Mish's Global Economic Trend Analysis

President Obama's Lies Regarding U.S. Dependency On Foreign Oil
Huge Problem With Bernanke's 2% Inflation Target Explained in Pictures
Unbelievable Stress of Making "Only" $200,000 After Taxes

President Obama's Lies Regarding U.S. Dependency On Foreign Oil

Posted: 01 Mar 2012 11:13 PM PST

The Los Angeles times notes Obama, chart in hand, presses his case on gas prices

As rising gas prices are putting pressure on politicians to act, President Obama called on Congress to vote quickly to eliminate subsidies for the oil industry, returning to a favorite target the president.

Obama repeated his case, outlined in a speech last week, that there is "no silver bullet" to rising gas prices. He highlighted his administration's effort to reduce dependence on foreign oil and boost development of alternative energy.

This week he introduced a new prop to illustrate his point. As Obama spoke, a chart popped up on television screens behind him. The graph showed U.S. dependence on foreign oil falling since 2005 -- from 60% of net imports to 45% in 2011.

The White House handed out copies to the crowd. Obama told them to take it home -- "it makes for a great conversation piece at parties."

"Now, one reason our dependence on foreign oil is down is because of policies put in place by our administration and my predecessor's administration. And whoever succeeds me will have to keep it up."

Really? No, Not Really?

The Facts show that President Obama is disingenuous at best, and a blatant liar at worst. I lean towards the latter. Reader Tim Wallace provides charts to prove it.

Petroleum Distillates Usage

That looks pretty good, doesn't it? But what the heck does it have to do with reduction in foreign demand, and more importantly, Obama's role (or lack thereof) in achieving those gains.

For the answer to those most pertinent questions, let's display the usage in terms of foreign demand.

Petroleum Distillates Percentage Usage

Chart Explanations

Reader Tim Wallace writes ...

Hello Mish -

I almost went apoplectic today reading on line that the President is now claiming to have cut our dependency on foreign oil, and that the US has imported less each year of his Presidency.

Foreign oil imports have indeed dropped throughout his Presidency, but as the attached charts show, there is a reason for that drop - a tremendous decline in USA usage overall. This is because of a declining economy, NOT because of "alternate sources" or any of the other lies tossed our way by the government.

Of more interest is the fact that although the amount of foreign oil has declined, it has grown as a percentage of our overall supply.

During the Obama Presidency we have become more dependent on foreign oil, not less!

His entire speech was disingenuous at best.

Tim

There you have it. President Obama absolutely did not cut dependency on foreign oil. In fact, foreign oil dependency rose from roughly 37% to 40% under his administration. To be more precise, foreign petroleum usage in his administration went from 37% to a peak of 41% last year, currently at 39.9%.

The only way Obama can take credit for the decline in consumption caused by the recession, is to take credit for the recession itself.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Huge Problem With Bernanke's 2% Inflation Target Explained in Pictures

Posted: 01 Mar 2012 12:22 PM PST

Ben Bernanke wants prices to rise 2%. There are numerous problems with such a proposal, the first being increases in money supply sometimes lead to asset bubbles and not increases in prices of consumer goods.

Indeed the Fed completely ignored (if not encouraged) the housing bubble because home prices are not in the CPI. A housing bubble and a housing crash was the result.

The second major problem with inflation targeting is prices may go up, but wages may not necessarily follow. Indeed they haven't. Let's start with a graph of 2% price inflation over time.

Inflation Targeting at 2% a Year

click on any chart for sharper image

Real Disposable Personal Income

That chart nicely shows a slight parabolic pattern similar to the start of the first chart. However, that growth is a mirage based on population changes. Let's factor out population increases.

Real Disposable Personal Income Per Capita

Real Disposable Personal Income Per Capita Detail

Income Gap Discussion

That "Income Gap" is not the only problem. One must also consider "skew". As a result of Fed policies, there have been some income gains, but only at the top end.

"Per Capita", by definition, averages out those gains.

In reality, a select few percent have done exceptionally well as a result of Bernanke's tremendously misguided policies. Another few percent have simply done well, and another perhaps slightly larger group have barely kept up.

The bottom 80 percent or so have fallen much further behind than the per capita charts suggest.

