I've just spent two days with friends and family in Disneyland, "The happiest place on Earth." Based on what I've seen, it ought to be called "the most crowded place on Earth." It was mobbed. Packed beyond capacity.

There's simply no way this country is in a recession with people spending money like mad amusing themselves at Disneyland. I've been coming here frequently for years, during good times and bad, having grown up in Southern California. I've never seen crowds like this. Not here, not anywhere -- not even on the Tokyo subways.

My family and I visited Disneyland July 9-13 and would have to disagree with Mr. Luskin's report of it being packed.

While the Magic Kingdom was crowded with young families with small children, the California Adventure Park was not nearly as full. The wait on the best rides was the shortest I've ever seen. The restaurants we visited nearby were also empty. While this is not great for my Disney stock, it was nice for our visit.

I would say that while young families are still able to afford this vacation, the teens and young adult crowd are being more disciplined with where they spend their money. (California Adventure is more geared for the teen and up crowd.)

"Home prices in the U.S. are likely to start to stabilize or touch bottom sometime in the first half of 2009," he said in an interview. Tracing a jagged curve with his finger on a tabletop to underscore the difficulty in pinpointing the precise trough, he cautioned that even at a bottom, "prices could continue to drift lower through 2009 and beyond."

Let me tell you a little tale.

I went to grades 6-12 in a small Washington state lumber town. It was a company town whose sole economy consisted of the lumber mill and the logging operations that supported it. The mill cut primarily old growth timber. During four summers of college, I worked in that mill doing enchanting things like cleaning out the pit, pulling on the chain and jackhammering the boilers.

One day, along came concern about a small, endangered bird called the Spotted Owl. Political talk arose about preventing logging in the small remnant of old growth timber, as this was the bird's primary habitat.

You can imagine what the townspeople said: "Goddamn owls! This is our livelihood! Cut the f@*&$ timber!" Even so, the mill hands knew the old growth was about gone. I know they knew it because I heard them talk about it in the break-shack. My father, an executive, knew it too. In fact, anyone who wasn't an idiot knew it.

(Although I admit that's setting the bar unfairly high in that town's case. To preempt the reader's first logical question, it's not that there wasn't enough replanted timber. The problem there was that the elderly mills were all set up to cut big logs, and would essentially require complete retooling in order to cut smaller new-growth logs economically. The companies didn't want to completely rebuild their mills.)

It was therefore certain that this town's primary economy would die out. The town had a couple of options. It could either keep yammering for a few more years of old growth cutting -- after which the cry of TIMBER! would be silenced anyway, leaving them in the same mess -- or it could begin to reinvent itself around its spectacular scenery, ultra-cheap housing, safe rural school, superb fishing, and excellent hunting. (Naturally, it took about fifteen years to decide on the latter.)

Thus it is with petroleum.

Those bellowing to drill-drill-drill now-now-now remind me very much of the townspeople who voluntarily chose not to see that their way of life would change, and that the sooner they changed it on their own terms the less the world would dictate that change to them.

The world has a firearm pointed at the United States, and that firearm is oil. As long as we depend upon petroleum, we will be enmeshed in affairs that would otherwise be "not our problem." Petroleum revenue has, in the main, been used against us and our interests by its recipients.

The day we cease to depend on petroleum is the day those bloated economies begin to recede to something approximating what they would have been without petroleum. But like the timber back in my little town, its days are numbered. We either take Erlenmeyer flasks and pipettes in hand and use our scientific know-how to find reasonable alternatives to petroleum, or we continue to let the likes of Hugo Chavez and the Wahhabis have far too much say in our future. OPEC was founded to counter the Seven Sisters cartel, and it did its job well.

It is time to render it moot.

Labels: Oil

According the USGS, the area north of the Arctic Circle has an estimated 90 billion barrels of undiscovered, technically recoverable oil, 1,670 trillion cubic feet of technically recoverable natural gas, and 44 billion barrels of technically recoverable natural gas liquids in 25 geologically defined areas thought to have potential for petroleum.

