Prior to this summer I spent three years warning my clients as to the danger that rising oil prices presented to our economy. This warning was based primarily upon the reality that our economy was not equipped to handle oil prices above $100 per barrel. Now three months after oil prices topped $140 per barrel and gasoline prices topped $4.00 per gallon, our congress should act now to counteract future volatility in oil markets.
Contributing to the recessionary pressures our economy is facing today was the high energy prices experienced over the summer. High oil prices affect every aspect of our economy including the nearly 40% of our consumption that is not transportation related. High oil prices not only affect the direct prices at the pump, but also lead to a rise in consumer prices for every item from food to the plastic toys you will purchase for your children this Christmas. As the global economy has contracted so have oil prices based upon an expectation that global demand will fall. The result of this expectation in falling demand has pushed non-reliant speculators out of the market place and pushed down prices.
Although we see the net result of these price drops at the gas pump, most manufacturers will not pass on their current savings in the price of consumer goods and food. The reality is that prices pushed up by high energy prices will not fall because these producers understand that their energy prices are likely to re-rise as economies improve worldwide. As a result of a need in stability and the reality that many speculators have abandoned the oil markets, our congress has a golden opportunity to address our oil-related energy needs.
As oil prices approached $150 per barrel, energy jumped to the forefront of national campaigns; unfortunately, as oil prices have collapsed by 60%, congress now seems poised to push their party line social agendas rather than enact legislation that is necessary to a healthy economy.
The current Congress has enjoyed the lowest approval ratings of any congressional body in US history, yet the American people blindly chose to elect more of ruling party in some distorted belief that positioning more of these buffoons in congress will somehow lead to an improvement. As a result, this current congress will most likely continue to enjoy record-low approval ratings and I am betting will fail to address our energy needs in a common sense, non-special interest manner.
Over the next two days, I will address several common sense policies that we should demand our congressional leadership address.
First, it is time that the American people demand leadership congressional leadership that acknowledges the realities of our economy and understands that leadership is the ability to position our nation's interests first, rather than the platform of their particular party.
Everyone must admit that our economy is based 100% on oil and even if we were to develop sustainable transportation fuel alternatives, our oil consumption would only drop by 60%. Secondly, we must demand that our leadership recognizes the reality that today there is no viable alternative to oil and that even if an alternative were produced today, our economy would easily need 50 years or longer to retrofit our manufacturing, transportation and energy infrastructure. The reality is that our nation has spent trillions of dollars over the past 100 years building an infrastructure uniquely designed for oil. The idea that a viable alternative could end our dependence on oil within a decade, or two, or three is naive and fiscally impossible. The sooner that we begin to support congressional leadership that understands the need to balance both today and tomorrow's energy needs and realities, the sooner we can make progress.
What we need is a comprehensive energy plan that understands the realities of our economy, addresses speculatory influences in the oil markets, addresses the need for expanded domestic oil production for both economic and national security reasons, and addresses the non-competitive government-sponsored oil monster that politicians have created and exploited.
Speculation In Oil Markets
As I previously mentioned, the only benefit of a collapsing global economy is the resulting 60% reduction in oil prices that we have experienced. The resulting collapse of the "oil bubble" has driven non-reliant speculators out of the oil markets. As a result, congress now has the opportunity to enact legislation that will help stabilize prices by limiting the influx of non-reliant speculation back into the oil markets. If congress does not act to limit speculatory forces in the markets, then we will once again see oil prices exponentially rise as the economy improves. Any such rise will only hinder consumer spending and slow the economic recovery process.
Prior to the so-called "Enron Loophole" trading in oil markets was limited to investors and industries that were reliant upon the commodity. For instance, the airline industry was a chief player in the oil markets because of their direct reliance and vested interest in the commodity. As a result of this reliance based trading activity, prices, although rising, were much more stable and less susceptible to massive volatility. The "Enron Loophole" essentially opened up the oil commodities market to non-vested or non-reliant investors. The resulting influx of billions of dollars in institutional assets such as pension funds has caused an exponential increase in oil market volatility. Re-establishing market rules that limit oil market trading will help provide stability to the markets as our economy attempts to pull out of the current recession. Without such limits, institutional investors will flock back to the oil markets as the economy improves. The resulting non-supply and demand driven price run-up will artificially inflate prices, slow any increase consumer spending and limit the pull-out from our current recession.
I believe in free markets, but oil is not a free market commodity. true free markets are based upon supply and demand based production and pricing. Oil production is not based on supply and demand, the production is arbitrarily set by the OPEC nations. The resulting profits based production easily manipulates a 'free market' trading of this commodity; limiting the speculative forces in the oil markets, will help bring stability to prices and limit market driven reactionary production cuts by OPEC.
Our economy is 100% oil based and clearly the "Enron loophole" has created a level of volatility in the oil markets that has never before been seen. It is time, especially considering the temporary exodus of non-reliant speculators to re-establish speculatory rules for the oil markets.
Addressing the influx of non-vested speculatory forces into the markets is an important step, but alone will only help with short term stability in the oil markets and consumer prices. In addition to a re-examination of market rules, we must take action to re-capture domestic energy wealth and production through expanding our domestic energy capabilities. That means the institution of multiple energy initiatives including expanded oil and natural gas production. As we outsource our energy needs, we are turning over trillions of dollars of our wealth to foreign nations, most of which have lax and unenforced environmental regulation, are investing billions in developing new energy generation technologies to assure they retain their energy monopolies, and for the most part want to counteract western influence.
To be continued...
J Brown
November 13th, 2008
Thursday, November 13, 2008
Friday, November 7, 2008
Stock Market Losses Will Mount As Investor's Plan For Obama Tax Increase!
In the week leading up to the election, many analysts on Wall Street believed that an Obama Presidency had been factored into the stock market during the month of October. Although the market was expecting an Obama victory, large segments of the marketplace were still hopeful that the expectation would not come to fruition. As a result, the markets primarily reacted to economic news and few investors planned for the full effects of an Obama presidency.
