laneys.info Beware of Yankees, drunks, and loose women.

What do the housing crisis, higher gasoline prices, and higher food prices all have in common?  They're all caused by greedy, stupid people.

Der Spiegel reported back in February about how the record prices for crude oil aren't being caused by supply and demand, but by investment bankers, pension managers, and other speculation on the commodoties market.  These are the same people that drove housing prices through the roof just a few years ago, pricing people out of affordable housing and driving the mortgage industry to invent fabulous new products like the interest-only loan.  Now that the real estate market has crashed, they appear to have set their sights on oil, driving the price up to record levels in spite of an abundance of supply.

The high price of oil, meanwhile, is driving consumers to look for alternatives and pressure the U.S. government to encourage the use of ethanol.  Enter the agriculture lobbyists, who want to protect their profits and have managed to convince Congress to levy a tarriff on imported ethanol that is made from sugarcane so that most of the ethanol used in the U.S.A. is made from corn and soybeans.  This, in turn, causes higher prices for these and other grain crops.  Combined with the higher fuel costs of delivery, this has increased the price of basic foods, such as milk, bread, and eggs.  Adding insult to injury, these same lobbyists continue to convince Congress that the federal government should pay farmers to not grow these same crops, since they don't want the market to be flooded with supply so that the price drops too low.  Worldwide, people are beginning to have difficulty in obtaining food, as the markets all shift to get the most money for their products and adjust to the redirection of food crops to energy production.

Eventually, just like the Internet bubble of the 1990's, the more recent housing bubble, and every other bubble of irrational speculation, the oil and food bubbles will burst.  The good news is that when that happens, prices will begin to come back down to rational levels.  The bad news is that just like with the housing bubble, prices won't come back down to what they were before - and should be still - and the investors that ignored all the usual warnings of risk will be left holding the bag for ridiculous amounts of money.  The pressure will be back on the Federal Reserve Board and the U.S. government to "stabilize the markets," which is just thinly veiled doublespeak for "bailout," and the U.S. taxpayers will be fleeced once again to make someone else rich.

Apparently, if you're an investment banker, the "invisible hand of the market" is a wonderful thing when it drives the price up and makes you rich, but when it's going all Jack Bauer on you, it's time for the government to step in and take over.  It's not supposed to work that way.  If you love the "invisible hand" so much when it's handing you cash, you have to suck it up and take it like a man when it sucker punches you, too.  Because otherwise, the rest of the world becomes the sucker.