These resources account for about 22 percent of the undiscovered, technically recoverable resources in the world. The Arctic accounts for about 13 percent of the undiscovered oil, 30 percent of the undiscovered natural gas, and 20 percent of the undiscovered natural gas liquids in the world. About 84 percent of the estimated resources are expected to occur offshore.

We know the resources are there and we know we have technology available today to recover the oil in an environmentally-responsible manner. Congress needs to act now to bring relief to American families. If our country is ever to be energy self-sufficient, we must be able to access our own energy resources.

I am not buying the lie, promoted by President Bush, that sacrificing the Arctic National Wildlife Refuge and America's coastal waters to oil drilling would make a real difference in gas prices -- either today or twenty years from today! I oppose any legislation that would remove the ban on oil development in these treasured places.

With just three percent of the world's oil reserves, our nation simply doesn't have enough oil to impact the global market or drill our way to lower prices at the pump. Putting rigs in the Arctic Refuge and off our spectacular coastlines would certainly boost oil company profits, but it would impoverish our natural heritage and deepen our already destructive dependence on oil.

We deserve real solutions to high energy prices -- not gimmicks and land grabs. Please support legislation that will help our nation kick the oil habit and usher in a cleaner, greener energy future. I urge you to promote measures that will make our vehicles far more fuel efficient, put millions of plug-in hybrids on the road and connect them to a cleaner electric grid, dramatically boost our reliance on renewables like wind and solar, and limit America's global warming pollution in order to spur innovation in energy technologies.

President Bush's "Drill It All" policies and his rejection of cleaner alternatives have gotten us into this mess. They will not get us out. Please take bold action that will move America beyond oil and into a more sustainable energy future.

With our economy sinking and oil prices soaring, George Bush is offering snake oil: a plan to sacrifice more of our coasts to oil drilling on the chance it will produce a few weeks' worth of oil and reduce gas prices by a few pennies a gallon...in 2028. Imagine America forever tethered to Bush's failed energy policy. It's like giving him five more terms.

It's a cruel Shell game. And BP game. And ExxonMobil game. Over the past five years, the number of domestic drilling permits has nearly doubled. But because of rising worldwide demand, oil prices have skyrocketed. More drilling off our coasts is not the answer. Once destroyed they can never be replaced. The only winners will be the oil companies.

Want gas at $1 a gallon? America needs a bold new approach to energy, from more fuel efficient vehicles to plug-in hybrids and electric cars. A cleaner electric grid powered by renewables. Existing technologies could have us driving at the equivalent of a buck a gallon for gas!

Tell your Representative and Senators to stop the giveaway of our coasts. Tell them you won't stand for billions more for oil companies -- and snake oil for the rest of us.

• Drilling is pointless because the United States has only 3 percent of the world's oil reserves. This refers only to known oil reserves, and most of our estimates are old and were made with outdated equipment. "In short, there could be much more oil under the sea than previously known."

• The oil companies aren't using the leases they already have. This one is just a myth. Oil companies have spent hundreds of millions of dollars exploring and constructing infrastructure to bring oil to market. Just because a lease is not yet producing the 130,000 barrels of oil a day to be deemed "active" doesn't mean it's being sat upon. "With oil prices still above $100 a barrel, that charge never made sense."

• Drilling is environmentally dangerous. Safety measures are pretty good these days. According to the Interior Department's Minerals Management Service, "between 1993 and 2007, there were 651 spills of all sizes at OCS facilities (in federal waters three miles or more offshore) that released 47,800 barrels of oil. With 7.5 billion barrels of oil produced in that time, that equates to 1 barrel of oil spilled per 156,900 barrels produced. That's not to minimize the danger. But no form of energy is perfect or without trade-offs. Besides, if it is acceptable to drill in the Caspian Sea and in developing countries such as Nigeria where environmental concerns are equally important, it's hard to explain why the United States should rule out drilling off its own coasts."

