Sushi Money

Okay, time’s up.  Raise your hand if you’re a supporter of the bailout, or the stimulus… at least to the degree that it once was?  The hands are becoming fewer as the bailout and stimulus have currently been shaped.  In fact, it’s hard to decide what to really support with the current stimulus debate, other than a strong desire to see our elected leaders get their act together and stop preaching catastrophic disaster every other day.   How about a little leadership?  Working with each other quietly and confidently, reminding the nation of our strengths and showing how we can overcome these challenges in a strong, united fashion?  Alas, that’s not what we’re seeing.

I mean really… does it inspire anyone to see the President and other folks pushing their version of the stimulus package so ardently that they believe resorting to scare tactics is in the best interest of the nation?  Taking the scare parade on a national circuit? Yes, they must really believe what they say.  Which is even scarier.   We are all concerned, and we all feel for those most affected by the economic crisis.  But town hall meetings across the nation to drum up support for the stimulus?  A lost decade? 

“The plan is not perfect. No plan is. I can’t tell you for sure that everything in this plan will work exactly as we hope, but I can tell you with complete confidence that a failure to act will only deepen this crisis as well as the pain felt by millions of Americans,” he [President Obama] said.

All I want to know is why the President and the Democrats think, with complete confidence mind you, that their plan is the best plan?  Don’t get me wrong- I like the fact that our government is working hard to do something, but what that something is has people staying up at night.

It’s enough to make you think that the “do nothing” side of the debate has merit, as in “First do no harm…”   But the harm has already been done by action or inaction, depending upon your viewpoint.   We don’t need more potential harm.

In my view, a super giant political spending bill code named a “stimulus plan” isn’t something that seems appropriate for the crisis at hand.  How President Obama can defend Senator Pelosi’s grand ambitions is beyond me.   We’ve been there before, and instant replay isn’t going to make it better.  And the Honorable Ms. Pelosi’s party has been in power since the 2006 elections after all.

“In the afterglow of President Obama’s inauguration, it’s easy to forget that Mrs. Pelosi’s similarly historic elevation to the speaker’s chair just two years ago had its own elements of a coronation — and its own claims of change we were to believe in.”

“The way Mrs. Pelosi handled Iraq has some interesting parallels to the way she is now handling the stimulus. In the early months of her speakership, the Democratic Congress faced its first test on Iraq in the form of a war funding bill. Mrs. Pelosi’s response? To lard it up with billions in unrelated domestic spending — including a now infamous provision that would have spent $74 million for peanut storage.”

Honestly I think there are some positive, constructive things we can do- and that both political parties should have a stake in crafting this enormous legislation.  But adding billions of tax-payer dollars for “do-good” initiatives and “nice-to-have” goals is not something that’s going to make a difference in the immediate future.  Why not focus on the crucial and necessary things… and then examine and revise as you go along?  Why spend decades of our children’s futures all at once?  Why risk making things worse? 

 ”If you find yourself in a hole… the first thing to do is stop digging.“   Texas Bix Bender

That’s my greatest concern… we’re going to exacerbate the problems and prolong the recession… or worse, foster an economic climate that leads to the Big D.   None other than Jim Rogers sees precisely that, and believes our leaders will indeed make things worse.

Rogers said Geithner, who was president of the New York Federal Reserve Bank, “has been dead wrong about everything for 15 years in a row,” and so was President Barack Obama’s economic advisor Lawrence Summers, who acted as Treasury Secretary at the turn of the century.

“It is mind-boggling to me, if I were on your show 15 weeks in a row and was wrong, you’d probably never invite me back. These guys have been wrong year after year after year consistently and here they are making the same mistakes again. This is not going to solve the problem, it’s going to make it worse.”

He said he was not contemplating investing into financials, as bankruptcies were still possible, and banks were still trying to find out how affected they were by the crisis.

“What’s happening is they’ve all panicked, cutting back everything, trying to see what they’ve got,” Rogers said.   “Everybody is frozen, trying to figure out ok, what are we worth, what do we do?”

In addition, the recent shifts towards protectionism are harmful, Rogers warned.   “This is very dangerous, that’s what caused the great depression in the 1930s. If it happens again, then you’d better sell all the stocks, you’d better sell a lot of everything and bunker down,” he said.

“We already have a lot of social unrest developing. If protectionism comes back, you’d better be really, really careful.”

Oh boy… with opposing views like that it’s hard to swallow the President’s “complete confidence” statement.   And although the Fed Chairman is pledging transparency (it’s about time…), many believe that won’t make any difference. 

And even Treasury Secretary Geithner’s plan… whatever it really is, hasn’t been very well received.

“Investors greeted Mr. Geithner’s speech with dismay and the Dow Jones Industrial Average shed 300 points. Lawmakers Monday night, on being briefed by Treasury officials, were also irked by the lack of details, according to people present.”

