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These crazy economic times
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    This week, as everybody prepares to take advantage of the sales tax holiday, it’s time for a little economic miscellany. Seems there are a few stories lingering around out there that don’t necessarily require an entire column but do deserve a polite mention.
    First is that fact that oil prices have dropped nearly $25 since the high of $147 on July 11. (Yea!)  According to industry experts, high prices and a deteriorating world economy have contributed to a drop in demand for the commodity. In addition, even with the recent drop in prices, analysts are predicting demand will be weak for the rest of the year, which puts more downward pressure on oil futures contracts.
    So, an increase in worldwide demand and a weakened U.S. dollar sent oil prices to a record high. Now that demand is weakening and the dollar is strengthening, oil prices are coming down.
    See, markets work. Textbook supply and demand. Textbook monetary policy.
    Of course, with each Euro currently “costing” $1.50, we still have a long way to go before the dollar gets anywhere near the level it was in 2003 when the currencies traded one-for-one. And it’s likely to be a while before we see $1.99 gas, but we’re moving in the right direction.
    So keep car pooling and buying those hybrids. Millions of people individually deciding to reduce their gasoline consumption will do far more to affect the price of gas than anything our Congress attempts to do.
    Also in the news this week (though barely) was President Bush’s quiet, fanfare-less signing of the mortgage bailout bill. I’ve written columns about this topic already so I won’t belabor the point except to add this: why are we bailing out anyone who made dumb financial decisions? You don’t give a drunk a beer and you don’t give a debt defaulter more money.
    A delightfully perfect example is the story of a couple in Atlanta who were given a house by the show Extreme Home Makeover. After they got a free house, they mortgaged it to the tune of $450,000, spent all the money and now they can’t make the payments. And they will likely qualify for the bailout.
    Free house, free money, free bailout — ah, the American dream paid for by charity and your tax dollars.
    One other thing about the bailout: the vast majority of Americans didn’t want it, many economists and real estate professionals said it’d hurt more than it’d help, yet Washington passed the bill anyway.
    There’s nothing like Congress listening to the will of the people...who make large campaign contributions.
    But this story is my absolute favorite. Turns out California is in a massive cash crunch. So much so that the Govenator has decided to cut 20,000 state jobs, freeze hiring and promotions and temporarily reduce some salaries with the hopes of preventing the state from running out of cash.
    While I sympathize with these state employees facing termination, why should they suffer a fate any different than those in the private sector? When revenues dried up in the banking, newspaper, automobile and construction industries, employees were laid off to balance the bottom line. So if state revenues are down, do what everyone else does — tighten the ol' belt and make tough decisions.
    I'm proud of Arnold for having the stones to do so.
    Interestingly, the state’s controller has said he will refuse to comply with the order and will continue to write checks. So we’re looking at a legal showdown.
    But I’m confused. Doesn't a controller control costs?
    In a private business, ordinarily the controller — effectively the head accountant responsible for monitoring internal controls — is the one guy (or gal) most responsible for keeping the business in the black. If revenues are down, he makes sure expenses are correspondingly down.
    But government accountants refuse to work this way – you know, spending less than they make. In fact, especially if they lean Keynesian, their answer out of a tough financial spot is to spend even more money, hoping that increased spending (a.k.a. debt) will spur economic growth.
    Is it wise to take out another loan if you can't pay the mortgage? No? Then why do we continue to allow our government leaders to work this way and bury us in debt?
    Lastly, there is one apparent bright spot in the economy: Wall Street psychotherapists. According to a story in Reuters, several psychologists have reported a 25 percent increase in business since the banking crisis fully bloomed in March.    
    Who's making the crazy money now?
    Phil Boyum thinks all ink spots look like government malfeasance. He may be reached on the couch at (912) 489-9454 or by e-mail at pboyum@statesboroherald.com.


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