Dow Near Record High - Again

[red states rule]

WSJ Op-Ed Busts an Old Media Meme: Current Economy Beats Comparable 1990s Period
Posted by Tom Blumer on April 23, 2007 - 06:22.
It's a read-the-whole-thing piece. Too bad it's subscriber-only.

Brian Wesbury, whose previous writings have been blogged on many times by yours truly (including here, here, here, and here), is very tired of the dissing the current economy is taking, and especially how it is unfavorably compared to the economy of the 1990s:

While I find it hard to believe that every complaint is politically motivated, it is difficult to imagine another justification for those who assert that the Clinton economy was better than the Bush economy.

For most Americans, who aren't familiar with economic analysis, it's impossible to determine what's actually happening. But the debate over Bush versus Clinton would be silly, if it weren't potentially influencing policy.

President Clinton took office in January 1993, almost two years after the 1990-91 recession had ended. On the other hand, President Bush took office just two months before the 2001 recession began.

As a result, any economic comparison that uses four-year presidential terms is highly misleading. The Clinton years will always look better than the Bush years with that approach. A better analysis which compares the two business cycles from their previous trough, shows the opposite. The Bush economy is equal to or better than the Clinton economy in almost every area.

Wesbury also makes a great point about the first half of the 1990s that Old Media has collectively flushed down the memory hole. When Wesbury compares that era's economic performance to comparable current times, and the causes of the difference, you'll see why:

There have been periods of sub-par performance, and one of those periods was the first half of the 1990s -- partly thanks to the first President Bush's and President Clinton's tax hikes.

Many argue that President Clinton's 1993 tax hikes did not hurt the economy, and that this proves taxes don't matter as much as supply-siders think. But nothing could be further from the truth. During the first 64 months of the '90s recovery, real average hourly earnings fell 0.2%, while the unemployment rate fell to 5.5%.

For the current recovery, during its first 64 months, real average hourly earnings are up 1.8%, while the unemployment rate is down to 4.4%.

..... Civilian job growth in the past five years is not statistically different than it was in the early '90s, while wages, for every income level, have experienced better performance.

The big difference between the two periods was that tax rates were hiked in the early '90s, while tax rates were cut in the early 2000s. And, contrary to popular belief, tax cuts, because they lift incentives to invest, always lead to a better environment for the overall population.

Wesbury has definitively shown that the tax-hiking era of the early 1990s was one where the average worker made no headway, while during the current tax-cutting era, all boats are being lifted.

If it weren't for writers like Brian Wesbury, information like this would be a closely-guarded secret kept by the Formerly Mainstream Media, whose business-news readers have perhaps never been more poorly served.

http://newsbusters.org/node/12231
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[red states rule]

He posted the factual statement of the amount the oil companies make, in response to your factless opinion about how rich the oil companies are getting.
It is YOU who didnt respond with a fact. Talk about being punked, hahhahahahahhaha
HAHHAHAHAHAHAHHAHAH
BWAHAHHAHAHAHHAHAHAHHA

Oil Company Profits

The Investment U e-Letter: Issue # 653
March 23, 2007

Oil Company Profits: Just Who Is Gouging Whom?
by Alexander Green, Investment Director, The Oxford Club


The new speaker of the House, Nancy Pelosi, calls oil company profits "obscene."

And at first blush, many would agree. Over the past 12 months, for example, ExxonMobil has made pre-tax profits of $164 billion on sales of $369.5 billion. That's a lot.

But are big oil company profits bad?

Hardly. Companies exist to maximize profits. Profits are what keep workers employed. They keep companies innovating, creating new products and services. They keep the economy humming and the country strong. And they allow you and I to invest and secure our financial future.

Even the school teacher who plunks some of her retirement account in an S&P 500 Index fund benefits from Exxon's rising share price - which is a direct result of Exxon's rising profits.

Many will argue that there is nothing wrong with an oil company's profits, per se. It's just that Exxon is gouging us at the pump. They're making too much.

But are they? After all, Exxon can't dictate gasoline prices. Markets determine the price of oil. It's supply and demand that sets the price at the pump.

