Straight Talk about Value

[For an update on global warming, click here. For brief comment on the passing of the baton at Justice, click here. For an even briefer note on Prince Ea, click here.]

Introduction: Mohamed El-Erian
A Bond Guy
Risk-Adjusted P/E: a Universal Measure of Value?
The Wild Card of Risk
Conclusion
Coda: the Wild Card of Climate Change
Update on Global Warming (4/28/15)

Introduction: Mohamed El-Erian

Sometimes inspiration springs from the oddest sources. Take Mohamed El-Erian, for example. I read all the news about him that I come across. Why? Because he’s a Muslim with an obviously Islamic (Egyptian) name. He’s also a generally recognized financial and business genius.

In our Yankee society, Christian Taliban have far more influence today than is healthy. So being a Muslim and a being hailed as a genius is a rare combination here, to put it mildly. El-Erian is probably twice as smart as even conventional wisdom gives him credit for being.

Not only that. Like our President, who also has had to drag around a racial ball and chain, El-Erian has a world-class temperament. At Pimco, he was the adult in the room, while his one-time partner and now nemesis Bill Gross played the tantrum-throwing child.

Remember the character “Marvin” from Doug Adams’ Hitchhikers’ Guide to the Galaxy? He was a robot with a planet-sized brain, who had to perform demeaning, mundane tasks like opening doors for people. El-Erian had to keep Pimco highly profitable, with the aid of his Oxford economics PhD and his even temperament, while working with Gross, who has a planet-sized ego and apparently a somewhat smaller brain.

Recently, Gross went to Janus Capital Group, where his first acts were to remind the press and public how smart he is. El-Erian, who earned $230 million in his last year at Pimco, is now spending time catching up with his young daughter. It’s hard not to like and admire the guy: he has his priorities straight.

A Bond Guy

So a recent interview with El-Erian in the Orange County Register caught my eye. It especially caught my eye when it reported that he has nearly all his money in cash because he thinks “most asset prices have been pushed by central banks to very elevated levels.”

Wow! Here’s one of the smartest financial geniuses in our nation, if not the world. And he’s got most of his money in cash because he thinks assets are overvalued. Should I sell out, buy gold bars, and put them under my mattress? That might hurt my back while I try to sleep. But if El-Erian is right, maybe I should.

Then I remembered. El-Erian is a bond guy.

Let me confess. I never understood the attraction of bonds. The kind of bonds that El-Erian dealt with are reputed to be very stable, very predictable, and very dull. He didn’t do much with so-called “junk bonds,” i.e., the high-yield, speculative stuff. The bonds he made his fortune on are binding promises of solid companies and sovereign nations to pay back money they borrowed, on a regular schedule and at reasonable (or at least market-based) interest rates.

Take a bond-issuing business company, for example. It doesn’t matter whether the company discovers a cure for cancer or nuclear fusion in a bottle. If you buy its bonds, all you’ll get is about 2% to 3% per year, at most today, or whatever the coupon rate is then. All you’re betting is that the company (or the sovereign nation or its agency) will still be around and able to pay back its debt, along with interest at the rate it promised.

What a bond issuer does in its business or governing—even if spectacular—doesn’t and needn’t concern you. Germany, for example, is way ahead of the rest of the world in our inevitable energy transition, which Germans call Energiewende. I would love to be able to bet on that: betting against German engineering is never a good idea! But none of these facts affects the terms or value of Germany’s bonds, although its strong government solvency and export surplus do.

Now bonds, at least long-term bonds, also have a peculiar characteristic. When general interest rates go down, their value goes up, because they promise larger returns than prevailing interest rates allow. Conversely, when general interest rates go up, long-term bond values fall.

In other words, bonds are not quite so dull as you might have thought from their general nature as glorified promissory notes. When prevailing interest rates change radically, you can gain or lose some serious money just on dull, pedestrian bonds.

That, of course, is precisely what made El-Erian and Pimco rich and famous in the aftermath of the Crash of 2008. El-Erian foresaw that central banks, in order to bail out the too-big-too-fail bankers who had caused the Crash, would have to peg interest rates low and keep them there for, in Fed-speak, an extended period of time. That meant that good ol’ dull, pedestrian long-term bonds (at higher interest rates) would rise in value and stay there for a while. And as central banks worldwide pegged interest rates close to zero and kept them there, the value of those pre-existing bonds would skyrocket—a rare event in the sleepy, stable, musty bond world.

So while I knew the abstract principle (bonds go up when rates go down), it never occurred to me that it would work so spectacularly as to make sleepy holders of sleepy bonds rich. I had saved my own retirement by selling out in 2007 on my Diogenes Test. I had noticed, quite painfully for me, that virtually no one in business or politics had been telling the truth, at least publicly. And I made some money by buying equities on the way back up, after the Crash. But I missed the whole four-year-plus bond rally.

Not only didn’t El-Erian miss it. He owned it. As a superb quantitative economist and bond expert, he knew much more than the general principle I knew. He knew in detail how much the terms (durations) of bonds would affect their value. And so he and Pimco cleaned up, cashing in on an absolutely unprecedented and (we hope) never-to-be-repeated interest-rate plunge in the aftermath of the Crash. Geezers who invested in Pimco’s products did correspondingly well.

Today, El-Erian is wisely counting and conserving his money and raising his daughter. Gross is beating his chest and telling everyone who will listen that his own brains, and not a unique financial environment, did it all. It’s not hard to see who is the more realistic person, let alone the humbler one. Since Francis became Pope, the value of humility has risen sharply.

Risk-adjusted P/E: a Universal Measure of Value?

But the big question remains. Is El-Erian right that assets now are grossly overvalued (pun intended)? And, if so, how can we tell? More to the point, did El-Erian mean to include equities when he said “assets”?

In order to answer that question, we have to have a metric of value that works for both stocks and bonds. I propose a three-variable measure, depending on price, earnings and risk.

The first two variables are straightforward and pedestrian. They are the basis of the price/earnings ratio, a universal measure of the value of equities. We’ll have to adjust this measure for risk and define what “risk” means. But let’s do that later.

You take the price of an asset and divide it by its annual earnings, in the same currency units as its price. The result is a dimensionless number describing the ability of your asset to earn money. You will find this number computed and listed for virtually every stock. For example, on Google Finance quotes, it appears at the bottom of the first column of statistics, just to the right of the big price.

For dividend-paying stocks, the P/E ratio helps determine the dividend rate or payout ratio (which Google Finance calls “Div/yield"). But it’s not the same because no company pays out all it makes to its shareholders. Companies like Apple hoard a lot of dough, at least until their shareholders get restless and demand payouts, in the form of dividends or stock buybacks.

There’s nothing unusual or difficult about a P/E ratio. It’s simple arithmetic. A slight nuance intrudes in deciding whether the period for calculating earnings is leading or trailing and for how long. There’s also something called the “Shiller P/E ratio,” which is based on a ten-year moving but trailing average of earnings. It’s supposed to be both more stable and reliable than single-year-based P/Es and a bit high on an historical basis right now. But otherwise the P/E ratio is a universal and pedestrian way of measuring the value of equities.

So here’s the rub. Right now, if we take the unusual step of applying the same P/E metric to bonds, the result is really, really high. Consider, for example, a short-term (six-month) Treasury Bill. As of April 6, it was earning 0.10%. So its P/E ratio, which is just the reciprocal of its earnings rate, was 1/0.001 = 1,000.

Just how high is that compared to P/Es for equities? Well, before market opening on April 22, Apple’s P/E was 17.10. Google’s was 26.34. Exxon Mobil’s was 11.45. First Solar’s was 16.15. Pretty far below 1,000, huh?

So if you compare just P/Es, you would have to conclude that the sixth-month T-Bill is vastly overvalued, at least as compared to Apple’s, Google’s, Exxon-Mobil’s or First Solar’s stock. Maybe El-Erian’s reference to “assets” was intended to cover only the bonds that he made his fortune on, and not stock.

I know, I know. It’s unfair to compare returns on bonds with P/E ratios because you never get all of a business company’s earnings back as dividends. Some companies, including Google, pay no dividends at all. Some, like Apple, pay small dividends—and only under shareholder duress—while continuing to hoard huge sums of cash.

But corporate earnings are real money, too. They don’t come back to you, the shareholder, immediately and directly. But they do, indirectly, increase the value of the stock. And they are much more “real” than future profits or future appreciation of the stock, at least if the earnings figures used in P/E ratios represent ”trailing“ or past earnings. They are money in the bank, just not your bank as shareholder.

Money is money, after all. And if a corporation makes money reliably and copiously, shouldn’t the markets recognize that in valuing the company’s stock? Is a T-bill with a P/E ratio to you of 1,000 really worth over 50 times as much as a share of Apple stock?

Before you answer, consider that bonds, unlike stocks, have no prospect of appreciation, except when interest rates go down, as they did when central banks saved the global economy after the Crash of 2008. But we all know—or at least we all believe—that interest rates are going nowhere but up. So why are bonds worth so much more than stocks on a P/E basis?

To answer that question, we have to plunge into the final and most murky variable in my proposed valuation scheme, namely, risk. It’s where math and science fade into the never-never land of art, emotion and mob psychology.

The Wild Card of Risk

In order to get a handle on risk, we first have to define the term. By itself, “risk” is a pejorative. It’s uncertain and scary. But the flip side of “risk” is “reward.”

There are, in general, two kinds of risk. The first is the risk that earnings will fall, or the upside chance that they will rise. The second is the risk that the value of the investment will depreciate, or the upside chance that it will appreciate, for reasons other than changes in direct earnings.

