Change is good
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It's easy to see how the Mumbai terrorists need to be fought, because we're over here and they're over there.
The lesson is simple, obvious, and it tastes like bile if you're being told to administer it. It's precisely what we didn't do after 9-11, and precisely what led us down the road to today.
There is an enormous threat developing to the War Against Oil we all need to conduct in order to save the planet.
Low oil prices.
The price of crude on world markets has been cut in half over the last few months, as the recession we started with our Confederate Money spreads around the world. While the U.S. has responded appropriately, injecting new liquidity to partly make up for what has been lost, the world has yet to respond. The dollar is up against the Euro as a result.
Why is a lower oil price bad? If you spent the last year working on a plan to develop solar or geothermal or hydrogen energy, based on a price equivalent of $100/barrel oil, your project is now dead in the water. Your investors have pulled out and that energy won't be produced.
So long as energy prices are subject to the instant fluctuations of hedge funds and day traders, it is impossible to plan for new supplies.
The solution is simple, and it's time we went for it. As I have stated here many times, that solution is to set a floor price for oil.
I saw another one the other day.
It was a pick-up truck, a black "W the President" sticker in the window. No other adornment. No McCain stuff. Nothing about issues, nothing about the party.
The sticker looked clean, and new. Just like the "W '04" ovals I see on other big cars and trucks as I drive around Atlanta and its suburbs.
Very strange. Given the reality of our time, an economy in the tank, the American brand on the ropes, the air increasingly hazardous to your health, the cost of filling that car passing $100.
The question no one in the media or on the left is asking -- what's going on?
George W. Bush has become an -ism. And Bushism has become a cult, something we're going to have to contend with seriously in the years ahead.
What is Bushism?
Obviously the philosophy behind the politics of George W. Bush. But what is that, exactly? You can name the policy stands, but I'm more interested in the myths and values, the assumptions, which lie behind those stands.
I disagree with some of what Al Gore said today, but I welcome it nonetheless.
Let me start with my points of disagreement:
My main problem with Gore for a long time has been his making global warming into a partisan divide, and despite his talk about national security this speech maintains that trend. Getting an introduction from Bernie Sanders is nice, but it's partisan.
It's counter-productive. The War Against Oil must be non-partisan in fact, not just rhetorically.
Wall Street is agog over T. Boone Pickens' "plan" for alternative energy.
But read it. Read it closely. Know what it is?
It's Communist. Not "let's start a commune and grow organic produce" communist. Stalinist 5-year plan Communist. My way or the Gulag Communist.
Here it is, at the end of his Wall Street Journal piece in Pickens' own words. This is his proposition. I just used some boldface so you would see what he's really saying:
The government must mandate the formation of wind and solar transmission corridors, and renew the subsidies for economic and alternative energy development in areas where the wind and sun are abundant. I am also calling for a monthly progress report on the reduction in foreign oil imports, as well as a monthly progress report on the state of development of natural gas vehicles in this country.
In other words, "Subsidize what I'm already doing. Override any objections to my plan for big windmills and ginormous transmission lines hundreds of miles long. Give me control, and guarantees. Make me Wind Czar and put all your eggs in my basket."
This is why Communism fell, because they bought 5 and 10 year plans from goobers like Boone Pickens. He has claimed all his life to be an anti-communist, but this plan reveals him for what he is. He's not a businessman. He's another lobbyist with his hand out. For Siberia read West Texas.
There's a better way.
The U.S. military is the largest user of fuel in the world. Especially jet fuel. Get our people out of Iraq and we can cut those needs dramatically, thus cutting the price of oil substantially.
It is amazing that no one in politics or the media has made this simple observation. Supply and demand for oil are on a knife-edge, the price set and re-set constantly on the floors of commodity exchanges like the New York Merc. Given the conservation now going on across America, prices should have started falling by now.
They haven't. Because the U.S. military keeps grabbing up supply.
Smart defense suppliers know this. But their plans for "oil free by 2050" don't yet call for the military to move away from hydrocarbons. Instead they want to develop tar sands and oil shale for military fuel use. These fuel sources are actually worse for the environment than oil itself, because of the energy needed to extract the resource.
But there is hope.
Think of this as Volume 11, Number 21 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.
All the economic problems of our time have a single root cause. (Cartoon by Thomas Nast, for Harper's Weekly.)
Whether we're talking about the Internet, about wireless technology, or about energy, the cause is a lack of reason to produce more.
