Archive for July 2008

Give a man a fish…

And he’ll take out a $450,000 loan on it.

LAKE CITY, Ga. – More than 1,800 people showed up to help ABC’s “Extreme Makeover” team demolish a family’s decrepit home and replace it with a sparkling, four-bedroom mini-mansion in 2005.

Three years later, the reality TV show’s most ambitious project at the time has become the latest victim of the foreclosure crisis.

After the Harper family used the two-story home as collateral for a $450,000 loan, it’s set to go to auction on the steps of the Clayton County Courthouse Aug. 5. The couple did not return phone calls Monday, but told WSB-TV they received the loan for a construction business that failed.

The house was built in January 2005, after Atlanta-based Beazer Homes USA and ABC’s “Extreme Makeover” demolished their old home and its faulty septic system. Within six days, construction crews and hoards of volunteers had completed work on the largest home that the television program had yet built.

The finished product was a four-bedroom house with decorative rock walls and a three-car garage that towered over ranch and split-level homes in their Clayton County neighborhood. The home’s door opened into a lobby that featured four fireplaces, a solarium, a music room and a plush new office.

Materials and labor were donated for the home, which would have cost about $450,000 to build. Beazer Homes’ employees and company partners also raised $250,000 in contributions for the family, including scholarships for the couple’s three children and a home maintenance fund.

ABC said in a statement that it advises each family to consult a financial planner after they get their new home. “Ultimately, financial matters are personal, and we work to respect the privacy of the families,” the network said.
...
“It’s aggravating. It just makes you mad. You do that much work, and they just squander it,” Lake City Mayor Willie Oswalt, who helped vault a massive beam into place in the Harper’s living room, told The Atlanta Journal-Constitution.


I suppose we’re supposed to feel sorry for them, huh? They got a 1/2 million dollar house and $250k for nothing.  

But it wasn’t enough. They had to take out a loan on the house – one which they couldn’t pay back.

And we’re supposed to feel sorry for them?

Why Economic Theory is Out of Whack

Last week the New Scientist had an article that looked at an alternative economic theories to better explain the current credit crisis and other economic bubbles.  The traditional economic theory developed in the 1950s by Milton Friedman and Eugene Fama says that prices of a stock or commodity should tend towards their true values based on the incentives to investors to make money and market information. This theory tends to explain relatively small movements in the value of the asset, but doesn’t explain large movements in price up or down very well.

The article can be found here (subscription required). I’ve located the complete article here - until the New Scientist’s lawyers find the site and take it down.

Here’s my response to Jack Markell’s commercial.

In Delaware the 2 term governor Ruth Ann Minner (D) is leaving office. The State Treasure Jack Markell wants to be the guy to fill it, and has been running this commercial (link to video) to convince Delawareans that he’s their man for the job.

Here is my response to Jack Markell’s commercial.

The Springfield XD40

Sometimes at the range I begin to wish that ammunition wasn’t so expensive because I want to stay and shoot for hours. Friday night was one of those nights when the Kid & I tried out the Springfield XD40. The Kid wanted to see what a bigger gun felt like, and one of the guys at the range recommended the XD40.

Springfield XD-40 - Courtesy www.joesfirearems.com

The gun is one of Springfield’s polymer pistol line and fires a .40 round.  I’m still trying to learn the differences between cartridges, calibers, and guns – which isn’t easy given the diversity of firearms at our disposal here in the USA. But had I not known that I was firing a bigger cartridge, I wouldn’t have known that I wasn’t firing a 9mm.

As Jack Knight notes in his excellent review of this weapon, the gun competes with Glock and fires much like a Glock. I liked this gun and felt that I could have shot it for at least an hour or two. Although firing a bigger round using a larger cartridge, I found this weapon kicked less than some of the 9’s we’ve shot. In fact neither the Kid nor I had much trouble keeping it under control while firing several consecutive rounds – and that says alot considering the trouble the Kid has had firing some of the 9’s. The mechanism was tight; the Kid had trouble pulling the slide back and loading the initial round; but I actually felt that it was appropriate. The gun has a drop safety which wasn’t a problem, and given the tight trigger wasn’t really needed in my opinion.

