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– Mugsy

This was really quite extraordinary… so much so that it deserves a special Sunday Evening edition of Mugsy’s Rap Sheet.

The Bush Administration’s Secretary of the Treasury, Henry “Hank” Paulson, did a guest spot on two Sunday News talkshows this weekend to address the rapidly sinking economy. On both shows, he was asked about the falling dollar, which fuels inflation, has pushed oil over $100 a barrel and gold over $1,000 an ounce:

Really quite remarkable.

And just why was Secretary Paulson asked to appear on, not one, but two Sunday shows? Here are some economic highlights of the past week:

  • The brokerage firm Bear/Sterns, worth over $1.5 Billion last year with stock trading at over $170/share, looked to the government for an “emergency bailout” last week to avoid bankruptcy, and was purchased by rival JP.Morgan/Chase for $270 million ($2/share) over the weekend thanks in part to a giant financial bailout from the U.S. government.
  • The U.S. dollar fell to a record low against the Euro. Once worth more than the Euro when George Bush entered office, the greenback fell to just $0.63 against the Euro when markets closed on Friday.
  • Fears over the value of the U.S. dollar and an American economy which appears to be headed for… if not already in… a recession, spiked investment in gold, pushing it above $1,000 an ounce for the first time in history.
  • The DOW went on a roller-coaster ride, falling 147 points the previous Friday, another 153 points the following Monday, skyrocketed 416 points on Tuesday, fluctuating another 11 points before loosing another 194 on Friday to close back below the 12,000 mark (11,951.09). I remind you again that the Clinton peak eight years ago was 11,723.
  • Foreclosures in the U.S. are reported to be “Up over 60% versus just one year ago.”
  • Oil hit a new record high nearly every day this past week, closing at a record high of $111/barrel.
  • The record high oil prices pushed gasoline to a record high national average of $3.35 per gallon of Regular.

Perhaps this is why Secretary Paulson felt the need to hit the airwaves and reassure the townsfolk that there is “no need for alarm”.

Since oil is traded in dollars and not Euros, the decline in the worth of the dollar make oil more expensive. But with Euro’s being worth nearly 40% more than the dollar, the price per barrel of oil for Europeans is closer to only $60, having a far milder impact on their economy. Ditto for the price of gold. And a more valuable Euro makes the purchase of American real estate an absolute bargain in the current depressed mortgage market. British and other European companies are snapping up struggling American corporations for a song while their markets continue to stay afloat. And American retailers openly court the British Pound and Europe’s Euro because of it’s increased worth.

The National Debt, while still inconceivably outrageous, would be closer to $6Trillion instead of ten if the dollar were not so depressed.

And speaking of “depressed”, I think I’d better stop here before I am too.

PS: I appear to be having some video trouble. Let me know if the video link stops working by posting in the Comments. – Mugsy)