Democrats are rebuking President Bush for saying in his speech to the Knesset, here, that to “negotiate with terrorists and radicals” is “appeasement.” The Democrats took it as a slap at Barack Obama. What bothers me is the continual reference to Hitler and his National Socialists, particularly the British and French accommodation at the Munich Conference of 1938.

What Hitler was demanding was not unreasonable. He wanted the German-speaking areas of Europe under German authority. He had just annexed Austria, which was German-speaking, without bloodshed. There were two more small pieces of Germanic territory: the free city of Danzig and the Sudetenland, a border area of what is now the Czech Republic. We live in an era when you do not change national borders for these sorts of reasons. But in 1938 it was different.

Shades of Marge Schott. What is the world coming to? HT: LGF

Barack Obama laid into John McCain on Friday for advancing a tough-guy foreign policy that he called “naive and irresponsible”…

Senator Obama added, speaking of President Bush and Senator McCain: “They aren’t telling you the truth. They are trying to fool you and scare you because they can’t win a foreign policy debate on the merits. But it’s not going to work. Not this time, not this year.” It will be a compelling — and disturbing — commentary on the state of mind of America in 2008 if the so-called “realist” Senator Obama is correct about “this time and this year.”

Crude futures soared to a new intraday record near $128 a barrel and finished up $2.17, or 1.8%, at an all-time closing high of $126.29, boosted by a report from Goldman Sachs commodity analysts, who said investors are underestimating the “inevitability” of further increases in crude and other raw materials. The investment bank raised its forecast for oil in the second half of 2008 sharply, to an average of $141 a barrel, up from Goldman’s earlier target of $107.

Meanwhile, from the FT: “Saudi Arabia said on Friday that it was increasing its oil production to its highest level in two years,…by about 300,000 barrels a day.” But who’s counting anymore? Maybe the bulls are right and others are wrong. But why were so many people wrong a year ago, and why has the previously unthinkable now suddenly become the inevitable?

The Fed has come up with a clever idea, establishing an enterprise to focus on bubbles before they become crises. WSJ:

First came the tech-stock bubble. Then there were bubbles in housing and credit. Chinese stocks took off like a rocket. Now, as prices soar on every material from oil to corn, some suggest there’s a bubble in commodities…how and why do bubbles form? Economists traditionally haven’t offered much insight. From World War II till the mid-1990s, there weren’t many U.S. investing manias for them to look at. The study of bubbles was left to economic historians sifting through musty records of 17th-century Dutch tulip-bulb prices and the like.

The dot-com boom began to change that. “You were seeing live, in action, the unfolding of lots of examples of valuations disconnecting from fundamentals,” says Princeton economist Harrison Hong. Now, the study of financial bubbles is hot.

Its hub is Princeton, 40 miles south of Wall Street, home to a band of young scholars hired by former professor Ben Bernanke, now the nation’s chief bubble watcher as Federal Reserve chairman…They are building on work done by the late Hyman Minsky, whose once-ignored ideas about investing manias are now in vogue, and the late economic historian Charles Kindleberger, whose 1978 “Manias, Panics and Crashes” is a classic. But compared with Mr. Minsky or another student of bubbles, Yale’s Robert Shiller, the Princeton trio focuses less on mass psychology than on mathematical models. These they use to show how bubbles can be created even in markets that include rational, calculating investors…

At the height of the tech bubble, Internet stocks changed hands three times as frequently as other shares. “The two most important characteristics of a bubble,” says Wei Xiong, are: “People pay a crazy price and people trade like crazy.”…

Under the Hayek view, bubbles don’t make sense. As soon as some group of traders irrationally pushes prices way up, more-rational traders should take advantage of the mispricing by selling — bringing prices back down. But the tech boom reinforced an oft-quoted warning from John Maynard Keynes: “The market can stay irrational longer than you can stay solvent.” So investors who spot the bubble attack only if each is confident that other skeptics are on board. In work done with Mr. Abreu, Mr. Brunnermeier concluded that if all the rational investors could agree to bet against the bubble, they could make big profits. But if they can’t coordinate, it’s risky for any one of them to bet against a bubble. So it makes sense to ride it up and then get out quickly as soon as the bubble’s existence becomes common knowledge.

While studying bubbles with policy intent is a good idea as we have said, it remains to be seen if academic economists are up to the task. One of them noted in the WSJ piece:

“I was always convinced that there was an Internet bubble going on and never invested in Internet stocks,” he says. “My brother-in-law did. My wife always complained that I studied finance and her brother was making a lot of money on Internet stocks.”

By the way, the economic models of the economists do not presently indicate that commodities are in any kind of bubble, despite prices and trading that have doubled in the past year in the teeth of a global slowdown. History will show whether that judgment is correct.

I would like to apologize to you for assuming that your private assurances to me regarding your desire to cooperate in our efforts to negotiate bipartisan lobbying reform legislation were sincere. When you approached me and insisted that despite your leadership’s preference to use the issue to gain a political advantage in the 2006 elections, you were personally committed to achieving a result that would reflect credit on the entire Senate and offer the country a better example of political leadership, I concluded your professed concern for the institution and the public interest was genuine and admirable.

Thank you for disabusing me of such notions with your letter to me dated February 2, 2006, which explained your decision to withdraw from our bipartisan discussions. I’m embarrassed to admit that after all these years in politics I failed to interpret your previous assurances as typical rhetorical gloss routinely used in politics to make self-interested partisan posturing appear more noble…

I have consistently maintained that any lobbying reform proposal be bipartisan. The bill Senators Joe Lieberman and Bill Nelson and I have introduced is evidence of that commitment…I initially believed you shared that goal. But I understand how important the opportunity to lead your party’s effort to exploit this issue must seem to a freshman Senator, and I hold no hard feelings over your earlier disingenuousness. Again, I have been around long enough to appreciate that in politics the public interest isn’t always a priority for every one of us. Good luck to you, Senator.

John McCain sometimes seems to present himself as a reincarnation of TR, with his military experience and iconoclastic attitude, as well as his trust busting, regulating, and conservationist reflexes. It would appear from the letter above that McCain in turn sees Senator Obama as something like a new Slick Willie, a slippery fellow whose words cannot be taken for more than the nice sounds they made at the time they were uttered. (That puts McCain one step ahead of where Newt Gingrich was in 1995, when the Speaker was momentarily beguiled by the President.) Whether these times need either a new Roosevelt or a new Clinton is a matter that remains to be seen.

With 92 percent of the precincts reporting, Mrs. Clinton had 67 percent of the vote and Mr. Obama had 26 percent. John Edwards, who pulled out of the race but whose name remained on the ballot, had 7 percent.

