Sunday, July 31, 2011

Obama's Indirect Tax Through Keynesian Economics

Even this tax-and-spend President has agreed that raising taxes during a weak economic period is a bad idea because it would further exacerbate an already languishing economy. But, indirectly, that's exactly what he and his previous completely Democrat-controlled Congress did through a massive "stimulus" spending program.

John Maynard Keynes, certainly the pure consciousness of Keynesian economic theory, correctly assumed and stated that the total aggregate demand (spending) in any economy is a direct result of the spending activity by (1) the public sector (state, local, and federal governments) and (2) the private sector (consumers and business). Further, he theorized that "if" private sector demand fell during an economic downturn, the economy could be righted, again, by simply increasing the amount of spending by the public sector; and, thus, offsetting any loss of demand in the private sector. In theory, it seems so elegantly simple and logical. Thus, we have the basis of "stimulative" spending that almost every Democrat believes to be the key to good recession-beating economics.

But, what Keynes (and the Democrats) totally missed the boat on, is the fact that all that stimulative spending would severely devalue our currency. In fact, in the last 2-1/2 years, the the U.S. dollar has lost more of its value against a market-basket of other key currencies than it had in the 15 years prior to Obama taking office. And, in an economy, like ours, which is so dependent on consumer spending and with a consumer who is so dependent on imported goods, this is pure economic poison.

In our economy, the consumer reigns king; normally representing about 70% of our total economic activity. The remaining 30% is comprised of a combination of public sector and private business spending. So, if, in any way, you hamper the consumer's ability to spend money by diverting a bigger chunk of their paycheck to either higher or new taxes or through higher prices, the economy would be doomed to falter; a fact that we are now seeing after having spent trillions to supposedly "stimulate" the economy.

The reality is that the consumer's paycheck has been under assault by the continuing devaluation of the dollar; which, in turn, has driven import prices higher and higher. In fact, in the last Import Price Report, the "average" of all import prices rose 13.6% -- year over year -- while the American paycheck has remained fairly stagnant. As a result of this inflation, the American consumer has seen their gasoline expenses double under Obama's watch; with the "average" 2-car family now paying about $2000 more per year. (Please note: The doubling of gasoline prices is only partly driven by the dollar's loss in value. The rest of the price inflation is due to the speculation that future demand could outstrip supply; eventually making world oil prices skyrocket. The demand side of this speculation is also being driven by the increasing need for oil by some rapidly emerging economies such as China and India. In addition, the instability in the Middle East could result in supply shortages. Also, there are foreseen supply limitations in this country due to Obama's anti-drilling policies; especially since America, with only 5% of the world's population, uses 25% of world's entire oil supplies.)

On top of higher oil prices, the consumer has seen their average food bill rise by almost 30% since 2009. That's because much our nation's food bill is for imported products. For example, 70% of our seafood comes in from other countries. Most all of the nation's fresh, off-season fruits and vegetables are imported. Even that morning caffe latte is dependent on coffee being brought in from places like Columbia. In addition, food prices are also very sensitive to rising energy prices. That's because gasoline and diesel fuels and electricity are heavily involved in every aspect of food production and in the delivery to market. While I have not been able to determine an exact number, my guess is that an average family of four has seen their food bill rise by at lease $2200 a year since the value started dropping in 2009.

Also, in a surprising way, domestically grown foods and food products are seeing prices rise as a result of the devalued dollar. That's because, as the dollar weakens, our farm goods and our manufactured goods actually become cheaper; overseas. That may seem like a good thing; and, for the most part, it is. But, it also has an adverse effect by increasing the demand for all those now-cheaper American farm goods that are supply-limited due to the fixed available acreage that can be dedicated to that products production. In effect, as our products get cheaper overseas, we find ourselves competing with the rest of the world for our own farm products. As a result, the extra demand -- given effects of the Law of Supply and Demand --- causes prices to rise domestically. Sometimes, farmers, seeing a more lucrative opportunity for an exporting farm good, will switch crops to a more attractive and profitable exportable product. When this happens, a supply-void occurs for the farm product being abandoned. As a result, that product, too, will see its prices rise as supplies decline.

The bottom line is that the stimulus package, by virtue of a weakened dollar, is actually having the opposite of its intended effect because it, for the most part, hurts the primary driver of the economy: the American consumer. Added to this, consumer spending is being further eroded by all the new taxes and increases on existing taxes that are being applied by individual state, county, and local governments across this country, as those governments try to push back against their rising deficits. But, as in the case of the weakened dollar, raising taxes just causes the economy to decline even further; thus, conversely, causing deficits to increase from an economy that gets even weaker.