Overall this step up was a winner. If it wasn’t for the cost of rounds – 50% more than 9mm – this gun would become of our faves. But at $18 for 50 rounds, it’s easy to break the budget quickly firing this gun. For those wanting a more powerful weapon than a 9mm but are concerned about control, this gun is for you.

MSM Finally Acknowledges Success in Iraq

And it appeared on Yahoo!’s homepage (ephemeral link).

Analysis: US now winning Iraq war that seemed lost

BAGHDAD - The United States is now winning the war that two years ago seemed lost. Limited, sometimes sharp fighting and periodic terrorist bombings in Iraq are likely to continue, possibly for years. But the Iraqi government and the U.S. now are able to shift focus from mainly combat to mainly building the fragile beginnings of peace — a transition that many found almost unthinkable as recently as one year ago.

Despite the occasional bursts of violence, Iraq has reached the point where the insurgents, who once controlled whole cities, no longer have the clout to threaten the viability of the central government.

That does not mean the war has ended or that U.S. troops have no role in Iraq. It means the combat phase finally is ending, years past the time when President Bush optimistically declared it had. The new phase focuses on training the Iraqi army and police, restraining the flow of illicit weaponry from Iran, supporting closer links between Baghdad and local governments, pushing the integration of former insurgents into legitimate government jobs and assisting in rebuilding the economy.

Scattered battles go on, especially against al-Qaida holdouts north of Baghdad. But organized resistance, with the steady drumbeat of bombings, kidnappings, assassinations and ambushes that once rocked the capital daily, has all but ceased.

This amounts to more than a lull in the violence. It reflects a fundamental shift in the outlook for the Sunni minority, which held power under Saddam Hussein. They launched the insurgency five years ago. They now are either sidelined or have switched sides to cooperate with the Americans in return for money and political support.

Gen. David Petraeus, the top U.S. commander in Iraq, told The Associated Press this past week there are early indications that senior leaders of al-Qaida may be considering shifting their main focus from Iraq to the war in Afghanistan.

Ryan Crocker, the U.S. ambassador to Iraq, told the AP on Thursday that the insurgency as a whole has withered to the point where it is no longer a threat to Iraq’s future.

“Very clearly, the insurgency is in no position to overthrow the government or, really, even to challenge it,” Crocker said. “It’s actually almost in no position to try to confront it. By and large, what’s left of the insurgency is just trying to hang on.”
...
Read the entire thing


Success. We has it!

The Council Has Spoken: 7/25/2008

Congratulations to this week’s winners.

Council: Done with Mirrors – Who knew?

Noncouncil: Stars and Stripes – Soldiers Recount Deadly Attack On Afghan Outpost

Full vote here.

Speak Truth To Power – Just Not to School Administrators

Imagine that you are an African-American father whose kid comes home complaining that he’s been bullied at school by white kids for being black. Imagine taking up the issue with the local schoolboard, and having your child forced to use special bathrooms and being barred from classrooms where substitute teachers are present. Meanwhile your kid is continually subjected to racial epithets and in one incident choked. The response? The school and the school board ignores your problem.

So you take the issue up at public meetings, and the school’s superintendent refuses to provide you with answers. But you don’t give up and you attend each public meeting, demanding an answer from the school board.

Finally the school board responds to you in a letter. The letter, written by the school board’s attorney states you are in violation of board policy on “harassment or bullying of employees,” and that you “engaged in uncivil and disruptive conduct in violation of Board policy” at a June 23 Board meeting and a July 7 District Discipline Committee meeting. It threatens legal action link.

Are we in 1950’s Alabama? Nope. Flip the ethinicity from African-American to Caucasian and reverse the colors and you have Donald Soles’ situation in suburban Delaware.

Soles, who is white, first appeared before the Brandywine Board of Education at its December, 2006 meeting and has attended Board meetings regularly ever since. During public comment periods, he has requested an explanation, and has been frustrated by the Board’s refusal to engage him publicly. Superintendent James R. Scanlon has said Soles’ criticisms are unfounded but has refused to comment further, saying it would violate the Family Education Rights and Privacy Act.

