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Wednesday, November 30, 2011

Would Obama Follow Turkey?

The slaughter in Syria continues unabated and president Obama has done essentially nothing at all to make clear American displeasure at the conduct of the Assad regime. Obama is spending all his time on his re-election campaign even though there is still a year until election day. Apparently, it is too much to ask the president to deal with a major foreign policy problem. Word comes today, however, that Turkey has suspended all, that's right ALL, financial dealings with Syria. Turkey has also cut off all sales of military equipment and has even said that military action against the Assad regime may become necessary. The Turkish govenment does not have the luxury of hiding its head in the sand like Obama since Turkey borders directly on Syria. Refugees from Syria have been escaping into Turkey for months and the pressure on the Turkish government has been building and building. In addition to Turkey, the United Arab Emirates has today cut off all air travel by its airlines to Syria.

The big point here is that Turkey and the UAE are Islamic countries, and they both are imposing severe sanctions against the monstrous killers in Damascus. The Arab League has also taken actions against Syria. But Obama's course of action has been to just ignore the whole situation. It is a disgrace. Maybe the example of Turkey will show Obama what needs to be done.

Actually some good news -- the ADP employment report

According to the ADP report on employment for November that was released this morning, the economy added 206,000 jobs in the private sector. This is the first good report on employment in quite a long time. The report was not all good. The biggest part of the new jobs were temporary seasonal workers for UPS; planned layoffs for the first eleven months of the year now exceed those for all of 2010; and the plans for future hiring in December are substantially lower than those in November. Nevertheless, we finally have a month in which the number of jobs added is enough to keep up with the growth in the workforce. The more important number will be out in a few days when we hear the unemployment numbers for November. The ADP report bodes well for a good report there.

Oh Come on!

This morning there is a piece linked to Drudge from columnist Nile Gardiner of the UK. Gardiner says it is great that president Obama condemned the Iranian attack on the UK embassy in Teheran, but then Gardiner points out that Obama called it the English embassy rather than the British embassy. England, of course, is just one part of the UK along with Wales, Scotland and Northern Ireland, and there hasn't been an English embassy anywhere in the world for centuries. Gardiner then recalls that Obama called France "our closest ally" and that he talked of visiting "all 57 states". Isn't this going too far? Do we really expect the president of the United States to know the proper name of the ally with whom we have a special relationship? Just cause the Brits fought alongside Americans in Iraq and are still doing that in Afghanistan is no reason to know the name of their country. Come on -- how demanding have we become as a people. Besides, we need to look at the bright side of this thing: at least when recalling the 1979 attack by Iranians on the US embassy in Teheran, Obama did not call it the Californian embassy.

Tuesday, November 29, 2011

Gingrich Bashing

Real Clear Politics reprinted an article by someone named Steve Benen of Washington Monthly that takes newt Gingrich to task for his supposed "refusal to accept the legitimacy of scholars and intellectual authorities." Reading the piece, I got a glimpse into the distorted world of progressive thought that refuses to accept the idea that views that disagree with their own have any merit whatsoever. The views of the author were plain enough when he called Gingrich the "disgraced former Speaker" when first referring to him. There is nothing so even handed as calling the subject of your article "disgraced". (For those progressives who might read this post, that last sentence was sarcasm.)

Benen claims that Gingrich like all other conservatives want to eliminate learned authorities so that they can just make up statistics to support their crazy ideas. As Benen puts it, "Anti-intellectualism, alas, is now a standard approach to expertise in Republican circles, who necessarily assume those with objective knowledge might interfere with GOP policies, and should therefore be discredited, fired, and/or ignored."

The funny thing, of course, is that the purported examples of this sort of behavior by Gingrich to which Benen points all involve reducing the size and cost of government. In a move that Benen descries as truly horrible, Gingrich oversaw the cutting of bloated committee staffs in the 1990's when the GOP took over control of the House. Imagine, after 40 years during which the Democrats put more and more of their cronies on the payroll of the committees, Gingrich and the GOP cut out many of the unnecessary positions rather than simply fill them with their own cronies. The Republicans did something for the good of the country by cutting costs; no wonder a progressive Democrat like Benen cannot recognize the validity of such a move. Benen also points to Gingrich's statement that he would abolish the Congressional Budget Office. Of course, Benen ignores the reasoning behind the Gingrich view and portrays the proposal as an attempt to exile expertise from Washington rather than one to bring honesty back into the budget process so as to replace the current distortions.

I do get annoyed to read things like Benen's garbage and I get more annoyed to see that a magazine allows this nonsense to be published. Nevertheless, I guess I should take it as a good sign that the progressives are worried that their days in power are numbered. After all, why else bother discussing Gingrich at all?

State and Local Government Employment

The Washington Post has a story this morning about how states and local governments are caught in a "fiscal vise" due to weak revenues and increasing costs. It is exactly the story one would expect from the WaPo: the poor states are being squeezed now that the stimulus funds have dried up. There is one canard that the Post repeats, however, which I believe needs to be discussed. According to the WaPo, "The fiscal pressure on states has become a drag on the job market; local and state governments are shedding jobs, even though the private-sector job market has shown signs of improvement. State and local governments have cut 455,000 jobs since the beginning of 2010."

Let's take a look at the employment levels at state and local governments in a bit more depth. First of all, according to the Census Bureau, at the beginning of 2010, states and localities employed 19,809,000 people. In other words, the 455,000 jobs whose loss the Post laments were just 2.3% of the total employed by the states and localities. Second, between 2000 and 2010, the total number of folks employed by state and local government increased by just under 2 million. That was an increase of more than 10% during that ten years. Think about that for a moment; what major event or trend required state and local government to increase employment by two million people? It was not population growth; during the decade, population growth was only a fraction of the growth in state and local government employment. The truth is that the growth in government employment was a triumph of inefficiency and waste. States that could easily have achieved their goals with one level of employment went to higher levels instead. Taxpayer money was wasted and political friends were rewarded. All that is happening now is that some semblance of reality is being brought back into the state and local governments.

The truth is that contrary to the story that the WaPo puts out there, not every reduction in employment by state and local government is a tragedy. Often, bringing employment to proper levels and avoiding the waste of the taxpayers money is a very, very good thing. I lived in New York City through the financial crisis of the 1970's. City payrolls were cut by over 40%, not just 2.3%. Nevertheless, New York City managed to function and to provide nearly the same services as prior to the layoffs. Keep this in mind the next time someone tells you that layoffs are decimating state and local government. Just ask what service is no longer being provided, then watch the head scratching and stammering.

Anglo-Iranian relations break down

News today from Teheran is that Iranian "protesters" have stormed the British Embassy in Iran as well as another British diplomatic compound in the northern part of that city. As of now, it is unknown if any of the British diplomats were injured in any way or if they were taken hostage a la the 1979 Iranian "protest" against America. Police and government forces stood by and watched as the embassy was stormed. The attack on the British embassy was supposedly in response to the sanctions placed on Iran by the UK about a week ago in connection with stopping the Iranian nuclear program. The UK banned all British financial institutions from doing business with their Iranian counterparts, including the Central Bank of Iran. Since London is one of the world's largest financial hubs, these sanctions really hurt.

Let's hope that none of the British diplomatic personnel were harmed and that all leave the country safely in the next few days. Let's also hope that should the Brits decide to retaliate against the mullahs, president Obama has the sense to back our long term ally. Indeed, since it is clear that the sanctions imposed by the Brits were enough to result in such a major upset in Teheran, it should also clue in Obama that America should follow suit with its own sanctions. New York is the most important financial center in the world. If institutions doing business with Teheran were to be banned from transacting business in the USA or with American companies, it would be a blow against Iran unlike all of the weak sanctions of the past. Since even the UN now confirms that Iran is developing nukes, it is time for the USA to act in concert with our allies to isolate Iran.

