Monday, November 17, 2008

"Whatever It Takes"

"Yes We Can." or so the saying goes. Looks more like wishful thinking leading to changes we did not anticipate. Is this an example of The Law of Unintended Consequences or will we find other/better examples ahead-?

From yesterday's Bloomberg:

The government will do ``whatever it takes'' to revive the economy, Obama said. That means ``we shouldn't worry about the deficit next year or even the year after,'' he said, adding that in the short term, ``the most important thing is that we avoid a deepening recession.''

Why do I not expect to see 1) cutting taxes to relieve the taxpayer or to raise revenues 2) reducing the size or scope of government to use scarce tax money more wisely to be on the list of things to try early.

Ignore the deficit-?
When Congress just added $5 thousand billion in new debt to the government balance sheet, PLUS tossed $300 billion in air-dropped stimulus, PLUS $700 billion in Financial Rescue, PLUS are planning an additional (pick-a-number) $300 billion, $500, billion, $600 billion in new air drop stimulus PLUS another unknown number in "infrastructure and unemployment befit extensions. (We haven't gotten to the expanded health and welfare freebies that bought the election)

Where does all the new money come from-? Selling U.S. Govt Bonds-? To foreign buyers-? Who really thinks we will -NOT- devalue the dollar to repay the fixed term debt with inflated greenbacks... Will Congress be able to avoid telling businesses how to run their businesses-? They are already demanding that banks loan good money to get the economy rolling. Don't they know how we got in this mess and why it's dragging along-? How can anyone loan against an asset when you don't know what the asset will be worth in 3-6-12 months-?

PLUS GM, FORD, CHRYSLER and their UNIONS need LIFESUPPORT for next two years... They have no way to find profits and pay back-EVER. The UAW is growing older and at $71.++/hr they are not competitive. PLUS the UAW retirees may get screwed and turn to the Pension Benefit Guarantee Funds for salvation... But find Lehman, GE and others ahead of them in line. (meaning yet-more govt money needed to bailout retirees) The NYTimes has already reduced its medical benefits to retirees. There will be many more companies dumping retiree obligations onto the government. Cleaning up balance sheets is going to be difficult and painful. No loans will flow to companies with an ugly Balance Sheet.

The Democrats cannot let the United Auto Workers suffer. I guess it means we all will share the pain of bad contracts and Congressional meddling for two to five years before they get consolidated and largely liquidated. Penn Central Auto Makers-? AmAuto Manufacturers-?
Didn't we see this with the railroads-? How successful was that-?

PLUS we still have a shooting war in Iraq and Afghanistan... And a still active and aggressive Islam-o-Terrorist enemy.
PLUS Mexico still has a shooting war against Narco-Terrorists
PLUS Venezuela is funding revolution in Argentina, Ecuador, Bolivia, Nicaragua
PLUS Russia and China are heading to Cuba to test the Monroe Doctrine.
PLUS ongoing Pentagon commitments for new toys, replacement of old equipment, expanded size of the forces to avoid burn-out from combat tours.
All of which means shrinking the military ain't gonna happen, unless we want embolden all our enemies at one time. Sorry, Barney.

Tightening the belt, shrinking personal debt and consumer demand for one-to-two years is probably not gonna be considered at all... Not politically popular... Until we find a bottom price on assets, inventories, capacity and can release the cash that America is holding- Nothing Moves...

I expect the next air drop stimulus to go towards home and small holiday bills. Credit card bills will become the next discretionary payable if they haven't already. Home Mortgage possibly already is. All the talk of mortgage renegotiation is making even those with ability wonder if they are The Fool to keep paying when the Mortgage Holder is willing to reduce-reset-renegotiate... (Is this a Moral Hazard-?)

I guess this is one way to have Gen X, Gen Y, Gen Z, all learn about economics, responsibility, frugality and work... Good thing us Boomers were inoculated early and avoided those lessons... "We" never learned em so we couldn't teach them to anyone, or so it seems many of these recent days.

"Hope" and "Change" are words into which we can toss our aspirations. "Work", "Responsibility" and "Frugality" are old fashioned ideas we will rediscover before we finish and return to the "Bush-Prosperity-Years". We will be changed but not in the way we anticipated when 2008 began. We will still have "Hope" for Americans take Hope add it to Work and Responsibility to create a better future for all of us. This is what we do. This is who we are. No people or nation does it better.

I wish our New President the best. His success (or failure) is deeply tied to that of the entire nation. His Party affiliates on The Hill may need to be reminded early that he is The President, separate but equal to all of them combined.

How's your Monday going-? Obviously, I'm ranting away trying to make sense of my newspapers and emails...

Tuesday, November 4, 2008

Election Day

"There is much to be said for not saying much."
-Frank Tyger

Today is the day we all get to vote. After almost two years we have hashed the candidates pretty finely. We have endured leaks, gaffs, spin-sound bites, spin and more spin.

By the end of the week we may know who will be our Fearless Leader. I say "end of the week" because I suspect there is enough voter fraud to slow things down and cloud the outcome. I hope I am wrong. I feel I am right.

I think that either candidate will only serve one term. McCain due to age. Obama due to his difficulty in -ACTUALLY- having to accomplish something. Pelosi and Reid will ram thru lots of stuff without consideration of the other 49% of Americans. When these actions fail, they will blame Obama and walk away like the Siamese cats leaving the fish bowl in "Lady and the Tramp"... The cats song applies to them as well.

In any event, we will still be one America. We will have tens of thousands who will do what they believe best for America at the sacrifice of their own comfort. We will also have a few thousand who will do what ever they can to advance their own comfort and ease. They will be assured that "someone else" will clean up the mess... They have lived this way all their life.

I am glad that the contest too so long. It winnowed out some very likely looking candidates who seemed to have the whole game in a suitcase and were waiting for the limo to sweep them to their coronation.

We will have a chance to vote our concerns, pleasures and outrage in two years. 435 Members of Congress and 33 Senators will be up for re-election...

The wisdom of our Founding Fathers is amazing. Their understanding of human weakness and passions was clear and unfazed by any fantasies of human nobility. We are not angels with a few frail and weak among us. We are cowards, lusting for more and willing to do any act for our own success...with a very few angels in our midst.

Tonight, when its all over. Hoist a tall glass of something strong and propose a toast to "America, Long may our banner waive. Long may our people be better than our politicians"... I will... The American people are better than any that we have every elected... We may deserve better. But we keep voting our wishes and hopes instead of our practical demands.

Saturday, September 27, 2008


I'm burned out on politics and politicians. The Media have made it very clear that they control the message. That message is "Obama wins"

I will resume my Talk-Back Response to the debate when the transcripts are available... I realize I will lose the nuance of tone, inflection and body language. I don't think that matters as the media will tell us what we saw and why it's important.

The fools on the Hill see the sun going down and the eyes in their head see the sun spinning round... round, round, round... the conversation never stops and never reaches a point.

