We wish we had been there, when George W. Bush visited with the headman of Saudi Arabia.
We wonder how he put it.
“C’mon buddy, pump some more of that oil so we can get this recession thing over with.”
For his part, we wonder if the Arab curved up the edges of his mouth, slightly, when he replied:
“Don’t try to blame us for your problems. If you’d protect the dollar, the oil price wouldn’t be at $90… or $80… or even $50. It’d still be at $30.
“And oil isn’t the only thing. Just look at wheat, corn, and soybeans. Instead of coming here to ask us to pump more oil, maybe you ought to go to Kansas and tell your own people to plant more wheat. And while you’re at it, maybe you should ask the miners to produce more gold – that’s up too.”
Both men had a point. If more oil were pumped out, its price would go down. But the same thing could be achieved by pumping out fewer dollars.
As to either possibility, we can safely say nothing. All we know is that if the rate of dollar creation goes down, it will be in spite of the best efforts of Bush, Bernanke and the whole company of market manipulators who are desperately trying to stop Mr. Market’s correction.
Now, everyone accepts the idea of a slowdown… even with falling rates from the Fed. What they are all asking is: how bad will it be?
The force of a correction is equal and opposite to the deception that precedes it. The last five years have seen the most lavish dissembling the planet has ever seen. The Greatest Boom Ever was a complete fraud… and it was accompanied by more extravagant delusions than a presidential election. Millions of people apparently took out mortgages never intending to pay them off. Sophisticated investors believed these bad loans could be made good by splicing and dicing them. Economists believed you could get rich by spending more money… or by printing more! Whole populations thought they could live on the savings of others. And the world’s imperial power thought it could finance its military campaigns by borrowing from its rivals.
We blink… and wonder what kind of correction could possibly equal such breathtaking claptrap.
Markets and Money