Soles has since enrolled both of his children in private school, and has repeatedly called for the ouster of Scanlon. However, in her letter to Soles, Cooper said there is no law or Board policy that addresses a citizen’s request to fire an employee.


This is the same school board that decided to ban the sale of plastic toys that shot marshmallows – and used school funds in a “marshmallow shooter buyback program,” – the first of its kind in the nation.

Marshmallow Shooter - Banned Donald Soles - Courtesy CommunityPub Newspapers.
Banned in Brandywine School District

But bureaucrats know how to maintain power. In the end they wore Soles down.

Soles has since enrolled both of his children in private school, and has repeatedly called for the ouster of Scanlon. However, in her letter to Soles, Cooper said there is no law or Board policy that addresses a citizen’s request to fire an employee.

Now, Soles is wondering if it is time to give up and move on, literally.

“The entire state of Delaware doesn’t seem to care if a child is denied access to classrooms for reporting bullying,” said Soles, who took his fight to the Department of Justice as well. The Attorney General determined the alleged incidents involving Soles’ son may have involved harassment, disorderly conduct and other offenses, but none met “the elements for an assault III charge.”

He plans to put his house on the market.


I can relate. Delaware’s public schools are notoriously bad compared to schools across the border in New Jersey, Pennsylvania and Maryland; it’s one of the most common concerns voiced by people who are moving to the state, and I have personally met people who refused the lure of “tax free shopping” in exchange for higher taxes but better schools outside of the state.

As a parent and homeowner myself I’m making plans to leave the area. Like Soles’ kid mine has suffered due to the district’s policy of mainstreaming – whereby they place special needs and disruptive children in the classroom, forcing average kids and teachers to deal with extraordinary behavior. The Kid has also dealt with racist eptithets, but isn’t yet at the age where bullying is more common. I plan to be gone before he’s that old.

Kudos to the CommunityPub paper for covering the story. It has been completely ignored by the News Journal, which tends to ignore local news in favor of printing stories off the news wires. The weekly CommunityPub is the only local paper I read now – and it’s free!

The Council Has Spoken: July 18, 2008

Congratulations to this week’s winners:

Council: Wolf Howling: Critiquing The Obama Manifesto On Iraq

NonCouncil: Melanie Phillips: Sleepwalking Into Islamization

Complete voting here.

Dissent Is The Highest Form of Patriotism – But Not In Science

I’ve never bought that line, and it’s obvious that the aphorism doesn’t apply in Science either. Case in point: scientists who dissent “with the overwhelming opinion of the world scientific community.”

Source: American Physical Society

Climate Sensitivity Reconsidered

The following article has not undergone any scientific peer review. Its conclusions are in disagreement with the overwhelming opinion of the world scientific community. The Council of the American Physical Society disagrees with this article’s conclusions.

By Christopher Monckton of Brenchley

Abstract

The Intergovernmental Panel on Climate Change (IPCC, 2007) concluded that anthropogenic CO2 emissions probably caused more than half of the “global warming” of the past 50 years and would cause further rapid warming. However, global mean surface temperature has not risen since 1998 and may have fallen since late 2001. The present analysis suggests that the failure of the IPCC’s models to predict this and many other climatic phenomena arises from defects in its evaluation of the three factors whose product is climate sensitivity:

1. Radiative forcing ΔF;
2. The no-feedbacks climate sensitivity parameter κ; and
3. The feedback multiplier ƒ.

Some reasons why the IPCC’s estimates may be excessive and unsafe are explained. More importantly, the conclusion is that, perhaps, there is no “climate crisis”, and that currently-fashionable efforts by governments to reduce anthropogenic CO2 emissions are pointless, may be ill-conceived, and could even be harmful.


The highest form of patriotism is serving your nation. The highest form of Science is keeping an open mind.

Alternative Energy: My Blogfather Weighs in…

Steven Den Beste provides an update of his scepticism of alternative energy in this update to his USS Clueless work...

The problems facing “alternate energy” are fundamental, deep, and are show-stoppers. They are not things that will be surmounted by one lone incremental improvement in one small area, announced breathlessly by a startup which is trying to drum up funding.

