I Run Because…

So at midnight I got one of my every so often urges to hit the pavement.  With an incredulous stare from my wife and the obligatory “wear you’re reflective vest” – I hit the pavement.  Tonight was one of those unique nights where the steam seems to hover ever so slightly above your feet and the moonlight blends with the street lamps and moist air to create a hazy, mysterious glow around otherwise dull objects.  I felt particularly good tonight and could have ran forever it seemed but have to be up and at em’ in, uh… 4.5 hours now for an early morning meeting in Alpharetta.  The vacant streets and the black painted veil of silence conspired to set my mind spinning.  So, I do what I do best when I run, I had a conversation with myself (I love those).  The conversation was centered around a seemingly innocuous question, “why do I run?”.  Here is what I came up with.

I Run Because...
I Run Because...

I Run Because…

I like it

I also like beer

there are those that can’t

it makes me feel alive

you never know when it might be your last

I like to commune with myself

it helps me escape

I like to test my limits

I like to get lost

I fancy myself as a counter-culturalist

I always have

I like to get high 🙂

I want to be better

it makes me better

a man I most admire does

it doesn’t require a membership

its natural

its stretches you

it makes me better for those I care about most (see video)

… I could go on but these were a few that flowed freely on a really cool night for a run.

Also here is a great article from the NY Times on running – enjoy.

Exercising with the Family

Tri-Training with Kirsten

Quick post for me today. Recently my wife signed up for her first triathlon in June 2010. Like most things, she is highly disciplined and committed once she sets her mind to something. She got a little help during the weekdays so she could run, bike, swim, etc. and get ready for the big day. This has been going on for almost 3 months and she is doing great.

I’ve done a few triathlons of my own over the years and have been a runner / biker for more years than I care to count. In the past, this was kind of my thing. I had to steal time away during the evenings, weekends, etc. to get in a few miles. My older daughter has kind of gotta in to the routine as well and likes to do a 1/2 or 3/4 mile with me before I head out on my own route. As the kids get older this is increasingly harder to do but one of those things that I have to do. I, and my wife, have discovered I’m generally a much more agreeable and fun person when I exercise 🙂

Within the last few weeks my wife asked for my help in learning the fine “art” of clip-on pedals and gear changing. Anyone who has ever road-biked or mountain-biked can appreciate the complexities of trying to find the right gear as your losing momentum and heading up a gargantuan hill. I was happy to help and over the last few weekends have headed out to local parks with her and the kids to get in mileage and help get her ready. This included a pull-along cart for the kids that I termed the “roller-coaster” to help make the 1hr+ long ride more bearable in their minds. I, of course, got to carry the kids which made for an interesting bike ride. The closest parallel is running normally and then putting on a speed chute (running parachute) and trying to run. Basic ideas is it slows you down a bit. This actually helped me in that it made the ride more difficult and allowed all of us to get in a good workout.

Through these last few weekends I’ve increasingly gotten more and more excited about the possibilities of exercising as a family. What an awesome experience. What was once my “guilty” pleasure is now something that the whole family can get on board with.  More importantly, I look forward to the day when my little girls can start running, biking and maybe competing on their own.

I guess in short, over the last month or so my opinion on exercising with the family has changed dramatically. With some changes in equipment and schedules we have an activity that the whole family can enjoy now.

…and, oh by the way – today Kirsten (along with her motivational coach (me)) finished the full length sprint distance bike and run (pic included above).  I’m so proud of her!  She didn’t stop, not even once, and burned up the running portion averaging right around a 9 minute to 8:50 minute mile.  I’m most excited that my wife and I have now found a passion that we can enjoy together for many years to come.

