Tuesday, May 27, 2008

Oil is all the Rage

Long weekends are good and bad. The good is the time away from your actual job, sleeping later than 5am, and time aplenty to do whatever you want. The bad is the first day back to reality. I really did not want tot get up this morning. Tough time.

Anyway, I had a good weekend. The dry aged steaks were amazing. The new fishing rod and reel setup work extremely well. My potato plants are growing like crazy now. I hope you all had a good holiday weekend as well.

Airline Bailout on the Way?
I read a story this morning (I can't remember where I read it or who wrote it; it was early this morning and I was half awake!) that was discussing the price of oil and how much it costs the airlines to buy fuel in the current high price era. The numbers were pretty scary and towards the end the writer remarked that the airline industry will be calling for their own bailout by years end if things do not moderate on the oil price front and fast.

While I am certain that the price of oil will "moderate in the coming quarters" this line of thinking certainly has become first response as of late. Industry in trouble? Bail them out! This is what happens when you ignore moral hazard.

So we are currently bailing out the following:
  • Insolvent banks that caused the mortgage mess due to greed and poor management
  • Insolvent home mortgage borrowers that chased prices up

Airlines a possible next bail? How about this list of possible bailouts that will be needed:

  • Airlines broke from fuel costs
  • American auto makers
  • Home builders at some point
  • Realtors and finance jobs that are being lost

At what point can we just bail on the USA? The speed at which we have arrived at complete acceptance of pure socialism is scary. No debate. No vote. Nothing but the FED along with the money folks screwing the taxpayer so they can stay rich. Ugly stuff.

Oil is all the Rage

I have about had my fill already of the oil stories. As I have said oil speculation is bad while speculating in housing is awesome. Oil speculation should be investigated by congress while home speculation should be encouraged by tax breaks and bills from congress. You get the idea.

The oil price angle, and the causes of the higher prices may be good in one way. Finally there may be a fair and objective look at what Greenspan/Bernanke easy money has done to the dollar and commodities as functions of excess liquidity. I would not hold on to that hope too hard.

Have a good night.

6 comments:

watchtower said...

GYSC

Did you see any of the pictures that the Mar's probe "Phoenix" has taken?
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I wish someone here would put their two cents in about whether or not they think we will see wage inflation in the future.
I'm pretty much split 50/50 on it as of now.
Can you have "hyperinflation" without wages going up to chase the higher prices?
Oh well I guess that's a pretty big can of worms to dive into.
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GYSC
Good post, it's just that I don't know if we are heading for socialism or fascism.

Anonymous said...

Watchtower,

I think socialism is the most likely path. When everyone and everything becomes dependent on a bail out by the government for the public good it seems like the most likely path to me.
I think this years elections will be telling and I don't expect many winners to have an R after their name. I also not optomistic due the fact that the Boomer's are more then likely going to lead to money printing to pay for SS and Medicare. There is no will in this country to do anything else I fear.

You are right about wages by the way.
Hyperinflation destroys the German and Austrian middle class

http://www.pbs.org/wgbh/
commandingheights/shared/
video/wmp/mini_p01_04_a_220.html

Kevin

watchtower said...

Kevin

I was "forbidden" to look at that webpage (i.e. www.pbs.org...).
My computer said that I may have to log in to see this page, do you have another link to this?

Anonymous said...

Watchtower,

Try this, I think I screwed that link up.

http://www.pbs.org/wgbh/commandingheights/shared/video/wmp/mini_p01_04_a_220.html

Kevin

watchtower said...

Kevin

They still wouldn't let me in.

Can you give me a brief summation of it?

Anonymous said...

Watchtower,

Yes basicaly this guy need 20 pay raises in 8 months.