The Honor Of God

The most boneheaded miscalculation of all time…

“Terrorism will be reduced…weapons of mass murder will be limited, people will be safer around the world, human rights and democracy will be unleashed in the Middle East, and the fragile outlook for world prosperity will be improved… The uncertainty tax on world growth will be lowered too, as will the energy tax from temporarily spiking oil prices.”

This was Larry Kudlow writing in March, 2003.

The spike in oil prices he described took place on March 12th, 2003, pushing the price of a barrel of crude all the way up to $37.83 and the price of a gallon of gasoline to $1.72. Yesterday, oil closed at $137 and gas sells for $4.06.

But Kudlow was hardly alone in his hallucinations. Laurence Lindsey, then George Bush’s senior economic advisor, looked into his own crystal ball and saw nothing he didn’t like.

“Under every plausible scenario, the negative effect will be quite small relative to the economic benefits… The key issue is oil, and a regime change in Iraq would facilitate an increase in world oil,” thereby driving down oil prices.

Paul Wolfowitz, then Deputy Secretary of Defense, went on to reassure the nation that Iraqi oil revenues would pay all the costs of reconstructing the country.

Today, we are talking about one of the most boneheaded miscalculations of all time. Almost with a single maladroit stroke, a relatively small group of world-improvers undermined the progress of 9 generations. Five years later, Americans are on the losing end of the “biggest transfer of wealth in history,” as T. Boone Pickens described the oil market of 2008. George W. Bush has the highest disapproval ratings of any U.S. president in history. America’s most profitable industry – finance – has collapsed…its currency has lost a third of its value…and European, Chinese and Indian economists are wagging their fingers saying, “I told you so.”

But here at The Daily Reckoning we always look on the bright side. And the sunny side of this story is that the United States needed to be humbled. After the Soviet Union fell to its knees in 1990, America had a monopoly on worldwide military force. Nature abhors a monopoly; she needed to take the U.S. down a peg. Who better to do the job than this group of neo-cons? They knew no history; nor did they understand economics. They were the perfect people to lead the nation to disgrace and bankruptcy.

Mr. Kudlow continued his miscalculation by referring to a survey, in which 69% of respondents said they would gladly pay $300 for the war.

So far this year alone, the price of crude has risen 40%. It’s now $100 higher than when the neo-cons took America into the Iraq War. Each American uses 25 barrels of oil per year. This is equivalent to a tax of $2,500 in additional energy expense per person…or $10,000 for a family of four, annually. In addition, the war itself is estimated to cost between $1 trillion and $2 trillion. Divide that by the number of U.S. families and you get a figure of $10,000 or more.

Ooops.

But the numbers are just the beginning. High energy prices are undermining the American way of life itself, such as it is. As colleague Byron King explains, below, we’ve spent the last 100 years building the wrong kind of world. Now, many Americans are doomed to live in the ruins of a civilization that no longer works.

“Rethinking the country life,” begins an article in the New York Times . “Suddenly the economics of American suburban life are under assault,” it continues. Then, it gets down to business.

When Larry Kudlow, Laurence Lindsey and Paul Wolfowitz were explaining how nice it would be to rough up the Middle East, the average suburban American household spent $1,422 on gasoline. Now, according to the Bureau of Labor Statistics, the sum has risen to $3,196. Another estimate puts the increase in energy costs to the typical family at $50 per month. Anyway you look at it, it’s a lot of money for people who don’t have much money. And the figure goes up the further you get out in the boonies.

“Life on the edges of suburbia is beginning to feel untenable,” says the Times .

Like it or not, Americans are being forced to park their cars. This spring, they cut back on their driving at a sharper pace than anytime since 1942. But it’s hard to stop driving when you live far from work and far from shops.

Meanwhile, we got the latest figures on the U.S. housing market. According to the Case/Shiller survey, prices fell at their fastest rate ever in April, down 15.3% over the year before. This no doubt contributed to an enveloping funk in consumer confidence, which hit a 16-year low.