The Parallels of Adventure Racing & Business

C4 Adventure Race Pic
C4 Adventure Race Pic

A few weeks ago, I participated in a small adventure race in Woodstock, Georgia (Northeast of Atlanta). It was put on by the YMCA of Cherokee County and was a bunch of fun (many thanks to YMCA and Toby Bramblett for their efforts in pulling the race together).  The format included trail running, mountain biking and kayaking with land navigation and various challenge obstacles mixed in.  The team structure included three person, two person and solo teams.  I participated as a single team (solo) and raced under the banner “Kenzie-Carr”… in tribute to my two little girls! 🙂

Leading up to the race, and especially during the race, I had much opportunity to reflect and be a bit introspective.  In fact, I had a bit too much time to reflect because the race was 18 miles and 4 hours of cold river and lake crossings coupled with copious amounts of mud, sweat and salt.

This reflection lead me to start drawing the parallels between adventure racing and life.  Attached are a listing of just a few of those parallels.  I guess it is these parallels and the mental challenge of laboring through pain, nausea, fatigue, etc. that really draws me to the support of adventure racing.

Parallels of Adventure Racing & Life:
  1. “Competition is always more intense than you believe” > No matter the race, I always have a false notion that somehow the competition is going to be lacking, non-existent, or unprepared.  However, with each race I complete, I am ever more mindful that there is always a tier of well-prepared, intense and driven competition that will not simply roll-over.   Business is very similar to this adventure race parallel.  No matter the business, or challenge, there is always a group, no matter how small, that will pose significant competition to you and is prepared to sweat, sacrifice and bleed on equal levels to your own. Believing that there is no competition or the competition is going to roll-over is a fallacy.
  2. “Don’t always follow the crowd…or at least be conscious that you’re doing it” > During the race I got into a segment of the course where the terrain was unfamiliar and my land navigation became quite lacking.  It was at this time that I started checking for another competitor that was making better progress than I.  I found an experienced team that clearly had a great level of background in this tedious portion of the course.   In effect, I began following the crowd.  In business, we often follow the crowd.  Call it “group think” or a similar derivative but the end-effect is the same, your in the shadow of some one else.  More importantly, when your following some one else, you are intrinsically linked to their fate.  In my case, the group I followed helped me find a key checkpoint that might have otherwise been elusive.  In business & life, we follow the crowd at times.  The key is to be conscious when you are doing it and recognize that eventually you have to step out of the collective shadow and into your own light.
  3. “Stuff happens..deal with it and frame it correctly” > We all know it happens, the real question is how will you deal with it.  In my adventure race all was going wonderfully until the final stage, kayaking.  The day had been filled with some very fast trail running and equally fast mountain biking.  Each of these stages included lots of river passes and mud bogs which resulted in some very frozen feet.  When I reached the transition area for the final leg I looked forward to a change of shoes and a nice dry pair of socks.  Being fully outfitted with dry wear, I grabbed my kayak and headed for the lake and my miles of paddling.  At the lake’s edge I was confronted with the scenario to walk in the lake and get my newly acquired dry feet apparel wet again, or try to do an awkward beach “push-off”.  The allure of dry feet was too much.  I decided the awkward, and in retrospect risky, beach “push-off” was the best bet for me.  With the grace of a sea lion,  I “pushed-off” from the beach and for a good few 3 seconds my feet were dry as the Sahara.  ….BUT… suddenly, unexpectedly, the kayak began to shake and wobble with the vigor of a stuck Sea Lion.  Suddenly, the kayak rolled & SPLASH.  In short, “stuff” had just happened to me.  I had 3 choices, (1) quit; (2) trade in my completely drenched clothes for semi-dry clothes at the transition station and burn 15 minutes; or (3) take a breath and jump in the kayak and paddle on.  I chose option #3.  Let’s face it, I was cold but had already been cold.  I chose to frame the optimistic view point which was I was nearly 70% done with the race and feeling great.  I excitedly pushed on and dried out pretty quickly.  In our daily business interactions we all know “stuff” happens.  I would argue that one of the things that separates an enduring enterprise from a short-lived one is how they view unexpected challenges and overcome them.
  4. “Try new approaches” > It’s easy to get bogged down in the application of the same methodology, or tools, that you have grown accustomed to and comfortable with.  Being able to recognize and appreciate that the “traditional” way may not be the best way is a critical aspect of success in any discipline.  For me, during the mountain biking portion I realized I had a mechanical. In essence, my bike wasn’t shifting right in the lowest of gearings.  I was forced to try a new approach.  Sometimes life and business force you to try a new approach.
  5. “Persevere – its easy to throw in the towel, but much more difficult to finish” > In life and in business, I have seen it all too often that a person or organization’s default response is to run for cover, throw in the towel or generally accept defeat.  Some people, more than others, have this as part of their standard “toolkit’ of life.  Too difficult = I’m going to do something else.  Probably one of the characteristics I like best about the adventure races I have been in is that they challenge you to dedicate, focus and persevere in order to finish.  My moment of this race was when I took an unplanned swim in Lake Allatoona on a very cold day in February (see item #3).
  6. “Challenge yourself” > Once in the race, I had the choice to just be a participant or to really try to push myself to my limits.  I think in business it is easy for organizations, teams and individuals to just participate.   They show up at the office, check some email, cup of coffee and on, and on, and on….  Businesses and team members should challenge themselves.  What is a new innovation that could springboard the company? Is there a new lead, new market opportunity or product enhancement that could be fast tracked?  Challenging yourself (or the business) is key to separating yourself from the pack and leading the charge instead of being just another passenger that is along for the ride.
  7. “Train & prepare for success” > I think the parallels here are pretty obvious.  Whatever the challenge, business or physical, you have to prepare for success through proper training and preparation. Too many times in business we enter into a competitive scenario without fully preparing ourselves or our organizations.  Members of a business organization have a propensity to believe that their competitors and their own organizations are static.  Worse yet, sometimes large organizations rely on their own perceived brand without realizing they need to always be “in training”.
  8. “Got to be in it to win it” > The last one is not only a cliche but also obvious.  However, this may be one of the most important parallels of all.  Too many times in business, as in life, we choose not to participate because the challenge is perceived as too taxing.  There are a thousand other cliche phrases I could use here.  Simply put, in life and business, a large part of your success is deciding to show up.
C4AR kayaking
C4AR kayaking

