From a subprime mortgage crisis to skyrocketing oil prices to sluggish consumer spending, the troubling evidence keeps piling up that the U.S. economy has slowed and may even be heading for a recession.
But Federal Reserve Chairman Ben Bernanke (in photo) offered no holiday cheer in a congressional hearing Thursday, resisting calls from several lawmakers — most notably Sen. Sam Brownback — to stimulate the economy with an interest rate cut.
“It seems to me that now is the time,†Brownback told the Fed chief. “When those gas prices get up to $3 a gallon, it seems to hit some sort of psychological point in consumer’s mind that ‘I have less to spend,’ and that’s a reality for them.â€
Bernanke didn’t see a recession on the horizon, but he made it clear that the economy was going to get worse before it gets better.
All the more reason to appreciate Wichita’s surprisingly healthy economic vital signs going into the holiday season.
Posted by Randy Scholfield
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34 Comments
Of course, living under the dictates of the Environmentalists does have a price. That is, a price that will continue to spiral upwards and make our dependence on foreign oil mandatory. Funny, one never hears complaints about the oil fields in Venezuela, Saudi Arabia and other places in the world.
Meanwhile, in the U.S., we have untapped crude resting in the grounds of Alaska and off the Gulf coastlines, that could possibly exceed the total output of all the ‘oil importers’ combined.
But, it is not environmentally or politically correct, so we become enslaved to foreign oil and the dictates on our domestic fuel consumption.
The foreign oil companies love the U.S. Environmentalists. The Green crowd has by distorted politics lined the pockets of those oil producing countries with trillions of dollars and the made the U.S. dependent on foreign oil.
We have enough oil in and around the U.S. to never ever see another foreign Oil Tanker arriving in our ports.
Environmental Political Correctness has caused the U.S. to become financially stupid.
The environmentalists had a plan in the 70s put forward by President Carter. Don’t rely on imported oil through energy efficiency and 20% of power would be generated by solar by 2000. The Republicans didn’t want that so they voted for Reagan and years of deficit spending, foreign wars for oil, a bloated military, and supporting dictators like the Shah, Saddam Hussein and the Saudi family.
To blame the current problems on the environmentalists is sheer ignorance. The U.S. dollar decreased 30% in value since Bush took office, and he managed to aid in the price increases of oil by starting conflicts with Chavez, Iraq and Iran.
It looks like it may be time for Americans to face the music. The price we pay for gas at the pump has very little to do with supply and demand, and everything to do with the falling value of the dollar. The subprime mortgage market was all about greed. The borrow and spend policies of the last 6-7 years are coming to their obvious conclusion. Some say that deficit spending and debt don’t matter, but that defies logic. You can’t continually spend money that you don’t have. Five years of a war we didn’t need to fight with a price tag over $100 billion a year is the final nail in the coffin.
If the coming recession starts before the next election, the GOP is dead meat. Voters will know who they have to thank. With a little luck, the GOP will spend the next 20 years out of power.
We’ll be very fortunate if recession is the worst we see. The current administration and their failed economic policy may have bought us a depression.
What is the dollar back by? Nothing more than faith.
The fed creates money out of thin air. Monetary value is based on the availability of the currency. If Gold were as plentiful as limestone, it wouldn’t be worth it weight in tootsie rolls.As long as the so called federal reserve, the group of private bankers, can control our monetary system we will continue to have nothing but problems.
We have yet to see the full extent of the damage from their last rate cut.as far as who to blame for the coming recession… You can’t just blame the GOP, the Dems have bowed down everytime a new war spending bill comes up.
Big Oil is good for America. I love to drive and am thankfull for gasoline to fuel my car and airplane. What happens when the Prime Rate gets down to ZERO? Poor Bankers. Happy Days ahead
Doug
Where does anyone begin in refuting your smorgasbord falsehoods?
First of all, the fall of the dollar has much to do with the fact that other countries are becomming stronger.
When it was a case of the dollar against basket-case economies, of course the dollar always triumphed.
Now those countries are doing better, and, even if the US economy stayed the same, the other countries, in relation, have gotten better in comparision.
That issue asside:
Greens push for “carbon taxes” and the like rather frequently.
