Something significant was missing from the main account of the incident, be it from the Associated Press or Reuters.

But McClatchy Newspapers (its pitiful financial state notwithstanding) got the real story. “Friends said Zaidi covered the U.S. bombing of Baghdad’s Sadr City area earlier this year and had been ‘emotionally influenced’ by the destruction he’d seen,” says its reporter in Baghdad.

This salient fact was otherwise missing from establishment media coverage.

If after nearly six years of war in Iraq, two of which were marked by public disillusionment, and three more by public disgust, most establishment media still can’t see how ordinary folk in distant lands are transformed by U.S. foreign policy into opponents of the U.S. government, what does that bode for the coming “surge” in Afghanistan?

Or, stated more simply, have we learned nothing?

As Steve Clemons noted over the weekend, there’s a growing bipartisan consensus that Afghanistan is “the good war” in contrast to Iraq. Certainly that’s the impression the new president conveyed throughout the campaign.

From bipartisan consensus usually springs horrible policy, devised hastily — e.g., the bailout of the money-shuffling class. Has anyone who supports this coming “surge” articulated who exactly the enemy is? Didn’t think so. How this enemy will be pursued and defeated? Didn’t think so. What resources should be devoted to achieving this objective to avoid Iraq- and Vietnam-style escalation? Didn’t think so.

The bombing of a supply convoy a week ago is truly an ill omen. There’s just one slender supply line for U.S. and NATO forces stretching from Karachi up through Pakistan and through the Khyber Pass into Afghanistan.

No wonder Clemons worries, as a friend wrote him, that Afghanistan might turn out to be “the place where the dreams and hopes of the Obama Presidency are buried.” An Empire of Debt, crashing and burning on the rocks of insolvency and the Hindu Kush.

Just like the Russians in the 1980s.

Have We Learned Nothing?

Crude prices jumped on Monday in electronic trading as news of the attack broke, but analysts said the impact on prices spilled over into Tuesday, when exchanges on both side of the Atlantic re-opened after the long weekend.

“Is it demand? Is it speculation? Is it OPEC punishing George Bush for the war in Iraq?” asks Dan Denning in The Daily Reckoning Australia. “OPEC thinks there’s plenty of oil. It’s the declining U.S. dollar that’s to blame. OPEC says that for every one percent decline in the dollar oil rises by US$4, and vice versa.

“The solution to high oil prices, then, is not increased supply or reduced demand, but a stronger U.S. dollar! Well, there is certainly some truth to that, but it is not likely to happen any time soon. As a tangible good whose supply cannot be increased by a central banker, the oil price (a little like the gold price) tells you there’s too much paper money chasing too little stuff.”

Alexander Green in Investment U has identified a new, highly profitable oil source: “Alberta’s oil sands are the largest known reserve of oil on earth, containing between 1.7 and 2.5 trillion barrels. (Saudi Arabia, by comparison, has only 262 billion barrels of proven reserves. In fact, all OPEC nations combined have less than 900 billion barrels.) For decades, these sands weren’t even considered part of the world’s oil reserves because the oil there wasn’t economically extractible at prevailing prices using then-current technology.

“But times have changed… And the new gold rush is on.

“In Alberta’s oil sands, energy companies don’t drill for oil. They dig it up. After excavation, giant trucks three stories high – carrying up to 400 tons of oil sands – carry it off to a processing plant.”

Read on here to find out how to cash in on the tar-sands “black gold” rush with this oil mining company.

Even our fish is wondering. He darted back and forth acrosss the tank this morning as we both watched the overnight report from New York on TV. Who knew fish could be stressed by rising commodity prices?

Our old friend Kevin Kerr back in the States reckons that the combination of peak North American driving season (the Memorial Day holiday this weekend) and a touch of financial speculation will pressure prices higher. There is no relife in sight, either.

