Saturday, October 13, 2012

U.S. BECOMES LESS PROFITABLE DUE TO HIGH OIL COSTS

Unemployment set to explode
Finance – Townhall – 10/13/2012
Click the link to view the chart—the blue line (unemployment) matches or exceeds the red line. It has a long way to go
It's only a coincidence that this surge in unemployment would appear set to take place just as the U.S. government approaches its self-created "fiscal cliff", where the ongoing failure of the Obama administration to negotiate government spending reductions in good faith with the U.S. Congress threatens to push the U.S. directly into recession in early 2013!
five of the last seven U.S. recessions were preceded by considerable increases in oil prices (Sill 2007).
Intuitively, the mechanism at work is the following. An increase in, for example, the price of oil leads to an erosion of profit margins. Firms lose money, and begin to go out of business. To restore a zero-profit equilibrium, some variable in the economy has to alter. If labor and energy are the key inputs and interest rates are largely fixed internationally, it is labor's price that must decline.
This effect is what Obama administration officials are after in part when they state their political objective that the price of fuel must "necessarily skyrocket", as it gives the administration a target to scapegoat (capital owners) while simultaneously increasing their client base of unemployed individuals who will become dependent upon government-provided welfare for their income.
Or maybe they're just a bunch of screwups.

Northwoods Patriots - Standing up for Faith, Family, Country - northwoodspatriotscomm@gmail.com

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