Judenrein in the Middle East

There were two contrasting news reports in the last couple of weeks that perfectly clarify the Arab-Israeli conflict. The first was a comment by Pal president Mahmoud Abas on 12/24 when he said that in a future Pal state there would not be any Israeli presence. This includes any IDF presence but more importantly any presence of Jewish settlers. Thus Jews are not allowed to live in a Pal state, in effect he wants it to be Judenrein.

The second news story was a poll conducted amongst 1000 East Jerusalem Arabs who live within Israel to determine what they would do if a Pal state was created. Of the 1000 polled 54% said if their neighborhood remained in Israel's hands they would not move to the Pal state and would prefer to stay in Israel. If their neighborhood became part of the Pal state 40% said they would try to move into Israel and only 37% said they would want to stay in Pal state.

Arabs living under the Israeli government have some of the highest living standards of any Arabs in the entire Middle East. They enjoy voting rights, participation in government, superior health care, better job availability and educational opportunities for their children. Granted it is not perfect and there is disparity between Jews and Arabs but the truth is in the poll data as the Pals know that they are better off under an Israeli flag than an Arab one. This demonstrates the Israelis firm belief in religious tolerance and human rights.

On the other hand, why can't Jews live under a Pal government? If Jews want to live in Hebron, the site where the Patriarchs and Matriarchs were buried, they should be able to despite the presence of an Arab government. I do not think most Jews would choose to be residents of Arab controlled lands seeing how the citizens of such countries are treated by their governments. But the absolute requirement of Abas to devoid their land of Jews says a lot about their religious intolerance, lack of compassion, and disbelief in human rights.

So the logical conclusion of these two news stories is a situation where Arabs can only tolerate living amongst themselves to the exclusion of any non-Arabs (really non-Muslims as they persecute christian Arabs) while in Israel the Jews treat all their citizens fairly regardless of race or religion. I can understand why the Arabs are so intolerant since they are educated from birth to hate Jews, Christians, Hindus, etc. They even hate other Muslims of a different sect. But why can't other countries (eg. European nations) of the world see this disparity? Why do they continuously portray Israel as the evil oppressor while the pals are the persecuted ones? The evidence to the contrary is so clear and blatantly obvious. The only answer that can make any sense of this irrational, blinded, nonsensical viewpoint is the ubiquitous hatred of the Jew.

While everyone is falling over themselves trying to grant the pals their own judenrein state in order to achieve peace the truth is the average pal would rather live in Israel.

The First Global Bubble

Previous bubbles of assets or financial instruments have tended to be restricted to specific countries. Starting with the famous tulip bubble in Holland and more recently with the real estate bubble in the USA these anomolies were localized. The Nasdaq bubble in the nineties affected predominantly investors in the US market. There were many more asset bubbles not as well known as these but I believe we are about to enter a new situation where demand for commodities will be a global phenomenon and eventually lead to a global bubble.

Essentially, no one will have any trust in paper money. The dollar which is the "reserve currency" will continue to suffer as the treasury can print them to pay off debts and obligations. Eventually, this has to lead to a lessening of value for the dollar. This will lead to a forced situation of returning to a gold standard. It will not be a choice of the government but people will demand payment for goods and services only if that payment is backed up by something tangible.

There is an ongoing devaluation of the dollar and the problem is if you look to another currency to park money they are all trying to devalue their currencies. This is done to maintain exports and domestic businesses. It boils down to which currency is the least bad. The only place to maintain value is in commodities and more individuals and countries will seek commodities to maintain asset value.

China and other buyers of US treasuries will not accept a declining dollar and will cease to purchase our bonds. This will require the interest rate on the treasuries to skyrocket in order to find buyers to accept US debt instruments. This will lead to further printing of money to pay these higher intersest rates causing further declines in dollar value and the viscious cycle continues. I suspect that China will only lend us money if it is backed by a gold standard. Meaning, that their return of principle and interest will be adjusted to reflect any loss due to dollar devaluation (which is essentially a gold standard).