With equities, this risk often involves qualitative estimates of a company’s general future prospects. For companies like Tesla and solar array vendors, which are trying to start whole new industries, these estimates vary with every company announcement, rise or fall in actual earnings, and prognostication of a trusted source. Hence the volatility of their stocks.

To some extent, this volatility is irreducible. No one has yet invented a real crystal ball, and predicting the future of these leading (or possibly failing) companies involves much the same uncertainty as predicting a national or the entire global economy.

Similar uncertainty arises out of he murky relationship between earnings and non-earnings appreciation, including the guesstimation of future earnings. Except for non-productive investments like jewelry and artwork, value depends both on how much an asset can earn and what others are willing to pay for it. These two variables are related, as are the factors that make them rise and fall. But often their relationship is complex, as is the timing (short or long term) of changes in them.

Take Tesla, for example. It might sell fewer of its electric cars in China in the current quarter because Chinese buyers don’t see enough charging stations in China to assuage their range anxiety. That’s a short-term risk with a direct effect on next quarter’s sales and earnings. But sales might also fall, in the longer term, because the Chinese desperately want to make their own electric cars and might put lots of legal and practical barriers in Tesla’s way. Or, in contrast, sales might rise in the longer term because China’s rich folk and leaders don’t much like breathing soot and want clean air sooner than later. And then there’s the additional wild card of Tesla’s announced new business: selling modern batteries for use in energy solutions entirely outside of cars.

No amount of arithmetic can simplify these sorts of predictions or make assessing the short- and long-term risks a mechanical process. You might even have to know something about engineering and science. But the important point is that there’s both an upside and a downside. In this essay, the term “risk” includes both, even though the term “risk” sounds pejorative. We should remember that, in nearly every case, there’s a potential reward for every risk.

Now, having defined “risk,” we find our analysis getting curiouser and curiouser. Take Apple, for instance. Our P/E = 1,000 T-bill is presumably priced so high because the US government has the world’s lowest credit risk. In spite of the Tea Party’s repeated attempts to shut down our government and provoke a default, no one, apparently, believes that our government will actually default on its debt. That 0.10% interest may be meager and miserable, but it’s all but guaranteed. Or at least it’s perceived as such.

So what about Apple? Is it likely to go belly up anytime soon? Isn’t it now the world’s most valuable private company? Didn’t it just get inducted into the Dow 30?

My wife and I bet heavily on Apple, and for good reason. It makes nearly every computer, tablet and smart phone we own, plus nearly all their peripherals—some ten devices in all. (And that’s not even counting the obsolete stuff put away in drawers, closets and boxes.) Its products and software are an irrevocable part of our lives.

We could live without Apple. But we have no desire to, and it’s not what we’re accustomed to doing. So we’re not going to forsake Apple anytime soon, whether as consumers or as investors. Nor are hundreds of millions of consumers like us worldwide. Apple is going nowhere south.

Furthermore, 3.5 years have now passed since Steve Jobs died. Tim Cook has sheperded Apple through several iPhone models, numerous supply problems, and the Apple Watch introduction. He’s reportedly looking at automotive electronics, including self-driving and maybe even electric cars. Those are markets in which Detroit has so far failed miserably (except for the Chevy Volt) and has little expertise.

Cook has revealed he is gay. So what? He’s less mercurial, emotional and tyrannical than Jobs. He’s probably a better and steadier CEO. He might even have been the real power behind the throne all along. The notion that a company as large and as consistently innovative as Apple subsists on a single man’s genius is, like Mark Twain’s early demise, greatly exaggerated.

So why are people willing to pay $1,000 for every short-term dollar that our Treasury pays and only $17.10 for every buck that Apple makes, when Apple is in no more danger of imminent demise than our nation?

Sure, the United States of America is even less likely to go under than Apple. But we’re talking about short-term bonds, or T-bills. Is our nation really that much more likely to survive the next six months? Even with Ted Cruz running for president? Even with the Tea Party influencing, if not controlling, Congress?

No, I find it hard to understand the vast differences in what investors are willing to pay, and to accept in return, for bonds and stocks today. And I haven’t even mentioned the negative real returns (interest less inflation) that investors are getting on many sovereign bonds, especially in Europe.

Conclusion

Long term, there are still risks and imponderables for any business. In fields like computers, mobile devices and cars, it’s hard to get a clear picture of what the world will look like five or more years out.

But as we all know, no one investing today thinks that long term. The farthest ahead anyone (perhaps besides our President and Warren Buffet) thinks today is two quarters ahead: six months. We Yanks are a culture of hucksters looking for the quick buck; hence high-frequency trading.

A Japanese CEO recently lamented our Yankee short-term mentality. He even expressed a desire to limit transient financial investment in real (nonfinancial) Japanese companies to three years or longer. During that length of time, companies like Apple are more likely to thrive than our own United States, let alone many sovereign nations. Right now, for example, Apple has more cash reserves ($178 billion) than France ($148 billion).

So what accounts for the extreme variance between bond earnings and corporate P/Es? I can think of only three possibilities.

First, there’s the risk aversion of the Baby Boomers, the most selfish and risk-averse generation ever. They’re starting to retire now. As we all know, older people are more risk averse than younger ones. And as I’ve analyzed in an earlier essay, Baby-Boomer retirees have lots of money, which they are hoarding in their little investment jars. Apparently they would rather put that money into low-return bonds, or even lose money from inflation, than risk losing any principal in equities or even money-market funds that might “break the buck.”

The second possible source of the bond/stock earnings chasm is habit, aka inertia. Bond guys and stock guys (the gamblers and swindlers who set the pace and culture for investment are still almost all guys) are two different tribes, with two different cultures and mentalities. Were that not so, El-Erian and Pimco could hardly have cleaned up so handily after the Crash of 2008. Others would have recognized the well-known relationship between bond values and interest rates and exploited it equally successfully.

So far no one from either tribe, apparently, has given much thought to how out of whack earnings from bonds are now with earnings from equities. For well over a century, we have thought of bonds and stocks as different species, not just different animals, so much so that we tend to forget they are all financial instruments and all designed for the same purposes: to fund business and make investors money.

The third possible source of discrepancy is the fear that constitutes our species’ strongest emotion and causes the worst and most irremediable financial stampedes. Investors are scared to death that a small twitch in the bond markets, slightly lowering the effective P/E for bonds, will send equity markets into a tailspin. In this they have much precedent: the most sudden and drastic equity-market dips recently have followed mere hints that the Fed may some day raise interest rates.

Of course all three factors no doubt play a role. But the result is a striking anomaly. April’s rate for French sovereign bonds is 0.47%, for an effective P/E of over 212. Meanwhile, the P/E for Apple, which has bigger cash reserves than France, is a bit over 17. And without derogating France, whose culture and contrarian approach to life I revere, which entity would we tag as having having the greater upside for short-term, surprising innovation?

Some day, someone might begin to notice that these figures are apples and oranges. Then what might happen? A crash in the French bond market, and maybe even in our own, might ensue. Or equities might rise.

One final thing really puzzles me. Everyone knows—or at least most believe—that Janet Yellen is going to raise interest rates slowly and gradually, so as not to do anything rash and cause unintended economic upsets. The process of getting back to “normal” interest rates, whatever that means, is likely going to take the better part of half a decade.

During all that time, the ineluctable logic of bonds is going to make their value go down. Bond investors are going to lose principal. At least investors in long- and medium-term bonds are. And they’re going to lose it steadily, reliably and predictably, as Yellen raises rates.

At least that’s the conventional wisdom. As I’ve analyzed in another post, I’m a contrarian on this point. I think low inflation and a risk of deflation may be the new “normal,” at least in well-managed economies, and at least for a decade or two. This conclusion has more to do with demographic and structural changes in developed-country economies than the Crash and its aftermath, which may have temporarily obscured these longer-term changes.

If I’m right, central banks will delay raising interest rates, and medium- and long-term bonds will muddle along without losing value. They won’t gain principal value because central banks already have pushed their interest-rate levers to the limits on the low side. And if I’m right, central banks won’t even try to lower interest rates, for fear of provoking a deflationary spiral. So medium- and long-term bonds are unlikely to appreciate or depreciate, and the present disparity between their miserable returns and returns on stocks will remain.

At the same time, short-term bonds are not going to provide enough interest for most geezers to live on, at least not until short-term rates get a lot higher. At 0.1%, for example, six-month T-bills will give you an income of $1,000 a year on an investment of a million bucks. No one can live on that. In contrast, to take just one extreme example, Royal Dutch Shell, the big oil company, is paying a dividend yield of 6.02% (before market opening on April 22), or over sixty times as much.

Maybe the notions that bonds are usually safer than stock, and that they don’t normally lose principal (except in financial panics) are so deeply embedded in geezers’ minds that they don’t have room for any other information. Maybe geezers and their advisors don’t understand that what goes up must come down: the four-plus-year bond rally caused by the Fed is going to reverse itself, and over about as many years, if and as the Fed slowly raises rates. (Take me, for example. I missed the bond rally because I’m an active sort of guy. I don’t think bonds do much. But now that I’ve missed the party I sure don’t want to partake of any hangover.)

Maybe the general and fuzzy notion of “diversification” has captured the imagination of geezers and their investment advisors. Bonds and stocks act differently, the notion goes, so you should always have some bonds as a hedge against dips in equities. But does that notion hold true when you think that bonds are likely to dive, or at least not appreciate, for an extended period of time, and they don’t pay enough to live on anyway?

