A Healthy Dose of Economic Reality

Just in case you have a friend who still believes that anyone elected in the 2008 election is going to wave a magic wand and make things all better in four years, here is a little something that you can send them that just might smack them back to reality.

Yesterday the Wall Street Journal reported:

"An Abu Dhabi sovereign-wealth fund has purchased a majority stake in the Chrysler Building, an iconic New York City skyscraper."

photo courtesy of Wikipedia

Reuters is reporting:

" Home foreclosure filings jumped 53 percent in June from a year earlier, although they were down 3 percent from May, and foreclosures are expected to rise further, real estate data firm RealtyTrac said on Thursday.

Foreclosure filings rose on an annual basis in 39 states to a total of 252,363 properties during the month, with Nevada, California, Arizona and Florida posting the highest foreclosure rates.

One out of every 501 U.S. households received a notice of default, auction sale or bank repossession in June, RealtyTrac said.

'June was the second straight month with more than a quarter million properties nationwide receiving foreclosure filings," said James J. Saccacio, chief executive officer of RealtyTrac. "We have not yet reached the top of this foreclosure cycle.'"

U.S. News & World Report is reporting:

"As if the U.S. economic slump, the housing crisis, surging oil and food prices, and a general sense that things are not going all that well weren't enough, a new study forecasts that China will become the 'pre-eminent world commercial influence' by 2035, when it surpasses the U.S. economy. The study released today is by Albert Keidel, who specializes in China economic issues at the Carnegie Endowment for International Peace. It is clear that China's economic juggernaut will have far-reaching implications for economic, diplomatic, and military matters in coming years--the subject of Keidel's study titled 'China's Economic Rise--Fact and Fiction.' "

Just one day before the Nation's birthday celebration, NPR reported:

"62,000 jobs were cut from company payrolls in June, and the number of laid-off workers seeking benefits also rose sharply last week in further signs of a slowing U.S. economy.

The separate Labor Department reports Thursday seemed to underscore that the economy is in a substantial downturn, if not a recession.

The cuts in June marked the sixth straight month that employers have trimmed payrolls. Gains in education, health services, leisure and hospitality, and government were not enough to offset heavy losses in construction, manufacturing, business services and retailing."

And yesterday the CEO of 12 US Airlines sent the following open letter to their customers:

Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now.

For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers.

Since high oil prices are partly a response to normal market forces, the nation needs to focus on increased energy supplies and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation.

Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.

Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper.

The nation needs to pull together to reform the oil markets and solve this growing problem.

We need your help. Get more information and contact Congress by visiting www.StopOilSpeculationNow.com.

Richard Anderson CEO Delta Air Lines, Inc.		Gerard J. Arpey Chairman, President and CEO American Airlines, Inc.
Bill Ayer Chairman, President and CEO Alaska Airlines, Inc.		Dave Barger CEO JetBlue Airways Corporation
Mark B. Dunkerley President and CEO Hawaiian Airlines, Inc.		Robert Fornaro Chairman, President and CEO AirTran Airways
Timothy E. Hoeksema Chairman, President and CEO Midwest Airlines		Lawrence W. Kellner Chairman and CEO Continental Airlines, Inc.
Gary Kelly Chairman and CEO Southwest Airlines Co.		Douglas Parker Chairman and CEO US Airways Group, Inc.
Douglas M. Steenland President and CEO Northwest Airlines, Inc.		Glenn F. Tilton Chairman, President and CEO United Airlines, Inc.

Friends, the preceding is not an obituary but a strong cautionary warning.

The world has changed and America will either lead in the change or be left to pick up the scraps that fall from the table. So, now is not the time for fear mongering, rash actions, petty divisiveness, empty promises or pining for the good old days.

Regardless of the outcome of the US election in November, the problems we face won't disappear overnight. However, the next President and Congress will set this nation's course for the next generation. So don't let politicians, the media or partisan PACs lead you around like sheep. Before you fall for the rhetoric and the hype, gets the facts. Then get involved and stay involved.