The confidence level of suburbanites falls with their house prices. We have no proof, but our guess is that no houses are falling more than those built most recently, most far out. That’s where homeowner equity is likely to be lowest…and where the increased price of commuting hits hardest. That is where house prices ought to be most vulnerable. Potential buyers will simply add up the costs of commuting – in time and money – and subtract it from what they are willing to pay for the house. The longer the commute, the lower the price.

“Prices in outer suburbs will get clobbered,” concludes economist Mark Zandi.

The country will be turned inside out by higher energy prices. The suburbs are becoming less and less desirable…compared to concentrated, close-in developments near city centers. For the first time since the 1920s, the inner cities are ‘in.’ The suburbs, meanwhile, are ‘out.’ And the further out you go…the further ‘out’ they are. Over time, many of these out-lying suburbs are likely to become slums…or maybe simply abandoned, left to become ghost towns, with tumbleweeds blowing through the empty split-levels and burned-out neo-colonials.

In the fashionable inner cities, meanwhile, the middle classes will adapt and probably be better off for it. They’ll walk to restaurants, to school, and to shops. In the far out suburbs, consumers will regret every trip to the shopping mall…and rue the day they listened to Larry Kudlow.

But here we let Byron King pick up this point…

“The returns are coming in from the distant precincts of the oil patch, and the winner is… Oil!

“The price for oil has barely budged based on the Saudi Summit. There has been no summer sell-off, and I’d be surprised to see a significant pullback as the summer driving season kicks into gear. (Followed by hurricane season, and then the buildup for winter heating stocks, followed by winter.)

“What’s going on? Well, what the Saudis give – in proposed, future increased production…the Nigerians take away – with ongoing oil patch carnage that forces the likes of Shell and Chevron to close vast pipeline systems. Apparently the present trumps the future, even in the futures markets. Everything is connected to everything else, isn’t it?

“Here is my take on the exit polls from the Saudi Summit…

“Consumers and their representative governments are desperate for an oil pullback. This $135 oil is draining budgets. The poor and working poor are already marginalized in this cruel world of ours. Now it’s the turn of the middle classes to get kicked into the cellar of the modern age. People are working time-and-a-half just to put food on the table and gas in the car. Retirees and others on more-or-less ‘fixed’ incomes are impoverishing slowly. Unless they are impoverishing fast. Bankruptcy filings among the older and elderly demographics in the U.S. are soaring. The bottom line is that the conventional image of a ‘decent standard of living’ is rapidly receding for many tens of millions of households. The 20th Century is truly over. (I think this has much to do with the meteoric rise of Senator Obama as well… He offers nothing new – mostly just classic, populist Democratic Party bromides – but he offers it in such a sweet and beguiling, Teflon-coated manner…)

“And it will get worse before it gets better. To be perfectly blunt, it might not even get better. Over the next year, and into the foreseeable future, in the developed world people will go broke buying motor-fuel, heating oil and natural gas. (Wait until next winter… Sweet Jeeeezus!) In the less-developed world, people will go broke buying bread. And then the poorest amongst us will starve. Any way you look at it, it’s bad for business.

“Fast-rising energy prices are decapitalizing entire nations. Energy prices are destroying wealth faster than people can re-create it. Entire segments of the world economy have hit the iceberg and are filling with cold seawater. Some industries are becoming obsolete in a matter of months. Much of the airline industry is drowning in red ink before our eyes – almost every flight in the sky is losing money, no matter how much they charge to check your suitcase or how few peanuts they put in the small package.

“And down on the ground, most motor transport is just plain uneconomic any more… ‘Dead Rigs Driving.’ Farewell to the ‘Warehouse on Wheels.’ Sic Semper Globalization.

“Large swaths of the auto & truck building industry have become capital-wastelands. For example, GM is closing SUV factories and planning to ditch the Hummer brand. This cascades down to firms that make everything that goes into a set of gas-guzzling wheels. You name it: hot-coiled strip, axles & tires, wire bundles, paints & coatings, window glass and seatbelts, and so much more. Billions of dollars worth of past investment is just gone…bye-bye, poof! And the good-jobs-at-good-wages? History.

