Saturday, June 7, 2008

Middle Class Guilt and the Emerging Oil Bubble Economy

Here we go again.

On the front lines of the next big economic bubble.

I observed the pattern of the dot-com bubble and the housing bubble, especially by living here in California and some have remarked the new economy is a bubble/burst cycle economy (but there is nothing new about it apparently)

An economic bubble is when people pick something on "the market" that is gaining naturally as it should but un-natural, outside forces interfere and people start buying in not because they naturally would do so but now rather as a form of betting (can you believe this is all legal?). They overload it beyond what its really worth outside of the "fad". But because people see it growing, they think it must be for real even though its just like people fighting over a used kleenex from a celebrity.

Now I'm scared shitless about what is going to be the fallout of the emerging OIL BUBBLE economy.

I had just heard a radio interview on NPR thismorning with an analyst talking about todays record oil jump of 10 dollars on the heals of a week of newscasters commenting "Hey guys great news first day of no gas price jumps". And then right after that, a shill for the oil companies posing as an environmentalist rattles on about the changing infrastructure and how the price increases are systemic.

Noted in the commentary was how the down economy makes for a weak dollar and our weak-ass federal reserve chairman will keep the interest rates low, creating an even weaker dollar. This cycle coming at the same time as increasing concerns about food shortage have been given a boost by industry looking to our food supply as an alternative to crude-based fuel needs, adding more economic pressure.

The commentary noted that Morgan Stanley (a highly influential investment analysis company) has insisted that the price of oil WILL go up.

And so here's the bubble:

Oil is being seriously looked at internationality as a viable and valuable investment commodity- Especially since the dollar is so weak. So, many international companies have pulled their investment out of the dollar (and it sinks farther), but it begs the question, where will they put it now?

And the meat of our dilemma:

Because when a commodity is said to have "investment potential" that term means some people are buying up as much as they can, hoping the price goes up, NOT because they want to actually use that commodity.

It is very rare for a commodity investor to actually get the commodity they have invested in at all. In reality, they sell it at the last minute when the price is the highest!

Guess who is paying that highest possible price? YOU ARE.

To make it clear: By virtue of the fact that people are buying it, not to really use it but just with the hope that the price goes up: THE PRICE WILL GO UP!

That is because the investors are creating a false sense of higher demand.

I hope you all have at least heard people talk about "supply and demand" as it relates to something's price. What that means in a free market is when a commodity is in demand, companies selling you things are going to charge as much as they can possibly get from you before you refuse to pay, thus setting the market value.

And in our case there is another element driving the price up as well.

And that element is FEAR.

I don't want to go far off topic but I will briefly ask people reading this to think about TV shows and the news these days if they can recall the last time in the US we had such reactionary mass embrace of the environmentalist movement. Would you agree it was say, around 1990? Remember the cartoon show "Captain Planet"? (produced by Ted Turner who has been quoted saying "I am a socialist at heart".)

From my memory it started with pressure to get rid of styrofoam and hairspray, I remember as a kid that they made a big deal about that stuff and we started getting a smaller trash can too. Too small for our family of 6 especially when we kids cleaned our rooms. I remember a couple kids at school scared about what would happen, pleading with their peers to "save the environment". Then it was kinda dropped by the time the x-files came out, as fast as it started, and then we were all against cigarettes by 6th grade -2 years later.

I propose that this set up a very real FEAR inside of those youngsters at the time and it created a powerful subconscious TRIGGER.

Being used today.

In a very clever way.

Those who learned the history of the United States and the Industrial Revolution will recall that Oil and Banking have been intimatly tied together for a very long time. Those who know a little more will know that radical political movements across the globe in the 20th century were funded by the international banking establishment.

I believe most people would agree, still, that the environmentalist movement is a whitewashed version of radical leftism.

Since industry is tied to the world banks and the world banks are tied to funding radical political movements is it any wonder today that the biggest proponents now of this radical environmentalist movement are industry?

But they do not advocate much of a change for how they do business, but rather how YOU behave and how much you SPEND.

Though guilt based advertising triggering those fears planted during youth and by radical leftist collage professors that work in science and industry who get on the controlled media which are, funded by big industry and then berate us for the use of our habits then harp on how gas is going to be uber expensive.

You couldn't ask for better marketing.

How happy would Peter Pan, JIFF and Skippy be if they got together and had scientists come on the news everynight and talk about how we are going to have to get used to $8.00 a jar peanut butter? I would guarantee when you went to the store the next morning you would see $8.00 peanut butter on the shelf.

And thats what is happening to us all.

We have fear based marketing and deep product placement going on with the so called "green" fad aiding the oil companies in their phenomenal record breaking profits by convincing us all we are evil and as a punishment deserve the artificially high price at the pump.

We have big banks and international investors driving the price of oil up through its new posture it as an investment commodity.

We have the recoil of this effect damaging the US economy further, weakening the dollar and creating a self fulfilling prophecy and downward spiral which will soon be exacerbated by alternative fuels based on the food supply, farther straining resources around the globe.

As the demand for goods so closely tied to our survival become more more strained the result will be more constraints on individual human behavior and a consolidation of government powers internationally.

Who knows how deep this cycle will take us an how much of our economic infrastructure will be dismantled in the process? Will there be an airline industry? Will there be cars? What about when it all breaks down the the price returns to normal? Who will have the power that comes from industry at that point? Why the hell is everyone moving to Dubai??