Sunday, February 27, 2011

Sec. Gates warns against any additional "land wars."

Let's hope the White House is listening. Another land war would be a DISASTER.

Defense Secretary Robert Gates has a message for his successor.

“Any future defense secretary who advises the president to again send a big American land army into Asia or into the Middle East or Africa should 'have his head examined,' as General [Douglas] MacArthur so delicately put it.”

Saturday, February 26, 2011

How many oil shocks is it going to take?

By Nick Sorrentino

If there is anything that unites suburban Washington DC it is the traffic. It’s not the Nationals, it’s not even the Redskins, it is the traffic. Washingtonians have the dubious distinction of driving in what was recently called the worst traffic in the United States. Walk into the break room at work on a rainy day, I guarantee you that the topic of conversation will be how long it took to get from x place to y place. It is a constant source of frustration for Washingtonians. Just the other day it snowed a few inches during the evening rush hour and it took my wife 5 ½ hours to drive 24 miles.

Now though drivers have something else to complain about, gas prices.

The Exxon near my house was pricing regular gasoline at 3.04 per gallon on Monday. Today (Saturday) it is $3.30 per gallon. So that’s a rise of roughly 9% in less than a week. Not fun.

In some places out west gas prices are already over $4.00. The rest of the country might be knocking on $4.00 a gallon soon.

Rising gas prices are bad for a myriad of reasons. But perhaps worst of all is the way it sucks money out of the economy.

For many people a 25% increase in the cost of their commute will impact them quite a bit. For those on the edge of poverty such a rise might push them over. For those a bit better off things will soon get that much tighter after 2 years of already tight times.

Additionally, while rising gas prices take money out of the consumer’s pocket it also pressures the cost of the staples most people need to live. Nearly everything in the US is shipped. Shippers incur the higher fuel costs and pass it along to their clients who in turn pass it along to the consumer. Upshot, your bread, milk, and diapers cost more.

Now, not only is there less money in the pockets of many but the price of things has also increased. The net result is a reduction in the purchasing power of the consumer which even in the wake of the recession is responsible for between 60-70% of the US economy.

This most recent flare up in the Middle East and its impact on the price of fuel must be considered carefully by common sense conservatives. Does it make sense to leave our country exposed to such shocks? No, I think not.

Unfortunately just turning on the oil spigots in the US isn’t going to do it. First it takes quite a long time to bring wells online. Second we don’t even get much of our oil from the Middle East. We get the vast majority of our imported oil from Canada and Mexico. We get practically none from Libya. Yet the reason why gas prices at my local Exxon are up 9% in a week is because the market fears Libyan oil going off-line. What gives?

The price of oil is set in the futures markets. If traders think overall world demand is likely to go up or the supply to go down on a global scale the price is going up. It is unlikely that any drilling on the North Slope of Alaska or off the coast of New Jersey will move markets enough to make a huge impact.

The only country at this point with the ability to move the oil markets at will is Saudi Arabia and things are looking increasingly tenuous there. Should we at this point still be at the mercy of the Saudis? As a conservative I would say absolutely not. It’s not like we haven’t been warned after all.

What’s more is that Saudi Arabia may not have as much oil as they say they have. Many experts within the industry are questioning the official reserve numbers.

I would encourage anyone interested in Saudi oil capacity to read this brief but very good article on the subject by Kent Moors in Seeking Alpha.

Regardless we must take the development of “alternative” resources of energy seriously. It’s not fair to subsidize them, but we have for too long not factored the real cost of oil dependence for this country. It’s time we did and made some bold changes.

Do you think that the Middle East is likely to settle down any time soon? It hasn’t for 2 millennia. Maybe we as conservatives should consider the idea that wind, solar, and even natural gas are things we should embrace as responsible people who want the best for our country. We just can’t afford the risk of being nearly entirely dependent on oil any longer.

This article was originally written for the Republican Leadership Network. If you liked the piece please join the LER on Facebook. (See right margin.)

Thursday, February 24, 2011

I want a solar roof. Localities raise the cost by as much as 2/3 with red tape!

