i dont have anything of value to add.

but please do carry on.




[Edited on August 10, 2006 at 3:07 AM. Reason : ]

8/10/2006 3:06:42 AM

Quote :

"Now Compare this to the chart you just posted of how horribly the dollars value has fallen."

You misunderstand, that is 3% a year annual growth of the money supply, not inflation. Right now inflation is around 3% a year, but that is at a money supply growth rate of around 8% (or at least it was). A growing economy needs a growing money supply just to keep wages and prices from falling. The problem is that we tend to let the money supply grow far beyond what is needed by the financial system.

8/10/2006 9:22:24 AM

Quote :

""Kansas and Colorado are enjoying an extensive boom in exploration by lots of family owned businesses." What generally happens is people retire from the majors and go start their own company to drill baby wells in the parking lots of McDonald's Restaurants."

Once agian, completely besides the point. I'm not talking about drilling, I never have. I asked, why is there no signifigant number of competitors entering this market? The profits are there, they have been for a good while. If this is contestable, we should be seeing more entrants.

Quote :

"I said the network of pipelines here in the U.S. was a low barrier to entry; every other barrier still remains: the equipment is rediculously expensive, talent is both rare and expensive, tight governmental regulations, time of investment, high probability of failure, social stigma to operation, etc. etc."

I don't see any of those as larger than the airline industry, who we've seen several companies enter.

Quote :

"If you are going to call every natural barrier to entry a market failure then you need to look up the word failure."

It is a failure if the system is not able to allow competition to work in that case, much like a natural monopoly, which the government must regulate for it to begin to work close to effectively.

Quote :

"It would be a true failure if firms didn't take these realities into account before investing. Sure, oil prices would be closer to equillibrium, but as a whole society would have suffered because firms should be compensated for the high risk of such investments, which isn't taking place at the equillibrium price."

You'll note I refered to them as "economic profits".

8/10/2006 9:49:58 AM

Quote :

"I'm not talking about drilling, I never have. I asked, why is there no signifigant number of competitors entering this market?"

Then dear god tell me what you are talking about. The high profits of today are coming from oil exploration and drilling. Out west every tom dick and harry is starting his own exploration and drilling operations, yet you say you are not talking about drilling. Well, that is where all the profits are, the profits for refining are up but not high, (except for heavy sour crude, but that's a different story) the profits for distribution and sales are barely up at all, so why are you not talking about drilling?

Quote :

"It is a failure if the system is not able to allow competition to work in that case"

Well, until you tell me to system you are referring to I cannot speculate as to whether or not there is sufficient competition. But to the best of my knowledge there is no natural monopoly in the oil industry. The capital goods required by the business are made by numerous independent manufacturers across the globe and can be had by anyone just for the asking. If you had a few million dollars lying around and expected to find oil under your house then I know of no reason you could not drill for it. Of course, I would suggest you hire someone whos done it before, but I'd leave that up to you. As it would be such a small quantity of oil production I would recommend you stick with shipments via tanker truck either to Wilmington or to Charlotte for grading and sale.

But I must warn you, very little oil has been discovered in the state of North Carolina, so I don't rate your prospects very high.

[Edited on August 10, 2006 at 12:31 PM. Reason : .,.]

8/10/2006 12:30:30 PM

in my opinion, it seems like there is so much more the government could do to maximize profits

like what if they rationed out food portions and gas, etc- everyone would be going as efficiently as they could(so profits would be maximized)

8/10/2006 3:45:21 PM

^ In my opinion, "sacrifice for the good of the country" is near dead. Any politician that started rationing would be swiftly punted out of office.

Am I cynical? Of course I am. We have an anti-war movement that has zero connection to the war but act on a self-righteous high horse (what are you protesting? there's no draft!). We have politicians that are consistently piling debt upon debt onto this country through their pet projects like a bridge to a tiny island of 50 people in Alaska. We have an administration that has started an FBI program to monitor internet pornography in households while the War on Terror continues, where you think FBI resources might be put to better use. We have a senior citizen population that has a massive pension waiting for them that will never be paid in full because there is not enough money but no one does anything to fix it.

I am not a Republican or Democrat really, but still care about politics and look at its connection to national concerns. I want you to look at issues like possible oil shortages and ask yourself this: When a crisis comes, do you trust the people in power in this country (both parties) to do what is right, like rationing, or what is easy?

8/10/2006 4:51:59 PM

Quote :

"Then dear god tell me what you are talking about."

