Dear Readers:In any economy, each variable is dependent upon a series of others. For example, when interest rates (yields) increase, bond prices, and the prices of other fixed-income securities, tend to decline. Additionally, equity securities and variable-rate investments tend to increase in value, and funds go from one "bucket" into another. We are forever switching "buckets" in response to changing economic data and indicators.
In a more sophisticated economy, with a speedier exchange of information, accelerated transactional capability, and complex investments (such as derivatives, futures contracts, and the like), economic responses tend to happen faster and more precipitously. In fact, the economy responds more to expectations than to occurrences. If oil prices rise, speculators jump on the bandwagon (which, by the way, is one of my least favorite metaphors), and actually enhance the effect. Modern markets are studies in propaganda and self-fulfilling prophesies.
A classic example: If you believe that you're in an economic depression, you might help create one. If a great many people feel as you do (let's presume that you have a great deal of influence), a depression will surely ensue, as confidence in the markets is lost, and people start selling out of their investments in a panic. In a sophisticated, complex economy, this collapse happens very quickly and to a greater extent than in the (sigh) good old days of pads and pencils, and meatloaf with mashed potatoes for dinner.
Despite this phenomenon, which has been proven time and time again throughout history, people tend to refuse to accept it. I heard a fellow mention just last week (as he heaved a sigh of relief at the prospect), "I think oil's going to settle down at about $100.00 a barrel. Thank God."
This week oil prices dropped significantly from their meteoric rise of several weeks ago, and Mr. Bernanke of the Fed (who is starting to look more and more like Dr. Andrew Weill) announced that he saw no need to increase interest rates because he felt optimistic that inflation was not significant enough to warrant a monetary policy adjustment.
Suddenly, energy policy is retreating from the front lines as an issue, at least to the perception of the masses. A false sense of security is reducing their anger, their ambition and their initiative, as they retreat back into a new status quo. Why have oil prices dropped? Nobody knows except the few very powerful folks who control it, and who periodically conduct these evil experiments in the price elasticity of demand. I suspect that the oil barons determined that if pushed too much harder for too much longer, people would get quite serious about oil alternatives.
Mark my words (not literally, as that would be a waste of paper and a part of the chain reaction that causes deforestation). Douglas Castle says that the price of oil is going to spike several more times before people get queasy enough to start screaming out for relief again. It is only a matter of time, and the intervals between price run-up incidents will be getting shorter.
I am thankful that this last "lube job" on the Western Nations hurt enough that automakers are changing their design plans, that governmental and private institutions are still investing in alternative fuels and technologies, and that India has broken the stranglehold of the petroleum oiligopoly. Perhaps this time, the oil companies, acting in traditional harmonious collusion, pressed their luck just a bit too far. While the average person on the street is sinking back into contentment, some of the decisionmakers in industry and the public sector have decided that they should be prepared for the next assault.
I am even happier (albeit selfishly) that the number and frequency of inquiries about thorium and thorium-based nuclear technologies are continuing to rise. Apparently, not all of the people can be fooled all of the time.
In the spirit of the Olympics, I say: "Thorium --when you need energy to compete!"
--THORIUM ENERGY, INC.
p.s. The photo above depicts a small group of Americans enjoying a typical weekend, now that all is "well" with the economy. I would reckon that most of these spam-grillers think that Bernanke is a muffler company. But I would never put that in writing. --DC