As for me, I was glad I showed up, challenged myself and got to go through the many emotions and physical challenges that make adventure racing such an awesome high!  I have several others races on the calendar in 2010 and look forward to continuing to get to know myself, my limits and having the opportunity to frame life differently and be truly appreciative for all that I have.

The Affordable Health Care for America Act (HR3962) Trades Our Collective Liberty for Security (FYI…that’s bad)

No matter where you stand on the political “aisle” of life, be it Republican, Democrat, or Independent the current bill that was just recently passed by Congress is an absolute disgrace.  In fact, let us start on the right frame work from which to view this abomination.  Instead of pigeon holing ourselves into a nice category like conservative, republican, etc. how about we try a new name for our collective selves.  Guess what that name is?

A-M-E-R-I-C-A-N !

USA
“He who trades liberty for security deserves neither and will lose both.” (picture courtesy of USAA)

With that common understanding now well established let’s proceed.  The disgraceful part of the current bill is that is throws out the common themes and ideals that have identified us as the greatest nation on Earth for the better part of two centuries.

Ideals and values such as freedom of choice, hard work, honest day’s pay for an honest day’s work, entrepreneurship, and oh by the way did I say freedom & liberty? If not let me say it again…. FREEDOM…LIBERTY.  You see in today’s mass media market values like FREEDOM & LIBERTY have been watered down and commoditized.  Some how these words are now just part of the common toolkit of career politicians and political hacks, used to fight battles of popularity and power.

It seems that somehow overtime our country’s collective memory of how hard won our individual liberties and freedoms were have been forgotten.  Let’s face it getting the rights we have today and the lifestyle we enjoy was not a god-given right.  It was, and is, a gift that requires us to be vigilant and protect this wonderful thing we have been given.  I believe in America we have forgotten that liberty and security are two very different ideals.  The vote that was passed in Congress is a vote that by and large passed using persuasive arguments that appealed to constituents “security” side.  I like to be secure as well but not at the expense of my liberty.  To put this in extremely basic terms I’ve created a simple analogy: (see below)

