August 08, 2011

Hell in a Handbasket

A Downgrade now, hopefully an upgrade in November 2012...


Posted by MEC2 at 07:53 PM | Comments (0)

March 24, 2011



The insatiable monster that is the government appetite for power, control, and expanding itself has GOT to be slain. They want to tax soda, toilet paper, mileage, EVERYTHING. It has stolen all it can from us, and stolen from our children and grandchildren - in the ultimate case of taxation without representation - and it's not enough. Awash in debt, it wants more. Always more. The debtasauraus will consume all until it brings this nation to ruin.

Yeah, it's been a few... years since I posted. But this had to be said. Note - I am 100% serious that huge deficit spending is taxation without representation. It is unconscionable to have a 1 trillion dollar yearly debt, much less the over 1 trillion yearly debt we've been saddled with since Obama and the Democrat Congress joined forces to absolutely EXPLODE the deficit. It's like they sat in a room, saw the amount of money they were proposing to spend and said "screw it, just spend it all!" Washington has been driving this country toward the cliff for decades, but the current Administration and it's cohorts have floored it and won't think there's a problem until there is no more road. All to feed government's insatiable appetite to centralize, subsidize, infantilize, and eventually, supervise every life aspect if they can.

It's likely already at an unrecoverable level - the dollar is likely going to inflate like an enormous balloon, because there won't be anyone left to soak up our continued issuance of debt, and those who have bought it will eventually want something for it, meaning too many dollars chasing real commodities. Disaster.

The monumental debt is the greatest national security threat this nation faces. Nothing has the potential to cripple our nation like the looming insolvency of our currency. To destroy our way of life, Al Qaeda shouldn't attack us, they should loan us money.

Posted by MEC2 at 07:47 PM | Comments (0)

April 11, 2006

Passing Gas

I'll be buying food this week, gas next week...

If there is one single economic indicator that affects the economic outlook of a vast majority of citizens - it's not unemployment, or the Dow - it's the price of gasoline. Outside of urbanized areas, which means most of the country, gas prices influence your outlook on everything from where you work to leisure activities. Feel like tooling over to the next town for the craft fair? That $5 admission comes with a $25 gas tab, so maybe not. Run to the local burger joint for lunch? Add $3 to the price of that Unhappy Meal...

Oil has been sitting at $60 for a while now (which we, ahem, predicted), and while gasoline dropped to a fairly acceptable $2.10 or so per gallon a few months ago, it has now climbed to a Storm-the-Bastille mob enraging level of nearly $3 in most places. That's a near 50% increase - except oil hasn't increased that much, in fact, only maybe 15% over that time. So why the hike?

Many reasons - oil, surely, but also the change from winter to summer fuels (yes, there is a difference...), and most secretively, the rapid move away from MTBE to ethanol as a gasoline oxygenate to reduce pollution. Not only are there costs incurred by the change, but as the process moves forward, gasoline companies are using the price to restrict demand during the move. Some states - those with the most expensive gasoline, you will note - already ditched MTBE in favor of ethanol.

Despite a personal wariness of oil-company bashing, MTBE is a crisis of their own making. MTBE has been their oxygenate of choice because... it is a petroleum byproduct, and both a) means they are a provider/profitter of the oxygenate and b) means that ethanol is minimized in the market and kept a marginal player unable to threaten the position of gasoline as the combustible fuel of choice. As long as MTBE is around, there was no reason to use ethanol, long anathema to the petroleum industry - Henry Ford himself saw alcohol, not gasoline, as the fuel of the future.

So when you figure out whether to take out a mortgage to fill your tank, just remember, it's not just the price of oil that is taking you to the cleaners... it's cleaner air as well...

Posted by MEC2 at 11:13 PM | Comments (3)

August 31, 2005

Fill 'er Up

I wonder if that's full service or self serve...

Good news...

Mid-grade and premium are just a dime or two more per gallon still.

When you're paying $6 bucks a gallon, what's another 20 cents for the good stuff?

If you go full serve, be sure to ask the attendant to check for looters under the hood...

Posted by MEC2 at 10:39 PM | Comments (1) | TrackBack

January 13, 2005

The New Normal

Oil prices rise again, and $60 is the new $30...

