SAR #9292

Hope is not a viable investment strategy.

Remember When? The Dow is tip-toeing at 10,000, and better not look down, because there are no fundamentals down there to catch it, just Bernanke's funny money. Remember back in the old days, when the dot.com bubble drove P/E's from the traditional 15x range way up to 47x? And then remember what happened? You don't? That's okay, the P/E ratio is now 140x and the show's about to begin in the center ring! Good thing the Dow doesn't represent the real economy.

Reason #46: One more reason that Americans will never support effective measures to combat global climate change – they'd have to give up their power-guzzling big-screen high-definition TVs. Ain't gonna happen.

Usual Suspect: A suicide bombing killed several senior Iranian Revolutionary Guard officers. “ Surely foreign elements, particularly those linked to the global arrogance, were involved in this attack,” said Iranian television. “Linked to the global arrogance” - wonder who that could be?

Put a Cork in It: Some researchers have demonstrated evolution, natural selection and all, in a bottle.

Fairly Unballanced: Somebody finally noticed that Fox News is not news, but opinion journalism, a wing of the Republican Party, a propaganda machine masquerading as a legitimate news organization. What took the adults so long to catch on?

Promises, Promises: Geithner says the US must live within its means – once the economy recovers, if it ever does, or what little global confidence there is in the dollar will erode. In other words, it's a confidence game. But you already knew that.

Rubbing it In: After successful raids on oilfields in Africa, China now has its sights on drilling rights in the Gulf of Mexico, which – despite its name – America views as a private reserve. Enter a chorus of politicians...

Non-negotiable: Most of the world's decision-makers think they can negotiate with the laws of physics and chemistry, and continue signing a long series of useless treaties that will become a global suicide note. Even the brutal truth that we are ''on the edge of a precipice beyond which there is no redemption'' may not be enough to move the world to action. Even doing something, but not enough, will lead to disaster. The planet cannot be bought off.

More of the Same: Delinquency is on the rise. No, not the juvenile kind, the indebted consumer kind. In September a record 7.65% of mortgages were 30 or more days late. In sub-prime mortgages it's over 40%. Delinquencies also rose on home equity loans and auto loans.

More of the Same: Sunday's NY Times sees a bright and happy future for the US, based on endless greed without any moral constraint or responsibility.

The High Priced Spread: Expect oil to trend higher. Global demand is expected to rise from this year's 84.6 mbd to over 86 mbd in 2010 – and that's the level of demand that drove prices to $150 in mid-2008. Add in the decline of the dollar and recovery-dampening oil prices look to be a sure thing.

Keeping Score: The Dow has broken 10,000 for the 26th time, with the first time being more than a decade ago. In lieu of gifts, please direct donations to a local homeless shelter.

Ennui: It is becoming evident that we are sinking slowly into an economic depression. The middle class now lives from paycheck to paycheck. Half of mortgage owners have no equity, no sense of ownership in their houses. Nearly 20% are unemployed or underemployed. Millions more will be evicted before Washington gets through sending money to Wall Street. But still the people slumber in front of the TV. Anger? What's the point?

How'd GS Do It? It was easy. We gave them $76 billion, loaned them $2 trillion more at less than 1% and then guaranteed their losses. Or something like that. And where's that anger?

Solomonic solution: Some argue for deflation. Others point to quantitative easing and scream inflation. Who's right? Both. For the immediate future, Americans' net worth will decrease and their food and energy bills will increase, while house prices fall as the economy suffers the effects of both inflation and deflation. We live in interesting times.