And most importantly, before you get involved decide where you stand on the issues. Know your own mind.

This is what I would suggest to anyone who needs to decide on which candidate to support:

-- First Step

Make a chart (on paper or computer) which includes:

• a column for listing the issues (economy, war, education, health, climate change, crime, food safety, trade, immigration, etc. ) Try to keep the list to no more than 8-10 issues or this process may get overwhelming.
• a column for ranking each issue in order of importance to you and your community
• a column in which you will list your current position on the issue
• allow a column for each candidate that you are considering supporting. In these columns you can note whether the candidate agrees or disagrees with your position
  

It will be easier to do this on the computer because you may need to revise your lists several times.

-- Second Step

List your issues and your current position on each. Don't rush this process. It doesn't have to be done in one day or one week.

-- Third Step

Rate your list of issues in terms of importance to you and your community.

-- Fourth (and most important) Step

Do your research. Get as much unbiased information on your issues as possible.

Great sources of information are:

• OpenCongress.org
• GovTrack.us
• Project Vote Smart

If you normally listen to only conservative news sources try also listening to opposing views from time to time. Conversely, if you only get your information from liberal media outlets and blogs try listening to the opposing view occassionally. To my knowledge no one has died yet from listening to the other side's opinions.


-- Lastly, review your results and rate the candidates.

I know that what I've outlined sounds like a lot of work but your future is worth it.

Surprise, Surprise - Senate GOP blocks windfall taxes on Big Oil

Ok, no one is really surprised.

Believe it or not I agree with the GOP when they say that the windfall profit tax won't do a thing to lower $4/gal. gasoline. I also agree that if the windfall profit tax is passed Big Oil will probably increase their prices. Big Oil and their cronies in Washington are going to milk this cash cow dry. However I also believe that the bill should have passed and here's one common sense reason why.

If Big Oil is making record profits they should not also need to feed from the government trough by receiving billions of dollars in tax breaks.

At present Big Oil is sticking it to consumers at the pump and at tax time. Instead of going to Big Oil, the billion of dollars of the working public's tax dollars should be directed towards companies solely committed to the research, development and production of alternative energy (excluding ethanol which is being subsidized by the farm bill).

Doesn't this make sense?

But oh, it may put a few oil industry lobbyists out of work.


excerpt from:
Senate Blocks Windfall Tax on Big Oil

Saved by Senate Republicans, big oil companies dodged an attempt Tuesday to slap them with a windfall profits tax and take away billions of dollars in tax breaks in response to the record gasoline prices that have the nation fuming

GOP senators shoved aside the Democratic proposal, arguing that punishing Big Oil won't do a thing to lower the $4-a-gallon-price of gasoline that is sending economic waves across the country. High prices at the pump are threatening everything from summer vacations to Meals on Wheels deliveries to the elderly.

The Democratic energy package would have imposed a 25 percent tax on any "unreasonable" profits of the five largest U.S. oil companies, which together made $36 billion during the first three months of the year. It also would have given the government more power to address oil market speculation, opened the way for antitrust actions against countries belonging to the OPEC oil cartel, and made energy price gouging a federal crime.

"Americans are furious about what's going on," declared Sen. Byron Dorgan, D-N.D. He said they want Congress to do something about oil company profits and the "orgy of speculation" on oil markets.

Related posts:

When The Student Becomes the Master

It's Time for An Intervention

When the Student Becomes The Master

Capitalism

"An economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market"

If the Bush Administration has faltered in its efforts to bring "democracy" to the Middle East, it has certainly succeeded in exporting its brand of capitalism to Saudi Arabia. When it comes to oil, Saudi Arabia gets an A+ in understanding "supply and demand", "market forces", and "business friendships."

excerpt from:
Los Angeles Times: New forces fraying U.S.-Saudi oil ties
by Paul Richter

For decades, Saudi Arabia worked with its dominant customer, the United States, to keep world oil markets stable and advance common political goals.

