The Final Number One?

Interesting headline story:

The Washington Post leads with an interview with CIA Director Michael Hayden, who provided a "strikingly upbeat assessment" on the fight against al-Qaida. Even though the CIA had previously warned that the Iraq war had provided an opportunity for al-Qaida to grow, Hayden now says great progress has been made, and al-Qaida is struggling to survive in Iraq and Saudi Arabia.

How is it possible that a decentralized group of people, driven by ideology, fueled by the social, political and economic unrest that is the Middle East be "struggling to survive"? These people can't seem to get out of the cold war era when it was nation against nation. Al-Qaida on it's best day is barely and "organization" much less one that's on the run.

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Nirvana

Did you know that we live in Nirvana? We have solved so many of our problems in the U.S. that only the most minor infractions require our attention. That's the only explanation I can come up with for this little gem:

The LAT reports that a small brewery in Weed, Calif., has come under the sights of the federal government because it decided to print the words Try Legal Weed on the bottle caps of Weed Ales. The U.S. Treasury Department says the marketing ploy can't be used because it alludes to using marijuana, and it's "false and misleading" because a buyer could be confused about what's inside the bottle. "They sell Bud. We sell Weed," the brewery's owner said. "What's the difference?"

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Who To Believe?

This was an interesting announcement yesterday:

Dow Chemicals said it is being forced to carry out an across-the-board price hike due to increasing energy costs. The move is particularly significant because Dow Chemicals is one of the world's largest chemical manufacturers, and its products are used to make a wide variety of consumer goods. Dow's CEO issued a statement where he squarely put the blame on Washington for failing to deal with "rising energy costs and, as a result, the country now faces a true energy crisis, one that is causing serious harm."

Let's add it up. Govument says inflation is at a 4% rate. Dow says they need to raise prices 20%. Who do you believe? Unfortunately (and as I wrote about the other day), the bond market continues to think that Dow is right. Interest rates are rising, which will be very bad news for the housing bidness.

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Ah huh

File this under the "I'll believe it when I see it" file.

Rep. Debbie Wasserman Schultz (D-Fla.) said that the House Judiciary Committee would be willing to arrest Karl Rove if the former White House official doesn't testify about his role in the firing of nine U.S. attorneys in 2006.

Wasserman Schultz, in an interview on MSNBC Tuesday, echoed the demand of House Judiciary Committee Chairman John Conyers (D-Mich.) that Rove would not be allowed to invoke executive privilege to avoid testifying. Rove could not invoke the privilege since he said he did not have conversations with the president about the attorneys' firing, Wasserman Schultz said.

Asked by MSNBC host Dan Abrams if the committee would go far as having Rove arrested, Wasserman said it would.

Debbie? I promise you that it will be necessary.

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Interest-ing

I keep reading in various obscure places stories about the bond market being "flooded" with new government bonds. It seems that U.S. government debt is not slowing down at all.

Why does this matter?

Over the past 8 years or so, there has been a whole lot of cash sloshing around in the world that gladly bought U.S. debt. But what happens if that stops? It's simple supply and demand. If you have too much debt/too many bonds and not enough buyers, bond "prices" go down until someone will buy them.

Why do you care?

Because when bond prices fall to encourage people to buy them, yields (read: interest rates) go up inversely. No matter what the Fed does. And recently that has been happening. So far the increase has been slight, not enough to get the media's attention. But if it keeps up, it may be the beginning of inflation fears showing up as significantly higher interest rates.

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Why High?

Oil prices are sure all over the media.

This is the best explanation for why oil prices are skyrocketing. It's very technical, but it's all there. Here is the conclusion:

We are now in the early stages of a full blown energy crisis that was predictable if not wholly avoidable. Politicians are awaking to the crisis now that escalating energy costs make its existence plain to see. It is highly unlikely that politicians will now grasp the gravity of the situation that the OECD and rest of the world faces and the responses will likely be ineffectual and too little too late.