The last two days since the election have seen a 10% drop in the US stock markets based partially upon a bad retail sales report, but despite a 1.5 point drop in British interest rates. Although retail sales fell, there was no injection of news that was entirely unexpected that would cause such a drop to occur. The fact is that investors have now realized the reality of an Obama presidency and now we all must be prepared for the massive sell off that is likely to occur before the end of the year.
Why would an Obama Victory lead to a massive sell-off?
Simply put, the fear that he and a Democratic Congress will push through tax increases next year.
Wealthier Investors have dissected Obama's tax plans and as the year ends, smaller investors will also begin to realize the reality of Obama's plans. If Obama were to push through his tax plan next year, he would institute an higher capital gains rate and an increase in the top tax brackets. As a result, investors will act before the end of this year to sell off investments that have generated both long-term and short-term capital gains in order to reduce their tax burden. There is, of course, the possibility that Obama would put his damaging tax increases on hold; however, that is a risk that investors are unlikely to take and if they were to wait they could see capital gains rates as much as 50% higher.
So brace yourself, as at this point a traditionally inactive November and traditionally positive December are likely to see nontraditionally high levels of volatility and a continued sell-off. From now until the end of the year, the market is in full Obama preparation mode and any negative economic news will only compound the sell-off.
J Brown
November 7th, 2008
The last two days since the election have seen a 10% drop in the US stock markets based partially upon a bad retail sales report, but despite a 1.5 point drop in British interest rates. Although retail sales fell, there was no injection of news that was entirely unexpected that would cause such a drop to occur. The fact is that investors have now realized the reality of an Obama presidency and now we all must be prepared for the massive sell off that is likely to occur before the end of the year.
Why would an Obama Victory lead to a massive sell-off?
Simply put, the fear that he and a Democratic Congress will push through tax increases next year.
Wealthier Investors have dissected Obama's tax plans and as the year ends, smaller investors will also begin to realize the reality of Obama's plans. If Obama were to push through his tax plan next year, he would institute an higher capital gains rate and an increase in the top tax brackets. As a result, investors will act before the end of this year to sell off investments that have generated both long-term and short-term capital gains in order to reduce their tax burden. There is, of course, the possibility that Obama would put his damaging tax increases on hold; however, that is a risk that investors are unlikely to take and if they were to wait they could see capital gains rates as much as 50% higher.
So brace yourself, as at this point a traditionally inactive November and traditionally positive December are likely to see nontraditionally high levels of volatility and a continued sell-off. From now until the end of the year, the market is in full Obama preparation mode and any negative economic news will only compound the sell-off.
J Brown
November 7th, 2008
Wednesday, November 5, 2008
Welcome Back Carter!
What you can expect from an Obama administration.
Foreign Policy
A) Iran - If Senator Obama follows the path that he has laid out for Iran then the country will go Nuclear within just years. World leaders including Prime Minister Brown and French President Sarkozy have both spoken out against Obama's plans in dealing with Iran. Just one week prior to the election a private memo released by the French President referred to Obama's foreign policy as simply "naive" and "irresponsible." A military strike by Israel will offer the only alternative.
B) North Korea - Nothing will change in North Korea unless Kim Jung Il, the "dear leader" becomes incapacitated. If Kim Jung Il were to pass away or be unable to rule that would be unwelcome news to South Korean, Japanese, and US leadership. Kim Jung Il is brutal, but he is a narcissist and hypocrite who lives a lush personal lifestyle and has never defied the world to the point that it would threaten his lifestyle. The greater danger is the next generation, who have been indoctrinated into believing that the Western World led by the US is to blame for the 17th century lifestyles. With no dissent, no outside media and no generation left that has experienced freedom, this entire society has been brainwashed into believing that the destruction of the US, South Korea, Japan and Europe is necessary.
C) BROKEN BORDERS - You may as well forget about it. Senator Obama, nor the Democratic Leaders have no intention of dealing with border security or combating the tide of Illegal Aliens flowing across the border. They won't even discuss the issue. Senator Obama voted against the appropriation for the 700 mile border fence and let's face reality. A man whose own Aunt is an illegal alien will never take action to address the issue.
D) Russia - The bear has risen from its nearly twenty year slumber and is once again stalking Eastern Europe. For the past ten year, European conflict experts have warned against the rise of Russian Imperialism and the societal movement away from democratic rule. Russia will continue to test their boundaries and seek control of European energy supplies, they will become more aggressive towards what is left of Georgia and then move onto Ukraine.
E) Venezuela - I have long warned against the morphing of Socialism in Fascism in Venezuela. Chavez is bent upon military and economic domination in the region and without forceful US protection of its neighbors, Venezuela will continue its military buildup and aggression. For 60 years, US leadership has worked to counteract the rise of a socialist based fascism in Central and South America, yet today we have elected a leader that has run on a platform nearly identical to that of Chavez. Venezuela has funded the guerrilla war waged by Marxist Colombian Rebels, providing money, weapons and even troops in an attempt to overthrow the Democratic nation. Venezuela has openly defied international borders by sending troops into the border regions of Guyana and openly laying claim to the sovereign territory. Chavez is headed down a path by which he seeks dominance of South Central America. Nearly every expert agrees that if international intervention does not occur, South America will break out into war.
Economy
A) A Second Fruitless Economic Stimulus Package - The stimulus package will be not be passed until after Obama's inauguration. At that time the stimulus package will be massive and fruitless. It will dole out billions of dollars to state governments that have improperly budgeted and overspent. The package will allow state's like Illinois that is currently $2 billion in arrears for medicaid payments to providers to catch up on their bills. In addition, the bill will enable a massive infrastructure improvement program committing billions to road projects, sewage plants and water systems. By time the money flows through Federal and State wash cycles, pennies on the dollar will flow back into the general economy. You might receive some infrastructure improvement, but the net effects will be negligible and will not provide relief to middle class America.
B) The Federal Deficit will Balloon - There is no way around this as even before a second stimulus package, Democratic Leadership and Senator Obama have called for hundreds of billions of dollars in new federal expansionary spending. Considering the $350 billion already appropriated to the bailout, another $350 billion committed to the financial bailout and a second stimulus package as large as $500 billion, it is realistic to believe that the federal deficit will exceed $1 trillion dollars next year, with no signs of shrinking.