But the surging price of oil, which soared more than $10 a barrel Friday to a record-high $138.54, has made it plain that those days are over. New forces, including a weak dollar and an oil-thirsty Asia, have blunted the United States' leverage and helped sour the two countries' relationship.

As gasoline prices have risen, the White House has unsuccessfully exhorted the Saudis to step up production, and Congress has threatened retaliation. But the situation now is a far cry from the days when the U.S. economy dominated the direction of the petroleum market.

"That gave us leverage," said Greg Priddy, an oil analyst at the Eurasia Group, a New York-based risk assessment firm. "There's certainly a perception that the power equation has changed."

The weakening of the economic relationship comes when the vital U.S.-Saudi security relationship also has been fraying.

In the 1980s, the U.S.-Saudi bond that kept oil prices low was credited with helping weaken the Soviet Union during the waning days of the Cold War. And it helped keep markets stable after Iraq's 1990 invasion of Kuwait.

But the Saudi government has been dismayed by the consequences of the war in Iraq and by what it sees as a weak Bush administration commitment to the Palestinians.

The relationship is shaping up as a political issue for the fall campaign, certainly among congressional candidates and perhaps among presidential candidates.

With a 20-million-barrel-per-day habit, the U.S. remains the world's largest oil customer, even though its daily consumption over the years has dropped from one-third of total daily production to one-fourth.

But the U.S. can no longer guarantee on its own that producers will have the markets they need for their oil. Nor can the Saudis, alone, ramp up production in sufficient amounts to stabilize prices.

China and other Asian nations now use about 17 million barrels a day. That's up more than 20% since 2003, and booming growth is expected to continue.

With the shift in buying power, the Saudis are cultivating important Chinese customers, analysts say. Saudi Arabia recently contributed $50 million for Chinese earthquake relief, and King Abdullah has visited China.

When Knowledge Obviously Was Not Wisdom

Today, the US is facing both a food and an energy crisis.

Many scientists and politicians once thought that bio-fuels was the answer to the ever increasing demand for oil and its rising costs. However, now that food crops like corn are being diverted to the production of ethanol, costs for everything from meat to milk to eggs is skyrocketing. In addition, scientists and environmentalists are now realizing that the ethanol production process is harmful to the environmental and actually adding to the problem of global warming.

Now some politicians are ready to limit ethanol production and expand drilling in protected areas of the environment in order to meet America's energy needs. However there is already a great deal of evidence showing this to be an impractical solution. One, because of the irreparable damage that he will due to the environment. And two, because, in the case of the Alaska Pipeline, the ground no longer stays frozen solid enough months of the year, in order to move the oil tankers in and out of the area.

In some circles voices are demanding that OPEC lower prices. Ironically, this cry is often coming from those that believe in letting "the market" drive the economy. Many of these voices are suggesting the Kuwait and Iraq should remember their "friends"? Are they saying that "it was really all about the oil"? Meanwhile oil companies like BP & Shell are reporting record profits.

While addressing Congress today, Senator Chuck Schumer (D-NY) succinctly pointed out that the money from most American's stimulus checks will end up in Saudi Arabia. He suggested that the passage of the Saudi Arms Deal be blocked if they do not increase oil production. It seems that so many events over the last seven years have come down to ARMS & OIL.

Some politicians and business interests are trying to sell the idea of clean coal. Ask the people in Appalachia, whose air and drinking water is being poisoned by mountaintop mining, if there is anything "clean" about coal.

And of course there are the proponents of nuclear energy -- a process for which there is no viable way to dispose of the waste product.

As bleak as this conundrum of food, energy and environmental problems sounds, I am sure that the world's scientists and business community will find the answers. But will they learn the real lessons?.

Will world leaders finally learn that :

• just because we have the knowledge to do something it might not always be wise to do it
• just because an idea has a short-term benefit that he should also be evaluated for its long term consequences.
• we have always lived in a global community

In an article for the Washington Post, Stephen Mufson painted a very clear picture of the ties between food and oil. Here's an excerpt from his article, " Siphoning Off Corn to Fuel Our Cars".