“So, is there room for optimism here? Yes, in the sense that high prices are concentrating many minds on energy. ‘Energy’ is the most important issue of our time, bar none. That is, people are finally beginning to understand the centrality of energy to our collective existence. Take away the cheap energy, and it becomes clear that mankind has spent the past century building the wrong kind of world.

“Another way of saying it is that we’ve collectively built ‘tomorrow’s ruins’ today. And I don’t mean just the physical structures, the bad architecture and stranded infrastructure that is worthless when energy is expensive. Think as well about the social structures that are beyond worthless when energy gets expensive. Tell me when you start to get worried…

“Much of what happens in our time only happens because energy is relatively cheap and abundant. So when energy gets expensive, a lot of what happens is going to stop happening.

“I leave the rest to your imagination.”

Bill Bonner at the Daily Reckoning

http://www.dailyreckoning.com/

 

Dear Brothers and Sisters,

“Unless a grain of wheat falls into the earth and dies, it remains alone; but if it dies, it bears much fruit” (Jn 12: 24). The Evangelist John thus foretold the glorification of Christ through the mystery of his death on the Cross. In this Easter Season, in the light of the mystery of the Resurrection itself, these words acquire an even deeper and more incisive eloquence. If it is true that a certain sorrow can be detected in them because of his imminent departure from his disciples, it is also true that Jesus pointed to the secret for defeating the power of death. Death does not have the last word, it is not the end of everything but, redeemed by the sacrifice of the Cross, it can henceforth be the passage to the joy of life without end. Jesus said, “He who loves his life loses it, and he who hates his life in this world will keep it for eternal life” (Jn 12: 25). Thus, if we can die to our selfishness, if we refuse to withdraw into ourselves and make our life a gift to God and to our brethren, we too will be able to know the rich fruitfulness of love. And love does not die.

Here is the renewed message of hope that we gather from God’s Word today, as we say our last farewell to our beloved Brother, Cardinal Alfonso López Trujillo. His death, which came just as he seemed to have recovered from a severe health crisis that began more than a year ago, has deeply distressed us all. In the United States, where I was on a Pastoral Visit, I immediately raised to God a prayer of suffrage for his soul and now, at the end of Holy Mass at which Cardinal Angelo Sodano, Dean of the College of Cardinals, has presided, I join you all with affection to recall the great generosity with which the late Cardinal served the Church and to thank the Lord for the many gifts with which he enriched the person and the ministry of our late Brother.

At the Consistory of 2 February 1983 Archbishop Alfonso López Trujillo was the youngest Cardinal on whom my Venerable Predecessor, Pope John Paul II, conferred a Cardinal’s hat. He was born in Villahermosa in the Diocese of Ibagué, Colombia, in 1935, and while still a child moved with his family to the capital, Bogotá. Here, when he was a university student, he entered the Major Seminary. He continued his studies in Rome and was ordained a priest in November 1960. Having concluded his theological formation, he taught philosophy at the archdiocesan seminary and worked for many years at the service of the entire Church in Colombia. In 1971, the Servant of God Paul VI appointed him Auxiliary Bishop of Bogotá; in those same years he was also President of the Doctrinal Commission of the Colombian Bishops’ Conference and was chosen shortly afterwards as Secretary General of CELAM, an office he carried out with recognized competence over a long period.

In 1978, again by Paul VI, he was entrusted with the office of Coadjutor Bishop of the Archdiocese of Medellín with the right of succession, and he later became its Pastor. His deep knowledge of the ecclesial situation in Latin America acquired during the long period in which he had worked as Secretary of CELAM led to his appointment as President of this important ecclesial body, which he directed wisely from 1979 to 1983. From 1987 to 1990 he was President of the Colombian Bishops’ Conference. He also had opportunities to broaden his knowledge of the universal Church’s problems, having taken part in the three Assemblies of the Synod of Bishops held in the Vatican: in 1974 on evangelization, in 1977 on catechesis and in 1980 on the family. Moreover, it was precisely to the family that he was called to be especially dedicated, from 8 November 1990 when John Paul II appointed him President of the Pontifical Council for the Family, an office that kept him in active service until the moment of his death.

