Manufacturing Monday: Steel looks chirpy, while China faces some woes

Some interesting stuff happening in the manufacturing sector. The US Dollar, despite the President's claim today that he wants a strong currency, continues to drop. Rising material costs, be it ore or petroleum, has had some unintended consequences. I noted on Daily Kos last week, that many businesses are starting to take a second look at the US given the rise in transportation costs.

Domestic steel looking not too shabby

Hoarding in Plain Sight: did Strategic Oil Reserves trigger Oil's Parabolic Move?

There is a fierce debate going on at across a number of economic and financial blogs about the most recent price spikei in oil. After years of seemingly orderly increase, the price of oil took off dramatically in February 2007 and even moreso in early 2008, rising from $55 a barrel only 16 months ago to $140 a barrel now -- a percentage equivalent to the move from $20+ a barrel to $55 a barrel in the entire decade from 1997 to 2007.
Clearly, something happened in the last year and a half to cause the price of oil to go "parabolic" -- the straight to the heavens chart that we have seen before in the 1920s stock market and the Nasdaq tech bubble.

Shipping Costs and Offshore Outsourcing

Recently an individual emailed me believing increased fuel costs would magically bring back his service job (engineering). Not so, I pointed out, for unlike manufacturing which requires raw materials, components, shipped around the globe per their ill advised and little analyzed global supply chain fuel and transportation costs, service jobs can be offshore outsourced with almost no supply chain costs whatsoever. And no, putting a toll booth on the Internet super highway is not the answer.

That said, for manufacturing there might be a silver lining to rising energy costs. According to the Wall Street Journal, High cost of shipping goods brings some jobs back to U.S., global supply chain costs are taking their toll:

The Enron Loophole

You hear a lot of buzz words these days about shady deals and speculation on oil futures. So, what exactly is this Enron Loophole so many refer to which allows all of this trading on energy to go on with no accountability or regulation?

From Professor Greenburger:

it has been widely understood that, unless properly regulated, futures markets are easily subject to distorting the economic fundamentals of price discovery (i.e., cause the paying of unnecessarily higher or lower prices) through excessive speculation, fraud, or manipulation.

Another squeeze by the Boa Constrictor economy

(hat tip to taonow: I've stolen your analogy)

A while ago, in a diary entitled Are Hard Times near? The Great Decline in interest rates is ending I pointed out that the great decline in interest rates that began in 1981 looked like it was coming to an end, and with it American consumers' ability to refinance debt at lower rates. I noted that if consumers could no longer refinance at better terms, and if their wages weren't growing, the engine of the American economy would stall, not just for a short time, but for a very long period -- What I have called "The Slow Motion Bust."

With oil prices at $126 a barrel, and $4 a gallon gasoline, the boa constrictor of higher prices has tightened around the average American's budgetary breathing space some more. A look at how much and how consumers are coping, below.