Haven’t had the time to write posts about what I’ve been concentrating on recently:  Our national energy system and what we need to change as quickly as possible.

That said, the political scene out of Washington DC hasn’t really changed all that much.  Republicans, in their long running soap opera aimed at fooling the American voter Republicans still represent them, are now constructing the latest episode in that opera:  “Fire a million employees or we’ll shoot the American economy in the head,” otherwise knows as sequestration.  Sequestration is the child of another GOP soap opera installment called “If you don’t give us what we want we won’t raise the debt ceiling and we’ll shoot the economy in the head.”   In case you haven’t noticed all of these opera segments  end with the threat “we’ll shoot the economy in the head.”

Sequestration came about as a result of the first debt ceiling threat.  It refers to the $1.4 trillion in government spending the Democrats gave to Republicans as a sop to keep Republicans from ‘shooting the economy in the head,” by refusing the raise the debt ceiling in order to pay bills Congress already agreed to pay.    Well, those sequestration cuts come due March 1 and now Republicans are threatening, once again, “to shoot the economy in the head” by allowing all the sequestration cuts to be implemented, as agreed upon, even though most Senate Republicans, and a near majority of House Republicans too, not to mention the Democrats and the President, think to do so is insane.

Sequestration will result in 1 million job losses in 2013 (Congressional Budget Office estimate) and no one believes the private economy will step up to replace those lost jobs any time soon.  So that’s how Republicans will “shoot the economy in the head,” this time.  In other words nothing has changed.  The Republicans really, really do want to “shoot the economy in the head.”  And that’s what a good portion of what passes for leadership in the not-so-modern Republican Party intend to do.

Some Republicans formerly known as Tea Party types (the shoot the economy in the head and ask questions later crew) are showing a little bit of anxiety in light of the shellacking they took at the ballot box in 2012.  House majority leader Eric Cantor, of Virginia (a state President Obama won in 2008 and in 2012), made a speech recently that could have passed as coming from a progressive Democrat.  Most notably he directly endorsed the ‘Dream Act’ for the children of illegal immigrants that the President essentially enforced via executive order.  And he described families of illegal immigrants (estimated at 11 million people) as ‘part of our national fabric.’   Nothing about a legal pathway to citizenship for these parts of our ‘national fabric,’ of course, in his speech.  One must not forget that this is a soap opera.  It’s fictional as far as the Republican Party is concerned.  This is hopeful, marketing ‘spin’ and nothing more.   The party that wanted all 11 million to ‘self deport’ as part of its official party platform in 2012 hasn’t changed that platform.

There’s no real mention of ‘jobs’ anywhere in Congress, although the White House keeps harping on that as an important policy.  So that’s not changed.  The White House puts up some legislation that’s far too small to have a great enough jobs impact, and Republicans refuse to pass it anyway.

Energy policy is stealth-like and not much mentioned.  Republicans, who represent oil and coal interests, keep trying to keep oil and coal subsidies and to eliminate subsidies to competing sustainable energy industries.  So far it’s a stalemate.  Both are keeping their subsidies.  Innovation favors sustainable, where technology improvements are cascading, bringing down costs annually.  Meanwhile basic oil and coal industries haven’t had a new technology in over a century.  Natural gas has had the development of new ‘fracking’ technology which frees up heretofore unreachable gas deposits, but true to form, Congress has done nothing to accelerate the increased use of natural gas.

Republicans still claim to be the defenders of America’s bill paying tradition, but the only technique they’ve actually offered is to ‘shoot the economy in the head.’  Republicans won’t raise sufficient revenues to help pay the bills and they won’t negotiate spending cuts unless Democrats abandon their loyalty to social contracts like Social Security and Medicare:  Ideas that have been roundly rejected by voters several times.   By wide margins.

So while the nation keeps struggling, it is left to its own devices because Republicans insist on trying to impose on American their wildly unpopular, and unnecessary as well, policies.

Every once in a while I’ll write my opinion about the direction of equities.  The last time was in September when I counseled readers to start putting cash in the market, 10% at a time, when the market takes a big dip.  If you had you’d have picked up new positions when the DJIA was between 10,950 to the low 11,000s.  The DJIA is currently moving up and down in the 12,150 to 12,250 range.   So a good call, shorterm.

As is often the case, there’s a lot of ‘noise’ that surrounds and often motivates short term moves.  The ‘headwinds’ talking heads always cite are: Europe’s continuing balance of payments problems; slowing growth in China; DC’s dysfunction; if it isn’t the heat it’s the humidity; whatever.

The truth is that large multinational corporations continue to make headway and profits.  Everywhere.  The US economy keeps chugging along and is expanding, albeit at a slow rate.  But it’s expanding.  And even a slowing China is knocking the cover off the economic ball.

A key driver of economies is the trend of credit.   The past two quarters credit growth (total net bank loans) expanded smartly–except in September when the market tanked.  That month it expanded at a meagre 1.6% (annualized) rate, dropping from an 8.2% August rate.  Then credit growth jumped back up to 7.2% in October and held at 7.1% in November, when the market snapped back smartly.

So what to do now?  The bank figures are monthly.  Our view is that the market will continue trending upwards along with decent credit growth.  But the trend won’t be as strong as it has been since the lows of September.  If you’re nervous and the market does trend up into Christmas, then sell into the rise and begin to raise some cash once again.   Given the very real problems with deleveraging in the developed world, the chance of gaining a re-entry point in the future is assured.