Saturday, May 31, 2008

Jottings -Updates- Random Thoughts


It's been a while. Almost two months since I penned my comments on the Recession. We still have no Recession. Some may argue that a .06 increase to a .08 increase isn't very much. However, it's not a decrease. The classical definition is two quarters of reduced (negative) growth. We haven't had any. We may not

I can see some glimmers of the end of the economic downturn. If our politicians don't screw it up by pouring more money (and tax increases) on special interests that reward the quick and easy while purporting to save the slow and diligent. The credit freeze is starting to un-lax (Unwind and relax, My kids said that. It fits.) Loans are being made and people are buying big ticket items. The 47% Bonus depreciation that was included in the Free Money stimulus package will start to kick in in the Third and Fourth Quarters of the year.

Overall, I think we have a bit of "Stagflation" happening. Gasoline costs are driving up the prices of everything but we haven't had an increase in payroll. We are promised huge tax increases by the Democrats next year. So, people are moving their investments into assets. Inflation will make the assets worth more (really the same in constant dollars) Congress will get more money from bracket creep and the bonus depreciation will make the new items cheaper... The low dollar should be making our exports a great bargain. We should have lots of tourists from abroad spending their bigger money on our bargain destinations... But we cannot depend on these sources of income to help pull us around. I look for higher interest rates in the near and long term. We need to make investments in the US competitive and profitable again. I'd like to see us sell some gold and soak up some of the dollars floating around the world. That won't happen for fear of causing a panic.

Oil is a bubble. Anything above $30/bbl is a function of 1) war premium and 2) speculation by lots of big funds and soveriegn nations. Iran is hoarding their oil offshore in tankers. This removes several million bbls from the market and drives up the prices of transportation. In the meantime, Brazil has discovered an estimated 33 billion bbls in deep water offshore. They have tied up many/most of the deep water rigs for their exploration. China will develop the Cuban oil fields and the US will sit with pristine beaches and pay-pay-pay. Sometimes it seems we have adopted the Malcolm Forbes strategy from the 1970's. He urged America to use up everyone else's oil first and then develop our own resources. What we need is to get busy developing our alternatives...

Global Warming

At $6/gal we will change the way we live. At $4/gal we're starting to cut back. The whole Global Warming scam is designed to force us to live poor. The proposed Cap-and-Trade program for businesses is but the opening for personal carbon rationing. I can easily see a time when each of us will be given a ration card. As we use carbon we will be dinged. When we run out, we will be forced to buy more from our less active or industrious fellow citizens...or from the govt. Every gallon of gas, every kilowatt hour, every airplane flight will be subject to rationing.

This is Free Money for the govt. They will create an artificial shortage. They will sell us access to the carbon gases. They will control the supply and not have to actually produce anything in return. They limit the number of nuclear power plants. They limit refinery development. They limit exploration. They define what types of oil we can develop (No Oil Shale, No Canadian Tar Sands)... Of Course, as our Masters and Superior Beings traveling on Important Govt business, they will be exempt from the same rationing scheme.

Can't happen here-? Why not-?

What do we do when the earth turns cold-? Over the past 100,000 years cold has been the dominant weather pattern. We look at our industrial history and become frightened. We see how we have changed and advanced. Things that killed us by the millions 100 years ago are seldom seen by the modern doctors... We are afraid of our success. We have created a new religion that demands great leaps of faith because the scientific evidence is shallow at best. We now need to force everyone to sacrifice for the noble cause. Of course, being humans we all know that those who advocate the most sacrifices will be among the few suffering the least.

What do you think-?

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