Red tape, wrapped in red tape, blocks the sun, and costs the consumer money.

As the federal government pushes to make solar energy cost competitive with coal, local governments are undercutting the effort by imposing high fees and red tape on business and consumers.

“Consider thousands of local processes, fees and timelines,” says Rob Cahill, manager of business development for solar financier SunRun, pointing out that installing solar panels is still treated by city authorities like a complex home renovation. “It’s not surprising that a significant amount of (solar’s cost) is embedded in a local regulatory morass,” he says.

Click here for the story.

Wednesday, February 23, 2011

Fascism marches on: In New York City you can't even smoke outside.

I am a former smoker. I smoked for 10 years. Smoking is a horrible thing on so many levels. Basically if you are a smoker you are paying someone to damage your health, diminish the general quality of your life, and ultimately probably kill you. However, this regulation is just insane. Second hand smoke indoors is barely bad for you. Outside? Well, this is just people with too much power enforcing neopuritanical nonsense.

New York joins Chicago and San Francisco with initiatives fighting second-hand smoke in public places.

New York City's parks department will enforce the ban, which said it would give a warning before issuing a $50 fine. Police will not enforce the ban.

"This is tyranny, rationalized by a lie," said Audrey Silk, director of New York Citizens Lobbying Against Smoker Harassment. "That second hand smoke is harming anybody outside is an absolute lie."

She said that her organization plans to organize an outdoor "smoke-in" on May 23.

Tuesday, February 22, 2011

How will a 25% increase in the cost of gasoline before the summer affect you?

By Nick Sorrentino

As I write this I see that crude oil prices just jumped 7% on news of unrest in Libya and in the rest of the Middle East. As of this moment oil is trading just south of $100/barrel.

In the summer of 2008, just before the precipitous stock market crash, oil prices spiked to over $140/barrel. This was one of the main reasons the so called “Great Recession” began. Gasoline prices crested above $4.00 a gallon and everyone from commuters to industry felt the hammer of expensive fuel come crashing down. People drove less. The cost of shipping went up. Prices of houses in the exurbs went down even more as people began to realize that $1.20 gas was gone forever. Exurbanites had to come to terms with the fact that their 50 mile commute was going to cost them a fortune, as if it didn’t already. Chevy Suburbans went up for sale across America. Then the economic chasm opened and the price of oil fell with the stock market and the housing market.

Many people survived that first oil shock by paying for the newly expensive fuel with credit. Money was still relatively easy, and the vestiges of the housing boom still existed. In 2008 the banks hadn’t reigned in home equity lines. People were still able to move balances around on credit cards and even transfer them to 0% interest cards without much trouble. Nowadays this is not the case.

For the American consumer, which is represented mostly by the middle class, the easy days are gone. For nearly 2 years we have heard that recovery is “right around the corner.” Remember “Recovery Summer” as pitched by Vice President Biden? That was last year.

Many people have adjusted to the new realities of a limping economy. This is the light the will help us find our way out of the economic darkness. People are starting businesses, even with little help in terms of capital from the banks. This is a fantastic thing. Household debt burdens are decreasing, which is also good. Interest rates for the time being are low, if you can in fact get the money. There are many things to be positive about.

But an updraft in the price of fuel could do much to challenge the “organic recovery” I think we are seeing on a household level. People have to get to work. Gasoline is not an option, especially in a place such as Culpeper. ( I wrote this for the Culpeper Star Exponent originally.) If a family is on the edge now a big bump in their fuel bill will be paid from funds usually allocated for other things, such as food.

But before we get all riled up about what the folks in the Middle East are doing to our monthly finances we should acknowledge that the Federal Reserve also isn’t doing us any favors. By printing money at the rate it currently is the Fed is forcing commodities priced in US dollars to increase. Oil is priced in US dollars. It’s not all Middle Eastern revolution. Much of the blame for the surge in oil prices (and in groceries for that matter) can be laid right at the feet of Chairman Bernanke.

