford getting to work or interviews. It hurts the working poor, the fixed income, and the unemployed the most. Noble perhaps to cheer higher fuel prices, but it just isn't at the pump. The cost of transportation will seep into the commodity items, and basic staples will cost more.

As a small business owner, my cash flow goes to shit because of the additional fuel cost in the ground. My profits (or lack there of) go down because of the increased cost of credit cards as a percentage of the higher fuel costs. My taxes go up because gross sales increased with smaller margins. My inside sales suffer as folks have less to spend. My driveoffs go up (one of the few that still tries to trust folks), and our repair facility suffers because folks have less money to fix things that are broken. My employees suffer as we have to cut hours to remain in business. Just a bad thing. MEanwhile the big corporations can weather it and the smaller business folks suffer.

So, hurting those that can least afford it at this point when the economy is struggling is not a good thing in my humble opinion. It hurts the little businesses and the people that can't afford it the most. The rich get richer, and they will always be able to put jet fuel in their planes.

[Yavin4]

17. The Working Poor Should Be Put To Work on Modernizing Our Infrastructure

Look, cheap gas prices are a thing of the past. The developing world, China and India, is going to be using more and more fuel. Gas prices are going to rise no matter what.

Unfortunately, the only way to get policy makers to move towards action is through a crisis.

[MadHound]

24. So the poor and working class get to bear the brunt of that crisis,

Driving them down even further, hmmm.

You must love Malthus and Social Darwinism, solving our energy problems by taking another huge bite out of those "underclasses".

If we can't get a decent, job creating stimulus through a Democratically controlled Congress and White House, what makes you think that the working poor will be given work to modernize our infrastructure?

[BzaDem]

25. What exactly is your proposal? How are you personally going to prevent demand increasing from China

and other countries? As has been said by many in this thread, by far the largest factor in oil price increases is foreign demand.

[Yavin4]

26. What's The Alternative?

How can we keep gas prices lower when Chinese and Indian consumption is rapidly rising.

[MadHound]

37. Rather than let the market force the issue,

Why not start a massive switch to alternatives now? Wait, that would take a lot of political capital, require the Dems to stand and fight.

Ahh, forget about it, it's just easier to let the markets ravish and kill the poor:eyes:

[BzaDem]

38. Do you actually think there is any amount of political capital that would result

in a "massive switch to alternatives now?"

Really?

[MadHound]

51. Again, so it is your solution to let the markets brutalize the poor and working class

In order to get this change done? Is that your solution, a cleaner, greener society at the expense of the poor and working class?

Mmm, compassionate change. Perhaps Obama should use some of that political capital he's got, oh, wait, he used it all up getting a deeply flawed HCR done.

[BzaDem]

54. What about an answer to my question? Do you believe there is ANY amount of political capital that

would result in you getting what you want at the moment?

[MadHound]

55. Actually I do,

But given that this administration isn't going to expend that capital, and that far too many people are like yourself, willing to promote change at the expense of suffering and hardship of the working and poor people in this country, nothing is going to be done to implement real switches to alternative fueling.

So do your happy dance, the poor and working class people are going to suffer badly, your president won't have to fight, and that political capital he has, well gee, I guess it can be used to reduce spending, ie Social Security cuts.

Happy? Somehow I thought so.

[BzaDem]

63. I wouldn't call myself happy. Just amazed that a single person thinks John Boehner is about to have

the most right wing house in a century vote on (let alone pass) something along the lines of what you are talking about. I think the vast majority of Obama bashers here would disagree with you.

I would actually call myself sad -- that the Republican party is so effective at spin and misinformation it can even manipulate some progressives to blame Democrats for a Republican House's actions.

[MadHound]

66. Well, there are several steps that the Obama administration can take on their own,

After all, unlike the common belief around here, the Executive Branch of government is not helpless.

There's also that whole bully pulpit thing that Obama only uses when he wants to berate liberals, but he could actually use it to achieve some good in this area (remember Carter?)

