American Citizens News Network

July 16, 2008

The Facts

Since the price of oil has increased so dramatically over the past several months, there’s been a lot of lobbying to open up restricted areas for drilling and oil production. President Bush has not failed to mention this each and every time he gets in front of a microphone. Many Democrats are against this, as are most of the environmentalists. Without fail, those who are in favor of opening up the restricted areas justify the need by proclaiming we, America, must become independent of foreign oil, and bring down the price.

My View

Earlier this month I wrote a post entitled “Why Oil Prices Are What They Are” where I addressed the absence of competition in the oil industry. One of the reasons for this absence is that all the crude oil produced in the world goes into a single “bucket”, where the price is set to all countries and customers, regardless of who produced it. With that fact in mind, just exactly why are we suppose to believe America will become independent of foreign oil if we start producing more oil here in America? And just exactly how will this bring down the price of crude oil here in America if foreign countries like China and others continue to increase their consumption?

I worked in the oil and gas industry for many, many years, and just about all of that time was spent offshore in the Gulf of Mexico. And there is one thing I can personally attest to; safety and environmental records have improved so much since the early-to-late 1980’s that it’s almost a non-issue, and will continue that way if current regulations continue to be imposed on the oil companies, including the smaller oil producers. By comparison, onshore plants, refineries, and facilities can only dream of being as good. Therefore, I can not oppose to opening up restricted areas if those same laws are applied AND enforced. But Bush, Chaney, nor any other advocate can convince me we will become independent of foreign oil or the price will come down just by opening up these areas. That argument is nothing but a smoke screen to give the oil companies access to more product so they can grow bigger and wealthier. This fact is more evidence this administration and their supporters are working only for the oil companies and other big business, and have absolutely no concern for the middle and lower class. It’s also evidence they have absolutely no problem lying to the public in order to achieve their goals. Remember their resistance when Congress pushed to curtail adding crude oil to our reserves while the prices were so high? Remember how they said our reserves would dwindle and we couldn’t afford that? Well, the price of crude oil dropped $6 per barrel today when the new numbers came out. Crude oil stocks rose by 3 million barrels; gasoline was up 2.4 million barrels; and distillate rose by 3.2 million barrels. And that’s with refineries operating at just over 87%. Just more evidence of the lying. But why should the lying surprise us; this administration has demonstrated on many occasions they have no problem lying about anything to achieve their objectives. And to think we (including me) called Bill Clinton the biggest liar of them all. Thank God Bush didn’t have sex in the oval office, or we’d really be upset with him.

July 9, 2008

The Facts

On CNBC this morning Nouriel Roubini of RGE Monitor said the financial markets credit looses will go beyond $300 billion and reach $1 trillion. (RGE Monitor is a global economic and financial analysis firm based in New York City with additional offices in Asia and Europe, and ranked as one of the world’s best economic web sites.) Roubini teaches economics at NYU, and has an excellent record in his economic forecasting (even Becky Quick of CNBC admitted that, which was surprising). He’s very pessimistic about the future of our economy, and expects the current recession to get worse and “be long & protracted”. Relative to the financial crisis, Roubini predicts it will be the worst one since the great depression of 1929, that hundreds of banks will go bankrupt, and a government bailout will be of little help. Roubini also pointed to the 62,000 jobs that were lost in June as further evidence of an impending bad recession when coupled with the fact that we now have had six straight months of job looses.

My View

Democratic Governor Joe Corzine of New Jersey was also a guest on CNBC this morning talking about the economy, and the differences of how Barak Obama and Joe McCain propose to handle the economic situation. Corzine was pointing out how the Republicans want to spend & spend and not come up with a way to pay for the spending (this use to be the Democrats). It seems the Republicans want to spend the money, but don’t want the wealthy and corporations to pay their fair share. They seem to figure if they just “charge it”, the middle class and lower class taxes can pay for it later; if it gets paid at all.

