Monday, June 30, 2008

Bill Gross Has Been Reading Up On Vickrey

The often-very-wrong bond fund manager is a paleo-Keynesian, sounding alot like William Vickrey. So, does the US suffer from a chronic lack of aggregate demand? We constantly hear that we are an overly consumerist people, us Americans. Indeed, we even like to import alot of stuff from abroad. In fact, aren't we always hearing that we consume more than we produce? Doesn't seem like the logic holds up, as Mankiw says. Still, imagine a world of Gross/Vickrey (pun intended) deficits. Government would be recycling a helluva lot of our savings into the economy, but what would they be recycling it into...iPhones? Independent films? Vitrectomies? Starbucks? Zip Cars? Harry Potter books? HDTV? Not likely. Countless things that we choose to consume everyday, and even value so highly as to be obsessive about them, would never land on a government spending priority list in a Vickrey world. Ah, yes, $5 Ethiopian coffee is clearly in the national interest and creates high paying jobs! We'd miss out on alot of innovation, even the very small scale innovation that we seem to love. Except for the most ascetic among us, our lives would be significantly less rich and enjoyable.

Friday, June 27, 2008

Bright Idea of the Day

If you believe this story, the tax rebates are keeping consumers spending and buoying the softening economy. Those tax rebates took several months, almost a year, to debate, pass, and implement. Let's recap. In 2008, you and me have earned income, sent it off to the government, waited for them to send it back, and now have it back. And because we have it back, this is helping the economy. So, in the interests of further helping the economy I offer this bright idea: let's shorten the cycle time by cutting out the middle steps. Let's say that me and my fellow Americans be allowed to not send off a portion of our income to the government. That means it wouldn't take months to come back and we could help the economy right now, today, pronto, immediamente. Hmmm. But what would I call such a plan?

UPDATE: Mankiw calls it the same way.

Wednesday, June 25, 2008

Barack Obama, Federalist Hangin' Judge?

Wow, who woulda thunk it?

I am torn.  I am inclined to view Obama as a cynical, leftist, moral relativist, and no doubt he would appoint judges exactly like the 5 that ruled in the majority here.   But, he has two daughters.  No dad with little girls can help but be deeply wrenched by this case.  Still, I think this is a freebie for Obama.  He can base his stance on his personal revulsion and use it to move to the center, which he needs to do, but would he really appoint judges with a federalist bent based on his views here?  No.  He'll appoint another Ruth Bader Ginsburg to the SCOTUS safe in the knowledge that it'll be some other guy's daughter that gets raped by a guy who doesn't have the death penalty to fear.

Just like with Boumediene, the Supreme Court has shown its ignorance of how the law as passed down by them is not the same as the realities that affect the world.  As Ralph Peters has pointed out, US soldiers fighting the war on terror now have every incentive after Boumediene to kill rather than capture.  What on Earth does the SCOTUS think a father of a little girl who has been violently raped  should do?  Accept justice on Breyer, Stevens, and Ginsburg's terms?  Not a chance.  If ever there was a dictat of the law that will inspire extra-judicial violence, this is it.  Father's have placed their franchise in the hand's of legislators who will express their deep feelings about the violation of their princesses in the body of the law, but no.  Ruth Bader Ginsburg says it is not "proportionate".  Fuck proportionate.  Mark these words, in due course a child rapist will die at the hands of a distraught father.  Justice will have been served in the opinion of most everybody except for five robed individuals and that father will face prison because all but five insulated elites have ignored the Constitution and imposed an extraneous notion upon the written law of the land.

Barack Obama, you are free riding.  If you are truly repulsed by this decision, declare that you will support federalist judges in all respects.  Otherwise you are a fraud.

Hey Paul Gigot: Thomas Frank Is Awful

Ugh, Thomas Frank is just godawful. He's now on a streak of something like seven or eight inane columns. Last week's column prompted me to lay into the folks at the WSJ who employ him. This week's only serves to make me want to vomit. He cites a lone instance of incompetent/corrupt government contracting to indict private vs. public provision of services and smears the whole legitimate case for private sector provision of services as a conservative fraud. This is a highly complex and nuanced debate within the field of political economy, but Frank justs wipes it all away with an anecdote. It is not as if the world has never seen massive fraud and waste at the hands of "progressive" government. Furthermore, what Frank misses is that the fraud and waste evident in contracting to private companies begins with and emanates from the belief in big and expansive government. Fine, private contractors have failed to live up to promises and cheated taxpayers, but who selected the bozos and funded them? Who managed the process and provided the lax oversight that allowed the fraud and waste to blossom? Yes, the government. Not Republican government or Democratic government, but big, ambitious, interventionist government. So, the government can't even choose the correct people and oversee the process correctly, but they sure as hell must be better at the whole kit and kaboodle from planning to execution. What, like the Post Office or the IRS or the Census Bureau? How are we to believe that a government that can't manage experts can be both manager and expert? The anecdotes that Frank provides only demonstrate further the endemic incompetence and/or flawed incentive structure that doom big government approaches to failure. He has inadvertantly shown us how government more often than not will screw up - something we've known for a long time.

