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Old 05-25-2011, 06:16 PM   #1 (permalink)
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Default Not even a free breakfast

Great article from prairie2



Not even a free breakfast


Oil was up today on projections issued by Goldman Sachs that oil will hit $130/barrel by this time next year. The other big banks chimed in with similar forecasts making it a virtual fate accompli since these banks own more oil than all the oil companies, at least on paper. Record supplies and a stagnant economy seem to not deter their optimism, or pessimism depending on whether you are the guppy or the shark in this pond.

The CEO of Exxon testified before Congress recently that 40% of what you’ve been paying at the pump goes to Wall Street. You might assume that he was just shifting the blame to anyone but himself, he didn’t mention that oil companies are willing participants in the Wall Street shenanigans and profit from it greatly. Most oil costs less than $20/barrel to produce so you can see how it would serve everybody involved to keep the market price above a $100.

In reality most oil doesn’t sell for anywhere near the “market” price but this inflated number is required in order that the rich elites can take a large skim off the top of almost all economic activity. It’s sort of like when the mob ran Las Vegas, but without the pretty showgirls to distract us. Those mob guys were amateurs compared to Wall Street. The occasional gambler might lose his house in Vegas, the housing bubble took millions of houses and the suckers didn’t even know they were placing a bet.

The Government has been making money this week with sale of 7 B of AIG stock at a modest profit. Chrysler also paid back 7.6 B to the US and Canada bringing it in line to repay 100% of its emergency loans as it posts record profits. The misery of Toyota of course boosts US manufacturers despite chronic parts shortages from the destruction of critical manufacturing plants in Japan.

Japan is moving to require all new construction to incorporate solar electricity production and its prior plans to produce 50% of its electricity from Nuclear are being scrapped. Germany who has replaced the equivalent of 12 nuclear plants with solar over the past ten years and had suspended their solar program because of a surplus of electricity but is likely to shut down even more of its older nuclear plants.

The US continues to have no real energy policy along with no trade policy or manufacturing policy. We are getting some new manufacturing jobs this year but they pay a third of what the same jobs paid three years ago. Okay we do have policies for trade, manufacturing and energy but they are set on Wall Street and only serve Wall Street. But then the House always makes the rules to make money for itself and not for us marks and they don’t even comp our breakfast. Prairie2 News
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Old 05-25-2011, 06:36 PM   #2 (permalink)
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Once again, it's all about fucking Americans for the sake of immense short term profit. Seriously, our country is turning into a cast system. Social mobility and the "American Dream" are dead, meaning those born without wealth cannot gain wealth. The percentage of "Rags to Riches" cases are so infrequent compared with the population, that it's practically the same thing as winning the lottery.

The other thing to observe is that many of the "Rags to Riches" people have un-ordinary resources and wealth at their disposal. My favorite example people like to glorify is Bill Gates, who despite what people think went to an upper class private school and had state-of-the-art computer technology at his disposal. If Bill Gates was born as some poor ass kid in the Bronx, he would probably be out in the street right now selling hot dogs, not sitting in a mansion being a billionaire. Until people realize that they cannot achieve the wealth the bourgeoisie are dangling in front of them, they will forever be chasing the dragon.
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Old 05-25-2011, 07:10 PM   #3 (permalink)
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Once again, it's all about fucking Americans for the sake of immense short term profit. Seriously, our country is turning into a cast system. Social mobility and the "American Dream" are dead, meaning those born without wealth cannot gain wealth. The percentage of "Rags to Riches" cases are so infrequent compared with the population, that it's practically the same thing as winning the lottery.