To one Times reporter, it was all just so much ho-hum: “just another state in her column to reinforce her view that she can win in November, and by extension, that Mr. Obama cannot.” (By contrast, the NYT’s coverage of Senator Obama’s victory in Wyoming, a state with half the delegates and no recent history of voting Democrat in the general election, was quite bouncy and upbeat.) We wonder what counts as a good state and what is “just another state.” Not really too hard to guess.

UPDATE

The Times was considerably more upbeat about the endorsement from erstwhile contender John Edwards, which did find it way to the front page: “Ex-Rival Edwards Throws His Support to Obama…The endorsement could offer Senator Barack Obama help in his efforts to win over working class white voters in the general election.”

“One of the things I think is very important to realize is that the growth in the world oil consumption is not that strong.” — David Kelly, chief market strategist, J.P. Morgan Funds; The Washington Post, May 4, 2008….On May 2, the Friday before [the Lehman $80] prediction made news, Bloomberg had reported that Iran is again storing its heavy crude on tankers in the Persian Gulf because the country has run out of onshore storage tanks while awaiting buyers. Further, Saudi Arabia has extended discounts on its sour crudes to $7.45 for Arabian Heavy. Doesn’t sound like there’s any real supply problem with that grade of crude, does it?

It is an understatement to say that over the last five years the media have rained reports predicting an impending energy Armageddon. But those reports have tended not to disclose their sources—which often were individuals heavily invested in the oil futures market.

For example, Goldman Sachs was one of the founding partners of online commodities and futures marketplace Intercontinental Exchange (ICE). And ICE has been a primary focus of recent congressional investigations; it was named both in the Senate’s Permanent Subcommittee on Investigations’ June 27, 2006, Staff Report and in the House Committee on Energy & Commerce’s hearing last December. Those investigations looked into the unregulated trading in energy futures, and both concluded that energy prices’ climb to stratospheric heights has been driven by the billions of dollars’ worth of oil and natural gas futures contracts being placed on the ICE—which is not regulated by the Commodities Futures Trading Commission.

In case you’ve forgotten, it was only 2001 when Business Week reported that some Wall Street firms were hard-selling to the public stocks that their companies were quietly divesting—and/or pushing questionable stocks for companies in which their affiliated banks had a financial interest. In a nutshell, some individuals with a specific vested interest in a certain financial outcome used the media to enrich themselves and their companies, leaving the public investor holding the bag.

Once that deception was uncovered (after the stock market collapsed), and after the congressional hearings in 2001 proved beyond any doubt that these things had happened, the national media swore that they would never again be taken in by this type of corporate deceit. Then came 2004 and oil.

As the second quote at the beginning of this column makes clear, the Senate pointed out in its 2006 report that oil reserves (not including the Strategic Petroleum Reserve) were at a 20-year high during the time that report was written; therefore, there was no shortage of oil whatsoever. This seemed to confirm a Jan. 10, 2007, article in Reuters that quoted Tony Nunan, a risk manager at Mitsubishi: “We’ve got a short-term [oil] oversupply problem.” Yes, an oil oversupply problem in fall of 2006.

Then, as now, that certainly isn’t what we were being told. Instead we were being bombarded daily in the media and analysts’ reports with justifications for the high price of oil: The “terrorism premium” on each barrel of oil, the rising demand of China and India, troubles in the Nigerian oil patch, oil pipelines’ being blown up in Iraq, wider war in the Middle East, T. Boone Pickens’ warnings that the world was on the cusp of Peak Oil, “surging demand” for gasoline in the U.S., the weak dollar—and so on. (Peak oil is described as the world crossing the halfway mark for extracting its oil reserves. It is not maximum production.) However, the Senate took a dim view of those excuses, particularly the ones about Peak Oil or diminished capacity for oil production: “There’s a few hedge fund managers out there who are masters at knowing how to exploit the peak [oil] theories and hot buttons of supply and demand, and by making bold predictions of shocking price advancements to come, they only add more fuel to the bullish fire in a sort of self-fulfilling prophecy.” (The Role of Market Speculation in Rising Oil and Gas Prices, U.S. Senate, June 27, 2006).

We don’t know with any certainty which scenario for oil is true, but it is certainly of some note that many of the prognosticators have a monetary stake in the matter when they make a prediction. Goldman Sachs would appear to have a particularly delicate position, given its prediction of another spike, its non-publicly disclosed bets on the direction of the oil market, and the prominence of its former senior executives at the highest level of economic policy in the US. It all feels a bit unseemly.

“The most recent data and estimates suggest the oil market should have been in surplus the past two months and should remain in that position for the rest of 2008 – as long as Opec maintains its production at current levels,” the IEA, the developed countries’ energy watchdog said in its most recent monthly report…Inventories in OECD countries dipped to just below the five-year average, but those in developing countries were more difficult to calculate. The IEA said it suspected some inventory filling was not being reported and that consumers were competing with each other in hording oil in case prices rose even higher.

This past weekend, CNN raised the question of $300 oil, with a graphic to match. Frank Sesno said: “$200, even $300 a barrel oil is a what-if scenario people ignore at their peril”… Kind of sounds like CNBC in March 2000 (when CNBC actually often had higher daytime ratings than CNN).

“I will not shirk the mantle of leadership that the United States bears,” Mr. McCain said pointedly. “I will not permit eight long years to pass without serious action on serious challenges…Instead of idly debating the precise extent of global warming, or the precise timeline of global warming, we need to deal with the central facts of rising temperatures, rising waters, and all the endless troubles that global warming will bring,” he said at a Vestas wind turbine manufacturing plant in Oregon, where the environment is a central issue for voters. “We stand warned by serious and credible scientists across the world that time is short and the dangers are great.”

Unfortunately, many on the Left were not impressed and will continue to support other candidates of their choice. Of course, McCain could have said something like this:

there would be plenty of oil available to the United States if the oil companies were allowed to get it: “Eighty-five percent of offshore oil is off-limits.” Responding to objections to offshore drilling by environmentalists and their allies in Congress, Robertson noted that some of the strongest pro-environment nations in Europe - he mentions Denmark, Norway, the United Kingdom - lease offshore locations for oil exploration. The technology has become so good, he said, that during Hurricanes Katrina and Rita, “one thousand offshore wells were destroyed (in the Gulf of Mexico), but not one leaked.” Australia, he said, has allowed offshore drilling for 40 years without any environmental damage.

In addition to the sinking value of the dollar, here is the main problem: According to the Department of Energy, U.S. oil production has fallen approximately 40 percent since 1985, while the consumption of oil has grown by more than 30 percent.