Surely there is a lefty columnist out there who isn't an embarassment to the left and surely the WSJ ought to be able to find and hire such a person.

N.B. - for all you readers who might think I'm just barking and that I don't have any real influence over at the WSJ, check out this June 23 editorial and then this June 11 post. Hmmmm.

Tuesday, June 24, 2008

Bush's Black Swan?

David Brooks is dead on in today's NY Times, but the point that goes underemphasized here is that the experts are usually wrong, not because they aren't well-versed or out of mal intent, but because expertise in many fields is a false promise, it's unattainable. Complexity makes expertise unattainable. The experts' plan has just as much chance of working as an outlying plan - perhaps even less so, because the experts are likely to all be relying on data or ananalytical framework derived through consensus. Consensus has a tendency to overlook certain data or institutionalize an analytical flaw, either of which could render the whole exercise worthless. Bush saw this and placed the Black Swan trade.

Nightmare Walkin', Psychopath Talkin'...

Barack Obama has come out with two stunners lately in his attempt to explain his views on energy policy. The second, chronologically, is the most important in terms of what it tells us about him - that he willingfully ignores basic economics in pursuit of the favors of key political interest groups. His criticism that McCain's advocacy of OCS drilling "makes no sense" itself makes no sense. McCain says alot that makes no sense, but his support for more drilling isn't one of them. Economics is the study of the use of scarce resources, and the bedrock concept of microeconomics is the laws of supply and demand. Supply and demand is the fundamental lens through which the energy problem has to be analyzed and discussion of supply and demand has to be the foundation of the debate. That Obama rejects this should disqualify him to attend a meeting of my homeowners association, let alone the White House.

The second inexplicably stupid thing he has said is that he is upset only with the pace at which energy prices have risen, not that they have risen. Thus he expresses his disdain for an increasing standard of living in which more and more people of previosly modest means can achieve: first, freedom from the wants of poverty; second, increased life expectancy; and third, increasing convenience and creature comforts that add to the basic quality of life. This comment reminds me of the parable that stands at the heart of the 1988 movie 'Colors' about gang violence in LA. The parable is first told by Robert Duvall's character to Sean Penn's, both police officers, and told a second time by a transformed Penn to his new patrol partner after the Duvall character's death. In the parable, two bulls, a father and son, stand on top of a hill looking down at a herd of cows. The son says, "Hey Pop, let's run down there and f**k one of those cows," to which the father replies, "No son, let's walk down and f**k them all." Obama's only regret is that he and his radical, anti-free market, environmentalist supporters couldn't walk down that hill.

Monday, June 23, 2008

Dutch Idea of Health Policy

Bar and restaurant owners in NYC howled when Nanny Bloomberg banned smoking in the city's eating and drinking establishments. Looks like Dutch bar owners have a similar beef, albeit with a twist - pure marijuana, OK; cutting the cannabis with a little tobacky, a no-no.

Mundell On How to Nosedive

Like any other line of work, the economics profession has a bent to declare its "young stars" in order to recognize the younger generation and let the world know (or make them think) that the profession is dynamic and exciting. These are essentially, hard-working, ambitious types who play well to the incentives placed before them. In academia those incentives are to publish papers, lean to the left politically, and give some scientific gloss to policy that expands the role of government. As you would expect, the Obama campaign has a bunch of these young stars in his camp. The thing is, these young stars are essentially policy neophytes - their economics are untested and their experience in the world of policy is limited - and most will turn out to have little or no impact on their profession or their profession's role in our society. It is likely this reality that led the WSJ to title its weekend profile of Robert Mundell, "An Economist Who Matters" in order to remind us that the old sages are still among us.

What does Nobelist Mundell think will happen if the current dividend, capital gain, and marginal income tax rates are allowed to expire, meaning rise? "If that happens," Mr. Mundell predicts, "the U.S. will go into a big recession, a nosedive."

