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My Economic Theory
Jan. 26th, 2009 09:20 amWe are suffering from a perfect storm of deregulation. In late 2000, right before Clinton left the White House, Republicans (Dick Lugar and Phil Gramm) pushed and passed a rider on an 11,000 page appropriations bill: Senate Bill 3283, also named the "Commodity Futures Modernization Act of 2000". Catchy name.
This rampant deregulation lead to California's blackouts, Enron's self-destruction (Enron bought and sold the very bill they killed themselves with), collateralized debt obligations, and record oil prices through speculation and commodities trading. All of which could have been avoided if Republicans weren't pushing a pro-corporate special interest agenda. But at this point I am certain that nearly all of the woes American companies are currently experiencing are due to the economy's dependence on cheap oil - and deregulation made everybody go nuts with greed. Transportation costs get huge, and when margins are slim, big spikes in fuel cost lead to massive losses and price inflation. And I think we're going to see the impact of this for at least a few more quarters. The really scary thing though is whether or not oil prices are going to go nuts again at the whim of the speculators; if they do, any healing the economy does will be undone.
This rampant deregulation lead to California's blackouts, Enron's self-destruction (Enron bought and sold the very bill they killed themselves with), collateralized debt obligations, and record oil prices through speculation and commodities trading. All of which could have been avoided if Republicans weren't pushing a pro-corporate special interest agenda. But at this point I am certain that nearly all of the woes American companies are currently experiencing are due to the economy's dependence on cheap oil - and deregulation made everybody go nuts with greed. Transportation costs get huge, and when margins are slim, big spikes in fuel cost lead to massive losses and price inflation. And I think we're going to see the impact of this for at least a few more quarters. The really scary thing though is whether or not oil prices are going to go nuts again at the whim of the speculators; if they do, any healing the economy does will be undone.