THE WACKY LOGIC OF OIL AND POWER

By Stephen Leeb

In this week's update, we turn to political and moral issues, as well as how to make money …
***** Dull news is good news.
***** The President’s energy agenda.
***** Idi Amin, Saudi Arabia and waking up with fleas.
***** The reawakening left brain of Americans.
-------------------------------------

The most remarkable thing about the market lately is how little changed it is from week to week. So let’s turn our attention away from the short-term picture, towards something with more significant long-term effects

THE WACKY LOGIC OF OIL AND POWER

We have been bullish on oil for as long as TCI has been around. Although it’s not the only important commodity in an uptrend today, we believe oil exerts a stronger influence on the market than anything else. Consequently, we felt compelled to comment on how energy was dealt with in President Bush’s State of the Union Address last week.

First of all, we usually avoid politics in these updates. But it is clear America has become a house divided over the issue of how to handle Iraq, with much of the country favoring a change of course and the President sticking to his guns, literally. We don’t presume to know what, if anything, can heal that country, but we are pretty sure about one thing. The President would not be so firmly committed to a project so costly (in lives as well as dollars), so lengthy, and so unpopular if Iraq were not sitting on large oil reserves.

Our modern Western world was built on cheap oil. And our government will fight tooth and nail to maintain its supremacy by keeping control of as much oil as possible. (Unfortunately, so will the rest of the world, and therein lies the danger.) But that's not the most important aspect of the President’s speech. What appalled most about the President's words were his proposals regarding alternative energies, particularly his emphasis on corn-derived ethanol.

As a recent article in Scientific American pointed out, turning corn into ethanol is a non-starter. Corn is just far too expensive to use for fuel. If we try, we will only drive corn prices up to unaffordable heights. Soaring corn prices would in turn mean soaring prices for beef, chicken, pork, and any other animal we currently feed corn to. Growing enough corn to satisfy our fuel needs would also take too much land and water. The result would be a fuel that cost more than gasoline.

In fact, some have argued that it takes more energy to produce ethanol from corn than burning ethanol would produce. Now, if ethanol were made solely from corn stalks and otherwise wasted plant materials, it might make sense. But that doesn't look like the policy we're getting. Instead and we hate to say this the President's plan seems geared towards winning votes from farmers in the mid-West who would benefit from outrageously high corn prices. It may make good political sense. But it will NOT meet our need for affordable energy.

We cannot help notice the strange logic that dominates this issue. On the one hand, the world powers are willing to go to tremendous lengths and costs to secure oil supplies, yet when it comes to other energy sources, the efforts made are never more than half-hearted. The people of the future may well wish that today's leaders had spent less money fighting wars for oil, and more money developing sustainable alternatives. And speaking of the costs

RECOMMENDED FILM: THE LAST KING OF SCOTLAND (YES, IT SAYS SOMETHING IMPORTANT ABOUT INVESTING)

Recently, I enjoyed Forest Whitaker's excellent performance as Idi Amin in the film, The Last King of Scotland. Idi Amin, as you doubtless recall, was once President of Uganda. During his time in office, he ordered the slaughter of an estimated 300,000 members of minority groups in that country. (The title of the film reflects the fact that Amin liked his soldiers to dress in Scottish kilts.) It was a very well made film, though gruesome in parts, and Forest Whitaker certainly deserves the Golden Globe he has already received for the role, and possibly the Oscar as well.

However, the film reminded me of the appalling fact that Idi Amin in real life never was brought to justice. Instead, when he was finally deposed by an army composed of Tanzanians and Ugandan exiles, his only punishment was exile to the kingdom of Saudi Arabia, where he lived comfortably for over 20 years. Keep in mind, this man was as brutal and nasty as Saddam Hussein, if not worse. Yet, Saudi Arabia offered him sanctuary. Saudi Arabia, which is our best if not only real hope for our future oil supplies, assuming they aren't exaggerating how much oil they have.

We seem to recall a few years ago a country harboring a man named Osama who had orchestrated mass murder. In that case, our government was willing to bomb it back to the Stone Age if he wasn't brought to justice (he wasn't, and the bombing took place). Yet, Amin was safe in Saudi Arabia until his death in 2003. Meanwhile, the Saudis continue to be our best of friends, and we are doing nothing to end our dangerous dependency on them.

As the saying goes, if you lie down with dogs, you may wake up with fleas. Well, in the schizophrenic government we have today, the right brain may think oil is the only answer, but the left brain (the part that thinks holistically) seems to be shifting its priorities towards alternative energy sources. In fact, we think support for alternative energy will soon be higher than even in the 1975-85 period. Not only is fear of an oil shortage reaching the marketplace, but awareness of environmental issues such as global warming is spreading rapidly.

We're not completely convinced that today's environmental anomalies are due to fossil fuels, but we see that policymakers are becoming convinced. And that's all it takes to create an investment opportunity. Meanwhile, the trend is your friend and the short-term trend is still upward. All the positive factors we have discussed for the past month are still in place, with the continued exception of the Dow Transports. They are close to new highs, but not there yet. Nonetheless, we see few problems in the week ahead (baring, of course, extraordinary events).

Until next week,
Stephen Leeb
Editor,
The Complete Investor

http://www.completeinvestor.com/mf/

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CRB Dominated by Oil

by Adam Hamilton

Until this week, many of the trading days in January have been just another turn of the screw for beleaguered commodities investors. With prices falling and psychology dismal, countless bearish theories have taken root like weeds in the fertile pessimistic soil. The ranks of even the incorrigible commodities bulls have thinned.

Yet over the last few days, like a warm spring breeze bringing hope for the end of winter, we've seen some nice gains in key commodities' prices. Rising prices, even for a short spell, do wonders to pry the icy black fingers of bearish fear off the hearts of investors. With excessive bearishness bleeding off, finally investors can rationally consider commodities again.

I want to exploit this island of rationality amidst a sea of gloom and doom to try and kill a dangerous bearish falsehood that is misleading many. Just as a carefully crafted heresy can sway the hearts of even the long-time faithful, this particular bearish notion is wreaking havoc among even the long-time commodities investors. It is best we drive a jagged wooden stake through its heart and send it back to the obscurity it deserves.

This dangerous theory is the widespread notion today that the long-term commodities uptrend has been broken so this bull market is technically over. Since it only takes a chartist two minutes to demonstrate this on a CRB Commodities Index chart, this pernicious idea is spreading like wildfire. It looks sound on paper, but a critical flaw exists in this thesis that negates it outright. Sadly since few know of this flaw, this false idea has hoodwinked many.

The show-stopping problem with the now infamous broken secular support line of the CRB has to do with this flagship index's composition. As I will explain in this essay, the CRB index that generated the major support line that failed in recent quarters no longer exists. The new CRB index that replaced the old CRB is radically different in construction and execution and totally incomparable. It is worse than comparing apples and oranges.

Interestingly stock guys totally understand that indexes change. Stocks are added and removed from the S&P 500 and NASDAQ 100 all the time. Interestingly in the NASDAQ 100's case, of the 100 component companies that were in this flagship technology-stock index near its early 2000 secular high, only 39 remain in it today. It is wild to realize that 61% of 2000's elite tech stocks have been booted from their elite index!

But commodities guys, probably because there aren't that many commodities around relative to the thousands of stocks, seem to overlook the fact that indexes change. The flagship CRB index has actually had ten major revisions since it was launched in 1957. Just like a stock index, a commodities index has to change in order to keep up with the times and fairly reflect today's, not yesterday's, key commodities.