No, the United States cannot drill its way to energy independence. But with the roaring economies of China and India gobbling up oil in the two countries' latter-day industrial revolutions, the United States can no longer afford to turn its back on finding all the sources of fuel necessary to maintain its economy and its standard of living. What's required is a long-term, comprehensive plan that includes wind, solar, geothermal, biofuels and nuclear -- and that acknowledges that oil and gas will be instrumental to the U.S. economy for many years to come.

• if it's too little, it's not worth it, and,
• if it's a lot, we'll just extend the deleterious carbon age that much longer.

We're borrowing money from China to buy oil from the Persian Gulf to burn it in ways that destroy the planet. Every bit of that's got to change.

The answer is to end our reliance on carbon-based fuels.

What if we could use fuels that are not expensive, don't cause pollution and are abundantly available right here at home?

We have such fuels. Scientists have confirmed that enough solar energy falls on the surface of the earth every 40 minutes to meet 100 percent of the entire world's energy needs for a full year. Tapping just a small portion of this solar energy could provide all of the electricity America uses.

And enough wind power blows through the Midwest corridor every day to also meet 100 percent of US electricity demand. Geothermal energy, similarly, is capable of providing enormous supplies of electricity for America.

The quickest, cheapest and best way to start using all this renewable energy is in the production of electricity. In fact, we can start right now using solar power, wind power and geothermal power to make electricity for our homes and businesses.

But to make this exciting potential a reality, and truly solve our nation's problems, we need a new start.

That's why I'm proposing today a strategic initiative designed to free us from the crises that are holding us down and to regain control of our own destiny. It's not the only thing we need to do. But this strategic challenge is the lynchpin of a bold new strategy needed to re-power America.

Today I challenge our nation to commit to producing 100 percent of our electricity from renewable energy and truly clean carbon-free sources within 10 years.

A few years ago, it would not have been possible to issue such a challenge. But here's what's changed: the sharp cost reductions now beginning to take place in solar, wind, and geothermal power - coupled with the recent dramatic price increases for oil and coal - have radically changed the economics of energy.

When I first went to Congress 32 years ago, I listened to experts testify that if oil ever got to $35 a barrel, then renewable sources of energy would become competitive. Well, today, the price of oil is over $135 per barrel. And sure enough, billions of dollars of new investment are flowing into the development of concentrated solar thermal, photovoltaics, windmills, geothermal plants, and a variety of ingenious new ways to improve our efficiency and conserve presently wasted energy.

And as the demand for renewable energy grows, the costs will continue to fall. Let me give you one revealing example: the price of the specialized silicon used to make solar cells was recently as high as $300 per kilogram. But the newest contracts have prices as low as $50 a kilogram.

You know, the same thing happened with computer chips - also made out of silicon. The price paid for the same performance came down by 50 percent every 18 months - year after year, and that's what's happened for 40 years in a row.

To those who say the costs are still too high: I ask them to consider whether the costs of oil and coal will ever stop increasing if we keep relying on quickly depleting energy sources to feed a rapidly growing demand all around the world. When demand for oil and coal increases, their price goes up. When demand for solar cells increases, the price often comes down.

When we send money to foreign countries to buy nearly 70 percent of the oil we use every day, they build new skyscrapers and we lose jobs. When we spend that money building solar arrays and windmills, we build competitive industries and gain jobs here at home.

To those who say 10 years is not enough time, I respectfully ask them to consider what the world's scientists are telling us about the risks we face if we don't act in 10 years. The leading experts predict that we have less than 10 years to make dramatic changes in our global warming pollution lest we lose our ability to ever recover from this environmental crisis. When the use of oil and coal goes up, pollution goes up. When the use of solar, wind and geothermal increases, pollution comes down.

When President John F. Kennedy challenged our nation to land a man on the moon and bring him back safely in 10 years, many people doubted we could accomplish that goal. But 8 years and 2 months later, Neil Armstrong and Buzz Aldrin walked on the surface of the moon.