Except for the banks, brokers and bondholders, and everyone else bailed out by the Fed, most have been clobbered by Fed policies.

Ironically, many of those bailed out have the unmitigated gall to whine about their plight. Please See Unbelievable Stress of Making "Only" $200,000 After Taxes for details.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Unbelievable Stress of Making "Only" $200,000 After Taxes

Posted: 29 Feb 2012 11:53 PM PST

People who have nothing to eat, no job, and are about to be tossed out of their homes in foreclosure, really do not know what stress is.

To fully appreciate stress, please consider the sorry "plights" of Andrew Schiff, marketing director for Euro Pacific Capital, Daniel Arbeeny, a Wall Street headhunter, and hedge-fund manager Richard Scheiner.

Bloomberg describes the out-and-out horror stories of all three in Wall Street Bonus Withdrawal Means Trading Aspen for Coupons

Andrew Schiff said the $350,000 he earns, enough to put him in the country's top 1 percent by income, doesn't cover his family's private-school tuition, a Kent, Connecticut, summer rental and the upgrade they would like from their 1,200-square- foot Brooklyn duplex.

"People who don't have money don't understand the stress," said Alan Dlugash, a partner at accounting firm Marks Paneth & Shron LLP in New York who specializes in financial planning for the wealthy. "Could you imagine what it's like to say I got three kids in private school, I have to think about pulling them out? How do you do that?"

Wall Street's cash bonus pool fell by 14 percent last year to $19.7 billion, the lowest since 2008, according to projections by New York state Comptroller Thomas DiNapoli.

"It's a disaster," said Ilana Weinstein, chief executive officer of New York-based search firm IDW Group LLC. "The entire construct of compensation has changed."

Wall Street headhunter Daniel Arbeeny said his "income has gone down tremendously." On a recent Sunday, he drove to Fairway Market in the Red Hook section of Brooklyn to buy discounted salmon for $5.99 a pound.

$17,000 on Dogs

Richard Scheiner, 58, a real-estate investor and hedge-fund manager, said most people on Wall Street don't save.

Scheiner said he spends about $500 a month to park one of his two Audis in a garage and at least $7,500 a year each for memberships at the Trump National Golf Club in Westchester and a gun club in upstate New York. A labradoodle named Zelda and a rescued bichon frise, Duke, cost $17,000 a year, including food, health care, boarding and a daily dog-walker who charges $17 each per outing, he said.

He described a feeling of "malaise" and a "paralysis that does not allow one to believe that generally things are going to get better," listing geopolitical hot spots such as Iran and low interest rates that have been "artificially manipulated" by the Federal Reserve.

Poly Prep

The malaise is shared by Schiff, the New York-based marketing director for Euro Pacific Capital, where his brother is CEO. His family rents the lower duplex of a brownstone in Cobble Hill, where his two children share a room. His 10-year- old daughter is a student at $32,000-a-year Poly Prep Country Day School in Brooklyn. His son, 7, will apply in a few years.

"I can't imagine what I'm going to do," Schiff said. "I'm crammed into 1,200 square feet. I don't have a dishwasher. We do all our dishes by hand."

He wants 1,800 square feet -- "a room for each kid, three bedrooms, maybe four," he said. "Imagine four bedrooms. You have the luxury of a guest room, how crazy is that?"

Summer Rentals

The family rents a three-bedroom summer house in Connecticut and will go there again this year for one month instead of four. Schiff said he brings home less than $200,000 after taxes, health-insurance and 401(k) contributions.

"I wouldn't want to whine," Schiff said. "All I want is the stuff that I always thought, growing up, that successful parents had."

Imagine the Stress

Imagine the stress of renting a three-bedroom summer home for only one month instead of four.
Imagine the stress of only making $350,000 pre-tax
Imagine the stress of making a mere $200,000 after tax and IRA contributions, and having to wash dishes by hand
Imagine the stress of being able to send your kids to the $32,000-a-year for the Poly Prep Country Day School in Brooklyn

Imagine the stress knowing full well that none of the above is enough, yet not being able to whine about it.

"I wouldn't want to whine," Schiff said. "All I want is the stuff that I always thought, growing up, that successful parents had."

This is more than nauseating, so if you need to excuse yourself to take care of matters, please do so now.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

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Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

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