According to government estimates, there is enough oil in areas accessible to America - 112 billion barrels - to power more than 60 million cars for 60 years. The Outer Continental Shelf alone contains an estimated 86 billion barrels of oil and 420 trillion cubic feet of natural gas. Had President Clinton not vetoed exploration in the Arctic National Wildlife Refuge (ANWR) in 1995, when oil was $19 a barrel, America would currently be receiving more than 1 million barrels a day domestically

It seems doubtful that Senator McCain picked up any meaningful amount of votes from Clinton or Obama supporters by saying the former and not the latter. Maybe the joke is on the GOP.

We started covering Sen. Barack Obama’s inability to hire good staffers in June 2007, when he blamed staffers for some opposition research trying to link Sen. Hillary Clinton, D-NY, to outsourcing in India; for injecting some venom in the David Geffen/Hillary Clinton fight; and for missing an event with firefighters in New Hampshire. In December, we noted again that Obama was blaming the answers on a 1996 questionnaire on a staffer…So, for those keeping track at home, that’s ten instances of Obama publicly blaming his staff for various screw-ups…You of course could also add Austan Goolsbee, Samantha Power, Gordon Fischer, and retired Gen. Tony McPeak…That would be 14. We will continue to keep track. And for the record, yet again, let me state that I find Sen. Obama’s staff unfailingly competent and polite, courteous and efficient…

Hmmm. Wasn’t it also ABC, in the person of Brian Ross, that broke the story and began the aggressive reporting of the Jeremiah Wright story in the MSM.

The only way speculation can have a persistent effect on oil prices, then, is if it leads to physical hoarding — an increase in private inventories of black gunk. This actually happened in the late 1970s, when the effects of disrupted Iranian supply were amplified by widespread panic stockpiling.

But it hasn’t happened this time: all through the period of the alleged bubble, inventories have remained at more or less normal levels. This tells us that the rise in oil prices isn’t the result of runaway speculation; it’s the result of fundamental factors, mainly the growing difficulty of finding oil and the rapid growth of emerging economies like China. The rise in oil prices these past few years had to happen to keep demand growth from exceeding supply growth.

Meanwhile, Barton Biggs (who is often a little early on things) says that oil is in a “manic” period and that an interesting trade is to go long the financials and go short “energy and the whole materials sector.” Who is right? We don’t know.

it is a mistake to conflate his African identity with his Muslim heritage. Senator Obama is half African by birth and Africans can understandably identify with him. In Islam, however, there is no such thing as a half-Muslim. Like all monotheistic religions, Islam is an exclusive faith. As the son of the Muslim father, Senator Obama was born a Muslim under Muslim law as it is universally understood. It makes no difference that, as Senator Obama has written, his father said he renounced his religion. Likewise, under Muslim law based on the Koran his mother’s Christian background is irrelevant.

Of course, as most Americans understand it, Senator Obama is not a Muslim. He chose to become a Christian, and indeed has written convincingly to explain how he arrived at his choice and how important his Christian faith is to him. His conversion, however, was a crime in Muslim eyes; it is “irtidad” or “ridda,” usually translated from the Arabic as “apostasy,” but with connotations of rebellion and treason. Indeed, it is the worst of all crimes that a Muslim can commit, worse than murder (which the victim’s family may choose to forgive).

With few exceptions, the jurists of all Sunni and Shiite schools prescribe execution for all adults who leave the faith not under duress; the recommended punishment is beheading at the hands of a cleric, although in recent years there have been both stonings and hangings. (Some may point to cases in which lesser punishments were ordered — as with some Egyptian intellectuals who have been punished for writings that were construed as apostasy — but those were really instances of supposed heresy, not explicitly declared apostasy as in Senator Obama’s case.) It is true that the criminal codes in most Muslim countries do not mandate execution for apostasy (although a law doing exactly that is pending before Iran’s Parliament and in two Malaysian states)…

another provision of Muslim law is perhaps more relevant: it prohibits punishment for any Muslim who kills any apostate, and effectively prohibits interference with such a killing. At the very least, that would complicate the security planning of state visits by President Obama to Muslim countries, because the very act of protecting him would be sinful for Islamic security guards. More broadly, most citizens of the Islamic world would be horrified by the fact of Senator Obama’s conversion to Christianity once it became widely known — as it would, no doubt, should he win the White House.

This matter would appear to be non-trivial. We have witnessed great intensity of feeling as to what constitutes justice in the situations of other apostates, and the situation of the President would appear to be a special and highly visible case. Criminalizing apostasy ought itself to be a crime, but that, unfortunately, lies far in the future.

analysts at Lehman make a strong case for falling prices as the markets absorb bearish signs such as the Chinese stockpiling oil in advance of the Olympics, and the estimated 28 million barrels Iran is storing in tankers because it can’t find a market for the heavy, difficult-to-refine crude. “If those 28 million barrels were in U.S. crude stocks, the market here would be a lot looser,” said James Crandell, an energy markets analyst at Lehman.

A key assumption…is that the Saudis will increase production after the election to curry favor with the new president and try to influence policy in the Middle East. While Saudi Arabia guards its oil production and reserves as state secrets, the nation has recently announced three long-awaited oilfields have begun production. Lehman estimates those will add 1.3 million barrels a day of capacity, compared with expected global demand growth of 900,000 barrels a day.

If the Saudis open the spigots, in other words, crude prices would drop, just in time for the desert nation to gain influence over whoever takes residence in the White House. “There’s a history of output increases, not exactly coinciding with the election but a few months afterwards,” says Crandell.

Meanwhile, here’s a story of a high performing hedge fund that lost $17 billion in a few days last year due to its exposure to mortgages. That couldn’t happen in the oil market, could it? Almost everyone is bullish. Even the bears talk about an $80 floor for oil.

In the overall race for the nomination, Obama has 1,864.5 delegates and Clinton has 1,697, according to the latest AP tally. Obama is just 160.5 delegates shy of the 2,025 needed to secure the Democratic nomination…There are 217 pledged delegates at stake in the remaining six primaries. Obama is on track to secure a majority of the pledged delegates on May 20, when Kentucky and Oregon vote…

Obama has a 163-delegate lead among the pledged delegates won in primaries and caucuses. That means Clinton would have to generate an identical lead among superdelegates to catch him…A little more than 200 superdelegates remain undecided, and about 40 others will be named by state parties at state conventions and meetings throughout the spring.

The numbers are a little dizzying, but they seem to say that Senator Clinton will be behind by about 150 or so pledged delegates at the end of the primary season, and the superdelegates are unlikely to change that result. So what’s the point of continuing, many ask. But that question assumes that Senator Clinton is still running for President, in which case her mission would appear to be futile or an option on a misstep by or damaging revelation about Senator Obama. Not much of a strategy.

