Biden: "We Misread How Bad The Economy Was" -- A Comment Scripted by the American Petroleum Institute?
Vice President Biden, in humble contrition "confessed" that the Obama administration "misread" the depth of economic troubles it inherited. In doing so, in putting it into the terms he did, displayed a chilling lack of understanding of the economic landscape.
There seems no comprehension, and no mention, of how the cost of oil has encumbered the economy. Since February, or less than a month into the Obama presidency, the price of oil has doubled. It has moved quickly from some $33/barrel to over $72 barrel, and hovers around $66 barrel today.
The nation consumes some 20 million barrels of oil daily. A doubling of price to the current circa $66/bbl dollars means a daily additional "tax" on American consumers and industry of some $660 million. Simple arithmetic: 20 million barrels by $33 (the difference in today's $66/bbl price to February's $33/bbl) totals $660 millions a day. In rough numbers, making allowances for variations from these benchmarks both up and down, the massive total cost to the economy impacted by the doubling of oil prices from the end of February through the first days of July was nearly $70 billion. This real-time sum virtually neutralizes in large measure that portion of government's stimulus package that has been spent to date.
No it wasn't altogether "We misread how bad the economy was" it was more "We misread what was happening in the economy". Yes, and rightfully, alternative energy was seen to be a high priority of the administration. However, to the oil industry's cheer, there was little or no focus on the immediate and insidious impact of oil prices, their manipulation by OPEC and speculators who were given a pass, in spite of their machinations on oil prices and its profound impact on a faltering economy with mounting job losses and the steep contraction of discretionary spending due in large measure to the cost of energy.
Hardly any forceful initiative by the CFTC over the aberrations of oil trading worldwide, not only in the commodity exchange of New York, but in the offshore exchanges be it London, Dubai, Singapore, not to speak of the burgeoning over-the-counter market. The CFTC needs to pursue aggressive policies for far greater transparency in trading of oil futures -- to identify who and for whom trades are made, how much is being traded, and to what end.
And then the administration placated the oil industry and the likes of the American Petroleum Institute by blindly continuing to load up the Strategic Petroleum Reserve, purposefully or inadvertently, sending a signal that the doubling of oil prices is OK as far as it is concerned.
As the New York Times quoted a Deutsche Bank analyst today, "Crude oil prices appear to have been divorced from the underlying fundamentals of weak demand, ample supply and high inventories". Certainly the administration has its hands full, but clearly something is deeply amiss. The sooner Mr. Biden et. al wake up to this issue the better for all of us!
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"The Spice Must Flow..!"
I would really hope that whatever economic model the Administration used to justify the stimulus and project its impact would take a higher projected cost of energy into account. I would hope they wouldn't have used $33 a barrel.
Keynesian notion is that the economy is driven not by rational calculus but by "animal spirits" on the part of economic actors, that is, by their "spontaneous urge to action."
Key among these animal spirits is confidence, the presence or absence of which is at the center of the collective action that drives economic expansions and contractions. Not rational calculation but behavioral or psychological factors predominate.
This is not new stuff. Keynes saw this over 50 years ago. Human nature is what it is. Sorry Ktm, but you are wrong.
What did Keynes say about the geology of oil on this planet? Did he contribute anything to that topic? No? Then you better not use him as an argument against facts of nature.
Our problems stem from complete ignorance of fundamentals. Sorry, Rule, the world is not impressed by how you or Mr. Keynes feel about it. Instead it counts every atom and at the end of the day its book keeping is ALWAYS correct. And the entry on naturally occurring hydrocarbons shows that we are inching closer to zero by the day.
The only one who remains unimpressed is you. Most of the rest of the world has come to accept the fact that Man exists, and has a psychology that in many instances act counter productively to the good of the species.
You insist on a natural world in which man does not exist. That in itself is unnatural. It is a fact of nature that we do exist, and that we have drives that do not obey the same rules of the lower species. THAT is what's fundamental.
Raymond, candor is a GOOD thing.
I wonder what would happen if one of our senior leaders said something crazy like, “Ladies and gentlemen, though we as politicians have never been truthful about this, the standard of living for most Americans has been going down since the 70’s and, speaking candidly, will continue to go down due to our rapacious standard of living based on greed. The bill has come due”
Or, what will you say when Obama says, “Ladies and gentlemen, If you hadn’t heard, Mexico will no longer be shipping oil to us due to many factors beyond our control…..
Or, “Ladies and gentlemen, Though we have failed to see this coming, the CIA has learned that OPEC is incapable of maintaining current crude oil production levels past this year, and we must therefore be prepared to accept drastic measures in order to maintain our security……”
Even though it makes our leaders look like idiots, don’t you want to know?
power corrupts..
be the power oil... debt?... trash... bonds... if there is a chance to beat somone's mom or kids out of it... someone "ethical" and respectabl
Joe Bidden says what he thinks without worrying about being P.C.- good for him. Too bad that our leaders don't stop worrying about what is expedient or pragmatic.
it's just too much to ask.
It is, William.
With all the economic indicators revealing an economic calamity on the horizon two years before Biden makes his asanine comment about not knowing the depths of the problem and incomplete information, has to be the height of incompetence. I thought Bush/Cheney raised incompetence to a galactic level, but Joe is trying to match them with his incoherent comments.
So based on that Jimmy Carter beats them all with his insight 30 years ago that America has to become energy independent. Just too bad that until recently 300 million people didn't have the slightest idea what Jimmy Carter was talking about at a time when early action would have actually made a difference.
Read Matt Taibbi.
