Tuesday, May 31, 2011

High Energy Partnerships -- Dividends

6 Mid-Cap Oil & Gas MLPs Currently Offering Yields Above 6%

Why Mid-Cap MLPs?

Master Limited Partnerships (MLPs) are a growing asset class. There are a few giants in the business. However, these middle-sized MLPs may be preferable because they offer better potential for growth. Simply put, a $3 billion company goes up by 33% if another billion enters it, while a $10 billion company would only go up 10% in that situation. Howver, it works the same way when funds depart. Thus, there is risk.

There has been significant growth in interest for this asset class. This growth is most notably from individuals at or near retirement age who are looking for higher yield options in a low yield world. These partnerships have appreciated with the oil markets, and may be overvalued in the short term. Nonetheless, as more money comes into the MLP asset class in search of income, it is likely that M&A activity will begin to heat up within the industry. Such M&A activity tends to benefit the smaller market participants, as they are acquired by the larger participants.

Another reason that mid-cap MLPs may outperform the larger ones is their lack of recognition. Fewer analysts follow them. As MLPs become more accepted and ownership becomes more common, the checken-and-agg effect of growing analyst coverage will most likely lead to more trading, which, mixed with rising energy prices, is likely to lead to higher share prices for these already high-yielding securities.

Six Mid-Cap MLPs That Currently Yield over 6%

Boardwalk Pipeline Partners LP (BWP)

Yield: 7%

Market Capitalization: $5.62 billion

Debt: $3.27 billion

Buckeye Partners LP (BPL)

Yield: 6.3%

Market Capitalization: $5.83 billion

Debt: $2.64 billion

Enbridge Energy Partners LP (EEP)

Yield: 6.7%

Market Capitalization: $7.9 billion

Debt: $5.25 billion

Nustar Energy LP (NS)

Yield: 6.9%

Market Capitalization: $4.1 billion

Debt: $2.4 billion

Plains All American Pipeline LP (PAA)

Yield: 6.3%

Market Capitalization: $9.25 billion

Debt: $5.59 billion

Regency Energy Partners LP (RGNC)

Yield: 7%

Market Capitalization: $3.5 billion

Debt: $1.22 billion

Many of these names, like the larger MLPs, have appreciated considerably over the past year. Due to this appreciation, it may be wise to prepare a list of those with characteristics you like and watch them for a better entry price. Of course, if you had chosen that course of action six months ago, you probably would have missed out on some decent growth and/or distributions.

MLPs and Taxation

MLPs are partnerships, so they do not pay corporate income taxes, on either a state or federal basis. They are fairly similar in this regard to the once great Canadian Royalty Trusts (Canroys) that Canada recently eliminated, forcing restructuring. Additionally, the investing limited partner might be able to record a pro-rated share of any depreciation to reduce tax liability. However, this theoretical advantage does not exist where the MLP is held in a tax-deferred account, such as an IRA. Nonetheless, they are often effectively used in IRAs for their high yield characteristic alone.

The tax liability of the MLP is passed on to its holders. Each investor receives a K-1 statement that details their share of the partnership's net income. That income is then taxed at the investor's individual tax rate. The MLP may also make cash distributions that are not taxed received, but reduce the cost of partnership shares/units and create a tax liability that is deferred until the MLP is sold.

An ETF and Why CEFs are an Issue

I would also like to mention that the ALPS Alerian MLP ETF (AMLP) is an ETF that provides exposure to a basket of MLPs that is supposed to correspond to and track the Alarian MLP Infrastructure Index. The annual expense ratio is listed as 0.85%, which is slightly above average for an indexing ETF, but this option may be preferable to individuals that desire diverse exposure to the asset class, or to those that do not feel confident picking and choosing individual names within the asset class.

There are also some newer MLP Closed End Fund (CEF) options that many may prefer because they are designed to produce a 1099 rather than a K-1. These CEFs are usually preferred by individuals that want to hold MLP exposure in an IRA or those that just don’t want to file a K-1. While there may be some reasons to hold such a CEF, their corporate structure essentially counters the tax pass-through characteristic of the investment plus expenses. If that was a good idea, why wouldn't these businesses structure themselves as corporations?

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Monday, May 30, 2011

Sunstroke hits Solar Energy

The impossible claims have been made. They've said it. Cheap solar power is just around the corner. But that's where it's always been.

GE Sees Solar Cheaper Than Fossil Power in Five Years

Solar power may be cheaper than electricity generated by fossil fuels and nuclear reactors within three to five years because of innovations, said Mark M. Little, the global research director for General Electric Co. (GE)

“If we can get solar at 15 cents a kilowatt-hour or lower, which I’m hopeful that we will do, you’re going to have a lot of people that are going to want to have solar at home,” Little said yesterday in an interview in Bloomberg’s Washington office. The 2009 average U.S. retail rate per kilowatt-hour for electricity ranges from 6.1 cents in Wyoming to 18.1 cents in Connecticut, according to Energy Information Administration data released in April.

GE, based in Fairfield, Connecticut, announced in April that it had boosted the efficiency of thin-film solar panels to a record 12.8 percent.

Improving efficiency, or the amount of sunlight converted to electricity, would help reduce the costs without relying on subsidies.

The company said in April that the factory will have about 400 employees and make enough panels each year to power about 80,000 homes.

Solar-panel makers from Arizona to Shanghai are expanding factories to add more cost savings that analysts say will sustain the industry’s expansion. Installations may increase by as much as 50 percent in 2011, worth about $140 billion, as cheaper panels and thin film make developers less dependent on government subsidies, Bloomberg New Energy Finance forecast.

Solar Costs Dive

The cost of solar cells, the main component in standard panels, has fallen 21 percent so far this year, and the cost of solar power is now about the same as the rate utilities charge for conventional power in the sunniest parts of California, Italy and Turkey, the London-based research company said.

Most solar panels use silicon-based photovoltaic cells to transform sunlight into electricity. The thin-film versions, made of glass or other material coated with cadmium telluride or copper indium gallium selenide alloys, account for about 15 percent of the $28 billion in worldwide solar-panel sales.

First Solar Inc. (FSLR), based in Tempe, Arizona, is the world’s largest producer of thin-film panels, with $2.6 billion in yearly revenue.

Smart Grid

Little also said the U.S. transition to a full smart grid will take “many, many years” to develop.

A complete smart grid would consist of millions of next- generation meters installed in businesses and homes, appliances that adjust their energy use when prices change, and advanced software to help utilities control electricity flows, he said.

“I think it’s going to be a long time before we can realize the full potential of the smart grid,” he said. “But it is coming.”

GE this year plans to introduce the “Nucleus,” a device that will let consumers track their household electricity use with personal computers and smart phones. The company also is investing in its appliance and lighting unit, including $432 million for U.S. refrigeration and design centers announced in October.

Utilities need to have incentives to put in place devices that save energy, and Congress needs to provide greater certainty on tax policy surrounding renewable energy, Little said.

