Just how many accidents will BP be permitted? Look, if you run your car into a telephone pole at 60 mph, you are probably permitted only one accident, in spite of air bags and seat belts. Or you might be driving safely on a interstate when a semi-truck trailer comes over the median strip smashing into you. Though it was not your fault, you were permitted only one accident.
But consider BP. Perhaps their worst "accident" was when they had their previous name of The Anglo-Iranian Oil Company which arranged for our CIA (Hard as that may be to believe.) to eliminate the duly elected Prime Minister of Iran. What did that Prime Minister (Mossadeq) want? He wanted the same deal that BP had signed with Egypt, i.e. 50% of the profits. Yes, at one time, within the lifetime of many of us, Iran had a democratic government. But BP (current name) managed to get us to do away with a democratic (parliamentarian) government and reinstitute the Shah and a regime more "amenable" to BP. Of course the rest is history. The Shah was eventually replaced by the ayatollahs and a government hostile to the U.S. with countless deaths and several times more serious injuries. See: http://en.wikipedia.org/wiki/BP for a more complete but still brief history.
I don't know just how many serious accidents BP has had, but another disastrous one was the 2005 Texas City refinery disaster in which 15 people were killed and 170 injured (http://en.wikipedia.org/wiki/Texas_City_Refinery_explosion). This was at the third largest refinery in the U.S. Actually, the refinery was a part of Amoco before BP bought Amoco.
And then there are small accidents like the recent Trans Alaskan Pipeline accident that shut off oil transport for 10% of the U.S. oil consumption for more than 3 days. Well, no one lost their lives or were seriously injured in this accident. Though this is the longest accident to fix on the pipline, it is just one of a number of ongoing accidents.(http://www.usatoday.com/news/nation/2010-05-29-alaska-oil-spill_N.htm?csp=24&RM_Exclud e=Juno) But if spills of the Alaskan pipeline were the only problems BP faces, perhaps we could live with it, but they add to the list.
Then of course, there is the BIG ONE in the deep water of the Gulf of Mexico. This accident smells. Again there was loss of life (11 killed), a mounting and broad ecological disaster to both the sea food (shrimp, fish, crabs, etc.), tourist industry, and, last but not least, the loss of millions of barrels of oil. This disaster is still developing.
One has to think, hasn't BP had enough accidents? How many lives have to be lost? How many serious accidents have to be incurred? How much oil has to be wasted? How many global political problems are they to be permitted to create? Haven't they caused enough trouble? Isn't it time that BP be disbanded? It may be too bad that the BP Amoco deal didn't go the other way, i.e. Amoco acquiring BP. But it didn't. How much longer is BP going to be allowed to mess up society?
Saturday, May 29, 2010
THE OTHER OIL ACCIDENT
While focus has been on the huge Gulf BP oil "accident," there has been another one involving the Alaskan pipeline. News on this accident has been lost amongst the bigger "accident." The company managing the pipeline is majority owned (47%) by, who else, BP which has the largest interest. It was shut down for more than 3 days, shutting off around 10% of the U.S. oil supply for that period, but is up and running again, I guess. For some recent news see:(http://www.usatoday.com/news/nation/2010-05-29-alaska-oil-spill_N.htm?csp=24&RM_Exclud e=Juno)
NO WAY OUT - II
Since I wrote Part I, I have read a piece by John Mauldin (http://www.frontlinethoughts.com/index.asp) which explains the financial problems countries face, using Greece and, to some extent, the UK as examples. Though he makes only passing reference to the U.S., we seem to be in agreement that there is No Way Out.
Well, if we were to have a huge increase in productivity or another bubble economy, that would certainly help, and it should be mentioned. But who sees a huge increase in productivity or a bubble economy in our future?