“The absence of detail speaks to the thorny issues that lie at the heart of the financial crisis: how to value the toxic assets causing banks to report losses and how to shuffle aid to homeowners and stem the rise of foreclosures. Many of the potential solutions come with a host of fresh problems, which Obama officials have grappled with much as their predecessors did.”

But there are some potential winners and losers in the stimulus plan, and money is sure to go to a lot of places we don’t really understand.  Whether those places really do anything to help us climb out of this economic pit is the real question.  I’m not holding my breath.

Bail-out this, and bail-out that.  I know it’s serious and the country is facing so many challenges.  But I’ve got to admit I’m tired of hearing about it all.  You would think Congress holds hearings and press conferences simply to amuse themselves.  Either that or they don’t have a clue about what to do at this point and are hoping for some magical consensus as a way out of the mess. 

But when I look into my heart of hearts, beyond my concerns about the wise use of taxpayer dollars and the exponential increase in the national debt, I also have to admit that I really hope we can put together some kind of a bailout package for the big-three U.S. auto makers- Ford, GM and Chrysler. 

It was hard to put those feelings into words exactly, but after watching banks fail and huge bailouts for the big Wall Street institutions, I was shaking my head wondering why we couldn’t put something together for the auto makers- the icons of American industrial greatness through generations.  After all- if these guys go bankrupt, then what about every supplier and finance company that are so deeply tied to them?  What about the untold thousands of employees whose jobs are linked to the auto industry?  What about all the mom and pop businesses that support and rely on those workers and companies?  And who (else?) is going to want to buy American cars, especially if they are worried about warranty’s, maintenance and a car company still being around in a few years?   

I could go on and on, but today I came across Ben Stein’s article, Bail Out Detroit – Now and I just couldn’t say it any better. 

“I get sick when I hear about how this or that professor says we cannot have bailouts in a free market. Really? How about the bailouts the professors get because gifts to colleges are tax free? How about the bailout they get because if they have to teach six hours a week they feel overwhelmed, while the guy on the line in Dearborn works a grueling forty and doesn’t whine about it?”

“Somehow, we can give bailouts to investment banks where the top dogs make hundreds of millions a year for running the company into the ditch and wrecking the whole credit picture in America. Somehow we can have bailouts for Fannie Mae and Freddie Mac, whose bosses were trading on the credit of the taxpayers to make themselves rich while pumping up a serious housing bubble.”

“Amazingly, we can have whole fleets of C-130’s fly to remote areas of Iraq and Afghanistan with pallets of hundred dollar bills piled from floor to ceiling. Then we can pass them out to warlords who make tea for our soldiers one hour and blow their guts out the next. We can send CIA operatives into Somalia and give millions, maybe hundreds of millions, to warlords to fight other killers.”

“But we cannot find it in our hearts to save our fellow Americans in Ohio and Michigan and Indiana who make the cars and trucks that about half of us buy? We can send billions to Germany and Japan to bail them out after they bombed us and killed our POWs and killed six million Jews. But we cannot help the children and grandchildren of the men and women who fought our war and made us the arsenal of democracy?”

“Something is very wrong here.”

“…And why are we so angry at the car companies’ executives? They get miserable pay by Wall Street standards and have much harder jobs. Why are we so angry at the unions? They negotiated their deals in good faith. It’s not their fault that roller coaster gasoline prices messed up their world. They are our brothers and sisters. They fight our wars. They maintain our middle class lives. Maybe they get paid a lot, but they have been giving back for years. When will it ever be enough? And what about the retirees? They get the benefits they were promised. If those can be taken away, then whose benefits are safe? And do you think it will be cheaper if the government takes on those costs directly?”

“Let’s stop the Depression before it starts. Let’s show some fairness and good faith to our own. Let’s bail out the Big Three, help them slim down, shape up, and keep making great cars and trucks. The Big Three are us and if we cannot help ourselves, who can we help?”

 Bailing out Ford, GM and Chrysler is the right answer, and I hope our legislators get it right- or at least get it started right.  It’s not going to be an easy road, or the final answer.  It will take time and the taxpayers are going to pony up for a lot of it.  But it’s who we are, and in the end- if we let these guys fail altogether, it’s going to cost us a heck of lot more.

How does a well educated middle-aged registered nurse end up losing $400,000 to scam artists?  For the life of me I can hardly understand how this is possible, especially because it’s such a well known internet scam and involves the red-flag word “Nigeria”.   This otherwise intelligent (maybe not) woman emptied her husband’s retirement account, and took out loans on their house and car all to continue sending money to thieves half way across the world.

