Sunday, April 25, 2010


America has been blessed with a gaggle of geese that lay golden eggs. But we seem intent on wringing the neck of these geese one by one.

Take natural resources. No place on earth has more natural resources than the United States of America. For example, we have billions of barrels of oil and trillions of cubic feet of natural gas off our coastlines. Unfortunately, this huge oil spill in the deepwater Gulf will nip in the bud the growing recognition among even erstwhile environmental whole earth, holy do-gooders like Obama that we urgently need to tap that energy. What terrible timing. Even though this spill is the first significant one since the one off Santa Barbara over 40 years ago, our national energy policy will likely remain strait-jacketed so that we can not touch one drop of that oil or one cubic foot of that gas. We would rather sends tens of billions of dollars every year to people like Putin, Chavez and Islamic fundamentalists who hate our guts. Meanwhile, Brazil recently discovered a huge oil find in the Gulf adjacent to US territory. Only God knows how much energy resources lie within our grasp. What do you think China, Japan or the EU would give to have what we have and do not use? Lunacy!!!

Another goose laying golden eggs is the US drug industry. The US is basically the pharmacy to the rest of the world. No better example exists of American know-how and ingenuity than our pharmaceutical and biotech companies. We have produced one miracle drug after another over the past hundred years. The rest of the world owes us a great debt of gratitude. Yet listening to the healthcare debate over the past year, one would think that our drug industry is some vast criminal enterprise. These dumb as dirt congresspeople seem to have no clue what the risks and costs are every time a drug or biotech company launches an effort to develop a new drug. The companies ask for and deserve a high reward for this risk and huge capital investment. But Obamacare may strangle these companies to such an extent that the risks are no longer worth taking.

Another golden goose whose neck we have recently wrapped our hands around is the capital markets. Our capital markets have been the envy of the world. Over the past twenty-five years, the US Capital Markets have been able to perform the magic trick of financing a nation of spendthrifts so that it can have the highest standard of living in the world, bar none. We have a major funding gap between what we produce and earn and what we spend and consume. Despite this, our efficient and sophisticated money raising machine has managed to keep the US Dollar as the reserve currency of the world even though our fearless leaders have created one huge fiscal fuck up. I'm not out to defend Goldman Sucks or deny the need to reform, but just like energy and drug companies, financial firms are being vilified and caricatured to such a degree that one has to wonder why anyone would want to work for those firms. People forget that capital is fungible, mobile; it can go anywhere. One reason that investors overseas are willing to put their money here, money that we need to support our enormous "funding gap," is that our capital markets have been the most efficient anywhere. If this financial "reform" ends up damaging our markets to the extent that they no longer have the elasticity and efficiency as before, then capital will go elsewhere.

China, Europe and other places like Singapore are rubbing their hands in glee as we seem intent on trashing our markets. They appreciate that a country can't be a great power unless it can easily raise the funds it takes to support a great power military and the capital investment necessary for a great power economy.

Imagine twenty years from now sitting in some dingy rental house that you can't afford to buy because that great mortgage machine of the 90's and 2000's was basically shut down in 2010. The house is dark and dank because the energy that was supposed to be supplied by all those wind farms somehow didn't turn out to be as great as promised; besides, the cost of wind energy turns out to be way beyond the means of the average person to pay for it without government subsidies, which ended in 2015 when the US credit rating got downgraded to junk. Meantime the price of natural gas and heating fuel has gone up ten times. And oh yeah, you're probably dead anyway by then since the drug companies quit producing all those "miracle drugs" that extended everyone's lifespans because laws and regulations essentially killed any return on the huge investment necessary to create such drugs. But hey, you never have to worry about a once-every-fifty years oil spill ruining the beaches, where you can sit and gaze at all those giant wind turbines as they daily massacre thousands of ocean birds. And since Wall Street got shut down and moved to Shanghai, you won't have those greedy bankers thinking of new ways to fund a lifestyle beyond your means. And those rapacious drug companies?...Who needs them since you get all the generic drugs you need from India anyway. And if closing down the drug companies means you don't live as long, who cares if this is what living in 2030 comes down to...

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