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Friday, June 4, 2010

Dow Jones Plummets 1,000 Points -- May 6, 2010

The prison is on a level 1 modified lockdown. A level 1 lockdown is the most restrictive lockdown, during which prisoners are not allowed out of their cells except for medical emergencies. After 48 hours, visitation is permitted, but inmates are brought to the visiting room in handcuffs, and visitation is limited to one hour. Prisoners are not allowed to place orders for commissary during a level one. Normally, no prisoners are let out of their cells to work, however, it is Officer Appreciation Week, and the guards do not want to do any menial work. Thus, the warden has made this a modified level one lockdown to permit inmates to pick up trash, pass out food, pick up laundry, and other necessary work that the guards would be forced to do.

Most inmates do not like being on lockdown, and locked in their cages 24-7. However, when I have a decent cellmate, I prefer lockdown. I do not like going out for chow and would rather have trays brought to my cell. It is very aggravating dealing with all the loud and obnoxious prisoners. In my cell during lockdown, all I have to deal with is my cellmate. Any time the administration wants to give me room service is all right with me. As for missing recreation, showers, or chapel services, they do not outweigh the peace of being able to get away from the commotion in a maximum security prison. Our recreation consists of two 2-hour periods of time on a yard, or in the gym. Typically, we are put on a small yard which is merely two basketball courts surrounded by fencing and razor wire. I do not even bother going to these yards. Typically, I do not go to the shower room either, but wash up in my sink. I never go to chapel services. Thus, lockdown only means not having to go to chow and possibly missing a gym day.

Another reason I like lockdowns is that I am able to set my own schedule. Feed and yard lines are never run on a predictable time schedule. Lunch can be any time from 9 a.m. to 1 p.m., and dinner from 4 p.m. to 8 p.m. I like having a regular routine, and I plan a day down to minute details. A former cellmate of mine remarked not long ago that even though we have not been cellmates in years, he could wager exactly what I would be doing by the time of the day. This may be an exaggeration, but lockdown permits me to have a very ordered schedule without worry of interruption.

While many prisoners become bored in their cells, I never do. I am always busy throughout the day with numerous activities. I exercise, read, write, clean the cell, prepare meals, organize my boxes, wash clothes, fix electronics, feed the sparrows, and if I run out of things to do which is rare, I turn on my television. I listen to my Walkman for a number of hours each day, usually while I read or do other tasks. As I write this journal entry, I have my large headphones on and surf radio stations for music I like. I also despise commercials, and switch channels when they come on. I do this so often with my TV that after seven years my TV channel buttons are wearing out. Hopefully, the dial on my Walkman never wears out.

At noon, I prepared some tuna burritos. My neighbor had given me some shells and I needed to use them before they became moldy. From my blog posts, someone may think that I am a fan of Mexican food, but I am not. It is just a food I can prepare in my cell with commissary foods. I used store bought tuna, instant cheesy rice, refried beans, and tortillas to make the burritos. I used small packages of ketchup and relish to make a salsa sauce. While I eat, I am unable to read or it is difficult, so I put away the corporate reports I was studying to watch TV.

It was 1 p.m. as I searched the stations for news. Only CNN was on, and although I did not like this particular news anchor, I watched this program as I ate. The news was still focused on the oil spill in the Gulf of Mexico. This news was of interest to me because my family owns shares of British Petroleum. In fact, B.P. is my favorite large integrated oil company because of their superior earnings and dividends. I also recognize the British government still goes out of their way to assist the pursuits of the oil company. After the rig exploded on April 20th, I searched all the TV news and radio stations to learn what companies were involved. Not only does my family own shares of oil and natural gas producers, but offshore drilling companies. I hoped it was not any they owned, however, after two days I finally learned the rig was owned by Transocean and the oil reserve by B.P.

Eleven employees of Transocean were killed in the explosion that destroyed the largest rig in the gulf. It was a year ago that I read the corporate report from Transocean which illustrated that rig on the front cover. The Deepwater Horizon was capable of drilling miles below the water into the seabed. Transocean was proud of their achievement, and the amount of oil they were able to bring up to the surface. More and more, Western oil companies such as B.P. were drilling in deep offshore waters because other deposits had been depleted or were off limits by governmental laws. Years ago, the oil being drilled by the Deepwater Horizon would have been beyond the capabilities of technology. Barack Obama recently stated he would permit more offshore drilling. This catastrophe had the potential of closing off this much-needed policy change, which would be unfortunate because energy independence is possible for the U.S. and not with expensive, heavily subsidized alternative energy sources that the liberal establishment endorses.