Across the country, ethanol plants are swallowing more and more of the nation's corn crop. This year, about a quarter of U.S. corn will go to feeding ethanol plants instead of poultry or livestock. That has helped farmers like Johnson, but it has boosted demand -- and prices -- for corn at the same time global grain demand is growing.

And it has linked food and fuel prices just as oil is rising to new records, pulling up the price of anything that can be poured into a gasoline tank. "The price of grain is now directly tied to the price of oil," says Lester Brown, president of Earth Policy Institute, a Washington research group. "We used to have a grain economy and a fuel economy. But now they're beginning to fuse."

Not everyone thinks it's fantastic. People who use corn to feed cattle, hogs and chickens are being squeezed by high corn prices. On Monday, Tyson Foods reported its first loss in six quarters and said that its corn and soybean costs would increase by $600 million this year. Those who are able, such as egg producers, are passing those high corn costs along to consumers. The wholesale price of eggs in the first quarter soared 40 percent from a year earlier, according to the Agriculture Department. Meanwhile, retail prices of countless food items, from cereal to sodas to salad dressing, are being nudged upward by more expensive ingredients such as corn syrup and cornstarch.

Rising food prices have given Congress and the White House a sudden case of legislative indigestion. In 2005, the Republican-led Congress and President Bush backed a bill that required widespread ethanol use in motor fuels. Just four months ago, the Democratic-led Congress passed and Bush signed energy legislation that boosted the mandate for minimum corn-based ethanol use to 15 billion gallons, about 10 percent of motor fuel, by 2015. It was one of the most popular parts of the bill, appealing to farm-state lawmakers and to those worried about energy security and eager to substitute a home-grown energy source for a portion of U.S. petroleum imports. To help things along, motor-fuel blenders receive a 51 cent subsidy for every gallon of corn-based ethanol used through the end of 2010; this year, production could reach 8 billion gallons.

Now, however, the legislation is being criticized for making food more expensive while gasoline prices continue to climb. Rick Perry, a Republican who succeeded Bush as Texas governor, has asked the Environmental Protection Agency to waive half of the "misguided" ethanol requirements because of rising food costs; every penny increase in per-bushel corn prices costs his state's livestock industry $6 million a year, he said.

Hopefully, US leadership will get serious about finding longterm sustainable solutions to today's food, energy and environmental issues and the American public will get serious and realize and any solution will involve a little sacrifice.

Isn't It Time to Rethink Our Role?

Ok you may not think that global warming is real, or at least not enough of a reason to stop driving your SUV to the corner store. Well how does $4.00 a gallon gasoline strike you?

OK, you say that you can handle that. After all when you turn on your car it returns the favor.

So how do you feel about home heating oil, airline travel, food, transported goods, pizza delivery, mowing your lawn......?

Ok, you're in the top 1% on the economic scale and you can weather the storm. After all, it's only money. Besides, the war on terror is the most important thing!

So just how is America supposed to fuel all of those aircraft carriers, jets, tanks and humvees?

Are you finally getting the picture?

The one question that is virtually never asked, or at best glossed over, during every presidential candiate debate ( Democratic or Republican ) is how America is going to end it's dependence on foreign energy sources.

Why?

Because the mass media doesn't think that the America public wants to hear the truth. The truth is that no matter who is elected in November, real change is not going to be easy, it's not going to be painless and it's not going to happen overnight.

In other words Americans are going to have to rethink the American Dream.

I'm not talking about core values like freedom and democracy.

I'm talking about the idea that if we elect the "right" people that government will magically fix everything while we sit back living life as usual and acquiring STUFF.

Yes, government does play a major role in establishing policy, creating laws and overseeing agencies and programs that protect the common good. But a government is only as effective as the people she represents are committed -- always has been, always will be.

