The market went up last week on little interesting news. However, margin debt - the amount of money borrowed to play the market - is approaching an all-time high and is currently somewhere slightly above $380 billion. This means the market is especially sensitive to any correction, as if the market drops by more than a couple percent people operating on borrowed money are going to have to pull out quick. The economy continues to show signs of fraying around the edges.
Italy has no government - no one was able to form one after the last hung election. But their parliament has managed to convince President Napolitano to stay on for another seven year term. The president in Italy is a bit of a ceremonial role, but he calls elections and can help moderate when people are forming governments, so this is a bit of good news, I suppose: Italy retains a small bit of adult supervision.
How to be a successful terrorist: We learned something from the Boston marathon bombers. It's a bit "popular" among terrorists to bite off more than they can chew, a richer target that requires more complicated logistics to hit. Such people reach out over the internet for help and wind up getting caught. For a couple of years Al Queda has been promoting a different soft of terrorist attack - an Al Queda operative wrote: "To bring down America we do not need to strike big. In such an environment of security phobia that is sweeping America, it is more feasible to stage smaller attacks that involve fewer players and less time to launch and thus we may circumvent the security barriers America has worked so hard to erect. This strategy of attacking the enemy with smaller, but more frequent operations is what some may refer to the strategy of a thousand cuts. The aim is to bleed the enemy to death." Al Queda counsels lone wolf jihadists to follow a three-pronged target selection process. They should choose a target with which they are well acquainted, a target that is feasible to hit and a target that, when struck, will have a major impact. The Tsarnaev brothers did all three in Boston. Targeting something huge and spectacular will result in a search for help that will get you caught. Instead jihadist ideologues are urged to conduct simple attacks using readily available items called the "build a bomb in the kitchen of your mom" approach.
On Tuesday retired Israeli Maj. Gen. Amos Yadlin said Iran has essentially crossed the "red line" set by Israel for its nuclear activity. On September 27 the Israeli Prime Minister told the UN General Assembly that Iran had almost produced enough 20% - enriched uranium (529 lbs) for a single nuclear bomb, which Israel considers unacceptable (i.e. a red line). The Israelis believe the last chance to strike Iran's nuclear facilities is within a very few months. After that, we'll all just have to learn to live with a nuclear Iran.
How much debt can the US sustain? Liberal economists (read: Paul Krugman & friends) assure us that our best path forward is to continue to build up more debt until the economy recovers. A growing fraction of this debt is being used for transfer payments, meaning our children will be paying off debt to support today's welfare recipients. Implicit in their argument is that the economy will come back - we will return to robust growth, and the growth will mean the debt gets easier and easier to pay off. My readers know I'm skeptical that the US economy will return to robust growth any time in the next few decades. Meanwhile federal debt continues to soar ever higher into new peacetime records. Conservatives think this is insanity. No one actually knows for sure, we're conducting a multi-trillion dollar experiment with our children's money. In any case, it's clear that taxes need to go up a bit, it's clear to me and other conservatives that spending needs to be reined in, and it's clear to me and other conservatives that we need a plan to get to and beyond a balanced budget, and start paying off some of this debt. It's also clear that conservatives are no longer the driving political force in this country, and it's difficult to see when they might return to that position. In the meantime, like many conservatives, I'm unwilling to discuss tax increases for just so long as the left is unwilling to discuss transfer payment cuts. And our children's economic future continues to degrade while we're in this stalemate.
Global Warming: I'm not a big fan of this "theory," but it's worth paying a bit of attention to these people. They claim that a 2° rise is all the Earth can handle. They claim that 565 gigatons of CO2 will put us there. You can calculate the CO2 that would be produced by burning all the existing proven oil reserves: 2,800 gigatons. So the Global Warming crowd would like us to leave 80% of our proven oil reserves in the ground. Try to imagine how the various middle east governments feel about that idea: those governments live on pumping up oil and paying off their people to remain sheep. Turn off the oil, and the oil wealth / nepotic / kleptocrat classes turn from beneficent rulers to targets. Heck, in this country try to imagine Exxon saying one day soon, "Sorry, folks, we're at the end of the responsible use of oil, so we're shutting the doors today. So long and thanks for all the fish."
Who's the richest man alive? Carlos Slim (Mexico, cell phones), $60B? Bill Gates (Microsoft) $60B? Warren Buffet (US investor), $55B? Perhaps. But it's possible the richest man in the world has never been listed in Forbes: Vladimir Putin, president of Russia, income $173,000 per year. Also secretly owns perhaps as much as a third of Gazprom, the Russian equivalent of Exxon. And gets kickbacks in the form of stocks and money from other Russian companies. Total net worth estimated in the $50b to $70b range. And he made it all in the last 25 years or so. Not bad for an ex cold war KGB spy.