Sunday, February 26, 2012

Long Way To Go

Lawrence Lewis blogs on Daily Kos "The odds that President Obama will be reelected are strong and growing stronger. The economy is staggering back to its feet, no one can credibly claim that the Republicans are better on national security, and the field of Republican candidates continues to be an embarrassment of embarrassments."

Opining on the editorial page of the Boston Globe, Tom Keane argues that if nominated, Mitt Romney will "pivot" to the center, a debatable proposition; and that if Romney loses, Republicans will complain that the party did not nominate a conservative and will be even more obstructionist. "obstreperous" and uncooperative.

That is undoubtedly true but, like Lewis, Keane also believes it highly likely President Obama will be re-elected "given the economy’s turnaround and the GOP’s own ugly infighting."

Don't go making reservations for the inaugural ball just yet. columnist and CNBC contributor Daniel Dicker writes "With gas prices spiking so early in the new year, it's easy to predict that the United States will see $4 gas sometime this summer. I would even put the chances of $5 gasoline at one in three."     He notes that gasoline demand in the nation is at a 10-year low and supplies are so plentiful the U.S.A. now is a net exporter.        With the ever-increasing tensions in the Middle East, Tehran may take its oil "out of the global supply chain."         Meanwhile, he explains, hedge funds, money managers and institutional funds are bidding up the cost of oil by adding to their commodity holdings as they continue to buy stocks.       Dicker concludes "It sounds bizarre, but it's true -- asset investments -- bets on oil -- are costing us every time we fill up."

The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in July 2010, granted the Commodity Futures Trading Commission authority to draw up new rules on commodities speculation, including oil.   The CFTC avoided doing so but, prodded by Vermont Senator Bernie Sanders, in October finally "voted to impose position limits on commodity speculators."    But as David Dayen noted, Sanders recognized "Under this rule, a single Wall Street speculator will still be allowed to hold positions equal to 25 percent of the physically deliverable supply of crude oil, gasoline, and heating oil. That’s not enough.”     It's unclear when the rule will take effect and even then, it's unlikely it will significantly restrain oil speculation.

Of course, you won't hear any of this from the GOP presidential candidates, who will increasingly (as Newt Gingrich already has done) blame President Obama for rising gas prices.         The mainstream media will treat their complaints as if they're credible.     The ongoing worldwide increase in demand (a relatively minor factor) and the volatile nature of the Middle East will be blamed for the run-up in prices.    But news outlets will largely ignore the impact of corporate America because the explanation for the increase at the pump is a little complex, insufficiently sexy, and uncomfortable to Wall Street.   Speculating endlessly on the political impact, the "liberal media" will pound on the subject by showing the price signs at gas stations, interviewing irate motorists, and virtually ignoring speculation.

If we are to believe everything we hear or read from the usual suspects, we would think that the only economic factor bearing on the outcome of the presidential and congressional elections is the unemployment rate.      Unemployment and under-employment are still at horrific levels, and the media would have better served the citizenry if it had made the effort to explain the rationale behind economic stimulus and the salutary effects on joblessness of the American Recovery and Reinvestment Act.    

That, obviously (cliche alert), is water over the bridge.       But as gas prices rise, the guys and gals on television will be shocked! shocked! to find President Obama's favorability numbers decline and the projected match-up between the President and his opponent(s) tighten.     It will not be smooth going for Obama, no matter the radicalism of the Republican Party and the weaknesses of its nominee.

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