To wit:  One Democratic response to $4 gas was to shift “obscene” profits from the oil companies, to the poor U.S. consumer.  Fact is, oil companies made less in gross margin on sales (8.3 cents) compared to electronics manufacturers (14.5 cents) computer equipment (13.7 cents) and Microsoft (27.5 cents).  One might say, well look at absolute dollars, the oil companies are rolling it in.  Fact is, oil companies made $86 billion in profit last year (gasp).  But Financial Services, the very source of the current “crisis” made $137 billion.  And information technology companies made $103 billion.  We live in a free enterprise, capitalistic system.  How does government get to say how much profit I can make as an entrepreneur or investor?  Sadly, the Republican mantra of “Drill, baby, drill” makes no more sense.  Fact is, any drilling we launch now will take years to produce results and will not have an appreciable impact on our domestic energy supply.  Nor will tapping reserves.  Nor will the lame brained idea to waive the gas tax so Americans can drive a bit more on our dilapidating highway infrastructure that is underfunded.

Petroleum is a non-renewable, fixed quantity resource.  As it gets scarcer, prices will go up.  This is a law of nature that anyone taking Econ 101 will encounter in the first pop quiz.  The solution will lie in setting proper conditions for investment and development of alternative energy sources.  It’s a point that’s a bit more sophisticated than the political rhetoric, but tapping American ingenuity, resourcefulness and yes (gasp) the pursuit of profit is gonna be the path out of the energy crunch.  And by the way, higher prices are not such a bad thing.  It forces the issue and provides other solutions to be introduced into the marketplace and begin riding down the cost curve.  A bit more sophisticated, yes.  But could we shift the discussion a bit higher up the intellectual food chain?

Okay, fast forward to today.  I believe we just observed more lame rhetoric get stepped on by the Godzilla of reality.  The Feds have been scrambling in a reactive fashion to respond to the crisis in financial markets. (Which in this writer’s opinion makes $4 gas look like child’s play.)  Just about anyone who knows anything about the topic will agree this is the worst situation since the Great Depression.  The specific actions taken with respect to Fanny and Freddy, Lehman Brothers and AIG were “one offs” as officials scrambled to prevent things from getting worse.  These were not comprehensive, systematic actions.  Yesterday, rumors of just such an approach surfaced.  One can argue the merits of the proposal all day long, but suffice it to say some pretty bright financial professionals, people who are not politically born and bred, are behind the design.  Immediate response by the Speaker of the House  and her colleagues was to berate the idea, claiming the American taxpayer should not be saddled with bailing out mistakes of the fat cats on Wall Street.  The system is all the fault of the current administration (perhaps) and the answer lies in more and better regulation.

Well, a briefing just occurred for the politicos, staged by Treasury and Federal Reserve officials.  My hunch is it was akin to explaining how the corral gate is open, all the horses have run away, and looking to more and better regulation is like closing the corral gate.  Only problem is, the horses are still running away and getting farther and more scattered by the second.  Sure, lets keep the gate closed but let’s round up the horses first or we’ll be on foot for the foreseeable future.  When a potential failure of AIG could be described as the financial and economic equivalent of nuclear winter, I bet the dawn of reality set in.

Guess what?  Today the Speaker of the House is all for the plan.