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Friday, November 09, 2007

Waiting for the inevitable collapse
Posted by Jill | 5:40 AM
Lost in the unbelievable botch job the Administration has made of America's position in the world is the unbelievable botch job they have made of our economic condition.

1. Oil prices. So far gasoline hasn't topped $3/gallon in most places, despite the recent spike in oil prices. It makes one wonder what the trigger was when they DID top $3 last summer when the per-barrel price of crude was far lower. But there's only so long this will hold before prices at the pump hold up. Meanwhile, homeowners with oil heat (like Mr. Brilliant and I) are going to wear a lot of sweaters this weekend (except that our price is capped because we are on a payment plan):

Oil prices rose Thursday after dipping briefly below $96 a barrel, indicating traders were back in a buying mood after pocketing gains from crude's recent rally.

Oil prices had surged to a record above $98 a barrel in the previous session amid supply concerns, the weak U.S. dollar and OPEC's apparent reluctance to pump more crude into the market.


And oil prices affect EVERYTHING:

Converted into chemicals, the oil and gas become petrochemicals that are used to develop plastic, polyester, rubbers, detergent, and chemical fertilizers and other pesticides. But it's also used in fragrances and lipstick, in candles and telephones, in pharmaceuticals and insecticides.
Petroleum is used to make artificial limbs and soaps, but it's not used to produce dairy products. Cows are. But cows need to fatten up before they're milked and slaughtered, and they're mostly fed a diet heavy on corn. As more corn is directed to energy production, the price for corn has risen and dairy farmers have passed those costs up the food chain.
Those higher feed costs alone have infused an extra $47 a year per person into grocery bills, according to an Iowa State University study in May.
And don't forget: Farmers sow crops with tractors and use trucks to haul goods, all of which are fueled by diesel. Those higher transportation costs also get pushed up the food chain.
Consumers at the supermarket check-out counter see that they're paying sometimes record-high prices for milk, cheese and yogurt at the same time that the costs of Tide, Pampers, Ivory soap, M&Ms and Cheerios are creeping up.


2. Debt. The so-called "Fiscal Responsibility" party has been maxing out national credit cards as quickly as it can amass them:

The U.S. Treasury Department said on Wednesday publicly held U.S. debt breached $9 trillion this week for the first time ever, just five weeks after Congress had raised the statutory borrowing limit.

At the end of September, U.S. President George W. Bush signed a measure to increase the debt limit ceiling to $9.815 trillion from $8.965 trillion, allowing the government to keep issuing debt.

3. Housing. Are you part of the 67% that now "owns" a home? Do you live in any of these markets? Then I sure hope you haven't been using your house as a piggybank, because the value of your house is going to drop like a stone over the next few years. Now this isn't all the Administration's fault, except to the extent that Republican laissez-faire contributed to the development of mortgage products that allowed people who couldn't possibly afford it get into homes they couldn't afford -- products that were like those "no interest for 15 months" payment plans that appliance stores offer. But the Bushistas didn't care as long as it was just middle-class individuals in danger of losing their homes. When the financial markets started to feel the pain, suddenly the idea of letting millions of people lose their homes wasn't something that "the market should sort out" any longer.

The increase in the debt limit is the fifth since Bush took office in January 2001. The U.S. debt stood at about $5.6 trillion at the start of his presidency.

In approving the debt limit increase, Congressional lawmakers said the $850 billion increase should be large enough to allow the government to continue borrowing into 2009, well beyond next year's presidential and congressional elections.


If this bunch had set about to wreck everything as a matter of policy, they couldn't have done a better job. The only question is whether they've reduced so much of our prestige and our credibility and our economy to rubble that it can't possibly be rebuilt.

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