Although having a changing yardstick creates obvious problems of comparability, not having one leads to obsolescence and irrelevance. For example, of the 28 commodities included in the original CRB of 1957, there are quite a few that just aren't relevant at all in our modern economy. Can you imagine if rye, potatoes, onions, hides, and lard were still in the CRB today? It would be laughed out of the markets! Lard?!?

Historically when the CRB was periodically revised over the last 50 years, the changes involved component switching/adding/removing only. For example, in the CRB's 4th major revision in 1973, lard (among other commodities) was removed and coffee was added. Coffee, a commodity more critical than water for many people these days, has remained in the CRB since. It is a far better component choice for today's economy than lard.

Nine times after the CRB was introduced a half-century ago, periodic revisions happened where fading older commodities were swapped out for other ones with rising usage and importance. Yet over all that time between 1957 and 2005, the calculation methodology for the CRB essentially remained the same. All component commodities were equally weighted and geometrically averaged. This geometric averaging, across all components' prices collectively, banished extreme volatility from this index.

But in mid-2005, in the CRB's tenth revision, an incredibly radical change took place. Not only was the CRB's list of individual components adjusted as usual, but its entire calculation methodology was truly radically changed into something new never before seen in this index. The equal weighting and traditional geometric averaging that were used for the first 48 years of the CRB's life were thrown out the window.

Each one of these core calculation-methodology changes alone would have rendered the CRB highly incomparable to its entire history, but both of them together created an entirely new index. It is not at all comparable to its previous half-century. Provocatively the CRB's secular uptrend support line that just failed, terrifying commodities investors, straddled this radical tenth revision.

Before we get into the notorious technicals that are misleading investors, it is important to consider the tenth CRB's typical component and unprecedented weighting changes. Right before this tenth revision went live in July 2005, I wrote an essay discussing it in depth. This chart is lifted right out of that earlier essay and is tremendously important to understand if the CRB's recent behavior concerns you.

In the 48 years before the tenth revision, all components had equal weighting in a perfectly sliced pie. But in the tenth revision a monster arose and consumed much of the pie, kind of like me every Thanksgiving. The weight of crude oil was radically raised to 23.0% of the entire CRB index, compared to the mere 5.9% it had commanded since it was first inducted into the CRB in 1983.

Now please realize I believe this increase in oil's weighting is totally justified. It is absolutely the King of Commodities today. It forms the foundation of our extensive global trade and hence the entire world economy. Virtually everything we consume in the first world is transported via oil-powered ships, trains, trucks, and airplanes. Without oil, the incredibly intricate global logistics network on which we so heavily rely today would grind to a halt. We would be thrust back into the Steam Age before flight and global trade would implode. Oil's supreme importance is unassailable.

This being said, the fact is today's CRB is radically different from all the CRB history that came before it. And believe it or not, the 5.9% to 23.0% increase in oil understates this case. In today's CRB, both heating oil and unleaded gasoline are also included. But of course both of these crucial commodities are refined from oil and hence directly dependent on oil's pricing. Since gasoline wasn't in the ninth CRB revision, the effective weight of oil products soared from 11.8% to 33.0% in the tenth revision.

Thus today oil effectively dominates the CRB comprising a full third of its weight! 33% is an enormous weighting in an index. For a comparison, tech-stock traders know that the NASDAQ 100 is heavily dependent on Microsoft's fortunes since it is the biggest tech stock on the planet. But even that tech monolith only accounted for 13% of the NASDAQ 100's market cap as this year dawned. At 33%, oil is the CRB!

This crucial fact has enormous implications for anyone who watches the CRB. Before July 2005 oil played a small role in the CRB in line with that of its commodity peers. Since July 2005, oil has been weighted 5.5x to 33.0x times higher than any other individual commodity component. Before the tenth revision, the other commodities could override oil if they were moving in different directions. Today oil's CRB dominance is virtually unchallenged.

Now these huge weighting changes alone would render the CRB incomparable to its past, but the jettisoning of the traditional geometric averaging means we have an entirely new index since mid-2005. Geometric averaging vastly reduces the impact that any one component's price can have. It results in a tremendous smoothing that creates a calm and lazily meandering index. The new arithmetic averaging removes this excessive smoothing to create an index far more responsive to price moves in any individual component.

And indeed, just as the underlying math predicts this is exactly what we've seen since the tenth revision. This chart shows the history of this commodities bull in CRB terms, including the now infamous broken secular support line that is igniting so much angst. The behavior of the ninth CRB revision before July 2005 and the tenth CRB revision since is radically different. They are not even close to being the same animal anymore.

The CRB itself continued its tight secular uptrend for a little over a year after its tenth revision was made. But based on what I know about the CRB's construction and the radical changes that took place in mid-2005, I suspect this apparent trend continuity is more coincidence than anything else. Yes, support on the tenth CRB revision failed last autumn, but this support line for the new CRB was only valid back to its July 2005 creation, not to this bull's birth in late 2001.

The raw difference in volatility that the end of geometric averaging yielded is really pretty stunning. In this chart, I traced the CRB both before and after its tenth revision with a smoothed line. You can see these lines offset away from the CRB itself. This volatility approximation prior to July 2005 is very smooth and sedate, generally meandering lazily with sharp moves between support and resistance few and far between.

But after mid-2005, the volatility approximation line for the CRB started jumping around aggressively. Now oil, itself very volatile, effectively made up a third of this index and there was no more geometric smoothing anyway to throttle down extreme price movements in any component. The CRB started jumping around in its perceived continuing uptrend channel like a little kid who just ate a plate of cookies and has pure sugar flowing through his veins.

Since the behavior and volatility characteristics of the CRB were radically different before and after the tenth revision, it is totally irrational to extend the same trend lines across that vast change. The fearmongering technicians doing this, regardless of through ignorance or malice, are comparing apples to oranges. The CRB since its tenth revision is an entirely new index with no comparable roots in the past and no history.

The way this new CRB is constructed, it has no choice but to immediately and completely bow to the will of oil. If oil is strong the CRB will thrive, and if oil is weak it will suffer. Ultimately the CRB's notorious support breakdown is merely a reflection of the tremendous correction we've witnessed in oil over the last six months. Many other commodities have been relatively strong compared to the horrific carnage in the oil pits.

Oil's bull market really didn't start firing on all cylinders until 2004, when it finally climbed above $30 for good. This next chart examines oil and the CRB since then, a rather convenient span of time for our purposes today since the tenth revision is right near the middle. There are very clear differences between how the CRB interacted with the oil price in its ninth-revision days compared to the last 18 months of tenth-revision action.

With the oil complex being weighted at 11.8% in the ninth CRB revision yet geometrically smoothed, the CRB was not heavily influenced by oil. In 2004 alone for example, we see a strong CRB rally while oil was largely flat and a couple of quarters later a strong oil rally while the CRB was largely flat. Even more tellingly, when oil plunged in late 2004 the CRB actually rose during the first half of this huge swoon! Why? Other component commodities were thriving and they outweighed the struggling oil price.

But since the tenth revision with the oil complex weighing in at a hefty 33.0%, the CRB is slaved to oil. Today the CRB cannot do anything unless oil does it first. This, along with the straight arithmetic averaging, has led to vastly more volatility in the CRB that perfectly matches that of oil like a key in a lock. So when oil started plunging late last summer, the tenth CRB revision had no choice but to plummet in sympathy, quite unlike in 2004 when the CRB ignored another massive oil plunge.

The big "secular" CRB support line break shown above that is tormenting commodities investors is really nothing more than a massive oil correction. Yes, this oil correction is easily the biggest of oil's bull market, but what can we expect in the warmest year in the US in over a century? We had an anomalously very warm winter in the States, a rare event, so oil-complex demand fell, inventories rose, and prices sold off.