“It turned out to be a lot of money up front, but it started with just $100.  The scammers ran Spears through the whole program. They said President Bush and FBI Director “Robert Muller” (their spelling) were in on the deal and needed her help.“

Ahem… well, you see Presidents and FBI Directors don’t ask regular people for help.  Unless they’re behind in the polls for re-election perhaps… But important people have, you know- other people to do that kind of stuff for them?

“They sent official-looking documents and certificates from the Bank of Nigeria and even from the United Nations. Her payment was “guaranteed.”  Then the amount she would get jumped up to $26.6 million “ if she would just send $8,300. Spears sent the money.”

“More promises and teases of multi-millions followed, with each one dependent on her sending yet more money. Most of the missives were rife with misspellings.”

Okay, I guess if someone’s going to give me a lot of money I won’t hold their spelling problems against them. 

“When Spears began to doubt the scam, she got letters from the President of Nigeria, FBI Director Mueller, and President Bush. Terrorists could get the money if she did not help, Bush™s letter said. Spears continued to send funds. All the letters were fake, of course.”

Oh boy.  Even worse, she was told it was a scam by relatives, friends and other professionals, and was advised to stop- and still she kept sending money.  No offense Ma’am, but I hope your nursing judgement is better than your everyday, ah, money handling judgement.  

This type of “Nigerian” scam is a called “advance-fee fraud” and it has been around for a long time.  Even worse, it’s reaching an epidemic level and people keep falling for it!   What’s the best way to avoid it?  Just don’t reply to any email or letter than has anything do with Nigeria for one…  more importantly think about these words from the Federal Trade Commission:

If You Receive an Offer

• If you’re tempted to respond to an offer, the FTC suggests you stop and ask yourself two important questions: Why would a perfect stranger pick you ” also a perfect stranger ” to share a fortune with, and why would you share your personal or business information, including your bank account numbers or your company letterhead, with someone you don’t know?
• And the U.S. Department of State cautions against traveling to the destination mentioned in the letters. According to State Department reports, people who have responded to these “advance-fee” solicitations have been beaten, subjected to threats and extortion, and in some cases, murdered.
• If you receive an offer via email from someone claiming to need your help getting money out of Nigeria ” or any other country, for that matter ” forward it to the FTC at spam@uce.gov.
• If you have lost money to one of these schemes, call your local Secret Service field office. Local field offices are listed in the Blue Pages of your telephone directory.(I never knew that!?).

Admittedly some people get involved in a scam and it becomes an obsession to fix it, get their money back or it becomes some type of self-denial.  That’s such a shame, and it must border on psychological issues sometimes.  But apparently the woman in the article above would like other people to know her story so maybe it can prevent someone else from falling into this trap.  Good for you lady, and thanks for sharing it.  It’s too bad you couldn’t have done so earlier without losing so much money.   

It also upsets me that our government, and the governments of Nigeria or other countries cannot do something to prevent or remedy this type of situation.   It’s bad enough when we’ve lost 36% over the course of a year in the markets- but to just give our life savings away to scam artists?   Don’t fall for it!

For More Information

More information about Nigerian Advance-Fee Loan scams is available from the U.S. Secret Service (www.secretservice.gov/alert419.shtml).

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad. 

In these last days before the election I find myself amazed at the emotions and tactics of the political candidates and their followers, on both sides of the aisle and at both the national and local level.  This surely is one of the most fascinating, if not important elections we have faced in decades. Today I’m stepping out of the financial discussion to share a few thoughts on the election.  This may frustrate or disappoint some of you, and it may please others.  Whether you agree or disagree, that’s fine.  I respect your views and the choice that’s right for you.  I’ll even try to put up a guest post with opposing views if someone sends it in.  But for today, here’s mine:

Who am I voting for?  McCain.  Why?  Primarily because I believe he has a better vision for the future of the nation, as well as a philosophy that strengthens rather than weakens the foundations of society over time. 

I’m voting for McCain not only in terms of my views on national security or economics, but more importantly in considering the basic elements of what one believes about freedom and democracy.   At the heart of these beliefs, for me, is an understanding that the individual in society is the strength of that same society. Whatever we do to help grow, foster, improve and assist that individual in realizing their potential and expanding their ability to contribute to society is essential both for them and the nation as a whole.  

One of the growing socio-economic buzzwords is the term human capital.  Human capital refers basically to the inherent skills and knowledge that an individual may possess in order to contribute to society and produce economic value both personally and for that society.   One of the hallmarks of America has been to establish a foundation of freedom that allows this tremendous drive by individuals to grow and succeed, personally and professionally, and to seek ”…life, liberty and the pursuit of happiness.”    I prefer to think of it the same way as Benjamin Franklin:

“All the constitution guarantees is the pursuit of happiness. You have to catch up with it by yourself.”              

