Discussion for article #244262
“Oil markets will be concerned that this could be an incremental step in a deteriorating political situation that might ultimately threaten world oil supply,” Ric Spooner, chief analyst at CMC Markets, said in a commentary."
Bullshit.
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It’s a shame that Congress is so opposed to a fiscal stimulus program – what with a scary black Democratic President in the White House who might take credit for it – but this underscores the need for a massive national economic recovery program.
A massive jobs program focused on rebuilding our infrastructure could provide needed work for Americans and an economic boost to our nation, and help to offset the exposure our financial networks and many of our large multinational corporations face in the event of further turmoil in the Chinese markets.
Even though our interest rates rose slightly in recent weeks, we can still borrow money at incredibly low rates, and the beneficial spin-off effects of a massive infrastructure initiative would be widespread.
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But if the current world oversupply of oil is curtailed, doesn’t that mean energy-company stocks will go up, which would be good for the market? he asks innocently.
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“Shhhh,” say the oil company executives.
Saudi Arabia gets a free Two-Fer.
It gets to piss in the face of the Shiites, and they get a FREE boost in Oil Prices (what they actually wanted all along.)
They have SERIOUS problems domestically with the ISIL threatening the Monarchy externally and a largely Young, Male, Unemployed, Uneducated, restless population that is getting fed up with the constant cuts in domestic stipends that the Monarchy uses to BUY their acquiescence to their despotic rule.
The best thing they can do (in their minds) is to gin up a Holy War against the apostates (Shiites) to distract their population from how badly they are being screwed over by the corrupt Monarchy, and to drive up global oil prices at the same time. If they play their cards right (with the help of Netenyahu and his slavish minions in the US Congress) they might even be able to prevent the Iranians from getting back into the international Oil markets entirely by reinstating an embargo (after they manufacture a Iranian-led “Atrocity” somewhere.)
This is a dangerous game they are playing, but the House of Saud knows that the Reich-Wingers have it’s back and they can do whatever they want because Money (Oil) talks, innocents be damned. They are just “collateral damage”.
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I agree with you, except that Congress just passed a big infrastructure bill in December that will start pouring money into the economy during 2016. If the Administration can get its act together - not holding my breath about that - money should have started going out today and into project startups in February. There are two other important stimulus measures helping the economy. The first, of course, is the big drop in oil prices which is like a tax cut. The second is the massive amounts of money that are pouring into the economy through Obamacare; this is happening through the federal financing of the Medicaid expansion and the enormous - but totally ignored - infusion into local economies (funnelled through the health insurers) of the Obamacare premium subsidies. Both these sources of stimulus happen automatically under Obamcare and are not subject to the appropriations process. Like you, I’m worried about Chinese contagion, but I think - you can correct me - that we are using China more to manufacture our products than we are as a purchaser of our products, so Chinese contraction can be a problem, but hopefully not fatally contagious one.
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Agree with you on all your points re ACA, falling gas prices, and the Highway Bill as economic stimuli.
However, the Highway Bill will fund only a small share of what’s really needed: the professional society of civil engineers estimates there are a couple trillion dollars of projects that need funded.
And the Highway Bill won’t help to modernize water treatment plants, sewer plants or other infrastructure, but can only be spent on surface transportation projects.
Yes, we don’t sell much to China, but rather import their goods. And the strong dollar means that our own exports have risen in price internationally which puts them at a competitive disadvantage.
My point was that additional stimulus could provide a buffer from international economic turmoil and stagnation, and also create jobs that won’t be outsourced.
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I absolutely agree with you. We need much more stimulus-- and in all the areas you mentioned. I’m hopeful, however, that the Administration knows enough to front load the process, in order to get infrastructure money flowing heavily in 2016 – for all kinds of reasons, not least of which is the high velocity of money injected into the economy for infrastructure, but the generally long lead time to actually get projects off the ground.
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Yes, there seems to be moves to streamline the permitting process to speed up these projects. Typically these projects have very long lagtimes because of the various studies that need to be undertaken.
And there seems to be efforts to raise money for additional stimulus, either in the form of tax reform, allowing public-private partnerships to fund projects, and other strategies. Hopefully one of these approaches can get approval by at least some of the Republicans in Congress.
The “new” infrastructure spending is mostly a partial undoing of the damage that the GOP did to the federal budget during the last few years. Better than continuing to hit ourselves in the head, but nothing like what we need.
And low oil prices are a two-edged sword: on the one hand they make certain things cost less and thus let people do OK on lower wages/prices than they otherwise would. On the other hand, people working in the oil business (including/especially the lowest-level workers) have gotten hammered. And the artificially low oil prices (from the Saudis pumping like there was no tomorrow) have distorted investment signals for other forms of energy.
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Agree that the falling oil prices are a mixed bag for our economy, and the new highway bill only addresses pent-up and long-delayed demands for projects.
The unmet needs will still have to be addressed, and our lawmakers might have to be “creative” in waving some other banner – national security, for instance – in order to rally support (sad to say, but “infrastructure” is not a sexy story to many).
Otherwise, Republicans will be able to maintain and defend their obstructionist stance by claiming to be “fiscally responsible” with the nation’s money
We can cite the need for hardening our electrical grids, our mass transit and air traffic control systems, our dams, etc. against terrorist and hacker attacks.
We can evoke the need for energy independence and sustainability, in protecting tax credits for the installation of renewable energy systems, against the efforts of fossil fuel interests who are supporting efforts to roll back these incentives and credits.
We can wave the banner of boosting American jobs in modernizing our seaports in order to be able to accommodate the supertankers that will be able to traverse the Panama Canal when its expansion is soon completed.
We can appeal to the somewhat “libertarian” impulse of some in promoting “getting off the grid” with high-speed fiber optic installations and solar electric for people who live in remote areas that are not adequately served by large utility firms.
It seems unfortunate that we might have to resort to these strategies in order to defend what used to be policies that enjoyed widespread bipartisan support, but there you are.
And don’t forget that the Republican President Eisenhower sold the need for an interstate highway system – among the largest infrastructure projects ever undertaken up to that point – by touting the national security aspects of that initiative.
It’s depressing to think you may be accurate. As long as we can spin improvements as letting us kill people in other countries more efficiently, or stop them from killing us, there’s a chance money can be spent to make americans’ lives better. Oh, yes, and also if the spending is structured to maximize profits and political graft…
Hmm, maybe we could figure out a way to make infrastructure part of the NSA budget…
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Yes, and it’s also depressing that we are so dependent on the Chinese economy for our economic well-being.
I’m no isolationist, and I realize we are in a global economy, but we need to provide some momentum for our domestic economy that could serve as a counter-force for the headwinds overseas.
And a strong infrastructure program could also help to modernize our public facilities – a source of much of our economic strength – and help to make our businesses and marketplace more efficient, as well as make everyday life more convenient.
And passing the Trans-Pacific Partnership could bring almost 40 percent of the world economy into our orbit and away from China while upholding enforceable standards of worker rights and environmental safety.