What is absolutely amazing is the paucity of knowledge about how our financial institutions work. We lack the ability to analyze the problem, understand the solution or see the opportunity this presents for everyone. We are no longer a nation of pioneers, risk takers or even aggressive business people. We have become a nation of wage slaves and shopkeepers. No wonder we flock o politicians who promise us free lunch, free medical care, free housing, free cars...all without risk or worry.

The Wall Street Journal
has done an excellent job of describing the problems, its background, consequences and ramifications of the proposed solution. Please read the editorials, opinions and columns for this past week.

Or write me and I'll send you the links. Its all free now. has been free for some time.

This is the greatest opportunity to solve the Social Security problem, Medicare/Medicaid problem without raising taxes ever to come our way. Our fearless leaders are hiding under the bed and wishing they could vote "present". Others are larding up the plan to 102 pages of crap. i.e. 20% of all returns to be paid to ACORN. That's paying the community organizers more than the small town mayors. That could be as much as $440 Billion in taxpayer money going to a tax exempt organization that registers the dead, the never-living, and mythological citizens to vote for Barack Obama.

Have a good weekend. Watch little TV. Wait til Monday to see which way your stocks go. Only 40 days til election... One would think it was important the way the dirty tricks are being organized and pulled.

Read a good book-!

Thursday, September 25, 2008

This is Serious Folks

Where are the adults-? Why is everyone in the media so ignorant-? Why are our thought leaders so unwise in the ways of finance, Wall Street, the world-? This ain't a TV show or an Oliver Stone movie. There are no "bad" guys... There seem to be a few good guys trying to get in insane and addicted to steer away from the iceberg... I am holding my breath, saying my prayers, hoping for the best and preparing for the worst... What are you doing-?

Watching the hotel TV and listening to idiots babble... I thought several things.... and I'd like to share.

1) Most people have no idea how capital is formed and wealth created. Most people get a paycheck and spend most, save some then buy house, car and save for college. Some get retirement plans pushed at work and take em cause they're free... Outside of paycheck and balancing the checkbook, they are lost

2) Most TV folks cannot do math. They cannot calculate simple interest. They cannot make a budget and know whether they will be able to afford a payment.

3) Our leaders have no clue. Our Senators and Congrespeople are simple fools. They are slightly less able than your average drunk. They get paid to drink but lack the skills of a good manipulative hustler...

4) They do not understand the problem. They do not understand the proposed solution. They just "want it fixed, now" and then they want to blame Bush and/or the rich...

This is a GREAT opportunity for every teacher in America to teach simple business math. Operating statement (and budget) and Balance Sheet... No need for any explanations of derivatives, Collateralized debt instruments or anything suave... Just basic family and business math...

Instead we'll get a bunch of demagoguing and populist rabble rousing...

Watching the credit markets seize up during the course of the year has been an education for me. I suspected some troubles in housing/mortage industry because of the articles in the WSJ and Forbes... I have had several deals crater as lenders got cold feet and ramped up their nervousness rate. I was just quoted an outrageous rate to lease equipment... We walk away when the deal gets stupid. My partner and I have some strict guidelines and walk away when the other party gets foolish.... I saw a big shift in investor confidence when Obama and Democrats Pelosi and Reid sarted coming against the rich... I think we'll have some great investment opportunities over the next 12 months... If you're gonna play; Have a chat with yourself first. High rewards come from high risk. Low risks bring low-moderate rewards...

Just remember when you see the idiots on TV saying we need higher taxes and we need to get the top 1%... To raise revenue, you cut taxes. Kennedy did it, Reagan did it, Clinton did it(well, he didn't but Republicans did and gave him credit) and Bush did it... If they are serious about needing more money to pay bailout, debt etc... cutting taxes raises money....

As Obama told Gibson "Raising taxes is a question of fairness"... It's not about raising cash or paying bills...

Whatever the Politicians do, the market will take it into account and react accordingly. I trust the markets more than I trust Congress to do the right thing in the long run...

I was speaking with someone this morning about the seriousness of it all...and they were quoting TV, newspaper editorials and wondering where "their" personal bailout is...

People doan geddit...

This is not a crisis of bad loans.
There are some bad loans mixed in with a bunch of good loans -AND- an accounting rule (post-ENRON inspired FAS 157 lookit up) that says you mark -ALL- assets to market... There are very very few people who buy bundled mortgages. A note representing 1,000 mortgages is not gonna be held by a whole bunch of people... When ONE holder needs cash and sells their note at a firesale-all notes of this thinly traded type must be marked down to firesale prices... This causes some institutions to need much more equity or capital or cash to keep their ratios inline with regulatory authority... creating a cascade affect on all such holders of these instruments... The vast majority (95%) of mortgages are still being serviced every month...

The original plan was for the Feds to buy these illiquid notes and hold tle maturity... These notes represent some value. Right now, nobody knows what they are because they have been written down so hard. Merrill sold itself for $.22 on the dollar because it couldn't see itself raising the extra capital to meet required ratios... The notes are good, but the rules say not... What would you pay for one-?
If you bought a bundle of 1,000 mortgages for $.22 on the dollar and held them to maturity you'd get rich. If 5% (present mortgage foreclosure rate) went bad you'd still have the underlying asset. Would that asset have dropped 78% in value-? You'd still have something worth more than you paid for it. Even at $.50 on the dollar you'd probably make some very good money on the returns...

The issue of sub-Prime notes means first that the home owner is less than good creditworthy... That means they are paying a premium interest rate plus higher fees to get the note to begin with. Many are Adjustable Rate Mortgages that adjust when interest rates go up... Many-many-many buyers thought they would 1) re-finance at higher valuation, 2) sell at higher valuation 3) re-finance to fixed note. Many-many-many home buyers in Bay Area and elsewhere saw low risk-high reward for getting into many such homes and renting them out. Their good credit and renters payments would build equity forever... However, prices quit rising. Rates went up. Re-financing was not an option... That forced many to walk away and caused many renters to get pushed out of homes they where they had never missed a payment...

Freddy and Fannie bought these sub-Prime notes, bundled them, sold em to Wall Street. Took the money and bought more mortgages. Along the way they paid $15-$16M in donations and lobbying to Congress. They also paid their head guys nearly $100M in bonuses and minor flunkies prorated amounts from the top banana... They also had sloppy accounting. If Freddy and Fannie were a truly Public company their top bananas would be in jail... but because they paid protection they got to keep their bonuses...

The problem with all this is that because the financial institutions are holding "bad" paper... They are not making any more loans. They are raising rates and fees and hoarding cash everywhere they can... The affect is all the small institutions are also bumping up their fees and interest rates... Interest rates have jumped three times over what they were a few months ago. Even Ford is forced to pay 7.5% for its prime money...