The CRB "breakdown" is merely a reflection of the problems in the oil market, not commodities as a whole. When investors look at the CRB today, they should just think "oil". Oil utterly dominates this index now and it will continue to do so until the CRB's methodology and weighting change. And flagging oil fortunes due to an amazingly warm winter do not translate into fundamental problems across the board in commodities. This is oil-and-gas specific only.

I hate falsehoods and it really irritates me when market commentators mislead investors due to insufficient research. If they are going to guess on the future and be wrong, fine, that is speculation. But to bring up a CRB chart, show a dire long-term support breakdown, but conveniently fail to mention that they are really looking at two radically different indexes, is unacceptable. To me it reeks of gross negligence or fraud.

As I write about this issue publicly and in my newsletters to try and help investors really understand what is up with the CRB, I invariably get questions asking why I don't reconstruct the ninth-CRB-revision methodology myself and graph it out to today to compare with the tenth CRB revision. Believe me, I really want to. Unfortunately I lack the mental firepower to pull it off so some mind far superior to my own will have to do it. Here is the problem for me on ninth-CRB-revision reconstruction.

I am a student of the markets and love this stuff, but I have never seen another index even remotely close to the complexity of the old CRB. First, it didn't just use one commodity price, it used many simultaneously. We'll use oil for this example. The old CRB, multiple times a day, took the oil price across multiple oil futures contracts expiring within the next six months. Then it arithmetically averaged them. So a reconstruction would require extensive historical daily data from all futures contracts for each component commodity simultaneously and a hideously complex spreadsheet to run the numbers.

And if it is possible to reconstruct this first part of the old CRB, individual component "pricing" daily, then the second part must be undertaken. Each individual component price, itself an average of many futures prices, has to be equally weighted and then geometrically averaged with the other components. All this is possible, but getting the raw data historically for a broad array of futures simultaneously and properly crunching the data would be a Herculean task at best. And the result would probably only approximate a hypothetical extended ninth CRB revision.

So I would love to see what the ninth CRB revision would look like extended to today. I hope someone out there can build it. I know this for sure, the CRB breakdown would either be vastly smaller, a minor dip under its long-term support, or it would not exist at all. While crude oil is important, it is not the only commodity in existence. And all commodities trade independently on their own inherent individual supply-and-demand fundamentals.

Most of the time when I have seen bears use the CRB support breakdown to frighten people, they have used it in the context of declaring that it must mean the secular commodities bull is over. But even this raw technical premise is flawed. In a secular bull market, all a correction means is that there is a temporary surplus of either supply or greed. Once this temporary imbalance is rectified, the long-term bull will continue if fundamentals remain intact. Oil's bull is not over fundamentally, not by a long shot, and the warm-winter disruptions will be absorbed sooner or later.

The bears also claim that commodities were at an all-time high last spring and therefore their bulls have run their courses. Nonsense. Thanks to the ever-inflating fiat-paper money supplies in the US and around the world, valid multi-decade comparisons cannot be made in nominal dollars. To compare today's commodities bull with that of the 1970s, inflation must be considered. Although conservative since it understates true monetary inflation, I am using the US Consumer Price Index as my inflation proxy in this next chart.

The blue line is the nominal, unadjusted CRB that the bears are fretting over. Yes it looks high compared to the 1970s. But the red line is the CPI-inflation-adjusted CRB, and shows the true state of commodities prices today given the vast decline in the purchasing power of each US dollar thanks to the Fed's prolific printing presses. In proper monetary context, the action prior to the recent CRB carnage looks merely like a modest initial upleg of a long secular bull!

Even at its top last spring, the real inflation-adjusted CRB was only near early-1990s commodities prices. And as you can see above, those early-1990s prices were already very low after decades of sliding real commodities prices. Today, after the sharp correction in the CRB since last summer, the index is merely back to late-1990s levels. This is not too far above the secular commodities lows of late 2001! Commodities remain very cheap today!

To see real commodities prices comparable to those of the 1970s, the CRB would have to climb near 800 to hit early-1980s real price levels and even higher to hit the real prices seen shortly after Nixon severed the last remaining vestige of the US gold standard back in the summer of 1971. And really, since the tenth CRB revision is so radically different from the nine before it, who knows how high it will go this time around? I guess it depends on how high oil's bull ultimately carries it.

One more thing to note here. I drew in previous CRB revisions on this chart, although all were trivial component swaps/additions/deletions compared to what we saw in the summer of 2005. All indexes periodically change over time and such changes need not cause anxiety. Modifying the CRB, or indeed any index, is simply par for the course as time relentlessly marches on and economies and markets evolve.

While I do love comparability as a student of the markets, I ultimately think the radical changes in the CRB at its tenth revision are good. Nothing attracts investors to new markets quicker than volatile prices that are rising on balance. Without all the excessive geometric smoothing of the old CRB, which I never liked, it will be free to experience far larger and more exciting moves than would have been possible in the old CRB. And big up moves will really capture mainstream investors' attention and affections.

At Zeal we very much believe the secular commodities bulls are alive and well, including oil's. Lately we have been focusing much of our attention on gold and silver though, as the precious metals seem to be early on in major new uplegs that should yield tremendous profits. If you are interesting in seeing our latest recommendations for high-potential gold-stock trades, please subscribe to our acclaimed monthly newsletter today. January's fears have yielded an awesome time to load up on elite precious-metals stocks.

The bottom line is the CRB index radically changed in mid-2005, and severed all ties with its illustrious past. The oil complex now accounts for a third of this index and utterly dominates it. The alleged CRB breakdown advanced by fearmongers is not secular as it is only valid for the tenth CRB revision, or a little over a year. All it proves is there was a huge oil correction on an extremely anomalous warm winter.

If you are a commodities investor, I urge you to look at the fundamentals and not be misled by technicians who are not telling you the truth about the radically different CRB. Some are naïve and don't know this, much to their embarrassment I hope, but others have hidden bearish agendas. The reality is today's secular commodities bulls are far from over because commodities' long-term structural supply deficits still persist.

Adam Hamilton, CPA
Zeal LLC.com

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Mr. Hamilton, a private investor and contrarian analyst, publishes Zeal Intelligence, an in-depth monthly strategic and tactical analysis of markets, geopolitics, economics, finance, and investing delivered from an explicitly pro-free market and laissez faire perspective. Please visit www.ZealLLC.com for more information, www.zealllc.com/samples.htm for a free sample, and www.zealllc.com/subscribe.htm to subscribe.

Copyright © 2000 - 2006 Zeal Research

The Rising Liquidity Wave!

by Puru Saxena

Capital markets powered ahead in 2006. As expected, the big winners were the emerging stock-markets led by Peru, Vietnam, Venezuela, China and Russia. The laggards however were the stock-markets of the "developed" world - no surprises here for my regular readers. Over in the commodities arena, several base metals (zinc, copper and nickel), precious metals (silver, palladium and gold) and grains appreciated significantly.

So, how can we explain the simultaneous rise of so many uncorrelated markets?

During the past 12-months, the ongoing monetary-inflation, credit-growth and expanding liquidity environment drove up prices in various markets. Apart from rising interest-rates and unrest in the Middle-East, we did not get any major negative developments on the economic front, which also helped the global markets. Finally, the US housing slowdown did not curb borrowing and affect consumer spending, thereby preventing a recession. So, what can we expect in 2007 from the various asset-classes?

STOCKS - Going forwards, I expect the liquidity environment to remain supportive of asset prices resulting in another good year. If my assessment is correct, emerging-market equities and commodities should (once again) be the biggest beneficiaries in 2007. Even the US stock-market may surprise to the upside.

