Friday, April 28, 2006

Excessive Spending - Investment Exceeds Earnings

The American Petroleum Institute has run a full page ad showing a graph that compares oil industry investment versus "earnings" since 1992.

This ad shows that investments exceeded "earnings" in most years... except for 2004. 2005 is not shown.

The basic question here is what is meant by the term "earnings". Is that gross revenue, gross profit, net profit... what? Most people may not know that the term means:

The net income of a company during a specific period. Generally, but not necessarily, referring to after-tax income.

Earnings are perhaps the single most studied number in a company's financial statements. They show how profitable a company is.

Powered by Copyright © 1999-2005 - All rights reserved. Owned and Operated by Investopedia Inc.
So, it is not surprising that "earnings" are less than investment. In fact, it is astounding that "earnings" exceed investment. The automobile industry invests billions of dollars to earn millions. So the oil industry seems pretty lucrative by comparison.

Exxon's return on investment (ROI) is about 32%; GM and Ford are about 0%; Toyota is about 5-1/4%. THAT should put things into a little better perspective. (Source:
for example: Earnings of 500, Cost of 5000 gives a 10% return

Tuesday, April 25, 2006

Excessive Spending - Cost of Gasoline

Back on September 21, 2005 (and a few other times) I wrote about the issue of the state sales tax on gasoline and how the State of Michigan really had no incentive to see the price of gasoline decrease.

In The Detroit News today, there was an editorial about the subject:

Fuel prices rise and fall according to supply and demand. There's not a shred of evidence that price increases reflect anything other than that age-old dynamic.

But if state lawmakers want to give Michigan motorists a break, they have the power to do so by suspending, modifying or eliminating the state sales tax on gasoline.

We're generally not in favor of tinkering with taxes in reaction to commodity prices because the chase becomes an endless game. But if lawmakers are worried, they have options beyond petitioning Washington, a tinker-toy scheme proposed by the governor.

The femeral artery is cut... get the iodine!

Come on guys, nothing has changed since September when I wrote:
Let's see, here's the math:
  • 15 gallons @ $3.00 per gallon is $45.00
  • eliminate the sales tax and save $2.70
  • eliminate the poor signal progression and make that 15-gallon purchase a 12 gallon purchase for the same distance traveled and save $9.00
Okay, let's not solve the problem; let's cut tax revenue for schools.

Gosh, and I thought our government didn't understand.
Okay, maybe it doesn't....

Sunday, April 16, 2006

Happy Easter

Christians will celebrate the resurrection of Jesus from the dead today. Some truly believe that; others believe something happened, but they are not sure; still others don't really believe Jesus physically rose from the dead, but his spirit lives on in his followers. Despite the differences, the impact of Jesus' life continues to be profound for both believers and non-believers.

Easter may be secularized with chocolate bunnies and egg hunts, but the message is clear: the human spirit, the soul, is unbounded by death. Love does not die, but lives on.

Friday, April 14, 2006

Happy Passover

My youngest son is celebrating his first Passover Seder dinner with the family of his girl friend.

He was raised in a non-religious family but with many of the Christian traditions, so this is a new experience for him. I hope all goes well. He read up on the Passover so that he could be a good guest and show respect. I'm proud of his effort.

Thursday, April 13, 2006

Ethnic Divisiveness - Power or Prayer?

Several times, I have commented that Islam (as practiced in some countries) is not too dissimilar from Christianity as practiced in Europe about 700 years ago. My son made the same observation recently. It's as if there is a natural progression regarding mass belief systems:

  1. Revelation - a "new truth" is revealed to a "prophet"
  2. Conversion - new followers spread the "new truth"
  3. Persecution - existing powers are threatened by the growth of the "new truth" and attempt to eliminate the followers causing the followers to rally around their "new truth"
  4. Adoption - the old powers reach an accommodation with the "new truth" by adopting it and adapting it
  5. Growth - rapid expansion of the "new truth"; however, many followers are in name only
  6. Corruption - the "new truth" becomes secularized and gains ascendency in political power which it focuses on rather than the original message of the "new truth"
  7. Regrouping - the followers of the "new truth" become so fragmented that political power is disrupted and lost, forcing the followers back to a formalized approximation of the original followers
  8. Secularization - the "new truth" becomes the "tradition" of the secular society, but without most of the original energy or importance to the followers; there is a "place" for the "new truth" in ritualized gatherings, but the secular society is the focus of the followers.
Islam is somewhere between stage 6 and 7. Christianity is well into stage 8. Judaism achieved a much more restricted period of power and a small geography because it was sandwiched between the Egyptians and Romans. It has jumped back and forth between stages 3 and 8 and that may be why it has endured as both a faith and social structure so long.

