I don't care IT"S SPECULATION!

Guys, it's speculation that is driving up the price of oil. I don't care what the so-called appoligists say about the price being more demand, peak oil, or whatever. 

Simple math. 

Dollar is worth 20% less than a year ago. Last year's price 60 bucks a barrel. That means, this year, it should be 72 bucks a barrel. 

That doesn't explain the 60 dollar premium on each barrel of oil. Some say it's demand from China and India. Ok, their economies grew about 10% each, so let's say it's now 87 bucks a barrel. What else? War with Iran? Problems with Nigeria? Ok, give it another 20 bucks a barrel. That's 107 or so.

130+??? It's speculation guys. It's greedy industrialists and financiers who are moving out of the real estate market and into the commodity market. 

Are gasoline prices driving you to the poor house?

Are you feeling the pinch? 

Devaluation of the US currency coupled with speculation within the market is driving the cost of fuel into a very dangerous area. The economy has pitched into the recession/depression cycle, and the more that gasoline costs, the deeper we will dive into the recession/depression. 

On the surface, it's about the price of gasoline for your car. However, so many things depend on oil that all sorts of hidden costs are going to be pushed into your budget. Just think about bringing a Veggie to market. Something simple, like corn. 

Corn is primarily grown in the mid-west of the US. Oil products are used in all stages of growth. Seeds are transported to the farm. Loaded into a harvester.  Planted. Sprayed with pesticide . Harvested. Sent to a silo. Processed for market. Transported to market. Placed for sale. Bought. Transported home. Prepared. Each stage of this process takes fuel, electricity, and petroleum products. The price of oil effects every stage of this production and consumption process. 

What can you do about it? Here are some simple steps you can take

1. Use bike or walk for local errands when possible

2. Turn off unnecessary lights and devices at home

3. Try re-usable bags at the grocery store

4. Plant a food garden

5. Go to bed earlier

6. Eat less

7. Buy locally produced products

Sounds like what I was telling you a bit earlier in the blog... hmm.. interesting how that works out. 

Credit Cards under attack

Fallout from the credit crunch is the shrinking availability of credit for consumers and small businesses. Traditionally, a credit card is considered as a bank loan, all be a revolving credit account. This draws on the same pool of credit that is shared with homeowners and other folks.

Normally, this is not a problem. But with the number of foreclosures and bad loans the banking industry has made, the pool to spread the risk of credit card borrowers is shrinking. While wildly profitable, the credit card industry has been rather predatory when it comes to credit cards.

This is the excuse the Federal Reserve is using to grab even more power. They want to regulate credit cards for the "good" of the consumer. You have to ask, "They did such a fine job with the banks, why not let them grab power over credit cards".

It almost seems planned, how the Federal Reserve is systematically destroying the purchasing power of the middle class. First, homes. Second, currency devaluation. Third, credit availability for the majority of America.

What's going on there?

Spinning up

Just getting back into the swing of things. It's interesting to me to see how people are reacting to the high food and energy prices. Folks like to blame the housing credit crunch for all the problems they are having today. I suppose, in an indirect manner, the housing crunch is causing the problem.

It's primarily caused by the devaluation of the US dollar. Bernanke has been lowering interest rates for about 9 month now. It's 2%. You can't get much lower than that. That is causing the US dollar to be worth less, and because of that, oil prices are going up, and food prices (basic supply and demand) are going up at a similar pace.

So, when you fill up your tank, instead of cursing the poor station owner or the oil companies, you should curse that Bernanke jerk who keeps shoveling our money into a ravenous hole of greed and sin. He's just feeding the beast, and starving us of our hard work.

So, I'm just spinning up. I'll get back into the swing of things pretty soon.

Glad to be back!

Back to Back of the Envelope

Welcome to Back of the Envelope. Or should I say, I'm back to BOE.

As you can see, it's been a rough ride for the economy. Many of the things we talked about since the blog started have come true, such as rising food prices, the (slower than anticipated) credit impact, and the economy going into a recession. Some of the things, such as the price of gold and the banking failures have either been wrong or the impact has been less than I expected.

That's part of the fun of doing back of the envelope analysis. There is a story, from Wikipedia, about doing Back of the Envelope calculations. I won't repeat it here, but the gist of it says it's a general estimate that gets you in the ballpark. Back-of-the-envelope_calculation

You might have wondered what happened to me since mid-Feb. It's much simplier than some of the emails/posting I got about it. First off, thanks everyone for your kind words. Secondly, I did not become financially ruined, I was not kidnapped by the New World Order, I did not die in an accident. (I leave that to the DC Madam and her ilk.)

I got into an accident in mid Feb. I was not hurt, but the overhead of getting a "new" (used) vehicle and dealing with the insurance took up my attention. While taking care of this, I had to switch to "Extended Work Weeks" for my job. This means, long hours. So, for the last several months, I've been working long hours and travelings. The combination of these events caused me to chose not to work on BOE. Besides, all the good stuff was already in the mainstream news.

Now, that things appear to be settling down, I think it is time to start again. The economic storm has made landfall, and we now are in the eye of the hurricane. The other side is coming to hit us, usually the back wall of a hurricane is much stronger than the front wall.

I look forward to posting again. Please drop me a line anytime.

Still here - on extended work weeks

Hi Guys,

I'm still here, watching in horror all the stuff that is going on. I have to work EWW (Extended Work Weeks) for about another month. I'm working hard so I don't get laid off, so I'll be back as soon as things settle a bit at work.

Lehman Bros. I was wrong on precious metals, but it's kinda late to figure that out.

Cya soon! Hugs!

JP

Short Break - Taking a few weeks off

Hi Guys, I'm going to take a bit of time off. I had an auto accident over the weekend and need some time to take care of personal business that has accumulated.

Thanks!

JP