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In these times of uncertainty, it's good to know that we can look to our president as a beacon of wisdom, shining light and nuance on the tough economic challenges our country is facing.

The New York Times reports that Bush summed things up this way at a Republican fund raiser: "Wall Street got drunk. . . It got drunk, and now it's got a hangover. The question is, How long will it sober up and not try to do all these fancy financial instruments?""

That kind of trenchant insight must be the true benefit of a Harvard MBA. I'm tempted to make a reference to the fact that George "Choked on a Pretzel" Bush knows all about drunkenness and hangovers, but instead I'll keep this non-personal. Although, maybe I won't: How long between Bush's last beer and his first run for office? Maybe that's how long it'll take Wall Street to sober up. Could be a quick turnaround!

But with bailouts of Fannie and Freddie set to cost taxpayers $25 billion -- to say nothing of the Bear Stearns fiasco -- it looks like this decade-long round of Grey Goose was on us. Cheers!

With crude oil trading down to $126 a barrel, though some are still touting the price is moving to $200, or even $300 a barrel, it actually looks more like it is heading to at least $100 barrel. With growing sentiment in Congress, even among mainstream Democrats, to accept President Bush's proposal to do more drilling, the market has taken this as a signal that the government is serious about taking action to bring down prices at the pump. If the Democratic leadership would get on board, the current drop in crude prices would be nothing compared to what could happen.

Coupled with projected slower growth in emerging markets, most notably China, where we could see GDP growth slow by more than 2%, why should the price keep moving higher?

it's important to note that the decline we have witnessed over the last few weeks should result in a drop of over 50 cents a gallon at the pump. Coupled with people driving less, thus easing the demand, the increased supply, or the potential of increased supply on the market should help keep prices moving down.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 7/23/08.

A government bailout of Fannie Mae and Freddie Mac would cost U.S. taxpayers $25 billion over the next two years under a plan being proposed by the Bush administration, according to an analysis by the Congressional Budget Office.

The July 14th proposal by the administration would grant the Secretary of the Treasury temporary authority to purchase obligations and other securities issued by Fannie, Freddie and the Federal Home Loan Banks. Congress is expected to vote on the proposal soon.

CBO used historical data to estimate expected losses on the different types of credit risk the GSE's (government-sponsored enterprises) have in their portfolios.

Republicans and my colleague Aaron Katsman are trying to blame Democrat Barack Obama for rising gas prices. This is election-year politics at its worst.

For one thing, as the Washington Post and other independent observers note, drilling for more oil will do little to alleviate the pain U.S. drivers are feeling at the pump. The available supplies are probably not going to make much of a dent in our never-ending thirst for the black gold. Remember, the oil may not be as easy to get or cheap to process.

"Drilling off the coasts would increase U.S. oil production but have no short-term impact on gas prices," the Post says. "While some analysts disagree, an Energy Department report last year said production would not start until 2017 and have no 'significant' effect on prices or supplies until 2030."

An even more ridiculous idea floated by Republican John McCain is the so-called gas tax holiday, which has been roundly denounced by economists and Obama as a dangerous economic gimmick. Experts estimate that it would save the average consumer a whopping $30.

Republican presidential candidate Sen. John McCain, is launching a new TV ad that puts the blame of $4.00 gasoline at the feet of Barack Obama. As reported by Breitbart.com the ad asks, "Gas prices-$4, $5, no end in sight, because some in Washington are still saying no to drilling in America. No to independence from foreign oil. Who can you thank for rising prices at the pump?" The answer is Obama.

The fact is that while I doubt only Obama is to blame, the nominee, along with the power brokers in the Democratic party, have presented no solution to help ease pain at the pump. If the jump in crude oil is based on a a supply shortage, then the Republican solution of more drilling, both offshore and in Alaska makes sense.

Obama has rejected this, but has put forward no tangible solution. On the one hand, he agrees that the U.S. needs to be energy independent, but on the other hand, offers no serious way of getting to independence. Wind power and other non-nuclear alternatives don't have the scale to power an entire nation. Just an aside, but isn't it odd that when talking about 'alternative energy,' nuclear is never mentioned, though in other parts of the world like Europe it produces a sizable amount of energy.

As for environmental concerns, oil is now brought out of the ground with cutting edge technology, so worries of huge oil spills isn't all that realistic.

Consumers should stop being held hostage by election year politics, and for the good of the nation, Obama should cross party lines and agree to increased drilling.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 7/21/08.

There are many ironies in the fact that President George W. Bush will throw the first pitch at Major League Baseball's All-Star Game in New York. For one, President Bush is the first managing general partner of a Major League team (the Texas Rangers) to become President of the United States.