People saw the institutions seizing up and started to pull money from their Money Market accounts... There was a run on money market funds starting last week. If it had gone unchecked... we would have toppled the world. You cannot pull $1.7 trillion out and put it under the mattress without bad things happening... Money Market funds are not insured-at present- under the bailout they will be.... That should stop the run... BUT since the banks are paying so little on CDs and savings and have limit of $100,000, it won't be long before people move lots of cash from banks to Money market funds for higher rates and unlimited protection... Ultimately this will drive up mortgage rates... at same time as excess inventory drives down prices... (average home price dropped 11% in August following a 5% drop in July)....

If the financial market seizes up... The ONLY availbe funds will be what people have in their hands and bank accounts... Credit cards won't work... Lines of Credit won't work, home equity notes will be called or rates raised, lines of credit based on home equity will stop... all small business working capital will be based on cashflow... Customers will have to pay COD for all deliveries or shipments... There will be no new loans for vehicles or equipment...

The Bailout is to lubricate the economy-not take on bad loans- They are "bad" only because nobody will buy one at anywhere near their full value...once a few are bought then the mark-to-market action will raise all boats... Balance Sheets will have lots of higher valued assets plus cash and equity... Loans will flow... and credit standards will be raised but loans will be made-homes will start to be bought which will stabilize their values and stop the decline...

Doing nothing is to jump off a cliff...larding up the bill with crap will do nothing to solve the problem short term and will screw things up long term...

AIG insured the loans. They had insurance policy that said the bundled notes would be good... all the claims forced because the mark-to-market criteria was forcing AIG to pay out... Again a run on the insurance company... The Bailout would raise the value of the bundles and reduce the AIG exposure... The present "bailout" is merely a standby loan with warrants that convert to 80% of the stock...diluting the present Shareholders and making the Feds VERY RICH...

Cash is King... "He who got gold make rule"... Congress has the gold...their rules will decide if we go forward or backward... This is a financial problem that needs a financial solution. Unfortunately, I fear we may get a political solution along with a financial one.

This is serious... it can be worse.... It should get better if we can get some adults in the room to speak up... Not Barney Frank and Chris Dodd... They are clowns who have no clue and care less...

So... Tell me if I'm reading this wrong-? Tell me where/what I need to understand better...

Patriotic Taxation

Been muddling over Biden's "Paying Taxes is Patriotic" theme... He says the rich should pay more...

But his logic would have the top 1% of tax payers THIRTY-FIVE TIMES more patriotic than the lower 40% of taxpayers... I don't think that's necessarily so...

I was also thinking about the affects on our society when 40% of all the people who are of working age pay NOTHING and in some cases get paid by the govt for making so little...

Surely that breeds a dependency on the politicians who promise more-more-more... It also breeds a complacency about the country, about elections, about the way got is run and about how the nation is working... after all... it costs nothing and occasionally is profitable to be poor.

Under Obama and Pelosi the number of people NOT paying taxes will rise to almost 50%... The top 5% will pay more-more-more and not change any habits or behavior... But if the top 5% is so smart, won't they opt out-? Start their own companies, pay themselves whatever is left over and build equity-? Won't they buy ever bigger houses to get the homeowner decduction... won't lots and lots of tax games get played that are tax avoidance driven vs profit driven-?

When 5% goes from paying 70% of all bills to paying 100%...won't those numbers shrink-? Even taxing the dead won't raise enough to pay even greater freebies for the bottom 50%...

Didn't LBJ try something like this in the '60s...and didn't it lead to ever higher inflation-?

I see some huge rounds of inflation coming if Obama-Pelosi get their way... We'll go broke feeling rich...

I remember reading a tale of Eskimo hunters coating a double edged knife blade with seal grease and freexing the handle in the ice. The wolves would come along and lick the blade. Every lick would bring more warm blood into their belly. And they would die feeling warm, full and happy...

Is that us-?

Monday, June 2, 2008

The War in Iraq- Thoughts

The drumbeats are sounding. Even the Washington Post has an editorial saying "We're winning". They are urging Obama to change his Iraq strategy now that he has cinched the nomination. He can dump the Ultra-Left and move to the Center where most of America lives. They conclude with
When Mr. Obama floated his strategy for Iraq last year, the United States appeared doomed to defeat. Now he needs a plan for success.

Jeff Lukens at American Thinker has some thoughts on "Was it worth it?"

No one likes to go to war, but even an elective war is sometimes necessary. With all the consternation these past years, President Bush may finally be able to say "Mission Accomplished" to what he originally set out to do.

This we know, Saddam had Weapons of Mass Destruction. He even gassed his own Kurd and Shiite populations in the 1980s. What happened to those chemical weapons? Who knows? Whether they buried them in the ground somewhere or trucked off to Syria, we had every reason to believe he had them.

It's nice that some people remember the poison gas. The Iranians do. The Kurds do. Saddams generals do. We took the treat seriously.

What should the President of the United States do when 1) we've been attacked by terrorists 2) a state sponsor of terrorism, with Weapons of Mass destruction and willingness to use them, continues to flaunt UN sanctions? 3) When the state sponsor of terrorism corrupts the UN and most of European bureaucracy with his "Oil-For-Food Program" bribes? 4) When we suspect another attack is imminent? Should he wait for another attack-?

The movies are the only places where the Good Guys let the Bad Guys draw first. The Old West Bad Guys were shot in the back, usually with shotguns wielded by farmers. Letting the bad guy fire first gets a lot of innocent bystander type good guys killed.

The question none of the anti-war Bush haters will answer: How many dead Americans before we act-? I've never been told the acceptable level of American dead we should suffer before we commit our forces.

The thought of terrorists with WMDs is scary. However, the worse thought is that we have no way to retaliate. Unlike the Cold War, we can have no Mutual Assured Destruction balance. If we lost a city, who do we nuke-? Do we really nuke the Mountains of Pakistan-? Tehran-? Damascus-? How do we respond to a WMD attack-?

We have learned to do counter-insurgency fairly well. Actually, we have re-learned it. We first learned it in Nicaragua, then forgot it. We were trying to re-learn it in Vietnam, but ran out of citizen patience. We were able to re-learn it and be effective in Iraq. Now, our Pentagon Chiefs want more troops trained for a battle in Europe or Asia against uniformed troops. They want bigger weapons systems, more toys... we may soon go back to sleep and have to re-learn how to do counter-insurgency. Generals need flagpoles and stuff to park beneath it. They need troops to stand in formation around em. A peacetime military needs to justify it's existence by asking Congress for more flagpoles and everything that surrounds it. Otherwise, you don't need all those generals.

From the terrorist, narco-trafficante, narco-terrorist, rogue state perspective; insurgency works. It's cheap, scalable, effective . Forces need little training or discipline so no bases. No uniforms, just used weapons. New recruits can be rounded up either by the press-gangs or internet trolling. They will not likely face trained and disciplined troops who will have the will to fight a lengthy counter-insurgency... Russia has not been successful in Chechnya. Just tramped them down for now. China the same with Tibet.