So why aren’t we seeing a gargantuan shift of geezers’ savings from bonds to equities? Beats me. As the old saw goes, markets can stay irrational longer than you can stay solvent. But unless I’m missing something pretty basic, bond markets are pretty irrational right now.

Of course bond markets aren’t going away any time soon. Companies and governments need to borrow money from time to time, and they need loans for longer terms than commercial-paper markets can provide. But why any geezer in my position would be eager to put a substantial part of his or her portfolio into them at this particular time has left me scratching my head. Maybe corporations, as distinguished from hard-pressed governments, will start issuing fewer bonds as the interest they must pay rises and they find some way to repatriate their estimated $ 2 trillion-plus collective overseas cash horde.

The financial gurus willing to talk on record appear to agree. High-grade corporate bonds are now yielding, on average, 2.94%. That’s a P/E of over 34, about twice Apple’s and more than that of any stock mentioned in this post. When you consider that bonds offer no corporate-success upside and are vulnerable to higher-interest-rate declines for an extended period of time, you might understand why one expert said, “It’s an awful time to be an investment-grade bondholder.”

Which brings me back to El-Erian and Gross. El-Erian has retired and is raising his young daughter. Gross is beating his chest. Maybe Gross has nothing else but marketing to sell his bonds now.

One thing is utterly free from speculation. El-Erian has the economics PhD from Oxford. Gross has an undergraduate degree in psychology and an MBA. Go figure.

Coda: the Wild Card of Climate Change

To summarize the foregoing post, bonds are not good investments now because they offer miserable returns. Almost any good dividend stock can beat their long-term returns, and short-term returns are abysmal. Remember that $1,000 annual return on an investment of a million bucks?

Unfortunately, returns on bonds are probably only going to get worse. As interest rates rise, existing bonds (as distinguished from newly issued ones) will lose principal, negating their meager interest. That’s what conventional wisdom expects.

But that’s not terribly likely to happen, at least in the immediate future. Inflation is tame and, due to demographic factors, likely to stay so. The so-called “wage-price spiral” is probably dead, perhaps for a decade or more, due to demographic factors, continuing automation and disintermediation of everything, and continuing globalization, with its intrinsic migration of work to lower-wage environments.

As for interest rates, what’s to raise them, unless the Fed and/or other central banks jump the gun? Our species is now in the throes of a massive, global deleveraging effort, beginning here at home. If the GOP ever wins the presidency, our Yankee deleveraging effort will accelerate. China is deleveraging, too, if only to avoid asset bubbles. Even tiny Greece is.

As for corporations, they’ve all used nearly-free money, which central bankers have been happy to provide since the Crash, to build up their balance sheets. Our Yankee corporations alone have an estimated cash horde of over two trillion dollars.

So if interest is the price of money, where’s the demand for money going to come from? And where’s it going to come from in the foreseeable future? Based solely on demographic and economic factors, the most likely forecast is for interest rates to remain low for the foreseeable future, except in mismanaged economies like Russia’s.

And if interest rates somehow do rise, what will happen to bonds, or at least the medium- and longer-term ones? They’ll lose principal. They’ll tank.

Could anything change this dismal outlook for bonds? One thing could: a sharp spike in global demand for money, which would raise interest rates. Medium- and long-term bonds would lose principal, but returns on short-term bonds would rise. As the markets adjusted and accepted the change in interest-rate environment as durable, so would returns on newly issued medium-term and longer-term bonds. (Old ones would truly merit the term “junk”).

What could cause a massive global spike in the demand for money? Climate change.

No, not the change itself. That’s already baked in (pun intended). What most business leaders and policy makers still don’t fully appreciate is that greenhouse gases aren’t like a volume control that you can turn up and down. They stay in the atmosphere for the better part of a century. And every day they stay they heat up the Earth more by trapping more of the Sun’s energy.

To put it simply, the amount of greenhouse gases in our atmosphere determines not just global warming, but the rate of increase of global warming. The amount we have in the atmosphere right now is further heating our planet continuously, not just keeping it warm, as I write these words. In other words, greenhouse gases are not merely a blanket, but a heater. (More precisely, the Sun is the heater, and the greenhouse gases trap more of its heat every day.)

As the amount of greenhouse gases that our species collectively dumps in the atmosphere increases, global warming doesn’t just stay put. It accelerates.

Every single day, our species’ coal power plants, natural-gas power plants (at half the rate), cars, trucks and planes, and fossil-fueled space heating are accelerating the rate of global warming by dumping more carbon dioxide into our atmosphere. And that’s not even considering the possible sudden, nonlinear effect of positive global-warming feedback, as warming melts our planet’s glaciers and ice caps, releases methane from melting permafrost, and releases yet more methane by warming undersea methane hydrates.

It’s impossible to predict before it happens. Our Earth is too big and complex a place, and our science is too primitive. But right now we could be on the cusp of a catastrophic feedback loop that could change our planet forever, extinguishing a large part of our species and a majority of others. (Recall that methane has ten times the warming effect of carbon dioxide.)

But before that happens (we hope) there may also be a dramatic economic effect. Remember the concept of financial stampedes—a much better model of financial panics than the cliched “bubble”? Climate change—or rather its penetrating the thick skulls of global business leaders and policy makers—could cause something like that.

It’s beginning to look as if even we recalcitrant Yanks are starting to believe that climate change is real. The era of denial is coming to a close. It’s doing so in slow motion, but it’s doing so. (Thank you, Mike!) So is the era of finger pointing, as marked by China’s recent (but vague!) agreement to begin cutting its own contribution seriously.

What happens when, all of a sudden, the world’s high and mighty begin to acknowledge the catastrophic risk we face as a species, and that they, their families, their companies and their nations are not immune? There will be a stampede of another sort: toward massive, global capital investment in renewable energy, safer nuclear energy, conversion away from fossil fuels, and energy conservation.

Now renewables (principally solar arrays and windmills) have peculiar economic characteristics. They offer electricity at lower cost than fossil fuels, because they have no fuel cost, no effluent-control cost, no pollution cost, no global-warming cost, and very low maintenance. But they do so at a price: large, up-front capital investment.

Nuclear power plants are similar. They offer non-intermittent “baseload” power without producing greenhouse gases. But they cost much more than fossil-fuel plants to design and build. And safer ones than we have now will cost even more.

So what happens when it finally penetrates our species’ thick skulls that we are going to have to go on an unprecedented, global building spree, of renewable-energy sources and safer nuclear power plants, or else we are all going to cook, all together, pointing our fingers at each other as we fry? (See 1 and 2)

We are going to have a collective capital investment stampede of unprecedented global size and scope. Then, and only then, will demand for money increase radically, and interest rates will rise accordingly.

When will that happen? Your guess is as good as mine. Global warming is now as reliable as death and taxes, both of which it may soon cause to rise. As I type these words, it is slowly, steadily and inexorably accelerating. Positive feedback could cause a sudden “jerk”—the scientific term for rate of increase of acceleration.

But physical processes, even jerky ones, are much more predictable than human psychology, especially mob psychology. The massive, global capital-investment stampede probably won’t get started in earnest until we have a summer, or several summers, in which heat waves kill large numbers of people all over the world.

Don’t worry. Such a summer will come. It could be this coming one. But we can’t know precisely when until it happens. In the meantime, we can plan and build, or we can deny and point fingers. Your choice.

Footnote 1: Actually, El-Erian did mean to include equities. In a very brief (less than one minute) video on Bloomberg.com, published over two weeks after the interview that inspired this post, El-Erian explicitly mentioned equities. He also described his own investment strategy, which he called “barbelling.” What he apparently meant was cutting down investments in public stocks and bonds, which he view as influenced by central bankers’ financial (not real!) inflation, and putting more money into illiquid, non-public investments, presumably including private offerings, private firms, real estate, etc. Whether the “bar” in the “barbell” is his large cash holdings or his remaining public investments, and which is larger, he didn’t make crystal clear.

Of course you can put a lot into illiquid, non-public stuff if you made $230 million in your last year before retiring. Not only did El-Erian do so; he also has numerous contacts in business, especially finance, which can give him opportunities for illiquid, non-pubic investment that the rest of us will never see.

For the rest of us, El-Erian’s advice is not especially relevant to our circumstances, except in two respects. First, it’s always a good idea to be ahead of the crowd in investing; normally you do that, if you can, by investing before the public gets a chance to. There’s not much surprising there. Second, it’s a good idea to remember that, as admirable and smart as he may be, El-Erian is a bond guy, with the bulk of his actual business experience outside of equities. Is it just possible that he might be inclined to overlook today’s stark differences in valuation between bonds and equities?

As for whether equities are also grossly overvalued (pun intended), doesn’t that depend on alternatives? With tens of millions of retired geezers (nearly all much less wealthy that El-Erian) looking for places to generate reasonable income to live on, money will probably flow to the places that provide the best combination of income and security. Right now, they doesn’t appear to include bonds, at least for those investors who need current income. And it probably won’t be until the prices of equities rise so much as to put their price/earnings ratios much closer to the extravagant current levels (or then-prevailing levels) of bonds’.

Tens of millions of geezers with filled investment jars looking for income are a demographic fact. If they can’t get income from bonds, they’ll put it into equities, perhaps with a preference for those that pay dividends. Unlike El-Erian, they don’t have the options of finding illiquid, nonpublic investments and waiting for appreciation or of sitting on cash.

So equity markets are likely to become a rising tide that raises all boats. The trick in such markets will be to identify and avoid those sectors and/or particular equities from which volatility will cause a greed stampede to become a fear stampede first. In short (pun intended), it looks as if stock pickers are going to earn their pay again, but on the downside.

