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Vet67to82 (< 20)

Taxes and the Economic Stimulus



February 09, 2009 – Comments (2) | RELATED TICKERS: BAC , DXO.DL.DL2 , DHT

  The wait for the stimulus has an emotional roller coaster effect, if the economic impact of how the numbers are reported isn't made clear,  as it will affect our markets, and those around the world, it's only going to get worse.   Many  families of different sizes and income, based on the number of incomes in the household, and the number of persons in the household, worry what the tax burden will be. 

   The United States gov't has lots of assets the American public, even the world often forgets about. It's not just the gold in Fort Knox, it's the millions of acres in our national parks, it's the crude in the Strategic Petroleum Reserve (SPR) ...  Every country with ocean frontage has, by international law, a 200 mile economic zone to explore, develope, and use to that country's benefit, fishing, shipping, commodities exploration, etc.  The USA has a LOTs of coast and millions of miles of economic zone, the gov't has chosen to block oil exploration ... and only recently seemed to wake up.  Technology has come a long way, and the search can be done without harm to the environment. 

 Why can't our gov't look at all it's assets and strive, where econonomically feasible, to use those assets to earn income.  Income to offset and reduce the tax burden and the debt loads.  I'm sure the People would feel a lot better about the stimulus if the gov't focused their attentions on all the assets and explored ways to get those assets to produce income to relieve the burden on the taxpayers.  The crude in the SPR produces no income.  We should mandate ( We paid for the crude in the SPR)  the US gov't sell crude from the SPR when crude prices overheat, forcing prices down, and refill it with the lower prices.   Profit opportunity 101. 

 Back when crude hit $100+, I started e-mailing elected officials.  I suggested selling some of the crude in the SPR, the SPR was worth $97 Billion at the time I made the suggestion. I said to  look at mothballed military bases near areas of the country that are having power problems and build new nuclear power plants on the bases, retain the ownership of the plants, and sell the power as a supplier to the power companies.  The US gov't would have a steady stream of income, and could re-fill the SPR from the earnings.  The new nuke plants would put people to work and reduce our need for crude.  I also pointed out that I believed the price of crude was overheated, was going to damage the global economy if it didn't drop, and the gov't's sale from the SPR would hasten that drop, benefitting the world.  I got some nice thank yous ... they'd consider my concerns.  But, nothing happened, and rounding the numbers for sinplicity sake,  look what the gov't lost:
 Crude hit, then dropped from $147 to it current $40/bbl.

  (1)  $107 x 700 million bbls in the SPR  = $75 BILLION lost through missed opportunity.  

  (2)  Plus, the missed oportunity to head off the global meltdown, the job losses, and even the need for the stimulus ... 

 Inspite of demand, the US Mint keeps halting the sale of gold coins (excuse: lack of blanks - with all the gold bought and paid for in FT Knox? ) People are willing to pay the premium (income to the gov't) , and the gov't lack of motivation to make it happen should concern us all.   

  We need a gov't that looks for economic opportunity like a good business does.                   

2 Comments – Post Your Own

#1) On February 09, 2009 at 1:20 PM, devoish (71.10) wrote:

Wasn't the USA buyers of crude for the SPR at $120? Faced with the fear of shortages didn't GWB fill the reserve at very high prices?

(Your way certainly seems smarter in hindsight)

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#2) On February 11, 2009 at 3:35 PM, StockSpreadsheet (67.28) wrote:

I don't like the idea of using our National Parks to make money.  I don't mind them selling tickets for entry or tickets for camp sites.  However, the same type of thinking, (how to make the National Parks profitable), let to the Hetch Hetchy dam that inundated a whole valley with scenery equivalent to Yosemite and took that national treasure out of action as a park for the far future.  This has led to stress on Yosemite since all the visitor now must go to the one valley instead of being able to dispurse over a wider area.

Also, in regards to nuclear, the refining of spent fuel is only in its early stages or they would not still be building the repository in Yucca Mountain, as there would no longer be a need for it.  Until we can reprocess 95% or more of spent nuclear fuel, it cannot really be considered a green power source and until we have a place to store the toxic waste, (for 100,000 years or more until it becomes safe), large-scale building of nuclear plants is not a good idea.  However, if you wanted to turn the old, unused military bases into wind farms, solar farms or even install some gas-powered generators, (since we have lots of natural gas in the U.S. and can make more naturally), then I think you would have a good idea.

As for oil companies now being clean and not damaging the environment, remember that BP just recently spilled thousands of gallons of oil in Alaska due to a rupture of the pipeline caused by poor maintenence.  Also, one of the reasons that New Orleans got hit so hard by Katrina is that all the oil pipelines running through the marshes south of New Orleans, and the leakeages from those pipes, killed off the plant life that was holding the soil and just laying the pipes added to the soil erosion, so now the marshes that used to protect New Orleans from storms have been greatly reduced in size, making the damage to New Orleans from Katrina much worse than it would have been a few decades ago.  I'm not saying that we shouldn't explore for oil off of our coasts, but that exploration has a lot more consequences than you suggest with your statement "the search can be done without harm to the environment".

As for the gold coins, maybe the government has been reading TMFSinchurana (sp?) and believes gold is going to $1,500 or $2,000 an ounce soon and want to save their gold to sell it off at a higher price?  Don't know anything about it, but could be a possibility.

I think that one thing where I agree with you would be that the government should run itself more like a business.  There is a lot of waste and duplication in the government.  You might need to get permits from 12 different agencies when you should only need to go to one.  The Mint prints our money, the Treasury Department sells T-bills and bonds and the Fed is supposed to oversee that banks.  Why not consolidate that under one agency in the Treasury Department and cut out layers of beaurocrats?  We have a Department of Defense and a Department of Homeland Security.  Shouldn't the Defense Department be in charge of our security?  Isn't that what defense is all about, security?  Also, how many managers are in the Social Security Department for every case worker that actually handles the actual work.  In industry, it is probably 10 workers per manager, though some average a 5:1 ratio.  I would bet that in the SS Dept. that the number probably is closer to 1:1.  That number should be changed to have more workers and less managers.  Also, a lot of our government computer systems are grossly outmoded.  Last time I read a report on it, most of our air traffic control systems were using computers from the '70's.  Planes need to fly miles apart because the system can't handle too many planes at one time.  With updated computers and updated radar, the planes could safely fly with only about a mile separating them and the capacity of our airports could be greatly increased, (many more takeoffs and landings possible).  (I might not have the exact distances correct for airline spacing, but the effect is the same.)  It is in areas like these that I think the government should adopt a more business-like attitude.

Just my thoughts.



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