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  • How Will Fortune Magazine's 10 Stock Picks for 2009 Fare?
    "The Chinese and the Japanese, who have been these bonds’ primary buyers ..."

    Utter nonsense. China recently supplanted Japan as the largest foreign holder of US debt, with a total at the end of October of $652.9 billion, or 6.17% of all US debt. Japan's total was $585.5 billion, or 5.54% (www.treas.gov/tic/mfh....).

    "...[China and Japan] will transform from net buyers of US Government bonds to sellers. By drastically increasing the supply of such bonds on the market..."

    You seem to ignore your own word - transform. IF China or Japan were to become a net seller of US debt (questionable), it would do so gradually. It's not like they would one day drop all of their securities onto the market.

    "Any new US Government bonds that could be auctioned under such circumstances would be forced to pay much higher rates of interest, which would make such new issues too expensive and thus impractical."

    First off, you make no prediction about what interest rates will be.
    But US borrowing "too expensive and thus impractical"? Seriously? Has the going interest rate ever had any impact on the issuance of US debt? Did the government slow borrowing in 1981 when 3-month treasuries, which now yield close to zero, were yielding more than 14%? No, it INCREASED borrowing. So you think that in 2009 we'll see 3-month treasuries yielding at least double-digits, right?

    But beyond that: you think the Fed will have no "interest rate control mechanisms" that aren't "out of commission." Sounds like you mean that the federal funds rate will remain near zero while short-term interest rates are double-digits.

    Think about it, or take a look at a chart - federal funds is almost always very close to the 3-month rate, and when it's been out of whack fed funds has always been higher. You're trying to describe a world where a bank can borrow from the Fed at near-zero rates, then use that money to buy short-term US debt that yields 10+%. It's pure fantasy.
    Jan 05 12:37 pm |Rating: +1 -3 |Link to Comment |View article
  • Taking Profits - Thanks, Obama
    Blonde Molly wrote: "for bs to imply that ad is a racist for pointing this out seems wrong too. bs acts surprised that the government could be behind promoting one race over another."

    AD plainly stated that subprime loans are made "almost exclusively to minorities," but his own cited source said "one study indicates that 18 percent of the loans in the subprime market went to black borrowers." Again and again in his posting, AD misquoted source material, changing terminology meaning "low income" to "minority." Make your own judgments.

    It is certainly true that minorities often are disproportionate beneficiaries of government programs targeted to benefit low-income people. But this is more often than not because minorities make up a disproportionately high percentage of low-income people.

    Couple of things about the stats you mentioned:

    "...during the economic boom of the 1990's... the number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998... [and] the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent."

    Without the underlying data, this is marginally useful at best. These increases are most likely explained best by socioeconomics rather than race, as credit began to be extended to less credit-worthy borrowers. As a group, Hispanic Americans are somewhat less creditworthy than African Americans, who as a group are less creditworthy than Asian Americans. So naturally, if lending standards are lowered, the benefit will be captured more by those on the bottom of such a scale than by those on the top.

    It would be useful to know the percent increase during the time period for white borrowers, but they didn't provide that.

    The federal government, and other governments, certainly have programs that specifically target minorities and women. It's not necessary to overstate them, however, which is what's been done here. Re-read AD's post - the thrust of the argument is that overzealous government regulation forcing lending to minorities is the cause of the current market dysfunction. The facts don't bear this out in the least, and the argument is either ignorant or racist. I invite AD to tell us which.
    Dec 13 11:03 am |Rating: 0 0 |Link to Comment |View article
  • Taking Profits - Thanks, Obama

    Wow, this will take a while. My apologies to those who don’t give a rat’s ____. While I'm no expert on this history, I can say...

    ArtfulDodger wrote:

    "...the Equal Credit Opportunity Act passed by Lyndon Johnson (LBJ) and a Democrat Congress in 1967."

    Wrong. The ECOA was passed in 1974 and signed into law by President Nixon.

