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The Daily Reckoning Australia newsletter of today is kind of short but what really got my attention was  short term treasury bonds trading at a negative yield. In other words, they cost more to buy than they are worth when redeemed at full maturity, which is completely unprecedented. Apparently, traders think that US bonds are the best place to put one’s money, even at a negative yield (guess they figure it just loses money less rapidly??!?) If I was an investing man and had any money, small problem that, no money, I would have gone short on oil in July and had money but alas that trade is gone, and oil has very little room left  to go lower and no fundamentals for a rapid increase near term. Matter of fact it lost another $6 a barrel after OPEC swore on everything but the Bible that it was going to cut production by up to 2 million barrels per day last week. Kind of like the stock market after Bernecke, Paulson and co. pushed the funds rate to zero, small rise and then the continuing plummet. The perceived reality is nobody has enough cred for the market to have a lasting faith in, and things are not even close to being unwound yet. Think the housing bubble is bad, wait until the commercial paper starts to shred.  Oh and BTW, AP asked the largest banks, you know, the billion dollar bailout babies, what they did with our money, and they either said they did not know or they refused to tell. We do know they have been doing everything BUT what the purpose of the money was intended for, which was lending it to people so they could  buy  some of those repossessed houses. What to do, short of applying for a bailout?  I would probably buy some gold futures on pullbacks (further into the deleveraging/deflation cycle I would start looking at gold stocks on producers, like Newmont gold for example, because they will be bargain basement price after the stock crunch), and do option puts (selling a commodity short) on overpriced commodities like copper, uranium etc that are going to crash and burn as manufacturing plummets. The same holds for stocks, one can sell short a company stock, so if you do reverse analysis and look for the weakest of the major players in a sector or industry, you can make money on their way down. The real problem, as the newsletter  authors note, is that everything seems so obvious that everybody KNOWS what has  to happen in the markets. (which is the sure sign to run the other way, or at least wonder why all lemmings love cliffs…) The real kicker is the timing…,  I really think in the short term gold, and gold stocks,  are going to take a hit also, perhaps down to the $600 range or more (gold is even for 2008 if you can believe it, after hundreds of dollar per ounce price swings!) before the deleveraging is done and inflation kicks in. One thought I want to leave with you as an investing strategy most people don’t talk about, and that is you can make money when companies and commodities are going down, not just when they are going up, so your asset management strategy does not have to be solely preservation. You can recoup your nest egg now and watch for the change in gold and other commodities when the inflation spike comes, which will be more rapid than the oil spike and slump was, in my opinion. I just think deflation is going to continue for the next few months and any money you can spare is better placed on strategic short bets.

