US weathering 'oil price shock': Bernanke (silver lining to high prices)

[UpInArms]

Source: AFP

WASHINGTON (AFP) - The US economy is holding up in the face of a "serious oil price shock" because it is less dependent on petroleum than in the 1970s, Federal Reserve chairman Ben Bernanke said Wednesday.

Bernanke said the record surge in energy costs has created "significant challenges" for the US and world economy but that the situation is far different than the oil crisis of the 1970s.

"Then, as now, we were experiencing a serious oil price shock, sharply rising prices for food and other commodities and subpar economic growth," Bernanke said in remarks prepared for delivery at Harvard University's commencement.

But Bernanke said the "silver lining" in high oil prices is that it provides "a powerful incentive for action," including conservation and other measures to become more energy efficient.

"The improvement in energy efficiency is one of the reasons why a given increase in crude oil prices does less damage to the US economy than it did in the 1970s," he maintained.

"Although our economy has thus far dealt with the current oil price shock comparatively well, the United States and the rest of the world still face significant challenges in dealing with the rising global demand for energy, especially if continued demand growth and constrained supplies maintain intense pressure on prices," he added.

Read more: http://news.yahoo.com/s/afp/20080604/bs_afp/useconomybankenergyoilbernanke

[MikeNearMcChord]

1. I would love to see Bernanke, make $12.00 an hour

and make that same statement. He travels in limos, what the F%$K does he know?

[The_Casual_Observer]

2. This stuff about no effect is a myth, 3 months from now they'll be saying

"it's bad, it's really bad ....we didn't have any idea it could get this bad".

[Tippy]

10. I agree...But I have been woried , really worried for years

My dad talked a lot about the Depression and some of what he told us about, I see happening every day. God help us all.....I began several years ago telling my kids don't buy a house, some listened one didn't their hous was forclosed on over a year ago...

[MilesColtrane]

3. The question is, how far the oil companies will go in their efforts to maximize profits now.

Push prices up too hard and they run the risk of killing the golden goose (US economy).

Push too little and they run the risk of being perceived as not being ballsy enough by the shareholders, especially if this really is the beginning of Peak Oil and the last chance to cash in...an admittedly fowl stance to take.

bird brains

[Trajan]

5. The golden goose ...

Has been individual spending .... Some 75% of all economic activity ....

THAT Golden Goose is dying a slow death, and nothing short of immediate wage boosts across the baord is going to change that ....

[awoke_in_2003]

6. That pic

in your sig line, still blows my mind.

[sandnsea]

4. Oh this has barely started

People haven't even had to sell their second cars yet. We're just starting to see the affects of these oil prices.

[Sherman A1]

9. Agreed & Well Said

I have been saying this to family & co workers since late last year.

This is just starting and it is going to get very ugly.

[Alcibiades]

7. Bernanke in February: no stagflation

"The current inflation is due primarily to commodity prices of oil and energy and other prices that are being set in global markets. I believe that those prices are likely to stabilize, or at least not to continue to rise at the pace that we've seen recently. If that's the case then inflation should come down and we should therefore have the ability to respond to what is both a slowdown in growth and a significant problem in the financial markets," he said.

"Again, we do have to watch it very carefully, but I don't think we are anywhere near the 1970s situation," Bernanke added when asked if stagflation pressures are a risk.

But today?

"Then, as now, we were experiencing a serious oil price shock, sharply rising prices for food and other commodities and subpar economic growth,"

So he missed today's stagflation in February, when it had already started. That means he will notice we are in a depression about four months after it happens.

[KillCapitalism]

14. Ha, that's BS plain and simple.

It's too bad they don't post a "misery index" like we had back in the 70's. The misery index was the unemployment rate + rate of inflation. I guarantee you if there were a misery index published right now, it would stun people. It would probably be 40 or greater. I think in the 70's it may have only reached 25 or so. Simply put, if people REALLY knew how bad it was out there, the revolts/riots would begin.

[Alcibiades]

15. The misery index still exists

See http://www.miseryindex.us/

The press simply does not pay attention to it anymore, though it's occaisionally mentioned. One problem, I think, is that the data on unemployment and inflation are so unreliable today. Especially for inflation, which the Bushies have kept low through innovative math.

[Baby Snooks]

8. Tell a lie enough and you believe it...

Tell a lie enough and you believe it yourself along with everyone else.

Maybe the wealthy are weathering it. No one else is. Like everyone else in his world Bernanke obviously sends the office staff to fill up the car they drive him around in and sends the household staff to the grocery store and about the only thing he knows about his personal economy is that his accountant takes care of everything and he signs the tax return every April.

Apparently George W Bush isn't the only one who represents the "haves and have-mores."

I go into shock every time I go into a grocery store. Meat is twice what it was a year ago. Sausage is about the same. But it is lighter in color. So there is more filler now. Coffee is a dollar more than it was six months ago. Everything is more expensive.

Not only foreclosures but evictions are impacting communities throughout the country. More and more people are becoming homeless.

What is selling in the housing market is selling at fire sale prices in a growing number of cities around the country. The exception is new homes. But the builders are hiding quite a few "freebies" and contributions to the buyers at closing and of course bonuses to the selling agents. The listing prices may have remained stable. But the net sales prices have not. And of course housing starts are falling.

The reality of illegal immigration is that many of them are becoming jobless and homeless as well. As the construction industry collapses, many are out of work. Restaurants, hit with fewer customers and higher wholesale prices, are letting kitchen staff go.

We have an estimated 50 million illegal immigrants in this country. We don't even take care of our own. Who will take care of them?

In Bernanke's world, everything is fine. In the real world, everything is not fine.

[Alcibiades]

11. Things are looking grim

I strongly suspect Bernanke is the sort of person who managed his own money until they put him on the fed. I think Fed members have to have their money in a blind trust, unless the Bush administration eliminated that requirement, which wouldn't surprise me.

We just bought a 10 year old house in a nice neighborhood for 7,000 less than the asking price. Last year, most houses in the area were going for 250k. We bought ours for 200. My mom was looking at buying a new house, and they had dropped their price down by $14k, but then they did the bait and switch and kept adding on price increases, so much so that she backed out. Then they called her and told her that they would throw those things in for free, and she told them "no, thank you."

Tough times mean that many of the immigrants who were doing jobs "Americans don't want to do" will now have to compete with citizens for the same jobs. There was a time when restaurant work was a backup for working class people who lost their jobs, but now many are told that they cannot do the work because they cannot communicate with their coworkers (when what their employers really want is to pay people the lowest wages possible, and to get workers who don't lodge OSHA complaints, etc). I expect some political pressure to accomplish real workplace immigration enforcement for the legions of employers who handle this with a wink and a nod. The human fallout from all of this will be handled, of course, by private charity, which means a lot of folks will fall through the cracks.

[Javaman]

12. what a colossal sycophant to the rich and stupid*. nt

[Deja Q]

13. I read Indians are having a hissy fit because their government is no longer subsidizing the costs.

http://www.chinadaily.com.cn/world/2008-06/05/content_6739831.htm

http://www.salon.com/tech/htww/2008/06/04/india_oil_price/index.html?source=rss&aim=/tech/htww

[daleo]

16. The 70's weren't so bad

The working class was doing ok, compared to now. Same with the middle class. The upper classes weren't as well off in the 70's, though.