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Let Them Eat Oil

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As I write this, BuzzFlash is asking if it is time for a French Revolution. I say no, for there is never a good time for a French Revolution. Too many adverse reactions always emerge from total chaos. For the French, it was Napoleon. But it is a fair question to ask right now, because such events happen only when there are no other options remaining for the "small" people to pursue toward the redress of their grievances against the powerful. Just ask Tsar Nicholas II how it works; he knows!

We may well be in the moment of such a time. Despite all of the recent Happy Talk in the investor propaganda media regarding an improved economy, the AFL-CIO reports: "250,000 unemployed workers a week are losing their unemployment benefits because they can’t find jobs." And as AFL-CIO President Richard Trumka reminds our federal Solons, "…both Republicans and Democrats must remember that, come November, voters will be thinking about one thing: jobs." No doubt! The New York Times reports that just between June 1 and June 14 of this year, "325,000 jobless workers have been cut off" and "that number will swell to 1.25 million by the end of the month."

"Somebody DO something," shout the people. 60 percent of Americans — according to a June 11-13 USA Today/Gallup poll — say they would favor “additional government spending to create jobs and stimulate the economy.” Yet the desired relief is nowhere to be found. Instead, as Ann Davidow queries, "…what exactly is so ‘free’ about government subsidies that underwrite the business ventures…?

A local example of this problem (for me and my fellow Californians, that is) can be seen in the California state budget. Millions of tax dollars are spent each year subsidizing business activities while needy people can expect their benefits to be cut or eliminated. Hollywood alone gets $100 million a year, allegedly to keep productions in California and save Los Angeles studio workers their jobs. But the State of New Mexico offered $40 million in tax rebates to Hollywood production companies to film in their state, and discovered in a 2008 review of the practice published in Governing that that for every dollar spent, it received but 14.4 cents in return. Even a client of Bernie Madoff would see this as being a bad investment!

Hollywood could care less about a measly $100 million subsidy from California, and the piddling $40 million from New Mexico, if it had to be surrendered. They only "earned" a record $10 billion dollars in 2009. This is nothing compared to what the energy industry and Wall Street see each quarter! Yet they also continue to be subsidized by the federal government while Main Street languishes from neglect — if not destroyed by criminal abuse.

Matt Bai, writing in The New York Times, asks why so much popular anger is directed at Obama, and decides that the people expected Obama to defend them against the predation of large corporations only to discover that he isn't about to do so. Instead of pushing the Congress for viable economic relief for Main Street, he has "Just Words" to offer.

This leads to a bad image problem for Obama. NYT's Charles Blow sums up the problem by observing, "There is a lot of space between a caricature and a man of character."

Russell Simmons, founder of GlobalGrind.com, seems to be rising to fill the empty Gucci boots intended for the Champion of the People. In a letter sent to the Members of the Financial Reform Conference Committee, Simmons notes that he is "the owner of a debit card company" and seeks to advocate against the passage of the Durbin Amendment. "No one has yet been able to tell me how Senator Durbin's amendment will keep the under-served from being hurt by higher fees," he thunders, "or how the amendment will ensure lower prices for consumers instead of bigger profits for merchants."

Stand Barack Obama up against Russell Simmons and tell me which is the caricature and which is the man of character.

I believe that I can name the caricature the defines Obama: the star afraid of casting a shadow. Obama has allowed the financial fears of the Republicans and Blue Dogs regarding the growing federal debt to limit his range of action in easing the fiscal plight of the nation. Yet even the conservative Economist stands up for more stimulus for the economy, declaring:

The anxiety is that markets will lose confidence in US government debt…compared to what? What assets might come to seem less risky to spooked investors than T-bills? Will investors shift to German government bonds? Japanese bonds? Chinese bonds? Gold? Real estate? It is presumably possible for the US government to run a large enough deficit that such assets might come to seem less risky than Treasury bills, but judging by the bond markets, we seem to be nowhere near that point. [italics mine – R]

The Maoists over at London's Financial Times share this view, offering as evidence the fact that "The stock of money fell from $14.2 trillion to $13.9 trillion in the three months to April, amounting to an annual rate of contraction of 9.6pc." and quoting Professor Tim Congdon from International Monetary Research, who shouts out that "The plunge in M3 has no precedent since the Great Depression."

For all of you readers out there who play economists on this blog, I believe this means that the money supply is in severe contraction, which by definition precludes the inflationary rhetoric of the Repubilcans and Blue Dogs standing athwart the stimulus of the economy and yelling "STOP!". Whose heels are pressed against whose throat, Rand?

Elsewhere in the Economist article, support is offered to Paul Krugman, who fires off his latest J'accuse against "self-described deficit hawks" (citing Sen. Ben Nelson specifically) who are "eager to slash benefits for those in need", calling them "hypocrites" over these concerns disappearing when the tax breaks of the wealthy come up for review. Krugman's angst regarding Nelson is defined as Nelson stating that $77 million for unemployment relief was unaffordable after voting for the first Bush tax cut, which provided $1.3 Trillion in relief for those who need it the least.

Yet Obama seems determined to be one of these hypocrites, further enhancing his caricature status. Huffington Post reports that Obama is doing the bidding of the Business Roundtable in pressuring Congress to strip provisions intended to provide the SEC authority to "allow investors to have proxy access to the corporate decision-making process". Those Commie pinkos over at that Marxist-Leninist propaganda rag known as The Motley Fool are generating a petition campaign in support of the proxy rights measure, declaring as they rush to the barricades that "As owners of the companies in which we invest, it's time for us to demand the authority to weigh in on how they are run."

Sacré bleu‎! Tish! That's FRENCH!