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First Connecticut Bancorp -- Stock Conversion

First Connecticut Bancorp is going public. It's converting from mutual ownership to stockholder ownership and it appear the conversion is occurring at a considerable discount from book value. In other words, this conversion may well be an excellent deal for depositors who want to become owners.

First CT Bancorp will sell up to 17.2 million shares at $10 each when it goes public in either June or July.

Keefe, Bruyette & Woods is handling the conversion. The phone number for the conversion center is (877) 860-2086.

If the maximum number of shares are sold, the Price-to-Book Value Ratio will be 73.2%.

Meanwhile, the Price-to-Core Earnings Multiple (based on trailing 12 months earnings) will be 73.6.

Thus, based on Price-to-Book, the deal is attractive. But based on the Price/Earnings Ratio, it's much less attractive.

Bottom line: this deal deserves close analysis. The stock may well jump from $10 to $13 when trading begins.

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Sunday, May 29, 2011

Oil -- More Domestic Oil is the Answer

We can drill for oil in Texas, and we can use the hydraulic fracturing process to extract it from the rocks it's in. Or we can go for the easy stuff in the Artic National Wildlife Refuge, off the coast of California and in a lot of other places that are now officially off-limits to drillers.

Why is the nation determined to bankrupt itself while enriching the people who want to provoke our collapse? Crazy.

Shale Boom in Texas Could Increase U.S. Oil Output

May 27, 2011

CATARINA, Tex. — Until last year, the 17-mile stretch of road between this forsaken South Texas village and the county seat of Carrizo Springs was a patchwork of derelict gasoline stations and rusting warehouses.

Now the region is in the hottest new oil play in the country, with giant oil terminals and sprawling RV parks replacing fields of mesquite. More than a dozen companies plan to drill up to 3,000 wells around here in the next 12 months.

The Texas field, known as the Eagle Ford, is just one of about 20 new onshore oil fields that advocates say could collectively increase the nation’s oil output by 25 percent within a decade — without the dangers of drilling in the deep waters of the Gulf of Mexico or the delicate coastal areas off Alaska.

There is only one catch: the oil from the Eagle Ford and similar fields of tightly packed rock can be extracted only by using hydraulic fracturing, a method that uses a high-pressure mix of water, sand and hazardous chemicals to blast through the rocks to release the oil inside.

The technique, also called fracking, has been widely used in the last decade to unlock vast new fields of natural gas, but drillers only recently figured out how to release large quantities of oil, which flows less easily through rock than gas. As evidence mounts that fracking poses risks to water supplies, the federal government and regulators in various states are considering tighter regulations on it.

The oil industry says any environmental concerns are far outweighed by the economic benefits of pumping previously inaccessible oil from fields that could collectively hold two or three times as much oil as Prudhoe Bay, the Alaskan field that was the last great onshore discovery. The companies estimate that the boom will create more than two million new jobs, directly or indirectly, and bring tens of billions of dollars to the states where the fields are located, which include traditional oil sites like Texas and Oklahoma, industrial stalwarts like Ohio and Michigan and even farm states like Kansas.

“It’s the one thing we have seen in our adult lives that could take us away from imported oil,” said Aubrey McClendon, chief executive of Chesapeake Energy, one of the most aggressive drillers. “What if we have found three of the world’s biggest oil fields in the last three years right here in the U.S.? How transformative could that be for the U.S. economy?”

The oil rush is already transforming this impoverished area of Texas near the Mexican border, doubling real estate values in the last year and filling restaurants and hotels.

“That’s oil money,” said Bert Bell, a truck company manager, pointing to the new pickup truck he bought for his wife after making $525,000 leasing mineral rights around his family’s mobile home. “Oil money just makes life easier.”

Based on the industry’s plans, shale and other “tight rock” fields that now produce about half a million barrels of oil a day will produce up to three million barrels daily by 2020, according to IHS CERA, an energy research firm. Oil companies are investing an estimated $25 billion this year to drill 5,000 new oil wells in tight rock fields, according to Raoul LeBlanc, a senior director at PFC Energy, a consulting firm.

“This is very big and it’s coming on very fast,” said Daniel Yergin, the chairman of IHS CERA. “This is like adding another Venezuela or Kuwait by 2020, except these tight oil fields are in the United States.”

In the most developed shale field, the Bakken field in North Dakota, production has leaped to 400,000 barrels a day today from a trickle four years ago. Experts say it could produce as much as a million barrels a day by the end of the decade.

The Eagle Ford, where the first well was drilled only three years ago, is already producing more than 100,000 barrels a day and could reach 420,000 by 2015, almost as much as Ecuador, according to Bentek Energy, a consultancy.

The shale oil boom comes as production from Prudhoe Bay is declining and drilling in the Gulf of Mexico is being more closely scrutinized after last year’s Deepwater Horizon disaster.

What makes the new fields more remarkable is that they were thought to be virtually valueless only five years ago. “Everyone said the oil molecules are too large to flow in commercial quantities through these low-quality rocks,” said Mark G. Papa, chief executive of EOG Resources.

EOG began quietly buying the rights to thousands of acres in the Bakken and Eagle Ford after an EOG engineer concluded that the techniques used to extract natural gas from shale — fracking, combined with drilling horizontally through layers of rocks — could be used for oil. Chesapeake and a few other independents quickly followed. Now the biggest multinational oil companies, as well as Chinese and Norwegian firms, are investing billions of dollars in the fields.

The new drilling makes economic sense as long as oil prices remain above $60 a barrel, according to oil companies. At current oil prices of about $100 a barrel, shale wells can typically turn a profit within eight months — three times faster than many traditional wells.

But water remains a key issue. In addition to possible contamination of surface and underground water from fracking fluids, the sheer volume of water required poses challenges, especially in South Texas, which faces a severe drought and rapidly diminishing water levels in the local aquifer.

At the rate wells are being drilled, “there’s definitely going to be a problem,” said Bay Laxson, a local water official.

Dave Thompson, regional production superintendent for the oil company SM Energy said the industry knew that water issues were “an Achilles heel.” He said his company was building a system to reuse water in the field.

But unlike Pennsylvania and New York, where fracking for natural gas has produced organized opposition, the oil industry has been mostly welcomed in western and southern states.

Thanks to the drilling boom, the recession bypassed North Dakota entirely. Here in Dimmit County, Tex., the unemployment rate has fallen in half, and sales tax receipts are up 70 percent so far this year, allowing the county to hire more police officers and buy sanitation and road repair equipment.

“In my lifetime, this is the biggest thing I’ve ever seen,” said Jose Gonzalez, 78, a retired teacher and son of migrant farm workers, who leased mineral rights to Chesapeake for $27,000 and sold another plot for $100,000 to a company building an RV park for oil workers. “You can see I’m happy.”

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Sunday, May 22, 2011

LinkedIn? How About TakenIn?

It's more than likely Warren Buffett would declare that LinkedIn is worth only a few dollars a share. Based on it's revenue and profit figures, what other conclusion is there? The company's prospects may suggest that revenue and net income will rise, but not at the speed of light, with is what the current stock price calls for. Thus, it's reasonable to assume the shares are headed for collapse as soon as it's possible to short them.

