Friday, October 30, 2009

The cost of cap and trade: part one

From the 02 November Greater Niagara Newspapers

By Bob Confer

Sitting near the top of the Left’s ambitious agenda is the tempering of alleged man-made global warming. The Democrat-controlled Congress and Obama Administration hope to achieve this goal through a variety of tactics which include green energy incentives, stricter environmental regulations and the absolutely ludicrous concept of cap and trade.

Simply put, cap and trade is a means of taxation and control in which the federal government, further exceeding its intended bounds, would put limits on the amount of greenhouse gases that manufacturers, energy producers and the like could put into the atmosphere and then charge them for anything over and above their individual caps.

This user’s fee for the atmosphere would add significantly to the cost of living, which, in turn, would severely decrease the quality of the human existence (the polar opposite of what cap and trade’s proponents trumpet as their ultimate goal). The tax will show up in every single thing we buy, for it will be applied to the energy we use to heat and power our homes or take ourselves to work and it will be affixed to the activity that produces the food we eat, the clothes we wear and the products we utilize. Its impact will be staggering, without a doubt.

But, how bad will it be? No one seems to know for sure, but any way you slice it, it stinks.

On the low end of the scale, estimates were released by the Environmental Protection Agency just over a week ago that pegged the impact at no more than $100 per year in added energy costs to the typical household. That number is obviously too small and it should not be believed because of its bias. The EPA is only looking out for its own interests (its job security and power) by minimizing the estimation of the financial impact of the bill.

The Congressional Budget Office, which typically underestimates the financial burden of all things government, said back in June that cap and trade would cost the average household only $175 per year. Theirs was a flawed study, looking only at the costs to manage the program, ignoring the impact that energy restrictions would have on the greater economy and all it produces.

The Heritage Foundation, a Conservative think tank, has been saying since May that the program would cost American families some $1,500 per year in direct energy expenses alone. This large value doesn’t even include cap and trade’s costs hidden in any of the products they purchase.

The Heritage Foundation seems be quite close in its estimates for formerly-secret internal documents released by the Department of Treasury this September said it would cost American taxpayers $200 billion per year, or $1,761 per family. One must assume the Treasury would know best of its impact as it would be that agency that manages the revenues reaped by such a program.

Whether you’re talking about $100 or $1,761 (the latter being the most likely result), no family can afford cap and trade. Taxpaying Americans already pay more than their fair share for local, state, and federal government programs through income, sales, and property taxes, whether directly or indirectly in the value of the goods and services they purchase. In a recession where jobs are scarce and incomes have dropped, breadwinners will be unable to support themselves, their families and each other under this new, massive theft from our citizens.

Wednesday, October 28, 2009

A bailout for the average investor

From the 26 October Greater Niagara Newspapers

By Bob Confer

It seems like every special interest group has received a bailout during the Great Recession. Bankers were awarded trillions to keep their enterprises afloat. Teachers and other government workers were able to keep their jobs through federal funding. Even senior citizens have been earmarked for a one-time cash payment that makes up for the lack of growth in Social Security disbursements.

All of those groups represent only a small portion of the many who have received bailouts. Sadly, one group, the largest and most important of them all – the average family – has been left out in the cold. John and Jane Doe haven’t been awarded extra spending money or a little financial security. Unlike those who have, they remain either unemployed or underemployed or fearful of their future earnings and expenses.

They need a bailout of their own. But, just like the others who have already received bailouts (more aptly called "handouts") from the tax coffers or the infinite fiat money supply, they don’t deserve to have other people’s money thrown at them. Rather, they should buck the trend and be bailed out by their own money. Such a self-funded bailout can be garnered through immediate access to funds that are rightfully theirs: Monies that are so close yet so far away in their 401(k) accounts.

Most folks who have a 401(k) won’t touch it for fear of being penalized. By law, if someone under the age of 59 and a half dips into a 401(k) it is considered early withdrawal and the individual must pay a 10 percent penalty (an excise tax, really) to the federal government on top of the income taxes that must be paid on the 401(k). That’s a huge hit, whether someone has $10,000 or a $100,000 in their account.