I believe that the adverse effects of the stimulus spending (and taxes) can be clearly seen in the chart (below) which shows that our economic activity declined as more and more stimulus money (and taxes) is applied:

Prior to the application of any stimulus funds, the economy was actually on the mend as noted by this chart of Gross Domestic Spending:

Visually, there is an obvious change in our economy's direction as the stimulus money rolls out. The chart above clearly shows how the economy was recovering and, if left alone without stimulus funds, it would probably be doing fine right now. Instead, we are on the verge of going negative; once again.

I just think the economy would have been better served by reducing the amount of Federal spending; not increasing it. In that way, import prices would have actually fallen because the dollar would have strengthened. This, then, would have promoted increased consumer activity and that would have resulted in renewed hiring instead of the increased unemployment we have now. While it is a fact that exporting corporations might have been hurt by strengthening the dollar -- making their products more expensive in the world marketplace -- that fact could have been easily mitigated by reducing the corporate tax rate. Furthermore, Congress could have helped stimulate corporate business activity by passing legislation that would have allowed multinational companies to return profits back to the U.S. without any penalty of Federal taxation. Right now, those profits would not only be taxed in the foreign country in which they were earned, but also by the U.S government; should any of those profits be returned to this country. As a result, much of those funds are used to help the economies of the countries of origin and not the United States.

Saturday, July 30, 2011

Green Versus Green Over Windmills That Kill

Now, as the open landscapes of America are being populated with wind turbines, we are starting to see some very unintended circumstances. Specifically, the virtual killing of many species of birds and bats by those supposed green machines.

In Pennsylvania, alone, it has been reported by researchers who have taken samples of dead bats around wind turbines that as many as 10,000 pest-killing bats were killed by wind turbines in just the last year. Other studies indicate the "protected" American Golden Eagle and even the rarer American Bald Eagle were succumbing to the hacking blades of these green energy devices. Of course, millions of other birds that are of less environmental importance are also being killed by the blades of those turbines.

As a result of all this mayhem, we are now seeing environmentalists going toe to toe with each other, in our courts, over the creation and expansion of certain wind farms; especially in areas with fragile bird populations. Additionally, there are environmental studies being conducted to analyze the impact on non-avian wildlife from the substantial ground vibration and low-frequency noise being produce by the blade and turbine rotation.

To me, this is just a repeat of a decades old controversy that has hung over our nation's dams (our first green energy producers) and how those dams have severely harmed the spawning habits of various fish; such as trout and salmon. Today, we have less dams than we did 100 years ago because environmentalists have successfully been able to get them removed by using our nation's court system.

The wind turbine issue is a real dilemma for the environmentalists. On the one hand, you have many environmentalists who believe these "green machines" are the future of energy in this country; saving the planet from millions of tons of greenhouse, carbon emissions. But, on the other hand, many other environmentalists are now seeing these devices as killing machines that could literally wipe out many of the fragile species they have spent years trying to protect.

So, I guess you could say we have a real life, "Green Paradox" (of sorts) being set before us. It will be interesting to see who ultimately survives in the resolve of that paradox: the birds and the bats or the wind turbines. Based on the history of environmentalism in this country, it has always been the creatures who win in our courts. Take, for example, how a tiny lizard. the dunes sagebrush lizard, is now threatening to thwart all dunes-related oil production activities in West Texas. So, my money is on birds and bats and not on those samurai bladed wind machines. We'll just have to see.

Friday, July 29, 2011

Only Four-Tenths Of A Percent GDP Growth In The First Quarter?

Sometimes, you'll see numbers from the Obama Administration that just make your head wanna explode; and, this morning was no exception.

What I am talking about is the latest Gross Domestic Product (GDP) report as being released by Obama's Bureau of Economic Analysis (BEA). For four months now, the First Quarter GDP growth number, month-by-month, has gone through several iterations. Initially, its was reported by the BEA to be 1.8%. Then, the following month, the First Quarter growth was again reported to be 1.8%. In the 3rd attempt to nail down the number, the growth for the First Quarter was actually bumped upwards to 1.9%; making the general population think there was an actual improvement over the previous reports. Now, just a month after bumping the growth from 1.8% to 1.9%, this mornings revision came in at just 0.4%!

