Tag Archives: Obama

Ethan-oil?

Things are getting heated in the dispute over the federal mandate to mix corn-based ethanol into the nation’s fuel supply. There are always two sides to every story, and in this case, there are two big names pitting themselves against each other: Big Oil versus Big Agriculture. Both sides are powerful and self-interested, but the former may have an edge on this matter.

The ethanol mandate forces the public to use and subsidise a product that is both uneconomical and environmentally destructive, if you consider the land, fuel and fertilizer needed to grow, harvest and transport all that corn. Which is why some consider it a misguided policy that should be cut.

It was success for the Environmental Protection Agency (EPA) which last week for the first time proposed to trim this ethanol mandate. However is Congress doing enough on this matter? How about taking it one step further and revising the law that requires increasing amounts of ethanol in gasoline – a law which was conceived during the period straight after 9/11, when there was anxiety over the nation’s then-growing reliance on Middle Eastern crude oil, and before the consequences of mass ethanol production were clearly understood. By now it should be known that ethanol (which was pitched to the public as a renewable and environmentally friendly energy source) hasn’t lived up to expectations. In fact, some calculate that producing ethanol actually consumes too much energy and generates greenhouse gases.

The EPA’s proposition is modest: using the reasoning that U.S. gasoline use is falling - mainly because cars are becoming more fuel-efficient - they propose that U.S. fuel companies would be allowed to use about 6 percent less ethanol in 2014 than this year. Without such a change, fuel companies might have to break through the so-called blend wall, producing gasoline with more than 10 percent ethanol - even though many U.S. cars and trucks aren’t designed to run on mixes with higher amounts of ethanol. There is an alternative: to buy credits granting exemptions from adding ethanol, but a bidding war for these credits earlier this year helped drive the price of gas to almost $4 a gallon!

The other side of the story is that ethanol has also pushed demand for corn to the breaking point. Did you know that much as 40 percent of the nation’s corn crop goes to ethanol production? That means ploughing up millions of additional acres, much of it environmentally sensitive grasslands or wetlands.

The mandate not only raises the price of farmland but also forces Americans to pay as much as $40 billion a year more for food - from soft drinks to beef - according to estimates by Texas A&M University researchers. There are even signs that this has played a part in the rise in global food prices.

The oil industry has asked the EPA for a partial or total waiver of the mandate for next year, but Obama’s administration supports the mandate, and he has powerful allies from Iowa, the country’s biggest corn producer. To be fair, there is a place for ethanol in the nation’s fuel mix, since in small quantities it helps gasoline burn more efficiently in car and truck engines, but why not let the market, rather than the mandate, settle this?

Obama’s Re-Election Among Best for Stocks

Neither a problematic release of health-care reform nor international outcry over spying allegations are enough to spoil Barack Obama’s triumph in having one of the best stock markets for a re-elected president. Signs of a reverse, however, are making their way on the horizon.

Standard and Poor’s index jumped 24 percent this year recording its third-biggest annual increase after a returning president since the 1930s, trailing the second terms of Bill Clinton and Ronald Reagan. The index has advanced 108 percent since Obama became president, adding more than $10 trillion in equity market value.

Obama stock increases have been favoured by a record Federal Reserve stimulus, interest rates around zero percent and a doubling of corporate profits since they dropped to a five-year low in 2008. The rally that started just after Obama took office now exceeds the average length of bull market by almost a year, and valuation have increased 18 percent in 2013. But the future looks grimmer with prospects of the Fed curtailing stimulus, threatening higher borrowing costs, and further gains under the current president are not anticipated.

Obama Tapping Merkel?

The German government received intelligence that U.S. spies may have been monitoring Angela Merkel’s phone. A very upset German chancellor called U.S. President Barack Obama to complain for not playing nice, saying she “unequivocally condemns such practices” and finds them “completely unacceptable.”
Despite Obama’s assurances that the U.S. has not and will not monitor Merkel’s phone, German news magazine Der Spieger claims to have gathered information showing that the chancellor’s phone has in fact been tapped.
Read the full article here.

Keystone – The Pipeline to Prosperity

After the U.S State Department recently released a positive evaluation of the planned Keystone pipeline, several special interest groups and politicians begun their lobbying efforts in a bid to persuade president Obama to ratify the agreement with Canada.

The 1,179-mile, 36-inch-diameter crude oil pipeline system would transport roughly 830,000 barrels of synthetic crude oil per day and diluted bitumen from Alberta, Canada to numerous destinations in the United States.

The primary reason for the delay of the pipeline is the influential environmental movement. The movement’s main worry is that any pipeline spill would contaminate air and critical water supplies and cause damage to the region’s wildlife.

However, the pipeline would significantly reduce American dependency on foreign oil, especially from hostile countries such as Venezuela and some Arab countries – according to some estimates – by a whopping 40 per cent. Moreover, the introduction of the pipeline would provide several thousands of highly paid jobs for the U.S. economy which is in desperate need of more jobs.

The American economy needs the pipeline and the jury is still out on what the possible environmental effects of the pipe would have. The fact remains, the Keystone pipeline would vastly reduce American dependency on hostile countries.

