OR: More News From the Out of Touch
"I think the price is above what's justified by the fundamentals of the marketplace," John Snow said. "It's out of line with the fundamentals, and there will be a movement back toward the fundamentals, which means a lower price."
John Snow, Secretary of the Treasury, is George Bush's point man on the economy who seems to think (noting the quote above) that oil is overvalued relative to the supply and demand in the worldwide economic system. The oil market this morning reacted to this revelation by rising by as much as another 1% and there is no sense among the traders that prices will slip any time in the near future. Once again we see Bush advisors who don't seem to understand the problems created by an increasingly tenuous and dangerous international situation.
It is interesting that Mr. Snow seems to be echoing the Saudis who are a seemingly broken record of "we will increase production, we will increase production, we will increase production." However the truth is that the Saudis and OPEC have seldom had U.S. interests in mind when it comes to the oil situation. Remember when OPEC said they wanted to produce to a oil target of between $20 and $25 per barrel?
Now, you should understand by now from living in a free market economy that when oil is over $50 that OPEC companies make twice as much money, right? I mean, does it make sense if you could sell your house for $200,000 that you would want to sell it for $100,000? How about a car company that sells you the new Porsche Boxster for $50,000 when someone will pay $100,000 for it?
A deeper problem exists though in the perception that the Bush administration has that government should simply be a tax reduction system. It was noted in the debates last week that Bush has not vetoed a spending bill in 4 years. It was not noted that tax reduction, at first good for the middle class in terms of the marriage penalty tax elimination has not helped the middle class since with the exception of those with large families. My own return increased by $40 last year.
Meanwhile, the government runs billions more into debt, increasingly lowering the dollar's value around the world and making oil even more expensive. But, the Bush administration got passed even more tax reductions for businesses just today.
When you look at the concept of government as a business it is not unlike any other. That is, it has a range of product and services and in order to be successful it must be responsive to the people that use it's products and services and to the shareholders (that is you and me).
The first key to success in that sense is respect for the taxpayer. But this administration, when challenged on the budget or on spending acts as if you are not entitled to your opinion. How dare you challenge the White House on the budget? Don't you know we are in a war? Don't you know that we are the boss and that you are just a user of governmental services?
You might get the idea that it is the citizen who is the terrorist when we don't give blind support to the Bush policies that have led us where we are. More and more economists tell us that oil prices over $50 is disasterous for us. More and more know that without cutting the deficit we will pass on trillions of dollars of debt to our grandchildren and wreak any chance of social security lasting much longer.
Meanwhile, the Bush administration is supposedly working on more tax cuts for W's political base, the ones with incomes over $200,000.
Does anyone see how disasterous this would be?