My God, where the hell did that number come from? Going from 1.9% to .4% isn't just a tweaking of the previous three numbers, it's a complete blow up of those earlier reports. This kind of thing just makes one wonder about what is going on and how much politics is playing a part in the reporting of our economic activity. Obviously, if that meager .4% growth was reported at the beginning of this First Quarter reporting exercise, Obama's economic policies would have been under serious attack. However, by reporting it now. with all the focus being on the "new" Second Quarter GDP number, the Obama Administration is somewhat able to sneak this horrible number in under the radar of the general, voting public.

Given this kind of shenanigans, can anyone really trust this morning's initial Second Quarter GDP report? Is it possible that we really had negative GDP growth last quarter and, like the reporting of the First Quarter's data, we won't find this fact out until the initial Third Quarter report is released? I guess we'll just have to wait another three months to really find out! As I have said may times before: "So much for the most transparent Administration in the history of the United States!"

Thursday, July 28, 2011

Another Blow To Global Warming Alarmists

In a new study, using NASA's satellite sensing data from the years 2000 to 2011, co-author Dr. Roy Spencer, a principal research scientist at the University of Alabama in Huntsville and U.S. Science Team Leader for the Advanced Microwave Scanning Radiometer flying on NASA’s Aqua satellite, has determined that far less heat than previously modeled is actually being trapped in the earth's atmosphere as a result of CO2's presence. An article covering this study can be read at (Click here to See Story).

Tuesday, July 26, 2011

You Can't Keep An Excellent Triple-A Rating By Going Deeper Into Debt

If you listen to all the arguments about raising the debt ceiling, some on the left claim that we could jeopardize our "AAA" credit rating if we don't raise the debt ceiling and, as a consequence, allow the country to default on its debt obligations. However, this is a canard, for pure political reasons, to push us to raise spending levels and not make any significant cuts to existing Federal programs.

The fact is that there are enough revenues, without raising the debt ceiling, to pay all our debts as well as support many of our current, operational obligations such as Social Security and military pay. Revenues this year will top $2.1 trillion dollars. That's about $172 billion in revenues per month while, at the same time, the interest on our debt will average about $42 billion a month; leaving $130 billion in revenue to support much of the other, essential businesses of our government. Of course, this fact does leave about $144 billion a month in other unfunded operational costs. But, we could survive, month-to-month, without default on our debt and without suffering a ratings downgrade for that very reason.

But, the real jeopardizing fact with regard to our credit rating is the amount of debt, itself. Even if we get a debt ceiling increase, the rating agencies may still lower our rating by virtue of the amount of debt that we continue to accumulate versus any real potential for revenues increases. The left would argue that simply raising taxes would solve this supposed "revenue" issue. But, as had been pointed out many times, even if you completely taxed away every penny being earned by the so-called rich, we would still fall well short of the revenues needed to make any real dent in our total debt. A debt that now sits at $14.5 trillion and rising. The only real solution is austerity through program cuts.

The real reason for the threats to downgrade America's excellent rating is that Federal spending has increased by 30% under Obama. When Bush left office, spending was at about $2.9 trillion dollars. Today, the annual Federal spending level is at $3.8 trillion; or, about $900 billion more than when Bush left. What's worse, and for all his talk of fiscal restraint, in February, Obama submitted a 10-year budget outlook whereby he would take us from the current $3.8 trillion annual spending to nearly $6 trillion in annual spending in just 10 short years. Then, through some rather generous assumptions on the economy and taxes, Obama projected that the Federal deficit would remain the same over that same 10-year period. Seen as a true fairytale, his budget submission was totally rejected by the Senate on a completely bipartisan basis; 97 to zip.

Our credit rating is in jeopardy because we can't keep raising spending levels at a rate faster than our revenues increase. In the throws of a deep recession and, subsequently, declining revenues, Obama jacked up spending by 30% in some false assumption that all that increased spending would stimulate the economy. But, the economy continues to flounder and unemployment levels continue to rise; raising the specter that revenues may continue to fall with our debt levels continuing to rise at an ever increasing rate. Our credit rating is no different than a personal credit score. If a person continues to keep spending themselves into hock, their credit score will go down; making it very difficult to borrow or obtain a loan at the best rates. And, that's exactly what will happen to the U.S. government if we continue to spend and borrow.

So, the bottom line is that we need to raise the debt ceiling in order to keep the current level of government operations running. But, in order to satisfy the rating agencies, we need to show that we, as a country, are prepared to make significant cuts in spending to reverse the massive debt accumulation. As far as raising taxes goes, this just might have to happen; but, the revenues from any tax increases should be matched at a rate twice that amount with substantial and realistic spending cuts. Only then, can we assume that we will avoid a ratings downgrade.