Friday, June 20, 2008

Stop Misguided R&D on a Cure for HIV/AIDS

Don Boudreaux at Cafe Hayek is one of our age's great debunkers of economic illogic and various other inanities. Today he muses over the reigning economic absurdity regarding oil. The second inanity Don addresses - that we shouldn't drill for oil in ANWR because that oil won't hit the market for many years - ought to not need debunking since it is so patently illogical on its face. Still, many people actually accept this illogic even though it is principally championed by people who tell us we need to take drastic measures RIGHT NOW in order to avert catastrophic developments fifty, or even a hundred, years hence due to global warming. I don't recommend this tack however since logic can't penetrate the protective shell of religious zeal that envelopes global warmists. My preference for rebutting someone who spouts this kind of gibberish is to attack a suitably sacred progressive god, but one that doesn't inspire such high levels of mental intransigence. So, next time you hear that we shouldn't drill in ANWR because we won't see that oil for years, just say "Indeed, that is the same reason we shouldn't pursue research into a cure for HIV/AIDS. Given the state of our medical and scientific knowledge, we couldn't possibly see a cure for at least ten more years."

Climate Virtue Socialism In Action

I've noted before that Europe seems to have a far stupider energy policy than we do here in the US, if you can believe it. There are many factors driving up the cost of energy in Europe, but one of the significant drivers of the inflation is the EU's cap and trade system, a system which we are contemplating here in the US. Turns out that capping and trading is causing some problems, not just by driving up energy problems, but by embarrassing the Euros who want to export their virtuous central planning poison around the world...

"Europe needs to demonstrate that emissions trading is not too expensive, to win agreement for a global climate protection deal starting 2013, Lewis said. 'Probably the last thing that a European policymaker would want to see is a price spike in the carbon market in Europe that would make other countries internationally less willing to contemplate tough carbon caps.' "

We can't have anything standing in the way of Climate Virtue Socialism, so what to do? Cheat obviously...

"Carbon costs layered on top of surging energy prices will likely prompt countries to allow the import of more United Nations credits, which are 26 percent cheaper, `to cushion against, the risk of an excessive price spike,'' Lewis said. `A more generous quota may have to be allowed.' "

I'll say it again, let's stay well behind the Euros and see if these schemes actually work or drive the economy over a cliff before we do anything.

Wednesday, June 18, 2008

Thomas Frank Is Not Worthy of WSJ's "Wednesday Liberal" Column

Ever since Al Hunt left the Wall Street Journal, its Op-Ed page has lacked the token voice of an unabashed liberal. The editors recently rectified this situation by hiring Thomas Frank to give us capitalist pigs our mid-week dose of wooly-mindedness. I've lost count, but we're about five or six columns into the Frank Era and I have to say the WSJ hired the wrong guy. His columns are easily picked apart for their glaringly silly theses and they are not the least bit informative or entertaining. Frank makes me yearn for Al Hunt.

Today's column is no exception. Frank takes the poster child in chief of what was wrong with the Republican congressional majority - Tom DeLay - and uses him as exhibit A to declare conservatism a failed doctrine. DeLay was exactly what conservatives loathed about the Republican majority that claimed to govern in their name; he embodied the abandonment of fealty to small government principles. Just to take a few examples, conservatives howled with disgust over the Medicare section D entitlement expansion and DeLay's key role in ramming it through, as well as cringed when DeLay declared, inexplicably, that congress had squeezed all the fat out of the federal budget. Frank missed all this. Conservatives might not have liked the dishonest hardball assault that Ronnie Earle employed to go after DeLay, but in no way did that sympathy extend to believing that DeLay was good for conservatism. Frank is obviously living in a bubble somewhere because he couldn't be more wrong. If Jeff Flake were the most powerful guy in the House and Don Young was a pariah, Republicans would likely still be in the majority. If Jim DeMint and Tom Coburn were not lone voices in the Senate, then Republican coffers would be full and their prospects for the upcoming election cycle would be rosy. True conservatives have abandoned the Republican party not because they have found their beliefs wanting, but because they have found their beliefs foresaken by those who claimed to uphold them. History and experience has taught us that bigger government is worse government, government solutions create problems not solve them, and that government expands at the expense of our liberty. Tom DeLay is a blip. A hundred Tom DeLay's couldn't unteach us what history has taught us and what experience teaches us every day. Whatever name you put on it - conservatism, libertarianism - smaller, less intrusive government has an enormous appeal and advantage that grows everyday as the global laboratory gives us disappointment, failure and disaster at the hands of powerful government. If Frank thinks his worldview has won the day because Tom DeLay was a typical, power hungry politician, I welcome his misdiagnosis and false confidence. In the meantime, the WSJ should find a decent liberal columnist, Frank is sullying its Champagne pages with beer budget commentary.