Wednesday, May 26, 2010
NO WAY OUT
The estimates of the amount of the Federal debt this fiscal year exceed the sum of the discretionary budget (which includes the DoD) by $1.55 billion to $1.4 billion, and the estimated deficit is probably a minimum number. On top of this is any deficit in entitlements which will also add to the total, and Social Security will run a deficit this year. Anything that is done to decrease the deficit will hurt someone or, more likely many someones. In addition, most cuts will also hurt some business or businesses.
For example, firing Civil servants will put people out on the streets. Their income will be less and, in addition to any strain put on their lifestyle, they will have less purchasing power, hurting local businesses and perhaps even national businesses to some degree. The same can be said for Federal contract employees, and loss of a Federal contract may endanger the whole company. It is true that Presidents Bush-41 and Clinton fired more than one million Civil Servants without causing a recess, however, the economy was in an upswing which alleviated economic problems from the number of employees out of work, i.e. they could find other work. In contrast, this economic recovery is slow to add employment so firing more Federal employees or contract workers add to the unemployment picture.
A good example with the problem of making any budget cuts was the Obama administration wanting to shut down the manned mission return to the Moon. Now in these dificult times, it seems to me that if there is any program we could dispense with it is returning man to the Moon; yet screams were heard all over the country because NASA spreads contracts over as many congressional districts as possible hurting employment and business all over the country. Of course, savings from stopping manned missions to the Moon will be only a tiny part of the Federal deficit problem, though it is a start, but it can be a major hurt to many people and congressional districts, if not states. But, can’t we do without manned missions to the Moon?
Another seemingly good cut would be to stop the subsidy to corn based ethanol. You have to do an awful lot of calculating to determine that there is any benefit at all to carbon dioxide emissions from corn based ethanol, and, if you cut down a forest to make a corn field, you come out behind. A high duty has been put on imported sugar cane ethanol from Brazil to make it uneconomic. Corn based ethanol is really just a subsidy to agribusiness. Rather than cutting back on the subsidy to corn based ethanol, the percentage of corn based ethanol allowed in gasoline has been increased from 10% to 15%.
Yet a third good move would be to prohibit earmarks. The reason is that before earmarks are passed, the congressional districts have not gotten used to the money. The worst that can happen is that unemployment and local business in the district will remain unchanged. It is not that I am heartless about the condition of the unemployed in any congressional district, but you are not going to cut the budget without pain, and to leave things as they are may just be the least painful. However, earmarks are something an individual congressman can do to justify their existence so they are going to earmarks up with most reluctance. Just ask John McCain.
There is much anger over 47% of the tax payers paying no Federal income tax. This large sum is largely due to the Child Tax Credit when parents not only get to count a child as a dependent (and take $600 per child off their income), they also get to take $1,000 per child off their income taxes. President Bush-43 increased this tax benefit from $500 to $1,000. The reason for this benefit is to increase the birthrate of the country. I have not seen any information to show this benefit has the desired effect, so this subsidy, at the vary least, could be rolled back, at least to $500, if not eliminated. What are the odds that it will be?
Lastly, adding a dollar tax to a gallon of gasoline would be beneficial in many aspects. Not only would it increase Federal revenue to some extent but should decrease importation of foreign oil and reduce pollution of the atmosphere, a trifecta. This suggestion has even been proposed by some conservatives. After all, some revenues from imported oil help finance our enemies to fight us. I believe it is most unusual, and may be unique, for a country to finance its enemies, which is what we are doing in importing oil. I do understand, however, that such a tax is very regressive for the working poor. The working poor often live very far from their places of work and cannot afford to move closer. In addition they tend to own older, cheaper, less fuel efficient automobiles which consume more gasoline per mile traveled. The usual suggestion is to use some of the increased revenue to subsidize gasoline for the working poor. Of course this subsidy will decrease the net revenue and won't decrease opolooution or imported oil as much, but it is probably the humane thing to do.