But what if Senator Clinton is playing another game entirely? Senator Clinton’s dogged perseverance at this juncture makes perfect sense if she is running for Vice President, and wants to assure herself that she is in a position to demand that role in an Obama/Clinton “dream ticket.” Senator Clinton herself raised the idea in March.

It seems clear enough that Senator Obama does not want Hillary Clinton as his running mate. When she raised the idea of a joint ticket, he quickly ridiculed it. More recently it has been reported that Michelle Obama is dead set against the idea.

So if the Clintons have decided that the VP slot is the best attainable result in 2008, then the strategy would be to force Senator Obama to select Senator Clinton as his running mate. The path to doing so would appear to be to fight to the end, be only a handful of delegates behind the Illinois Senator, find some metrics if possible which show her as actually ahead of Obama, and hammer home the point that she delivers the demographics and the large states that not only complement the Obama coalition, but are critical to a successful Democratic strategy in the general election. A Democratic Party convention full of a visibly unhappy Clinton and Clinton delegates — after the choice of some unknown (or well known) VP candidate other than Clinton — could be a TV disaster. A unity ticket, hands joined and held high, would be precisely the opposite.

By the way, an Obama/Clinton ticket would appear to have some impressive additive strengths, based on the primary results to date. (The MSM will not look to add their weaknesses together, as we know from past electoral history and current practice.) “Change we can believe in — Experience we can count on” is not a bad positioning for the candidates, though it might be a tad long for a bumper sticker.

The Change/Experience ticket raises the issue of what John McCain will do with his VP selection. In our hypothetical scenario, McCain supplies the “Experience” checkmark versus the Democrats, but what about “Change”? A whitebread or older gentleman VP candidate, no matter how well credentialed, runs a certain risk: Democrats are to Republicans as iPods are to Victrolas. Then again, there’s that talk about McCain’s picking Bobby Jindal as a running mate, which would be a very interesting choice. Jindal was pretty impressive on Hugh Hewitt’s program the other day. We’ll have to see what happens. Not too much has conformed to the conventional wisdom so far.

UPDATE

We note that Carl Bernstein seems to agree with this thesis.

The amazement was on their faces. Hundreds waited for Barack Obama on that evening in South Carolina, 15 weeks ago, to claim victory — a surprising victory, surprisingly large. And amazing it was. It made it possible for him to stand today on the verge of being the first black person ever nominated for president by a major party.

One could guess the thoughts of the blacks and whites in that crowd: Can you believe that our state — South Carolina, first to secede and first to open fire in the Civil War — is now catapulting a black man to the front of the presidential contest in a year that bodes well for Democrats?

“Race doesn’t matter,” some began to chant. “Race doesn’t matter!” The cry soon gave way to more familiar chants of “Yes we can,” and everyone in the auditorium surely knew that race does still matter in so many ways. But in a pinch-me moment, they seemed to realize that a barrier had been broken with a swiftness and certainty that even they had not foreseen.

“One could guess the thoughts of the blacks and whites in that crowd: Can you believe that our state — South Carolina, first to secede and first to open fire in the Civil War — is now catapulting a black man to the front of the presidential contest” — the treacle doesn’t get any thicker than that. (Furthermore, the AP writer was not reporting what was actually going on in the minds of the crowd; rather he was recounting his own flight of fancy.) And it doesn’t stop there:

Rep. Elijah Cummings…says the Illinois senator convinces people of all races that Americans as a society, and as individuals, can achieve higher goals if they try. “He says we can do better, and his life is the epitome of doing better,” says Cummings, noting that Obama was raised by a single mother who sometimes relied on food stamps. “He convinces people that there’s a lot of good within them.”…

Obama is an electrifying speaker. At virtually every key juncture in his trajectory, he has used inspirational oratory to generate excitement, buy time to deal with crises, and force party activists to rethink their assumptions that a black man with an African name cannot seriously vie for the presidency. A prime-time speech at the Democratic convention in Boston catapulted him to national attention in 2004. When his presidential campaign badly trailed Clinton’s high-flying operation, he gave it new life with a timely Iowa speech that outshone her remarks moments earlier…

Obama has a compelling biography, too. The son of a black African father he barely knew, and a white Kansan mother who took him from Hawaii to Indonesia, he was largely raised by his white maternal grandparents. He finished near the top of his Harvard law class, then rejected big firms’ salaries to work as a community organizer in Southside Chicago, where he found a church, his wife and a place that felt like home…

Jim Margolis…interviewed many of Obama’s Harvard classmates for TV ads and documentaries. They told him Obama “was wise beyond his years, and never talked down to people,” Margolis said. “He has this amazing ability to connect with people and understand their problems,” he said. “And through it all, there is this optimism.” For a politician with only four years of experience at the federal level, Obama also has spot-on instincts, associates say, and a steely confidence in his convictions…

Obama fans often search for words to express their attraction. “He just really electrifies you when you are listening to him,” said Lena Bradley, 78, a beauty salon owner in Washington. “He has something that’s leading him.” As ephemeral as “something that’s leading him” sounds, it’s hard to explain in more clinical terms his impact on people. But it’s there.

So we’re back to the MSM’s revealing its mad crush on the new JFK on steroids (hmmm, wasn’t the first JFK actually on steroids?). But something seems quite different this time in the life and workings of media’s putative First Family, i.e., the First Lady. Robert Novak comments on some of the new Jackie’s activities:

Close-in supporters of Sen. Barack Obama’s presidential campaign are convinced he never will offer the vice presidential nomination to Sen. Hillary Clinton for one overriding reason: Michelle Obama. The Democratic front-runner’s wife did not comment on other rival candidates for the party’s nomination, but she has been sniping at Clinton since last summer. According to Obama sources, those public utterances do not reveal the extent of her hostility.

Mrs. Obama would appear to be as angry as ever. Hugh Hewitt sees Michelle Obama, Jeremiah Wright, the Ayers/Dohrn cell, and Tony Rezko as the Four Horsemen of the Obama Apocalypse. Of course, with the media reverting to embarrassingly fawning treatment of the candidate, and preparing to launch the epithets of political correctness to silence any uncomfortable character questions, it remains to be seen whether there will be an Apocalypse at all, or whether we’ll just proceed directly to the Rapture.

UPDATE

While we’re on the subject: if John McCain had said there were 58 states, would the media give that a pass, or would McCain get the potatoe treatment or worse?

Nigerian unrest. Yep, that’s why oil went up $5 in the last few days. And the dollar, too. That’s big. (I know, it’s going down today, but it doesn’t matter — buy the stocks on weakness.) OK, everyone repeat after me: We are running out of supply, and worldwide demand is off the charts.

