Why The White House and Fed Can’t Fix the Economy (CNBC NEWS): White House To Releases 30 Million Barrels Of Oil From America’s Strategic Petroleum Reserve


The elitists are doing everything to destroy the dollar & the middle class and bankrupt America.

And pouring oil over the Greatest Depression from vital strategic reserves won’t help, but will increase the problems in the future, as intended by the elitists.

More BS America will have to take a bath in!

Why The White House and Fed Can’t Fix the Economy (CNBC NEWS, June 23, 2011):

Today the White House and International Energy Agency teamed up to try to help the US economy. In a rare coordinated effort, 60 million barrels of oil will be unleashed onto global markets, with 30 million from America’s strategic petroleum reserve and the other from IEA stocks.

The IEA says the move is being done to replace output lost by the mess in Libya, which has taken about 1.5 million barrels per day off the market. (It sounds good in a press release, but our viewers know that even with Libyan production going off-line global oil supplies have actually been rising the last few quarters so this explanation rings hollow).

But enough on oil, because that’s not what this is really about anyway.

It’s about the White House finally recognizing what millions of American families already know: the economy is still too weak, the recovery too slow, and they need to try something new.

That’s bad news, but the worse news is that there probably isn’t much that the White House, Fed, OPEC, HUD or any other acronym can do to fix it. Even the combined might of the President and Ben Bernanke can’t overcome millions of deleveraging American households.

Spooked by the financial crisis, high unemployment and sagging home prices, American families are buckling down, paying off bills and saving instead of spending. Like it or not, we are a consumer spending and credit driven economy. So when we buckle down, our trickle-down economy buckles up.

But here’s the good news: much of the deleveraging may already be in the rear view mirror.

The Fed publishes what it calls the “financial obligations ratio” (FOR). It’s a broad measure of household debt service combined with auto payments, insurance and property taxes.

Though the Fed lacks a pretty graphic for the FOR, a scan of the numbers tells us things are getting better on household balance sheets following some pretty heady years recently. The FOR has fallen from a peak of 17.55 in Q3 2007 to 14.84 last quarter. This is the first time this measure of household debt-to-income level has been under the 15 mark since the third quarter of 2000.

The St. Louis Fed does have pretty graphics, and the one below shows how US household debt service payments as a percent of disposable income continues to fall rapidly. We’re saving, not spending. Instead of buying a new car, we’re paying off college loans. Instead of credit, we’re using debit. We’re realizing that a smaller mortgage is a better mortgage and no one really needs the biggest house on the block anymore.

The chart may tell the larger tale, too, about when a recovery will really begin.

Notice how it took about three years after both the 1979-1981 and 1990-1991 recessions for Americans to begin taking on credit risk again. We need to be truly convinced things are better before we take financial chances again.

We clearly aren’t there yet.

Even though consumer credit is on the rise again after contracting every quarter last year, you don’t need to be reminded that this downturn is steeper than most and thus it will take longer to heal. Americans have learned some harsh lessons about the danger of debt the last few years, and they’re doing the right thing by removing it.

Ultimately this deleveraging is a long-term positive for the economy. Fiscal discipline is a good thing. (Something D.C. will hopefully learn)

The downside of this discipline is that until Americans are done cleansing their own balance sheets, there isn’t much President Obama or Ben Bernanke can do to make the economy healthy again.

$3 trillion in stimulus, quantitative easing, health care legislation, Dodd-Frank and a host of other programs weren’t the answer because D.C. doesn’t yet get that you just can’t buy confidence.

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