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Borrowing to Buy Oil - 1/27/08

Oil is surging to $100.00 a barrel, the dollar is sinking in quicksand, the Dow is dropping, foreclosures are increasing, and credit card debt is out of control. Yes recession is unavoidable.

The Feds cutting the interest rate only increases inflation, which increases the cost of almost everything. This is just to prop up the stock market, while hurting the average person.

We must borrow from Europe, Japan, China and the Arab nations, then turn around and defend their access to Gulf oil and make Iraq safe for democracy. This is total madness and the majority of the U.S. citizens are clueless to what is going on!

China and Japan have two trillion dollars we have given them in return for the stuff they sell us. The Arab nations also have two trillion dollars we have given them for the oil we need. They in turn buy up U.S. banks, businesses, ports and more. The U.S. is selling herself to pay for her bills. It’s like going to the International Pawn Shop everyday until the whole house is empty. Then putting the for sale sign in the front yard. Oh we can stay in the house after it is sold if we pay rent.

This very subject was characterized in Warren Buffett’s Squanderville vs. Thriftville story written in 2004. To quickly summarize; Squanderville, which is the U.S., buys most of the things they need from Thriftville, receiving Squander bonds in return. Thriftville then converts these Squander bonds into Squander dollars, which then is used to buy up all the assets of Squanderville. Soon Squanderville can only pay the interest on the debt and must work much harder, never being able to pay back the loans to Thriftville. Sound familiar?

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