You move in with your parents as a 35 year old adult after suffering a job loss, etc.  Your parents provide you “security” – roof over your head, food, transportation, comfort, conversation, etc.  However, it comes with a price.  You see your Mom is a strict Southern Baptist and doesn’t agree with your late night carousing, drinking, video game playing, farting, texting on your cell phone and she vehemently disagrees with this whole thing she calls the “world wide web”.  So guess what she does? That’s right, she restricts you.  Mom and Dad agree that you can no longer go out past 6pm, you can only drink Schwepps Ginger Ale (on special occasions you can have O’Doul’s), the only games you can play are checkers (good news is your Mom has a friend named Hilda that rocks at checkers), gaseous substance releases have to be done outside and last but not least she confiscates your laptop calling it the “gateway to hell”.

And there you have it folks.  You’ve achieved your security and in the process you have traded your liberty.  Sucks doesn’t it?

Make no mistake about it.  This is the path we are on.  You see, we can’t have it both ways.  I hope that sooner, rather than later, we as Americans understand the differences and the tradeoffs that are involved.

Thomas Jefferson nailed it a very long time ago when he said the following:

“He who trades liberty for security deserves neither and will lose both.”

On this Veteran’s Day let us not only honor those great men and women who have honorably served but also be reminded that their sacrifices were to guard the liberty and freedom of choice that we have today.

http://www.opencongress.org/bill/111-h3962/show >  Visit this link to learn more about HR 3962

Foreshadowing the Federal Path, Is New Jersey a Proxy for Extreme Democratic Policies?

Could there be any better example of government largesse than the great state of New Jersey?  Boasting one of the highest tax rates in the union and boasting an even higher amount of government hand-outs it has to be one of the poster children for what life may resemble in the rest of our beloved union if we continue to let this current Democratic power-grab continue unabated. Before you believe that I’m some Southern Conservative that doesn’t have a clue about life in the North let me preface my comments by saying that I met my wonderful wife in New Jersey and went to undergrad in New York.

Okay…with that being said as they like to say in baseball – “Batter Up!”.  Today, I came across an article that was discussing President Obama’s visit to New Jersey to lobby the states democratic base to vote Governor Corzine in for another term.  In fact, in this event it appeared the Dems were pulling out the heavy artillery and actually had to change the venue from Rutgers to PNC Stadium to accommodate the flood of people wanting to get a chance to see President Obama.  In a show of the popularity of Obama versus Corzine, they even gave Obama top billing on Corzine’s event (see picture below of the campaign poster).  All of this is somewhat laughable in a state that boasts some of the highest taxes in the union and has shown a continued propensity to operate its government machine on the backs of hard-paying property owners.

My key question, if Corzine and Obama are such great buds and have such an awesome thing going with their democratic policies then why is New Jersey in such a hole.  Property owners are getting the shaft and the state makes it very difficult to attract new businesses, and in turn new residents.

I think the challenge is expectations.  Like most things in life, and as my wife likes to tell me,  if you set expectations realistically it generally makes life more enjoyable.  It seems that some residents of New Jersey have an expectation that amounts to a hand-out.  Nothing in life is free. It is cleche’ but absolutely correct.  Can you have “free” healthcare ? can you live in nice accommodations without working ?- the answer is yes…  BUT …. it comes from somewhere.  The business owner, the land owner, etc. that has to support the “free” healthcare adjusts his cost of doing business calculations by factoring in this new cost.  He then looks for ways to adjust.  These adjustments include – shedding work force, raising prices on his products, moving overseas to a lower cost environment, etc.

At the end of the day, New Jersey helps to serve as a window into what our federal government and other states may resemble if we let these “expectations” go unchecked.  Business owners, workers, citizens, legislatures – we all have a choice.  One a decision is made we also have a choice.  I hope the citizens of New Jersey exercise their choice and vote Corzine out of office.  However, caution exists.  The new person filling his shoes has to be like the doctor – delivering realistic news, setting realistic expectations and making us take the right medicine which may taste bad but will have the appropriate effect.