He could step up and try to make a deal with the 'Pugs, but yeah, you're right, that's not going to happen.

These things could be done. Will they, that's the big question.

But sadly, your only solution is to let the poor and working class take the huge hit. Mmm, compassionate change:eyes:

[BzaDem]

68. Do you remember what kind of Congress Carter had?

Do you actually think there is ANY amount of "bully pulpiting" that will convince Republicans to agree to a deal on alternative energy that you would favor? I'm not talking about unilateral executive action -- I would agree there are possibilities there (such as EPA regulation of carbon emissions, which is moving forward). I'm talking about actually convincing Republicans to put to a vote (let alone pass) a bill moving to alternative energies that you could support.

If you agree that there is some amount of "bully pulpiting" that will so-convince a Republican controlled House, do you think there is a single member of DU that would agree with you? I have yet to see one. The whole "bully pulpit" canard was used quite a bit on DU when we controlled the House (and nominally the Senate), but never (to my knowledge) with regard to a Republican House.

[MadHound]

69. Oh, so you admit to there being possibilities

Wow, that in and of itself, the admission that this administration isn't powerless as you've previously claimed, is a miracle.

Thanks, I'll think I'll leave on that high note, BzaDem recognizes that the Executive Branch is not powerless.

Bye:hi:

[BzaDem]

72. You (as usual) are being disingenuous. You know I freely admitted as such in YOUR previous thread on

the subject, since we had a long discussion about it.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=9578919#9578952

You going out of your way to refuse to answer my question on whether bully pulpiting can sway a Republican House vote specifically (and, if so, whether any DUer would agree with you) speaks volumes.

[Autumn]

20. They are not going to bother with any of that,

"they" can afford to pay the higher prices. The rest of us? Tough shit. Meanwhile the oil companies rake it in, with "their" blessings, and that's not going to change.

[Javaman]

36. The only good thing will be that people will get pissed....

you can start illegal wars, you can take away our rights and freedoms, you can phone tap us, lie to us, etc, but god forbid you prevent us from driving.

I have long said here on DU on many a post, if you want change in this country, real change, not madison avenue change, raise the price of gas to at least $5 bucks a gallon.

Until then, shut up and watch dancing with the starts while your ass expands.

[WinkyDink]

14. And the oil-igarchs sail on, on their newest mega-yachts.

[Ikonoklast]

19. The dollar is firming up on the world market.

The world economies are starting to ramp up, calling for increased energy usage.

Why aren't you paying any attention to all the other commodity prices that have risen, and recently fell, right along with the dollar's rise and fall?


Look at corn and soybeans, then get back to me.

There will be no hyperinflation, as much as you want everyone to suffer until your Socialist Utopia comes into being.

[DFW]

41. A real yo-yo this week

The Euro has risen from $1.288 to $1.333 now, about a 4% drop in one week for the dollar against the euro.
In the currency markets, that's immense. Gold has dropped, too, from over $1410 at the beginning of the year
to just under $1360 a few minutes ago. Things are very volatile just now.

[Ikonoklast]

43. Yep. That is huge move, like last weeks single-day 1% gain in the dollar.

Looks like there are forces trying to do some massive short covering.

[lib2DaBone]

23. Bernake "Whistling Past The Graveyard"..Could the U.S. central bank go broke?

http://www.reuters.com/article/idUSTRE7096FE20110111?pageNumber=2


QUANTITATIVE TEASING

That threat is already apparent in the Fed's latest round of bond buying, or so-called quantitative easing. According to calculations by Reuters Insider credit analyst Ed Rombach two weeks ago, the average duration of the Fed's new portfolio of bonds is just under 5 years, and every 1-basis-point rise in 5-year to 6-year Treasury yields results in a loss of about $65 million.

The Fed is sitting on paper losses of about $2.3 billion on the purchases of U.S. Treasuries it made from November 12 until late last week, according to an analysis by Reuters Insider.