President Franklin Roosevelt was the first to attend an All-Star Game and throw out the first pitch, starting the tradition. He too had to deal with a poor economy and by the time he threw out that first ball the groundwork was being laid for World War II. President Bush has had to contend with his own war.

While there are differing views as to whether we should have gone into Iraq and whether we should stay or get out, this will always be viewed as George's war, fair or not. And the state of our economy in 2008 will also be viewed as George's economy, fair or not.

The ultimate irony for me is that Yankee Stadium is scheduled to be torn apart at the end of the season. This is YANKEE Stadium and the last president to set foot in it will be George W. Bush. The stadium with the greatest heritage in baseball, the 'House That Ruth Built', is going to be torn apart while our economy is also being torn apart. It is being torn out at its roots.

The Washington Times reports that Phil Gramm, UBS AG (NYSE: UBS) vice chairman and senior economic advisor to John McCain (R.-AZ), thinks we're a nation of whiners. Gramm's UBS is a leader on three important fronts in the effort to destroy the U.S. economy: the $1.3 trillion subprime mortgage catastrophe, the $330 billion Auction Rate Securities (ARS) freeze, and a tax evasion scheme of unknown magnitude.

The Washington Times quotes Gramm as saying: "We have sort of become a nation of whiners. You just hear this constant whining." UBS probably pays Gramm well for his services so I can see where he's coming from. He is making money and he's the only one who matters. But if you think he is helping McCain, think about these things:

It's time to start drilling for oil and natural gas offshore on the east and west coasts. We are wasting our time and our money, and risking our future by not doing so. The energy needs of the United States have made oil our number one import and the biggest factor in our imbalance of trade.

It is not just that oil holds us hostage to the rest of the world. This imbalance of trade means we cannot support ourselves and must borrow from others to get by, and I, for one, have a very hard time with that notion. I prefer independence -- remember that? I think it was an important concept in our founding, way back when.

The imbalance in trade is a mortgage against the future of our children and it is getting worse year after year. The money often goes to foreign governments whose interests are not aligned with ours and they hold us politically and economically captive. Nothing is more shameful than President Bush pleading with Saudi Monarchs to pump more oil.

Presumptive Republican presidential candidate John McCain's plan to award a $300 million prize "for the development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars " raises many questions.

For one thing, what does he mean by "leapfrog?" Does the McCain car have to be 10?% better? 20% better? or 30% better? Will a marginal improvement suffice? Moreover, who is going to decide whether the goal is met? environmentalists? the automakers? the government? These people can not agree on what we should do to reduce air pollution; I can't imagine the fights that will occur over what constitutes a technological "leap."

McCain wants the car to deliver a power source at 30% of the "current costs." Does that mean costs as of 2008 or whenever this wonder car is ready to be sold to consumers? How does he define "costs?" Is it the total cost of ownership or a reduction in the sticker price or something else entirely? Why limit it to batteries? What about hydrogen fuel cells whose only pollution is water vapor?

In a speech he delivered today, McCain pointed out that "right now we have a hodgepodge of incentives for the purchase of fuel-efficient cars." Indeed, purchasing a hybrid only makes economic sense for the most die-hard of tree huggers. But is the answer to skyrocketing gasoline price to be found in a contest? I am not so sure.

Perhaps no other economic phenomenon better characterizes this initial decade of the twenty-first century than the development of -- and GDP growth in -- the developing world.

The economies of Brazil, Russia, India, and China -- often referred to as the BRIC economies -- are major reasons why the developing world will grow 6.7% in 2008, far outpacing growth rates in the United States, Europe, and Japan.

New York Times columnist Roger Cohen argues that what we're seeing is not just the development of markets, not just 'the world is flat,' to use the term popularized by his Times colleague Thomas Friedman, but a reversal: the world is upside down. In Cohen's interpretation, the new economic tigers' accomplishments are large, ongoing, and system changing. Moreover, a power shift is occurring from the U.S and Europe to the new engines of growth.

For Cohen, Brazil is the economic model of the age: abundant minerals and crops, investment capital pouring in, a sugarcane-based energy policy, rising personal incomes, and an increasingly prosperous middle class, with plenty of land to mine, to plant, to expand. It is, in many ways, much of what the United States is not in 2008.

Yesterday, Fed Chairman Ben Bernanke gave a speech at the Federal Reserve Bank of Boston's 52nd Annual Economic Conference in Chatham, Massachusetts. In his speech, he said, "The Federal Open Market Committee will strongly resist an erosion of longer-term inflation expectations, as an unanchoring of those expectations would be destabilizing for growth as well as for inflation."

