On Gas Prices

With gas prices increasing and prognosticators anticipating many more increases, it’s time A Frank Angle about the situation. Here are a dozen points everyone should know.

1) Presidents do not sit in the Oval Office thinking of ways to increase gas prices.

2) Politicians saying they can control gas prices is verbal flatulence.

3) The oil drilled in the United States enters the global commodity market – thus not for the United States. In other words, the Keystone Pipeline and Drill Baby Drill do not lower prices at the pumps.

4) The world commodity market determines the price of oil

5) Speculation in both directions is how the commodities market works – which is one reason why it is also called the Futures Market.

6) The supply and demand for oil influences the commodity (oil) market. For those who don’t know, usage Asia and the emerging markets is growing.

7) World situations (as Iran, Syria, Libya, etc) affect the commodity market because commodity brokers do not like uncertainty.)

8] The number of refineries operating and the operating margin affects prices.

9) Prices differ state to state because of different amounts of state taxes.

10) The amount a person spends depends for gas on three factors: the price per gallon, the vehicle’s miles per gallon, and the miles driven. Which one is out of the control of the consumer?

11) Politicians saying they can control gas prices is verbal flatulence.

12) Presidents do not sit in the Oval Office thinking of ways to increase gas prices.

On Jobs: February 2012

As the unemployment rate continues to slowly lower, I offer the following thoughts.

  • In January 2008, 7.6 million were unemployed (4.9%)
  • In the 7 months prior to Sept 2008, unemployment grow by 1.259 million
  • From September 2008 through March 2009, unemployment grow by 5.779 million
  • In the 9 months following March 2009, unemployment grew by 1.495 million

If 8.533 million Americans lost their job in the economic collapse of 2008-2009 – and improving the job market by 100,000 per month will take approximately 86 months – that is over 7 years to return to the unemployment rate of January 2008 (4.9%), of course with assumptions.

However, the 86 months does not account for colleges continuing to graduate people ready to enter the job market, nor military personal returning to the civilian workforce – oh, surely we haven’t forgotten that the unemployment rate in those two groups is higher than the average.

If job growth continues to improves, the discouraged worker (unemployed, but not looking) will seek work, thus unemployment could rise. See this graph from Bruce.

Of course given that unemployed has an official definition and that other categories exist, this provides more statistics so any partisan can find numbers to justify their point and to say what other partisans want to hear.

Republicans continually complain about the slow jobs numbers, but they continue never to address the following:

  • Being for smaller government, how many federal workers do you plan to layoff?
  • Being against the auto bailout, how many additional workers would have lost their jobs in addition to the 8.533 million?

To the Democrats and the White House I ask the following:

  • Because the sensible already know, when are you going to stop emphasizing the inherited situation?
  • When are you going to admit that you spent too much political capital on the health care debate at a time when the economy was at the top of the list?

I could go on, but I have already set forth other tough economic questions in these posts: March 2011 and September 2011.

Although none of us are perfect and each of us use a preference filter of some sort, the American public needs to remove their head from their ideological anal orifice, shed the partisan filters, stop listening to political horseshit, and learn to understand the situation – thus checking out what the accuracy and inaccuracies from the talking heads. Then, and only then, the public can have meaningful discussions to not only agree and disagree, but to also determine the course.

Ah – at least now I feel better, but I have little hope for this.

On Some Economic Questions

The US economy is mired in a slump, the European economic crisis add to the woes, and Americans are wondering, “Jobs, jobs, jobs – where art thou job.” Americans have lost over 8 million jobs, yet the economy has created on 2.5 million since the upturn.

For starters, the private sector (not the public sector) is the main job source in a capitalist economy. No matter if consumers are individuals or corporate, increased consumer demand for goods and services is the main fuel for hiring and investment. In other words, regardless of all the partisan talk, government can only do so much. Therefore, it is time to ask some questions.

Reducing payroll taxes for employees increases the money available to workers, but what if workers save more because of the uncertainties in their life?

Tax credits to companies hiring those unemployed for 6 months is a noble thought, but this would primarily fill a vacant existing position – thus not a new job. Do you think any company would create a steady stream of hire-to-fire so can get more credits?

Why should a company expand payroll if their demand for the good or service has not increased?

With demand driving growth, how do reduced regulations increase demand?

Companies are achieving more with less, and are using offshore workers to lower costs. Even with the GOP talking points of lower taxes, less regulations, loosened lending practices, and increased demand, what guarantee do the taxpayers have that the companies will invest in American workers?

A strong financial sector is the foundation for a capitalist economy. With a large reason for our economic troubles directly aimed at the roulette nature of the financial industry and their pseudo-promotion of the housing industry, how can returning to the less-regulated casino environment be good for the economy?

If the housing/building industry drives the demand for much of the economy, what is the plan to stimulate this industry?

Taxes decreases must increase revenue to federal, state, and local governments. What if they don’t?

Infrastructure projects increase the demand for materials while putting more people to work, which also returns money in the form of tax withholdings. However, where/what is the funding source for this investment – and at the expense of doing without what?

Do our leaders construct trade agreements to increase demand?

We have a federal government struggling with the opposing forces of deficit reduction and stimulating demand by providing aid to financially struggling public sectors in order to help local public workers keep their job. Of course, one’s position directly correlates with a concern about the next election.

Meanwhile, as consumers drive demand, three main factors act as significant forces acting on their psychology: high unemployment, a depressed housing market, and a political atmosphere consuming all the oxygen in the room with their battle between the inept, the misguided, and the knowledgeable choosing to be inept or misguided.

With another round of budget ideology ahead of a September 30th deadline, count on Washington lowering not only consumer confidence, but the confidence of the business and banking sectors, thus promoting consumers, businesses, and lending institutions to keep more money on the sidelines.