Obama gets top billing at Corzine event

http://www.nj.com/news/index.ssf/2009/07/president_obama_link_to_gov_co.html

Video Clip of the crowd arriving at PNC Bank Arts Center for President Obama

Cap and Trade Legislation- Bad News for America

Okay, I have a huge ax to grind with our Federal government for the latest bill proposed, HR.2454 – American Clean Energy and Security Act of 2009.  In this act, the federal government has once again figured out how to do what they do best… suck more dollars from our free-enterprise system to fuel their rampant and most-often, ignorant, mis-allocation of capital.  I am an ardent believer in the need to preserve our environment, however, this piece of legislation helps to steer more dollars into the Federal coffers and does very little to bring about the true “security” that the bill’s name implies.

I have provided a link below that will provide more background on the bill and its intended aim:

H.R.2454 – American Clean Energy And Security Act of 2009

As of June 26, 2009 the measure had passed in the House by a  wide margin but appears to be up against significant resistance in the Senate.  A recent article from mid-August details the less than likely affirmative vote needed from the Senate to make this law.  [article in American Thinker]

Ultimately, my primary issue with the legislation is that it works on the same premise that so much of Washington revolves around, that premise is very simple – “TAX IT”. Don’t like it > “Tax it”…. can’t pay for it, no worries let the Federal government handle it and we will “Tax it (i.e. You)”….Want “security” (i.e. Social Security, Energy Security, Health Security)….guess what – you are correct – “Tax it”. Look the enterprise and power hungry machine called Federal government has proven that they couldn’t manage a corner grocery store budget, let alone the trillions they are siphoning out of our economy right now.  Free market theorist like me eschew a simple ethos … stay the hell out of the way.  (i.e. guide / don’t force).  We have all seen the impact of government intervention, that case study was called…”let’s increase home-ownership rates, skip-ahead five years and we have a collosal housing melt down.  I am being extremely macro in my comments but you get the idea.

My second ax to grind is with the ardent Democratic voters who came out in droves to express their support and enthusiasm for Obama.  I applaud their enthusiastic exercising of their right to vote and becoming involved in the political debate.  Although I don’t agree with their vote I applaud their enthusiasm.  Jump eight months later and those same Obama zealots when asked about cap and trade…. reply – “Cap & WHO??”.  Long story short, many of these people got involved, purchased some T-shirts, decaled their car up like they were going to Woodstock – and after the election forgot about it.  Literally, they turned the switch off and went back to the daily grind trusting that our Federal government machinery would stay finely calibrated and not abuse the historic Democratic majority that had been achieved.  The right to vote is a priviledge with responsibility.  That responsibility is to stay engaged in the process.  I could go on – but I think you get the picture.

Below is a good video for those of you who need a quick primer on Cap & Trade.

Barbara Boxer – Fighting Opposition with Race Card

Okay, I’ve seen my fair share of strange things.  I once actually interned for a summer in Washington, DC and got to sit through hearing, testimonies, etc.  Generally, these affairs are more prose and posturing than rubber-meets-the-road execution.  However, recently, I came across the following video that was the testimony of Harry Alford, the President of the National Black Chamber of Commerce.  His testimony was before the Environmental Committee and his position on a piece of legislation opposed that of Senator Boxer.   Mr. Alford had came to the committee to assert facts, figures and research so that a true discussion could take place regarding the legislation that was in front of the committee.  

Seemingly this should have be just another committee hearing on just another day in Washington.  However, on this particular day, instead of having a discussion regarding the actual data and research, Senator Boxer reverted to adding documents to the committee record from other black associations that countered the position of Mr. Alford.  Let’s say this didn’t sit well at all with Mr. Alford and he actually let Senator Boxer know that this was a “racial” approach and the wrong “path” to be going down. 

