The Blue State

51 leading economists: Gas prices impacting economy

Based on 51 leading economic analysts that were surveyed by Bloomberg News, you can expect that the economy will slow between now and the end of the year.  Interest rates and gas prices are the culprit to blame, forcing consumers to spend less money:

Growth is moderating as fuel prices surge. The cost of abarrel of crude oil for August delivery on the New YorkMercantile Exchange jumped to a record $75.78 a barrel on July 7.The average price of a gallon of regular gasoline rose to $2.94on July 6, a 10-month high, according to figures from theAutomobile Association of America. The record, $3.06 a gallon,was set on Sept. 5 after Hurricane Katrina.         

      

``We see energy prices continuing to stay high,'' DouglasSilver, chief executive Officer of International Royalty Corp.,which invests in mineral royalties, said in a July 10 interview.

Ironically, this report comes just one day after Henry Paulison was sworn in as the new U.S. Treasury Secretary.

The online magazine Money Week also sees the U.S. facing a greater threat of inflation.

When consumers are pinched by high gas prices, they have less money to spend, affecting businesses in just about every sector, especially the Airline Industry (high gas prices less people flying = bankruptcy).  See, not everything is driven by top-down economics.  There is a trickle-up effect, not just a trickle-down effect.

Paulson: Putting a tasteful spin on corruption

With the nomination of Henry Paulson to the Treasury Secretary Post, Americans should at least be allowed to know the truth behind the curtain.  Paulson is a Wallstreet guy who, in 2002 immediately following the Enron scandal, led the spin strategy to alter public disapproval of large corporations.  His strategy was called "Restoring Investor Confidence: An Agenda for Change."  In a nutshell, it was like convincing the public that the sky was black.  With all those corporate scandals in 2002, such an optimistic take on Wall Street just did not fly.

Paulson is beloved by the CATO institute for his supply-side, Reaganomical approach that advocates across the board tax cuts and subsidies for oil companies and other large corporations.  After all, why should he not favor that approach?  Skimble blog noted in 2003 that Bush's tax cuts for the wealthy helped add $2 million to Paulson's personal finances.

On an positive note, Paulson will easily become the most green member of the Administration.  Until his nomination by President Bush, he was the co-chairman of the Asia/Pacific Council of the Nature Conservacy.

However, all in all, the environment will not be Paulson's focus when serving this Administration.  His pro-tax cut stances fit in quite well with an already pro-corporate welfare White House that, in this year's budget, allocates $6.1 billion worth of subsidies to oil companies.  Paulson's job in this Administration, just as it has been ever since the Enron scandal, is to put a positive spin on corporate corruption.  Judging from the fact that Bush chose Paulson specifically, the President probably believes he is up to the task.