How does a tax code encourage outsourcing American jobs? Very simple......a tax break for companies that ship American jobs overseas. The problem lies in profits that are earned in the United States are subject to a 35% corporate tax. Profits earned overseas by multinational corporations can defer paying U.S. taxes until they return them to the U.S. and these transfers usually don't happen for several years. Tax codes outside the U.S. are extremely low, particularly in Ireland and this is why we see multinational corporations. This is what encourages companies, who want to expand because they are growing, to move to a "tax haven" and the creation of say, 100 jobs, will be filled by those who are not American. The U.S. has one of the highest corportate tax rates in the world. But despite the high tax rate, the U.S. takes in less annual revenue from corporate taxes, measured as a percentage of economic output, than almost all other major economies. And part of this explanation for that shortfall is the allowance for corporations to postpone taxes on foreign income. Economist Jason Furman put it this way, "The problem is the company gets to deduct the cost of doing business right away, but they don't have to pay tax on the profits until they bring them back".
This deferral clause has been in the tax code for over a half century and any attempts to reform it have been thwarted. Even President Kennedy asked Congress to rewrite tax provisions that consistently favor United States private investment abroad compared with investment in our own country. Corporate foreign earnings are growing in such large volumes that to match that with low corporate tax and low wages, you will have the perfect receipe for outsourcing.
The Democrates say that the United States, in an effort to embrace globalization, has overlooked the costs to working Americans. Frankly, no one cares about the average little American who is just trying to make it in this world. Just look at the subprime mess and all those greedy bankers. Clearly the rich keep getting richer and the poor keep getting poorer. Why is it that we see this country continually sold out to globalization? It's because our "elected officials" need to go back and study American History 101 and embrace what created the birth of this nation to begin with. Too much on the agenda in the minds of our elected officials is globalization and in their efforts to embrace it, they are flushing this country down the toilet.
Monday, March 24, 2008
Friday, March 21, 2008
The Bi-Polar Mania of Wall Street
I wonder if I can go to the Fed discount window and get an overnight loan for $1 million dollars @ 2.25% because I have "liquidity issues"? Well maybe not...........I guess I'll just rough it for now! So what's the deal with this schzophrenia we see in the financial stocks and the commodities market? People just can't make up their minds which is the safest bet. With the fear of a global slow down, investors are speculating that the slower economic growth will curb demand for energy, metals and grains. Now everyone is pulling out of commodities. Ok, so were commodities a bubble, like housing that will and is bursting? Well we shall see IF prices go down and that includes gasoline that we fuel our cars with. I will believe it when and only when I see it!
Interestingly, the stock market hasn't seen such wild price swings since 1938, about 70 years ago. Makes you wonder really how secure the whole "system" is. The volitility is exploding like a giant volcano. Perhaps a volcanologist can tell us when it will crash and burn. Perhaps this all a psychological mess like bi-polar mania that is just medicated with an anti-depressant? Or are these signs of a much deeper, systemic problem that will only get worse? Really the only way to assess investments would be to look at the issues from economic indicator analyses to determine where different investments had been and the likely direction to move in the future. But true it is, if this country continues to go deeper into debt, there is no doubt in my mind that it will fail. Refusing to deal with our national debt will bring likely failure to our economy and our options are running out as time goes on.
Interestingly, the stock market hasn't seen such wild price swings since 1938, about 70 years ago. Makes you wonder really how secure the whole "system" is. The volitility is exploding like a giant volcano. Perhaps a volcanologist can tell us when it will crash and burn. Perhaps this all a psychological mess like bi-polar mania that is just medicated with an anti-depressant? Or are these signs of a much deeper, systemic problem that will only get worse? Really the only way to assess investments would be to look at the issues from economic indicator analyses to determine where different investments had been and the likely direction to move in the future. But true it is, if this country continues to go deeper into debt, there is no doubt in my mind that it will fail. Refusing to deal with our national debt will bring likely failure to our economy and our options are running out as time goes on.
Tuesday, March 18, 2008
The makings of a collapse......
