Posted by
m0t0r1zed on Thursday, October 16, 2008 1:42:44 AM
We've been focusing too much on just the banking system. We seem to have forgotten that the early slowdown in the global economy was not due to the housing mess and its ripple effects.
It was oil.
Oil siphoned off trillions of dollars out of the world economy, businesses, and consumers. The rapidly booming markets in China and India hit walls because of high oil prices.
Although the oil bubble has burst, it is because the world is tanking - as I kinda expected. The drag effect of high oil prices has sapped the confidence of consumers and was compounded by the credit nonsense.
However, the credit and financial mess has been addressed - imperfectly perhaps, but nonetheless addressed.
I think we now need to focus on stimulating confidence in the general economy. One of the ways is by driving down the price of oil.
Every time confidence in the economy improves, oil speculators spike prices back up - essentially driving confidence back down. We need to obliterate the price of oil and gas. Nothing will improve consumer confidence more than to see regular back down to around a buck and being able to fill up our gas tanks without wincing.
To drop oil prices, the following should be done.
1) Release the hounds, er, the strategic reserves.
2) Raise interest rates by 1/4 pt. Low rates aren't doing squat anyway.
3) Pass a drilling bill including the highly symbolic ANWR
4) Begin building nukes
5) Pass legislation limiting some types of oil speculation.
6) Push solar, coal, wind, etc. funding, blah blah blah.
Low oil and gas prices will have a strong, positive ripple effect on the world economy - THAT EVERYBODY CAN UNDERSTAND - and doesn't require friggin psychoanalysis and hand holding of bank lending fears. Stop mucking around with banking reform.
IT'S DAMN SIMPLE. SPIKE OIL AND GAS DOWN FAST. NO RECESSION. THE END.
Sheesh, we don't need to create a freaking new world global banking system or neo-socialist order to fix the "crisis of confidence" in the world. There are additional things that could be done to fix the general economy, but I adhere to the principle of KISS, especially since I am simple and stupid.
edit:
I view the concepts of living and non-living very differently from most people. A dumb analogy but ... perhaps the world economy could be likened to a living organism and money as its blood. Ideally, you want the blood to be flowing to where it is most productive and needed.
For example, you always want blood flowing to the brain, heart, and other vital organs. When thinking, you want an increased blood supply to the brain. When exercising, you want increased blood flow to the muscles.
Blood is always flowing and changing as it is directed to different regions. By this analogy, I would say that during the past spike in oil prices, all of the blood in the world economy was flowing towards our a$$. Yes, we still had blood flowing to our vital organs, but the brain that conjured new innovations and the muscles that powered industry all had a bit of a dropoff in performance. Recently, I believe that we had a lot of blood dilating our rear end to no great purpose.
And that is my very technical analysis of the world economy. =P