bubble, bubble, oil and trouble

My economic literacy is admittedly pretty superficial, but I think John McCain might be correct about speculators contributing to the soaring price of oil (and in fact, I sincerely hope that he is), but, I also think he is completely wrong about what to do about it:

"Where we find such abuses, they need to be swiftly punished. And to make sure it never happens again, we must reform the laws and regulations governing the oil futures market, so that they are just as clear and effective as the rules applied to stocks, bonds, and other financial instruments. In all of these markets, reform must assure transparency, prevent abuse, and protect the public interest."

If this really is a speculator-driven bubble, a good number of the speculators will lose their shirts when the contracts for delivery come due and the supply outstrips actual demand, bursting the bubble and dropping prices to less stratospheric levels.

In other words, if this is the problem, it is a self-correcting one. Politicians hate that.

Of course, another possibility is that what we are seeing now is the market correction, which is an unpleasant enough thought on its own, but would also mean that any heavy-handed attempts to thwart it will only make things much, much worse.

I think there is a clear choice between the major party candidates regarding foreign policy, and I will most likely vote accordingly if at all. But I'm pretty sure on economic policy we're fucked no matter what.