Footnote 2: If you’re about my age, it’s hard to think of any interest-rate regime as “normal.” As I grew up, I postponed buying real property for about a decade because interest rates were stuck for years far north of 10%. Now they’re near zero. The only constant I can see from that vantage point is change.

And what about central banks? They’ve discovered that they can keep national and global economies stable by jiggering interest rates. They can even—with few side effects and no Weimar Hyperinflation—cure the aftereffects of something as severe as the Crash of 2008. Russia’s central bank, too, has discovered the game, to the point where the ruble is now too strong.

Don’t get me wrong. Having disinterested, well-trained experts whose primary goal is not enriching themselves in charge of our species’ economic infrastructure is a major advance in human civilization. Three cheers for Janet Yellen, her expert peers, and all they represent! But one way their stabilizing hands work is by assuring us all that no particular regime of interest rates will ever again be “normal.” Self-seeking private bankers and investors are just going to have to adapt.

Footnote 3: Want to build America and American jobs without raising taxes? Doing so would be pretty easy if Congress weren’t utterly dysfunctional. Just provide tax incentives to bring that two-trillion-plus dollars back to the US and into real (non financial) productive investment.

How to do that? Also easy. Let the money come back tax free, but only if and to the extent it ends up in new, physical, job-creating capital investment. Not in excessive salaries or bonuses for already too highly paid executives. Not for windfall distributions to undeserving shareholders through dividends or stock buybacks. Not into so called “capital gains” for speculative purposes, which are really short-term (one year) anyway. But into real, long-term, productive, job-creating physical capital investment in new plants or industrial infrastructure that adds real long-term value to our already grossly over-financialized culture.

Could we Yanks do it? Could we track the money and claw back tax relief if it didn’t go into building our nation, rather than into inflating useless personal individual wealth and increasing already-gross inequality? Of course we could.

Already we Yanks have the most intrusive and complex tax system in the known Universe. If and when we get out there into interstellar space and meet really foreign cultures, their members will come from all over the Galaxy to marvel at our Yankee tax system. They will study it assiduously as something for younger, less sophisticated cultures not to do. They will note, no doubt, that this entirely artificial system, which has nothing to do with reality, physics or even sensible finance, is far more complex than the tricks they will teach us to travel easily among the stars.

But if we Yanks can find some rational way to get that two-plus-trillion back home and into productive use—and not into the undeserving personal pockets of plutocrats—at least some of these highly advanced interstellar intelligences might argue against putting all of us Yanks in a big zoo.

The Delayed Transition at Justice

Despite the important of the foregoing post, especially to investors, I would be remiss not to comment on the long-delayed transition in our Attorney General’s office.

Seven months ago, when Attorney General Holder first announced his leaving, I published a post praising him and lamenting his leaving. I can’t do much better now than provide a link to that post. To summarize it, I have not seen a better person in that office in my nearly seventy years of life, and I’m a retired professor of law.

The long delay in confirming Holder’s successor, Loretta Lynch, was the type of travesty of democratic government to which we Yanks already have become inured. But it had an unexpected benefit: the chance to see a superb exemplar of the legal profession in action for another half year.

Since my last post on Holder, our divided and tortured land has seen a spate of killings of unarmed African-Americans by police. The most notorious occurred in Ferguson, Missouri.

While the press, the public, and pundits were viewing with alarm, and while the African-American community was (quite understandably) going ballistic, Attorney General Holder was doing what good lawyers do. He was investigating and gathering evidence.

Not grandstanding. Not making public pronouncements. Not using the serial tragedies to boost his own public image or advantage his own ideology or political party. Not pontificating or viewing with alarm. Just gathering evidence.

What a concept! But, also, what results.

Holder’s voluminous and exquisitely researched report on Ferguson was incontrovertible. It revealed bizarrely twisted municipal and police cultures, which funded institutionalized racism by targeting African-Americans, especially the poor, as revenue sources.

Because the report was so thorough, so well done and so shocking, it caused almost instantaneous change. Ferguson now has a new police chief and prosecutor, two new members of its city council, and, presumably, a new determination to make itself a better place.

That report has not stopped the spate of police killings of African-Americans, which continues apace. But it has caused other political earthquakes. The small town of Parma, Missouri, elected a female African-American mayor, and several city officials quit. So the new mayor will have a chance to change that city, too.

The total effect of Holder’s positive influence on our nation is much greater than the sum of its parts. His character and professionalism are shining examples to all of us, especially to those who aspire to careers in law and public service.

Among the Ten Commandments of a good lawyer is the maxim: “Never assume anything.” Holder and his methodical, careful approach to evidence exemplify that command.

That’s a vital reminder for all us Yanks today. For we have become a tribe of Olympic-class conclusion jumpers. Riven by abstract ideology, we always assume the worst of members of the other tribe. For us, rumor becomes fact, a single fact a trend, and that trend the Truth. It does so as fast as electronic social media or cable TV can spread a lie.

This dismal phenomenon is beginning to corrupt not only our civic life, but our international reputation and credibility. It’s not just the climate-change deniers, who ignore the evidence of decades of work by thousands of scientists around the world, and all because they’d just rather not have things be as they are. It’s also the Rolling Stone article about the so-called “gang rape” at the University of Virginia. More recently, a law professor felt she had to defend herself publicly when her law students jumped to conclusions about a typo in a hyperlink she posted, which erroneously led to a porn site.

In the last four centuries, our species has made notable progress, in both law and science, by requiring evidence before coming to conclusions. Recent trends in our Yankee culture have been retrograde to that human social evolution. AG Holder has fought these sad trends valiantly and effectively, not by declaiming or protesting, but by providing a brilliant example of how good the best of us can be.

Like our President, AG Holder will be a very hard act to follow. I know as little about Loretta Lynch as I did about Holder when Obama first appointed him over six years ago. So of course I am reserving judgment on her. But Holder has raised the bar about as high as any single public official can do, and I’m sorry to see him go.

Prince Ea

I recently “discovered” Prince Ea, if I can presume to use that word for a man whose work garners orders of magnitude more hits than mine. Wikipedia describes him as a musician and activist, born Richard Williams, with a college degree in anthropology and honors in Latin.

I think of him as a potential modern prophet for our secular age. Some day, I expect to see him on Time Magazine’s list of the 100 most influential people. He’s not there yet because, apparently, he’s still in the process of discovering his true calling.

To understand what that is, spend a quarter-hour watching two of his recent viral videos. The first is an apology to future generations for us destroying our (and their) planet. The second is a sober and alarming assessment of why the world might end soon, but with an upbeat finale.

On this blog, I try to present facts, figures and probable consequences. Prince Ea deals in values and emotion but by no means ignores consequences. He explores the consequences of the culture we Yanks have and are developing, and he invites us to cure it with the same medicine that Jesus prescribed: love.

I won’t demean his work by trying to describe it. I’ll just say this to pique your interest: he’s a so-called “rapper” who uses erudite English, but with the clever rhymes and alliteration for which rap is famous. Best of all, his vocabulary is so apt and his elocution so clear that this near-70-year-old white geezer can hear and understand every word.

Maybe that’s because his messages are so important that he wants everyone to take them on board. Do yourself a favor and give him a view. He just might help save our Yankee culture and our planet.

Update on Global Warming (4/28/15). No, I’m not clairvoyant. When I published the foregoing post on April 24, and the Coda a couple of days later, I didn’t know that the leading scientific journal Nature was just about to publish a new study of weather extremes, including heat waves and torrential rains. Nor did I know that the New York Times would publish a summary this last Monday (yesterday).

But as one of the study’s authors said, it’s really not

“that complicated. You make the world a degree or two warmer, and there will be more hot days. There will be more moisture in the atmosphere, so that must come down somewhere.”

The study’s authors did a mathematical/statistical analysis of what might happen if global warming continues to get away from us, i.e., if we continue to drag our heels on slowing its acceleration. They concluded that extreme heat waves might rise 62 times by the end of this century. Undoubtedly, some of them would mimic the 1995 Chicago heat wave that killed hundreds, or the 2003 European heat wave that killed an estimated 70,000. Some might be even worse.

Long before then, one hopes, we would starting building non-fossil-fuel energy sources seriously, even maniacally.

Maybe it will take several decades for these physical climate trends to reach catastrophically punishing proportions. But interest rates don’t depend directly on climate change. They depend on human perception of future collective needs. That can change at any time, as our befuddled species begins to make contact with reality. The sooner, the better.

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Assassinations and Yankee History

[For comment on the President’s nuclear deal with Congress, and the roles of all parties to the Iran talks, click here. For recent posts on John Kerry and our differing Yankee cultures, the durability of low oil prices, and one source of our national belligerence, click here.]

Wednesday was the 150th anniversary of Abraham Lincoln’s death by assassination. PBS commemorated the tragic event with a tepid discussion of how little has changed in our South to this day.

Of course not much has changed. One of our two best leaders ever, a man with the brains, skill, insight, empathy and finesse to have fostered real change, was killed on that day.

It’s an odd thing, really. We Yanks have a blind spot for assassinations. Maybe all people do. When we think about the sweep of our own history, we tend to ignore them. It’s almost as if they were nothing more than the sudden, unexpected death of a favorite uncle.

But assassinations have changed history. One in Europe sparked the most senseless war in human history and began a century of horrors, during which our species almost extinguished itself in nuclear fire.

Unfortunately for us Yanks, assassinations have changed our own history more than any other human culture’s. Maybe that’s because we’ve had so many of them.

