And today, I can announce a special treat: I will be repeating the feat for tonight’s Vice-Presidential Debate between Senator Joe Biden and Alaska Governor Sarah Palin. So tune in and sign on to Open Borders for every verbal thrust and witty riposte.

But a few important differences stand out. First, U.S. voters are overwhelmingly against the bailout plan. Congress people are receiving nearly 100 phone calls and letters opposing the plan for every one that is positive. In contrast, when the invasion began in 2003, 72 percent of Americans supported the war, according to the Pew Research Center. To say that the country is being tricked into supporting this action—as many claim was the case with the Iraq invasion—is quite obviously not the case.

 

Second, unlike Iraq, which was more of an existential threat, the losses in the markets are measurable and very real. Trillions of dollars are being lost; unemployment rising to levels not seen in decades; inflation is cropping up around the globe: officials are desperate to right the ship. The threat of Saddam Hussein was never this real.

For more, just come on over.

The first piece is on the economic meltdown, with the failure of Wall St.’s major firms and how Washington is taking assertive steps to intervene:

The U.S. government has alternately saved companies deemed too large to fail, let others fall on their swords, before moving back to saving institutions. With markets continuing to fall, the Bush Administration has evidently seen the limitations of addressing the problems of individual firms.

Changing tack, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke—himself an expert in the 1920s and ‘30s—have sought to address the underlying issue by using at least $700 billion in public funds to buy up the troubled assets from private companies.

With the increasing government action in Washington, many are writing Miltonian economics obituaries. One Republican senator lamented: “The free market for all intents and purposes is dead in America.”

There is certainly a shift towards a more hands-on approach to managing markets; but there are also limits to how far U.S. officials are willing to go. For example, Bush Administration officials were quick to quell calls for limits on executive pay. Also, these more intrusive measures have limited life spans. The most recent plans to buy up securities will run for two years. Similarly, the loans that have been issued to AIG and co. have a two-year span. These plans are meant as a short-term elixir, rather than a long-term regulatory structure.

Check it out to see if the free-market system is truely dead.

With all eyes focused on Beijing, politicians, diplomats, and certainly journalists have less time for other goings-on. Is it coincidence that John Edwards gave a most solemn confessional to ABC News on the very day the drummers and athletes were assembled in the Bird’s Nest stadium for the Beijing’s opening ceremonies? It seems unlikely.

And, what about the outbreak of violence in Georgia’s breakaway province of South Ossetia? The proxy dispute between Moscow and Tbilisi over these lands has been rumbling for years, and though it has escalated in recent months –particularly with Georgian President Mikheil Saakashvili’s push for NATO membership — there was no major catalyst. As Anne Applebaum writes in Slate, “Previous tensions — both in South Ossetia and Abkhazia, the other piece of Georgia that has declared sovereignty — had somehow been resolved without an actual war. Someone, clearly, wanted this one to go further.” The what and the who are still unclear; yet the timing is suspiciously close to the Olympics.

So are the Olympics inherently political due to their size, scope and unique place within the human psyche? And further, is it really a bad thing that the Games may have an imbued political element? As always, read the article here and let me know what you think.

[T]here has been a recognition on the part of the developed nations that developing economies have the right to some form of protection. The most recent plan, which has been given the green light by India, China, Japan, Australia, Brazil, the U.S. and the EU, allows for developing nations to protect some industrial sectors from broad cuts in import tariffs.

The ministers have begun moving towards the idea of lowering subsidy thresholds, but not to the point where they would dramatically affect current regimes. For example, a proposal implies that Chile would shave industrial duties to around 12%, though its rate currently stands at only 6%.

In some ways, these developments represent the good winning over the perfect. Since no one country can accept the total demands of the opposite side, the modus operandi is to slide, rather than leap, towards removing trade barriers. Some free-trade supporters are ruefully and cautiously backing these developments. The Economist for one noted, “These are not vast gains… But they are gains nonetheless.”

More interesting has been the change in mindset for Western policy markers domestic plans though. In the UK, there was Northern Rock; in the US, there is Fannie Mae, Freddie Mac, and Bear Sterns. Are those in power trading in their Milton Friedman for their Keynes? Check out the full article here and you decide.

The war of words has continued as well. Leading Israeli officials have voiced their willingness to protect their “vital security interests,” while Tehran has declared its intentions to strike “the heart of Israel” and “set the United States’ vital interests in the world on fire” should it be attacked.

Yet the shifting nature of domestic politics in the three protagonist countries mean that war is by no means an inevitability, and indeed may be the main reason an attack does not take place.

Israeli Prime Minister Ehud Olmert is working under pall of an ever-widening corruption probe and low approval ratings. Though attacking Iran might give him a political jolt, he has proven to be less than stellar when it comes to directing military operations in the past, most notably during the Lebanon War in 2006. Sensing this weakness, political rivals are stepping up their efforts to unseat Olmert, which is where some of the more militant rhetoric is coming from.

Similarly, the U.S. is in the midst of a political changeover, with a presidential election coming in November. While there is speculation the current White House inhabitant, George W. Bush, would like to attack if he had the choice, it would seem that he does not. Firstly, the military brass is against the idea, and senior officials, particularly Secretary of Defense Robert Gates, have largely ruled out such a tack.