I posted this video because I think in this day and age to have this type of political posturing going on indicates a true lack of intelligence on the part of Senator Boxer.   Honestly, the basic argument she was forming went something like this…”Mr. Alford, all of these other black associations like my position – so you must be wrong because you represent a black association.”  I would hope in her time in Senate, Senator Boxer has learned the proper and improper way to form counter points. However, based on this display in her own committee I was both frightened and reminded how we truly need good old fashion reform in Washington.  The problem with the status quo that we have today is that no matter what the so-called impetus is for a senator, congressman, etc. to pursue their political offices,  many times the real underlying impetus is hubris, power, money, etc.  Senator Boxer is just another in a long line of professional politicians that just don’t get it.   She is clearly out of touch with the majority of Americans and also living in a long past era where persons of color are expected to follow the same exact believe system. To lump the African American community into one large “group” as she did during this committee does an incredible disservice to African Americans, freedom of choice and my basic intellect.  In closing, Senator Boxer, we are now in the 21st century – don’t use the NAACP and 100 Black Men to advance your causes – instead try using data, facts, figures and a common sense approach.

Video: Courtesy of Youtube.com and www.ChuckDevore.com (running against Sen.Boxer in 2010 election)  

The Next Great Heist…Misinformation

Misinformation and the Internet
The Next Great Heist…Misinformation

Okay so I have seen my fair share of Die Hard-esque, conspiracy laden action movies and would like to think of myself as a generally level headed individual.  Seriously, who could really believe that some Internet savvy, greedy, terrorist organization could take control of an entire US network infrastructure and cause wide spread pandemonium like what happens in Die Hard 4. Even better, what about the James Bond movie, Tomorrow Never Dies, where a crazy media mogul tries to start a war by leveraging his global media empire combined with the basic vulnerability of a absurdly naive viewing audience. The movie Tomorrow Never Dies was filmed in 1997 and since then we have experienced the rise of Google, heightened popularity of social media platforms, and a general ability to be plugged in and reporting from almost anywhere.

It is in this new modern day, “always-on” society that I wonder: Have we created such a highly integrated, Internet driven society that our basic vulnerabilities are significantly higher today than they might have been even five years ago? (i.e. Are the plot lines of these two movies referenced above really that far out of line?)

Case in point, in 2008 there were 2 occurrences that received moderate news coverage but had a more significant impact than what the standard news media portrayed. Both occurrences involved misinformation and big swings in the public stock prices of two very large companies.  The bigger issue behind both of these stories was the fact that because of the interconnectedness of our modern day world, the misinformation spread quickly and caused downstream affects that were extremely significant. The two publicly traded companies affected in these two instances were Google (GOOG) and United Airlines (UAUA).

The United Airlines scenario is particularly intriguing.  Over the weekend of September 6, 2008 (Saturday) an article was posted to the South Florida Sun Sentinel website that indicated United Airlines was filing for bankruptcy.  The shocking article was actually true with just one problem. The actual bankruptcy filing of United Airlines had occurred approximately six years prior in 2002.  Here is the interesting part, through the wonders of the Web, website visitors began clicking on the article in heavy volumes while visiting the newspaper’s website.  This caused the article to grow in popularity and actual be featured on a most popular article section of the website.  This in turn caused Google’s news reader bots to recognize the significance of the article and index it within the Google news ecosystem.  One search later by an investment advisory / news shop in South Florida and a subsequent Bloomberg update and Voila!, massive sell-off of United Airlines on Monday, September 8th, 2009. How massive?  Below is the trading activity from September 2, 2008 to September 10, 2008.  On the panicked Monday sell-off, United Airlines (UAUA) traded in volumes that were nearly triple from the previous Friday.  More importantly, the stock which had closed at $12.30 a share on Friday reached a intra-day low on Monday of $3.00. The delta of $9.30 a share represented the evaporation of $1.4 Billion, Yes that’s BILLION. Obviously, the move downward on Monday was countered when investors realized the story was old and not relevant.  The thing I find most poignant about this scenario is that it shows both the fragility and strength of our networked society.

Information regarding details of United Airlines bankruptcy filing:  http://www.out-law.com/page-9418

United Airlines Trading Surrounding Bogus Bankruptcy Filing
United Airlines Trading Surrounding Bogus Bankruptcy Filing

The other scenario in 2008 involved Google.  Similar concept, misinformation and interconnected systems cause momentary blip and erratic pattern in trading.

