Well we have to blame someone for the high price of oil, don't we? Let's crack down on those oil speculators and oil companies for driving up the price of oil and all will be right with the world again, right? WRONG!
The price of oil or any other commodity is driven by supply and demand. Yes, speculators may drive up the price, but the higher prices will only hold if demand equals or exceeds the supply. If not, the speculators who got in late will run for cover and sell their positions driving the price down. Eventually the price will settle at the appropriate market level. This is basic economics, yet I hear people whine that the government should get involved to crack down on speculators. Even Obama is touting this in his ads to bring the price of oil down. Yeah, that's what we need, government involved in controlling those that invest in oil and those big oil companies like they are the root of all evil. The people who vote on these principals are absolutely clueless. If you trade or sell anything, aren't you trying to get the best price? Maybe the government should crack down on you for driving prices up on whatever you are selling because I want your product for a cheaper price! See how ridiculous this is?
Those people that speculate take on a great amount of financial risk. For example, attempting to ride piggyback on anything that is rising or falling in price at a dramatic rate to make money is a dangerous path if you don't know what you are doing. It is high stakes gambling. But, if they are willing to accept these huge risks they also deserve to reap the potential huge rewards. In the end prices will always settle at an equilibrium. The extreme prices are only temporary. Speculators are needed in the market (especially in the commodity markets) and trying to eliminate this group of investors will cause many undesirable issues. The high price of oil will be the least of our problems.
If you are really serious about lower oil prices or lower prices for anything, then reduce your demand for that product. There are always alternatives. Having the government controlling a free market and the price of anything is a recipe for disaster.
Saturday, August 9, 2008
Sunday, March 9, 2008
The US Economy - March 10, 2008
You have to love the political rhetoric of the promises to fix the economy. The economy, like all things in life, is a cyclical process. The ebbs and flows are similar to the change of seasons. While policies and events help shape the direction, it is businesses and the consumer that ultimately moves the needle. Humans are greedy by nature and a recession is merely a cleansing of that greed. Government and the Federal Reserve react to put more money in the economy and eventually the pendulum will swing again.
In May, Americans will receive tax rebate checks to help stimulate the economy. And it will do just that. But, this is not a fix to the current conditions. It will provide a temporary spark but it won't be sustainable unless Americans find more discretionary income in their pockets to spend. And it needs to be noted that if the government knows this is a way to stimulate the economy, why are corporations and consumers taxed to death? Higher taxes will always lead to a depressed economy (eventually) because consumers and businesses drive economic growth and nothing is more powerful than the discretionary dollar that can be spent.
To key weapons to control the US economy are taxes and interest rates. Lower one or both and the economy will prosper. Raise both and the economy will suffer. It really is that simple and complex. It is complex because inflation works in the opposite direction most of the time.
So if Americans want to influence the economy, they will need to understand what impacts it first. Take universal health care for example. Where will the money come from to pay for this? Higher taxes? If so, this means less jobs and tougher economic conditions. We all need to ask these questions before voting for "change".
Time will heal the wounds of the current economic cycle like it has done in the past. Understand what impacts the economy and why and you will make more informed and prosperous decisions in the future.
In May, Americans will receive tax rebate checks to help stimulate the economy. And it will do just that. But, this is not a fix to the current conditions. It will provide a temporary spark but it won't be sustainable unless Americans find more discretionary income in their pockets to spend. And it needs to be noted that if the government knows this is a way to stimulate the economy, why are corporations and consumers taxed to death? Higher taxes will always lead to a depressed economy (eventually) because consumers and businesses drive economic growth and nothing is more powerful than the discretionary dollar that can be spent.
To key weapons to control the US economy are taxes and interest rates. Lower one or both and the economy will prosper. Raise both and the economy will suffer. It really is that simple and complex. It is complex because inflation works in the opposite direction most of the time.
So if Americans want to influence the economy, they will need to understand what impacts it first. Take universal health care for example. Where will the money come from to pay for this? Higher taxes? If so, this means less jobs and tougher economic conditions. We all need to ask these questions before voting for "change".
Time will heal the wounds of the current economic cycle like it has done in the past. Understand what impacts the economy and why and you will make more informed and prosperous decisions in the future.
Monday, January 21, 2008
NFL Network Wins
Obviously this didn't turn out to be a week 2 exhibition game and now both teams face off in the Super Bowl. The NFL Network got some much needed exposure and fans were treated to a great game. Now, fans will have to decide if it is worth switching providers.
Saturday, December 29, 2007
NFL Network caves in to pressure
In an about face from the NFL, the Patriots-Giants game will be televised on NBC and CBS. Is there that much interest in this game? Why did the NFL cave in on this demand?
