Archive for June, 2011
“What is truth?” – Pontius Pilate, fifth Prefect of the Roman province of Judaea
Regular readers of the Weekly Recon know that we often are amazed at what gets heavy coverage in the news. We don’t have to repeat our often flabbergasted remarks about the relative importance to society of drunk celebrities, young moms on trial and “reality shows” that quite often are simply…well…unreal.
Forgive us but we just can’t understand the attraction of celebrities dancing with professional dance instructors for example.
A quick scan of the news shows us that there are quite a few other “minor” events happening in the world. It is astounding that these stories don’t receive more widespread and repeated coverage.
Let’s take a quick walk through some recent news (emphasis added) followed by our commentary.
The real reason Saudi Arabia can’t respond to today’s growth-threatening rise in oil prices is exactly the same one as their failure to respond to President Bush’s personal plea in 2008 for more production during the first encounter with triple digit prices. Saudi Arabia has nothing more to pump, save for very limited amounts of heavy sour oil that most of the world’s refineries can’t handle.
Wow, the recent OPEC meeting in Vienna was really very bad theatre. The participants weren’t even very convincing.
Saudi oil reserves have been openly questioned for years. If the Saudi’s don’t have spare capacity then who is the “marginal producer” or the country that has the ability to influence the world oil market by increasing production. An ever more disturbing question might be, “Is there such a thing as a marginal producer…..Or is everyone pumping at full capacity? If so what does the American economy look like when oil is $150 per barrel? How about $200 a barrel?…..
For Jean-Claude Juncker, the prime minister of Luxembourg, the threat of immediate market turbulence means the usual norms of transparency don’t apply.
“When it becomes serious, you have to lie,” Juncker, who as the chairman of the regular meetings of eurozone finance ministers is one of the currency union’s key spokesmen, said in recent remarks.
So politicians lie, huh …In this case just he just outright admitted to it.
Oh well, I’m glad our politicians are telling us the truth. For awhile there I was beginning to worry that we are not in an economic recovery, that inflation is a problem and that our national debt might be completely out of control. I mean maybe when things get “serious” as Mr. Juncker says, our politicians will start to lie but for now things seem to be going just fine….right?
Note: for the intellectually dense in the peanut gallery, the preceding paragraph utilizes a literary genre called satire.
Greece is preparing to sell off billions of dollars worth of state assets including airports, highways and state-owned companies, as well as banks, real estate and gaming licenses, to meet international lenders’ demands that it raise funds.
European finance ministers said Sunday that they were on track to give Greece a second huge bailout to keep the government afloat, but reiterated that Athens had to take tough measures to get it.
In addition to selling some of the country’s prized economic assets to pay off its national debt that it squandered on living “la dolce vita.” Greece has been urged by a few parties to sell some of its prized islands!
Wise observers in America would do well to look across the ocean at the birthplace of democracy and take note of the violent protests, crippling strikes and the humiliating sale of national treasures all due to government overspending and excessive debt.
Boy it sure would be a shame to have to sell the Statue of Liberty or the Golden Gate Bridge to the Chinese.
So to sum up….. with these three short news items we have learned that energy supplies are likely to become tighter, politicians obfuscate the true state of affairs and piling on massive amounts of debt as an economic policy leads to selling the family jewels….literally.
The truth hurts… goes the wise old saying. In this world, we cannot escape reality for long. We can delude ourselves with celebrities, gossip and circus like entertainment for awhile but sooner or later, the truth always manifests itself…sometimes in very ugly ways.
Yet I am also reminded of another old saying…the truth will set you free. For there is a certain freedom in facing your destiny, accepting reality and making some tough, but clear headed, decisions.
Sadly at this point, our culture prefers the desperate chasing of mirages and distractions that only prevents us from reorganizing and rebuilding.
Is there any hope?
Of course there is.
The hope, however, will not be found in trying to sustain the unsustainable. The alcoholic does not become sober with more whiskey and an economy does become independent and resilient by piling on more debt.
An airplane prepares for takeoff by turning into the wind, and similarly, a culture must face its problems head on before resurrecting itself.
Have a great week,
Michael Bechara, CPA
Granite Consulting Group Inc.