Figure 1: Dow Jones rallies after mid-term election year

Source: Chart of the Day

This is a pre-election year (US elections are scheduled for November 2008) and history has shown that during pre-election years, American stocks have done well. Moreover, each mid-term election year in the US since 1950 has provided investors with an opportunity to profit from a significant rally (Figure 1). The current rally began in June 2006 (prior to the mid-term elections) and if historical patterns remain intact, the Dow Jones should advance strongly over the coming year.

The US economy is currently undergoing a mid-cycle slowdown and the chances of a full-blown recession are slim. Over the coming months, I expect US housing to deteriorate further but a crash is highly unlikely. In other words, I anticipate a soft-landing in the US economy. For sure, the world's largest economy has severe problems (record-high indebtedness and sky-high deficits), however other nations want to sell their merchandise to the US and are willing to finance its deficits. As long as this continues, the US economy should be able to live on borrowed time.

I am of the opinion that despite a slowing US economy, growth in other parts of the world may remain unharmed. Asia is advancing at a blistering pace, Latin America has turned around and Eastern Europe is developing rapidly. In fact, the "developing" world is expected to outperform the industrialised nations in the future (Figure 2). Accordingly, our managed-accounts are invested in the fastest-growing regions of the world. At present, my preferred stock-markets are Brazil, China, Mexico and Russia. Furthermore, I may add that assets in the US will continue to disappoint for as far as the eye can see.

Figure 2: World economic-growth trends

Source: Morgan Stanley

COMMODITIES - Over the coming year, I expect commodities to resume their bull-market and make headlines all over the world. Despite all the negative news surrounding natural resources, the fundamental factors have not changed. In fact, the recent consolidation has made commodities even more attractive. Global demand for "things" is rising, supplies are tight and monetary-inflation continues worldwide.

As China and India continue to urbanise, it is estimated that more than 150 million surplus workers from rural areas will move to cities by 2020. It is interesting to note that roughly 60% of China's population and 70% of Indians still live in rural areas. These numbers are shockingly high when compared to a more developed Asian nation such as Korea, where over 80% of the population live in cities!

Back in 1980, over 80% of the China's population resided in rural areas (versus 60% today) and this number is expected to decline further to 40% by 2030. India is lagging in this department as its rural population has not fallen much over the past 30 years, but the downtrend is expected to accelerate in the years ahead (Figure 3).

Figure 3: Major population shifts ahead!

Source: United Nations

I am sure you will agree that people in cities generally earn more money when compared to rural areas. For example, the per-capita income of rural households in China is US$510 whilst it is US$1,400 in the case of urban households.

Once the millions of Asians move to urban centres and become wealthier over the coming years, they will demand a better quality of life and all the "creature-comforts" you can possibly imagine. These people will want bigger homes, washing machines, televisions, refrigerators, motorcycles, cars and so forth. Now, unless you are a central banker and have the ability to create something out of thin air, it is safe to assume that the demand for all these goods will require an immense quantity of raw materials such as cement, steel, copper, rubber, zinc and energy.

Now that we have established the case for a sustainable rise in the demand for natural resources, let us examine the supply dynamics. Throughout the 1980's and 1990's, prices of commodities were caught in a vicious bear-market. The devastation was so severe that the majority of the commodity-producers did not invest in spare capacity. After all, there was no incentive to spend more money and increase supply when prices were falling sharply! So, when the demand for commodities suddenly began to rise 4-5 years ago, nobody was prepared for it. Even today, despite the surge in the prices of raw materials, spare capacity and stock-piles are extremely low.

Figure 4 shows the price and inventory levels (shaded area on the chart) for both copper and zinc. Since December 2002, both these base-metals have risen sharply to all-time highs, yet their inventory levels are close to or at record-lows.

Figure 4: Base-metal inventories extremely depleted!

Source: Raymond James

These days there is a lot of noise about the copper "bubble". It is my observation that asset-bubbles are usually accompanied by an over-supply of the item in question and build-up of its inventories. Yet, if you take note of the copper inventories on the London Metals Exchange (Figure 4), you will quickly realise that the "bubble-talk" is totally absurd! On the contrary, supply-shocks in the near future may cause inventories to diminish further as Bolivia plans to "industrialise" a river that supplies water to Chile's Atacama Desert, thereby threatening the world's largest copper-mining district.

I suspect copper (like many other commodities) is simply consolidating within its ongoing bull-market and its price in real (inflation-adjusted) terms is still way below its all-time high recorded in the 1970's. Over the coming days, copper may decline somewhat more but once the correction is over, I anticipate copper to resume its uptrend in the latter part of 2007. Utilise any weakness in the near-future as an opportunity and consider investing in copper-mining companies that have huge reserves and cash-flows.

Furthermore, it seems to me that the multi-month consolidation in precious metals is now almost complete and we are likely to see upward moves over the coming weeks. Both gold and silver have built a huge base and they have recently shown strength in the face of a strong US dollar - impressive action. It is my belief that this maybe the final opportunity for investors to buy precious metals and quality mining stocks at these depressed levels - it always pays to buy when the sentiment is negative.

Finally, as the central banks continue to debase their currencies through monetary inflation, precious metals and other tangible assets should appreciate significantly over the coming years.

The above is an excerpt from Money Matters, a monthly economic publication, which highlights extraordinary investment opportunities in all major markets. In addition to the monthly reports, subscribers also benefit from timely and concise "Email Updates", which are sent out when an important development in the capital markets warrants immediate attention. Subscribe Today!

Puru Saxena
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Puru Saxena is the editor and publisher of Money Matters, an economic and financial publication NOW available at www.purusaxena.com.

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Wakeup America – Understand the Mind of the Jihadist

by David J. Jonsson

The war on terror might be lost not on the streets of Baghdad but in the corridors of Congress. A divided America and Anti-Americanism serves our enemies well. Soon we may see a vote in Congress that says, "We can't stop the surge plan, but we don't support it." It is time for America to understand who the enemy is, the murderous ideology that is driving them and their strategy for success. This would be the Islamist's greatest fear.

It is important to understand that the goal of the Jihadists is – following in the footsteps of Muhammad to create the "Islamic kingdom of God on Earth." The primary goal is not primarily to conquer lands but to Islamize the world. The drive is to instill Islamic law (Shariah) into both Muslim society and the entire world, and ultimately to recreate society under their interpretation of the law. The strategy is to utilize the sword of Islam. The sword may include terrorism, but more importantly it is bringing together groups of people with a common hatred, which can cause the ultimate decline in will of the populous. This cabal has coalesced as the Leftist/Marxist – Islamist Alliance. As we will see pacifism, self-hatred, complacency and appeasement – deserve attention, equally important is the use of Islamic Finance to gradually make the West comfortable with accepting living with Shariah law. See my article: Islamic Economics and Shariah Law: A Plan for World Domination.

In the forward to Militant Ideology Atlas recently published by the Counter Terrorism Center at the U.S. Military Academy General (retired) Wayne A. Downing commented: "President Bush, in his commencement address at West Point in May 2006, compared our nation's current war with violent Islamic extremism to the long struggle against communism and the Soviet Union. The President told graduating cadets from the Class of 2006—nearly all bound for combat in Iraq and Afghanistan—that, "like the Cold War, we are fighting the followers of a murderous ideology that despises freedom, crushes all dissent, has territorial ambitions, and pursues totalitarian aims." The United States and her allies eventually prevailed in the long war against the Soviets but only after making a concerted effort to fully understand the enemy, its ideology, its vulnerabilities, and how these vulnerabilities could be best exploited. Today, over five years into this generation's long war, we do not have this same understanding of the ideology that is driving our enemies; we lack a map needed for planning the way ahead. "Significantly, the report uses these empirical findings to identify powerful messages and influential messengers that can turn different constituencies against the Jihadis. These constituencies range from benign mainstream Muslims to the most violent Jihadis. The recommendations of this report establish a baseline against which strategic communications campaigns can be calibrated and adjusted.