    AD: "It was all a continuation of LBJ’s "War on Poverty" and his "Great Society"—a socialist concept invented to help the Democrats buy the minority vote permanently."

    How would you describe Nixon's wage and price controls and Bush's semi-nationalization of banks, both of which are more socialist policies than any LBJ program? If LBJ's intentions were so cynically political, why is he said to have uttered these words after signing the Civil Rights Act: "We have lost the south for a generation."

    AD: "When Ronald Reagan got elected in 1980 this type of lending and building came to a halt over most of the nation—except in states that continued to subsidize contractors for such building."

    Sure, and when Reagan got elected in 1980 the economy immediately went into the deepest recession since the 1930s. Care to imply a cause-and-effect relationship there, too?

    AD: "...the Clintons [tried] to get Congress to pass a '$30 billion stimulus package' for certain cities. It was such a blatant attempt to repay city governments that had promoted the Clintons’ campaign that even the Democrat Congress declined to go along with it."

    Wrong. The proposal included $15 billion for highway construction, summer jobs, community development, jobless benefits, education programs, and projects for treating waste water, and $15 billion for business tax credits for equipment investment. Faced with a certain Republican filibuster, the proposal was abandoned.

    AD: "...the Clintons (sic) lost heavily in rural areas but won a large majority of the votes in cities and carried as much as 98% of the vote in areas where minorities lived."

    Which is pretty much exactly the same as every Democrat.

    AD: "The media didn’t tag Clinton as the "first Black President" for no good reason."

    I believe it was Toni Morrison that "tagged" him with that, and that she did so because she saw parallels between his treatment during the impeachment and a general societal assumption of guilt in accused black men. I might not have the reasoning quite right.

    AD: "The first move the Clintons' HUD made was to strengthen the rules within the CRA and give Federal Housing bureaucrats the fangs to bite the financial institutions that did not comply—"

    Pretty sure this is inaccurate. According to testimony by Sandra Braunstein of the Fed, there was no substantial change to CRA between 1992 and 1995, when: "The CRA regulations were substantially revised again in 1995, in response to a directive to the agencies from President Clinton to review and revise the CRA regulations to make them more performance-based, and to make examinations more consistent, clarify performance standards, and reduce cost and compliance burden. This directive addressed criticisms that the regulations, and the agencies' implementation of them through the examination process, were too process-oriented, burdensome, and not sufficiently focused on actual results. The agencies also changed the CRA examination process to incorporate these revisions."

    AD: "...these new powers allowed federal bureaucrats to order financial institutions to create a new lending vehicle, which became known as the subprime loan."

    Tell me, how is it that some banks, like USB and WFC, had almost no exposure to subprime loans? Fact is, some banks and other lenders did a lot of subprime lending (which was extraordinarily profitable while the housing bubble was expanding) and others did not. Countrywide did large amounts of subprime lending, and was extremely profitable until last year. There was a huge financial incentive to lend to anybody you could when house values were increasing as they were.

    Fed Governor Ed Gramlich, 2004: "The growth in subprime lending represents a natural evolution of credit markets. Two decades ago subprime borrowers would typically have been denied credit. But the 1980 Depository Institutions Deregulatory and Monetary Control Act [passed by Democrats - ed.] eliminated all usury controls on first-lien mortgage rates, permitting lenders to charge higher rates of interest to borrowers who pose elevated credit risk, including those with weaker or less certain credit histories. This change encouraged further development and use of credit scoring and other technologies in the mortgage arena to better gauge risk and enabled lenders to price higher-risk borrowers rather than saying no altogether. Intense financial competition in the prime market, where mortgage lending was becoming a commodity business, encouraged lenders to enter this newer market to see if they could make a profit."

    AD: "These are loans made almost exclusively to minorities..."

    Nonsense. Hopefully due to ignorance rather than racism, but nonsense nonetheless. In 2005 for example, about 17% of white borrowers got higher-cost mortgages. Perhaps "almost exclusively" means something different to you than to me.

