advice from a fake consultant

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On Hole Cards, Or, “Drill, Baby, Drill”? Why? Is Canada Out Of Sand? May 25, 2011

In America, today, there are three kinds of drivers: those who look at the other gas pumps down at the ol’ gas station and think: “Oh my God, I can’t believe how much that guy’s spending on gas”, those who look at their own pump down at the ol’ gas station and think: “Oh my God, I can’t believe how much I’m spending on gas” – and those who are doing both at the same time.

Naturally, this has brought the Sarah Palins of the world back out in public, and once again the mantra of “Drill, Baby, Drill” can be heard all the way from the Florida coast to the Arctic National Wildlife Refuge.

But what if those folks have it exactly backwards?

What if, in a world of depleting oil resources, the last thing you want to do is use yours up?

To put it another way: why isn’t all our oil part of the Strategic Petroleum Reserve?

Consider the inexorable logic of the Big Lie. If a man has a consuming love for cats and dedicates himself to the protection of cats, you have only to accuse him of killing and mistreating cats. Your lie will have the unmistakable ring of truth, whereas his outraged denials will reek of falsehood and evasion.

–From the book Ghost of Chance, by William S. Burroughs

So here’s the thing: we produce a surprising amount of our own oil right here in the USA (in fact, we’re the world’s third-largest oil producer), but we don’t produce enough to cover our current use, and that’s why we import about half of the roughly 19 million barrels of oil we use daily. The vast majority of that is used in vehicles or for heating; almost none is used to generate electricity.

Our largest suppliers of oil, despite what you might think, are not all from the Middle East: instead, it’s Canada, Saudi Arabia, Mexico, Nigeria, and Venezuela, in that order.

(Perhaps you’re thinking: “Canada? Oil?” Yes. Canada and Oil. They provide us with more than twice as much as Saudi Arabia from huge “oil sand” resources, primarily in Alberta; the exploitation of those resources has created a huge environmental controversy.)

Now if you ask me, an ideal situation would be one where we decided to get out of the business of using oil altogether – and to help make my point, we have some helpful numbers from a guy that you pay every day to figure this stuff out: Mark Doms; he’s the Chief Economist for the US Department of Commerce, and, to paraphrase Little Feat, he’s always handy with a chart.

According to Doms, 60% of our 2010 trade deficit (about $265 billion) represents the cost of imported petroleum products, and if things continue through December as they did the first three months of this year, in 2011 every American, man, woman, and child, will pay a “tax” of about $1000 to import all that petroleum.

Do you know what we, individually, spend on gas? In March of this year, the average household spent just over $300 on that month’s gasoline; 5 months ago that number was $56 lower. The way it works out, every time gas goes up 10¢ a gallon, it costs the average household another $7 a month.

And that’s not all: less than half of the total cost of imported oil is paid at the pump: about 44% of imported oil is used by businesses; another 15% is used by governments across the USA, and that means almost 60% of the cost of imported petroleum is “folded into” the price of everything else.

(A quick author’s note: you’ve seen the words “oil” and “petroleum” used liberally in this story; the exact literal reality is that in each instance we should really be referring to “petroleum products”, and that’s because we import and export not just crude oil, but a variety of other petroleum products. I get tired of using the phrase “petroleum products” over and over, and I’m probably using “oil” and “petroleum” more interchangeably than I should.)

So get this: if we were out of the importing oil business, we’d save about $300 billion a year – and as it turns out, over a 10-year period we could actually convert the entire US auto fleet to electric cars powered by windmills by providing $15,000 cash “buy-outs” for today’s 135,000,000 gasoline cars and building the wind generation and “smart grid” we’d need to support the effort…and doing all that would cost…wait for it…about $250 billion a year.

If I get the math right, 20 years after we first started building windmills and subsidizing cars, everything would be paid off; and every year after that the US economy would generate a $300 billion “profit” on our investment – unless the price of a barrel of oil goes up. If it does, the amount of money coming back to our wallets every single year from then on, obviously, also goes up.

And if we were out of the “using oil for driving” business, once everything was paid off we could put almost $4000 a year (in today’s dollars) right back in the pocketbooks of every family in this country – which, if you ask me, represents a pretty good “tax cut”.

Let’s also keep in mind that any new oil drilled on our public lands might not necessarily end up in the US; that’s because even if oil companies were 100% free to “Drill, Baby, Drill” in our waters to their hearts’ content…they’d also be perfectly free to sell as much of that same oil, anywhere in the world, to whatever entity might end up being the highest bidder – and today, our friends in places like India and China are desperate to be that high bidder.