The most consequential, of course, was Lincoln’s. His replacement as president, Andrew Johnson, had two monstrous political and character flaws. He was a vindictive Union Democrat bent on persecuting the South for having had the temerity to secede and provoking our nation’s most terrible and costly war. He was also an overt and intransigent racist. He tried to veto the Civil War Amendments and did veto the Freedman’s Bills that might have given our freed slaves a chance to stand on their feet.

This dismal combination of flaws in policy and character set our nation back a century. Johnson’s mean spirit towards the defeated South was worlds away from Lincoln’s “malice toward none and charity for all.” It helped provoke the South’s longstanding hostility and resentment toward the rest of the nation. That feeling of separation still animates the Tea Party today, not to mention mindless opposition to our President and Ted Cruz’ ridiculous regional campaign.

At the same time, Johnson’s adamant opposition to the freed slaves’ economic independence and development (and to the South generally) helped turn the South’s resentment inward, against its own oppressed people and its own debilitated state. The resulting despair and self-disgust helped entrench wretched theories of racial superiority. It’s no exaggeration to say that the subsequent near-century of Jim Crow and lynchings would have been much less likely, maybe impossible, had Lincoln lived.

Lincoln’s assassin John Wilkes Booth was no random nutcase. He was a diehard rebel and racist whose acts were carefully planned and explicitly political. As he lay dying of his mortal wounds, he is reported to have looked at his own hands and condemned them as “useless . . . useless.”

But if some dark power were to resurrect him today, Booth would make a starkly diffferent assessment. He would be proud, indeed boastful, for having set back the progress of the North, democracy, equality and justice for over a century. He would be overjoyed that his murderous act had helped define the South to this day. He would cackle with pride and triumph like Satan himself.

The three assassinations of our 1960s were no less consequential. First JFK, then Dr. King, and finally JFK’s brother Robert fell. All in a single decade, two in a single year, 1968.

The effect of those three assassinations, coming in such quick succession, was devastating. As a nation, we have not yet even begun to analyze it, let alone recover from it.

PBS is our premier video news service. On the fiftieth anniversary of JFK’s murder, the best it could muster was a program analyzing how well our television news services performed on the day JFK fell. Insofar as analyzing the social and political consequences of those three assassinations, we are still in collective cultural shock, half a century later.

Dr. King’s murder did not kill civil rights. The movement that he and so many other brave souls had begun had gained unstoppable momentum. Ultimately, it swept Barack Obama into the White House. But the three assassinations had long-term effects just as horrible as Lincoln’s.

When cut down, Dr. King was just beginning to connect the dots of poverty, racism, bossism, oppression of workers and our tragically unnecessary violence in Vietnam. He had observed that our own Yankee culture had become the world’s biggest purveyor of violence.

For that daring observation, he had lost political support, especially among moderates and whites. But Dr. King had a way of making hard points penetrate the consciousness of indolent minds.

Like Jesus, he was a political genius in the guise of a religious leader. His non-violent protest and his “I have a dream” speech changed our nation forever, peacefully and much for the better. Who knows where and what we Yanks might now be had he lived longer? We might still have a middle class.

Kennedy’s murder also made big waves in the river of history. Together with two thoughtful Russians, he had staved off Nuclear Armageddon during the Cuban Missile Crisis of 1962. He had stepped back from a catastrophic doubling down on our failed Bay of Pigs invasion, which he had reluctantly approved as a new and green Commander in Chief. He reportedly had been contemplating de-escalating our involvement in Vietnam when shot.

JFK’s assassination stopped the slow and tentative drift toward peace dead in its tracks. With little experience in foreign policy, but lots of Texas and Southern machismo, LBJ escalated our war in Vietnam into the tragic, unnecessary loss it eventually became. And Soviet Communist Party General Secretary Nikita Sergeyevich Khrushchev, who had made the deal with JFK to avoid Armageddon, reportedly wept.

Although less well understood, Bobby Kennedy’s assassination was equally consequential. Unbeknownst to most today, Bobby was far more committed to civil and workers’ rights than his brother. Ordinary people loved him. As he traveled the South and (during the riots that followed Dr. King’s murder) the North, he made common cause with the downtrodden and oppressed, but without alienating better-off workers. He reminded black protesters in Chicago that he, too, had had a brother killed.

Now we will never know, of course. But those who lived through that terrible decade of political murders could easily see Bobby as the greatest champion of workers’ rights ever. He might have eclipsed all but FDR—even Obama and Elizabeth Warren, with her still-unrealized promise. He might have brought real economic justice to America for at least a century. He might have saved our middle class.

Of course none of this actually happened. What did happen was obliteration of three of the most promising Yankee leaders ever. Their deaths left us with the lesser Teddy (flawed but still worthy), rudderless and with an aching heart. Nixon, his domestic “Enemies List” and Watergate followed as night the day.

We Yanks seldom note these horrible assassinations, except during brief commemorations like Wednesday’s. But we should at least recognize and acknowledge one thing: No culture in world history, let alone modern history, has had as many leaders cut down by assassins as ours.

In the past century and a half alone, we’ve killed four sitting presidents: Lincoln, Garfield, McKinley and Kennedy. Would-be assassins have injured two more: Teddy Roosevelt and Reagan. If you add Dr. King (our only national saint and greatest national martyr) and Bobby Kennedy (who might well have been president had he lived), the tally rises to six high-level political assassinations and two attempts in 150 years.

On the average, that’s more than one every generation. And this tally leaves out murders of lesser pols, such as Louisiana’s demagogic governor Huey Long, and attempted murders like the attack that paralyzed Alabama’s racist Governor Wallace.

No other human society even comes close to that dismal record.

Thus does our Yankee love affair with guns not only kill innocent children. It also validates Dr. King’s late-life judgment of our culture, sadly posthumously.

We Yanks may have the most violent culture in human history, surpassing even ancient Rome’s, in which citizens watched gladiators kill each other, and lions kill Christians, for sport. There great pols died on the battlefield, but not often while in office in peacetime. Caesar was the exception.

What does this all mean? Can we change? Aren’t these important questions? In the half century since they shot Kennedy (and his killer, before he could talk), we haven’t even begun to ask them seriously.

One thing at least is obvious. We must shake out, purge and reform our Secret Service as quickly, radically and effectively as possible. Our fragile culture cannot stand another assassination at this critical time. It would tear this country apart and virtually assure our devolution into a banana republic.

The night he was murdered, President Lincoln had a bill to create the Secret Service on his desk. We don’t want anything like that to happen, ever again.

With assailants penetrating the White House grounds and its inner sanctuary, and helicopters landing on its lawn, this is our most urgent domestic task. Nothing demands higher priority. Nothing else is more vital to our “homeland security.”

Longer term, we Yanks must begin the painful process of self-analysis. Why is it that we lose so many of our best, and just when they are closing in on our national dreams of justice and equality? What part of our Yankee culture is responsible, and how can we change it? What future do we have, as a nation and as a culture, if we can’t? Ancient Rome is long gone, and for much the same reasons of corruption, selfishness and violence that now plague us.

The President’s Nuclear “Deal” with Congress

The punditocracy is doing a lot of hand-wringing about the President’s agreement to let Congress have a say in any deal with Iran. Some seem to think that he’s gone Republican, or at least become an appeaser. But no. As usual, the President is just being smart.

How so? In at least five ways.

First and most simply, he’s trying to make peace with his domestic opposition, just as he’s trying to make peace with Iran. Intransigence won’t cut it in either case. Ted Cruz wouldn’t ever compromise, which is why he’ll never be president.

Second, there’s a little thing called buy-in. Now that Congress has a say, its most responsible members will want to make a deal work, not kill it. Whether a veto-proof majority of members actually commands some sense of responsibility may be doubtful, but probably 51% do. All the deal requires is 51%.

Remember LBJ? He was a master of Congress. He had a memorable motto for buy-in: “It’s better to have ‛em inside the tent pissin’ out than outside the tent pissin’ in.”

The third reason why the deal with Congress is smart is Congress’, shall we say, indisposition. I won’t say that collectively it has lost all touch with reality. But what most members do most of the time has little or nothing to do with reality.

They are actors in a political theater. They grandstand. They posture. They make pronouncements. They pander to every extremist group in their bases, as far as they can without losing general elections. They beg for money. Getting members to vote for or against a deal designed to keep Iran from going nuclear may help them remember their responsibilities and why they ran for office in the first place.

The fourth reason why the deal is smart is the Ayatollah. He’s the Iranian “bad cop,” to President Rouhani’s “good cop.” Secretary Kerry and the President both self-evidently want a deal more than war, so we Yanks need a “bad cop,” too.

Congress serves that function. Iranians really can’t complain if we engage in the same sort of classic hard bargaining that they do. Our doing so might even increase their respect for us Yanks. Hard bargaining is part of their culture.

The fifth and final reason why the deal with Congress is smart is something that few pols worry about much: substance. The words on paper are not nearly as important as the process of bargaining, the personal relationships established, and the measure that both sides take of each other.

It’s self-evident that Iran will resume its so-called “research” if it feels threatened, or if it doesn’t get real relief from sanctions. It’s self-evident that the West will cause sanctions to “snap back” if it has any evidence that Iran is doing so. These things will happen without regard to what any agreement says.

So the success of any deal depends not so much on dotting the i’s and crossing the t’s as on both parties believing that the deal—and honoring it later—continues to advance their national interests.

A non-nuclear Iran welcomed back into the global economy and contributing to it is in everyone’s best interest. It’s in Congress’ interest to let our President correct our grievous sins in foreign policy, including the 62-year-old senseless Little Cold War with Iran and our near-half-century old failed embargo of Cuba. It’s in the Ayatollah’s interest to let Iran continue to restore the thriving democracy that our and British spooks subverted in 1953.