    AD: "Whites—unless on welfare or disabled—still had to qualify according to the much stricter lending standards laid down by the Federal Depository Insurance Corporation (FDIC)..."

    Please cite anything – anything at all - supporting this claim.

    AD: "...after the Savings and Loan boondoggle of the late eighties and early nineties caused the government to have to pile approximately $1.8 trillion onto the National Debt..."

    More nonsense. The total assets – which is the most that possibly could have been lost - of all S&L's that were closed by the government was $519B. In liquidating these institutions, the total cost to taxpayers was about $153 billion. [www.fdic.gov/bank/anal...]

    An interesting question relates to the moral hazard here. Did today’s banks learn from yesterday’s S&Ls that the government would prop them up if they got into real trouble? If so, could then liberals make an argument that this whole problem originated with Reagan? Nah, I don't think so either.

    AD: "The changes to the CRA put into place new regulations that forced lenders to make high-risk loans to applicants that could not previously qualify..."

    Hope my boots are high enough. Janet Yellen, President, Federal Reserve Bank of San Francisco, 2007: "There has been a tendency to conflate the current problems in the subprime market with CRA-motivated lending, or with lending to low-income families in general... Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans, and studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households."

    AD: "Here are some of the rules qualifying the mandates banks received from the Clinton bureaucrats:"

    I'll be comparing the following paragraphs with the actual text from the booklet published by the Boston Fed titled 'Closing the Gap: A Guide to Equal Opportunity Lending,' which can be found here: www.bos.frb.org/commde...; I'll be adding emphasis. BTW, the Federal Reserve is not exactly chock-a-block full of political appointees, but whatever.

    AD: "Regarding Credit History: Lack of credit history should not be seen as a negative factor IN LENDING TO MINORITIES."

    Actual text: "Lack of credit history should not be seen as a negative factor. Certain cultures encourage people to 'pay as you go' and avoid debt. Willingness to pay debt promptly can be determined through review of utility, rent, telephone, insurance, and medical bill payments."

    AD: "Regarding Down Payment and Closing Costs: Accumulating enough savings to cover the various costs associated with a mortgage loan is often a significant barrier to home ownership FOR MINORITY APPLICANTS."

    Actual text: "Accumulating enough savings to cover the various costs associated with a mortgage loan is often a significant barrier to homeownership BY LOWER-INCOME APPLICANTS."

    AD: "Lenders SHOULD BEGIN to allow gifts, grants, or loans from relatives, nonprofit organizations, or municipal agencies to cover part of these costs."

    Actual: "Lenders MAY WISH to allow gifts, grants, or loans from relatives, nonprofit organizations, or municipal agencies to cover part of these costs."

    You might want to read the booklet. It's not nearly as scary, or racist, as you think.

    AD: "Still not satisfied with how banks were complying with their plan to transfer billions of dollars to their minority constituents..."

    You're pathetic.

    AD: "...each bank had to set aside certain amounts of funds to be lent strictly to minority applicants."

    I'm willing to bet that you've got this wrong, too. Please cite a source.

    AD: "To aid the banks in hiding the quality of loans they were making, the Clintons allowed them to make their loan portfolios more opaque...They also allowed lenders not to have to expose their writedowns every year, as they previously had to do—now they were able to hide billions in bad (or delinquent) loans..."

    Really? Do tell how. With citations.

    AD: "After 9-11 most Americans still don’t realize it, but they almost lost their economy then: people stayed home, they didn’t travel or buy, and they didn’t borrow. The whole system was about to collapse when Bush managed to push through investing and business incentive tax cuts and the Fed cut interest rates to an all-time low of 1%."

    This is almost unbelievably wrong. You write like the post-9/11 period was bad like today is bad. The 2001 recession was the shortest and mildest since WWII, lasting just two quarters, and real GDP rose by 0.75% in 2001, by 1.6% in 2002, and by 2.5% in 2003. Mortgage borrowing grew at a real rate of 7.4% in 2001, 10.3% in 2002, and 9.4% in 2003. In the economy, 9/11 was a blip.

