Oil prices are going up because of Obama, but not directly.

Obama is publicly approving of plans which expand the budget deficit to unsustainable levels (> 6% of GDP) for long periods of time.

People with money, including the Chinese, are coming to the conclusion that US debt is not a safe investment. They are looking for alternatives. To some extent, they’ve decided that commodities are an alternative.

Yesterday, the Treasury had a harder time than anticipated selling its latest round of treasury securities. Extrapolate out 2 years when deficits might be even bigger, and inflation is starting to come back and imagine what debt auctions will be like.

Commodities might end up being another bubble before this is all over. It will be a bubble of Obama’s (indirect) creation.

James