Global Cooling

Though promises of a gasoline tax “holiday” may sound pleasing to the ear of likely voters this summer, it is the permanent energy policies of the three candidates that will have long term affects on prices at the pump.  As this Wall Street Journal article points out, any of our would be presidents favor some form of green legislation, or windfall profits tax on oil companies, or both, that could result in higher fuel prices to consumers.
 

It is naïve to believe in the free lunch.  A cut in the federal gasoline tax, without a corresponding cut in spending, will lead to trouble.  Carbon caps on energy producers will lead to higher costs of production and higher fuel prices.  Windfall profit taxes directed at energy companies will result in increased corporate expense and will, of course, be passed on to consumers.  Raising taxes raises costs; period.  Somebody is going to pay.

For the record, Hillary’s proposal is the most ridiculous; institute a windfall profits tax on energy companies to pay for the gas tax holiday.  The result: energy companies raise prices to offset the new tax, consumers experience no discount at the pump, the Treasury is out the gas tax revenue.    

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The BBC reports today that the government of Hamid Karzai, the well-traveled Afghan president who has been held out to the west as sharp-dressed ideal of what a Muslim leader can be, has issued a ban on televised soap operas of Indian origin.  The authorities, seemingly, have determined that the broadcasts are in conflict with the country’s Islamic values.  

According to the Washington Post, which hosts a website featuring photos of our fallen military personnel, to date we have lost 486 soldiers in Operation Enduring Freedom, the Afghan campaign.  While that number pales in comparison to the 4,021 confirmed deaths in the Iraqi theater, those 486 were, and are, sons and daughters, husbands and wives, brothers and sisters.  

We have been in Afghanistan for over six years now and, based on the BBC report, the situation has not progressed significantly.  Yes, the Taliban’s power base has been greatly diminished.  Opium production, though, is at all time highs.  Osama is still out there, somewhere.  And now, the Afghan government is telling the people what kinds of soap operas they can watch.  This doesn’t sound like a country heading towards liberal democracy.   

What happened to “shock and awe?”  What is the end game here?  At a great cost of money, and a huge price in American lives, it looks as if, ultimately, we will replace the Taliban, and Saddam, with similar tyrants of a different name. 

An article previously published here at Global Cooling is currently featured at SeekingAlpha.com, an outstanding financial portal.  Click over to read this article, as well as many other well written articles, along with financial information, stock quotes and etc.

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Financial markets are, arguably, our greatest source of psychological experimentation.  Through careful observation, and even not so careful, social scientists should be able to glean information from market participants that could otherwise take years of well constructed clinical testing.  The follies of group-think were famously pointed out by Charles Mackay in his still relevant Extraordinary Popular Delusions and the Madness of Crowds” first published in 1841.  Though the research is out there, we have made little progress towards avoiding the same pitfalls that bring markets to their knees over and over again.

As recently as ten days ago most market pundits, whether on CNBC or Bloomberg or in print, were talking about a “bottom” in the current market cycle.  For a solid week or more that is all we heard; everyone was looking for a bottom.  As it turns out, and as should have been obvious based on the widespread professional consensus that we were at or near the lows in equity indices, the recent strength that gave hope to so many was nothing more than a dead cat bounce.  We now find ourselves right back where we were a month ago, the dollar making fresh lows, the S&P and Dow weak, commodities making new highs, and the Fed on the clock with some very big decisions to make. 

The lesson to be learned here applies to almost any circumstance, namely, crowds do a very poor job of decision making.  Even experienced, well regarded experts fall into the trap of group psychology and find themselves convinced that the crowd is in the know.  Whether it be finance, politics, civic organizations or church committees, the group rarely proceeds in the best way. Of course, there are those rare occasions when everyone is right.  When your money is involved, though, a healthy dose of cynicism is always a good idea, and when you find your ideas at odds with what all of the pro’s are thinking, don’t be afraid to trust yourself. 

And as a footnote, keep in mind that it is never necessary to buy the bottom and sell the top.  Rather than chase the volatile tail ends of movements, look for the big, middle parts of trends.  There is a top ten percent and a bottom ten percent to every large move, endeavor to reap the eighty percent in between. 

As previously pointed out in these pages, “Hillary Clinton” is running for president, not “Bill Clinton.”  Democratic voters should not fall prey to the misguided assumption that a vote for Hillary is a vote for a revertion to the Clinton years.  Hillary, as it is hardly necessary to point out, has her own mind and it is hard to imagine any scenario in which she will act as a puppet/mouthpiece for Bill’s ideas and guidance, or for that matter, the ideas and guidance of anyone else.  

As Charles Babington of the Associated Press reports in this article, Hillary and Bill can’t even agree on something as basic as a Free Trade Agreement with Colombia.  Of course, while Hillary says she opposes such arrangements now, she was a strong supporter of NAFTA when her husband was in office and hoping to have it passed. 

Hillary wants to be president, period.  She wants to be the first woman president.  She wants to be more than a senator and former first lady.  Hillary wants to move out of her husband’s large shadow.  She cares little about what the people want or what is good for the nation.  All one has to do is listen.

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In this age of war and high oil prices, Haliburton and ExxonMobil, the Republican party has gained, deservedly so, a reputation for being the party of cronyism.  The image is of a collection of WASP elites making decisions that affect the world, and their own financial fortunes, with little regard for the citizen.  One can almost see the spats and top-hats.

Enter the Democratic party, the party of the people, the party that is working for the good of the common man, and woman, and child, and union member, and immigrant, and gay and lesbian, and environmentalist, and anyone else save for the white upper middle-class male, and industrialists and billionaires, unless said billionaires are in the entertainmnet or technology businesses.  Based on this story from the Associated Press, it is looking more and more like the leaders of the Democratic party should take hold of a Webster’s Dictionary and look up the definition of the word “d”emocratic.  They might be quite surprised at what they read.  Far from listening to the voices of the “people” who this party claims to champion, the Democrats are relying on a group of elites, and even a few “super-elites,” to choose their presidential candidate.

The lesson here is that we, as anonymous citizen voters, have far less voice in our government than we are lead to believe and we are not represented by our elected officials.  Both national parties are parties of a select group of elites mostly devoid of the people.  Both parties will go to extreme measures to place their chosen candidates in the highest positions possible.  Both parties hold little regard for the true will of the masses past the point of popularity polls. 

In invoking the super-delegate system to select their candidate this year, the Democrats have sacrificed their legitimacy in questioning future election or voting processes, even if such should be decided by the Supreme Court.