An old adage warns,
"If you don't know where you are going, you'll probably end up somewhere else."

According to Chris Heffelfinger writing in the Terrorism Monitor Volume 4, Issue 24, December 14, 2006 The Ideological Voices of the Jihadi Movement, "It is news to few observers that thousands, even millions, of young Muslims are influenced—to some extent—by jihadi literature circulating on various Islamist websites and discussion forums. The mujahideen's use of the Internet for communication, indoctrination, recruitment and public relations has been well demonstrated. Through this medium, a field of preachers and ideologues compete for the vast audience of young Muslims, attempting to sway their opinion and bring them to the "correct" practice and understanding of Islam. Those backing the global jihadi movement have succeeded in capturing this audience—perhaps more so than other contenders—and have gained a wide following of careful but loyal readers."

"Surprisingly, the study found that al-Qaeda leaders Osama bin Laden and Ayman al-Zawahiri are not highly cited in jihadi literature. They are not considered authorities in Islamic law or looked to as the ideological force behind the jihadi movement. Indeed, in the world of Salafi-Jihadi ideology, they are relatively minor players. One possible reason for this is that the two are figureheads, pioneers in carrying out successful attacks against one of the enemies of Muslims. This suggests that there is a role for charismatic leaders to bring Muslims to jihad, as soldiers to the battlefield, but there is a separate role for these Salafi scholars in setting the broader goals for the movement, the limits and terms of engagement and selecting valid and legal targets. They are, in essence, creating the Islamic legal framework for this struggle so that the basis upon which it is waged will be sound. It is then left to strategists and Mujahid leaders to conduct successful campaigns within this framework."

"For the most influential scholars of the Salafi movement, are such as Abu Muhammad al-Maqdisi, Abu Qatada [See: Extremist clerics face prosecution for backing terror from Times On Line July 14, 2005. Abu Qatada: “Rome is a cross. The West is a cross and Romans are the owners of the cross. Muslims’ target is the West. We will split Rome open. The destruction must be carried out by sword. Those who will destroy Rome are already preparing the swords. Rome will not be conquered with the word but with the force of arms”] and Abu Basir al-Tartusi (Abd-al-Munim Mustafa Abu-Halimah) [See: ‘Islamic Legitimacy for the London Bombings’ Intelligence and Terrorism Information Center at the Center for Special Studies (C.S.S)]. The end goal is never jihad itself. [See also The Book Entitled: '39 Ways to Serve and Participate in Jihad] The objective is to bring Muslims to a Salafi reading of Islam and then to deliver salvation to the global Muslim community. As such, the primary element of the literature is the meaning and implementation of the Shariah. The scholars first bring their interpretation of Islamic law on various political and social issues and present their advice on the appropriate action. The common ground among the scholars behind the jihadi movement is their rejection of Muslims living under apostate laws and political systems governing outside what God has decreed. The required response—for all, but to differing degrees and with differing tactics—is resistance."

It is important to see the relationship between the comments of Sheikh Abu Basir al-Tartusi and comments by Tony Blair concerning the war in Iraq were a disaster. The article by the SITE Institute on November 22, A Whisper in the Ear of Tony Blair and His Government by Sheikh Abu Basir al-Tartusi presents the background. "British Prime Minister Tony Blair’s response in the affirmative that the War in Iraq has been a “disaster,” which was aired Saturday, November 18, 2006, in an interview on al-Jazeera’s English-language channel that was subsequently reported by British newspapers, is the subject of a statement recently issued by Sheikh Abu Basir al-Tartusi. The statement then serves as an open forum for Tartusi to advise Blair, and compel him to admit to disasters in other matters, such as Afghanistan, domestic British affairs, and being led with his “partner,” U.S. President George W. Bush, by Iran and the Shiites as conduits for their agenda."

"On Blair’s comment, Tartusi states: “We thought that you would never understand, and your stupidity was doubled. There was a haze of maliciousness between you and your vision which prevented you from seeing reality and the truthfulness of what happens on the ground. But in the end it became clear that you understood that you were wrong, and your mistake brought ordeals to your people and to other nations, even though this understanding came after it was too late".

The comments of Congressional leaders calling for the withdrawal of troops from Iraq and comments about President Bush parallel and merge with those of Sheikh Abu Basir al-Tartusi. The mujahideen's use of the Internet for communication, indoctrination, recruitment and public relations is thus demonstrated. Thus we see the brochure announcing the protest marches against war in Iraq being presented in Arabic and Persian. (See below.) Al -Jaseerah in an editorial on January 23, 2007 in support of Democratic Congressional moves against President Bush in an editorial by K Gajendra Singh, Texan Poker Bluff and Persian Chess Moves. "The president is living in a dream world,'' US Sen. Barbara Boxer" " Murtha clarified, " You know they say that Al Qaeda is causing the divisions and sectarian violence? The invasion itself is what causes the sectarian violence –It's the occupation causes the violence. That's the problem we have and we have to change directions."

"This drive to instill Islamic law into Muslim society, and ultimately recreate that society under their interpretation of the law, often translates into an endorsement for violent jihad as practiced by bin Laden and others. While there are many Muslim scholars who call for these sources of law to be the primary factors in how Muslims live, the important distinction lies in how one should confront political systems that rule by law other than Shariah. The debate over law and society is critical in jihadi literature. It establishes the framework through which young Muslims should struggle; for these scholars, it is clear their aim is not jihad, but the creation of such a society through jihad, an obligatory struggle for the believer."

"These Salafi scholars play a critical but not widely observed role in the global jihadi movement. Ideology is often overlooked and is considered separate from the strategic and operational aspects of Islamist militancy. Yet, the scholars behind the jihadi movement set the framework for debates and provide direction that is by and large adhered to, or is at the least a determining factor in the planning of attacks. By better understanding their role in the movement, governments combating terrorism can attempt to intervene earlier in the radicalization process and ultimately work toward undermining their influence."

According to the article in MERI Special Dispatch Series - No. 1007 October 17, 2005: Saudi Columnist: Jihadist Salafist Ideology is Like Nazism, "Saudi columnist Muhammad bin 'Abd Al-Latif Aal Al-Sheikh published two articles in the Saudi daily Al-Jazirah, in which he attacked the ideology of the Al-Salafiyya Al-Jihadiyya movement. He said that the ideology of this movement was similar to, or even worse than, the Nazi ideology, and that it should be dealt accordingly. "Therefore, I still believe that one of the primary missions of the international community today is to repeat its experience with Nazism and to deal with this dangerous barbarian culture exactly as it dealt with the Nazi culture. If this does not happen, the near future is liable to bring many [events], the consequences of which will be far more severe for all of humanity than [the consequences] of World War II."

Dinesh D'Souza wrote in January 21, 2007 the San Francisco Chronicle, Pelosi's crew and Osama bin Laden share common goal, "The Pelosi Democrats sometimes appear to be just as eager as Osama bin Laden for President Bush to lose his war on terror. Why do I say this? Because if the Pelosi Democrats were seeking Bush's success, then their rhetoric and actions now and over the past three years are pretty much incomprehensible. By contrast, if you presume that they want Bush's war on terror to fail, then their words and behavior make perfect sense. From the point of view of new House Speaker Pelosi and her fellow liberal Democrats, bin Laden today is, well, a small problem…"Listen to Pelosi and her colleagues on the left speaking about Bush, however, and it's clear they regard him as a very big problem."

