[Rhodes22-list] Weekend reading, not sailing, some might call it political, just educational

[Brad Haslett]

Ed,

Here's something else to add to your weekend reading.  Expect more of
this to follow - capital gets to vote as well. BTW, I read a good
retort to the UAW's willingness to compromise in 2011 but not in 2009,
"fine, we'll make you the loan in 2011".

Brad

------------------------

Oil Companies Voting With Their Feet

By INVESTOR'S BUSINESS DAILY | Posted Friday, December 12, 2008 4:20 PM PT

Energy: Another day, another oil company fleeing the country. No, this
isn't Ecuador, the banana republic that just defaulted on its debt
after chasing out investors. It's the United States, and what we're
seeing is self-defense.

Much political hay has been made in Congress about "unpatriotic"
corporations that move operations abroad. Weatherford International is
the latest, taking its headquarters from Houston to Switzerland. The
oil services company said that it wants to be closer to its markets.
But what it really meant was that it no longer saw the future in the
U.S.

In a political atmosphere of blaming corporations, it's no wonder.
Halliburton fled to Dubai in 2007. Tyco International, Foster Wheeler
and Transocean International all went to Switzerland. As a pattern
emerges, America's global standing diminishes, in part because it's
based on the willingness of companies to invest. It's an especially
bad sign when domestic companies flee.

"The U.S. is an important market," Weatherford CEO Bernard J.
Duroc-Danner told the Houston Chronicle Thursday. But, "it's just a
market. It's not the primary market."

How does that sound for a loss of global leadership? If that's not
clear enough, try this: "In the hierarchical pecking order,
(Houston's) not going to be Rome anymore."

What accounts for this vote of no confidence in the U.S.?

Start with the demonization of oil companies. Executives have been
hauled before Congressional star chambers, held up to abuse and
ridicule, and then blamed for high oil prices as if they wanted to
kill their markets. Rising global demand, nationalizations and
Congress' failure to open the country to drilling go ignored.

Huge companies such as Exxon Mobil, whose market cap exceeds the GDP
of most countries, create $100 billion in earnings in quarters when
oil prices soar. It looks high, but over the years, the industry's
average returns, at 9%, are less than other industries.

Nevertheless, Exxon's profits are evidence of its success at
extracting oil from miles below the earth's surface, even underwater,
and from unbelievably hostile environments, such as the Arctic.
Instead of being objects of national pride for their productivity and
efficiency, and subjects of heroic Hollywood movies, their success is
considered to be dishonest.

Congressional hostility affects oil companies' operations abroad, too:
Exxon, remember, noted that Congress' animus toward oil profits
directly encouraged Hugo Chavez's uncompensated expropriations of $1
billion of Exxon's assets in Venezuela, which drove oil prices higher.

With an expanded Democratic Congress and an incoming Democratic
president determined to create "patriot corporations," it's no
surprise to see companies try to get out while they can. Make no
mistake — it's investment fleeing the country. As this goes, foreign
capital could flee next.

Congress' abuse sets the political tone for the worst to come.

First, oil companies, like all corporations, endure the second-highest
taxation in the developed world (39.25% of their income), which
dampens their competitiveness. The 2007 OECD average is 27.6% and
falling. Worse still, U.S. firms are taxed on operations around the
world, unlike the global standard, making a move of headquarters a
defensive move.

Meanwhile, politicians openly say they want to hike taxes on oil
firms. President-elect Obama seems to have backed off, but questions
remain as to whether he can stand up to a rapacious and economically
ignorant Congress that hasn't.

Second, Big Labor is feeling its oats, swaggering confidently with
newfound political power. United Steelworkers approved a "national oil
bargaining policy" for higher wages and beefed up its "strike defense
fund," both of which point to plans to squeeze oil companies, if not
launch strikes.

"You have to prepare your membership for 2009," according to USW
International Vice President Gary Beevers on a union Web site. "The
oil companies are ready for us; we have to be ready for them." With
Congress at their back, oil companies are unlikely to lose.

None of this portends well for the U.S. business environment. That's
why top-performing firms, such as Weatherford, are exiting. Until
Congress learns to appreciate and value oil firms, this will continue,
leading to less U.S. investment and influence as more competitive
climes beckon.

On Sat, Dec 13, 2008 at 7:35 AM, Tootle <ekroposki at charter.net> wrote:
>
> I get all sorts of emails, this web site was contained in one:
>
> http://www.alipac.us/article3815.html
>
> And some so called political rhetoric:  "Let's switch gears here for a
> second. Apparently Dick Cheney, in a closed door Senate GOP lunch on
> Wednesday, warned the GOP, quote, that it will be Herbert Hoover time if aid
> to the industry was rejected for the bailout of the big three. This is
> exactly the same kind of stuff that they were saying about the bank bailout,
> but now they're saying it about GM. What do you think about what's going on
> right now,?' [Glen Beck]
>
> Reply to question: "Well, I think there's no end to this bailout. It's
> bailout without end. We need to find a way to bailout from the bailout and
> actually, with respect to Dick Cheney, I think he's got it actually wrong
> here. You know, it's very interesting to me, speaking as a foreigner, but
> the Americans always talk about the great depression. In other countries,
> they talk about it as a depression. It started in 1929, the worst was over
> in three or four years. What prolonged it in the United States was both
> Herbert Hoover and FDR over in overinterfering in the economy to impede
> recovery. That's why it's a great depression in the United States and it's
> just a depression everywhere else." Mark Steyn
>
> Ed K
> addendum:  "Sextant: an entertaining, albeit expensive, device, which,
> together with a good atlas, is of use in introducing the boatman to many
> interesting areas on the earth's surface which he and his craft are not
> within 1,000 nautical miles of." Beard and McKie
>
> --
> View this message in context: http://www.nabble.com/Weekend-reading%2C-not-sailing%2C-some-might-call-it-political%2C-just-educational-tp20990243p20990243.html
> Sent from the Rhodes 22 mailing list archive at Nabble.com.
>
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