If you were to take Bear Stearns and put it on the autopsy table and make a diagnosis for cause of death, clearly it would be GREED and with greed running so deep in the carcass, there would be no hope to revive it. Like a cancer that proliferates and usurps the body uncontrollably, when greed is unrestrained, it yields a terrible price. And so we have it, even the Fed with it's monetary defibrillators couldn't save the 5th largest bank in the U.S.
Any system that is built on deceit and greed is destined to fail........it's only a matter of time. Just like the Ancient Roman Empire that eventually collapsed, the systemic credit problems run so deep its only a matter of time before it collapses beneath its own weight. Every tax payer will foot the bill to bail out these large investment banks. And now the price of commodities will go up even more and everyone will be paying more for the already high prices of gas, food, wheat, etc. It's just a revelation of how overextended credit is. More banks are just hoping they have enough liquidity on had to cover the losses because if not they too are going under, oh but wait........I forgot, the Fed will just go to their printing press room and print up several billion US bank notes and pump that liquidity into the system. And the Fed has got it made.........for they will make millions of dollars on interest alone from those over night loans at the discount window where those large firms averaged $13.4 billion in daily borrowing. Clearly the only people who benefit from the interest rate cuts are those large Wall Street banks who collect millions of dollars off the little guys. And yeah, it's those little guys like you and me who really hold the economy together. If it weren't for our spending and borrowing, this economy would be in the toilet if it isn't already.
Any system that is built on deceit and greed is destined to fail........it's only a matter of time. Just like the Ancient Roman Empire that eventually collapsed, the systemic credit problems run so deep its only a matter of time before it collapses beneath its own weight. Every tax payer will foot the bill to bail out these large investment banks. And now the price of commodities will go up even more and everyone will be paying more for the already high prices of gas, food, wheat, etc. It's just a revelation of how overextended credit is. More banks are just hoping they have enough liquidity on had to cover the losses because if not they too are going under, oh but wait........I forgot, the Fed will just go to their printing press room and print up several billion US bank notes and pump that liquidity into the system. And the Fed has got it made.........for they will make millions of dollars on interest alone from those over night loans at the discount window where those large firms averaged $13.4 billion in daily borrowing. Clearly the only people who benefit from the interest rate cuts are those large Wall Street banks who collect millions of dollars off the little guys. And yeah, it's those little guys like you and me who really hold the economy together. If it weren't for our spending and borrowing, this economy would be in the toilet if it isn't already.
Friday, March 14, 2008
The "tough barrels" in oil production
In Hammerfest Norway energy executives were suduced by vast quantities of natural gas in one of the world's least hospitable places.....90 miles of Norway's northern coast, beneath the Arctic Circle. Freezing winds and blanketing snowstorms lash the region. No oil company knew how to operate in such harsh conditions.
But Norway has solved the problem.......one of the most advanced natural gas plants is coming to life. Gas will start crossing the ocean in specially designed ships, feeding into the pipeline network for America's East Coast. It will be the first commercial energy production from waters north of the Arctic Circle.
As global demand soars and prices rise, energy companies are going to the ends of the earth to find new supplies. In Kazakhstan, petroleum engineers are braving wild temperature swings in the shallow waters of the Caspian Sea to tap the biggest oil discovery of the last 30 years. They are drilling wells 6 miles deep in the Gulf of Mexico. And on the island of Sakhalin, off far eastern Russia, they have drilled horizontal wells through miles of rock to produce oil from a stretch of ocean notable for giant icebergs.
But as the industry extends its reach, the quest is becoming more arduous. The cost of producing new oil and gas is rising fast, and companies are troubled by worsening delays. Drilling rigs are scarce. Engineers, geologists and petroleum specialists are in critically short supply. And the POLITICS of oil and gas are getting trickier, with producing countries demanding a bigger share of the revenue and angry about project delays that postpone their payments.