Of course the greatest obstacle to meeting the challenge of 100 percent renewable electricity in 10 years may be the deep dysfunction of our politics and our self-governing system as it exists today. In recent years, our politics has tended toward incremental proposals made up of small policies designed to avoid offending special interests, alternating with occasional baby steps in the right direction. Our democracy has become sclerotic at a time when these crises require boldness.

It is only a truly dysfunctional system that would buy into the perverse logic that the short-term answer to high gasoline prices is drilling for more oil ten years from now.

Am I the only one who finds it strange that our government so often adopts a so-called solution that has absolutely nothing to do with the problem it is supposed to address? When people rightly complain about higher gasoline prices, we propose to give more money to the oil companies and pretend that they're going to bring gasoline prices down. It will do nothing of the sort, and everyone knows it. If we keep going back to the same policies that have never ever worked in the past and have served only to produce the highest gasoline prices in history alongside the greatest oil company profits in history, nobody should be surprised if we get the same result over and over again. But the Congress may be poised to move in that direction anyway because some of them are being stampeded by lobbyists for special interests that know how to make the system work for them instead of the American people.

If you want to know the truth about gasoline prices, here it is: the exploding demand for oil, especially in places like China, is overwhelming the rate of new discoveries by so much that oil prices are almost certain to continue upward over time no matter what the oil companies promise. And politicians cannot bring gasoline prices down in the short term.

However, there actually is one extremely effective way to bring the costs of driving a car way down within a few short years. The way to bring gas prices down is to end our dependence on oil and use the renewable sources that can give us the equivalent of $1 per gallon gasoline.

Our entire civilization depends upon us now embarking on a new journey of exploration and discovery. Our success depends on our willingness as a people to undertake this journey and to complete it within 10 years. Once again, we have an opportunity to take a giant leap for humankind.

Labels: Oil

Have you been watching this Georgia-Russia war? If so, do you think it might be a good moment to buy oil company stocks before the war sends the price of oil and energy stocks higher again?

Here are Kiplinger's estimated GDP growth forecasts for the developed world:

U.S. +1.5% in 2008 and +1.5% in 2009
Euro Zone +1.3% in 2008 and +0.9% in 2009
Japan +1.0% in 2008 and +0.8% in 2009

Here are the figures for the top developing countries:

China +9.6% in 2008 and +9.0% in 2009
Russia +7.7% in 2008 and +6.8% in 2009
India +7.6% in 2008 and +7.8% in 2009
Brazil +4.8% in 2008 and +3.9% in 2009

If you knew nothing more than this simple comparison, where would you elect to put your money? In the developing countries, of course. Among the four biggest developing countries, Russia looks like the best bargain.

Here's a handful of reasons to expect impressive economic growth from Russia:

• It's the largest country in the world by landmass

• It participates in the largest and most influential commodity markets in the world

• Within a few years, it will become the 2nd largest economy in Europe and the 6th largest in the world

• It has a young population

• Its education system is good, with almost 100% literacy

• Its GDP has been growing at 6.8% since 1999

Sierra Global Europe Fund manager Charlie Michaels pointed out to me in an email that the Russian market has recently become cheaper due to three negatives:

• Its government attacks on corporate interests

• The falling price of oil

• The unfolding war with Georgia

"Nonetheless," Charlie wrote, "Russia trades on a forward P/E less than 1/2 of China's (7X), has 35% EPS growth expectations (almost double China's) and just reported a 6-month trade surplus of over $100B. The new president, Medvedev, has no ties to the KGB, is much better educated than Putin, and has come out with numerous stock market friendly comments."

The Russian market has been punished excessively over the last couple of weeks. Even allowing for higher equity risk premium and more normal oil prices, the current valuations are compelling, we think. Our view is, even if sentiment continues to suffer on the back of the Georgia-Russia conflict, to use the current weakness to accumulate positions.

