A return to randomness

While I am expected to regain feeling in my finger and make a full recovery, I also have strep throat. So, this has not been my week and it’s only Monday.

I see that we have a new Fed chairman, assuming Ben Bernanke is confirmed. Dr. Bernanke should be an interesting change, since while he is qualified for the job (and I was really hoping to get the call, oh well perhaps I can have Karl Rove’s job, when it opens up in the New Year), he will have a more proactive monetary policy. Our new chairman will set targets for inflation and alter monetary policy to mean his goals. If he is soft on inflation and we have stagflation we are in trouble. Also, his character is in question, he is from and economic standpoint the 2nd most powerful man in the world, his every move can alter the world’s financial markets? Does he have what it takes to wield this power and shape America’s economic policy? I don’t know.

The one thing I can never predict is gas prices, and I figured out why. Most of the big oil companies both produce crude oil and refine it into fuel. So if they were prfiteering they would make money on both transactions, which is what I always assumed. That is why I could never predict price changes, since the price of oil is more inversely related to the price of gasoline. Here is how it works, Exxon (or other large oil company) drills for oil and sells it at a huge profit, well they mostly sell it to themselves. They take the oil and refine it and sell the fuel at less than it “cost to make”, however since the oil they sell themselves doesn’t actually cost what it costs on the open market, the selling at a lose is only on paper, and so they still make good money. Now the problem is small oil, since it is paying open market prices so it has to sell at market prices too, so big oil fixes its prices based on small oil being nearly profitable. Yes, oil is a false commodity much the same way it was when Standard Oil controlled the market.