Is it demand? Is it speculation? Is it OPEC punishing George Bush for the war in Iraq? OPEC, as we explain in our two-part essay beginning tomorrow, thinks there’s plenty of oil. It’s the declining U.S. dollar that’s to blame. OPEC says that for every one percent decline in the dollar oil rises by US$4, and vice versa.

The solution to high oil prices, then, is not increased supply or reduced demand, but a stronger U.S. dollar! Well, there is certainly some truth to that, but it is not likely to happen any time soon. As a tangible good whose supply cannot be increased by a central banker, the oil price (a little like the gold price) tells you there’s too much paper money chasing too little stuff.

The U.S. dollar, by the way, is not cooperating to bring oil prices lower. After its recent, much-ballyhooed rally, the dollar is giving back some of its gains. It fell yesterday against the euro, the yen, and the pound (the four other ugly contestants in this global currency beauty pageant…where the winner is the least ugly.)

The Aussie dollar played a role in the demise of the U.S. currency yesterday. Australia’s dollar is again at a 24-year high against the greenback. The kicker yesterday came from the release of the notes from the Reserve Bank’s most recent meeting.

The Bank didn’t raise the cash rate then from 7.25%. But the notes reveal it came awfully close. That information was enough to persuade some currency traders to sell America’s currency and buy Australia’s.

After reviewing the conditions in the global financial market (not so good) and the conditions in Australia’s domestic market (much better), members of the Board scratched their collective heads and decided not to raise the cash rate. There was a lot of talking, and wringing of hands, and gnashing of teeth, though.

“The question therefore remained,” after much private discussion, “whether the setting of monetary policy was sufficiently restrictive to secure low inflation over time. Members spent considerable time discussing the case for a further rise in the cash rate. But on balance, given the substantial tightening in financial conditions since mid 2007, and the extent of uncertainty surrounding the outlook, the Board decided that it was appropriate to allow the current setting of monetary policy more time to work.”

A near miss.

The Bank also said something interesting about the terms of trade (which is admittedly a challenge). Housing and business finance have both slowed down. This helps “moderate domestic demand,” to use a central banking phrase. Fewer Aussies borrowing (money and credit creation from thin air) also, hopefully, lowers inflation below the 4% rate its officially running at.

But the strong Aussie dollar is creating a monster in the terms of trade. The notes report that, “Members were briefed on the large increases in bulk commodity contract prices that had been agreed over the past month. In US dollar terms, there were price rises of 80 per cent for iron ore, over 200 per cent for coking coal and 125 per cent for thermal coal.”

Old news. But it’s still astonishing when you look at it, isn’t it? No wonder coal and iron ore stocks are flying.

“Other commodity prices were also high at present,” the notes continued. “The price of Tapis crude oil had risen steadily so far this year, and base metals prices were not far below the peak reached in mid 2007 after having roughly doubled over the previous three years.”

Here is the real surprise; “The rises in bulk commodity contract prices were significantly higher than previously forecast and would lead to an estimated rise in the terms of trade of 20 per cent this year. The increase in the terms of trade was expected to boost national income by about 3–4 per cent, which would be a significant potential stimulus to spending, notwithstanding possible constraints inhibiting a further rise in business and public-sector investment spending.

You can raise the cost of borrowing. But if what you sell to the rest of the world keeps going up in price, and you’re selling more of it, you’re going to have wads of cash in your pocket. That’s itchy.

And here is a statement that puts the entire boom in global perspective, “Members were informed that, measured by the change in the terms of trade over the past five years, Australia had received a larger income gain than any other comparable country, even before taking this year’s projected increase into account.”

Is there another country in the world that’s gained more from the commodity boom than Australia? No, according to the RBA. And that’s before that recent triumvirate of nearly triple digit gains in bulk commodities is figured in.

What does all this mean for shares? Well, the oil price is having two effects, with a third off in the distance. The first is obvious, energy stocks are zooming. Second, the high oil price is making many other unconventional and alternative energy projects sensible as alternatives. THOSE stocks are picking up too.