As to the South Ossetia conflict, we point out that while warfare is never a good thing, fundamentally Russia's economy and infrastructure are not affected. We think that the likelihood of military involvement of other superpowers is below average. The situation may end soon, to be replaced by diplomatic negotiations.

We see three catalysts for a Russian bounce: 1) a lasting ceasefire, and ultimately, some long-term resolution of the South Ossetia issue; 2) a rebound in oil prices: even a minor one will re-ignite interest in the oil and gas names, in our view; 3) an outcome of the Mechel situation in which the company remains a going concern.

While there is no such thing as a "perfect" dividend stock for all investors, it is not difficult to identify the most desirable characteristics in any dividend stock. The top four are yield, consistency, dividend growth, and the potential for price appreciation.

Yield: It should go without saying that an ideal dividend stock ought to start off with a good yield. That is, on the day you buy it, the stock should yield at least as much as, say, a bank deposit. Extra yield helps compensates for the risk of owning a stock, whose price is never guaranteed and is therefore at risk.

That said, some leeway can be granted on the initial yield because the best dividend stocks increase their dividend payouts, unlike CDs and bonds, which are "fixed income" investments. So a stock whose yield falls a little short of a CD initially may catch and pass it in a year or two.

My personal requirement for the minimum initial yield from a dividend stock is 2.5%. I will go as low as 1.9% for "Dividend Aristocrats," a term used by Standard & Poor's for their list of stocks that have raised their dividends at least 25 consecutive years. At the end of 2007, the last time they compiled the list, there were 59 stocks that qualified. Perhaps surprisingly, not all of them yield at least 1.9%, so don't assume that a steadily growing dividend "must be" high enough just because it is growing. The two are different factors that must be considered separately.

Consistency: The second characteristic is consistency (or reliability), not only in paying the dividend but in growing it too. There is no way to guarantee the future, of course, but we can draw reasonable inferences from past performance and current conditions. So, we want a company that displays:

• An uninterrupted payment of a dividend for at least several years.

• A steady history of raising its dividend most (if not all) years.

• No severe financial difficulties that seem to threaten the dividend.

• An explicit statement from management that they are determined to pay and periodically increase the dividend, or an implied intention based on the historical record plus current management statements recognizing the importance of the dividend.

My favorite company in the last regard is Realty Income (O). It states its purpose as follows: "As The Monthly Dividend Company® our primary goal is to provide dependable monthly income to shareholders." As a dividend investor, you can hardly ask for a clearer statement of management's intentions in regard to the dividend.

Dividend Growth: The third quality of a terrific dividend stock is dividend growth. It is a company's ability to grow its dividend that separates it from "fixed income" investments like bank accounts and bonds.

As stated earlier, high yield and steady dividend growth do not necessarily go together. Some companies increase their dividends infrequently or erratically. On the other hand, the presence of high yield tells you nothing about dividend growth. So both factors must be investigated separately.

My personal benchmark for minimum acceptable dividend growth is 5% per year (4% for Dividend Aristocrats).

Again, we look to the past to draw reasonable inferences about the future. My "go-to" statistic is the stock's annualized dividend growth rate over the past three years. It is not unusual to find rates of 15% or more. Often a stock's dividend growth rate closely tracks the company's earnings growth rate. I like that: It helps bolster my confidence that management will continue to direct a consistent percentage of earnings back to shareholders as dividends.

Yield and growth rate combine, of course, to determine the total dividend return to you. The math is simple. Say a stock is yielding 2.5% on the day you purchase it. If the company raises its dividend 15% per year, then in year two the yield on your initial investment will be 2.9%, in year three it will be 3.3%, and so on. Your personal yield will double in just under five years. (That's why I’m willing to give a 0.5% break in initial yield to stocks that raise their dividend regularly.)

