Political Irony

Last week, the number of Americans applying for unemployment benefits went up, causing widespread speculation that even though corporate profits are up, the economy is not recovering from the great recession and may even be heading for a dreaded “double dip recession”. One of the main things being blamed for this problem is high energy prices, as the price of gasoline — fueled by conflicts in the middle east — has refused to come down in any significant way. With the normal increase in oil consumption in the summer as people drive more and use more air conditioning, the economy could get even worse.

Companies have pulled back on hiring because of high gas and food prices, driven by excessive speculation in those commodities. So Obama did something smart — he released 5% of the US Strategic Petroleum Reserves. And he got other nations to release an equivalent amount of oil.

His timing was perfect. Oil prices had been falling slightly, making speculators nervous. By releasing oil now, he is effectively shorting the price of oil, which will force speculators to sell, further lowering the price of oil.

Now here is where it gets ironic. You’d think Republicans would be happy, since this will help lower the deficit they claim to be so worried about. But they hate Obama so much that they instinctively disagree with everything he does. So they (pretty much unanimously) attacked the move as purely political. House Speaker John Boehner said “By tapping the Strategic Petroleum Reserve, the president is using a national security instrument to address his domestic political problems.”

Fixing unemployment, the economy, and high gas prices is purely political? Does anyone else hear what the Republicans are admitting? If getting the economy going again will help Obama politically, then they want the economy to continue to suck. Even worse, they want the speculators to continue to drive up prices and create bubbles.

You can figure out the rest.

UPDATE: Remember this when the Republicans force the government to default. They aren’t actually interested in reducing the deficit, they are interested in making the economy worse. Does anyone wonder if it was a coincidence that the economy stopped recovering when Republicans retook the House in November?

James Verone is a 59-year-old man with medical problems. He has a growth of some sort on his chest, two ruptured disks, and a problem with his left foot. But he has no job, no health insurance, his bank account is empty, and he isn’t quite old enough for Medicare.

So he figured out an unusual solution. He went into a bank and robbed it, demanding the teller give him just one dollar. Then he sat down and waited for the police to come take him to jail. Why? Because in jail he would get free medical care.

Obama famously said that he wasn’t against all wars, just stupid wars. Well, we have a war we have been fighting since the 60’s that is pretty stupid: the War on Drugs. Hah, you might say, that’s not a real war, like Iraq or Afghanistan. And yet, the War on Drugs has had far more casualties, and has cost far more money than almost any other war we have ever had. And it is a war that we have been fighting right here in our own country.

And now, the Global Commission on Drug Policy (GCDP) has come out with their report, and they recommend decriminalizing drugs on a global scale as the only long-term solution to the drug problem. Who are the GCDP? Some whacked out hippy drug users? Hardly. The commission is headed by George Schultz, a former US Secretary of State, and includes numerous former presidents and prime ministers of countries around the world, not to mention a former Secretary General of the UN.

You can read the GCDP report, or you can read an article about it from the New York Times, written by a former president of the US.

Seriously, that’s a lot of people willing to admit that the war on drugs has failed. So what’s holding us back? Pure stupidity? Or are we addicted to the war on drugs even more than we are to drugs?

We’ve seen lots of talk about bubbles destroying our economy, but what are we doing to try to make sure we don’t have another one?

A bubble is caused by artificially inflated demand for a commodity. For example, the real estate bubble was caused by people who bought houses because they wanted a good investment — after all, “housing prices always go up”. But eventually the demand collapsed. The price of housing went up so far that people who, you know, actually wanted to live in a house couldn’t afford them any more. Duh.

Another bubble is oil prices. The UN estimates that speculators have driven up the price of a barrel of oil by 20 to 25%. But again, once oil gets ridiculously expensive, people stop buying it. They carpool or walk.

Now investors have found a new commodity to invest in: Food. In 2003, fund managers had $13 billion invested in food. By 2008, just five years later, that number had increased to $316 billion (yup 25 times). As a result, prices of food like bread and beef skyrocketed (and it isn’t rocket science).

What’s sickening about this is that the demand for food is stronger than the demand for housing — the spike in world food prices has brought on a spike in world hunger causing around a billion people go to bed hungry every night. Investors are betting on the price of food going up even more. According to the UN, speculation has already increased the price of food by around ten percent: “Food markets have been turned into a casino. And for no other reason than to make Wall Street money.”

Robert Reich explains what went wrong with our economy in just over two minutes:

Reich was Secretary of Labor under Bill Clinton, when the economy was booming and the deficit was eliminated. He also served in the administration of Republican President Ford. And you know what? Despite all the misinformation being thrown around right now, what he says makes a lot of sense. Will we listen?