There's two stories out there that are not getting wide play but are very important to our economic condition.
1. The value of the dollar is increasing, not decreasing. This trend was finally noted Monday and was partly responsible for the rise in the stock market.
2. Computer documents found in possession of a Colombian terrorist leader killed in that cross-border assault recently present clear evidence that Venezuela's Hugo Chavez is providing direct assistance to the FARC terror group and has offered even more help.
The greenback has, with some fits and starts, climbed against the Japanese Yen since it hit a low point on March 17. We're nowhere close to the highs of a couple of years ago, but it's a start. The dollar has climbed steadily against the Euro since a low struck on April 22. Again, there's a long way to go, but the direction is the correct one.
It was reported that when the U.S. Federal Reserve cut interest rates on the most recent occasion, there was a signal that it would be the last such reduction. The dollar has climbed since, since rate cuts depress investor interest in cash -- and an anticipated end to rate cuts would be considered favorably by those who direct their wealth that direction.
Therefore, the value of the dollar cannot account for the recent spike in the price of a barrel of oil to $126 -- which it reached today before slipping a couple bucks. So what was the cause?
Look to story number two, Venezuela and its support for FARC. About 11 percent of the oil imported from the United States comes from Venezuela. Think Citgo. The discovery of the documents according to some will make it nearly impossible to avoid some sort of a response from the Bush administration. If, for example, Venezuela is added to the list of state sponsors of terrorism, that 11 percent vanishes from the marketplace and the oil markets are scrambled.
So both stories, good and bad, are critical and deserve continued watching. You just might have to look hard to find information about them.
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In March 2002, a barrel of crude oil cost $25 and the price of gas was under $2. Here's my rule of thumb on the responsibility for the increase.
-- $25 to $45 from increased demand by China, India and other developing nations.
-- $45 to $70 from the war in Iraq.
-- $70 to $80 from the confrontation with Iran over nuclear weapons.
-- $80 to $95 from speculation and the desire of oil producing countries to maximize prices.
-- $95 to $110 from the drop in the value of the dollar.
-- $110 to $123, where it closed Monday, because of Venezuela.
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The situation in Venezuela shines more light on the failure of our national leadership. The speaker of the House, Nancy Pelosi, refuses to allow consideration of a trade deal with Colombia because her union backers are mad that some trade union officials have been killed in the South American country. I've heard that the union worries are overblown. I don't know the true situation.
Anyway, Colombia is the nation FARC has been revolting against for 50 years but now that the cocaine cartels have been removed, it's become one of the most stable and U.S. friendly countries in that part of the world. For the U.S. Congress to not even be allowed to consider a trade deal considered important to both sides borders on tragedy. And now that these documents have been uncovered, support for Colombia and other nation's targeted by Chavez, Peru and El Salvador, has to be greatly enhanced.
Yet, I checked some news sites and there's nothing about the trade pact being brought back to the table. No statements from Pelosi on her Web site about it.
In some ways, as I've passed along comments regarding the election and various political situations, I feel like I've ignored the overall thrust of this blog, which is that we need a complete overhaul of national leadership. The ignored Colombia trade pact is a great example of why such a thing is imperative.
