Certainly the crash of the sub-prime housing boom, which was caused by the progressive belief that owning a home was a right, is the primary reason behind the financial crisis and what was to become known as the  “great recession.”  The part that most people forget is that the “pin” that pricked the housing bubble, and led us down the economic abyss was oil prices.  In fact every rescission we have had since the mid-1970s has shown an accompanying spike in oil prices. It is not a coincidence that the worst recession in that period has been accompanied by the largest oil  price spike.

Economist Jeffrey Rubin said in 2008:

Curiously, an over-500% increase in the real price of oil gets virtually ignored as a culprit behind today’s economy, eclipsed by the ongoing crisis in financial markets. Yet the run-up in real oil prices this cycle is over twice the spike in oil prices that occurred during the first or second OPEC oil shock. And those oil shocks produced two of the deepest recessions in the entire post-war period, including the 1980-82 double dip.

The price of oil influences more than just how you heat your house or drive your car.

Since most manufacturing uses oil in at least some of their manufacturing process, even if it just to get product to the market, when the oil began to spike in 2006, people who could barely afford their mortgages began to have to choice between their bank payments or basic staple items whose costs were driven up by their energy costs. A few months later, when the price increases led to interest hikes in existing mortgages, the house of cards holding up the housing market collapsed.

Crude Oil prices peaked during the summer of 2008 as it hit $145 in July 2008. Prices began to fall immediately after President Bush lifted the executive ban on offshore oil drilling on July 14th. By the end of December 2008,  crude oil spot price fell to $30.28 a barrel. Its interesting that just the threat of new drilling drove down costs.

During the past two years prices has slowly risen to the middle $80s per barrel, but with the beginning of the protests in Egypt the cost began to rise more sharply and this week,  with the increased violence in Libya which produces 2% of the world’s oil supply (and has the most significant reserves in Africa) prices spiked from $86.15 four days ago to over $100:

Oil prices continued to rally Thursday, pushing stocks lower in Europe and Asia amid fears that the unrest in Libya could spread to other major Middle East producers.

The benchmark light, sweet crude futures contract touched the key $100 a barrel level in New York on Wednesday for the first time since September 2008. On Thursday, the April contract was at $100.95, up $2.85, in pre-market trading.

Even before the Middle East protests began, Jeffrey Rubin was warning about the increase in oil prices:

Oil prices caused the last recession, and oil prices will cause the next one as well. Energy inflation is already on the march. In fact, this time around oil prices are rising much earlier and much more rapidly than they did last cycle. Inflation is already running at nearly a five per cent rate in China; as oil prices go on to set new record highs, it’s only a matter of time of before we see those inflation rates in North America and in the rest of the OECD.

If the price spiked over $100/a barrel from Libya just imagine what will happen when the wave of protests reach Saudi Arabia (there are already calls on Facebook for protests against the Saudi Government the third week of  March). Should that occur the $145/barrel price of 2007 will be a very fond memory.

The oil spike in 2007/8 took down what was then a strong US economy. Should a similar or worse spike happen now, while the economy is barely keeping its head above water the United States may face and economic disaster worse than what was caused by the crash  of the housing bubble.

All this is happening while the United States sits on a major oil reserve. A 2009 study by the non partisan Congressional Research Service (CRS) sheds light on America’s energy resources. It shows show the U.S. supply of recoverable oil to be 167 billion barrels of oil, the equivalent of replacing America’s current imports from OPEC countries for more than 75 years.

Sadly, the progressives in Congress and the White House, refuse to open up our reserves to drilling–in fact we have gone backwards. One of the Obama administration’s first moves was to cancel contracts to exploit our shale oil reserves:

Interior Secretary Ken Salazar has canceled leases for energy exploration on 77 parcels of federal land in Utah, confirming that this White House is indeed a Small Oil administration.

The previous administration, which was not beholden to environmental special interests and seemed to understand the importance of energy, had released 130,000 acres of largely uninhabited — and uninhabitable — land for oil and gas exploration.

Some of the parcels are in or near the Green River Formation, an oil-rich region in Colorado, Utah and Wyoming that has the largest known oil shale deposits in the world, holding from 1.5 trillion to 1.8 trillion barrels of crude.

