Our Financials are a Mess

I spent some time reading about yesterday’s Bear Sterns meltdown. By the end of the day, JP Morgan Chase and the Federal Reserve were saving them from shuttering their doors, and the Dow was down by nearly 200 points. It really got me thinking about this market of ours.

The price of gold on the market has risen to over $1,000 per ounce. Since this previous “go to” investment is now out of reach of the day traders, they’re turning to the less expensive commodities. As a result, we’re seeing the prices of oil and food commodities soar. Light Crude is now over $110 per barrel. We all gasped in horror the day it closed over $100, but now $110 is old news.

The problem is that these vaporous buys and sells translate into the physical world in the form of prices for gasoline, diesel fuel and home heating oil, as well as for our real-world food. Here in Mount Airy, milk topped $4.00 per gallon last summer. It was just $2.65 back in 2005. That’s a 50% increase in two years! Low-octane gasoline is $3.25 per gallon, over $1.00 higher than pre-Katrina levels. Once the increases were made, we had no hope of going back.

Wheat futures have doubled in the last year. Corn is at record highs. But instead of putting more growth into the system, we’re paying farmers not to farm (including some rich celebs like David Letterman and Microsoft co-founder Paul Allen who own the land but probably wouldn’t farm it anyway) and pouring our corn into ethanol. That’s right, ethanol — which raises the cost of the fuel while dropping your fuel mileage. It’s not easy being green.

The housing market is not good either. The government is looking to reward people who bought houses that they couldn’t afford on terms that they didn’t pay attention to, meanwhile the rest of us will pay for it. And on top of that, many of them took out refinance after refinance, all the while sapping their home of its value so that they could buy a brand new H2 just like their neighbor. That was bad enough — but now Bush is talking about a $15,000 “rebate” to anyone who buys a home, going forward. How about rewarding the responsible, hard-working citizens who keep this economy going, for a change?

The really smart democrats here in Maryland deregulated our electrical providers in 1999. Now that the chickens are coming home to roost (in the form of 72% increases in our bills), they’re trying to blame it on the previous Republican administration and suing the power companies while also passing bills requiring a 25% decrease in individual power usage by 2011 and requiring that 20% of our capacity come from wind power. They can’t seem to see the writing on the wall — their stupid feel-good green policies are driving the prices up. And yet they persist.

So, with all of this in mind, I’ve come to a few conclusions:

1. Day traders need to be stripped out of the market. Inexperienced people sitting at home computers in pj’s and slippers should not be manipulating the market in stupid ways because they are either ignorant or just want to make a buck and don’t care about the consequences. Make them all go through training and get a broker’s license. Maybe that will put some sense into them.
2. The government just needs to let the housing market crash already. Their attempts at saving it are putting the stock market in turmoil. Stop trying to stave off the inevitable. Let it happen — we’ll recover; we always do. Besides, the sheer number of “no documentation” and “teaser rate” loan advertisements that I still see while surfing the web tells me that the mortgage bankers haven’t learned their lesson yet.
3. We’ve seen the end of sub-$3.00 gasoline. I’m sure it’ll be permanently over $4 by the end of the year, here in Mount Airy. Our greenie congresscritters need to stop screwing around. Ethanol is expensive, drops gas mileage and causes the cost of my food to go up. Hybrids are only good choices for city driving, and seriously pollute the earth with their battery replacements. Biking and walking aren’t options when work is over 40 miles away and public transportation doesn’t extend out to farm country. Clear the way to start building more refineries! Stop blocking ANWR drilling! And for crying out loud, don’t tell me that I need to go more green when your palatial estate has a $3,000 per month power bill and you’re flying around solo in a regional jet. And DO NOT get me started on Al-Gore’s-self-enriching carbon credits.
4. Martin O’Malley will win a second term and stick his hand even further down into my pocket. We’ve already seen a 20% increase in the sales tax and non-taxable items have become taxable this year. The income tax has been raised, and property taxes too. But the people who don’t pay the taxes will elect him again as long as he promises to keep the welfare checks coming, because they’ve got a pretty good gravy train going here. As badly as the tax PAYERS are getting screwed, we should at least expect dinner and a movie.

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