The way you can tell that a fan of “alternate energy” is a religious cultist is to ask them this question: If your preferred alternate source of energy is practical, why isn’t it already in use?

Why not? Because of The Conspiracy™. The big oil companies don’t want it to happen, and have been suppressing all this live-saving green people’s energy all this time for their own nefarious purposes.

As soon as you hear any reference to The Conspiracy™, you know you’re talking to someone who is living in a morality play. That isn’t engineering any more, that’s religion. And while religion is an important part of many people’s lives, it has no place in engineering discussions.


Hattip: Dean Esmay

What Can We Do to Lower Oil Consumption?

Like most Americans I’m concerned about high fuel prices. I’m also worried about America’s energy dependence on Middle Eastern regimes and nutcases like Hugo Chavez in Venezuela. I’m a big Excel geek too. Of all the software tools that I’ve used for fun and my job, I like Excel the best. So it should come as no surprise that I’ve turned to it to help make sense of the oil crunch.

In the short term, what can we do to lower oil consumption? In this spreadsheet (it has a simple macro but I made it) I lay out our current consumption along with three scenarios that examines the impact driving more fuel efficient cars and driving less have on gasoline and oil supplies. To do this I rely upon the following:

Here’s what I know:
• The number of gallons of gasoline refined from a barrel of crude in the USA.
• The current gallons of gasoline used per day in the USA.
The average MPG for all US cars and light trucks.
• The US population.
Number of new cars sold in the USA in 2007.
• Number of cars & light trucks registered in the US in 2006
Number of licensed drivers
Age structure of the American fleet (2001 estimate)

These variables allow me to calculate the following:
• The number of barrels of crude consumed in the USA per day for gasoline.
• The number of miles driven per day per licensed driver.

What I don’t know:
•2008 fleet mpg (assumed to be 17.1 mpg)
•Future consumption
•Future demand growth
•Future production

Because I don’t know the future, I am limiting the scope to the current time (for the less driving scenario) and the next two years (allowing me to use the age structure of the US car and light truck fleet.)

Assumptions
• No diesel or heavy truck statistics. The focus is only on gasoline usage.
• Flat world wide production (short term).
• Flat worldwide demand (short term).
• No disruption of oil supplies.
• No change in age structure of American fleet since 2001.
• Fleet MPG adjusted to EPA’s 2008 method (decreases historical values by 17.4%)
• I’ve used the harmonic mean to calculate the fleet average. This is the same function used by the EPA.

These are all big assumptions, but I need to make them to grasp our situation. At the very least I would expect to get a decent approximation of the actual numbers – say a variance of +/-25% for any given statistic.

So what do we learn by playing with the numbers?

It should come as no surprise that driving less has the greatest impact on consumption since no gasoline is expended. The problem is that people are already driving an efficient routes from point A-B because longer routes take more time, and people have been trying to save time since cars became a necessity. Perhaps I should add this as an assumption, but I don’t see people taking roundabout ways while running errands or commutting. But there must be at least a few percentage points in inefficiency or “slack” built into our daily driving. This assumption is based on the belief that everyone is not a delivery or taxi driver who knows the most efficient routes from point A-B.

If we cut 5% from the per capita mileage, we cut our gasoline usage by 5%. However things don’t move 5% closer. So how can we save that 5%? Based on what we know we find the average daily driving for licensed drivers is 32.9 miles. 5% of that is 1.6 miles/day or roughly 12 miles/week.

Is this realistic? 1.6 miles a day is roughly 30 minutes of walking or 10 minutes of biking. Add in mass transit and more efficient trip planning and I would estimate that it is realistic with the following caveats.

First it’s easy to imagine everyone walking or riding bicycles during nice weather, but imagine riding a bike in the rain. If we stay at home on a rainy Tuesday we can’t drive more on a sunny Wednesday to make up for the lost time without conserving Tuesday’s 5% on top of Wednesday’s.  Second we could capture some wasted mileage through better routing and trip planning mentioned above. Third, 41.5 million Americans have gym memberships. Assuming that most of those are licensed drivers, there is at least a percentage point or two of slack that could be gained by substituting walking or bicycling for treadmills and stair machines. Finally health care professionals recommend the benefits of walking or bicycling in the community, but do their communities support increased pedestrian activity? In my neighborhood there aren’t sidewalks along the major streets, forcing people to walk on the shoulder of roads where traffic zips by at 50 MPH, and many streetlights lack crosswalks. And I live in the heart of suburbia. Infrastructure changes would therefore be required.