On Playing with Words

Over the past several weeks, there has not been a shortage of discussions and commentaries around the debt ceiling. If nothing else, this topic demonstrates that politics involves playing the word game, which sometimes capitalizing on what the listeners do not know. For instance, let’s consider the following phrases/terms: size of government, deficit, and debt.

What is the meaning of size of government? To me, size refers to how big government is … the size of the organizational chart. On the other hand, some use size of government to refer to the amount the government spends. However, amount refers to the number of dollars involved. If the org chart remains the same, a budget decrease means the amount spent decreases while the government’s size remains the same. Of course, some also incorrectly use size of government when they actually mean the role of government.

Does the user mean debt or deficit? The two are not interchangeable terms. The recent debate involves plans for deficit reduction, but not necessary the debt. Yep, they actually agreed upon a budget decrease that reduces the rate of debt increase. That is, the debt still increases.

Deficit and surplus refer to the difference between income and spending – specifically, during a particular 12-month fiscal year. If income is greater, that’s a surplus. If spending is greater, that is a deficit. In other words, deficit and surplus only refer to a one-year period.

Debt is a long-term word involving an ongoing accumulation of yearly deficits. Interestingly, if the surplus does not cover the interest on the debt, a surplus does not reduce the debt. Even the GOP recognizes that it will take 10-years of concentrated deficit reduction to reach a point of the debt not increasing. Yep, at that point, a large debt remains.

The moral of this post is the following. As you either listen or read the commentaries, or even better, read comments and letters to the editor or comments on blogs, take note of these terms and you will notice correct and incorrect use … and misleading use.

On Trickle-Down Ryan

Rep Paul Ryan (R-WI), Speaker John Boehner (R-OH), and any other bandwagon Republican want to cut corporate taxes in order to stimulate investment. Why not? Profits go up, thus companies can invest more. News Flash: Hey … Trickle Down does not Work!

Hope about a few reality checkpoints on the matter.

Profits go up, and the shareholders are happier. Corporations are first accountable to their shareholders. Yep, the shareholders get preferential treatment over the community, over the state, and over the country. You see, capitalism is not patriotic.

Profits go up, and the executives get more (thus cutting into investment). As if people in these positions don’t already get enough. Then again, more means more.

Cash reserves increase, which then allows one company to purchase another – thus a loss of jobs.

Let’s say the company is willing to invest, thus increase employment. What is the guarantee that they do so within US borders? For those in the GOP who down know, the answer is, There is no guarantee!

Bottom line: You want to stimulate companies to invest in America, don’t give them a tax break to do something – give them a tax credit for doing something.

On Jobs

I wonder how many times I’ve heard Speaker John Boehner (R-OH) say something about jobs in America. Yes, jobs and the economy is a pressing need – but how many times have politicians used “jobs” as political manure? Let’s face the music!

Company mergers cost jobs. Company A purchases Company B, thus consolidates operations. Jobs are gone and won’t return.

Companies operate with their eye directly on the bottom line. If the company moves jobs to another country to lower labor cost in order to achieve a certain target, then that’s what is done. Jobs are gone and probably won’t return.

Some companies move operations to another country because of environmental laws. Jobs are gone and probably won’t return.

Companies have been downsizing, thus doing with less. Jobs are gone and probably won’t return.

Many aspects of manufacturing as textiles have gone elsewhere, and probably won’t return.

In manufacturing that remains, technology has replace what employees used to do, so those jobs won’t return.

Many look at government jobs as being the most stable, yet the current political climate is to cut, cut, cut – thus eliminating jobs.

As our politicians look to cut spending, especially by the Department of Defense, I wonder how many jobs will be lost in defense equipment and its supply chain.

The next time anyone hears Mr. Boehner or any other politician ask Where are the jobs?, let us remember that unless they detail specifics about a plan (and good luck with that), their statement is nothing more than political rhetoric for the benefit of their party. Just listen below to hear the party rhetoric of regulations and taxes. Meanwhile,  many Americans need jobs.

On IRAs and Congress

Bear with me, as I have to set the stage on something that has been on my mind for a long time.

In a world where too many people think of Social Security checks as retirement income, Individual Retirement Accounts (IRAs) are a good thing. The Employee Retirement Income Security Act (ERISA) brought us traditional IRAs in 1974. The Taxpayer Relief Act of 1997 tossed Roth IRAs into the retirement planning mix. Because ERISA was primarily aimed at pension programs, various amendments through the years have given small business owners additional options as Simple IRAs and Simplified Employee Pension (SEP) IRAs.

Primarily for executives, 401k plans appeared in 1978 allowing employees to defer compensation. Various amendments through the years expanded 401k opportunities to more people. Bottom line is that multiple opportunities exist to save for the retirement years.

It’s understandable that all these accounts come with rules for the owners: rules about contribution limits, tax obligations, withdrawal procedures, and various penalties for early withdrawal. For the life of me, one rule gets under my skin.

For whatever reason (either special interest or to get someone’s vote), Congress limited IRA contributions by qualifying contributors by income. In other words, those above a certain income cannot contribute to their IRA or they can only contribute a reduced amount.

What were the Capitol Hill nimrods thinking? IRAs should be available for every American. If he chooses, Bill Gates should be able to contribute to an IRA just like Joe Schmuck. I’ll take it one step further. Every American (if they so choose) should be able to maximize contributions into both the traditional and Roth IRAs regardless of income and availability of 401k plans – Period – thus eliminating the need for if-then statements and making the law easier to understand!

Retirement plans are just another example of Congress screwing up a good idea with unnecessary regulations – Damn jackwagons.