Tonight I was channel surfing and stopped for a few moments on Larry King Live. The topic, of course, was today's primary elections. A point was made that in some places people might have to wait in lines for 3-4 hours in order to vote and that this might discourage voter participation. Now, this is a point with some validity.

But then I think back to America in the early sixties when as a little girl I watched the news and saw people being beaten for even having the nerve to show up at the polls.

I think about all of the people in various nations in Africa, Asia and the Middle East who today travel hundreds of miles and risk their lives just to cast a vote.

I think about the millions of people around the world who cannot vote.

Then I think of the people who slept in mall parking lots overnight and stood in lines all day to get an iphone or a Xbox.

I think of all of the people who woke up at 5am to be the first in line for a Christmas sale.

And, I think of everything that is at stake in the upcoming presidential election and I say to myself,

If people aren't willing to stand in line 3-4 hours to make a decision that will shape the course of this nation for decades to come, how in heaven's name will America meet the challenges of the future?

If the American people don't rethink their role in solving problems, it doesn't matter who answers the phone at 3 AM.

Get the Facts, Get Involved, Vote and, Be Ready to Do YOUR Part.

The New Old Russia

Is it a coincidence that the Bush administration suddenly initiated a middle east peace process while democracy is going down the drain in Russia? Not long ago Putin and Bush were declaring that they were on the same page. Oh how times and people change... or do they?

This is a story the world should be carefully watching.

Australian Broadcast Corporation reports:

Russia's presidential election campaign has kicked off on the eve of parliamentary polls, as aides to Garry Kasparov say the chess legend turned Kremlin critic is being held incommunicado since his jailing last Saturday.

The campaign to replace outgoing President Vladimir Putin began officially with the formal announcement of the March 2 election date in the state newspaper, Rossiiskaya Gazeta.

So far only about a dozen figures with marginal public support have launched a bid, leaving the country waiting for Mr Putin to name his preferred successor - and to explain whether he will really leave power.

Mr Putin, who is not allowed to seek a third consecutive term next year, hopes to see his United Russia party score a massive victory in parliamentary elections.

As controversy grew over the fairness of the polls, aides to Mr Kasparov, arrested during a banned opposition rally in Moscow last Saturday, complained he had been barred access to lawyers and visitors.

"I've tried twice to see my client but I've not been authorised to do that. The officials at the Moscow city police headquarters never explained why and this contradicts all norms of international law," lawyer Olga Mikhailova said.

Kasparov aide Marina Litvinovich says that officially the opposition leader is being held at 38 Petrovka, the address of Moscow city police headquarters.

"However, no one can confirm this because they won't let anyone in to see him," she said.

Also barred from visiting Mr Kasparov are parliament member Vladimir Ryzhkov and Mr Kasparov's longtime bitter chess rival Anatoly Karpov, who is a member of a state-backed civil watchdog. Both men have the right under Russian law to make prison visits.

A city police spokesman told AFP he could not comment.

Mr Kasparov, considered by many the greatest chess player in history and now a bitter opponent of Mr Putin, was arrested while leading an unauthorised protest march and sentenced to five days jail.

The following day some 200 activists were arrested at a similar rally in Saint Petersburg.

US President George W Bush said he was "deeply concerned" by the crackdown.

Reuters is reporting that Amnesty International is calling for the immediate release of Kasparov and his supporters.

"Amnesty International considers him to be a prisoner of conscience and calls for his immediate release," the rights group said in a statement titled "Russian Federation: systematic repression on eve of elections".

"Several witnesses told Amnesty International that they had overheard conversations among the police indicating that it had been planned in advance of the march to detain Garry Kasparov."

U.S. President George W. Bush has said he was deeply concerned about the detention of rights activists and political leaders at opposition rallies over the weekend in Moscow and St. Petersburg.

Putin has accused Washington of plotting to undermine the elections and warned foreign states to keep "their snotty noses" out of Russian affairs. He said the elections would be democratic and transparent.

But Amnesty said Russia was making it almost impossible to express dissent.