    AD: "Both helped to save the American economy...”

    What country are you talking about? The economy, by every measure, was growing. The Fed lowered interest rates not because the economy was in trouble, but because inflation was in check. With inflation low, there was no reason NOT to lower interest rates.

    “…but the latter also exacerbated the subprime problem...but remember that banks had to make the loans because of the mandates.”

    This is such pure BS. Cheaper money means lower rates, which means more people can afford to borrow (or at least, more people thought they could afford to borrow, and lenders were willing to think more people could afford to borrow). With a larger market, more non-bank firms were entering the market constantly to chase profits, and the ones who made the most sub-prime mortgages made the most money, because more buyers meant increasing prices.

    By the way, if you can blame Clinton bureaucrats in the 1990s, why can’t you blame Bush bureaucrats in the 2000’s, when most of the failed loans were made? Oh, sorry, I forgot – this is all about putting blame solely on Democrats.

    AD: “The Clintons, however, were still not satisfied. To the last day of their Administration, the Clintons were pushing the two Democrat-created institutions called Fannie Mae and her brother Freddie Mac to buy more subprime mortgages. They did—with Clinton-appointed flunkies at the helm of both entities.”

    So you tell this story, and you lead it right up to about 2005, and then say that what was happening then was the Clinton administration’s fault? Brilliant. Also, please note that CEOs of FNM and FRE are not political appointments, though the President does appoint directors to both. I believe all of the recent CEOs were qualified. Incompetent, perhaps, criminal, perhaps - but qualified.

    But to the point, the vast majority of losses to date on all mortgages, including subprime mortgages, are on those made after 2004, when FNM massively increased its participation in the subprime market. How are you going to blame Clinton for that? I’m sure you’ll find a way.

    AD: “Because of mismanagement, an accumulation of hundreds of billions in worthless minority loans…”

    This is a common misunderstanding. The loans are not worthless; they are worth what the underlying property is worth. Oh yeah, and there’s that pesky racism question again, since I’ve already shown that there are plenty of white subprime borrowers.

    AD: “the government recently had to nationalize both Freddie and Fannie. I believe this will cost taxpayers a minimum of $200 billion this year—and hundreds of billions more over the upcoming years.”

    And again, you’re wrong. From which orifice did you pull the $200 billion number?

    “Fannie and Freddie became major contributors to the Clintons and other Democrats. The top four recipients have been Democrat Senators Chris Dodd, Barack Obama, John Kerry, and Hillary Clinton—in that order.”

    Funny, I see Hilary at 9th on that list. You should have left her off – then you wouldn’t have me pointing out Republicans Robert Bennett at 4th, Kit Bond at 5th, and Richard Shelby at 6th, not to mention the two Republican House members at the top of that list (Spence Bachus and Roy Blunt), all of whom received more from Fannie and Freddie than Hilary. (www.opensecrets.org/ne...).

    Pretty plain your research methods are… well, weak.

    “Worse even is Franklin Raines…”

    Yes – terrible. But his corruption is unrelated to the mess we’re in now.

    “Because of all of the above, home prices have crashed…”

    No. Because of the above, home prices skyrocketed. The crash is the correction.

    “...subprime borrowers—perhaps 2.0 million of them…”

    Here we are, the critical point. The median home price in September 2007 was $206,700. A year later it’s $183,300. For simplicity, let these represent the mean of the subprime borrowers’ home values. In the last year, that makes $47B of lost value for subprime borrowers. Should that amount of losses cause FNM and FRE fail, given mark-to-market accounting rules? Probably. Should it cause some banks to fail? Yes. Should it cause systemic failures in the financial system? Absolutely not. You need unregulated credit default swaps for that.

    “More proof that the Democrats caused the subprime debacle: See this 1999 article…”

    Read the article. Here’s a chunk: “…one study indicates that 18 percent of the loans in the subprime market went to black borrowers…” Now, this makes your previous statements look more like racist rants. But maybe you just didn’t read the article past the part that indicated that the Clinton administration wanted to expand home lending.