The principal reason for current high oil price is the proximity of a peak in global oil production. Politicians must understand this and then grasp that natural gas and coal supplies will follow oil down by mid century. Reducing taxes on energy consumption right now is the wrong thing to do. Taxation structure needs to be adjusted to oblige energy producing companies to re-invest wind fall profits in alternative energy sources on a truly massive scale.

Energy efficiency should be the guiding beacon of all policy decisions and this must apply equally to energy production and energy consumption.

I completely agree. Well, not completely. I think the fundamentals on oil are going to dictate continuing higher prices until alternative energies reduce demand.

But.

Nothing goes straight up (weekly oil prices):


And that's what oil is doing right now. A portion of the recent run-up is speculation imo. This mini-bubble will eventually burst and oil will come "down". I put that in quotes because I don't think we'll ever see sub-$3.00 per gallon gasoline again. What we will see is continuing higher highs, and higher lows in prices until everyone gets it through their thick skulls (it's taken over 30 years so far) that cheap oil is over.

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SCOTUS With A Conscience?

So, everyone's all abuzz with the Supreme Court decisions yesterday:

The New York Times and Washington Post lead with the Supreme Court ruling that federal civil rights laws that protect workers against discrimination also cover those who faced retaliation for complaining about bias in the workplace. The Los Angeles Times devotes its top nonlocal spot to the twin decisions that said workers, including federal employees, are protected from retaliation, even if the federal laws don't explicitly say so. The majority in the 7-2 and 6-3 decisions emphasized that the justices relied on Supreme Court precedent that had previously found an implied right to sue for retaliation. The decisions don't really change the broad outlines of employment law, but they were somewhat surprising coming from a Supreme Court that had been keeping itself busy by issuing a series of pro-business rulings and limiting the rights of workers.

Aside from the decision itself, which appears to be blatant common sense on the face, the buzz is that it wasn't a 5-4 decision or worse. Gee, I wonder who the dissenters were?

Roberts sided with the majority to protect workers. Yes, this is decidedly different from his past opinions. But folks, don't bet the farm on this being any kind of harbinger of future decisions. Like a stopped watch that is right twice a day, even a pro-business conservative will throw the poor working schmucks a bone once in awhile.

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Rats

There have been any number of rats that have served a full stint in the Bush administration and then written a "tell all" book blasting said administration. Scotty boy McClelland is the latest. I'm not going to honor the SOB with any "revelations" that are hot in the news media and blogosphere just now. From what I've seen, it's nothing that anyone who pays any attention doesn't already know.

To be honest, I'm sick of these guys. They are even a bit lower than Rove or Bush. They've served as loyal servants in the most corrupt and illegally driven administration evah, and then they write the book. At least someone like Rove, as nutso as he may be, has the courage of his convictions and is consistently nutso. It's like these book is meant as a cleansing exercise to show the village that they really do have a conscience .... or something like that (think $$$$$). So Scotty, I hope you don't sell any books and you just disappear into obscurity where you and your backbone belong.

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Village Idiots

Go read Digby.

I normally really like Rich Hertzberg. But I gotta agree with digby on this one.

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Uncork It

But what if there's wine in it?

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Roll Em' Johnny

Has John McCain pulled a Bob Bennett?

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Yeah. Real Funny

What do you expect from Faux?

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QOTD

"This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks."

- Thomas Friedman

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Oil Prices

I'm a regular reader of John Mauldin and his investing insights. Today's newsletter was on oil prices, asking if we are in a bubble or if supply is being outstripped by demand. Go read the whole thing for some really good insights on the subject.

The short version of his article is that oil is in a speculative bubble right now. He makes a good case for a significant drop in oil prices over the next six months. He also makes the case (and has in the past) that the longer term trend in oil prices will remain up.

