In light of the failing economy and mounting bailouts ..

budget deficits could explode over the next 10 years according to a new report from the Congressional Budget Office which is discussed in the Washington Times. The implication of course could be higher taxes, higher borrowing costs for consumers and businesses, an even weaker dollar and cutbacks in government spending at all levels. As I have suggested here many times, now is not the time to go out on a limb and get yourself into a deep hole.

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Making the tie between the weak dollar and the high price of oil and inflation, more are pushing for interest rate increases ..

Not one, but two separate stories on the topic from CNNMoney.com. Some think the Federal Reserve went too far in cutting rates and should reverse course and raise rates now to prevent inflation from getting (even further) out of control. It's funny how different people react to interest rate policy changes though. Some of my friends and colleagues, for example, think all interest rate cuts are good, but the dirty little secret is that interest rate cuts are mostly good for one group of people, debtors, over another group, savers. At a time when we face a crisis because of record levels of debt and the dollar gets weaker and weaker every time we spend more than we save I'm not so sure that encouraging people to become even more in debt is sound long-term policy.

On the flip side, Fed chairman Bernanke has studied in depth the causes of the Great Depression and knows that widespread bank failures don't help anyone. He and his colleague, Mr. Paulson, are certainly in a tough position now based on inaction of the very recent past. Hopefully the next time around they, or someone in their shoes, will have the foresight to put on the brakes before we've run off the cliff.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

So much for the hope of a stronger dollar and cheaper oil ..

at least for the last two days. The EU wants to raise interest rates to prevent runaway inflation (making their currency a more attractive investment than ours) and people think our economy stinks (so they don't want to invest here). All this leads to a falling dollar and rising oil prices because our friends in the Middle East want more of our devalued dollars in exchange for their oil. Simple right? Well then you also have to consider all the speculators, perhaps the same ones who previously drove the NASDAQ and housing bubbles, and the fact that many of the oil rich nations of the world are politically unstable, see Iran as one example from today's headlines.

It's a much more complex issue than many realize so I would hope everyone being critical of the oil companies would at least consider there are many other variables that are contributing to the prices we are paying at the pump. For anyone who does not realize it yet, the oil companies big profits are coming from the relatively small amount of crude oil being extracted from the ground here in the US due to the high price they can get for that crude in the global market. See my previous comments on this topic in response to a Republican editorial here and here.

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Now that GM finally recognizes that oil and other fossil fuels have a finite supply ..

maybe the last hold-outs in Garrett County will also accept this and change their behavior.

See yesterday's news story on GM's SUV and truck plant closings here.

It also seems as if the news that Americans are finally moving away from gas guzzlers to smaller more efficient cars is having a dramatic effect on the price of oil (down 10% from its recent high). Imagine that, we indicate we are going to take steps to strengthen the dollar and consumers shift purchasing behavior and oil prices drop. A novel concept.

In the wake of yesterday's news from GM a number of national columnists have penned their own views on related topics. In today's New York Times, David Leonhardt discusses the lifetime cost of ownership of various vehicles and in today's Wall Street Journal, Joseph White, makes an interesting comparison of the relative fates of the markets for over-sized SUVs and houses.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

Paulson goes begging ..

Another interesting video and story from Yahoo! Finance. Make sure you turn the sound on to hear their frank and to the point message that things need to change in a lot of respects including conservation. I applaud these guys for trying to educate the American public that we got ourselves into a big mess by borrowing far too much and being far too wasteful and need to give up begging the Middle East for help every week and start doing something to help ourselves. Hopefully the editor of the Republican Newspaper sees this as well, maybe he could gain a new perspective on why oil prices are where they are.

Don't forget to check back to Dan's Deep Creek Blog for future updates.