Bush "leadership" in crisis....

This cut & paste (my apologies) from an article in the Seattle Times will illustrate to all doubters what I'm getting at when I criticize Bush for a lack of leadership and catering to his oil company cronies, even in the face of a national disaster like Katrina....

The article talks about Bush releasing supplies from the national oil reserve, and his reluctance to "interfere with the free market" (seen as a green light to speculators to increase the misery in our nation - courtesy G. W. Bush).


Start of article section....

"The pledged release from the reserve came during a bipartisan clamor for action. Some Democrats, such as Rep. Edward Markey, D-Mass., have been haranguing Bush for months for such a release from the reserve, and they were joined this week by a handful of Republicans. But the White House has been reluctant to interfere with the free market.

That reluctance will dampen the impact of the intervention, said Amy Jaffe, an energy research specialist at Rice University's James A. Baker III Institute for Public Policy.

Oil traders in the 1990s knew the Clinton White House would intervene to hold down oil prices, so they would begin selling oil during price spikes. Bush's disinclination has emboldened speculators to bid up oil prices, she said, and they are not likely to sell now because they do not believe the White House will make sure prices fall sharply. "With Bush, speculators don't see a limit," she said.

Compiled from The Washington Post, Knight Ridder Newspapers, the Chicago Tribune and Seattle Times staff reporter Emily Heffter."

 

Better have a crystal ball!

So - Bush's "catering to his oil cronies" and even when he releases SPR oil, it can't come to any good. Is that right?

Beyond the fact that Bush was never Big Oil (in Texas he was known as little oil - ie, a small-player), your argument amounts to claiming that if Bush could surprise the market (eg, through being less predictable), the consumer would benefit. "With Bush, speculators don't see a[n upside] limit," said Jaffe.

That's true for the short-term. But consider if Bush - like a latter day FDR - tried to shock "evil" speculators. Eventually they would learn to anticipate higher levels of uncertainty. Higher market uncertainties eventually get factored into the market price, and people wind up paying higher prices than necessary. So - tell me what's been gained?

In general, market prices benefit ffrom reduced uncertainty. When a war happens, especially in the ME, oil and gas prices jump precisely because of the added uncertainty. Yet Carl suggests added uncertainty is a good thing?

The error of your ways lies in supposing that speculators are bad - that somehow they cheat or rob the consumer. In fact, they earn their premiums by anticipating future prices, permitting market makers to shift the risk of uncertainty. Thus, in commodities they function like does insurance for the rest of us by shifting risk from those unwilling or unable to bear potential losses to those willing to assume the risks.

Speculation is a hugely risky business, and as an ex-speculator myself, I know first-hand what read before hand: very few make any money long-term. It's often called legalized gambing - and that's for good reason. Just as small speculators have lost their shirts, so have mega-millionaires and Nobel Prize winning economists, such as those in the Long Term Capital Managment crisis in 1998, taken over after only for years. /www.erisk.com/Learning/CaseStudies/ref_case_ltcm.asp

Bush rightly resorts to he SPR's because this emergency (ie, Katrina's gulf damage) creates an oil shortage on top of a demand driven spike. While the latter has proven to be medium-term, the former is (assumung a bad hurricane season doesn't last more than three more months) short term, and any pol has a responsibility to cushion against that if they can because we all would if we could without government's help.

-Orson

 

Did I not make myself clear?

I will NOT allow politics to enter into the current Gulf Coast situation, until things are totally stabilzed.