The Supply/Demand Balance Rules in Oil, Just Like in Paper – Much Higher Prices Are Inevitable

Category : Economic Issues, Energy Issues, Fossil Fuels, Global Warming, Nuclear

President Obama’s policies are designed to discourage the development of “climate changing” fossil fuels. The President would rather send our tax dollars to producers of solar, wind, and ethanol (to keep them economically competitive with fossil fuels) rather than earn tax income from the development of oil, coal, and natural gas. Well, the good news is that those government subsidies may not be necessary in the years ahead. When oil prices rise to $150-$200 barrel, and never see double digits again – maybe wind and solar will be able to compete without government handouts. Of course, it will be many decades (if ever) before these alternative energies satisfy a substantial percentage of U.S. energy needs. Continue Reading

Governing by Hope… and Deception

Category : Economic Issues, Energy Issues, Environmental Issues, Politics

We have elected a  President who never learned that actions have consequences. He sets policy by how he wants the world to be and not by how it is.

President Obama governs by hope, just as he promised he would. He apparently does not realize that post – modern philosophy is just an inside joke. It’s an intellectual exercise. No one really believes that truth is whatever each of us wants it to be. Wishing doesn’t really make anything happen. And if you expects your hopes to come true, they had better be based on a realistic appraisal of the world…or else “hope” is just a campaign slogan.  Continue Reading

Obama’s New Science Czar, His Stated Hope is that the U.S. Economy will Shrink in Size

Category : Economic Issues, Politics, Science, Spending Issues, Subsidies

President Obama’s commitment to socialism is, by this time, not in doubt. His consistent pattern of appointing individuals with socialist views (really closer to purely communist views) to key government posts is remarkable. John Holdren, Obama’s new Director of the White House Office of Science and Technology Policy will feel very comfortable fitting in with previous appointments. Read the CNS News report here.

First off, he fully satisfies that Obama arrogance requirement. A CNS news reporter when asking for an interview mentioned that he had read some of Holdren’s work and had questions. Holdren’s response was that, “If you read it and have a problem, you’re misreading it”. Continue Reading

Study Concludes that U.S. Business Interests Would Benefit From the Elimination of Foreign Competition

Category : Economic Issues, Environmental Issues, Forestry, International

This is another of those stories that should outrage every fair-minded American. We are inundated with exaggerated stories of the damage being done by tropical deforestation. The latest report is titled, Preserving Tropical Forests Benefits U.S. Agricultural & Timber Interests.

The authors of the report suggest that… Continue Reading

China is Coming to America

Category : China, Economic Issues, International

A good friend clued me on to the attached story. Very interesting! You will enjoy reading American Made, Chinese Owned. A few passages follow, but take a few minutes and read this well-written report.

But for hundreds of Chinese companies like Yuncheng, the U.S. has become a better, less expensive place to set up shop. It could be the biggest role reversal since, well … when Nixon went to China. “The gap between manufacturing costs in the U.S. and China is shrinking,” explains John Ling, a naturalized American from China who runs the South Carolina Department of Commerce’s business recruitment office in Shanghai…

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Federal Employees Overpaid by 64%

Category : Economic Issues, Politics, Spending Issues

Well, that is not exactly accurate. For the title to be accurate, federal employees would have to be as efficient as private employees. But we will ignore employee productivity in this post. The point here is that those public companies competing in world markets are limited in what they can pay their employees. There are apparently no limits, however, on salaries and benefits paid to public employees – that segment of society that is, they say, not infected with private sector greed.

The data is taken from a USA Today story, and the copy below from The Patriot Post.

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Chinese Statistics

Category : China, Economic Issues

The sustainability of  Chinese economic growth is a growing concern.  More and more we see specific situations that raise questions.  The attached report offers another caution. In a nutshell, Chinese economic data is not believable. Go to Lies, Damned Lies, and Chinese Statistics, for good insights on this topic.

Wall Street’s Role in the Financial Crisis

Category : Economic Issues, Weekly Feature

Michael Lewis is a wonderful writer. Lewis has written classics books such as Liars Poker (1989), Moneyball (2003), and The Blind Side (2006).