Does anyone think that National Oil Varco goes up 5 points for no reason? Go read the Transocean conference call from Wednesday. It’s eye-opening. The premier deepwater driller — with the best technology and expertise, and most important, clout with the rig builders — can’t get enough rigs for 2011 to equal the demand. The big issue on the RIG call was whether the rigs will be available at the beginning of 2011 and not the end! And when they come, the bidding for them already is so furious that they won’t mean anything to the possibility of more oil and gas in the world…

Nigeria? How about the U.S., our own worst enemy? Or, don’t forget the globe itself, which is running out of oil quickly, despite many pundits’ best attempts to tell us it’s all about the dollar.

Maybe he’s right, but we can’t help recalling a Wall Street TV pundit saying, sometime after March 2000, “if Yahoo! gets down to $80, back up the truck.”

The global surge in food and energy prices is being driven primarily by fundamental market conditions, rather than an investment bubble, say the majority of economists in the latest Wall Street Journal forecasting survey. Fifty-one percent of the respondents said demand from China and India was the prime factor in soaring energy prices, and 41% said the demand was the chief contributor to rising food costs…The survey, conducted May 2-6, showed that the 53 respondents, on average, expect the price of crude to fall to about $105 by the end of next month and to about $93 by the end of the year.

Oil prices went up $15 a barrel in a week or so from just before the survey of economists to today. But there’s no bubble. Really. If oil goes up another $15 next week, what would that be?

We note a contrarian view that seems a bit more sensible: “‘Commodity markets have become a strange safe haven, with prices well out of line with underlying market fundamentals,’ said Diane Swonk of Mesirow Financial Holdings Inc. “I am dumbfounded that a report like employment report triggered a rally in oil prices…Just plain ridiculous’.” Indeed. But stay out of the way of that train.

What happens to “It’s Over” if Clinton pulls a 40-point victory in West Virginia on Tuesday, then follows it up a week later with a 30-point victory in Kentucky? If these states turn out in the same margins that states since March 4th have averaged, that would imply a net of about 290,000 votes for Clinton. That puts her within striking distance of a reasonable popular vote victory. “Over” will be over as we turn our attention to Puerto Rico.

There are good reasons not to take Puerto Rico lightly, even though the press has continued to do exactly that. I would note: (a) Puerto Ricans vote in large numbers (2 million in the last gubernatorial election); (b) Puerto Ricans have never had this important a role in United States presidential politics; (c) Puerto Rico’s politics is focused at least partially on how (if at all) to adjust its relationship with the United States; (d) Puerto Rico’s is an open primary, and the residents of the Commonwealth, who are United States citizens, do not see themselves as Republicans or Democrats.

The inference I draw is that Puerto Ricans could turn out in huge numbers. If they do, and they swing for Clinton in a sizeable way, the popular vote lead could swing, too. Add 290,000 votes from West Virginia and Kentucky to 250,000 votes from Puerto Rico, account for expected losses in Oregon, Montana, and South Dakota, and you get Clinton leading in many popular vote counts, some of which are really quite valid. If she has one of those leads when the final votes are counted on June 3rd, the race will go on to the convention.

Meanwhile, Charles Krauthammer, among many others, has an obituary for the Clinton campaign.

Iran has chartered an armada of supertankers to act as floating storage for as many as 28 million barrels of crude oil that is backing up on them. Analysts are blaming worldwide refineries yet to recover from maintenance programs. It’s not the first time that Iran has had trouble finding buyers; they temporarily floated 20 million barrels in 2006. No, I can’t explain this in light of record oil prices and continual cries for more release of OPEC crude oil.

So Iran is apparently now keeping oil from the market while continuing to produce it. Parking it offshore would appear to create some hidden inventory that might not show up in some official figures, possibly damping prices. Who else might be up to similar shenanigans? (Of course with Iran, there’s always a possibility of a super-secret war explanation.)

Meanwhile, an AP story said that analysts “struggled to explain” the continued rise in the price of tulip bulbs, er, oil. No kidding. “‘Crude oil is currently held up in a tug-of-war between the Goldman reality and the physical reality,’ said Olivier Jakob of Switzerland’s Petromatrix in a research note, adding that the investment bank’s prediction made for ‘a great story to support pension funds piling more into commodities’.” And a few years ago Moody’s and S&P said that subprime mortgages were just dandy for pension funds. So it goes.

- The length of the Democratic contest has been -– in some ways -– a plus for the party. The AP estimates that more than 3.5 million new voters registered during the competitive primary season. And the hundreds of millions of dollars spent energizing Democratic turnout will leave organization and energy in place for November. Mr. Obama is a better candidate for having been battle tested. And Mr. McCain has to fight hard for attention. He’s mentioned in less than 20% of the coverage in recent months, while Mr. Obama and Mrs. Clinton are talked about in 60% to 70% of the coverage.

- The length of the Democratic contest has been –- in some ways -– a minus. It has revealed weaknesses in Mr. Obama and Mrs. Clinton. Mrs. Clinton came across as calculating, contrived, stiff and self-concerned. Mr. Obama is increasingly seen not as the Second Coming, but as a typical liberal Chicago pol with a thin record, little experience, an array of troubling relationships and, to top it off, elitist sensibilities. Nominating him will now test the thesis that only a Democrat running as a moderate can win the White House.

The primary has created a deep fissure in Democratic ranks: blue collar, less affluent, less educated voters versus the white wine crowd of academics and upscale professionals (along with blacks and young people). Mr. Obama runs behind Mrs. Clinton’s numbers when matched against Mr. McCain in key industrial battleground states. Less than half of Mrs. Clinton’s backers in Indiana and North Carolina say they would support Mr. Obama if he were the nominee. In the most recent Fox News poll, two-and-a-half times as many Democrats break for Mr. McCain (15%) as Republicans defect to Mrs. Clinton (6%) and nearly twice as many Democrats support Mr. McCain (22%) as Republicans back Mr. Obama (13%). These “McCainocrat” defections could hurt badly…

The battlegrounds will look familiar. It will be the industrial heartland from Pennsylvania to Wisconsin, minus Indiana (Republican) and Illinois (Democrat); the western edge of the Midwest from Minnesota south to Missouri; Colorado, New Mexico and Nevada in the Rocky Mountains; Florida; and New Hampshire…

Almost everything we think we know right now will be revised and even overturned during the next six months. This has been a race in which conventional wisdom has often been proven wrong. The improbable or thought-to-be impossible has happened with regularity.

Perhaps it would be most surprising if the conventional wisdom turns out to be correct from here now on.

oil has maintained its upward momentum in the face of sharply diminished U.S. demand, which fell in February to 19.7 million barrels a day. That was down a million barrels a day from the 2007 average.