The expansion of human capital through the economic fabric of our free American democracy has arguably fostered the greatest revolution of invention and creative genius in history.  Yet it isn’t perfect.  What society is?  Even with the current economic challenges we face, the grand experiment of American democracy has been an incredible success story that continues to foster industrial, technological and environmental change throughout the world.  More importantly it places people first, acknowledging both the value of human rights and the value of human life.  Something that far too often is forgotten about most of the world in which we live.

We owe that strength and genius not to the nation of America itself, but rather to its people.  And the only way we are going to continue fostering the strength of the American nation over time is to continue empowering people as individuals, and not as recipients of government programs and largesse that increasingly demands adherence and holds their future hostage. 

I read a message on one of the news sites today that was interesting.  I think it’s a creative story and not a real event, but it makes an interesting point:

“Today on my way to lunch I passed a homeless guy with a sign that read “Vote Obama, I need the money.” I laughed. Once in the restaurant my server had on a “Obama 08″ tie, again I laughed as he had given away his political preference- just imagine the coincidence. When the bill came I decided not to tip the server and explained to him that I was exploring the Obama redistribution of wealth concept. He stood there in disbelief while I told him that I was going to redistribute his tip to someone who I deemed more in need–the homeless guy outside….”

Maybe the waiter would actually smile, and say “Good idea!” if this were to happen.  Probably not however, because few of us like having our money taken from us and being told we must give it to others.  Choosing to do so is one thing.  Not having that choice is another.

I believe Obama’s vision of change and “economic justice” to be lacking in understanding for the basics of freedom and democracy, and that it devalues rather than empowers the individual in society over time.

And quite frankly I would rather politicians work to legislate for structural  economic foundations, with evolving regulatory approaches, that support free enterprise rather than redirecting the hard work and success of some to those that may do little to earn it.  I believe the dreams, creative vision and efforts of hard-working Americans actually lift up the nation over time, and that if we make taxes too burdensome, and focus on re-distributing the products of their success to those who do not earn it can only serve to undermine the fabric of the nation.

I do believe we must give and share with those who may not ever be able to achieve or survive on their own, or without help in so many areas.  But giving of your own volition is one thing.  Having your money taken and being told that you must do so is another.  Rather than government deciding who are the deserving among society to receive the wealth of others, we must foster a nation that lifts up the poorest and those who are struggling. 

We can teach, train, volunteer, and give of ourselves in so many ways, and government can help establish programs and structures to facilitate those goals.  But economic justice is far more than being “neighborly” by taxing the rich, and handing out money to the poor.  It’s a balance to be sure, but Obama’s views- and those of Pelosi, Reid, Frank, Dodd, etc., are balanced much too far to the left.

Essentially I think America needs McCain more right now than we need Obama. 

Yet from the polls, media blitz and just about every other indicator, it looks like Obama has some incredible force that may sweep him into the Presidency this election.  If so then perhaps I’m voting with the minority.  Maybe the nation needs a pyschological shift of energy or some zen-like aura of charismatic change that Obama seems to bring for so many people.   But I just don’t see it.  I would rather focus on McCain’s experience and practical approach to moving the nation forward, rather than some lofty, unscripted vision of change. 

In the car this morning I actually heard two religious hymns being sung with Obama’s name in them, holding him up even as “holy.”  I have to admit that was a little shocking to me, and I’m not even an ardent religious observer.  I have to wonder if in times of national challenge or crisis that people might be flocking to someone new, someone they want to believe in and that can “save” America?  Have many of our fellow Americans replaced their religious views with a secular perspective that is looking somewhere for hope, and are they now looking toward Obama to provide that level of dramatic change?  Maybe so.  Whoever wins the Presidency, I do think the country will be fine.  But it’s going to be a very interesting ride depending upon the direction we take.

Spent a great weekend mostly outdoors enjoying some beautiful Autumn weather.  Don’t you just love this time of year?  The leaves are changing colors, the air is crisp and cool, and it gives us a chance to catch up on things we’ve put off for too long. It’s also just plain fun to explore the countryside and get out a little more, especially with lower gas prices! We even marched in a parade this weekend, listening to the sounds of a high school band.  For all the challenges the nation faces, it’s great to see people involved in the community and enjoying the timeless traditions each year.

Gas prices in our area have fallen drastically in recent weeks.  You can sense relief at the pump when filling up.  It’s all part of the great unwinding of leverage.  The more we read about the financial mess it appears that hedge funds and other large insitutions have caused much of the drop in share prices through liquidation of investments in order to raise cash.   Some people believe this unwinding will continue with more downward pressure on stocks.  Others believe we’re close to a bottom, and even Warren Buffet is pitching to buy stocks right now.

As for oil prices, we don’t see those “experts” talking about $200 or $300 oil anymore. In fact, many people believe oil could fall below $60 a barrel for some time, and OPEC is scrambling to put production cuts to shore up prices.  