The over-reaction to the BP oil spill, a hiatus of all offshore drilling, and the follow-up rules changes represents another retreat from exploiting our own natural resources.

As the United States continues to struggle through a weak, jobless recovery we are approaching the next economic crisis caused by higher oil prices, a crises whose start date has been moved forward due to the unrest in many of the Arab Middle East countries.

Sadly, even if we survive the coming economic collapse, we are doomed to confront collapses over and over, until we begin to search for and exploit our own energy reserves.

]]> http://biggovernment.com/jdunetz/2011/02/24/how-the-wave-of-middle-east-revolts-will-drive-the-us-into-a-deep-economic-crises/feed/ 274 http://biggovernment.com/publius/2010/11/19/senate-approves-4-6-billion-to-settle-pigford-indian-discrimination-cases/ http://biggovernment.com/publius/2010/11/19/senate-approves-4-6-billion-to-settle-pigford-indian-discrimination-cases/#comments Sat, 20 Nov 2010 00:01:07 +0000 Publius http://biggovernment.com/?p=198069 From the Associated Press:

The Senate has approved almost $4.6 billion to settle long-standing claims brought by American Indians and black farmers against the government.

The money has been held up for months in the Senate as Democrats and Republicans squabbled over how to pay for it. The two class action lawsuits were filed over a decade ago.

The settlements include almost $1.2 billion for black farmers who say they suffered discrimination at the hands of the Agriculture Department. Also, $3.4 billion would go to Indian landowners who claim they were swindled out of royalties by the Interior Department. The legislation was approved in the Senate by voice vote Friday and sent to the House.

Elouise Cobell, a member of the Blackfeet Tribe from Browning, Mont. and the lead plaintiff in the Indian case, said Friday that it took her breath away when she found out the Senate had passed the bill. She was feeling despondent after the chamber had tried and failed to pass the legislation many times and two people who would have been beneficiaries had died on her reservation this week.

“It’s 17 below and the Blackfeet nation is feeling warm,” she said. “I don’t know if people understand or believe the agony you go through when one of the beneficiaries passes away without justice.”

John Boyd, head of the National Black Farmers Association, said the passage of the black farmers’ money is also long overdue. “Twenty-six years justice is in sight for our nation’s black farmers,” he said.

Lawmakers from both parties have said they support resolving the long-standing claims of discrimination and mistreatment by federal agencies. But the funding has been caught up in a fight over spending and deficits. Republicans repeatedly objected to the settlements when they were added on to larger pieces of legislation. But Senate Majority Leader Harry Reid, D-Nev., satisfied conservative complaints by finding spending offsets to cover the cost.

Read the whole thing here.

You dance, delay, and deceive. You speak melodious words about seeking the wisdom of the public in making these decisions and then ignore evidence of the public will when you get it, or worse, you hide it.

First came the dance.  In August 2008, after soaring gas prices and a dramatic shift in public opinion caused President Bush, Florida Governor Charlie Crist, and Republican presidential candidate John McCain to reverse their positions on offshore drilling, then-Senator Obama also changed. The Democratic presidential nominee reversed his own position and that of his party, saying he was open to offshore drilling as part of an overall energy plan.  The Democratic Congress followed a month later by quietly dropping the 25-year Congressional ban on offshore drilling.

Then came the delay. In January 2009, President Obama inherited a draft five year offshore drilling plan prepared by the outgoing Bush administration.  The plan was already receiving public comment as part of the elaborate rule making process followed by federal agencies.  Ken Salazar, Obama’s new Secretary of Interior, determined the decision about new offshore drilling was so important that he ordered a six-month extension to the comment period.

Third comes the dishonesty.

In April of 2009, during a discussion about offshore exploration in San Francisco, Salazar said that President Obama directed him to “to make sure that we have an open and transparent government” and that “these are not decisions that are going to be made behind closed doors.” Salazar went on to say that President Obama wanted to make sure that DOI was “maximizing the opportunity for the public to give us guidance on what it is that they want to do.”

Yet, more than four months after the comment period ended, the Department of the Interior has failed to make any public announcement about the results, even though sources have told American Solutions for months the comments show a 2-1 advantage in support of offshore drilling.

