The Smoking Deficit

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Ok it is official, Americans have slid to the lowest intelligence quotient in known history.  What the heck are you people doing out there?  Pull your heads out of the oven and breath some fresh air.  I am so sick of the “OMG the Bush deficit is going to destroy us” and the “Evil Oil Companies are out to drive us into a depression”, or one of my personal favorites, “Big business needs to PAY for what they are doing to us”.

Lets learn a few things about how to get rid of smoke smell in house, shall we people?  First off the deficit of 9 trillion dollars is butkis, we could pay that entire amount in a heartbeat simply by suspending Nasa.  That is only 1 item in our entire government and there are millions of items.  You people who are falling for the rhetoric of selling ourselves to the Chinese are morons, you pay a higher percentage of your income for your car than we pay the Chinese for our debt. I don’t care if you hate the guy or love him, blaming one man for our governments runaway spending is asinine and you all re-elected something like 80% of incumbents.  You want to know who to blame the deficit on? Take a look in the mirror.  The point is, for a war time deficit 9 trillion is chump change, we are fighting this thing on the cheap so far.

So what about the price of gas that is hurting us all so much.  It HAS to be the big oil companies and Bush doesn’t it?  Only in the fantasy world of the NYT and CNN.  You have to be a completely disconnected sociopath to not know about the concept of supply and demand.  Oil companies STILL make approximately 9-12% profit per gallon of gas, their “windfall” profits come from the fact that 12% of 3.00 (0.36/gallon) is a hell of a lot more that 12% of 1.40 but it is still only 12%.

“They were doing ok on the 0.17 they were making why should they get to make 0.36 now?” some of you will ask.  And I will tell you.  Oil company profits pay for exploration, research, and more importantly dividends.  Something like 40% of oil companies are owned by retirement and 401K plans. Oil companies are one of the reasons your 401K didn’t tank after Katrina when the economy slipped.  They are one of the big reasons your 401K will only lose a few percent during the projected recession.  To blame them for making the same amount of profit they always have is moronic.

And on to my favorite, “We need to tax big business for making money”.  Ummm how many of you work for GE, directly or indirectly?  How about Ford? GM? Philips? Sony?  I can go on and on and just in that short list I work indirectly for all of them.  Now lets add to their taxes, which are already something like 300% more than anything you or I pay.

What do you think they are going to do?  Well the choices are few but painful. They can of course just raise their price to maintain the same profit margin.  Most will, to some extent, but they will probably combine the price increase with a downsizing effort to lower overhead.  This causes inflation and unemployment.  BRILLIANT.  Now because they increased their price above current market the demand will decline, so they make fewer widgets which require less parts or materials.

Sooooo those indirectly working for them also have to scale back operations, oops more of that unemployment thing.  Do corporate CEOs make too much?  I guess it depends on how important you consider that position to the success or failure of your company.  When you pay a severance package to a CEO you are not only paying for his work but you are showing incentive to those who you hope to replace him.  It can get out of control and in several cases has but since most board of directors own a direct stake in the company it tends to correct itself without assistance for your exceptionally bright local politician.

Now since we have discussed the best air purifier that has become the common sense of economics lets take a look at a couple things you might want to REALLY be afraid of.  One of the biggest influences on the price of a gallon of gas recently is not the profit hungry oil companies or the slavering hedge fund speculators.  It is the fact that a few years ago, what is $112 a barrel oil now would have been $90 or even less.  How can this be?  Part of the price increase you think you are seeing is a deflation of the value of a dollar.  Oil by demand and supply should be around $70 a barrel, you can expect a slightly higher price due to high demand and volatility speculation but the rest is simply because what someone doesn’t sell to the US they can sell to Europe or Asia.

Well when a dollar that used to be worth .75 Euro becomes a dollar worth .45 Euro than you are going to pay more dollars for that same barrel of oil.  Needless to say the politicians don’t want to stress the fact that their p***poor management and willingness to “throw more money at it” has driven down the value of the dollar and begun the swing toward recession.  When we as Americans stop taking the spoon fed line of BS from the mainstream media and start applying some real common sense to it maybe we can regain control of our country and our freedom.  Until then I suggest thinking real hard about what your politicians are saying and ask yourselves, “Am I really going to fall for this again?”

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