How to Cash in on LinkedIn

Friday, May 20, 2011

Start your own IPO and award yourself millions in options

— Quit your job.

You heard me. Quit your job, move to Silicon Valley, and start a venture to compete with LinkedIn (LNKD - News).

News from the initial public offering shows Wall Street is handing out free money again for dot-coms, and who knows how long it's going to last?

LinkedIn more than doubled on its stock-market debut, rising from $45 a share to $105 by early afternoon. That values the company at $10 billion.

That's equivalent to $130 for each of this company's 75 million monthly users. Hmmm. How long before a competitor offers the members, oh, $120 each to move? It won't even cost a penny. The new company can give the new members $120 ... in stock!

You think I'm kidding, but somewhere in an old email I still have a record of all the stock I "owned" in a free Web service that started up in London during the last dot-com bubble. The more I used it, the more "stock" I got. The IPO was going to make everyone rich.

LinkedIn, despite the hype, is primarily a service for hosting résumés. You can call it "networking" and "social media" and whatever you like, but half the company's revenues come from recruiters looking to trawl through all the résumés on the site.

How exciting is that? Last quarter, those revenues from recruiters came to $46.3 million.

That's 21 cents per LinkedIn user per month. Yes, you can see why this stock is being valued at $10 billion, can't you?

Another $28 million came from advertising. That's another 12 cents per user per month. Wow.

Online advertising. What a great business model.

This week's reaction to the LinkedIn IPO suggests the new dot-com mania may have some way to run. There's still a lot of skepticism about the Web out there, and that's bullish. Lots of people who "just don't get it." The new economy. The new world. Web 2.0. Web 3.0. It's not about earnings; it's about eyeballs!

Bubbles typically don't burst till the last bear turns bullish. The collapse of the last dot-com bubble was signaled weeks in advance, when the IPOs stopped popping on their debuts.

Cash in while you can. Resume-site.com? Resume-world.com? Resumeszone.com? GoDaddy says these domain names are all free, for just $12 a month. Or pick some goofy name out of a hat. But make sure to get out in time.

Be as shameless as you want. In the months leading up to the IPO, LinkedIn insiders awarded themselves millions of stock options at prices as low as $19.63 a share. They have now made $300 million just on the options they've awarded themselves this year!

And the great game continues. A public stock basically gives them their own currency with which to pay themselves. What a deal! The fine print of the LinkedIn prospectus shows management plans to issue millions more in stock and options to insiders — massively diluting current shareholders.

Meanwhile, if you are an investor in this IPO, please do the math.

LinkedIn is now valued at $10 billion. That's 660 times last year's net income of $15 million.

Apple (AAPL - News), by way of comparison, is at 16 times earnings.

Surely no one would invest in a high-risk stock like LinkedIn unless they expected strong capital gains (there are no dividends, naturally). But if you are hoping LinkedIn will rise by, say, 20% a year from here, be aware of what that would mean: In 10 years' time, it would be valued at $62 billion. (And that ignores potential dilution from new stock and options.)

If by then the stock were trading on a more reasonable multiple of, say, 20 times earnings, net income would have to be $3.1 billion.

How do you get from $15 million to $3.1 billion in 10 years? You grow earnings by 70% a year, every year, for a decade.

The chances of this happening? You make the call.


Saturday, May 21, 2011

Enhanced Interrogation Techniques -- They Work

Thanks to WikiLeaks, word is getting around that waterboarding works. It gets the reticent types to speak, and apparently they have a lot to say. This is not something Obama wants to hear and he certainly does not want voters to consider what it means.

After becoming president, he ended the interrogation practices of the Bush administration that were key to leading SEAL Team 6 to bin Laden in Pakistan, where he had been hiding for at least five years. Since Obama's inauguration, US intelligence efforts have failed to locate additional al-Qadea leaders. That's the result when our intelligence officers use the Obama strategy of asking nicely.

WikiLeaks bolsters argument for ‘enhanced’ interrogation tactics
Cables show U.S. collected details of plots, terrorists

By Rowan Scarborough

The Washington Times
May 19, 2011

WikiLeaks founder Julian Assange’s ongoing release of the Guantanamo Bay prison files, and large numbers of classified State Department cables, attempts to expose what he calls American corruption.

But supporters of the George W. Bush administration’s global war on terrorism say the nearly 800 Guantanamo files show that “enhanced” interrogations of hundreds of captured operatives at secret overseas prisons and at the Cuban prison amounted to one of the most successful intelligence operations in history.

Before the interrogations, the U.S. knew little about al Qaeda in the immediate aftermath of the Sept. 11, 2001, terrorist attacks. Years later, the CIA and military had accumulated a large database of ongoing plots and the identities of terrorists, the WikiLeaks files show.

“The WikiLeaks documents provide still additional evidence that intelligence gained from CIA detainees not only helped lead us to Osama bin Laden, it helped us disrupt a number of follow-on attacks that had been set in motion after 9/11,” said Marc Thiessen, a former Bush speechwriter.

“Without this program, we would not have gone nearly 10 years without another catastrophic attack on the homeland. This is quite possibly the most important, and most successful, intelligence program in modern times. But instead of medals, the people behind this program have been given subpoenas.”

He was referring to Attorney General Eric H. Holder Jr.’s launch of a criminal investigation of CIA officers who conducted the “enhanced” interrogations, some of which the Obama administration has dubbed “torture.”

The killing of Osama bin Laden underscores the value of the vast intelligence database. The treasure trove of information includes the identities of terrorists operating abroad, plots to kill civilians and details on how al Qaeda used a network of couriers for clandestine communication.

Public disclosure of the interrogation windfall began in April by the anti-secrecy website WikiLeaks, which obtained hundreds of classified U.S. reports on detainees written by Joint Task Force Guantanamo, the military unit in charge of the prison at U.S. Naval Base Guantanamo Bay, Cuba.

As of Thursday, WikiLeaks had released 765 of 779 Gitmo files.

The files show that prisoner Abu Farajal al-Libi, al Qaeda’s No. 3 and a close aide to bin Laden, first disclosed the terrorist master’s special courier to the CIA. It was the agency’s ability to find and track the messenger that ultimately led a team of Navy SEALs to bin Laden’s compound in Abbottabad, Pakistan, where he was killed early on May 2.

Supporters of sending terrorist suspects to Guantanamo Bay — which the Obama administration has vowed to shutter, though its initial deadline has come and gone — for trials at military commissions say the prison provided a single collection point to assess and cross-check intelligence on an enemy the United States knew little about.

“We learned a tremendous amount about the operation, not only in Afghanistan but the organizational structure and how they were operating outside the immediate combat area, for example in Europe,” said retired Brig. Gen. Thomas L. Hemingway, the Pentagon’s top legal adviser to the commissions’ office during Guantanamo’s early days.

Gen. Hemingway recalled a case when the military command in Afghanistan was looking for a senior Taliban commander. Interrogators found a detainee who knew the suspect. The detainee drew a diagram of his compound. Aerial surveillance located the home and led to the commander’s capture.

“There was a lot of actionable intelligence that was developed down there for a long time,” Gen. Hemingway said.