Tuesday, June 17, 2008

Why Forbes Is Forbes and Elle is Elle

How did Forbes manage to make Heidi Klum look like a cross between Debbie Harry and Goldie Hawn in Private Benjamin? Sheesh.

At This Rate McCain Will Be Quoting Uncle Milty by August

This is a total 180 for McCain. Hmmmm. Did Luskin get to him?

UPDATE:  OK, clearly Luskin has NOT gotten to him...or he wouldn't be spoutin' gibberish like this.

Very Odd

Greg Mankiw wonders what business Ben Bernanke has talking about healthcare. If only he would wonder what business any economist has talking about climate science.

Monday, June 16, 2008

Give Those Iowans Government Cash for Strip Clubs!

I'm glad someone has the balls to say it - that the difference between Katrina and the Iowa floods now are that New Orleans was a dysfunctional cesspool when the flood waters came, in contrast to the civic-minded normalcy that generally prevails in Iowa.

Friday, June 13, 2008

Obama's Financial Lake Wobegon (Of Sorts)

If this becomes policy, I predict a substantial increase in the amount of tax returns that claim Adjusted Gross Income of $249,999 or slightly less. A huge chunk of America's payroll flows through LLCs and S corps, who bear the full 12+% of Social Security taxes via the self-employment tax. Trust me, if you are in the ballpark of Obama's $250,000 threshold, it is not too hard to make a few thousand dollars vanish from the pass-through income. Let's say you're on track to haul in $260,000 in AGI, which means you'd owe an extra $19,500 in SE tax; many folks will find a way to magically convert $11,000 of income into 'business' expenses. That ski trip you took the family trip. Your daughter's new laptop for college, um, it's for the business. (Of course, I don't endorse this sort of thing, after all, there are plenty of legal ways to shelter income.) It'll be a financial Lake Wobegon of sorts - not where everybody is above average but where large numbers of tax return filers' AGIs cluster roughly around $249,000.

Middle East Miscellany

Did the Saudis actually say "yes" to Bush when he went hat in hand asking for more oil to flow, but need to be seen as saying "no"? Just a few weeks ago, the press the world over reported gleefully that the Saudis "rebuffed" the leader of the free world. Not so fast. More here. Like I said, Bush seems to like letting his detractors ooch out further on the limb before he saws it off. Also, it says something about Bush that he was satisfied to accept the perception of defeat on the media while achieving his aims in reality.

On another note, the blogosphere is making a little hay over Iran's annoucement that it will build a bunch of new refineries to alleviate its gasoline shortage. Well, let me throw a little cold water on the hype. Iran annouces all sorts of stuff like this all the time, but the reality is that these projects, like many others in Iran, may never come to fruition. To put it mildly, financing is hard to get for projects in Iran - and hopefully we will really turn up the heat on financial institutions that want to finance these refineries. Secondly, the Iranians bungle alot of stuff. They have to provide jobs to people so they require alot of work to be done by state-owned companies, which typically employ alot of boneheads. You can pretty much count on any big, complex project like this Iran coming in overbudget and behind schedule. They say 2012. Realistically, think 2014. These refineries won't be a factor in the Cold War we need to wage - that I hope we are waging - with Iran to satisfactorily arrest their drive to acquire nuclear weapons.

You'll Never Beat the Irish!

As always, the Irish could be counted on to show their good sense. With a history and culture that has an ingrained aversion to the petty (and not so petty) tyranny of offshore bureaucracies, I don't know how the Eurocrats thought this would ever pass. Brilliant work, lads.