Was Iraq it worth it-?

I think so. We would have lost more civilians in a WMD attack by terrorists. We would have seen the UN and most of Europe corrupted by seven more years of Oil-for-Food bribes. We may have seen more radicals in control of more oil producing countries in the Middle East. (Would we really have invaded Saudi Arabia if al Quaida had overthrown the govt-? Mecca and Medina off limits to pursuit or attack-? )

It's easy to rant and scream rabid vitriol... it's harder to explain where someone went wrong and why the path not taken was better... Until we invaded, everyone thought Saddam had WMDs and would not hesitate to use them... Should we live with that kind of threat-?

Saturday, May 31, 2008

Jottings -Updates- Random Thoughts


It's been a while. Almost two months since I penned my comments on the Recession. We still have no Recession. Some may argue that a .06 increase to a .08 increase isn't very much. However, it's not a decrease. The classical definition is two quarters of reduced (negative) growth. We haven't had any. We may not

I can see some glimmers of the end of the economic downturn. If our politicians don't screw it up by pouring more money (and tax increases) on special interests that reward the quick and easy while purporting to save the slow and diligent. The credit freeze is starting to un-lax (Unwind and relax, My kids said that. It fits.) Loans are being made and people are buying big ticket items. The 47% Bonus depreciation that was included in the Free Money stimulus package will start to kick in in the Third and Fourth Quarters of the year.

Overall, I think we have a bit of "Stagflation" happening. Gasoline costs are driving up the prices of everything but we haven't had an increase in payroll. We are promised huge tax increases by the Democrats next year. So, people are moving their investments into assets. Inflation will make the assets worth more (really the same in constant dollars) Congress will get more money from bracket creep and the bonus depreciation will make the new items cheaper... The low dollar should be making our exports a great bargain. We should have lots of tourists from abroad spending their bigger money on our bargain destinations... But we cannot depend on these sources of income to help pull us around. I look for higher interest rates in the near and long term. We need to make investments in the US competitive and profitable again. I'd like to see us sell some gold and soak up some of the dollars floating around the world. That won't happen for fear of causing a panic.

Oil is a bubble. Anything above $30/bbl is a function of 1) war premium and 2) speculation by lots of big funds and soveriegn nations. Iran is hoarding their oil offshore in tankers. This removes several million bbls from the market and drives up the prices of transportation. In the meantime, Brazil has discovered an estimated 33 billion bbls in deep water offshore. They have tied up many/most of the deep water rigs for their exploration. China will develop the Cuban oil fields and the US will sit with pristine beaches and pay-pay-pay. Sometimes it seems we have adopted the Malcolm Forbes strategy from the 1970's. He urged America to use up everyone else's oil first and then develop our own resources. What we need is to get busy developing our alternatives...

Global Warming

At $6/gal we will change the way we live. At $4/gal we're starting to cut back. The whole Global Warming scam is designed to force us to live poor. The proposed Cap-and-Trade program for businesses is but the opening for personal carbon rationing. I can easily see a time when each of us will be given a ration card. As we use carbon we will be dinged. When we run out, we will be forced to buy more from our less active or industrious fellow citizens...or from the govt. Every gallon of gas, every kilowatt hour, every airplane flight will be subject to rationing.

This is Free Money for the govt. They will create an artificial shortage. They will sell us access to the carbon gases. They will control the supply and not have to actually produce anything in return. They limit the number of nuclear power plants. They limit refinery development. They limit exploration. They define what types of oil we can develop (No Oil Shale, No Canadian Tar Sands)... Of Course, as our Masters and Superior Beings traveling on Important Govt business, they will be exempt from the same rationing scheme.

Can't happen here-? Why not-?

What do we do when the earth turns cold-? Over the past 100,000 years cold has been the dominant weather pattern. We look at our industrial history and become frightened. We see how we have changed and advanced. Things that killed us by the millions 100 years ago are seldom seen by the modern doctors... We are afraid of our success. We have created a new religion that demands great leaps of faith because the scientific evidence is shallow at best. We now need to force everyone to sacrifice for the noble cause. Of course, being humans we all know that those who advocate the most sacrifices will be among the few suffering the least.

What do you think-?

Monday, April 7, 2008

Recession -NOW -Update

Are we in a Recession-?

It's been a long time since we had one. The one in 1992 was a "hair-shirt" recession. We talked ourselves into it and we popped out again without the majority of the country feeling anything except worry. We haven't had one in a long time. We're losing the population that lived through the Big Depression.

The slight depression early in the Bush years scared the Republicans enough to push for tax breaks. This one is being fueled by:

1 Fears of a Democrat controlled Congress and White House. Together they have promised to not only let the Bush Tax Breaks expire (prompting a huge tax increase) but to add new taxes and regulations to businesses and The Rich. (Whoever they are-we're never told if we are one or not I don't know who to hate, feel pity or be depressed over.) The Democrat controlled govt is already talking about protectionism and abrogating the NAFTA trade agreements simply "because". They over look the historical affects of the Smoot-Hawley Act which is credited with destroying over 60% or the worlds trade and driving the worldwide Great Depression even deeper. They claim they want the US to use "soft force" to deal with drugs, narco-terrorism and terrorism. Yet they refuse to approve the Columbia Free Trade Agreement. This agreement will improve exports from the US. It will allow Columbian farmers to have a viable economic alternative to the cocaine and marijuana crops. What do the Democrats REALLY want-? The world and America waits for some clarity.

2) the Credit Freeze. Nobody knows what their collateralized securities are worth. They're forced to mark them to market, but the market keeps moving and when it drops the asset value drops. Which spins the cycle yet again. There was some fraud and some theft but not to the degree that companies are writing off their holdings. The knock-on effect is that all funding institutions are looking for belt-and-suspender guarantee on any loans. If the Freeze continues then only the credit card companies with usurous rates will be providing liquidity to the economy.

3) Sinking Dollar is harming our exports. We need an active Fed to start pulling dollars off the market. They can do this by buying in dollars with either foreign currency or swapping some of the gold we hold. At around $1,000/per ounce the US needs to sell some gold, platinum and palladium. (no wonder the meth addicts are stealing catalytic converters from the driveways at night). Gold, Silver,oil are commodity prices all reflect the surplus of US Dollars floating about the world. We cannot raise interest rates in the middle of this credit freeze. Too many contracts are tied to the Fed Rate.

Here are a couple of tidbits from the daily news feed that you may have missed;

The leader of the NBER
personally thinks we are sliding into a recession. The NBER, (National Bureau of Economic Research,) a non-profit research organization, typically declares start and end dates for U.S. recessions. The group has not officially declared the U.S. is in a recession.

Transportation is a leading indicator of the economy.
BNSF Idles Freight Cars Due to Downturn
Freight railroad BNSF Railway Co. is parking miles of rail cars in some parts of the country because there is not enough freight to keep them moving, the Associated Press reported Monday.

