Hello everyone. My last post covered oil speculation and I had promised to cover more about the underlying supply and demand dynamics on this post. There is way too much to talk about and the oil price seems to be stuck in the $60-$75 range for now. Being out and about these days, the underlying concerns with people I visit seem to be about where the economy is going, what the government has been doing and their plans going forward.
The biggest news of the week is healthcare. I spoke about healthcare awhile ago before any plan was submitted. Well, the plans have been submitted and the Congressional Budget Office (a nonpartisan group in the Congress) said that the plans would add to our deficit woes. Deficit spending seems to be an American tradition. I could spend hours discussing the details of the plan but I think my main concern is the cost to us the taxpayer and to businesses. Tax the rich, a surtax in fact! Easy choice, but it won't pay for the plan. Tax businesses! Hmm, nice move but that hurts economic growth. I saw a statistic that 3/4 of all business are small ones. More to come on this as Congress is pushed into voting for a costly bill....
Last week, Henry Paulsen (the former Treasury Secretary) testified in front of Congressional panels investigating the Bank of America/Merrill Lynch merger/acquisition. As you recall, the CEO of BoA (Ken Lewis) said there was pressure from our government NOT to back out of the deal. Well, Mr. Paulsen admitted that. Where is the outrage on this? I guess people wanted the government to order people around last fall.
A watchdog for the TARP program postulated that the program along with other government bailout programs could cost $23.7 trillion before its all said and done. Wow. I think the estimate is high but even at $10 trillion, its a bit scary. Get the printing presses ready!
Again and again, the press is gloming onto more signs that the economy is turning around. I, frankly, don't see it yet. Until consumer spending comes back and the credit market continues to open, then we can talk. Foreclosures continue and people who have modified their mortgages still remain in trouble. I did notice one thing the other night, I saw that a 1969 Mustang Boss 429 model sold at auction for $195,000. People still have money but they aren't spending as readily as they did.
Stay tuned as I'll attempt to unravel the cost of the healthcare plan. I don't think we need more debate about actual reform provisions. Stay strong.
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