The great financial minds in Washington are at it again, starting another war. As usual, it is "for our own good" and will make twenty-eight per cent of the adult population miserable while destroying a large industry and reducing tax revenues sharply. Does legislation get any better than that?
This time they're making war on another weed, one that has been a favorite in America since before the time of Pocahontas. The Nicotine Nazis are on the rampage and propose to turn tobacco over to the FDA to "regulate." The FDA intends to start by mandating the removal of all additives, including menthol, and my girlish laughter is going to dissipate as the smoke does.
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Since the sound byte medical types and MSM are convinced that smoking is worse than sex was to Victorians most citizens will doubtless think prohibiting tobacco (the real proposal; regulation by the FDA is merely the first step) is a fine solution that will lower health-care-related costs even though the jihad of the last thirty years has had no effect. The usual Liberal logic was applied: you may not smoke, but all diseases are tobacco-caused so either you are ill because of "second hand smoke" or you took a puff behind the woodshed when you were thirteen and forty years later you got cancer because of it. Smoking has become the easy, automatic answer for cause of death and is probably implicated in cases of suicide and car crashes.
This isn't about making Linda snarl at the world; we're interested in the economic effects ― which will be catastrophic. Ten years ago I spent $72/month on my two-pack-a-day habit. Taxes have been piled on to the point that the carton of cigarettes that cost nine dollars then is well over fifty now. Think of that as fifty-buck lattes or fifty-buck movie tickets.
"Sin" taxes are a favorite for revenue and those of us who enjoy a little tot of Irish or a glass or two of (heart healthy) red wine are subject to truly sinful and prejudicial new taxes ― at least one raised recently by 537% by Mr. "I'm not going to raise your taxes unless you make a quarter of a million a year." We got the usual equal treatment before the law: all smokers and drinkers are penalized.
Has anyone consulted the Carolinas to see what effect knocking R J Reynolds off the Big Board is going to have?
What about the shareholders there and of P. Lorillard and others? What about my solicitous neighbors who voted a ten dollar a carton tax last year to procure more "social services" before Mr. Obama added his ten dollar a carton tax to already outrageously punitive fees? The loss in tax revenue will be enormous and governments don't understand about reducing spending when income falls. Adjusted for inflation something like eighty per cent. of our cherished smokes are pure tax revenue, and guess what? Non-smokers are going to have to "sacrifice" to make up for that loss.
A black market will surely spring up, which may account for the BATF ruling that all purchases of fifty cartons or more must be reported to them! Even if all taxes are paid. Seriously. You have to fill out a form including your license plate number and full personal data.
Travel and tourism...a higher percentage of Europeans and those from the Middle East smoke and I know what my rule is: If I can't smoke, I don't go. How appreciative are New York, Las Vegas, and Miami going to be when the French and Germans say "non" and "nein?" Who cares how good the exchange rate is if a monsieur can't even buy a pack of Galoises or an American brand or smoke within twenty-five feet of a doorway? Will there be revenuers, so to speak, wandering around the country hunting tobacco patches and sniffing the air? Why not? There are some of those jobs Mr. Obama claims he is going to create. Will foreigners get special dispensations or will customs confiscate their cigarettes for failing to meet US standards?
Attempts to legislate morality and lifestyles always fail and always have nasty consequences. If there hadn't been prohibition Joe Kennedy would never have made a fortune running rum and we would have been spared Teddy in the Senate all these years. Why not ban sugar, which is far worse for you than fat, and ban the substitutes too? (Because the Stevia producers do not have the lobbies that sugar, Equal, and Splenda do.) Put enough social engineers to work and we could wind up with everyone in the country loathing everyone else and set new records for assault and battery.
Most of you probably don't smoke and don't see what the fuss is about; you even believe my health will improve if I am treated like a toddler. (Will I live longer if I stop smoking? No, but it will seem that way. Mostly, it is my choice, not the government's.) My bleeding ox may not move you, but how do you feel about the proposal you be taxed for every mile you drive? I don't drive a hundred miles a month, while lots of you drive several thousand. Will you like having your car fitted with a device that records your mileage (at your own expense) and allows the government to track your every move? They don't intend to lower the incredible taxes on gasoline, either. It will be argued that you deserve it because you are using more than your fair share of the gasoline and doing more than your fair share of wearing out the roads.
You know how it goes, people: When you don't protest when it happens to us, they'll come after your butter, cheese, salt, red meat, Cokes, cell 'phones, and roofs that are any color other than white. In times past coffee, tea, and chocolate have all been taxed and chances are that most of you regard one of the three as an invigorating "must have." They look like prime targets for revenue-hungry governments once the evil weed is outlawed.
Laissez faire, people, laissez faire. Let's all take responsibility for our own choices and pay for our own vices and stop regulating and taxing others for theirs.
Let us hope that wiser ― or more rapacious ― heads prevail in the latest campaign of the war against tobacco.