One can understand having to pay the income tax portion since it was a pre-tax investment extracted from their paychecks. One can almost see the logic behind the penalty; it’s a means to reinforce that 401(k) plans are long-term, retirement-focused plans and not short-term options. But, one can also see the penalty as being an odious government cash grab that - especially in times of need such as this recession – hurts the average person.

My proposal is this: The government should temporarily abandon, say for a one or two year period during this economic crisis, the 10 percent tax, allowing investors to take a one-time withdrawal without penalty. Think of the number of baby boomers who could have saved their nest eggs during the stock market collapse if this were the case. More importantly, think of the many households that up until a year ago were two-income households and are now single-income (or no-income) homes that could really use their 401(k) money now. Many in the financial sector would consider that to be a foolish use of money, but they really need to be empathetic. In this job-sucking recession those families don’t care about their income 30 years down the road, it’s now that matters most and they need the money to feed their kids and keep a roof over the heads.

Surprisingly, I haven’t heard this simple yet effective idea for getting cash into peoples’ hands broached by anyone in Washington or the pages of the national press. Therefore, I plan to turn this into a little experiment in active citizenship. I’ll share the concept with the powers-that-be and I’ll let you know how it is received. Hopefully, it’s accepted with open arms so you can have access to your money – when you need it most - without getting penalized for it.

Monday, October 12, 2009

The US Dollar: a worthless piece of paper

The 08 October 2009 column of The New American website, originally appearing at:

By Bob Confer

Following the OPEC Summit in November of 2007, Iranian President Mahmoud Ahmadinejad shook things up when he said the U.S. dollar was “a worthless piece of paper.” He had expressed concern over the dollar’s decreasing value and wondered aloud if the global marketplace should use another currency in the trading of oil. At the time, the world scoffed at the concept and looked at Ahmadinejad as a mad man.

How the times have changed! Ahmadinejad could almost be looked at as trendsetter and more of a genius than a mad man as other world leaders – some of the most powerful on the planet - have taken to his way of thinking. On October 6, a United Kingdom newspaper, The Independent issued a shocking report that said Gulf Arabs along with the leaders of China, Russia, Japan, and France, have been meeting in secret to develop a plan that would abandon the dollar as the unit of trade for oil. The article noted their plan to move to a mixed currency basket that would include, among others, the Chinese yuan and euro.

This suddenly mainstream belief that the dollar is worthless does have its merit. The world’s reserve currency has tumbled as of late, hitting this past week its lowest value in 14 months versus the value of the currencies of the United States’ largest trading partners. This decline follows a brief half-year period when it grew in strength, becoming a safe haven for domestic and foreign investors in the panic that followed the collapse of the financial markets in September and October of 2008. Prior to that, the dollar had been in a frighteningly steep decline — independent of the recession — in which wholesale prices grew by 6.7 percent in 2007, inflation’s greatest annual increase in 26 years.

The dollar has become so weak that many investors — at home and abroad — are abandoning it and heading to gold ,which reached all-time highs in recent days. On October 9 it ended the day at $1,056 an ounce, a record high that will no doubt be exceeded in the coming weeks.

The expansion of gold’s value is something one typically sees in periods of crisis, but we are supposedly not in a crisis — many nations and even the Federal Reserve have said that the world is climbing out of the recession. That means that people are now buying gold not out of fear but rather because it’s a safe bet against inflation. This situation has become so extreme that the oil fund conspirators have planned to add gold to their currency basket, something that would mark the first time since the abandonment of the last vestiges of the gold standard in 1971 that the precious metal will be used as a currency equivalent.

Gold’s ongoing rise indicates even rougher times ahead for the U.S. dollar. As investors sell-off their dollars and foreign borrowers pay off their debts far in advance, the global markets will be flooded with greenbacks that no one, other than Americans, will really have any use for. Because of high supply and low demand for it, the dollar will continue to devalue and become the least powerful of the currencies used by the world’s largest economies.

As that takes place in the global markets, the U.S. federal government, aided and abetted by the virtually untouchable and uncontrollable Federal Reserve, will demand the creation of more of our money — out of thin air — in an effort to address the irresponsible runaway spending that the Bush and Obama Administrations have instituted in their misguided endeavors to right our sinking economy. The current national debt is just under $12 trillion and the Congressional Budget Office recently estimated that the federal deficit will be $1.4 trillion for fiscal year 2009. This constant addition to the already-overabundant supply of dollars will debase our currency because it won’t be backed by anything of value (which it really hasn’t been since the loss of the gold standard) because those who have been our biggest borrowers (like China) will borrow no more out of fear of getting no return — or, quite realistically, a loss — on their investment, meaning that every dollar added is, as Ahmadinejad put it, a worthless piece of paper.