Oil prices are climbing again, as supplies and other market conditions continue to drive the price up in a familiar pattern. Just the numbers are different.

This price plateau between $40-60 is here to stay. Here's why.

Oil supply is currently inelastic in terms of increasing capacity. When supply is inelastic, the price must rise until demand falls. Currently, the United States consumes a very large share of world oil production. However, developing nations such as India and China are seeking to greatly increase oil and energy consumption to further develop their economies. Since supply is inelastic, and there is no more supply to meet this increased demand, any increase in Chinese and Indian consumption must come from someone else, such as the United States.

Except that US demand is inelastic - there is very little downward mobility in US energy consumption levels.

The result is what we have now - OPEC producers cranking at full capacity, and unable to produce enough product to satisfy demand. As such, the price rises, and in a market where demand is inflexible, but so is supply, the commodity will go to the highest bidder - the United States.

Oil prices have risen, and will stay high, because the United States economy is absorbing the costs of a static supply of oil at a higher price point. At the higher price, the US can meet it's oil consumption needs, while pricing the speculative demand expansion of energy consumption in developing countries out - those countries cannot expand energy consumption at $50 or $60 a barrel.

This situation will not abate until there is an increase in elasticity in either the expansion of supply or retraction of demand - both very unlikely. Until then, the increased prices will rise and stay high - even climb - until it has risen enough to price developing nations out of the consumption increase equation.

The US economy can do this. Developing nations can not. As we see stories about $50 a barrel oil, recognize that this is the new norm. The days of $20 a barrel oil are past, at least until energy markets run on another commodity. The US economy so far has absorbed the price increase very well. While everything is more expensive, the fact that gasoline prices historically have been low and that oil prices only have a proportional effect on gas prices has meant some grumbling at the pump, but little more.

The wild card - the dollar. Oil transactions are in dollars. All of them. A radical change in dollar valuation can have interesting effects on oil prices. The cheaper the dollar (that is, the lower it's value against other currencies), the more likely supply remains strict.

Enough to make someone go out one day shootin' at some food, and up from the ground come a bubblin' crude...

Posted by MEC2 at 11:01 PM

October 17, 2004

Only The Little People

The Teresa Heinz returns are out... guess who pays under the median?

"Only the little people pay taxes" - Leona Helmsley

Teresa Kerry released her 1040 form naked (without supporting documents) to reveal she paid a whopping three-quarters of a million dollars on five million in income.

We think this surely sounds fair - after all, that's alot of money. But wait a minute. Isn't the top rate 35%? Let's break down the calculations here... Heinz paid only 16% in taxes...

And this reveals what we call The Big Lie.

The Big Lie is that high income tax rates make sure the rich pay their fair share.

Here's The Big Truth. The Big Truth is that income taxes don't tax the rich - they tax those trying to become rich. There is no wealth tax. As such, the progressive income tax actually helps preserve class separation - helps to keep distance between old money (wealth) and new money (income).

Over half of Teresa's reported taxable income - some $2.7 million - came from tax-free investments, income from which as you might surmise is not taxed. That's -0%- of income that goes untaxed, whereas someone who actually worked for $2.7 million would pay roughly $900,000 to the federal government.

This is what accounts for what could be called egalitarian Democrat plutocracy - which accounts for why many extremely wealthy individuals - Kerry, Kennedy, Corzine, Boxer - espouse very progressive tax rates and champion the redistribution of income via government taxation. Because quite simply, high income taxes don't affect them - their wealth is secured, and residual income is tax free.

If you want to see Ted Kennedy go apoplectic... suggest a wealth tax...

Posted by MEC2 at 08:05 AM

October 02, 2004

Crystal Ball

Looking into our future, we better hope we don't see Europe's present...

Goverment officials in Holland are trying to unwind the social safety hammock, and finding the one thing the public is willing to work hard for is the right to not have to work hard.

Without creating an economics thesis, suffice it to say - Europe doesn't work. At least not very hard. Retirement, wages, labor policies, unemployment, all regulated and filtered through government planning and policy to create a sense of economic security - but the supposition that collective policy action through the government will somehow provide a result that is greater than the sum of it's parts is nonsensical. The market requires a reaction to market forces that is absent in the socialist West.