C) National Security Budget Cuts - The federal budget currently allocates just 14% of its revenue to homeland and national security. That amount includes domestic security an national security spending. To give you some perspective, current national security spending is at its lowest level in US history and just a fraction of the 43% that President Kennedy allocated to National Defense. Senator Obama and the current Democratic Leadership have been consistent in their calls for billions of dollars in national security budget cuts. It will happen and by the end of 2010 if the United States is not involved in a broader war, national security spending will be well below 10% of our federal budget.
D) Energy - You may as well forget about any expansion in domestic oil and natural gas production, it will not occur. Democratic Leadership and Senator Obama will reinstate the federal moratorium on offshore drilling and push for legislation that will double land lease rates and shorten the development time for that land. Domestic Production of oil and natural gas will continue to decrease. Moreover, cap and trade rules that will be instituted by this Congress and Obama take effect, any opportunity to expand domestic refining capacity will be lost. No new refineries will be built, the C&T rules will punish the development or refinement of oil shale or Canadian oil sands and we will become more and more reliant upon the light, sweet crude flowing from the middle east. In addition, Obama and the Democratic Leadership will push for a Windfall Profits Tax on oil companies at a much lower target price than the $80 per barrel suggested on the campaign trail. In order for the tax to take affect today, they will push for a target of $60 per barrel. The resulting production based tax will become regressive. US coal production will fall and the coal powered energy industry will shrink dramatically as increased taxes destroy industry profits. Energy prices will rise dramatically in coming years, causing larger amounts of money to flow to other nations, causing higher prices and inflation domestically and limiting opportunity to push the US to the forefront of alternative energies. Countries such as Saudi Arabia and the UAE that are committing billions of dollars in oil profits to alternative energy research will increase their dominance and further their plans to become the world's energy suppliers.
F) Taxes - Tax rates will go up, and they will initially go up on any individual making more more than $100,000, and when that fails, the target will move downwards. What will most likely happen is that Democrats will vote to extend the Bush tax cuts on all but those individuals in the top brackets. However, the current leadership will then provide a FICA credit to those 40% who currently pay no income tax and lift the limits on FICA for everyone else. The result will mean a 6% increase in taxation for any American earning more than $100,000 per year. For those in the top brackets who are already responsible for a vast majority of our governments revenue, they will see their taxes increase by well over 10%. The self employed will suffer the most as they are responsible for both sides of the FICA tax and will suffer a 13% FICA tax rate on earnings over $100,000. In addition, small businesses responsible for FICA taxes and increased rates and a 40% increase in the minimum wage will have no alternative but to both raise prices and eliminate employment growth.
G) Regulation & Competition - When our progressive President's, Teddy Roosevelt, Taft and Wilson, implemented the nation's first measurable regulatory reform, they did so out of a belief that regulation should not stifle business growth but rather promote fair and increased industry competition. These leaders believed that a highly competitive environment competing for both consumers and workers would lead to improved employee benefits, better working conditions and lower prices. Yet, after the break up of Ma Bell our government radically shifted the regulatory environment to a more punitive and in many cases tax-based regulatory environment. The results of decades of tax-driven, punitive regulation has actually driven competition out of the market place. The financial sector, both banking and insurance based has dramatically shrunk, leading to the death of regional insurance companies and local banking. The oil industry, telecommunications industry, energy industry, and others have all fallen victim to the same consolidation. The net result is larger and more powerful companies, focused on profits and driving out existing competition. The financial crisis that we are facing is the perfect example of the need for more competition and regulatory reform. When one financial company has become so large that its failure can cause billions of dollars in losses worldwide, then there is a problem. The unfortunate part of this financial crisis is that as these mega financials fail, the government has allowed the creation of Super Mega Financials in Bank of America, JP Morgan and Citi. Now imagine if one of those three failed. An Obama administration will do nothing to stem this tide of false regulation predicated on taxation that stifles competition. The Obama administration and current Democratic leadership will not reform our regulatory system, but will instead add a new round of punitive tax-based regulations that will further diminish competition and lay the framework for a larger crisis if one of these super mega corporations fail.
H) The Shrinking Middle Class - With a downturn in global economies, has come a new populist assault among the upper class. Senator Obama and the current Democratic Leadership wish to use the tax code to build our economy from the bottom up. Their belief is that economies grow from the lower classes upward. Their belief is that we can strengthen the middle class, while diminishing the upper and lower classes. This belief in a middle class driven society has been attempted in the past with no avail. Marxism is based upon one absolute belief: The creation of a communal society in which there is a extremely limited upper class and little or no lower class. This theory was the basis of the Russian revolution, the Cuban Revolution and the current undertaking in Venezuela. This theory will fail as it has never worked in the past.
The Obama plan is predicated upon taxing the upper class and businesses in order to equalize income and provide greater upward mobility to the lower class. However, true upward mobility can only be achieved if there is upward mobility within all classes. The wealthy of this nation drive the investment that is necessary for economic growth, the less of a potential return on their investment because of taxation, the fewer dollars will be committed to that enterprise. In addition, the wealthy do not suffer from an ever progressive tax system as they have accrued their wealth. Ultimately, as business taxes and upper class taxes increase, the wealthy and US businesses will raise prices so as not to affect their bottom line. As a result any redistribution at the bottom is eroded by a higher cost of living.
Next, although there may be some initial limited upward mobility from the lower classes, upward mobility of the middle class will be stifled by an increasingly progressive tax system. As a result, there will be fewer wealthy and those attempting further upward mobility will become frustrated and eventually accept a fate as perpetually middle class. If we make it harder for the middle class to move upwards by a massive tax system that will remove 50% or more of their income, why not settle for less and forgo the work. As middle class mobility stifles, the tax base will shrink and the disparity between the upper and middle classes will grow. Thus, the ultimate result is that today's middle class has little opportunity for upward mobility, yet have to high of an income to receive any redistributive benefit. The middle class becomes stagnant and ultimately begins to fail as inflation erodes their purchasing power.
This is what has occurred time and time again in societies that have attempted bottom-up growth. The middle class shrinks and ultimately we are left with a working class and an elite class. Our nation has never grown from the bottom-up and those great leaders of our past such as Kennedy and Reagan understood the implications of this system of income equalization.
