Oil, oil, toil and trouble

A couple pieces talking about oil:

First off, Austin Bay blogs about one man's pain being another man's gain:

The London Times reports:

'…Iraq still has good economic prospects, thanks to the high price of oil, the International Monetary Fund said yesterday.

In its first assessment of the Iraqi economy in more than 25 years, the IMF reported that the interim Government needs to tackle chronic security and political problems if it hopes to rebuild the country. The cost of security and insurance cover swallows 30 to 50 per cent of reconstruction funds.'

One man’s irony will be another’s nifty conspiracy theory — a jack in oil prices rescues Baghdad.

On the not-so-encouraging front is this from Irwin Seltzer at The Weekly Standard:

So as Greenspan prepares to exit the scene, he sees an economy that is growing rapidly, a labor market that is tightening, an intractable trade deficit and a dollar that is weakening, house prices that are in his view "frothy" in some areas, and fiscal policy that is loose and getting looser. He also faces his now-famous "conundrum"--the failure of long-term interest rates to keep pace with the increases he has mandated in short-term rates.

So he will want to continue raising interest rates, not only to the "neutral" level that neither heats nor cools the economy, but to a level that will actually cool things down. But high oil prices make it more difficult to decide just what to do, since they can act as a drag on economic growth as well as a source of inflationary pressure. That's called stagflation--not the legacy that Greenspan cares to leave as he gives up life at the Fed.

Did he really say the 'S' word?