Just the Tip of the Iceberg

Interesting article in the NY Times, which is primarily the posting of an email from an excutive in the banking industry, stating that the mortgage crisis is only the tip of the iceberg.  That what the really big problem will be this coming spring is people defaulting on their credit card debt.

I can see how this will be a tremendous problem and no one side is really to blame in all of this.  Yes, the banks and other companies should not be sending out credit card applications left and right, but if they didn't then I would have much leftover to open after Mrs. B sorts the mail.  Seriously, the people receiving all of the offers for credit cards don't have to get the cards.  

Consumers using credit cards need to use credit wisely.  Don't run up large balances that can't be paid off by the next payment due date.  Or have a plan in place on how long it will take to repay the balance off if it is absolutely necessary to buy whatever it is that is needed.

In the comments posted at the end of the article was one that I thought was pretty good:

"Just because someone gives you a gun, doesn’t mean you aren’t responsible when you shoot somebody–even if that someone is yourself."  K.

Just because we receive these offers in the mail, it doesn't mean that we have to accept the cards or use them.  We can't put all of the blame on the banks and other companies encouraging us to use these cards, we have to take some responsibility as well.  After all, we only have ourselves to blame if we don't use credit wisely.  

Let's hope that this iceberg doesn't come to pass this next spring as this banking executive is predicting.  I for one, have seen our investments decline in value way too much already.  

If the president elect does get an economic stimulus package that will include checks to all taxpayers, let's hope that they include a requirement that all credit card debt has to be paid off before the money can be used for anything else.  Not sure how they would accomplish this, but in my opinion, it would certainly go along way toward getting us out of this crisis better than anything else that's been suggested so far. 

Happy Thanksgiving

Happy Thanksgiving to everyone!

Why is the price of diesel fuel a $1 per gallon more expensive than regular gas?

Well, gas prices are certainly down significantly from where they were only a few short weeks ago, but I have been puzzled for a while why diesel prices continue to be fairly high.

Today Mrs. B took me to the doctor (thank you Mrs. B) and then we ran an errand for the Durham Symphony while we were in the area. While we were stopped at an intersection I noticed that regular, unleaded gasoline was $1.899 per gallon and diesel was at $2.899 per gallon - a $1 per gallon difference. Hmm, maybe since I'm feeling like such an invalid I could look into this today while I'm sitting around doing nothing.

So what I found out so far is that the price of oil makes up approximately 64% of the price as can be seen in the graphic above. Not surprising as this is what you would expect since diesel is refined from oil.

What I didn't know was that there are only a certain number of gallons of diesel that can be made from one barrel of oil. According to this government website a barrel produces a range of products as is shown in this graphic:


Other searches indicate that each barrel contains 42 gallons of crude oil and the standard refraction process produces approximately 19 gallons of gasoline and 10 gallons of diesel and heating oil combined. And, according to this article in the NY Times, that this proportion can be tweaked slightly using the current process to produce slightly more diesel, but not a significant amount.




It seems that while demand for gasoline has decreased and depressed the price of oil and refined refined gasoline demand for diesel has not decreased in the US as well as in Europe. From what I've read Europeans drive more diesel cars because of the fuel efficiency and overall consume more diesel than gasoline.

What seems to be happening is that the refineries in Europe are producing diesel for consumption in their markets and shipping the excess gasoline to the US. The US refineries, because overall demand for gasoline is down, have lowered their production of gasoline to keep from building a huge inventory of gasoline, hence lower production of diesel that is keeping the price of diesel higher than regular gasoline.

With gas a down to price levels not seen since 2002/2003, demand not likely to increase any time soon, and the importing of gasoline from Europe, the price of diesel fuel is likely to remain at or near this level. Seems to me that the biofuel industry in this country has a window of opportunity to create a market for itself that shouldn't be missed.

By the way, just in case you were wondering, according to the government article quoted earlier, the federal excise tax on one gallon of diesel is $0.24.4 cents and state taxes add an additional $0.20 cents per gallon on average.

Bam!

That's how it came on yesterday morning. I was standing in Ronnie's (the partner I work for ) office and just barely started to turn my upper torso and BAM!


I felt a spasm in the left side of my back that made me gasp. Ronnie looked at me like I was crazy and I just stood there for a couple of minutes until I could talk. The initial pain subsided, but all day long I kept feeling tremors and more tightening of my muscles.


Mrs. B was very compassionate and helpful when I got home last night with help getting a heating pad on the right spot. Although I probably should be using ice instead since I think this is caused by inflammation of the nerves and surrounding muscle tissue. I'll have to look that up later.

Well, anyhow, the alarm goes off this morning and I can barely move so it is off to the doctor's office to see what can be done.

Strange isn't how you can feel absolutely fine one moment and the next you are left gasping for breath because of the pain. And the really strange part of all of this is that I was just doing normal honey do stuff around the house this weekend, playing with the kittens, walking the dog, etc. Nothing strenuous. I guess you just never know when something like this is going to happen.

Sage Advice?

