My point is this, and its real basic, so no need for any dissertation on the Federal Reserve this afternoon....There is (obviously) no regulation, quota or tax break in place that has the net effect of me paying less $100 to fill up my damn gas tank.
This is a deep discussion. But I want to peel a few more layers off of this onion.
The Federal Reserve has printed more dollars (upwards of $200 billion) to bail-out greedy mortgage bankers.
Each time the Fed pumps more worthless paper into the economy the money in your pocket is worth much less than it was the day before. So you pull up to the gas pump waving a dollar bill that is really only worth seventy-five cents in the world market. That gas pump is going to shut off earlier than you think it should.
Yes, corporate greed and speculation played a big role in the financial mess we are in... but greed and speculation are not just with the oil companies, OPEC, and the commodities futures market. Greed runs deep.
If someone signed for a home mortgage that they were not sure they could afford in the future... that was greed. That was speculation.
Those news reports of massive numbers of home foreclosures are another way of telling you that value is rapidly being sucked out of your wallet.
Now, I'm not placing the blame for this whole mess on the poor family who wanted a nicer place to live. I'm just sayin', everyone who has had a hand in this agony doesn't have "Inc." behind their name.
And what we see at the gas station is just the start... you been to the grocery store lately?
All good points Royalld.
Gas is indeed just the start. Food is getting there. Next is water. Then will come utilities.
Regulation is the road to communism.
And hands down, this is your best point -
If someone signed for a home mortgage that they were not sure they could afford in the future... that was greed. That was speculation.
Those people who lost their homes they couldn't really afford were no less greedy than the people who sold them the outrageous mortgages.
Those folks were probably more stupid than greedy but what does that have to do with the price of tea in china.
If regulation is the road to communism, pure capitalism is the scenic route to the same destination.
Pure capitalism doesn't exist, unless we're printing our own money or using the barter system.
All these straw man arguments about capitalism are convenient, to say the least.
But let's make this simple. This is how regulation works.
A law is passed that says X can't be done.
The agency tasked with enforcement gets enough of a budget to hire two people and a monkey to police it.
The agency is run by people from the industry to be policed (e.g. the CDC is staffed from the ranks of Big Pharma people or the EPA full of people from Big Oil).
The regulation is rarely, if ever, enforced against the big guys. When it is, the fine is overturned by a court later, so it really doesn't matter. And the regulation has a million loop holes that keep an army of lawyers working full time arguing about whether it applies to some course of conduct.
When the regulation is enforced, it's used as a weapon to keep small guys out of the business or to dispose of people who served their purpose.
Securities regulations didn't save Enron's or Worldcom's shareholders. But it made a whole lot of lawyers rich and none of the executives had to pay restitution. So for all the fanfare of regulation, there are ex-employees of Enron, with no pension, no job, etc. Lots of good regulation got them.
Oh, I know, I know. There just wasn't enough regulation.
To RJEsq:
Be careful what you wish for... you may get it.
From the Associated Press:
Jul 8, 9:32 AM (ET)
WASHINGTON (AP) - In an effort to prevent a repeat of the current mortgage mess, Federal Reserve chairman Ben Bernanke says the Fed next week will issue new rules aimed at protecting future homebuyers from dubious lending practices. Bernanke also says the Fed may give squeezed Wall Street firms more time to tap the central bank's emergency loan program.
The mortgage rules will crack down on a range of shady lending practices that has burned many of the nation's riskiest "subprime" borrowers - those with spotty credit or low incomes - who were hardest hit by the housing and credit debacles. The plan would apply to new loans made by thousands of lenders of all types, including banks and brokers.
The bell has already rung on the value of the US dollar, the price of oil in America, and "the price of tea in China"; but this seems to be the Federal Reserve's grand, but late, regulatory attempt to un-ring the still echoing bell.
This is a joke by the Fed. I don't even know how they say this stuff with a straight face.
Their printing of dollars is what caused the crisis, which made easy money available to all the member banks.
Great. So we get new "rules" that will ultimately prevent certain people from getting loans (in the name of saving them from themselves) and then we're going to have to listen to Al Sharpton's bullshit about racial inequality in the availability of credit.
Predictable.
Unfortunately, although sub-prime mortgages had a lot to do with what we are paying at the gas-pump now, this new regulation will do nothing to lower the price of gas.
I know very little about the financial markets... but I wish I could operate like the Federal Reserve... thereby, if any of my friends fell on hard times I could go into my basement and print up a batch of legal tender to help him out.
You're all three correct as far as you go with it.
Now read your hypertiger wisdoms and go ALL THE WAY!!!
Lets say you are a King and you impose a tax...that is what compound interest is...a tax...rich mans tax...
Now he employs a person to wipe his ass...all the farmers have to pay the tax so that the king can feed the guy that wipes his ass...What if crops are bad? And the farmers can't pay the tax? Then the King sends other people - soldiers - that the taxes pay for...and they extract what they can...and if that doesn't work out then you invade and conquer...
Without an expanding money supply the tax eventually sucks up all private property in the system and concentrates it...If Gold is money...compound interest will eventually suck it all up in to the hands of the few...Then those who need money have to rent it from the top...No escape...Eventually the top just rents out paper instead of gold to keep the slaves happy...
Unless you rise up and kill the King...,
The current post is GRRRRRRREAT!!!!!!
(though I honestly about lost it when she who will not be named went on a momentary rip about "communism")
Bernanke and Paulson looking out for their peeps with some requested too big to fail regulations...., now ain't that about a blip!!!
Indeed CNu. Regulations are there to protect the big guys from their own reckless behavior.
Translated into English, these "regulations" simply mean that the Joe Schmoe Taxpayer will be paying the price of someone else's financial skydiving.
All information suggests that there is no diminished supply and that demand is unchanged (although all-too-high). Based thereon, than I'm prepared to lay the blame at the feet of corporate participants who have consistently earned three and four hundred percent in profits annually at the expense of the consumer. I'm also prepared to point fingers at speculators and oil futures traders who also apparently have in hand in this bull crap.
Tell you what, let's table my advanced oil industry primer until sometime next month. In the meantime, I propose, that OPEC, Bush, Obama, you, your mechanic, your cleaning lady, and all the rest of the world's geniuses, get together and come up with some restriction or regulation that gets prices down.
Call it a friendship pact if you are unnerved by the word regulation, just get back to me and the other billion people in this country who get pissed off every time we go get gas.
Not I may be taking a few liberties, but I probably speak for a good half billion of the lot when I say, I really dont want to debate how you do it, just get it done. Call us when gas returns to a reasonable price per barrel.
Is oil really going up or is the dollar, which is entirely oil-backed, going down?
In any event, I suppose the answer doesn't matter because there is no reason to lower prices.
I think it's wonderful that prices are going up. Spoiled, arrogant, wasteful Americans are getting a good lesson out of this.
Public transport is becoming more popular.
Living 10,000 miles from work will no longer be an option.
Hummers are already on the endangered species list.
And we'll probably never see the fine art of "cruising", that was so popular back in the day.
Less likely to throw away food when it costs so much.
A reduction in the use of plastic (which is petroleum-based), which is the scourge of the earth anyways, will be next, spearheaded by grocery stores who buy mountains of plastic bags that end up littering the planet.
Let the cost of gas go to $10 per gallon and maybe all the fatties of America will start riding their bikes and rollerblading to work.