Monday, July 14, 2008

Blowing Bubbles

First we had the dot com bubble and then there was a real estate bubble, now we have an oil speculation bubble? Some economists tie them all together. Some people like to say it is a conspiracy, the likes of which we have seen by the powers that be. I know that those with money can always figure out a way to keep it over those who do not have any themselves. I guess we should all be asking, why isnt any investment being made in refining, especially by those who are getting so wealthy from this situation. Well, I suppose it's easier to make your money from the top end when you don't have to do as much, where the very existence of your product creates higher demand for more. When all these producers and oligarchs have to do is go out and create some drama to get more income is it any wonder there is not even more drama?

All these bubbles follow the same pattern, spiralling upward to dizzying heights and then when they can no longer be supported, succumb to the darts and pinpricks levvied by the masses. This oil/gasoline situation will follow the same procession, but I wonder who will be left standing when this plays itself out. In an ever more and more interconnected global economy I think these bubbles will be just an outward manifestation of instant pressure being concentrated in any given area for even just a short time. The evidence is in that a herd the size of the race of man can stampede one direction then turn around and stampede the other way, without even thinking.


gregcalac said...


Not that I'm worried about them, but where will the Chinese sell their products when our (United States) disposable income evaporates due to the high cost of fuel and the devaluation of the dollar? I am also concerned that rampant inflation is just around the corner as well.

The biggest problem that I see for Americans is our inability to save money and pay for things we want with cash.

If we made our purchases the old-fashioned way we would be receiving value for our efforts and paying less for the things we want.

Another good reason for saving is to help reset the "cost of funds" which many banks use to set interest rates charged when we do borrow for large purchases.

Across the U.S. and including our area, the 11th District of the Federal Reserve Bank, the cost of funds is a calculation that takes into consideration: deposits on-hand by banks, costs of administering loans, etc. If Americans simply put more money into the bank then the calculations of the "cost of funds" would tilt in our own favor.

We've made this situation a huge problem by living beyond our means for many decades. Blaming the government for our economic woes is simply denying our own guilt in this mess.

Comments by: Greg Calac @

JohnnyT. said...

You are definitely right about that. And I am living proof! ooof!