It took American Solutions almost four months and the power of the Freedom of Information Act to finally uncover indirect confirmation that, out of over 530,000 comments submitted, pro-drilling comments outnumbered anti-drilling comments by a 2-1 margin.

In an email dated October 27, 2009, Liz Birnbaum, director of the Minerals Management Service, informs other Interior officials that a preliminary tabulation of the results of the comment period had not yet gone to Secretary Salazar, adding “[s]o the Secretary can honestly say in response to any questions that he’s [SIC] has not yet seen the analysis of the comments – staff is still working on it. I did, however, confirm to him the 2-1 split that these guys [at American Solutions] are emphasizing.”

When a public employee is on record condoning purposeful deception of the American people, the taxpayer should no longer have to fund his or her job.  Secretary Salazar should immediately fire Liz Birnbaum for purposefully deceiving him, and in turn, the American people.  It’s not possible for the Secretary to honor pledges of openness, honestly, and transparency in government if his staff is going to deliberately undermine such pledges.

Public opinion polls already measure near 70% support for offshore drilling, so the results from a public comment period that reflect the same public sentiment should not be surprising.  But after all this talk of wanting the public’s input, Secretary Salazar and his team must find it a real stumbling block to have to explain all their anti-energy development actions in light of the comment period results to which they previously attached such great importance.

This newly gained insight into the anti-energy exploration mindset within the Department of the Interior allows a new perspective of President Obama’s mention of offshore development in his recent State of the Union address.  Here is the one paragraph in which the President described offshore development:

But to create more of these clean energy jobs, we need more production, more efficiency, more incentives. And that means building a new generation of safe, clean nuclear power plants in this country.  It means making tough decisions about opening new offshore areas for oil and gas development.  It means continued investment in advanced biofuels and clean coal technologies.  And, yes, it means passing a comprehensive energy and climate bill with incentives that will finally make clean energy the profitable kind of energy in America.

To the passive listener, it sounded like President Obama expressed at least rhetorical support for offshore drilling.

But the President only says we must make “tough decisions” on offshore drilling, deliberately refusing to apply that standard to other decisions on energy.

But tough for whom? Certainly not for the public that overwhelmingly supports more offshore drilling.

Indeed, the only person facing a tough decision is the President since an important part of his political base is opposed to new American energy development.

Bucking public opinion would indeed be a tough decision for this President, but he has shown himself quite comfortable with bucking public opinion to pursue stunningly unpopular policies on health care and cap and trade.

In short, it’s a fair conclusion that the tough decisions the President identified in his State of the Union was his intended decision not to pursue any new offshore oil and gas development. The actions by Salazar and his team are entirely consistent with that conclusion.

What makes all of this dispiriting, especially this month, is that with 15 million Americans out of work and with the President’s recently submitted budget projecting trillion dollar annual deficits for the next ten years and a near tripling of the national debt by 2020, the President is throwing away a golden opportunity over the next three decades to create millions of new jobs and generate more than $270 billion in annual economic growth from new oil and gas development, including $54 billion annually in federal tax receipts that could help lower the federal deficit and the national debt.

These extraordinary benefits of job creation and economic growth – all without requiring any federal spending – are, sadly, not on President Obama’s agenda, notwithstanding all the phony rhetoric to the contrary.

Indeed, we can look forward to the President’s continued strategy of dance, delay, and deceive.

The art of obfuscation is central to California-style politics.  Think back on Speaker Pelosi’s byzantine explanation of why she called career CIA employees liars.  Incomprehensible, deliberately vague misdirection characterizes the California-style of politics.  Never be precise; never say what you mean, and certainly, never let facts interfere with the spin.

Cumbersome, incoherent  legislation is another example of obfuscation, California-style: thousands of pages of  gobble-de-gook, the Stimulus, at 1000 pages, the Energy bill at 1100 pages and the Healthcare bill version #1 at 1300 pages and the latest House healthcare bill at a whopping 1990 pages.

Pelosi seems to have assembled these monstrosities so that few in Congress can read the legislation in its entirety before she calls the vote.   Deceptive executive summaries, with left wing talking points, attached to these gargantuan documents are yet another form of obfuscation.

