The Bush administration's policy and approach to dealing with the economy is being driven by election year politics, which in turn is driving the cost of oil even higher, and increasing the chances of a recession in 2009 (after the election).
I suspect that tanking the economy and throwing the country into a recession is a Rovian-style strategy -- Republicans know they will lose the election this November, so they are making sure America enters a deep recession, that could well turn into a depression, knowing that the next President will have a tough time during their four year term.
But what is clear is the political impetus by Republicans in this move to throw Americans out of work and tank the US dollar further.
The declining dollar makes our goods cheaper overseas, but the rising cost of oil will drive inflation. The answer is to stop the dollar's decline and reverse the price trend on oil, but the Bush administration has absolutely no intention of doing either.
It's an election year, and although they haven't much of a chance at the White House, they will do all they can to hold onto their seats in the House and Senate, as well as give John McBush a better chance at the Presidency.
Oil futures shot up to nearly $139 a barrel Thursday after OPEC's president said oil prices could rise well above $150 a barrel this year and Libya said it may cut oil production.
Light, sweet crude for August delivery rose as high as $138.95 a barrel shortly after the New York Mercantile Exchange opened before retreating some to trade up $4 at 138.55.
Chakib Khelil, president of the Organization of Petroleum Exporting Countries, said he believes oil prices could rise to between $150 and $170 a barrel this summer before declining later in the year. Khelil said he doesn't think prices will reach $200 a barrel.
The head of Libya's national oil company said the country may cut crude production because the oil market is well supplied, according to news reports.
"Shokri Ghanem, the nation's top oil official, declined to say when a decision would be made on whether to lower production, or give any indication of the size of the cut under consideration," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn., in a research note.
Driving prices higher will cost Americans their jobs. GM is teetering on the brink of bankcruptcy, and if Citibank fails the dollar is going to go through the floor.
And all the Republicans are concerned about is locking and boosting oil company profits.
Oil futures were also rising as investors reassessed comments the Federal Reserve made Wednesday when it held a key interest rate unchanged. Many investors who had expected the Fed to raise interest rates in August now think a rate hike is unlikely until after the November election or next year, said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.
Republican economic policy in Washington is being driven by election-year politics. Inaction now means the dollar will fall further, and the cost of oil will rise.
Interest rates affect the dollar; many analysts believe the Fed's rate cutting campaign, which began last September, had much to do with weakening the dollar against the euro and sending oil prices skyrocketing. Investors buy commodities such as oil when the greenback is falling. Also, a weaker dollar makes oil less expensive to investors dealing in other currencies.
The dollar slid against the euro after the Fed's comments Wednesday, and was down again on Thursday.
"Breaking through $140 now ... seems hard to avoid," Cordier said.
We've seen this time and time again. Republicans do not care about average Americans.
The sooner we all rise up and denounce the Republicans the sooner we can put this nation back on track. Americans need to speak up and speak out against the factions in our government that are causing these problems - the Republicans, and their Rovian approach to manipulating our lives for their benefit and the benefit of their oil and defense industry benefactors.
Money is being driven out of the equity market and into commodities like gold, and like oil and food - which are highly inflationary. There will be cutbacks, there will be a loss of jobs, and the Republicans just don't care - it's an election year, which means it's time for the Grand Oil Party to screw America again.
Note: Wizbang Blue is now closed and our authors have moved on. Paul Hooson can now be found at Wizbang Pop!. Please come see him there!