And yet another WSJ report, showing outsized oil inventory increases that the market quickly ignored:

EIA’s latest data show that oil inventories rose by 5.7 million barrels last week more than four times the average analyst forecast of a 1.4 million barrel rise in stockpiles, according to Dow Jones Newswires.

Gasoline stockpiles also jumped by 800,000 barrels compared with expectations for a 400,000 barrel draw, while refinery usage fell 0.4 percentage point to 85%, rather than rising by 0.4 percentage points as forecast. Some analysts believe that weak readings of refinery usage may be a sign that operators are feeling pinched by the high price of crude, which they purchase as a raw material, and shaky demand for gasoline, which they sell to recoup their costs.

Who cares? It’s party time! — for some.

A piece of Morgan Stanley research shows that Emerging Market countries now export roughly as much to each other as they do to the EU and US. A central economic question of our time is whether this seemingly greater independence of the EM countries from the the US and EU means a real “decoupling” has happened. No one really knows the answer to this question, which is indeed perhaps the central economic question of our times, because of its implications for the global economy over the next five years at least.

If a decoupling really has occurred, the EM countries can feed on each other for good growth while the West languishes in recession or near recession for a while. This would give continued support to the boom in commodities and oil, which otherwise appears extremely long in the tooth.

As you know, we are very skeptical of the “decoupling” thesis. China’s rather dodgy numbers and other irregularities raise the issue of what happens if growth should slow and people start turning over the rocks to see what has been covered up during this ultra-long, ultra-rare period of hypergrowth. Moreover, China may be a model of transparency and good corporate practice compared to some of the other EM countries.

The Morgan Stanley chart above includes not only China but Argentina, Brazil, Chile, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Thailand, and Turkey — so there is plenty of room for mischief, cooked books, bad loans, and all the rest, which tend to get revealed, to further ill effect, during periods of recession and economic duress. All the projections of a continued super-boom in commodities and oil are premised, to one extent or another, on the decoupling hypothesis. We don’t believe it. We shall just have to see who is right.

Analysts at Goldman Sachs Group are back with a revision to their oil “super-spike” call, originally made in 2005. This time, the target is $150 to $200 a barrel for crude oil, within the next six to 24 months.

Goldman’s group, led by analyst Arjun Murti, says the energy crisis “may be coming to a head.” They cite the lack of supply growth outside of the Oil Production and Exploration Countries, and the struggle for OPEC nations to produce more, as part of what will continue to drive prices higher.

In April of 2005, Mr. Murti’s team said the super-spike in oil could lift prices as high as $105 a barrel, which one analyst then compared to a “Dow 20,000″ call.

Crude’s Yearly Close
Year 12/31 close
2001 $19.84
2002 $31.20
2003 $32.52
2004 $43.45
2005 $61.04
2006 $61.05
2007 $95.98

The rapid rise in the last year or so suggests $150 could not be far off, and even $200 does not seem fanciful. Perhaps it’s a sign of the times that such a call has only had a mild effect on futures — oil, of late, was up 36 cents to $120.33 a barrel.

“Will we see $200 in the next 24 months? I think it’s possible,” says Phil Flynn -vice president, senior market analyst, Alaron Trading. “Will we see it in the next six months? It’s possible if we have another hurricane or another disruption…long-term, I think we will see oil hit $200 a barrel.

We continue to observe a lot of demand destruction going on in the US and elsewhere, and suspect that the growth of the BRIC-like countries will slow more markedly than is commonly expected in the face of near recession conditions in much of the developed world. But, hey, what do we know? No much so far, apparently.

Curiously, however, in a poll in which religious issues are important, the poll appears to undersample religious people. People who attend church at least once a week were 41% of the electorate in both 2000 and 2004. Such people formed only 26% of the sample in the CBS poll. Churchgoers are seemingly underrepresented in a poll about politics and church by over a third. How reliable can the results of such a poll be?

Moreover, people who attend church at least once a week broke 65/35 for George Bush in 2000 and 2004. Undersampling this large and highly relevant demographic group would appear on the surface to call into question the poll’s validity, and make it look like an ad for Senator Obama. Is anyone surprised?

What can it be that has kept Obama in Wright’s pews, and at Wright’s mercy, for so long and at such a heavy cost to his aspirations? Even if he pulls off a mathematical nomination victory, he has completely lost the first, fine, careless rapture of a post-racial and post-resentment political movement and mired us again in all the old rubbish that predates Dr. King. What a sad thing to behold. And how come? I think we can exclude any covert sympathy on Obama’s part for Wright’s views or style—he has proved time and again that he is not like that, and even his own little nods to “Minister” Farrakhan can probably be excused as a silly form of Chicago South Side political etiquette. All right, then, how is it that the loathsome Wright married him, baptized his children, and received donations from him? Could it possibly have anything, I wonder, to do with Mrs. Obama?

This obvious question is now becoming inescapable, and there is an inexcusable unwillingness among reporters to be the one to ask it. (One can picture Obama looking pained and sensitive and saying, “Keep my wife out of it,” or words to that effect, as Clinton tried to do in 1992 when Jerry Brown and Ralph Nader quite correctly inquired about his spouse’s influence.) If there is a reason why the potential nominee has been keeping what he himself now admits to be very bad company—and if the rest of his character seems to make this improbable—then either he is hiding something and/or it is legitimate to ask him about his partner.

I direct your attention to Mrs. Obama’s 1985 thesis at Princeton University. Its title (rather limited in scope, given the author and the campus) is “Princeton-Educated Blacks and the Black Community.” To describe it as hard to read would be a mistake; the thesis cannot be “read” at all, in the strict sense of the verb. This is because it wasn’t written in any known language. Anyway, at quite an early stage in the text, Michelle Obama announces that she’s much influenced by the definition of black “separationism” offered by Stokely Carmichael and Charles Hamilton in their 1967 screed Black Power: The Politics of Liberation in America.

It’s an interesting question. Politicians and media figures both earn their livings through popularity contests, and it is intriguing that Obama’s judgment failed where Oprah Winfrey’s did not. As Newsweek reported: “Winfrey was never comfortable with the tone of Wright’s more incendiary sermons, which she knew had the power to damage her standing as America’s favorite daytime talk-show host…’She’s always been aware that her audience is very mainstream, and doing anything to offend them just wouldn’t be smart. She’s been around black churches all her life, so Reverend Wright’s anger-filled message didn’t surprise her. But it just wasn’t what she was looking for in a church’.” It’s still a puzzle why the Obama family didn’t come to the same conclusion much sooner.

