Every time some jackass starts in on the “recession” thing, for example. I point out that the economy has survived seven years of press corps and political trash-talking without actually HAVING a recession, and that’s pretty remarkable.

The trash-talkers are traitors AFAIC, economies run on information and CONSTANTLY feeding false and harmful information into an economy in the hopes that it will create a collapse is sabotage, plain and simple. And it has hurt economic growth, WHICH HURTS PEOPLE, especially people who need economic growth the most!

So the next time someone trash-talks the economy, just ask them why they hate poor people.

And Obama’s a socialist, which means he’s economically illiterate pretty much by definition – and deliberately so.

Terrye on May 3, 2008 at 7:12 AM

Good question! I don’t know about the specific case, but here’s a couple of things to think about.

1. When the financial press says the price of oil has gone up or gone down, they are generally talking about the “nearby” futures contract, which is the price of the next futures contract that will expire, not the spot price of oil.

2. When the financial press says the price of something went up or down because of blah, blah, blah, they are usually talking nonsense. The prices are the results of transactions taking place among thousands of market players who are trading for lots of different reasons. The only thing you can say for sure is that the price rose because there were more buyers than sellers at the old prices.

3. Having said that, the explanation given is not irrational. If the chances of lower supplies for next month go up, then the expected spot price should rise, and so the nearby futures contract should also rise. Nothing nefarious here, just thousands of people each acting in their enlightened best interests.

4. This is a little bit more arcane, but the spot price should also rise with an increase in the nearby futures price. To see why, imagine you own a storage terminal that is only half full, and the price of next month’s crude oil goes up by $3.00/bbl. and the spot price doesn’t change. You know that you can store a barrel of crude for $0.50. What do you do? You buy spot oil, stick it in your tanks and sell the futures contract. You pocket a riskless $2.50/bbl. You keep doing that until the spot price rises/futures price falls or you run out of storage.

Make sense?

One secondary school at a time.

Limerick on May 2, 2008 at 9:11 PM

*cries*

I don’t know why the Republican party can’t get a PR campaign started that shows how idiotic a “windfall profits” tax is for everyone, including the followers of Democrats. A campaign like this should be broadcast on every major media outlet from now until the election.

Education is the only answer to the pandering that has prevailed in the Democratic party for decades. Not all the followers of the Democrats are stupid…they can understand and have common sense. All that is needed is an awakening of that common sense yet the Republican party has failed to provide the alarm clock!

Maybe the Republican party still needs a “wake up” call. You would have thought after losing the House and Senate they would be insomniacs but evidently they are still asleep at the switch.

So here is how Democrat Jimmy Carter did it, he put in a the windfall profits taxes, then when prices went sky high he put in price controls. Simple fix. The result was you got to stand in line for half a day to try and obtain five gallons of gas. It was cool, the watse of time. But hey, the rest of the economy was crushed under his sky high interest rates so you had plenty of time to stand around for your rations.

Soviet planned command and control economies failed, but they didn’t try hard enough. All the Soviets needed to succeed was more money.

That will cure the problem of price excessive profits and before long we won’t ever have this problem again.

Thank you and I understand what you are saying. My point is why did the price of oil go up $3 in one day on the fear of short supplies. That is exactly what the Bloomberg report said. They did not say that physical supplies failed to reach a market. So far as I know, none have.

As much as the price of gasoline sickens me, I’d like to see a permanent tax holiday to lower the price. To make gasoline appear more affordable, I’m doing the same thing I did after Katrina when all the stations jacked up their prices, I fill up every other day a few gallons.

exactly the masses do not understand they pay th corperate tax when they buy the product. Corperate tax ends up being a hidden tax +. + because the consumer also pays the cost of collecting the tax.

Imagine that you wanted to explore for oil in the Arctic and there were no corporations, nor any reasonable facsimiles thereof. Would each supplier (for pipe, trucks, food, air transportation, labor, shipping, information, capital, etc) contract with each of the other suppliers? What a mess! So the law creates a central point through which all contracts flow, and they call it a “Corporation”. So when the government taxes corporations, they are actually using the resources of the corporation to collecttaxes.

So, corporations never pay taxes, they just gather them. The problem is that it’s very hard to tell who is actually paying them. It might be the consumer, it might be the employees, it might be the providers of capital – it all depends on the nature of each of those markets.

Of course, to the government that’s fine, because there’s no one to complain. The people who are actually bearing the burden of the tax don’t even know. It’s a scam!

Besides, such as times in the 1980’s when the oil companies were all losing money because oil was so cheap, if the oil companies start losing money in the future, is the federal government going to step in and give them subsidies? (They sure as hell are not going to sunshine the taxes!)

allrsn on May 2, 2008 at 9:48 PM

No probs. I think I proved that I’m pedantic by using the word pedantic!

jl on May 2, 2008 at 9:45 PM

It was self-deprecating

Ok sorry you depreciate your self.

Exxon’s effective tax rate for the previous fiscal year was 42.4%. The left’s darlings, Starbucks and Google had tax rates of 35.6% and 25.3%.

marked by a narrow focus on or display of learning especially its trivial aspects

At least McCain acknowledged he didn’t know as much as he should about economics; but the two Democrats haven’t learned from history and just know everything about economics except how it works in the real world.

allrsn on May 2, 2008 at 9:41 PM

It was self-deprecating.

Pedantic – adjective

1 : of, relating to, or being a pedant
2 : narrowly, stodgily, and often ostentatiously learned
3 : unimaginative, pedestrian

jl on May 2, 2008 at 9:31 PM

I’m about to get all pedantic on your sorry butts.

Since no exitsting poster has challanged your position, and since most of the posters at HA understand at least some degree of economics HOW THE HELL DOES THAT SATEMENT FIT IN?

jl on May 2, 2008 at 9:31 PM

I like pedantic. I had to look it up but I like it anyway.

Great post.

When the dollar falls in value relative to other currencies it means that the things that you buy from those countries cost more dollars. Since oil is a global commodity, it costs more in dollars when the dollar is worth less. The same is true of Korean microwaves and Swiss chocolate, which is why a falling dollar is inflationary. Too much money chasing too few goods.

Next, don’t blame oil “speculators” for pushing up the prices. They aren’t doing it. Remember that the spot market (effectively the market for actual phyical oil) has to clear. That is, the supply must equal demand. The price at which that happens is the price you observe. The only way, then, for someone to force the price of oil up is to physically remove it from the market. For speculators to do that, they would have to buy massive amounts of physical oil and store it somewhere! There just isn’t enough storage available to do that and, trust me, somebody would notice.

Now, speculators could, in theory, push up the forward (think futures contracts) price of oil, but for every buyer there must be a seller, so half the market must be on the other side. And if people noticed that the forward price of oil was consistently higher than the eventual spot price (which must clear!) they would start shorting futures and they’d take the “speculators” to the “cleaners”.