Since the "lower" class isn't doing so hot either, the question might arise of class tensions and the leftist boogyman of discussing income redistribution for long term social stability. Or is this still to far outside politics and the American Dream to consider?

Steve,

Brilliant program and look forward to more from your new initiative. Hindrey was the most impressive when you had Clinton's, Obama's, and Edwards' (Hindrey) advisors on earlier this year. Gallagher is wonderful too--loved his forecast for the year being in economic purgatory!

Higher energy and commodity prices represent a secular change in the enconomy that will be as long lasting and profound as the high-tech/biotech/internet revolution of the late 20th century. The last revolution was particularly suited to America's talents. The best universities in the world, low capital gains taxes, a loose regulatory environment, an openess to immigration (especially from places like India), English as the global language, the dollar as the reserve currency all served to allow the United States to prosper more than any other nation from this great secular trend.

America is poorly prepared for this new secular trend. Collectively we have a huge investment in gas guzzlers that will take years to unwind, geographically many of us live in suburban environments and in single family homes that are inherently energy inefficient, we are much more reliant on coal, gas and oil for electicity generation that some of our economic competitors and while other countries have been working on reducing fossil fuel use to cut down on green house gases, America has been delaying.

Forget China and India, they're growing but it will be decades before their economies are large enough to compete with us in a serious way. Europe (and perhaps Japan and Taiwan) on the other hand is perfectly positioned to gain a competitive advantage from this permanent trend of high energy prices. They already drive smaller cars. A greater percentage of them live in urban settings, they rely to a much greater extent than we do on nuclear power for electicity generation, their public transport infrastructure is more developed and they have 10 years of figuring out how to meet the Kyoto emissions standards.

The bottom line is over the next 10-15 years the on a relative basis, the Europeans will be getting richer and Americans will be getting poorer. The desire of both McCain and Obama to increase defense spending will aggrevate this trend. If Obama wins, his plans for health care reform however laudable will also have a temporary negative impact on the economy (Europeans have already been through the economic dislocations that changing a sector so important to the economy is destined to cause).

The best advise? Sell dollars, buy Euros.