Hunt for bin Laden

In the hunt for bin Laden, the files show al-Libi provided critical information. The CIA used so-called enhanced-interrogation techniques on al-Libi but did not subject him to waterboarding — the most controversial of techniques, which also included stress positions, slapping, shaking and dousing captives with cold water.

“In July 2003, [al Libi] received a letter from [bin Laden‘s] designated courier, Maulawi Abd al-Khaliq Jan, requesting detainee take on the responsibility of collecting donations, organizing travel and distributing funds to families in Pakistan,” the document stated.

“[Bin Laden] stated detainee would be the official messenger between [bin Laden] and others in Pakistan. In mid-2003, detainee moved his family to Abbottabad, PK, and worked between Abbottabad and Peshawar.”

U.S. officials said the name provided to interrogators was false. But the intelligence added to the other bits of data that helped the U.S. learn how bin Laden planned to direct al Qaeda from Pakistan, the real name of his special courier and the connection of the group to Abbottabad, where the courier moved around 2006.

The courier, who eventually led the U.S. to the compound unwittingly, was killed in the raid. The Obama administration has not identified that person’s name.

Other plots

An earlier declassified CIA report on Sept. 11 mastermind Khalid Shaikh Mohammed reveals that he disclosed the identities of several operatives and the status of a number of planned attacks.

One plan called for commandeering commercial airliners at London’s Heathrow Airport. Authorities broke up the plot.

Mohammed was one of three al Qaeda leaders waterboarded by the CIA. The Bush administration called it part of “enhanced” interrogations. The Obama administration has labeled it “torture.”

The leaked detainee files show that other ranking al Qaeda operatives provided a first-ever look inside the al Qaeda killing machine:

• Ramzi Bin al-Shibh revealed how operatives gained visas to enter the West, often by gaining acceptance to an educational institute. If they were denied visas at U.S. embassies in the Middle East, they would try to gain entrance to Europe and apply from there.

• A terrorist identified as Hambali, the leader of the al Qaeda-funded Islamiyah network in South Asia, provided extensive information on his terrorist contacts in Indonesia. Responsible for the 2002 Bali bombing that killed more than 200, Hambali disclosed the existence of the “Infraq Fisabillah” fund used to finance travel by terrorists to and from Pakistan for training.

• Abu Zubaydah, another high-ranking bin Laden aide, provided a wealth of information on al Qaeda’s ability to forge documents used to gain access to the West. Zubaydah, for example, forged medical files to show that a terrorist had been tortured. The supposed victims then used the phony medical history to gain political asylum in Europe or the United States.

“Detainee has intimate knowledge of al Qaeda’s use of a document committee for forging documents such as identification cards, visas, and passports,” the Zubaydah file states, adding, “Detainee has provided a wealth of information on terrorist organizations. He has provided intelligence on their operations and leadership. Detainee continues to be a valuable source of intelligence for operations still occurring today.”

• Mohammed Abdah al-Nashiri, another close bin Laden aide, operated a separate al Qaeda operation in Yemen that received aid from Yemeni security forces. The revelation showed that, as in Pakistan, a U.S. ally supposedly working with the West actually was helping the enemy.

One of three al Qaeda captives waterboarded, Nashiri provided the names of a number of operatives still in the field.

Broad consensus

It is not just Bush administration supporters who say interrogations of terrorist suspects at Gitmo and other venues worked.

Asked on NBC News whether enhanced interrogations, including waterboarding, produced information that helped find bin Laden, CIA Director Leon E. Panetta said: “In the intelligence business, you work from a lot of sources of information, and that was true here.”

Mr. Panetta said: “We had a multiple series of sources that provided information with regards to the situation. Clearly, some of it came from detainees and the interrogation of detainees, but we also had information from other sources as well.”

Asked whether he would deny that waterboarding produced critical information on bin Laden, Mr. Panetta answered said he would not.

“No, I think some of the detainees clearly were, you know, they used these enhanced interrogation techniques against some of these detainees,” he said.

“But I’m also saying that, you know, the debate about whether we would have gotten the same information through other approaches I think is always going be an open question.”

Mr. Panetta opposed Mr. Holder’s decision to open a criminal investigation into the CIA interrogators.

The debate over the use of “enhanced” interrogation techniques has raged on Capitol Hill since Mr. Bush initiated the tactics, the most famous of which was waterboarding, and said Geneva Convention rules apply only to signing parties and thus not to stateless terrorists in the wake of the Sept. 11 attacks.

Even though leaders from both parties were briefed on the practices as early as 2002, leading Democrats derided their use as reports of secret prisons emerged around 2006.

In 2007, Mr. Bush signed an executive order prohibiting cruel and inhumane treatment, humiliation or denigration of prisoners’ religious beliefs. After taking office in 2009, Mr. Obama dubbed some of the techniques torture, closed the secret prison system and said the administration would abide by the Geneva Conventions.

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Friday, May 20, 2011

Obama Energy Plan -- Pay More, Get Less

What should we do about energy? Simple. The government should permit drilling everywhere there's oil and gas. That will at least keep Americans working in high-paying jobs. At the same time, the government should encourage car companies to build more hybrids. They work.

A lot of gasoline is wasted by cars and trucks idling at red lights, stop signs and at other times when they are not moving or moving slowly. Electric vehicles use NO electricity when stopped. Thus, hybrids, which run on electric power at low speeds can actually increase the efficiency of motor vehicles. After all, a car with a gasoline engine idling at a stop light is getting zero miles per gallon. ZERO miles per gallon. Can't get worse than that. Whether the car is a Hummer or a Saturn, it's getting zero miles per gallon.

Next, the government should encourage automakers to build cars powered by natural gas -- methane. There are already lots of fleet vehicles using this fuel. It works. The fuel is abundant and domestic. The vehicles are in production. What they lack are re-fueling stations. However, cities with natural gas taxis have some traditional gas stations that have added natural gas to their product line. Also, the Post Office operates a lot of natural gas vehicles. Thus there are already sites at which they fill up.

Next the government must grant permits for the construction of new nuclear power plants. We must also build new coal-fired plants and gas-fired plants.

If we had a sane energy policy, it would be far easier to fund research into improving the efficiency of solar panels as well as to develop cleaner coal-fired plants. But the nation cannot survive on less energy. We will always need more. Every year our aggregate energy consumption will rise.

Four More Dollars?
The Obama administration wants energy to be scarcer and costlier

The U.S. Treasury reports that the federal government ran up $870 billion in red ink in the first seven months of this fiscal year. That is $70 billion, or 9%, higher than at the same point in fiscal 2010, which ended up with a record $1.3 trillion deficit.

America's energy policy is as bad as our fiscal policy. The federal government is focused on producing not more energy but less of it, on making costs higher rather than lower, and on expanding regulation.

Start with nuclear power. It's pollution-free and an excellent source of energy. We have 104 nuclear plants in America today, but only one more is expected to become operative in the next few years, the first in two decades.