ISM Contraction May Indicate Trucking Upturn, Analyst Says
Last week’s Institute of Supply Management report that showed continued contraction may actually be good for the trucking industry’s outlook, according to an industry analyst, the Associated Press reported.

I read the two as saying long term freight is gonna slow down. Short and intermediate freight demands will draw down inventories until demand returns. Manufacturing will slow and if demand does not rise, stop. Then we are in deep trouble. Loans must be paid, insurance must be paid, rents, leases and mortgages must be paid, even if there is no manufacturing or sales of goods and services.

Things are not that bad. They probably will never get that bad. Our fears will make them worse. Our politicians may create a problem where one could have been avoided. we don't have to have a recession or depression. The market is correcting itself. The fire will be over before the fire brigades can react-but they may pass laws that make it harder to avoid or correct in the future.

In seven months we will know much more than we do today. Unfortunately, the country cannot hold its reath for that long. Plans will be made, approvals granted or denied, commitments made based upon the best estimates of what the economy will be doing in 2009 and 2010.

What does it all mean-?

How do you read the headlines-?

Friday, March 7, 2008

Economics, Politics, Anticipation

WSJ email alert from the Recession-Now front lines:
from The Wall Street Journal
March 7, 2008

U.S. recession fears mounted as employment fell in February at its fastest rate in five years, suggesting that the housing and credit crunch is gripping the broader economy. U.S. nonfarm payrolls fell by 63,000 in February, after declining 22,000 in January. If not for a rise in government jobs last month, payrolls would have fallen by more than 100,000. However, the unemployment rate dropped to 4.8% from 4.9%.

Ahead of the jobs report the Federal Reserve raised the amounts outstanding in its Term Auction Facility available to banks to $100 billion. The Fed's move lowered the odds of a change in the federal funds rate before the next meeting, but raised the chances of a three-quarter point reduction on March 18.

For more information,

For more analysis of the economy, see:

A reason to vote for McCain

Another indication of the affects of politics on business-I am seeing and hearing Investment Bankers and business owners starting to change deal structure and pricing in anticipation of a Democrat take over.

The general line is to lock in M&A terms now before Obama comes with his 28% Capital Gains rate, before the Bush tax cuts expire, before the death tax goes back to 55% over $1M valuation, etc. Lots of talk about shifting assets to trusts and getting creative in ways to avoid the hits.

Business owners are starting to look at ways to deal with increased regulation. Nobody has anything specific yet, but the general tone is that the increased regulation will be more in line with union rules and union organizing attempts. Things that stress business and create a favorful union organizing environment are expected.

Estimates that a full-tilt union America will drive up the cost of everything by 20%... That seems scary, but it was what I heard yesterday... Add to that the tax increases and credit crunch, plus whatever mischief Congress creates to replace the Alternative Minimum Tax... There are gonna be a lot of folks with six figure household income scrambling for tax shelters and new income opportunities...

The markets run ahead of events. Right now there is a bit of panic and a lot of fear. But the tide was already shifting in consideration of higher gasoline prices ($5-$6/gal-?), tighter credit, fewer home starts and less consumer spending...

The Democratic Congress and the Democratic Candidates have succeeded in scaring the marketplace-and the world... It's gonna take some strong medicine to prove them wrong... Cassandra is respected a lot longer than Pollyanna ever was...

Are we talking ourselves into a recession-?

George Anders column in Wednesday's WSJ reflects a lot of the thinking I am hearing and seeing...

Hurry, hurry, hurry to carry out corporate acquisitions before the November elections, some attorneys and investment bankers are telling their clients. That is because they think a Democratic presidential victory could create more roadblocks for takeovers.

Guessing what political-office seekers might do if elected is never a sure thing. Some stances taken on the campaign trail have a way of fading from sight once the election is over. Other positions prove impossible to implement.

Higher capital-gains taxes could also jolt the takeover market, though getting congressional approval for such changes won't be easy. In Senate votes in the past few years, both Sen. Obama and Sen. Clinton have voted for ending the current 15% capital-gains rate and returning to higher levels.

Mr. Obama told the TechCrunch Web site in November that he favored capital-gains tax rates close to 28%, where they were under the Reagan administration, though not quite that high. Mrs. Clinton hasn't been as specific.

For individual shareholders, a higher capital-gains rate would mean keeping less of the proceeds from selling a company. That could be a particular sore point for owners of closely held companies, who may have personally built up the value of such companies over decades. As a result, some private-equity firms are urging potential sellers of companies to act fast, while the 15% capital-gains rate still applies.

Tuesday, March 4, 2008

Our Enemies- Why This War Is Different

Alan Dershowitz has an op-ed article in today's WSJ... I bring this forward because not many read the WSJ. Not many read this blog. However, we must consider the future we all face. ( I have excerpted bits of his work. Please read the whole article)

Zahra Maladan is an educated woman who edits a women's magazine in Lebanon. She is also a mother, who undoubtedly loves her son. She has ambitions for him, but they are different from those of most mothers in the West. She wants her son to become a suicide bomber.

Zahra Maladan represents a dramatic shift in the way we must fight to protect our citizens against enemies who are sworn to kill them by killing themselves. The traditional paradigm was that mothers who love their children want them to live in peace, marry and produce grandchildren. Women in general, and mothers in particular, were seen as a counterweight to male belligerence. The picture of the mother weeping as her son is led off to battle -- even a just battle -- has been a constant and powerful image.

Now there is a new image of mothers urging their children to die, and then celebrating the martyrdom of their suicidal sons and daughters by distributing sweets and singing wedding songs. More and more young women -- some married with infant children -- are strapping bombs to their (sometimes pregnant) bellies, because they have been taught to love death rather than life.

The two basic premises of conventional warfare have long been that soldiers and civilians prefer living to dying and can thus be deterred from killing by the fear of being killed; and that combatants (soldiers) can easily be distinguished from noncombatants (women, children, the elderly, the infirm and other ordinary citizens). These premises are being challenged by women like Zahra Maladan. Neither she nor her son -- if he listens to his mother -- can be deterred from killing by the fear of being killed. They must be prevented from succeeding in their ghoulish quest for martyrdom. Prevention, however, carries a high risk of error. The woman walking toward the group of soldiers or civilians might well be an innocent civilian. A moment's hesitation may cost innocent lives. But a failure to hesitate may also have a price.

The traditional sharp distinction between soldiers in uniform and civilians in nonmilitary garb has given way to a continuum. At the more civilian end are babies and true noncombatants; at the more military end are the religious leaders who incite mass murder; in the middle are ordinary citizens who facilitate, finance or encourage terrorism. There are no hard and fast lines of demarcation, and mistakes are inevitable -- as the terrorists well understand.

We need new rules, strategies and tactics to deal effectively and fairly with these dangerous new realities. We cannot simply wait until the son of Zahra Maladan -- and the sons and daughters of hundreds of others like her -- decide to follow his mother's demand. We must stop them before they export their sick and dangerous culture of death to our shores.