Indeed, it seems that the well-being of Americans is secondary to the environmentalist movement which views nature as holy. All decent people should be concerned about the state of the environment, but a movement that ignores human realities should not influence policies that are harmful to the individual.

There are many great individuals who are worried about the environment and indeed the fight over the pipeline is battled mainly on ethical grounds; one side defends the necessity of the highly productive pipe, spewing out the most important substance needed to run a modern industrial economy, while the vociferous opposition argues that running such an economy would take place at the expense of wildlife.

Pantheism is the modern-day religion which seems to impact policy positions that often override common sense positions. Indeed, the pipeline issue comes down to one question: does one prefer the well-being of animals over the well-being and prosperity of human beings?

What Sequester?

American political life continues to produce terms and definitions that dominate news coverage and political talk shows. Once it was all about the fiscal cliff and now all we hear is sequester or sequestration. The jarring political talk can be numbing and most of the time uninteresting. However, sequestration, which was passed on Friday, will have wide-ranging consequences.

The term itself simply refers to comprehensive budget cuts. As a result of the deficit-reduction package, several federal programs will see spending reductions which will come into force over the next 10 years. The cuts total $1.2 trillion, and will concern both defence and non-defence spending.

The history of sequester is rather odious. When talks between Congressional Republicans and democrats broke down in 2011, parties agreed upon the BCA (Budget Control Act) which meant that warring sides would set up a super committee that would decide on a deadline which would automatically activate spending cuts, now better known as sequestration. It was agreed that if Congress, and consequently the super committee, were unable to pass new cuts by January 2012, $1.2 trillion in automatic cuts would be triggered - hence the term sequestration.

Most reason-loving politicians understand the urgent need for spending cuts.

However the sequester plans seem to suggest that American politicians are scared to make tough decisions and instead take their cues from artificially concocted, pre-planned programs which constantly relieve campaigning politicians from any responsibility. In a way, the sequester is equally a political necessity, victory and a failure for both parties. It shows that high-minded rhetoric seldom leads to decisions that influence policies.

However, a vast number of Americans want spending cuts and fiscal responsibility. President Obama is a master of rhetoric and makes most decisions far away from the blinding limelight.

Obama has portrayed himself as the champion of the unemployed and struggling segments of American society. But Obama has defended the need for sequestration which will impact Obama’s base: mainly the low-income minorities.

However, a recent NBC/WSJ poll showed that 53 per cent of Americans want spending cut sand 39 per cent want even further cuts. Obama does not have the pressure of re-election therefore he can continue to blame the “ineffectual” Congress for forcing the sequester on Americans while supporting it behind closed doors.

In terms of the dynamism of the US economy the sequester is a step in the right direction, but hardly even grazes the surface when it comes to Washington’s acute and incurable spending binge.

Lew A Sign Of Obama’s Second Term Agenda

During the presidential campaign of -08, Obama proclaimed to fundamentally transform America, promising to change the sociopolitical landscape Americans had been accustomed to. However, Obama’s first term – except for the widely unpopular health care reform – was by and large conventional, without massive policy tweaking compared to his predecessors.

Obama’s – as his remark to Russian PM Medvedev indicated – second four year term in the White House will give him more freedoms to enact policies that otherwise would have endangered his chances of being reelected.

Since election victory, Obama has nominated two men who fit the world view of the unconstrained Obama: realism abroad and socialism at home. Jack Lew, Obama’s nominee for the position of Treasurer indicated that the government will expand and social programs will remain intact as RCM’s Larry Kudlow observed:

“…the real problem is that Lew is a left-liberal Obama spear-carrier, whose very appointment signals a sharp confrontation with the Republican House over key issues such as the debt ceiling, the spending sequester, next year’s budgets, and taxes.”

Kudlow is also right on the money suggesting that Obama’s cabinet picks signal a left-wing turn:
“Lew is to the left of the departing Tim Geithner, just as Chuck Hagel is to the left of Leon Panetta, and John Kerry is to the left of Hillary Clinton. It gives you a sense of Obama’s second-term direction, which is likely to move toward high taxes at home and weak national security abroad.”

Time will tell, but investors should worry about waning American power and ever-expanding state to contribute to a weaker economic outlook.

Lew To Replace Geithner

The current White House Chief of Staff Jack Lew is poised to become the next Secretary of Treasury, pending senate approval. Obama is pushing the envelope with his candidates for two hotly contested positions the other being Sec of Defense for which Chuck Hagel is the White House’s number one candidate.

Opposition to Hagel emanates mostly from civil rights activists and pro-Israel groups who have their beef with Hagel’s past statements. Lew has been criticized for lying to the congress about Obama’s budget plans which – according to Lew – were not supposed to add to the national debt. The republican Senator, Jeff Sessions has been the most vocal critic of Lew.

“We need a secretary of Treasury that the American people, the Congress, and the world will know is up to the task of getting America on the path to prosperity not the path to decline,” Sessions said.

“Jack Lew is not that man,” he added.

However, Lew seems to have an easier way into Obama’s cabinet than Hagel who has angered both Republicans and Democrats with his positions on Iran and Israel. Needless to add, both nomination processes will be extremely contentious and heated, but it is likely that Obama will have his way – Chicago style.