US 2003: Deflation or stagflation?
b_rieux at yahoo.com
Thu Dec 26 01:43:39 MST 2002
I keep thinking the US government has overshot
its efforts to control deflation (that is, in
effect, to export it through various measures in
total contradiction of its freetrade rhetoric,
such as steel tariffs, cheap dollar policy,
bilateral trade agreements that actually dampen
free trade outside the agreements, etc.). The net
result next year could be be a jolt of
Domestic oil (to which much of the current Bush
caudillo has intimate ties) likes high oil
prices. And 'turnkey infrastructure' companies,
such as the ones who would get contracts to
reconstruct Iraq (that is, to take over and build
up its oil production and distribution capacity)
love a war somewhere, since it helps to even out
cycles in all the contracts they get from the
federal government. All the more attractive is
the fact that the war will be in an oil-rich
country with relatively few snags in exploitation
once regime change is achieved. Heck, the more
infrastructure destroyed, the better. And we know
that the current Bush caudillo has close ties to
such construction interests as well (indeed,
domestic oil, infrastructure providers, and a lot
of US private equity--among other things, as
government-subsidized and insured venture
capital-- largely overlap).
The run up to the war on Iraq (now in progress in
many ways already if you go by the tonnage being
dropped from the completely illegal no-fly zones)
has got domestic oil and infrastructure companies
quite expectant of future fortunes.
I'm sure at the national security council
meetings where economic issues were addressed,
deflation was the key word, and a high price in
oil was probably seen as potentially positive in
preventing it. But perhaps the overlords have
overdone it, and stagflation awaits (high oil
price, a looming war, a rather cheap dollar,
etc.). It should be interesting to see how the
oil spikes and the flat demand for Christmas
presents meets up with 'overall consumption' and
prices in the US. I say deflation for Japan and
Germany, but the US, it's too close to call
See AP article excertped below.
White House Pressed to Use Oil Reserve
Wed Dec 25, 9:24 AM ET Add Business - AP to My
By H. JOSEF HEBERT, Associated Press Writer
WASHINGTON - The Bush administration faces
renewed requests to free oil from an emergency
government reserve and counter tight supplies,
especially at Gulf Coast refineries, because of
political unrest in Venezuela.
The administration plans no such move, however,
according to senior officials, although they said
the Venezuelan situation was being watched
Rep. Billy Tauzin, R-La., chairman of the House
Energy and Commerce Committee, urged the
administration this week to give strong
consideration to tapping the government's
Strategic Petroleum Reserve. He said several
refineries along the Gulf Coast are close to
running out of oil.
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