It seemed the TV news was bent on sensationalizing and reporting about the oil spill. The coverage was biased, and politically motivated. B.P. was being portrayed as a corporate villain, despite the rig not even being owned or operated by them. But, even if the blame for the spill was correctly assigned to Transocean or Cameron International (the company which did the cement work at the sea bed that was to prevent natural gas and methane from coming upward), it was an accident. Accidents are unavoidable and will occur on occasion, despite how many safety precautions are taken. When I read corporate reports by drilling companies, one of the main issues they write about time and time again is safety. Drilling is a dangerous job, but these companies try to have as few accidents as possible. Not only for the safety of their workers, but for their bottom line. A drill company with a bad record is not going to be hired by oil and natural gas companies. Certainly, if B.P. could have foreseen the explosion of the Transocean rig, they would have gone with a different company. This catastrophe will cost B.P. a lot of money, not only in clean-up costs, but public goodwill that the company has spent years and millions of dollars developing. This disaster may also cause the Obama administration to prevent energy companies from fully developing the oil resources in the Gulf and elsewhere--oil that the U.S. and the West needs for a vibrant economy without continuing to add to the cash reserves of the Middle-East or Venezuelan governments.

Because of the massive negative TV reporting aimed at B.P., earlier I had told my family to buy more shares of B.P. if the price fell to $45. On Sunday, I had heard Democratic political pundit James Carville say he actually felt sorry for B.P. because when it is all said and done, B.P. will be known as L.P.--Louisiana Petroleum. He went on and on about all the money B.P. will lose. However, although most of the public does not know it, this was a joint venture between BP and Anadarko Petroleum. There are many companies that will share liability. Furthermore, during one of my readings of corporate reports of offshore drillers in the Gulf, I learned of a government law that caps liability of oil spills. I also remember the Exxon Valdez oil spill which, although plaintiffs won an enormous sum, was eventually cut to a tiny fraction by a higher court. Earlier in the week, I read in the Wall Street Journal that AIG was to face enormous bills this quarter on top of the enormous amount of money they owe the federal government due to being the insurer of the companies involved in the drilling project. The sell-off of B.P. stock was done on emotion, and I hoped to profit off the overreaction. I did not realize the market was about to have a sudden correction, however.

While listening to the news anchor go on and on about the potential hazards to the ecosystem by the oil spill, and then on to the riots in Greece, I watched the Dow numbers in the background. The numbers began to fall at a pace I had never seen before. The Dow was actually in a free fall, and in two minutes, I saw it fall over 500 points. I said to my cellmate, who was sitting on his bunk reading another fantasy novel, "Turn on your TV -- the Dow has just fallen a thousand points in a couple of minutes!" My cellmate did not stir. He did not care or understand what this meant. I told him that millions of dollars have just disappeared, and the American market has lost 5% of its value! He still did not turn on his TV, and I began voicing the falling numbers as they happened with incredible speed: "Minus 600, minus 700, minus 800, minus 900!" I told him this must be the sharpest free-fall in market history, and I am surprised they have not suspended trading on the NYSE. Finally, my cellmate made an obligatory comment. Although he may be unconcerned with the historic market correction, I was riveted to my TV.

The Dow Jones fell with such surprising speed that the news anchor did not even notice the developments until it was brought to his attention. By the time he turned around, the Dow had already lost 600 points. This newsman was just a filler for more competent journalists who were on during the most watched TV hours. He began to talk about the free-fall, but really had no understanding or background in economics. My cellmate may as well been reporting the news on CNN, I thought. It probably became apparent to the CNN news directors as well, because soon other news people were pictured and the comments of specialists were procured. I did not need their input to know what was happening, however. The market was well due for a correction, and many investors knew it also. They had placed automatic sell orders, and when some investors began selling on the news of Greek debt and riots, it began a chain reaction that was unstoppable.

For a long time I have told friends and family to beware of a pending market correction. I told them to begin selling when the Dow hit 11,000. Some of them listened to me and sold off a few stocks and mutual funds. However, I was upset they took such limited action and expressed their belief that the market was going to continue to rebound. I adamantly told them, "No! This is only an artificial bounce created by huge government stimulus, intervention, and virtually free cash lending by the Federal Reserve." Corporate reports came in very good for the first quarter. News reporters and investment advisers hyped up the economic data, failing to mention how precarious it was. Despite the rosy news I was hearing, I knew the double-dip recession was over the hill. Although I knew it was there, I could not see it and I could not time it exactly. The U.S. government had thrown so much money into the market, it could stay afloat until 2011 before stalling.

As I listened to the news on CNN and the Dow numbers gyrated, I was disappointed that people I knew did not liquidate more of their investments. It is very frustrating for me to spend vast amounts of my time reading about the economy, analyzing stock companies, and even making detailed charts when my advice is largely ignored. My family sends me massive amounts of investment literature. I read it all, and give my opinion. I have given specific advice on what to buy, when to buy, and what to sell, and when to sell it. Sometimes they listen, and sometimes they don't. I wish I could invest my own money and did not have to depend on others. I hate having to depend on others. As a prisoner, you have no money and no control over anything. You are always at the mercy of others.