The problem lies in the basic workings of fixed income. By definition, bond prices decline when their yields or interest rates go up. That means that as the economy recovers and pushes inflation higher, the Fed will move to increase interest rates, pushing down the value of its giant bond portfolio.

"What would the international reaction be if the Fed suddenly had to go and be recapitalized?" said Bob Eisenbeis, chief monetary economist at Cumberland Advisors and a former head of research at the Atlanta Fed. "I don't think that would bode well for Treasuries, or for the dollar, or anything else. It would be embarrassing."

[Statistical]

27. Only to those that don't understand ecomics.

Fed is holding roughly $2.43 trillion in T-bonds. Lets assume the average yield on that is only 2%. That is ~$48B in interest payments.

Now principle value has declined by -$2.3B (that is like losing a penny off a hundred dollar bill) but the interest gained from its holdings +$48B

[BzaDem]

28. No, the US central bank cannot go broke. The US central bank prints the currency.

To the extent this might cause inflation, the US central bank raises interest rates to choke it off.

[MadHound]

30. And you just showed that you simply didn't read the piece,

Not surprising.

[BzaDem]

32. Actually, I did. n/t

[cbdo2007]

40. I guess if you keep saying it long enough....eventually it HAS to get worse. ha ha hahhaa

ha hahahaha

As the economy has improved more and more we keep seeing the posts saying "hold on, it's about to get worse" yet it just keeps getting better in just about every sector.

A broken clock is always right twice a day I guess, so keep this up and you should be right maybe a few times a decade.

[Broderick]

42. I think they massage the numbers

I don't see it getting better yet. I see the underemployed ranks growing around me as well as the unemployed. Fuel prices will affect everyone that can least afford it. Makes the numbers look good on growth in the economy, but everything else suffers. I see too many blind to what is really going on out there.

[Motown_Johnny]

44. I thought the new projections was for 3.2% growth through all 4 quarters of '11

Higher energy costs are to be expected

[Statistical]

46. and not just in the US. Entire global economy is growing.

Global GDP growth is projected to be 3.3% for 2011. The entire world runs on energy and we aren't making any more crude oil.

The funny thing is the same people who say gold rally is real think oil rally is fake. The world needs oil, the industrial needs for gold are tiny.

[GliderGuider]

57. There's something going on with oil prices that's deeper than speculation

I know it's fashionable to blame speculators, but think about the implications of this graph for a second:



This graph shows the sum of all the world's net oil exports -- the amount of oil for sale on the world market -- over the last 24 years. Notice what's happened since 2005. That was the year that the world's oil production hit a plateau that it's been on ever since.

So, global oil production has been flat for 5 years. In oil exporting nations their consumption has continued to rise, resulting in lower levels of net exports. With less oil on the world market, oil importers are forced to bid the price up in order to get the supplies they need. As the world economy tries to recover from the recession, it needs more oil. The result is rising demand in the face of falling supply. It doesn't take a rocket scientist to figure out why prices are rising. It does, however, take an open mind and an ability to look deeper into the issue.

[Thunderstruck]

76. Almost no one will acknowledge this simple fact. Indeed, they will ignore it. n/t

[trackfan]

58. There can't be hyperinflation if nobody is making any money.

If there were to be hyperinflation, wages would inflate, which would destroy debt, which is the main problem with the economy.

[MadHound]

62. "Which would destroy debt, which is the main problem with the economy."

Hammer, meet nail.

Bernanke is essentially trying to do a "little" of that by monetizing the debt, ie printing more money. It is a risky business however, overdo it, and you're going to spin into hyperinflation. It is in many ways similar to the strategy that the Weimar Republic tried in paying out its war reparations, and we see what happened there.

[BzaDem]

74. It is actually not at all similar to the strategy that the Weimar Republic tried, though right wing

fanatics in the media (and as far as the media is concerned, usually only right wing fanatics) repeat that at length.