Link to Valleywag article  http://valleywag.gawker.com/5057089/googles-share-price-swings-200-in-a-few-minutes

So what’s the point?

The point is simply a recognition on my part that :

(A) we are more connected and that creates awesome opportunities and also more risks

(B) this interconnectedness could be used by greedy criminals (you know the Die Hard 4 kind) to manipulate markets and momentarily guide opinion and therefore behavior

(C) within this environment we need to craft governmental legislation that will ensure we all are allowed to benefit from the good but limit our downside risk.

In short, I love technology, the Internet and sometimes these social apps. Well sometimes not the social apps, especially when a semi-friend from high school updates me on the fact that they are folding laundry with Tommy.  Either way, it is clear to me that some of these far-fetched plots of Tinsel town could potentially be more viable as we continue to migrate ourselves, our businesses further into the Internet as evidenced by 2 incidents in 2008 (GOOG & UAUA).

World Flow of Oil


Here is a fantastic graphic from British Petroleum. (Source: BP Statistical Review of World Energy 2009). Very interesting to see the inbound flow of oil into the United States.  I was particularly interested to see the flows of oil from the Middle East into Asia areas and also the rest of the world.

Given the continued discussion about America’s energy dependence this graphic clearly shows their is a gap between public perception versus the reality.

 

World Flow of Oil in 2008
World Flow of Oil in 2008

US Needs to Go on a Budget Diet

Whether it is losing that spare tire, giving up that daily latte, or taking that prized ten year old flannel shirt to good will, losing and the idea of doing without is never one that is very easy.  Let’s face it most of us are programmed in almost the same way. Give us something that we didn’t need and we say thank you.  Try to take it away and good luck.  Our US economic policy has proven this phenomenon transcends personal borders and actually manifests on a national scale as well. 

This phenomenon has never been more apparent than in the face of the current economic crisis that the United States faces.  President Obama has rallied his troops, and politicians from Seattle to Secaucus have all sung the praises of budget cutting and fiscal responsibility.  Interestingly enough though it appears that all politicians are on board for budget cuts at a macro perspective, but when it comes to actually cutting “THEIR” budgets – the consensus and collegial penny-pinching bureaucrats seem to lose it.  Effectively, all are ready for budget cuts so long as they don’t have to sacrifice any of their hard earned federal hand-outs. 

Take for instance the case of Mayor Pagliughi who is fighting proposed federal and state budget cuts to his tourism budget for the Cape May, New Jersey area.  It seems Mr. Pagliughi believes that proposed federal and state budget cuts will slow the nearly $5 Billion annually that is spent in Cape May County each year.

I’m certain that both state and federal funds have helped to ensure job stability and continued tourism revenues to Cape May County but the real question is what is the demarcation line for “have to have” versus “nice to have”.  

My approach to the issue of federal budget belt-tightening is quite simple, I parallel the budgeting process to my own simple family budgeting process.  If we only have X amount of income in a month and I know that we are going to have X+10% in expense…then guess what?  That’s right, like most American families I scour through the budget and cut the fluff for that month to ensure that we don’t spend ourselves into oblivion.  This expense cutting is certainly not pleasant but it is the responsible thing to do.  Often times the things that get cut are those that are most fatty in nature and are not core to keeping our household operating. For instance, maybe we cut back on our entertainment budget and don’t go to a museum or zoo, or maybe we eat out a few less times that month.  

Certainly I’m not naive, and I recognize that cutting jobs and federal programs is not as easy as cutting my daily latte, but, at the end of the day the approach is the same.  The idea that we can continue to spend without cutting back is flawed.  Cutting back by its very nature is a painful process and one that makes all involved uncomfortable and sometimes anxious.  However, the alternative to not cutting back now is that current politicians put an even greater weight on our future generations in terms of debts and delaying the very real, and hard decision making that is required by persons in power. 

So, let’s get real with ourselves and call a family meeting, sit-down, talk about it and get it done.  The current turf-protecting that is taking place in Washington and elsewhere is a recipe for more years of the same and a continued bloated and flawed federal budget.

