On Wednesday the markets woke up to find that crude oil was trading noticeably higher. At first I thought the summer driving season was upon us and as usual crude generally goes up during this time of year. Then it was discovered that turmoil in Iraq was causing this situation.
My thoughts in this regard are as follows:
- The US went to war with Iraq in 2003 to “supposedly” free the Iraqi people from the tyranny of a dictatorship. As our former President said “It ain’t about us, it’s about them.” I should add a y’all to that statement. So began Operation Iraqi “Freedom”. One point about that freedom stuff that everyone talked about then. If you allow history to be your judge freedom is won and maintained because the people of that respective nation wanted it bad to enough to fight for it. Meaning the people and not an outside influence made that happen. This happened during the French Revolution, the American Revolution and even the British with the Glorious Revolution. It has never been an outside influence that made that happen.
- The people of Iraq have never proven to the world that they wanted change. Their neighbors in Iran did in 1979 when they overthrew the Shah of Iran. Not to say that they came up with a better government, but they did make a change.
- The people of Iraq in my opinion just want a job to go to and their bellies fed. They don’t care about democracy. What is democracy if you’re starving and can’t eat?
- The US has spent untold billions on this country, building up and training their army and now when the government needs to put down a revolt, where are they? History has shown us repeatedly that when a government doesn’t protect its people; that regime will lose power quickly and certainly. The same thing happened with the Roman Empire and the Weimar Republic in post- World War I Germany. When the government isn’t protecting the basic rights of its citizens it will fall apart quickly and absolutely.
- In the US we were told that Iraqi oil will pay for this war. This is what we were told. Yet to my knowledge the US hasn’t collected one dollar from their oil. This whole notion was ridiculous to start with as once the war was over, oil went up. In the summer of 2004 the price for unleaded fuel in the US was over $3.00 a gallon. And now? Yes gasoline has fallen from the summer of 2008 when crude was over $140.00 a barrel but the price of gasoline? It has dropped from over $4.00 a gallon but is still relatively high. I have no doubt that Big Oil will seize on this moment to increase gasoline prices in the US.
- Lastly, our finest young men and women who serve in the Armed Forces are now being denied the benefits that they earned because of budget cuts or other nonsense related to the sequester. This is disgraceful and if recruitment goes down, the government has no one to blame but themselves as they broke the sacred promise of assisting war veterans at a time that they need it most.
I have no doubt that the Iraqi government will come crying to the US that they need help. This is a country that can’t put down a terrorist uprising in its own country, yet the US has to get involved? In all likelihood and unfortunately, yes. It’s either that or the US will pay more at the gas pump and believe me, no one can afford that right now. Yesterday we saw Retail Sales, Core Retail Sales drop. For an economy in which 70% of GDP is consumer spending this is not in tandem with recovery. Businesses will complain that they can’t hire more people because of higher gas prices. Where have they been for the past five years? This so called “recovery” is tepid at best and I don’t think we’ll see the Fed raise interest rates any time soon. This economy couldn’t handle it and if we thought Retail Sales dropped now, wait….