But, when economic forces push the price of oil or fuel upwards, they say that Bush did something wrong? Huh? How does that work?
You tax the heck out of everythign, regulate us to death, refuse to allow any new refineries to be constructed, on US soil, in over a generation, and then the supply and demand cause and effect is the fault of? —
The falling dollar has made oil more expensive. This will cause us to use less foreign oil. Is that not what you want? Oh, I forgot, you want the government to mandate such things. You dont want consumers and the market place to do these things, on our own!
Ok, now the “Jimmy Carter” defeatest, sweater wearing argument comes up:
Doug, when did any politician, from any party, ever say that you could not use solar power?
Actually, you have argued against your own “solutions” by bringing up past promises.
You greens DID tell us that solar was the answer, back in the Jimmy Carter days. Now, you tell us that wind is the answer.
I am all for both solar and wind to supplement current power needs, but — your false promises of today sound an awful lot like your false promises of yesterday.
Also, folks:Mortgage lenders give heavily to Democrat candidates.
I think a few mortgage scam artists and bank scam artists even got pardoned by Bill Clinton, didnt they? It wasnt all cocaine dealers he let off the hook!
Dont forget Whitewater, Castel Grande, Madison Guarantee Savings and Loan (That went broke holding a note that the Clintons never repaid.)—–
Furthermore, the Budget Deficit has declined dramitically. The deficit as a percentage of tax revenues is historically low. The deficit as a percentage of GDP is historically low. The deficit has no bearing on the sub-prime mortgage issue at all, NONE!
(If our debt ever causes economic problems, it will be because that debt is forcing UP interest rates. The sub-prime mess is due to low interest rates going slightly higher. It is also due to individuals making some bad decisions. In some cases, there have also been fraudulent appraisals and fudged financial qualifications. That stuff happens all the time, and we dont hear about it unless the lenders go broke.Just like we would never have known about the Clintons unpaid Madison Guarantee loan if the lender had not gone broke.Most of this is normal economic cycle stuff.The market it working.We will get through it all just fine.This doesnt even come close to the “dot com” bubble under Clinton, which began its collapse the day Clinton sued Microsoft.
Recession?
Oh no, that is just the BEGINNING.
This nation is looking at wholesale disaster if we do no correct course and SOON.
We have outsourced our enegy dependence AND our manufacture of almost everything. At the same time we are importing millions to exploit in low skills work.
We are becoming a nation of a few who have a lot, some who have enough, and many who have nothing.
A LITTLE socialism soon or a lot down the road. Time to choose. And time to grow beyond conventions and embrace change and innovation.
Econ that is a very good point and was the point at which the Clinton recession started. I find it amazing that with the Wichita economy flourshing we are talking about a depression and lauding Carter as a man of vision.
We do need to as a nation take action. We need to develop our own energy sources. We need to build new refineries and repair the old unused ones. We need to encourage our own oil producers.
We ALL need to work to achieve that goal. Redistribution of the wealth will be a short term fix because without new revenue coming in, the economy of the US and the government will falter and eventually fall.
High oil prices are fueling one of the biggest transfers of wealth in history. Oil consumers are paying $4 billion to $5 billion more for crude oil every day than they did just five years ago, pumping more than $2 trillion into the coffers of oil companies and oil-producing nations this year alone.
In the United States, the rising bill for imported petroleum lowers already anemic consumer savings rates, adds to inflation, worsens the trade deficit, undermines the dollar and makes it more difficult for the Federal Reserve to balance its competing goals of fighting inflation and sustaining growth.http://www.washingtonpost.com/wp-dyn/content/article/2007/11/09/AR2007110902573.html?hpid=topnews
http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-IraqOil_10bus.ART.North.Edition1.42010ac.html
By JIM LANDERS
KIRKUK, Iraq – The spike in oil prices shaking the U.S. economy right now is something of a self-inflicted wound stemming from a war gone awry.Iraq’s oil production has been crippled since the start of the war, amounting to one of the biggest disruptions in world oil supplies since World War II, according to statistics compiled by the U.S. Department of Energy.