Individuals and governments all over the world will want to park their money in commodities and the demand will be tremendous causing price increases. So the demand side of the equation will also lead to soaring prices. I would not be surprised if new currencies will be created that are backed by a gold standard.

These are fundamental economic trends leading to higher commodity prices but as is human nature they will become overvalued as prices exceed the fundamentals. The bubble will inflate worldwide. So in a nutshell US debt will decline in value on two fronts. The underlying dollar currency is declining in purchasing power and as intersest rates rise the bond's value will decline. So what am I doing? or beter yet what should I be doing?
1. Get out of any bond instruments.
2. Leverage as much as possible (maximize outstanding mortgages and DO NOT prepay). You will be able to pay the debt back with much cheaper dollars.
3. Convert any floating loans to fixed interest rates. Let the money you owe be fixed but let the money you lend (money markets) float.
4. Buy commodities, hard assets, real estate. Tangible stuff.
5. Buy stocks in miners. Better yet become a miner. Don't chase dividend producing stocks because the 2% or 3% from a stock will not look good next to much higher and safer money market rates.
6. Buy the inverse US treasury which rises as treasuries decline. See stock symbol TBT.

I have not done all these things and I am not an expert. Use your judgement.

The Problem

The problem that no one is talking about and that contributes to almost all the other problems in the world is the continued overpopulation of humans on the planet. No one will talk about it because there is no incentive for the individual to do anything about it and solving this problem is essentially insurmountable. Government cannot fix it by limiting the number of births and most religions encourage high birth rates to raise their numbers.

The strain on the natural resources becomes more and more evident with every passing year as more humans demand those limited resources. Every commodity from metals to cotton to grains have been rising to new highs due to the increased demand and limited supply for these items. Oil will continue to trend upwards as more emerging economies catch up with the developed world and crave that black liquid that powers everything. It is inevitable that clothing, food, jewelry, and gas will all rise due to increased global demand. Demand is outpacing supply.

Water is also a limited resource and the human population may find it difficult to provide enough water for everybody. Certain areas will be harder hit, specifically, areas of Africa and Asia may have to wage war to maintain supplies of water for their populations.

Increase in mankind is straining the environment as humans consume so much of the available resources. Deforestation and the resulting decreased animal populations will surely have long term repercussions. The strain on fish populations in our oceans and seas due to overfishing may be nonrecoverable.

More demand on resources promotes more belligerence amongst countries to control those resources and this trend will likely continue. There will be more wars to control these desirable resources.

The overpopulation of our cities, states, and countries cause situations where there are not enough employment options for everybody. Thus there are high levels of unemployment causing civil unrest and redistribution of wealth from workers to non-workers. Too many people and too few jobs will especially hit the young people hardest as they search for employment. Lack of a job/future will lead to greater discontent and uprising by the youth.

Overpopulation is the source of many of our problems but as with many of natures extremes there are self correcting influences. More demand for food and water with limited supplies will result in more famine and death from malnutrition and dehydration. More war with more devastating weapons in order to control resources will lead to more death. More overcrowding of our cities will lead to more virulent strains of microbes leading to more death from infectious disease. This is inevitable as humankind expands to levels that cannot be supported by the natural resources of the planet. Although the problem of overpopulation is not correctable from within, nature will inevitably use its laws to correct this anomaly.

2012: Who Will It Be For The GOP

Here we are at the beginning of 2012 which is the start of 2012 presidential campaign. I guess we know who the democratic nominee will be. I don't think anyone has a chance of competing with BO. Hillary doesn't have a chance since BO will get 98% of the black vote in any challenge and this is too much of a head start for Hillary to overcome. She does not want to be seen as the anti-black candidate and will have to wait for BO to leave office for her to give it another go. No one else could give a serious challenge.

The republicans though, provide an interesting picture. Palin is an automatic loser and a guarantee of four more years of BO. She is not presidential material and I really hope she knows it. She is great at rallying the people on the right and is terrific for the party. She will get out the vote, raise lots of money for republican candidates, and help in many state and local elections. She should be the cheerleader in chief for the republicans not try to be the commander in chief.

