BUSH’S GOLDEN YEARS by Doug Casey Chairman, Casey Research, LLC
Unless you attribute the Republican victory to a vote fraud of unprecedented magnitude, the reality is that Americans thoroughly endorsed what President Bush stands for. So let’s play the cards the way they’ve been dealt. And, perpetual optimist that I am, I think the next four years stand to be among the most profitable of a lifetime for a minority of properly positioned investors and speculators.
I’m not talking about the average American. Having sown the wind, Boobus americanus is going to reap the whirlwind. As PATRIOT 2 becomes law, what little is left of civil liberties and the Bill of Rights is going to disappear. The gigantic deficits the government will run to fund both the war and domestic programs (don’t forget that Bush is the only president since the 1820’s who never vetoed a bill) will take interest rates to levels we haven’t seen for a generation. That will crush the current mania in real estate, and likely cause the stock market collapse that began in March 2000 to resume. Unemployment will rise. The dollar will accelerate its collapse, as foreigners, from Central Banks to the man in the street, unload their dollars, causing the price of imports to skyrocket. The American standard of living will nosedive. I expect we’re looking at what will amount to a much more severe version of the ‘70s. And that’s only if the current adventure in Iraq doesn’t mutate into World War 3.
But, as I said earlier, I prefer to look at the bright side. Higher levels of inflation won’t only drive capital from the dollar and conventional investments; it will drive capital into gold. It bears repeating that gold is the only financial asset that’s not simultaneously someone else’s liability. And that’s why, as fear and uncertainty increasingly stalk the world, the world will increasingly turn to gold. Bush believes that it doesn’t matter what foreigners think about the U.S. He’ll find that once countries start holding their reserves in Euros and gold, the dollar will become a hot potato.
The way I see it, the dollar is on the way to reaching its intrinsic value… which is an I.O.U. nothing on the part of a bankrupt government. This is a catastrophe for the average American, but boon for those who follow the trend. I fully expect to see gold trading well over $1,000 before Bush’s term is over.
But the really big gains will be in mining exploration stocks. The American public is still stock-crazy, not having figured out that the unprecedented 1982-2000 bull market is over. They’re still looking for the next sector to get into. When the gold stocks start to move, people will try to get in—but it will be like trying to drain the contents of the Hoover Dam through a garden hose, because the market is too small to absorb any serious buying. Gold stocks will go into a bull run wilder than anything we saw with the Internet issues. (It’s starting already: of the 9 precious metals stocks recommended in the September edition of the International Speculator, 6 are already up over 15%, with the top four up 61%, 63%, 102% and 150%... all in just over 3 months.)
There will be an immense transfer of wealth in the years to come, from those who don’t own gold to those who do. A lot of that is almost guaranteed by Bush’s profligate foreign and domestic policies. Best of all, the gains in store for us will be subject to the low capital gains taxes Bush is promising—one part of his policies I agree with.
(Ed. Note: For more on Doug Casey’s International Speculator, and to 6 free premium reports, including 5 Great Stocks You Can Buy Under $1.00, click here now.)
And now for something completely different:
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OLDTIMERS BEHIND THE WHEEL
Last month, George Weller, a man who killed 10 people and injured 63 others in July 2003, was indicted for manslaughter and could face up to 18 years in prison.
Haven’t heard of him in the news?
That’s probably because George is not a deranged serial killer or fanatic terrorist… he is a 87-year-old Los Angeles resident who lost control of his car.
Weller was out for a drive when he reportedly mistook his gas pedal for the brake and plowed through a crowded Santa Monica farmers’ market at speeds of up to 70 miles per hour. He plead not guilty, claiming that he suffers a heart condition which had caused him to become momentarily confused—but in November 2004, a judge ordered him to stand trial.
This leads us again to the question: Are elderly drivers a significant threat to the public?
Statistics from the National Highway Traffic Safety Administration show that per capita rates of elderly driver involvement in fatal crashes have increased in nearly half of U.S. states over the past two decades. Nationwide rates of fatal crashes are more than double for drivers between the ages of 70 and 75. And elderly drivers have more fatal crashes per mile driven than any other group except teenagers. The numbers have led Illinois and New Hampshire to require road tests for anyone 75 and over renewing their driver’s license; in South Carolina and Utah anyone over 65 renewing has to pass a vision test; in Maine applicants as young as 40 are being tested.
