Wednesday, March 19, 2008

Bear Stearns/Santa Claus

(The following is taken from an e-mail to a law school classmate who was published in the Wall Street Journal in March of 2008 on the subject of the federal government's bailout of the Bear Stearns investment firm. Most of the profanity has been stripped.)

I have been thinking about [the Bear Stearns bailout] since I learned of it down in the Cayman Islands. I heard that raving twit, [US Treasury Secretary] Henry Paulson, stammering and stuttering his explanation of why it made sense to do the bailout. What a nincompoop!

No, actually, we the audience are the nincompoops because we nod our heads and suck this stuff up.

How can ANYBODY be surprised (though appalled) that this is happening?? Corporate welfare! Bidness as usual! Dubious has had someone to sweep in and clean up his messes his whole life, so why not share the wealth, esp. at taxpayer expense?

Paulson should have had the guts to just tell all the naysayers to go have sex with themselves. It would have made more sense, and it would certainly been in keeping with the Vice-President's example vis-a-vis Sen. Leahy. Besides, what difference could it have possibly made?

Paulson said US "fundamentals" remain sound. Not one pseudo-journalist bothered to ask him what "fundamentals" meant. They all just regurgitate this nonsense verbatim as if it SHOULD make sense to the cognoscenti. (Only hopeless idiots like me need ask.)

Amazing. As a passenger on the plane said yesterday when I was ranting and raving about that, what in the world would lead me to expect otherwise???

I wish Hillary and Obama would weigh in on this stuff. I would threaten to revoke the guarantee the very first thing I do if elected Prez!

I finally figured out that the reason the Boooosh Admin. approved the Bear Stearns bailout is because there are no "nigras" or "spics" in high places over there who might just piss the money away on drugs and booze or "wims" for their personal vehicles.

We have truly gotten the govt. we deserve.

The prez candidates seem to be willing to say almost nothing of consequence during the entire campaign. It does not matter, though, because Mencken's "booboisee" just don't seem to notice or care. Most voters respond to how they "feel" about a candidate, which is just as well, since their brains are overloaded with "American Idol(t)" and "Survivor" and critical thinking is a lost art.

Since "feeling" is so important, I would like to hook their genitals up to an electric socket so they could "feel" even better! As Bill Maher said the other night in his "New Rules," that politicians need to quit saying that Americans are not as dumb as they are presumed to be, well, yes they are!!! Most Americans are dumb as you-know-what!!!

OIL,, That Is--Texas Tea!

(The following was a recent e-mail to a self-described conservative friend who thinks the "liberals" have screwed up the economy, but that oil prices have had very little overall effect--so far.)

When Bush was running for Prez in 2000, oil was $31 per barrel. During the campaign, he was critical of the failure of the Clinton Administration to formulate an energy policy.

Oil closed March 5 [2008] at $104+ per barrel.
That is an increase of over 300% from 2000.

[Oil closed over $135/bbl. May 21.]

The Urban Consumer Price Index for November, 2000 was 174.1 (1982-84 = 100).

The Urban Consumer Price Index for January, 2008 was 211.08.

That is an increase of about 21.3% from 2000, inclusive of the oil cost increase.

Oil prices held relatively steady from 1994-1999 around $20 per barrel then went up, then back down in 2002 to about $25 per barrel.

In early 2004, oil prices spiked sharply upward to over $70 per barrel, then sagged briefly to $52 per barrel in mid-2007, then they have spiked again in steady fashion, roughly doubling in less than one year to current times (Spring, 2008--See graphs in Wikipedia.)

This price pattern does not make any sense to me. It seems to defy the usual supply/demand analysis. It appears to be deliberate price manipulation in defiance of market forces. Practically all of the oil companies have posted record profits during the past year despite the substantial increase in their costs.

The Bush Administration's Dept. of Justice has almost totally ignored antitrust enforcement.

The huge doubling of oil prices in less than one year is a radical price increase in a very broadly established commodity.

Prepare for another round of "stag-flation" within the next 2 years.


The events of 1974-79 have little or nothing to do with the current economic situation OTHER THAN to illustrate the power of a spike in oil prices vis-a-vis the rest of the economy, manifested as "stag-flation" which helped bring down Jimmy Carter's Administration (along with the hostage crisis).

What is relevant, I think, is the sudden SPIKE in oil prices during the past 11 months, from ca. $52/bbl. to over $108/bbl. now, 2008. I believe that RATE of increase (over such a short time period) cannot be readily absorbed into the overall economy without trauma, and it will, I think, manifest itself WITHIN THE NEXT TWO YEARS as higher prices across the board (unavoidable inflation), unemployment or substandard employment, and stagnant net income (working-class wages) the wage scales being effectively capped by higher fuel costs incurred by employers.

The Fed will raise interest rates again trying to control the impossible-to-control inflation, and they will destroy jobs and businesses in the process, YET AGAIN, just like Paul Volcker did in the late 1970's. I know this happened because I saw several of my acquaintances and clients NEEDLESSLY get put out of business and/or unemployed because of utterly counterproductive higher interest rates set by unelected banker guys with 6-figure incomes and steady jobs in Washington. It is going to happen again in about 2 years. Mark my words.

