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Cap N Trade Giving Away America's Greatness By: Charles Payne

It's about time to ask what this Copenhagen climate accord stuff is really all about. I've been going through it and the more I study it the more I'm convinced it serves two purposes:

  1. It gives the government control over energy input costs which means incredible leverage over business.
  2. It dovetails with the idea that America has raped the rest of the planet and is now due to pay it back.
The meeting best reflects the notion that America is the evil country that has brought the globe to the brink (to borrow a well-worn word) so now it owes the planet by slowing up its own economic growth while funding slower growth in under developed countries. In a way, it's like going back to Michael Jordan to ask him to share his earnings with the guys that were stuck on the LA Clippers because it's just the right thing to do. Actually, it's more than that because his old team would also have to vow to play just four players at a time while charging their fans more to view games. It's kind of the ultimate apology for American arrogance. That's because it will cost every American money, power, and prestige. Not to mention it will set back the nation's dominance to the point where it puts the country on a path of mediocrity.

Essentially, we are pledging to cut back to using the same amount of fossil fuels consumed to support the economy in 1907. I wouldn't be surprised to see American ingenuity come up with an energy source to someday make it easier to completely get off fossil fuel, but the timeline and the economic pain are not just simply unreasonable, they are suicide. According to a research report from Charles River Associates, net job losses from proposed cap and trade regulations will mount to 2.5 million people a year. In effect, this attempt to head off the potential impact of the average temperature on the planet from rising one degree over the next one hundred years just doesn't make sense. It doesn't add up unless you consider the enormous guilt trip that has been foisted upon the country for decades by those that in their heart of hearts dislike the greatness of the nation.

In the meantime, to get the ball rolling, the so-called rich nations will create a fund for poor countries. That fund will begin with $10.0 billion but quickly leap to $80.0 billion a year, and finally reach $150.0 billion plus a year. I've read where the African Union itself wants no less than $60.0 billion a year but maybe as much as $200.0 billion a year to get involved. Equally as shocking is the fact that we have to pay China, the world's largest emitter of CO2, to be a part of this sham. India, which is coming on strong but has 400 million people without electricity, is also murmuring that it's going to need serious compensation. By the way, China isn't down with letting any international agency into its nation to check on compliance. So, once again, I get back to the fundamental question of why are we selling the country down the river? Why are we willing to make a leap backward into time?
Do the greens have this much power that they can orchestrate the dismantling of the greatest nation on earth? Should Americans feel so guilty about their success that they are willing to head back to "Go" (and definitely not receive $200) and start from scratch?

The Energy Cost

There are a variety of estimates as to how much cap and trade will cost the average American, beyond the fact we are making the nation less competitive:
  • A report by the Department of Transportation pegs the cost to U.S. taxpayers to as much as $200.0 billion or $1,761 per household.
  • John Boehner (R-OH) has crunched the numbers and says that the action will result in an additional tax bill of $366.0 billion or $3,100 per household each year.
  • Democrats point to an estimate by MIT that the bill will only cost the average household an extra $800.0 a year.

Socked in the Breadbasket

There is no debate that cap and trade legislation is going to be expensive for all Americans. The amount our average energy bill climbs varies based on the think tank and economists that take a crack at the numbers. But one thing not being talked about is all the ancillary costs, including America becoming less competitive and the actual day to day cost of living surging. As things stand now farmers in South Dakota face $367.0 million in taxes.
  • $175.0 per dairy cow
  • $87.50 per head of beef cattle
  • $20.0 per hog

Even the USDA says that food CPI will increase by 5% by 2050, and in the process, America will lose 59 million acres in cropland and pasture production. So, a population of 420 million people would have far less land to grow/farm food and that means the country that has been the breadbasket to the world would have to import food as beef production would decrease 10%, hogs 23%, and dairy 17%. As for agriculture exports, we would experience massive declines:
  • Corn: -1.0 billion bushels (20% of current exports)
  • Soybeans: -430 million bushels (30% of current exports)
  • Cotton:- 2 million bales (or 50% of current exports)

Is America feeling so guilty for its success that it's willing to become an importer of food?

House Spending Bill

The Associated Press released highlights of the spending bill passed by the House yesterday. All figures are in billions.

Well, we were promised no earmarks or home state pet projects but there are, along with allowing Amtrak passengers to transport firearms in checked luggage.

God Bless the 16,000 troops called up for duty in Afghanistan and their brothers in arms.

Economic Data

Retail Sales

We like what we see in this morning's November retail sales report, which reverses the gloom following the chain-store sales data released last month. Headline retail sales for the month were +1.3% (consensus: +0.6%), and +1.2% ex. auto (consensus: +0.4%). A few things that stood out to us:
  1. Core retail sales (ex. auto, gasoline receipts, building materials) has now ramped consistently since September (+0.6% in November)
  2. The strength in the November numbers should trump the modest downward revisions to October numbers (which still seemed favorable)
  3. Building material sales were strong (+1.5% m/m)
  4. Consumers still very picky in what they are buying. Going to department stores for accessories and good deals (sales at department stores were positive) but shunning clothing stores (not many deals) and furniture. Furniture and clothing sales were down in the month, slightly.

Import/Export Prices

Prices for imports and exports both increased in November at a faster rate than the previous month. Import prices rose by 1.7%, while exports prices rose by 0.8%. For exports, this is the largest monthly rise since July 2008. Excluding petroleum, import prices rose by 0.4%, and excluding agriculture export prices rose by 0.7%. The increase in export prices comes as a surprise, and comes at a time when exports are surging on a weak dollar. It seems likely that the increase in the prices of exports comes down to simple supply and demand, with rising demand for exported goods causing prices to come up. Among the biggest gainers for exports were crops, energy, and metals. Leaders for imports were mining, energy and metals.

Disclosure: None