I read an article on CBS Marketwatch by Jon Friedman that suggested that the NFL did it because it was afraid of Congress. We don't want to rouse the sleeping giant of Congress, do we? Are you kidding me? Shouldn't Congress be concentrating on other things rather than worrying if some football fans are going to miss a game that will look like week two of the exhibition season. And do we really want the government to "fix" this so called problem? Why don't we just vote for communism and let the government run our lives? How ridiculous.
While the NFL Network will get some exposure, it did step on some toes of the companies that already support the NFL Network. It also has set a precedent that will only serve to heat up an argument on how the big bad NFL is cheating it's fans the next time a big game is televised only on the NFL Network.
We don't need Congress to have our backs. Fans have a choice on TV providers. This is a free market economy and it needs to stay that way. If fans want the NFL Network that bad, then they should change to a provider that has the station.
I read an article on CBS Marketwatch by Jon Friedman that suggested that the NFL did it because it was afraid of Congress. We don't want to rouse the sleeping giant of Congress, do we? Are you kidding me? Shouldn't Congress be concentrating on other things rather than worrying if some football fans are going to miss a game that will look like week two of the exhibition season. And do we really want the government to "fix" this so called problem? Why don't we just vote for communism and let the government run our lives? How ridiculous.
While the NFL Network will get some exposure, it did step on some toes of the companies that already support the NFL Network. It also has set a precedent that will only serve to heat up an argument on how the big bad NFL is cheating it's fans the next time a big game is televised only on the NFL Network.
We don't need Congress to have our backs. Fans have a choice on TV providers. This is a free market economy and it needs to stay that way. If fans want the NFL Network that bad, then they should change to a provider that has the station.
Monday, December 24, 2007
NFL Network: Satellite vs Cable
As the Patriots inch closer to perfection, the battle between cable TV and satellite will intensify this week. But should you really blame NFL and the NFL Network for giving you the opportunity to see the game?
The last time I checked, this is a free market economy. As a customer, you are free to choose cable or satellite. Yet, the media and fans want to blame the NFL and the NFL Network for not giving them a chance to watch the game. Of course cable blames the NFL Network (and the Big Ten Network) for wanting too much money for the station to be included on their basic package. Besides, they don't want to "subject" all their customers to paying a higher cost for the basic package. But, it is OK to include (take your pick) other stations that many have little to no interest in watching, but that is another story.
What is interesting is that the satellite companies can offer competitive package prices that includes the NFL Network and Big Ten Network and cable companies like Time Warner can't. It is hard to understand why more people haven't made the switch. Perhaps they are fearful that their TV will go out on them every time it rains or snows. Cable companies can only hope that their customers hold on to these false beliefs.
For sports fans, satellite TV, like DIRECTV is far and away a better choice than cable. Offering the NFL Network is only part of the overall sports menu. As the NFL Network continues to grow, you can expect more live games to be offered. You can also bet that the TV providers that do offer the NFL Network will continue to hammer the airwaves to get people to make the switch. If the cable companies continue to be arrogant and not give customers want they want, cable prices will continue to increase in order for them to absorb their lost in market share.
Regardless of what side of the argument you are on. The fact is this. You have a choice. You do not have to whine and blame the NFL and the NFL Network for being greedy. They are running a business. If it is something you want, it IS available to you. You just need to change your provider.
The last time I checked, this is a free market economy. As a customer, you are free to choose cable or satellite. Yet, the media and fans want to blame the NFL and the NFL Network for not giving them a chance to watch the game. Of course cable blames the NFL Network (and the Big Ten Network) for wanting too much money for the station to be included on their basic package. Besides, they don't want to "subject" all their customers to paying a higher cost for the basic package. But, it is OK to include (take your pick) other stations that many have little to no interest in watching, but that is another story.
What is interesting is that the satellite companies can offer competitive package prices that includes the NFL Network and Big Ten Network and cable companies like Time Warner can't. It is hard to understand why more people haven't made the switch. Perhaps they are fearful that their TV will go out on them every time it rains or snows. Cable companies can only hope that their customers hold on to these false beliefs.
For sports fans, satellite TV, like DIRECTV is far and away a better choice than cable. Offering the NFL Network is only part of the overall sports menu. As the NFL Network continues to grow, you can expect more live games to be offered. You can also bet that the TV providers that do offer the NFL Network will continue to hammer the airwaves to get people to make the switch. If the cable companies continue to be arrogant and not give customers want they want, cable prices will continue to increase in order for them to absorb their lost in market share.
Regardless of what side of the argument you are on. The fact is this. You have a choice. You do not have to whine and blame the NFL and the NFL Network for being greedy. They are running a business. If it is something you want, it IS available to you. You just need to change your provider.
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