Wednesday, February 06, 2008

In the news. . .

Several news tidbits stuck with me from last week.

The Department of Labor reported a net loss of 17,000 jobs for the last month, a marked change in the direction of that indicator that has been trending up for the past four years or so. That fact, plus the sub-prime mortgage and housing market crisis, indicates the U. S. economy is really slowing.

The U. S. and most foreign stock markets reflect the same reality. Tough news for low-income families who likely will be joined nearer the bottom of our economy by a crowd of previously middle-income families.

In the past month I've had several conversations with people who have either lost their homes or fear they may. I fear we will begin to see even more growth in the numbers of Americans who fall into poverty.

ExxonMobil reported historic, all-time record earnings for an American corporation in the last quarter. The data point that sticks with me: the company earned $1,300 per second in the reporting period.

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16 comments:

Anonymous said...

Just wait until the Democrats or John McCain (same thing) puts a massive new tax on energy, in the name of the global warming hoax.

As to the housing crisis,I heard the other day that 97% of homeowners make their payments on time. That sounds pretty good to me.

Anonymous said...

Larry:

No qualms about your post. However, it's easy to take things out of context. ExxonMobil's earnings represent a return of about 10% on investment, about average both for the oil industry and for American corporations generally. The fact that the earnings are huge simply reflects the size of the company, not some kind of "windfall" profits.

Anonymous said...

Exxon also paid 41% of the profits in taxes. Just think, if the Government did not have this huge tax amount to play with, the government would have less money to provide to places like CDM. There is another side of the coin, you know.

Justin said...

Also, since you lived in Louisiana, you probably remember the time when oil was cheap. Way cheap. And if I remember correctly it wasn't exactly a boon to the poor folks in Louisiana.

Larry James said...

Thanks for the posts. My intention was simply to put up interesting news items. Of course, I don't agree with some of what the four of you have said here, but that's okay, since that is what a conversation site is about!

I'd love to see the documentation on the 41% corporate tax claim. Also, documentation on the 10% return would be nice.

The idea that global warming is a "hoax" should prompt discussion, I'd think!

Justin, actually, Louisiana was doing better in the late 1970s and early 1980s, at least among the poor, than was true before Katrina. Of course, the storm makes everything different.

Daniel Gray said...

This guy gives the numbers, saying Exxon made 40B after taxes, with 30B paid in taxes (total profits 70B):

http://seekingalpha.com/article/63131-exxon-s-2007-tax-bill-30-billion

I don't doubt his numbers, but several commenters on his article make good points challenging the meaning of the numbers. While the 41% rate is technically true, I don't think this takes into account the fact that a majority of the taxes Exxon paid were actually taxed on consumers at the pump. I'm sure this was a bottom line number of total taxes due, not Exxon's out-of-pocket profit taxed. So a lot of this tax money was actually paid by consumers, not Exxon.

While I think oil companies have been unethical in the past, I think a majority of our oil/gas woes are due to increased speculation on the futures market by hedge fund managers. Most economists say supply/demand numbers put oil at about $50 per barrel. The added $30-40 is due to market speculation and over-investment. Frankly, I think this is where some government action needs to be taken. I understand the importance of the futures market on some agricultural products, but I think it is purely detrimental to the cost of oil.

Anon 1:38, even if you think global warming is a myth, shouldn't you still learn to appreciate and take care of the world you live in. A lot of us grew up camping/being outdoors where we were taught to try not to leave a footprint on the environment. I think the same concept applies here.

"I heard the other day" is a pretty unreputable source. Care to provide some information on the low 3% default rate?

belinda said...

Why do so many, and most republicans, think global warming is a hoax?

belinda said...

Don't be fooled - someone in the food chain is making big $$$ at Exxon and the other gas companies as well. They make me sick with their commercials pretending they're searching for alternative methods - this would put a dent in their income.

Anonymous said...

Larry:

As to ExxonMobil's earnings being 10% return, please see:

http://finance.google.com/finance?q=NYSE:XOM

under "Key Stats and Ratios."

Belinda:

Awfully self-righteous! Do you drive a car? Can you do it better? If so, go for it. BTW: No one suggested there weren't people making "big money" out of Exxon's profits. That doesn't change the fact that those profits judge by return on investment are quite reasonable.

Anonymous said...

Belinda - Number 1 - because anything Al Gore says is a hoax. Number 2 - Remember the internet comment? Number 3 - there is solid, unbiased scientific evidence that disputes the global warming "market" that Al has created for himself. Number 4 - if global warming was legit, then Al, John and the rest of the global warming crowd would not have a carbon footprint as large as the state of Texas.

Justin said...

Daniel,

Is it not possible that if the government adds taxes onto the oil companies, such as the windfall profit tax, that that would also just be passed along to the customer?

As far as I understand it, corporations don't ever really pay taxes. They pass along the taxes to the customers, just like they pass along all other costs to the consumer. Raising taxes on corporations will just raise prices for consumers, because the profit margins that companies demand will not change, because that's what they've determined they need to make to make their business worth running.

Daniel Gray said...

Justin, did you read my post? Because I'm pretty sure that was the point I made -- that corporations really aren't paying all those taxes out of their own pocket, so people like anon shouldn't feel sorry for them.

Corporations are still paying taxes, not everything gets passed to consumers. Based on elasticity, and supply and demand, consumers are paying a higher share of the taxes since oil is predominantly inelastic, but corporations still pay some of it.

belinda said...

I work at NASA. There is plenty of scientific evidence to support the global warming "idea." All I am saying is that the OIL companies don't want us to find an alternative method.

Anonymous said...

Belinda:

Let's just assume, for the sake of discussion, the oil companies do not want alternative energy. So what? What would be stopping any and all other kinds of companies, entrepreneurs, etc. from exploring this field? It's not necessarily the job or duty of the oil companies.

(BTW: I'm guessing from your silence you do drive a car.)

belinda said...

Yes, I do drive a car. I have no other way to get around. I don't have the luxury where I live of any sort of mass transportation.

I am not arguing against other corporations looking into alternative methods - this post was about the gas companies and their record profits. That's all I was addressing - why would THEY want us to use anything else other than what they produce?? Sort of the supply/demand thing.

Anonymous said...

If any of you who want to tear down a US company or industry, tear down the banks. A year or so ago when Exxon posted the first $10B quarterly profit on $90B in revenue, about an 11% profit, Bank of America earned $4B on $16B in revenue, a 25% profit.

9-10 years ago when oil was around $10 a barrel, no one was there to bail out the oil companies. People need to stop picking just on the oil companies and get their facts straight.

Anyone notice that corn and wheat prices are through the roof, causing food inflation like we haven't seen in years. Do you realize its due to the demand for corn based ethanol, which has the lowest yield per acre of any of the ethanol producing crops? Many of you need to take an economics class or two. I know business is not everyones favorite topic but it has a role in every part of our lives.