While not satisfying Gomez Addams, Obama is also not alone in disappointing Americans. Mon Dieu! Despite a clear need to cut unnecessary largess from the budget, 22 Senate Democrats aided a united GOP faction to defeat the elimination of generous federal tax breaks for big oil companies. Why? Because U.S. Per Capita Oil Consumption Plummets and threatens their meager profits from the first quarter of 2010!

Meanwhile, back on Wall Street, the banksters were high-fiving after their investment in the New Democrat Coalition of the House delivered a handsome return by rescuing their endangered derivatives from the dreaded regulatory monster. Who cares if FDIC expects many more bank failures due to the malfeasance of these candidates for Satan's chapter of Gambler's Anonymous?

But the topic of the moment is the Gulf and those affected by BP's criminal negligence and industrial murder. Americans are "demanding a major improvement" in BP's responsibility in their actions, both toward their shareholders and to their society. Obama has tremendous leverage to impel compliance with these wishes, but we all know he isn't man enough to use it. Why should he care if one of Louisiana's major income generators has been shut off, not just in 2010 (the 45-day shrimp harvest season began right as Deepwater Horizon converted itself into the Creature of the Black Lagoon), but "for years to come."

Even affected oil workers ponder their future, discussing among themselves the potential for green energy technologies even though they don't feel there is much of a future for them down there. Says one, “The only problem I see with it is, it’s so expensive to generate energy by other means, whether it be wind or geothermal or whatever.” He clearly is full of oil company kool-aid and other noxious substances, for as author Tom Zeller Jr. notes:

"Those cost differentials, of course, don’t always reflect a variety of externalities tied to fossil fuel extraction — including increased health-care costs arising from smog and other pollution, for instance – or the price tag associated with polluting bodies of water like, say, the Gulf of Mexico."

In light of Arizona's lead in expelling foreign farm workers from our borders with their usurpation of federal immigration policy, one would think that the affected residents of the Gulf would be looking into other employment options. Federal stimulus money is available to hire 3100 workers for an average of $8.68/hour in Haley Barbour's Mississippi. And the blueberry farmers of North Carolina –stung by fines for hiring juvenile workers and underpaying their crews- need workers and are offering at least $7.25/hour. But they better hurry, for unemployment claims are increasing again, and about 8000 Los Angelinos are about to lose their subsidy funds because Congress won't extend them. They think you are paying too much in taxes now.

We won't disabuse them of this thought, for it might be redirected into a more productive reduction in federal expenditures. Rep. David Obey, who decided not to run for re-election this fall, is attempting to do the right thing on his way out the door of the House for the last time. He's attempting to force a showdown between guns and butter in the budget. But we all know that Eisenhower's warning about the military-industrial complex was already too late when it was delivered in 1961. Thanks for playing, Dave.

Getting back to the current course, BP isn't out of our sights just yet. BP has been pressuring the Canadian Parliament for drilling rights in the Arctic even as the pollution of the Gulf increased dramatically. Unlike their Yankee neighbors, the Canadians asked all the right questions BEFORE allowing BP to claim carte blanche to Drill, Baby, Spill. This has proven to be the wise decision now that the news is out that BP could repeat their virtuoso Gulf performance up in Alaska's Prudhoe Bay:

"The condition of the [Prudhoe Bay] field is a lot worse and in my opinion a lot more dangerous," said Marc Kovac, who has worked for BP on Alaska's North Slope for more than three decades. "We still have hundreds of miles of rotting pipe ready to break that needs to be replaced. We are totally unprepared for a large spill."

Toke on THAT joint, Sarah Palin! No stems, no seeds that you don't need! See how high you get from THAT! Eight miles high at least!

Now, where have we heard this complaint about a lack of preparedness before? Oh, yeah — from the guy who wanted his life back! Whatever floats your boat, Tony! Maybe Charles Blow can fill your slack sails with his caricature observation cited above.

Since your friends want clear sailing between themselves and you, you might ask Abby Sunderland how to sail a craft with a broken mast in high seas. You might need to know how once the people of the Gulf set you adrift in The Bob to bob about in the mess you made. You know she's seaworthy — she came in fourth!

Oh yeah – Happy Fathers' Day, Tony! It's a disaster! It looks just like YOU!

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  • John Wilson

    We have a consumer dominated economy, not a producer dominated economy, therefore,subsidies should be directed at consumers not producers.

    The poorest consumers are the best targets because they have to spend everything so they have the largest economic multipliers.

    Subsidies directed at producers do not produce jobs because employers will not hire people if they don’t have markets to sell to. It’s a waste of money.

  • I’m with #2. Republicans are just Democrats in louder clothing. Thanks to career politicians, we are ALL up the proverbial creek with no paddle.

    Excellent job, Realist. I might not agree 100% with you, but you have a way of hashing it out.

  • John Wilson

    Good article.

    The combination of our federally subsidized and nurtured business community and cutting the ground from under regular citizens tends toward slavery.


    When my unemployment benefits run out and I lose my house there is a good chance I will lose my family as well. It’ll be better for them because then they will be able to apply for welfare benefits. There are no jobs.

    I blame the politicians, of all stripes, for my lost job with no jobs to replace it.

    I blame the politicians, of all stripes, for the bubble which caused my home to fall in value over 300%.

    And when I lose my family, my home, my way of life and have nothing else to lose it will be those same politicians, of all stripes, I will blame.

    With nothing left to lose I see nothing that will stand in the way of justice. I build their houses. I feed their families. I walk the grounds of their enclaves keeping the scary things at bey. And should they so blithly allow those who have served them well to perish I see no reason to not see them and their ilk as enemies to myself and those around me I cherish. And I will treat them as such.

    The time for words and civil discourse has passed.

  • Glenn Contrarian

    Good article, Realist! It’s nice to see someone who’s objective enough to point out the problems on both sides of the aisle. Well done!