Post Traumatic Oil Price Disorder

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from HuffPost:




Max Keiser
Post Traumatic Oil Price Disorder
Posted May 18, 2008 | 05:25 PM (EST)



You know you live in a decadent country when basic facts of life are greeted with jeers and calls for excommunication from the realm like Paul Krugman is getting pilloried for his recent NYT piece on oil price inflation. Here's the deal folks, oil is priced in dollars and to bail out the U.S. banking system America's central bank is flooding the market with record amounts of dollars. What happens when too many dollars chase too few barrels of oil? Well, believe it or not, the price of oil goes up. Now this is not a political statement. This is a statement of fact. Speculators in the oil market (and the agriculture market) are a mere subset of the irresponsible credit expansion crazy people who run the Fed. And yes, the world has hit 'peak oil.' All three of the biggest oil fields in the world are now in decline. Demand for oil is rising toward 100mn. barrels a day, while production has peaked at around 86 mn. barrels a day. Too much money chasing too few barrels means the price goes up. And the Chinese are happy to pay. Seems simple enough...

But does this stop America's pundits from trying to avoid this economic reality, that oil is probably going to $160 in the near term and $200 in the medium term? No, they love to pretend that economics has nothing to do with the price of oil going up and that it's the fault of speculators and OPEC. You see the same myopic, "What me, worry?" Alfred E. Newman thinking on display in almost every facet of American political and economic life.

For example, did you know that soldiers in Iraq are not as bad off as we thought. There's not that much Post Traumatic Stress Disorder because it's politically inconvenient and much cheaper for the Private Equity run White House if it goes away.

From the Washington Post:

A psychologist who helps lead the post-traumatic stress disorder program at a medical facility for veterans in Texas told staff members to refrain from diagnosing PTSD because so many veterans were seeking government disability payments for the condition. "Given that we are having more and more compensation seeking veterans, I'd like to suggest that you refrain from giving a diagnosis of PTSD straight out," Norma Perez wrote in a March 20 e-mail to mental-health specialists and social workers at the Department of Veterans Affairs' Olin E. Teague Veterans' Center in Temple, Tex. Instead, she recommended that they "consider a diagnosis of Adjustment Disorder.

See, the economic and societal problems go away if you just put your head in a bag labeled CBS, NBC, ABC, CNN, Fox and stomp your feet and cry "Mommy, mommy, make the bad people go away." Yes, it must be Osama's fault, Iran, Paul Krugman , the speculators, anybody and everybody but the real culprit; incompetent, decadent, dangerously out of touch crony capitalists undermining the system with trillions of worthless I.O.U.'s they choose to call, 'money.' It was great while all that fiat currency ersatz whip cream was boosting the 'value' of your house, until it's not, and now you're 'upside down' now that 'rat' of credit is appearing in the 'snake' of global finance in the form of runaway commodity price inflation. If you didn't sell your house at the top, like the guys at Toll Brothers housing who sold out of their stock at the top? Well, your continued participation is heroic and please accept this Purple Heart for suffering such equity loss. .....(more)

The complete piece is at: http://www.huffingtonpost.com/max-keiser/post-traumatic-oil-price_b_102222.html

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1. This is a better article

Paul Krugman and the New York Times' Pious Pontifications at the Pump

On May 12, upon reading Paul Krugman's bizarre Op-Ed "The So-Called Oil Bubble," they must have been popping champagne corks at the American Petroleum Institute. The New York Times, consistently off-base when reporting on oil markets and their construct (please see "The New York Times' Hidden Hand on Oil's Agenda", 04.25 08) permitted their resident economic guru to hit one out of the "Alice in Wonderland" ballpark.

In an extraordinary piece of jejune analysis Mr. Krugman instructs us that the rise in oil prices isn't the result of runaway speculation but rather "of fundamental factors," and then repeats the standard oil patch saws citing growing needs of emerging economies, difficulty in finding oil, etc. Therefore "there's no good evidence that prices have gotten out of line." There, words coming from the hallowed pages of the New York Times. An oil flack's dream come true!

The nonsense continues. Speculation in oil markets is dismissed. According to Krugman, higher prices due to excessive speculation would result in a situation "in which supply exceeded demand. This excess supply would, in turn, drive prices back down." So according to Krugman, in that this hasn't happened, the vertiginously high oil prices as we now know them are a legitimate reflection of market forces. Simple as that. Economics 101. Oh, for the good old days.

That trading markets can be successfully manipulated is dismissed. Think Enron and California utilities. Think CFTC investigation of BP's alleged manipulation in crude oil trading. Look at India suspending futures trading in foodstuffs markets because of the distortions that have resulted. Think of the fire power inherent in Middle East sovereign wealth funds, giving the capability to move oil and energy markets if they chose to do so (are they, aren't they? an open question).

Then Mr. Kugman continues as though he had landed on this planet from some outer celestial body made of blue cheese. Not a single mention, not one, of the oil cartel, the Organization of Petroleum Exporting Countries who control 40 percent of the world's oil supply and willfully and collusively keep millions of barrels of supply off the market each day- and no comment on what that has done to distort oil markets.

http://www.huffingtonpost.com/raymond-j-learsy/the-new-york-times-pious_b_102046.html