Monday, November 28, 2011

Oh, but Herman Cain allegedly had an affair

The United Nations issued a report today that accused Syria of "crimes against humanity". According to the UN, at least 256 children had been killed by Syrian government forces. The UN also found patterns of summary execution, arbitrary arrest, enforced disappearance and torture, including sexual violence and abuse, some of it directed against children. One would think that this would be big news in the mainstream media. Anyone who thought that, however, would be wrong. What is the story of the hour? Herman Cain may have had an affair. That's right, why focus onindiscriminate rape, torture and murder of close to 4000 people including over 250 children when you can talk about Herman Cain's possible affair instead.

I would say that the media sucks and leave it at that, but even that statement does not do the situation justice. Remeber four years ago when John Edwards was one of only three Democrats left in the running for president? The National Enquirer broke the story of Edwards mistress and his love child, but the mainstream media did not give the story any coverage. How can it be that Edwards' affair did not merit coverage but Cain's affair does? There is no allegation that Cain fathered an illegitimate child like Edwards did. To my mind, that makes the allegations against Cain not as serious as those against Edwards, but the media just does not agree.

The truth is that the important story today is the slaughter in Syria or, at least, the accidental attacks on Pakistani forces by NATO. People died! But no, the American media is going to spend the next few days discussing Cain's personal life. What a disgrace (and I do not mean Cain's conduct). Can it be that the media is ignoring Syria because the Obama administration has chosen to do the same? Can America really just stand by idly while Assad kills and tortures children. Shouldn't Obama actually say something? Shouldn't America act at least to the same extent as our British and French allies? Is Obama so wrapped up in his re-election campaign that he cannot take the time to do the right thing?

I am not advocating military action in Syria. America has a moral duty to speak up, however. Even if Obama thinks that America is nothing special, he still ought to speak out against Assad; any moral being has that duty.

Stock of the Month for December – UCORE Rare Metals Inc

After a break for a few months, the stock of the month feature is back. For December, the choice is UCORE Rare Metals, Inc. (symbol UCU in Canada or UURAF on the pink sheets). UCORE is a highly speculative mining stock that will be producing rare earth elements or REE’s. The principal UCORE mine is in Alaska at Bokan Mountain on the sourthern part of Prince of Wales Island. While the company has other mining sites, Bokan is the only one currently of significance.

In order to understand the rationale for UCORE, one first needs a bit of background with regard to REE’s. Rare earth elements have been used for a while in glassmaking, lighting, and metallurgy and REE’s are also increasingly needed for battery alloys, ceramics, and permanent magnets. Many high tech applications like lasers require REE’s in their manufacturing process. About 95% of all REE’s are produced by China which only began mining the REE’s about 20 years ago. Now, with the Chinese holding a stranglehold on the world supply of REE’s, China is imposing export quotas on these minerals. The Chinese aim appears to be to force manufacturers that need the REE’s to build plants within China in order to get sufficient quantities of REE’s. As a result of the Chinese actions, the price of REE’s skyrocketed earlier this year. Those prices have come down a bit now, but they are still substantially elevated. Many manufacturers are coming up with substitutes for REE’s, but the need for these minerals remains substantial and growing.

One response to the Chinese actions has been the opening of REE mines around the globe. Despite the name “rare” earths, REE’s are located in many places around the world. The problem is that there are not many locations that have a sufficient quantity of these materials in one location so as to make a mine economically feasible. The Bokan site is, however, one such location. Bokan was originally a uranium mine. It already has the necessary permits for mine operation. In addition, Bokan is in an area of Alaska already designated as appropriate for mining so there should not be any of the environmental fights that slow down so many mines and drill sites.

The company estimates that Bokan contains 374 million pounds of Rare earth oxides making it the largest deposit of REE’s in the USA. There are also extensive reports and presentations on the company website. These documents are too complex to summarize here, but for anyone who is interested, the company website can be reached by clicking on the title to this post.
So, in summary, we have a market that is being squeezed in dramatic fashion by the Chinese. UCORE controls the biggest deposit of the REE’s in the USA and it has all the permits necessary to go ahead with the mine. If the price of REE’s stays in the stratosphere, UCORE should be extremely profitable once production starts next year. In other words, this is a highly speculative company that brings with it the promise of a major profit.

The stock price is currently 47.5 cents per share. If the company successfully gets production going next year as planned, and if the Chinese keep the pressure on the price of REE’s, UCORE could easily go up by many multiples over the next two years. UCORE has the potential to provide huge returns.
DISCLOSURE: I am long UCORE stock.
WARNING: UCORE is much more speculative than other stock about which I have written. Anyone interested in buying the stock should make sure to read the reports on the company’s website and to do further review of the available materials. Even if you decide to buy, I strongly suggest that you limit your purchases to only that small portion of your portfolio that you set aside for high speculations. The return could easily be enormous, but the risk of loss is also major.

Terrible News for Rush Limbaugh

There is terrible news today for Rush Limbaugh: Barney Frank is retiring from Congress. Limbaugh has been doing a reasonable imitation of Frank on his radio show for years; it has become a staple much like Limbaugh's Bill Clinton. So while Frank's departure is good news for America, it is a sad day for poor Rush.

Obama's Bonanza -- Helping two core Democrat Constituencies at once!!

Here is a news item from USA Today that shows just how effective president Obama has been at helping important groups that support the Democrats:

" The National Highway Traffic Safety Administration announced Friday that it has opened a formal investigation into the [Chevy] Volt fires. It said it was taking the action after several tests. In each, the car's lithium-ion battery heated up or caught fire after a severe crash. But the fire didn't break out immediately. In some cases, it took weeks, leading to warnings for tow truck operators and storage yards to make sure the cars are parked away from buildings or other vehicles. No injuries or fires in customers' vehicles have been reported."

So there you have it. The Chevy Volt is being built by GM as a result of direction that the company received from Washington as to what vehicles to offer. As you all must know, Obama sank tens of billions into the bailout for GM and then gave most of the company to the unionized workers of the UAW. The taxpayers will not get all the money back, but the UAW will eventually control GM.

But here is the true genius of Obama. Not only did he work things out so the union got GM at taxpayer expense, he also managed to set things up so that the trial lawyers got a new bonanza. That's right, the Chevy Volt which Obama forced to be built catches fire just like the Pinto of old. Think of how many lawsuits will be started by owners of Volts. Think of those legal fees! Think of how much it will cost the taxpayers to bail out GM a second time! For Obama, it is a win-win situation!

Okay, so I may be overreacting just a bit. After all, there cannot be suits brought by people other than those who actually bought a Volt. That means the number of suits is ridiculously small. Even so, however, it means a big batch of new suits for those trial lawyers.

The Payroll Tax Holiday

For 2011, the payroll tax was cut by 2% in order to provide a stimulus to the economy. Now that that cut is coming to an end, the political games are going full tilt with regard to whether or not there will be a renewal of that cut for 2012. The stakes are high; if the cut is not renewed, the average American family will return to a higher tax level that will cost about $1000. There is also the question of the so-called doctors' fix for 2012. Absent action by Congress, payments to doctors for Medicare services will be cut substantially starting January 1. And let's not forget the Alternative Minimum Tax. The AMT must again be changed by Congress or it will start to hit tens of millions of middle income Americans with a major tax increase, again starting January 1.

Well here is a suggested solution: the House Republicans should announce that they will vote to extend or fix all three of these items permanently, but they will do so only if there is a plan to offset the cost with either other spending cuts or reasonable revenue enhancements. They should call upon president Obama to announce his plan. In other words, call the Democrats' bluff.

The payroll tax cut costs about $120 billion per year. The doctors' fix cost twice that amount. Throw in the AMT fix and the total cost is in the area of half a trillion dollars per year. So what does that mean? Simply put, it means that Obama cannot tax the rich to pay for this stuff. The full amount of the extra tax on the wealthy that Obama wants is about $70 billion per year. Even if the rate is raised to much higher levels, there is no way such a tax could even pay for half of the cost of the three items in the "fix". There will need to be real changes to spending and entitlements. Indeed, Obama will not be able to cut further from defense since that is already scheduled to be gutted by the automatic cuts after the failure of the super committee.

Just imagine if Obama had to actually deal truthfully with the budget deficit. I do not think he could ever bring himself to do that.