Neither the Ayatollah nor Congress is actually negotiating the deal. Either can insult fellow leaders and damage his or its respective nation by being a spoiler, not a builder. Only time will tell whether both will exercise their responsibilities accordingly. Each side, one hopes, is smart enough not to let peculiarities in the other’s procedures of government kill a good deal.

Note on the term “both sides.” On rereading the post on the Iran talks above, I noticed something that might lead readers to think it culturally arrogant or negligent. The post refers to “both sides” of the Iran talks, as if there were only two.

While I might have changed that phrasing, I have a policy of not correcting anything important on this blog. If I make a mistake, I acknowledge it in an update or later post and move on.

Of course there are five other parties to the talks. In alphabetical order, they are Britain, China, France, Germany, and Russia. But none of them has had a half-century pathological state of enmity with Iran, at least not one sufficient to motivate Iran to develop nuclear weapons.

Only a single party to the talks (the US) has initiated and mounted an invasion and occupation of Iran’s neighbor, Iraq, and is still engaged in military operations there. Britain helped a bit but has pulled its troops out.

The only other nation maintaining a state of enmity with Iran similar to ours is Israel. But Israel is not a party to the talks. The US might be viewed as Israel’s proxy, but the obvious and growing split between the US and Israel under Netanyahu make that notion problematic. In any event, as I’ve analyzed elsewhere, Iran’s enmity toward Israel may be derivative of its hatred for us Yanks.

Britain, France and Germany have an interest in the talks because Iran’s nuclear missiles, if developed, could reach them. Iran’s attempt to block the Straits of Hormuz in any war would affect these nations’ energy interests directly.

Iran may have a hard spot in its heart for Britain, whose spooks helped ours to subvert Iran’s democracy and install the Shah in 1953, and which participated in our occupation of Iraq. But Iran has never expressed that enmity in quite the same terms as its enmity toward the US. More to the point, Iran has never threatened Britain, France or Germany, or vice versa.

Russia is there because it wants to be Iran’s best friend, has supplied much of Iran’s nuclear technology, and could be part of any technical means of assuring or verifying Iran’s abandonment of nuclear weapons. China has no direct interest at all: it has only indirect interests in peace, international order (especially in the Mideast, the source of much of China’s oil) and nuclear nonproliferation. China is there mostly because it is a major power and can provide a neutral sounding board.

By no means does this analysis indicate that the other parties’ participation is empty. All parties represent the weight of global concern and their individual anxieties. All parties can serve as “reality checks” and provide vital global perspective in heated negotiations. Russia is particularly important because it has assumed the role of Iran’s friend and protector.

But the parties who must make a deal are Iran and the United States. It is inconceivable that any other party to the talks would refuse to accept a deal to which both the US and Iran agree. It’s in this sense that I referred to “both sides” above, meaning no disrespect to any other party, and not intending to belittle the important role that every party plays.

Iran has no reason to fear an attack from Britain, China, France, Germany or Russia. Given our dismal 62-year history with Iran, Dubya’s name calling (remember “axis of evil”?), our invasion and occupation of Iraq, and our nation’s strength, Iran would not be irrational to fear an attack from the United States. Therefore the parties to the talks besides the United States and Iran find themselves in the positions of a friend (Russia) and bystanders who pull two parties to an incipient bar brawl apart before the fighting begins. Whether the fight commences depends on the United States and Iran.

Update on Oil Prices and Electric Cars. A very recent post analyzed the reasons why oil prices are likely to stay low for the foreseeable future. One of those reasons is the likelihood of electric cars stealing some of the demand for oil (which generates electricity virtually nowhere).

As if in corroboration, Bloomberg.com just published a news video of a new foreign electric car offering 1341 horsepower, which reportedly beats a Bugatti. The designers apparently are looking for money to finance production next year.

Such a car is bound for the luxury market. It will hardly be the affordable people’s car that helps phase out oil. But its existence does suggest the kind of engineering talent and sustained effort now going into electric vehicles worldwide.

Designing and producing a cheap car for the masses is a greater and perhaps less interesting challenge for engineers. But it’s also the problem that offers solvers real wealth and a permanent place in industrial history. Another unaffordable luxury car doesn’t. Henry Ford is the man to follow here.

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John Kerry and Why Culture Matters

[For analysis of Hillary and her “debut” as a real candidate, click here. For an update on oil pricing in the medium and long term, click here. For a discussion of one source of our national belligerence, click here.]

It’s hard for most of us Yanks to ken, let alone appreciate, John Kerry. He’s one of us, but he’s unlike most of us. He’s of our smallest and most unusual Yankee culture. He’s a New Englander.

In the old days, the phrase “rock-ribbed” was an obligatory adjective for that noun. What did it mean? It’s not exactly self-explanatory, is it?

But at its base, New England culture is neither mysterious nor strange. It’s just unusual, especially for us Yanks. And especially today.

Like any culture, New England’s traditional one has a whole constellation of characteristics and values. But two stand out. First, you do what’s right, what works. And if it hurts, you suck it up. You suck it up even if it hurts like hell, even if it kills your career and makes you miserable. You don’t complain or make excuses.

Second, you don’t brag or tout yourself. Ever. You are humble and self-effacing. It’s not about you. Ever.

All by themselves, these two traits of New Englanders explain two key things about John Kerry. First, they explain much of why he lost his bid for the White House in 2004. Second, they explain why he just might be the best thing for us Yanks in 2016.

Remember how Dubya the Frat Boy defeated Kerry? He “Swift Boated” him and called him a “Defeatocrat.” Kerry didn’t defend himself. Why? Because he would have had to tout his own virtues. Kerry just couldn’t do that. Why? Because he’s a New Englander.

Kerry fought and was wounded in Vietnam while Dubya was sitting out the war doing macho stunt flying for the Texas Air National Guard. Also unlike Dubya, Kerry was and is a smart, thoughtful guy. He doesn’t let his “gut” rule him. He thinks.

When Kerry got home from Vietnam, he began to figure out that our fight there had been a tragic mistake. If anything, we Yanks should have been fighting on the other side, against colonial rule. Wasn’t that what our own Revolution, so long ago, had been about?

So Kerry changed his mind and his position. He had fought in the war and had been wounded, but he became an anti-war protester, later a leader of the anti-war movement.

That’s how Kerry got his start in politics. He bore the slings and arrows of the super-patriots, the chicken hawks, and all the rest. He bore the unkindest cuts of all, from his fellow soldiers who had fought and been hurt, too, but couldn’t see any reason to change their minds.

Kerry bore all these things without flinching or complaining, because he’s a New Englander. Eventually, he became Senator from Massachusetts. His fellow New Englanders saw his true grit, in both war and protest against it.

Changing your mind requires a special virtue: humility. In order to reverse course, you have to admit you were wrong.

Most pols have trouble doing that. They don’t ever change course. They “stay the course.” They double down.

LBJ did that in Vietnam. If you’re too young to have lived through that era, know three things about it. First, it was our most ignominious and costly Yankee defeat ever. (A PBS special airing this week reprises our dismal, frantic flight from what was then Saigon.) Second, it involved, killed and wounded more of us Yanks than any war since history’s most horrible one, including Dubya’s two decade-long unnecessary wars.

Third, the War in Vietnam split our Yankee nation right down the middle for two generations. The chaotic Democratic Convention in Chicago in 1968 was just the beginning. Our current President recognized all this in his insightful and prescient “one America” keynote speech in 2004.

Sadly, LBJ was far from alone in doubling down on a mistake. The first to double down in Vietnam was French President Charles de Gaulle. You can see his machismo and sad intransigence in his face just by looking at his photograph. After his ignominious French defeat at Dien Bien Phu, he handed the whole disaster off to LBJ, whose Texas machismo wouldn’t let him say “no.”

There were and are others, too. Dubya doubled down in Iraq. Putin is doubling down in Eastern Ukraine. Assad is doubling down in Syria. Kim is doubling down on nuclear weapons and missiles.

Fortunately for our species, the most catastrophic doubling down in history never happened. During the 1962 Missile Crisis, our leading general General Curtis LeMay wanted to “vindicate” our failed Bay of Pigs invasion by mounting a full-scale invasion of Cuba. Most of Fidel Castro’s minions wanted to fire Soviet intermediate-range nuclear missiles at New York and Washington to stave off that invasion. (Contrary to our intelligence then, but as we know now, a few of those missiles were already operational.) Nuclear Armageddon—the Mother of All Doubling Down—was minutes away.

That doubling down might have extinguished our species. Our entire Cabinet, except for JFK and his brother Bobby, was for it. The only thing that prevented it from happening and let our flawed species muddle on was the cool and mature judgment of three human beings: two Russians and a Yank, JFK. Not coincidentally, JFK was also a New Englander.

Now come Pope Francis and John Kerry to show our species the virtues of humility. It’s about time!

You can see Kerry’s humility and “no excuses” culture on display in Judy Woodruff’s extraordinary interview about Iran last week. Kerry says that Iran must come clean about its past nuclear programs, and that we will relax sanctions only gradually, as Iran keeps its promises. Kerry humbly (and accurately!) confesses that the “Deal” isn’t there yet, and may never be.

Kerry is tough as nails, as much on himself as on Iran. He makes no excuses. He just tells, soberly, severely and accurately, what has been done and what must yet be done.

Other pols would give themselves wiggle room. They would mealy-mouth it so they could claim any result as “success.” They would be planning in advance how to “spin” a loss or stalemate as a “win”—how to keep their career and personal prospects alive, even at the cost of a nuclear Iran.