If a Dem is elected Prez this year, he/she will take the blame for all that, and the Re-Pubes will re-capture the White House again in 2012, and they will hold it for another 30-40 years thereafter!! Brilliant!!

It is well to recall that Paul Volcker blamed Jimmy Carter's relatively modest deficits at the time for the stag-flation, despite the FACT that Ron-Old Ray-Gun's later deficits were much bigger, yet by then (early/mid-1980's) the oil price spikes had been folded into the economy, and the overall CPI inflation rate was much more modest. In my not-so-humble opinion, Volcker was a whored-out Re-Pube liar. I never heard him admit to the role of the oil-price spikes of the early/mid 1970's in creating the stag-flation of the later '70's.

Gas was about 34c/gal. when I moved from Lexington, Va. to Orange, Va. in 1973 and remained fairly steady that next year, to mid-1974. It was at least $0.65/gal. within 2 years thereafter and went to $1.50/gal. by Reagan's election in 1980. That is a 500% rise in gas costs, probably reflecting the rise in oil costs from 1974-80. The CPI (see below) rose 86.9% from 1973-1980. The CPI overall increased annually throughout the Carter Admin. but the annual % increase started declining in 1980 BEFORE Reagan became Prez, and continued its decline into 1981, for which Jimmy Carter ought to get credit. Unfortunately for him, it still rose about 26% from 1978-80. I don't know why the jump was so big from 1974-77 when Gerald Ford was Prez

The ratio of 500% to 86.9% = 5.75. I am not sure if that signifies anything OTHER THAN to say that oil rose almost 6 times faster than did the CPI.

If oil rises 500% from its 2000 cost, that is $31 x 5 = $155/bbl.
(Oil fell to about $104.50 on 3/19/08.)

HOWEVER, it may well be that the RATE of increase over time is more important than the overall increase, i.e., the doubling within less than a year. The jump from $52 to $108 during the past 11 mos. is troubling to me. I don't recall oil prices jumping that much in such a short time back in the 1970's.


CONSUMER PRICE INDEX--1962-1983/1983 = 100:

JULY, 1973 = 44.2
JULY, 1974 = 49.3
JULY, 1977 = 60.8
JULY, 1978 = 65.5
JULY, 1980 = 82.6
JULY, 1981 = 91.5
JULY, 1982 = 97.5
JULY, 1983 = 99.8

1973-74 = +11.5% = 1 YR.
1973-77 = +37.6% = 4 YRS. = 9.4%/YR.
1977-80 = +35.9% = 3 YRS. = 11.97%/YR.
1978-80 = +26.1% = 2 YRS. = 13%/YR.
1980-82 = +15.3% = 2 YRS. = 7.7%/YR.
1981-82 = +06.6% = 1 YR.
1981-83 = +09.1% = 2 YRS. = 4%/YR.