“OPEC, supplier of about 40 percent of the world’s oil, may pare output by 1 to 2 million barrels a day in stages to stabilize prices, said Chakib Khelil, the group’s president. Deutsche Bank AG lowered its 2009 crude oil price estimate by 35 percent to $60 a barrel, citing the possibility of a “major world recession.”  

Maybe they’ll succeed for a time, but how anyone can say that consumer demand was the primary reason for the runup of oil prices is beyond me.  Yes, there is huge demand for oil- too much demand as the U.S. is dependent on foreign oil and prices rose sharply. But that is only because supply was so restricted, and speculation by investors also impacted demand.  Speculation has played an enormous role in our oil markets in recent years and now we’re seeing prices stabilize with the unwinding of leverage and credit crisis impacts. 

But guess what?  Lower oil prices may not last beyond a few months or a year or two because the world’s appetite for oil continues to increase and we’re still not producing enough here in the U.S.

There is real demand for oil globally, and there are only so many places we can get our oil from. So yes, the price we pay for oil will be driven by the demand and the supply of oil we can produce or import over time.  Investors will also return to the oil markets and at some point we’ll see prices rise again.  Let’s hope that between increased production in the U.S. and reduced demand through higher mileage and alternative vehicles, that prices won’t rise quite as high as they did this year.

****************

In other news I will say that I was bothered that Barack Obama raised over $150 million dollars during the month of September alone.  That’s more than George Bush and John Kerry raised combined during the 2004 election!   Why does that bother me?  Mostly because he’s taking money from private sources, instead of public funding like John McCain.

With public funding, we know where it comes from, who gives it, and there are detailed records and accountability.  Senator Obama had earlier pledged to stick to public funding, but later changed his mind and broke that promise, taking millions from private sources instead.  Where is that money coming from?  Who are the people and institutions that are “buying their way” into the campaign coffers of one of our Presidential candidates?  

I’m no expert but I thought that campaign finance reform was supposed to reduce that type of thing?  In any event, Senator McCain is not lacking for funding either, although he’s behind Obama.  McCain received a big chunk of matching dollars to help finance his campaign:

“Helping Sen. McCain keep up was the one-time, $84.1 million in taxpayer matching money he received in September. Sen. Obama won’t get such a one-time payment because he opted out of public financing after first suggesting he would participate, a decision that has cost him some political points.”

“Public financing gives candidates taxpayer money for their campaigns, but it also requires them to hew to spending limits and essentially stop fund raising for themselves during the general election. The parties can continue raising money for the candidates; however, much of their spending must be conducted independent of the presidential campaigns. By opting out of public financing, Sen. Obama is free to spend as much as he can raise.”

“McCain spokesman Tucker Bounds said the campaign can overcome the fund-raising mismatch. “We are going to be competitive because, despite Barack Obama’s best efforts, this is an election not an auction,” he said.”

“The Obama campaign has also fielded criticism from Republicans for what they say is a lack of donor transparency. Federal rules don’t require disclosure of donors giving less than $200. Small donors account for about half of Sen. Obama’s 3.1 million contributors.”

I will say that I’m tired of being bombarded with tv advertisements for the candidates. We don’t watch much tv, but do have it on in the evenings.  The “I’m so-and-so, and I approve this message” line is getting really annoying.  I find myself hitting the mute button, regardless of which candidate’s advertisements are playing.

I do have a preference for one candidate over the other at this point, but I would rather not make this a politically focused discussion.  I will say that I think the nation is so much greater than any one candidate, President or their administration.  If I have any concerns, it is more about a possible Liberal Supermajority taking over the nation’s highest offices as President and in Congress.  I don’t think either party should have a lock on both Congress and the Presidency.  That gives the politicians nearly free reign to pass whatever legislation they think is okay. 

Yet regardless of who is elected this year, I think we’ll be fine.  Both Senator McCain and Senator Obama should be able to gather effective representation within their party to lead the country through the recovery over the next four years.  It may be a little more painful in some areas such as taxation or spending cuts, but we’ll get through it.  I think the nation’s political focus also goes in cycles.  It may be time for more change than many of us are prepared for!  But in another four years we can revisit the process once again.  Have a good week.

When the nation is struggling economically, it is often those at the fringe of poverty or crisis that are the worst hit.  Add a natural disaster or two to the mix, and you have a prescription for hard times at its worst.  The American Red Cross, the Salvation Army and other relief agencies are having a difficult time raising funds to support their operations after Hurricane’s Ike and Gustav decimated the gulf coast.

In large part it’s just that the media interest has been focused on other things the past couple of months.  Instead of lingering news stories about the effects of the hurricanes, we’re now embroiled in the Presidential election and the financial crisis at the center of national interest.

