Straws in the Wind January 11, 2008

ALZHEIMER'S EXPERIMENT PRODUCES HOPEFUL RESULTS

Successful Alzheimer's therapy may be on the near horizon. Experiments with Enbrel an FDA-approved drug for rheumatoid arthritis show great promise for treating the symptoms of Alzheimer's.

REPUBLICAN SUPPLY-SIDE TAX POLICY IN NEED OF OVERHAUL

Moderately conservative NYTimes op-ed writer in today's paper comments and quotes former Bush speech writer David Frum ("axis of evil:" coiner) as follows:

"Supply-side economics had a good run, but continual tax cuts can no longer be the centerpiece of Republican economic policy. The demographics have changed. The U.S. is an aging society. We have made expensive promises to our seniors. We can't keep those promises at the current tax levels, let alone at reduced ones. As david Frujm writes in 'Comeback,' his indespensable new book: 'In the face of such a huge fiscal gap, the days of broad across-the-board, middle-class tax cutting are over.'"

SUMMING UP THE 110TH CONGRESS

Lewis Lapham sums up the 110th Congress nicely as follows in January Harper's :

"Congress doesn't see fit to stop the killing in Iraq, postpones debate on the questions of energy and health-care policy, confirms an attorney general ambivalent in his statements about torture but clear in his thought that the president on occasion can claim powers not granted by the Constitution, searches diligently for ways and means to protect the home-mortgage industry (i.e., the makers, not the users, of junk and subprime loans)and to reduce to 15 percent of income the tax charged to hedge-fund managers earning upwards of $50 million a year."

IRAQ CIVILIAN DEATH TOLL 151,000

The World Health Organization estimates the Iraq civilian death toll at 151,000, a high cost of efforts to bring democracy to the Middle East.

MORE WIT AND WISDOM FROM LEWIS LAPHAM

AL Gore on why he's not running: "What politics has become requires a level of tolerance for triviality and artifice and nonsense that I find I have in short supply."

Lapham: "In a president they [the oligarchs in finance, pharma, oil, et al] look to find a first-class concierge glad to be of help. Plato referred to the arrangement as oligarchy, a form of government rooted in property qualifications and therefore less confusing than democracy. He distilled the concept into two sentences:

'When wealth and the wealthy are valued in the city, virtue and good men are less valued. What is valued is practiced, what is not valued is not practiced.' "

BERNANKE THROWS IN THE TOWEL

"The outlook for real activity in 2008 has worsened...We stand ready to take substantivfe additional actions [in plain English, cut short term interest rates] as needed to support growth and to provide adequate insurance against downside risks."

Comment: Paul Krugman questions whether Fed rate cuts can do the job. And I recall that my long-ago Money, Currency and Banking instructor, Professor Rice commenting that Fed interest rate cuts are somewhat "like trying to push a string."

The stock market reacted favorably to Bernanke's promise of interest rate cuts.

GIANT WRITE-DOWN IS SEEN FOR MERRILL

Merril Lynch is expected to suffer $15 billion in losses stemming from soured mortgage investments, almost double its original estimate, prompting the firm to raise additional capital from an outside investor...The loss far exceeds the $12 billion hit many Wall Street analysts had forecast....To shore up its deteriorating finances, Merrill is now in discussions with investors in the U.S., Asia and the Middle East, including American private equity firms, to raise about $4 billion in the coming days....In recent months Merrill and several other firms have grabbed financial lifelines from wealthy foreign governments.

From the NYTimes 1-11-08