1973-80 = +86.9%
1974-80 = +67.5%

1962-01-01 30.000
1962-02-01 30.100
1962-03-01 30.200
1962-04-01 30.200
1962-05-01 30.200
1962-06-01 30.200
1962-07-01 30.200
1962-08-01 30.300
1962-09-01 30.400
1962-10-01 30.400
1962-11-01 30.400
1962-12-01 30.400
1963-01-01 30.400
1963-02-01 30.500
1963-03-01 30.500
1963-04-01 30.500
1963-05-01 30.500
1963-06-01 30.600
1963-07-01 30.700
1963-08-01 30.800
1963-09-01 30.700
1963-10-01 30.800
1963-11-01 30.800
1963-12-01 30.900
1964-01-01 30.900
1964-02-01 30.900
1964-03-01 30.900
1964-04-01 31.000
1964-05-01 31.000
1964-06-01 31.000
1964-07-01 31.000
1964-08-01 31.100
1964-09-01 31.100
1964-10-01 31.100
1964-11-01 31.200
1964-12-01 31.300
1965-01-01 31.300
1965-02-01 31.300
1965-03-01 31.300
1965-04-01 31.400
1965-05-01 31.500
1965-06-01 31.600
1965-07-01 31.600
1965-08-01 31.600
1965-09-01 31.600
1965-10-01 31.700
1965-11-01 31.800
1965-12-01 31.900
1966-01-01 31.900
1966-02-01 32.100
1966-03-01 32.200
1966-04-01 32.300
1966-05-01 32.400
1966-06-01 32.400
1966-07-01 32.500
1966-08-01 32.700
1966-09-01 32.800
1966-10-01 32.900
1966-11-01 32.900
1966-12-01 32.900
1967-01-01 32.900
1967-02-01 33.000
1967-03-01 33.000
1967-04-01 33.100
1967-05-01 33.100
1967-06-01 33.300
1967-07-01 33.400
1967-08-01 33.500
1967-09-01 33.600
1967-10-01 33.700
1967-11-01 33.900
1967-12-01 34.000
1968-01-01 34.100
1968-02-01 34.200
1968-03-01 34.300
1968-04-01 34.400
1968-05-01 34.500
1968-06-01 34.700
1968-07-01 34.900
1968-08-01 35.000
1968-09-01 35.100
1968-10-01 35.300
1968-11-01 35.400
1968-12-01 35.600
1969-01-01 35.700
1969-02-01 35.800
1969-03-01 36.100
1969-04-01 36.300
1969-05-01 36.400
1969-06-01 36.600
1969-07-01 36.800
1969-08-01 36.900
1969-09-01 37.100
1969-10-01 37.300
1969-11-01 37.500
1969-12-01 37.700
1970-01-01 37.900
1970-02-01 38.100
1970-03-01 38.300
1970-04-01 38.500
1970-05-01 38.600
1970-06-01 38.800
1970-07-01 38.900
1970-08-01 39.000
1970-09-01 39.200
1970-10-01 39.400
1970-11-01 39.600
1970-12-01 39.800
1971-01-01 39.900
1971-02-01 39.900
1971-03-01 40.000
1971-04-01 40.100
1971-05-01 40.300
1971-06-01 40.500
1971-07-01 40.600
1971-08-01 40.700
1971-09-01 40.800
1971-10-01 40.900
1971-11-01 41.000
1971-12-01 41.100
1972-01-01 41.200
1972-02-01 41.400
1972-03-01 41.400
1972-04-01 41.500
1972-05-01 41.600
1972-06-01 41.700
1972-07-01 41.800
1972-08-01 41.900
1972-09-01 42.100
1972-10-01 42.200
1972-11-01 42.400
1972-12-01 42.500
1973-01-01 42.700
1973-02-01 43.000
1973-03-01 43.400
1973-04-01 43.700
1973-05-01 43.900
1973-06-01 44.200
1973-07-01 44.200
1973-08-01 45.000
1973-09-01 45.200
1973-10-01 45.600
1973-11-01 45.900
1973-12-01 46.300
1974-01-01 46.800
1974-02-01 47.300
1974-03-01 47.800
1974-04-01 48.100
1974-05-01 48.600
1974-06-01 49.000
1974-07-01 49.300
1974-08-01 49.900
1974-09-01 50.600
1974-10-01 51.000
1974-11-01 51.500
1974-12-01 51.900
1975-01-01 52.300
1975-02-01 52.600
1975-03-01 52.800
1975-04-01 53.000
1975-05-01 53.100
1975-06-01 53.500
1975-07-01 54.000
1975-08-01 54.200
1975-09-01 54.600
1975-10-01 54.900
1975-11-01 55.300
1975-12-01 55.600
1976-01-01 55.800
1976-02-01 55.900
1976-03-01 56.000
1976-04-01 56.100
1976-05-01 56.400
1976-06-01 56.700
1976-07-01 57.000
1976-08-01 57.300
1976-09-01 57.600
1976-10-01 57.900
1976-11-01 58.100
1976-12-01 58.400
1977-01-01 58.700
1977-02-01 59.300
1977-03-01 59.600
1977-04-01 60.000
1977-05-01 60.200
1977-06-01 60.500
1977-07-01 60.800
1977-08-01 61.100
1977-09-01 61.300
1977-10-01 61.600
1977-11-01 62.000
1977-12-01 62.300
1978-01-01 62.700
1978-02-01 63.000
1978-03-01 63.400
1978-04-01 63.900
1978-05-01 64.500
1978-06-01 65.000
1978-07-01 65.500
1978-08-01 65.900
1978-09-01 66.500
1978-10-01 67.100
1978-11-01 67.500
1978-12-01 67.900
1979-01-01 68.500
1979-02-01 69.200
1979-03-01 69.900
1979-04-01 70.600
1979-05-01 71.400
1979-06-01 72.200
1979-07-01 73.000
1979-08-01 73.700
1979-09-01 74.400
1979-10-01 75.200
1979-11-01 76.000
1979-12-01 76.900
1980-01-01 78.000
1980-02-01 79.000
1980-03-01 80.100
1980-04-01 80.900
1980-05-01 81.700
1980-06-01 82.500
1980-07-01 82.600
1980-08-01 83.200
1980-09-01 83.900
1980-10-01 84.700
1980-11-01 85.600
1980-12-01 86.400
1981-01-01 87.200
1981-02-01 88.000
1981-03-01 88.600
1981-04-01 89.100
1981-05-01 89.700
1981-06-01 90.500
1981-07-01 91.500
1981-08-01 92.200
1981-09-01 93.100
1981-10-01 93.400
1981-11-01 93.800
1981-12-01 94.100
1982-01-01 94.400
1982-02-01 94.700
1982-03-01 94.700
1982-04-01 95.000
1982-05-01 95.900
1982-06-01 97.000
1982-07-01 97.500
1982-08-01 97.700
1982-09-01 97.700
1982-10-01 98.100
1982-11-01 98.000
1982-12-01 97.700
1983-01-01 97.900
1983-02-01 98.000
1983-03-01 98.100
1983-04-01 98.800
1983-05-01 99.200
1983-06-01 99.400
1983-07-01 99.800
1983-08-01 100.100