Blue Magic Economy

Are we going back to 2007?

Matthew Yglesias does a nice job summing up one of the big problems in the current economic dynamic: the more the economy grows, the higher the price of oil rises. The higher the price of oil rises, the more of a strain it puts on the economy. Before the economic crisis really hit, you'll remember, one of our economy's biggest problems was the high cost of oil. Yglesias writes:

What if six months [from now], the economy is actually growing? Not growing rapidly. But just growing. Like, the number is above zero rather than below it.

Well it seems to me that we’ll be right back where we were in the summer of 2008 where sky-high gas prices were clobbering everything. And we haven’t really done anything over the past year to leave ourselves better-prepared for that situation.

And a lot of the other indices in the economy are back to where they were at the end of 2007: stocks are up big, commodities are up, gold is up, real estate sales are up, and many are saying that soon, because of a weakened dollar, exports will be back up. Remember that Jay-Z video for the song Blue Magic where instead of displaying dollars he displayed euros? That video was made while the economy was still riding high -- but was seen by some as a sign that we were headed toward disaster.

Again, the question remains, what happens next? Have we spent trillions of dollars just to go back in time two years? Will we just bob up and down between bad and worse -- bad being 2007, with high oil prices, high stock market prices, low unemployment and fear of a coming crash, worse being 2008, with low oil prices, low stock market prices and an actual crash at hand? Generally, those kinds of swings from high to low end in the drug addict hitting bottom.

Can't you picture the Federal Reserve (whose loose monetary policy was blamed for getting us into this economic crisis in the first place) singing these lyrics from Jay Z's song "Fallin'"? Fallin was on the same album as Blue Magic, which came out at the end of 2007. January 2008 is when the recession officially began.

I know i shouldnt've did that I know its gon' come right back
I know its gon' destroy everything i made
Its probably gon' get ya boy sent away
But this game I play, ain't no way to fix it...

Said where i would stop before i even started
When i get to one brick, then The Game i will depart with
Got to one brick then i looked to the sky, said
Sorry God, i lied, but give me one more try...

The irony of selling drugs is sort of like i'm using it
Guess its two sides to what 'substance abuse' is ...

Cause come January, it gets cold
When the letters start to slow, when your commissary's low
When your lawyer screams "Appeal!" only thinkin' bout a bill
When your chances are nil, damn, gravity's ill...