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Saturday, August 12, 2006


Dog Days Musings

Supposedly, a cease fire takes effect Monday - we'll see if it does, and more to the point, whether it takes. This has not been such an easy go for the Israeli's. It was a lot easier to clobber Arab national armies than guerrila terrorists. However, I suspect they have done much more damage to Hezbollah than observers have said, and that's one reason the bad guys are agreeing to an intermission. They have also used up about a third of their rockets and are hoping to replenish that supply from Iran. My guess is that hostilities might resume when Israel's spies see arms shipments resume from Syria and Iran.

It might have been better to keep going on the campaign to eliminate Hezollah, but it could be the Israeli's can also use the time to rethink tactics and get some better intelligence about locations of rocket launching sites and guerrila defenses.

I guess you could say that my view is that this cease fire will be quite temporary.

The plot to disrupt air travel by the British Islamo-fascists and their Pakistani and Al Queda friends was itself disrupted, but if the secondary goal of these creatures is terror, they accomplished that to the extent that they have rendered air travel even less convenient then it already was. By the way, the objection by American Muslim groups to the above term, used by President Bush, is nothing more than a protest against accuracy. We really did not need yet another demonstration by western Islamists of their equivocation regarding their terrorist co-religionists.

Also demonstrating a tin political ear are those Democrat leaders lining up with Lamont following his primary win over Senator Lieberman, perhaps the most responsible member of his party. Democrats seem to have a desire to follow each other over the cliff. This November should represent the ineptitude sweepstakes as both parties fall all over themselves, seemingly trying to lose. Normally, with Lieberman staying in the race as an independent, splitting the Dems vote, one would think that the GOP might pick up a seat but Connecticut has become so blue, and the GOP entry is so weak, that is a long shot. The prediction here is that Lieberman bucks the party and retains his seat. Then the intriguing question is which caucus he lines up with, D's or R's. The smart move would be to line up with whoever the majority is and see if he can get a committee chairmanship.

The Fed paused, and you would think that this is big news as Bernanke was criticised for giving up to inflation, or it was too late, or whatever. In reality, the pause is a neutral event. The Fed has not loosened, it just let up on the tightening. The problem continues to be that the Fed's interest rate actions have a delayed impact, and the economic indicators they are studying are lagging indicators. As this blog stated long ago, commodity prices forecast inevitable inflation quite a while ago, and that is what we are seeing in the numbers. The impact of Fed tightening is starting to impact the economy, and we will see moderating inflation eventually. Basically, the Fed will continue to overshoot, lurching one way and then another as long as the M/O is to wet their collective finger and stick it in the air, rather than take their cue from commodity futures.

It's really a problem to be so dependent on the great gut instincts and analytical abilities of Greenspan, et al. It would be so much better to have mechanical approaches in place to maintain steady commodity pricing. Of course, it would help even more if congress and the administration could restrain their wasteful spending instincts so there would not be so much debt for the Fed to monetize. To paraphrae the Harptones, "That is my dream."

On August 2, I bought 100 shares of PWI at 31.46, a new position. On August 7th, I added 100 shares of SHLM at 21.63. Then, yesterday, I added 200 shares to my XLNX position at the bargain price of 19.80.

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