Making the simplest and most logical Federal budget cuts or revenue increases are strongly opposed which shows just how difficult cuts in the Federal budget are going to be. Undoubtedly everything I have proposed above will total less than $300 billion reduction of the Federal budget, probably much less. Thus these are only a small step toward solvency, but they would be a start. I also suspect that if such small steps as mentioned above are accomplished to partially reduce the deficit, a recession could result at least, perhaps even a depression. However, even accomplishing any of the above items is doubtful. Addressing the Federal budget deficit seems likely to not occur but, if it is addressed, a painful process will be involved hurting many people and corporations and the general economy. I hope that I am wrong, but I see no way out.
For example, firing Civil servants will put people out on the streets. Their income will be less and, in addition to any strain put on their lifestyle, they will have less purchasing power, hurting local businesses and perhaps even national businesses to some degree. The same can be said for Federal contract employees, and loss of a Federal contract may endanger the whole company. It is true that Presidents Bush-41 and Clinton fired more than one million Civil Servants without causing a recess, however, the economy was in an upswing which alleviated economic problems from the number of employees out of work, i.e. they could find other work. In contrast, this economic recovery is slow to add employment so firing more Federal employees or contract workers add to the unemployment picture.
A good example with the problem of making any budget cuts was the Obama administration wanting to shut down the manned mission return to the Moon. Now in these dificult times, it seems to me that if there is any program we could dispense with it is returning man to the Moon; yet screams were heard all over the country because NASA spreads contracts over as many congressional districts as possible hurting employment and business all over the country. Of course, savings from stopping manned missions to the Moon will be only a tiny part of the Federal deficit problem, though it is a start, but it can be a major hurt to many people and congressional districts, if not states. But, can’t we do without manned missions to the Moon?
Another seemingly good cut would be to stop the subsidy to corn based ethanol. You have to do an awful lot of calculating to determine that there is any benefit at all to carbon dioxide emissions from corn based ethanol, and, if you cut down a forest to make a corn field, you come out behind. A high duty has been put on imported sugar cane ethanol from Brazil to make it uneconomic. Corn based ethanol is really just a subsidy to agribusiness. Rather than cutting back on the subsidy to corn based ethanol, the percentage of corn based ethanol allowed in gasoline has been increased from 10% to 15%.
Yet a third good move would be to prohibit earmarks. The reason is that before earmarks are passed, the congressional districts have not gotten used to the money. The worst that can happen is that unemployment and local business in the district will remain unchanged. It is not that I am heartless about the condition of the unemployed in any congressional district, but you are not going to cut the budget without pain, and to leave things as they are may just be the least painful. However, earmarks are something an individual congressman can do to justify their existence so they are going to earmarks up with most reluctance. Just ask John McCain.
There is much anger over 47% of the tax payers paying no Federal income tax. This large sum is largely due to the Child Tax Credit when parents not only get to count a child as a dependent (and take $600 per child off their income), they also get to take $1,000 per child off their income taxes. President Bush-43 increased this tax benefit from $500 to $1,000. The reason for this benefit is to increase the birthrate of the country. I have not seen any information to show this benefit has the desired effect, so this subsidy, at the vary least, could be rolled back, at least to $500, if not eliminated. What are the odds that it will be?
Lastly, adding a dollar tax to a gallon of gasoline would be beneficial in many aspects. Not only would it increase Federal revenue to some extent but should decrease importation of foreign oil and reduce pollution of the atmosphere, a trifecta. This suggestion has even been proposed by some conservatives. After all, some revenues from imported oil help finance our enemies to fight us. I believe it is most unusual, and may be unique, for a country to finance its enemies, which is what we are doing in importing oil. I do understand, however, that such a tax is very regressive for the working poor. The working poor often live very far from their places of work and cannot afford to move closer. In addition they tend to own older, cheaper, less fuel efficient automobiles which consume more gasoline per mile traveled. The usual suggestion is to use some of the increased revenue to subsidize gasoline for the working poor. Of course this subsidy will decrease the net revenue and won't decrease opolooution or imported oil as much, but it is probably the humane thing to do.
