This will be short because I can't find another place to discuss a small "tell" in an article from HuffPo this morning. The article is about how gas prices are likely to continue to rise in 2011 as the U.S. and global economy improves in 2011.
Here's a telling tell about a possible political incentive for The White House to extend the tax cuts for the wealthy for 2 years (aside from the gathering clouds of Citizens United).
A further oil price spurt came in late November as it became clear that Congress was likely to extend for two more years tax cuts set to expire at the end of the year.
Why did oil prices rise because of the tax deal? What does that have to do with anything? Here's a thought...
I don't believe for one second that tax cuts for the wealthy will fuel economic growth in 2011. I don't think any fair-minded informed person on this site believes that either. However, that is the subtext behind that telling snippet. But it just doesn't hold water. So... how is that tax cut deal fueling economic growth for two years?
Here's why: Because the wealthy who are benefiting from the tax cut extension now know that they have 2 more years to make as much money as they can before the tax extension really will expire, and both marginal and capital gains rates will return to "normal"... or higher given the deficit and debt concerns. The uncertainty of what's to come with taxes on their estates must be a pit in their greedy psychotic stomachs.
How does this affect "The Re-Elect" campaign by The White House?
You're probably ahead of me now. Those tax extensions are an incentive not for rational markets to create higher investment and jobs on its face. No, it's an incentive for the super rich, the corporate and private fund managers of uber-wealth, to make all the money they can, to push as much investment forward as they can, to put as much bonuses and profits in their pockets before what is most probably a certain end to the extension. Any economic benefits over the next 2 years are an asset to The Re-Elect too. There it is.
This also leads I think to a short term "mini-bubble", with bubble economics with which we're well familiar. (Bubble profits, crash, middle class suffers ("Austerity!") to pay for the bubble burst while the wealthy keep their fake profits.)
If this policy creates jobs, then so be it in my mind. But I think that for The Re-Elect, both a) employment, or b) happy rich people are equivalent in political terms for The White House.
And I think it's important to note that any economic improvement that is perversely associated with the tax cut extension is not affirmation of trickle-down economics, but rather the effect of the sands of an hour glass falling until the super rich lose their tax-payer subsidization of their profits.
Commodity prices like oil don't just rise on economic fundamentals; they also rise on speculative bubbles.
[PS - I'm glad for any comments or discussion. This is offered in all good faith for general consideration. I welcome criticism, but please, no "sharking." If it can't be said constructively, it really shouldn't be said. Happy New Year!]