I figured the enormous drop in the Dow Jones would not close 10% down. The drop was an emotional and auto-pilot reaction to the images coming out of Greece. Nevertheless, I know the drop will wake up investors to the realization the markets' rebound is not based on sound fundamentals. People will scrutinize the U.S. market now, and many will jump ship. Many investors were riding the rebound and were not in it for the long term. I doubt the Dow will again see above 11,000 for years. I anticipate a volatile market with investors not sure if the U.S. economy can stand on its own feet without continued massive government spending and stimulus. Ultimately, they will see it cannot. You either pay now or pay later. The administration has kicked the can down the road as far as it was possible. The double-dip recession and long term stall of the U.S. economy is, in my opinion, inevitable.

I watched the news until 2 p.m. when I tired of the poor CNN coverage. I decided to see if the Rush Limbaugh news radio show was discussing the Greece riots and economic repercussions. More and more, I have found myself going to radio for news to avoid the liberal bias. The Rush Limbaugh show had just gone off, but that was just as well. It is mostly an entertainment program rather than a news program. I searched through AM radio stations until I found what I was looking for. I listened or watched the news for a few hours today. Not only was there the economic news to hold my interest, but I was waiting for the polls to close in England. Britain had parliamentary elections today, and I was interested to see if the Tories took power after being in the minority for almost 2 decades. It was not until 6 p.m. that the Big Ben Tower was shown on CNN with the results. The Conservatives did indeed win, but they did not have enough seats to form a government by themselves.

After seeing the Big Ben Tower, I turned off my TV and wrote my family a quick letter. I revised my B.P. purchase price from $45 to $40 a share or lower. I was caught a little off guard by the sudden drop in the economy. With the drop, and assumed continued selling, my family should not buy any more shares of B.P. unless it was selling below $40. I would have called, but we were on lockdown and there are no telephones on the gallery. In any event, I was probably still in C grade from the disciplinary ticket I received in January. Inmates have their phone pin number made inaccessible when they are given C grade. Even if I tried, I could not get through on the telephone. Also in my letter, I reiterated my opinions about the stock market and what investments I thought were good, and which ones I thought should be on the chopping block. I can only lead a horse to water, but I cannot make him drink, I thought as I put my letter on the cell bars for pickup.

After completing my letter, I turned on my TV to channel 3, which is the prison's video station. The movie "Avatar" was set to play at 8 p.m. I had heard much about the movie's special effects, and being a fan of science fiction, I was interested in seeing the film. It was released on DVD a few weeks ago, and prisoners, including myself, were anticipating its playing. Instead of popcorn and soda, I took out a few apples and a jar of peanut butter. I also made some instant apple and cinnamon oatmeal which I tossed some peanuts into. These would be my snacks for movie night.

The film was a little unrealistic, but had very real-looking imagery. The special effects even without the 3-D glasses were impressive. I was reminded of when I was a child and saw Star Wars for the first time. Star Wars was certainly a greater movie for its time, but I could see many similarities in style, substance, and graphics. The movie was very good, however, I found myself with a bad aftertaste because of the film's moral message. The producer of Avatar had attempted to portray mankind, or empirical capitalism, as evil. A resource company was mining the far away planet, and they wanted the land that the alien aborigines lived upon. After they learned of the aliens unwillingness to move, they set out to destroy them. The heroes are traitors to the company, to their country, and even to their species. They would rather live in their avatars as aliens than as humans. They successfully defeat the portrayed greedy resource-hungry villains from Earth. I am sure this story was loved by tree-huggers and liberals alike. They would rather we use solar and wind energy, despite its enormous expense and disastrous consequences to our economy and power. Despite seeing this propaganda film, and the media condemnation of BP, I still say, "Drill, baby, drill!"

June 18, 2010

This week, I watched the presidential address, the congressional hearing on Thursday, and continued massive negative media publicity against BP with growing dismay. Readers may find it odd that a prisoner would be so concerned about such matters, and the vast majority of prisoners do not care. However, although I have been condemned to die in prison and will probably never be a member of this or any society, I cannot but be alarmed about the descent of the United States and for that matter, most of Western civilization. I realize that there is more meaning than just my own fate and limited scope within these walls.

On Wednesday, Barack Obama addressed the nation regarding the Gulf oil spill. Instead of outlining how the U.S. government was to more effectively respond to the disaster, I heard how BP would be forced to pay, and how more Americans would continue to be out of work due to his moratorium on drilling. I also heard the President use the oil spill accident to promote his carbon tax and alternative energy policy. The U.S. does not need more taxes and a disasterous expensive so-called "green" energy policy. What the republic needs is more drilling and now. When an airplane crashes, all air traffic is not grounded to a halt. Accidents happen, and will continue to happen. While learning from this, America needs to press forward. America has more natural gas reserves than any other nation on the planet. America also has enormous amounts of coal and untapped oil off the coasts and in various places now off limits to drilling. If the U.S. wishes to remain a superpower, it must have access to large and larger amounts of cheap energy.