Groups like the American Association of Retired Persons (AARP), however, dispute the validity of the numbers. Since most statistics show increases in the number of older drivers involved in fatal crashes rather than in the overall number of crashes, AARP argues that this only proves seniors—who tend to be more frail—are more likely to die in a crash than a younger person. Thus, says AARP, the stats don’t reflect on elderly drivers’ abilities, only their health.
This argument is supported by the fact that seniors have a lower rate of crash involvement per 1,000 licensed drivers than any other age group. And studies from the National Center for Injury Prevention and Control show that drivers age 65-74 do not pose a greater risk of serious injury or death to other drivers.
Overall, the elderly are safer drivers than 16- to 24-year-olds, but the risk factors of the latter can’t be tested as easily. Teenagers tend to speed, tailgate, and get in accidents at night—seniors are more likely to crash in broad daylight because they get confused in an intersection or have a medical condition such as impaired vision. Therefore, opponents argue, stricter testing based on general observations about the health of the elderly population could lead to discriminatory policies. If seniors are to be tested because they’re more prone to conditions that impair driving, then why not also test, say, the entire African-American population, a group with statistically higher risk of diabetes, which also reduces driving ability?
A recent issue of the Journal of the American Geriatrics Society noted that, “In the absence of disease or functional impairment, there is no empirical evidence that subtle age-related changes in visual sensory or cognitive skills… affect the ability of older persons to operate a motor vehicle safely.”
Still, even AARP supports testing for the very aged; the group recently supported legislation in Florida requiring drivers 80 and older to take a vision test whenever they renew their driver’s licenses. Florida is one of the few states trying to assist the elderly by making roads more navigable, with larger, more readable road signs and sloped curbs that help prevent tire blowouts.
Indeed, there are many who say society is as much to blame for elderly drivers’ problems as the old folks themselves. Seniors’ groups frequently complain that the car-based design of U.S. cities makes it impossible to get around without a vehicle. A 2004 report by the Surface Transportation Policy Project estimated that more than 3.5 million elderly non-drivers stay home each day because they simply have no means of transportation… leading to depression, alcoholism, and physical ailments. And studies show that seniors’ family members often push them to stay on the road, for fear of having to constantly chauffeur them.
What to do? In light of the fact that the government has blown its budget—for our generation and many into the future—the odds of a major revamp of public transportation to accommodate the aging demographic any time soon are nil. Therefore, the best advice for driving safely remains to drive defensively.
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FDA: CONTROLS FOR THE CONTROLLERS
When Dr. David Graham told the Senate Finance Committee in late November that the U.S. was facing one of the greatest catastrophes “in the history of this country… or the world”, he wasn’t talking about the next terrorist attack. He was talking about the Food and Drug Administration.
In recent years, confidence in the agency responsible for ensuring the safety of our food and prescription drugs has been severely rocked. The failure to post timely warnings about side effects of antidepressants when taken by children (WWNK 5/3/04); a lackluster record with regard to foodborne diseases (WWNK 8/23/04); bungled oversight of this winter’s flu vaccine program (WWNK 11/1/04); and the recall of previously approved and popular drugs as Vioxx and Baycol.
The FDA has come under fire not only for its maddeningly slow responses to well-researched reports of dangerous side effects, but for delegating the task of gathering this data to the same pharmaceutical companies that have a lot to lose if one of their blockbuster drugs is pulled from the market. A recent study by academics at Oxford University, led by researcher Dr. An-Wen Chan, provided evidence of systemic manipulation and fraudulent research reports. "The most worrying aspect,” said Dr. Chan, “is that over 50 percent of the outcomes found by the trials weren't reported—and so can't be included in the reviews used to assess different treatments." In almost two-thirds of the cases, the results of the clinical drug trials omitted alarming findings of potentially harmful side effects.
Seldom, if ever, has the FDA—once known for its high standards and rigorous testing—been held in such low esteem, and last month two more reputable voices were added to the critical chorus.
Dr. David Graham, reviewer in the agency’s office of safety research with 20 years of FDA service, said in his scathing testimony before the Senate Finance Committee that is investigating the FDA in the wake of the Vioxx scandal, “I would argue that the FDA, as currently configured, is incapable of protecting America against another Vioxx.” He recommended to immediately recall at least five other drugs—Crestor, Bextra, Meridia, Serevent, and Accutane.