One of the accounting news services that I subsribe to had this quote at the bottom of the email and I thought would share it.

"I have found the best way to give advice to your children is to find out what they want and then advise them to do it."

--Harry S. Truman,33rd U.S. president

More to come... just need to actually do some work!

Lunch time.

Well, I can just imagine what would have happened if I had followed our 33rd president's advice with Cailyn all the time while she was growing up! I tried to find the context from where this quote was taken, but was unable to find anything. I imagine that his point might have been once your kids get older it is wise to listen, let them make their own mistakes and be there to help them pick up the pieces.

What do you think?

Here are a few more curtesy of Brainyquote:

"I never did give anybody hell. I just told the truth and they thought it was hell."

"If you cannot convince them, confuse them."

and of course:

"The buck stops here!"

$500,000,000,000.00 - $700,000,000,000.00

That's about how much money the estimate is of the financial package needed to rescue our country from this economic crisis. That's a considerable sum of money to spend and not even be sure that the stimulus will work.

Mrs. B asked me what I was reading a little earlier today and I've been trying to make some sense out of the whole economic stimulus package, big 3 bailout, etc. Actually, I've not only been reading today, but for the last two months. So many different views and opinions about what should be done, what's worked in the past and more importantly what hasn't worked.

But, before I go down that path, I was interested in trying to understand the scope of the spending that the president elect is proposing. Something to put this amount of money into perspective. So I thought, okay, how high would a $700 B stack of money be? Started poking around on the web to find the height of a stack of currency and it seems that someone else had this thought as well. But, it still bears repeating, in a somewhat more abbreviated form.


If a stack of 250 dollar bills is about 1 inch high, as the article states then a $1,000 would be about 4" high. $1,000 divided into $700 billion equals 700,000,000 times 4" equals 2,800,000,000". Doesn't help much does it? So if we divide that number by 12 we get 233,333,333.33 feet.


Still not much help is it? Okay, so if measuring this in feet doesn't help let's try miles instead: 233,333,333.33' divided by 5,280 feet equals 44,191.91 miles. That's a lot of miles!

The earth's circumference at the equator is 24,901.55 miles so if we laid this stack of bills around the equator it would go around the earth more than one and three quarter times. Or, if left standing in one tall pile, this stack of bills would reach almost a fifth of the way to the moon based on an average distance from the Earth to the Moon of 238,857 miles. Pretty high stack of money, isn't it?

Well, let me get to my point of writing this entry in the first place. I have been reading a lot of the press concerning the economic decline, stagflation, rising unemployement, etc. and what needs to be done to correct this problem. What our president elect is suggesting is something akin to a new, New Deal, a la FDR. In one way, this kind of makes sense, you put people to work rebuilding infrastructure, developing green energy alternatives and the like. Businesses and individuals both benefit from the spending that in turn benefits other businesses through consumption of their goods and services. Or at least in theory.

Here is an opinion piece that I read this afternoon that implies that the New Deal may have been good at the time, but had a long term impact that our country did not fully feel until the late 60's thru the 80's: inflation, unemployment, high interest rates. Besides, as is indicated in the article, if people feel that the increase in their income is of a temporary nature, then they will not be as likely to consume as much as everyone thinks. If she is right, that what might happen from this huge spending plan 30 to 40 years down the road? Will it even work as intended?

I don't know what the answer is, I'll leave that to people smarter than I, but I do wish that our government would slow down and think this through very carefully. There is already talk of having this economic stimulus package on the president elect's desk his first day on the job. I don't believe that a spending plan this large should be implemented without a lot of thought given to whether it will work in the first place and second, what impact this will have on the generations to come.

Separation of Church and State

Searching for answers?

This last week I heard 2 separate reports on National Public Radio, that while were not part of a series are certainly related.

The first report was an interview with a catholic priest regarding abortion rights and something he said really struck me as extremely significant. Basically his point was that he did not have any issue with abortion being legal, but that he believed that it was the responsibility of the church to teach moral values to their parishioners with respect to abortion as well as other moral issues. I know that this priest's viewpoint is not shared by all of his fellow clergy, but I think that maybe they should listen to him and stop trying to influence legislation to enforce moral behavior.

The second report concerned the republican governor's meeting that was held in Florida this past week. A number of the rising stars of the party were being interviewed about what the party needed to change in light of the disastrous defeat of the past election. What was said was that the GOP needed to return to the platform and values of the party of the late 70's and early 80's when Ronald Reagan was elected. Sounds like the rising stars didn't really learn anything new in all of the meetings they held.

They should have listened to the first report from the priest and taken a clue from his approach. Separate church and state. Quit trying to legislate moral behavior, ie. making abortion illegal, leave that to the church to influence their own flocks. For those that do not go to church, or do go, but believe differently, let them make their own decisions about what's moral or immoral behavior.

The GOP should focus on the what a majority of this country's citizens want their politicians to work on - turning around the economy, global warming, a more peaceful world, fixing the health care system, etc. Shake off the christian right demagoguery of the so called moral majority - obviously the majority wasn't large enough to win the last election!