For more on the situations in Iran, Israel and the U.S., check out the full article over here.

Not being able to agree on what is even causing the rush on oil has itself driving up prices. Despite all the analysis, discussion, and number crunching, this public argument between exporters and consumers has injected uncertainty into the market, neutralizing any efforts to ameliorate the situation.

For example, last week, China announced that it would be raising the price of fuel in an effort to tamp down demand. Yet, the move was widely seen as insufficient. Bloomberg summed up the mood, its headline declaring: “Oil Is Little Changed After Falling on China’s Fuel Price Gain.” Similarly, American oil companies are now involved in Iraq’s oil industry for the first time in 36 years. Also, the MEND, a group that has been largely responsible for the disruption of oil production in the Niger Delta, has called off ceasefire to its efforts, which will hopefully bring some stability to the region and enable Nigeria to reestablish its production capacity. These are good signs for the oil industry, but together these moves brought down prices by a mere $4. Even a promise from Saudi Arabia to increase production has been met with reservation.

See who thinks what about high energy prices. And then let me know what you think.

That is not to say that these oil companies are hard up. Their revenues are astronomical. Exxon has enjoyed record profits as energy prices have risen (though, sometimes even these returns are not enough for investors it seems.) But why? All evidence points that since they cannot get access to as much oil, their profits should take a hit. But oil companies are now working within the paradigm that has been present to (and created by) them, a framework where they cannot get into other countries to extract petroleum, but have a commitment to their shareholders.

The idiosyncrasies of the oil market means that oil producers—both companies and countries—can actually enjoy greater revenue by decreasing production. As has been reported, Exxon is not planning on increasing its oil production in the near future, yet its share price continues to rise. As the article quite rightly points out, “What if Steve Jobs said Apple wasn’t going to sell any more iPhones than it did in 2007? What if Howard Schultz said Starbucks’ latte production would stagnate, at least until the next U.S. president embarked on his reelection campaign? Shares of both companies would plummet.”

However, it is important to remember that cellular phones and lattes are not like oil: People can (if forced to) forego their morning coffee; they can use a Blackberry instead of an iPhone. The inelasticity of oil—due to the lack of viable substitutes—means that as supply tightens, prices jump.

Are exporting countries using the same arithmatic in their own production decisions? Read the full article to see the evidence.

But as is all too evident, people only change their behaviors when they are forced to—and usually by costs. While oil could be bought for $18 a barrel, what was wrong with driving a Hummer or an Escalade? Understanding this axiom of the human psyche, some like New York Times columnist Tom Friedman advocated a “patriot tax” on oil that would increase prices and force Americans to change their ways; the proposal was obviously a political non-starter.

Now, that equation has changed. The price of a barrel of crude oil stands at $138.54; it climbed by $10 on Friday alone! Gasoline prices now average over $4 a gallon in the U.S., according to AAA—an increase of 28% from a year ago.

Suddenly that new gas guzzler doesn’t look so appealing. Across the U.S., sport-utility vehicles sales are down to the tune of 42% while pick-up trucks sales fell by 36%. If trends continue, automakers could end the year selling one million fewer SUV and trucks than they did in 2007. General Motors recently closed four factories dedicated to these larger vehicles and the company is even contemplating discontinuing its Hummer series.

Along with the shift to more enviromentally friendly and sustainable living, could it be that high energy prices have actually increased the security of the Middle East and the U.S.? Read the full article here, and decide for yourself. And as always, please let me know what you think.

The first article outlines what is causing the high prices, highlighting the problems that oil companies like Exxon and BP face in their foreign operations, particularly the limited availability of oil fields and rising extraction costs.

Oil companies have garnered the most vitriol. With their spectacular profits, they are easy targets. Yet, even they are struggling with the brave new energy world. One of the biggest problems for western oil companies is that there are fewer and fewer places where they are able to extract oil. Russia has put pressure on BP and Shell to leave the country. Exxon has been shoved out of Venezuela. Iran is off limits, and Iraq, which sits on huge reserves, is too dangerous and its government has so far been unable to reach a consensus about oil contracts. Even in the U.S., oil companies’ exploration opportunities have been limited to offshore waters and Alaska.

By limiting the opportunities of the major energy companies, energy-rich countries are on the front foot. They now control the supply levels, and therefore have a big say over prices. But OPEC was in this position before in the 1970s only to see prices plumb new lows in the 1990s as new sites came on line, filling the market with a glut of oil. Consequently, they are less willing to invest in new exploration. According to the International Energy Agency’s Fatih Birol, “The oil investments required may be much, much higher than what people assume.” Furthermore, any oil fields that are accessible to the likes of Exxon and Chevron are either aging or in hard-to-reach areas, like the Arctic. This means more expertise and expensive tools are required, driving up the costs of exploration.

Read the rest of the article and let me know what you think. Should we be helping out major oil companies, which we are dependent on to fuel our economies? Or should we let prices remain high to give an economic incentive to change our behaviors? Comment away!