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Monday, February 21, 2011

China flexed its muscles using U.S. Treasuries

This article in Reuters discusses in depth the degree to which China is America's banker.

It is true that we both need one another so it is virtually impossible for the Red Dragon to pull the Treasury plug overnight. They can however stop buying our debt, which they have. They can try to convert our debt, which to some extent they have been able to do. They can focus on developing more trade with countries other than the US, which they have. They can prop up a failing Europe, which they are.

Click here for the story.

Wednesday, February 16, 2011

I, Pencil - The Classic essay from Lawrence Read. From FEE, "Many first-time readers never see the world quite the same again."

Eloquent. Extraordinary. Timeless. Paradigm-shifting. Classic. Half a century after it first appeared, Leonard Read’s “I, Pencil” still evokes such adjectives of praise. Rightfully so, for this little essay opens eyes and minds among people of all ages. Many first-time readers never see the world quite the same again.

Click here for the essay.

Tuesday, February 15, 2011

Interesting analysis of the Arab Democratic Storm from Kenya, This was featured by Africom

Interesting piece from Kenya.

The ingredients for the current storm are shared by many countries -- authoritarian regimes perceived to serve primarily the interests of venal elites and foreigners; an unemployed youth bulge (especially informed and educated unemployed and underemployed youth); and in addition to that a global environment where the truth matters and the lies of states are exposed for what they are quickly and clearly.

Click here for the story.

Saturday, February 12, 2011

Social media is a miracle.

Times are changing. There is little doubt. As I talk with smart people across the political spectrum who are not deeply tied to the state this seems to be obvious.

People who make their living from the state don’t want things to change. They recognize that as long at the establishment protects their interests , they will do better than most folks.

But increasingly the non state class, the people who largely do not receive their bread from the state are fed up. This goes for my redneck friends, and it goes for my hippie west coast friends. So long as the people in question do not derive most of their income from the perpetuation of the system they are willing to accept that the system is broken, corrupt, and needs to change.

But the side that relies on the government for its paycheck is large and powerful. It is very hard to say to someone that their source of income, the institution to which they have given much of their lives is illegitimate. It is far harder for that person to agree with you. To do so is to make a huge leap. To do so is to put the mortgage in jeopardy. To do so is a personal revolution. Frankly I understand. Being uncomfortable economically sucks.

But times tend to change whether one wants them to or not.

I make my living in social media. I make money helping people communicate ideas. That’s where I get my bread. That’s how I got paid.

I am deeply thankful that the internet and social media exist. It allows everyday folks to communicate and spread powerful ideas. The fact that such a thing exists (social media) is a miracle. Let me make that point again. It is a MIRACLE.

Imagine for a moment if someone went to Janet Napolitano at the Department of Homeland Security and said; “Look I have this technology that allows anyone anywhere to share whatever idea he or she wants. What do you think?”

The reaction would be swift and horrible. There would be no social media. There would be no revolution in Tunisia. There would be no revolution in Egypt. There’d be no revolution in….

Rand Paul's speech at CPAC, just fantastic. BTW Ron Paul won the CPAC straw poll today!

Friday, February 11, 2011

Policy makers need to discuss whether a global currency-reserve system focused on the U.S. dollar is sustainable

It seems that everyone from Korea to China to France to Brazil is no longer just talking about the end of the dollar as the world reserve currency, now it seems steps are being taken. Our debt is unsustainable and the world knows it.

The end of the dollar as world reserve currency would have wide ranging impact for nearly anyone who does any business in US dollars. From GE to you and me.

A “long-term challenge is to decide whether the current international monetary system that uses a particular currency as reserve currency can remain sustainable throughout the world,” Yoon said in a speech in Seoul today.

Tuesday, February 8, 2011

The social conservatives wuss out at CPAC

By Nick Sorrentino

Thursday begins the annual CPAC conference in Washington DC, the annual gathering at which Republicans from all around the country come to party, listen to speakers, and most importantly cast their vote in the straw poll for which Republican they would most like to see at the head of the ticket in the next presidential election. It’s usually a pretty stayed affair, aside from the late nights pulled in the hotel bar by some of the younger staffers, but this year there is controversy.

