The Oil Bubble Had Better Pop Soon Or...

The headline starts off...

Oil Surges Towards $87...

...ending with...

As U.S. Economy Recovers.

God are we screwed...!

Or... to put it another way... the opening words of the headline points should send a chill down readers spines that, as I've predicted, we're headed for stagflation - hitting this summer!

As for the closing words...

(*SNORT*)

Bullshit.

Those of you who follow my newsbites or are independently widely read, informed, knowledgeable, and able to "connect the dots" know better.

The oil price rise is based upon speculation and market manipulation pure and simple; it has little connection to supply and demand or production cost issues. It's a "paper" run-up that unfortunately is "real" at the pump.

If the bubble doesn't deflate prior to hitting $90 a barrel...

(*SIGH*)

Then I fear momentum and manipulation will push prices upwards to the $120, perhaps $140 a barrel range. At that point we're really screwed.

Hell... even if oil "only" stays at between $90 and $110 a barrel throughout the summer the inflationary repercussions will kick in as they did with the oil spikes of 2005-2007.

The only hope I can offer... there's a fair chance the bubble might indeed burst within the next few days - worst case (of the best case) scenario within the next few weeks.

Frankly, oil prices should be fluctuating between $45 and $60 a barrel right now. The economy - the consumer as well as businesses - can handle that. Summer pump prices at $3/gal. - even $3.25/gal. or tops $3.50/gal. at worst - the country can handle that for a window of time.

I'm telling you, though... worse case... oil really shoots up, prices at the pump hit the $4/gal. level or (God forbid!) above... then the domino effect takes hold and we're in for a bad, bad, bad few years.

God help us. Even if "real" Republicans - real conservatives - take both Houses of Congress in November they won't have any power till January of 2011.

Obama is President till - at least - January of 2013.

Obama... Bernanke... Geithner...

(*MASSIVE MIGRAINE HEADACHE*)

These dummies will continue to do pretty much everything wrong over the next few years and a Republican Congress won't be able to stop them. That's why I fear we're in for at least a couple of years - more likely several - of stagflation.

Remember the '70's through the early '80's? If you don't recall what steps it took to vanquish the results of failed economic policies pursued by LBJ, Nixon, Ford, and Carter, perhaps you might do a bit of research - a bit of reading.

Volcker gets credit for some good decisions prior to Reagan taking office, but it was only the combination of Reaganomics and Volcker's tight money policies which wrung inflation out of the economy as Laffer's tax theories set the stage for economic expansion and real (private sector) job growth.

Hey... I'm not writing this to start a debate on Reagan. I know there are those of you who hate him, who dispute that his economic and foreign policies created a true boom economy while laying the groundwork for the fall of the Soviet Union... but I view your perspective as so warped and counter to observable reality that I find it unworthy of debate.

Anyway... let's hope that the oil bubble soon bursts.

Absent that... let's hope that everything we learned about economics throughout the '70's and '80's is in the Age of Obama... er... inoperable. No longer valid...