Friday, April 25, 2008
IS THE U.S. ECONOMY UNDER TERRORIST ATTACK?
Is the American economy under a terrorist attack? Most U.S. economic indicators are down. Consumer confidence is low; gas prices are high; food costs are soaring; unemployment is on the rise; the value of the dollar is declining; mortgage foreclosures are still rising, and basically, the economy is a mess. Is this just a normal cycle or is something else driving the downturn?
Most of what is happening to the U.S economy makes little sense and the turmoil seems self-induced. Banks and mortgage companies did not have to raise home interests even though the rates were not fixed. As soon as they saw what was happening, any rational mind would have stopped raising rates and re-evaluated its impact before it got out of control. It benefits no one to have banks foreclosing. Did they think that by doing so there would be thousands of more homebuyers waiting in the wings to scoff up the empty houses?
We all know what is happening to oil prices. Economists tell us that prices are usually driven by such factors as inventories, demand, political unrest, climate, value of the dollar and speculation. While these are often fabricated excuses to raise prices, the facts do not line up. According to most reports, inventories are fine; demand is actually down; political disruptions have been minimal and the climate has not recently destroyed or halted too many drilling operations. The dollar is certainly off, partly due to the oil issue but the key factor appears to be speculation. According to most analysts, it is speculation that id fueling the current absurd increases in oil. These same analysts also say that the speculation makes little sense and does appear to be driven by normal standards of supply and demand. The obvious question is who are these speculators and do they have a hidden agenda?
On the food front things are getting progressively worse. Prices rose 4% in 2007 and they are expected to rise at least another 4% in 2008. We have seen food riots in places such as Mexico, India, Italy, Indonesia and Africa. The U.N. is warning of massive food shortages as the ravages of global climate change and the use of food as biofuel greatly reduce world food supplies. There are persistent attempts by U.S truckers to stage a national strike over diesel costs which all but cripple deliveries of food to markets and many on fixed incomes are facing choices between food or medications. Here in Maine it is quite possible that the lobster and fishing industry will be decimated this summer by soaring fuel costs.
In the face of all of this negative news we see little or no public policy aimed at addressing these issues. Record oil profits go unchecked, food and energy costs are spiraling out of control, seasonal jobs are severely threatened and yet nothing is happening to deal with these issues. Scientists are reporting faster than expected rises in greenhouse gases and polar ice is also melting at unanticipated rates. Assuming an active storm season this summer, all of these factors combine to further exacerbate an unstable economic climate.
It is clear that things like environmental disasters may be out of our immediate abilities to change. However, the economy seems to be shooting itself in the foot and nothing is being done to attend to the victim; namely, the consumer. The underlying question is who is doing the shooting? Who stands to gain by all of this turmoil? Who is pulling the economic strings causing havoc to the economy? Are there “economic terrorists” bent on disrupting the world economy?