Goodbye NLRB --At Least For Now

The National Labor Relations Board has been turned by president Obama into an agency with a mission to help labor unions and hurt employers. It is the NLRB that is trying to shut down the new Boeing plant in South Carolina and its thousands of jobs on the grounds that the plant had to be built in a union state. It is also the NLRB that has been changing the rules for unionization elections from those which have been in force for many decades. The latest attempted change is to cut the time between the filing of documents to begin the challenge until the date of the mandatory election, thereby making it much harder for the employer to explain to its workers the merits of not going union.

It seems, however, that all of this one-sided work for the unions by the NLRB has come to an end for now. Indeed, it seems that the reaction to the over-reaching by the NLRB may even be the end of that body. Let me explain: In New Process Steel v. NLRB the Supreme court ruled that the NLRB could not take any action absent the presence of a quorum of three members (out of the five who are to be on the panel). That decision came in the summer of 2010. Right now there are only three members on the NLRB, however. Obama has nominated his usual strongly pro-union people for the other two positions, but these nominations have not been approved by the Senate. In December, the term of an additional member of the NLRB will end and there will be only two people remaining on the board. At that point, the NLRB will be unable to act until new appointments to it are approved. In an even more delicious move, the remaining Republican appointee on the board has made clear that he will not be attending any more meetings until after December; in other words, this man will prevent the NLRB from taking any legal action while it still could muster a quorum with his presence.

Obama could get around the logjam in the appointment process by using a recess appointment. He did this earlier in his term with another NLRB appointment. The House, however, has made clear that it will not recess at any time during the remainder of the Obama term, just in order to prevent such a recess appointment.

The Democrats are howling with outrage at these moves. In truth, however, the GOP is just using the Democrats own tactics back against them. During the last two years of the Bush administration, the Democrat controlled Senate held proforma meetings every three days just so that it would never be in recess; the specifically announced purpose of these sessions was to prevent recess apoointments by president Bush. And who can forget the Democrats who fled from the legislatures in Texas, Wisconsin and Indiana in order to deny those bodies a quorum. In each case, the Democrats were outnumbered in their chambers, but they thwarted the will of the majority by using their absences to prevent action.

I have to say that I love watching the hypocrisy of the Democrats as they assail the Republican on the NLRB for following the Democrat play book.

Sunday, November 27, 2011

Lying in the Campaign

The New York Times is out with an article lamenting the likelihood that the presidential campaign will be fought with lies. Oh, the horror of it all! The Times tells us sanctimoniously that lying in the campaign will make governing difficult after that. The centerpiece of the Times article is a recent Romney ad that took Obama's words out of context although for "balance" purposes, the Times also mentions a blatant lie by Debbie Wasserman Schultz, the chair of the DNC. Only the Times could be this tone deaf to the reality of our current government.

The Times acts as if lying is something new which is arising in the campaign. What complete nonsense. Obama has been lying for months and years as president. Here are a few of his best lies:

1) If you like your current insurance plan and doctor, you will be able to keep them with no cost increase under Obamacare.
2) When I get elected I am going to go line by line through the budget and eliminat unnecessary federal spending.
3) The Stimulus has kept unemployment down and helped grow the economy. (Even the Congressional Budget Office now confirms that the net effect of the Stimulus has been to reduce economic long term growth while spending just under a trillion dollars.)
4) I have made my decisions on when and where to deploy and remove troops from Afghanistan strictly on the basis of what is best for our forces and not on political grounds.
5) The failure of the super committee was due to Republican refusals to cooperate. (In fact, Obama stayed away from the deliberations rather than attempting to bring them to a successful close, and the Democrats held out for a deal that would include over a trillion dollars in new taxes.)

The list of lies could go on and on, but you all should get the point. Indeed, I believe that nearly everyone in America other than the Times recognizes that Obama is a liar. But the Times is right about one thing: it is hard for him to govern.

Demography as the Future -- 2

The other day I wrote about the plethora of article in the liberal media discussing how shifts in the demographic makeup of the electorate would allow president Obama to be re-elected. It is the new line of reasoning among progressives desperate to see Obama win as to just how he can do that with his approval ratings in the toilet. Today, the story line made it to the Washington Post in an article by Dan Balz. Even Balz did not just join the chorus, however. After two pages of nonsense about various groups of voters and how they voted last time, Balz finally comes to the point. He asks if demographics will allow Obama to overcome the dissatisfation with his presidency. That, of course, is the big question and it provides its own answer. If the country is still dissatisfied with Obama and his presidency in November of 2012, Obama is going to lose, even if the majority of voters fall within groups that supported the president last time. If the present trends continue, at some point in the future even the liberal press will have to recognize this reality.

Science or Creed?

I think it is time for us all to review the difference between science and "accepted wisdom", between observation and experimentation on the one hand and conforming to a dominant view of the world on the other hand. There are few things that one needs to accept on faith; only things that cannot be proven. Paramount is the existence of God; this has always been the subject of faith. Morality is another item that many take on faith, but even so, it is an item that changes. One hundred years ago, behavior that today is commonplace was considered immoral; the reverse is true as well. Here in America, we have been taught to question the validity of societal determinations of what constitutes moral behavior. In my lifetime, I have watched behavior models change drastically. There are whole groups in society that make their careers promoting the issuance of challenges to accepted morality, to the accepted wisdom of society.

Science, however, has nothing to do with accepted social wisdom. It involves primarily observation of the natural world, development of theories that explain the observations and then verification of these theories through testing. Much of the advancement of modern man has been the result of the advancement of scientific knowledge. Science has also led to some of man's greatest disasters.

In many ages there has been a tension between religion and science. Religion, of course, is a matter of faith; it cannot be questioned through observation, etc. The common example used to illustrate this point is the treatment of Gallileo by the Church hundreds of years ago. Gallileo theorized that the sun was the center of the solar system and that the Earth orbited around the sun. This view was considered heretical by the Church and Gallileo was forced to recant or suffer severe consequences. As time has moved forward, however, the ability of religion to thwart scientific advancement has been greatly reduced and essentially ended. Supposedly, science is now paramount. Indeed, an entire vein of political thought has advanced the view that religious beliefs and societal views of morality should be shunned when determining the actions of the government and that these sources should be replaced by learned experts who will guide the affairs of man with their superior knowledge and intelligence. While this view is rarely stated in such a simple manner, it is the driving force of progressive thought today.

The problem, of course, is that progressive thought suffers from its own dogma. The idea that progressives listen to learned experts who rely on science to determine the best course for society is simply a lie. In truth, this is just part of the progressive belief system and it has little relationship to reality. Here are two examples:

When Charles Darwin proposed his theory of evolution through natural selection, it was construed as a direct attack on religion. Most people have heard of the Scopes trial in which the real question was choosing evolution or creationism as described in the Bible. Progressives, however, took Darwin's work and expanded it into the realm of everyday human existence. Natural selection among people was supposed to be the proper way to look at the population. This manifested itself in a variety of ways. The doctrine of Social Darwinism, the eugenics movement, even the extreme racial views of the Nazis were a direct result of this scientific theory run amok. Although progressives like to forget this, organizations like Planned Parenthood were started, in part, with the purpose of reducing the reproductive rates for "lesser" people, the poor and uneducated. Herman Cain recently mentioned that Planned Parenthood had been started to prevent black babies. He has been attacked for saying this, but it is the truth. It took the Holocaust, the final logical extension of this "scientific" belief to finally end this idea as a commonly accepted school of thought.

Another example of progressive dogma is the current global warming hysteria. A scientist would look at the data first, something that progressives cannot do. What, after all, do we know? There are extensive climate records that were compiled at the university of East Anglia that form the basis for much of the discussion in this field. This, of course, is the very data that was revealed as questionable in the Climategate scandal. Numbers were manipulated to fit within the theory rather than the theory crafted to explain the data. There is a total fog over the actual data that is available. Indeed, there are atmospheric temperature records that have been kept since the 1940's that can be reviewed rather than the surface temperatures used by East Anglia. The atmospheric recods show no warming trend at all. In short, we do not even know if there is a warming trend underway.