Joe Corzine is a very well experienced economic politician. He is low keyed and doesn’t get rattled by the aggressors. Becky Quick and Joe Kernen of CNBC tried a couple of times to trick him up, but it didn’t work. When Corzine mentioned that incomers of $250 thousand and more weren’t paying their fair share of taxes, Quick said “$250 thousand doesn’t go as far in New Jersey as it does in the mid-west”, implying most people in New Jersey shouldn’t have to pay their fair share of taxes because it cost more to live there than in other places. Corzine shot back immediately saying 90% of the people in New Jersey made $100 thousand or less. Speaking directly to Quick, he went on to say “I hate this trickle down stuff, and that’s what you are talking about, under McCain and the last 7 or 8 years of Bush”. Quick quickly shut up (no pun intended). To support the trickle down economics flaw, Corzine pointed out that in the 1990’s (under Clinton) we had a 22 million job increase, while under Bush we have had only a 6 million job increase. He finished off that portion of his comments by saying “maybe the people who watch your show are not being bothered with the economy, but the vast majority is getting crushed”. The entire interview with Joe Corzine was extremely enlightening. You should go here and watch it. It’s 10 1/2 minutes long, but worth it.

Right after Corzine, CNBC had Mitt Romney on. This seemed to make the host smile with pleasure and delight. Romney was introduced with great fanfare and music. Joe Kernen started the interview by saying “I tried to ask Corzine some questions, but he was so smooth I couldn’t lay a glove on him”, and said to Romney “maybe you could counteract what Corzine said”. And, of course, Romney did, but it was with very flawed facts and disinformation. But to be fair, Kernen did ask Mitt Romney some tough questions, to which Romney answered in typical political fashion, which was really no answer at all. However, he didn’t miss out on the opportunity to mention “reigning in spending”, which was immediately followed up with that dirty word “entitlements”, which means Social Security, Medicare, and Medicaid; all those things middle and lower class people eventually come to rely on. But he conveniently ignored the fact that tax breaks and other “goodies” given to the wealthy & corporations is also “spending”; which now is also considered an “entitlement” by those recipients. If you like, you can watch Romney’s interview.

Both politicians, Corzine and Romney, were basically promoting their respective Presidential candidates and throwing rocks at their opponents. But when it comes to the proposed tax plan each candidate has officially filed, the facts speak for themselves. I wrote a post on this last month, and once you read that and all the supporting documentation, you to will know the facts, whether you want to accept them or not.

As for CNBC host, with the rare exception of one or two, they certainly come across as supporting the political right. (And to think Rupert Murdoch, owner of Fox News, started his business channel because he thinks “CNBC is too anti-business”.) Any guest who speaks too negatively about the economy, growth, or the market while under a Republican President, they (the host) try to get them to reword their comments or change what they are saying. If they can’t, they just wait until the interview is over and then try to debunk them when the guest is no longer around to defend. And you certainly can’t take the word of the many investment managers CNBC has as guest. They are never going to give the market or the economy a bad report card. If investors stop investing, those managers are loosing big money. Even while the “Bullish” market is at 27.4%, the lowest it has been since 1994, the investment managers are saying the Bear market is over. Most say all will be well in “XX” months, so “now is the time to invest”. Naturally, since no one has a crystal ball to refute them, they have nothing to loose; and if they are wrong, no one will remember what they said.

CNBC often cites the result of their on-line and television polls on these issues. Sure, their polls are going to be positive about the economy and the markets; as I said before, the vast majority of the people who watch CNBC are in that upper 5%, and not only will that 5% not be bothered by the bad economy, they have much to loose if they support the idea the economy is severely damaged. So I put little credence in CNBC polls.

My bottom line on this post is that we are in a recession by its basic definition, regardless of the arguments, and it is going to get much worse. We can thank the Bush administration and the changes in laws he has insisted on for the markets and big businesses. However, if you are part of that 5% who has become wealthy, or wealthier, by those changes, you are happy and not bothered by the recession.

June 10, 2008

The Facts

Keith Hennessey, Assistant to the U.S. President for Economic Policy and Director of the U.S. National Economic Council, was the morning guest on CNBC’s Squawk Box today. He was pumping up George Bush’s accomplishments relative to the economy, and the latter’s desire to make the tax cuts permanent. But each time he did so, he was very quick to say that it would take 6-9 months before we will see the results. And he was just as quick to say that raising taxes on businesses would not fix our economics problem.