This is inflation in practice, which is guaranteed to cause real pain for the average American. Higher money supply will raise the specter of growing wholesale prices, which, in coming years, will far exceed the pinch we felt in 2007. This will in turn create a lower standard of living for all who live in the United States.

Upon assessing this development, one cannot help but wonder if the dollar’s demise is being done in purposeful fashion. It’s not the dollar’s naysayers, the Chinas and Russias, who made it weak. No, it was the United States’ government itself. Even while knowing full well the impact of overspending and inflation, our leaders have pressed ahead in a manner that cheapens our dollar and our existence. Such decisions may be a deliberate move to weaken our nation, the most powerful in history, so it can be fully integrated into the less-prosperous and less-free economies and societies of the world.

The dollar has been made worthless by design. Hopefully, our great nation will not follow suit.

The Bills are all business

From the 12 October 2009 Greater Niagara Newspapers

By Bob Confer

As I was writing this column the Bills were only a few days removed from a devastating 38-10 loss to the Miami Dolphins, exemplifying how moribund the Buffalo franchise has become. As one would expect, the fans of a 1-3 team that has been outscored 123 to 61 on the season were calling for heads to roll.

All of their venting, complaining, and criticism will do no good. The Bills will continue to be the Bills that we have come to accept as the norm. There’s a reason that they haven’t been competitive enough to produce a winning season in 10 years. It’s not because they share the division with the New England Patriots. It’s not the mystical Buffalo curse. It’s capitalism.

Team owner Ralph Wilson is an old-school capitalist, meaning that profitably and shareholder value (and not touchy-feely pursuits) are paramount. So, what he sees year in and year out no doubt has him pleased. While we might see dismal football on the field, Wilson sees a good game in the books with a strong balance sheet and a healthy profit and loss statement. According to, in 1999 the team’s revenue was $102 million. In 2008, it reached $206 million, doubling in only a decade. Operating income was just as healthy over that span: despite being nearly equal in 1999 and 2008 at around $12 million, in 6 of those 10 years the income ranged from $29 million to $35 million.

Such financial success doesn’t necessarily equate to success on the field, nor should it. To someone like Ralph Wilson wins and losses don’t mean as much as they might to the fans or the team because his company – his life’s work, his greatest gamble, and his greatest success - is producing as well as it has been financially. There’s really no reason for Wilson and staff to mess with what’s working for them. The status quo on the field can be maintained because it’s making money and lots of it.

It costs money to replace coaches, institute new systems, and bring in the pricey role players that a winning team needs. Would those investments really equate to a better bottom line for the franchise? No, because from where would the revenue growth come? Surely not the fans. That’s because they are already there and as rabid as ever: Bills attire is still selling at a good clip and tickets are being purchased at record rates (for the first time in its 50-year history the Bills have had back-to-back years of 55,000 season tickets sold). That’s almost unbelievable because the team is 61-87 since the start of the 2000 season and we’re in the worst recession since the Great Depression. If those two factors won’t turn people away, nothing will. It’s apparent that no matter how good or bad the team is or how little money the fans have they will continue to worship the franchise.

And that’s probably how Wilson sees the world. He knows he also an almost captive audience, one that hasn’t abandoned the underperforming teams like those in other NFL cities (like Detroit) have. He’s making money, so why change anything? If he’s fearful of losing fans it’s easier and more cost effective to inject a little marketing into the mix than it is to make significant changes to the way of doing things. The salesmen in the Bills front office have done this quite well this century, feasting on the team’s rich history and the fans’ unmatched histrionics. Only in Buffalo, under such slick advertising efforts, could Dick Jauron return for a fourth season and people somehow pile into the Stadium in droves.

Because of that approach to corporate profitability and not team productivity, the Bills will remain pitiful for quite a while and, at this rate, they will be known as a punch-line not for their Super Bowl losses but rather for their transformation into the second coming of the Buccaneers of the 1970s and 80s.