Production, processing, transportation, and marketing of gasoline.

Quote :

"The high profits of today are coming from oil exploration and drilling. Out west every tom dick and harry is starting his own exploration and drilling operations, yet you say you are not talking about drilling."

I'm not talking about drilling.
I'm talking about exxon, bp, and shell. The petroleum oligopoly.

8/10/2006 7:26:27 PM

Quote :

"I'm not talking about drilling. I'm talking about exxon, bp, and shell. The petroleum oligopoly."

What do you think Exxon, BP, and Shell do? They explore, drill, ship, refine, distribute, and market petroleum products.

Of course, I don't see how you can possibly imagine the petroleum market is an oligopoly, wikipedia has a list of over 100 companies. Here is a list of just the largest U.S. companies:
Vaalco Energy Inc., Sunoco, Sinclair Oil, Ship N Oil Corporation, Pogo Producing, Marathon Oil Corporation, The Louisiana Land & Exploration Company, Koch Industries, Kerr-McGee, Halliburton, Gulf Oil, Devon Energy, ConocoPhillips, Chem-Energy Corporation, Chevron Corporation, Arbusto Energy, Anadarko Petroleum Corporation, Amerada Hess Corporation, Alon USA.

This list does not include the cornucopia of foreign firms operating in the U.S. or private firms not publicly traded.

Compare this to the complete list of all oil companies operating in the whole of Mexico: Petroleos Mexicanos, the state monopoly. No wonder oil production is falling in Mexico, a country that is still largely unexplored for oil, government run industries always lack sufficient investment. Better to rob the profits of the company now and build your pet projects now because odds are in 5 to 10 years when investment in new fields would be coming online you probably won't be in office anymore.

8/10/2006 11:35:54 PM

Quote :

"What do you think Exxon, BP, and Shell do?"

Mainly, they process, transport, and market.

Quote :

"Of course, I don't see how you can possibly imagine the petroleum market is an oligopoly, wikipedia has a list of over 100 companies."

Search for any one of the "big four" and they'll mention how they are part of the "big four", BP, Exxon, Shell, and Total.

8/11/2006 12:16:41 AM

Sure, they are the big four, but collectively they barely control 18% of the market, but you evidently have a different definition of oligopoly.

[Edited on August 11, 2006 at 1:29 AM. Reason : .,.]

8/11/2006 1:29:29 AM

In general--and I think that this relates to the overarching point of the thread--many citizens of the United States really do not know how to live free. Witness the recent wild debate and knee-jerk reactions concerning personal investment of some Social Security funds.

It appears that many Americans are simply too scared to take full control of their retirement planning and other areas of their lives. It's really a shame.

8/11/2006 3:36:02 AM

^
I've said it before, hooksaw, making sense on the wolf web will get you nowhere.

8/11/2006 11:02:22 AM

Quote :

"Sure, they are the big four, but collectively they barely control 18% of the market, but you evidently have a different definition of oligopoly."

Which market? The supermajors are vertically integrated.

8/11/2006 11:12:32 AM

^ and no one else is?

8/11/2006 1:13:26 PM

^^ I suppose you're right, EarthDogg. I guess I'm just a glutton for punishment.

I just don't understand why some people want more government and less freedom. It does not make sense to me, and it never will.

8/11/2006 4:33:11 PM

Let me toss this figurative bomb into the mix: One can make a case that a monopoly CAN be a good thing. Take the Bell Labs of time past, for example. It simply cannot be legitimately disputed that so many amazing technological advances (transistors, lasers, faxes, programming languages, and so on) could have been made if so many resources had not been concentrated in one entity.

Remember, this is NOT necessarily my position; rather, it is one that has been offered by some economists.

I am not submitting a pro-monopoly or pro-oligopoly argument here. What I am suggesting is that it often seems in this country that some of us want an individual or other entity to be successful--just not TOO successful. Some in this country loudly bemoan the plight of the poor while attempting to bring down the rich in the same breath. I think that is just wrongheaded.

8/11/2006 4:59:40 PM

Quote :

"and no one else is?"

No other signifigant players in this market. You can't seriously argue that they don't share a great deal of the market.

Quote :

"One can make a case that a monopoly CAN be a good thing. Take the Bell Labs of time past, for example. It simply cannot be legitimately disputed that so many amazing technological advances (transistors, lasers, faxes, programming languages, and so on) could have been made if so many resources had not been concentrated in one entity."