Bush administration officials predicted Iraqi oil production would soar after Saddam Hussein was gone, to levels of 6 million barrels a day or more, and that Iraq would be able to rebuild with its own oil revenues. Instead, Iraqi oil production remains in the doldrums – 2.2 million barrels a day, below pre-war levels of 2.7 million barrels – because of a rat’s nest of sabotage, theft and mismanagement so stark that oil is paying for insurrection rather than reconstruction.
“Our people, we are living on a sea of oil but we’re facing a very big crisis in all of Iraq, not only in Kirkuk,” said Mayor Abdul Rahman Mustafa. “We have the shortage and the crisis of the fuels.”
Annie this is considered an ‘opinion’ piece and as such isn’t a news story.
“because of a rat’s nest of sabotage, theft and mismanagement so stark that oil is paying for insurrection rather than reconstruction.”
And this is news because…?
I’m still looking for that quote from Bush about the future of Iraqs oil.
If you won a million dollar lottery today, would you be broke in 10 years?I know the type.You are far too emotional to deal with money.You seem to know yourself, well.So, not trusting yourself, and resenting other people who can make good decisions on their own, you want to empower government.
Not just to “help” you, and protect you from yourself, but to get even with those who disagree with you, and want to run their own lives, make their own mistakes, and achieve their own triumphs.
“We do need to as a nation take action. We need to develop our own energy sources.”
YES! SPOT ON!
“We need to build new refineries and repair the old unused ones. We need to encourage our own oil producers.”
No No NO!. Have you learned nothting?
We faced this problem 30 years ago in the 70’s. We spaced it off then. Look what it got us.
Pursue the first part of your statement. Shout it from the rooftops even and I’m with you.
But ENOUGH with this “hurry up and stay the same!” mentality.
In my opinion this is a statement from a whitehouse talking head.Kgrm your statements are a reflection of your ideology.Pre-invasion part of the sales pitch was a low cost war and reduced gas prices.Your side gambled and lost.Ideology meet consequences now we all get to pay thanks guys.
As Matthews noted later in the broadcast, Laurence Lindsey – President Bush’s senior economic advisor at the time — argued in 2002 that the Iraq war would increase oil supplies and lower prices. From the Washington Times, 9/19/02:
As for the impact of a war with Iraq, “It depends how the war goes.” But he quickly adds that that “Under every plausible scenario, the negative effect will be quite small relative to the economic benefits that would come from a successful prosecution of the war.”
“The key issue is oil, and a regime change in Iraq would facilitate an increase in world oil,” which would drive down oil prices, giving the U.S. economy an added boost.
Let’s take bets on when the cons here will start in on BILL CLINTON! BILL CLINTON!
JR, we’ve also outsourced our food supply.
Bill Clinton?Gosh, I did that already and got NO credit for it?Darn!—-”I think a few mortgage scam artists and bank scam artists even got pardoned by Bill Clinton, didnt they? It wasnt all cocaine dealers he let off the hook!
Dont forget Whitewater, Castel Grande, Madison Guarantee Savings and Loan (That went broke holding a note that the Clintons never repaid.)”
I Europe, they’re using greenbacks for personal hygiene.
It’s cheaper than toilet paper . . .
Annie cited a source that said, “Bush administration officials predicted Iraqi oil production would soar after Saddam Hussein was gone, to levels of 6 million barrels a day or more, and that Iraq would be able to rebuild with its own oil revenues.”
That is correct. However the PHASE II Pre-Iraq-War Intelligence Report that finally came out showed that the intelligence agencies warned that oil production would not be up to that of the past and even if it were, it would not fund reconstruction.
This was another blatant lie by the Bush administration based on nothing but wishful thinking.
JM – I also remember “the war will pay for itself with oil revenues” and “it will be weeks, maybe months, not years”
WMDs -
Words ofMass
Disinformation
There is around $1Trillion worth of Risky House Loans, yes with a “T”, which is a miliion times a million. http://radar.planetizen.com/node/61522
How much is a $1 Trillion dollars? That is a stack of $1 bills that is 67866 miles high, yes miles. The approximate distance to the moon is 238900 miles, so $1Trillion is over 1/4 the distance to the moon!
A long way enlightenment.
However, that dollar bill is just paper.
Currency is based on the reputation and faith in U.S. government.
