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Archive for the ‘Regulation’ Category

Top Five Oil Executives – FIRE them all!

In Opinion, Regulation on May 13, 2011 at 3:36 pm

I’m disturbed that not one of the oil company executives who recently were grilled by the US Senate had the courage to tell the truth about the proceedings in that hearing room.  Asking those honest business men to defend themselves against false charges, asking them to sanction their own public humiliation in front of a bunch of spineless politicos is disgusting and unAmerican . . . but so is not defending oneself when unjustly attacked.

I suspect that they think that their public/investor relations team is correct when they advised the CEOs to bite their tongue and take it.  But in the long run, they do a horrible disservice to their shareholders when they let the companies’ assets be confiscated by the government – little-by-little-by-little.  To stand by and watch, so long as their salary isn’t at risk, is grounds for termination.  They should all be fired immediately, if not sooner, and replaced by men or women who know that making a profit is not grounds for punishment or derision.

Dancing with the devil invariably strips one of the power to stand up to his duplicitous, self-serving criticisms.  These companies have become dependent on government largess, so they dare not bite back.  They’ve let the government dictate the rules of their business.  Government controls when and how they drill for, deliver, produce and refine their products, because the big guys have spent decades helping the government draft more and more rules and regulations that quell their competition – and then they act surprised when their master wants to slap them around to make the voters think the government is protecting them from an evil corporation.  But, they grin and bear it, because they know the pain will only last a news cycle or two.

We need a new brand of politicians – and a new breed of corporate leaders who thrive in the marketplace without government protections – and SOON.

Regulation Revolution

In Financial, Health Care Reform, Recommended Reading, Regulation on April 16, 2011 at 12:24 pm

Wall Street Journal is on the right trail.  Labor unions will win by regulation what they can’t get by democratic or other means of policy making that hinge on the merits of an argument.  (See Editorial here)

The democrats and their bosses/enablers (union leaders) know that regulatory control is their best, most effective weapon.  The GOP-controlled the House can’t stop actions taken and rules written by any of the innumerable commissions and agencies.  Parts of the Financial Regulatory Reform and Health Care Reform laws are going to be used against all of America’s businesses and individuals to revoke liberties and freedoms we thought were protected by the Bill of Rigths.

Those laws are littered with provisions that empower regulators to do whatever they deem to be “good” and “fair”. Put those laws together with BHO’s executive order of a few months ago (HERE) and you have an all-powerful government controlled exclusively by the unelected bureaucrats of the executive branch; and the legislature has rendered itself powerless to stop it.

Congress has passed laws that grant the POTUS enormous unchecked power.  Recent laws set “goals” and establish comissions with the authority to write rules (aka laws) to accomplish those ill-conceived goals. It’s plainly unconstitutional, but no one is watching.  Instead the focus is on who or what industry shall get the next tax credit or a grant or subsidy from Uncle Sam-ta Clause.  All the while Cass Sustein is busy, behind the fog, rewriting every regulation on the books and laughing at the food fight Paul Ryan and John Boehner are having with Harry Reid and Barack Obama.

Glenn Beck and Finance

In Financial, Opinion, Regulation on March 27, 2011 at 10:31 am

Mr. Beck,

You contributed to the downfall of America on March 1 by perpetuating a couple of myths.

First, oil speculators CAN NOT force the price of oil up.  In every futures contract, there is a ‘long’ side and a ‘short’ side.  For a speculator to make money on the way up, someone has to lose money; for there to be a gain on the UP position, some third party will have speculated on the opposite movement, DOWN, and his loss is the first speculator’s gain.  So, unless there is a complicit, knowing loser on the other side of the trade, forcing the price up by speculation is impossible.  To say otherwise is to feed fear, the last thing we need.

Second, you spoke at some length about “bear-runs” – circumstances where companies’ stock prices were “forced” down by short sellers.  For starters, see above – there are two sides to every trade – some one else believed the opposite, that the share prices would be stable or rise.  In addition, the examples of Bear Strearns and Lehman are telling.  The problems in those two situations were not the short-sellers; the main problems were those companies’ business plans, plans which the short sellers believed would fail.  The short sellers invested their money such that they would profit if their assessment of the plans turned out to be accurate.

In the case of Bear, that problem was worsened by US Treasury Department intervention to (1) assume all of the liabilities of Bear Stearns and (2) sell the remaining assets for a price that didn’t take that $30 Billion white-wash into account.  JP Morgan stole the company with the government’s sanction, getting to keep the assets with the assurance that the contingent liabilities that were on Bear’s balance sheet would be paid by the government – nice work, if you can get it.

With Lehman, the government doomed Lehman when it said “we’re not saving Lehman.”  (I’m not suggesting the government should have ‘saved’ Lehman – the government should have never been involved in the matter.)  We will never know if Lehman could have made it out of their over-commitments to real estate, but they were never given the chance.  Instead government intervention and mark-to-market accounting forced them into insolvency.  Eventually, Lehman filed for bankruptcy and, notwithstanding all the predictions to the contrary, the world did not end.  The market deals with failure almost as well as it does success.  It cleanses the system of bad business plans, and government intervention to keep the market from finding the bottom, so it can bounce, prolongs the pain and moves the bottom DOWN further.

Much can and has been written – much of it wrong – about the financial crisis of 2008.  More populist, anti-Wall-Street-trader rhetoric will not help the country avoid future crises.  More regulations, more government and more mud throwing will all worsen the problem and lead to worse outcomes.  A more clear understanding of how markets function – including how they function to punish failure – will make for a less interventionist government and better outcomes.

Saving money by reducing freedom

In Economics, Financial, Recommended Reading, Regulation on February 1, 2011 at 4:55 pm

Economist from GMU, Don Boudreaux, strikes again.  Please, Mr. President, let us buy whatever lightbulb (or wine, or automobile or health care) we, as free men and women, choose.

Incandescent Arrogance

Regulating by banning things for which people would otherwise pay a premium is typical of our government’s arrogance.


A Letter to the WSJ

In Financial, Letters to Editor, Regulation on January 31, 2011 at 3:54 am

Our letter recently published in The Wall Street Journal

Link here.

You smilingly call it “fine print” when you describe the portion of President Obama’s recent executive order that requires agencies to consider the unquantifiable benefits of “human dignity, fairness and distributive impacts” when weighing the costs and benefits of a regulation (“Obama’s Rule-Making Loophole,” Review & Outlook, Jan. 24). That’s not fine print. That is the very essence and the sole purpose of the executive order—to override any and all previous orders which required an honest, objective cost/benefit analysis.

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