But the hurricanes along the Louisiana and Texas gulf coast did an incredible amount of damage, wiping thousands of homes and businesses off the map and all but destroying the gulf seafood industry for years to come.  Did you know that the combined costs of Hurricane’s Ike and Gustav are forecast as second only to Hurricane Katrina?  The ongoing credit crisis is not going to make it easy for these states to rebuild their infrastructure either.  

But where’s the real national interest?  Where are the Hollywood stars traipsing through the streets?  Where are the MTV benefit shows and internet campaigns raising money for all of those displaced by this disaster?  The government’s response was much improved over Katrina, so we’re not reading story after story about the “failures of the system.”

But the real failures may be that the American public is not helping those in need as we’ve done in the past.  The national interest is just not there right now.  Whether it’s because of the lack of media interest, or that it wasn’t jazzy New Orleans that was hit we don’t really know.  But it looks like disaster fatigue has set in, not enough people are donating money and a lot of folks are really in need of help. 

For many of us living far from the region, the most efficient way we can help is by donating money to the organizations that put people and resources on the scene of the crisis. With that in mind, we’ve posted a few links to leading disaster relief organizations below.

All of these organizations provide an essential role in leading relief efforts, and getting food, water and coordinated shelter and clothing for people who need it. Especially for the children.  Please help in whatever way you can, or through your local relief organization.  Thank you!

American Red Cross Donation page

Salvation Army Donation page

Mennonite Disaster Relief donation page

Just when we thought the price of oil was finally coming down we get the rug pulled out by OPEC’s decision to reduce oil production by more than 500,000 barrels of oil per day.    Think U.S. dependence on foreign oil doesn’t matter?  It surely does, and gas prices in our area jumped by almost .20 cents yesterday all because these guys want to squeeze us and keep the price of a barrel of oil above $100.  That and maybe Hurrican Ike impacting the petroleum infrastructure.  But OPEC cites a “huge oversupply” of oil based on reduced consumer demand.  Maybe so, but I’m sure all the money we send to the middle east doesn’t bother them either.  

And are Russia and OPEC going to influence world energy markets?  What about Russia working with the Venezualan military?  So let’s see: OPEC, Russia and Venezuela.  Three of the world’s largest oil producers.  Working together.   And the U.S. is dependent on their oil.  Doesn’t sound like a friendly long-term combination if you ask me.  Aside from terrorism, is there a greater threat to U.S. national security than being tied economically to the oil production of these nations?

I’m thinking that the ”Drill Baby, Drill” mantra from the McCain-Palin team sounds pretty good right now.  Sure we won’t see it for a few years, but just making the decision to drill more of our own oil will have a significant psychological, and maybe financial, impact on the world’s oil markets.   With all due respect to the WSJ Environmental Capital blog, when could it ever make more economic sense than right now?! 

And I’m all for alternative energy, but that’s going to take time as well and may have great limitation to satisfying overall demand for U.S. energy needs.  It should not be mutually exclusive- it should all be part of a comprehensive energy plan.  Which we should develop at an Energy Summit.  Just saying. For a long time.  But it just makes absolutely no sense for the U.S. to limit our ability to sustain our own economic well being.  

In other news we find that speculation has indeed played a huge role on influencing the price of oil in energy markets.  And that’s a primary reason for the decline of the price of oil in recent weeks.  Sounds like somebody’s on to the speculators and maybe are finally considering action to limit this kind of volatility.

“An independent study of oil markets concludes that speculation by large investors was a primary reason for the surge in oil prices during the first half of the year and for the more recent price declines.”

“It said investors poured $60 billion into oil futures markets during the first six months of the year as oil prices soared from $95 to $145 a barrel and since then have withdrawn $39 billion from those same markets as prices have retreated.”

“Michael Masters of Masters Capital Management, which did the study, said the flow of money ” not major changes in supply and demand ” caused the volatile movement of oil prices. The report was released Wednesday by Senate and House sponsors of bills to put additional curbs on oil market speculation.”

Will that induce the Congress to do anything yet?  Time will tell. So far all we see is a lof posturing on both sides of the aisle.  I also filled up propane tank yesterday, or rather had a company come out to fill it.  We use a large propane tank to take care of home heating needs, and much like the little white barbecue propane tank it works just fine.  It’s the alternative to natural gas when you don’t have a gas utility nearby.  Only problem is that the price of propane has just about doubled over the past three years.   Winter heating costs are really going to skyrocket this year, especially for those using oil furnaces and home heating oil, and I suspect we won’t hear much outcry until it becomes painfully expensive.   

Of course by then we’ll have a new President and a new administration.  Will it bring change to our economic fortunes, our national security?  I’m sure it will.  The only problem with change however is what kind?  The kind of change I’m seeking takes care of our future security needs first.

