April 15, 2008
Breakfast At
Tiffany’s ©
Vol. 3 Issue 8
The world is run on natural
resources. With certainty, the price of one
particular natural resource is controlled by
supply and demand. The country with the
greatest supply of this resource, almost
certainly can control the market.
Its price historically, has been based on
the value of the U.S. dollar. Historically
this resource has been priced around the $35
mark. It has remained that way for decades
usually never fluctuating more than
ten-percent up or down.
Recently, its price has skyrocketed
beyond belief. It is off the charts. So much
so, companies who distribute their final
refined commodity are showing profits, which
exceed those earned by manufactures of
computers and other electronic devices whose
profit margins have always been high. Even
the investment and banking industry’s'
profits pale compared to these enormous
profits. Many working people in America are
finding they have financial trouble
purchasing the final products produced by
the raw materials.
Recently, I purchased one of these
products knowing that the price this week
was much higher than last weeks. However, it
was my wife’s birthday and she really wanted
that gold bracelet she had her eyes on for
some time. Oh! You thought I was talking
about oil. I am sorry folks; gold has risen
much higher than oil. Actually, a barrel of
oil since 1965 has risen 300% while an ounce
of gold has jumped by 2,700%
Congress in its infinite wisdom decided
to call in the CEO’s of the oil companies
whose profits are exceedingly higher than
what they think they should be and rake them
over the coals. [Pardon the pun] Therefore,
they marched them out in front of the public
on C-Span for all to see. Have they
forgotten the saying "People in glass houses
shouldn’t throw stones."
How quickly Congress forgets that they
are part of the problem. Oil and gasoline
prices are as high as they are because of
congressional regulation. Countless barrels
of oil lie in reserves waiting to be plucked
from the earth. However, the oil reserves
are off limits. When was the last refinery
built in the United States? What about all
the oil that is imbedded in coal reserves
waiting to be converted into clean burning
fuel? What about the fact the oil industry
is one of the highest taxed in the country.
What will happen to the price at the pump
when in its infinite wisdom Congress burdens
us with higher gasoline taxes?
Are they courting the environmentalists,
who do not want us to drill for fear of
displacing the Caribou or Spotted Owl?
However, Congress has no problem displacing
you and me through eminent domain if they
need our homes for a parking lot.
The free markets have to allow the price
of any commodity to be determined by the
market place. Supply and demand have always
determined the price of any product or
service in the world. The sooner we wake up
and realize this, the better off we will be.
When Congress bailed out the banking and
mortgage industry what lesson have they
taught us? Let us look back to when the
government bailed out Chrysler in the 70’s.
Chrysler made bad business decisions and was
losing more money than water flowing from
the Hoover Dam. So the government said do
not worry we are here to save you. Remember,
the money used to bail out Chrysler came
from our tax dollars. How many shares of
Chrysler stock did you receive?
If the government let the chips fall
where they may and let Chrysler go under,
would General Motors and Ford have picked up
the slack and become bigger and better than
they are today? Would they be worried about
laying off workers today as they are,
because their losses are exceedingly high?
With Chrysler out of the picture, one third
of the domestic competition would be gone.
When you reward bad behavior, it only
leads to more bad behavior.
Here we are bailing out Bear Stearns, or
at least guaranteeing the loans. What about
other companies that have made bad business
decisions who are in trouble. This appears
to have all the makings of a new entitlement
program for the rich. Who is next?
How about taking care of the mama-poppa
operations and small businesses that make
bad decisions every day and fold up their
tents. Where are their bailout dollars? Line
up folks; Congress just set a new precedent.
Why not, everyone else is lined up for his
or her entitlements.
it is probably true that had the
government not guaranteed the loans to bail
out Bear Stearns the full faith in the other
investment houses may have been in jeopardy
and stockholders in those companies may have
run for the hills. Nevertheless, would that
really happen or would it be conjecture. We
may never know. However, it certainly gives
Lehman Brothers, Morgan Stanley, and all the
other investment companies a belief that
they can walk the tight rope and Congress
will be there, like a safety net to catch
them if they too were to fall.
In retrospect, should not Congress called
in the real culprits; the people who are
benefiting from the 2,700% rise in the price
of gold. Where are the CEO’s of Cartier,
Tiffany’s and Harry Winston? Why were they
not subpoenaed to appear before congress to
explain their excess profits?
If the jewelry business gets as bad as
Bear Stearns maybe Tiffany’s as an
enticement will serve breakfast with every
purchase you make, paid for by some
government food give-away program.
And, that is my opinion.
Michael Solomon If you want to
help restore sanity to America, join the
Flag Day campaign.
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