Making the simplest and most logical Federal budget cuts or revenue increases are strongly opposed which shows just how difficult cuts in the Federal budget are going to be. Undoubtedly everything I have proposed above will total less than $300 billion reduction of the Federal budget, probably much less. Thus these are only a small step toward solvency, but they would be a start. I also suspect that if such small steps as mentioned above are accomplished to partially reduce the deficit, a recession could result at least, perhaps even a depression. However, even accomplishing any of the above items is doubtful. Addressing the Federal budget deficit seems likely to not occur but, if it is addressed, a painful process will be involved hurting many people and corporations and the general economy. I hope that I am wrong, but I see no way out.
Saturday, May 15, 2010
SPORT OF NATURE (Poem)
A streak of light across the heaven,
A body burns in Earth’s hostile sky
Drawn close by gravity’s fatal attraction.
Then in but a few seconds,
A meteorite thuds dirt or bursts on rock:
Somewhere an explosion is heard.
A bit of stone or iron smolders:
Matter unchanged since the Sun was born
Had come in cometary orbit to Earth.
The meteorite parent,
If it can be found, contains secrets of Earth’s birth:
A challenge given to man by God.
1973
Reprinted from Meteoritics, v. 10, no. 3, p. 288.
Wednesday, May 12, 2010
THE THEOLOGY OF NATURAL HAZARDS
Many Christians feel that natural hazards are tools of the devil. But I disagree. After all the Apostle's Creed of the Presbyterian Church, starts with "I believe in God the Father Almighty, maker of Heaven and Earth..." which would seem to include things like earthquakes, hurricanes, volcano eruptions and the like. Stanza 3 of the Presbyterian Hymn “All Things Bright & Beautiful” mentions the "winter wind," after "The Lord God made them all." They say that it is an ill wind that blows no good. Perhaps, but the good of the winter wind eludes me. Off hand I can't think of anything good that comes out of winter wind, except if you are in a warm home when the winter wind blows outside to give you a cozy feeling. There are hymns that mention earthquakes (and not as some instrument of the devil).* And of course, the Bible uses earthquakes to even do good such as Acts 16:25-34 where an earthquake opens the prison doors where Paul and Silas were held.
Such devastating things as earthquakes, volcanic eruptions, landslides, hurricanes, lightening, floods, and the like do have interesting effects as many people are likely to stop being mean to each other and respond to the damage done by these natural hazards (loss of life and injuries in addition to massive loss of things) with sympathy and positive actions. For awhile a large group of people around the globe respond positively to natural hazards in contrast to a smaller group of looter's, traffickers, etc. It even happens in "man's inhumanity to man" such as 9/11 (but alas not as much for refugees in a time of war). At times I think that God gave us these natural hazards to distract us from our meanness to each other and intended for us to use our brains to figure out ways to overcome these obstacles. Unfortunately, the distraction isn't as much as might be hoped.
I have noticed those who are exposed to a variety of natural hazards have a certain vitality. The poster child of what I am talking about is Japan which experiences earthquakes, volcanism, typhoons, tsunamis, and landslides, among others. They pretty much have it all. This island country about the size of California has few natural resources, many of which are pretty well used up. There is no reason for Japan to be a prosperous country except that they will it so. They are indeed an impatient people which led them into WW-II. But they now realize they can achieve their goals by peaceful means. It is just amazing that Japan has the second largest economy in the world. And speaking of California, it too has many different kinds of natural hazards and is probably the most vital of American states.
Yes, every dark cloud has a silver lining or at least nearly so.
