Tuesday, August 26, 2008

Oil drops to $113 a barrel


Speculation was the thing that drove it, of course. And as soon as people started to realize that, the speculators bailed. Lo and behold, there really wasn't much of a crisis, now was there?The Economist says that this is bad for us:

Now, there are several schools of thought. There's the one that says that when you use less oil, the demand and the price drops.
If speculation is to blame for the high oil price, then higher interest rates, not lower ones, may be warranted, at least in the medium term. Cheap money, after all, results in expensive assets, as the bubble in stocks then houses showed. In a research note published last month, Marco Annunziata of UniCredit argued that once the current crisis is over, central banks may return to the "unfinished job" of restoring interest rates to a less bubble-blowing level.

That the oil price may be so high because interest rates are so low is also an argument long pursued by Jeffrey Frankel of Harvard University. He points out that rates now fail to compensate savers for inflation: real interest rates are negative. As a result, the return to pumping a barrel of oil, selling it and investing the proceeds is often less than can be gained by leaving the oil in the ground and waiting for its price to rise further.
Then there's the reality that speculation was the likely culprit--and I think that's true because, as soon as they moved against it, the prices dropped dramatically. The rapid fall in prices suggests not a gradual decrease in demand but rather an artificially inflated "bubble" created by greed:
"$100 oil isn't justified by the physical demand in the market.  It has to be speculation on the futures market that is fueling this." - Clarence Cazalot Jr., Chief Executive Officer, Marathon Oil (October 2007).

"The price of oil should be about $50-$55 per barrel."
- Stephen Simon, Exxon Mobil Senior Vice President (Senate Judiciary Committee April 1, 2008)


"The price has nothing to do with a shortage of oil. There's a lot of oil on the market. It's because of speculation and OPEC cannot control speculation." - Abdullah al-Badri, OPEC Secretary-General (Agence France-Presse June 11, 2008)
Take your pick...

Thursday, August 14, 2008

What Does Your Irish Surname Have to Do With Terrorism Anyway?

Thanks to the fact that there used to be an active Irish Republican Army, everyone with an Irish surname probably gets to enjoy hours and hours of fun waiting to get on a plane. Your government at work throws common sense out the window:
Four years ago, author James Moore released his latest book critical of President Bush.

"Bush's War for Re-election" was released in fall 2004 and raised questions about the president's service in the National Guard during the Vietnam War. The issue of Bush's service became a campaign issue during the 2004 presidential election.

Months later, on his first airline flight since the election, James Moore was told by the airline he was flying that his name matched a name on the government's terrorist watch list.

Airline passengers whose names match those on the watch list must provide additional information at airline ticket counters before being allowed to obtain a boarding pass.

"Traveling became very complicated," Moore said.

Since the name "James Moore" was added to the list in January 2005, Moore says, he must arrive at airports hours before his flight and is prevented from checking in electronically at home or at the airport. Depending on the level of scrutiny, he says he can actually spend several hours trying to obtain clearance before being allowed to fly.

According to the ACLU, the name James Moore is one of a million names and aliases that have a match on the so-called terror watch list.
It's possible that Moore is being retaliated against. It's far more likely that, because the database is sloppy and contains thousands of IRA names and identities, the reasons are more innocent than anyone wants to admit to.
Since the list is secret, there is no way to verify that claim. But even if we accept the claim as true, the reality is that the list impacts millions of innocent Americans with the same or similar names as the "foreign terrorists" the government intends to cover.

It may well be true that former assistant attorney general Jim Robinson is caught up by this list because he shares the name of a suspected IRA terrorist, for example. That IRA suspect is probably not a U.S. citizen - but that's cold comfort to Robinson when he tries to fly. For those whose names resemble some faraway terror suspect and find themselves hassled or worse, the fact that the suspect is not an American is irrelevant.
Very little, if any, common sense has gone into protecting Americans. If you're going to take a nation full of Irish descendants and subject them to painful security checks because someone decided that everyone who might have once have been in the IRA is a current threat in this climate of Islamic terrorism, well, I have news for you--they ain't. Notwithstanding the support that the IRA has given certain Middle Eastern terror organizations, one must conclude that it is highly impractical to take Britain's list of IRA members and inject it into the system here in this country. Again, where is the common sense?

Don't expect it anytime soon. The next President is going to have to find thousands of meticulous, patient people to find these glaringly stupid errors and fix them, and if he fails to do so, he'll be sentencing many Americans to a permanent misery. My hunch is that a fellow named McCain is going to know how to handle this issue better than a fellow who is not named McCain.