As for oil production, our government is limiting it, and over the years domestic drilling has been declining. In 1970 the U.S. produced 3.5 billion barrels; by 2010 that figure was down to two billion. The federal government has prohibited oil and natural gas drilling on 83% of federally owned land and increased the importation of foreign oil. In 1970 only 500 million barrels were imported; last year it was 3.3 billion barrels. That means that in 1970 U.S. oil production was 88% of consumption, and today it is only 37%.

Drilling for oil in the Gulf of Mexico has been restricted, especially since the explosion of the Deepwater Horizon rig last year. The Obama administration first put in place a drilling ban, then a virtual moratorium on issuing new Gulf permits. Then with the uproar over high gas prices, President Obama announced last week a desire to open up the process to more exploration and drilling. But the basic belief of our current administration and the environmental left has been to restrict our exploration and extraction of the 163 billion barrels of crude oil that the Congressional Research Service says are off our coasts and on our land.

Take the case of the oil in Alaska: the amount of oil we produce there now has decreased from 2.0 billion barrels a day in the mid-1980s to about 600 million today. There is more oil off the coast of Alaska, but for the last five years the federal government has not given approval for drilling in the Beaufort and Chukchi seas. What Mr. Obama said last week may now permit such drilling—a bright spot if so. Meanwhile, House Republicans have proposed a bill hopefully called the Reverse President Obama's Offshore Moratorium Act.

As for other energy technology, the National Center for Policy Analysis's Sterling Burnett this month published an excellent analysis of America's energy needs and costs (available here). Today solar power is close to our fastest-growing renewable energy source. Its production grew 15.5% in 2009, but it still accounts for less then 0.5% of global electric power output. And it isn't cheap: subsidized solar energy costs between $220 and $300 a megawatt hour, compared with $110 for electricity nationwide.

That breaks down to $63.10 a megawatt hour for natural gas, $113.90 for nuclear power, $136.20 for modern coal-fired plants, and $210.70 for solar photovoltaic power. According to the Heritage Foundation the subsidies we pay are $23 per megawatt hour for solar and wind, compared with $1.59 for nuclear power, 44 cents for conventional coal, and 25 cents for natural gas. We must start becoming competitive, without large subsidies, to reduce the current distortion in our energy markets.

The good news is that it is estimated that there are 50 trillion cubic feet of natural gas recoverable from fracking just in the Marcellus shale region of Ohio, West Virginia, Pennsylvania and New York. There are concerns about the impact on the environment and drinking water, and they need to be addressed, but the natural gas access is important to our energy needs.

We should also end the 45-cent-a-gallon subsidy of ethanol, which yields one-third less energy per gallon than gasoline. The cost of ethanol subsidies total about $6 billion per year. Sens. Tom Coburn of Oklahoma and Dianne Feinstein of California have introduced a recent bill to do away with the subsidies, along with a 2.5% tariff and 54-cent duty on imported ethanol.

To put it all in the perspective of the environmentalists and the current administration, consider the statement of Energy Secretary Steven Chu in The Wall Street Journal: "Somehow we have to figure out how to boost the prices of gasoline to the levels in Europe." The current gasoline price is about $8.50 a gallon in England and $8.80 in France and Germany.

Sound and significant energy resources are vitally important to our economy and our people. Energy should be reasonably priced, plentiful and be managed by its producing industries. Market prices are better than government subsidies and regulation. The government (and the green lobby) should get out of the way so that we can develop the new technologies we will need over the long term.


Tuesday, May 17, 2011

Truckin' -- with Natural Gas

What are we waiting for? There are already Post Office vehicles, buses, taxicabs and indoor shop vehicles that run on Natural Gas. The technical problems affecting the vehicles themselves were solved a long time ago.

What's missing? Refueling Stations and the willingness of manufacturers to build Natural Gas Vehicles.

Electric cars are stuck with the problem of batteries. They are lousy sources of energy. But natural gas and gasoline are close enough in most ways that they are true substitutes for each other. Except there are few places where operators can find refueling sites. However, the Post Office could change that by opening natural gas filling stations on some of their properties.

Going Natural is an excellent idea for supplying America with energy for the next few decades.

Natural-Gas Trucks Face Long Haul

Backers of Alternative Energy Seek a Shift for Diesel-Hogging Rigs, But Subsidies Remain a Hurdle


An 18-wheeler can burn as much fuel in a year as 40 cars. What if it burned domestic natural gas instead of imported oil?

That is hardly as arresting a vision of America's energy future as electric cars, whose power could conceivably could come from the wind or the sun. But a growing chorus of fans, including President Obama, says natural gas might deliver more bang for the buck—and they want taxpayers to spend billions of dollars to subsidize the shift.

The typical semi-trailer truck guzzles 20,000 gallons of diesel annually and uses the same roads day after day. So switching trucks to natural gas from diesel, which comes from oil, could make a big dent in U.S. petroleum use. And it wouldn't require building nearly as many new fueling stations as switching America's roughly 240 million cars and light trucks to something other than oil.

Like all roads to a potential alternative-energy tomorrow, however, this one is strewn with potholes.

A world in which most 18-wheelers run on natural gas instead of diesel is "going to be pretty slow in coming," said Bill Graves, president of the American Trucking Association.

For years, environmentalists have lobbied for taxpayer subsidies for natural-gas cars and trucks, arguing the fuel burns cleaner than gasoline or diesel. They have had limited success—notably in smoggy Southern California—getting regulators to prod bus and trash-truck operators, owned or contracted largely by municipalities, to make the change. Often, buyers of these natural-gas trucks have received government subsidies that have helped defray the higher purchase price.

Exact figures for the number of natural-gas vehicles on the road are hard to come by. But James Harger, chief marketing officer of Clean Energy Fuels Corp., an installer of natural-gas fueling stations that is partly owned by billionaire investor T. Boone Pickens, estimates 15% of U.S. buses and trash trucks run on natural gas.

Now, Mr. Obama, some 190 Republicans and Democrats in Congress, the natural-gas industry and major trucking firms are promoting a federal bill to broaden that transformation.

In part, their argument is about energy security: Recent discoveries of massive natural-gas troves from Texas to Pennsylvania mean the country is newly awash in the fuel.

It is also about money: The new supplies have sent U.S. natural-gas prices to historic lows, just as Mideast unrest and developing-world demand have sent diesel prices skyrocketing, to an average of about $4.12 a gallon. Where natural gas is available at U.S. pumps today as a motor fuel, it typically costs about two-thirds the price of diesel after adjusting prices for the different energy contents of the two fuels.

If America could affordably manufacture natural-gas trucks and build enough fueling stations to keep them on the road, the economy could shave billions of dollars a year in imported-fuel bills, backers of the technology say. But that is a big if.

Trucks configured to burn natural gas cost more than trucks that run on diesel. They need modified engines and bigger and stronger fuel tanks. How much more they cost differs wildly depending on the type of truck.

A trash truck that costs $200,000 outfitted for diesel costs only another $10,000—or 5% more— equipped for natural gas, said Kevin Walbridge, executive vice president of operations at trash-hauler Republic Services Inc. That price premium has fallen as trash-truck manufacturers have cranked out steadily larger volumes.