Sometimes natural hazards do have some positive outcomes even today. For example after the great Indonesia earthquake in 2004 and in addition to the massive outpouring of sympathy and aid from around the world (http://en.wikipedia.org/wiki/2004_Indian_Ocean_earthquake):
The hardest hit area, Aceh, is considered to be a religiously conservative Islamic society and has had no tourism nor any Western presence in recent years due to armed conflict between the Indonesian military and Acehnese separatists. Some believe that the tsunami was divine punishment for lay Muslims shirking their daily prayers and/or following a materialistic lifestyle. Others have said that Allah was angry that there were Muslims killing other Muslims in an ongoing conflict.[95] Women in Aceh required a special approach from foreign aid agencies, and continue to have unique needs.
The widespread devastation caused by the tsunami led the main rebel group GAM to declare a cease-fire on December 28, 2004, followed by the Indonesian government, and the two groups resumed long-stalled peace talks, which resulted in a peace agreement signed August 15, 2005. The agreement explicitly cites the tsunami as a justification.[96]
Such devastating things as earthquakes, volcanic eruptions, landslides, hurricanes, lightening, floods, and the like do have interesting effects as many people are likely to stop being mean to each other and respond to the damage done by these natural hazards (loss of life and injuries in addition to massive loss of things) with sympathy and positive actions. For awhile a large group of people around the globe respond positively to natural hazards in contrast to a smaller group of looter's, traffickers, etc. It even happens in "man's inhumanity to man" such as 9/11 (but alas not as much for refugees in a time of war). At times I think that God gave us these natural hazards to distract us from our meanness to each other and intended for us to use our brains to figure out ways to overcome these obstacles. Unfortunately, the distraction isn't as much as might be hoped.
I have noticed those who are exposed to a variety of natural hazards have a certain vitality. The poster child of what I am talking about is Japan which experiences earthquakes, volcanism, typhoons, tsunamis, and landslides, among others. They pretty much have it all. This island country about the size of California has few natural resources, many of which are pretty well used up. There is no reason for Japan to be a prosperous country except that they will it so. They are indeed an impatient people which led them into WW-II. But they now realize they can achieve their goals by peaceful means. It is just amazing that Japan has the second largest economy in the world. And speaking of California, it too has many different kinds of natural hazards and is probably the most vital of American states.
Yes, every dark cloud has a silver lining or at least nearly so.
Sometimes natural hazards do have some positive outcomes even today. For example after the great Indonesia earthquake in 2004 and in addition to the massive outpouring of sympathy and aid from around the world (http://en.wikipedia.org/wiki/2004_Indian_Ocean_earthquake):
The hardest hit area, Aceh, is considered to be a religiously conservative Islamic society and has had no tourism nor any Western presence in recent years due to armed conflict between the Indonesian military and Acehnese separatists. Some believe that the tsunami was divine punishment for lay Muslims shirking their daily prayers and/or following a materialistic lifestyle. Others have said that Allah was angry that there were Muslims killing other Muslims in an ongoing conflict.[95] Women in Aceh required a special approach from foreign aid agencies, and continue to have unique needs.
The widespread devastation caused by the tsunami led the main rebel group GAM to declare a cease-fire on December 28, 2004, followed by the Indonesian government, and the two groups resumed long-stalled peace talks, which resulted in a peace agreement signed August 15, 2005. The agreement explicitly cites the tsunami as a justification.[96]
* The modern Presbyterian hymn "God of the Sparrow" in verse 2 starts out: "God of the earthquake God of the storm ..." (The Presbyterian Hymnal: Hymns, Psalms, and Spiritual Sons: Westminster/John Knox Press, Louisville, Kentucky, 1990).
Friday, May 7, 2010
EFFECTIVENESS OF TAXES
Modified from a post on the Motley Fool
The reasons often given for decreased personal income taxes not being effective is that only a small portion of the decreased taxes for the wealthy go into productive things and even this small percentage often takes years to be effective. For example, Greenspan worried that too much of the decreased income tax benefits the wealthy received would be invested in Treasury securities and that the tax savings of the lower classes (including middle class) would be used to pay off debt (with which they were loaded). Also the "windfall" tax benefit of the wealthy often goes to things that may benefit the global economy but have no or little benefit to the U.S. - such as purchasing existing stock, chalets in Switzerland, Canadian bombardier personal jets, islands in the Bahamas, and the like. Thus decreasing income taxes is an inefficient way to stimulate the economy.
