And before you say "but Microsoft doesn't produce anything that's a "hard good" I will simply note that Intel has a pretax operating margin in the 50% range, and they make physical devices.

Record source prices of course lead to record sales and that leads to record profits in dollar terms, but in margin terms this is a terrible business.

The reason oil is expensive is that both sides of the aisle have insisted on refusing to take our recessionary lumps from 2000 when they came due, and that pressure translated directly into monetary and fiscal policy. This resulted in a loss of relative value in the dollar, and since our oil comes from other nations, those nations have (quite reasonably) applied a discount to the present value of the dollar when pricing the product (oil) that we wish to buy, seeing no indication that we are going to return to sound fiscal and monetary policy at any time in the future.

At the same time we've spent the last 30 years refusing to develop any of our own petroleum resources, despite having very significant amounts of resource that can be recovered for our own consumption.

This, plus rising demand fueled by our stupidity in believing that we can have people sew jeans and assemble DVD players for 25 cents/day forever, and they will never demand better wages or working conditions, nor will they want a car, scooter or even a refrigerator in their house, has led to the circumstances we find ourselves in with energy prices.

This bill, which Bush will certainly veto (but Obama or Hillary will just as certainly sign) will bring back an old 1970s standby - gas lines. Why would you bother investing in more exploration when you can't drill anywhere, and if you manage to make more money the government will simply tax it away? The obvious outcome of such a bill will be lower production, not higher, and that will translate into shortages.

Count on it.

If you think the "stimulus checks" will spark a recovery in the economy, better read this first:

"The Bush administration's tax rebates won't prevent the U.S. economy from stagnating in the second quarter as soaring food and fuel bills hurt consumers, a Bloomberg News survey showed.

'Consumers have gone into the bunkers,' said Ken Goldstein, an economist at the Conference Board, the New York-based research group that tracks confidence. They 'fear that their budgets are getting squeezed tighter and tighter.'"

Note that while the conclusion of the article is correct it does not cite the real reason that they never work.

The fact is that such "rebates" are a circle jerk. The "money" to pay them did not come from production, it came from debt issue (we're running deficits) and the "spending" thus is not actual GDP expansion (productive output in excess of debt.)

As a consequence the net impact of such "stimulus checks" is always negative, because once the money is gone the debt overhang and service requirement remains, exactly like the HELOC and housing craze produced not sustainable GDP growth but rather debt overhang and a subsequent economic crash.

Isn't it time that we expected journalism to actually deliver news, and economists to recognize the basics of mathematics in their pronouncements?

Have you heard this from any of the mainstream media? CNBC? The Wall Street Journal? Bloomberg?

Why do we allow so-called "journalists" to continue to pronounce that 2 + 2 = 56?

We have become a nation where "put it off until tomorrow" is the name of the game - for more than 50 years. "Great Society" does not, did not, and cannot work. It is predicated on the idea that you will never have to pay the check on the table as you can always find a way to get someone to loan you the money so you can defer that until tomorrow - indefinitely.

This is just as fanciful as believing that people will sew our jeans for 25 cents/day forever, but never want a pair of those jeans for themselves.

Reality has a nasty way of intruding into our economic fantasy island game in both Washington and on Wall Street, and today we saw that in our trade deficit numbers. While some people cheered this, the internals told a story that is not being reported:

"Demand for goods from China suffered the biggest slump last month, helping to narrow the trade gap with that nation to $16.1 billion, the smallest in two years. At the same time, exports to China were the second-highest ever."

Pricing pressure (upward) as their standard of living rises at the same time our demand softens.

Oil, of course, will drive trade figures the wrong way, but the real story is softness in imports, which means softness in consumption, which means a falling GDP over time, as the consumer is 70% of our economy.

Unfortunately there is no "go vote for the right guy" trade you can put on, because all of the candidates and both political parties are divorced from reality.

As a consequence your choices are between dumb and dumber come November, which isn't exactly the "stuff" that a solid economy - and thus stock market - are made of.

SPX 1070 anyone?

In one hint of intelligent acts Homeland Security and ICE appear to be ready to actually start enforcing the law:

"Employers should be prepared in the coming months for immigration raids on scales never before staged by the federal government. The stakes for employers will be especially high if the courts give a green light to the mailing of Social Security no-match letters."

Ding ding ding. I've been advocating this for years.

There is absolutely no reason not to use this information to solve the problem. When I ran MCSNet we were required to report all new hires within a very short period of time, including the workers social security number. If the same number appears in two places at once in a fashion that simply could not be someone working two jobs (e.g. you're not employed in San Francisco and New York at once!) then send ICE out to both places and deport the guy who used the falsified credentials. If the SSN was never issued (its just plain false), do the same thing.

To those who claim that this is somehow "wrong", did you rail about the original purpose of this data matching? That was to find "deadbeat parents" and insure that they would be served withholding orders so their child support would get paid! Well, if that's ok, how come this isn't?

I hear all sorts of people bleating about how unfair it is to enforce immigration laws, but nary a peep was heard when this law was passed over a decade ago for its original purpose, nor has there been any attempt to block that usage up until now.

Hypocrisy knows no boundaries.