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While Europe Burns

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It’s been a long time since I wrote about Europe.  How many ways can a humble blogger say, “Nothing has really changed”?  Nothing has.  Currency union has turned into a straightjacket of austerity and the European Union is plunging into a deep recession.  The only true news has been a day of protest across Europe, fueled in part by the now 25% unemployment rate in Spain and other nations.  It has become a full meltdown.

But so far, no banks have failed.  Isn’t that wonderful?

There are several potential problems for the US as this continues, but the most important is its effect on our trade.  Yet, for all the trouble in Europe, it may not affect us at all.  Can Europe burn while the US stands by?  The short answer is sure, why not.  Here’s why:

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Restructuring Our Economy

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It’s time for a repeat – this one from 18 months ago, but it still needs to be said.  Over and over.

It’s one thing to complain about the economy – anyone can do that.  But what should be done to fix it?  Longtime readers know that I believe that our economic situation is a Managed Depression and that only a fundamental restructuring will end it.  This is my Six Point Plan to do exactly that.  It describes action by the Federal Government, which is to say that it is a political platform – meaning it is incomplete and taken from a certain perspective.  If you have questions, please follow the links.

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Fiscal Cliff

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The phrase is often credited to Ben Bernanke, but variations of it have been around for decades.  The “Fiscal Cliff” that went largely unmentioned during the campaign now dominates the talk out of Washington.  It is probably the most important thing that will happen in the next Congress, and it will certainly set the tone for the end of the Obama administration.  Yet almost no one has taken the time to explain what’s at stake in plain language.

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Ice This Thing

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In any close basketball game, the last few minutes take just about forever.  There are strategic time-outs to regroup and plan, and there are numerous fouls given by the team behind just to get the ball back.  An election is no different, and Hurricane Sandy is the timeout needed by Team Obama to ice the win.

But they had the lead going into it.  The economic reports coming out this week show the score very clearly, and it’s definitely Obama’s game to lose.  As the press starts to bubble how big the lead is and Romney starts to foul out, we can see how this developed very clearly over the long summer – as was noted in Barataria all along.

The real difference between an election and a hoop game is that not many people know how to keep score.

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Breaking the Oil Cycles

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News shown out over the highway in big glowing numbers – 3.289, a number lower than anyone had seen in a while.  That was the price per gallon of gasoline the last time the little purple car was filled up and piloted back down the highway.  A few months earlier it was 3.929 at the same station, about 20% higher or $7.68 over a tankful.  How can that possibly be?

Many things go into the price of gasoline, but the most important is the cost for crude oil.  Something around 60% of the cost at the pump is the raw material that fuels our lives, the rest being more or less fixed costs in refining, transportation, taxes, and profit.  It’s the price of oil that is notoriously volatile, driving the changes at the pump.  And something is about to be done about it, too.

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