That's an arguement moreso for economies of scale. I'd be inclined to agree with this, simply due to economies of scale, most industries would ideally function better under on non-competitive entity. This simply can't be obtained under capitalism. We'd need a different economic system to fully take advantage of this. Under capitalism, any entity that does not compete will not produce the socially optimized level of output at the socially optimized price.

8/11/2006 9:34:30 PM

Quote :

"Take the Bell Labs of time past, for example. It simply cannot be legitimately disputed that so many amazing technological advances could have been made if so many resources had not been concentrated in one entity."

I do, and have, legitimately contradicted this exact thesis. Regretfully, I don't have time right now, must sleep, till later...

Quote :

"No other signifigant players in this market. You can't seriously argue that they don't share a great deal of the market."

I already have. See above.

8/12/2006 12:40:50 AM

Quote :

"Some in this country loudly bemoan the plight of the poor while attempting to bring down the rich in the same breath."

LOL Dicken's Scrooge had the same idea in "A Christmas Carol" ....

Quote :

"'This is the even-handed dealing of the world.' he said. 'There is nothing on which it is so hard as poverty; and there is nothing it professes to condemn with such severity as the pursuit of wealth!' "

8/12/2006 12:43:37 AM

Quote :

"I already have. See above."

I doubt your 18% includes the vertically integrated oil sellers. Please, name one other large, vertically integrated oil seller.

Quote :

"LOL Dicken's Scrooge had the same idea in "A Christmas Carol" ...."

I'd reply with an FDR quote

"It is an unfortunate human failing that a full pocketbook often groans more loudly than an empty stomach."

8/12/2006 3:01:32 AM

No, that 18% only included the big 4, like I said.

Another one would be Citgo.

But you miss a big point. BP often doesn't own BP stations. Most stations are independently owned and regularly switch providers (taking down all the BP colors and putting up the Kangaroo colors). The reason is obvious, if you care, BP and Exxon don't want to face the risks associated with owning something so subjective as a fixed gas station, unless it is a sure thing.

8/12/2006 8:52:49 AM

Quote :

"Another one would be Citgo. "

Citgo is the Venezuelan national oil company.

8/12/2006 10:18:06 AM

Quote :

"Another one would be Citgo."

It's not vertically integrated as the others are.

Quote :

"But you miss a big point. BP often doesn't own BP stations."

I didn't miss that point, I know that.

8/12/2006 11:54:24 AM

Ah, yes, the liberals as Scrooges; I love it. Unfortunately, unlike the ultimately reformed Ebenezer Scrooge, the liberals will never change their philosophy and help the Tiny Tims of world through individual efforts and private funding.

Poor Tim:

http://images.google.com/imgres?imgurl=http://www.cedmagic.com/featured/christmas-carol/1951-xmas-tiny-tim.jpg&imgrefurl=http://www.cedmagic.com/featured/christmas-carol/1951-xmas-tiny-tim.html&h=300&w=400&sz=22&hl=en&start=8&tbnid=MnLhXublvZSLXM:&tbnh=93&tbnw=124&prev=/images%3Fq%3Dglyn%2Bdearman%26svnum%3D10%26hl%3Den%26lr%3D%26sa%3DN

By the way, the version of _A Christmas Carol_ with Alastair Sim is my favorite. I actually won't do Christmas without watching it at least once. The film has important messages about greed, change, and charity that I use as an annual reminder to myself of how I should live my life.

[Edited on August 12, 2006 at 4:17 PM. Reason : Link]

[Edited on August 12, 2006 at 4:19 PM. Reason : Link II]


[Edited on August 12, 2006 at 4:25 PM. Reason : Link III]

8/12/2006 4:09:31 PM

I await your latest economic manifesto, LoneSnark.

8/12/2006 4:16:45 PM

maybe you should await instructions on how to link to a picture.

8/12/2006 10:40:00 PM

Quote :

"It's not vertically integrated as the others are."

I'm confused. Citgo owns oil fields in Venezuela, it owns refineries in Venezuela, it owns the pipelines in Venezuela, it owns a franchise of gas stations in America. What the fuck is missing to make it "vertically integrated"? As if that mattered, WTF is wrong with you?

Or is Citgo different because it has a state granted monopoly (in Venezuela), while the others do not?

8/13/2006 12:52:42 AM

Quote :

"Citgo owns oil fields in Venezuela"

No, PDVSA owns the oil fields, and PDVSA owns citgo.

