Are the Fundamentals Still Strong?

Here's a movie to watch: http://www.youtube.com/watch?v=C4egXbhSOhk. Most economists avow that US deregulation helped the economy to grow; they also seem to think it went too far & helped cause the current economic problems.1 Even John McCain admits it now, despite the fact he was anti-regulation up until this month.2 Go to www.therealmccain.com for more, in case you weren't convinced.

The first vote on the bailout ended in defeat, despite the fact that Bush & leaders from both parties supported it. Could it be re-election season has reared its ugly head? Isn't it funny how some of the legislators cried foul, while the past 20 years has seen them support bill after bill that reduced banking & other controls established in the 1930's. So we had a Great Depression and we don't learn from it? Will Sept '08 be called GD2 (or Black Monday) by future historians?

I wonder. The richest 400 families in the US in 2000, had a wealth of about $1 trillion. In the last 8 years, that grew to $1.6 trillion.3 If you take away the $1 trillion loss Bush claims happened on Wall Street yesterday, that only leaves $.6 trillion. Oh, too bad. I don't know how those folks will survive. There can't possibly be any connection between deregulation and greed, can there?4

A fix has to be in the works and passed; doing nothing will only exacerbate the problem--at least that's what all the economists seem to be saying.5 Interest rates have been too low, the housing market has collapsed, and all those bad mortgages (created after deregulation) have ballooned. I wonder who gets penalized? The moneylender or the ignorant homeowner? So far, the mortgage side of things is winning.6

Sources:
1. http://www.msnbc.msn.com/id/26774653/
2. http://www.cnn.com/2008/POLITICS/09/23/mccain.bailout/index.html
3. http://moneycentral.msn.com/content/invest/forbes/P129955.asp
4. Greider, William, The Nation, "Waiting for the Big One", Sept. 10, 2007.
5. http://www.usnews.com/blogs/capital-commerce/2008/9/19/analysis-washingtons-trillion-dollar-wall-street-bailout.html.
6. http://www.msnbc.msn.com/id/26837854

The S&L Crisis, Part Deux

For those who don't remember, I offer a history lesson (as well as a political one). Up until the last year & 1/2, Congress has been controlled by the Republican Party--for 16 years! For the last 4 or so years, all THREE branches of government were Republican controlled. Right now, the Dems have a 1 vote lead in Congress--and you can't count Lieberman, because he's really a Republican in a blue coat. In order to override presidential vetos, you need 2/3 of Congress to agree--well, we ain't there yet folks. Bush likes to veto and he likes to do signing statements, changing many of the laws in favor of deregulation.

Now for the history lesson. If you were cognizant during the 80's, you might recall the S&L Crisis under Reagan. If not, go to http://www.uwsa.com/issues/cfr/quicksandl.html (or do a Google search on the S&L Crisis). Lending requirements were loosened, enforcement & oversight were reduced, etc. Foreclosed homes were placed under the RTC (Resolution Trust Corp) for auctioning instead of handled by local real estate offices. The result was things like $200,000 homes selling for $1200. In some cases, those winning the auctions had ties to the current administration (George Bush senior was one of them). One of the failed Colorado S&L's was run by, can you guess who? Jeb & George Jr. John McCain was one of the notorious Keating 5 that led to the crisis in the first place--and it cost the taxpayers over $124 Billion!

Fast forward to 1999 & we see history repeating itself. The Republicans once again began easing regulations such as Glass-Seagull (passed in the 30's to stop this sort of thing). Republicans had been chipping away at it in 1983 & 1987. Gramm-Leach-Bliley eliminated the rest of the New Deal regulations, leading to a massive amount of consolidation within financial markets. The result was risky investments designed to maximize profits.

So, here we are all over again. Another Bush in office, a series of deregulations by the Republican-led Congress
Look at Enron & Worldcom & ask yourself, "What regulations were passed to avoid this from happening again?" None. Did I mention Gramm is one of John McCain's advisors?

Sources:
1. http://www.progressivehistorians.com/2008/02/how-s-crisis-is-repeating-today.html
2. http://www.uwsa.com/issues/cfr/quicksandl.html
3. http://www.fdic.gov/bank/historical/s&l/slbib9.html
4. http://www.wmsa.net/People/john_mccain/ariz-republic_chap_V_1999.htm

The Real McCain

Here's a website, with videos, in case you want to find out more about John McCain. Such as:

1. His stand on oil drilling & Big Oil

2. His health records

3. His houses (at last count, 9)

4. His stand on veteran benefits

5. His position on Iraq

The website is http://therealmccain.com/ (or click the header to this blog).