Hi Eric been reading your blog on liberal blogs and violence, either you are a more patient man than me or have a lot thicker skin, as I have never tried to reason with those of rabid tongue and mind in their own pits. About your assertion that we will not, as conservatives, retaliate as in a tooth for a tooth, I am not so sure. The problem is a matter of our survival. As long as conservatives could feel that this too shall pass, People of the Book type morality allowed  the turning of the other cheek. God would avenge your wrongs and all that. However, we are entering a period of history where the liberal left is unhinged enough to try exterminating conservative thought ( and any conservative not willing to change affiliation) quicker than you can say “burn’em!” Von Clausewitz stated that the only way to defeat an enemy is to be willing to use the same tactics against them that they employ ( or worse), because to deny your forces a tactic out of moral qualms may well lead to the annihilation of your nation. Machiavelli stated that it is better to be feared than loved, and conservatives have gotten where they are because they would rather be loved than be in power. We are in a war for the soul  and destiny of our nation, and liberals (even though a lot of them do not believe in souls, bless their grinchy hearts) know this truth and act on it. Conservatives really cannot comprehend the depravity and depth of hatred liberals have for them, but viewed through the lens of an eternal warfare between good and evil, it makes perfect sense why they hate us so much. Lucifer, the son of the morning, was cast out of heaven for wanting the glory of the Father. His pride caused his fall, and now he wishes nothing more than to damn those who did not follow him and were deprived of a mortal experience. We got bodies and eventual resurrection, he and his followers do not. He hates righteousness, and all that is good (of God). Liberals are cut from the same cloth, because when you get right down to it, they either have deluded themselves about what they really believe in (IE they are conservatives but do not realize it yet, which is what I hope is the case with your girlfriend:-)), or they are actively fighting against God, because basic liberal tenets like abortion, gay rights, moral relativism, etc, cannot be squared with a God of laws and justice. Liberalism and God are diametrically opposed, when both are properly understood. Both Old and New Testaments talk about those who shall be sheep in wolves clothing, speaking the words of life but murdering men’s souls. Now,  I want to make clear that even though I am speaking from a scriptural standpoint, God works on the ground, so to speak. I am talking of realpolitik, a pragmatic assessment of what the path ahead is. The scriptures tell what will happen, I try to understand and be prepared, so I and my family may not fear. What I am trying to say is too many religious people are so blinded by this idea of turning the other cheek they forget the war history of the Jews under a wrathful God, the moneychangers in the Temple, the Sodom’s of the world, and yes, even the Flood. It is not only just to act in defense of right, it is eventually required of all those who honor God. The imagery in Isaiah of Israel going through as a young lion among the wicked, sparing none, is not a pacifistic  one, nor of mercy either. Either we beat the liberals brutally and convincingly now  in the law, the ballot box, and the court of public opinion, or we  will be forced to do it later in the streets. Evil cannot co-exist with good, it can only be restrained and chained down to where it does the least harm: But let loose unrestrained on a supine and ungodly citizenry as we now have, the destruction of good  is the sure result. Liberals have through the Prop 8 fiasco shown themselves incapable of being governed by law (and as you noted, not one liberal is willing to call the gay activists down and discipline them), so the more their will is thwarted, the more violent they will become, until they either achieve their designs or they are met with sufficient pain to be persuaded of their folly. They are bullies, and spoiled fools whose bad manners have been tolerated far too long. Truly the Word is: Spare the rod, spoil the child (and ruin the nation).

I have read quite a bit on both sides of the argument about how Obama is going to govern, and I am not totally convinced even he knows. From the time he sprang onto the national stage two years ago, he has been the epitome of pragmatism. Nothing has been too large, or sacred, to “throw under the bus” if it seemed to imperil his chances to gain the Presidency. Does that mean he has no guiding star other than power, or that he is truly an astute politician, one of the most stellar practitioners of rhetorical chicanery in modern history? By the way, I do not mean the forgoing in a positive light. Obama is not a typical liberal, in that he is not wedded to any one tenet of the liberal cause, except abortion, and even then there was no real challenge to call him on it(the partial birth fiasco ran more on whether he lied, not the substance of what he was espousing). Faced with an enraged electorate, I think he would have thrown his opposition to the “born-alive” bill under the bus too. So what does this have the do with Charles’ column? Just that Obama has dreams, but when they meet reality, as his “withdraw from Iraq immediately!” met the NSA daily briefings, the dreams change to pragmatism. His vision of America is probably not that shared by most Townhall readers, but his ability to effectively Change what he Hoped to…? Pragmatically, it’s not gonna happen.

Ahhhh. Chicago! Gangsters, druggies, rappers, 8-mile road, convicted felons, politicians (but I repeat myself), and the ONE, even Obama or as Jonah put it, “hero-saint light-worker Jedi Knight Messiah that he is…, who can pick up manure from the clean end”. How he can be elected in Daley’s wonderland and remain clean is like expecting a girl at one of Nevada’s “ranches” to be a virgin, it just defies logic and common sense. Yet, most of what the MSM passes for news these days has no relation to common sense either, being more like the dirty end of manure. Once the bulldog gets through with the Gov’ner and running down the who did what and knew it when, I expect Libby’s memory will look pretty good to all of the Democratic politicians involved in this mess. And I will wager there will be a lot more felony convictions than the one throwaway Libby had to take a fall for. Blago has no incentive to be quiet about possible Obama malfeasance  as he is tossed under the bus, for  even he cannot be stupid enough to think Obama would pardon him, altho he was stupid enough to keep making plans to sell the Senate seat after knowing his phone was wiretapped…. It will be interesting what the MSM and other news outlets come up with over the next week or two(or if the MSM even tries). Like Buchanan said today, this one is not going away, there are too many questions  unanswered. Why oh why, does a seemingly intelligent man like Obama have such bleeping bad associates? I really think he should start being judged by the company he kept. Perhaps we are too parsimonious with our blame here, though, because after all, the voters in Illinois DO keep voting for this type of scum. I think Doug Giles is right, some people really should not be allowed to vote.