Then, we have the question of what is causing the warming trend -- if there is one. The progressive crowd has taken Al Gore's word that the science is settled: man has caused this to happen. So once again, the world has a non-scientist, a high priest of global warming, who we are supposed to accept as correct and "believe". The problem, of course, is that the actual data does not support the Gore thesis. Man made global warming is based upon the premise that greenhouse gases produced by man are trapping heat in the atmosphere and thereby warming the Earth. In the last year, however, we have finally gotten data from NASA of the rate of heat radiation into space over the last eleven years. The worldwide data shows that the radiation of heat is proceeding at a level about 4 or 5 times higher than the global warming models predict. This is not a minor variation; it is a data stream that completely destroys the logical underpinning of global warming theory. But, since this data does not comport with the progressive dogma of global warming, it is ignored. Just as Gallileo was told to ignore his work, the current progressives tell us to ignore the actual data and stick with a disproven theory.

The truth is that actual science needs to be used to determine what we can about the question of climate change. Breakthrough work was recently done at the european science center at CERN. Experimentation demonstrated that the largest (by far) cause of climate variation may be the levels of solar radiation hitting the Earth. This area of inquiry is still in its infancy, but it holds the promise of letting us know much more about variations in climate. Man made global warming theory has not yet been disproven, but we are well along the road to do that. In the interim, no one should accept the theory as "settled science" or even a likely result. If science is indeed to be paramount, then it has to be actual science, not just a new dogma designed to replace some older one.

Saturday, November 26, 2011

Now We Will See the True Benefit of the Obama Policy on Pakistan

Over the last three years, it has seemed as if the relationship between the USA and Pakistan has deteriorated to a dangerously low level. Today, we have now seen a new low. About 24 Pakistani soldiers were killed along the Afghan/Pakistani border due apparently to an airstrike by NATO forces operating from Afghanistan. NATO says it is investigating, but it looks like a major screw up by the NATO forces. NATO forces, of course, is another way of saying American forces in Afghanistan. In retaliation for the attack on the Pakistani outpost, Pakistan has shut its border to Afghanistan to supplies for the troops operating there. Pakistan has also ordered America to vacate an air base in Pakistant from which it is believed that American drone attacks were originating. To put this in context, half of all supplies for the forces in Afghanistan come through Pakistan and the airbase in Pakistan is one of only two from which the drones can operate. The Pakistani moves are a major problem for the US effort in Afghanistan.

In the old days under George Bush, American relations with Pakistan were not great but they were not bad either. Since Obama took office, however, things just seem to get worse and worse. It seems that Obama just talks about things that need to be done with regard to Pakistan, but never actually does anything. Obama nevertheless tells us that things are going just great with the Pakistanis. We will soon see whether or not Obama can turn things around here. Clearly, it is not Obama's fault if there is an accidental strike on a Pakistani outpost almost on the border; such things, though horrible, do happen. Obama, however, will have direct responsibility for how well things can be repaired after the damage from that airstrike has been inflicted.

Eric Alterman: Living Proof of Bias

Eric Alterman is an English professor at the City University of New York. He self describes as a "distinguished professor of English", but after reading the articles he writes in the liberal journal, The Nation, one has to wonder what distinguished him. In his latest column, "Next Stop on the GOP Crazytrain: Newtsville", the truth becomes all too clear.

First, let me describe the article. Alterman tells us that the GOP candidates are "bat-shit crazy". Bachmann makes "nutty suggestions"; Cain is "ignorant"; Gingrich should "be in a rubber room". Oh, I almost forgot, Gingrich has a "diseased brain". Then he gets to his main point: America is suffering from "intellectual insularity" in which “the teachings of dubiously credentialed leaders are favored over the word of secular experts in the arts and sciences.” Alterman wants the "masses" to listen to their betters, these "secular experts in the arts and sciences".

The truly funny thing about Alterman is that he actually believes this stuff. America should listen to him, the "distinguished" professor of English at CUNY, a "secular expert". For those of you who are not familiar with the City University of New York, let me explain what it means to be an English professor there. Alterman should be better described as a teacher of remedial English for students who graduated from high school in New York City but who remain unable to write a paragraph, spell or read above a seventh grade level. He is a tutor for those whom public education failed.

There are many universities other than CUNY where being an English professor carries with it a certain patina of knowledge. Even at those universities, however, knowledge of literature does not carry with it any indication of insight into politics or national policy. Secular expertise does not provide that insight.

It is not worth taking the time to discuss Alterman further. Readers of the Nation may want the wisdom he has gained teaching remedial english, but most Americans do not.

Friday, November 25, 2011

Media Madness

I heard two different newscasts this morning; both were "national" rather than local. The stories that were covered were amazing. There was the obligatory coverage of Black Friday shopping crowds. Each one had a lengthy piece on the Occupy movement plan to disrupt shopping at certain stores. Each one had a short piece on events in Cairo with the focus almost exclusively on the two female reporters who had been assaulted. Both mentioned that the Egyptian/American reporter had been raped by police, but neither mentioned that the French reporter had been raped by members of the crowd. Basically, that was the entire newscast.

So what was wrong with these broadcasts? First of all, the United Nations announced that it now has proof that Syrian government forces have been systematically torturing children to get information about the activities of their parents. Somehow, this got overlooked. Second, the Egyptian government is going ahead with elections despite all of the protests. This too was considered unimportant. Third, the Occupy movement plan to disrupt shopping has been a total failure. Even its facebook page for the event could not get a following. Nevertheless, the media covered it as if it were a national movement involving hundreds of thousands of folks. In truth is was more like the 99 people rather than the 99%. In other words, for those who just got their news off the radio this morning, there would be no way to know what is going on in the world. Instead, one just got news on the latest and greatest from the occupy movement together with coverage of what happened to two reporters in Egypt.

Thursday, November 24, 2011

Blatant Lies from the Left

Jeffrey Sachs bills himself this way: "Economist; professor and director of the Earth Institute at Columbia University; Special Advisor to the UN Secretery-General; author, 'The Price of Civilization'". With a resume like that you would think that he could at least check his facts (or tell the truth). But no, he can't. A few days ago, the progressive Mr. Sachs wrote a piece on the Huffington Post in which he claimed that spending cuts were unnecessary and the higher taxes were the answer to every need in America. Sachs said that there are two economies and the those without a college degree suffer badly. To make his point that spending cuts were the wrong thing to do, Sachs argued at length about how terrible the cuts in federal Pell grants have been. The poor are ever less likely to be able to afford college as a result according to Sachs.

The problem is that Pell grants have not been cut. Indeed, when the debt ceiling compromise was reached last August, Republicans and Democrats agreed to raise spending on Pell grants by 17 billion dollars. Pell grants were the only program of the federal government for which spending was increased as part of that deal. Over the last decade, Pell grants have gotten larger and larger. In short, Sachs either does not know what he is talking about or he is intentionally lying.

I will give Sachs to benefit of the doubt and say that he is merely incompetent. Indeed, one has to wonder what advice Sachs is giving to the Secretary General of the UN. Of course, given how well the UN functions, the quality of Sachs' advice may not matter. The truth, however, is that one often needs to look at what these so called experts are saying to see if they are even close to being correct. Just because someone has a title of professor, that does not make him or her correct.

Wednesday, November 23, 2011

Happy Thaksgiving Everyone!

I want to take this time to wish all of you a Happy Thanksgiving. Despite all the problems we face every day in the country, each of us has a great deal for which to be thankful. Thanksgiving is perhaps the most American of holidays. It is not about our nation like Independence Day. Nor does it have specific religious overtones or commemorate a particular event. No, it is the day when all of America can take time to say thank you for our blessings. It is a recognition that there is a higher power than us, one who has watched over and protected this country for centuries. It is a point we all need to remember more often.

