Thursday, January 3, 2008

Uh...

Taken from Slate:
It's also a bad sign that the government allowed oil prices to hit triple digits. In theory, policy-makers understand the importance of the psychological threshold and try as hard as possible to avoid crossing it. If they weren't able to avoid $100 oil, then perhaps the economy is in a worse state than we realize.

I am not convinced that there is anyone in American goverment whose job it is to manipulate the price of oil. Even if there were, I think there are very few tools that can be used here, and certainly no short-term ones. Probably no long term ones, either, unless you believe the American economy is going to become an increasing share of the world economy, which seems unlikely.

I would also certainly not buy the fact that simply because oil hit an arbitrary target ($100 today isn't a $100 tomorrow or a $100 last year) implies economic woes down south.

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