Subject: Post election and back to policies:-)  my comment to George Will column on 12-11-08
Nice to see the minds functioning again instead of flamethrowers (not that it wasn’t fun to be ascerbic about liberals sometimes…) I agree that Pakistan and Afganistan are unwinnable by outside forces  (without, as earlier noted, a Genghis mentality), and interior schisms between tribes and religions make any national government with real authority extremely unlikely. So, why are we involved? Simply because to not be involved carries far worse possibilities to our national security. We may not have much leverage, but we do at least have some, as well as intelligence assets on the ground and in the respective governments. The islamic nations worry us because of oil, and terrorism, but strategically they are backwards, insular nations. They have many smart, highly talented people, but the ruling regimes are so removed economically from the masses they might as well be different nations, which is why Osama and Wahabbism represent a more fundamental threat to the Gulf Arabic nations than to our own. The terrorists may blow some of our landmarks up, buy they cannot destroy our culture and throw us back, as a nation, to the middle ages, as they can Saudi Arabia, Quatar, et al, because we do not have a majority of citizens in grinding poverty being radicalized by religious imams while our rulers life large.
The real intractable problem on the worlds stage is Pakistan/India, because of profound religious differences going back 60 years to the partition of the nation into a Muslim and Hindu homeland. They have been fighting over Kasmir for literally decades, both have nuclear weapons, and large populations of very poor cannon fodder the elites would not hesitate to expend in the name of national interest. Plus, we really do not possess the mental toughness and pragmatism to negotiate with any of these nations, so we should not even pretend we can unless we are willing to be effective in our negotiations(which requires more than throwing money around). Pakistan came around into our camp not because of our words, but because of what we did to the Taliban in Afganistan. Piecemeal, and nuanced, approaches do not work in that region of the world, so we need to go in to win decisively, or stay out. Since staying out is not an option at this stage, winning is the only way left. Unless, of course, we want to go the way of France and Britain, appease our way into obscurity and Sharia law eradicating our national identity. Perhaps that is really where I feel Gates and the rest of these oh so experienced people (BTW if they are so experienced and have been around for 40 years, why are we stilling having these problems?) miss the boat, they are focused primarily on the physical insurgency of the islamic radicals, and not realizing that national security must in  large part be based on defeating the ideology. We are a Christian nation and have no business adopting Sharia compliant financing, foot baths, clean foods, or any other politically correct genuflucting to Islam, let alone refusing to criticize radical Islamic terrorists because it might hurt their feelings! Wipe the terrorists  from the face of the earth so they can go enjoy their 70 promised virgins, and let us move on with the task of getting along with the “moderate” muslims of the world.  What our political classes tell us in the name of diversity we must do, is aiding and abetting our enemy in their efforts to destroy our culture and way of life. Multiculturalism is, indeed, the murdering of our culture, as noted by a previous post to Will‘s TH column.