"Sen. Robert Byrd compares Bush to Hermann Goering and the Nazis. Hillary Clinton accuses him of "turning back the clock on the 20th century ... systematically weakening the democratic tradition. ... There has never been an administration more intent upon consolidating and abusing power." Sen. Ted Kennedy charges that "no president in America's history has done more damage to our country than George W. Bush.""

"Whether it realizes this or not, the Bush administration is facing a kind of liberal-Islamic alliance: a sympathetic relationship that leading leftists in America have with Islamic radicals around the world. I'm not suggesting the two groups actually like each other. Actually, they despise each other. Leftists like Pelosi, Barney Frank and Michael Moore despise bin Laden and his fellow radicals because they are religious fundamentalists who want to impose Islamic [Shariah] holy law. That means goodbye to women's rights and gay rights and, in all candor, goodbye to people like Pelosi, Frank and Moore. By the same token, Islamic radicals like bin Laden detest the American left because, as they see it, the left is the party of atheism, family breakdown and cultural depravity. The left is in the vanguard of imposing secularism, no-fault divorce, gay marriage and libertine social values not only in America but also abroad."

"But the man who threatens the Islamic radicals and the American left even more than either group threatens the other is Bush. Leftists don't like radical Muslims like bin Laden but they absolutely hate Bush. Why? Because from the left's point of view, bin Laden threatens to impose Shariah in Baghdad but Bush threatens to impose Shariah in Boston. Bin Laden is the far enemy but Bush is the near enemy."

"In the past generation, the left has gone from a party that mainly cares about working people to a party that mainly cares about sex. Labor unions are now a low priority, and abortion and gay rights have become the centerpiece of the left's social agenda. Bin Laden doesn't threaten these rights, but Bush does. One more Supreme Court appointment by Bush, and Roe vs. Wade might be jeopardized. The biggest obstacle to gay marriage today is the president and his allies on the religious right."

This was brought home when Bush Addresses Annual Right to Life March in Washington. "President Bush noted that the U.S. Declaration of Independence cites "life" as the first of three fundamental, universal rights of humanity. He said the concept remains relevant today. "We believe that every human life has value, and we pray for the day when every child is welcomed into life and protected by law," the president said. Many abortion rights defenders, meanwhile, cheered last year's elections in which Democrats took control of both houses of Congress. While the previous Republican congressional leadership was pro-life, the current Democratic leadership is solidly pro-choice."

"One indication that bin Laden seeks a similar alliance with the American left is that bin Laden, who used to attack all Americans as evil, has in recent videotapes dramatically changed his tune. He now openly praises American leftists like Robert Fisk and William Blum and calls for a "truce" in which states that oppose Bush are exempt from future terrorist attacks. What bin Laden seems to be saying to the American left is pretty clear: I and my radical Muslim friends will supply the terror, and you use the casualty lists to demoralize the American people and convince them to get the United States out of Iraq and the Middle East. In this way, bin Laden and his American allies can achieve their shared goal of defeating Bush's war on terror. Another "convergence of interests."

Nikolas T. Nikas in the article on National Review on Line The Young Battle for Life commented: "The number abortions are staggering and so, sometimes, is the temptation to despair. As we soberly mark the 34th anniversary of the judicial atrocity known as Roe v. Wade, the sheer number of innocent victims of that act of judicial tyranny overwhelms our everyday experience. Even under the most conservative of estimates (and we lack certainty because we do not have a national, uniform mandatory abortion reporting requirement), somewhere between 40 and 50 million unborn children have died under this nation's regime of abortion. To put that number in some context, the best estimate is that the total war dead, of all causes, for all of America's major and minor wars since 1775 is 1,329,991 or an amount equal to just one year of Roe's infernal tally."

Consequently the left seems to have developed a devious strategy to share the aims of the enemy abroad in order to defeat the enemy at home. Leading leftists have brought together the likes of Kurt Vonnegut, Toni Morrison, Barbara Ehrenreich, Katha Pollit, Jane Fonda, Spike Lee, Oliver Stone, Gordon Moore, Jim Wallis and others to promote the Anti-War, environmentalism/global warming, anti-globalization, and social justice agendas into a powerful force. I refer to this cabal as the Leftist/Marxist - Islamist Alliance in my recent book: Islamic Economics and the Final Jihad: The Muslim Brotherhood to the Leftist/Marxist - Islamist Alliance.

Of course as an elected official, Pelosi can't admit she wants America to lose in Iraq, but what she can do is erect obstacles at every juncture so that it's impossible for Bush to succeed there. First, try to block the request for more troops. Then, try to block the call for needed additional funds. Then, when the time is right, push to redeploy American troops away from the fighting and to places in the Middle East, where they are powerless to stop the insurgency from toppling the elected Iraqi government.

Progressive Democrats of America in their article of January 17: Woolsey takes up President Bush's Challenge on Iraq hail the bill H. R. 508 -- comprehensive alternative to escalation: plan would bring all US troops home within 6-months. The Advisory Board of the PDA includes illustrious people: United States Representative John Conyers, Jr., Jodie Evans co-founder of CODEPINK and co-author of the book Stop the Next War Now, Congressman Raúl M. Grijalva represents the 7th Congressional District of Arizona in the U.S. House of Representatives, Tom Hayden was a founding member of the Students for a Democratic Society (SDS) in 1961, Congresswoman Barbara Lee, Cindy Sheehan the internationally known mom and peace and social justice advocate. The article at politicalaffairs.net, "Marxist Thought Online" - Bush’s policies shame Americans illustrate Sheehan's thinking. Congresswoman Maxine Waters, Congresswoman Diane E. Watson, Congresswoman Lynn Woolsey, Rev. Lennox Yearwood, Jr. Washington D.C. activist, member of the Hip Hop Summit Action Network and PDA Board Member.

"Joined by Congresswoman Barbara Lee (D-CA), and Maxine Waters (D-CA), Congresswoman Lynn Woolsey (D-Petaluma) today introduced the Bring Our Troops Home and Sovereignty of Iraq Restoration Act of 2007, sweeping legislation, which would establish a 6-month timeframe for withdrawal for all US military forces from Iraq, provide a framework for bringing stability back to Iraq, and fully fund the VA health care system." Such actions are combined with AP reports that Speaker of the House Nancy Pelosi is moving to create a special committee to recommend legislation for cutting greenhouse gases. According to AP, Pelosi is stirring the pot within the upper ranks of the Democratic Caucus, taking on Capitol Hill powers such as Rep. John Dingell (MI), Chair of the Energy and Commerce Committee, who has been close to the auto companies on the issue. PDA has taken issue with Pelosi's rhetoric and actions on the Iraq war, but we are heartened by any efforts by her to reduce greenhouse gas emissions. . .even if it means stepping on a few toes. See: Global Warming Committee at top of Pelosi Agenda

The United for Peace and Justice is a coalition of more than 1300 local and national leftist groups supporting the Anti-War, environmentalist/global warming, and anti-globalization movements. Member groups include: American Muslims for Jerusalem, American-Arab Anti-Discrimination Committee (ADC) - National Office, CODEPINK: Women for Peace - DC, Sojourners (Jim Wallis), Communist Party - N. CA. Oakland, CA, Global Exchange, Rainforest Action Network, International Socialist Organization (ISO) - NYC, Democratic Socialists of America, International Solidarity Movement (ISM) - NY, Progressive Democrats of NYC, 15th Congressional District, socialist Party USA - New York chapter, among others.