Final point: it is fervently to be hoped that Frank Rich, and those who think like him, keep trying to bring up the faulty parallelism of Jeremiah Wright and this fellow Hagee. It won’t hurt Senator McCain, in our opinion, and it provides yet another excuse for Pastor Wright to make a spectacle of himself, as if he needed one.

The Clinton campaign in Indiana is featuring an ad (via Gateway Pundit) of a plant that was closed in 2003. The jobs were outsourced to China, and Clinton blames the Bush administration. Run of the mill trade policy ad, you say. Not quite.

The Magnequench plant that was closed was not making waffle irons. The plant apparently manufactured 80% or more of the sintered NdFeB magnets that are used in the US military’s smart bomb guidance systems. Sounds sinister, yes? And an even better ad for the Clinton campaign. But it gets more complicated. All the transactions that resulted in ownership of the plant by Chinese interests occurred during the Clinton administration.

In 1995, according to ABC, “China National Non-Ferrous Metals…and San Huan New Material High-Tech Inc…joined with other interests to purchase the Anderson, Ind.-based Magnequench…The two Chinese companies were headed by the husbands of the first and second daughters of then-Chinese leader Deng Xiaoping.” The 1995 transaction was approved by CFIUS, the responsible government agency. Then, in 2000, Magnequench bought the factory that appears in the campaign ad. So it would appear that if there is an issue about the transfer of sensitive technology to China, it occurred before George Bush was President, rendering some of Senator Clinton’s claims in the ad moot or ridiculous.

But is there a legitimate national security angle to the story in the first place? Former Magnequench vice president Andy Albers says no, via ABC. “‘Nothing was done by Magnequench that aided the Chinese military program or hurt the U.S. military program,’ says Albers, who adds that Clinton’s focus on his former company ‘concerns me because it doesn’t address the main issue, which is how to make U.S. companies more competitive globally at’s the question we should be asking, that’s what we should be addressing. We should not be twisting the truth about that this is a national security issue, because it’s not a national security issue, it’s about global competitiveness’.” Former counsel to Congressman Duncan Hunter, Jeff Green, agrees that the matter is not a national security issue: “‘I think it’s more accurate to say that all the technology and production of these Neo magnets comes from overseas,’ he says, including Japan, Finland, Germany and China.”

So either both the Bush and Clinton administrations are to blame, or neither one did anything wrong. It’s a bit hard to say at the moment, but it appears from the news reports that, on a micro level, the system apparently functioned normally, although there are dissenting voices on left and right alike. However, on a macro level, the picture looks a little different, and raises the question as to whether the procedures in place at the CFIUS arm of the Treasury Department are adequate in a world that changes rapidly. At first blush, they do not appear to be.

One obvious question: does CFIUS track purchases or consolidations that occur after it has approved the sale of a company? For example, there are apparently sources for the Neo magnets in Japan, Finland and Germany, as well as in China. But what if a Chinese company or companies were to subsequently purchase those operations in Japan, Finland, and Germany? Would we ever know? Before it was too late to do anything about it? How? The current transactional approach of CFIUS, even as modified by FINSA, looks sort of like Hart-Scott-Rodino procedures for defense related industries. CFIUS procedures do not seem to take into consideration certain plausible or likely future events which could render its decisions unwise in retrospect. This would appear to bear looking into.

As the cost of running gas-guzzling tractors soars, even-toed ungulates are making a comeback, raising hopes that a fall in the population of the desert state’s signature animal can be reversed.

“It’s excellent for the camel population if the price of oil continues to go up because demand for camels will also go up,” says Ilse Köhler-Rollefson of the League for Pastoral Peoples and Endogenous Livestock Development. “Two years ago, a camel cost little more than a goat, which is nothing. The price has since trebled.”

The shift comes not a moment too soon for a national camel population that has fallen more than 50 per cent over the past decade, to about 450,000, according to government figures…A sturdy male with a life expectancy of 60-80 years now fetches up to Rs40,000 ($973), compared to Rs5,000-Rs10,000 three years ago…

A camel looks like a good return on investment at these prices. You can buy a camel for a dozen or so tanks of gas, and it runs for 60-80 years. Heck of a deal.

“I want the Iranians to know that if I’m the president, we will attack Iran,” Clinton said April 22 in an interview with ABC. “In the next 10 years, during which they might foolishly consider launching an attack on Israel, we would be able to totally obliterate them.”…On “Meet the Press” Sunday, Obama said: “It’s not the language we need right now, and I think it’s language reflective of George Bush. We have had a foreign policy of bluster and saber rattling and tough talk and in the meantime have made a series strategic decisions that have actually strengthened Iran.”

No wonder Hamas endorsed this fellow.

Four score and seven years ago … No, wait, my mistake. Two score and seven or eight days ago, Barack Obama gave the greatest speech since the Gettysburg Address, or FDR’s First Inaugural, or JFK’s religion speech, or (if, like Garry Wills in The New York Review of Books, you find those comparisons drearily obvious) Lincoln’s Cooper Union speech of 1860.

And, of course, the senator’s speech does share one quality with Cooper Union, Gettysburg, the FDR Inaugural, Henry V at Agincourt, Socrates’ Apology, etc.: It’s history. He said, apropos the Rev. Jeremiah Wright, that “I could no more disown him than I can disown my white grandmother.” But last week Obama did disown him. So, great-speech-wise, it’s a bit like Churchill promising to fight them on the beaches and never surrender, and then surrendering a month and a half later, and on a beach he decided not to fight on.

It was never a great speech. It was a simulacrum of a great speech written to flatter gullible pundits into hailing it as the real deal. It should be “required reading in classrooms,” said Bob Herbert in the New York Times; it was “extraordinary” and “rhetorical magic,” said Joe Klein in Time – which gets closer to the truth: As with most “magic,” it was merely a trick of redirection.

Obama appeared to have made Jeremiah Wright vanish into thin air, but it turned out he was just under the heavily draped table waiting to pop up again. The speech was designed to take a very specific problem – the fact that Barack Obama, the Great Uniter, had sat in the pews of a neo-segregationist huckster for 20 years – and generalize it into some grand meditation on race in America. Sen. Obama looked America in the face and said: Who ya gonna believe? My “rhetorical magic” or your lyin’ eyes? That’s an easy choice for the swooning bobbysoxers of the media. With less impressionable types, such as voters, Sen. Obama is having a tougher time.

Bonus quote: “Michelle Obama is a bizarre mix of condescension and grievance – like Teresa Heinz Kerry with a chip on her shoulder.”

As for Mr. Obama’s friends, the Weathercouple: By all accounts, Bernardine Dohrn and Bill Ayers are unfathomably charming, brilliant and comely people, absolutely irresistible. Everybody who meets them is taken and forgets what they should know…the senator’s relationship with his radical Hyde Park neighbors is actually quite warm, even close.