8/13/2006 1:41:16 AM

Well, that is backwards. Usually Exxon sets up a separate company to manage its oil field, not the other way around. Obviously ownership does not imply ownership, my bad, they are clearly not "vertically integrated."

8/13/2006 8:15:26 AM

a bit old, but funny



Caption at the bottom: "Of course, the U.S.A. is not going to go bankrupt. The point of this piece is to make the inevitable alternative obvious. The U.S. will repay its debts, backed with the full credit of the government. Debts will be paid in full... with itty, bitty little dollars."

8/13/2006 7:14:44 PM

Quote :

"Usually Exxon sets up a separate company to manage its oil field, not the other way around. Obviously ownership does not imply ownership, my bad, they are clearly not "vertically integrated.""

This was different. The PDVSA bought out Citgo. But you are correct, they are not vertically integrated.

8/13/2006 8:19:26 PM

^ Sorry, that was sarcasm.

The point is every stage of production/refining/sales is owned directly or indirectly by one organization, in this case PDVSA, which makes it just as vertically integrated as Exxon or BP.

With the obvious proviso that I don't believe any of them are really vertically integrated since most of their oil gets refined in refineries owned by other companies and sold in franchise gas stations owned by independent individuals which are simply paying for the right to put up BP and Exxon and Citgo signs.

8/14/2006 9:51:05 AM

Okay, I'm waiting for said instructions, Kris.

8/15/2006 12:48:14 PM

ok another simple question i thought of...so i'm in alamance county, getting my oil changed, and while waiting i see on the tv an infomercial about buying gold...talking about how gold has gone up to like 700 an ounce...well it got me thinking...

isnt our paper money(fiat i think) backed up by gold...well if our money is backed up by gold, and gold keeps rising, why is the dollar continuing to fall against other currencies like the euro and stuff?

8/15/2006 1:10:38 PM

Quote :

"isnt our paper money(fiat i think) backed up by gold"

Our paper money is based on a fiat monetary system which means that it has no government backed ties with gold what-so-ever. The two are completely independent from each other.

Now, you referred to other currencies in reference to the value of gold in dollars, there is a point to be made here. If the value of the dollar falls then holding everything else equal we should expect the price of gold (in dollars) to rise. Since the dollars has fallen a fraction or two in the past few years, one might suspect the price of gold in Euros to not have gone up quite that much.

[Edited on August 15, 2006 at 1:42 PM. Reason : .,.]

8/15/2006 1:40:26 PM

well isnt their some rule that all our money has to be backed up by something?

i was always under the impression(or atleast thats what i thought erickson told us in ec 202) that our money was backed up at the federal reserve(where we keep all the gold)

8/15/2006 1:45:55 PM

Our money has been backed up by nothing more than people's confidence in it since Richard Nixon pulled the United States off the gold standard in 1971.

8/15/2006 1:54:06 PM

The Federal Reserve does operate numerous vaults in which it holds the gold of both the U.S. as well as other countries. And if ordered to do so by Congress it could use that gold to buy dollars off the market. However, there is no current order to do so at any price, which means there is no explicit backing being provided by the gold reserves. But you may feel an implied backing in the event that the dollar collapses, but that would depend on who is in political control of the government and would require specific legislation.

8/15/2006 2:54:54 PM

Quote :

"The point is every stage of production/refining/sales is owned directly or indirectly by one organization, in this case PDVSA, which makes it just as vertically integrated as Exxon or BP."

There's a big difference between "directly" owning something and "indirectly" owning something. I mean I own a few stocks, but that doesn't mean I own like 1,000 different companies. In order to be vertically integrated, the company must own every stage themselves.

Quote :

"in franchise gas stations owned by independent individuals which are simply paying for the right to put up BP and Exxon and Citgo signs."

It more than just the signs, those gas station owners wouldn't really have any other way of supplying gasoline without buying it from one of those companies.

Quote :

"Okay, I'm waiting for said instructions, Kris."

site_crazycode.aspx

Go down to images. Sorry if I was a bit rude, I do realize that only a handful of people on this site read how to post an image before they made a fool of themselves.

Quote :

"well isnt their some rule that all our money has to be backed up by something?"

Ours are backed by nothing, they are each similar to a stock certificate, their value is determined relative to people's perception of it's worth.