What he leaves out is the cost of victory to these deluded fanatics. Yes, we will face the high cost of killing innocents along with those we traditionally will sacrifice to save... But what type of country, what culture will follow should they achieve victory-?

This will be a long and ugly war

We Are Changing

Today's WSJ has a front page story about our changing gasoline consumption practices. It's worth a read.

As crude-oil prices climb to historic highs, steep gasoline prices and the weak economy are beginning to curb Americans' gas-guzzling ways.

In the past six weeks, the nation's gasoline consumption has fallen by an average 1.1% from year-earlier levels, according to weekly government data.

That's the most sustained drop in demand in at least 16 years, except for the declines that followed Hurricane Katrina in 2005, which temporarily knocked out a big chunk of the U.S. gasoline supply system.

As supplies have outstripped demand, gasoline inventories have been on the rise for the past four months, reaching their highest levels since February 1994. Yet, in a sign of the growing disconnect between demand and the market, prices at the pump are being driven higher by a powerful rally in crude oil.

Investors piling money into commodities as a refuge from inflation have helped push oil prices close to their inflation-adjusted record of $103.76 a barrel, set in 1980. On Thursday, oil closed at $102.59 a barrel on the New York Mercantile Exchange, a new high in nominal terms, but slipped back 75 cents on Friday to settle at $101.84 a barrel. (Gold closed at $985.70/oz, Silver at $21.35/oz, Platinum at $2,230.00/oz, Palladium at $576.00/oz. Grain and other ores are similarly at all time highs-AJ)

Car dealers are selling fewer minivans and large sport-utility vehicles. In fact, only small cars and smaller, more fuel-efficient SUVs, are showing a rise in sales. Small-car sales in January were up 6.5% from a year earlier, while sales of crossover vehicle grew 15.1%, Autodata Corp. says.( I look for changes in engine technology to make the gas guzzlers bargains for the creative and inventive. Such as the man in Sacramento area who has converted a Hummer to diesel and claims to get 20/mpg. Of course, his warranty was voided by the action.-AJ)

At $6.00/gallon we will be a different nation. This will have knock-on affects on restaurants, job choices, wages, housing decisions, entertainment. The pressure on taxi regulations will create political turmoil as restrictions on the number of taxis meets a suddenly rising demand for service. All of this will have political mischief, demagoguing and pandering opportunities.

Sawdust Shortage

Something else we might not have considered with the slump in the housing markets and restrictions on tree harvesting, also from today's WSJ:

The price of sawdust has soared since 2006, up from about $25 a ton to more than $100 in some markets. Blame the housing slump: Fewer new homes mean fewer trees cut for use in construction, which leads to less sawdust and other wood waste, driving up the price.

It's surprising how many industries use wood waste. Wineries use oak sawdust as a flavoring agent for some wines. Perdue Farms, which raises broiler chickens, goes through seven million cubic feet of wood shavings a year. Oil-rig operators in Wyoming and Colorado pour sawdust into the caverns they find deep inside rock formations as they hunt for pools of petroleum. Sawdust gives drill bits something to grind through.

The shortage is leading to some unusual solutions. Mr. Johnson now mines old houses that are being torn down for lumber that he can grind up and sell. He has also opened a free wood dump for any construction crew that wants to drop off any two-by-four trimmings from a local site. Mr. Stulce, who runs the Utah wood-waste supplier to oil rigs, says rig operators that use sawdust are now dumping some novel substitutes. "They're pumping in almond hulls, walnut shells, whatever they can get," he says.

Farmers have come up with perhaps the most unusual tactic: using processed cow manure as bedding instead of wood shavings. Many dairy farms have a process to convert cattle waste into methane gas that they sell to electric generators. The byproduct is basically the hay the cows ate. Lee Jensen's Five Star Dairy in Elk Mound, Wis., uses an aerobic digester to render manure into stall bedding, and has so much on hand after the process that he's selling the excess to neighbors. (I love American ingenuity. This is a great example of making a profit out of what others would consider waste-AJ)

Texas vs. Ohio

The WSJ Opinion Journal has a great comparison of these two states that are playing such an important role in shaping our current election battle.

There's no doubt times are tough in Ohio. The state has lost 200,000 manufacturing jobs since 2000, home foreclosures are soaring, and real family income is lower now than in 2000. Meanwhile, the Texas economy has boomed since 2004, with nearly twice the rate of new job creation as the rest of the nation.

Anti-Nafta rhetoric doesn't play well in El Paso, San Antonio and Houston, which have become gateway cities for commerce with Latin America and have flourished since the North American Free Trade Agreement passed Congress in 1993. Mr. Obama's claim of one million lost jobs due to trade deals is laughable in Texas, the state most affected by Nafta. Texas has gained 36,000 manufacturing jobs since 2004 and has ranked as the nation's top exporting state for six years in a row. Its $168 billion of exports in 2007 translate into tens of thousands of jobs.

Ohio, Indiana and Michigan are losing auto jobs, but many of these "runaway plants" are not fleeing to China, Mexico or India. They've moved to more business-friendly U.S. states, including Texas. GM recently announced plans for a new plant to build hybrid cars. Guess where? Near Dallas. In 2006 the Lone Star State exported $5.5 billion of cars and trucks to Mexico and $2.4 billion worth to Canada.

So tomorrow the eyes of America will be on these two states moving in different directions. Ohio has an economy burdened by high taxes and work rules that impose heavy costs on employers. Texas embraces free trade, keeps taxes low, doesn't impose unions on business and has tooled itself for 21st century global competition. Ohioans may not like to hear this, but for any company considering where to locate a new plant or move an existing one, the choice between Ohio and Texas isn't even a close call.

The challenge for our national economy in a world of competition is to become more like Texas and less like Ohio.

I really enjoy the Wall Street Journal. I find it to be the only newspaper in America that treats me like an educated adult. I don't always agree with their positions. I can't use all the information they bring every day. I would feel handicapped if I did not have access to their information in print and online. Rupert Murdock and News Corp have taken over the paper. I pay for both the print and online. They talk about making the online side free or no charge. I hope they don't get too clever with their marketing... If you don't subscribe, please consider joining. Like William F. Buckley's works -they will prod you from your comfortable set world of assumptions and opinions.

Monday, March 3, 2008

The Future Quoted

Every month Forbes magazine has as it's last page a series of quotations. The page is titled "THOUGHTS On the Business of Life"

In January they looked at the future... I thought I'd add my $.02 worth of talkback...

"The future is no place to live your better days" - DAVE MATTHEWS

1) We cannot have it all now. 2) Tomorrow will be a better day 3) Trying to live all your better days in the future is as foolish as trying to live all your better days right now. Youth and life are for learning, experimenting and experiencing. Later days will may whatever comes your way richer and deeper because you delayed. Life is not a zero sum game. There will always be more, better and more pleasant days ahead... Shouldn't we be saying "Today was good, Today was fun. Tomorrow is another one"-?

