Month: May 2011

The House of Representatives just voted down a measure to raise the debt limit to more than $14 trillion.  The vote was more than three to one against the bill.  That doesn’t mean everyone who voted against it didn’t want the debt ceiling raised; many probably voted against it because it required that $2 trillion in spending cuts be instituted to offset the additional $2 trillion in debt the bill would have allowed.

Am I the only one that doesn’t understand how people can say that if we don’t raise the debt ceiling, confidence in the economy will fall?  If that’s the case why don’t we double the debt limit to $24 trillion?  That would REALLY inspire confidence!

Actually, confidence comes from being in a strong financial position with a lot of cash in savings and investments and very LITTLE DEBT.  At least that’s the way things work in the real world.  Of course, Washington DC often doesn’t act like it is in the real world.

I wish I had confidence that the members of Congress would do something substantive about the national debt, but even the most severe budget hawks among Republicans seem unable to maintain that stance in the face of liberal politician and press demagoguery.

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There’s a broken record in the media right now.  It’s playing “Obscene Profits…Obscene Profits…Obscene…”  So I got to thinking, how do you define “Obscene Profits?”

In my last post, I pointed out that many people, including many politicians and reporters who babble about the “Obscene Profits” the oil companies are making right now, don’t understand the difference between profit and profit margin.  The dollar amount of profit can be huge for companies like Exxon or BP, but their profit margin (profit as a percentage of revenue) might still be alarmingly small.  After all, there are times that any business will experience a loss, so the times of profit help balance that out.

Also, I pointed out that Government often makes more money on gasoline than oil companies, because government collects taxes without any of the risk the oil companies take.  Thus the title “Can you say H-Y-P-O-C-R-I-S-Y”.

So, what are “Obscene Profits”?  Undoubtedly, the people who use that term are statists who love government or non-profits and think any profit at all is dirty.  However, when a hard-working couple fills their 401k’s with the stocks of public companies, they are counting on those companies making a profit so they won’t starve to death during their declining years.  They would prefer that the profits be as “obscene” as possible.

Also, when a young person get her first job right out of college in a company that has a “last-hired-first-fired” policy, she certainly hopes that the company makes a profit, the more “obscene” the better, or she may be moving back with Mom and Dad.

And when an entrepreneur works 18-hour-days 6 or 7 days a week for 10 years, investing his lifeblood and borrowing every dollar he can, until he finally sees black figures on the bottom line, he needs to start making a profit consistently, or why would he do it?

Why would anyone take the risk of working and investing unless there was the promise of a good return, and why would we begrudge anyone generous rewards of their labors?  If we deny business the rewards of capitalism, the flow of goods and services we count on would cease.  And then where would we be?

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Perhaps nothing illustrates better how Democrats don’t understand economics than the effort now underway to punish the oil companies for the current increases in gasoline prices.  First suggested by President Obama, the Senate tried but failed to pass a bill taking certain tax breaks away from specific large oil companies.

The measure was defeated procedurally and may yet pass.  It specifically targets the five largest oil companies and, since the tax breaks apply to most businesses, not just oil companies, was a blatant attempt to punish these companies for changes in the market, some of which are beyond the oil companies’ control.

Did it never occur to the politicians that raising taxes on companies that produce gasoline can only cause gasoline prices to rise further?  Such obvious logic appears lost on the Democrats, who function on the economically illiterate level of a janitors union member, always sure some faceless, corner-office executive is cheating them just because they’re mean.

The current cliche is that oil companies are making “record profits”.  Trouble is, the dollar amount of profits is meaningless unless you also know the profit margin, which is the percentage of profit compared to gross revenues.  Oil companies actually have razor-thin profit margins and the taxes received by Federal and state governments on each gallon of gasoline is often greater than the profit made by the oil companies.

So the president and the Senators who want to punish the oil companies because gas prices have risen are actually netting more money on each gallon than the oil companies are.

Can you say “H-Y-P-O-C-R-I-S-Y”?

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After the execution of Osama bin Laden, I heard a report which may not have been connected, but it seemed to be.  I think it was ABC News which reported gleefully that gasoline prices were about to plummet 25 cents to levels we haven’t seen since, well, March.  The jubilant tone of the report gave the unmistakable impression that President Obama had vanquished Public Enemy No. 1 and, could it be?  Gasoline prices, the one thing that could harm him in the 2012 reelection bid, were about to fall!

True enough, crude oil prices did fall from about $100 to just above $80 per barrel, prompting prognosticators to predict a corresponding drop in gasoline prices.  Surely the politics gods had smiled on the President and the Democrats!