Economists Are Not Historians

I tend to like Gregg Easterbrook's economic commentary - he happens to be one of the most aggressive and articulate opponents of the Jeff Sachs school of global economic do-goodism, which I find theoretically naive and practically ineffective. Today in the WSJ, Easterbrook does a typically fine job in getting us to put things in perspective - economically that is. Then there is this: "Of course, a long, bloody and costly war being fought for no clear purpose depresses the national mood." Savor the irony of an economist telling us to have some perspective on the economy, while exhibiting none when it comes to history. By historical standards, the Iraq war is neither particularly long nor bloody. Yes, it is costly, but mostly because aside from killing our enemies we are rebuilding infrastructure in Iraq, providing medical care to many Iraqis, and trying to incubate civic institutions. If we fought this war the way nearly every other war in history has been fought - with bloody-minded ruthlessness - it wouldn't be very costly on a relative basis (e.g. imagine how cheap the war would be if we actually stole Iraq's oil rather than let the Iraqis use it to finance their incipient democracy). Finally, I would argue that this war does have a clear purpose, but that is a legitimately debatable point and I will put it aside for the exercise here is one of perspective; is this war any less purposeful on it's face than the Vietnam War, Russia's war in Chechnya, the Korean War or a host of other modern wars? Even if you are inclined against the war, it is hard to argue that the Iraq war is significantly different in its questionable genesis than our nation's other recent wars. Actually given our most siginificant recent wartime experience - Vietnam, where we lost tens of thousands soldiers and slinked away in defeat - America ought to be relatively upbeat that this war compares much more favorably in terms of human cost and achievement of aims. So. cheer up America!

Thursday, June 12, 2008

Good (and I mean really GOOD) News.

Don Luskin is advising John McCain. McCain sure does need the help. I think Don is a pioneer here. Obama is such an affront, an assault, an indignity, and thoroughly anathema to Libertarianism that McCain ought to be positively engaged by Libertarians in the hope that we can influence him. Even just a smidgen of ground gained within the McCain policy agenda for libertarian ideas is well worth it. If you start to hear McCain quoting Milton Friedman on the campaign trail, you'll have Don to thank!

Wednesday, June 11, 2008

Cold War Against Iran Getting Warmer

Last December I said "spring/summer 2008, it's game on." So, last week an Israeli minister hints that Israel might do the dirty work that needs to be done. Today, Bush is throwing some stepped up sanctions and saying that all options remain open. Do I think that bombers will be entering Iranian airspace soon? I give it a 10% chance. The game that does appear to be on is the last final aggressive chessboard moves of Bush's presidency. His policy toward Iran has been a failure, at least on the surface, but I advise to withold judgment. I have paid close attention to this President's policy and tactics over the last eight years and I have detected a recurring pattern. The administration tends to pursue a policy that goes under- or unarticulated. It then receives enormous criticism from all quarters. Its supporters, who think they detect the logic in it but are bewildered at the lack of promotion by the administration, start to second guess. Then, after everyone has positioned themselves farther out on the limb (his political enemies being farthest out on that limb), the President saws off that limb. This could turn out to be an apt analysis for Bush's Iran policy. He might very well have worked quietly to bring Iran to the edge of collapse and will bequeath the next POTUS a feeble and conciliatory Iran or an Iran on the verge of internal upheaval. (Incidentally, this is one reason I think that history will be kind to GWB's presidency. As his policies play out over time, many will be revealed to be more successful than originally thought, and the fact that he pursued them against a ripe tide of criticism will count favorably in the evaluation of his leadership.)

Let's review. 1) We've been building up the Strategic Petroleum Reserve well beyond necessary levels so there is no "oil weapon" and then we stop precisely when the spread between sweet adn sour crude is widening. This policy has been a success - Iran can't seem to find buyers for its stinky, low grade crude. 2) Iranian influence in Iraq has been neutralized and their cards revealed. We let Iran get away with all sorts of shenanigans in Iraq for five years, getting a close look at their tactics and weapons. Then all of a sudden we stomp on Iranian proxies in Iraq and crush them in a matter of months like a bug. 3) Syria might be in the process of taking a bribe - Hezbollah cakewalked into greater influence in Lebanon and Israel and Syria are telling the world they are quietly talking - to walk away from its support of Iran.

All of this is very interesting. We may not see the mini-Cold War being waged against Iran turn hot, but it sure will get warmer. Look for more pressure applied to Iran's refined gasoline vulnerability, more pressure on its financial institutions, and one or two special surprises over the summer of the Cold War variety.

Foreigners Buying Up US is Great News

Two similar stories out today are meant to fit the meme, and framed thusly, that our suffering economy has left us open to pillaging by foreigners. First, some Arab oil sheiks are buying the Chrysler Building, no doubt because our addiction to oil and lust to despoil the earth has lined the pockets of of the global economy's drug dealers, yada yada yada. Second, the Italians are buying the Flatiron Building. Same thing, our debt-addicted, consumerist gorging has destroyed the value of the currency versus those prudent, austere Europeans and on and on.