The most contentious issue is the attendance of GOProud, a gay Republican group

2 weeks ago a number of socially conservative groups, including the Family Research Council, Concerned Women of America, and even the Heritage Foundation announced that they would boycott this year’s CPAC conference if GOProud was allowed to officially attend the gathering.

This is unfortunate. The very essence of conservatism is the belief in the limited roll of government. A gay group that espouses such a belief should be welcomed into the fold, not shunned. Yet for some groups allowing outed gays to have a voice at the conference is a bridge too far. They would rather not be in the same hotel ballroom with such people thank you very much.

It’s bigotry plain and simple.

It is entirely reasonable for socially conservative groups to engage in debate at the conference over the issues surrounding GOProud’s official attendance. It is also reasonable for them to voice their displeasure loudly. But to pick up the ball and go home? Well, that’s just lame.

There are far bigger fish to fry than these social issues. The massive expansion of government and the commensurate expansion of the federal debt should be priority number one. It will take every ally conservatives can muster to turn this ship of state around and back toward something that resembles fiscal sanity.

Yet the social conservatives would rather bicker about whether a gay group can set up a table in the lobby of the Marriot, than address the issues that threaten this country fundamentally.

There is another analysis of why the social cons have backed out, and it has less to due with GOProud and more to due with a rabble rouser named Ron Paul.

Last year Ron Paul shocked the establishment and won the presidential straw poll. Using social media and other means the libertarian wing of the Republican Party showed up in force and embarrassed the establishment darling, Mitt Romney. Dr. Paul won the poll with 31%. Romney came in second with 22%. The establishment was on notice.

In the year since the social conservatives have had plenty of time to marshal support for Mr. Romney, and indeed have forked over lots of money to the former Massachusetts Governor. Yet as the social conservatives assessed the CPAC landscape it appeared again that their man was marching toward defeat.

Now, with these groups boycotting they can make the case that the straw poll didn’t really reflect the broader GOP, which of course would support Mr. Romney and a much more socially conservative agenda.

Another interesting player absent from CPAC this year is Sarah Palin. She likewise has assessed the 2011 CPAC climate and has decided to sit this one out. Not however due to inclusion of GOProud however. In fact over the weekend on CBN no less she basically made the case for GOProud’s inclusion, though she didn’t say so explicitly. She knew that she was going to lose the poll and preferred to be graceful about it. Unlike the socially conservative establishment groups.

That is really what the boycott is about. The establishment is losing it’s grip on the Grand Old Party and they are not happy about it. In the wake of the Reagan era the social conservatives sought to completely dominate the Republican Party. They almost took it completely over. In the end however they fell short.

But don’t feel bad guys, you still have a place at the table. Right next to GOProud.

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Sunday, February 6, 2011

Libertarian Left- A great article on "Freed" Market Libertarianism, From The American Conservative

"At the risk of oversimplifying, there are two wellsprings of modern pro-market left-libertarianism: the theory of political economy formulated by Murray N. Rothbard and the philosophy known as “Mutualism” associated with the pro-market anarchist Pierre-Joseph Proudhon—who sat with Bastiat on the left side of the assembly while arguing with him incessantly about economic theory—and the American individualist anarchist Benjamin R. Tucker."

Wednesday, February 2, 2011

Are the protesters in Egypt actually ahead of the West?

DC Metro CEO: Random bag searches here to stay.

And so the march against our liberty continues on. The TSA can see you naked. It's illegal to video record cops in Maryland. DC Metro authorities can randomly look in your bags at the train stop.

Basically the CEO of Metro told the people who didn't like the policy (600 people signed a petition in protest) to lump it.

Yes there is a very real threat of attack in Washington. But the terrorists win when we abandon our rights for "safety." But hey after 10 years, how many times can this be said.

Click here for the story.

About Me

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Nick Sorrentino is the Editor of The Liberty and Economics Review and CEO of a social media management company.