Not Kerry. He’s a New Englander.

In the end, culture trumps all. It trumps law, and it trumps science. It determines whether people follow either. Our minority rule in Congress, our Old South Revival (aka the “Tea Party”) and our many climate-change deniers prove this point.

Culture even trumps religion, although religion can be part of culture. If you doubt this, consider Indonesia, Malaysia, Turkey, Egypt, Iran, Hamas and the Islamic State. They are all majority Islamic entities. Yet are they all the same? Not hardly. The difference is culture.

We Yanks are a truly multi-cultural society. We have three primary cultures. In the last two generations or so, we’ve mostly given only two of them a try. LBJ and Dubya, both Texans, turned our Western macho culture and Southern apotheosis of war into our three longest-ever wars: one abject loser and two stalemates. Reagan gave us a combination of Mid-West culture and Western self-promotion. It worked to end the Cold War but gave us two generations of selfishness as an economic “strategy.”

Maybe it’s time, for a change, to give our New England culture another try. Oddly, the Senior Bush was of that culture. He was raised and educated in New England before moving to Texas. Not so oddly, he exercised self-restraint in war, with Colin Powell’s sage advice. He brought us Gulf I—the shortest, least costly and most stunning major military victory in our history. He even raised taxes when necessary, breaking his rash “read my lips” pledge and forfeiting a second term. Like Kerry and our current President, he never complained and never made excuses.

At the moment, we Yanks seem to have degenerated totally into our Hollywood “culture.” It’s all about self, image and “spin.”

Various GOP hopefuls strive mightily to achieve just the right combination of pandering to the motley group of extremists and clueless billionaires that Dubya, Rove and Luntz wove into their parody of a serious political party. They make the campaign for leadership of the free world look like an episode of “American Idol.” Jeb is still trying to decide whether he wants to be yet another one of them or risk his political future on being serious. Hillary goes on Facebook and Twitter to change her image and “spin” her past.

But Hollywood is not a real Yankee culture. It’s a fiction monger. Some might say that its current incarnation is a pathology, at least compared to the uplifting myths it used to tell.

Once upon a time, we Yanks had the reputation of New Englanders. Before the Crash of 2008, which we caused, you could take our word to the bank, especially in financial and economic matters. When Adlai Stevenson showed our U-2 photos of Soviet medium-range missiles in Cuba, no one worldwide doubted them. The whole world gasped.

We’ve lost a lot of ground since then. We’ve lost so much that Assad and Putin think they can use our own too-compliant media to propagandize us. Who do they think they are? Fox?

So maybe it’s time to revert to the culture of John Adams and our Northern Founders. Maybe it’s time to tell the truth even when it hurts, to stop beating our chests and justifying our mistakes and arrogance by calling ourselves “exceptional,” and to stop complaining about the global peaceful competition that was once our credo and that we and the Brits started. Maybe it’s time for our opposition in Congress to stop believing that the solution to every foreign problem is war. Maybe, in short, it’s John Kerry’s time.

Footnote: Perhaps the main reason why Kerry lost in 2004 (besides the general human propensity not to change horses in midstream) was the lack of vision in his campaign. But Kerry’s a good man and a smart man. He has a vision inside him; he just has to articulate and elaborate it. You can hire writers, advisers and even thinkers; you can’t buy good judgment, virtue or vision.

A New Prediction for Oil and Gasoline Pricing

About three months ago, this blog published a prediction that oil prices will stay low for quite a while. That prediction superseded an earlier one, which saw no rational economic motive for the Saudis’ letting oil prices plummet but did see political motives. That earlier post had neglected long-term economic factors, in effect accusing the Saudis of resorting to short-term thinking almost as much as our Yankee Congress.

The later and better prediction—of low oil prices for the foreseeable future—relied on a growing new phenomenon. For the first time since the discovery of oil’s use to power cars over a century ago, it now has reasonable substitutes for that primary use: natural gas and electricity. Demand is now in play.

Unbeknownst to me, that’s exactly what the Saudis themselves were thinking. At least it was according to a recent blockbuster article on Bloomberg.com. That articles recounts the history, biography and recent changes in views of Ali al-Naimi, a brainy American-educated technocrat and Saudi Arabia’s Oil Minister for the past twenty years.

Bloomberg’s longish article is well worth reading. It tells a lot about the Saudis’ practical and wily oil policy, how a really smart self-made man (Naimi) rose in the Kingdom, and how the Saudis slowly learned the differences between desire and reality, wishes and consequences in the real world.

But for the bottom line, I can save you the time to read it. What Naimi learned, and what the Saudis now believe, is that global demand for oil is likely to peak before supply.

They are worried not just about competition from natural gas and electricity (almost none of which comes from oil). They are also worried about reduction in global demand due to conservation, energy efficiency and increasing gas mileage, efforts to fight climate change by reducing the use of fossil fuels generally, and efforts of developing nations, especially China, to avoid the past mistakes of developed ones.

Of course Naimi knows more about all these things than I do. For twenty years he’s been the head of Saudi oil planning and the de facto head of OPEC. He’s spent his whole professional life worrying about these issues, and he’s now 79.

Yet two things are notable. In the past, Naimi has been unusual for his openness and accessibility to the press, especially for a Saudi. About demand decline, not so much. Last November, the polished and urbane English-speaking manger brusquely told a badgering television crew to “Get the hell out.”

The second thing notable thing is that you don’t have to be an OPEC insider, let alone a Saudi, to understand what is happening globally with energy in general and with oil in particular. You just have to keep your eyes and ears open to what is going on in the world.

You might have to be an insider to know that frantic filling of tanks at low prices has supported oil demand for the last several months, and that prices might drop to new lows when all the tanks are full. But you don’t have to be an insider to know that demand is now in play and will be for the foreseeable future.

With their light, sweet, cheap crude lying right near the surface in their desert Kingdom, in big underground pools, the Saudis are the world’s low-cost producer. Their modern, world-leading high-technology oil exploration and extraction industry doesn’t hurt. While oil prices fall, they can keep selling at a profit longer than anyone else, including our Yankee frackers.

Their concern about peak demand long preceding peak oil is now open and public. They’re afraid that they won’t be able to sell their oil at high prices forever. If their reserves turn out to be as big or bigger than they hope, they even fear that they might not be able to sell their entire reserves at all.

Imagine how you would feel, after all that investment, trouble and worry, to see some of your oil stay uselessly in the ground, and some of your massive sunk investment go to waste! So, among other things, the Saudi Royal Family is beginning to plan for a post-oil economy. Right now. The Saudi Princes!

The consequences for oil pricing in the medium and long terms should be obvious. My 2012 prediction of six- or-seven dollar gasoline prices is most probably wrong. If the Saudis have anything to say about it—and they most certainly do—oil prices are likely to stay at or below their current levels (as long as Saudi prices don’t go political) until the Saudis’ reserves run out. When the dust settles, they aren’t going to be left with oil in the ground.

What will that mean for cars and light trucks? It won’t change my December 2013 table of cents-per-mile driving costs much at all. Even at a steady price of $2.00 a gallon, the cost of driving on gasoline will be 6.67 cents per mile (for a 30 MPG car), still the highest in the table. The cost of driving on natural gas at industrial pricing will still beat it by over a factor of three, and of driving on commercial solar photovoltaic electricity by over a factor of seven.

So only one thing still stands between Naimi’s demand fears and his worst nightmare: lowering the capital cost of electric vehicles. With the Germans, Japanese and Chinese all bent on that goal, not to mention us Yanks, how long do you think it will take?

“Apotheosis of War”

This odd choice of phrase is deliberate, not accidental. It’s the translation of the title of a famous Russian painting, the (or an) original of which hangs in the permanent collection of San Francisco’s Palace of the Legion of Honor.

That title well fits the American South’s pathological culture. The South so honors military tradition and values that you might think it actually won the Civil War. It has a number of our leading military institutions, and it has produced some of our greatest generals, including its own champion, Robert E. Lee.

Those facts might seem strange, but not after you think a bit. The South’s culture was born of slavery and remains tied to bossism, coercion and oppressing the little guy. Why else would the so-called “conservative” culture of our poor, mostly non-industrial South universally support Wall Street’s economic dominance?

That fact makes no logical or territorial sense whatsoever. But it makes perfect cultural sense.

Ultimately, a culture of slavery that morphed into authoritarian dominance must rely on force. So militarism comes with the territory.

Can the South change? Isn’t that the most important question for the success of our nation and maybe our species?

The answer is probably yes, but slowly. African-Americans, who live there in large numbers, are part of the key. Another part is in-migration by people of all races and cultures, including retirees from New York, snowbirds from all over the frozen North, and immigrants from all over the world.

Watching in-migration make demographic changes in a pathological culture is like watching grass grow or paint dry. It’s patient, exhausting and frustrating work. But we have few other options.

We tried the worst war in our Yankee history. It abolished slavery but left the South’s culture largely intact. You don’t change culture by making war. More often, you entrench it.

The law is another unlikely option. A constitutional amendment to abolish the filibuster, Hastert Rule, and malapportioned Senate is probably not happening, except by prying these tools of minority rule from the South’s cold, dead hands.

An option I once suggested—economic coercion—appears to have no support. So waiting for Godot may be the only realistic option. Another that could gain steam is organizing, something that our brilliant community-organizer President might try after he leaves office.

Whatever option ultimately works is going to take time, patience, skill, finesse and determination. It must match, at least in part, the skill and doggedness with which the South—from our very Founding and the drafting of our Constitution—has bent the world’s greatest democracy to its own twisted ends.

