Monday, June 29, 2009

Part Two: Cap and Trade and the 1970's Oil Shocks

Mark Twain once said "The past may not repeat itself, but it sure does rhyme".

If you remember the 1970's, a decade worth forgetting, you might well remember the following and relate the items to Cap and Trade:

*The 1970’s - 1981 economy/recessions suffered “oil shocks”.

*Cap and Trade would create something larger. Rather than a 1970’s “oil shock” it would be an “all energy shock”. This time around add in electricity and natural gas to the oil shock equation .

*There were cascading price increases which effected producer products and consumer products in the 1970’s due to the oil shocks.

*The higher oil costs of the 1970’s left consumers with less disposable income. Meanwhile, the consumers armed with less disposable income found consumer good and services rising in cost. Less disposable income in the face of rising prices. Then came spiraling wages followed by higher prices. At the height of the recession came: 21% mortgages, +10 inflation rate, money market funds paying 15%, and high persistent unemployment.

That was the 1970’s.

Cap and Trade would equate to the 1970’s Oil Shocks.

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