However, today the price of crude oil futures was over $100 again and average national gasoline prices had fallen less than a penny.  It is true that refineries are about to ramp up production, which is one of the factors that led to the rosy predictions of falling crude prices, but now we have another problem.

It seems that, in addition to the murderous tornadoes that sliced across the South two weeks ago, we are now faced with near-record flooding of the Mississippi River and its tributaries, which are threatening oil refineries in Louisiana with Katrina-like shutdowns.  Thirteen percent of the nation’s domestic fuel production comes from the 11 threatened refineries.  Hence the return to $100-a-barrel crude.

According to this article, futures traders have given up on $80-a-barrel crude prices and are thinking of $100 as “the new $80” and the bottom of the trading ladder.

Yikes!

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I’m often critical of President Obama because I don’t like his world view or his policies one little bit, but today I have to say, he has hit all the right notes with the daring and dangerous raid that resulted in the death of Osama bin Laden.  My congratulations and thanks to the president.

In many ways, this operation was out of character for Obama.  It was well-conceived, planned in detail and executed flawlessly.  No American lives were lost, which is astounding considering the potential for disaster.  At one point it appeared a “Black Hawk Down” disaster could be in the making, when one of the two helicopters’ engine failed and the bird had to be downed and destroyed.  But that eventuality had been planned for and the courageous Navy Seals were able to get in, kill and remove the body of Public Enemy No. 1, and get out to safety.

Also uncharacteristically, no one notified the Pakistanis that we were going in.  That is pretty much an act of war among diplomats, but this was not a time for diplomacy.  Now, the Pakistanis have “some ‘splainin’ to do”, since bin Laden had apparently been living in his large comfortable compound for years, with retired Pakistani military officers living all around him.

Perhaps the thing that will be most unsettling to Obama’s leftwing base is that the intelligence which made the raid possible came directly from the “enhanced interrogation techniques” applied at Guantanamo Bay.

One college student among those who poured out to celebrate in Times Square after the announcement by Obama commented, “Now we can bring our soldiers home from Afghanistan.”  Wrong.  Would that that was the take-away from this, but it is more likely that the War on Terror will escalate as true believers plan retribution.

However, bin Laden was still an important symbol and the fact that America persisted through three presidential administrations to pursue and dispatch the founder of al Qaeda must give at least some extremists pause to realize that, as Obama said, “When Americans set our mind to do something, we can do it.”

One of my Facebook friends correctly noted that it would have been unfortunate to mark the 10-year anniversary of 9-11 with Osama bin Laden still at large.  Now that remembrance will have a completely different flavor.

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We were all amazed and saddened by the tornadoes that ravaged the Southeast last week.  Amazed by nature’s ferocity and saddened by the loss of nearly 350 lives at last count.  I pray for those who are grieving the loss of loved ones, their personal belongings and, in many cases, their livelihoods.

NBC’s Brian Williams anchored a special Friday night that was very well done.  It showed much of the amateur as well as professional video of the storms as well as some poignant stories of survival.  It will take many months, if not years, to recover for many of those affected.

Then toward the end of the program, Williams apparently couldn’t resist pandering to the Climate Change hoaxers.  I could hardly believe my ears when, in an interview with The Weather Channel’s Jim Cantore (whom I’ve met during a brief stint working at the Channel’s Atlanta HQ), Williams asked something like, “What have WE done to cause this?”

Huh?

It was fascinating to watch Cantore try to answer without insulting Williams.  Here’s a paraphrase: “The scientist in me says it isn’t settled,” Jim began, “but in looking at this devastation, I have to wonder what’s going on.”

In other words,”There’s absolutely no proof that anything man does or has done leads to this kind of natural phenomena, but my HEART wants to do something.”

When I worked at the Weather Channel, it was at the peak of the El Niño hysteria, and the top meteorologists there circulated a memo to all Weather Channel employees that we were NOT under any circumstances to imply that El Niño or Global Warming or Climate Change were caused by human activity.  There’s just no scientific basis for it (see my earlier posts here and here).

Williams himself made the point that this was the worst tornado outbreak since the 1930s.  And we all know how bad the SUV’s polluted back then!  Put that together with the fact that we now know that average earth temperatures were higher in the Middle Ages than they are now and it’s obvious  that the idea that our lifestyle somehow causes weather events like tornadoes or that altering our lifestyle could alter the weather is just nonsense.

The hatred for Freedom and Free Enterprise Capitalism is so great on the left that they will miss no opportunity to make the point that we’ve got to change how we live, including shamelessly taking advantage of a tragic natural disaster.  To do so cheapens the human tragedy with political pandering.

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