The Double-Edged Sword

Stock markets rose on word that the Fed might cut interest rates... 400+ points. Great! Look the market now. Not so good, huh? Without policies that work – sustainability – that’s what markets do when they are lost and looking for answers. They just rise and fall on any news. A rate cut at the Fed? Didn't stop hoarding last time; the credit markets didn't unfreeze, and while it looks good to think you will save money with lower interest rates, are you even able to borrow assuming good collateral? Dropping interest rates can also push the dollar lower, making imports more expensive.

Speaking of imports, let’s look at oil and the good news: the price has plummeted in recent weeks. Yet countries with vast natural resources are often considered wealthy; they even occasionally fall victim to using that power and wealth – we politely call it “check book diplomacy” – to buy, bribe and bully. Our buddies in Russia , Iran and Venezuela , predicting our demise, were paying to expand their internal (and external) power base and challenge the perception of America as a superpower. With all this new “natural resource” power, they funded and purchased new allies and stridently screamed at “evil” America . The problem is… well to have a valuable commodity, you have to have a market, and to have a market, you need buyers with money.

Sorry, Vladimir V. Putin, Mahmoud Ahmadinejad, and Hugo Chávez, your buyers seem to be unable to buy as much of your “stuff.” And what they can pay, based on what their people can afford and what they earn, seems to be a lot less than your “stuff” was selling for earlier this year. Didn't think the economic crisis, that you were sure would sink the America , would affect you, huh? Thought oil prices would hold and rise? Hope you didn't spend all the money you were counting on! Maybe you'll remember this lesson when the market for oil rises some day, and it will – some day – that it is easier to try and make the world work together than assuming that you will always be riding an economic escalator and can dictate everybody else’s future. In the past, that attitude didn't work for us particularly well either. Welcome to “global integration.”

Now for the other side of the sword – as oil prices drop, so do our internal priorities and incentives to seek alternative, non-fossil-fuel-based energy. Even though each and every one of us knows that the price of oil will rise again, the issue has been moved, you should pardon the expression, to a back burner for the moment. But if we have learned anything in this meltdown, you'd hope is that it is much better to deal with obvious issues before a crisis takes away your power to deal with such obvious issues calmly, efficiently and effectively. Alternative energy development must remain one of this nation’s highest priorities and should not be tied to the vagaries of the “markets of the moment.”

I’m Peter Dekom, and I approve this message.