My View

First off, you’ve got to admire Hennessey for leaving the door open for his buddy Bush; “6-9 months before we see the results” of making the tax cuts permanent. That’ll give the old sheriff time to get out of town before everyone knows its all bunk. That little trick has been working for those 3-5 year CEO’s of large companies for 20 plus years now, so why not our President.

Now on to what matters. Let’s understand the difference of “raising taxes on businesses” versus “discontinuing tax breaks”. THERE IS A DIFFERENCE! The first is asking businesses to pay more than their fair share of taxes, which they clearly are not doing when you throw in all those tax loop holes they have. The second is telling businesses that they are no longer going to be on an entitlement program.

I hear so much about how we have to do something about entitlements we are handing out to undeserving people, and no one would agree with that more than I. However, the main difference with me and so many others out there is that I also do not think businesses should be getting entitlements, no matter what kind of “justification” one wants to put on it. Get this through your thick skull; trickle down economics DOES NOT WORK! How many more times have we got to prove that? That’s been tried by every Republican administration since the 1950’s, and some before, and the only thing it accomplishes is making the rich companies richer with near to nothing filtering back into the work place.

That doesn’t make you happy? Ok, let’s do this. Let’s take away all my tax loop holes (which I can’t take advantage of because my income doesn’t qualify me for those) and take away the tax loop holes for big businesses (and the wealthy). Let’s take away all these big business tax cuts that seem to be so important to so many and have one tax law for every individual and every company. Then at the end of every year let’s pass out the same tax forms to everyone, individuals and companies. Now, let’s all do our taxes, but; let’s add an extra box just above the bottom line for big business; and that box will say “deduct 5%”. Now they will be paying 5% less taxes than me. Guess what? I’ll be happy with that. But guess what else? Before the ink is dry on the tax forms, big businesses will be screaming, “no, no, no; let’s go back to the old way and I’ll gladly give up those all-so-important tax breaks”.

Here’s the bottom line; big businesses, Bush, and all those others will not be satisfied until only individuals earning less than $125 thousand a year and small businesses with less than 25 employees are paying taxes in this country. But really, they won’t be satisfied then; after that, they will not want to pay any state taxes, city taxes, property taxes, sales taxes, cost for any environmental damages they cause, etc., etc., etc. I said this many, many years ago; business will not be happy until 100% of gross revenues are coming into the board rooms and 0% is going out. And I have no doubt that, even then, they would be looking for some way to improve on that. But, hey! Don’t misunderstand me here; if you think I am saying that the Democrats are better, you are as wrong as you can be. The only difference between the two is that the Republicans want me to support the wealthy and big businesses and the Democrats want me to support all the worthless people, lazy people, & illegal immigrants in this country, and whole host of other unworthy causes. All I want is a job and for all of us to be treated equally. And trickle down economics, supply side economics, or pro-economy economics, what every phrase you chose to use, has not given anyone below the executive level a job yet.

June 6, 2008

The Facts

During the two day period of June 3rd and June 4th, crude oil prices dropped more than $6. Then over the last two days prices jumped about $16, to more than $138 per barrel. Every news source in the country is talking about this today. On top of all this, the jobs report for last week came out this morning with 49,000 jobs lost last week. That contributed mightily to the Dow dropping nearly 400 points today.

My View

So much for the “supply & demand” excuses for rising oil prices. But that hasn’t stopped the propaganda experts; they know there are still millions out here that are still their puppets and gladly mimic the notion that supply & demand is driving the prices up. Then there’s the scare tactics. It seems that the Deputy Prime Minister of Israel made some off-handed comment today that “bombing Iran’s nuclear sites was unavoidable” and the disinformation experts grabbed onto that as an excuse of rising oil prices. Next I expect to hear the night cleaning lady in the UN building being quoted on the shortage of petroleum related cleaning products as the reason for a huge price increase.