The other thing to observe is that many of the "Rags to Riches" people have un-ordinary resources and wealth at their disposal. My favorite example people like to glorify is Bill Gates, who despite what people think went to an upper class private school and had state-of-the-art computer technology at his disposal. If Bill Gates was born as some poor ass kid in the Bronx, he would probably be out in the street right now selling hot dogs, not sitting in a mansion being a billionaire. Until people realize that they cannot achieve the wealth the bourgeoisie are dangling in front of them, they will forever be chasing the dragon.
when the system is designed toward profit, insterad of people...that is what produces.
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Old 05-26-2011, 07:52 AM   #4 (permalink)
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Life in a Plutocracy..... The really sad thing is to see these dumbass blue collar, $35,000 to $50,000 a year people vote against their own best interests time and time again. All the while truly believing that they are somehow part of this "big boy club" of the elites.
That's because they are just as shortsighted and ignorant as everyone else. Until the general public understands that voting itself a largesse from the public coffers does nothing but perpetuate serfdom of the middle class, this is what we'll have. We vote for welfare programs, selective tax breaks, subsidies for various industries, favortism (amounting to little more than subisdization) for unions and the like etc.

All the while this undermines an economic mindset of savings, investments tempered by losses and disciplined credit which could give us real economic prosperity. It's a lot like Western Medicinein that way ... let's just treatment rather than finding a cure.
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Old 05-26-2011, 01:13 PM   #5 (permalink)
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Again..when the goal is profit curing the symptoms is much more profitable than finding the cure...Not that I have a quick solution...
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Old 05-26-2011, 01:33 PM   #6 (permalink)
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Again..when the goal is profit curing the symptoms is much more profitable than finding the cure...Not that I have a quick solution...
That's not a problem. Profits can only be made if you provide a service or good to society that benefits society. We could completely eliminate the purchase of gasoline and petroleum derived products and then petrol companies wouldn't make a dime. Of course, petroleum products are pretty useful, huh? Maybe their deep margins are indicative of the width and breadth of usefulness of their products. If prices are too high, the market corrects and it's reflected in lower aggregate demand. Of course, since aggregate demand isn't decreasing, then it's obvious prices aren't too high. It's a sign that the product they provide is incredibly useful. It's a sign that society is too dependent on gasoline because we value our mobility.

Ask yourself this: would YOU be willing to buy only lccal made products that don't require shipment across the country? Would you be willing to drive 30% less and take the subsequent limitations this would place on your mobility? WOuld you be willing to use less petroleum derived products or products which use petroleum (for transport or other means) in their manufacture?

Life would start to get really hard, really quickly. People aren't willing to do this and this is the real reason petrol companies get to charge big prices and NOTHING changes.

The goal of EVERYONE is profit, not just petroleum companies. That's how an economy works. It's the exchange of things of value you can provide in exchange for things of value you want provided.
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Old 05-26-2011, 02:05 PM   #7 (permalink)
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Not all has to be based on profit. Basic services of as industrialized society can be paid by taxes and statalized, like firefighters, police, the army and Health care, like in the rest of the world. Especially if you don't have a (useless) war per generation to pay for.
Oil companies make billions because they are subsidized. They are because they pay off politicians to defend the company's interests intead of ours...and we pay much more than we should. Not to mention fuel efficiency that here in US is a JOKE compared to the rest of the planet. But apparently every 3rp person here transports elephants and needs a 6wd truck.

Of course I would be willing to buy local, I do it already for what I can. Drive less? Please! Why is driving still a "fun" thing to do? I do it because I have to! Build better and more connected communities and we could all save in gas and health...trains? Subways?
The goal should not be profit, but the community wellness and culture. that is what lasts and makes a nation "better" and an exaple for the rest of the world to follow. Otherways you're just repeting the empires of the past...and the don't last. The balance is in the middle...
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Old 05-26-2011, 03:09 PM   #8 (permalink)
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That's not a problem. Profits can only be made if you provide a service or good to society that benefits society.
Horse maneuvers. Futures trading (just to name one ferinstance) benefits no-one except the traders and generates a profit.

And I'm not sure about lawyers, either.
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Old 05-26-2011, 09:14 PM   #9 (permalink)
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Horse maneuvers. Futures trading (just to name one ferinstance) benefits no-one except the traders and generates a profit.