I happen to totally agree with Mauldin. While I'm perfectly happy to see oil prices rise (it seems to be the only way to get folks to wake up!), I think the recent parabolic rises are unsustainable and not supported by the fundamentals. Some pundits are suggesting oil will go to $150 or $200 per barrel this year. And maybe it will. But at some point the speculation portion of the recent runup in prices will pop and oil will fall precipitously. However, when it does fall like a rock, I feel it will "hit bottom" at around $100 per barrel, still significantly higher than the previous bottom. But as usual, when gasoline falls to around $3.00 to $3.50 per gallon, consumers will breathe a sigh of relief at the "lower prices" and the adaptation process will continue.

The fact remains that oil prices are on a long term trend line up, and will continue so until alternative energy sources are more widely utilized.

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Moving Beyond Toast

Hillary is now past being toast and is quickly approaching pure carbon:


I guess there's been a lot of buzz that Hillary would want the second slot betting that Obama would get knocked off during his run/Presidency. While I think I understand what she was trying to say, it could be interpreted as in really bad taste. Such is the life of a politician. It's the reason I work for politicians rather than being one.

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Getting Through

Is it possible, maybe just a little itsy bitsy possible that folks are finally getting the picture?

WASHINGTON -- Americans drove less in March 2008, continuing a trend that began last November, according to estimates released today from the Federal Highway Administration.

“That Americans are driving less underscores the challenges facing the Highway Trust Fund and its reliance on the federal gasoline excise tax,” said Acting Federal Highway Administrator Jim Ray.

The FHWA’s “Traffic Volume Trends” report, produced monthly since 1942, shows that estimated vehicle miles traveled (VMT) on all U.S. public roads for March 2008 fell 4.3 percent as compared with March 2007 travel. This is the first time estimated March travel on public roads fell since 1979. At 11 billion miles less in March 2008 than in the previous March, this is the sharpest yearly drop for any month in FHWA history.

Though February 2008 showed a modest 1 billion mile increase over February 2007, cumulative VMT has fallen by 17.3 billion miles since November 2006. Total VMT in the United States for 2006, the most recent year for which such data are available, topped 3 trillion miles.

Additionally, the U.S. Department of Transportation estimated that greenhouse gas emissions fell by an estimated 9 million metric tons for the first quarter of 2008.

This proves that a gasoline tax would have worked. Had the U.S. government instituted an progressively painful gas tax back in 1975, we could have accomplished the needed result much sooner and with far less pain to working people.

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A Billion Here, A Billion There ....

More proof that U.S. taxpayer dollars were pocketed by Iraqi's. They're probably padding their Swiss accounts against a rainy day.

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A Chip Off The Ol' Block

Kathy Hilton on her daughter Paris:

Kathy Hilton doesn't care if you think she's a bad mother. In an interview promoting her latest venture, a beauty line, Paris' mommy dearest spoke about the dark days of her daughter's jail sentence. Mrs. Hilton was horrified by her daughter's jail term, she said, and felt that the punishment was excessive.

During Paris' time in the slammer, Mrs. Hilton added, "People were even throwing excrement at the window of her cell." Paris was also subjected to wearing a scratchy, unflattering jumpsuit, which Mrs. Hilton found upon her release. "When I felt how rough it was—that thing was like sandpaper—I threw it away," she said tearfully. But Hilton says her kid's incarceration did have an upside: "I lost so much weight."

Damned those unfashionable scratchy prison uniforms! Perhaps they could have called in Yves St. Laurent to design something more appropriate?

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Fatwa Explained

The prominent cleric al-Sistani in Iraq is reappearing in the news. Yesterday word leaked that he is privately issuing fatwa's against the U.S. occupation.

Juan Cole provides possible explanations for why this is happening, and why it's happening now. The short version is that the longer the U.S. stays and the more successful the anti-insurgency, the more likely Sunni's will regain power (that's what happen when the British were in Iraq in the 1920's). Al-Sistani does is also Iranian born and fears increased U.S. sabre rattling against Iran. If al-Sistani decides to actively and openly oppose the occupation, things could heat up considerably.

Added: Here's another great analysis of the situation. It's not good for the U.S.

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Factoid

Did you know that the U.S. military consumes 1.5% of all oil used by the U.S.?

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