Put all of this together, and you get back to the question I posed at the top of the story: why in the world would we be in a hurry to “Drill, Baby, Drill”, when we could, instead, put all our efforts into getting out of oil, which would save us so much money that the conversion pays for itself?

Then, when oil’s running $400 a barrel or so, let’s use our oil to pay China back the trillion dollars we owe ‘em…which, at current production rates, would only take about 400 days, assuming it were possible to divert all our production for that purpose.

To state it a bit more ironically, it may be that the smartest thing we can do right now is to conserve every possible drop of oil we have…until we don’t need it any more, and it becomes a sort of Strategic Cash Reserve that can help strengthen the dollar and reduce the national debt in the years to come, both at the same time.

Or to put it another way, the next time someone tells you they want to “Drill, Baby, Drill”…you can step right up, look them square in the eye, and ask: “Why do you hate America?”

And won’t that be fun?

 

On Universities And Such, Or, If Obama’s A Kettle, Is Donald Trump Black? May 1, 2011

Just about 40 seconds after (Yes, He’s Actually The) President Barack Obama brought forth his Certificate of Live Birth unto the world Donald Trump was accusing Obama of somehow sneaking his way into some University or another.

If Trump’s to be believed, Obama was a terrible student at a College, and then he somehow snuck his way into a University; after that he basically grifted his way into becoming the President of the Harvard Law Review.

Trump would tell you that he’s a hustler, that Obama is, and we’ve got to do whatever it takes to figure out what kind of semi-illegal shenanigans Obama’s University experience was all about.

But here’s the thing: Donald Trump has his own history of semi-illegal University shenanigans—and it appears that some of his semi-illegal shenanigans continue to this very day.

”I don’t lie. When I speak, I believe it to be true. One week later, it may no longer be.”

–French raconteur Bernard Tapie

So here’s the deal: just like there are people who want to Be Like Mike, there are those who wish to emulate The Donald; in 2005 it was announced that Trump University would be formed to help make that possible (the name was trademarked in 2004).

According to the announcement, the University:

“…will offer a rich mix of products and services, including online e-learning courses, multimedia home study programs, and a series of publications. These diverse offerings are geared to a broad range of consumers, from small business owners and entrepreneurs to investors and other professionals looking to advance their careers and to create wealth. Trump University’s innovative, world-class business curriculum will be designed according to the Learning by Doing method. Content will be delivered through interactive learning experiences, including evaluating business plans, simulating real estate purchases, and developing marketing strategies.”

You first meet the “Admissions Office” by either signing up online or by attending one of Trump U’s free one-day seminars—and the Admissions Office is looking to get you to sign up for the $1495 three-day “conference”.

If you do, you are, according to those who’ve been there, instructed to immediately increase the credit limits on your credit cards (immediately as in during the next coffee break), so that you might take advantage of the real estate investment opportunities you’re going to be turned on to at the end of the weekend.

But it appears that investment opportunities aren’t what end up being presented to the conference attendees. Instead, they’re being presented with the opportunity to invest in more courses, this time for numbers ranging from $9,500 to $35,000.

If you jump in for the full package, you’re told that it’s “the next best thing to being Trump’s Apprentice”, and, thanks to your personal mentor (you’ll have a year’s access to this service), you’ll be connected to Realtors, contractors, and other investors (a “Power Team”); all this will allow you to become a Real Estate Professional, doing profitable real estate deals, just as Trump does.

You’ll make enough on your very first deal, it is claimed, to pay for the entire $35,000 course.

(There are other courses as well, including one known as the CEO Success Codes, intended to help you “Learn how to run your business The Trump Way”.)

What is the Trump Way, precisely?
Here’s how Stephen Goff, one of the Trump U trainers, lays it out, as described in a Houston Chronicle article:

You find a property worth $200,000, but the owner’s willing to take $125,000. Why?” Pause. “Because he’s in trouble.”

You put in an offer, even if you don’t have the money. Then you sign a contract, giving yourself 60 days to close. The next day, you put an ad in the paper, advertising the $200,000 property for $150,000. You get that money — in cash — before the 60 days is up, and voila: $25,000 profit without putting down a penny of your own money.

