High Oil Prices, Plummeting Home Values and the State of Middle Class America

On June 25, 2008, the New America Foundation brought together Leo Hindery, Managing Director at InterMedia Partners and former senior economic advisor to the John Edwards Campaign, and Tom Gallagher, Senior Managing Director at International Strategy and Investment Group, to discuss the causes behind skyrocketing oil prices and their implications for American middle-class families. An MP3 audio recording can be downloaded below, while video is available at right.

Hindery began by laying out research pointing to speculative investment as the reason for between one third and one half of the recent oil price increases. Sovereign wealth funds are adding to this distortion. Many of these funds, often under the control of non democratic nations such as Saudi Arabia, China, and Russia, throw their financial weight around for geopolitical as opposed to financial benefit. These funds, combined with capital controlled through various other governmental means, total thirteen trillion dollars in value.

Current U.S. policies only demand governmental review in the case of foreign investment into sensitive technologies or infrastructure. In an era of global capital flows, these policies need to be expanded to include review of foreign investment in U.S. financial markets. The approval process must also be made more stringent, without the current bias towards automatic approval.

Gallagher laid out both his near term predictions for the US economy (limbo in the U.S. and fast economic growth fueled by irresponsible monetary policy in much of the developing world) and his longer term speculation on the direction of political thought in America. Will ’08 be a reversal of ’80 with regards to a reversal of the past two decades’ convention of limiting government influence? As globalization has increased individuals’ perceptions of personal and professional instability, there has been increasing demand for policy safety nets. These feelings seem to be reaching a crescendo in this election season.

-Ian McAllister, Research Intern, Economic Growth Program See map: Google Maps

Participants

Featured Speakers

• Leo Hindery
  Managing Director, InterMedia Partners
  Former CEO, AT&T Broadband and YankeeEntertainment & Sports Network

• Tom Gallagher
  Senior Managing Director
  International Strategy and Investment Group, Inc.

• Steve Clemons
  Director, American Strategy Program, New America Foundation
  Publisher, www.TheWashingtonNote.com