The equity market dropped this morning as a result. Many traders interpreted these comments quite hawkishly, assuming that the Chairman was implying that interest rates may be raised as early as the end of this year. But as I have stated previously in my book, Follow the Fed to Investment Success, "Watch what the Fed does, not what it says."

This speech reminds me of the famous "irrational exuberance" speech by then Chairman Alan Greenspan in late 1996. Greenspan said that "irrational exuberance" had caused the equity markets to reach unsustainably high levels. Many then interpreted these comments quite hawkishly and assumed that the Fed would be raising rates shortly.

However, the Fed did not raise rates until several years later. Economic events, such as the debt crisis in the emerging markets and Russia, prevented the Fed from taking action, and the U.S. equity markets continued to rise. The bear market in the S&P 500 finally did occur in 2000, almost five years later.

First Quarter GDP was revised to 0.9% up from the initial estimate of 0.6%. This was also up from the fourth-quarter GDP number of 0.6%. The increase was largely due to increased export growth with consumer spending up but quite anemic.

Initial jobless claims came in at 372,000 which were up from 368,000 from the prior week. However, this was still well below the 400,000 number often mentioned as associated with recessions.

These numbers indicate that it is likely that the U.S. economy will avoid a recession this year. The monetary easing from the Federal Reserve seems to be cushioning the downturn with businesses and the consumer. We are also seeing the positive aspect of a lower dollar with increased export growth. The fiscal stimulus will also be kicking in the economy as the rebate checks arrive in the mail.

Does this mean that the economy will start to rally? Not likely. The housing downturn continues and will act as a break on consumer spending. This has no quick fix and will take time to repair itself. The last housing crisis in the late 1980s and early 1990s took several years to be resolved. This time will not be any quicker.

With the U.S. congress trying to please all constituencies in this election year, especially those who took subprime mortgages and can't afford the monthly payments, where is congressional help for military families to save their homes from foreclosure?

A disturbing article on Bloomberg states, "In the midst of the worst surge in mortgage defaults in seven decades, foreclosures in U.S. towns where soldiers live are increasing at a pace almost four times the national average, according to data compiled by research firm RealtyTrac Inc. in Irvine, California."

With the stress of potential foreclosure on their minds, don't you think that this may impact their ability to fight in Iraq?

The article continues, "The Servicemembers' Civil Relief Act protects soldiers and sailors from losing homes for nonpayment of mortgages only while on active duty and for 90 days after they return home."

Ninety days?

I have not decided who I am voting for yet. Or maybe it would be more accurate to say I have decided on multiple occasions only to become undecided again. While some will see me as fickle, or worse, others may be in the same boat.

I am also continuing to think about what difference any of the candidates can make on the economy, and based on these musings, where to invest. My current belief is that none of them will have a profound impact on our economy.

There are no financial wizards among them. Here is the shocker though: I like all three candidates, or at least can find some good in each of them. Each of them is a fighter, and I believe each one of them brings certain skill sets to the job. There are also things about each candidate that are inescapably negative. Clinton has so much baggage, Zsa Zsa Gabor would be jealous. Obama does not have the experience and he has a degree of arrogance (right sweetie); McCain is an old stick-in-the-mud who, as a long-time senator, has spent more hours with lobbyists than almost anybody, though he is pretending otherwise.

Where does this leave me from an investment perspective? My first choice, for stability with moderate growth and dividends, remains the defense sector. I wrote Defense sector rolls over S&P 500 for 8th straight year a while back and I still think that it is the most secure. Here's why:

A) None of the candidates will want to appear soft on defense when we are at war, and all three have made threatening remarks in some country's direction to make sure the electorate knows that.

B) The War in Afghanistan and Iraq rages on, and even the most optimist view is that a draw-down will take years.

C) Even if all war ceased immediately, the upgrading and replenishment of the hardware will cost billions of dollars and most of the defense contractors have that in their backlogs now. Chasing Value: General Dynamics & Raytheon -- The defense does not rest

A front page story on Edwards backing Obama in today's Financial Times had an interesting unattributed comment near the end. In it, a source suggested that a deal could be in the works to make Hillary Clinton give up her quest for the Holy Grail -- err Democratic nomination.

The final paragraph in the print edition (this paragraph actually didn't make it into the online edition of the story) quotes one of senator Clinton's Wall Street backers as saying that the "'ultimate peace pact' with Obama could involve some sort of support from him to pay off her debts, which are estimated at $20m or more."

I am not sure how Obama would help Clinton pay off her campaign debts. Would he divert money he's raised from his supporters to Clinton? I don't think Obama supporters would be too happy about that. Or would he start a new round of fund raising with the explicit understanding that the money would go to Clinton? It's no surprise really that someone from Wall Street would be suggesting such a deal. I don't know whether this kind of thing has been done before but my hunch is that it has.