Nov 21 2008

Scary Times

I’ve stopped paying attention to the stock market these days. Oh, I keep tabs on it frequently but I’ve removed the Windows Vista gadget I used to have in the sidebar that showed me how the market is doing in a “realtime” basis. It’s too depressing. I’ve already done all that I can at this point to shore up my own finances. Back when this plunge was first starting I moved my 401k investments out of stocks and into bonds and money market funds. I’ve moved my wife’s IRA to bonds. Where I can’t do that I’ve left the accounts alone with the hope that when the market rebounds…which it will…I will at least recover my investment (albeit I may be an old man by then) or make good on it in a big way.

What disturbs me is the lack of leadership at the top — both from the White House and from Congress — in addressing this issue. After asking for $700 billion dollars to buy these toxic mortgage backed securities that helped drive this mess, Treasury Secretary Paulson has now decided that doing so is too complicated and would not provide the needed effect of calming the markets and providing some sense of confidence. Instead, he’s investing that money in the banks themselves. Unfortunately, the banks apparently are intent on either sitting on that money (like the American consumer is doing with whatever cash reserves they have) or using it for acquisitions and mergers. That, of course, hasn’t helped at all nor has it resulted in the much needed relaxation in the credit markets. The idea that this money would help cause a “trickle down” effect that would settle the upset American economic market seems to have failed. I, personally, would posit that the Reaganomic idea of “trickle down” has now been clearly shown to be the “Voodoo Economics” that President George H. W. Bush once claimed. Perhaps Secretary Paulson should use the other half of the $700 billion dollars that he’s got in a “trickle up” idea — instead of giving the rest of the bailout money to banks and other financial institutions give every household in the country $100,000 and let them spend it to help jump start the economy. Since “trickle down” doesn’t work…perhaps “trickle up” will.

I read Paul Krugman’s latest op-ed piece in the New York Times and it doesn’t really give me all that much hope. Yet he’s right…we’ve got a complete drift in economic policy due to an administration that is apparently unsure of what to do (or unwilling to do what it needs to do) and a Congress that is biding it’s time…for what I don’t know. What I do know is that the lack of action by the administration (or their claims that they are not sure of what action to take next) as well as the statements made by Congressmembers such as Senator Carl Levin yesterday are going to really drive the American consumer into a bunker mentality that perception will become reality. Consider this statement made by Senator Levin yesterday

We cannot allow the issue of which source of already appropriated funds will be used for the essential purpose of preventing the economy from sliding into a depression, which is a real possibility if one or more of the domestic auto companies goes under, given the impact of the auto industry on millions of jobs, on suppliers that are in most or our states and on all of our communities which have Big 3 auto dealers.

Levin, Carl, “Statement of Senator Carl Levin on Bipartisan Agreement to Support Auto Industry,” November 20, 2008, found at http://levin.senate.gov/newsroom/release.cfm?id=305179

I’m certainly not claiming that Senator Levin is stating that we are already sliding into a depression but such statements can cause real fear in American consumers and they will respond accordingly — by pulling back even further on whatever spending they are already doing and that will, in turn, contribute to the slide into a depression.

What’s happening now is a mess created by this administration with it’s lack of real economic policy, by a Congress that is, and has been for years, truly partisan, and by a Fed Policy Board Chairman that argued too much for allowing the markets to regulate themselves. But, let’s be honest, it’s also caused by an American consumer that bought on credit as far as they could go and by a system that threw all the basics of lending out the window in the pursuit of short term riches. We have forgotten the very basic concepts of economics — you don’t get something for nothing. And now, many more of us may well lose everything.

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Nov 16 2008

Enough Already!

Published by under Energy Policy,Thoughts

Once again President Bush has shown us just how pathetic and partisan he really is. Here it is, September, very little time left in this congress to get much of anything done and the House of Representatives passes an energy bill that has bipartisan support. It includes a little of everything: it allows for offshore drilling, includes incentives for renewable energy, requires oil companies to drill for oil on lands that they already lease from the government, and requires the government to release oil from the Strategic Petroleum Reserve (SPR). And what does President Bush and the White House call it? “A waste of time” that’s what.

President Bush doesn’t like it because allows drilling between 50 and 100 miles offshore…not the 3 mile limit that he and the Republicans prefer. President Bush doesn’t like it because it pays for itself through a repeal of some of the tax cuts that the energy bill from 2005 gives to the oil industry. President Bush doesn’t like it because it doesn’t give states an incentive to allow for drilling off their coasts. In general President Bush doesn’t like this bill because it doesn’t give his buddies in the oil industry (who are raking in money hand over fist while oil is high) a free reign to do whatever they want, wherever they want without any consequences.

