America is spending while the rest of the world is saving. But for how long? ... On March 10, Ben Bernanke—a former Princeton professor who at the time was a governor of America's central bank—addressed a gathering of economists in Richmond, Virginia, on America's gaping current-account deficit. Its causes, he argued, were to be found abroad rather than in American profligacy. In particular, Mr. Bernanke mused, the world might be suffering from a “global saving glut”. The phrase immediately caught on. Like the famous remark about “irrational exuberance” by Alan Greenspan, the chairman of the Federal Reserve, it has since helped to shape the global economic debate.

And the Economist's conclusion?

The recent shifts in global saving and investment patterns are not permanent, but nor are they likely to be reversed overnight. Although Japan's economy is looking perkier, and China adjusted its currency regime in July, the surplus of saving from Asia, and from the oil-exporters, is unlikely to fall sharply in the near future. Nor is it likely that the central banks that have been piling up dollar assets will suddenly stop, let alone dump their greenbacks in a hurry. Both factors suggest that America's creditors will probably allow the global imbalances to persist for a while.

Falling in love with stocks is a serious mistake: The inviolate rule is: When it falls 15%, sell it -- irrespective. Sometimes, you fall in love with a stock -- like I did with TriPath Imaging (TPTH) -- and violate that rule. I did with TriPath. I've held on, knowing it had great management, great products and was doing well. But, shit happens and it happened yesterday. The company reported that the FDA called for more data for TriPath's application to market a new imaging system called FocalPoint GS. Thus, TriPath withdrew its premarket approval supplement filed with the FDA and said it intends to collect additional clinical trial data to support the claims it is seeking. It is talking to the FDA regarding about what data it wants. This request for more info is not a rejection of TriPath's new product, but a clarification. The company plans to submit the new data in 2006, but said it was too early to determine the effect on its financial forecasts. I hope to talk to management today. For now, I'm hanging in. TriPath is the one stock I'm holding, though it has violated my inviolate rule. My one little madness. Damn.

All about hybrid automobiles:

This weekend's New York Times Magazine ran the most fascinating piece on hybrids. The basic conclusion: hybrids can save hugely on gas. But a better sales idea is a hybrid car that performs well and still saves gas, given its heady power. Excerpts:

+ In the last year the auto industry has decided to drastically bulk up its hybrids. Car makers are ditching the bumper-car designs that have thus far defined the genre, and in the next two years, every new hybrid that hits the showroom will be a lumbering truck, a thundering S.U.V. or a high-powered luxury car. There is nary a podlike bubble among them. Normally these sorts of boats are infamous for their abysmal fuel economy. But when tricked out with hybrid drivetrains, they can squeeze up to 50 percent more out of a tank of gas. In essence, they are a compromise - nowhere near as good with fuel as a Prius but nowhere near as bad as a regular S.U.V. gas guzzler.

+ To understand how hybrid technology can produce a muscle car, it's helpful to consider the basic engineering behind hybrid drivetrains. A car like the Prius derives its superb mileage from an elegant ballet performed between the fuel engine and the electric motor. The goal is to let the gas engine work only when it is most efficient to do so, which is when the car is running at roughly 20 m.p.h. or higher. A gas engine is at its worst efficiency in two situations: when it's revving fiercely to get a car moving from a standstill and when the car is idling at a stoplight and going nowhere.

The central genius of a hybrid is that the electric engine steps in at these inefficient moments. An electric motor, as it turns out, is far better suited to accelerate from zero because of a quirk of physics - when pushing off from a dead stop, an electric engine has much more torque than a gas engine. It's fundamentally suited to the task. Better yet, when a hybrid is stopped at a red light, the gas engine can shut down completely; it won't start up again until the electric engine has accelerated the car to that magic 20 m.p.h. point. The upshot is that a gas engine operates only in its near perfect window of efficiency, thereby burning substantially less fuel than normal. When a car brakes, the electric motors switch to "regenerative" mode, transforming the energy of braking into electricity that recharges the batteries. The fuel efficiency of this self-contained process in a Prius can be as high as 60 miles a gallon, or 66 miles a gallon in an Insight.

Yet as any physicist knows, efficiency can be flipped on its head. If a hybrid system can squeeze more energy out of a single unit of gas, then why not reverse the proposition? That is, instead of using the extra juice to increase fuel economy, employ it to propel the car faster and harder.

+ As these experiments unfolded, the auto industry began to realize that high-performance hybrids were not only possible but might also be the answer to hybrids' enormous marketing problems. Sure, Leonardo DiCaprio and Harrison Ford were lining up to buy Toyota Priuses. But surveys showed that hybrids would never break into the mainstream because Middle America couldn't abide their feeble performance. "Skinny tires, little engines - they looked arguably more like a science project than a car you'd want to drive," says Anthony Pratt, who covers hybrids for the car-industry analyst J. D. Power & Associates.

Indeed, Pratt's consumer surveys discovered recently that, even with rising gas prices, "performance" was still far and away the single most important factor in buying a car. J. D. Power polled people who owned their cars for 90 days and asked them what the most important part of their purchase was. Only 33 percent said gas mileage, and a mere 7.6 percent said "environmental impact." The No. 1 factor for 62 percent of the respondents was "reliability and durability."

