Those Wonderful Reagan Years – Part I, The Economy

I write this with some trepidation.  There are Reagan lovers and haters.  I’m lean toward the side that there was an enormous gap between the Reagan promises and what actually happened.  One thing can not be denied- Reagan clobbered Mondale in 1984, so he was very popular, at least in 1984.

Part I will be the economy.  Reagan came through with his promise to take government off the backs of the American people.  Lower taxes allow more spending, so there’s more prosperity.

Sorry- but it really didn’t work that way at all.   Economists like to look at the debt to GDP numbers.  Remember Reagan was president from 1980 to 1988.

https://en.wikipedia.org/wiki/National_debt_of_the_United_States#/media/File:FederalDebt1940to2012.svg

But you can look at it anyway you want, it still went up:

https://en.wikipedia.org/wiki/National_debt_of_the_United_States

But, what about taxes, didn’t Reagan cut taxes.  He did, then imposed one of the largest tax increases in history:

Conversely, Congress passed and Reagan signed into law tax increases of some nature in every year from 1981 to 1987 to continue funding such government programs as Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Social Security, and the Deficit Reduction Act of 1984 (DEFRA).[139][140] Despite the fact that TEFRA was the “largest peacetime tax increase in American history”,[140][141][142][143] gross domestic product (GDP) growth recovered strongly after the early 1980s recession ended in 1982, and grew during his eight years in office at an annual rate of 7.91% per year, with a high of 12.2% growth in 1981.[144]

While the deficit was increasing and taxes were going up,  so our economy was improving.  Reagan lovers by the way, do not accept this.

https://en.wikipedia.org/wiki/Ronald_Reagan

So, was Reagan a real tax cutter, or tax cutter phony?  The tax hikes took back about 1/2 to 1/3 of the tax cuts.

Reagan was a firm believer in keeping government out of business, except of course when business was collapsing.  The Savings and Loan collapse begins with deregulation laws passed when Carter was president, and more laws passed under Reagan.

The market share of S&Ls for single family mortgage loans went from 53% in 1975 to 30% in 1990.[40] U.S. General Accounting Office estimated cost of the crisis to around $160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government from 1986 to 1996.[2] That figure does not include thrift insurance funds used before 1986 or after 1996. It also does not include state run thrift insurance funds or state bailouts.

https://en.wikipedia.org/wiki/Savings_and_loan_crisis

Reagan the conservative, was the first with the billion dollar bailouts, followed by  President G.W. Bush.

It is certainly true, that economic trends take time to be recognized and then  changed, and  a lot depends on the will of Congress.  The collapse of the housing market in 2007-8, dates back to deregulation legislation signed into law by Clinton, just before leaving office.

The stock market crash of 1987  (Black Monday) was pretty bad.  I remember 1986-1987  well, as I was working for an oil company, and decided not to take any vacation, as I was scared I wouldn’t have a job if I took 2 weeks off.  Oil prices crashed in 1986, and it was a terrible time to work for an oil company.

https://en.wikipedia.org/wiki/Black_Monday_(1987)

I won’t win any friends from the Reagan lovers, but hopefully,  you won’t label me a Reagan hater.  If you look at  the economy from the day Reagan began to the day he left, the economy by most measures improved, but was this because of his conservative philosophy, or because he took action contrary to this philosophy?

I believe supply side economics is much better left as a theory, rather than a reality.  No one expands there business because they have receive a tax break.  They do it because there is more demand for whatever they are producing.

Stay tuned,

David Lord

 

 

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Shell Oil’s Exit of the Chukchi Sea in the Arctic Circle

DRILL -BABY-DRILL

Wow- what just happened?     Shell Oil made 7 billion dollar investment in the Arctic Circle, drilled one well in 4 months, and poof,  then this week they announced   they didn’t find enough oil to justify further exploratory drilling.

With last week’s announcement,  Greenpeace can claim victory, I guess.   Well, if they want to.  Perhaps they were better off with the war against Shell.  I mean perhaps the average American can’t locate the Chukchi Sea,  but Shell gas stations are another story.

But,  let’s go back to the well and  Chukchi Sea.  It is above the Bering Straits, between Russia and Alaska.

https://en.wikipedia.org/wiki/Chukchi_Sea#/media/File:Chukchi_Sea.png

Shell’s Burger J exploratory well is located 80 miles from the coast of Alaska.   This well was drilled strictly an exploratory well.   After drilling and logging the perspective hydrocarbon zones,  the well would be plugged and abandon.   The well was drilled to a depth of 6800 ft, encountered some hydrocarbon shows, and then plugged with cement.   This would all be done in accordance to the approved well plan.