The Democrats just do not get it

In 2008, the Obama campaign got extraordinary mileage out of playing the race card. Hillary and Bill were racists; Sarah Palin was a racist; in fact anyone who criticized Obama was a racist. It worked; Obama avoided being fully vetted and he won the election. After Obama took office, the use of race as a defense continued. Who can forget all the attacks on the Tea Party as racist. These folks were racist in the eyes of the Democrats simply because they opposed Obama's policies. The media played up this theme as well. But something important happened. The American people got to see the Tea Party rallies. They got to hear the arguments of the Tea Party. They got to realize that while the Tea Party disagreed with Obama, they were surely not racists.

Well now Obama's forces are at it again. Today's target is Mitt Romney. the Democrats are claiming to be shocked that Romney used racist images that harkened back to Reverend Wright in a new TV ad running in various markets. So what are these racist images, you may ask? The first one is a well dressed African American woman walking down the hall. The second is a church congregation that African American. Oh the horror! Oh the shame!

Have the Obamacrats lost their minds? Is it now to be racist to show African Americans in commercials? A well dressed woman is racist? How? A black congregation is racist? How?

The truth is that it is a good thing for the Obamacrats to start throwing these charges at Romney now. The current charges are so ridiculous that people will clearly see them for what they are: a desperate attempt to hurt Romney with baseless charges. Obama and the Obamacrats are well past the "boy who cried wolf" status. They have become jokes on this point.

So Here's the Real Truth

Ezra Klein is a progressive wonk who inhabits MSNBC and the Washington Post. He represents the too smart by half segment of progressive thought the is certain that it knows more than anyone else about what ought to happen in the country. Today, Klein is celebrating the failure of the Super Committee and says that that failure together with Congressional gridlock puts the progressive Democrats in total control. After all, there are two big events that will go ahead in January of 2013 if no other agreement is reached. The first of these big events is the expiration of the Bush Tax Cuts. Upon that expiration, the tax rates will return to where they were under Bill Clinton. To Klein, that would be just peachy; just imagine, the tax bill for America will go up by over $4 trillion during the following decade. Of course, the problem is that over 80% of the increased taxes will hit the middle class. Remember all that bombast from Democrats about how the Bush cuts were just a tax cut for the rich? Well they were lying. Over 80% of the cuts went to the middle class. If the tax cuts expire, the middle class will get hit hard. Klein has no problem with that happening, but he does say that Obama thinks that it would not play well politically.

The second event coming in 2013 is the automatic imposition of cuts to domestic and defense spending. Each of these will get hit with a reduction of $60 billion per year. Klein likes these cuts too since they hit defense hard but do not reduce entitlement spending. Of course, even Obama's secretary of defense has said that these cuts would be disasterous. Progressives like Klein do not care.

Klein left out a few other events that will be triggered either in 2012 or 2013. The first of these is the drastic drop in reimbursements from Medicare to doctors unless the so called doctors' fix is enacted for another year. Imagine what will happen to doctors who see Medicare patients when their income gets cut by nearly 50%. How many of these doctors will just stop seeing medicare patients?

The second event is the return of the Alternative Minimum Tax at levels that will hit almost everyone who pays taxes in this country. How will folks who earn $75,000 react when their taxes get raised to the 26% level? It will not be pretty. Nor will the damage done to the economy as all that tax revenue gets sucked out of consumers' pockets.

The third event is the end to the payroll tax holiday of 2% put in place for one year in 2011. Most families will suddenly be paying an additional one thousand dollars in taxes. It is safe to say that most will not like it.

Klein, of course, does not mention these or other events because they will not be to the liking of progressives, yet gridlock would cause them all to occur. My guess is that we will see some sort of overall bargain for all of these items. If nothing is done, the AMT, the doctors' fix and the payroll tax holiday will all come crashing on the country in just seven weeks.

My guess is that Klein may not be so much in favor of gridlock as we move forward. I expect that the GOP will put forward a bill that deals with all three of the 2012 items but which also takes care of the 2013 ones as well. That will let the Democrats choose. Klein needs to remember that those who live by gridlock, die by gridlock.

Business trends in the USA for GasFrac Energy Services Inc. -- 2

The other day, I wrote about the prospects of Gasfrac Energy Services, Inc. (GFS:CA or GSFVF on the Pink Sheets) for growth in the market in the United States. There is now a very important bit of news that has to be added to that analysis. Chevron Corporation has confirmed that it tested teh GasFrac process on five wells in the Piceance Basin in Colorado. The company also said that it is evaluating the results. A full article about this development can be reached by clicking on the title to this post.

This is extremely good news for GasFrac. Obviously, it would be even better were Chevron to report that after a full review it was switching to fracking using liquid propane. Nevertheless, for a major like Chevron to be using the process gives management a big selling point with the rest of the market. Further, if Chevron decides that it gets better results with liquid propane, we could soon see a long term contract for GasFrac.

On the downside, if Chevron decides that it will not be using the GAsfrac method, it would probably slow the momentum for GasFrac in the USA. Assuming, however, that all of the data released by the company that shows higher yields and quicker productive use for wells completed with liquid propane rather than water based fluids, Chevrom should adopt the GasFrac method.

Disclosure: I am long GasFrac stock. It is one of the larger holdings in my accounts.

Tuesday, November 22, 2011

The Latest GOP Debate

Tonight's so-called National Security debate on CNN just ended. Even though this was about the tenth debate so far, it still was able to both break new ground and to reveal things about the candidates that merit comment.

First of all, let's do the usual discussion of winners and losers. In my opinion, the winner tonight was less clear cut than usual. Romney and Gingrich once again put in the strongest performance overall, but each had moments that could well be used against him. Nevertheless, I would rate them the winners, and I would put Gingrich ahead of Romney overall. the clear loser was Herman Cain followed closely by Jon Huntsmann. Ron Paul was his usual self, so I do not consider him to have lost. Paul's positions, however, will never play well with the majority of Republicans.

To me, the most revealing moments of the night came towards the very end in the discussion about Syria. It was clear that some of these candidates were in over their head on an issue that they clearly should know something about. Herman Cain started off the mess by calling for the US to orchestrate a plan for Syria's neighbors to stop buying oil from Syria. Of course, the problem is that Syria is not an oil producing country, so the entire premise of Cain's position made no sense. Rick Perry followed with a call for a no fly zone over Syria. These zones were used in Iraq after the Gulf war to prevent Saddam Hussein from using his air force against domestic opponents. Then a similar no fly zone was imposed in Libya when Gaddafi began using planes to bomb protesters in cities around the country. In Syria, however, the Assad government is not using planes against the uprising. The Syrian air force is already grounded. Perry's plan was ridiculous; it simply made no sense. Huntsmann followed with a discussion of the Arab Spring which rambled and made essentially no sense. For all his supposed knowledge of foreign affairs, Huntsmann sounded like he was intentionally doubletalking just to get off that question. This was followed by a typical Ron Paul answer which wandered from here to there without ever making sense.

In my opinion, Cain made clear tonight that he really has little knowedge of foreign affairs. Even after some of his earlier problems with this subject, he does not seem to have learned much. When he cannot say 9-9-9, Cain has little to contribute. For me, tonight's debate sealed Cain's fate as a candidate.

Rick Santorum turned in a usual performance. He was fine in what he said, but he did nothing to distinguish himself.

Michelle Bachmann was truly at her best tonight. Her answers were nuanced, thoughtful and clear. She was clearly in the top tier tonight.

So let's go back to Gingrich. His answers early on about the Patrior Act were show stoppers. He got a little wonky when he spoke about Social Security. Most of his other answers were excellant. The big issue tomorrow will be how folks react to his answers on immigration. Gingrich took the position that illegal immigrants already in the USA should be reviewed by local boards that function much like draft boards used to. Those who are here for only a few years should be deported, but those who have been here for decades, who have family ties here and who have worked honestly while here should be given some status short of citizenship that allows them to stay. Bachmann immediately called that amnesty for 11 million illegals. Of course, that was inaccurate and I suppose Bachmann knew that. Still, amnesty is such a hot issue that Gingrich may get zapped for his answer. Even so, I was pleased to see Gingrich get a chance to take that answer back and NOT do so. Instead, Gingrich made his case that the plan made sense. And I have to admit, Gingrich's view is the first one I have heard in a long time that has possibilities (not to mention that it also will not be perceived as anti-Hispanic by those who only half listen.)