Saturday, July 23, 2011

Fifteen Years With No Global Warming!

For nearly 15 years, global temperatures have been flat with no real evidence of any additional warming. But, my guess is that not too many people reading this blog entry are even aware of that fact. That's because the liberal media in this country has kept this reality buried by only reporting the stories that enhance the warming myth. Certainly, now, with record heat across the country, the liberal media has taken the opportunity to, once again, hype all this heat as being part of climate change and anthropomorphic global warming. But, prior to all this heat, that same media completely ignored the record cold temperatures of last winter in places like China; where the cold was both intense and wide spread.

But, what is really funny is the fact that many of these "greenies" who are now claiming the resurgence of global warming, had just got through buying into a study that, supposedly, explained away the lack of any current global warming by claiming that it was all do to China's intense burning of coal. According to the work of climate scientist, Robert Kaufmann, and his team, the burning of "dirty" coal in the production of electrical energy releases aerosolized sulfates into our atmosphere. Then, those sulfates act to reflect heat radiation from the sun back into outer space; thereby completely offsetting the global warming effects of carbon dioxide. Of course, many climate change critics see this "sulfates" hypothesis as a convenient means to explain away the failure of the alarmists to prove their warming case; as noted in this recent opinion piece by Patrick Michaels, titled "Why Hasn’t The Earth Warmed In Nearly 15 Years?" (Click here to See Story).

So, this begs the question: Are temps flat or are they really rising? Certainly, the facts don't support the latter.

The Kaufman's of the world have you believe that global warming is very much real and alive; even though you can't see it happening any longer. But I have a real problem believing this from Kaufmann or, for that matter, any climate change advocates because, for 15 years now, they have tried to cover up the lack of any global warming. Instead, they have continued the lie that the earth is still in a warming trend. Worse yet, the liberal media helped to sustain that lie instead of exposing it. To me, the Kaufmann hypothesis just proves the lie; a lie that the warmists weren't ready to admit until they could come up with some possible excuse as to why there was no warming. But, if you carefully read Patrick Michaels excellent article, you will find substantial holes in the Kaufmann conclusions. In fact, one can only conclude that Kaufmann's rationale is one of convenience (for the cause, of course) and not necessarily based on real scientific fact. As Michaels importantly notes, the Kaufmann conclusions are primarily based on correlation and not necessarily on causation; resulting in a "fallacy of cause" that is known in both science and in statistics as cum hoc ergo propter hoc (or "a logical fallacy" simply translated from Latin: "with this, therefore, because of this").

Lastly, for years I have been aware of the absence of warming; at least in the United States. That's because our own National Climatic Data Center provides all the information needed to come to that conclusion. In fact, since 1998, temperatures haven't just been flat, they've been falling at an average rate of nearly a full degree per decade. To see this fact, just go to NOAA's Climate Summary webpage (Click here to access the page). Now, to see a 1998 to 2011 annual temperature chart with a trend line, just select "Annual" under the "Period" option. Then, in the two sets of range boxes, set the beginning as 1998 and the ending as 2011. Finally, "Submit" to see the chart.... Viola! No warming!

Wednesday, July 20, 2011

Obama and the Democrats Are Distorting the Term "Loopholes"

According to Obama and the Democrats, business activities like big oil production, corporate jet ownership, and the operation of a hedge fund are taking advantage of tax "loopholes" so that they can avoid paying taxes. This is a complete distortion of the term "loopholes".

Loopholes are an ambiguity in the tax laws that allow someone to skirt paying taxes. For example, if there weren't specific conditions associated with claiming dependent children as a tax exemption, both parents, filing taxes separately, could each reduce their taxes by both claiming the same children as dependents. But, that loophole doesn't exist and only one parent can actually claim any given child as a dependent deduction.

But, the things that Obama-and-company are claiming to be so-called loopholes are not ambiguous. They are legitimate deductions and tax advantages that were intentionally written into the tax laws, over time, by both the Republicans and the Democrats of Congress. Take, for example, the accelerated depreciation for the purchase of corporate jets. Obama and many Democrats call this a loophole. But, it's not. The fact is that it is an intentional tax advantage that was signed into law, by this president, as part of the Stimulus Package with the full intent that it would spur on corporate jet ownership and thus aid the International Machinists and Aerospace Workers Union by "saving or creating" their jobs during this recession. There was nothing ambiguous about it. It was clearly spelled out in that law. But, Obama, once again, has decided to use that particular tax advantage as a form of class warfare. My guess is that both "focus group sessions" and phone polling have determined that using of the word, tax loopholes, yields a more favorable response, politically; especially for those in Obama's own political base. For sure, the word loopholes has a negative connotation and implies, to some extent, that dirty pool is afoot.