The fastest way to cut that 5% would be for companies to allow those who can to do so to telecommute one day a week. While the majority of the workforce would not be able to do this, telecommuting would allow some to save 20% of their commute. As firms are recognizing that it can earn them some “green” credentials, it may become more common; however only a minority of the workforce works at a job where this is physically feasible let alone tolerated.

So what does that 5% in savings get us? We drop from 388.6 million gallons of gasoline per day to 369.7 million. That’s a savings of about 900,000 barrels of crude used domestically, or 1.1% of the world total. Given the fluctuation of supply and demand globally, a percent drop in demand would have little impact on prices.

So based on our numbers so far, a 5% cut in gasoline consumption would have little affect on world crude oil prices. Could we do better with a cut of 10%? Of course, but lopping off 3.2 miles a day means that we would have to make up for that with an hour of walking or 20 minutes of biking. 7 days a week, 365 days a year. We’d be a much fitter nation as a result, but I just don’t think there is enough impetus for Americans to cut back that much. Perhaps it will be there if and when gasoline hits $6/gallon, but at this time I just don’t think it is realistic.

What about driving more fuel efficient cars? Since we know the age profile of vehicles on the road today we can estimate the impact of purchasing more fuel efficient cars over the next two years. Because vehicles 2 years old or less constitute less than 14% of all cars on the road, it takes time for their fuel efficiency to have much impact on overall gasoline usage. If all vehicles sold over the next two years (30.4 million) averaged 25 mpg, we would use 6% less gasoline in the USA but lower the worldwide demand for crude oil by 1.4%.

Is that 25 mpg average realistic? Unfortunately no. According to FuelEconomy.gov only 21 cars meet or exceed the combined 25 mpg – a small fraction of the hundreds of models sold. The selection of models is limited as well: small cars, family sedans, hatchbacks and station wagons. No pickup trucks or SUV’s, and while some may not need one of those particular models, others do. In addition without delving into production numbers for these vehicles it is doubtful that 15.7 million of them could be supplied. For example as of November 2007 Toyota had sold just over 500,000 of its hybrid Prius in the United States, with predicted sales of 200,000 in 2008.

Given these constraints perhaps a 20 mpg threshhold is more realistic. Unfortunately savings in 2 years would be 2% of US gasoline consumption, which in turn would lower worldwide crude demand by half a percent. There doesn’t seem to be much bang for the buck there.

Does this mean that buying more fuel efficient cars is futile? Of course not. If anything the incremental gains in fuel efficiency of vehicles are longer lasting than any changes in our behavior. If the price of gasoline falls – which it will inevitably do – it will be easier for people to hop into their cars and drive than to walk, bicycle or combine trips. The gains in fuel efficiency for the entire fleet are as hard to erase as they are to accumulate, so there is no reason not to buy the most fuel efficient vehicle you can.

Changing the fleet is where the big gains are found. If we start over the next two years to sell cars averaging 20 mpg, followed in 2012 by cars averaging 22 mpg, in 2016 25 mpg, and in 2018 selling cars with an average of 30 mpg, by 2020 we will have a fleet average of 23 mpg. That fleet would consume 26% less gasoline, lowering global crude demand by 6.1%. Add in a healthy 5% less driving, and the result is cutting gasoline demand in the USA by a third.

Those are significant savings to the pocketbook as well as to our national defense, and if you think that 2020 is distant just remember that it’s as far away as 1996. Unfortunately if we are to switch to the long term benefits we also must revisit our assumptions. Demand for oil will continue growing in Asia for the forseeable future; demand will also grow along with the population in the US.