So let me get this straight.   Officials around the world and within the U.S. say oil prices are at record highs because of the fundamentals of supply and demand.  We don’t have enough supply, and there’s too much demand. And speculation is not to blame.

And yet the great oil debate continues with many of the oil producing nations saying they don’t intend to increase supply because there is not enough demand and the market doesn’t warrant it.  Instead they blame excessive speculation as the real problem.

OPEC’s Secretary General Abdullah al-Badri called for measures to curb market speculation, a factor the Organization for the Petroleum Exporting Countries has said is driving prices to unjustified levels.

“We are not happy with the current level of price for one reason. It has nothing to do with the fundamentals,” he told the Reuters Global Energy Summit on June 10.

Saudi Arabia’s oil minister Ali al-Naimi says: “I am convinced that the supply and demand balances and crude oil production levels are not the primary drivers of the current market situation and that markets are already well-supplied.” (At the Jeddah Energy Meeting in June.)

He also says, “Supply is enough. The price is driven by many, many causes — most of which is speculation.” (At the World Petroleum Congress in Madrid June 30)

But others disagree, and even commodity experts within the U.S. argue over the Hunt for Oil Villians with many believing that speculation and futures contracts play little role in price increases. 

But then there’s the oil companies. Oil executives also think it’s a supply and demand issue.  The oil companies cite the lack of new supplies, and not speculators, as the reason for high oil prices.

Tony Hayward, chief executive of BP said the argument that financial investors buying oil futures were behind oil’s record levels was a myth.   “Supply is not responding adequately to rising demand,” he said at the World Petroleum Congress in Madrid.

At the same conference, Shell chief executive Jeroen van der Veer said “We don’t think that the financial markets are leading the speculation, probably they follow what other people fear as long-term fundamentals; I do not think that you can blame speculation for the oil price.”

Sounds like the U.S. is being squeezed from all corners and no one knows what the heck is going on.  And yet here we are with oil over $140 per barrel.  

Meanwhile the U.S. Congrees is scrambling to do something, anything, to placate voters.  And instead of blaming oil companies as they’ve done for decades, they’re finally looking for solutions.  Apparently they’ll do anything to prevent increased drilling, so Congress is trying to reign in speculation with at least nine proposed bills.

And this is not just a U.S. issue of course.  Officials in the UK are now trying to determine what’s to blame for high oil prices.  And think of the effect on poorer nations, and those living in poverty?  It’s a harsh reality, but the number of people suffering and dying from hunger is only increasing as fuel prices influence global economics.

Senator John McCain is now pushing for Energy Security and an expansion of domestic oil production.  Personally I think it’s about time.  It’s a valid point: In 1969 we sent astronauts to walk on the moon, yet in 2008 we are bankrupting our economy because we have not planned ahead for energy independence. 

The U.S. has not increased domestic U.S. oil production capacity in over 30 years, and instead we have placed ourselves in economic servitude to hundreds of foreign oil producers.   The last U.S. oil refinery was built and began operating in 1976, and for many years since refineries have operated near 90-100% of capacity.  Yet in over three decades, no new refineries have been built due to the burden of environmental and political regulation. 

And the U.S. is the only country in the world in which oil companies have been legally prevented from drilling for new oil reserves in order to produce enough gasoline and diesel fuel to supply our needs.  

If the Global War on Terrorism is about protecting America and other free nations at home, then we should be willing to do whatever it takes to bring down oil prices.  Our national security is not solely affected by terrorists abroad who wish to do us harm.  National security is also about economic viability. People are afraid of being able to sustain themselves and their families over the long term.

In the name of environmental activism and global warming mania, the U.S. and other nations have seemingly become bent on a course of economic self-destruction that harms not only U.S. families and individuals, but possibly has led to increased hunger and starvation of millions of humans across the world due to biofuel emphasis such as ethanol production.

œIt™s very hard to imagine how we can see the world growing enough crops to produce renewable energy and at the same time meet the enormous demand for food, says Professor John Beddington, the UK’s Chief Science Advisor at a sustainability conference in March 2007.   œThe supply of food really isn™t keeping up.

“By 2030″, he said, “the world population would have increased to such an extent that a 50 per cent increase in food production would be needed.” By 2080 it would need to double. But the rush to biofuels “ allegedly environmentally friendly “ meant that increasing amounts of arable land had been given over to fuel rather than food.

It’s a delicate balance.  U.S. environmental regulations are a good thing in general.  We appreciate and need clean air, water, forests and resource diversity. But taken to the extreme, we can tie our hands economically and end up hurting real people and the ability to grow the economy. I’m all about conservation and stewardship of natural resources. But people must come first in terms of the decisions for how we balance resource use. I don’t believe it is mutually exclusive- I think we can both protect the environment and balance resource use such as drilling for oil in ways that are environmentally responsible.