It’s not that Ralph Wilson is evil, he’s just doing his job and he’s doing it well. Realize that capitalism is a two-way street. You, the fan, have, quite strangely, rewarded and enabled the team’s poor performance and Wilson has been more than willing to accept your hard-earned dollars for that. So, until you stop going to these poorly-played games or Ralph Wilson and his heirs stray from their fiscal and corporate conservatism, it will continue to be business as usual at One Bills Drive. And, it’s business that keeps it that way.

Monday, October 5, 2009

The death of Niagara's woods

From the 05 October 2009 Greater Niagara Newspapers

By Bob Confer

Older readers of this column will remember the once abundant American chestnut. This magnificent tree dominated the Eastern landscape with quick-growing specimens that quickly and routinely exceeded reach 100 feet in height. Once World War II ended the chestnut became a thing of the past. By then, more than 3 billion of the trees (25 percent of the Appalachian forest) had succumbed to a blight inadvertently brought to North America from Asia. Now, the tree is extremely rare, only a select few with hardy genes can be found in areas off the beaten path. Those chestnuts almost never reach 50 feet in height and are always short-lived.

Similarly, baby boomers and some of their very oldest offspring will remember how the impressive American elm used to dot the countryside and line city streets. It was a long-lived tree (it could healthily exceed 150 years of age) with thick trunks and wide canopies. Following the demise of the chestnut it, too, had an invasive agent attack it. Dutch Elm Disease, a fungal infection spread by an Asian beetle, ravaged the elm population over the second half of the twentieth century. It didn’t fully wipe out the elms as it did with the chestnuts but it left behind a significantly-smaller population of elms that could reach only a fraction of the age and size that they once did. For all intents and purposes, the elm is basically dead as we knew it.

A lot of folks look back with fondness on chestnuts and elms. Whether someone was a man of the earth who farmed or hunted alongside these once-great trees or was a child who spent many a summer hour climbing or swinging from one of them, they gave us many great memories and also some great economic benefit: The chestnut was one of the best hardwoods for furniture and home construction and the wood of the elm had fantastic strength.

The devastation of our woodlots and forests at the hands of foreign invaders is almost never-ending. It seems that once one species of tree sees its demise another begins to face its greatest threat. Now is no different. Two types of trees which are very abundant on the Niagara Frontier – ashes and beeches – will disappear very soon.

As it stands now, the ash remains unmolested in our area except for the sudden appearance of some beetles in the southwest corner of our state earlier this year. But, that’s not the case in the upper-Midwest. There, 40 million trees have already died at the jaws of the emerald ash borer, another Asian pest that first appeared in the US in 2002. These beetles bore through inner bark of ashes, essentially girdling and ultimately killing the trees. Nearly 8 billion ash trees are at risk of being exterminated. Not only will this have a detrimental impact on our environment, but it will also harm our economy: $25 billion of ash is harvested annually in the United States. There is no known way to control the borer. Its eastward movement can only be slowed down by firewood and timber quarantines (as we’ve seen in Chautauqua and Cattaraugus counties). It’s pretty much guaranteed that the beetles will demolish our forests. It’s that unstoppable of a pest.

One pestilence that’s well under way is that faced by our beeches. Everyone is familiar with these trees, they of the smooth grey/silver bark (a perfect target for carvings of initials and love), the spiky nuts, and the dead leaves that stay on the tree all winter long. They have fallen victim to beech bark disease, a two-stage ailment where a small insect known as a scale infiltrates the bark and is then followed by a deadly fungus. The bark cracks and falls off and then the malnourished tree topples over. This disease has really put a stranglehold on the area since the turn of the century. Take a look at any woodlot or town park in Niagara or Orleans County. If they are anything like our family farm in Gasport every beech tree is dead or showing symptoms of infection. It’s hard to believe that just a few years ago they were healthy and vibrant.

Unfortunately, there’s nothing we can do to save the ashes and beeches. They will go the way of the chestnuts and elms, whether it’s now or 5 years down the road. In the meantime, get out in the woods and appreciate their beauty while you can. Take some pictures or harvest the timber before it’s too late to do either. The trees are dying and they will become memories of the past, further changing the look, economic viability and natural balance of the Niagara Frontier.