Will supply grow to meet that demand? The answer depends on whether you believe in peak oil or not, and that question, discussed here, is beyond the scope of this article which focuses on the short (2 year) term. Demand could be affected by plug-in hybrids and electrics like the Chevy Volt and others. While electric cars would constitute an insignificant portion of the fleet during the early part of the next decade, they would reduce demand in our equations by decreasing our pool of licensed drivers. Oil supply could be boosted by political decisions allowing drilling in sites previously ruled off-limits.

What’s the answer? In the short term it is to drive less, walk or bicycle if possible, plan your errands and when it comes time to buy a new car, purchase the most fuel efficient one in its class. Most likely gasoline at $4 gallon is already forcing you to do much of that already. But it took time to get us into this mess and it will take time to get us out of it. What is needed most on our part is determination to help ourselves and the guts to pressure our leaders in goverment.

What they must do is get out of the oil business by stopping oil and gas subsidies on one hand, and opening up drilling in previously untouched areas on the other. But I am not stupid or anti-environment. The government must monitor these efforts closely to make sure that the best safety and environmental standards are applied at each well head, and on each pipeline.

Would setting CAFÉ targets help? I believe that CAFÉ targets work best when gasoline is cheap; when it’s expensive there isn’t a need for them. SUVs and light trucks are languishing on new car lots. Dealers are practically having to give them away, while they can’t keep high MPG cars like the Prius and Honda Civic on their lots. Given that the price of gasoline will eventually fall, it would make sense that the government set the targets now at a time when the car industry has no problem meeting them in anticipation of the time when gas falls. While I’m no fan of excessive government regulation of the market, what CAFÉ targets do is smooth out demand between times when efficient vehicles are in demand with the times they aren’t.

Fight an Unconventional War Unconventionally…

Here’s an idea. The Taliban are now working with the drug lords to provide protection to the poppy crop in exchange for a cut in the revenue.

 Why don’t we buy the entire crop – preferably directly from the farmers – and destroy it? In exchange we handle the protection. According to the CIA Factbook, the opium trade is worth $4 billion. That’s probably an inflated street value. Would it be worth say $2 billion a year to stabilize the country – as well as get Afghanistan opium and heroin off the streets?

The Council Has Spoken: July 11, 2008

Congratulations to his week’s winner:
Non-Council: Bishop Hill, Is Gun Control Behind Our Loss of Civil Liberties?

And a special thank you to the Council for awarding my post the title for this week’s council posts,

American Whining and the Culture of Dependence. Full voting results are here.

It is an honor and I humbly appreciate it.

More Proof of an Oil Bubble

Like we need more… “Are We in the Peak of an Oil Bubble” by Lisa Zyga.

The scientists looked at the data in the context of three different models, and all three models revealed the existence of a “log-periodic power law,” in mathematical terms – in other words, a bubble. In economic terms, the researchers explain, a bubble refers to a situation in which expectations of future price increases cause prices to temporarily rise without justification from fundamental valuation.

Further, the models showed that the bubble is close to a local peak, and we may have even reached the peak already. On the other hand, the researchers noted, this critical peak may also be embedded in a larger-scale bubble, one that could develop in the coming months and years.

American Whining and the Culture of Dependency

The AP wire story “Americans’ unhappy birthday: ‘Too much wrong right now’” link appeared the day after Independence Day. The story uses an Optimist Club meeting to discuss the general feelings by Americans that their nation is “on the wrong track” and that “something must be done.”

... talk turns to the state of the Union, and the Optimists become decidedly bleak.

They use words such as “terrified,” “disgusted” and “scary” to describe what one calls “this mess” we Americans find ourselves in. Then comes the list of problems constituting the mess: a protracted war, $4-a-gallon gas, soaring food prices, uncertainty about jobs, an erratic stock market, a tougher housing market, and so on and so forth.

One member’s son is serving his second tour in Iraq. Another speaks of a daughter who’s lost her job in the mortgage industry and a son in construction whose salary was slashed. Still another mentions a friend who can barely afford gas.

Joanne Kontak, 60, an elementary school lunch aide inducted just this day as an Optimist, sums things up like this: “There’s just entirely too much wrong right now.”


