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Blog Watch: Depletion, Leaders, Stimuli And The Economy

- Political & Economic Commentary -

October 18, 2010 (FinancialWire) (Investrend Forums Syndicate) (By Bud Burrell) (Go to http://www.financialwire.net/?s=cmmtry for all recent commentaries.) — For years, one of the few incentives offered oil and gas companies was something called the “depletion” allowance, which allowed these companies to expense the reduction of producible O&G product each year, taking it as a charge against their assets, and allowing them to retain a larger percentage of their earnings to reinvest.

Contrary to common public opinion and an intentionally obtuse mainstream media, the profit margins and returns on the investments of our energy companies and that sector rarely exceed less than 5% per annum.  They need enormous capital to do the necessary exploration to find oil and gas in regions they can reach, yet more capital to drill and develop these increasingly hard to find assets, more capital to refine the raw product into consumable form, and finally, more capital to develop and manage the infrastructure to get the refined products to end customers.

As I look at our country’s leadership assets, I have come to a practical realization that our two party system is absolutely hostile to the development of true leaders, and that even when a Party finds a good leader and gets him or her elected, they become a “wasting” or “depleting” asset from the moment they take office with the term limits we impose in most Federal positions, and in many state positions. There is no system to identify and develop leaders from the bottom up, as our political system is contrary to leaders having any inclination towards creating any threat to their own jobs. Leadership development is absolutely inherently integrated into our military structure, and into the capitalist system of our country. How many of you who have ever had responsible jobs have ever not been required to identify a “successor” or “successor plan” in that job?

How can we begin to identify and develop national leaders from local and state levels? As of right now, our top leaders are generally capped out after two full terms, with noted exceptions, including our Congress and Senate. Shouldn’t people who want to seek political office have to have read the Declaration of Independence, and the Constitution? Shouldn’t they be able to pass the 9th grade civics class final exam we took as kids (and eliminated by our new educators from most curricula)? I will tell you now that I doubt 80% of our elected leaders could pass such a test with a cheat sheet right in front of them.

Why is the history of our country so important to elected officials? If they don’t know history, they will repeat past mistakes, over and over. The best example in front of us right now is the failed stimulus plan and 2009 budget of this administration, which was supposed to generate new jobs, support the economy generally and do it quickly. Had any previous President and administration tried to end a deep recession/depression with such a plan in recent history? The answer is yes, and the result was the same failure this stimulus plan has produced. The Depression was the target of the relatively enormous stimulus plan of Franklin Delano Roosevelt, and it failed across the board. After a second short raid on the economy in 1937 run by the then head of the SEC, Joe Kennedy Sr. from his authority position as chairman of the SEC, they made 1938 the worst year of the Depression. It was in the period from 1933 to 1937 that FDR came up with schemes to make unemployment look lower that it ever got, like not counting anyone unemployed more than a year in the statistic. That con is still run today.

Could anyone look at FDR as a successful leader? The answer is only yes on the level of his work as a wartime President. He was bailed out by WWII, and he certainly would have been remembered as a failed President had it not come along. Could a leadership plan take credit for having Harry Truman on hand to take over when FDR died? Hardly. Truman was selected by Democratic Party leaders because they thought they could easily control him, his prior political experience being as the lead midwest bagman for Tom Pendergast and the Democratic Party. When VP Henry Wallace was found to have a chief of staff in 1944 who was a serving soviet intelligence officer (read The Venona files/papers), he had to go. Truman had always executed his prior duties flawlessly, and they thought that would make him a good dog, responsive to instructions and ready to be replaced by Party leaders at their discretion.

Thank God for this country that he turned out to be anything but someone’s obedient dog, and rather, he acted as an outstanding President who kept the snouts of the real pigs running his Party out of the trough. You don’t have to agree with all of his decisions, but in general history has been kind to him for a reason. Was he the last Democratic President with any personal integrity?

It is no secret that our economy is a political one. Our market has discounted President Obama in the main Dow and S&P markets against the expected outcome of a Republican run of the congressional and senatorial slates in the November, 2010 mid-term elections. Added to that is that in the current environment of uncertainty, U.S. business, besides liquidating jobs wholesale, has hoarded cash against a possible economic tsunami compounded by global financial turbulence and horrendous debt loading, magnified times ten when the unfunded liabilities of our social welfare schemes are added. I would argue that the last decade could be called the “lost decade”, in the sense that net on balance, markets, investment portfolios, retirement accounts and our currency are net losers, to marginal returns at best.

If any leader were to take a company down such a path for such a long time, he would long ago have been sacrificed by his board of directors, thrown to the shareholders. So why should our country be any different? We face the greatest crisis in our history, founded on three bombings on our own land, which killed over 3500 people without a war response. I liked George Bush as a person. I would enjoy having a drink and dinner with him. But if he asked what his biggest mistake was, it was to fail to unite this country behind a war effort. Had he done so, Roosevelt would have been left in the trash bin of history with Woodrow Wilson, another progressive, where he belongs.

What say the American people? They will be heard in November, and again in 2012. If they respond favoring our country and its history, we win. If they are silent, this country is doomed, hoisted by its own petard.

Source: Investrend Weblogs (http://www.investrendweblogs.net/).

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