I too thought it very interesting that the Democratic voters would split so much on a foundational issue for the Dems, ie. gay marriage, and give  Obama the states of California and Florida but uphold traditional marriage. My family and I have been having some good conversations about whether there is still a majority of good people left in the USA, and I think the gay marriage votes give some hope in that respect. For all you history buffs out there check out the rise of Hitler and the National Socialist party in Germany to Obama’s rise, down to their platform of “hope and change”, economic turmoil, takeover of a major political party followed by ruthless suppression of dissent and an elimination of opposition. The time it took to change Germany from a basically free republic to a Socialist/Fascist dictatorship (but I repeat myself): four  years, from about 1930 to 1934. Once a nation gets to a certain point on the slippery socialist slope, the fall to the bottom comes rapidly. It has also been pointed out that there is a correlation between the morality of the people and the amount of freedom they choose to have in relation to government, or to state it differently, the more righteous the people, the less government interference in freedom and individual rights. So…, we have a lot of deluded people out there who really do not understand where Socialism leads, but still have good basic moral values. As long as good people remain in the majority there is hope to change the socialist trend, but by the very nature of Socialism, it tends to corrupt minds and morals. Did I mention that in Nazi Germany, homosexuality was widely practiced among the elites, and Christianity was banished as a public nuisance/enemy to the State? Christianity and Socialism are antithetical, and cannot  coexist peacefully.  There was an excellent post about how evangelicals gave Obama the election

http://www.idahovaluesalliance.com/news.asp?id=941

Kind of a wakeup call,eh?

I have to admit that I never was very excited about my choice of McCain, because I felt my choice of more conservative, electable men had been eliminated during the primaries by the liberal media. McCain is a great patriot, I just could never wrap my mind around him being a great conservative republican. Conservative Democrat maybe. At any rate, is it better to have a effective pragmatist in office, who may or may not govern from the center, or an ineffective Republican that would excel at National Security but have many social and fiscal policies not so very much different than Obama, or the repudiated Bush spend, spend, spend years? Bush has signed over one Trillion dollars in bailout bills that would never had been necessary had a fiscal conservative that understood money markets and the housing bubble been in office! Bush was a lot better than Gore or Kerry would have been, but to say he was competent and conservative is pushing it. So, the question remains, is effective pragmatism better than clueless RINO semi-conservatism? That is why McCain lost, too many voters asked themselves that question and chose pragmatism. Only the loony left like Moveon.org and DailyKos actually expect Obama to govern on the platform  he campaigned on in the Democratic primaries: After all, 56 million Americans did not vote for him and he said he wants to be their President too. I do not like his radical ties and background, but Obama has shown himself to be a very quick study on what works, because no rational observer would have given him odds of winning the Presidency two years ago, but he did. Despite the complicity of the liberal media, I have to assume that our electorate knew enough of his negatives to disqualify him, but chose not to, and instead elected him with enough of a margin that there is no doubt he won. Acorn and all the rest of the shenanigans Chicago politics come up with do not produce a spread of almost eight million votes. But a great majority of his general election supporters are a far different breed than Ayers, Resko, Wright and co.;  even Pelosi, Reid and Murtha are not mainstream Democrats. He will have to decide which group he gives his allegiance to, and I am willing to bet it is the centrist middle. Why? Because he wants to be a two term President who accomplishes great things, not a one term lame duck whose over-reaching Left  lost him his congressional majorities in the midterm elections, as happened to Bill Clinton in his first term. Clinton got a second term because Bush the elder sold out on taxes, and did not finish the first gulf war. Almost forget, wasn’t there someone named Perot who got 18% of the popular vote that year? That could have contributed to a Bush loss too, don’t you think…  Bush was, however, an incompetent semi-RINO, and shot himself in the foot, electorially speaking. Obama will not have that gift in 2012, as he will face not just a Romney or Huckabee, but possibly the likes of Sarah Palin and  Bobby Jindal, who are very popular with the conservative base and have broader demographic appeal than Obama started out with. He will have to perform very well just to effectively govern, and with the government hamstrung by fiscal crisis, he does not have enough money available for another New Deal, so he can veto the more outrageous Congressional bills without popular backlash by wearing a conservative fiscal mantle. The prospect of a  Democratic President vetoing a spending bill in the name of fiscal responsibility has a delicious irony to it, doesn’t it? After all, the nation does not have enough change in her pockets left, to pay for the type of Change the radical Left wants. In fact, I expect considerably less change than wished for all around, for both voters and Democrats. We will end up a little more broke, and they will learn the meaning of a frustrated majority.