    AD: “…documents the Clintons were behind pushing Fannie Mae into making more subprime loans to minorities...”

    Actual text: “…increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people…” More racism?

    “In 2003 Treasury Secretary John Snow testified before Congress that if something weren't done, the subprimes were going to cause terrible problems for the nation.”

    Not true. The Bush administration was seeking an expanded regulatory role, but it was due more to the failure of the GSEs to meet accounting standards than to any other single reason. You might want to read the testimony, rather than regurgitating somebody else’s assessment of it: www.ustreas.gov/press/....

    By the way, the related bill (HR 2575) never made it out of committee. For balance, I feel the need to point out that at this point, Republicans controlled the House, the Senate, and the White House. And they didn’t even get a bill to the floor.

    “The Senate Republicans sponsored a bill, led by none other than John McCain (who seemed not to remember this during the presidential campaign) to reregulate subprime loans, but the Democrats blocked the bill.”

    Pretty sure you’re wrong, yet again. First off, the effort (2005, SR 190) was not led by McCain. More importantly, it had nothing to do with subprime lending; it was along the same lines of the 2003-4 “effort,” which was related to the accounting problems and earnings restatements of the GSEs. Go read the text.

    “Barney Frank and Dick Schumer (sic) told John Snow that there was no problem with the subprimes and that the nation actually needed more lending in that area.”

    Since John Snow didn’t mention “subprime” in his prepared 9/10/03, 10/16/03, or 4/13/05 remarks, I’m doubtful that these statements ever occurred. Please, prove me wrong. As for the nation needing more lending - this was an area of agreement. The Bush administration’s stated goal was to increase home ownership by (as I recall) 5.5M.

    Congratulations! This was as error-filled a posting as I can remember. And if anybody else is still reading, I hope you don’t consider it wasted time.
    Dec 12 16:22 pm |Rating: 0 -1 |Link to Comment |View article
  • Taking Profits - Thanks, Obama
    Dodger, it surprises me not that you would disagree with Paine; most of contemporaries eventually did, as well, and many of his thoughts are now outdated, outmoded, or otherwise OBE.

    But you are the one twisting words here. Perhaps you should actually read the latter parts of Rights of Men, wherein Paine lays out proposals for a quite extensive revision of then-current taxation, with the goal of (depending on your preferred rhetoric) ending poverty, providing a social safety net, or establishing (a touch of) socialism. Does he say that the government should try to make everybody economically equal? Of course not. But then again, neither did "Buffett Jr."

    You said: "You surely won't find anybody who had anything to do with founding this nation speaking of an 'equitable country.'" I have shown your statement to be false. That you disagree with Paine's written words is fine; I disagree with a great number of them as well. This is irrelevant to my point, which was that your statement was incorrect.
    Dec 12 10:39 am |Rating: 0 -1 |Link to Comment |View article
  • Taking Profits - Thanks, Obama
    ArtfulDodger wrote: "You surely won't find anybody who had anything to do with founding this nation speaking of an "equitable country." You surely won't find anyone who laid the foundations of the freedoms we've had in this nation spewing such crap."

    You might want to read up on your Thomas Paine. Specifically, "Rights of Man." From Taffel's forward:

    "The most important aspect of the Rights of Man is that it reveals far more explicitly than any of his other works that at the core of Paine's ideology lies a belief that political and economic inequality is rationally indefensible and morally intolerable. It was on this principle that, when push came to shove, Paine would not give an inch, whereas his more pragmatic allies recognized that, in order to actually run a government, adherence to such a principle must be curtailed."