Business and consumer confidence are in my view the preeminent factors influencing economic strength going forward.  Whatever we do in regard to high oil prices must be framed in the context of assisting consumers and companies with improving their economic fortunes. 

If we have learned nothing over the last century it should be that a rising tide does indeed lift most, if not all, boats.  But at present, as the tide continues to recede this year we are seeing many boats in the name of job cuts, bankruptcies and foreclosures, left on the beach of the dwindling U.S. economy.

While Congress, economists and other experts are trying to figure out “who’s on first” we just need to roll up our sleeves and get busy becoming energy independent. 

Abbott and Costello were funny decades ago, and will still be funny many years from now. High oil prices are not very funny to most Americans and neither is watching the great oil debate in the media. But just maybe we’re finally recognizing that we need to do something different, and that’s a start.

For the record I agree strongly with Thomas Madden: America’s Days Aren’t Numbered. On this 4th of July we have much to be thankful for, and much to look forward to.

How many of us watch American Idol these days? I do… I just enjoy the passion and singing of the competitors, and even getting to know their on-air personalities. David Cook is amazing, but then they are all doing an incredible job. Tonight I was amazed with Jason Castro’s version of Over the Rainbow. Gold awaits many of these performers, and a marketing bonanza for the promoters. And tomorrow Idol Gives Back brings us a wonderful charity special.

Somewhere over the rainbow
Skies are blue
And the dreams that you dare to dream
Really do come true

I believe in dreams, and that we can help others to realize their dreams. What an incredible, heartfelt song.

That’s the mantra this week as Congress is set to grill oil company executives about fuel prices and supply concerns.  Well it’s more like the political folks have a chance to give some of the heat they’ve been taking from their constituents, back to the oil companies.  I’m all for that- not just to give the oil execs an earful, but also to see our politicians trying to find some answers.

What argument can be made in defense of big oil when they are reaping enormous profits each year?  It’s a business to be sure, and they are in business to make money like any other business.  But when the oil companies profit seemingly at the expense of the national economy, and mom and pop in small towns across America, then you have to wonder where our priorities are.

The problem is that Congress in all its wisdom may decide to tax the he#l out of the oil companies, and while that money goes straight to Uncle Sam to help pay (or expand?) government programs, it’s not solving the issue of getting more oil, or becoming more oil independent.  Think it’s going to change anything for the average family?  I don’t think so- in fact, gas prices will probably get more expensive because the oil companies are paying extra taxes.

Realistically, U.S. consumers pay some of the lowest fuel prices in the world compared to many other net importers of oil.  But that doesn’t change the fact that we are paying more than we have ever paid here in the U.S., and it affects the household budget at home in many, many ways.  Not the least of which are higher grocery prices.  Overall it’s sad that we have put ourselves in this position- but it’s the truth.  When no refinery has been built in the past 30 years in the U.S., what does that say about our priorities?  When we can’t further develop off-shore or Alaskan oil fields because the politicians are too concerned about their re-election and don’t want to appear anti-environment, then we are left to import oil from every third-world nation that has it. 

We are truly slaves to the oil trade- and we will pay what the market will bear.  The oil companies are not the really bad guys, but they aren’t helping matters either.   They’re going to grit their teeth and smile that toothy smile to make their margins.  But some of those margins are squeezed as well.  For example, in order to find and get at some of the vast resources of deep oil, they need specialized deep sea rigs.   These are amazing feats of human engineering. Billionaire John Fredriksen is Norway’s richest man, worth at least $7 billion, and he leases these things.

“His units are in such demand he can charge major oil companies nearly $600,000 a day to use them. Similar rigs were earning about $70,000 a day just five years ago. With leasing rates like these, a vessel that cost half a billion dollars to build can pay for itself in as little as four years.”

So who pays for the use of such beasts?  We all do.   We are all faced with limited supply, and too much demand across the world.  The oil is there- we just haven’t planned ahead and there are too many pigs at the trough.     I say bring back the Oil Price Wars, and let the government cut out the middle-man.   Oh wait… there’s probably not enough supply to have an oil price war.We do need to lessen our dependence on foreign oil. 

We need to foster alternative technology, and yes- we need to develop and build nuclear power plants to help supply our energy needs so we aren’t using natural gas or coal to do so.  And we need to stop kicking the empty can and try to produce enough of our own oil to fulfill the needs in our own country. Or we can abandon all that when someone invents the next miracle engine, fuel or transportation device…   

Personally I think we should build out a vast network of maglev trains and small commuter vehicles.  Begin in the suburbs of the major metropolitan areas and let them grow.  This could be the rail and gold spike victory for the next century.  And somewhere during that timeframe, we might even be able to abandon the use of oil for fuel altogether.