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8:30 AM EST Tuesday, June 6, 2006: I'm bored with inflation obsession. I'm bored with our new Fed Chairman's ability to spook stockmarkets. I hope (and pray) that in time Bernanke will learn to keep his foot out of his mouth. If he keeps doing what he did yesterday, he'll drive us into recession. Yesterday the Dow fell a tinge under 200 points (a whopping 1.77%) because Bernanke burbled on about inflation. His spooky words (my highlighting):

"Consumer price inflation has been elevated so far this year, due in large part to increases in energy prices. Core inflation readings -- that is, measures excluding the prices of food and energy -- have also been higher in recent months. While monthly inflation data are volatile, core inflation measured over the past three to six months has reached a level that, if sustained, would be at or above the upper end of the range that many economists, including myself, would consider consistent with price stability and the promotion of maximum long-run growth. For example, at annual rates, core inflation as measured by the consumer price index excluding food and energy prices was 3.2 percent over the past three months and 2.8 percent over the past six months. For core inflation based on the price index for personal consumption expenditures, the corresponding three-month and six-month figures are 3.0 percent and 2.3 percent. These are unwelcome developments."

To my brain, the man is freaking out over nothing, burbling on about statistical peculiarities. He must know how totally inaccurate the government's inflation measures are. We've already burst the real estate bubble. And there's nothing he can do about energy. But if he keeps burbling on about higher inflation and much higher interest rates, he's going to kill corporate capital spending... And that definitely won't be good.

That said, the stockmarkets are going to have to deal with a green, baby Fed chairman, who still learning (hopefully). Which means this summer is gong to be far worse in the stockmarket than we'd predicted with our simplistic "Sell in May and Go Away."

Cash is going to be king this summer. Losing value to inflation will be far less painful than losing to falling stock prices.

While the markets deal with our green Fed Reserve chief, they also have to deal with a green Treasury Secretary, Hank Paulson.


Henry Paulson

But this one is brighter, more savvy and far more tested in the realities of markets. Paulson is the very talented head of Goldman Sachs. Jim Cramer, who worked at and with Goldman Sachs for many years has written a really decent piece explaining Paulson's intelligence (he's bright), his successes (they're awesome) and his motivation (he wants to give back). The piece begins (and I buy into what Cramer says):

Most people in this country don’t understand how robust the U.S. economy is, that it grows as fast as many much younger countries’, and that it creates countless jobs and a tremendous amount of wealth. While we have our faults—we borrow too much, we don’t save enough, we are energy gluttons and shopaholics—our economy is still the envy of most nations.

Yet who cares? Who even knows? Certainly not the electorate.

The disconnect between the reality of strong growth and wealth creation and the domestic perception of our economy is staggering. Most Americans probably think we are teetering on recession, not putting up the best numbers we’ve had in years. People think George W. Bush is a stumblebum, not just for the business in Iraq but for business in America.

Hank Paulson, the new Treasury secretary, is going to change that. The former chief executive officer of Goldman Sachs is going to make a difference, on any number of levels, but the most important is that he can communicate the one good story that President Bush really has to talk about: the economy.

When I try to pin down why Bush has failed so utterly in trying to make the case that he’s responsible for superb job and GDP growth, I always come back to Treasury for an explanation. The Treasury secretary is both the point man for strategy to create growth and stability and the nation’s chief economic pitchman. It’s his job to shape economic policy and to sell that policy to investors. John Snow, the man whom Paulson replaces, was seemingly silent as an operator, and terrible as a promoter. Paul O’Neill, Snow’s predecessor, had ideas but couldn’t get himself heard, inside or outside of Washington.

Paulson, on the other hand, can operate and sell.

For the entire article, click here.

Questioning assumptions: Never accept the conventional wisdom. Question it. Doing so will make you a better investor, a better businessperson, a better person. I'm not pushing contrarism. I'm pushing questioning assumptions. For, on those assumptions, we build heady castles in the sky. Those castles are often built on firm logic and infirm assumptions. Item from today's Wall Street Journal:

"Runners and athletes are always searching for the perfect shoe to improve performance and reduce injury. But some say shoes are the problem, and the best solution may be training without them.

Some experts now believe that most athletic shoes, with their inflexible soles, structured sides and super-cushioned inserts keep feet so restricted that they may actually be making your feet lazy, weak and more prone to injury. As a result, barefoot training is gaining more attention among coaches, personal trainers and runners.

While exercising without shoes may sound painful, the idea is that your feet need a workout, too. Proponents believe running barefoot changes a runner's form and body mechanics to prevent some common athletic injuries.

Summer traveling:
A man boards an airliner, takes his seat, and is surprised to find a large purple parrot in the seat next to him.

The aircraft takes off and a pretty flight attendant walks down the aisle past the man and his seat mate. "Hey, bitch," says the parrot, "bring me a whiskey and soda, and make it snappy!"

The flight attendant looks annoyed, but walks on. A minute later, she walks back up the aisle, and the parrot pipes up again.

"Dammit, you lazy w#$%^, where's my whiskey? Hurry it up!"

Visibly flustered, the flight attendant hurries up the aisle and returns quickly with the parrot's drink.

Impressed with the parrot's technique, the man decides to get some quick service for himself.

"Hey, slut," says the man, "get me a dry martini. And don't drag your sorry ass - I want it right now!"

The flight attendant turns red with anger and runs to the front of the plane. In a moment she returns with the First Officer and two burly male flight attendants.

The crewmen seize the passenger and the parrot, jerk open the emergency door, and hurl them both out of the airplane at 35,000 feet.

As the two hurtle out the door, the parrot says to the man, "Ya know, for someone who can't fly, you got a lotta cojones."

Harry Newton

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads. Thus I cannot endorse any, though some look mighty interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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