Radical Noesis - Thinking outside the box

In the U.S., we are told that the costs increases are due to the hurricanes. Is that the force driving prices elsewhere? Why the cost difference? Are other nations paying the price to moderate prices in the United States? It seems possible since the collapse of the U.S. economy could have dramatic global effects. Or, is there some hidden price support system in the U.S. that we don't know about? Also possible, but no one seems to be asking or answering that question.

While the hurricanes are the purported justification for higher prices in the United States, the third quarter earnings reports for the oil companies are off the charts. In fact, Exxon's profits are up 75% over what they were in the third quarter last year. Shell's profits were up 68% and British Petroleum reported an increase of 38% - a slacker apparently. It is clear that the dramatic rise in profits came from the pockets of consumers. In an environment where an increasingly tight and marginal supply is driving rates up, there is clearly skimming (dare we call a 75% profit increase skimming) going on.

This leads to a second conundrum. The U.S. Commerce Department reports that the economy GREW by 3.3% in the second quarter. This is the same period when oil prices were dramatically rising - not just in the U.S., but in the global market as well. If increasing petroleum prices are driving down economies around the world, why would they be stimulating the economy of the United States? Might it be because energy prices are not included in the calculation of the inflation rate in the United States?

Those same hurricanes in the U.S., have decimated the economy of the Gulf Coast. To date, there are approximately 540,000 people out of work in the impacted areas alone, and this number is climbing with each week. Last week, another 24,000 people filed for first time unemployment benefits. Are there any bets that the economic report for the U.S. in the third quarter will show an increasingly rosy picture? After all, the public has been willing to accept five years of a "jobless recovery." That means that the economy has consistently "improved" even as few jobs are created. Perhaps, it is because that energy companies can have increases of 75% profit that does count towards the economic growth measures, but that the impacts of those profits do not count in the inflation measures. In the current scenario, that means an increasing divergence between the measures of economic strength and inflation.

While the numbers are being massaged and distorted on both sides of the U.S. economic equation, people are living a very different story. The Associated Press reports Consumer Confidence Plunges. To what pray tell do they attribute this lack of confidence?

"Already battered consumers have lost even more confidence in the economy during October as they contended with hurricanes, surging gasoline prices and worries about the job market. "

...

"Much of the decline in confidence over the past two months can be attributed to the recent hurricanes, pump shock and a weakening labor market," said Lynn Franco, director of the private research group's Consumer Research Center in a statement.

She said the "degree of pessimism, in conjunction with the anticipation of much higher home heating bills this winter, may take some cheer out of the upcoming holiday season." "

Pessimism indeed. Perhaps the Brits should take a page from the U.S. propaganda book. If you say it often enough, people will believe it. They will think that their "pessimism" is personal and not linked to a much broader problem. The economy is "growing" but only they can't find work. Gas and heating prices are incredibly high, but this is just a "rough spot." Interest rates are climbing because the economy is doing so "well." We are not teetering on the brink of a recession (or even depression), but poised for "boom" years. If the "boom" happens, it will likely be a positive expansion for those currently benefiting, and explosive decompression for most of the population. But never mind, the U.S. public will likely be frightened into another "war." to distract us from our problems.

Update
I KNEW it. The U.S. economic report of the third quarter? Economy Grew Despite Storms. Yep folks, in spite of the storms, the U.S. saw a 3.8% growth rate - "beating" the 3.3% of the second quarter.