Wringing our hands over Oil

When Hurricane Ike made landfall yesterday, I noticed the price of gas at the local Citgo rose from $4.09 to $4.19. Now, perhaps gas rigs came in yesterday and dropped off their latest load which, coincidentally, increased in price .10/gallon. Maybe Citgo watches the market and prices accordingly? I don't blame the gas station; they're a retailer operating on slim margins.1 Maybe investors are at it again; Ike's 'a comin' and refineries in LA & TX could reduce availability. Economics goes into action: supply is reduced, demand stays the same--price goes up. The only problem is, the supply hasn't been reduced yet. I guess I don't get economics.

Even oil company execs agree that the US is a "declining oil province and have been for 25 years." 2 What seems to be the common denominator among anyone with any energy knowledge (according to all the sources I've found) is, gasp, conservation. As Nelson Schwartz, Fortune's Europe editor, noted in 2006, "a serious push for conservation would get the attention of the energy markets and drive prices lower."3

Oil-producing nations are wary. On the one hand, prices are higher than ever, but production is stable or, in some cases, down. G. Bush has met with the Saudis to try to get a release of more oil, while Congress is pushing for sanctions.4 The mantra is "why are we buying oil from the terrorists." That in turn makes the Saudi's worry. Mike Schaefer of Energy & Capital gives us this history lesson: In 1985, the Reagan administration made a pact with Saudi-Arabia to reduce the price of oil. This would hit the Soviets hard, making it more difficult for them to influence other countries in the area. The prices dropped from $26.46 to $10.25 in about 3 months. The Soviets couldn't keep up because their oil prices were much higher; their economy began to collapse. However, the Saudis (and then the rest of OPEC) now had a trick from our playbook.5

According to Schaefer (The Truth About Oil, Part 2, Energy & Capital, Jan.12, 2007), the lesson OPEC learned was how to "cook the books." Somehow, between 1989 and 1990, Saudi officials claimed oil reserves increased by 87 billion barrels--without finding any major new fields. Five other OPEC countries magically added more reserves as well (see images above). What does this mean? There's even less world oil than we think. Add to that the fact that countries are increasing their demand, and I think you get the picture (if not, go to http://www.energyandcapital.com/articles/oil-reserves-decline/340). Schaefer later points to Canada and extracting crude from oil sands. He also reminds us that the strength of the dollar is directly tied to oil supply and cost. This is proven by the countries who've already shifted their currency from US dollars to the euro, resulting in the huge devaluation of the greenback.6

While Schaefer fails to expound on the conservation issue, others pick up the mantra. You can find video discussions on all energy-related topics at http://video.energypolicytv.com/displaypage.php?vkey=3a8d6aa2308357a268a7&channel=Conservation. I'm sure you can search the web and find writers who insist there isn't an oil shortage, that the reserves are actually much higher or that it's all just politics. But, what if they're wrong? How can you tell? Shell Oil officials are worried that demand for oil and gas will outstrip supply within seven years. 7 (Of course, they want the price to stay high, so there's an ulterior motive). OPEC insisted, a few days ago, that there's no shortage on the oil market. 8 Did you know you have to ask "what type of oil?" Light, sweet crude, which is easier to refine, is in short supply. Heavy, sour crude, with a higher sulfur content, is harder to process, but is more available.9

According to an article by Ismael Hossein-Zadeh, supply is probably at parity with demand, perhaps even a little higher. 10 So, why is the price of oil and gas still outrageously high? Hossein-Zadeh believes it's because of war and geopolitical instability. "...the current oil price shocks are caused largely by the destabilizing wars and political turbulences in the Middle East. These include not only the raging wars in Iraq and Afghanistan, but also the danger of a looming war against Iran that would threaten the flow of oil out of Persian Gulf through the Strait of Hormuz."

"To sum up, manipulative speculation and dollar depreciation account for most of the recent increases in the price of oil—speculation accounts for nearly 60 percent, dollar depreciation for almost 40 percent. This is no longer a secret. What remains largely a secret, and needs to be exposed, however, is the relationship between speculation and dollar depreciation, on the one hand, and war and geopolitical instability, on the other."11

Wow. When I started writing this article, I really had no idea that it would result in the following solution: if we get out of Iraq, oil prices will go down!