In fact, many countries hold large amounts of our dollars to back their own currencies, thuns kind of setting themselves on a US Dollar standard, but this happens to be one contributor to the lowering value of the dollar.

8/15/2006 3:13:22 PM

Quote :

"In fact, many countries hold large amounts of our dollars to back their own currencies, thuns kind of setting themselves on a US Dollar standard, but this happens to be one contributor to the lowering value of the dollar."

sounds like to me that america is so badass, other countries want a taste

Quote :

"The Federal Reserve does operate numerous vaults in which it holds the gold of both the U.S. as well as other countries. And if ordered to do so by Congress it could use that gold to buy dollars off the market. However, there is no current order to do so at any price, which means there is no explicit backing being provided by the gold reserves. But you may feel an implied backing in the event that the dollar collapses, but that would depend on who is in political control of the government and would require specific legislation."

what if they released some of that gold when social security dries up...seems like an easy way to pay for something when you dont have any money to do so

[Edited on August 15, 2006 at 4:04 PM. Reason : .]

8/15/2006 4:02:04 PM

Quote :

"sounds like to me that america is so badass, other countries want a taste"

Yeah, so much so that our debt is pretty much entirely financed by China and Japan by buying treasury bonds. (The Europeans are getting out of dollars...a lot.)

So think about this, the next time some politician talks about the No Child Left Behind Act of the government or sending a division to Iraq, it's all being put on one big charge card. And who's giving us the money short-term? A bunch of communists.

8/15/2006 4:30:11 PM

Quote :

"what if they released some of that gold when social security dries up...seems like an easy way to pay for something when you dont have any money to do so"

Not a rediculous idea... But gold has lost its ability to demand real wealth. For the past 30 years while the dollar has lost about half of its value the amount of money required to buy an ounce of gold has remained remarkably flat. To buy a single ounce of gold in Jan 1980 it took $400, in Jan 1990 it took $400, in Jan 2000 it took $300. Sure, today the price is way up but it is sure to come back down.

"The United States holding of gold is worth approximately $180.1 billion as of June 1st 2006."
http://en.wikipedia.org/wiki/Official_gold_reserves

As such, selling of every single bar of gold would fund our current government for 1/6th of a year.

8/15/2006 5:52:57 PM

Quote :

"A reserve currency (or anchor currency) is a currency which is held in significant quantities by many governments and institutions as part of their foreign exchange reserves. It also tends to be the international pricing currency for products traded on a global market, such as oil, gold, etc. This permits the issuing country to purchase the commodities at a marginally cheaper rate than other nations, which must exchange their currency with each purchase and pay a transaction cost. (For major currencies, this transaction cost is negligible with respect to the price of the commodity.) It also permits the government issuing the currency to borrow money at a better rate, as there will always be a larger market for that currency than others. The United States dollar is the most important reserve currency in the world today. At the start of 2006, 66.3% of the identified official foreign exchange reserves in the world were held in United States dollars, 24.8% in euro, 3.4% in Japanese yen, and 4.0% in pound sterling, according to the IMF.. For this reason, the US dollar is said to have "reserve currency status", making it possible for the United States to run significant trade deficits (financed by seigniorage) with limited economic impact as long as the major holders of reserve currencies do not issue public statements suggesting otherwise. The Pound Sterling was the primary reserve currency of much of the world in the 18th and 19th centuries. But perpetual current account and fiscal deficits financed by cheap credit and unsustainable monetary and fiscal policies and the relative decline of Britain from being the world's pre-eminent military and economic power led to the pound losing this status. The G8 also frequently issues public statements as to exchange rates, though with the exception of Japan, the member states are impotent in their ability to directly affect rates. In the past, however, its predecessor bodies could directly manipulate rates to reverse large trade deficits. The top reserve currency is generally selected by the banking community for the depth, strength, and stability of the economy in which it is used. Thus, as a currency becomes less stable, or its economy shrinks, bankers may abandon it for more stable or deeper economies, although it may take a long time, as recognition is important in determining a reserve currency. For example, it took many years after the United States overtook Great Britain as the financial centre of the world before the dollar became the unquestioned global reserve currency. The Euro is already the 2nd most commonly traded reserve currency, and is the most likely candidate to displace the dollar as the predominant reserve currency. Since the euro was launched in 1999 (largely replacing the deutschmark as a major reserve currency), its contribution to official reserves has risen continually as banks seek to diversify their reserves and trade in the eurozone continues to expand. "

8/15/2006 6:59:45 PM