To the extent that consumers worried about low fuel economy, it was as a matter of personal inconvenience: stopping to refuel every few days was a big hassle. Before Lexus began selling its 400h S.U.V. hybrid this spring, the company conducted a focus group to find out why would-be buyers wanted a hybrid. The reason: convenience. "The big deal was, I don't have to stop that much to fuel up. That was a primary purchasing factor!" says Dave Hermance, executive engineer for environmental engineering at Toyota's Technical Center. "It wasn't so much the fact that 'I'm going to save $600 a year in fuel savings.' Then there was the 'Oh, yeah, it makes me feel very, very good about the environment. When my kids come home from college, they don't chew on me as hard, because I'm doing something environmentally correct.' "

In this new generation of high-powered hybrids, you essentially get the same powerful S.U.V. drive you've always had - but with slightly better mileage. For example, the Lexus 400h has a six-cylinder engine, so it attains mileage of up to 27 to 32 miles per gallon. But the electric motors endow it with the feel of a V-8, a car that would normally get a measly 13 miles to the gallon. Similarly, Ford's Escape S.U.V. has only four cylinders but drives like a V-6 and gets 36 miles to the gallon.

+ The biggest engineering challenge in any high-performance hybrid is not really managing the drivetrain, however, or even the electric motors. It is the batteries. They are the linchpin of how a hybrid system performs, because they determine how long the electric motors will be able to function.

Consider, for comparison's sake, a laptop battery. It works very slowly, taking several hours to charge, then it holds the charge for weeks at a time and dispenses it in a slow trickle. In contrast, a battery for a hybrid needs to work in huge, rapid surges. It must rapidly blast out a very big charge - the motors in the 400h require a heavy 150 kilowatts - and then recharge just as quickly by capturing regenerative power while braking. If you could force the 400h to drive solely on batteries, with no gas engine at all, they would last for only a minute or two. But this never happens, because in reality the batteries are constantly inhaling and exhaling energy; a single drive across town might involve a dozen such cycles.

If you wanted to endow a hybrid with astonishingly high fuel efficiency, you'd charge the battery to its absolute peak; that way, it could spell the gas motor for the longest possible period. But a fully charged battery tends to swell with heat, and such wear and tear would significantly shorten its life span. You would have to do open-heart surgery on your hybrid, having a mechanic regularly install new batteries at a cost of several thousand dollars. Customers, Hermance realized, would never tolerate that. Indeed, surveys show they don't want to change the batteries for seven years or more. So with the 400h, Lexus did what most hybrid automakers do: they programmed the car's software to intentionally hobble the energy flow, ensuring that the regeneration would never fill the batteries more than 60 percent. This means the batteries will last years - but potentially at the cost of significantly reducing the vehicle's fuel economy.

So, how does it feel like driving a high performance hybrid? Writes the author:

+ I turned the key in the ignition to start the car and. . .nothing. No sound, no shudder of the engine awakening. Then it hit me: of course there was no sound. The 400h uses its electric motors to push off from zero, so even though the gas engine hadn't come to life yet, the car was indeed "on." I gently stepped on the accelerator, and sure enough, the car drifted forward, silent as a ghost. Half a block later, the engine quietly began purring. I quickly discovered that the 400h really does perform as if it were a full V-8. When I suddenly hit the accelerator to dart out of a tight spot in traffic, the tires gave a satisfying squeal.

Yet in other ways, the experience felt subtly different from a regular S.U.V. When I quickly sped up to get onto a highway ramp, for example, the acceleration didn't push me back into my seat the way a normal car would. This, as it turned out, is due to some intriguing physics in the hybrid drivetrain. When a regular car accelerates, it goes through a "shift curve." Each time it shifts up a gear, the transmission needs to disengage for an instant, producing a moment of deceleration - followed by a sudden fresh burst forward. It's that staggered, pulsed feeling that we typically associate with speeding up. But the hybrid 400h has a considerably more complicated "planetary" drivetrain, which organically weaves the efforts of the gas engine and the electric motors together. You don't feel any dead spots because whenever the gas engine is changing gears, the electric motors prevent those tiny temporary decelerations.

Fun play on Broadway: Saw it last night. Jill Clayburgh is great. Correction, the whole cast is great.

Moving into a retirement home:
An old gent moved into a retirement community where good-looking, eligible men are at a premium. After he had been there for a week, he went to confession: "Bless me father, for I have sinned. Last week I had my way with seven different women."

The priest said, "Take seven lemons, squeeze them into a glass and drink the juice without pausing."

"Will that cleanse me of my sins, Father?"

"No," replied the priest, "but it'll wipe that grin off your face."

Recent column highlights:
+ Blackstone private equity funds. Click here.
+ Manhattan Pharmaceuticals: Click here.
+ NovaDel Biosciences appeals. Click here.
+ Hana Biosciences appeals. Click here.
+ All turned on by biotech. Click here.
+ Steve Jobs Commencement Address. The text is available: Click here. The full audio is available. Click here.
+ The March of the Penguins, an exquisite movie. Click here.
+ When to sell stocks. Click here.

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. That money will help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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