Romney's weakest moment also came on the same topic: immigration. He jumped all over the place on this point, first attacking and then retreating from a verbal assault by Perry.

It will be interesting to see how the media plays the Gingrich/immigration remarks. My guess is that since Newt is the new flavor of the month, we will see non-stop attacks coming from this point. If Newt can explain his position and get the party to understand his position, however, this may well play very well to his advantage; he will have taken the attack and survived. Time will tell.

The truth about the Stimulus is leaking out

Here is the first paragraph of a story in the Washington Times today:

"The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy."

There you have it. The CBO is non-partisan and it is the entity that scores the impact of legislation prior to congress voting on each bill. It has no axe to grind. But now the CBO says that the Stimulus will be a net drag on the economy over the long term. To make things worse, it may have only created 700,000 jobs. Since the stimulus cost close to 800 billion dollars, that means Obama spent about 1.1 million dollars per job and hurt the economy in the process. What a major success!

Does AP stand for Always Pathological?

I just read an AP story about the appearance by Michelle Bachmann on the Late Show with Jimmy Fallon. The headline read "Roots welcome Bachmann with pointed song." Roots is the band for the Late Show, and the "pointed song" was something called "Lyin' Ass Bitch". Now Michelle Bachmann is not my first, second, third or fourth choice for president among the GOP candidates, but she is an accomplished woman who has worked hard throughout her life. She is a serious candidate for president and she deserves to be treated with respect. When the Late Show decides to use an insulting song to bring her out to the stage, it deserves to be called out for that move. This was not a "pointed" song; it was a nasty and disrespectful one. The AP knows this and it should not be covering up the truth.

And while we are on the subject of late night talk shows and Republican candidates, we had a bizarre scene earlier this week when David Letterman grilled Herman Cain about the charges of sexual harrassment that have been made against him. Letterman treated Cain as if he were guilty without question. He was rude and cut Cain off at every possible moment. He even asked Cain if there wer 999 women who would be coming forward. The strange thing about the episode is Letterman's supposed outrage at Cain's alleged behavior. Letterman, after all, admitted a few years ago that he had engaged in sex with female employees of his production company. His excuse was that nothing in company policy said that it was wrong for management to have sex with employees. This is the guy who was up in arms about unsubstantiate claims made for the first time 14 years after the fact against Cain who denies them all.

Demography as the Future

Not long ago, I discussed how many in the media have started writing about possible combinations of states that Barack Obama could put together to win his re-election bid. The media narrative has changed from Obama is unbeatable (last May) to Obama is a likely victor (July) to Obama has a path to victory by winning certain states in the electoral college. Now we are seeing yet another spate of stories with a new narrative about the election. This storyline tells us that changes in the electorate will offset the poor economic conditions and allow Obama to win re-election. I will not bore you with all the details, but the basic argument in these pieces is that the voters of 2012 will include a higher number of minorities than the 2008 voters. Further, among whites, there will be a higher proportion of college graduates than there were four years earlier. As a result, even though Obama's share of these groups may decline, he will still win re-election.

The new main stream media narrative is a clear sign that Obama's chances for re-election continue to decline. The media is not even talking much about specific states anymore since the combinations that would be needed for victory are getting more and more difficult to justify. No, now we are told that Obama will win on demographics alone. The truth, however, is that the folks writing these articles seem more intent on convincing themselves that their hero will still win than they are in reporting news or even presenting insightful commentary.

Let's consider the facts. In 2008, Obama was elected the first African American president and black voter turnout jumped up extraordinarily. The 2008 election saw the highest turnout by African American voters in recent history. After four years of economic chaos and without the historic nature of electing the first black president, the turnout of this group in 2012 is likely to decline rather than increase.

The minority community that most likely will increase its share of the electorate in 2012 is Hispanic America. These voters do not have the same connection to Obama as is present in the African American community. Indeed, just imagine the effect on the voting by this group is the GOP nominates Marco Rubio as the first Hispanic candidate for national office. Rubio's presence on the ticket should lock up Florida for the Republicans, but it also ought to draw many Hispanic voters in Arizona, New Mexico, Colorado, California, Nevada and elsewhere. Just imagine if just 15% of Hispanics decide that due to Rubio's presence on the ticket they will vote for the Republican. I would mean the end of Obama's chances for re-election.

Then there is also the question of the level of turnout within the Republican base. In 2008, many marginal voters in the GOP base were discouraged and just did not vote. These voters were far from enthusiastic about McCain, and they were not happy with the Bush administration either. In 2012, however, Obama supplies the energy to these same folks. Just imagine the lure of casting a vote to repeal Obamacare, to get rid of bailouts, to free up the economy and to return to more conservative governing principles. Obama is not a personal target for most of these folks, but his policies have enormous bullseyes on them. A return to the turnout levels of 2004 for the GOP base will also probably seal the doom for Obama's candidacy.

The ultimate truth, however, is that demography will not decide the next election. In fact, it is an amazing manifestation of clearly the Democrats take the minority vote for granted that these articles even get written. What will actually decide the next election are events and policies with a dash of campaign strategy and performance thrown in. If the economy continues in the doldrums, Obama will be hard pressed to win. If we fall into a double dip recession, Obama is toast. If the GOP candidate presents common sense policies to the American people that seem likely to work, again Obama will lose. In fact, if Obama does not finally come forward and tell us all what he plans for a second term (or even for the rest of this one), he will ultimately fail. So next time you read one of these articles discussing how Obama will win, just remember that the author is writing this for the other people who, like him, live in the liberal media bubble that is the main stream media. Reality will appear on election day, but until that gets close these stories will just keep on coming.

Climategate 2.0

Two years or so ago, e-mail from the University of East Anglia were leaked and they called into question most of the so-called science that formed the basis for global warming theories. I say "so-called" because the e-mails made clear that the data used to demonstrate the "validity" of the theories had been manipulated, distorted and perhaps even created to help in that endeavor. Well, now it has happened again. has released a new batch of e-mail from East Anglia which takes up right where the last batch left off. The communications are not those of scientists trying to find the truth but rather of people trying to assure that their work seems valid so that the grant monies will keep flowing.

The sad thing is that much of the world has been taken in by the phony science pushed by these folks. Some people want trillions of dollars spent to combat a global warming problem which may well not exist. It is truly incumbent upon the next American president to commission an open and detailed government study to gather the actual, correct data with regard to global warming. If there is truly a problem here, then we should do what we can to deal with it. On the other hand, if global warming is just a sham, then it would be suicidal to spend trillions to fight its effects.

The Democrats' Disconnect

Here are a few facts to consider:

1) Democrat John Corzine is the former chairman of Goldman Sachs, the largest investment bank on Wall Street and in the world.
2) Democrat John Corzine is the formet senator from and governor of New Jersey. As governor, Corzine raised taxes substantially but left the state with a huge budget deficit (a shortfall of about 30%) when he was voted out of office.
3) Democrat John Corzine is the chairman of MF Global, one of the worlds largest commodity trading firms. MF Global just filed for bankruptcy as a result of the company making highly risky bets on european bonds. We learned today that 1.2 billion dollars of the funds of MF Global's customers are missing, and it is alleged that Corzine's company just looted the customers' accounts in order to cover the losses on its bad bets. The majority of the customers who lost most of their accounts were farmers and ranchers across America who used the commodity exchanges to sell their products.
4) Democrat Nancy Pelosi is the leader of the Demcrats in the House of Representatives. When the Democrats controlled the House from 2007 to January of 2011, Pelosi was Speaker of the House.
5) Democrat Pelosi is alleged to have used her position to take actions favorable to credit card companies. She also got major positions in the initial public offering of stock in the same company. As a result, Pelosi made enormous profits. If the allegations are correct, then Pelosi sided with the big credit card companies against regular people and made a fortune in return.
6) Democrats are constantly saying how Republicans favor the rich and the big banks while they are the party of the little guy. Indeed, Pelosi is out with a new fund raising appeal explaining why it is Republicans who do things for the rich. It is the same Pelosi who is alleged to have manipulated the system to help major credit card companies in return for being steered major stock profits.