Consider oil, only because it's top of mind. Why should OPEC produce more? Why should any other major producer? Why should these suppliers lift a finger to halt the thefts and corruption which keep oil from the market?
Will they make more money by doing this? No, they won't. Oil is at $130 per barrel and going higher. Add more supply and the price will go down.
The same is true for Internet service and wireless service. Why should the companies which control Internet broadband allow the creation of a "new pipe" in wireless? It would compete with their shared monopoly. Having kept prices for basic broadband at $50/month and higher, these monopolists are now moving to actually raise prices by limiting the number of bits they deliver under those contracts, and preventing the spread of competing technologies.
Why shouldn't they? What is their incentive for investing in their networks to increase the number of bits they deliver? Will they earn more money as a result? No, they won't.
The problem in all these cases is the same. Shared monopolies, or oligopolies. The free competition of capitalism naturally moves markets toward this climax state. Think Coke and Pepsi, or Bud and Miller, or WalMart and Target. A very small number of companies in each market control the bulk of supply, and are thus in a position to set prices. Why do you think it costs over $1 for a can of fizzy water?
While proclaiming the benefits of capitalism and competition, the United States government has been endorsing this principle of oligopoly for most of the last century, and that trend has accelerated during this decade. All that has really happened is that the oil producing nations of the world have figured this out and taken advantage.
So the answer to our economic doldrums is simple. We need to switch from giving people reasons to withhold product from the market and give them reasons to supply it.
Think of this as Volume 11, Number 18 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.
I have long been intrigued by what stands for value. (Picture from The Zoo.)
Throughout the 19th century, gold was the standard of value.
The 1896 Crisis, the Cross of Gold speech, these were outgrowths of the 1895 gold loan by J.P. Morgan to the U.S. government in exchange for bonds, which Morgan then sold at the "usurious" interest rate of 4%. With gold as the standard of value, the value of other commodities (like wheat) withered. Farmers suffered, bankers gained. The farmers' uprising was called Populism, and it made Democrats dominant in the farm belt for decades.
Today we have a new standard of value. Oil. And the impact is much the same. For wheat read dollars, for farmers read Americans, and for J.P. Morgan read the Saudi sheikhs, Hugo Chavez and Vladimir Putin.
What makes a "strong" store of value is the fact that its supply is limited, that it doesn't inflate. It's stable. It's sound.
The U.S. dollar is no longer sound. It's being tossed out by Helicopter Ben the way farmers a century ago tossed wheat on the market, and the result is very predictable. The age of the "dollar standard" is over, and while the world seeks a new safe haven, oil will do nicely.
There can be only one response.
The mood at the end of the annual Davos retreat of big moneybags was, in a word, scared. (Picture from Freakingnews.com.)
They're looking at the world economy the way New Orleanians looked at the TV weather shows a day before Katrina hit. They see the thing blossom before them, they're told it's headed right for them, but there are no freeways out of the money business. You gotta own something.
Why panic? The cataclysm has two components:
History shows that whenever excess, a bubble, is found within the market, you can't turn things around until that excess is wrung completely out. Think about the dot-bomb. Some of the best companies lost half their value. Some lost 90%. Many went under completely. Now that the housing bubble is obvious that is what has to happen.
And the impact of making that happen is catastrophic. Think about it. You've got a $250,000 house. Before this is over it might be worth $125,000, it might be worth far less. Your buyer has to qualify for a fixed-rate mortgage, and put down a substantial down payment. Now how much do you owe on that house? I'd venture to say very few mortgages are half-paid off. And what happens to a loan when the value of the collateral falls below what you've borrowed? Well, on Wall Street they call that a margin call.
What we're seeing right now might be just the tip of the iceberg. Because all the excess has to be wrung out -- in home prices, in the mortgages underlying them, in the derivatives and other crap made with those mortgages.
Yet that's just half the problem.
These are still Sputnik days in The War Against Oil.
By that I mean, just as 50 years ago, most people are still in shock over the enormity of the challenge, and what may be necessary to meet it.
This, of course, is much bigger than what we faced 50 years ago. Most of the fear then was overdone. The Russians were not ahead of us technologically. They merely had a demonstration, based on rocket expertise acquired from Nazi Germany, which we had yet to exploit.
The War Against Oil, on the other hand, must become a living reality, worldwide. China is already fully engaged. This is a necessity on their part, given the Chinese economy's reliance on coal.
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