    Then, quoting Paine: "'When it shall be said in any country in the world, my poor are happy; neither ignorance nor distress is to be found among them; my jails are empty of prisoners, my streets of beggars; the aged are not in want, the taxes are not oppressive; the rational world is my friend, because I am the friend of its happiness: when these things can be said, then may that country boast its constitution and its government.'"
    Dec 11 16:16 pm |Rating: 0 -3 |Link to Comment |View article
  • Taking Profits - Thanks, Obama
    "Obama talked about changing light bulbs in his speach last week on you tube,he said it would save energy,and help the economy,by making jobs.

    Closer, but not quite. Here's the quote:

    "Our government now pays the highest energy bill in the world. We need to change that. We need to upgrade our federal buildings by replacing old heating systems and installing efficient light bulbs. That wont just save you, the American taxpayer, billions of dollars each year. It will put people back to work." [www.foxnews.com/politi.../]

    Now, when I read that I make my own determination of where it would "put people back to work." I take it to be far more in the installation of new systems as opposed to people going around replacing light bulbs.

    In any case, It's not anything close to "Obama actually said that changing light bulbs and heater systems in Federal buildings would save the economy."

    Fireball wrote: "are you one of those BO protection bloggers?" All you have to do is follow the link to my other comments to make up your own mind. Too much work? Or is your mind already made up?
    Dec 11 13:14 pm |Rating: 0 -1 |Link to Comment |View article
  • Taking Profits - Thanks, Obama
    "Obama actually said that changing light bulbs and heater systems in Federal buildings would save the economy."

    Really? Can you cite a legitimate source for this "quote"? Didn't think so.

    "Obama's simply retarded plan to waste taxpayer money 'building whatever' is the worst idea possible for the taxpayer at a time like this."

    Who said "building whatever"? Can you tell us specifically what is in Obama's plan that you don't like?
    Dec 10 17:32 pm |Rating: +3 -6 |Link to Comment |View article
  • Industries to Avoid, Industries to Buy

    You're going to be busy, if you insist on trying to respond to everybody. You should just stop and take your lumps for writing a weak piece.

    "Response to Economics Teacher: For you to make such a rash ascertain [sic] tells me you are of the school of traditional economic thought in America – the same school of thought that advocates the Federal Reserve’s destruction of our currency; the same school of thought that believes that a 2-decade plus period of overconsumption is somehow good for the U.S. economy; the same school of thought that promised free trade would bring better jobs to Americans."

    Tell me, which school do you think this is? The Monetarists? Neo-Keynesians? Neo-Classicists? Chicago? Friedman? Galbraith? Mankiw?

    "America is mortgaging off its wealth to foreign nations. And the weakness of the dollar is a reflection of this reality."

    Actually, it's closer to the other way around; the weak dollar makes all US assets less expensive and more attractive, so capital flows into the US to take advantage of higher expected returns.

    But so what? Can you tell me what's bad about foreign investment in the U.S.?

    "Finally, my investment track record speaks for itself..."

    And is irrelevant.


    "Finally, if..."

    Wait, you already had a "finally." How many "finally"s do you think you can have?

    "...if economists really understand the things that enable one to provide valuable investment advice, why is it that I have never heard of an economist who has become wealthy from investing?"

    How about Warren Buffett? MS in Econ from Columbia. And, as I recall seeing somewhere, he's done pretty well.

    "With due respect..."

    You might want to can the attitude - it will bring you nothing but grief. Just a throught.
    May 12 15:42 pm |Rating: 0 0 |Link to Comment |View article
  • Industries to Avoid, Industries to Buy
    Wow, what a rant full of nonsense - I couldn't even get through it all. Just a few nuggets:

    "President Clinton signed NAFTA, which all but ensured the beginning of the end of American manufacturing."

    Nonsense. NAFTA was enacted at the beginning of 1994. Between 1993 and 2007, U.S. motor vehicle and parts manufacturing output increased by 50%. For comparison, in the 14 years ending in 1993, motor vehicle and parts manufacturing increased 27%. Overall US manufacturing profits rose by 154% between '93 and '06, while from '77-'93 they rose only 46% (Economic Report of the President, Tables B-53 and B-92).