"The silencing of media and human rights defenders, the harassment and ill-treatment of those who highlight human rights violations or those who express dissent, is unacceptable," Nicola Duckworth, Amnesty's program director for Europe and Central Asia, said in a statement.

In an Oct., 2007 interview with Bill Maher on his program "Real Time", Garry Kasparov discussed the Russian election, Putin, Bush, and oil prices. Today his words seem positively prophetic.

Why Are We Really Talking About Iran Anyway?

As former Fed Chairman Alan Greenspan might say, "it's largely about the oil"

And I might add securing US dominance in the oil industry -- a dominance that oil industry executives see slipping away.

According to an article in Sunday's International Herald Tribune:

HONG KONG: When the state oil and natural gas company PetroChina makes its debut Monday on the Shanghai Stock Exchange, China's booming stock markets will be on the verge of another milestone. Soon after the Shanghai listing, analysts expect PetroChina to surpass the U.S. energy behemoth Exxon Mobil as the world's largest company by market value.

PetroChina shares, already traded in New York and Hong Kong, are expected to be seized on by a market awash with cash and investors eager for new opportunities. At the close of markets Friday, PetroChina was valued at $460 billion, making it the world's second-most-valuable company, worth about $26 billion less than Exxon Mobil.

The article does point out that PetroChina is much less profitable than Exxon. However that doesn't seem to bother investors in the Chinese market. After all, since when does a company have to be profitable to be considered valuable. Just look at Amazon.com

What matters is that everyday the US dollar loses value and the debt to China increases.

Canadian & Iraqi Taken Hostage During Attack on Chinese Run Oil Field

This will definitely get the world's attention


an excerpt from:
BBC NEWS | Africa | Sudan rebels 'hold China oil men'

A Darfur rebel group has claimed it has attacked a Sudanese oilfield in the Kordofan region, taking a Canadian and an Iraqi oil worker hostage.

The group, the Justice and Equality Movement (Jem), said it attacked the facility, run by a Chinese-led consortium in the Defra oilfield.

Jem said its action was a message to China to stop helping the Sudanese government with their war in Darfur.

China is a major investor in the energy industry in Africa.

But it has faced some criticism for maintaining close links with the Sudanese government in Khartoum as international concern over the situation in Darfur has continued to rise.

The Canadians and the Iraqi both worked on the oilfield run by the Chinese-led consortium, the Greater Nile Petroleum Operating Company in Sudan's Defra oilfield.

This MUST Be Against the Law

War profiteering, Insider Trading, Collusion, Treason ?

Ok you lawyers out there --- If they prosecuted and convicted Martha Stewart, isn't there something that can be done for Ray L. Hunt. plk.



excerpt from:
A Surge, and Then a Stab - New York Times
by Paul Krugman

Now here's the thing: Ray L. Hunt, the chief executive and president of Hunt Oil, is a close political ally of Mr. Bush. More than that, Mr. Hunt is a member of the President's Foreign Intelligence Advisory Board, a key oversight body.

Some commentators have expressed surprise at the fact that a businessman with very close ties to the White House is undermining U.S. policy. But that isn't all that surprising, given this administration's history. Remember, Halliburton was still signing business deals with Iran years after Mr. Bush declared Iran a member of the "axis of evil."

No, what's interesting about this deal is the fact that Mr. Hunt, thanks to his policy position, is presumably as well-informed about the actual state of affairs in Iraq as anyone in the business world can be. By putting his money into a deal with the Kurds, despite Baghdad's disapproval, he's essentially betting that the Iraqi government — which hasn't met a single one of the major benchmarks Mr. Bush laid out in January — won't get its act together. Indeed, he's effectively betting against the survival of Iraq as a nation in any meaningful sense of the term.

The smart money, then, knows that the surge has failed, that the war is lost, and that Iraq is going the way of Yugoslavia. And I suspect that most people in the Bush administration — maybe even Mr. Bush himself — know this, too.