Our nation has the financially strongest and demographically largest middle class of any nation in the world. Our society has the highest standard of living of any nation in the world. Our middle class is only possible because of the potential of upward mobility, Obama's plans to increase taxation on this upward mobility will stifle the middle class and eventually lead to contraction.
You cannot have upward mobility unless you have upward mobility across all classes.
This is just the beginning. Just as in 1976 we have just elected what Ronald Reagan referred to as the 'trust me' government the government that promises the world and in the end will leave our middle class weaker and the world less secure.
J Brown
November 5th, 2008
Foreign Policy
A) Iran - If Senator Obama follows the path that he has laid out for Iran then the country will go Nuclear within just years. World leaders including Prime Minister Brown and French President Sarkozy have both spoken out against Obama's plans in dealing with Iran. Just one week prior to the election a private memo released by the French President referred to Obama's foreign policy as simply "naive" and "irresponsible." A military strike by Israel will offer the only alternative.
B) North Korea - Nothing will change in North Korea unless Kim Jung Il, the "dear leader" becomes incapacitated. If Kim Jung Il were to pass away or be unable to rule that would be unwelcome news to South Korean, Japanese, and US leadership. Kim Jung Il is brutal, but he is a narcissist and hypocrite who lives a lush personal lifestyle and has never defied the world to the point that it would threaten his lifestyle. The greater danger is the next generation, who have been indoctrinated into believing that the Western World led by the US is to blame for the 17th century lifestyles. With no dissent, no outside media and no generation left that has experienced freedom, this entire society has been brainwashed into believing that the destruction of the US, South Korea, Japan and Europe is necessary.
C) BROKEN BORDERS - You may as well forget about it. Senator Obama, nor the Democratic Leaders have no intention of dealing with border security or combating the tide of Illegal Aliens flowing across the border. They won't even discuss the issue. Senator Obama voted against the appropriation for the 700 mile border fence and let's face reality. A man whose own Aunt is an illegal alien will never take action to address the issue.
D) Russia - The bear has risen from its nearly twenty year slumber and is once again stalking Eastern Europe. For the past ten year, European conflict experts have warned against the rise of Russian Imperialism and the societal movement away from democratic rule. Russia will continue to test their boundaries and seek control of European energy supplies, they will become more aggressive towards what is left of Georgia and then move onto Ukraine.
E) Venezuela - I have long warned against the morphing of Socialism in Fascism in Venezuela. Chavez is bent upon military and economic domination in the region and without forceful US protection of its neighbors, Venezuela will continue its military buildup and aggression. For 60 years, US leadership has worked to counteract the rise of a socialist based fascism in Central and South America, yet today we have elected a leader that has run on a platform nearly identical to that of Chavez. Venezuela has funded the guerrilla war waged by Marxist Colombian Rebels, providing money, weapons and even troops in an attempt to overthrow the Democratic nation. Venezuela has openly defied international borders by sending troops into the border regions of Guyana and openly laying claim to the sovereign territory. Chavez is headed down a path by which he seeks dominance of South Central America. Nearly every expert agrees that if international intervention does not occur, South America will break out into war.
Economy
A) A Second Fruitless Economic Stimulus Package - The stimulus package will be not be passed until after Obama's inauguration. At that time the stimulus package will be massive and fruitless. It will dole out billions of dollars to state governments that have improperly budgeted and overspent. The package will allow state's like Illinois that is currently $2 billion in arrears for medicaid payments to providers to catch up on their bills. In addition, the bill will enable a massive infrastructure improvement program committing billions to road projects, sewage plants and water systems. By time the money flows through Federal and State wash cycles, pennies on the dollar will flow back into the general economy. You might receive some infrastructure improvement, but the net effects will be negligible and will not provide relief to middle class America.
B) The Federal Deficit will Balloon - There is no way around this as even before a second stimulus package, Democratic Leadership and Senator Obama have called for hundreds of billions of dollars in new federal expansionary spending. Considering the $350 billion already appropriated to the bailout, another $350 billion committed to the financial bailout and a second stimulus package as large as $500 billion, it is realistic to believe that the federal deficit will exceed $1 trillion dollars next year, with no signs of shrinking.
C) National Security Budget Cuts - The federal budget currently allocates just 14% of its revenue to homeland and national security. That amount includes domestic security an national security spending. To give you some perspective, current national security spending is at its lowest level in US history and just a fraction of the 43% that President Kennedy allocated to National Defense. Senator Obama and the current Democratic Leadership have been consistent in their calls for billions of dollars in national security budget cuts. It will happen and by the end of 2010 if the United States is not involved in a broader war, national security spending will be well below 10% of our federal budget.
D) Energy - You may as well forget about any expansion in domestic oil and natural gas production, it will not occur. Democratic Leadership and Senator Obama will reinstate the federal moratorium on offshore drilling and push for legislation that will double land lease rates and shorten the development time for that land. Domestic Production of oil and natural gas will continue to decrease. Moreover, cap and trade rules that will be instituted by this Congress and Obama take effect, any opportunity to expand domestic refining capacity will be lost. No new refineries will be built, the C&T rules will punish the development or refinement of oil shale or Canadian oil sands and we will become more and more reliant upon the light, sweet crude flowing from the middle east. In addition, Obama and the Democratic Leadership will push for a Windfall Profits Tax on oil companies at a much lower target price than the $80 per barrel suggested on the campaign trail. In order for the tax to take affect today, they will push for a target of $60 per barrel. The resulting production based tax will become regressive. US coal production will fall and the coal powered energy industry will shrink dramatically as increased taxes destroy industry profits. Energy prices will rise dramatically in coming years, causing larger amounts of money to flow to other nations, causing higher prices and inflation domestically and limiting opportunity to push the US to the forefront of alternative energies. Countries such as Saudi Arabia and the UAE that are committing billions of dollars in oil profits to alternative energy research will increase their dominance and further their plans to become the world's energy suppliers.