And I'm not sure about lawyers, either.
Maybe if you ignore the risk speculation mitigates for the producer. While the price can go up, it can also go down. The speculator provides a level of price stability and security for the farmer and the like. He buys the farmer's crop ahead of time. So he benefits the farmer (producer) in this way.

Most of speculation is done through trading of derivatives for example through futures contracts on exchange traded markets and forwards for more technical contracts traded off the exchange. If speculation was such a surefire way to make money, everyone would do it. Speculation is oftentimes involved in non-durable goods, mostly perishable commodities. These are goods the farmer must sell at the time or risk losing his crop and getting nothing in return. The function of the speculator is therefore twofold. He also creates acute aggregate demand for products that are subject to flux production and other asset risks for assets of these types. He stabilizes the price not only in a monetary sense but also in a temporal sense. He create a demand market for the farmer before he even harvests his crops given the farmer operating margin for things that can occur between sewing, growing, harvest and market.

Like I said, all services provide someone with a benefit. Whether it be liquidization of hard to exchange assets or mitigating risk by providing counterparty insurance protection, there is a benefit. Just because you cannot see the benefit, doesn't mean it doesn't exist. If the benefit didn't exist, the person would not make the trade.

If the farmer knew he could sell all his crops 8 months ahead of time directly to the consumer (distribution in the case of farmers who don't vend themselves at market) at cost and cut out the middlemen giving his consumer some extra coin further patronize his cropshare (or just charge the higher price himself), don't you think he'd do so? As it were, I'm sure he's very happy to get paid before he even has to worry about sewing his crops.

For the other matter, i don't agree with taxation on different asset classes nor do I agree with subsidy.

KirkRider:

Yes, basic services can be funded, organized and paid for at a state and county level, I agree. There are a few Constitutional allowances for the things that may be organized at the Federal level (A.I S.VIII of The Constitution), and that is all it should without further ratified amendments. Fuel effiency is a joke, yes, but gas prices are also much lower than in other countries. In England, prices are around 1.49 sterling/litre right now ($9.22/ US gallon) for diesel. If our prices go up, people will be forced to cut back on gas related expenses. As it is, good ol' Bob doesn't want to compromise on paying $110 every week to fill up his F-250 Superduty.

Mass transit is also only an option in areas of heavy urbanized development. Urban sprawl developing from inner suburb growth will simply overwhelm our ability to build transit infrastructure around it. Energy prices being high also drive up development costs so the more expensive gas gets, the more expensive it is to design and power mass transit to offset the high gas costs in the first place. It's a self-perpetuated feedback mechanism.

Sorry, but these solutions seem practical at face value, but in detail won't hold up to scrutiny.
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Old 05-27-2011, 10:11 AM   #10 (permalink)
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Protection rackets also benefit small shop owners by preventing them from getting their shops burned down. As a side benefit, petty crooks tend to 'disappear' abruptly when they start to irritate the insurers.

Fundamentalist preachers also provide a service in return for you giving them your life savings. You get a really really good feeling....

OK, irony aside, anything can be beneficial if you define "benefit" widely enough. And yes, both parties in a deal see a benefit to signing the deal (even if the benefit is keeping your knees intact). But in the broader picture, you have to evaluate benefits vs damage. Market speculation, house flipping, futures trading, are nothing more than inserting yourself into the middle of a transaction and skimming a portion of the cash flow. The same could be done far more cheaply and fairly using other means, but of course that would be "socialist", and "free market capitalism" MUST be maintained, no matter how many other people suffer. The key phrase of course always being "other people".

Now, to be fair, I also believe in minimal government, but I temper the attitude with the idea that government should be big enough to do its job. Rabid right-wingers are generally nothing more than warmed-over libertarians, who advocate teeny tiny government no matter what. My response to those is and always will be: move to Darfur. It's got exactly what you want. Don't let the probability that you'll be dead within a week deter you. Follow your dream!
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