Yawn... peak oil won't go away just because Mr. Learsy writes another diatribe. We had 30 years to clean up our act and use less oil. We did nothing. Now some of us don't want to pay the price for their selfish behavior. What can we say? Get a Prius and move on with your lives.
Say hello to your friends over at Exxon when you pick up your check...
Since when does Exxon promote peak oil? Did I miss something?
Number one, the price of oil only hit $33 a barrel for a few moments of one day and only on the front month contract. The months out contracts never got below $40 a barrel. Second, the increase in the price of oil has nothing to do with OPEC. Everyone expected a bounce because it was incredibly oversold, having fallen to $33 from $147 in a matter of months. There was also buying as a hedge for the weakening dollar. You can't blame "speculators" for buying oil because of inflationary monetary and fiscal policy -the debasement of the currency. Many people are buying oil simply to protect themselves from poor govt policy. Back in the 30s the govt took away the peoples right to protect themselves (own gold) and that should never be repeated again. The price of oil also went up over the prospect of a global economic recovery and thus an increase in demand, as well as hoarding by China. Last, the increase in the price of oil back to the $50-$70 level was a good thing as it enabled energy companies to continue exploration and production projects as well as keep energy equipment manufacturers producing. All those propped up employment. But most importantly, it kept the economies of the commodity producing nations, particularly Russia, from imploding and thus warded off serious global economic, financial, political, and social ramifications.
Also, the idea that oil has been "manipulated" by speculators shows a total ignorance of speculation in general. The increase in the price of oil was in no way "caused" by speculators. In fact, nothing goes up because of speculation. Rather, global governments and the federal reserve caused prices to go up. Speculation is just the consequence of those policies. Oil is a hard asset. Oil is priced in paper money. The world is printing enormous amount of paper money to keep the world out of depression. Doesn't it make sense that it should require more of those printed paper dollars to buy the same amount of oil? A lot of people, governments, companies, and investors would rather own hard assets right now than printed paper dollars. That's what they want to own and that is their right.
manipulation is better word than speculation. the problem of course is the enormous amounts of moeny that poored into the commodity bubble as the stock and real esdtate bubbles collapsed. oil in recent times has become a finacial instrument rather than a commodity and therefore is subject to manipulations
the price of oil has not been behaving under the strictest terms of supply and demand fundamentals
NPR is having a great program on this issue right now on Diane Rheim show
even the oil industry guys on the program are agreeing that there is too much manipulations and specualtion going on and that some regulation should be in place to add guardrails if you will
denial is another form of ignorance dugan
You were doing pretty good until you mention that speculators are not cause of oil going up. Please tell me how oil is able to jump 20 points in a day??
what you are descrining is speculation
Hey, it is up to guys like you, no one listens to us out here.
Weren't these clowns shouting from every bell tower and steeple in the country that this was the worst economy since the great depression? Where the 'F' was the mis-read??
Sustainable Government NOW!
as underestimations go one has to admit that this was a good one, however I disagree with some of the comments here in that the financial system did needed to be bailed out or it would have brought everything down. The truth is we are all in for some hardship before things improve.
As understatements go we misread the depth of the economic crisis rates up there, when everyone who didn't have their hands out grabbing what they could knew the whole system was unstable.
regardless though you have to start rebuilding somewhere, now the oil card has kicked in once more it seem the recovery is fast grinding to a halt before its truly started
In truth new hardships are up ahead for all of us, sooner we realise that the quicker we can adjust and move on.
We Now Have A Total Gangster Government
Source: www.youtub
We now have a total gangster government to go along with our dumb-ed down citizens; wow!
"They don't even pretend anymore. It's total in your face cronyism. "
“but clearly something is deeply amiss”
Here is Obama’s economic team:
Larry Summers, former Clinton Treasury Secretary and advisor to Goldman Sachs who supported the repeal of Glass Steagal and the passage of the Commodity Futures Modernization Act deregulating derivatives and speculation.
Timothy Geithner, former head of the New York Fed who oversaw the entire financial meltdown and did nothing.
Robert Hormats, Vice Chairman of Goldman Sachs, is to be installed as Under Secretary of Economics, Business, and Agricultural Affairs.
• Jacob Lew, Chief Financial Officer of Citigroup Alternative Investments Group, as Deputy Secretary of State
(Lew’s dept. lost $509 million in the Q1 2008)
• Michael Froman, Citigroup, Deputy National Security Adviser for International Economic Affairs. Froman was formerly Chief of Staff to Robert Rubin at Treasury, before following him to Citi.
• Froman’s deputy, David Lipton, ran Citi’s global country risk management effort.
• Lewis Alexander, Citigroup’s chief economist and now Counselor to Treasury Secretary Timothy Geithner
• Neal Wolin, President and COO, Hartford Insurance Company, Property and Casualty Group now Deputy Treasury Secretary (Hartford received $3.4 billion in TARP funds).
• Gary Gensler, Goldman Sachs partner, now Chairman of the Commodity Futures Trading Commission Note: It was Gensler who was a key proponent (as Clinton’s Assistant Secretary of Treasury) in pushing the Commodity Futures Modernization Act of 2000.
• Mark Patterson, Goldman Sach’s lobbyist, now Treasury Chief of Staff
• Linda Robertson, Enron lobbyist, Chief PR Federal Reserve
Any questions?
Yes. Excuse me Mr. Olephart, but what about Peek Oyle? :)
No questions, OP. None.
We are so screwed.
They never considered it, they abdicated their responsibility wasted their mandate and put all their eggs in the Giethner, Goldman Sachs, Bernanke basket and let them run things, the very same people who created this mess..!
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