Romney is difficult because of Romney care. No matter how much he tries to separate Romey care from Obama care it is an impossible feat. Health care is one of the most important issues of the election and he will not be able to provide a vision that is significantly different from Obama care. This sinks his candidacy.

Newt is the smartest idea man of the republican party and if I had my choice I would want him as my president. But unfortunately I think he is unelectable. There is a certain staleness that I feel a politician gets after he has been around for a while. People lose their excitement after a while and I think he would suffer from that.

Huckabee, I have never been to thrilled about as a candidate. I don't think he generates much connection with the voter and I don't think he would create significant turnout.

So who is it going to be for the GOP? I think it is going to be someone who is not yet on the radar screen. The best person would be a governor over a senator or congressman. Governors are natural precursors to presidents as they run a state government with responsibility for budgets. Contrarily, congressmen fight over bills without the individual onus of the success of the country.

The nominee should be from a state which has shown that republican ideals have improved the financial outlook of the state. They should have been in office for a minimum of three to four years. They should have made inroads into cutting government size and intrusion as well as government spending. They should be seen as being able to stand up to unions and special interest for the benefit of the taxpayer. These policies are exactly what the American people want and having demonstrated they could implement them in there states, the electorate will want them implemented nationally.

I am sure such an individual exists but right now they have not taken to the stage. In the next few months we will see who enters the race.

Rationing Health Care Part II

My daughter texted me last week that she didn't quite get the last blog entry, so I wanted to expand a little on that topic. I also wanted to mention that I am not opposed to industry discovering and profiting on new health care modalities. Free market forces promote the development of new techniques and drugs and the profit that follows is the reward for taking the chance on such a development.

People in the pharma industry would defend the high cost of new drugs in the following way. They note that the cost to bring the drug to market is very expensive. Only one in a hundred molecules that go through expensive trials actually make it to market so they have to recoup the cost of not only the marketable drug but also the molecules that were developed and tested that never made it. They also would mention that by keeping people with chronic diseases healthy with newer technology, other costs such as long term hospitalization or institutionalization have abated. Lastly, they would stress the enormous impact that new drugs and technology have had both by lengthening people's lives and improving the quality of those lives. Is there any price to be placed on those factors?


Sometimes by looking at an extreme example you can clarify the problem and possible solutions. Lets say that an imaginary drug company named Eternity Therapeutics develops two drugs. Drug A can cure cancer but you must take it for the rest of your life. Drug B can stop you from aging but must also be taken daily or the aging process will resume.(Btw, these are not fantasies but research is now taking place to achieve both of these). The cost of each drug is one million dollars per year. Why is it so expensive? Maybe it has ingredients that are extremely rare and thus is in limited supply. Maybe Eternity Therapeutics knows they can get their price so they price it at whatever the market will bear.

So who should pay for drugs A and B? Private insurance companies will not include these drugs in their benefits. Their premiums would have to be too high to include these drugs. If government included these drugs in their benefit packages, the country would go broke (I should say, even more broke than they are currently). Ultimately , it is unaffordable and only the rich will be able to get them. At some point the cost of extending peoples lives will just cost too much for society. The only question is where is that point. Will we be able to have the discussion without the opposition declaring death squads or throwing granny under the bus.

My point in the previous blog was not to demonize private industry regarding the cost of new drugs/techniques. Hopefully, they can continue to develop drugs and profit without charging exorbitant fees. Their profit should be generated from all countries not just the USA which pays higher fees than other countries. The point was only to raise the notion that the costs of new technology have outpaced the ability of society to pay for them. What's the use of developing new drugs if society cannot afford them. Eventually, industry will conclude that if there is no profit to be had further innovation will cease. Everyone loses.

Rationing Health Care, A Must

I was talking to a friend of mine who works in the pharmaceutical industry last week. He was on a trip trying to market the use of a drug for multiple sclerosis. He was circulating amongst neurologists in my area trying to encourage these doctors to use his drug. Out of curiosity, I asked him how much the medicine costs and he responded $48,000 per year. I told him that I thought that was a ridiculous price and he responded by asking if I knew how much it costs to investigate new drugs and bring them to market.