F) Taxes - Tax rates will go up, and they will initially go up on any individual making more more than $100,000, and when that fails, the target will move downwards. What will most likely happen is that Democrats will vote to extend the Bush tax cuts on all but those individuals in the top brackets. However, the current leadership will then provide a FICA credit to those 40% who currently pay no income tax and lift the limits on FICA for everyone else. The result will mean a 6% increase in taxation for any American earning more than $100,000 per year. For those in the top brackets who are already responsible for a vast majority of our governments revenue, they will see their taxes increase by well over 10%. The self employed will suffer the most as they are responsible for both sides of the FICA tax and will suffer a 13% FICA tax rate on earnings over $100,000. In addition, small businesses responsible for FICA taxes and increased rates and a 40% increase in the minimum wage will have no alternative but to both raise prices and eliminate employment growth.
G) Regulation & Competition - When our progressive President's, Teddy Roosevelt, Taft and Wilson, implemented the nation's first measurable regulatory reform, they did so out of a belief that regulation should not stifle business growth but rather promote fair and increased industry competition. These leaders believed that a highly competitive environment competing for both consumers and workers would lead to improved employee benefits, better working conditions and lower prices. Yet, after the break up of Ma Bell our government radically shifted the regulatory environment to a more punitive and in many cases tax-based regulatory environment. The results of decades of tax-driven, punitive regulation has actually driven competition out of the market place. The financial sector, both banking and insurance based has dramatically shrunk, leading to the death of regional insurance companies and local banking. The oil industry, telecommunications industry, energy industry, and others have all fallen victim to the same consolidation. The net result is larger and more powerful companies, focused on profits and driving out existing competition. The financial crisis that we are facing is the perfect example of the need for more competition and regulatory reform. When one financial company has become so large that its failure can cause billions of dollars in losses worldwide, then there is a problem. The unfortunate part of this financial crisis is that as these mega financials fail, the government has allowed the creation of Super Mega Financials in Bank of America, JP Morgan and Citi. Now imagine if one of those three failed. An Obama administration will do nothing to stem this tide of false regulation predicated on taxation that stifles competition. The Obama administration and current Democratic leadership will not reform our regulatory system, but will instead add a new round of punitive tax-based regulations that will further diminish competition and lay the framework for a larger crisis if one of these super mega corporations fail.
H) The Shrinking Middle Class - With a downturn in global economies, has come a new populist assault among the upper class. Senator Obama and the current Democratic Leadership wish to use the tax code to build our economy from the bottom up. Their belief is that economies grow from the lower classes upward. Their belief is that we can strengthen the middle class, while diminishing the upper and lower classes. This belief in a middle class driven society has been attempted in the past with no avail. Marxism is based upon one absolute belief: The creation of a communal society in which there is a extremely limited upper class and little or no lower class. This theory was the basis of the Russian revolution, the Cuban Revolution and the current undertaking in Venezuela. This theory will fail as it has never worked in the past.
The Obama plan is predicated upon taxing the upper class and businesses in order to equalize income and provide greater upward mobility to the lower class. However, true upward mobility can only be achieved if there is upward mobility within all classes. The wealthy of this nation drive the investment that is necessary for economic growth, the less of a potential return on their investment because of taxation, the fewer dollars will be committed to that enterprise. In addition, the wealthy do not suffer from an ever progressive tax system as they have accrued their wealth. Ultimately, as business taxes and upper class taxes increase, the wealthy and US businesses will raise prices so as not to affect their bottom line. As a result any redistribution at the bottom is eroded by a higher cost of living.
Next, although there may be some initial limited upward mobility from the lower classes, upward mobility of the middle class will be stifled by an increasingly progressive tax system. As a result, there will be fewer wealthy and those attempting further upward mobility will become frustrated and eventually accept a fate as perpetually middle class. If we make it harder for the middle class to move upwards by a massive tax system that will remove 50% or more of their income, why not settle for less and forgo the work. As middle class mobility stifles, the tax base will shrink and the disparity between the upper and middle classes will grow. Thus, the ultimate result is that today's middle class has little opportunity for upward mobility, yet have to high of an income to receive any redistributive benefit. The middle class becomes stagnant and ultimately begins to fail as inflation erodes their purchasing power.
This is what has occurred time and time again in societies that have attempted bottom-up growth. The middle class shrinks and ultimately we are left with a working class and an elite class. Our nation has never grown from the bottom-up and those great leaders of our past such as Kennedy and Reagan understood the implications of this system of income equalization.
Our nation has the financially strongest and demographically largest middle class of any nation in the world. Our society has the highest standard of living of any nation in the world. Our middle class is only possible because of the potential of upward mobility, Obama's plans to increase taxation on this upward mobility will stifle the middle class and eventually lead to contraction.
You cannot have upward mobility unless you have upward mobility across all classes.
This is just the beginning. Just as in 1976 we have just elected what Ronald Reagan referred to as the 'trust me' government the government that promises the world and in the end will leave our middle class weaker and the world less secure.
J Brown
November 5th, 2008
Tuesday, November 4, 2008
Will America Get Chamberlain, When We Need Churchill?
This election will prove to be an indictment upon our education system. A system that no longer focuses upon the history of nation, the ideals and beliefs of our founding fathers and the concept of American Exceptionalism which created that shining city on a hill. Our education system teaches history in bytes and major events, never focusing on the small events that led to our nation's challenges. Today our nation may elect the first black president, but if Senator Obama should win, we will have also elected the most inexperienced, far left and untested leader in US history. The media has led this nation into believing that our economy is destroyed and that we are headed for depression. As Senator Obama stated, "the worst economic crisis since the great depression"; yet, they have conveniently forgotten about the entirety of the 1970's. The media has compared this Manchurian candidate to John F. Kennedy, yet John F. Kennedy who committed 43% of his budget to national defense and believed in top - to - bottom tax cuts would never have a place in today's Democratic Party. They have led the nation to believe that we are in the need of a second 'new deal', without acknowledging the reality that the first 'new deal' did not solve our economic woes.
The media has painted a picture that an election is about the economy, yet the reality is that the primary function of Government and any President is national security. FDR understood this, even as he pushed his expansion of government he was also was a staunch internationalist surrounded by protectionists; one of only a handful of politicians who supported the Stimson Doctrine; and tried for his first seven years in office against his own party to begin an expansion of the military.
