We had the dot.com bubble. It burst. Then we had the real estate bubble. It too has run it's course and is painfully, slowly bursting (it's not done yet folks!) We also have the homeland security bubble, in which previously obscure and tiny companies have become giants raking in billions of your tax dollars to protect you from hordes of terr'ists (and collect data on what websites you visit and phone calls you make, all the while other government programs like food stamps get cut!) But since the homeland security bubble is being funded directly by your tax dollars it's secure for now so we'll just leave it be.
The real estate bubble never was about "po people with bad credit ruining it for everyone else by biting off more than they could chew"... this was definitely part of the problem but not the core reason for all the badness that happened. The real culprit was what the banking industry did with those mortgages- they bundled them into all kinds of exotic debt instruments and then played them on the market to create fake money. It was all a bunch of smoke and mirrors that succeeded in creating vast sums of money out of thin air with no real production... the ultimate wet dream of the concept called wealth creation! But enough about that. I've talked about the housing problem lots in other articles. What has happened is what always happens when you build a system on false grounds... it's fallen apart!
Citigroup and all the other major banks have laid off thousands of workers. Bear Stearns fell apart and was 'purchased' for pennies on the dollar for what it's stock used to be worth. The Federal Reserve has had to inject more than half of it's 900 billion dollar reserves to keep any more big banks from going under AND has dropped interest rates to dangerously low levels. Sovereign Wealth Funds in the middleast and all over the world poured billions more into the economy in a giant IOU for the U.S (they'll be calling favours soon enough I'm sure) And..... none of it has worked!!!
The banking industry in the U.S has turned into a predatory monster that feeds off of it's citizens rather than helping them. Think I'm wrong? Hundreds of billions of your dollars have already gone to bailing out these banks in one of the biggest cases of corporate welfare in modern history! According to the laws of capitalism we've been drilled with all our lives, these banks shouldn't have gotten a handout at all. They created this whole mess with their greed and shenanigans in the first place. While things for the little guy only get worse, it seems that large private business has carte blanche to get as much public money as they want, regardless of their criminal actions!
How has the U.S financial sector responded to all of this oh-so generous help? They've created another bubble. It's nothing personal. The industry has no ill will towards the good people of the U.S. It's just that in the hyper-capitalist economy we live in, people hold no intrinsic value. I hate to break it to you, but in today's world as a plane-jane human being, you are utterly worthless. The only worth that can be ascribed to human beings is how much wealth we can create, or how much wealth can be derived from us. In essence, the only value we hold today is as a type of commodity. Either we must create capital through labor/investment/employment or we must provide a source of capital (credit card debt, mortgages, bill payments, insurance payments, phone bill, etc) Our commoditization has reached it's (thus far) zenith in the prison system. Now if you go to prison you are a wealth creation center for the private company that runs the prison, the mandatory therapists you have to pay after you get out, the people running the website that tracks your movements that you have to register with and of course the plethora of work-release programs that put prisoners to work for private companies outside the prison for pennies (not as good as slavery, but it's a good start! we cheerfully sing)
I know I haven't even gotten to the next bubble that has been created but it's necessary to understand the system in which we live. The underlying concept being that at the core, we hold no value simply for being a person that is drawing air and metabolizing food. We can starve to death, die of disease or kill each other over petty meaningless squabbles and it really has no effect on the system so long as we're not hampering wealth creation. This is quite often part of the reason why big business tends to be so anti-welfare. They see large sums of money going to worthless commodities that create no wealth in return and want that money instead to go to more productive ventures. If we're a productive citizen and we die, then it does have a small effect on the system but the beauty of "human resources" is everyone is replacable. Everyone. Don't kid yourself on that one. Stalin learned this when he killed 30 million of his own people and still managed to create one of the largest superpowers in history.
So what does this all mean? The banks and financial industry don't give two rips about the precious U.S of A or any other country. In fact, they don't even care about humanity or the common good or any such mushy nonsense. They care about cold hard profit, in maximum quantity.
It is because of this mentality that we find ourselves in our present predicament which is also creating suffering around the world. It is because of this mentality that the big banks will always try to create another bubble as soon as the present one collapses, because bubbles are the fastest way to make a lot of money. Think of it like a crack addict coming down from his high. The right and proper thing for him to do is go into rehab, but instead all he wants is another dose as soon as possible. So too runs our present economy. And that next shot of crack, that next bubble which we see unfolding? Food and Oil
The truth is there is no oil shortage whatsoever. Rampant speculation on futures in oil and food has driven the price of both to record levels-
"NEW YORK (MarketWatch) -- Speculators now account for about 70% of all benchmark crude-oil trading on the New York Mercantile Exchange, up from 37% in 2000... The report comes ahead of a House oversight subcommittee hearing slated for later Monday on Capitol Hill to study the role of financial investors in the crude futures market."
and from the Oil and Gas Journal, Texas-
"Since 2003, commodity index speculation has increased 1,900% from an estimated $13 billion to $260 billion invested. Stupak said 85% of the futures purchases tied to commodity index speculation comes through swap dealers—investment banks that serve as intermediaries for their pension fund and sovereign wealth fund customers."
There is no physical shortage of oil on the market. Adjusted for inflation, we are now paying more for gas than the price in the 70's, and at that time there was an actual physical shortage as could be seen with gas rationing and long lines at stations. If gas is so much more expensive now due to supply issues, why don't we see the same long lines and rationing initiatives? Because there's no shortage. One day, yes there may be, but not right now. This is one issue that we can't blame evil big oil for, although they're not complaining (nor would I if I were in their shoes!!)
No, instead the problem of high oil prices is due to our economy that has become addicted to bubbles. The financial sector, reeling from it's near collapse of the last over-inflated bubble is now trying to recoup it's losses by massive speculation in oil and food. Who suffers? Everyone but the bank. Families and individuals have harder times making ends meet. The price of just about everything goes up, companies lay off workers and in poorer countries we have had (and will continue to see many more) riots because people are having difficulty feeding their family.
And all of it is completely unnecessary. The private banks got themselves into this pickle, got a massive welfare payment of your public money, and then turned around and stuck it to you by driving up the price of everything to make it big on another bubble. Increasing oil production won't drive the price down, at least not by any appreciable amount.
What can we do? Better hope your wealth creation index value is high enough to ensure your survival. Because your status as a human being sure isn't! This is where government(s) need to come into the picture to act in the public good. Of course, this will be seen as "market manipulation" and interruption of the "natural" functioning of the economy the Friedmanites will cry. How dare the government act in the interest of non-productive assets in order to hamper the right to private businesses making a profit? So what if some people die and go broke? It will keep population from exploding and they're easily replacable. At least that is the unspoken thinking behind it.
When I was in school studying digital logic, I had a very traditional english instructor whom the class mostly hated for his extremely strict marking habits. 15 % would be docked for a single line not perfectly straight on a circuit diagram (as per the english method he preferred the old fashioned way, pencil at a drafting table) Whenever he drew circuit diagrams of NOT, AND, NOR and NAND gates we would all snicker as he routinely monologued every action he took in the drawing, connecting lines between gates he would always shout "bubble to bubble!" For the first time, I now see the logic of his words and how they apply to many things in life.