It is impossible to produce oil except as test lasting a few days, without facilities.

http://www.washingtonpost.com/news/energy-environment/wp/2015/09/28/royal-dutch-shell-suspends-arctic-drilling-indefinitely/

http://www.shell.com/global/aboutshell/media/news-and-media-releases/2015/shell-updates-on-alaska-exploration.html

So, how much oil is there in Chukchi?   When no well has yet to confirm a commercial discovery,  the reserves (proved oil) of the Chukchi sea are zero. But how much oil might there be- is an entirely different question.    The resources  value could be as much as 30 billion barrels.  See:

https://en.wikipedia.org/wiki/Chukchi_Sea#Oil_and_gas_resources

And also as low as zero.  Of course, Shell would likely have been happy with one billion barrels in recoverable oil,  if it was a light oil that could be produced at high rates.

Shell was the largest leaseholder, so it will be hard for smaller companies to take similar risks.

The world is full of oil that will never be tapped, and it is a fact of life in the oil industry. There were billions of barrels of “resources” along the Eastern Atlantic coastline until a few exploratory wells  reduced these speculative estimates to zero.

Many  deposits are too small, or too remote, geologically too complex  and with environmental risks too great to be worth  being developed.

Stay tuned,

David Lord

 

 

 

 

 

Winning again

“Make America Great”

Trump’s theme.   Listen closely, it is more getting what we want as a country and the hell with everyone else.  You don’t tell a football team, to cut deals with the other team.

But, getting things done, whether passing bills in Congress or negotiating with other countries overseas,  it is a slow process to search for common ground and compromise.   Republicans, if they are going to solve problems,  they’ve got to work out solutions with Democrats.

It’s the big problems that require long term collaboration.    If Obama wants to get get North Korea to stop its aggressive nuclear weapons program,  then he’s got to get help from China and Russia.

Similarly with global warming.  It does exist and will require intense negotiations with hundreds of countries  to reduce carbon emissions.

Trump thought it was crazy that it took 18 months to work out a deal with Iran.   He’s not used to working with 5 other countries, with all the  complexities and the UN involvement.  He’s a one-on-one guy,  with here’s the deal, do you want it or not?   If it’s a hotel or golf course, he can walk away from a deal, with a “come back when you’re ready”  attitude.

Problem is no Republican can get on Fox News, and talk about compromising with Democrats, without looking like traitors to conservatism.  Even worse if they talk about collaborating with China and Russia on issues such as global warming and terrorism.    The big problems will not be solved by Republicans or Democrats, it will be solved by governments working around the world on common objectives.

Make America great by understanding the need for: compromise,  collaboration and diplomacy.   It is not just America will benefit because Iran is blocked from gaining nuclear weapons.  It will be the world that is great.

Stay tuned,

David Lord

 

George H.W. Bush and John Kerry

George H.W.  Bush jumped from a plane at 11:15 am, 2014 in Kennebunkport, ME  and parachuted down to the ground. It was his 90th birthday. WOW.  He did it because he can do it.   And it is an inspiration to everyone.

John Kerry is 73 years old.  He is an avid cyclist.  On May 31, 2015,  he had a bicycling accident in France. He bicycles because he can do it.

These are two outstanding examples of people with incredible energy-  not ready for the arm chair by any means.

Trump is way off base to call John Kerry stupid for bicycling in France.   Kerry is an athlete, but I honestly think Bush is even more spectacular. These are definitely two high energy,  tough guys.

I think both would agree that an occasional athletic activity or workout, relieves daily stress and improves mental health.   At advance age, it’s all about keeping the blood moving.

Stay tuned,

David Lord

Debt ceiling and self inflicted wounds

Congress must pass a clean debt ceiling hike.  This is the real big one.

Don’t worry about October, and the spending bill.  Failure to pass the spending bill means essential government services are shut down.  There will be a lot of press coverage, and blaming who’s at fault.   Holding up the bill because of Planned Parenthood non-scandal, is silly.

Failure to raise the debt ceiling is catastrophic.  It might happen.  It means the US refuses to pay for spending already authorized by Congress.  Many economists have said debt ceiling authorization shouldn’t exist and doesn’t exist in almost all countries.

The failure to raise the debt ceiling will result in the lowering of US credit, a disaster for business and crashing stock market.

The change out of the Speaker of the House on Oct 30 has been worried.

If it does happen,  it is the fault of the Republicans.  And it is supremely dumb.

Stay tuned,

David Lord

 

Republicans remaining

In quick review, I eliminated 7 candidates because they didn’t have government experience or they were way too conservative.

The 7 candidates you should not vote far are Trump, Carson, Fiorina, Rubio, Cruz, Huckabee and Paul.  Graham, Jindal and Santorium are too far behind in the polls.  Might be the story for Christie and Kasich.  So, that leaves Bush which Trump is trashing at every opportunity.    And Bush never gets more than about 8% of the poll numbers.

At this point, only half of the top four republican candidates have any government service.  Shouldn’t this count?

Stay tuned,

David Lord

 

 

 

Radical Muslims and Americans

The Republicans pride themselves in using a word that Obama has avoided “Radical Muslim Ideology.”   The terrorists, such as Al-Qaeda and ISIL say this is their  ideology. Good descriptors for these groups are gangs,  terrorists or murderers.  ISIL took terrorism to a new level, with kidnappings and other crimes for profit.