Sources:
1. http://www.energybulletin.net/node/8994
2. http://money.cnn.com/2006/02/08/news/international/pluggedin_fortune/index.htm
3. Ibid
4. http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=&xml=/money/2008/05/15/bcnoil115.xml
5. http://www.energyandcapital.com/articles/oil-consumption-world/337
6. http://www.energyandcapital.com/articles/oil-saudi-ghawar/343
7. http://business.timesonline.co.uk/tol/business/economics/wef/article3248484.ece
8. http://www.chinadaily.com.cn/world/2008-05/09/content_6673565.htm
9. http://www.energybulletin.net/node/2341
10. http://www.counterpunch.org/zadeh07122008.html
11. Ibid

1984, History, and Government

Like watching movies? Try one of these movies & other media, posted in chronological order.

1. George Orwell, 1984, the classic book on government-speak (war is peace, freedom is slavery, ignorance is strength and it's not an "escalation", it's a "surge"). If you enjoy reading online, go to http://www.mirrors.wiretapped.net/security/info/books/george-orwell--1984.txt. Written in 1948.
2. The Secret Government: The Constitution in Crisis (Bill Moyers, 1987, http://video.google.com/videoplay?docid=3505348655137118430). 90-minute documentary covering Reagan & the Iran-Contra Affair.
3. Haynes Johnson, Sleep-Walking Through History: America in the Reagan Years, 1991, Doubleday. Discusses how America became a debtor nation and ethical misconduct resulted from deregulation and ideology.
4. Capitol Crimes, an expose on corruption in the Bush Administration, in 4 parts, so plan on 90+ minutes. (Moyers, 2006, http://www.pbs.org/moyers/journal/08012008/watch.html. Get an August '08 update at http://www.pbs.org/moyers/journal/08012008/profile.html.)
5. Inside the War on Terror (http://www.pbs.org/moyers/journal/07252008/watch2.html, July 2008). ~10 minute interview of journalist Jane Mayer on torture. Includes a transcript.
6. Scott McClellan's book, What Happened, blows the lid on the Bush Administration's use of falsehoods to get America involved in war in Iraq. (see 20 minute video at http://www.ireport.com/docs/DOC-33104). Also see Mike Green's book, The Whole Truth about the US War on Terror.
7. The Brookings Institution, Political Corruption in the US and Around the Globe (short read, looks to campaign finance reform, April. 08 (see http://www.brookings.edu/opinions/2004/0428corruption.aspx). Want to see who pays for what in this country? Go to http://www.opensecrets.org/index.php.
8. Corruption at Fox News & Rupert Murdoch, see http://www.disclose.tv/viewvideo/8556/fox_news___CORRUPTION/. The story itself is unsettling; about 11 minutes.

More Reasons Not to Vote for McCain

As if you needed more, here are my picks to date. If you click on the name of this blog, it'll take you to Bill Press' website where you can see even more.

1. He voted against raising the minimum wage 19 times.
2. He voted against veterans benefits and the GI Bill.
3. He was part of the Keating Five (dirty dealing with Charles Keating)
4. What "maverick" votes with George Bush ~90% of the time?
5. He's in favor of off-shore drilling (after being opposed to it).
6. He graduated 894 out of 899 from the Naval Academy. During his military flying career, he lost five Navy aircraft. He doesn't support POW rights. That makes him a natural for Commander in Chief?
7. He agrees with Bush's illegal wiretapping.
8. He doesn't know anything about the economy & we're a nation of whiners. Remember, you're not rich unless you make over $5 million.
9. He's in the pocket of big oil, taking over $2 million in campaign contributions. He also has a pro-big oil running mate whose husband works for BP.
10. He wants to continue the war in Iraq for 100 years. Oh, and let's bomb, bomb, bomb Iran while we're at it.




Sources:
1. http://thinkprogress.org/2008/08/31/mccain-minimum-wage/
2. http://www.bloomberg.com/apps/news?pid=20601087&sid=a9ZsiYWjIyxc&refer=home#
3. http://www.azcentral.com/news/specials/mccain/articles/0301mccainbio-chapter7.html
4. http://www.aflcio.org/issues/politics/mccain_bush.cfm
5. http://usnews.feedroom.com/?fr_story=FRdamp291545&rf=sitemap
6. http://www.guardian.co.uk/world/deadlineusa/2008/jun/12/falloutfromthegitmoruling
7. http://www.huffingtonpost.com/mark-kleiman/one-interview-two-gaffes_b_105968.html
8. http://www.voanews.com/english/archive/2008-07/2008-07-14-voa27.cfm?CFID=37941943&CFTOKEN=10795194 and http://www.latimes.com/news/nationworld/washingtondc/la-na-rich18-2008aug18,0,1063695.story
9. http://www.youtube.com/watch?v=QJPo5IGTd0A
10. http://thinkprogress.org/2008/01/04/mccain-100-years/