"There is always one moment in childhood when the door opens and lets the future in" -GRAHAM GREENE

It doesn't always come rushing in all in a gush. There is no single moment when we swap being a child for being an adult or being old. We get peeks and glimpses. Sometimes we get a full dose that is more than we can handle. Sometimes we get so much that our childhood is shortened... The future is always waiting in just the next instant with a surprise...

"Prophecy is the most gratuitous form of error" - GEORGE ELLIOT
"Wall Street indexes predicted nine of the last five recessions" -PAUL SAMUELSON

Self evident...

"The future is called "perhaps" which is the only possible thing to call the future. And the important thing is not to allow that to scare you" -TENNESSEE WILLIAMS

We can change the future. We cannot change the past.We can change the way we view the past. Sometimes for the worse. Sometimes for the better. We cannot fear tomorrow. Even if we are certain that disaster awaits, there is always the possibility that changes will make it better or worse...

"The more unpredictable the world becomes, the more we rely on predictions" -STEVE RIVKIN

Some places they are called forecasts. Sometimes the Board of Directors will spend the forecasted profits. They can be very upset when the results are different. Nobody ever gets fired for bringing in better results than forecast. Many have lost their heads to disappointing results.

"I never think of the future. It comes soon enough" -ALBERT EINSTEIN

I do. I think often about the future consequences of events around me. I am aware that "demographics is destiny" and that as a "Boomer" we will be changing many things for the better as well as for the worse... Most of which we cannot predict. We have a life long history of unintended consequences from our best wishes and good intentions.

"We not only romanticize the future; we have also made it into a growth industry, a parlor game, and a disaster movie at the same time" - EUGENE KENNEDY

Our politicians are promising us great things personally, bad things for the EVIL RICH, and dire consequences for all of us -IF ONLY- They all seem to have a program that involves more of our money, freedoms, privacy and innocence. If only-we would trust them they would provide or prevent exactly what we are seeking.

"The future, according to some scientists will be exactly like the past, only far more expensive" -JOHN SLADEK

Many of our politicians want to lead us into that fantasy world only this time they will arrange funding. No Thanks. I'd rather have our own future, similar but enough different so that the past has been taken into consideration.

"My future starts when I wake up every morning. Every day I find something creative to do with my life" -MILES DAVIS

What a great way to live. I wish I could say that.

"The best way to predict the future is to invent it." ALAN KAY

Amen. Americans can create our own future. We usually drag the rest of the world along with us. Sometimes they don't want it. Mostly, they like the results. They could create their future, but they are afraid of the changes.

Sunday, March 2, 2008

New Year, New Outlook

Happy New Year.

Yes, I know it's March. March and April have long been associated with New Year- new beginnings, new flowers and new life after a long grey/gray winter (grey with an "e" seems more dreary than with an "a"). Spring seems a more appropriate place for a new year than the Gregorian Calendar that places January 1 as the start of all new things...

I have always had more luck when the business of the new year began along with the rise of grass and green. Warm winds blow more favorably than the cold cutting damp knives of January.

As you noticed from my last post. I became disenchanted and frustrated with the NFL, the New England Patriots, our political tussling, the impending holidays and arrival of family from far and near. I was becoming a grouchy curmudgeon. Who would want to read that drivel.- even if I was right... I have tried hold to the advice that Thumper's Father gave him in the movie "Bambi"; "If you can't say something nice, don't say anything at all."... We can all grinch, complain and gripe... My Grandfather used to say "A kicking mule can't pull"... I have decided to stop kicking... well at least as much events allow.

My Grandfather followed a mule plowing for most of his life. My Father graduated from high school during WWII. He could have had a farming deferment. Being young, energetic and having a hangover he spent one morning walking behind the mule watching it's rear end and decided he would rather go fight Germans... He was 20 years old at the Battle of the Bulge... As he aged he remembered the funny times during the war and tried to forget the horrors. He was among a group that liberated a concentration camp. "It was just a little one " my Aunt said... (Her husband spend the war at Fort Dix wrestling paperwork. We didn't spend much time around her. Stupidity might be contagious. We took no chances.)

It affected my Father when he would remember the horrors of what supposedly civilized people had done to others. He had a hard time sleeping for many years. He went from a small town in a corner of Georgia where most farming was still done the way it had been done for 100 years to the world of mechanized genocide. There was one Jewish family in the country. There were no Catholics. Nobody in his world had ever expressed that kind of hatred and evil... There was some bigotry towards blacks, but the depression had hammered the whole countryside. Everybody was broke. It's hard to hate when you're all in the same boat.

My father died in 1959 in a car wreck. That was long ago, far away and ancient history.

Except it's not. George Santayana is attributed to the misquote "Those who cannot remember the past are condemned to repeat it". History does seem to run in cycles. It does not run in ruts. Things are never exactly the same as they were before. We can learn something of the future by studying the past and looking for the reasons that people made decisions which led to known results. We do that by studying history. It seems we concentrate too much on battles, elections and personal lives of dictators, kings and royalty. We don't spend enough time looking at the common people. We look at the weapons and great buildings and not at the homes and daily lives of those who make the machinery of civilization work. Yet, when the great leaders need a war, they turn to these people for justification, fodder, support, sacrifice, and sacrifice. When we study businesses we do the same things. We look at the large enterprises, the leaders of these monster corporations... We don't study either the people who make the wheels turn, the paperwork move and the details attended. We don't study successful individuals and look for clues to what habits and traits made them so.

We like to think that we are wise. We are the "thinking ape ". But we are often blind to the people and changes around us. We make plans. We present them for approval, revision, alteration, amendment and finally funding. We give credit to ourselves for our success. When it fails we blame "bad luck " . I have yet to see a successful person attribute their position to "luck " Yet, we study their failures to avoid "bad luck " corrupting our plans... This all seems a bit arrogant to me.

We won WWII. We have no real idea what we did right. We did not have the best trained army. We didn't have the most modern and effective weapons. We were able to build and supply ourselves and our allies. We didn't get into a war of attrition in the traditional sense. We did not repeat the meat-grinders of WWI. The more books are written and the more detailed history is revealed, the more I read it as a very close run. We could have lost.

I think the defining difference between WWI and WWI was American leadership and the spirit of the American people. We were at war. We had been attacked. We struck back and then began the the search for allies, understanding the enemy and preparation to win. We faced an enemy that had attacked its neighbors, had enslaved its citizens and slaughtered thousands because they didn't fit some grand design. We faced an enemy that had wealth, intelligence, cunning, a ruthless disregard for human life be it their own forces or their enemies or the innocents. They were killers willing to use the most modern weapons and means to make the world into a better place for their kind. We had no illusions about their barbarism. We were clear in our commitment that their kind could not prevail or only be knocked down to return again stronger and more deadly.