According to the www.DiscoverTheNetwork.org Jim Wallis is:
• Activist preacher and editor of the leftwing Christian magazine Sojourners
• Democratic Party operative who claims that God is "neither a Republican nor a Democrat"
• Apologist for communist atrocities in Cambodia and Vietnam
• Dedicated foe of capitalism
• Contends that Biblical scripture calls for large central government to aid the poor

Sojourners is a member organization of the Win Without War anti-war coalition.

United for Peace and Justice is planning a major demonstration in Washington DC and other major cities on January 27 to protest involvement in Iraq and other place. "With support from MoveOn.org, True Majority, Working Assets, the RainbowPUSH Coalition, the National Organization for Women and hundreds of other national and local groups, word about the Jan. 27th antiwar mobilization is reaching far and wide. Momentum is building and people from all walks of life and every corner of the country will be marching on Washington, DC, on Saturday, Jan. 27th. The brochures are prepared as follows:
• ACT NOW TO END THE WAR! Brochure in English
• ACT NOW TO END THE WAR! Brochure in Spanish
• ACT NOW TO END THE WAR! Brochure in Persian (Farsi)
• ACT NOW TO END THE WAR! Brochure in Arabic

In a companion article, War Resisters -- Support the Troops Who Refuse to Fight, "It takes courage to say that you will not fight -- especially if you are a soldier. As more members of the U.S. military step forward for peace, the peace movement must step forward to support them."

According to an Article posted on the Party of Socialism and Liberation on January 23, 2007, March on the Pentagon Saturday, March 17, 2007 is planned to celebrate the 40th anniversary of the historic 1967 march on the Pentagon and the 4th anniversary of the start of the Iraq war. "The mass demonstration is to demand: U.S. Out of Iraq Now! According to the Statement from the Act Now to Stop War & End Racism (ANSWER Coalition) on the March 17-18 Global Days of Action, [They] are returning to the Pentagon because it maintains 714 military bases in 130 countries to extend the influence of US transnational corporations, oil giants and banks. The slogan of national security and the war on terror stands exposed as a pretext for a global empire enforced by military might and limitless violence."

"While the focus of the recent years has been to use military power and violence against the Arab people, the Pentagon has been targeting peoples and nations all over the world. U.S. troops occupy South Korea. U.S. nuclear weapons target North Korea. Interventionist actions are already taking place in the Philippines, and are planned against Cuba, Venezuela, and throughout South and Central Asia."

Endorsers for the March on the Pentagon include: Ramsey Clark, former U.S. Attorney General; Maxine Waters, Congresswoman; Cynthia McKinney, Congresswoman; Cindy Sheehan, co-founder Gold Star Families for Peace, author; Malik Rahim, Founder, Common Ground Collective, New Orleans; Macrina Cardenas, Mexico Solidarity Network (MSN supports the Zapatistas, an armed revolutionary movement in Chiapas, Mexico that strongly opposes globalization and free-trade agreements.), Paul Haggis, Director of Crash, 2005 Academy Award for Best Picture, Elias Rashmawi, National Coordinator, National Council of Arab Americans (NCAA); Waleed Bader, Vice chair of the National Council of Arab Americans, ("NCAA is a Radical, anti-Israel and anti-American group and Coalition Partner with International ANSWER") Chair of NCAA NY/NJ Chapter, Former President of Arab Muslim American Federation - NY, International Socialist Organization ("Anti-American, anti-capitalist Communist organization."), Freedom Socialist Party National Office, (Trotskyist political party founded in 1960s. Calling itself "a product of the living tradition of Marx, Engels, Lenin, and Trotsky."), among others.

According to discoverthenetwork.com International ANSWER (an acronym for "Act Now to Stop War and End Racism") is run by Ramsey Clark's International Action Center, which is staffed by members of the Marxist-Leninist Workers World Party (WWP). ANSWER views the United States as a racist, imperialist, sexist, homophobic nation and the world's chief violator of human rights -- guilty of unspeakable atrocities, past and present, foreign and domestic. On February 15, 2003 of that year, ANSWER, in conjunction with United for Peace and Justice, helped mobilize another set of massive antiwar demonstrations; some 500,000 attended in New York City, as did 100,000 in Los Angeles and many others in San Francisco, Chicago, and elsewhere across the United States.

The Independent Progressive Politics Network - IPPN has been active within the peace movement since right after the 9/11 attacks. They played a key role in forging a coalition which organized the first, major demonstration in April, 2002 in Washington, D.C. against the Bush Administration's militaristic and repressive reaction to that attack. 80,000 people marched on that day.

As United for Peace and Justice (see also their homepage at www.unitedforpeace.org) came together toward the end of that year we were active as it organized against the illegal invasion of Iraq, and we have been active ever since. George Friday, a member of IPPN's Steering and Executive Committees, was elected last year to be one of three national co-chairs of UFPJ. See also report on IPPN at Discover the Network.

The Progressive Caucus (Democratic) with Rep. Dennis Kucinich as co-chairman is an organization of Members of Congress founded in 1991 by newly-elected Representative Bernie Sanders (Independent-Vermont), the former socialist mayor of Burlington and a member of the Democratic Socialists of America (DSA), which describes itself as "the principal U.S. affiliate of the Socialist International."
The Progressive Caucus recently crafted its "Progressive Promise" document, which advocates socialized medicine; radical environmentalism; the redistribution of wealth; the elimination of numerous provisions of the Patriot Act; dramatic reductions in the government's intelligence-gathering capabilities, debt relief for poor countries; and the quick withdrawal of U.S. troops from Iraq.

According to the article Socialism in America Socialism in America is alive, well, and growing. Aided by such influential Congressmen as John Conyers, Ranking Member of the House Judicial Committee, David Bonior, the pit-bull-dog who successfully whipped Newt, Maxine Waters, the President's outspoken defender in the impeachment debates, and nearly 60 other Representatives, socialism is advancing in America behind the "Progressive" label.

"The Democratic Socialists of America (DSA) is the largest socialist organization in the United States, and the principal U.S. affiliate of the Socialist International. DSA's members are building progressive movements for social change while establishing an openly socialist presence in American communities and politics.

In spite of the comments of Nicholas Burns comments at Herzliya conference in Herzliya, near Tel Aviv, Israel, 21 Jan 2007, reported on Voice of America, US Says More Pressure is Needed to Stop Iran Nukes, the Peace and Justice organization in their article The Time to Stop a War With Iran Is NOW! Calls for signing a petition to Secretary of State Condoleeza Rice that rejects any U.S. military action against Iran and demands direct negotiations. Copies will go to Chairs of the Senate Foreign Relations Committee and House Committee on International Relations.

To quote Dinesh D'Souza: "Whether it realizes this or not, the Bush administration is facing a kind of liberal-Islamic alliance: a sympathetic relationship that leading leftists in America have with Islamic radicals around the world." The Leftist/Marxist - Islamist Alliance is a serious threat to our way of life and even more so to liberals who have joined the cabal. Living under a totalitarian Marxist, Leninist, Bolshevist, Trotskyist government or a country where Shariah law rules must not be an option.