As an example, consider Sherwin-Williams (SHW). Its current yield is 2.3%, just a shade under my normal minimum. But it is on the Dividend Aristocrats list (more than 25 consecutive years of dividend increases), and it has grown its dividends 23% per year over the past three years. While it may not sustain that growth rate (its 2008 increase was 11%), let's say we are confident in an annualized 12% growth rate for the foreseeable future. That means that the original 2.3% yield becomes 2.6% in year two, 2.9% in year three, and 3.2% in year four, all based on the original investment. Our original yield of 2.3% will double in about six years (based on the original investment).

Potential Price Appreciation: The first three factors focused on the dividend itself: its magnitude, reliability, and growth. The fourth important factor in a great dividend stock is independent of the dividend. It is the potential for the stock to appreciate in price.

This is another advantage that dividend-paying stocks have over bank deposits and bonds. To use the phrase again, the latter are "fixed income" investments. Not only is their income fixed, but so is their principal. At the end of a bond's term, the principal is returned to you -- ravaged by inflation. A stock, though, has a fighting chance to keep up with and exceed inflation. Historically, in fact, stocks do just that.

Some investors believe that a dividend stock's price rises because of its dividend and increases to it. I don't go that far. I believe that any stock's price is determined by a host of factors, not all of them rational. Let's just say that the stock's dividend is one factor that many investors consider in deciding a fair price to pay for a stock. The important fact is that the stock has the potential to grow in price, just as its dividend does.

Don't forget that any stock's price has the potential to decline, too. To guard against that, any investor should do his or her normal homework to determine an advantageous valuation (price) to pay for any stock.

Disclosure: I own O and SHW.

What do you think can be done to bring down the outrageous food costs in America?

I enjoy your wry looks at politics. What's the nuttiest thing you've heard in the presidential campaign so far?

• The reason we're damaged by high oil prices is that we're dependent on oil. We need to get rid of that dependence, not find a way to extend it.

• As if you needed it, the ability of this solution to find any support among citizens provides more evidence that the preponderance of people are woefully ignorant. Offshore drilling will have no measurable impact on gasoline prices for at least 10 years. Even then, the amount of oil added to the nation's intake would be so small that the price per gallon would drop somewhere on the order of 5 cents.

• For such a small -- come on, meaningless -- benefit, we're going to further damage the already reeling environment?

• The only lesson anybody should take from high oil prices is that it's high time we move beyond the carbon age. We've had the capability to drive nothing but all-electric vehicles (not halfway hybrids) for the past fifty years. What do you think vehicles inside warehouses run on? The only reason you're pumping expensive, dirty, terrorist-funding gasoline into your car is that oil companies want you to do so and have paid all the right people to be sure you must. Understand that. Exxon Mobil earned $11.7 billion in profits last quarter alone, a 14% increase and the largest single quarter profit in U.S. history.

We need to off-shore drill for oil and natural gas, and anybody who says we can achieve energy independence without using and increasing these existing energy resources either doesn't have the experience to understand the challenge we face or isn't giving the American people some straight talk. -- ABC News

The current federal moratorium on drilling in the Outer Continental Shelf stands in the way of energy exploration and production. John McCain believes it is time for the federal government to lift these restrictions and to put our own reserves to use. There is no easier or more direct way to prove to the world that we will no longer be subject to the whims of others than to expand our production capabilities. -- John McCain for President website

You won't hear me say this too often, but I couldn't agree more with the explanation that Senator McCain offered a few weeks ago. He said, "Our dangerous dependence on foreign oil has been thirty years in the making, and was caused by the failure of politicians in Washington to think long-term about the future of the country."

