Monday, April 28, 2008

A Hard Habit to Break

Gasoline pumps are always covered with advertisements that take the unique advantage of a captive audience. Every pump seems to be covered with offers for every type of credit card provided by the oil company. I would imagine their effectiveness is better than ever since filling a car and paying cash these days would require carrying a suitcase of cash in your trunk. It is always amazing to see the enticements on these ads in large print and then read the fine print.

Today’s offer was a 10% discount on future gas purchases. The offer sounds fairly good. The ad offered an example of 29 cents per gallon savings on the price of $2.909 per gallon. That phrase alone speaks to the times as the pump price today was $3.459 per gallon. The fine print has all the details. The savings is limited to no more than 90 days and no more than $35.00 total savings. That won’t even fill your tank and isn’t really significant when you consider the current pricing.

Some of the big grocery store chains here in Tennessee feature gas stations that offer discounts based on groceries purchased. One offers 10 cents per gallon savings when you purchase $100 of groceries. Others at the big box stores offer discounts when using the store credit card. But the pump at the big box store offers gas mileage enhancing additives for additional costs. Does that mean these discount fuels don’t normally have the cleansing chemicals needed for today’s fuel injection engines? If so, what are we really saving?

The gasoline pricing crunch causes many of us to question who is pulling in the extra money. Some of us question the record profits at the oil companies, but is that really the root of the problem? The source of record profits can be attributed to the higher prices, but only because they draw a percentage of the profits. If you examine our oil refineries you may discover a smaller amount of income being invested in their capital base which could be distressing unless we are surely looking for an alternative fuel system. The lack of reinvestment does provide more funds for distribution to the stock holders, the ultimate goal of corporations.

Some people blame a supply and demand situation. I’m not sure fuel supplies have dwindled to the point of raising the prices to record levels. But it is evident that someone else is taking in a profit. While it always seems the prices go up faster than they go down, the independent gas station owners are not really the ones drawing the profits. Similar to theatres not making much money off admission prices, gas stations only reap a minor income from gas sales. Their goal is to lure you inside the stores where they actually make their profit on inside sales.

Maybe we have spoiled ourselves in thinking the open oil trade would never find its way into a mode of escalating profits based on our abundant utilization of fossil fuel. The profits can be found in the futures trading and the oil market. Our demand for endless supply at cheap prices only reassures the market’s ability to raise prices and continue to make incredible profits.

Most people have probably already thought of the other group collecting a windfall, or should be collecting a windfall. The taxes on gasoline are usually a percentage. In fact, most tax systems are based on percentages. As prices and income rises so do the amount taken in by the taxing authority. It makes me wonder why any government would ever demand a tax increase. The law of percentages only leads us to believe a mere increase in income for the workers would reflect in an increase in income for government. But I can’t claim to be an economics expert. I am simply an engineer who deals with scientific facts.

An overhaul of the entire world market is not possible and it seems the market systems we have in place are quite effective. The price increase is simply based on how the investors perceive the market and place value on the commodity. As such, our only choice for causing change is to decrease the demand for the product. The simplistic example of market supply and demand would imply prices might cease their rise. I am not sure they will ever fall to levels we have seen in the past no matter how much we trim our usage. Remember, if we trim usage then the percentage taken in by the various groups raking portions of the income will decrease. For example, the taxing authorities who have become engorged with the extra income will need to go on a cash diet. We all know how difficult that would be.

And so we attempt to throttle the economic disaster while we search for alternatives. Remember the butterfly effect? Everything we touch will come back to touch us again. A recent example was the use of corn in making ethanol. The reaction came back in a rise in food costs and a market scare on supply of grain as farmers switched their crops to the more profitable corn supply for fuel. The only answer for us is to continue our push away from dependence on fossil fuels. Doing so requires we demand the manufacture of alternatively fueled systems. After years of sitting on the sidelines, that method seems to be starting to take hold with hybrid vehicles. But that is only the beginning. In the end it is our adjustment to a different lifestyle that will relieve the pain. Like a child placing his finger on a hot stove we are learning the only way to stop the pain is to stop the action that causes the pain.

© 2008 Mark A. Daily

Thursday, April 24, 2008

It's Utter Madness

The madness has ensued and I don’t know if we can pull our way back to the surface. On one hand you have the current administration which has made a total mockery of our Executive Branch of government. On the other hand you have an election process that is either the most entertaining or most frustrating we have known, depending on your point of view. Today we face more challenges than ever and we see it didn’t take a genius to get us into this quagmire. The next president needs better than average intelligence and a large shovel because the barn is full.