To better understand Graham’s concerns, your editors randomly picked one of the listed drugs, Accutane, a well-known acne medication, and looked at a few of its most prominent side effects… making us wonder how bad someone’s acne could possibly be, compared with this:
* When taken by pregnant women, extremely high risk of major physical deformations and mental defects of the fetus; so much so that female patients of childbearing age have to take a mandatory pregnancy test and sign a written agreement to “avoid sexual intercourse completely or… use 2 separate, effective forms of birth control” before starting Accutane therapy * Depression, psychosis, suicidal thoughts, suicide attempts, aggressive and/or violent behaviors * Pseudotumor cerebri (a syndrome with symptoms like headache, nausea, tinnitus, and visual problems) * Acute pancreatitis, in some cases fatal * Hearing impairment, in some cases persistent after Accutane therapy was discontinued * Hepatitis, inflammatory bowel disease * Decreased bone mineral density, calcification of tendons and ligaments, skeletal hyperostosis (excessive bone growth along the spinal cord), arthritis, tendonitis, “other types of bone abnormalities” * Vision impairments such as corneal opacities and decreased night vision, in some cases persistent after Accutane therapy was discontinued * Heart palpitations, tachycardia (very rapid heartbeat), vascular thrombotic disease (formation of blood clots in the blood vessels); stroke
Responding to Dr. Graham’s allegations, the director of the FDA’s center for drug evaluation, Dr. Steven Galson, stated that the drugs on the reviewer’s black list “are all approved and are safe and effective like other drugs that are approved, recognizing that safe does not mean risk-free.” Considering the—not only potential but nearly certain—effects of Accutane on developing fetuses, we conclude that “safe” in FDA lingo means any drug that doesn’t kill within 30 minutes.
In the December issue of the Journal of the American Medical Association, Dr. Catherine DeAngelis, editor in chief, and two of her deputies signed an editorial calling for a complete makeover of the drug safety monitoring system. Their solution: Creation of a separate agency that would conduct post-marketing surveillance of FDA-approved drugs and would have the authority to act on evidence of unacceptable risk.
“It is unreasonable,” the editors maintained, “to expect that the same agency that was responsible for approval of drug licensing and labeling would also be committed to actively seek evidence to prove itself wrong.”
Whether adding an additional layer of bureaucracy is the answer is, of course, debatable. But what should be beyond question is that, at a minimum, the FDA needs someone strong at the helm. For two years now, it has muddled along with an acting, rather than a permanent, director. That President Bush hasn’t filled this vacancy is incomprehensible, especially considering the breadth and depth of the problems within the agency, not to mention their potential for disaster.
According to a recent, strongly-worded editorial in the San Francisco Chronicle, the White House should quit dragging its feet: “It’s past time for reform… The Food and Drug Administration badly needs a shakeup and fresh leadership. It also requires new rules that will bar a repeat of the sluggish and negligent conduct that produced so many mistakes.”
There is an alternative that, while unlikely to come about, has been mentioned in these pages before. Namely to abolish the FDA altogether and let private businesses deal with the issue of food and drug safety. People would, overnight, begin paying far closer attention to the things they put in their bodies; web sites featuring product reviews—much like those that exist with computers—would crop up by the dozens; independent testing labs would be opened, privately insured by consortiums that have every incentive to make sure new drug research is meticulously executed, etc.
Utopian idealism? No doubt. But we refuse, perhaps stubbornly so, to accept that a true free market solution—where companies have tangible rewards and risks for success or failure—would produce a worse result than a faceless bureaucracy that works hand in glove with the same industry it is expected to regulate… the same industry that provides the life-after-government career path to the FDA executives. And where the bureaucrats’ primary incentive is to show up for work on enough days to qualify for a life-long pension.
THE MOTHER OF INVENTION
In response to our article “NGO’s—the Hapless Helpers” (WWNK 11/22/04), reader Neil wrote: “Reminds me of stories showing how millions of dollars of third world aid money funneled through UN agencies… end up telling the same kind of horror stories. For example, health clinics built and setup in African nations that have nothing but condoms, contraception pamphlets, and someone trained in their dissemination. These ‘medical’ clinics could work wonders if they were stocked with vaccines that cost pennies each.”
At least, it seems, the natives of those countries have learned to make creative use of the items so abundantly supplied.
Millions of free condoms distributed in India for birth control and AIDS prevention have found new applications, as the UK Telegraph recently reported, “such as waterproofing roofs, reinforcing roads and even polishing saris.” India’s military protects tank barrels with a rubbery layer, and Thailand’s runways have benefited from the wide color palette available.
Which proves again that the human mind always finds innovative ways for improvement.
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END QUOTE
"You need only reflect that one of the best ways to get yourself a reputation as a dangerous citizen these days is to go about repeating the very phrases which our founding fathers used in the struggle for independence."
--Charles Austin Beard, 1874–1948, American historian and author
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