Wednesday, March 19, 2008

$4 gallon of gas surprises Bush

The bulletin reached President Bush toward the end of his news conference Thursday.

Peter Maer of CBS News Radio asked: "What's your advice to the average American who is hurting now, facing the prospect of $4-a-gallon gasoline, a lot of people facing ... "

"Wait, what did you just say?" the president interrupted. "You're predicting $4-a-gallon gasoline?"

Maer responded: "A number of analysts are predicting $4-a-gallon gasoline."

Bush's rejoinder: "Oh, yeah? That's interesting. I hadn't heard that."

The president, once known for his common-guy skills, sounded eerily like his father, who in 1992 seemed amazed to discover that supermarkets had bar-code scanners.

The $4-a-gallon forecasts were reported widely in newspapers and on TV in the past week. The White House press secretary took a question about $4 gas at her Wednesday media briefing. A poll last month found that nearly three-quarters of Americans expect $4-a-gallon gas.

The president, however, had difficulty grasping the possibility, even after Maer told him.

"You just said the price of gasoline may be up to $4 a gallon — or some expert told you that," Bush repeated. "That creates a lot of uncertainty."

Now that Bernanke and Paulson finally get the weakness of this economy, it's comforting to know that President Bush understands gasoline prices.

Maybe he'll even quit stockpiling the SPR! And judging by the action in commodities today, it looks like the unwinding of the great commodity bull market has started.

Leverage is being squeezed out everywhere.

Look what happened now that the President acknowledged gas is $4 a gallon. What's next? Fisher and Plosser of the Federal Reserve getting the deflation clue?

When three month T-bills hit a 50 year low yields of .5% today, it may just be the number that awakens even these guys.

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