Tuesday, April 11, 2006

Ethnic Divisiveness - Law or Lawless?

Thousands demonstrate in support of ... I'm not sure.

From GIOVANNA DELL'ORTO, Associated Press Writer

"People of the world, we have come to say this is our moment," said Rev. James Orange of the Georgia Coalition for the People's Agenda in Atlanta, where police estimated that at least 50,000 people marched Monday morning.

At the Mississippi Capitol, 500 demonstrators sang "We Shall Overcome" in Spanish. In Pittsburgh, protesters gathered outside Sen. Arlen Specter (news, bio, voting record)'s office to make their voices heard as Congress considers immigration reforms.

Groups in North Carolina and Dallas called for an economic boycott by immigrants to show their financial impact.

So what's this about?
  • Unfair immigration laws that make immigrants actually go through a legal process?
  • Borders... you know, their existence?
  • Deportations for those who don't follow immigration law?
  • Not having the right to vote because you're an illegal alien?
  • Not being eligible for free social services?
Does this apply to Canadians? (of course not)

Monday, April 10, 2006

West Wing Ending

Now that the final season of West Wing is drawing to a close, do you wonder if NBC will attempt a spin-off?

How about Southwest Wing?

Sunday, April 09, 2006

Excessive Spending - The Big Picture

Reserve Chairman, Ben Bernanke, is focusing on the big picture as he raising the prime interest rates. That, despite the concerns that some have expressed.

Well, Mr. Chairman, sometimes the economy that is growing too fast which you see in the "big picture"

Isn't what you see on closer inspection.

Saturday, April 08, 2006

Excessive Spending - Down and Out

In response to yesterday's post regarding interest rates and the economy in Michigan, one of my friends suggested reading this article.

In response to that article, I suggest that all read this article.

As I have told my sons, "Nothing is ever as simple as it first seems."

When the rich are regrouping, imaging what is happening to the rest of the people in the area. Mr. Bernanke? Mr. Poole?

Friday, April 07, 2006

Letter sent to the Federal Reserve

As a 33-year resident of Michigan, I have seen economic cycles come and go. This one is different. There is a structural dislocation occurring in Michigan (and probably Ohio) that is being exacerbated by the actions of the Federal Reserve.

Ben Bernanke is focusing on how he has to take action to keep inflation in check. Rather than raise the prime rate and make everything more expensive here, Michigan businesses need to have a lowered borrowing rate. It's time to declare Michigan a disaster area and treated as such by the Federal Reserve.

One size does not fit all. I suggest that the members of the board re-acquaint themselves with the basic economic data of Michigan before dismissing this suggestion. Inflation is not the concern here; survival is.

Thursday, April 06, 2006

Fake Fossil Used by Evolutionists

The New York Times reported that a fish fossil has been discovered that is supposed to be the long- sought "missing link" between sea and land animals.


It's obvious that this so-called "fossil" is a fake. These so-called "scientists" took a crocodile head and front legs and stuck them on the body of a catfish and called it a "missing link." Well... anybody can do that. A bunch of kids I knew once made a "pig that flew" by sticking a pig's head on a goose's body. Man, that didn't fly!

It's time these liberal, commie newspapers stopped trying to undermine the traditional values of our society. We need to repeal the 1st Amendment! It's time we have Biblical Law!!! Stone the bastards.

Can"t Find It?

Use the SEARCH BLOG feature at the upper left. For example, try "Global Warming".

You can also use the "LABELS" below or at the end of each post to find related posts.

Blog Archive

Cost of Gasoline - Enter Your Zipcode or Click on Map

CO2 Cap and Trade

There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
The Independent (UK)

Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

My photo
Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)