The same article quotes an expert who suggests that this strategy:

“…can be done, but it’s also just as easy for me to audition for American Idol and become the next Justin Timberlake…”

Fun Fact: in his book Trump University Real Estate 101: Building Wealth With Real Estate Investments, Dr. Gary Eldred, the Real Estate Mastery Program “Content Expert” for Trump U, quotes The Donald thusly:

“The worst things in history have happened when people stop thinking for themselves, especially when they allow themselves to be influenced by negative people. That’s what gives rise to dictators. Avoid that error at all costs…

…People who take responsibility have no need to blame others or to be continually finding fault. The naysayers never manage to contribute much and never amount to much either. Don’t join their club. They’re the lowest common denominator.

I knew a guy that I used to call up just to see who and what he would be blaming that day. I don’t think that guy ever thought he had personally made a single mistake in his entire life. From day one, nothing was ever his fault. His biggest blind spot was himself, and, sad to say, he became a total loser because he never thought of the remedy for his biggest failure: himself…” (emphasis is original)

There is a bit more to this story than we have revealed so far: a lot of the information I discovered about the University came from documents related to a lawsuit, filed in 2010 by former students Tarla Makaeff, Brandon Keller, Ed Oberkrom, and Patricia Murphy; that suit is today seeking class-action certification on behalf of all Trump U “students”.

The Plaintiffs allege that Trump U doesn’t live up to its own hype, that Trump is not involved personally, that the expensive seminars offer no real value (a trip to Home Depot to view building supplies is reportedly part of one seminar), and that the mentors and the “Power Teams” either disappear completely after the three-day course ends, or they appear to offer deals that are self-serving and marred by conflicts of interest—and all of that means no “one year apprenticeship”, followed by tons of income every month, which is what the courses seemed to promise in the first place.

(Page 24 of the complaint shows an image of the Trump U homepage, with a picture of The Oddly Haired One next to the words ““Are YOU My Next Apprentice? Prove it to me!”)

There was also a signed letter sent to potential enrollees:

…You can do it, even if you only have five or ten hours a week to spare. With our simple instructions and practice exercises – and ongoing support from your own Trump Team of Experts – you’ll have what you need to succeed!” (Emphasis in original). The letter closes with Donald J. Trump’s name, signature, and at the Trump University address, at 40 Wall Street, 32nd Floor, New York, NY 10005.

It is also alleged that efforts made to obtain promised refunds have come to naught; the refunds are apparently always “just about to be issued”, or the appropriate person is never available to answer the calls that are coming in seeking information about refunds.

Trump University countersued, claiming various forms of defamation; the action is being defended as a SLAPP suit.

(For the record, it’s easy to find Web pages with complaints about Trump U; those complaints, for the most part, mirror those in the lawsuit.)

This whole real-estate hustle turned educational hustle has caused a reaction from the world beyond Trump; that’s something he noted in his Trump U blog:

Recently Gary Trudeau spent a week lampooning Trump University in his comic strip Doonesbury. The basic premise of each strip in the series revolved around the disparity between Trump University and a traditional university. . . .
Trump University has also been mocked in one of Jay Leno’s monologues, in the New York Post’s Page Six cartoon, and probably in a lot of other places.

It’s nice to see that my new venture is making a splash in popular culture.
As they say, no press is bad press. (emphasis is original)

(Doonesbury’s August 8th, 2010 edition is one of those comics which mentions Trump’s “school”.)

The New York State Education Department informed Trump that an educational institution with no degree-granting programs and no differentiated graduate and undergraduate divisions can’t be a University; as a result Trump University is now known as The Trump Entrepreneur Initiative.

(Despite the State’s order, the Trump University name seems to have lived on, however: The Trump Store website, as of the time this was written, still sells “Trump University Audio Books” and “Trump University Books” and “Trump University DVD and Audio Packages”.)

And remember Gary Eldred, Trump’s “Content Expert”? It turns out he has a few credibility problems of his own: he co-hosted a radio show with another expert in running a successful real estate development business, Fredric “Rick” Dryer—and in July of 2008, we found out the secret of how Dryer was able to be so successful.

He was convicted on 44 counts of real estate fraud.

So that’s our story for today: Donald Trump couldn’t wait to trash Barack Obama’s University experience, but Trump has some experience of his own regarding Universities—and from what we can see, when Trump opens a University, unsavory practices and questionable associations and lawsuits and regulatory actions follow in his path.

That’s no way to run a University, and, more to the point, it looks like The Trump Way is no way to run a country—except for maybe Blowhardistan.