French President Nicolas Sarkozy said on Tuesday the European Union should consider capping sales taxes on fuel products if oil prices rose further but his proposal got short shrift from Brussels. Sarkozy also suggested siphoning off extra revenues from sales taxes on petrol to create a fund for professionals, such as fishermen protesting about the price of fuel, who are hardest hit by the jump in energy prices.

“Oil has gone up 60% in 6 months putting big pressure on US household budgets,” says Bill Bonner in The Daily Reckoning.

“Now, instead of taking the hint – that it’s time to go in the other direction, by raising rates to head off rising prices – speculators think Ben Bernanke will continue battling deflation with further rate cuts. Maybe, maybe not… but our guess is that it doesn’t matter.

“Even if the Fed raises rates, it is unlikely to raise them enough to block the consumer price inflation already in the pipeline.”

The biggest laugh The Mogambo Guru has had all week was from Bloomberg.com reporting that “European consumers are ‘suffering as surging food and energy prices erode the value of their wages’, finance officials said.” The article continues that this is “urging governments to boost spending to help the poorest deal with the fastest inflation in 16 years.”

“Consumers are suffering because the stupid European governments boosted spending for a decade or more, the money financed by debt, and it is all of this spending that has made the purchasing power of the euro to fall,” says Mogambo. “And now the governments are going to boost spending some more Hahaha!”