Today, only about 4% of Republic's 14,700 trucks nationwide run on natural gas. The company expects to increase purchases of natural-gas trucks, depending on whether the federal government hands out more tax breaks. If the pending federal bill of incentives doesn't pass, a Republic spokesman said, "we will buy a much smaller number of natural-gas vehicles."

Long-haul trucks present a bigger challenge. In the U.S., they consume about 10 times as much diesel as trash trucks and buses combined. The biggest guzzlers are 18-wheelers, which average six miles per gallon. Some 225,000 were sold in the U.S. last year, but many analysts expect that number to soar to 400,000 this year, as the economy improves.

United Parcel Service Inc., which runs one of the country's biggest truck fleets, pays about $95,000 for an average long-haul "tractor"—the front part of the 18-wheeler, housing the engine and driver. It recently ordered 48 natural-gas versions at a cost of $195,000 apiece—about double the cost of a diesel model, said Mike Britt, UPS's director of engineering and maintenance.

Fewer than 1,000 natural-gas 18-wheeler tractors have been sold in the U.S., industry experts say. They are "just about being hand-built, much like a Rolls Royce," Mr. Britt said. Ramping up assembly lines to build them at volume, he thinks, could "lower the price dramatically."

UPS bought its natural-gas trucks only after getting $4 million in federal stimulus money to help defray the cost, Mr. Britt said. At current fuel prices, the trucks should easily pay for themselves in less than the 10 years UPS expects to drive them, he says. But UPS typically expects equipment to pay off within three years.

As a result, UPS won't buy more natural-gas trucks unless the government forks over additional subsidies, said Mr. Britt. The shipper supports the pending federal bill.

Under the bill, a company like UPS that spent an extra $100,000 to buy a natural-gas truck would get an $80,000 tax credit.

Federal officials haven't yet officially estimated the bill's cost. But Mr. Pickens, who has spent several years barnstorming the country and talking with federal legislators to drum up support of a subsidized shift to natural-gas trucks, puts the taxpayer price tag at about $5 billion over five years, for about 140,000 trucks and the necessary fueling stations.

Mr. Pickens and his wife own 41% of Clean Energy Fuels, the installer of natural-gas-vehicle fueling stations. Mr. Pickens says his motive is more patriotic than personal. The bill's potential cost to taxpayers is "peanuts," he said, a small price to pay for what he argues would be the increased U.S. energy security that would come from shifting trucks to a domestic fuel. The government should provide five years of subsidies, he says, "and then get the hell out of it. It flies by then, or it's a bad idea."

The chemical industry, which uses huge amounts of natural gas and thus want the price to stay low, is lobbying against the bill. It worries that shifting large numbers of trucks to natural gas would increase demand for the fuel enough to push up the price that chemical companies have to pay for it. Backers of natural-gas trucks "want the government to give them a leg up," says Owen Kean, of the American Chemistry Council, an industry group.

The experience of other countries suggests natural-gas vehicles sputter without long-running government aid.

Following the 1970s oil crisis, New Zealand tweaked taxes to make gasoline and diesel pricier than natural gas at the pump, said Brett Jarman, executive director of NGV Global, the natural-gas-vehicle industry's international trade group. By the mid-1980s, about 100,000, or 10%, of the country's cars ran on natural gas —at the time, the world's largest fleet, he said.

But a new government slashed oil taxes, and natural gas lost its price advantage. Today, only about 200 natural-gas vehicles are on New Zealand's roads, said Mr. Jarman.

If countries subsidize alternative fuels but then yank that largesse, he said, "you end up with a lot of wasted money."

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Tuesday, May 10, 2011

Helicopter Hell

Bin Laden Caught: But Another Black Hawk Down On Critical Mission

May. 10 2011

The biggest American casualty from the raid on Osama bin Laden's compound last week was a multi-million dollar secret helicopter that dropped 30 to 40 feet in the air onto the hard ground.

It took a while for all the details to emerge, but it appears the crash happened for one really surprising reason: The air on ground was much hotter than anticipated. That, combined with the high walls of the compound, created an air vortex that sucked the air right out from under the chopper. A mission that should have started with the U.S. Navy Seals rappelling into the yard instead began with a hard thud.

The fact that a helicopter failed during the mission was one of the least surprising details of the raid.

Part of the problem is perception, says Dr. Ira Blumen, an emergency medicine doctor at the University of Chicago who has researched accidents with medical transport helicopters. The military tends to use Black Hawks and Chinooks to transport large groups of people, so when there's an accident, it gets attention.

"Any time you have a helicopter accident, it's big news," he says. "It's more dramatic than a car accident ... And the higher profile the mission, the higher profile there will be when there's an accident."

Maybe too many people are familiar with the 2001 movie, "Black Hawk Down," which depicted a Black Hawk helicopter taken down by RPG's over Somalia.

Or maybe there really are too many helicopter crashes.

Congress is wondering what's up, too. They ordered the Department of Defense to look into helicopter failures in combat and figure out how to curtail crashes. Since 2001, 496 people have died in military helicopter accidents, according to a Department of Defense presentation given last October at the International Helicopter Safety Symposium.

Helicopter crashes are the third leading cause of death in the Iraq war, behind IED explosions and direct fire attacks. Surprisingly, the majority of those fatal helicopter accidents don't happen during combat. More than 80% of accidents happen because of weather conditions like dust storms, brownouts caused by sand kicked up while a helicopter is trying to land, wire strikes, engine failure, and something the military calls "controlled flight into terrain." In other words, pilots fly right into hills or mountains they aren't aware are there.

A spokesman for Sikorsky, which makes the Black Hawk, said the company wouldn't comment. Congress is not looking into Black Hawks alone -- the problem occurs across all the helicopters the military uses.

Despite what seems like chilling numbers, helicopter crashes have actually declined significantly since the Vietnam War, when 3,065 people died in helicopter crashes. That's thanks to one thing: The availability of night vision technology. In Vietnam, most surveillance missions occurred during the day, when it was easier for enemy combatants to see what they were shooting at. Today, a lot of those missions are done at night.

Operating a helicopter is possibly one of the most complex tasks a pilot can do, Blumen says. They have to fly horizontally, vertically, and make pinpoint landings in narrow, improvised spots. "There are more moving parts in a helicopter than in any other vehicle, except perhaps the Space Shuttle," he says. "It's more complex, and the potential for things to go wrong is higher. In other words, the very nature of a helicopter and the reason it is such a valuable vehicle--its ability to get in and out of tight spots without requiring a runway--makes it even more vulnerable to breakdown or shoot-down.

Nevertheless, Congress is pushing the military to cut the accident rate to .05 mishaps per 100,000 flight hours. The rate currently stands at 2.1 mishaps per 100,000 hours. The Department of Defense has to deliver a report to Congress in December outlining how it will cut the crash rate.

There are some technological fixes that could help. Terrain Avoidance Warning Systems alert pilots when they are too close to a solid object, kind of like the beeping backup warning systems that come in many cars these days. Those systems are already on a lot of helicopters that ferry VIPs around war zones, but don't work all that well for pilots on patrol or in combat. It certainly wouldn't have helped out the pilot dropping into Osama bin Laden's compound: He had to be in the treetops to get the job done.

