This story goes well beyond Murdoch’s decision to start charging for his company’s online news content. It is a debate about monopolies and the government’s role in protecting or destroying them.

In case you missed it, there is a great editorial in today’s Wall Street Journal by the CEO of Google, Eric Schmidt (scroll down for link). In the piece, the doctor doesn’t necessarily lash out at Murdoch and his recent attacks aimed at Google, but the desire to call Murdoch a crybaby is obvious.

Schmidt makes it clear that Murdoch’s woes are not Google’s fault, but are the fault of an industry that has sat on its hands for the last decade as competition quietly, but firmly snuck up to the back door.

Now that Murdoch owns a very expensive media empire, his plans are to use his massive industrial weight to keep the media industry from swaying in any direction. He’s certain that charging for his content will force his customers from straying to competitors.

Of course, Schmidt has something very different to say. Essentially, the CEO tells Murdoch to start getting creative. His company is dumping 100,000 clicks a minute onto the online news sector. If the industry can’t find a way to profit with some four billion hits a month, well, it’s not Google’s fault.

The answer lies somewhere in the middle. But of course, Washington thinks it can solve the problem. As you read this, Murdoch and his gang are discussing the “future of journalism,” with the Federal Trade Commission.

They are not down there asking for a bailout or inquiring about tickets to the next state dinner. They are asking for (or flat-out buying) protection from the anti-trust gang.

Just like a Manhattan businessman goes to Guido looking for some “fire insurance,” Murdoch and company are in Washington asking for protection from the ankle-biting competition.

What does Murdoch want from Obama?

He wants what every man wants, the ability to buy more. Under current regulations, Murdoch is unable to make purchases in certain rival publications and media outlets. But with the notion of critical mass on his side, if he could get the right to buy and control his rivals, he would have a much better shot at coercing the industry to move in the “right” direction. He could save journalism as we know it.

Will Washington bite?

Um, let’s see. With a horde of newspaper and television ad space on his side, does Murdoch have anything to give to politicians in exchange? This one’s a no-brainer.

If politicians can get on the good side of Murdoch or his competitors, the political campaign process may not be quite so expensive in 2012.

So here’s my first official prediction for 2010: Washington is going to take action and the media industry is going to be a hot one.

We got a first glimpse of what’s to come early today with the finalized deal from GE and Comcast. The next year, especially if Murdoch makes the right moves, will be filled with similar stories of consolidations and acquisitions.

Giants like Time Warner and Liberty Media are going to be players. And little guys like Virginia’s Media General and McClatchy will be in play.

It is going to be an interesting year as the industry finally gets serious about finding a clear strategy for the future.

Smart investors will make good money from the action and smart contrarians will know the money flows right back to Washington.

*** You have got to love the action from the natural gas markets these days. Even I, the bear of bears, wasn’t expecting yet another injection into the nation’s gas storage facilities this week, but what’s investing without surprises?

Thanks to today’s news, we were sitting on gains of as much as 415% on one of our three remaining natural gas plays. The lower gas prices go, the higher that figure will climb.

Here’s what I told TFN readers today about the nation’s natural gas glut:

“I am about as bearish as it gets when it comes to natural gas, but even I underestimated how bad the situation really is.

“While most analysts were expecting the year’s first official drawdown in the nation’s natural gas inventories, I conceded and said they were right. I expected a drop in supplies of one, maybe two, billion cubic feet of gas.

“Most analysts expected twice that figure as the nation starts to crank up its thermostat. After last week’s smaller-than-expected gas infusion, a withdraw this week looked like an easy call.

“I was so certain, I recommended TFN Strategic Trader members lock in gains on a couple of our natural gas plays. We locked in gains of 56% by selling half of our position in one play and 50% gains by unloading another play in its entirety.

“It looks like we jumped the gun.

“According to the Energy Information Agency’s latest report, released at 10:30 this morning, the nation managed to produce more gas than it consumed once again.

“This time last week, the agency showed a gain of one billion cubic feet. This week, the figure doubled to a weekly increase of two billion cubic feet.

“Under normal circumstances, this would not be much of an issue. But the nation’s storage facilities are 99.9% full and pipeline pressures are rising as suppliers try to squeeze in as much of the fuel as possible.

“So far, natural gas futures have not reacted too strongly to the news (which helps prove my theory about selling yesterday). December gas contracts are down by just $0.035 so far, which puts the price at $4.495.

“As the winter rolls on and investors and analysts finally realize this winter will be unlike any other for the natural gas market, that price will sink lower and lower.”

Keep reading here to read about several of the ways to take advantage of the situation.

*** Finally, there’s a celebration in my hometown tonight. We got word early this morning that Harley Davidson has officially decided to keep the doors open at the factory that employs nearly 2,000 local workers.

