Thursday, February 28, 2008

Don't Blame The Messenger, Day Two


Today Fed Chairman Ben Bernanke spoke and answered questions before the Senate Banking Committee. The Senators, as a whole, realize that the Chairman is not Superman. Many of the Senators know the score with regards to our economy, the global economy, OPEC, other commodity prices like food and ethanol, and most importantly, the limitations of the Federal Reserve Bank. The complexity of their questions indicate this.

I would like to put forth an analogy that I hope with help drive my point about the importance of driving down or at the very least an attempt to drive down the price of oil. The bees pollinate the flowers and from that cross pollination comes fruit. People spending their money at the local level on food, clothing, shelter and gas, works its way through the economy and has a similar effect that the cross pollination of the bees have on the production of fruit. Money changes hands and money is spent and the process continues. The economists have a fancy word for this, they call it the velocity of money. Unfortunately, when we all are paying over $3 a gallon at the pump, money is leaving the system.

We need to be pro-active with regards to the rising price of oil. We can not assume that the price of oil will stabilize over the coming months. The United States must take steps to confront and deal with the rising cost of oil, regardless of what may or may not happen for the demand for oil around the world. The psychological benefits of a decline in the price of oil and gas to the domestic economy, in my opinion, can not be over stated. Yes, I know about the housing crisis, the sub-prime loan mess, the rating agencies mess, and every other economic or financial mess that is out there. But, if our government wants to send a message to every single person that pumps his or her own gas at the gas station every week, that something is being done about inflation, then let that message be reflected in the price of gas that is so prominently displayed on the big sign next to every gas station. Don’t under estimate the psychological effect across the entire nation, in every city, town and village, when the price of a gallon of gas at the pump goes down a dollar. That, my fellow Americans, would put confidence back into the consumer and a few more buck$ back into his pocket. That coupled with the check we are to receive, will get our domestic economy moving, perhaps slowly at first, but back in a positive direction.

Action should be taken to encourage the production of oil, gas and diesel here in the United States. Congress and the President need to concern themselves with our energy policy now. It can not be heavy handed, for we don’t want to discourage foreign investment in the U.S., but measures need to be taken. We are being squeezed by OPEC. That coupled with the demand for oil on a global basis has resulted in the $100 a barrel price that we are paying today.

Economic activity is driven as much by what is in a person’s mind as by what is in his wallet. Markets, like people, (which is what they are made of) operate not in a vacuum, but in real time. The confidence, the psychology, of the consumer drives the markets and the domestic economy. Lowering the price of gas at the pump will improve the confidence of the consumer across the entire country. Stay tuned.

1 comment:

HAPPY IN NEVADA said...

I've been enjoying your 'blog'.

I lived in Cincincnati for 7 years; moved in 1980 - Seattle, Laguna Beach, and then to Nevada (no more state taxes and traffic).

I've been noticing your use of the flag; I had a piece of prose/poetry published back in 1976 when I lived in Cincy (the title is: "With Little Encouragement from the Wind"). I recently put it up on one of my blogs (I have for poetry - poetry that is not necessarily all 'sweetness & light').

I was thinking since you paint (as do I), you might even consider making an interpretation of my poem/prose with a drawing or painting - I'd love to see the results; how you'd express what I put into rhyme, into a single picture.

I'm not sure if this comment will show my profile and/or blogs, so let me leave it with you:

http://poeticjustismine.blogspot.com.

If you have any problems with checking it out, you can use:

http://sixtyfivealive.blogspot.com (as I said, I'm the same age as you are).

If you take a look at the poetry page, it's titled: CINCINNATI GHETTO - 1976 (sub-title is the 'encouragement/wind' stuff....)

It's entirely based on a real experience of mine; I was down in one of the worst parts of Reading - never have been afraid to go into a rough neighborhooad (and I have quite a few close-calls too); so much to learn - so much we should all learn, and know....

As to the trucking: My husband spent 9 years on the road - independent; he read the writing on the wall before it all hit, so he retired 9/03.

One thing: Some independents who work with certain companies 100% of the time (or more than 80) - as my husband, are supported by the CUSTOMER being quoted a cost where the extra gas/fuel costs are set out on a line-item, and the customer can choose to go with the contracting company, or not.

I'd say 97% of the time, we never had a customer refuse our agent; they all were in the same 'boat' in one way or the other, and most knew the value of the trucker - what would happen (and will) to the country if we don't support the trucking industry.

Given that San Mateo is noted for 'high prices' overall, you can feel a bit more comforted that most of those in California are around $4.12 - and this is the first week in April.

We (in Nevada) are at $3.42; upwards to $3.68 (diesel is about $3.89).

I enjoyed your post on the Reds; met Sparky Anderson a couple times when I attended some gatherings where I was a guest - he was as well.

I worked for L. V. Tomasetti who was VP @ GE Jet-Engine Division; also worked with P&G (contract), and with Burke Marketing Research as well as Bason Associates; had a great time during my 7 years (one bad divorce though).

Anyway, a pretty 'chatty' post, but all that you've written about is interesting to me; given the fact you're in an area where I still have two grown children who are married, makes it all the more appealing to keep up with your information (I'm going to send your 'blog' to them to also read).

Enjoy your week-end; keep up with that art - my passion is the piano; poetry, and photography (3P's); art has taken a bit of a back-seat now, but I use it in my photography; the 'eye for art' shows up with some great photos!

Diane - kcir114112@cmaaccess.com