Here are my thoughts on the real world effects of this Cap and Tax scheme passed by congress on Friday.
1. Major refiners will simply move their refining operations to other countries with lower labor costs and lower environmental restrictions. This will mean a much higher cost at the pump for Gasoline due to logistical issues and it will also exacerbate the regional shortage problems associated with the "boutique blends" of gasoline that each state require.
2. By using carbon offsets it will cause the price of lumber to increase dramatically. This will raise the cost of furniture, cabinetry, and especially new housing. The reason is one of the principal carbon offsets will be reduced logging. So expect higher housing prices across the board from New Homes, Existing homes, rentals and apartments.
3. Costs of electricity will skyrocket. The limitation on carbon release will force the power companies to buy offsets and or credits from each other to allow them to continue to generate electricity. They will also have to increase funding for alternative generation facilities which will along with all other expenses be passed along to the consumer.
4. The mandate for the use of "Biomass" will reduce our agricultural land that is now growing food crops to more use of Ag land for biomass fuel crops. this will mean a much higher food price at the grocery store. While we are paying these high prices the use of biomass will not reduce co2 being pumped into the atmosphere. As a matter of fact, most biomass produces more CO2 than burning hydrocarbons.
5. Added to this will be the additional transportation costs for goods and services used in the United States at the expense of our consumers and jobs. Higher prices means less demand which means less employment. I see no job improvement due to this bill. I see a net jobs loss in the petrochemical industry, logging, coal, retail, manufacturing, distribution etc.
There will be no part of our economy that does not feel the sting of this bill. When Nancy Pelosi took to the floor on Friday to push for this bill she said it all boils down to 4 words, Jobs, Jobs, Jobs and Jobs. As was pointed out in NFO Jobs for Brazil, Jobs for China, Jobs for Mexico, and Jobs for India. That is what is in this bill.What I would like to see is an independent investigation of the investments of the crafters of this bill. I know for one the Queen Nancy is an investor with T. Boone Pickens in his windmill and natural gas scheme. That entire business depended on this bill being passed and it will make them an absolute fortune. How many more Democrat pols have their muzzle in the oat bag of Climate Change industry?
Side Note: As of Saturday morning after the vote no one in Congress had even read the bill. It was still sitting in the Clerks office and had not been updated with the additional 300 pages of amendments.
Sunday, June 28, 2009
Wednesday, May 6, 2009
Government theft!
Well they have finally done the unthinkable. The Obama administration is trying to steal from the bondholders of Chrysler in favor of the unsecured creditors. In the latest press release from the Administration they are wanting the bond holders (secured creditors) to receive about 10% of the company stock in exchange for forgiving the debt. These are the lenders who loaned money at prefered interest rates in exchange for collateral in the assets of Chrysler. The UAW pension fund is an unsecured creditor. In exchange for their forgiving a portion of their unsecured debt they will receive 55% of Chrysler stock! This means that Chrysler will now be owned by the very people who ran it into the ground and made them unprofitable in the first place. However since the UAW gave over 68 million dollars during the last campaign season to Democrats this is just payback.
In a normal bankruptcy proceeding in the corporate world the order in which the assets are divided are written in law. First to get paid are the debenture holders. They are the ones who write the "Commercial Paper", IE short term loans to keep cash flow going. Second in line are the bond holders third in line are the unsecured creditors and then preferred and common stockholders.
The Obama administration is forcing an agreement in which this order is not upheld and preference is given to the unsecured creditors over the bond holders. Since many of the bond holders are also TARP recipients they are not going to balk. They have been threatened by the administration. However, there are a group of bond holders who are NOT TARP recipients and they are holding out. They do not want .30 on the dollar and they should not settle for it either. The Obama administration has threatened them that if they do not go along they will sick the White House press corp on them and ruin their reputations. It has already started with Obama's attack on them last week calling them "Vultures". This is serious business.
If we allow this to stand we are going to see our mortgage interest, corporate lending and automobile lending interest rates skyrocket. If lenders cannot count on the existence of the rule of law in regards to their collateral standing for the debt then mortgage, corporate and auto loans will be at the same level as credit card interest rates.
How many jobs will be lost and how many homes will be foreclosed if we allow this to stand?
In a normal bankruptcy proceeding in the corporate world the order in which the assets are divided are written in law. First to get paid are the debenture holders. They are the ones who write the "Commercial Paper", IE short term loans to keep cash flow going. Second in line are the bond holders third in line are the unsecured creditors and then preferred and common stockholders.
