Breakfast At Tiffany's

The world is run on natural resources. With certainty, the price of one particular natural resource is controlled by supply and demand. The country with the greatest supply of this resource, almost certainly can control the market.

Its price historically, has been based on the value of the U.S. dollar. Historically this resource has been priced around the $35 mark. It has remained that way for decades usually never fluctuating more than ten- percent up or down.

Recently, its price has skyrocketed beyond belief. It is off the charts. So much so, companies who distribute their final refined commodity are showing profits, which exceed those earned by manufactures of computers and other electronic devices whose profit margins have always been high. Even the investment and banking industry's profits pale compared to these enormous profits. Many working people in America are finding they have financial trouble purchasing the final products produced by the raw materials.

Recently, I purchased one of these products knowing that the price this week was much higher than last weeks. However, it was my wife's birthday and she really wanted that gold bracelet she had her eyes on for some time. Oh! You thought I was talking about oil. I am sorry folks; gold has risen much higher than oil. Actually, a barrel of oil since 1965 has risen 300% while an ounce of gold has jumped by 2,700%

Congress in its infinite wisdom decided to call in the CEO's of the oil companies whose profits are exceedingly higher than what they think they should be and rake them over the coals. [Pardon the pun] Therefore, they marched them out in front of the public on C-Span for all to see. Have they forgotten the saying "People in glass houses shouldn't throw stones."

How quickly Congress forgets that they are part of the problem. Oil and gasoline prices are as high as they are because of congressional regulation. Countless barrels of oil lie in reserves waiting to be plucked from the earth. However, the oil reserves are off limits. When was the last refinery built in the United States? What about all the oil that is imbedded in coal reserves waiting to be converted into clean burning fuel? What about the fact the oil industry is one of the highest taxed in the country. What will happen to the price at the pump when in its infinite wisdom Congress burdens us with higher gasoline taxes?

Are they courting the environmentalists, who do not want us to drill for fear of displacing the Caribou or Spotted Owl? However, Congress has no problem displacing you and me through eminent domain if they need our homes for a parking lot.

The free markets have to allow the price of any commodity to be determined by the market place. Supply and demand have always determined the price of any product or service in the world. The sooner we wake up and realize this, the better off we will be.

When Congress bailed out the banking and mortgage industry what lesson have they taught us?

Let us look back to when the government bailed out Chrysler in the 70's. Chrysler made bad business decisions and was losing more money than water flowing from the Hoover Dam. So the government said do not worry we are here to save you. Remember, the money used to bail out Chrysler came from our tax dollars. How many shares of Chrysler stock did you receive?

If the government let the chips fall where they may and let Chrysler go under, would General Motors and Ford have picked up the slack and become bigger and better than they are today? Would they be worried about laying off workers today as they are, because their losses are exceedingly high? With Chrysler out of the picture, one third of the domestic competition would be gone.

When you reward bad behavior, it only leads to more bad behavior.

Here we are bailing out Bear Stearns, or at least guaranteeing the loans. What about other companies that have made bad business decisions who are in trouble. This appears to have all the makings of a new entitlement program for the rich. Who is next?

How about taking care of the mama-poppa operations and small businesses that make bad decisions every day and fold up their tents. Where are their bailout dollars? Line up folks; Congress just set a new precedent. Why not, everyone else is lined up for his or her entitlements.

Yes, it is probably true that had the government not guaranteed the loans to bail out Bear Stearns the full faith in the other investment houses may have been in jeopardy and stockholders in those companies may have run for the hills. Nevertheless, would that really happen or would it be conjecture. We may never know. However, it certainly gives Lehman Brothers, Morgan Stanley, and all the other investment companies a belief that they can walk the tight rope and Congress will be there, like a safety net to catch them if they too were to fall.

In retrospect, should Congress have called in the real culprits; the people who are benefiting from the 2,700% rise in the price of gold. Where are the CEO's of Cartier, Tiffany's and Harry Winston? Why were they not subpoenaed to appear before congress to explain their excess profits?

If the jewelry business gets as bad as Bear Stearns maybe Tiffany's as an enticement will serve breakfast with every purchase you make, paid for by some government food give-away program.

And, that is my opinion.

Michael Solomon

Author of 'Where Did My America Go?"

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