Today we have a candidate, who in his rush to become the anti-bush has committed himself to a withdrawal from a war that we are winning and without any assurance that Iraq can stand on its own. Many Americans support this strategy, yet, what costs will we incur if the nation falls apart and we, by Senator Obama's own admission, would have to go back in. The media has led us to believe that the Bush Administration is to blame for the challenges in Iraq and they are right. But they have failed to inform the American people that Bush's biggest failure was his refusal to allow his Generals to determine the timing and run the war from the beginning; and Bush's biggest failure in refusing to allow his military commanders to determine the strategy will also be Obama's biggest failure.
Senator Obama wants to rush head on into the tribal regions of Afghanistan and Pakistan, yet the media is eerily silent on what occurred when the Soviets attempted this in the 1980's. The world is entering into what Winston Churchill once referred to as the Global Crisis. Utilizing Socialist populism, Venezuela is morphing into a fascist state bent on ultra-nationalism and massive investment in weapons. Control of North Korea is unknown as rumours of their leaders health continue to persist; yet a change in leadership from a narcissist to the next generation may only create a greater danger from the nuclear country. Three generations of North Koreans, cut off from the outside world have been indoctrinated into the destruction of the Western World, and now it appears these individuals may soon be in charge.
The 'bear' has been unleashed in Eastern Europe and the former KGB are now seeking the resurgence of a Russian Empire. Russia's unchecked aggression against Georgia was just the beginning of this resurgence. Soon the Bear will be unleashed in a plan of systematic aggression against eastern Europe.
In the middle east, Iran is now under the control of a megalomaniac subscribing to a radical sect of Islam that believes that the second coming will only occur after massive chaos. Iran's leadership seeks the re-establishment of a Persian Empire; a return to the greatness that stretched from China to Spain.
As the world enters a global recession, the free peoples of the world will once again be under siege. Scrupulous and irresponsible leaders will emerge worldwide, promising to solve the countries problems, while plundering their nation, suppressing liberty and threatening their neighbors. During times of weak economies, totalitarian states will seek to produce wealth for their nations through military strength and aggression. Socialism and communism are once again rising, just as they did in the 1920's. Our enemies are amassing and building their armies; and today our government is in the hands of individuals who are discussing a 25% reduction in the already lowest national defense budget in history.
All of the lessons that we need in life can be learned from the mistakes and successes of the past; and yet today, with the rise of a second "Global Crisis", we may once again choose Chamberlain when we need Churchill.
J Brown
Election Day 2008
The media has painted a picture that an election is about the economy, yet the reality is that the primary function of Government and any President is national security. FDR understood this, even as he pushed his expansion of government he was also was a staunch internationalist surrounded by protectionists; one of only a handful of politicians who supported the Stimson Doctrine; and tried for his first seven years in office against his own party to begin an expansion of the military.
Today we have a candidate, who in his rush to become the anti-bush has committed himself to a withdrawal from a war that we are winning and without any assurance that Iraq can stand on its own. Many Americans support this strategy, yet, what costs will we incur if the nation falls apart and we, by Senator Obama's own admission, would have to go back in. The media has led us to believe that the Bush Administration is to blame for the challenges in Iraq and they are right. But they have failed to inform the American people that Bush's biggest failure was his refusal to allow his Generals to determine the timing and run the war from the beginning; and Bush's biggest failure in refusing to allow his military commanders to determine the strategy will also be Obama's biggest failure.
Senator Obama wants to rush head on into the tribal regions of Afghanistan and Pakistan, yet the media is eerily silent on what occurred when the Soviets attempted this in the 1980's. The world is entering into what Winston Churchill once referred to as the Global Crisis. Utilizing Socialist populism, Venezuela is morphing into a fascist state bent on ultra-nationalism and massive investment in weapons. Control of North Korea is unknown as rumours of their leaders health continue to persist; yet a change in leadership from a narcissist to the next generation may only create a greater danger from the nuclear country. Three generations of North Koreans, cut off from the outside world have been indoctrinated into the destruction of the Western World, and now it appears these individuals may soon be in charge.
The 'bear' has been unleashed in Eastern Europe and the former KGB are now seeking the resurgence of a Russian Empire. Russia's unchecked aggression against Georgia was just the beginning of this resurgence. Soon the Bear will be unleashed in a plan of systematic aggression against eastern Europe.
In the middle east, Iran is now under the control of a megalomaniac subscribing to a radical sect of Islam that believes that the second coming will only occur after massive chaos. Iran's leadership seeks the re-establishment of a Persian Empire; a return to the greatness that stretched from China to Spain.
As the world enters a global recession, the free peoples of the world will once again be under siege. Scrupulous and irresponsible leaders will emerge worldwide, promising to solve the countries problems, while plundering their nation, suppressing liberty and threatening their neighbors. During times of weak economies, totalitarian states will seek to produce wealth for their nations through military strength and aggression. Socialism and communism are once again rising, just as they did in the 1920's. Our enemies are amassing and building their armies; and today our government is in the hands of individuals who are discussing a 25% reduction in the already lowest national defense budget in history.
All of the lessons that we need in life can be learned from the mistakes and successes of the past; and yet today, with the rise of a second "Global Crisis", we may once again choose Chamberlain when we need Churchill.
J Brown
Election Day 2008
Monday, November 3, 2008
Obama Energy: Bankrupt Coal...Artificially High Oil; Economy:40% Increase In Minimum Wage...Tax 80% Small Business Profits...
With just one day until the election, the real world effects of Barack Obama's economic and energy plans have 'come home to roost'.
Consider this...
According to the Department of Labor, 80% of Small Business profits and employment are derived by small businesses that have profits in excess of $250,000. These small businesses will which represent the primary strength of our economy will face a double whammy under a potential Obama administration.
First, the tax rates of these small businesses will increase. The result will force these small employers will in turn suffer slower growth as more money flows to the government and away from the business itself. The small business employers will hire fewer employees and in an attempt to maintain profitability during times of slow growth will most likely rely upon a combination of layoffs and higher prices.