To me, using the word "loopholes" is a totally dishonest tactic against what is, in most cases, a completely honest application of the tax laws. Once again, this president is playing fast and loose with the facts to gain political advantage. So much for the supposed "most transparent administration in the history of the United States"!

Friday, July 15, 2011

80% of American's Favor Increasing Taxes?

This morning, Obama pulled another amazing number out of the air to try and push support for his tax hikes on the "rich"; you know, those single tax payers making more than $200,000 a year and those marrieds making in excess of $250,000. He said there's no debate because 80% of Americans support raising taxes. Well, not so fast Mr. President! In a Wall Street Journal/NBC poll that was taken earlier this year, it is true that 81% of the respondents said they agree with tax hikes for the rich. But, the rich, in that poll, were those who make over $1 million a year; not the $200,000/$250,000 that Obama keeps yapping about. Once, again, this President is seriously misrepresenting the facts in order to support his position.

While that poll showed strong support for taxes on the ultra-rich, others aren't as definitive. The difference seems to be in how the question is asked.

A recent McClatchy poll indicated that 67% wanted taxes on the rich "if" it meant that cuts in medicare and medicaid could be avoided. Not, hardly the "strong" 80% number that Obama is quoting. And, just this morning, Rasmussen released polling data that showed only 34% want tax hikes; and 55% opposed any.

Obviously in the area of tax hikes, you can "cherry pick" any polling data you can find to support your position. Unfortunately, our president sought fit to find the biggest, outlying cherry he could find. I just love this guy's concept of "transparency" in governing.

Like It Or Not, We Need To Raise The Debt Ceiling

In the last 2-1/2 years, annual Federal spending under Obama has been raised by 30% from the $2.9 trillion in Bush's last year in office to the current $3.8 trillion; a near trillion dollar increase in spending. At the same time, revenues have fallen to $2.2 trillion. Even if Congress could roll back spending levels to the pre-Obama, $2.9 trillion, we would still be accumulating debt to the tune of $700 billion a year. Therefore, there is no way to avoid raising the debt limit and I think Republicans should just be straight with the American public and not keep saying that they won't vote to raise the debt ceiling at all.

Of course, it should be made quite clear that if Obama and the Democrats hadn't been so reckless in raising spending, we might not have had to have this debt ceiling debate for at least another 2 years.

Tuesday, July 12, 2011

Another Lie By Obama? This Time on Social Security Checks

Today, in an interview with CBS's Scott Pelley, Obama said that if we don't get a resolution of the debt ceiling impasse by August 2nd, Social Security checks won't go out "Because there may simply not be the money in the coffers to do it". Oh, really? For weeks now, Nancy Pelosi and other Democrats have been having fits over any Social Security cuts; basing their argument on the fact that the Social Security trust fund has enough funds to pay full benefits for 30 years. So, what is it? Will the trust fund become completely insolvent and unable to issue checks on August 3rd or not? Obviously, someone is lying.

Social Security has it's own funding that is supposed to be separate and distinct from any other federal revenues or spending. That's what a "trust fund" is all about. Additionally, under U.S. law, Social Security is a mandatory program. Did Obama just lie to get seniors all riled up in order to force Republicans to cave on raising the debt ceiling? If so, it is so typical of this President!

Friday, July 8, 2011

What The Unemployment Report Doesn't Tell You

Since 2007 and throughout these hard economic times, the workforce has remained constant at about 154 million workers. This is despite an average annual birth rate of approximately 1.25%. So, theoretically, and based on births alone, the workforce should have grown by about 8 million new workers (2 million workers a year); with this year's workforce totaling 162 million. Additionally, this country allows the legal immigration -- both permanent and temporary -- of about 200,000 to 300,000 work-eligible workers and their families each year. This, then, taken into consideration, means we should have a real current workforce of about 163 million workers. But, we don't.

Now, to the point of all these statistics.