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Can Hillary Win?

Six months shy of eight years ago, over a year before the 2008 presidential election, I wrote a post about Hillary. Its title was different, but it addressed the very same question: “Can she win?”

Then my prognosis was not positive. After analyzing her judgment and decisions on key issues, I concluded that she could easily have won the Democratic nomination but lost the general election.

So I threw my support behind Barack Obama. Despite his relative deficit of national experience, he seemed to have a finer, better, surer mind—a firmer grasp of real issues and the way the world works. I’ve never regretted that decision, not for one moment, not in the darkest days of Tea Party obstinacy, racism and mindless opposition to rational health insurance.

I used to have a near-photographic memory for things I read and wrote. Now I no longer do. But hits from visitors to this blog constantly remind me of posts I wrote in 2007 through early 2009 criticizing Hillary. There were many (see 1, 2, 3, 4, and 5).

After re-reading them, I find myself in a quandary. I want to believe that Hillary has grown and changed. I want to be able to support a female candidate for president and align myself with all the women who’ve been waiting patiently, for nearly a century, to vote for one of their own. I desperately want us Yanks to come up with a female leader like Queen Elizabeth I, who can usher in a new era of human cooperation and bump our whole species up a notch.

Unfortunately, it’s too early for our own Elizabeth, and she knows it. In the midst of our desultory war with IS, the Middle East falling apart, and Putin bizarrely stalking Ukraine, a credible candidate must have some real experience and gravitas in foreign and military policy. So far, our modern Elizabeth has none.

So I want to believe in Hillary. But I have trouble believing.

It’s not that Hillary is evil or stupid. She’s a Democrat in an era when Republicans have allowed themselves to become the Party of Extremists, a believe-anything, say-anything gang deluded and misled from its principles by twisted operatives like Rove and Luntz.

It’s not Hillary’s heart or fighting spirit that worries me. She has plenty of both. It’s her capacity for hard, penetrating and independent judgment. Before and during the 2008 campaign, she said and did a number of things what made me wonder, “What was she thinking?”

Perhaps the most important was her voting as senator to go to war in Iraq, without even reading the National Intelligence Estimate. The Estimate was full of strong dissents from our own intelligence community, questioning every rationale for war. Those dissents turned out to be both right and prescient. But Hillary cast her vote, apparently, for her own political future, knowing that if she didn’t beat the drums for war the GOP would tar her as weak.

Another lapse in judgment came later, in debate with the President. She accused him of threatening to bomb an ally, Pakistan. What he really wanted to do was ignore national borders and go after bin Laden, as he eventually did, successfully. Did Hillary really think a hyper-legalistic attitude toward national boundaries would stay the hand of justice? Did she prefer to make two unnecessary decade-long wars and invade and occupy two sovereign nations than to mount a surgical strike and kill the butcher?

Once the President gave her the chance to do something real, as Secretary of State, Hillary grew and matured as a leader. She and her team worked a minor miracle in getting UN approval for action in Libya just before the mad tyrant Qaddafi could annihilate all rebel opposition. The crusade of Madman Issa to find a way to blame her for the later Benghazi tragedy was nothing more than a witch hunt.

But, sadly, Issa didn’t have to work so hard to come up with another “what was she thinking?” moment. How could anyone performing the function of our Secretary of State, fourth in line for the presidency, ever believe it was a good idea to keep all her electronic messages and many official records on a privately-owned and privately managed server in her own private home?

That blooper will hardly destroy our Republic. Congress will eventually get all it wants—at least all that Hillary hasn’t yet erased. But Hillary’s gross error of political and practical judgment has left many of us with the suspicion that our Yankee official records are vulnerable to the same sort of personal control and Stalinist revision that made the Soviet Union such a butt of jokes. How could any great democratic leader think that was a good idea, or implement such a flawed system for sheer personal convenience?

Now Hillary is trying to soften her imperial “anointed one” image with social media. She is about to announce her candidacy on Facebook and Twitter.

Social media are no substitute for leadership. If we had put hard decisions to a “like” vote on Facebook in October 1962, most everyone reading this post would be dead (or never born), with older ones like me rotting in still-radioactive shallow graves.

The most important presidential decisions cannot be delegated. Some of them turned out to be good ones. They include Harry Truman’s decision to shorten history’s most horrible war by using nuclear weapons, and his even more important decision later to implement the Marshall Plan and love our erstwhile enemies. They also include his later removal of General MacArthur, thereby avoiding all-out war with China.

Perhaps the most important presidential decision ever made was the one by Jack Kennedy and two Russians not to give nuclear Armageddon a try. Lesser good decisions include our current President’s calls to wind down two decade-long unnecessary wars, to go after bin Laden in Pakistan, and currently to seek a reasonable rapprochement with Iran.

You can only measure how important decisions like these are by comparing them with the bad ones. Consider, for example, LBJ’s decision to escalate our losing War in Vietnam. a problem we inherited from the French. Then there were Dubya’s decisions to invade Iraq to stop the use of nonexistent WMD and his decision to invade Baghdad. Just compare the latter to Dubya’s own father’s decision, with Colin Powell’s sage advice, to stay out of Baghdad. That good call produced our quickest, cheapest, simplest and most decisive military victory since World War II.

Like it or not, our Constitution leaves life-and-death matters like foreign relations, war and peace almost exclusively in our president’s hands. As Harry Truman said, the buck stops at the president’s desk. Behind that desk there is no substitute for brains, curiosity, humility, flexibility and penetrating, independent judgment.

Does Hillary have those qualities? So far, we have little evidence she does, despite her growth as Secretary. It’s no excuse that all but one of the GOP hopefuls have no such evidence either, and that Jeb’s judgment is still a matter of conjecture, despite some good campaign strategy so far.

The trouble is not campaigning, but governing. So many pundits now talk of making Hillary “likable.” What utter balderdash!

I don’t want to “like” our president. If Hillary gains the White House, she will be the person who makes life and death decisions, not only for our much-abused troops, but for all of us. She will decide how long our two-century experiment in democracy continues, and whether it survives. And as we Yanks are still the world’s biggest economy and leaders of the free world (although rapidly losing that mantle), she will help fix the fate of our entire species.

So no, I don’t have to or want to “like” Hillary. Win or lose, she will never be my drinking buddy. I want to know that her key decisions are right. I want to feel respect, admiration and a bit of awe for her and her hard judgments, just as I do with our President now.

We tried the “bar buddy” bit with Dubya the Frat Boy. We got the worst bungler we’ve had in over a century, maybe our worst bungler ever.

What precisely did we get? We got two decade-long unnecessary wars, the Crash of 2008, the “too big to fail and no jail” rule for the bankers who caused the worst financial panic since the Great Depression, a stagnant economy, and economic inequality exceeding that of the Gilded Age. We also got Soviet-style apparatchiks Rove and Luntz in one of our two major parties, who turned it into something resembling the Russian Communist Party far more than anything in any European democracy.

I would be overjoyed to cast my vote for a woman. But Hillary has to show me that she’s worthy of the job. Cleverly exploiting Facebook and other social media won’t do that. Nor will her usual “triangulating” or strong campaigning; we know she’s pretty good at that. She’s got to convince me and millions of others that she’s really “ready on day one,” as her 2008 campaign slogan touted.

If not, we still don’t have to settle for Jeb and yet another dynasty. John Kerry will still be in the wings. His credibility will stand or fall on his Deal with Iran, and on its resembling the outline he made in his PBS interview this week. He courageously and rightly set himself a high bar. But if he leaps it, he will have my support if he wants it. He, too, knows how to campaign, at least (like Hillary) how to lose.

Only Hillary and John Kerry, plus a few others living, know how much that hurts. Only they know how much they will compromise for ambition or (in Hillary’s case) for the chance to be first, a modern Queen Elizabeth I.

Let’s be frank. If Hillary wins the nomination, I and tens of millions of others like me may have no place else to go. Hillary will move toward the center—which means toward the right—and take voters like me for granted. So will any other pol who wants to win. It’s part of the game.

So let me be frank. There are few, if any, circumstances that I can foresee under which I would vote Republican or stay home. I might vote for Jeb if he proves a rare political savior who can reform his broken party in less than eighteen months, crush the Tea Crazies and bring back the Party of Lincoln, with its practical care for equality, democracy, majority rule, prudence and caution abroad, personal liberty, and George Washington’s “no foreign entanglements”—in short, all the things that Dubya, Rove and Luntz threw under the bus in their mad dash to win at any cost.

That’s all about as unlikely as Putin is to go back to the kind of leader he was during his first presidency. Then he was most concerned about poverty in Russia and building a peaceful commercial and trading zone from the Atlantic to the Urals. Wouldn’t that zone include Ukraine?

So, no, I don’t foresee voting Republican or wasting my vote. I’ll go to my grave proud of having voted for Hubert Humphrey in 1968. I believe that voting for the lesser of two evils is the sacred duty of every small-d democrat.

But holding your nose while voting is not the same as enthusiastic support. That’s what Hillary needs to become our first female president. She will have to overcome residual sexism and the sad legacy of her many mistakes in campaigning, not the least of which was treacherously playing the race card in her losing battle with Obama.

She will have my enthusiasm—and my money—only if and when she shows she deserves it. I’ll give her the benefit of every doubt. But she’s a long way from earning that enthusiasm now.

So I thank God that John Kerry may be waiting in the wings. He’s still got a Labor of Hercules to perform, and he knows it. But if he performs it, and if he runs, he may well have my wholehearted support, despite his loss for lack of vision in 2004.

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