The U.S. legislature needs to understand the causes of the Gulf oil spill. I do not have any problem with law makers grilling the executives of BP, Transocean, Halliburton, or Cameron International. I also think it is wise to review governmental and oil industry policies to see if better regulation, and not necessarily more regulation, can be found. However, what I found mostly on Capital Hill was political grandstanding and public flogging of Tony Hayward, the CEO of BP. Blaming and focusing all people's anger on BP is not productive, but is contrarily counterproductive. BP is not the enemy, despite how the liberal media may want us to believe so. If it were not for the BP's, Exxons, and other Western energy companies drilling for oil in a mile deep of water, Americans would be paying much more for the commodity, and they would be paying that money to our real enemies.

This week, BP was coerced to put $20 billion into an escrow account. This huge amount of money, I have no doubt, will be dispensed by government unwisely to pay legitimate and nonlegitimate, or even fraudulant, claims. Other than clean-up costs, BP was only supposed to be liable for $75 million in damages. There is a good reason for this law, and it was not made to solely protect big oil. It encourages companies to invest millions of dollars into drilling exploration so they can bring oil onto the market at cheaper prices, and bring jobs to the Gulf area. Just like tort reform will help lower costs in the medical field, these liability caps have benefiical cost reduction consequences.

Last month, I recommended to friends and family to buy shares of BP at $40 a share. The price has dropped to below $30. I did not foresee the enormous media campaign against BP continuing for so long. Even today, I see CNN still has live footage of the oil spill and a day 60 count. At least, their speculative tally of gallons of oil released has been done away with. I also did not foresee BP being pressured to give $20 billion, and cancel their dividends for the rest of the year. However, despite this I have encouraged family to continue to purchase BP stock at under 30 a share, less than half its April highs. BP will survive this spill and the emotional sell off of its stock. Dividends will resume in 2011 and it will not surprise me if the stock price is back to $60 a share before 2015. A 100% return in 5 years is not a bad investment, in my opinion. And although I did not like BP's capitulation to Obama, nor its alternative energy movement with their "green" facade, investing in BP will be supporting a policy advantageous to the United States. Responsible acquisition of fossil fuels, and not subsidized alternative energy, is America's best hope to retain its power and financial wealth.


  1. Hey, Paul, that's what I've been saying too! Drill, baby, drill!!! You are right on!

  2. I am sure you are saddened by the loss of wildlife due to this accident, just as I am. I also wish newsmedia gave this much attention to all the dead birds killed by those giant wind turbines scattered around the planet.

  3. Paul,

    I've been reading your blog for some months now, and find your writing interesting and intelligent.

    I disagree with you, however, on the oil spill, on a couple of points: first, drilling for oil in increasingly difficult to get to locations is not going to decrease our energy dependence. Were we to drill in Alaska, and drain it, it would last for less than a year. We'd be energy independent for less than one year.

    Second, I think you underestimate the economic consequences of the continuing oil spill in the Gulf. The ultimate cost of this spill, in purely economic terms, will haunt us for the next decade.

    Finally, while I agree with you that BP is only partially responsible, it's pretty clear from the emerging reports that both the operators and the government were lax in their oversight of this operation. Time and time again, the government made "exceptions," and, as we have seen, the owners of the rig have been less than forthright in their operation of the rig. None of this is a surprise; such is the lure of money.

  4. While we certainly have different opinions of the oil spill, I have to say, I enjoyed reading how you tied the oil spill into the moral backbone of Avatar. An extremely well written blog.

    Hopefully the oil companies will learn from this accident and be better prepared for such an event in the future.

    (I am a former classmate of yours, currently working as a marine biologist in Florida. I really enjoy reading your blog and wish you the best.)

  5. Buy, baby, buy! From Canada, all necessary oil if posible. Who needs Middle-East when Canada, and Mexico, are loaded? Besides, do we want rich neighboors or rich muslim fanatics? Imagine if US is no-longer tied up to the price of oil set up by terrorists OPEC! As US consumes the most, removing this great customer from the equation (and making Canada the new Saudi Arabia) will bring sanity to the world as we could go ahead and ignore Middle East! And yes, Canada has enough oil, Mexico and Nigeria could chip in if necessary and drilling in the Gulf of Mexico (as not to lose the experience) should be more than enough to erase Middle-East from our news.

  6. I'm surprised that prisoners cannot have basic access to the sources, limited shopping, etc.


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