I have to wonder if the Democrats really believe that Americans are so stupid that they will overlook stuff like this.

Why All the Spin? Third Quarter GDP was 2%!

We learned today that the GDP annualized growth rate for the third quarter was revised to 2% from the initially reported 2.5%. This is not good news by any stretch of the imagination. A 2% growth rate for the economy is not enough to create the jobs required to bring down the high unemployment rate. It is not enough to raise household income. It is not enough even to raise government revenue or remove the pressure on government spending for the needy so as to reduce the deficit. Nevertheless, the spin on this number this morning was amazing in my opinion. One financial source commented that there was no reason for people to pay attention to such a "moldy" statistic. Moldy -- Huh? The third quarter ended about seven weeks ago. Most of the large companies are have been reporting their third quarter earnings in the last few weeks and more are still to come. When Hewlett Packard reported earnings for the quarter last night, did the Wall Street Journal sniff that they should be ignored as "moldy" statistics? Of course not. But it was the Journal that call the third quarter GDP number moldy.

Another financial source pointed out that the revised figures showed that the likelihood of improved growth in the fourth quarter was enhanced. Huh? None of the individual items of data they cited got any better with the revised data and two got worse. This cannot enhance the prospects for growth.

Look, I do not think there is a major difference between 2.0% and 2.5%; one needs to remember that these are annual figures, so the quarterly growth figure actually was revised down from 0.625% to 0.5%, hardly a big shift. Nevertheless, we should all remember the many proclamations of joy when the initial figure for the third quarter was announced at 2.5% a few weeks back. We were told over and over how this figure was so much higher than the 1.8-2% figure that had been expected. Well now, the original expectations have turned out to be correct. It would do a great service to the financial markets if the news media could stop spinning the results and if it would just report them instead.

Monday, November 21, 2011

The difference between leading and campaigning

I was just listening to CBS News cover the comments by president Obama about the Super Committee. Obama told the Committee to keep working and keep trying to find ways to reduce the deficit. That was it; no specifics, no suggestions and no attempt to bridge the gaps to find a solution.

Obama was campaigning. He was taking a position that will sound good to Americans who only hear the headlines without having to find any solution. Indeed, given Obama's re-election plan to run against the Republicans in the House, he probably is perfectly happy that the Super Committee fail. It fits perfectly with his campaign rhetoric.

Just imagine if Obama were to lead instead. Two months ago, Obama would have called the committee members to the White House to meet to discuss possible ways to bridge the gap. He would have had weekly meeting with them after that (or at least every other week). When the two side were not coming closer, he would have pulled strings to up the pressure on both groups to compromise. He also would have come forth with ideas of his own to bridge the gap. (Okay, so Obama having his own ideas may be only wishful thinking on my part, but I can dream.) Ultimately, we would have seen a deal and we would be part of the way towards dealing with the deficit as a problem.

The truth is that while Obama thinks that government is the answer to every problem, he does damn little to try to make the government work.

Restoring Honesty to the Federal Budget

I am sure that there are many of you who just read the title to this post and smiled or even laughed. "How naive," you must say. How could anyone imagine using honesty and the federal budget in the same sentence?

Well, here's the problem. It starts with a question: In the current fiscal year, the federal government will spend about 3.5 trillion dollars. If Congress never passes a new budget but instead passes a continuing resolution to keep spending at "current levels", how much will the federal government spend next year? For those of you who said that next year's spending will be the same as this year's since Congress just extended the "current levels", think again. The correct answer is that for next year, federal spending automatically goes up by about 7% and that higher level is considered an extension of "current levels".

Let's take this point to its logical conclusion. Over the next decade, federal spending will just about double even though it will be said to be the same as current levels in 2012. All of this is the result of the baseline budgeting scheme passed by Congress a long time ago. The original justification for the automatic increases was inflation, but that has changed. Now, the automatic increases allow the Democrats to spend ever larger amounts without having to explain any reason for the increase. Indeed, this is why Democrats stopped actually passing budgets and appropriations bills for the various departments when Obama became president. Spending goes up just with the continuing resolutions and the extra "emergency" spending.

So what would happen were Congress to go back to budgets that did not automatically increase? The answer is staggering. Were Congress to get rid of this baseline budgeting scam, it would be scored by the Congressional Budget Office as a $7 trillion cut over the next decade. That's right, the Super Committee was struggling to find $1.2 in cuts during the same period, but just changing the budgeting method results in seven trillion in cuts.

This disease of baseline budgeting infects the whole federal government. If Congress passes a law setting aside half a billion dollars to help veterans reintegrate after leaving the service, in ten years, that amount will be about a billion dollars for the year. That will be the case even if ten years from now, we have no veterans leaving the service after fighting in a war. In the interim, if the Democrats are able to keep Congress just passing continuing resolutions, no one will have looked at this program to see if it is past the need for it. The money will just keep flowing.

This may seem like a technical issue, but it lies at the heart of much of the deficit problem in the USA. If it is properly explained to the American people, it will cause an earthquake of outrage. Congress and the President are supposed to govern, not just move forward on autopilot.

Once More on Syria

Over the weekend, we learned that Russia has sent its navy to patrol in the Syrian waters of the Mediterranean Sea, a move designed to deter any attempt at foreign intervention in Syria. Let's analyze how this plays out:

1) The Assad regime in Syria is busy killing its own people in a frenetic attempt to stay in power. The death toll is now close to 4000.

2) The Arab League, that moribund collection of countries that never seems to be able to agree on anything, has vigorously condemned Assad and called for an end to the violence.

3) Western Europeans like the UK and France have denounced the killings and have also begun meeting with the opposition groups fighting the Assad regime.

4) Turkey, which ought to be an ally of Syria, has condemned the killings and is giving sanctuary to many refugees escaping from the slaughter. In return, Syrian forces have been chasing some of those leaving over the border. The situation is tense.

5) Iran, which is the main supporter of the Assad regime, has been extending more and more help to Assad while announcing that the killing should stop. Iran cannot afford to lose Assad since this would also cut Iran off from its client group in Lebanon: the terrorists at Hezbollah.

6) When the UN Security Council attempted to pass a resolution to call for the massacre to stop, Russia and China vetoed it. The UN has done nothing as a result.

7) The USA has been almost completely silent about Syria. The State Department has made noises about how the Assad regime has to stop the killing, but the White House has pretty much ignored the situation.

8) The absence of any commitment from president Obama to get involved in stopping the killing in Syria has emboldened the Russians. Putin knows that by putting warships in the Med near Syria, he will stop Britain and France from taking action. Neither country would risk a confrontation with Russia; they were prepared for air support in undefended Libya, but do not want an actual military opponent. Putin knows that the USA will do nothing; he has listened well to the silence coming from Obama. Had Obama come forward with a forceful statement against Assad and coupled that will a strong non-military response like real sanctions against Syria, Putin would have thought twice before sending in those ships. Obama's silence has thus prolonged the killing.

It is a disgrace that America is silent while thousands die needlessly so that a ruthless dictator can keep his hold on power. Sadly, it is probably too late for words from Obama to do any good now. Russia has already committed its forces here and that makes it unlikely that Putin would lose face by pulling out now. Obama has managed to transform a situation where words would have sufficed to one that is moving inevitably to a full scale civil war. I fear that the 4000 dead to date will be just a small down payment on the losses in the future.