Without it, all that paper is worthless.
Paul, as usual you demonstrate a complete lack of knowledge of anything. The dollar falls because of inflation and fears of economic instability. Rate cuts increase inflation and a growing U.S. deficit increases economic instability so other countries sell off the dollar. To believe your nonsense we’d have to believe the American economy has decreased 30% for the dollar to have decreased 30% yet our economy still grows between 1 and 2% each year. The recent fall of the dollar was due to China selling off American currency, not because some other country suddenly produced good numbers.
It appears you are clueless about Carter’s environmental program. Carter invested money in alternative energy research and subsidized the purchase of alternative energy. Reagan came in and ended those programs, gave a huge tax cut for the rich, increased taxes on everyone else, greatly increased military and deficit spending and capitalized on Carter’s investments in our economy. Don’t bother trying to claim what I have said because you are an idiot and you dream up things you wish other people have said.
As usual you have no grasp on the subject. That’s why Republican administrations since Reagan have thrown the economy in the gutter.
The dot.com bust happened because 90 % of the dot.coms were not revenue producers, and because of ignorant investors. Microsoft is not a dot.com company, they are a software producer, among other things and actually create value. Clinton can’t be blamed for investor ignorance.
“You… refuse to allow any new refineries to be constructed, on US soil, in over a generation,”
posted by econ101
More falsehoods from the fossil-fuel shill.
Refiners do NOT want to build expensive “new” refineries. They even dismantled a functioning facility, to prevent competitors from buying it.
Read the internal company memos,http://www.consumerwatchdog.org/energy/fs
* It’s cheaper (more profitable) to expand existing refineries, and make them more efficient.
* They make maximum profits when running at/near 100% capacity.
* They make extra profits, when demand spikes, and/or refinery failures create price spikes.
“Clinton can’t be blamed for investor ignorance.”
Well put Phantom
the .com bubble was created by investors for investors…
econ101,
Your hero Reagan made the U.S. much MORE dependent on imported oil, by rolling back CAFE mpg standards in 1985.
Written in 1990, but even more true today,
‘Make Fuel Efficiency Our Gulf Strategy1′http://www.rmi.org/images/PDFs/Security/S90-26_MakeFuelEffGulf.pdf
“Are we putting our kids in tanks because we didn’t put them in efficient cars? Yes: we wouldn’t have needed any oil from the Persian Gulf after 1985 if we’d simply kept on saving oil at the rate we did from 1977 through 1985.”More at link.
Tony – and I would add the many people who foolishly took out ‘crazy’ ARMs.
I have used ARMs in the past and will again. However based on a recognizable index like “1-year Treasury + 275 basis points”. These people allowed themselves to get sucked in by slick ‘financial advisors’ who told them what a great idea negative amortization is.
Correct, Doug. Good analysis.
Reagan was the one who GLEEFULLY ripped the solar collectors off the White House . . .
The economy HAS to go bad, or democrats will not get elected.
Therefore, despite any GOOD news, it is MOST IMPERITIVE that liberal press members turn a postive into a negative.
It is sad. If the news keeps reporting the economy is bad, pretty soon, people start believing it. Then they start pulling out their investments, stocks, and faith in our economy.
It snowballs. If you believe things are bad – they ARE bad.
Regardless of truth.
Actually high gas prices might be a good thing for the country. Maybe fewer of us driving huge SUVs 50 miles to work everyday. That would do alot for the country. Fewer Expeditions, Suburbans and Hummers means less people we have to send to Iraq to die for oil.
“”"The economy HAS to go bad, or democrats will not get elected.”"”
Sounds good to me. I am actually willing to weather a recession- even a nasty recession- to get rid of the Republicans. It would be well worth it to me. A year of recession vs 20 or more years of wars and the loss of our rights? It is a bargain!
“”"Your hero Reagan made the U.S. much MORE dependent on imported oil, by rolling back CAFE mpg standards in 1985.”"”
Not just him but GM and Ford had much to do with that too. I am starting to think that maybe GM and Ford going bankrupt might not be so bad a thing after all. Both of them have done alot to damage this country. More than they have done to help it. They should have been leading the way in saving energy- not being dragged kicking and screaming by Toyota and Honda.