Don't buy in. First of all, this reminds me of the late 80s and early 90s when we got our knickers all in a twist over the Japanese buying up many of our prestigious landmarks. We were afraid that Japan Inc was going to crush us. (Maybe when it came to cars, we were justified, almost everything else though, not so much.) What happened? Nothing really. Michael Crichton got a best seller out of the whole silliness and our friends in the land of the rising sun never did become our corporate overlords. Granted the Japanese were kinda scary with their manufacturing prowess. But the Italians? Tell you what, send me a list of Italian-made goods that dominate the world market. Better yet, send me that list on your Abu Dhabi-designed and manufactured iPhone.

So what ought to be the take away? The dollar has bottomed.

Less Than Six Months Left to Stick It To Max Baucus!

In my ongoing efforts to give the likes of Max Baucus a lesson in supply-side economics, here is an except from a letter I posted today to the Chairman of a publicly traded company in which I own a decent stake...

"Turning to slightly longer term considerations, the 15% tax rate on dividends established by the Jobs and Growth Tax Relief Reconciliation Act of 2003 will likely sunset at the end of this year barring action from Congress to extend it. In order to return cash to shareholders in the most tax efficient way, we encourage the Board of Directors to consider altering its dividend policy if the current dividend tax rate is indeed allowed to expire. In such a case, we recommend that the Board 1) declare a special dividend equal to 3 times the normal annual be paid before the sunset provisions take effect, 2) cease regular dividend payments in 2009 and beyond, and 3) commit to a share buyback program sufficient to retire at least 1% of the outstanding shares for every year in which regular dividends are not paid, subject to the share price level."

I'll keep readers posted as to whether management is on board.

Background here and here and here.

Monday, June 09, 2008

Was Friday's Jobs Data Misread by Investors?

JP Morgan equity strategist says Friday's jobs data was misread by the market. He argues that the data don't show a falloff in jobs, but a rise in people looking for jobs, notably younglings 16-25. Hmmm. Would that have anything to do with the higher minimum wage? Highly likely, although I know it is hard to believe that bad policymaking out of Washington would hurt average people.

Friday, June 06, 2008

Google, Inc. = A Bunch of Snide Pricks

Today is the anniversary of the D-Day invasion , where allied troops began the liberation of Europe from Nazi domination. It is also the birthday of the great Spanish painter Diego Velazquez. Now, I love Velazquez's work and he is one of my favorites of the grand masters, but I simply can't see Google's choice of his Las Meninas as their banner logo today, to commerorate Velazquez, as anything other than an overt middle finger to the honorable history of America's role during WWII and to this country's generally laudable history of military valor applied in defense of cherished principles. I can just see the glee at Google HQ as they troll around looking specifically for something other than anything to honor the D-Day forces to put on the banner.

Thursday, June 05, 2008

The Violation We Deserve

As to gas prices, George Will says we're getting what we deserve. True indeed. Typical of Will, he adds a nice bookish touch quoting Mencken. Call me de classe, but I think Dr. Phil is more apt.

Wednesday, June 04, 2008

Oldest Bars

I am proud to say I've imbibed at 6 of the 10. Living in NYC helps. Almost as old, and among the best, is this place - not coincidentally where yours truly took the future Mrs. Baseball on our first date. Who says romance is dead.

(HT: Instapundit)

Tuesday, June 03, 2008

Go Long Ford, Short Oil

It is always good to have a few reliable contrary indicators to supplement or confirm your own thoughts on a particular subject. Like the CIA. They don't think Iran is making nuclear weapons, so you can pretty much bet that they are. On the economy, there's Stephen Roach of Morgan Stanley. When he's a bear on the US, go long the US.

Today brings news of GM's massive corporate bet on persistant high gas prices. GM is my contrary indicator for smart management moves. So I am betting on a moderation in gas prices over the next several years. Five years hence, gas prices may not be low, but they could quite likely be merely reasonable. Although it looks bad now for gas prices, there is a logical scenario for lower prices. Even so, logical scenarios hardly ever play out according to script. It will be rogue or unforeseen developments that are likely to carry the day if gas prices do moderate over the next several years. Black (Gold) Swan anyone?

Although, good call on GM's part to kill the Hummer. I defer to no man in my appreciation for the blessed gift that is hydrocarbon technology and they will have to pry my cold dead hands off my SUV's steering wheel, but the Hummer was an atrocity, an assault on the senses, an offense to decorousness. Good riddance.