Market Forces Come In To Play

We have asked for help. We have asked for leadership. But for all our asking, the asking has fallen on deaf ears. Now the forces of the market will take over. Many people and families will suffer, but seeing Americans suffer on TV is something we have gotten used to. From Katrina to the forest fires out west, from the droughts in the South to the floods in the west, Americans have seen and some have felt the pain of disaster. These are not man made, but as we say, acts of god.

The economy and the way we run it is no act of god. People and families will suffer from the lack of leadership in Washington over the last 35 years. The energy crisis will now effect us all. With the price of oil pushing $110 a barrel and the price of gas on its way to $4 a gallon, market forces will now step in. Over a year ago I wrote to a friend in the investment business, that I wrote to about the economy, that the price of oil and gas was going to bring this economy to its knees. That because there was no leadership with regards to our energy policy, many people and families were going to suffer. Many will survive, but many will be lost to tragedy. Man made disasters take lives too.

The mortgage loan crisis is a whole book all by itself. True people made some unwise decisions about the size and expense of their home. Add to that a variable rate mortgage, and you have enough fuel for a disaster. I have had people ask me, " why would anyone take a variable rate mortgage?" There are some good reasons to do so, but they involve some very defined set of circumstances. Those people that were gambling with the movement of mortgage interest rates, thinking they could pick the bottom, may have missed their opportunity waiting for the last basis point. Greed takes its toll. There is an old expression on Wall Street, and it goes like this, “the bulls make it and the bears make it, but the pigs get slaughtered."

Necessity is the mother of invention. An old saying, but true. I look for Americans to start coming up with clever and not so clever ways to save on using gas. Perhaps this will be a blessing in disguise. Perhaps this crisis will force people to come together as a community, the way communities were years ago, and start working together to help each other out. When I was a teenager, in the 1950’s, I would drive my Dad home from the hardware store on I-75. He would point to all the cars with just one person and say, “ someday America will be sorry for such waste.” He knew that some day we would suffer from our wasteful practices at a time when his ideas seemed crazy. They seemed crazy even to me at the time.

Everyone can read the comments from the pros about the change over from winter to summer gas and the margins that are not there for the refineries, and the lack of incentive to produce more gas, but the bottom line as far as I am concerned is the lack of leadership in Washington, D.C. So, I will mention my favorite book about the situation we all find ourselves in today about oil. Go the the library or buy a copy on Amazon dot com, but please read Sleeping With The Devil: How Washington Sold Our Soul For Saudi Crude by Robert Baer, 2003. Perhaps if enough people know the score, we can get some real change in the game. Stay tuned.