Some things Americans should feel unhappy about. The skyrocketing cost of gasoline is a big part of the pessimistic mood gripping the country. Seeing the price blast into the stratosphere through $4 a gallon heading into $5 gives us the feeling of a linear progression. What will stop it from hitting $6, $7 or more? People feel helpless and believe that there is nothing they can do.

But a dose of reason is in order.

First the ministers of OPEC themselves have stated that there is a bubble in oil right now. Contrary to what many think, OPEC does not like bubbles because it recognizes that high prices bring new supply onto the market as oil is extracted from deposits that were considered unprofitable at $70/barrel. Add in the cut in demand brought by higher prices and a collapse in oil prices is inevitable. While bubbles irrationally overinflate prices, collapsed bubbles (“corrections”) inevitably overshoot the true value of commodities as producers flood the market with product in order to get the best price they can before the price declines more. This floods the market further, and coupled with decreased demand the effects of collapsed prices take a long time to clear.

There are several factors that play into this including the concept of “peak oil” and political meddling with markets – such as the Indian and Chinese government subsidizing of petroleum products and environmental opposition to drilling in ANWAR and use of oil derived from shale. “Peak oil” remains a controversial topic and the political meddling with markets inevitably breaks down from the high cost of subsidies and the political cost of keeping supplies off the market.

Like all bubbles – tulips in the 17th century, precious metals in 1980 and Internet stocks in 2000 – the oil bubble will pop. The key is to curb our tendency to demand that government “do something” since such meddling could only make the situation worse. Anyone who remembers the lines at filling stations during the Carter administration should be surprised at their lack during the Bush administration. The difference is due to the Carter’s meddling in the market with price controls, something that Bush – for all his real and imagined faults – has not instituted.
Contrary to what some politicians have said, there are no magic bullets that will help Americans with high fuel prices. Options include driving less, buying more fuel efficient vehicles including those with manual transmissions instead of automatics, and for those who heat their homes with oil, lower the thermostat. But these options take time to work, and they don’t elect politicians to office.

Rising home prices caused by the real estate bubble gave home owners a sense of wealth that encouraged indebtedness and excessive spending. Now that the bubble has collapsed, home owners are left with the bills at the same time they watch properties sell in their neighborhood for less. Those with adjustable mortgages are in their own private hell as they are squeezed between higher payments, declining values, and higher fuel costs. Those who can get some relief through refinancing; unfortunately for many in thjs difficult position bankruptcy is not an option anymore thanks to the bankruptcy “reforms” sponsored by Democrat senators Joe Biden and Tom Carper. The only option is to walk away from their homes, which eventually leads to more properties on the market, driving down real estate values in a self-reinforcing cycle.

For those that keep their homes there aren’t any easy solutions. Home values will continue to decline until the supply of homes is met by demand for them. In the meantime homeowners should pay down debt and save more so that they can leap at the buying opportunities that will come around once the real estate market has bottomed out.

“There are so many things you have to do to survive now,” says Larue Lawson of Forest Park, Ill. “It used to be just clothes on your back, food on the table and a roof over your head. Now, it’s everything.

“I wish it was just simpler.”

Lawson, mind you, is all of 16 years old.
...
Stay-at-home-mom Heather Hammack grapples with tough decisions daily about how to spend her family’s dwindling income in the face of rising food costs. One day, she priced strawberries at $1.75. The next day, they were $2.28.

“I could cry,” she responds when asked how things are.

“We used to have more money than we knew what to do with. Now, I have to decide: Do I pay the electric this week? Do I pay for gas? Do I get groceries?” says Hammack, 24, who lives with her boyfriend, a window installer, and their 5-year-old son in a rented home in rural Rowlesburg, W.Va. “You can’t get ahead. You can’t save money. You can’t buy a house. It just stinks.”


When you have a sixteen year old whining about how complex life is, or a 24 year old stay-at-home mom crying about a $.53 increase in the cost of strawberries, then it’s time to open up a can of some old fashioned Protestant work ethics and values.