There are a few in the media that is starting to question these excuses. However, some are being careful. One female reporter on CNBC today had a slip of the tongue when she used the word “accelerated” in reference to the price increases, but very quickly corrected herself and substituted the word “upsurge”. Not a whole lot of difference in the definitions of the words, but “accelerated” has more of a sinister sound. And she made it even more suspicious by being so quick to change the words (sure, then there’s the teleprompter). But other reporters such as Mark Haines of CNBC’s “Squawk on the Street” is becoming even more skeptical. He doesn’t seem to buy all this “justification” crap. He’s always been one to raise an eyebrow at many of the questionable reports, and he seems to be the only one on that network that isn’t a big business puppet. He often questions some of the things businesses are reporting, and challenges many of the other CNBC reporters.

One CNBC guest this morning, Thomas Higgins of Payden & Rygel, said that for the first time in several years the demand for oil imports have fallen. That doesn’t support the supply & demand theory. He also said that he certainly believes we are in a recession, which doesn’t set too well with the current administration. (Of course, if the Democrats win the White House in November, I fully expect to see the Republican machine come out within the first month or so of 2009 and declare that we are in a recession.)

Another report today put the capacity of oil refineries at only 87%. That can be viewed two ways; either there is not enough oil to refine or there is not a big enough demand for gasoline. I’m sure those who support the supply & demand theory will use the first, and those who say that supply & demand is not the problem will use the latter. But with the nearly 5% drop in the demand for gasoline in the past two to three months, it is easier to believe the latter.

Right along with the increase in the price of oil today, and as mentioned earlier, the Dow dropped nearly 400 points. There were lots of folks willing to offer there opinion today on why that happened. The most popular opinion was the jobs lost report that came out this morning. With the 49,000 jobs lost last week, that brought the total job looses for 2008 to 325,000. With this latest report, this means we have lost jobs every single month for the past two years. And when you take into account that just about all the jobs experts tell us that we need an increase of 100,000 jobs each month just to break even, some might say we have “lost” over 800,000 jobs this year. This brought the unemployment up to 5.5%, which is the highest since 1987. Let’s see now, who had been in the White House for several years in 1987?

I think it’s time to change the “official” definition of recession (and maybe even depression) if we are going to continue to rely on the current definition to determine if we are in a recession or not. Of course, even if that did happen, I wouldn’t expect the Bush White House to acknowledge it. No President, Republican or Democrat, likes to admit to a recession during their watch. But it seems this current Republican President and his diehard supporters are worse than any before.

April 30, 2008

The Facts

Mike Jackson, CEO of AutoNation, is a guest on CNBC’s Squawk Box this week. In a segment called the Root of All Evil discussing who should be blamed for the housing crisis, Jackson gave his opinion. He said it was a “reckless abandonment of credit standards by the housing industry”. He went on to say that in 04 and 05 they were building houses like crazy, and then they ran out of buyers. So they had to slow down the building or change something. They decided to drop their credit standards. He quoted things like “no money down, no equity, no credit checks, no proof of income, no proof of a job; here’s the keys”.

My View

Depending on which class of people you belong, you will either blame the mortgage/financial industry or the homeowner for what happened here. Only a very few will point to both. Just like the illegal drug industry; who’s to blame, the drug addict or the supplier? It all depends on who you ask. But we all know since the mid to late 1950’s when time payments (or credit, if you prefer) was extended to the consumer, consumers have used that tool to obtain things they otherwise would never have been able to afford. And don’t think for one moment that the “supplier” of those goods don’t know that fact also, and will certainly take advantage of it. When was the last time you went to buy a new auto and the salesman immediately gave you a trade in price on your auto and quoted you the price for the new auto? It’s been a couple of decades since they’ve done that. The first question they ask is “how much do you want your payment to be”, or “what kind of monthly payment can you afford”. In other words, “tell me what you want and I’ll make it happen”.

One other thing Mike Jackson said. He said they were all having a good time; the developers, builders, real estate agents, and originators of the mortgage. Although Jackson did not include them, there’s no doubt that most of the borrowers were also having a good time; until those big payments came due. The only difference is that all those Jackson mentioned didn’t have to pay a consequence for their good time, but the borrower did.