One wonders what it will actually take to dig us out. History, in my opinion, has shown that the Democrats have generally done a better job of digging us out of a financial disaster such as the one we now face. Republicans have generally done better in getting us through a war even though history dictates they usually get us into war. Nobody can argue that President Regan was a key factor in bringing down the threat of Communism. But President Bush has taken us into near depression and denied the decline of the economy every step of the way. Unfortunately for my Republican friends they had a captain equivalent to the Exxon Valdez at the helm this time and we’ve run aground.

When this venture to the next election started I began the trek with extreme enthusiasm knowing well that I was voting Democratic this round. Unfortunately for John McCain it would take a total mental collapse on my behalf for me to vote Republican after the fiasco of the past eight years. However, a third party candidate would look awfully nice right now. It’s just a little too late and, for my part, I am rallying for a Democratic President.

With my foundation securely in place I can now critique the candidate selection from which I will vote in November. I can only begin my evaluation by declaring the road we have taken as total madness. Just as the Republicans are nothing resembling conservative I am beginning to wonder what has happened to my Democratic friends. Super delegates seem to be some type of mechanism to forego the Democratic process. But I will save that critique for later.

Today we have two candidates that have bitterly nitpicked at each other such that every wound is exposed. A friend of mine feels it will make the final candidate stronger in the fall as all possible negativism will be out in the open before the Republicans begin their major offensive. It is a well founded thought, but I find the flaw in estimating the patience of the average American. After four years of President Bush I am not sure we can take any more negative influx. As such I must proclaim, “Enough already.” It is hard to imagine a job as valuable to expend one’s reputation with excessive risk.

So far candidates have misled, stretched the truth, and bickered to damaging levels rather than build unity among a party that has so much to repair in our country. Knowingly claiming heroism that never existed and counting votes that were not part of the contest both shame the Clinton legacy. Bill left office with little mud beyond a straight sexual affair that should never have become public fodder. Monica Lewinsky was a consenting adult female, something a little different than we have seen from some of our Congressmen. We can only hope Hillary doesn’t bring down the historical love the Democrats hold for President Clinton. Barack Obama’s hands are slightly cleaner but there is some guilt to be worn.

You ask if I have a solution. For this election little can be done because Pandora’s Box opened long ago. My advice to the candidates includes forgetting Florida and Michigan. A decision to forego those states was made and little can be reasonably done to restore the democratic process in those states. Those strange entities known as super delegates will need to be extremely careful to watch what the people really want. A super delegate only defeats democracy, so why are they in the Democratic Party?

My suggestions for the future are related to the problems we are seeing. Rid the Democratic Party of super delegates. They only serve to subjugate the democratic process and are reminiscent of a feudal system where aristocracy overrules the common man. Tell the states that all primaries will be held on a single day. They can participate or forego their participation in the Democratic Party. I imagine the party thought a stretched out primary system would expose the winning candidate, giving them endless victories to look like a sure bet. The opposite has happened. Decide the candidate on a single day, early in the process, so time can be spent on addressing the issues that show an advantage over the opponents in the main election.

It is truly a distressing time for the Democrats. Hopefully they will overcome what has become a media circus. Even better, maybe I am wrong and the extended battle is helping people understand the Democratic Party and strengthening their ability to solve our nations’ woes. The frenzy they have caused and the misdeeds performed are nowhere near the level of lies and deceit dealt to the American public by the current administration over the past eight years. Therefore, no matter which Democratic candidate becomes the nominee, they will get my vote. May God bless America and get us out of this enormous mess inherited from years of incompetence and mismanagement.

© 2008 Mark A. Daily

Wednesday, April 9, 2008

A Gambling Problem

CNN promised a heart wrenching story on a couple about to lose their home and the inheritance the couple used to make the down payment. It is at this point I usually turn the channel as my own personal mindset doesn’t usually allow me to watch distressing news. However, the economic troubles cast upon us by our government leaders, who have flatly denied it existed for a long time, peaks my interest in hearing what happens to the common family. The story only had one major twist: this was not a common family in dire needs.

It seems this California couple with a comfortable income had taken the wife’s inheritance to make a down payment on a home. Sounds good, doesn’t it? Well, after making the down payment on the 1.5 million dollar home the couple would still need 78 percent of their monthly income just to make the payments. What were they thinking?

Well, it seems that the wife in this fine pairing is a real estate agent and she decided to gamble her inheritance on what would seem a sure bet. They could easily make the down payment, buy the home, and by the time the money got short they would sell the house at a profit. This sounds like the typical story one might hear at the race track just before the big race. It seems their timing was not right. As might be expected to eventually happen, the bottom fell out of the housing market.

