Thursday, October 02, 2008



My guess is that the house will vote for the bail out bill tomorrow and declare VICTORY! The bill was improved from the prior bill by the increase in FDIC insurance and by the moves by the SEC to lighten up on the mark to market rules. Furthermore, republicans will be delighted to pass the AMT tax cuts. A significant amount of the increased spending has been explained away as renewals of previous laws. Those who are friends of T. Boone and other investors in solar panel and wind mill companies will also be pleased to vote yes. The ones, who voted no the first time, now have cover to declare that they made a horrible bill much better. The markets should reward the positive vote.


Gasoline prices will fall by more than $1 per gallon between now and election day. The wholesale price hit $2.25 today, making the expected retail $2.85. Republican members will reap benefits from now until election day, each time the price of gasoline is reported lower. The average price retail price was $2.33 the day that Nancy Pelosi promised the American people that democrats had a plan that would bring the price down. The moratorium on drilling was in effect during the entire run up to more than $4 per gallon. We will see Nancy's nationally televised promise replayed many times between now and the election, along with her promise not to save the planet and never allow drilling. The pending movement in energy prices is a huge plus for republicans. Democrats will counter that the price is down because the economy is down and republicans will counter that the economy is down because democrats made bank executives criminally liable if their bank did not lend to unqualified borrowers. People who have never heard of the Community Reinvestment Act are going to learn about it between now and the election.


Against very long odds, the Bush administration has guided the nuclear 123 agreement with India through the congress. India is already moving forward rapidly to further develop nuclear power. Negotiations between India and France are well underway. India expects to spend 80 Billion US Dollars on nuclear plants over the next several years. Now that the bill has passed, US firms such as the GE-HIT partnership will be allowed to bid on Indian projects.

In the mean time, in response to Russia's invasion of Georgia, Australia is backing away from its plan to sell $1 Billion of uranium to Russia annually. Turkey is backing away from its plan to have Russia build and supply its next plant. The USA pulled the Russia 123 Treaty from Congressional consideration about a month ago. Russia is paying a significant price for its invasion of a sovereign country.

The deal Russia had with Australia highlights the way Russia is trying to corner the energy markets. Russia is willing to pay a premium price for ore, even if it means leaving its own ore in the ground, so that it can be the biggest seller of refined uranium on the planet. The US was willing to cut out the competition of the "little guys" provided Russia was willing to help cut supplies off from Iran. It seems unfair to make a uranium supply deal with India, which has not signed the NPT, while penalizing Iran, but Iran has been open about its willingness to use nuclear bombs on Israel. India has acquired nuclear bombs for defensive purposes. The new rules will make it much more difficult and costly for other nations to develop nuclear bombs.

The passage of the 123 Agreement with India was important, partly because it has made it possible for the US to compete with Russia for another major nuclear consumers business. Russia is once again being left out in the cold; but, only because it is willing to play by "iron rules" rather than cooperating with its neighbors.

It is still amazing how infrequently we hear about nuclear power as being the best alternative to dirty coal. We continue to spew out tons of carcinogens while clean nuclear power plants turn out cheap electricity. The amount of nuclear power generated is going to grow significantly over the next 5 years and then it will grow at a rapid pace for the next 10, 20 or more years. Politicians on both the left and the right, who are for nuclear power, tend to talk about clean alternatives while avoiding using the word nuclear. Obama professes to be for nuclear power, but he adds his tag line in regard to the safe disposition of waste. He is for off shore drilling provided the tax revenues go to the "alternative fuels slush fund" instead of the states. Of course the states will not allow drilling unless they share in the revenues. Neither is Obama willing to acknowledge that the waste is being stored safely or that new technology has turned the waste into very valuable fuel. McCain is one of the few politicians who engages in "straight talk" and declares his support for nuclear power.

I am anxious to know when the first "nuclear battery" will be delivered. It will probably take a few years to make but the developer already has orders in hand. These nuclear batteries can be safely hauled on the back of a flat bed truck and they require no upkeep or maintenance during 7 to 10 years of operating life. Their use would lower the cost of heating tar sand oil by 70%!

Russia would very much like to be involved in this field of commerce. I will not be surprised if Russia agrees to withdraw from Georgia to get back into the good graces of most of the rest of the world. Russia can probably bully Ukraine, Kazakhstan, a few other former Soviet states and a few renegades such as Venezuela, Nicaragua and Iran into buying uranium from Russia, but Russia must be a good neighbor if it wants to do business with the rest of the world. VICTORY will come if the processes championed by Bush are allowed to play out over then next year or two.