The Obama administration is forcing an agreement in which this order is not upheld and preference is given to the unsecured creditors over the bond holders. Since many of the bond holders are also TARP recipients they are not going to balk. They have been threatened by the administration. However, there are a group of bond holders who are NOT TARP recipients and they are holding out. They do not want .30 on the dollar and they should not settle for it either. The Obama administration has threatened them that if they do not go along they will sick the White House press corp on them and ruin their reputations. It has already started with Obama's attack on them last week calling them "Vultures". This is serious business.
If we allow this to stand we are going to see our mortgage interest, corporate lending and automobile lending interest rates skyrocket. If lenders cannot count on the existence of the rule of law in regards to their collateral standing for the debt then mortgage, corporate and auto loans will be at the same level as credit card interest rates.
How many jobs will be lost and how many homes will be foreclosed if we allow this to stand?
Thursday, April 23, 2009
Madoff and Social Security
What makes the Madoff scandal any more scandalous than the current Social Security ponzi scheme we have in the US? A Ponzi scheme is where you promise a return on invested money and instead of investing it, you spend it. Later you take money from "new" investors to pay the old investors so that no one will be suspicious. This is what Madoff has done. He took billions of dollars in return for a promise to invest the money. He showed good returns to his victims for several years but the returns were phony. He was using the newly invested money from new investors to pay the old investors and on and on it went until the whole thing imploded as they always do.
Social Security in the US is nothing more than a Ponzi scheme writ large. The Federal Government took our money in return for a promise to pay. However instead of investing the money they have spent it and issued IOU's to the Social Security trust fund. They are using tax reciepts of current workers to pay the retirement benefits of the older workers. Outside of the ability to tax the workforce, what makes the Social Security system any better than Madoff's Ponzi Scheme?
Social Security in the US is nothing more than a Ponzi scheme writ large. The Federal Government took our money in return for a promise to pay. However instead of investing the money they have spent it and issued IOU's to the Social Security trust fund. They are using tax reciepts of current workers to pay the retirement benefits of the older workers. Outside of the ability to tax the workforce, what makes the Social Security system any better than Madoff's Ponzi Scheme?
A Nuclear Free World
Imagine for a moment if there were no nuclear weapons developed at the end of WWII. What would have been the consequence after the invasion of Japan and the conclusion of the war? We know that the US was preparing to launch a ground assault on the Japanese mainland to end the war and there would have been massive casualties on both sides as a result.
The question in this post is not about the results of the ground assault on Japan or the conclusions of WWII but what would have been the outcome in world events had there never been a nuclear deterrent?
My thoughts are that the existence of the Nuclear deterrent has kept the peace between the major powers on the earth since 1945. The implied threat that any direct confrontation between the US and Soviets would go nuclear kept everyone in their corners. Without the threat of nuclear war I believe the US, Western Europe and Japan would have squared off with the Soviets and eventually China in a war that would have made WWII look like a walk in the park.
In the direct aftermath of WWII there were people within the power structure of the US Government that wanted to immediately launch an attack against the Soviet Union while they were in a weak state. Cooler heads prevailed and it never gained sufficient traction to become policy. However in the decades after the tensions would have been so great that action would have taken place. The world would be a very different place.
Now suppose Obama gets his fantasy vision of a nuclear free world. What would prohibit the powers of the world as well as the minor powers from squaring off? What would prevent India from overrunning Pakistan or war from breaking out once again in Europe? What would prohibit the Chinese from trying to take Siberia from the Russians for the oil? Is this what the future holds?
The question in this post is not about the results of the ground assault on Japan or the conclusions of WWII but what would have been the outcome in world events had there never been a nuclear deterrent?
My thoughts are that the existence of the Nuclear deterrent has kept the peace between the major powers on the earth since 1945. The implied threat that any direct confrontation between the US and Soviets would go nuclear kept everyone in their corners. Without the threat of nuclear war I believe the US, Western Europe and Japan would have squared off with the Soviets and eventually China in a war that would have made WWII look like a walk in the park.
In the direct aftermath of WWII there were people within the power structure of the US Government that wanted to immediately launch an attack against the Soviet Union while they were in a weak state. Cooler heads prevailed and it never gained sufficient traction to become policy. However in the decades after the tensions would have been so great that action would have taken place. The world would be a very different place.