Sikorsky, the maker of the Black Hawk helicopter, has teamed up with Honeywell and Sierra Nevada Corp. to develop technologies that can help pilots navigate even when they can't see. They've installed a "Sandblaster" system on a Black Hawk as a test project, and so far the system is getting good reviews. Sikorski is a unit of United Technologies, a technology conglomerate that also operates businesses including Otis elevators, Carrier cooling systems and Pratt and Whitney engines.

Pilots can pre-program their landing spot, and then on approach they push a button that brings the aircraft from flight to hover mode. Three-dimensional radar penetrates the sand and dust to detect the terrain and objects within the landing zone. Another program pulls the data together to create a "synthetic" picture of the landing zone.

Bottom Line

Too many Black Hawk crashes are attributed to events other than combat. While the job of helicopters is to go in to hard-to-reach areas under all kinds of weather and environmental conditions, far too many are failing, and claiming the lives of servicemen. Congress wants to know why, and it wants the incidence of failure to be reduced.

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Schooling the Teachers' Union

Scenes From the New York Education Wars
When I was chancellor, I was told confrontation was bad. Not so...


Teachers are extremely effective messengers to parents, community groups, faith-based groups and elected officials—and their unions know how to deploy them well. Happy unions can give a politician massive clout, and unhappy unions—well, just ask Eva Moskowitz, a Democrat who headed the New York City Council Education Committee when I became schools chancellor in 2002.

Smart, savvy, ambitious, often a pain in my neck and atypically fearless for a politician, Ms. Moskowitz was widely expected to be elected Manhattan borough president in 2005. Until, that is, she held hearings on the city teachers-union contract, an extraordinary document, running for hundreds of pages, governing who can teach what and when, who can be assigned to hall-monitor or lunchroom duty and who can't, who has to be given time off to do union work during the school day, and so on.

The contract defied parody. So when Ms. Moskowitz exposed its ridiculousness, the United Federation of Teachers (UFT), then headed by Randi Weingarten, made sure that Ms. Moskowitz's run for borough president came up short. After that, other elected officials would say to me, "I agree with you, but I ain't gonna get Eva'd."

Politicians—especially Democratic politicians—generally do what the unions want. The unions, in turn, are very clear about what that is: They want happy members, so that those who run the unions get re-elected, and they want more members, so their power, money and influence grow. The effect of all this? As Albert Shanker, the late, iconic head of the UFT, once pointedly said, "When schoolchildren start paying union dues, that's when I'll start representing the interests of schoolchildren."

Union power is why it's virtually impossible to fire a teacher for non-performance. In New York City, which has some 55,000 tenured teachers, we were able to fire only half a dozen or so for incompetence in a given year, even though we devoted significant resources to this effort.

The extent of the problem is difficult to overstate. Take "rubber rooms," where teachers were kept—while doing no work—pending resolution of disciplinary charges against them, mostly for malfeasance, like physical abuse or embezzlement, but also for incompetence. The teachers got paid regardless. Before we stopped this charade—by returning many of the teachers to the classroom, unfortunately—it cost the city about $35 million a year. (Still costing more than $100 million annually are the more than 1,000 teachers who get full pay to perform substitute or administrative duties because no principal wants to hire them full-time.)

Then there were the several teachers accused of sexual misconduct—at least one was found guilty—whom union-approved arbitrators refused to terminate. The city was required to put them back in the classroom, but we refused to do so. Of course, the union has never sued to have the teachers reinstated. It just makes sure these deadbeats stay on the payroll with full pay and a lifetime pension.

It's little surprise, then, that American kids don't get the education they deserve. When I demanded reform as chancellor, I was regularly told by friends and foes alike that impatience is immature, challenging the educational establishment is a losing strategy, collaboration is necessary, and controversy is bad. It was bad advice, typical of the status-quo thinking that dominates American education.

Consider the common refrain that "We'll never fix education until we fix poverty." This lets school systems off the hook. Of course money, a stable family and strong values typically make it easier to educate a child. But we now know that, keeping those things constant, certain schools can get dramatically different outcomes with the same kids.

Take Texas and California. The two states have very similar demographics, yet Texas outperforms California on all four national tests—across demographic groups—despite spending less money per pupil. The gap amounts to about a year's worth of learning. That's big.

At individual schools, differences can be breathtaking. One charter in New York City, Harlem Success Academy 1 (founded by Ms. Moskowitz after she left politics), has students who are demographically almost identical to those in nearby schools, yet it gets entirely different results.

Eighty-eight percent of Harlem Success students are proficient in reading and 95% are proficient in math. Six nearby schools have an average of 31% and 39% proficiency in those subjects, respectively. More than 90% of Harlem Success fourth-graders scored at the highest level on New York State's most recent science tests, while only 43% of fourth-graders citywide did so. Harlem Success's black students outperformed white students at more than 700 schools across the state. Overall, the charter now performs at the same level as the gifted-and-talented schools in New York City, all of which have demanding admissions requirements. Harlem Success, by contrast, selects its students, mostly poor and minority, by random lottery.

Critics try to discredit these differences. Writing last year in the New York Review of Books, the historian Diane Ravitch argued that schools like Harlem Success aren't the answer because, as a group, charter schools don't outperform traditional public schools. Yet even Ms. Ravitch had to acknowledge that some charter schools get "amazing results." If that's the case, shouldn't we be asking why they get much better results—and focusing on how to replicate them?

A full-scale transition from a government-run monopoly to a competitive marketplace won't happen quickly, but that's no reason not to begin introducing more competition. In the lower grades, we should make sure that every student has at least one alternative—and preferably several—to her neighborhood school.

We pursued that goal in New York City by opening more than 100 charter schools in high-poverty communities. Almost 80,000 families chose these new schools—though we had space for only 40,000; the rest are on waiting lists. Traditional schools and the unions have been screaming bloody murder, which is a good sign: It means that the monopolists are beginning to feel the effects of competition. And at the middle-school and high-school levels, where students are more mobile, we can create community-based choice systems or even citywide ones. New York City high school students now have citywide choice (with some geographic priority), and schools know they have to compete for students.

Despite the tough politics involved, change is possible. In New York City, it took a mayor willing to assume control over the system and risk significant political capital. It also took time: Mayor Bloomberg and I had more than eight years together, while most urban superintendents serve for about three and a half.

Most of all, it required building political support. Toward the end of my tenure, reformers were fighting to lift the state-imposed cap on the number of charter schools allowed to open. The teachers unions opposed our effort precisely because our expansion of charter schools had been so successful. In fact, six months earlier, they had helped defeat a similar effort.

But this time, families with kids in charter schools and their community allies were prepared to help us fight. Philanthropic and business interests raised millions to support the mobilization effort, run ads and hire lobbyists. We prevailed, and the state legislature raised the cap substantially.