On this occasion, how is it possible not to highlight the zeal and enthusiasm with which he worked during these approximately 18 years, carrying out a tireless activity to safeguard and promote the family and Christian marriage? How can we fail to thank him for the courage with which he defended the non-negotiable values of human life? We have all admired his indefatigable activity. One result of his hard work is the Lexicon, which constitutes a precious text for the formation of pastoral workers and an instrument for dialogue with the contemporary world on the basic themes of Christian ethics. We can only be grateful to him for the tenacious battle he fought in defence of the “truth”, family love and to spread the “Gospel of the family”. The enthusiasm and determination with which he worked in this field were the fruit of his personal experience, linked in particular with the suffering his mother had to bear; she died at the age of 44 from a very painful illness. “When in my work”, he remarked, “I speak of the ideals of marriage and the family, it comes naturally to me to think of the family from which I come, because through my parents I have been able to understand how it is possible to fulfil both ideals”.

The late Cardinal drew his love for the truth about man and for the Gospel of the family from the thought that every human being and every family reflect the mystery of God who is Love. His moving address to the Assembly of the Synod of Bishops in 1997 lives on, impressed in the minds of all: it was a true hymn to life. He presented a very practical spirituality to those who are involved in the implementation of the divine plan for the family. He emphasized that if knowledge does not concentrate on understanding and educating to life, it will lose the most crucial battle on the fascinating and mysterious ground of genetic engineering.

If Cardinal López Trujillo made the defence of and love for the family the characteristic commitment of his service in the Pontifical Council of which he was President, it was to the affirmation of the truth that he dedicated his whole life. He testifies to this in one of his writings in which he explains: “I have personally chosen the motto “Veritas in Caritate‘, because all that concerns the truth is at the heart of my studies”. And he added that truth in love has always been an “existential pole” for him, at first in Colombia, when he strove “to find the meaning of genuine liberation in the theological context”, and later on, here in Rome, when he devoted himself “to deepening, proclaiming and spreading the Gospel of life and the Gospel of the family, as a collaborator of the Holy Father”. He concluded: “I deeply believe in the value of this decisive battle for the Church and for humanity and I ask the Lord to give me the strength to be neither lazy nor cowardly”.

To bring to completion the mission that Jesus entrusts to us, we must not be lazy or cowardly. In the Second Reading we heard how the Apostle Paul, a prisoner in Rome, urged his trusted disciple Timothy to take heart and to persevere in witnessing to Christ, even at the cost of being subjected to harsh persecution, ever strong in the certainty that: “if we have died with him, we shall also live with him; if we endure, we shall also reign with him” (II Tm 2: 11-12). May the late Cardinal’s generosity, expressed in a multitude of charitable actions, especially for children in different parts of the world, be an encouragement to us to spend our physical and spiritual resources for the Gospel; may they spur us to work in defence of human life; help us to look constantly to the destination of our earthly pilgrimage. And St John points out to us what this comforting destination is, offering for our contemplation in the passage of Revelation which has just been proclaimed the visions of a “new Heaven” and a “new earth” (21: 1), and sketching before our eyes the prophetic lines of the “holy city”, the “new Jerusalem… prepared as a bride adorned for her husband” (21: 2).

Venerable Brothers and dear friends, let us never lift our eyes from this vision: let us look to eternity, anticipating, even among trials and tribulations, the joy of the future “dwelling place of God with men”, where our Redeemer will wipe away our every tear and where “death shall be no more, neither shall there be mourning nor crying nor pain any more, for the former things have passed away” (cf. Rv 21: 4). We like to think that beloved Cardinal Alfonso López Trujillo, for whom we still desire to pray, has already reached this dwelling place of light and joy. May Mary welcome him and may the angels and saints in Paradise accompany him: may his soul athirst for God at last be able to enter and to rest in peace for ever in the “shrine” of infinite Love. Amen!