Month after month, the employment reports have shown that we have added new jobs to the economy. Last month, as reported this morning, only 18,000 new jobs were added. But, is this real job growth? Not, hardly. The fact is that the 18,000 new jobs falls horribly short of any growth in our workforce. As shown above, we roughly add about 2.25 million new workers to the workforce each year. That's approximately 187,000 new workers per month. Therefore, if we don't exceed 187,000 new jobs in any given month, we're actually losing jobs. This month, therefore, we really lost about 169,000 jobs if normal workforce growth is taken into consideration. That is the story that this and every employment report never tells you. Since Obama has taken office, the workforce hasn't grown at all; despite nearly a trillion dollars in stimulus. In essence, 5.6 million new workers in the last 2-1/2 years have just fallen off the map and their fate has never been reported in our so-called monthly employment report. That's a sad story that ought to be told. Instead, we have a President touting that his policies have added 2 million jobs to our economy since his taking office. But, as proven here, that 's a very false claim in light of normal workforce growth. To me, it's just another Obama con-job!

Tuesday, July 5, 2011

Obama: Your Marxism Is Showing

Karl Marx, the communist and the social economist, often talked of the struggle among the classes. He obsessed about the class of people known as the bourgeoisie. The bourgeoisie of society were those who placed too much into the value of owning property. Today, if Marx was still alive, he might just call them corporate jet owners. At least that's what Obama referred them as in his speech at his press conference of just last week. In fact, he obsessively mentioned corporate jet owners 6 times in that speech. He also singled out the so-called billionaires and millionaires. Just another bunch of "bourgeoisie" property owners that Obama is obsessed with.

Pitting one class against another is straight out of the Marxist playbook. That's exactly how the Marxist, Hugo Chavez, got elected in Venezuela and, then, managed to literally become president (or dictator) for life. Like Obama, the Marxist Chavez is also about redistribution of wealth. Since being president in Venezuela he has taken land from the rich and given it to the poor and he has nationalized formerly private businesses. All one has to do to understand how Marxism is in Obama's heart is to go back to the 2008 campaign and recall what Obama told "Joe the Plumber": "We need to spread the wealth around.." However, spreading the wealth around takes a serious toll on any economy; usually in the form of inflation. For example, since Chavez has been in office, Venezuelans have suffered from 20+ percent annual inflation and empty grocery shelves. A fate we could see here if Obama isn't stopped in 2012.

If anyone doesn't think this President isn't a socialist/Marxist, they have got their head screwed on wrong or they are just blindly ignoring the truth in what the reporter/writer, Bernie Goldberg, calls a "Slobbering Love Affair". The economy is still in trouble because we have an anti-business President in office. His fixation is to spend and spend while hiding behind Keynesian Economics as the means of promoting wealth redistribution programs like Obamacare that will ultimately sap the economy and that will only further high unemployment. Just look at his handover of GM to the labor unions as a perfect example of Obama's application of Marxist principals. And, as for inflation? We've already seen a doubling of gasoline prices under his rule and many food products are seeing annual double-digit price hikes. Isn't Marxism lovely?

Saturday, July 2, 2011

The Release of Oil Reserves: Another Failed Obama Econ Plan

On August 23, just 9 days ago, trading for domestic crude oil opened up at $94.47 a barrel and was heading south when Obama and the Int'l Energy Agency (IEA) announced the release of 60 million barrels of oil from the Strategic Oil Reserves of 28 countries. Our share of that release was to be 30 of the 60 million barrels.

As of today, the price of oil sits at $94.95 and is now higher than it was before the announcement. Once again, this President and his frat-boy and sorority-girl advisers got it all wrong. They don't seem to understand markets or even simple economics. You "can not" use a "reserve" whose replenishment is mandated by law to drive down prices. Sure, there was a quick price drop for a couple of days but, that was because a few novice traders bailed to protect their profits. However, the smart money simply saw it as another buying opportunity for a commodity that could easily be in short supply if there were any supply disruptions in the Middle East or elsewhere or if the economies of the world perked up again.

The thing is, when releasing oil from the strategic reserves you, in theory, create a "supply" imbalance and, based on the Law of Supply and Demand, prices should go down; and, they did. But, what team Obama completely missed is the fact that, at the same time, you have created a future "demand" imbalance that will completely offset the advantage of that original "supply" imbalance. That's because the amount of oil that was released will have to be bought back to make the reserves whole again. What's worse, because prices are rising, the repurchase will be, more than likely, at a price higher than what the original reserves were sold at; meaning that, once again, Obama has just wasted more tax payers money in another failed economic plan.