The couple is now complaining that their monthly house payment is around $8,000 per month. Approximately $2,000 of that payment is the principal and $6,000 is the interest. This attractive payment deal is after they negotiated a very fair modification to their mortgage. The bank gave them a new loan at 5.5% interest (or near that) with a 30 year fixed term. In all truth, that is a bargain. Yet the couple is not happy.

The wife is upset that she is about to lose the house, along with the inheritance she placed for the down payment. They believe the government should bail them out. What? I bought a simple, rather humble home with the hopes of fully paying off the loan. My payments are less than 15% of my monthly income. If the government bails these bad investors out, then who will pay the bill? Hint: we all pay taxes. Yes, we pay the bill.

So, if I am living my life in a humble home and forgoing extravagance then why should I help someone fix a bad gamble? Folks, I recently visited a casino because I had to stay in the hotel. No, I didn’t bet any money. But if the government had promised to cover any losses I think I would have had a very interesting evening.

Many common folks are suffering and losing their homes. Not because of bad bets. They are losing their homes because our government has promoted the export of their jobs to another country. In those cases we should hold our government responsible, first removing the officials who initiated the problem. But, bad investors simply need to learn a lesson. Live within your means and you should be able to keep a roof on your head. If you are reasonable you can put a little money away for the rainy day that is sure to come.

I have no sympathy for the couple in California and the story did not tug at my heart strings. The story simply set my resolve further that the government has created a mess and the current administration has simply let greed rule the day. Maybe it is time some of these unfortunate million dollar home owners admit the truth, they have a gambling problem. We have support organizations to help them if they simply admit the truth. Oh, and shame on the bank that let them finance at 78% of their monthly income. The bank loses too, with no sympathy from me.

© 2008, Mark A. Daily

Saturday, April 5, 2008

Abraham Lincoln Speaks to Us

"Allow the president to invade a neighboring nation, whenever he shall deem it necessary to repel an invasion, and you allow him to do so whenever he may choose to say he deems it necessary for such a purpose - and you allow him to make war at pleasure."
Abraham Lincoln

I have included this quote as one of my favorite quotations. President Lincoln was speaking about the turmoil of the times and his own personal turmoil on how to handle a fractured nation. He was faced with the daunting task of gluing a troubled people back together. Of course you know the rest of the story. He ended up forfeiting his own life by serving the people.

The message President Lincoln presented gives a nod to the Constitutional foundation that only Congress shall declare war. As such it is a mighty responsibility to place our young men and women into the line of fire. We are asking that they voluntarily, and sometimes forcibly, place themselves in front of a bullet for our freedom. But yet Congress has forgone that responsibility since World War II which marks a serious problem within our mighty nation.

Instead of making a decisive and collective decision, our lawmakers have chosen to pass the responsibility, and thus the potential blame, to a single person. That, I believe, is where we have ventured far from the wisdom of our forefathers. They rightfully knew that the seriousness of such a decision should never be left to a single individual. Placing an entire nation into the potential ire of the world should not be a single man’s decision. Yet, today, we simply tell our president, “Do as you please. We wash our hands of the matter.” And then when it comes time for our representatives in Congress to face the nation they simply say, “We know not how this decision was made.”

It is every countriy's right to defend its sovereignty, but yet a country must be held accountable for the decisions it makes. Thus, it is my firm belief that we rightfully placed our punishing force upon those forces in Afghanistan that invaded our land and attempted to place fear in our hearts. Yet, I still believe Congress should have presented the same bravery that our soldiers did and stand forth accountable for their actions. Their lack of fortitude, in my opinion, ended up costing us dearly.

For in the example they have continually presented since World War II, the decision to move forth in Iraq was simply a vote to tell the President, “Do as you wish.” Today we see the results. Congress men and women simply say, “We had no knowledge of what the President was doing.” It isn’t that simple. It is my belief that each person who voted that serious decision to a single person should be held accountable for the results of their lack of fortitude. Our only recourse is in the voting booth, but we should let that recourse sound across the land. There is where we should make our voice known if we are happy with the results and we should not allow Pontus Pilate to influence our government.

We will never know if President Lincoln actually knew the wisdom in his words. But we do know that not following his advice has yielded controversial results. No war declared by Congress has ever been questioned. Yet, many actions left to a single person has often been debatable. Some, like Afghanistan, are forthright and correct decisions to which we rally. Others, such as Vietnam and Iraq, leave many in doubt. It is a collective wisdom that should decide if we move forward. It is that collective body who forfeited its responsibility that should be accountable when their lack of fortitude presents questionable results.

© 2008, Mark A. Daily