First off, Ms. Hammack has bigger problems than $2.28 strawberries. Getting married would save some on taxes, but the best thing to improve her family’s situation would be for her boyfriend to get training to do a job that pays more than window installing. Another idea would be for them to leave the rental home for a cheaper apartment. How much space do three people need after all? There are existing job training programs for low income wage earners; her boyfriend needs to take advantage of them. I am an advocate of stay-at-home parents; maybe her boyfriend should be the one taking care of her child at home if Heather Hammack can earn more than he can on the current job market. Regardless, it’s not the federal government’s job to improve their lot in life – it’s theirs! As for the sixteen year old, what perspective can he possibly offer on our current economic situation?

I’ll be honest and state that I am earning the same wage today that I was eight years ago. Am I angry at the government for that fact? No. During those years I invested time and money in building up my Wife’s career. She’s now in her last year of residency and poised to double our family income.

This is not the result of a government program to improve our lives; it was a conscious decision we made 10 years ago. Like any investment it was fraught with risk: What if the Wife doesn’t pass the MCAT? What if the Wife doesn’t get accepted into med school? What if the Wife can’t find a residency program that wants her? What if the value of the Wife’s specialty decreases while she’s in school and residency? And the biggest risk of all, what if we get divorced?

I switched careers five years ago because I viewed my old one as becoming technologically obsolete. Again there was considerable risk to doing this; developers in my specialty could do better as others left for greener pastures. Has it worked out? Aside from the importation of H-1b/L-1 labor that depresses my wages (an example of more government meddling in the labor market), whether it has or not is not the government’s fault. I made the choice.

Since the Bush administration was pilloried in 2005 for its slow response to Hurricane Katrina, some politicians including Barack Obama and leading Democrats like Harry Reid and Hillary Clinton have encouraged Americans to expect more from the federal government. This is taking the culture of dependence which saw Katrina victims waiting for help from the federal government instead of relying upon state and local governments and even themselves. The Democrats see such dependence as an avenue to power, a strategy that has been successful for them in large cities such as Chicago, Philadelphia and San Francisco. Now they want to take that patronage machine national, and turn the entire country into Chicago or Philadelphia.

Republicans are not spared blame for this malaise. Instead of extolling the benefits of free trade, lower taxes and smaller government, they expanded government entitlement programs during an economic boom fueled by trade while ignoring the pleas for lower taxes and responsible government from the Republican base. They became RINOs – Republican in Name Only. By doing so they allowed Democrats to portray the party as out of touch and corrupt – the very criticisms that the party’s base was leveling at the party leadership. As a consequence Democrats are on the attack using empty words like “hope” and “change” and the GOP plays the Democrats’ game by reacting to the statements instead of attacking the Democrats with their own rhetoric. “Change? You’re going to need it to pay your taxes when the Democrats win in November.” “Hope doesn’t stop al-Qaeda from slamming aircraft into skyscrapers.” But Republicans are in disarray and many in the base are waiting for the clobbering in November to return the party to its roots.

Democratic politicians do not know anything except the culture of dependence and entitlement. It is the culture they learn in the corrupt political machines of the cities, and from the agricultural subsidies they feed Agribusiness in the Midwest. They peddle a poison that paralyzes its victims and saps them of their humanity, turning them into slaves beholden to their masters that feed and clothe them. “Ask not what your country can do for you, ask what you can do for your country,” has become “What will my country do for me?”

The solution is not more government but less. It is the solution that ended the economic malaise of the Carter administration. Less government was the mantle worn by Ronald Reagan when he took office in 1981, and it remains the solution a generation later when Reagan’s old foes from the Carter administration are poised to retake the presidency under Obama.

Americans must counter the rhetoric of more government with a demand for personal responsibility. It is not the government’s job to make you happy; it’s job is to create the conditions that allow you to pursue happiness. Americans have forgotten this, and there is no Reagan around to remind them.

Being Free isn’t easy. With freedom comes responsibility, and Americans don’t seem to bear the latter very well. Weathering the financial storm that lays ahead with the continued collapse of the real estate and stock markets as well as the rising cost of energy and food will be tough. However electing politicians who promise “change” and “hope” will only place people in power with prior experience at really screwing the economy up. The price of energy will come down; home prices will stabilize if only Americans take responsibility of their own situations and not expect the federal government to fix it.

But will we?