Second, Senator Obama wants to impose a second increased expense upon these small businesses. Obama has promised to increase the Federal Minimum Wage to over $9.50 per hour within the next three years. The problem with Obama's proposal is not an increase in the minimum wage, but rather the size of the increase and timing of the increase. The United States is entering a recession, during which unemployment is on the rise. The absolute worst thing that could be done at this time is to force an increase in the Federal Minimum Wage.
The minimum wage primarily affects small businesses and particularly the service sector. A rise in the minimum wage, during an economic downturn will only force small businesses that are struggling to maintain profitability to either dramatically raise prices, or most likely eliminate jobs.
Just consider if you owned a small business that employees 10 individuals at the minimum wage. Obama's wage increase would have the financial equivalent of you hiring an additional 4 employees. As a small business owner, are you now likely to go out and hire additional employees? No... During a recessionary period in which business revenue is shrinking, are you going to raise prices? No...Instead you are now likely to make cuts, and in most cases those cuts will come from your payroll expenses.
During recessionary periods our government should be looking to help protect job creation, not imposing additional taxes and expenses of employers. The minimum wage issue has had little discussion, but the ill-timing of his proposed increase only demonstrates the true destructive nature of Obama' economic policies.
Onto Energy...
Remember just one month ago...when Senator Biden stated that Obama was opposed to clean coal?? Obama immediately came forth and stated that Biden was wrong and that he supports the coal industry as a vital part of our nation's economy.
Yet, yesterday audio recordings of Senator Obama in an interview with the San Fransisco Chronicle surfaced in which he stated, "If somebody wants to build a coal power plant they can, it's just that it will bankrupt them because they are going to be charged a huge sum for all that greenhouse gas that's being emitted."
That interview took place in January of this year, just 10 short months ago. The interview supports Senator Biden's assessment and supports what Obama's opposition has claimed for months. Under the Obama Energy Plan, US coal production will fall as production expenses and taxes increase to a point that the business is no longer viable.
Moreover, Senator Obama continues to lambaste oil companies, calling for a Windfall Profits Tax to pay for his energy proposals. The problem however is that Obama's WPT is not based upon actual profits, it is based upon the gross cost of a barrel of oil. Under Obama's plan the government would impose a steep tax on any barrel of oil that is traded at a cost above $80 per barrel. Yet, today the cost of a barrel of oil is well below $80 per barrel. As a result, Obama's own energy proposals no longer have any funding. So what now?
Since Senator Obama is still discussing the tax, you can only assume one of two things must occur. One, an Obama administration would work to artificially inflate prices to a point well above $80 per barrel. The public would be forced to pay higher prices, domestic production would fall, but the government could collect their valuable taxes. Or... Obama will simply lower his target price, imposing the massive tax on on barrels trading for far below $80 per barrel. Again the result would be a mass exodus of domestic production and a destruction of oil company profits that would endanger the entire industry. Either way, the result will not be good for our economy.
With just one day left until this election, the American people need to wake up. Although Senator Obama's over-populous messages sound grand, the reality is that they are economically irresponsible, especially during periods of increased recessionary periods. Obama is appealing to nothing more than the self-centered nature of so many Americans who want to blame those who are more fortunate for their woes and believe that the government is somehow the solution to their economic woes. Americans need to stop putting themselves first and put this nation first. A strong economy is built upon policies that promote job creation, not punish the small businesses that create a majority of our nations jobs. A wealthy nation, which utilizes its own resources and works increase domestic production can do far more for improving the lives of it's citizens, developing new technologies and protecting the environment. Our nation has the highest standard of living of any nation in the world, yet Senator Obama wants to change "decades" (did you catch that) "DECADES" of economic policy to move towards a European Socialist Economy. Obama has promised everything to everybody and that is a recipe for disaster.
So with one day left, if you know anyone in these battleground states, call them. If you know anyone in a state that is not even a battleground state, call them, talk to them and let them know what the mainstream media is not telling them. If your a small business owner, let everyone know what the effects of an Obama administration will do to your business. Fight for your business, fight for your employees and end this madness and the potential election of this Manchurian candidate.
J Brown
November 3rd, 2008
Consider this...
According to the Department of Labor, 80% of Small Business profits and employment are derived by small businesses that have profits in excess of $250,000. These small businesses will which represent the primary strength of our economy will face a double whammy under a potential Obama administration.
First, the tax rates of these small businesses will increase. The result will force these small employers will in turn suffer slower growth as more money flows to the government and away from the business itself. The small business employers will hire fewer employees and in an attempt to maintain profitability during times of slow growth will most likely rely upon a combination of layoffs and higher prices.
Second, Senator Obama wants to impose a second increased expense upon these small businesses. Obama has promised to increase the Federal Minimum Wage to over $9.50 per hour within the next three years. The problem with Obama's proposal is not an increase in the minimum wage, but rather the size of the increase and timing of the increase. The United States is entering a recession, during which unemployment is on the rise. The absolute worst thing that could be done at this time is to force an increase in the Federal Minimum Wage.
The minimum wage primarily affects small businesses and particularly the service sector. A rise in the minimum wage, during an economic downturn will only force small businesses that are struggling to maintain profitability to either dramatically raise prices, or most likely eliminate jobs.
Just consider if you owned a small business that employees 10 individuals at the minimum wage. Obama's wage increase would have the financial equivalent of you hiring an additional 4 employees. As a small business owner, are you now likely to go out and hire additional employees? No... During a recessionary period in which business revenue is shrinking, are you going to raise prices? No...Instead you are now likely to make cuts, and in most cases those cuts will come from your payroll expenses.
During recessionary periods our government should be looking to help protect job creation, not imposing additional taxes and expenses of employers. The minimum wage issue has had little discussion, but the ill-timing of his proposed increase only demonstrates the true destructive nature of Obama' economic policies.
Onto Energy...
Remember just one month ago...when Senator Biden stated that Obama was opposed to clean coal?? Obama immediately came forth and stated that Biden was wrong and that he supports the coal industry as a vital part of our nation's economy.
Yet, yesterday audio recordings of Senator Obama in an interview with the San Fransisco Chronicle surfaced in which he stated, "If somebody wants to build a coal power plant they can, it's just that it will bankrupt them because they are going to be charged a huge sum for all that greenhouse gas that's being emitted."