Industry executives say their ability to keep up with global demand is badly strained. "We're facing bigger risks and bigger difficulties when we go into new frontier regions", said Odd A. Mosbergvik, a senior manager at the dominant Norwegian energy company, StatoilHydro. "But this is why the oil industry is for big boys. It's a big gamble."
The industry's new reach is shifting the economics of energy extraction. According to a recent study, discovery and development costs, a key indicator for the industry, tripled from 1999 to 2006, to nearly $15 a barrel. Last year alone, companies spent $200 billion developing new energy projects worldwide according tot he study by the consulting firms John S. Herold Inc. and Harrison Lovegrove- an amount larger than the economies of 147 countries.
These higher costs mean that the industry needs higher energy prices to finance new projects. They are also constraining its ability to expand quickly. "There are no easy barrels left," said J. Robinson West, chairman of PFC Energy, an industry consulting firm in Washington. "The only barrels are going to be the tough barrels."
There is plenty of oil and gas still in the ground, energy executives say. But the global consumption is rising SO FAST that they must keep looking for new sources. Despite worldwide concern over the role of fossil fuels, U.S. government specialists project that global oil and gas demand will increase by some 50% in the next 25 years.
At the same time, the big discoveries of the last 3 decades, like those in the North Sea and on the North Slope of Alaska, are drying up. So with the rising prices of oil and gas.....topping @ over $110 a barrel, it is not a matter of inflation or a weaker dollar as some economists would suggest, but rather a simple matter of supply and demand and that supply is quickly running out.
But Norway has solved the problem.......one of the most advanced natural gas plants is coming to life. Gas will start crossing the ocean in specially designed ships, feeding into the pipeline network for America's East Coast. It will be the first commercial energy production from waters north of the Arctic Circle.
As global demand soars and prices rise, energy companies are going to the ends of the earth to find new supplies. In Kazakhstan, petroleum engineers are braving wild temperature swings in the shallow waters of the Caspian Sea to tap the biggest oil discovery of the last 30 years. They are drilling wells 6 miles deep in the Gulf of Mexico. And on the island of Sakhalin, off far eastern Russia, they have drilled horizontal wells through miles of rock to produce oil from a stretch of ocean notable for giant icebergs.
But as the industry extends its reach, the quest is becoming more arduous. The cost of producing new oil and gas is rising fast, and companies are troubled by worsening delays. Drilling rigs are scarce. Engineers, geologists and petroleum specialists are in critically short supply. And the POLITICS of oil and gas are getting trickier, with producing countries demanding a bigger share of the revenue and angry about project delays that postpone their payments.
Industry executives say their ability to keep up with global demand is badly strained. "We're facing bigger risks and bigger difficulties when we go into new frontier regions", said Odd A. Mosbergvik, a senior manager at the dominant Norwegian energy company, StatoilHydro. "But this is why the oil industry is for big boys. It's a big gamble."
The industry's new reach is shifting the economics of energy extraction. According to a recent study, discovery and development costs, a key indicator for the industry, tripled from 1999 to 2006, to nearly $15 a barrel. Last year alone, companies spent $200 billion developing new energy projects worldwide according tot he study by the consulting firms John S. Herold Inc. and Harrison Lovegrove- an amount larger than the economies of 147 countries.
These higher costs mean that the industry needs higher energy prices to finance new projects. They are also constraining its ability to expand quickly. "There are no easy barrels left," said J. Robinson West, chairman of PFC Energy, an industry consulting firm in Washington. "The only barrels are going to be the tough barrels."
There is plenty of oil and gas still in the ground, energy executives say. But the global consumption is rising SO FAST that they must keep looking for new sources. Despite worldwide concern over the role of fossil fuels, U.S. government specialists project that global oil and gas demand will increase by some 50% in the next 25 years.
At the same time, the big discoveries of the last 3 decades, like those in the North Sea and on the North Slope of Alaska, are drying up. So with the rising prices of oil and gas.....topping @ over $110 a barrel, it is not a matter of inflation or a weaker dollar as some economists would suggest, but rather a simple matter of supply and demand and that supply is quickly running out.
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