Home > Author > Jeff Rubin
1 " At the end of the day, we supported globalization because we wanted to be able to buy cheaper computers, cheaper vehicles, cheaper clothes and cheaper furniture. Wal-Mart parking lots were jammed with North American workers buying bargain-basement-priced goods made in China even if in the process they were shopping themselves right out of their own jobs. "
― Jeff Rubin , Why Your World Is about to Get a Whole Lot Smaller: Oil and the End of Globalization
2 " We are liberal and tolerant because we are prosperous. "
― Jeff Rubin
3 " day to the news that the economy is back on track only to discover that there is less oil supply at our disposal than there was when demand started to fall. And it won’t be just the one-two punch of reviving demand and sagging supply that pushes prices up in a hurry. Once the genie of inflation is out of the bottle, it is going to take oil prices on a ride along with everything else. For one thing, there will be more money chasing fewer barrels in the world so the price will go up. And the dollars chasing that oil are going to be worth less and less even as the oil gets more valuable. Remember the Argentine peso and its 20,000 percent inflation rate? If a barrel of crude had been denominated in pesos, oil would have gone up 20,000 percent in 1989–90. If the United States wants to reflate its way out of recession, it is going to pump up the price everybody in the world pays for oil, since everybody pays in US dollars. If the dollar is worth less, oil is going to be worth that much more. "
4 " A WORLD OF SLOWER GROWTHAND HIGHER INFLATION If triple-digit oil prices are the true culprit behind the recent recession, what happens if oil prices recover to triple-digit levels or even close to them when the economy recovers? Does the economy slip right back into recession again? Everything else being equal—or ceteris paribus, as they say in the economics textbooks—that’s probably as good a forecast as any. Every oil shock has produced a global recession, and the record price increase of the past few years may produce the biggest one of all. But recessions, no matter how severe, are finite events. Ultimately, we face a far more challenging economic verdict from oil. Any way you cut it, a return to triple-digit oil prices means a much slower-growing world economy than before. And not just for a couple of quarters of recession. That’s because virtually every dollar of world GDP requires energy to produce. Not all of that energy, of course, comes from oil, but far too much does for world GDP not to be affected by oil’s growing scarcity. And there is nothing at the end of the day that we can do about depletion. Big tax cuts and big spending increases can mitigate triple-digit oil’s bite, but the deficits they inevitably produce ultimately lead to tax hikes and spending cuts that just make the suffering all the more painful down the road. Taking out a loan to pay your mortgage might defer your problems for a month or so, but in the end, it often makes your difficulties more acute. Borrowing from the future just turns today’s problems into tomorrow’s, and by the time tomorrow comes, they’ve become a lot bigger than if we had dealt with them today. Trillion-dollar-plus deficits, just like a near-zero percent federal funds rate, can mask the impact of high energy prices for a while, but ultimately they can’t protect economies that still run on oil from the impact of higher energy prices and the toll that they take. "
