Ed’s Daily Notes for June 12th   2 comments

Washington Post: Insurgents in northern Iraq seize key cities, advance toward Baghdad

Say goodbye to Iraq:

Insurgents inspired by al-Qaeda rapidly pressed towards Baghdad on Wednesday, confronting little resistance from Iraq’s collapsing security forces and expanding an arc of control that now includes a wide swath of the country.

By nightfall, the militants had reached the flashpoint city of Samarra, just 70 miles outside Baghdad, after having first seized Tikrit, Saddam Hussein’s hometown, and other cities while pressing southward from Mosul.

The stunning speed with which the rout has unfolded in northern Iraq has raised deep doubts about the capacity of U.S. -trained Iraqi security forces, and it has also kindled fears about the government’s grip on the capital itself.

In a country already fraught with sectarian tension, with parts of western Iraq already in Sunni militant hands, the latest gains by insurgents from the Islamic State of Iraq and Syria prompted ominous cries of alarm from leaders of Iraq’s Shiite Muslim majority.

Have we learned anything kids? When there is a power vacuum in the Middle East, it will always get filled with Islamic radicals.

The U.S. is directly responsible for creating this power vacuum. Unless we were planning to kill every Muslim, or we were planning to stay in Iraq for decades, we had no business in Iraq.

But hindsight is 20/20, right? So how should we proceed?

First, unless we are prepared to keep a force in Iraq for at least a generation, we need to stay out, even if that means surrendering Iraq to Islamic radicals. If we aren’t prepared to do what it takes, we have no business starting anything. (We need to get out of Afghanistan too, but that is another issue.)

Second, we have the question of Iraq’s oil production. We need to proceed on the assumption that Iraq’s oil production may be lost to the world for a long time to come. Sadly, the U.S. government isn’t prepared for this possibility, and won’t be as long as Obama is president. While his policy of supporting alternative energy sources will be good in the long run, it won’t help in the next few years. Expect rising oil prices in the near future.

Investment-wise, oil companies should do well. Once we get higher oil prices (whether it comes in a quick surge or slowly rising prices from increasing demand is the only question), there will be a greater demand for new oil sources, which should help companies supporting oil production (i.e. Seadrill comes to mind). However, knowing Obama, nothing will happen during his administration, so it will be up to the next president in 2017 to do something. But these companies should be good long-term plays, if you have the patience. In the medium-term, look for oil producers to do well.

Bloomberg: Apple, Starbucks Tax Deals With Irish, Dutch Probed by EU

Tax breaks for Apple Inc. (AAPL), Starbucks Corp. (SBUX) and Fiat Finance & Trade SA in three European Union countries are under investigation by EU competition regulators in a clampdown on special treatment for companies.

The EU is checking whether the tax deals in Ireland, the Netherlands and Luxembourg are illegal state aid, according to an e-mailed statement today. Governments can be ordered by the European Commission to claw back unfair aid.

The EU inquiry comes amid a global crackdown on tax-avoidance as governments struggle to increase revenue and reduce deficits. Lawmakers in the U.S., the U.K., France and Italy have scrutinized companies such as Microsoft Corp. (MSFT), Hewlett-Packard Co. (HPQ), Google Inc. (GOOGL), and Amazon.com Inc. The commission has said tax avoidance and evasion in the EU cost about 1 trillion euros ($1.4 trillion) a year.

My view is these companies are only doing what every individual who pays income taxes does: Find every tax break they can get. Because they are international companies, they have access to greater tax avoidance schemes than the average taxpayer, but the intent is the same. However, I believe companies shouldn’t be taxed at all, since that is only a hidden tax on customers by greedy governments looking to grab every penny they can get. Sadly, the EU will probably succeed in getting more money from these companies.


Posted June 12, 2014 by edmcgon in Editorial/opinion, News, Politics

2 responses to “Ed’s Daily Notes for June 12th

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  1. Ed, I’m confused. On the one hand you say “stay out of Iraq.” On the other you say unless the US does something, Iraqi oil is “lost to the world” and oil prices will rise because the US won’t do anything.

    What are you suggesting the US should do about Iraq?

    • BB,
      What the U.S. should do is maximize oil production while also continuing to work on alternative energy sources. We should also allow oil exports to Europe. Ultimately, our goal should be to make the Middle East irrelevant. Our involvement there is like an overbearing parent to a teenager. The teenager will never grow up as long as they spend all their time rebelling.

      I would also add that if we cannot obtain an alternative energy source, or even a supplement (i.e. solar), by 2020, we need to cut off all subsidies at that time. We’ve been subsidizing that industry too long. Then we need to determine what works, and run with it. We know nuclear works, and we can always fall back on that if we can’t make any progress elsewhere.

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