So here is the problem. We are discovering drugs and new medical devices that can extend the duration and quality of people's lives. That is wonderful but the problem is we cannot afford it. The advances in the medical and pharmaceutical industries have outpaced our ability to pay for it. There is no way government can afford to pay 48K for one drug per year to extend peoples lives with MS. Insurance companies would have to charge such high premiums if this drug was included in their benefits that it would be unaffordable. That is a sad statement but indicates ultimately the requirement at some level to ration care. At some level there must be a limit to an individuals medical consumption and the population of this country needs to understand that and establish the limits.

In Europe the governments decide which medications and technologies are allowed in the country. Part of their determinations are guided by a cost/benefit analysis. Can we afford to pay for this procedure or this medication? Is it worth the benefit received by the individual and society as a whole? In fact, I asked my pharmaceutical friend if the MS drug is being used in Europe and he said it was rejected. Likely due to cost as its efficacy has been proven. We in the US need to have this conversation and set limits. As technology continues to advance we will surely bankrupt ourselves using more and more expensive modalities.

People should be able to choose an insurance policy that would cover these extremely costly medications and they would be required to pay the fair premiums. People should also be allowed to buy a bare bones or catastrophic policy in which case they would not be covered for expensive drugs and would either not get it or have to pay out of pocket. In both cases, with private insurance the individual sets the limits by purchasing the appropriate policy/benefits. The problem is if you are on government insurance. What are the limits that should be set? Who should set it? Very difficult questions that we have to confront, but we absolutely must and soon.

Barney the Dinosaur

Barney the purple dinosaur sings never talk to strangers that's very good advice cuz you just can't tell if they're good or bad even though they may seem nice. After traveling to Israel over Thanksgiving I experienced a glaring difference between life here in the states and life in Israel. It is so embedded in our culture to be wary of strangers. Barney the dinosaur is indoctrinating our three and four year old kids to avoid any interaction with strangers as they are not to be trusted. Of course, this is necessary in our society as we are so disconnected with each other and bombarded with criminal activity every night on the news. It is a survival tactic that we learn at a young age. Contrarily in Israel, where people are interconnected by their religion, heritage, and nationalism there is much less wariness of strangers.

While traveling in Israel, for the most part, I traveled as a tourist. Stayed in a touristy hotel, went to touristy restaurants and went to historical sites visited by tourists. But I traveled by buses to get around, not by cabs, and this gave me a feel for life in Israel. Conversations take place on the buses between strangers all the time and sometimes get pretty heated. What struck me was when women with strollers would get on or off the bus there was always some stranger helping her with the stroller. My daughter who is studying in Israel tells me she would fall asleep on the shoulder of a stranger sitting next to her on the bus. She would wake up suddenly and apologize but the stranger would encourage her to put her back down and go back to sleep. Little children go on buses by themselves, something one would never see here.

Contrast that with public travel in New York. When I go on a subway everybody has their heads buried in a book being careful not to look up and actually look a stranger in the face. We become expressionless and dare not eyeball anyone in the subway car lest this lead towards an acknowledgment of another's presence. I do not recall ever seeing strangers helping each other as we are all too suspicious of each other's motives.

Life in Israel is tough but the interconnection between complete strangers is a benefit of living in a more uniform society. Life is easier here but we live in our little cocoons detached from each other. We live with constant suspicion of everyone and trust only our inner circle. They live with the threat of a bomb coming from an external enemy and we live with the threat of crime by our fellow American. Both locations have positives and negatives and I don't suggest that one is better than the other, just different.

Last week after I came home I saw a 3 year old black girl in the office who sang to me the Hebrew alphabet. She learned it from Barney the dinosaur and anyone with little kids knows that tune. By this little girl learning my culture Barney is creating connections between people but at the same time he is disconnecting people by warning about strangers. Seemingly a contradictory message.
Who knew the purple dinosaur was so deep and complex?