Thank you for an excellent column, Laura, and for addressing what is most on my mind this election cycle, the “what then” question. I have been working with my brother to turn his business around because he made some choices that had the potential to cost him a lot of money yet he did not enact the needed fixes I advised  until after he lost his shirt. Now he is completely changing his business without guarantee of success, a thing that would not have been necessary had he listened 6 months ago to basic business principles. What he did and what our government is doing now is so similar I want to shake somebody besides myself! Why is it that the needed common sense is sooooo absent on both a national and individual level? My brother needed to identify where he was losing money and cease operating in those areas before he could concentrate on profit making ventures, but thought refusing to fill orders (nothing like paying people to buy from you!) he had no legal obligation to fulfill would somehow damage his reputation (or something). Meanwhile, if his business goes bankrupt, he will have NO reputation, and no business. That is where you hit the nail on the head in this article, where we will be at as a nation if we do not engage in the policy analysis and tough fiscal decisions now, rather than wait for the inevitable crisis. Common sense dictates that you cannot spend more than than you make indefinitely, and government produces no goods or services, it just redistributes wealth. Even in printing new money, it actually robs citizens because of the devaluing of the extant money supply. The really fear inducing possibility is nobody will address root causes until the other shoe drops and one of the major governmental entitlement programs goes bankrupt…, then 800 billion will be small change. I like Newt’s ideas for changing and fixing our broken economic paradigms in government, but confess that sometimes I wonder if there is enough common sense left in America to make them work. If Obama gets elected by a majority, what little hopes I have are going to be pretty nigh destroyed. Anyway, thank you again for an excellent column, and if you have any ideas on how to get people to invest in foresight instead of pay dearly for hindsight, I would sure like to know:-)

Northern Ireland’s first lady is being investigated by police following allegations she committed a hate crime by launching a withering attack on homosexuality.  A homosexual activist has brought charges against her under “hate crimes” laws and police are investigating her.

http://www.thisislondon.co.uk/news/article-23491888-details/Northern%20Ireland’s%20′first%20lady’%20probed%20by%20police%20over%20gay%20hate%20rant%20on%20BBC%20radio%20show/article.do?expand=true#StartComments

In a diverse community that holds free speech in high esteem, we must remember that there  is not a “right” to not be offended. Free speech does not depend on how certain groups or individuals “feel” about the comments being made, any more than political discourse during an election relies for legality on whether it hurts the opposing candidates feelings or not. Free speech and freedom of religion rights trump  minority groups “feelings” about what is said of them. If Christians say they love the sinner but hate the sin, and then preach what their Gospel says about particular sins such as homosexuality, they have a right to, and should not be muzzled in the name of political correctness or accused of hate crimes. Have you ever wondered why a  homosexual activist can say anything he wants about Christians and get away with it, including calling for violent attacks? Because they are not held to the same standard of PC speech code they wish to enforce on others. Same with the Muslim community, they want to have the EU outlaw speech deemed offensive to Muslims, but then turn around and want to impose Sharia law on non-muslims and threaten violence and death to all who disagree. It is not Christians who are Fascists, my friends, it is the homosexual activists and radical Islamists who would force everybody to conform to their worldview on pain of fines, incarceration or death.  Perhaps the Muslims and homosexuals would like to be judged by the same laws they wish to inflict on others? Here’s the key: they are only tolerant of their own views, and wish to outlaw all others, which is why hate crime legislation is such a pernicious evil as it becomes a club by which deviant minorities can bludgeon society into accepting their lifestyle without the niceties of voting or persuasion.

A friend of mine sent me the usual big men in a back room monopoly theory of high oil prices, this time tied to Iraq since 1922, so instead of ignoring it, I thought I would give a shot at rebutting it.

