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Do you think oil prices are justified?
Yes 39%  39%  [ 12 ]
No 61%  61%  [ 19 ]
Total votes : 31

monty
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06 Jun 2008, 11:42 pm

Driving home and listening to the radio today, the economists all agreed that the $11 spike in a barrel of oil in one day was completely unrelated to market fundamentals of supply and demand, which really didn't change today. They mentioned two factors - the drop of the dollar, and speculators.

Between the producer and the consumer lies the commodity futures market. The amount of money going into the futures market has shot through the ceiling in the past decade. People know that if they buy oil future contracts, and the price keeps going up, they can turn a nice profit when the contract matures. Just like buying a house on speculation - pay $X now, sell for $1.5X when the house is finished.

Of course, the price of oil may not keep going up forever, and we may see a lot of investors get burned. In the mean time, increased demand (by speculators) is driving up the price of oil, just as increased demand drove the price of houses up. Towards the end of the housing bubble, some financial advisors were suggesting that people might rent instead of buying - and that was good advice. So, assuming that the price of oil will eventually collapse back to its equillibrium price, I am advising you to postpone filling your tank. Renting gasoline is not an option, but the bus, the bicycle, and sleeping in your cubicle may be needed until the most fair and rational market system imaginable corrects itself. Judging by the dot-com bubble and the housing bubble, you shouldn't have to wait more than a few years, maybe less.



Last edited by monty on 06 Jun 2008, 11:45 pm, edited 1 time in total.

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06 Jun 2008, 11:45 pm

The_Chosen_One wrote:
Well, the way I see it, "the market" is given way more respect as an arbiter in society than it deserves. There are certain things that cannot be produced at much or any of a profit but are yet necessary to assure the smooth running of a society - most of these come under the heading of public services and public utilities.

Capitalism can still allow for public provision of such things. Adam Smith advocated that in Wealth of Nations.

The_Chosen_One wrote:
If one went purely by "the market" and "self interest", we would see people living on the streets, dying of totally curable infections and other conditions because they can't afford to see a doctor, having no hope in life because they'll never get a job; and the list goes on. But wait, isn't that what life is like in the good old USA already?

Not very commonly, no. And laissez-faire capitalism is the best method for generating enough prosperity to lift even the poorest members of society out of the worst troubles.


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MR_BOGAN
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06 Jun 2008, 11:48 pm

The_Chosen_One wrote:
MR_BOGAN wrote:
Simple supply and demand.

Demand has out stripped supply, so the price goes up. :shrug:

As the oil runs out it is just going to get more expensive.
Oil isn't going to run out. We are being ripped off. Even when the world price of oil goes down, we very rarely see much of a dip in price at the petrol bowsers. On a side note, why are so many big gas guzzling SUVs and "Toorak Tractors" selling if petrol price is such a big concern?

To those who say we should trust to "the market", "the market" is just as big a tyrant as a dictatorship. You need some government intervention to protect people from being ripped off by large corporations and bosses.


Government intervention invading was invading Iraq. :lol:

Image

http://en.wikipedia.org/wiki/Peak_oil

Lots of predictions say we are reaching peck oil production. I hate to break it to you it is running out.


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06 Jun 2008, 11:51 pm

Speckles wrote:
Oh, I think it would be idiotic to do away with capitalism, in most cases it really is the best system. Not perfect, but nothing is. I'll also agree with the centuries of capitalism being one of the major factors to the prosperity of today - I don't know if you'd remember, but I actually defended sweatshops in another thread on pretty much those grounds.

I agree so far. I got quite the reaction in my AP World History class when I defended child labor in third-world sweatshops.
Speckles wrote:
I just feel that some aspects of society are better handled in a socialist manner. Like the military - IMO the scandals with Blackwater have proved that Rumsfield's idea of an outsourced military is kind of stupid. Or long-term disease research, because the incentives are messed up for private industry. Or for big projects like giant bridges or dams, which generally benefit society as a whole but are practically impossible to make money on. I personally would be willing to give up some of my theoretical liberty in order to gain the benefits of programs like those.

OK. Those types of things are why I'm a minarchist, rather than an anarchist like AG. I take a more Smithian view where I acknowledge the usefulness of government in certain specific spheres, such as military, justice, and public works/infrastructure. Even so, I'll side more with AG in these debates because we both want more liberty than there currently is, so the differences between the two of us are relatively minor in practical terms.


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Speckles
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06 Jun 2008, 11:59 pm

Orwell wrote:
Speckles wrote:
If you're going to invole the Soviet Union, I'm going to invoke Nicaragua. Both extremes lead to bad results.

What happened in Nicaragua? Or are you referring to Chile under Pinochet?


Roughly the same thing that happened to Chile, except democracy stayed around for longer and things went comparitively worse. It's a better example of Friedman's economics being applied in a stupid idealistic way IMO then Chile is. If you can stand to read the Shock Doctrine, there's a pretty good summary in there.



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07 Jun 2008, 12:05 am

Speckles wrote:
Orwell wrote:
Speckles wrote:
If you're going to invole the Soviet Union, I'm going to invoke Nicaragua. Both extremes lead to bad results.

What happened in Nicaragua? Or are you referring to Chile under Pinochet?


Roughly the same thing that happened to Chile, except democracy stayed around for longer and things went comparitively worse. It's a better example of Friedman's economics being applied in a stupid idealistic way IMO then Chile is. If you can stand to read the Shock Doctrine, there's a pretty good summary in there.

Lucky me, I'm not a Friedmanite. I tend to be more Vienna than Chicago.

Dunno what it is about Latin America, but no system they try ever seems to work. I think the issue may be more in the political instability than in the actual theory of the systems they are trying to implement. They've written constitutions that codify democratic republican forms of government and still failed, but this doesn't necessarily refute republicanism. It just means Latin America did a poor job of implementing it.


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