Regulatory Overkill
Research for Online Investors

by John Dalt

6/14/11

“Most biotech products coming to market today are five to ten years old.  Some are much older.  If personal computing had to jump the same kind of preclinical and clinical hurdles as biotech companies, we would still be using computers the size of suitcases with cathode ray tube monitors.  The latest phones would do little more than provide intermittent voice communication.”—Pat Cox—Breakthrough Technology Editor

You may have watched the Republican debate last night.  Not a lot of news was made.  There were the expected potshots at the sitting president.  Most were around the lack of job growth, the impact on people and how the speaker was going to increase jobs.  Not one debater asked, ‘how can President Obama be serious about creating jobs while his executive branch is killing jobs?’  From Gulf Coast Oil exploration workers to the Boeing workers in South Carolina, Obama must want to put people out of work.

But that is ok; we can import oil from the Middle East.  Is it lost on everyone that Boeing could have built a new plant in another country rather than S. Carolina, without any problem?  Our government seems to be saying, “Building overseas is ok with us, but if you build a new factory in the U.S. you will face the full fury of the federal bureaucracy.”

Such is the state we are in.  The government bureaucracy strangles anyone, or business, that needs approval to pursue their invention, business plan, or dream.  Need a building permit?  Stand in line to make an appointment for an inspector to visit your property…oh, and pay the fee.

Do you have an invention?  In 2010, the Patent Office was three and a half years behind on granting patents.  If you have an idea for the next Olympics...your too late.

Want to drill in the gulf?  You don’t even want to try, unless you paid the government millions of dollars a few years ago in an auction for the drilling tract.  If you don’t drill now the money is lost.

If you farm, do you have a right to water?  Ask farmers in the San Joaquin Valley of California.  In 2009 the U.S. Fish and Wildlife Service diverted water into the ocean rather than send it to the valley. The reason?  A small fish known as the “delta smelt.”  The government was reacting to a lawsuit brought by the Natural Resources Defense Council.  Lawyers (deltasmart) sued to protect the Deltasmelt.  Farmers in one of the country’s most productive valleys watched hundreds of thousands of acres turn to dust.  The crops were gone.  We can import our vegetables from Mexico.

This two inch fish put thousands of people out of work

Yesterday, the CEO of CKE Restaurants, Andy Puzder, was on the business news.  He told how Governor Rick Perry of Texas called him and invited him to ‘come-on-down’ to Texas.  The chain is considering moving their headquarters from California to the Lone Star State.  Why?  High taxes and regulatory overkill.  It takes the company eight months to secure the permits to open a restaurant in California, only six weeks in Texas.  They are going to open 600 restaurants in Texas!  CKE Restaurants owns the Hardees and Carl’s Jr. Chains.

Last week, Mr. Puzder announced he was going to meet with President Obama’s Job’s Council.  He has a five point plan to tackle the jobs crisis.  He said, “Creating jobs isn’t all that complicated.”  His five points are:

1. Make Bush era tax cuts permanent.
2. Repeal Health care law.
3. Reduce and streamline federal regulations.
4. Stop pro-union policies thru NLRB
5. Kill Cap-and-Trade.

We agree, but asking Obama to kill five of his favorite agenda items is like asking a Deltasmelt to walk on land…it ain’t gonna happen.

We wonder if President Obama and Michelle wonder the halls of the White House in the evening, humming this song from the Sound of Music:

When the dog bites,
When the bee stings,
When I’m feeling sad,
I simply remember my favorite things,
And then I don’t feel so bad.

As investors, we need to understand the reasons the U.S. economy is not recovering quickly and we have persistent high unemployment.  It is too bad our President and many others in Washington do not.

The mailbag:
Your editor mixed up his Asians by inserting the big empty shopping center into Japan instead of China.—subscriber J.R.

John’s reply:  How does that happen?  Proof reading or geography?

Yesterday’s article was one of the best I have seen.  Keep ‘em coming.---subscriber R.T.

I like your comment about waiting for the talking heads to predict Armageddon.  I hope we are just in the summer doldrums.---gulch subscriber G.C.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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