Instead of thinking…”Gee…this is about the best we’re going to get with this Congress” he would rather spit on it and play the “Blame the Democrats” game by saying that the bill was laced with “poison pills” and that House Democrats “‘lack of seriousness about expanding access to the vast domestic energy resources’ off U.S. coasts” (CNN, “Administration rips Democrats’ energy bill as waste of time“, CNN.com, September 17, 2008 ). This has nothing to do with actually trying to break the gridlock and the deadlock in Washington politics. This is just stupidity on the part of a President who has managed to screw up America more than it ever has been in the past. I notice how people in my community get all worked up about how “bad Clinton was”…well, at least under Clinton we had budget surpluses, we were growing the economy, we were respected in the world community, and we were paying down the national debt. Bush has managed to erase all of that and more!. We borrow from the Chinese to pay the Saudis for their oil, we have budget deficits galore, the national debt has grown tremendously, we are not respected in the world, we are in the middle of war that we (and the rest of the world) were lied to in order to gain support, and our civil rights are being eroded daily.

It’s time that President Bush stop blockading any effort to achieve a bipartisan move forward on the energy issue and support what he can get rather than stonewall based on ideology and sheer stupidity. If he wants to save any part of his legacy (whatever there may be left) then he needs to get his head out of the ground and do something positive.

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Aug 01 2008

Here We Go Again

Published by under Energy Policy,Thoughts

In another push to put the blame of high oil and gas prices on the Congressional Democrats President Bush yesterday urged congress to move quickly on lifting the ban on domestic offshore oil drilling. The Senate is currently gridlocked on a variety of energy bills with the Republicans claiming that they want an “open debate” and accuse the Democrat majority in the Senate of limiting amendments to avoid a vote on offshore drilling (Moscrip, Lara, “Bush pushes Congress on oil drilling“, CNN Money, July 30, 2008 ).

The President remarked: “American drivers are counting on Congress to lift the ban and so are American workers…I’ve lifted the ban, I’ve done my part, all Democrats have to do is allow a vote, they should not leave Washington without doing so.” (Moscrip, Lara, “Bush pushes Congress on oil drilling“, CNN Money, July 30, 2008 )

Sorry Mr. President…you haven’t done your part. Your part was to devise an energy policy for the 21st century that would have us weaning ourselves off of oil and gas and moving to more renewable energy technologies. Your administration has failed miserably at that part and now, when the chickens come home to roost, you want to blame Congressional Democrats for the whole situation. Remember, the Democrats have only controlled Congress for just under 2 years. You’ve been at the helm of the ship for almost 8 years. Our reliance on oil and foreign energy sources should have become painfully obvious after September 11, 2001 and you had the opportunity to lead us away from that reliance to a more independent energy future. But you chose not to. If anyone is at fault it is your administration and the Republican Congressional majority (as well as previous administrations and their failure to act as well).

Now the Congressional Democrat response is pretty lame as well. Senator Harry Reid suggested that the President “focus on releasing oil from the strategic oil reserve, speeding up production in areas already open for drilling and cracking down on oil traders.” (Moscrip, Lara, “Bush pushes Congress on oil drilling“, CNN Money, July 30, 2008 ) To me this sounds so weak as a response. Releasing oil from the strategic oil reserve will do nothing to really impact the cost of a barrel of oil and cracking down on oil traders falls into the old argument that it’s the “evil” oil speculators who are responsible for the current cost of oil. No Senator Reid…it’s something called supply and demand market forces. Stop playing populist politics at the level of the President and rise above the fray. Be honest.

As for speeding up production in areas already open for oil drilling…that I agree with. Oil companies are sitting on a lot of leases and doing nothing with them because they figure that the President and this administration will do everything in their power to get them more land (whether it’s offshore or not)…and then they can sit on that as well. The oil companies are raking in the profits at this point…why would they want to see the price of oil go down? Consider that Exxon-Mobil just announced that their second quarter profit rose 14% to 11.68 billion dollars (Werdigier, Julia, “Rising Oil Prices Lift Exxon to Record Profit“, The New York Times, August 1, 2008 ) Even if Congress repealed the ban on offshore oil drilling it would have zero impact on prices at the pump today. It takes years to develop a new oil field to the point that the oil reaches the market and on top of that, remember that this is a global market. The oil found in any new offshore field could just as easily be sold to India or China or to some other country who’s willing to pay top dollar for that oil. Americans need to tighten our belts, conserve, and develop and deploy new automotive technologies like better hybrid cards, electric cars, wind power and solar power to help reduce our consumption of oil and gas. That’s the long term solution to this energy crunch. But don’t ask the President or Congress to act…they’re much more interested in playing politics than doing something substantive to address this crisis.

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