Now to business. You could call your broker this morning and sell tobacco short before it occurs to a lot of people that the proposed policy would destroy another large industry and a major source of income. Even though I expect a fall in tobacco stocks I'm more inclined to think we should hold off until we see what sort of support Dr./Senator C can garner. There could be some good short-hold bargains to be picked up but your timing will need to be impeccable ― and keep a firm eye on your "greed" gene. Maybe scoop up a handful when the gloom is deepest but promise yourself faithfully that you'll dump it when you have a modest profit.
I'd have to look at current prices and what tobacco stocks have done for at least the last year, but I'd be feeling pretty antsy when I had a twenty-five per cent. profit, and I'd begin charting volumn and price daily when I was ten per cent up. By the time a stock had recovered half it had lost it would take a squad of Marines to keep me from selling. Nuthin' wrong with a quick little ten to fifteen per cent., you know, and a lot right about it.
As volatile as the market has been you can lose, get lucky, or make your decisions ahead of time. I have never lost serious money by selling too soon; I've lost it by not having faith in my judgment and buying or by not paying attention and missing a major sell signal.
How about a quick identity check? I'm a trader, the spiritual descendent of robber barons, and believe in hoisting the Jolly Roger, a quick capture, putting a prize crew on board, and on to the next opportunity. How many of you think in terms of "investing for the long term?" My bet is that most of you are traders who believe in stashing spare cash in metal or you wouldn't be here.
I dunno'… Maybe what we all need is for government to deliver the foods they want us to eat directly to our homes and make sure the things that have even a remote chance of harming us are all banned…
While they're at, they could test all of us at an early age and see what occupations we're most suited for and make sure that's exactly what we're doing with our lives. You know, to maximize our happiness and security. They could decide how much each of us makes and ensure that no one has too much more than anyone else.
To make implementation easier, they could build all housing in the nation ― entire cities, even! Plenty of efficient clinics and security cameras everywhere, including the homes they generously built for us…for our health and safety!
If we get on it now, we could have a perfect society in about Five Years.
Across the vast reaches of the editorial room Whiskey contributor and LIR editor Jim Nelson laments, "I tried to watch a Sarah Palin interview…I just couldn't do it. I did try though. Just couldn't."
Your editor's ears perked up. A few of the other editors asked for a little clarification. Jim obliged:
"Apparently sending a check to every citizen in Alaska is not socialism. Yep, it's okay for the Alaskan government to divvy up the natural resources and make sure everyone gets a fair share. That's not socialist…but Obama is."
Your editor bit his tongue gently and left the room.
So…about that oil…
Got a question for Mr. King concerning Peak Oil.
I read over the last few years a couple of reports questioning the "biotic theory" of oil formation as opposed to the "abiotic theory". To this day I have never heard or read any convincing rebuttal other than simple denial of the fact. What troubles me is that apparently it actually is a fact that large recoverable oil reserves have been found in non-sedimentary basins by the Russians. If so, wouldn't that impose some severe limitations to the Peak Oil theory? Sure it might not affect the short term of oil, but looking at the medium to long term, it seems to me the equation is dramatically altered.
Would really appreciate your view to help me make up my mind.
I've passed this question along to Byron and will let you know what he has to say in a future issue.
Allow me to take this chance to point out that Byron King and fellow regular Whiskey contributor James Howard Kunstler will both be on the Whiskey Bar panel in Vancouver. I hope to heaven someone brings up abiotic oil. There'll be plenty of booze beforehand so this ought to be really good.
To make sure you're there with a good seat.
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Friend of the Whiskey Room Matt Savinar has addressed abiotic theory on his website LifeAfterTheOilCrash.net:
A handful of people believe oil is actually a renewable resource continually produced by an "abiotic" process deep in the Earth. As emotionally appealing as this theory may be, there is absolutely no evidence for it. While many of the people who believe in this theory consider themselves "mavericks," respected geologists consider them crackpots.
That's a little harsh, but it is accurate. Hydrocarbons are essentially condensed sunlight. The nearby continual nuclear explosion in space we know as The Sun bombards our little rock with the entire spectrum of electromagnetic energy. The life forms we lump into the plant kingdom capture that energy and store it as glucose. The life forms we lump into the animal kingdom get their energy by eating the plants or by eating the animals who eat the plants.
A long time ago the corpses of microscopic plant life got buried by random geological movement and cooked at high pressure and temperature deep in the earth. The results ― depending on the pressure and heat ― are the hydrocarbons we use today: natural gas, light sweet crude and the heavier, harder-to-use stuff that's beginning to look more appealing.
Point is this. Hydrocarbons are the result of biological life, not the result of natural geological processes in the earth's mantle. The energy hydrocarbons hold ultimately comes from the sun (which itself is just an enormous cloud of single atom hydrogen collapsing under its own gravity and giving off energy by means of nuclear fusion).
The earth isn't pouring forth the stuff we need. Abiotic promoters point to refill from nearby fields as evidence of abiotic production. We wish it were that simple, but as the plaque above the bar reminds us: "You can't get something for nothing."
The day grows long and Whiskey web production associate Adam "The Adamic Bomb" Hopkins will grow angry if I don't send him today's issue to prep for the send by the deadline. He's asked nicely, but I see the promise of violence behind his eyes.
We'll meet again around the same time tomorrow.
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