We were attacked again in 1993 and 2001. In 1993, we treated the attack as a police action. We investigated and found the bad guys. We arrested them and gave them civil rights of a citizen and protections that they would never have given us. Throughout the 1990's we were repeatedly attacked. We continued to treat it as a police issue. We'd fire off a few cruise missiles to blow up some tents, an aspirin factory and bluster about.... We weren't serious about responding militarily. We were afraid of actually facing a serious enemy. We long lived in a delusional world of peace-harmony and political answers to all questions. Our thought leaders were convinced that all evil of the world originated somewhere in America and we should be ashamed of our success. On September 11, 2001 we were attacked by an enemy using airplanes as missiles. Suddenly, we were at war. Our Thought Leaders could not wish away 3,000 dead and replace the vanished buildings.

We faced an enemy that possessed no national homeland, no national boundaries, no national infrastructure, no factories, no government agencies, no way that we could strike back by sending in bombers and cruise missiles. The nation state had dissolved. However, like our enemies from the past these monsters
had attacked in many countries , had enslaved its citizens and slaughtered thousands because they didn't fit some grand design. We faced an enemy that had wealth, intelligence, cunning, a ruthless disregard for human life be it their own forces or their enemies or the innocents. They were killers willing to use the most modern weapons and means to make the world into a better place for their kind. They didn't covet our land, our wealth, or citizens, our peace or our prosperity. They hated us because we would be most likely to oppose their planes for world domination. Of all the nations in the world they chose America aas the toughest one to cow with threats and intimidation. They tested us with their 9/11 attack. They tested our newly elected President. Unfortunately, for them, this time they had a President who was willing to fight.

We went after their asylums in Afghanistan, the Philippines and South East Asia. We have had some successes. We have had a hard time convincing many nations and people that we face a united and organized enemy. Our intelligence and forecasts showed that Iraq, which had killed thousands of Iranians and Iraqi Kurds with poison gas, posed athreat. We went to the UN for sanctions and the authorization to use force to enforce the sanctions. WE asked and waited long months for answers to the future of those weapons of mass destruction. When we had no further choice we invaded and removed Saddam Hussein from power. We then engaged in helping the Iraqi people recover from 35 years of totalitarian dictatorship and subjection. It has been a rough process. We have adjusted and things are improving. The terrorists and criminal sectors of Iraqi society saw an opportunity to seize power. New generals, new tactics and the willingness of the Iraqi people to fight for their new lives have dramatically changed things over the past year. Our newspapers and TV media have chosen to ignore our victories. Our Thought Leaders still see America as the font of all evil in the world...

. Our own military has dubbed this "
the long war". Like previous "long wars" this may take a long time. We Americans have become accustomed to wars of short duration. We have not fought a long war since our struggle fro independence. We had to convince many that our cause was just and our course correct then as well.

Our enemy hides among the citizens of the world. They are as much at home in the highrise towers and hallways of power and wealth of modern cities as they are in villages and mountain caves. They go by many names. They hide behind the words of religion. They find a cover in religious fervor but when they are at full rampage, they take drugs, rape, steal, murder and desecrate without any consideration of any religion or the laws of any god or nation. They are killers. We refer to them Islamofascists or terrorists . We really don't know what to call them because they are very clever at turning our own civil libertarian concerns against us.

We know that they wish to kill us. They wish to attack and slaughter as many of us as possible. This will weaken our resolve and frighten their enemies. They will be able to convert the weak and assume world supremacy and the fulfillment of some nebulous grand design. They seek and will use any weapon that can kill tens of thousands of us in multiple attacks.

We have grown weary of the war. Our citizens have grown tired of the struggle. Our news media wants a different story. (They bore easily). Democracies have never had the long term will to face a tyrant. The longer we go without another attack, the easier it is to want to withdraw. have we not been attacked because of some plan or simply because we have been lucky, thus far.

Our new President will be tested. The Democrats have chosen to hold a race to withdraw from the major battlefield of this war. Altho, most recently they have decided that rather than remove the troops several hundred miles away they want garrison them inside large fortifications. They propose to fight a counterinsurgency war using the trench warfare tactics that created a meat grinder in "the war to end all wars" 90 years ago.

We are at war. Yet, our economy continues to grow and blossom. 95% of all workers are working. 96% of all mortgages are being paid on time. the revenues collected by the US govt are at all time highs. We do not have a draft to call up more military. Oil is expensive, but it is because the markets are uncertain about its availability 90 days from now. The oil speculators are chary of events in the oil producing regions of the world. There is no shortage of oil.

What the high oil prices have done is make alternatives economically viable. In 1977, I heard Sheik Ahmed Zaki Yamani speak. The first OPEC cartel price increases had shaken the world. Yamani had gone to school in America and knew us well. Like Admiral Yamamoto before him he knew that when they provoked America they "awoke a sleeping tiger". He feared that raising the prices too high or too quickly would prompt American ingenuity to find alternatives to their oil.

We are close to that point now. The high prices at the gas pump are prompting the govt., investors, inventors and entrepreneurs to seek alternatives. Ethanol and soy deisel now provide great farm subsidies but they pose long term problems. Wind and solar power are dependent upon the wind blowing and the sun shining. Improvements in solar power generation chips make it seem that we face another "Moore's Law" style revolution. If all these measures prove as promised what does that mean for the Middle East-?

Without oil wealth at the present level, will the world still scramble for access, control, possession-? If we only need oil as a lubricant, will the terrorists still get their funding-? Will terrorist states still fund their proxy wars-? What will the Islamofascists do when there is no more oil wealth-?

We must remain true to our American principles. We face many problems in the future. However the future is not carved in stone. We can still change the fates that our politicians say are aligned against us.

We cannot surrender to the fear mongers who would make us hide from the future. We cannot solve the problems of the future by retreating into the failed answers of the past. We cannot withdraw from the world. We cannot build walls and barriers to protect ourselves from everything. We are Americans. We are optimistic. We are inventive. We are creative. We are imaginative. We do not "muddle through", except when we are preparing to change the game...

We are the lucky beneficiaries of a grand experiment in participatory democracy. We are the first nation founded not by a tribe, a geographic boundary, race, religion or act of some government. We are founded on the philosophy that "all men are created equal and are endowed by their Creator of certain unalienable rights, that among these are life, liberty and the pursuit of happiness"

From that premise, we hold that all humans have a right to life, liberty and the freedom to pursue happiness... This makes us very much at odds with any nation or person that would deny or restrict life, liberty or freedom to anyone else. We have struggled with this history within our own boundaries. We have not won all the battles. We have too many who would take and even more who would surrender their freedoms for the politicians promise of the better life as a slave. Too many who would exchange the freedom to pursue happiness as we each define it for the promise of safety, security, jobs, health, housing, education and old age assistance... That way lies the trap of slave master, the tyrant, the return to serfdom

Thanks to Wikipedia for the history links...