OIL: A Dangerous Love Affair

We need professional counseling for this addiction
We need professional counseling for this addiction

 

 

I had the pleasure of recently seeing a repeat on the History channel of a program entitled “Crude”.  Its a great summary of the development and current state of the oil industry from the first discoveries in the US to the later mammoth find in Saudi Arabia.  I am convinced, as many of my friends and colleagues, that the current price of oil at sub-$50 a barrel is not sustainable.  Let’s face it the massive run-up to oil at $150 was equally not viable unless we were dealing with a radically altered new world order where the Suez Canal was closed and Iran was rattling sabers and throwing the US into a new skirmish.  No – the hard, cold facts are simple – the world depends on oil and we Americans are the poster-children for oil consumption.  

 

It is this last point that I find so interesting.  In one environment we are completely in love with cheap oil, SUVs, road trips and all the other benefits and lifestyle augmentation it provides.  But like most love affairs, when it is good, it is really good, and when its bad it looks like a scene out of Fatal Attraction complete with boiling bunnies and some crazy Glenn Close hair.  We saw just how bad this love affair can turn during the summer when oil was approaching all-time record prices and the effect at the pump was translating into $4.00 a gallon gasoline. Oh! the inhumanity!  The response was interesting and traumatic. The series of events that unfolded included general outrage followed by calls for government investigation followed by a modern day witch hunt against the oil executives and companies that produce the coveted black gold.  What was interesting was the American public actually got pissed that the oil companies were making a profit.  That analogous to holding a grudge against your corner crack dealer for making money from your addiction.  To take this ridiculous analogy one step further – why does your crack dealer make a profit, well because he takes the risk, he invests his own capital to buy the product, refine it and get it distributed, packaged and ready for sale and most of all … he supplies something you want, need, have become addicted to.  The fact that we as Americans are going to be pissed at Exxon and other corporations for making money is ridiculous.  Its even more ridiculous that the government hauls in the CEOs of these companies and asks them …”why Mr. CEO are you making so much money?”.  The point of this great thing called capitalism is that it creates incentive.  The incentive is simple – do good, be innovative, bring a product to market that others want and need and you can profit. 

 

The witch hunt held by Washington forgets basic economic fundamentals.  The debate that raged on appeared to be premised on the idea that Exxon was pocketing an extra $2 a gallon in profits when the price of gasoline moved from $2 a gallon to $4.  This is plain wrong.  Exxon like any other corporation has a cost of inputs and sale price of their output.  When the inputs price goes up (in this case crude /un-refined oil) then the output (gasoline) must also go up.  To drive this point home I looked at Exxon’s quarterly financial statement for Q4 2007 and Q2 2008.  Here are the findings. 

 

Exxon Q4 2007 Financials

Revenues = $116.6 Billion

Gross Profit = $47.3 Billion

Net Profit = $11.7 Billion 

Net Profit Margin = 10%

 

Exxon Q2 2008 Financials  

Revenues = $138.1 Billion

Gross Profit = $51.0 Billion

Net Profit =  $11.7 Billion

Net Profit Margin = 8.5% 


*Link to financial statement reviewed

 

What you see from the above financials is that Exxon’s revenue grew considerably in Q2 2008 but the actual profit per dollar of additional revenue was lower than what was experienced in Q4 2007 when oil was considerably lower. 

 

The point of all of this is that demonizing the oil companies for providing a valuable service and commodity that we all need is not the answer.  Instead why don’t we start by recognizing that we are part of the problem and in order to truly be free from high crude prices we need to curtail our consumption and look to more compelling and environmentally friendly alternatives.  The reality is that this is not an easy process.  As we are seeing now – gasoline is back under $2.00 a gallon and everyone has already forgotten the pain and outrage they felt just a few months ago.  Guys like Boone Pickens should be commended for helping to brainstorm alternatives and bring these ideas to the forefront.  With the current rate of population growth and migration of developing countries into the middle class – energy usage is and will be one of the greatest challenges of our generation.