Wednesday, October 15, 2008


It is not time to wilt in despair. Neither is it time to expect miracles. I do not think Obama qualifies to be President but he is likely to be elected. The good and bad news is that Obama is the classic puppet on the string. The "Chicago Political Mob" is responsible for his past elections, his past policies and his future policies. His administration will not be vastly different from a McCain Presidency. My major concern being the potential changes in the war on terror.

Having said the above, there is still a chance a rabbit will be pulled out of the Iranian hat. Now that North Korea is no longer on the state sponsor of terror list, the country is already being courted by nuclear energy suppliers. India, which came off the nuclear sanction list last week, is rapidly developing plans to grow its nuclear power generation by 700%. Iran is jealous.

There are calls from within Iran, begging the 5+1 to come back to the bargaining table. The Iranian leadership bluffed one time too many. They were offered all they could say grace over to make a deal but they held out for more. A major concession from Iran is needed to make the deal worthwhile to the west.

In the mean time, Venezuela and Iran are two of the nations being hit the hardest by the fall in oil prices. Venezuela, in particular, got used to living off high priced oil. It spent its new found money and then some. Stories abound that both Venezuela and Iran need $95 crude to balance their budgets. Today, crude has dropped to $75 and the slow down in China has just begun.

One of the things I do not understand is the huge jump in bond rates over the past few days. The unwinding of the Yen carry trade always gets the blame for big up moves, but it looks like the flood of money into the banking system might be more than enough to re-flate the system. Perhaps this is no big deal as it took until 1993 for bond rates to hit bottom after the 1990-91 real estate recession.

In recent days, there has been push back from the liberal blogging community. The negative side of the nuclear power story has been told again and again. All the while, country after country is gearing up to build nuclear power. Economics wins. The capital cost per kilowatt hour to build windmills is more than double and the windmills run reliably only a third of the time. The Greenies can talk about windmills until they are green in the face but the cost of nuclear power keeps going down relative to the cost of wind energy. The United Arab Emirates is the latest of the oil rich middle eastern countries to go nuclear.

Iran wants desperately to be a leader. It's current policy, which has not changed much in 30 years, is taking the country in the wrong direction. I am sure the Bush administration has said the best deal is on the table now. Does Iran want to depend on favorable terms from an Obama administration that will continue to fight nuclear power in the US?