I might add that buying more existing stocks is also not productive as once past the IPO (initial public offering), the corporation gets no more benefit from future trading of the stock.
I tend to agree with Paul O'Neill when he was Secretary of the Treasury that a better tack would have been to lower the corporate income tax. This would have given our corporations some advantage in international trade and might even decrease the price of goods sold domestically, thus stimulating demand. But there are few votes in lowering corporate income taxes so O'Neill was eventually canned (He tended to also make statements that were true enough but were impolitic.).
It might still be possible to do some decreasing of the corporate income tax. My suggestion is to take some* of the increased revenues from letting the Bush-43 personal tax cuts on the wealthy expire** and use them to decrease the corporate income tax. If the corporations used the lowered corporate taxes to reduce the prices on domestic goods, addition revenues could result from increased consumption. This would also stimulate the competitive nature of U.S. corporations in international trade, and increased revenues just might result. Among other things, if corporate profits should increase as a result, the price of stocks would correspondingly increase and enrich stock holders which could alleviate the increased personal income taxes on the wealthy.
*I say "some" of the increased revenues because some should also be used for debt reduction.
**Contrary to the claims of some, there is little indication that increased income taxes lower government revenues. President Bush-41 raised income taxes as did President Clinton. Although there were hysterical claims at the time that these would ruin the economy, the economy fluorished during the 1990s, and there was even positve cash flow the last four years of the Clinton Administration. George W. Bush lowered the tax rates, and there was no growth in employment or the economy in the first decade of the 21st century.
The reasons often given for decreased personal income taxes not being effective is that only a small portion of the decreased taxes for the wealthy go into productive things and even this small percentage often takes years to be effective. For example, Greenspan worried that too much of the decreased income tax benefits the wealthy received would be invested in Treasury securities and that the tax savings of the lower classes (including middle class) would be used to pay off debt (with which they were loaded). Also the "windfall" tax benefit of the wealthy often goes to things that may benefit the global economy but have no or little benefit to the U.S. - such as purchasing existing stock, chalets in Switzerland, Canadian bombardier personal jets, islands in the Bahamas, and the like. Thus decreasing income taxes is an inefficient way to stimulate the economy.
I might add that buying more existing stocks is also not productive as once past the IPO (initial public offering), the corporation gets no more benefit from future trading of the stock.
I tend to agree with Paul O'Neill when he was Secretary of the Treasury that a better tack would have been to lower the corporate income tax. This would have given our corporations some advantage in international trade and might even decrease the price of goods sold domestically, thus stimulating demand. But there are few votes in lowering corporate income taxes so O'Neill was eventually canned (He tended to also make statements that were true enough but were impolitic.).
It might still be possible to do some decreasing of the corporate income tax. My suggestion is to take some* of the increased revenues from letting the Bush-43 personal tax cuts on the wealthy expire** and use them to decrease the corporate income tax. If the corporations used the lowered corporate taxes to reduce the prices on domestic goods, addition revenues could result from increased consumption. This would also stimulate the competitive nature of U.S. corporations in international trade, and increased revenues just might result. Among other things, if corporate profits should increase as a result, the price of stocks would correspondingly increase and enrich stock holders which could alleviate the increased personal income taxes on the wealthy.
*I say "some" of the increased revenues because some should also be used for debt reduction.
**Contrary to the claims of some, there is little indication that increased income taxes lower government revenues. President Bush-41 raised income taxes as did President Clinton. Although there were hysterical claims at the time that these would ruin the economy, the economy fluorished during the 1990s, and there was even positve cash flow the last four years of the Clinton Administration. George W. Bush lowered the tax rates, and there was no growth in employment or the economy in the first decade of the 21st century.
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