It's reached the stage that there is a presumption of necessity of government involvement in order to survive:

"The Dutch way is to take care of people who have less," said Gerard Admiraal, an emergency services worker who attended a protest at Schiphol airport Tuesday.

"This government wants everybody to take care of themselves," Admiraal said. "Only the rich can do that."

This is a frightening abandonment of self-reliance. As the Dutch government tries to ween the populace from the government tit, we see the natural response of a child - hysterics, protest, and an infantile bleating of abandonment.

As Americans are tempted to look to the governmnet to provide solutions to what appear to be intractible problems - health care costs, retirement, education - we do well to understand the government cannot create more from less. It's conservation of matter - you cannot get out more than you put in. And when the government is involved, you can plan on the inefficiency and impersonal dispatch to provide far less than the sum of it's parts.

I see in Europe's future a painful but neccessary reckoning - one that we can avoid...

Posted by MEC2 at 07:49 PM

June 29, 2004

Robbing Peter

When you rob Peter to pay Paul, you can always count on the support of Paul...

In a display of a rare combination of candor and insanity, Hillary Clinton let the cat out of the bag with comments at a San Francisco gala:

We're going to take things away from you on behalf of the common good.

A man will usually tell you his bad intentions, if you listen and let yourself hear it.

This should have made the Kerry campaign wince. Right now, the impression isn't widespread that Kerry will raise taxes, which gives a Democrat much needed cover in a general election. But this remark is bound to start Republican tongues wagging.

And if there's any video of this event, it will be coming to a television near you... for the common good of course.

Posted by MEC2 at 11:20 AM

May 07, 2004

Deflating Air America

The last one out turn off the lights, unless the power company does first for non-payment...

The rats are abandoning the bad ship Air America.

Poorly conceived, planned, and executed, this star-crossed venture is headed toward bottom at a rate even we find suprising. The left in this nation has difficulty at times understanding capitalism - that the first rule of business it to make money. They saw the radio bit as a way to prostelytize America and stand up to the predominantly conservative talk radio force. But they thought that conservative talk radio is something propped up by RNC money, power, cronyism, and other hijinx, and that they could do the same. But conservative talk radio is propped up by listeners, who are an attractive demographic for advertisers, who in turn pay... instead, Err America thought that just by being on the air, they'd attract tithings from liberal patrons to continue their good work.

Those fleeing Err America were under the mistaken notion that "If you build it, they will come..." Deeper thoughts tomorrow...

Posted by MEC2 at 09:22 AM

April 01, 2004

My Way or The Highway

Bush threatens veto, to declare himself King of the Road...

Both the House and Senate have passed new Highway bills far in excess of the $256 billion sought by the White House - the House version weighs in at a portly $275 billion, the Senate version at a morbidly obese $318 million. The President has clearly indicated his willingness to veto a measure that exceeds his threshold.

It sounds amazing, but President Bush has NOT used a veto. Not once.

What was seen in early 2001 as likely to be a weak presidency has in fact turned into one of the most uniformly effective presidential terms in history. This doesn't involve the quality of policy positions, but rather the results sought by the White House, and their inevitable outcomes. From Medicare, tax cuts, homeland security, defense spending, partial birth abortion, when it comes to legislation, this White House gets what this White House wants.

Now, as the election year hits stride, the highway bill appears as a looming showdown over fiscal policy. In an era of large deficits, the Republicans are setting up a confrontation that will cast George Bush in the role of fiscal guardian, fighting to control spending with a spendthrift Congress. And it's politically genius.

What's more, the Democrats are being insanely complicit.

The Democrats are in the rare position of being able to seize the spending high ground - a natural result of being out of power at all levels of government. It's foolish for them to let Bush cast himself as protector of the red side of the ledger. But I've seen no willingness to prevent - nor even recognition of - the coming spectacle.

Bush's first veto, holding the line on spending, in an election where the Democrats want to talk about the budget deficit. It's political genius on the part of Republicans if they can - and the Democrats let them - carry it off.

Posted by MEC2 at 09:32 AM