Hi and thank you for emailing me. What you sent sounds somewhat plausible on the face, but here is something you need to consider, actually a few things. First is that Venezuela sells more oil to the U.S. than Iraq, because although Iraq has larger proven reserves, its output right now is lower. Iraq is actually producing more oil now than it was 2 years ago when oil was trading for $45 a barrel. Funny how more oil being produced in Iraq made the price go up isn’t it? Facts are persnickety things to theories like the one you sent me. Venezuela also hates the U.S. a lot more than Iraq does (or at least Hugo Chavez, the dictator, does) and could cause a much greater shock to our gas prices (and national security) than Iraqi production, and as a matter of fact, Mr. Chavez has been trying to nationalize the oil production facilities in his country, which is a fancy way of saying he is trying to steal the investments of foreign oil companies helping to develop Venezuelan oil reserves. Venezuela does not have the technical expertise to exploit some of its oil reserves, so it had outside companies invest billions of dollars in exploration and infrastructure, and when it was close to going online, tried to steal it from them. Mr. Chavez is currently before the World Court for his troubles, with large judgments being entered against him in favor of the companies he tried to shaft. According to all the conspiracy folks, maybe we should invade him instead:-) Secondly is that the oil companies do not make a certain level of profit per barrel of oil, i.e. if oil goes from $80 to $100 a barrel the oil companies do not get an extra $20 a barrel profits. What actually happens is that the producing countries such as Saudi Arabia, Iraq, etc., get a $20 a barrel increase in profits as it costs them the same to pump oil at $40 a barrel or $140 a barrel. The multinational oil companies pass this added cost onto the consumer, and keep about the same margin of profits. So they make 4 percent profits, to pull a number out of the air, on every barrel of oil, which means at $40 a barrel they make $1.60 per barrel, and at $100 a barrel they make $4 a barrel profit. Yes they are making higher revenues, but the higher price also justifies more R&D, and new exploration. The global oil companies have spent over 200 billion dollars in exploration, infrastructure and R&D in the last year alone. Do you know that a oil rig in the Gulf of Mexico can cost more than a billion dollars before the first barrel of oil is pumped from it? That cost is paid through revenues. Higher market prices give a lot of incentive to find more oil to sell, and finding more oil supplies drives the prices back down, as well as helping our national security. Oil producing countries have a greater incentive to sell oil when the price is high, as a free market would lead you to expect. Demand and supply drive prices, and China is becoming one of the main importers of oil after the United States (actually one of the main importers of everything from food to steel, China shut down 1/3 of its old steel mills last winter and diverted the coal to heating uses because of the extremely cold winter (no global warming there!) and because of the shutdown steel prices in the U.S. almost doubled.) and the projected increase in China’s need for petroleum products is for it to double by the year 2025 as more Chinese discover the joys of driving instead of riding a donkey. Conspiracy theories always want to show the big men in the back room, but the world oil market is too big for a monopoly to work. Even OPEC cannot control prices that well (or don’t you think they would keep prices above $100 a barrel oil all the time since 1973?)and besides, in the news this week OPEC nations are increasing the supply of oil they are pumping by over 800,000 barrels a day! What is really driving the prices up in the USA is the Democrat’s refusal to build new oil refineries (last new refinery was built in the 70′s and the price spike every spring is due to refinery bottlenecks due to govt. regulations concerning what type of gas can be sold where, and the resulting refinery bottlenecks, not oil supply issues), and Democrat’s refusal to expand domestic oil production. Dems just shot down a proposal to tap the oil shale in the Rockies this week, where there is a proven oil reserve in the billions of barrels, as well as refusing to allow oil drilling off our coasts and in ANWR(Alaskan wildlife refuge. Our domestic energy woes are directly traceable to a political party, it is true, but that party is the Democrats. One last thought: how is taxing oil companies going to bring down the price of gas? Every company sells a product at a price the market sets, and if the company incurs higher production costs in the form of taxes, etc, it passes them on to the consumer, or if unable to do that, will shut down rather than sell at a loss. Businesses are not like the government, they cannot continually run deficits and increase taxes or inflate the money supply by printing more to pay for their irresponsibility. They turn a profit or they go broke and out of business. Soooo…., how will raising taxes lower our gasoline bills? It won’t, it will raise our costs, just like the ethanol subsidies jacked up the price of corn and foodstuffs globally. Anybody can have a theory and some charts, but the truth of a global economy is much more complex, and I have just scratched the surface here. Government is a very inefficient parasite on the national economy, and should always be viewed through this one simple truism: Governments produce nothing, every dollar they spend comes out of a taxpayers pocket, and that dollar could have been used much more efficiently in the private sector.

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