Sunday, November 20, 2011

Keystone XL Pipeline Facts Show Obama Acting Only for Personal Political Gain

Most of you know that within the last week, president Obama decided to delay any decision on approving the Keystone XL Pipeline which is supposed to bring oil from the Canadian oil sands across the USA to refineries on the gulf coast. The announced reason for the delay was to study an alternate path for the pipeline so as to avoid crossing the Ogallala Acquifer, the source of drinking water in parts of seven states. There have not been any pipeline leaks of note in North America that would give rise to such a concern, and it seemed to me that the fear of potential leaks was ridiculous. I have said so previously; the Ogallala Acquifer has nothing to fear from the pipeline. Now, however, more evidence has been put forward that makes certain that Obama's action had nothing to do with saving the acquifer and everything to do with helping his re-election campaign. From all the rhetoric, any rational observer would think that the land above the Ogallala Acquifer was pristine prairie, not sullied by other pipelines. Today, however, I saw a map in the Ottawa Citizen that shows all of the other pipelines running across the acquifer. You can see that map by clicking on the title to this post. There are already so many pipelines across the entire area that it looks like a spider web on the map. Obviously, there is no real concern that one more pipeline will somehow harm the acquifer; that is just the excuse being used to placate the environmentalists who do not want any further development of fossil fuel resources in the USA.

The simple truth is that Obama has been wholly dishonest. He has put his political fortunes ahead of the good of the country. He deserves to lose the next election for this reason alone.

The Double Standard at Work

I made the mistake today of watching the panel discussion on ABC's This Week when they spoke about the GOP presidential race. Paul Krugman of the New York Times was one of the panel members, and he expressed the view that all of the Republican candidates other than Mitt Romney were "fools and clowns". No one reacted to this statement, not even an eyebrow got raised. As I heard this, I thought to myself what the reaction would be if a Sunday morning panelist called president Obama a fool or a clown. There would be an immediate outcry with charges of racism. There would be outrage at the hate speech being directed at the president. Whoever said that would get dropped from the program. In other words, people would react.

Have we really gotten so used to the double standard for conservatives and liberals that we can sit silently while good people are slammed in this way. Krugman did not take issue with the policies supported by the GOP candidates; he attacked them personally as idiots or as being unserious.

The truth is that Krugman is a polemicist with not much to say other than his personal attacks. Even his writing on economics frequently is flawed. It makes one wonder how he won the Nobel Prize. Was his uncle on the committee?

The not so super Committee

We are at the deadline for the Congressional Super Committee to come forward with a plan to cut the deficit by 1.2 trillion dollars over the next decade. As of now, it looks like there will be no agreement. Indeed, there will not even be any partial agreement. In many ways, this is a testament to the triumph among Democrats of politics over what is good for the country. Let me explain: The Democrats have grabbed hold of an issue that they believe will enable them to come back from their 2010 defeat, namely raising taxes on the wealthy. Polling has shown that voters favor higher taxes for the wealthy. Of course, voters also overwhelmingly say no when the question asked is "should the government raise taxes during bad economic times". Nevertheless, the Democrats are now insisting on making this a big issue as the country moves towards the 2012 election. To that end, we have seen endless stories announcing that the Republicans will not agree to raising taxes on the rich.

The problem, however, is that the Super Committee was supposed to come up with ways to cut the deficit. If no agreement is reached, then automatic spending cuts are supposed to go into effect, particularly hitting defense the hardest. The Republicans have come up with a few different proposals to do this. The latest involved about $300 billion in additional revenue by revamping the tax code to cut deductions and lower rates. In that way, not only will the deficit be cut, but economic growth will be promoted. There were also $900 billion in cuts in that proposal. Democrats have rejected that proposal. Despite a lot of searching, I have not been able to find what the Democrats propose, if anything. Since we are at the deadline, it looks like the Democrats' desire not to give up the tax the rich issue will prevent there from being any agreement coming from the Committee.

In the last month, we have watched president Obama make a series of decisions that will hurt the economy in order to help his election campaign. The Keystone XL pipeline and the Ohio gas drilling lease sale would have meant something in the area of 300,000 new jobs, but Obama put them on hold since they might upset the environmentalist in his base. Now, however, the congressional Democrats have gone Obama one step better. They are not just putting economic growth at a lower priority than their elections, they are putting the defense of the country as less important than their election strategies. Obama's Secretary of Defense has said that the automatic cuts to defense will do severe damage to the military. The Democrats, however, do not care. They want their issue for the next election and the country can be damned.

Earlier this year, we had Democrat after Democrat call the Tea Party "terrorists" because they demanded that the deficit be cut. Of course, the Democrats ultimately agreed that this was the proper course for the country. Now, however, we are not dealing with political hyperbole. the Democrats, by their actions, are actually siding with the real terrorists. They want make extreme cuts to the defense budget rather than give up an issue for the election. They deserve to be condemn for this.

A Correction

On November 16th, in a post called Occupy Update, I mentioned a statement from and Occupy Wall Street protester named Storm Shrimp. Since then, someone claiming to be that person contacted me to report that I misspelled her name which is actually Storm Shimp. While I cannot verify that this is correct, I did want to point it out in case I was wrong.

If you want to see the original post, just click on the title to this one.

Kudos to the New York Post

The top story in today's New York Post is about people from Occupy Wall Street who have been staying in the ultra luxurious W Hotel in downtown Manhattan not far from the demonstration in Zuccotti Park. Suite cost $700 per night, and one of those staying in the hotel just happens to be the man in charge of the $500,000 in donations that the protest has received so far. When asked why he was in the hotel on the night before the big "day of action" last week, Peter Dutro, the protest money man said that he lives in Brooklyn and was afraid that if the Brooklyn Bridge got shut down, he could not get back to the protest. As anyone who lives in New York can tell you, that is nonsense. Even if the bridge were shut to taxis, the subway would still run. It would be simple to get back to Zuccotti Park. I have to wonder whose money this guy used for his hotel room; he says it was his own, but was it?

That Post also spoke to an analyst for financial services giant Deloitte who was staying at the same hotel. This guy's company was paying for the room and he was alternating between work and going to the protest. Others from the protest were staying in the hotel as well. Still more were at the Marriott downtown.

The best part of the article, however, was the headline: "Occupy Wall Suite" and the second lead: "What do we service; when do we want it ... now!"

Saturday, November 19, 2011

Business trends in the USA for GasFrac Energy Services Inc.

After all the recent news from GasFrac Energy Services, Inc. (GSF:CA and GFSVF on the Pink Sheets), I received a question from Stan in New Jersey who asks the following: "I'm new to the stock but heard they're having a hard time breaking into the US drilling market for their fracing services. But, the conference call said differently. What's your take on that?" Because the company has made clear that an ever increasing part of their business will come from the USA, I think it worthwhile to set forth a response.

First of all, let's look at the facts.

1)Aside from some sporadic work in the past, the company began full time work in the USA during this year.
2)Right now, GasFrac has two sets of equipment in this country. More equipment will be arriving from the end of this quarter to the end of the first quarter of 2012, although the exact number of sets has not been disclosed.
3)Revenue in the American market was about half a million dollars in May of 2011. During the third quarter, that revenue rose to $12.6 million for an average of 4.2 million dollars per month. In October alone, US revenue was $12.9 million. This is more than the entire third quarter total.
4)GasFrac has said that full use of a set of equipment in the USA would result in about $75 million of revenue per year which comes to $6.25 million per month. Since GasFrac had two sets in use in the USA in October, that means that the total revenue of $12.9 million is more than the expected full use total previously announced. In other words, in October, both GasFrac sets of equipment were not only hitting the figure for full employment, they were actually beating that figure.
5)In the conference call, management said that it was working on long term contracts for the US market.
6)We also learned that the new President and CEO of the company is going to be located in the USA.

So what does all this mean?

First, GasFrac is may have taken some months to gain acceptance from US E&P companies, but that problem has been overcome. The equipment in the USA was working full time in October and one cannot do better than that.

Second, once the company says that it is concentrating on long term contracts in the USA, it has to mean that there are already companies with whom GasFrac is negotiating. If there were none, then management would have violated the securities laws against manipulating the market.

Third, the contacts of the new officers should help GasFrac get even wider acceptance in the USA. Indeed, the fact that Zeke Zeringue will have his office in the USA also tells us that GasFrac is prospering in the American market.

In summary, no one other than the company knows how well it is being accepted in the American market. However, the data released with the earnings and conference call all points to a very successful entry into the USA.

Disclosure: I remain long GasFrac. It is one of the largest holdings in my accounts.