As Shanker put it in a surprisingly candid speech in 1993: "We are at the point that the auto industry was at a few years ago. They could see they were losing market share every year and still not believe that it really had anything to do with the quality of the product. . . . I think we will get—and deserve—the end of public education through some sort of privatization scheme if we don't behave differently. Unfortunately, very few people really believe that yet. They talk about it, and they don't like it, but they're not ready to change and stop doing the things that brought us to this point."

Mr. Klein, the CEO of News Corporation's educational division, was chancellor of New York City public schools from 2002 through 2010. This article is adapted from the current issue of The Atlantic.

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Friday, May 06, 2011

Shopping for School Choice

Syms, once a famous clothing store in NY City, advertised itself by repeating the following statement: An Educated Consumer Is Our Best Customer. As all Americans know, education counts. What's more, when it comes to education, almost every parent knows something about the quality of the nearest public school, especially if the parent has a child attending the school.

Why, I wonder, is there such agony over public school education? Why is there such relentless effort put into spreading the notion that only the state can handle the education of the population. Why do people accept public schools as they are when private schools have been doing a better job of educating kids since, since, forever?

Our higher education system is a combination of state and private colleges and universities. There are some excellent state schools. But is there any doubt that the best colleges and universities are the private institutions? Still, there's no call to close the public institutions. Why? Because they compete on price.

In fact, when the student is attending a state university in his home state, the student pays far less than an out-of-state student. In other words, the student receives a voucher. Thus we know voucher programs work well at the college level, which means we can conclude they would work just as well for those in K-12 public schools.

If Supermarkets Were Like Public Schools

What if groceries were paid for by taxes, and you were assigned a store based on where you live


Teachers unions and their political allies argue that market forces can't supply quality education. According to them, only our existing system—politicized and monopolistic—will do the trick. Yet Americans would find that approach ludicrous if applied to other vital goods or services.

Suppose that groceries were supplied in the same way as K-12 education. Residents of each county would pay taxes on their properties. Nearly half of those tax revenues would then be spent by government officials to build and operate supermarkets. Each family would be assigned to a particular supermarket according to its home address. And each family would get its weekly allotment of groceries—"for free"—from its neighborhood public supermarket.

No family would be permitted to get groceries from a public supermarket outside of its district. Fortunately, though, thanks to a Supreme Court decision, families would be free to shop at private supermarkets that charge directly for the groceries they offer. Private-supermarket families, however, would receive no reductions in their property taxes.

Of course, the quality of public supermarkets would play a major role in families' choices about where to live. Real-estate agents and chambers of commerce in prosperous neighborhoods would brag about the high quality of public supermarkets to which families in their cities and towns are assigned.

Being largely protected from consumer choice, almost all public supermarkets would be worse than private ones. In poor counties the quality of public supermarkets would be downright abysmal. Poor people—entitled in principle to excellent supermarkets—would in fact suffer unusually poor supermarket quality.

How could it be otherwise? Public supermarkets would have captive customers and revenues supplied not by customers but by the government. Of course they wouldn't organize themselves efficiently to meet customers' demands.

Responding to these failures, thoughtful souls would call for "supermarket choice" fueled by vouchers or tax credits. Those calls would be vigorously opposed by public-supermarket administrators and workers.

Opponents of supermarket choice would accuse its proponents of demonizing supermarket workers (who, after all, have no control over their customers' poor eating habits at home). Advocates of choice would also be accused of trying to deny ordinary families the food needed for survival. Such choice, it would be alleged, would drain precious resources from public supermarkets whose poor performance testifies to their overwhelming need for more public funds.

As for the handful of radicals who call for total separation of supermarket and state—well, they would be criticized by almost everyone as antisocial devils indifferent to the starvation that would haunt the land if the provision of groceries were governed exclusively by private market forces.

In the face of calls for supermarket choice, supermarket-workers unions would use their significant resources for lobbying—in favor of public-supermarkets' monopoly power and against any suggestion that market forces are appropriate for delivering something as essential as groceries. Some indignant public-supermarket defenders would even rail against the insensitivity of referring to grocery shoppers as "customers," on the grounds that the relationship between the public servants who supply life-giving groceries and the citizens who need those groceries is not so crass as to be discussed in terms of commerce.

Recognizing that the erosion of their monopoly would stop the gravy train that pays their members handsome salaries without requiring them to satisfy paying customers, unions would ensure that any grass-roots effort to introduce supermarket choice meets fierce political opposition.

In reality, of course, groceries and many other staples of daily life are distributed with extraordinary effectiveness by competitive markets responding to consumer choice. The same could be true of education—the unions' self-serving protestations notwithstanding.

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Monday, May 02, 2011

When You Absolutely Have to Know -- Waterboard

Would Bush Have Washed Bin Laden's Body?

John Brennan in an ongoing press conference at the White House was quite insistent that all "Islamic precepts" were respected and adhered to in the burial at sea of Osma bin Laden. The first priority of the Obama adminstration was the Islamic burial of the man Obama claimed was "not a leader of the Muslim world"

Bush disposed of remains of Iraqi terrorist leader Abu Musab al-Zarqawi by burying him in a secret location. Did our soldiers wash al-Zarqawi's body? I am going to puke.

I think tis is outrageous and sick. Such respect we give, not only to a mass murderer of Americans in the name of Islam, but deference to the very ideology that has fueled this war on America.

"There is a requirement in Islamic law that an individual must be buried with 24 hours." John Brennan

The corpse was taken to the aircraft carrier USS Carl Vinson, officials told ABC News. The burial at sea was done in accordance with Muslim law -- a Muslim seaman conducted the process, said the prayers, and bin Laden's body was wrapped in the appropriate way.

"We are ensuring that it is handled in accordance with Islamic practice and tradition," an administration official said. "This is something that we take very seriously. And so therefore this is being handled in an appropriate manner."

It is rare, but when a body must be buried at sea, there are rules, according to Al Islam online.

The body should be lowered into the water, "in a vessel of clay or a weight tied to its feet," and as far as possible, it should "not be lowered at a point where it is eaten up immediately by sea predators."

Tradition dictates that the body is washed by Muslim men and a funeral prayer is said, then it is buried as soon as possible, usually within 24 hours. The body is wrapped in a shroud of white cloth and the face is moved toward mecca. The remains are always buried in the earth.

According to Brennan, there wasn't time to get bin Laden to another country and adhere to Islamic law so he was giving a bural at sea. There were Islamic clerics there - this all according to John Brennan,.

This was the priority of the Obama adminstration.

(Reuters) – Al Qaeda leader Osama bin Laden was buried at sea from the deck of a U.S. aircraft carrier in the north Arabian Sea after being washed according to Islamic custom and receiving a religious funeral, a U.S. defense official said on Monday.
"Preparations for at-sea burial began at 1:10 a.m. EST and were completed at 2 a.m. EST," the official said. "Traditional procedures for Islamic burial were followed."

"The deceased's body was washed and then placed in a white sheet. The body was placed in a weighted bag. a military officer read prepared religious remarks which were translated into Arabic by a native speaker. After the words were complete, the body was place on a prepared flat board, tipped up, whereupon the deceased's body eased into the sea," the official said.

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