Eventually, you have to believe that what’s good for the energy sector is bad for the rest of economy—energy being a cost for the rest of us and not a source of income. But we haven’t reached the point yet where high petrol or gas prices are reducing business production or household consumption.

For bulk commodities and minerals, we reckon the land grab will rush on, moving from resource to resource and project to project. Our latest investigative project in the small cap letter…well we won’t give it away. It comes out later this week.

Gold has not been idle either. You’ll notice it appears to have completed its consolidation after the first charge to US$1,000. After regrouping, shaking out the weak hands, and giving the dollar its due, gold is on the march again.

Our friend Kevin was on CBS Marketwatch this morning telling the host that gold could reach US$1,300 or US$1,500 in “just a few months.” His original forecast was for a move to US$1,500 in twelve months. But the speculative money is moving fast, Kevin says, and that could drive the move more quickly than he expected.

He said that fault for the US’s economic morass belongs to opposition party Democrats.

Apparently, President Bush feels they’ve undone in 16 months the stirring economic policies his Republican brethren crafted while they controlled congress during his term’s first six years.

And, yes, there is plenty of blame to go around. After all, both parties totally whiffed on the benefits of the economic stimulus plan that was to be the war in Iraq. All that’s done so far is run up a tab that has easily eclipsed a half-trillion dollars, as well as inflict catastrophic costs on the lives of US military and Iraqi families.

As far as the economic stimulus part goes, I suppose a case can be made that the war has been very good for the corporations that supply the 30,000 well-armed mercenaries, whoops, I mean private security forces that now work in Iraq. Their war-zone salaries alone cost the US about $6 billion a year.

Still, as the President tries to convince us that, in less than a year and a half, those crazy tax-and-spend Democrats have wrecked a thriving US economy, it should be noted that during the GOP’s six-year run as the majority on the Hill, Bush vetoed just one (sort of) spending bill.

It was a bill that would have lifted the federal ban on funding embryonic stem cell research. But, that was it… one veto in six years.

But, since the Democrats gained their destructive congressional majority, Bush has tripled his veto output.

Last October he vetoed a bipartisan bill that would have expanded children’s health insurance. He said that the $30 billion extra (spread out over five years) that Congress added to the plan was too expensive. He only wanted to bump the plan’s budget by $5 billion.

Under the Democrat’s venal economic watch, Bush also vetoed a bill that would have limited the CIA’s use of “harsh” interrogation techniques.

And, he nixed a $124 billion war-funding bill… but not because it was too expensive. He killed that bill because it would have set target dates for troop withdrawals from Iraq.

That’s it.

Pash Da Boddle

Other than that, be it six years of GOP spending or 16 months of Democrats signing checks, President Bush’s attitude can only really be described as “whatever.”

By the way, I stole that “whatever” from Eugene Robinson, who writes for The Washington Post.

While I’m at it, I am going to purloin a great Robinson line. Back in October he wrote, “To say that George W. Bush spends money like a drunken sailor is to insult every gin-soaked patron of every dockside dive in every dubious port of call.”

So, the president is trying to defend and deflect. That is a very “presidential” thing to do. Maybe he’s finally growing into the job.

But, to accept no blame for the US economy’s current state is also a very Karl Rovian thing, as well.

If Elected I’ll Serve

Now, I am not so arrogant to think that I could have done an overall better job as president during the past seven years and four months.

But, I think I might have done a better job understanding the issues… or at least being more up front with Americans about the effect my stances would have on them. For, my biggest disagreement with the current president is about his weak dollar policy.

It’s a policy that has honked me off for years.

In fact, as your president I would have promised not to engage in monetary policy before I had at least consulted the experts at the Federal Reserve Bank.

Between naps, golf and visits to the White House wine cellar (okay, and long lunches with Scarlett Johansson and Sheryl Crow) I would have begun my monetary research online, say at a Fed website.