Monday, March 7, 2011

It Can't Be Oil

The stock market went from up to down today and it really hasn't done much for several weeks. The Dow Jones got above 12,000 sometime back and it is barely above that level now with a lot of huffing and puffing.

The pundits point to oil and to events taking place in Libya. Don't believe it. There's plenty of oil and even if the bad guys get a hold of some oil, the first thing they will do is sell it to the highest bidder. So what else is new? Chavez sells to us. I rest my case.

The more serious problem is what is (not) going on politically. Except for some valiant souls in selected state governor mansions, there is no serious discussion afoot to tackle the US's entitlement nightmare. Europe is no better. Greece was quietly downgraded again by Moodys over the weekend without a comment from the US or European press.

It is not surprising that the press isn't noticing what the problem is here. The press seems to think that fighting to boost the income and benefits of folks making triple the average income in Wisconsin is somehow a great cause. They should start campaigning to pay baseball players and movie stars more money. That would fit their "activist" credo. They have completely lost sight of the people who are struggling in the US (and in Wisconsin). I'll give you a's not tenured school teachers in Wisconsin.

Oil is not the real problem here except in its manifestation of inflation. The real problem is debt, debt, and more debt. Until the President and the Congress acknowledge what the real issues are and begin to advance policy positions that move the needle in the right direction, markets are going to be sluggish. This is isn't much of a recovery after all and Obamacare is standing right in the way.