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Today's Commentary: 10.17.04
Im-Material Man
In another truly notable and cryptic appearance in front of the National Italian American Foundation last week, the ever blurry Alan Greenspan offered his take on oil prices as something of little concern, unless of course they go "materially higher". Thanks to the nation's top banker, an economist of great reputation, we have little to worry about as we head into winter with the odds stacked against us. There are problems in the pipeline and the conduits that get this precious commodity to the consumer and those pressures are forcing speculators to think, "hey, we can hedge our bets at $54". And that fixation with worry and the commodity hungry China gobbling up as much as it can find and at whatever price does not faze the chairman in the least it seems.
It has taken some of the pressure off of the Fed by, in a sense, raising interest rates via the pump. He likened this current inflated costs of oil as something reminiscent of the seventies, when you will remember, the crisis changed the way manufacturing thought about the endless bounty of oil and their growing dependency on it. But since then, we have become sluggish at chasing the alternatives that Mr. Greenspan alluded to in his speech. History, in this case is not a good guide of future performance of this resource or its long-term effects.
While the price speculation seems similar, the United States has done a good amount of shifting to alternatives on the industrial side of the equation. But the problem is on the American roads and in the no-longer-so-friendly skies.
We cannot be so sure that alternatives will be found in a timely fashion to offset, as Mr. Greenspan suggests, the possiblity of frivolous anxieties. In his speech, he believes that alternatives will be developed quick enough to ensure that conventional oil reserves will not run out. But as evidenced by the upcoming heating season, the rising pump prices and the difficulties the airlines are having, this is an economy stuck with its poor planning and preparation and probably for a good many years to come.
He may be off the hook about raising interest rates, but he should be suggesting more to stop the bleeding.
But if he does, it send a negative and potentially damaging hints directly at the success records currently being touted by the administration. At the risk of seemingly like I am once again taking the gauntlet up for the Democrats, there are certain things working on, or should I say, worming in this economy beyond the material presence of oil.
Greenspan should have suggested that had the administration better positioned itself to develop alternatives that are both forward thinking and fiscally responisible we would now have an incumbent with the enviable convergence of inevitable events. To have soaring energy prices and the vindication to have sought to rise above those shifts in Middle east enrichment and dependence, would have positioned the current administration as the caretakers with the foresight and the owners of the ultimate campaign tool.
Instead you cut taxes in the hopes that those misdirected philosophies espoused by your staff would somehow create jobs - which they didn't - make the economy stronger - which they haven't - and somehow rally big business, now wealthier, to hire a new workforce - which they have not. In fact, the employed rate has not budged. Trumpeting success in the unemployment rate is not a success at all.
But those pesky deficits have gotten in the way. Blaming the events of 09.11 and the recession that was developing when Mr. Bush took office are not viable excuses for lackluster policies directed at the folks who could have made a difference. That money you sent back, Mr. Bush was great in the short term but if polled on how that money was spent you would find it was used for day-to-day relief in a paycheck-to-paycheck world. Hardly stimulative when your own spending habits did not accompany your increased spending and generosity.
Mr. Kerry needs to be even clearer over these closing weeks or the President, but creating enough confusion will win by default. You have the right idea but honing in on specifics will entitled you to the highest office in the land. I would hate to think that default was your fault.
Mr. Greenspan could help if he chose by targeting what I would like to call economic insouciance. He should not continue to think that this economy can turn on a dime. He could be clearer instead of continuing to offer us with no parameters to his thinking instead offering phrases that could and possibly do mean almost anything. Is this a result of his amorous approval of Washington. Maybe.
It is not the "strong and growing stronger" world the President paints daily as he canvasses this nation with his message. It is however fixable as Mr. Kerry suggests.
But maybe, as he whistles his way to work each morning, seemingly oblivious of the real state this nation is in, the fed chief is thinking deeply about the current state of affairs. Or perhaps Greenspan, immaterial man is searching for his next message to the markets. If so, he will probably be stealing a lyric from Bobbie Mcferrin :
"In every life we have some trouble
But when you worry you make it double
Don't worry, be happy.
The Blue Money Report
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