Letters to the Editor
aveutter
Published Letters: 198 Editor's Choice: 32
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Exxon just as utility?
[Read the article: A paltry $11 billion profit for Exxon]
[Read more letters about this article: Here]Economists wedded to their supply demand curves always get it wrong. They assume that while intrinsic value remains constant, any rise in the cost of production results in a lower price paid for the raw material, in order to balance the equation.
The housing market offers a analogy to the problem. Housing costs are based on raw material, labor, and the cost to borrow money. Typically when interest rates go down, homes are worth more. Alter any point in the equation and the other variables should fall into line, assuming inflationary pressure are not a factor. Inflation is the only reason to change the intrinsic value of something,( or maybe the government threatens to jail everyone who doesn't own a home).
Now in this instance lower interest rates may actually drive home prices lower, because bankers refuse to lend, and buyers with cash or a large down payment are more reluctant, because they are putting their own skin in the game, and paying inflated costs which reflects the devaluation in the credit markets, and not any intrinsic change in value. With credit markets tight, its hard to sell price increases based on inflationary pressures.
Like bankers who won't lend money, at some point the oil suppliers simply shut off the spigot, circa 1970's. There is no hard cash to offer the suppliers, only increasingly worthless dollars, which are probably being manipulated higher through bogus government intervention.
Exxon is like the banker who doesn't want to loan money, (and part of the problem in housing is that banks became utilites, which simply passed on the mortgage paper to investors, without risking any of their money. That was the plan...)
Exxon's profit margin isn't there, they have to pay too much for the raw product, and they cannot pass on their costs to the consumer. The COngress can make them sell gasoline, which they will respond by telling Congress that gasoline is too cheap, and ask for more subsidies. The housing problem has caused national angst, but who cares about the energy market? Nobody really.
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Conservation is for losers
[Read the article: Who pays the most for gas?]
[Read more letters about this article: Here]Okay so why does America pay less for gas? One reason might be we have the best economy (or did anyway). Gasoline taxes are probably lower here than in other countries. And of course exchanging crude oil for American dollars used to be a wise choice. Are the world energy markets uniformly priced, and fairly conducted? There is consternation at present, that oil is sold off market, and the major exporters want to reprice in Euros, or Yen, but maybe the market never was fair or fairly priced. We were always the big kid who pushed to the front of the line, and we could bring military power to bear, (and we still do).
American politicians learned that conservation measures means you have failed to play the game well. Raising the speed limits and building bigger, fatter cars means you get the best prices, and all the oil you want, right? Conservation is for losers. Cheap little tin-can imports are a symbol of economic stagnation, or worse. I bought a new Honda Civic in 1975, 35 mpg, front wheel drive. Those were the dark years of course, lines at the gas pumps.
I mean the message is clear, and who uses the most doesn't pay the most. At least that's the way it's always been.
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The Jobless Revolution
[Read the article: When do we know the worst is over?]
[Read more letters about this article: Here]Oil prices are pretty rational. Global demand is strong, and the dollar is weak. There is none of the volatility you see in gold, just a relentless rise. The gold bugs on the other hand are a paranoid group, who feel the Central Bankers have been manipulating gold prices since Bretton Woods. SOme still remember when Roosevelt took their gold. They are sure that this time it will be different, but it is just more C. Brown and Lucy. This most recent rally in the market is probably money coming out of the gold ETF and going back into stocks.
Lets give credit to McCain, in Michigan, he said, those jobs aren't coming back. America is becoming a jobless nation, unless you call the food service industry gainful employment, (Even Bourdain opted out for the gritty world of television).
How is America going to handle mass joblessness? Good question. I suppose we'll go on the dole, like Europe.
And of course the more money we give the jobless, the better the economy will look, and the more likely you are to be reelected if you are a politician.
Ditto the credit crunch. What do people do when they have two of everything? The common wisdom goes that there is never enough, but Americans have never been good at avarice, and gluttony. (most obesity in this country is related to poverty, and when some wheel makes a billion he gives it all to starving kids in Africa.)
Here's a stark prediction. The Consumer Confidence number will be reconfigured within a year, to reflect the new reality. Fifty will be the new One Hundred. No one wants to look at these paltry numbers, it makes you feel, well, poor.