Liar’s Poker described Lewis’ personal experiences working for Salomon Brothers, and offers readers an insider’s perspective on the excesses of Wall Street firms in the ‘80s. Even 21 years later this book should be required reading.

The End, published in portfolio.com, is a review of how these Wall Street excesses multiplied over the last 30 years and then played a large role in the current economic crisis. The title refers to the end of the large Wall Street firms, although perhaps that title was a little premature. A word of warning; this report is R rated – not only for the profanity sprinkled within, but for the emotional impact most will feel as they come to better understand a primary catalyst of the economic crisis.

This report was recommended to Reel Time readers in 2009, and was very well received. It is a fascinating story.

Just as an aside, some use this report as evidence that the free enterprise system and the drive for profits should be eliminated. That is certainly not warranted, nor my view. The free enterprise system actually gives us the best chance to control greed – but that discourse is for another time.

For me, the key lessons from Liar’s Poker and The End were that as harmful as it tends to be for governments to interfere with business activities, the financial system still must be closely regulated. Secondly,  if you are fortunate enough to have a significant amount of money to invest, you might want to keep in mind that financial firms are not much more honest than Bernie Madoff. Let the investor beware, and be careful whom he/she trusts. I trust you will find The End well worth your time.

Gross Unfairness: Public vs Private Employment

Category : Economic Issues, Politics

The costs of benefits for public employees is staggering.  They far outstrip the average costs of benefits for private sector employees. And, as a result, you and I owe public sector employees a big debt.  In the attached report, a new Pew study finds that States Face $2.73 Trillion Bill for Retiree Benefits.

Our home (Chicago suburb) is worth about 60% of its 2007 value, but our real estate taxes have continued to increase each year. When a local school district official was criticized for not containing costs,  the response was, “Why should school district employees suffer just because the economy is not strong”.  While many of the rest of us lose our jobs, deal with pay cuts, reduced benefits, fewer hours worked, etc., government employees, in general, skate by with absolutely no discomfort.

This is a huge problem for our country. One reason it is so hard to control is that there are so many government employees (and spouses) who vote. Politicians who might want to address this issue find it hard to get elected, and/or remain in office.  Maybe it’s time to consider whether those employed by government entities, (and the spouse) should be allowed to vote. OK, I am not serious about that…yet.  But somehow, at all levels of all government, this has got to change.

The U.S. Remains #1 in Manufacturing

Category : Economic Issues, Politics, Weekly Feature

That the U.S. is the leading nation in manufacturing output gets little play in the media and would be a surprise to most North Americans. I recently ran across an interesting report on this subject, and this introduction offers some background before the link is presented.

In inflation adjusted dollars, U.S. manufacturing output has nearly tripled since 1980 – but it’s not all good news. Manufacturing employment is following a pattern similar to agricultural employment in the late 1800’s and 1900’s. The vast majority of Americans were farmers prior to the industrial revolution, but today less than 2% of Americans are employed in agriculture. During all those decades when agricultural employment was falling rapidly, however, farm production was growing even more rapidly.

Employment moved from farms directly to manufacturing. When measured as a percentage of those employed, manufacturing jobs peaked in 1943 at about 39%.  As previously occurred in farming, however, greater efficiencies drove jobs out of manufacturing. Even though manufacturing output continues to grow, only 9% of Americans are now employed in manufacturing, and in absolute terms, these jobs have been falling sharply since 1980. (Click on the graphs below for a larger views.)

For many years now, jobs being lost in manufacturing have been moving to “service” jobs. Many of these new jobs pay very well, but many do not. There is no easy solution to this problem. Protectionism, and increased government intrusion will make our nation weaker, rather than solve the problem. In the following link, Picking Winners,  Donald J. Boudreaux responds to a piece in the Wall Street Journal that suggests the U.S, needs an “industrial policy”. It is a short retort, but Boudreaux offers interesting facts and makes important points in the last few paragraphs.