David J. Jonsson is the author of Clash of Ideologies —The Making of the Christian and Islamic Worlds, Xulon Press 2005. His new book: Islamic Economics and the Final Jihad: The Muslim Brotherhood to the Leftist/Marxist - Islamist Alliance (Salem Communications (May 30, 2006). He received his undergraduate and graduate degrees in physics. He worked for major corporations in the United States and Japan and with multilateral agencies that brought him to more that fifteen countries with significant or majority populations who are Muslim. These exposures provided insight into the basic tenants of Islam as a political, economic and religious system. He became proficient in Islamic law (Shariah) through contract negotiation and personal encounter. David can be reached at: djonsson2000@yahoo.co.uk

President Bush's speech: The global impact of Iran and Iraq

By David J. Jonsson

With the conflicts heating up both in the Pacific with the threat of North Korea becoming a nuclear force and the Middle East, the need for diplomacy becomes more critical. However, diplomacy offers little hope in dealing with nations committed to bring about the apocalypse. Appeasement as occurred during the rise of Third Reich will not solve the problem. Becoming involved in a conflict between the Sunni and Shiite factions each seeking their domain and spheres of influence could result in a no-win war. There is little doubt that Russia and China, the recent supporters of Iran and North Korea, as indicated by their reluctance of supporting sanctions will potentially become involved. As I mentioned in my op-ed of November 26, The Grand Chess Masters: The Bear and the Dragon, "While the Iraq crisis continues, the strategy of the Grand Chess Masters—Russia the bear and China the dragon along with their pawns the Leftists, Marxists and Islamists continue to develop and put in place their strategy for the ultimate goal of world domination."

It will also become increasingly difficult to build our alliances with Europe. The EU recognizes that it is dependent on Russia for a major portion of their energy. Europe will import 84 per cent of its natural gas and 93 per cent of its oil in 2030 according to the Financial Times on January 9, Merkel concern over N-plant closures and the article from the Financial Times of January 9 Russia shuts oil pipeline to Europe, Russia will be supplying 70 per cent of Europe's total energy by 2030.

The West must recognize who the enemy is and fully comprehend the nature and goals of that enemy. Though President Bush's national address on January 10 was about Iraq, his most provocative comments focused on Iran. He correctly suggested that if our efforts failed in Iraq, "Iran would be emboldened in its pursuit of nuclear weapons." A nuclear-armed Iran would embolden Algeria, Egypt, Morocco, Tunisia, UAE and Saudi Arabia and possibly others to follow suit according to the article in the Times (UK) of November 4, Six Arab states join rush to go nuclear. Bush also implied military threat against both Iran and Syria. See also: Nuclear Proliferation--Options In A Perfect Storm by David J. Jonsson.

As S. Enders Wimbush has written in the Spectator on January 11, 2007, The End of Deterrence: "Iran is fast building its position as the Middle East's political and military hegemon, a position that will be largely unchallengeable once it acquires nuclear weapons. A nuclear Iran will change all of the critical strategic dynamics of this volatile region in ways that threaten the interests of virtually everyone else… It should surprise no one that quiet discussions have already begun in Saudi Arabia, Egypt, Turkey, and elsewhere in the Middle East about the desirability of developing national nuclear capabilities to blunt Iran's anticipated advantage and to offset the perceived decline in America's protective power. This is just the beginning. We should anticipate that proliferation across Eurasia will be broad and swift, creating nightmarish challenges. Iran, with its well-known support of Hezbollah, is a particularly good candidate to proliferate nuclear capabilities beyond the control of any state as a way to extend the coercive reach of its own nuclear politics.

Sabrina Tavernise, John F. Burns of the New York Times in their article of January 11, 2007 BUSH'S NEW PLAN FOR IRAQ - SHIITES WARY: They see U.S. interfering with power won at polls presented the Shiite case for not increasing U.S. forces in Iraq. "U.S. troops, Shiite leaders say, should stay out of Shiite areas and focus on fighting Sunni insurgents… There are misgivings, too, among other Shiite leaders, including some whom Bush has courted recently in a U.S. bid to form a bloc of politicians from the Shiite, Sunni and Kurdish communities that can break al-Maliki's political dependence on the radical Shiite cleric Muqtada al-Sadr. Shiite suspicions of the U.S. troop increase reflect a tectonic shift in the political realities in Iraq. Shiites, the principal victims of Saddam Hussein's repression, had joined with Iraqi Kurds in hailing the U.S.-led invasion in 2003, seeing it as opening their way to power. But once they consolidated their control through two elections in 2005, they began distancing themselves from the Americans, seeing their liberators increasingly as an impediment to the full control they craved. By contrast, moderate Sunnis, who were deeply alienated by the U.S. occupation at an earlier stage of the war, are now looking to Americans for protection, as Shiite militias have moved into Sunni neighborhoods in a deadly cycle of revenge. On Wednesday, moderate Sunni politicians hailed the idea of more U.S. troops."

The Text of joint statement from Democratic leaders by Nancy Pelosi, Senate Majority Leader Harry Reid, House Majority Leader Steny Hoyer and Senate Democratic Whip Richard Durbin following President Bush's address to the nation Wednesday counters the position of President Bush – the Commander and Chief and supports the Iranian backed position of radical Shiite leaders in Iraq.

"Rather than escalating our involvement in Iraq by sending additional troops, we believe that a plan for the way forward in Iraq requires these elements:

• Shifting greater responsibility to the Iraqis for their security and transitioning the principal mission of our forces from combat to training, logistics, force protection, and counter terrorism operations;
• Beginning the phased redeployment of our forces in the next four to six months; and
• Implementing an aggressive diplomatic strategy, both within the region and beyond, which reflects the continuing obligation of the international community to help stabilize Iraq and which assists the Iraqis in achieving a sustainable political settlement, including by amending their constitution."

Care must also be exercised in overwhelming support to the Sunni Factions, since they seek to recreate the Caliphate (See also: Caliphatism - Establishing the "Islamic Kingdom of God on Earth" by David J. Jonsson) as a counter to the developing Shiite Crescent encompassing Iraq with their Shiite led government and stretching from the Mediterranean to Pakistan. See: Iran Reaches the Mediterranean - Author David J. Jonsson.

The funding for the enemy comes from the dependence on energy from the enemy, which includes multiple nations and movements (Leftist/Marxist – Islamist Alliance) seeking to create a "new world order" under a totalitarian form of government. The impact of the funding is amplified by the Foreign Direct Investment (FDI) in infrastructure, technology, and facilities and support of financial services provided by major money Center Banks. See also my Op-Ed: Islamic Economics and Shariah Law: A Plan for World Domination.

The U.S. is in a position to develop on a crash basis a program of Energy Independence. Reducing the U.S. energy dependence on foreign oil will significantly reduce the threat of a future war. See: Give Me Energy Security And I Will Give You A Foreign Policy by David J. Jonsson.

Diplomacy and military strength may deter the expansion the threat of a global confrontation but the West must address its lack of energy security and dependence on ‘energy interdependence' instead of ‘energy independence'. The foreign policy of the United States and Europe must address the energy, the environment, foreign trade, financial, immigration, homeland security and defense tracks in a unified manner. Similarly, addressing the crisis in the Middle East, including the Israel-Palestine solution also involves solving relations with Russia, China and Eurasia. This will require commitment and pain now to our way of life. It will require sacrifice. The alternative will be even worse.

David J. Jonsson is the author of Clash of Ideologies —The Making of the Christian and Islamic Worlds, Xulon Press 2005. His new book: Islamic Economics and the Final Jihad: The Muslim Brotherhood to the Leftist/Marxist - Islamist Alliance (Salem Communications (May 30, 2006). He received his undergraduate and graduate degrees in physics. He worked for major corporations in the United States and Japan and with multilateral agencies that brought him to more that fifteen countries with significant or majority populations who are Muslim. These exposures provided insight into the basic tenants of Islam as a political, economic and religious system. He became proficient in Islamic law through contract negotiation and personal encounter. David can be reached at: mailto:djonsson2000@yahoo.co.uk?cc=info@SalemTheSoldier.us.