What Senator McCain neglected to mention was that during those thirty years, he was in Washington for twenty-six of them. And in all that time, he did little to reduce our dependence on foreign oil. He voted against increased fuel efficiency standards and opposed legislation that included tax credits for more efficient cars. He voted against renewable sources of energy. Against clean biofuels. Against solar power. Against wind power. Against an energy bill that -- while far from perfect -- represented the largest investment in renewable sources of energy in the history of this country. So when Senator McCain talks about the failure of politicians in Washington to do anything about our energy crisis, it's important to remember that he's been a part of that failure. Now, after years of inaction, and in the face of public frustration over rising gas prices, the only energy proposal he's really promoting is more offshore drilling -- a position he recently adopted that has become the centerpiece of his plan, and one that will not make a real dent in current gas prices or meet the long-term challenge of energy independence.

George Bush's own Energy Department has said that if we opened up new areas to drilling today, we wouldn't see a single drop of oil for seven years. Seven years. And Senator McCain knows that, which is why he admitted that his plan would only provide "psychological" relief to consumers. He also knows that if we opened up and drilled on every single square inch of our land and our shores, we would still find only three percent of the world's oil reserves. Three percent for a country that uses 25% of the world's oil. Even Texas oilman Boone Pickens, who's calling for major new investments in alternative energy, has said, "this is one emergency we can't drill our way out of." -- Lansing, Michigan speech

Labels: Oil

IRAN TENSIONS FADING

I've mentioned a few times that I see a strike on Iran's nuclear facilities as being the biggest geopolitical risk to the stock market.

According to Jonathan Laing in this weekend's Barron's, that risk is fading. Regarding an imminent attack, he wrote: "Don't bet on it -- or on oil prices heading higher as a result of hostilities."

He quoted Statfor's George Friedman, who thinks the widely reported preparations for attack by Israel and the U.S. were psychological warfare. "Why would Israel telegraph its punch like that?" Mr. Friedman asked. "Recall that when Israel took out Iraq's Osirak reactor back in 1981, it was successful precisely because it gave no hint at all of an impending attack."

Mr. Friedman believes that the Iranian response to any attack would be dire for the global economy. Iran would attack oil tankers and block the Straight of Hormuz to choke off 40% of seagoing oil traffic. "This is what could drive crude oil prices to more than $300 a barrel, which even over a short period would be cataclysmic to the global economy and stock markets," Friedman says.

Therefore, Israel and the U.S. will hold back.

Mr. Friedman sees an endgame under way, "in which Iraq will emerge as a buffer state protected by a residual force of 30,000 to 40,000 U.S. troops. They will be deployed in the desert, away from the Iranian border and Iraqi cities, serving in a non-combat, training role. As a result, Iran will have little reason to fear more aggression from Iraq."

Finally, he thinks Iran is "decades away" from producing nuclear missiles, if it can ever do so. The country lacks the experts needed to turn enriched uranium into weapons.

Let's hope so, and hope he's right about the threat of a strike having faded. Oil at $300 would turn this stock market into a bear of Arctodus proportions.

Living in Israel and knowing the psyche (I'm not Jewish, I just work here), and also being one of the cameramen who worked on the recent 60 Minutes piece on the Israeli Air Force so I got to listen in on all of the interviews, I can tell you that it will not take much for the Israelis to jump the gun. They really feel in their bones the existential threat to the Jewish State of Israel. The Holocaust experience and the lack of action by the Allies during World War II is burned into their military thinking...they are on their own.

In 1967 they were warned explicitly by the United States that if they started the conflict with the Arab states then they would be on their own. They did it anyway and struck first with a devastating raid on the Egyptian Air Force which basically won them the war. (Six Days of War by Michael Oren is a very good read...even though the guy is pretty center-right.)

Israel struck first also in 1956 with the British and the French in the Suez Crisis.

And of course the 1981 reactor that you mentioned in Osirak.

Iran is currently beefing up its air defenses with a brand-new type of Russian SAM system. This combined with any kind of unwelcome development could push the Israelis over what they predictably refer to as the "red line".

I spoke to a couple of F-16 pilots at parties in Tel Aviv (yes, Israel is that small) and of course they did not tell me anything secret, but it was obvious from the conversation that they really were training for a strike and that it was a warning not just to Iran but to the world to get it together and solve this problem.