    "Soon, styling and reliability combined with the toxic effects of unfair trade drew a larger market share."

    Unfair trade? You mean how certain foreign manufacturers were able to produce cars much more efficiently than others? Or do you mean like the ridiculous import duties assessed on light trucks that punished consumers and protected the auto industry?

    "...it's a poor consumer decision to buy a hybrid given the poultry benefit..."

    I think your analysis of this is fowl.

    "The MPG listed on U.S. autos has been proven to significantly underestimate the actual MPG for a variety of reasons. This has fooled consumers into thinking that their truck or SUV gets better gas mileage than in reality."

    You make this sound like US cars were given a marketing advantage here. ALL car manufacturers have been overstating their mileage for years, which is why a new standard is coming out this year.

    "How many of you drive only 12,000 miles per year? [T]he average annual mileage driven in the U.S. is about 25,000 miles..."

    Nonsense - I know very few people who drive 68.5 miles per day, and know lots who drive much less; cite some sort of evidence. Here are a few that put it at much closer to 12k than 25k: www.eia.doe.gov/emeu/r..., www.epa.gov/oms/climat..., msl1.mit.edu/Mar2Lectu....

    "How is it possible that oil companies are recording record profits under record oil prices? The only way it's possible is if they're keeping the same profit margins amidst the oil crisis."

    First: nonsense. It's certainly possible for profits to increase as margins decrease. Ever hear of Wal-Mart? But even so, how could they NOT have record profits in such a market? Those companies are in business to MAKE MONEY; this is called capitalism. If management is not maximizing returns for its owners (shareholders), management should be replaced.

    "Since oil is absolutely needed for consumers and businesses, doesn't [it] seem as if during a crisis, oil companies should absorb some of the pain and reduce profit margins? Why should oil companies be permitted to earn record profits while the rest of the economy gets abused?"

    "Permitted"? Seriously? Why stop at oil companies - what about grocery stores? What about drugstores? What about banks? Why not control ALL industries with a product that's "absolutely needed"?

    "The distribution of basic necessities should be controlled by the government or at least highly regulated to minimize consumer exploitation."

    Nonsense. The marketplace for such things should have the smallest degree of regulation necessary to foster efficiency and competition. This is a far cry from government control. Much as I hate it when folks throw this phrase around, yours is the socialist path, and it ALWAYS results in a less efficient, more expensive marketplace.

    "We already saw what happened to the utilities industry when Washington let the free markets take control – Enron."

    And we already saw what happened when the government broke up AT&T - WorldCom. Oh yeah, and that pesky Internet thing.

    "If you permit for-profit companies control the distribution and sale of a basic necessity, should you allow these companies to hoard profits during the most severe oil crisis in the history of the U.S.?"

    So just let me understand this - we need to add "petroleum distillates" to food, water, clothing, and shelter in the "basic necessities" category? Funny, in my history books, there seem to be a lot more years leading up to the internal combustion engine than following it. Are automobiles on the "basic necessities" list as well, so the government should be controlling that industry? It's a slippery slope, isn't it - where do you draw the line?

    "In conclusion, America's oil industry resembles a monopoly."

    Nonsense. The "oil industry" is quote varied, with many kinds of businesses from exploration to refining to transport to wholesale and retail. NONE of them behaves like a monopoly. Oligopolies, perhaps. But there is not a single segment of the industry with a single dominant player.

    "Before government deregulation in the late '80s, there were over 200 U.S. airlines... That was at a time when you had a lot of competition."

    Nonsense. If there had been "a lot of competition," there would not have been such a significant drop in airfares following deregulation. The one source I researched places the savings to customers due to deregulation at between 10-18% (www.econlib.org/librar...).

    "Friends, you won't find a person that embraces the free markets more than me."

    Nonsense.

    From what you've written here, I'd place you to the left of Obama and Clinton.

    Do you get paid for this? How do I get one of these gigs?
    May 12 15:23 pm |Rating: 0 0 |Link to Comment |View article

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