That interview took place in January of this year, just 10 short months ago. The interview supports Senator Biden's assessment and supports what Obama's opposition has claimed for months. Under the Obama Energy Plan, US coal production will fall as production expenses and taxes increase to a point that the business is no longer viable.
Moreover, Senator Obama continues to lambaste oil companies, calling for a Windfall Profits Tax to pay for his energy proposals. The problem however is that Obama's WPT is not based upon actual profits, it is based upon the gross cost of a barrel of oil. Under Obama's plan the government would impose a steep tax on any barrel of oil that is traded at a cost above $80 per barrel. Yet, today the cost of a barrel of oil is well below $80 per barrel. As a result, Obama's own energy proposals no longer have any funding. So what now?
Since Senator Obama is still discussing the tax, you can only assume one of two things must occur. One, an Obama administration would work to artificially inflate prices to a point well above $80 per barrel. The public would be forced to pay higher prices, domestic production would fall, but the government could collect their valuable taxes. Or... Obama will simply lower his target price, imposing the massive tax on on barrels trading for far below $80 per barrel. Again the result would be a mass exodus of domestic production and a destruction of oil company profits that would endanger the entire industry. Either way, the result will not be good for our economy.
With just one day left until this election, the American people need to wake up. Although Senator Obama's over-populous messages sound grand, the reality is that they are economically irresponsible, especially during periods of increased recessionary periods. Obama is appealing to nothing more than the self-centered nature of so many Americans who want to blame those who are more fortunate for their woes and believe that the government is somehow the solution to their economic woes. Americans need to stop putting themselves first and put this nation first. A strong economy is built upon policies that promote job creation, not punish the small businesses that create a majority of our nations jobs. A wealthy nation, which utilizes its own resources and works increase domestic production can do far more for improving the lives of it's citizens, developing new technologies and protecting the environment. Our nation has the highest standard of living of any nation in the world, yet Senator Obama wants to change "decades" (did you catch that) "DECADES" of economic policy to move towards a European Socialist Economy. Obama has promised everything to everybody and that is a recipe for disaster.
So with one day left, if you know anyone in these battleground states, call them. If you know anyone in a state that is not even a battleground state, call them, talk to them and let them know what the mainstream media is not telling them. If your a small business owner, let everyone know what the effects of an Obama administration will do to your business. Fight for your business, fight for your employees and end this madness and the potential election of this Manchurian candidate.
J Brown
November 3rd, 2008
Saturday, November 1, 2008
Broken Borders: How Will Obama Enforce Immigration Law When His Aunt Is An Illegal?
Has the Associated Press had a change of heart, or are they just covering their bases in the final days of the election?
Regardless, the Associated Press, has finally reported a story that should be particularly disturbing to all Americans. The President of the United States has, by definition, two primary roles as both the Commander in Chief and as the nations Chief Enforcement Officer. The role of the executive branch is to assure the enforcement of the laws passed by the legislative branch and signed by the President. So my question this morning is simple:
How is Barack Obama going to handle the enforcement of immigration laws and fix our broken borders when his own Aunt is residing in the US illegally?
According to the AP, Obama's recently located Aunt living in the slums of Boston has been residing in the United States illegally for years. Zeituni Onyango, according to an AP report based upon two separate sources including a law enforcement agency, was denied Asylum in the United States over four years ago and has been residing illegally within the US since.
Senator Obama fondly discussed "Auntie Zeituni" in his memoirs, the same memoir in which he discussed his responsibility to assist family members. The Illinois Senator apparently did not feel the need to assist his Aunt in seeking citizenship through proper channels; nor did the good Senator, who has earned millions over the past decade, make the decision to financially assist his Aunt living in a run-down slum in Boston.
The more important issue, however, is Obama's potential role as the Chief Enforcement Officer of the United States. Our borders are broken and the American people overwhelmingly want them secured and the tide of illegal immigration stopped. Obama's Aunt, who is living in taxpayer funded public housing, is one of an estimated 10 million illegals whose asylum applications have been rejected or whose Visas have expired. These illegal aliens, most of whom are also illegally employed, only add to the financial struggles of the states they live in.
Our nation is facing rising unemployment under the current recessionary pressures and our next President must be willing to tackle illegal immigration as a national security and more importantly, an economic issue. So Again, I ask:
How can a President whose own Aunt is living illegally in the United States possibly handle the issue of illegal immigration in an objective manner that places the interests of the American people first?
J Brown
November 1st, 2008
Regardless, the Associated Press, has finally reported a story that should be particularly disturbing to all Americans. The President of the United States has, by definition, two primary roles as both the Commander in Chief and as the nations Chief Enforcement Officer. The role of the executive branch is to assure the enforcement of the laws passed by the legislative branch and signed by the President. So my question this morning is simple:
How is Barack Obama going to handle the enforcement of immigration laws and fix our broken borders when his own Aunt is residing in the US illegally?
According to the AP, Obama's recently located Aunt living in the slums of Boston has been residing in the United States illegally for years. Zeituni Onyango, according to an AP report based upon two separate sources including a law enforcement agency, was denied Asylum in the United States over four years ago and has been residing illegally within the US since.
Senator Obama fondly discussed "Auntie Zeituni" in his memoirs, the same memoir in which he discussed his responsibility to assist family members. The Illinois Senator apparently did not feel the need to assist his Aunt in seeking citizenship through proper channels; nor did the good Senator, who has earned millions over the past decade, make the decision to financially assist his Aunt living in a run-down slum in Boston.
The more important issue, however, is Obama's potential role as the Chief Enforcement Officer of the United States. Our borders are broken and the American people overwhelmingly want them secured and the tide of illegal immigration stopped. Obama's Aunt, who is living in taxpayer funded public housing, is one of an estimated 10 million illegals whose asylum applications have been rejected or whose Visas have expired. These illegal aliens, most of whom are also illegally employed, only add to the financial struggles of the states they live in.
Our nation is facing rising unemployment under the current recessionary pressures and our next President must be willing to tackle illegal immigration as a national security and more importantly, an economic issue. So Again, I ask:
How can a President whose own Aunt is living illegally in the United States possibly handle the issue of illegal immigration in an objective manner that places the interests of the American people first?
J Brown
November 1st, 2008
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