At the core of our country,  is the separation of church and state.   But, it is fine for a political candidate to say, as Obama and others have done, that basic values are founded in their religious faith.   Dr. Carson went too far, in saying he would never vote for a Muslim.  Somehow his faith is better than others.  How can a man so smart be making statements like this?

My extended family is Buddhist,  Jewish, Catholic  and Protestant.   What every religion teaches is non-violence and respect for others.   There are no bad religions, just bad people.  

Most recently, extremely violent and hateful people calling themselves Radical Muslims and their aim is the creation of a new Islamic State.  They don’t deserve this title, as they are just criminals and murders. If America finds itself at war against Muslims, then it’s us against 1.6 billion people.  If America finds itself at war  against ISIL and Al-Qaeda, then there are less than 20,000 criminals to fight.

Stay tuned,

David Lord

Debt ceiling increases

Congress is likely to shut down government by the end of October.  A lot of waste and confusion.  But in the end, a deal will be cut between Republicans and Democrats.  We shall survive a shutdown.

Much more ominous is raising the debt ceiling limit.  This is  coming due early November.  There is no second chance on this one. I am scared by the complacency.  Failure to raise the debt ceiling will have massive repercussions, as the US will be in sovereign default, not because we can’t pay our bills, but because Congress refuses to pass a clean bill to raise the debt ceiling.

Raising the debt ceiling is not like raising the limit on your credit card, so you can go crazy during the holiday sales at Brandsmart.  It is simply authorizing the executive branch to pay the bills and interest on the debt,  based on spending that was approved by Congress.

Sovereign default is not joke.  It is scary and the blame goes to the neoconservative  Republicans on this issue.

Stay tuned,

David Lord

Planned Parenthood and Religious Freedoms

I’m sorry but this kind of gets personal.  My mother loved children.  I never saw her any more happy than when she held a baby in her arms.  She was for 35 years, a dedicated nurse, who really connected with people. She knew medicine, not only because she graduated from Colombia University School of Nursing, but because she kept up with all the latest medical information.   She was promoted to the position of infection control coordinator at her hospital.   She was a volunteer for Planned Parenthood, and counselled many young women.  

She counselled on safe sex practices, and dangers of STDs.   AIDS still is an epidemic. Planned Parenthood provides the needed information in the right way.  Mom’s comment to me is that this is really one organization that is really doing their job.   It treats young women with respect by telling them their options if they are pregnant,   “Only you can decide what is best for you”  is stated on their website.

“Where there is smoke, there is fire”,  but in this case,  “Where there is smoke, there are groups that knows how make it.”

If this is a country which believes in the separation of church and state, then there is no reason to discriminate against Planned Parenthood.   The US Government contribution is small.

http://www.plannedparenthood.org/

Stay tuned,

David Lord

 

 

Iran again

Ok.  It’s almost like the Geico commercials.  Perhaps 99% of everyone has heard about enough.

But, the Supreme Leader, Ayatollah Ali Khameni  made a speech yesterday,  about Israel not being around in another 25 years.    Lousy timing. “With Allah’s help, there will be no such thing as as a Zionist regime in 25 years,”  is what Khamenei said.   And the US is still the “Great Satan.”

The guy is 76 years old.   For sure, he’s not going to be around in another 25 years.   His hard line rhetoric  is contrasted with the President Rouhani and very importantly Foreign Minister Javad Zarif.  His title as “Supreme Leader” is a farce.  He  is all bark and no bite.  He is the spiritual leader of the past, not the real leader.

Next point- a lot of false statements were made by Republicans  about how Iran sponsored terrorism around the world.   But many of the speeches by House Republicans were ridiculous, because radical Islamic groups have thrived while the assets of Iran have been frozen and their economy is in dire straits.  This is a fact.

Where does most of the money for terrorism come from?   Experts will point first to Saudi Arabia, particularly in their aid to Hamas.  The worse group of terrorists in the world,   ISIL,  has many sources of income, ranging from the sale of artifacts and oil,  goods they acquire from looting of shops,  to selling of kidnapped foreigners, and private contributions.   Iran has supported the government of Syria and Hezbollah,  which are fighting both  ISIL and Al-Nusra (El Qaeda affiliated organization).

Bottom, bottom line- the sanctions were put in place because Iran was not complying with the nuclear non-proliferation agreement.   Lifting the Iranian sanctions  will  not help  ISIL  because Iran’s money is  going to organizations which are fighting  against ISIL.     The US is likely to put more troops in Iraq but has only limited options in Syria, if we don’t want to make things worse.

We can not economically wrestle countries to the floor and make them do what we want.  Sorry Dick Cheney, it doesn’t work.

Yes, the Iran deal will go through.  It is likely to strengthen the  moderates, who now run the country.   Forget the barking dog, please.  Time to move on.

Stay tuned,

David Lord