Well, that’s one way to see things. Perhaps as a counterpoint to the attractive characterization of Mr. Ayers, Hillary Clinton supporter Larry Johnson (yes, that Larry Johnson) has posted a picture of the “unfathomably charming, brilliant and comely” Mr. Ayers trampling the American flag (similar photo here):

According to the caption, Mr. Ayers is said to be stomping on the American flag in 2001, some six years or more into his political relationship with Senator Clinton’s opponent in the Democratic primaries. (HTs: Larwyn, Jules Crittenden, and Tom Maguire)

One observer once said that the main importance of PT-109 in the life of John Kennedy was that it was the only time in his life…when the power and wealth of his father couldn’t help him at all. Hillary in February 2008, after Obama’s stunning string of 10 victories, was like JFK in the water — everything she was used to relying on had proved to be useless…

After March 4, she suddenly seemed to look and sound different: She began to seem real. The shrillness was gone, and so was The Cackle, and so were the forced southern accents that once caused so many so much merriment. Hillary! — whoever that was — never really cohered as a character; her previous poses–the Perfect Wife, the Aggrieved Wife, the Empress-in-Waiting — were all unconvincing, but in her new role — the scrapper, forced to the wall, and hanging in there with ferocious and grim resolution — she is suddenly all of a piece. Along with her inner JFK, she has channeled her inner Robert F. Kennedy (going back to the days when he was still “ruthless”), along with her inner Margaret Thatcher — “No time to go wobbly” — along with echoes of the John McCain who clawed his way out of the grave only last winter, and the George W. Bush who just as tenaciously saved his Iraq policy…

It is a truism that liberals think people are formed by exterior forces around them and are helpless before them, while conservatives think individuals make their own destiny…Hillary may still be a nanny-state type in some of her policies, but in her own life she seems more and more of a Social Darwinian, refusing to lose, and insisting on shaping her destiny. If the fittest survive, she intends to be one of them…

It is no accident that it was just at this juncture that she began to rouse outrage in parts of what once was her base…what caused this display of intense irritation? She’s running a right-wing campaign. She’s running the classic Republican race against her opponent, running on toughness and use-of-force issues, the campaign that the elder George Bush ran against Michael Dukakis, that the younger George Bush waged in 2000 and then again against John Kerry, and that Ronald Reagan — “The Bear in the Forest” — ran against Jimmy Carter and Walter F. Mondale. And she’s doing it with much the same symbols.

We think that a number of Emery’s observations have merit. Senator Clinton is much improved as a speaker and a candidate from the Days of Coronation. Exhaustion, adrenalin, and desperation have a way of concentrating and revealing, indeed, even shaping a person’s core. Until these recent days, we had never heard Senator Clinton referred to as “one tough old broad.” Language aside, it was meant as a compliment.

Senator Clinton revealed something else about herself in April, and it has some significance: she is an incredibly rich woman, with $109 million in recent income, as well as the rest of the family business. It possibly eases some conservative minds to know that the Clintons have earned a fortune of several hundred million dollars (ill-gotten or not) and have quite a stake in the system. And inveighing against the “rich and powerful” can tend to be seen as party-line rhetoric once you’ve earned a checkbook that reaches nine figures. So the Hillary of today might seem safer than the Hillary of past decades to some conservatives.

Finally, it wasn’t so long ago that it was said that the “Clintons” were running for President, that a Hillary victory would be Bill’s third term. But that no longer seems so true, does it? If Hillary Clinton is elected President, it now seems more than likely that it will be Hillary, not Bill, who will be making the decisions. After all, she’s earned the damn thing, not him. That is a big change, perhaps the biggest of all (though of course it is much more worrisome when it comes to her actual policy views). Feeling that you’re not an interloper, that you’ve earned your place in life, is something that conservatives tend to respect quite a lot. Perhaps this new respect that Emery describes is not really “exceedingly strange”; Senator Clinton may well have earned it in the opinions of some conservatives — after all, you don’t have to hate your opponent to disagree with or vote against her.

Garry Niemeyer is paying the price for Wall Street’s speculation in grain markets. Commodity-index funds control a record 4.51 billion bushels of corn, wheat and soybeans through Chicago Board of Trade futures, equal to half the amount held in U.S. silos on March 1. The holdings jumped 29 percent in the past year as investors bought grain contracts seeking better returns than stocks or bonds. The buying sent crop prices and volatility to records and boosted the cost for growers and processors to manage risk.

Niemeyer, who farms 2,200 acres in Auburn, Illinois, won’t use futures to protect the value of the crop he will harvest in October. With corn at $5.9075 a bushel, up from $3.88 last year, he says the contracts are too costly and risky. Investors want corn so much that last month they paid 55 cents a bushel more than grain handlers, the biggest premium since 1999.

“It’s the best of times for somebody speculating on grain prices, but it’s not the best of times for farmers,” said Niemeyer, 59. “The demand for futures exceeds the demand for cash grains.” Commodity investors control more U.S. crops than ever before, competing with governments and consumers for dwindling food supplies…

Index-fund investment in CBOT corn, soybeans and wheat has increased 66 percent to the equivalent of 902,105 futures contracts, a record, since January 2006, when the government began collecting the data. Each contract represents 5,000 bushels, about what Niemeyer reaps from every 22 acres of corn planted.

Investments in grain and livestock futures have more than doubled to about $65 billion from $25 billion in November, according to consultant AgResource Co. in Chicago. The buying of crop futures alone is about half the combined value of the corn, soybeans and wheat grown in the U.S., the world’s largest exporter of all three commodities. The U.S. Department of Agriculture valued the 2007 harvest at a record $92.5 billion. Commodities are in their seventh year of gains

The momentum speculators in commodities are clever chaps. They know that their massive speculation actually causes behavior in the real world — hoarding — that reinforces the profitability of the strategy they are executing. It is regrettable that no regulations apparently exist to exert some control over the speculators who have no legitimate agricultural business interests, but are allowed to manipulate markets with their various momentum schemes.

(What would happen, for example, if futures buyers were forced to accept delivery of the commodities when they didn’t previously close out their positions, or incur some other substantial penalty? It appears that futures really act quite a lot like options in current trading markets. Wasn’t it the decoupling of futures contracts and delivery obligations that sparked tulipmania?)

The speculation-without-consequences might be jolly good fun in tulips, platinum or silver, but it is hard to feel the same way when it comes to food. The speculators’ activities have caused bankruptcies, food riots, panics and killings. Should they be publicly flogged? Or is it all just something that the marketplace will ultimately sort out?