Of course, at least half of those workers will be asked to leave over the next couple of years and the remaining workers will be working harder and getting paid less, but isn’t that the way it works these days?

Maybe we shouldn’t blow up the celebratory balloons just yet.

It no doubt reflects a fault in my makeup that I found it not entirely convincing – but then I’m a math major and a former banker.

The speech – which took the place of the State of the Union address since it’s Obama’s first year in office – concentrated almost entirely on economics, and in particular on the financial and economic crisis currently facing the United States. President Obama’s comments were least convincing when they focused on the financial aspects of the crisis.

President Obama’s first mistake was in blaming the entire current situation on Wall Street. That’s attractive, populist rhetoric, but where was the acknowledgement of the U.S. Federal Reserve’s role in the debacle, inflating the money supply 70% faster than gross domestic product (GDP) for more than 13 years, so that asset bubble after asset bubble caused the incentive structures on Wall Street to go haywire?

Where, too, was the (admittedly subsidiary, maybe No. 3 after the feckless Fed and the greedy bankers)  role that Congress played over decades, messing up the housing market by creating unregulated irresponsible government guarantee monopolies in Fannie Mae (FNM) and Freddie Mac (FRE), an extra excrescence that no other advanced economy has found necessary to finance housing?

Bashing bankers is good rollicking stuff for a campaign speech, but it is less appropriate here, when the problems must actually be fixed. This rhetoric actually obscures the reality of the current problem, and diverts attention from the still-dangerous presence of U.S. Federal Reserve Chairman Ben S. Bernanke, whose role in creating the disaster is in danger of being exceeded by his role in perpetuating it. If Bernanke’s current rapid expansion of the money supply leads to violent inflation, as is likely, the crisis will indeed be prolonged for a decade, as Obama claimed was possible without government action.

President Obama’s second inaccuracy on the financial side in last night’s speech was in diagnosis. Lending in the U.S. economy has not seized up. It did seize up for about two months after the September crisis, but even by the end of the year loan growth had resumed, as figures from the major banks show. The commercial paper market has reopened and the investment-quality bond market has run at high volumes since the beginning of January.

Only one major source of “easy money” in past lending markets has disappeared – the securitization business: Almost nobody will now invest in securitization structures, and with good reason. However, as my investigative analysis of the nation’s Top 12 banks last week demonstrated, most of the major U.S. banks are in better shape than we believe, and are actually making money.

Their profitability has been greatly increased by the disappearance of competition from securitization – loan margins at the healthy US Bancorp (USB), for example, increased from 3.7% to 3.9% in the fourth quarter of 2008, and will have increased still further now.

Other than a few huge “zombies,” most banks are now making good money the old-fashioned way, through the interest margin between borrowing and lending rates. They will continue to do so, provided the government doesn’t (as President Obama and U.S. Treasury Secretary Timothy F. Geithner are currently readying to) introduce artificial competition, by inventing new taxpayer-funded vehicles to make consumer loans and drive margins down.

Yes, loans need to remain available for houses, automobiles and other purchases, but there’s no reason why they should not be somewhat more expensive – to rebalance the U.S. economy, the U.S. consumer needs to save more, not borrow more.

As well as being shaky in his knowledge of banking, President Obama is coming to make me question his math. Reducing the budget deficit from 10% of GDP, its level in 2009, to $500 billion, about 3% of GDP by 2013, is a hell of a task. That 7% swing in the budget balance is almost double the largest four-year swing ever achieved since the end of World War II: 3.8% in 1996-2000. Even during the 1990s economic cycle as a whole – a period of exceptional economic good fortune and budget thriftiness – the swing in the eight years from 1992 to 2000 was only 7.1% of GDP.

The problem with trying to tighten fiscal policy so rapidly is the negative “stimulus” effect it would cause. If the U.S. economy does anything in mid-2010 but zoom like a Saturn V rocket roaring off the launch pad, sucking 7% of GDP out of government demand over so short a period is likely to abort the recovery and push the economy back into a depression. Furthermore, Obama intends to do this without raising the taxes by one penny on anybody earning less than $250,000, and while increasing the size of the armed forces, their pensions, and spending more on energy, healthcare and education.

Maybe I’m a grouchy old skeptic, but it doesn’t look to me as if the math adds up.

Look, President Obama is a wonderful speaker, he really is, and he gave quite a performance in his address to Congress last night. As a gnarled old Republican, I’m prepared to admit he’s as good as former President Ronald Reagan, I may even nurse a faint suspicion that he’s better than Ronald Reagan.

But to be a great president, Obama will need to pursue policies that are sufficiently middle of the road so as not to destroy the superb private sector that’s the backbone of the U.S. economy, and that are also cleverly designed to work properly. It’s the math, the economics and the finance, not the language, the arts and the humanities, where there are still doubts.

Source: Despite Great Speech, President Obama Presents Risky Plan