Stimulus funding is especially ripe with obfuscation.  For example, Speaker Pelosi is on record stating that she has not been involved in funding special interest projects out of San Francisco with the Stimulus.  One project, the San Francisco Marsh Rat, figured frequently in news stories. In fact, Pelosi’s public relations folks  claimed  these accusations are a “total fabrication” .

Despite what seems to be her decade-long involvement in the project, Pelosi, did not, technically, endorse earmarks for the Marsh rat since the creature in question is not a rat, but a mouse, the San Francisco Salt Marsh Harvest Mouse.  Second, the Departments of Interior and Commerce  allocated the funding;  Pelosi only ensured the funding stayed in the legislation. Third, the funding cascades through multiple entities, so finding Nancy Pelosi’s fingerprints requires part bloodhound,  part Sherlock Holmes, and a willingness to wade through a maze of primary sources that obscure the facts.

Stimulus legislation, Amendment #98, Page 69, appropriates $50 million for Department of Interior to fund the “California Bay-Delta Restoration Act”  for  “coastal habitat restoration”.  The Department of Commerce is also funded in the Stimulus, and Recovery.gov,  reports that Commerce, via NOAA,  has allocated $167 Million in grants to various States for coastal  ”restoration” and research projects considered to be of importance or value.  The “San Francisco South Salt Pond Restoration ” received $7.5 million in funding, the “American Canyon Salt Pond Restoration in San Francisco” received $8.5 million, and yet another, the Elkhorn Slough Restoration received $3.9M.  These projects support habitation for the Harvest Mouse.

If you keep following the breadcrumbs, the San Francisco South Salt Pond Restoration Project has a division, the South Bay Salt Pond Restoration Project that  supports the Salt Marsh Harvest Mouse habitation project.  The final clue to the connection with Stimulus funding, comes from the Milpitas Post, a  non-profit newsletter from March 2009 that gleefully reports their good fortune in receiving a Stimulus grant.

So, thanks to California-style politics, and despite Speaker Pelosi’s obfuscations, millions of dollars of taxpayer money did fund pork projects such as the habitation of the San Francisco Harvest Marsh Mouse.

Another Californian, and close, Pelosi confidant, Henry Waxman, practices California-style politics of obfuscation and intimidation, whether conducting his witch-hunt hearings or whether promulgating faulty energy legislation that will do little to address the energy problems in this country.  Waxman’s strategy is to affirm a  statement loudly enough and often enough in the press, so eventually the misstatement is perceived as fact.

Waxman’s truth-through-repetition technique has been enormously successful.   For example, Waxman cultivates the perception that he is eager for oversight.  The reality seems more that Waxman is eager for others to have oversight, but when it comes to his own district in L.A., Waxman is the original Mr. NIMBY(Not In My Back Yard).

For example, a few years ago, the FBI wanted to expand their offices at 11000 Wilshire Boulevard in Los Angeles.  The General Services Administration supported this decision to expand and improve the GSA-owned building on Wilshire Blvd.  Problem was, Waxman didn’t want the FBI to expand their facilities in the middle of his district. Congressman Waxman’s  campaign and fundraising headquarters for his  PAC are also located on Wilshire Blvd. Probably, the idea of a bunch of FBI agents located in the vicinity of his harvesters of campaign donations was, to Mr. Waxman, totally unacceptable.

Mr. Waxman went into overdrive to kill the idea of so many FBI agents located so near his fundraising efforts.   When negotiations didn’t yield the desired results, Waxman  applied pressure on the GSA .  Mr. Waxman epitomizes the California-style of obfuscation and intimidation.  At the very time he is applying pressure to move the FBI out of his district, he is simultaneously posturing himself as a great crusader, supportive of oversight!

Waxman’s technique was successful.  Ultimately, the FBI decided to locate its new, expanded facility elsewhere in L.A., out of Waxman’s district, even though the move  quadruples the cost to the American taxpayer.

California-style politics relies on deception, on truth-by-repetition, on overwhelming the time and thought processes of opponents with volumes of incomprehensible data and labyrinthine legislation, which successfully hides the details of  the bill’s real intent.

America has produced exceptional leaders: Senators, Congressmen, and Presidents who inspired with clear, logical prose and speeches.  Those days seem long are gone.  The California-style politics obfuscates real intentions to mask unwholesome and despicable acts—and, sadly, its practitioners  get away with it.