Thursday, May 7, 2009


The stock markets have been rallying on the not-so-bad news from recent unemployment, retail and "stress test" reports. However, note: the price of oil and gold are also rallying, with oil this morning topping $58 bbl. and gold jumping another $12 early today up to $924 an ounce. This utterly predictable dual rally shows two things: 1. turning the economy around will land us right back where we were about 9 months ago, with energy supplies constrained and the economy placed again on tenuous ground because of high cost of energy; 2. we will go directly and swiftly from the Scylla of deflation to the Charybdis of inflation.

In sum, we remain and will remain in a bust-and-boom, bubble economy. The idea that we need to "return" the economic "health" we have enjoyed/suffered for the past twenty years is sheer folly. But we are, above all, not addicted to oil, but addicted to what oil gave us: growth. It doesn't matter that it cannot be sustained; every presupposition about the solidity of our society rests upon it, and so we will base the foundation of global life upon an illusion.

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