Friday, October 29, 2010

Something's Still Wrong

Listening to another NPR story on the way home yesterday about political campaigning (Is there anything else in the news right now?)

Democrats (and I’d assume the GOP is using the same tactic – they just weren’t the subject of the report) are paying for ads – in this story mostly print flyers mailed to homes – flyers that essentially promote 3rd party candidates. The idea behind it is to convince enough voters to not vote Republican but rather another party. Dems realize they aren’t likely to get those voters to come to their side but if they can create dislike, distrust or just plain confusion, they succeed in reducing the vote counts for their opponents.

I guess for those types of things the funder must disclose who paid for the flyer and reading the fine print could uncover that an ad for a 3rd party was really paid for by the Democratic party or a similar group. But most people aren’t going to drill down that deep into a piece of junk mail.

Maybe all is fair in love and war and now politics.

Just more evidence for me that the system that allows money to flow so freely and for anything and everything to be OK under the 1st amendment, just doesn’t seem fair or the best way to operate political fundraising or elections.

For better or worse, if you are selling a product, your claims are supposed to be accurate, if you lie about your competition you can be sued and somewhere along the line the FTC, the FDA or maybe even the local BBB might come along and slap your wrist or worse.

But somehow the political realm is spared any sort of control or regulation that makes it honest, simple and … oh nevermind, politics will never be either of those.

Monday, October 18, 2010

Foreign Oil

OK pop quiz: Where does most of our imported oil come from?
This is not a trick question.

I was in a workshop with an MSU prof last week and he shared some surprising stats (at least for me).

Here’s the ranking which comes from:

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html

Crude Oil Imports
(Thousand Barrels per Day)
Country Jul-10
CANADA 2,055
MEXICO 1,174
NIGERIA 1,143
SAUDI ARABIA 1,033
VENEZUELA 1,016
IRAQ 430

Surprised? Me too. Canada #1? And almost double our next nearest supplier Mexico.
But look at the others: Nigeria – I went there in 1976 and it was unstable then – long before so many Christian/Islamic conflicts were even on the radar.

We make such a deal about the Saudis - #4 but in overall % of our imports – about 15% of this top 6.

Hugo Chavez gets in our news because he is so close and Pat Robertson said we should assassinate him but again they are down the list.

And lest anyone think we went to and are still in Iraq because of their oil – check the numbers. If we went to war in Iraq to get their oil, somebody somewhere needs to memorize this chart. Maybe pre-2003 they provided much more than this. I don’t know.
But if your/our political agendas are driven by oil in anyway shape or form, these numbers and countries have to factor in big-time.

I’ve always thought of Canada as a great source for Hockey and a pretty place to go (really love Montreal!) but honestly not much else. Did you know some of their oil comes from the Atlantic Ocean – offshore drilling? But most of it comes from not too far north of our long shared border. I just saw an article today about the pipeline to move Canadian oil to the gulf coast – being delayed. After the BP debacle, seems folks are antsy about having a big pipeline traversing the country. Guess memories of the Valdez spill decades ago are fresh too.

This is not an energy argument. This is not about big oil and how we need to wean ourselves off foreign oil.

But to believe the media, you’d think Saudi Arabia or at least some other Arabian country would be #1 and that’s what drives our foreign policy in the Middle East.
Here’s the next scary thought in all this: the MSU prof told us that Chinese and Korean companies are buying up stakes and shares in Canadian oil companies. So something right on our doorstep might get sucked into the Chinese vortex.

According to the Oil and Gas Journal, Canada had 178 billion barrels of proven oil reserves as of January 2009, second only to Saudi Arabia. The bulk of these reserves (over 95 percent) are oil sands deposits in Alberta.

My thinking here is that our north and south neighbors are hugely important to our energy future. Canada doesn’t seem like a direct threat in any way but if China is buying their way in to secure their energy future – shouldn’t we?

And Mexico. I heard off-hand and can’t recall the source but a comment about immigration into Italy from Libya. But then Italy stopped it. How did they stop it? They paid the Libyans not to come.

So in thinking about our own immigration policy (or lack of a coherent consistent plan) maybe paying Mexico something in exchange for a share of their oil is a solution to 2 vexing problems.

I have no answers here, just found this a very interesting and perhaps under-reported piece of information.

Friday, October 15, 2010

Something’s wrong.

Listening to a NPR story on the November elections and in particular the race between Harry Reid and Sharron Angle in Nevada.

I’m not a fan of Mr. Reid. I really don’t know anything about his opponent and am not trying to wade into their race with my opinion.

But some comments in the story point to a much bigger and pervasive problem than just this one race.

Two reporters were talking about some recent negative ads and the follow-up polling. A comment, and I loosely quote from memory, went something like this: “Negative ads about Angle are moving her negative numbers up to be closer to Mr. Reid’s negative numbers.”

So the goal is not to get people to vote for Mr. Reid but to raise the negative quotient for Ms. Angle. They might get some people to simply not vote for her. Or maybe vote for a 3rd party candidate instead.

I’m no expert on the whole “oppo” part of politics but this seems so twisted.

I understand that you sometimes need to point out the bad things your opponent has done or their bad ideology etc. But from that I would think you would contrast and compare so voters would then logically choose YOUR candidate.

All this money, all this energy and for what?

Friday, October 1, 2010

Credit Default Swaps

No doubt you’ve heard of this arcane Wall St. term in the discussion of all the bailouts and related issues to our ongoing nationwide financial crisis.
I still don’t understand them and probably don’t need to but am reading an article by Matt Taibbi in Rolling Stone about how these figure into the Gulf Oil spill and BP’s financial condition

I’ve never been a gambler beyond a penny-ante poker game here and there with my Texas buds but I do know that in Vegas you can bet on anything. In sports it is common not just to bet on winners but on who will lose and by how much.

As much as my simple brain can figure, a credit default swap (CDS) is a “bet” on whether a company might be able to pay back all their debt. Seems companies have their own CDS scores similar to our personal credit ratings.

The worse a company is doing, the more likely they might NOT be able to pay back their debt so buying a CDS on their debt costs more. Are you with me so far?

Seems as things got worse with BP; the price of their CDS went up dramatically.

Doesn’t this whole thing sound bizarre? People bet huge sums of money on whether a company will fail and not be able to repay their debt? For the life of me this doesn’t make any sense but then I don’t have an MBA nor have I ever worked on Wall St.

Here’s where things get even weirder. We’ve all heard “too big to fail.”

Let’s say BP owed $1 billion (don’t they wish! But for my example let’s use this small round number.) But that liability is not pegged to how much BP actually owes. If their scores are high enough and their failure seemed likely, thousands of “bettors” could wager on their failure. And the amount of those wagers could top that $1 billion many times over. So even though they are betting on BP failing to pay off, the regulators, Govts. – whoever – are worried about not only just BP but all people whose fortunes many now be tied to them through something as simple and complex as a CDS.
Some CPA et al may quibble with my simplified explanation but I think I have the essence.

People are worried about foreclosures, their jobs, how to make ends meet and a bunch of Wall St. quants (this may or not be a pejorative!) are manipulating the system to create all sorts of schemes to make more money with what appears to be very little oversight and regulation.

This is where I have never understood (my fellow) Republicans resistance to do something to reform the entire financial industry. These CDS-things seem like a good place to start. They have rules in gambling to (at least try) to keep the house honest.