Now suppose Obama gets his fantasy vision of a nuclear free world. What would prohibit the powers of the world as well as the minor powers from squaring off? What would prevent India from overrunning Pakistan or war from breaking out once again in Europe? What would prohibit the Chinese from trying to take Siberia from the Russians for the oil? Is this what the future holds?
Fascism in the Modern world!
Why bring up an archaic economic / political system in today's world? First lets examine Fascism in its actual definition. We have imposed a false definition of Fascism to be synonymous with Nazism. That is not what Fascism is and never was. The Nazi's adopted Fascism to split the difference between the socialism that was prevalent in Europe and the threat of communism which was gaining popularity. Among the nations in the 1930's who had adopted Fascism were Italy, Germany, Spain, and Greece.
So what is fascism? Fascism is an economic system that gives the facade of free markets but is actually controlled by government. It took the form of private ownership of business but government control of labor, production, distribution, and credit (Flow of money). They first eliminated small businesses by setting minimum funding requirements, abolishing all small business that did not meet these minimum standards. They then took virtual control of private business by setting up "Advisory" boards that controlled everything from wages to production. The government decided who worked where and what they were to be payed and what products they had to produce.
Fascism also virtually took control of business and private property by making the rule that all activity of a business or private individual had to be done with the good of the masses as the first priority.
So why bring this up now? Glad you asked. We currently have a President of the United States that has fired the CEO of one of our major manufacturers and replaced the board of directors with a hand picked group. The new CEO has said that his new boss would be the "Automotive task force". His reall boss should be the stockholders (owners of the company). This automotive task force has also decreed at the order of the President that in the future General Motors will have to produce "Green Cars" that no one wants to buy. So we have the government control of private business, the means of production, wages through the National Labor Relations Board and the flow of money to General Motors.
This brings us to the banks. The Government through the Treasury department and the Federal Reserve board has effectively taken control of the banks. In order to accomplish this they did not need to take over all banks. By controlling the larger banks IE Citigroup, Bank of America, Morgan Stanley Chase. They can take virtual control of all other banks. This is because of the methods used to flow the money supply from the Federal Reserve bank to the smaller banks. As long as the government has the TARP money in the larger banks they control the flow of money to private enterprise. So far the government is refusing to allow the Banks to repay the TARP money guaranteeing the government control of the banks.If the current trend in the United States continues using crisis after crisis to take more and more of our liberties and taking more and more control of our economy we will end up in a full fledged Fascist system. Here is a link to a good explanation of Fascism and the eventual outcome of such a system.
http://www.econlib.org/library/Enc/Fascism.html
So what is fascism? Fascism is an economic system that gives the facade of free markets but is actually controlled by government. It took the form of private ownership of business but government control of labor, production, distribution, and credit (Flow of money). They first eliminated small businesses by setting minimum funding requirements, abolishing all small business that did not meet these minimum standards. They then took virtual control of private business by setting up "Advisory" boards that controlled everything from wages to production. The government decided who worked where and what they were to be payed and what products they had to produce.
Fascism also virtually took control of business and private property by making the rule that all activity of a business or private individual had to be done with the good of the masses as the first priority.
So why bring this up now? Glad you asked. We currently have a President of the United States that has fired the CEO of one of our major manufacturers and replaced the board of directors with a hand picked group. The new CEO has said that his new boss would be the "Automotive task force". His reall boss should be the stockholders (owners of the company). This automotive task force has also decreed at the order of the President that in the future General Motors will have to produce "Green Cars" that no one wants to buy. So we have the government control of private business, the means of production, wages through the National Labor Relations Board and the flow of money to General Motors.
This brings us to the banks. The Government through the Treasury department and the Federal Reserve board has effectively taken control of the banks. In order to accomplish this they did not need to take over all banks. By controlling the larger banks IE Citigroup, Bank of America, Morgan Stanley Chase. They can take virtual control of all other banks. This is because of the methods used to flow the money supply from the Federal Reserve bank to the smaller banks. As long as the government has the TARP money in the larger banks they control the flow of money to private enterprise. So far the government is refusing to allow the Banks to repay the TARP money guaranteeing the government control of the banks.If the current trend in the United States continues using crisis after crisis to take more and more of our liberties and taking more and more control of our economy we will end up in a full fledged Fascist system. Here is a link to a good explanation of Fascism and the eventual outcome of such a system.
http://www.econlib.org/library/Enc/Fascism.html
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