So now that oil prices have collapsed, why isn’t the economy booming?
I know the answer is that housing is still way down and mortgage defaults are still high.
If you think oil was the bogeyman, then why isn’t a return to cheap oil causing a renewal of world economic growth? Why isn’t US consumption soaring again now that people are paying under $3 for gas again?
Oil just collapsed three or four weeks ago. Now that businesses see the collapse is real, they will loosen up.
Give it a month or two, and American businesses will be booming again.
This entire "credit crunch" is 90% psychological.
Like Alan Greenspan said, "Liquidity in the marketplace is just another name for confidence."
You could pump all the 'liquidity' in the US Treasury into the marketplace (and believe me, the Bush Admin is desperately trying to do that) and that won't cause but a blip.
But you cheapen the price of oil... the essence of American economy, and the market will loosen up and take off.
Mark my words, my friend. This economy will be pushing along fairly good within three months if worldwide oil stays below $60 a barrel and especially if America gets serious about allowing offshore drilling and oil sands.
http://www.americanthinker.com/2008/10/time_for_mccain_to_ruffle_some.html
This American Thinker writer says basically the same thing I did, which is that the energy shock was largely responsible for causing the economic crisis.
"Inexplicably, the Republican Party has managed not to take advantage of the two huge shocks brought on our economy directly as a result of liberal policies: the energy price shock and the mortgage-housing crash."
If American policies were solely to blame, why has the world lapsed into economic default and crisis?