Oil Companies, Profits, and the Courts

Some Americans are skeptical on this point, I know. So I direct them to last year's Supreme Court decision. The court ruled unanimously that oil companies have not been colluding to set prices.

Oil prices are high today because the economies of huge nations like China and India are developing rapidly. More oil is being demanded in the world market and there are few new sources of supply.

Hurricane Katrina destroyed a lot of oil processing capacity around the Gulf of Mexico too, so there has been less oil being processed. When less oil is supplied, gasoline prices rise.

What does the average oil company make today on the sale of a gallon of gas? Ten cents.

The federal tax on gasoline, on the other hand, is nearly twice that. Then there's state gasoline taxes. (If you live in New York, for example, you're paying 68 cents a gallon in taxes.)

If Exxon is gouging us at ten cents a gallon, what exactly is the federal government doing to us at 18.4 cents a gallon?

Who Is Gouging Whom?

After all, Exxon has to compete with other oil companies both here and abroad. It has to spend billions on exploration, billions more on development, and further billions on refining and transportation.

As a result, it's hardly making money hand over fist. Earnings at Exxon rose 9% last year but fell 4% in the fourth quarter, underscoring the challenges of rising costs and lower commodity prices.

And Exxon's profit margins are only 10.7%. Profit margins at Microsoft, on the other hand, are 26%. Perhaps we should pass a windfall profits tax on software companies.

Because that's what Big Oil's opponents really want: a bigger federal gasoline tax. Why? To fund the search for alternative sources of energy, such as ethanol and nanotechnology.

That's a fine sentiment. But will throwing around tens of billions of dollars in federal research grants really create alternative energy sources? If that were the case, shouldn't Uncle Sam give grants to:

Dell… to create more powerful computers?
Boeing… to build faster aircraft?
McDonalds… to make low-fat French fries that taste good?
The federal government doesn't need to do this, of course. These oil companies will continue to make higher quality products at better prices on their own. Why? Because they exist to maximize profits. (Profits, incidentally, that provide much of the tax base for the U.S. government.)

Trust me, we will have alternative energy sources eventually. Many scientists believe that near incredible advances in nanotechnology will allow us to solve all our energy needs with solar power within 20 years.

But it won't be the federal government that solves the problem. It will be the private sector - and its relentless drive for profits.

Good Investing,

http://www.investmentu.com/IUEL/2007/20070323.html

 

[red states rule]

odd.... are you suggesting that Global Crossing and ENRON were part of the technology bubble? Are you suggesting that the technology bubble was about accounting scandals?

Liberal media to the rescue


Washington Post Hails How 'Democrats Craft New Image' on Taxes
Posted by Tim Graham on April 23, 2007 - 07:10.
The headline on the top left of Monday's Washington Post is "Democrats Craft New Tax Rules, New Image." Reporter Lori Montgomery notes that House Democrats are "aiming to seize taxes from Republicans as a political issue" and want to change the alternative minimum tax (AMT) to fall more upon the rich.

Forget the AMT details for a minute, and let's not blame Montgomery for the headline writer's bias. But can you imagine the Post covering the Iraq surge with a headline like "White House Crafts New Iraq Strategy, New Image"? Isn't the creation of a new public image something that needs some media cooperation? In this case, the Post seems to be aiming to help Democrats craft a new image other than their very established tax-everything-that-moves image.

Montgomery notes that the Democrat proposal is "still in its preliminary stages" -- so what's it doing on the front page of the paper if it's so underbaked, except a little helpful attempt at Democrat image crafting? Turn inside to the paper's continuation on page A-4, and the headline is "Democrats Try to Shield Middle Class From Tax Meant for Wealthiest Americans."

There is some skepticism in the story from Republicans Reps. Paul Ryan and Jim McCrery, but the article is mostly reserved for the opinions of liberals and Democrats (some of them worried).

One crucial fact that Montgomery omits: who first installed the AMT? Which party always believes in punishing the rich with more taxes? It began in the Tax Reform Act of 1969, when Democrats ran both houses of Congress.

http://newsbusters.org/node/12232