False Sense of Security – Oil Pricing

Don’t fall for the lower gas prices and be lulled into a false sense of security. Oil is below $40 a barrel for the first time in 5 years. OPEC met in Algeria and decided to slash production by more than 4 million barrels a day below September levels. However, traders responded and drove down the prices further saying it was too late to affect pricing into early next year. OPEC has not fully implemented the two million barrel cuts earlier this fall as getting all involved to comply will be difficult. For example, Russia and Syria made no plans to comply. But when production is finally reduced then pricing will rise.

Will we repeat the 70’s and ignore the 2008 warnings to move to alternative fuels? I hope not. Lower pricing or not, it is time to make the changes needed for the future. We need alternative fuels to enable a more stable future.

Another Windfall! Fishman Wins Lottery!

Talk about being in the right place at the right time!

Fishman, CEO of Washington Mutual, took over the helm in September of this year. WAMU was seized by the regulators just three weeks later and the assests were sold off to JP Morgan. What was his salary and bonuses for just three weeks on the job?

Signing bonus – $7.5m

Shares – 612,500 – became worthless

Parachute – $6.15m

Annual bonus – $3.65m (not sure if he received this)

Pocketed – At least between $11m and $18m

Not a bad three weeks work if I say so myself!

Rob Smith Jr. Hits The Nail in Politics

Rob Smith Jr. really knows how to make you laugh with his daily political cartoons. One of his newest below:

Politics: The Squeaky Wheel Gets The Grease

Bailouts are not a solution to the economic crisis.  Why just stop at one company when there are dozens of others that are dealing with financial hardship too?  When favors are given to one group then others automatically line up also. This will continue as long as the government continues to make promises. The original bailout plan has already been corrupted by political interests. For example, Farm Aid is already pushing for part of the bailout. Good politics is rarely based on good economics. We are on a very slippery slope!

Politics As Usual – No Changes Yet

Thanks to Rob Smith Jr. for the above cartoon!

Economy – More From Rob Smith Jr.

Politics As Usual – Another Bailout?

Automakers need to restructure and not be bailed out by money from the U.S. taxpayers. The automakers have already been approved for $25 billion for manufacturing cleaner cars, but their situation has worsened. Detroit’s high labor and costs from problems in the past have made it almost impossible for the big three to make it without monumental amounts of money. In 2004, the big three had 370,000 employees supporting 800,000 retirees. This is becoming an even greater burden as these companies downsize. Restructuring is the only way out.

You may find more information on this topic at Heritage.org.

The Economy – What America Owes

Did you know that 20% of our GDP is now owed to foreign governments and investors?  We now owe – are you ready for this – $2.67 trillion to foreign governments and investors. In 2001, we owed China $61.5 billion and today we owe $541 billion. Russia has also increased from $10 billion to $74.4 billion in just 8 short years. These debts are sold in the form of US securities and all the interest has to be paid.  So a big chunk of our wealth will still be going overseas in the years to come. Some of the other debts we owe are: Japan – $585 billion, UK – $307 billion, OPEC nations – $179 billion, Caribbean – $147 billion.

Source: US Department of the Treasury

Will Obama’s Stimulus Work?

As you know by now, we have a new President. And the challenges ahead would be daunting for anyone that makes it all the way to the White House. The Democrats are already pushing for a new stimulus check, so the real question is: Do stimulus checks work? Here are a few facts:

$78 billion was issued in stimulus checks the last go around.

$12 billion was spent.

$66 billion was saved or paid toward the consumer’s own debt.

Congress had hoped that Americans would spend all the money and boost the economy. Did not happen. Some economists believe the money would be better spent on our aging infrastructure which has increased economic activity in the past. So what do you think?

Lower Entitlements Means Lower Taxes

It is time for Congress to talk about fiscal spending and to curb any tax increases. Our prosperity is at risk due to entitlements. Tax revenues are surging into the Treasury and the tax burden is set to increase under the current law. The burden will continue to rise and reach a record high by 2026. A serious strategy is needed to reform spending, constrain entitlements and curb the projected growth of taxes. The four things Congress needs to do:

1. Reject any increase of the Social Security wage cap.
2. Reject any tax increases and impose no new taxes.
3. Make the Bush tax cuts permanent.
4. Fix and repeal the Alternative Minimum Tax.