Monday, January 30, 2006

Comparing Market Forces and Hijacks


This past Saturday on KCBS here in the Bay Area, CA, Bratworse and I heard an editorial that basically compared the oil companies profits to the housing market. The guy said in effect, don't blame the oil companies if the markets make it that profitable. You don't blame your neighbor for driving up the housing market and you don't begrudge him his 500% profits if the markets bear it, do you?

Both Bratworse and I shook our heads, disagreeing with this sentiment.

This morning, it finally hit me why the comparison doesn't work.

The comparison works ONLY if the following conditions in the housing market were met:
  1. The houses were all owned by a handful of corporations;
  2. Blocks of houses were slowly disintegrating and NOT being replaced;
  3. And, there were no rentals available to people.
See, what drives the housing market are HUGE numbers of people willing to participate in a free market situation.

However, what drives the oil market are a few companies holding the entire populace hostage.

BTW, I predicted that there would be record profits here. Nice to know that no matter what happens, the fat cats will still get fatter yet, eh? NOT!

 
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