This is the age where politicians get their chance to run up huge debts.  “Politics is about what works,” said Hillary Clinton. At least, we think it was Hillary Clinton. Someone said it. Someone who is an imbecile.

Politics is not about what works, it’s about what you can get away with. And what you can get away with is often exactly what doesn’t work at all.

Our beat is money, here at the Daily Reckoning. We specialize in fraud and folderol. We leave the homicide beat to someone else.

What the US is getting away with, from a financial point of view, in addition to counterfeiting, is very grand larceny on a Super-Madoff scale. It is borrowing trillions of dollars even though it has no way to honestly pay back the money.

Still, so eager are the lenders to part with their money that the yield on the 10-year T-note fell

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Everything is happening just as we thought it would. Stocks are rising. And people think they see better times coming.

Whoa… this is eerie! Following the great crash of ’07-’09 cometh the rebound. Hesitant, cautious at first…

Then, people begin to believe it. They begin to see the “green shoots” of a revival. Stock prices rise. The green shoots sink deeper roots and flower. Pretty soon, people think they are in knee-high clover.

Confidence is rising. Consumers, house-holders, investors – all think the worst is over. And if the worst is over, better times must be coming. If better times are coming, prices should be rising. And investors should be making money. And businesses should be expanding.

It’s all happening as forecast. Except that businesses aren’t expanding. The underlying economy is not really getting better. It’s actually getting weaker. But we’ll talk about that another day.

Today… we issue a warning: watch out, the

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Geo-political tensions are mounting in the global energy game. And that could make investing in oil right now the trade of the year, says Manraaj Singh. Buying shares of oil majors is a good move now. But Manraaj says quality mid-sized oil companies are best placed to return big profits in the next oil bull run.

This from Fleet Street Invest:

Israeli tanks have just rolled into Gaza…Almost three thousand miles away, Nigerian separatist blew-up an oil pipeline over the weekend…Meanwhile, Russia is locked in a dispute over the price of gas with Ukraine. Today they stopped deliveries of natural gas to Ukraine, Turkey and Europe to force the Ukrainians to pay up…

While fears about political instability drive the price of oil back up again, the OPEC oil barons are tightening the screws on global oil supplies…Oil was trading at just $35 per barrel on Christmas Eve. It’s over $50 this

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Some commodities are due a strong rebound, says Manraaj Singh. The underlying fundamentals are largely unchanged from July, when many resources were posting record highs. Manraaj says crude oil prices could double by the end of 2009, while agricultural prices will also soar.

This from Fleet Street Invest:

Just a few months ago it seemed like the whole investment world was jumping onto the commodities bandwagon. Now it seems that they can’t jump off fast enough.

The benchmark Reuters/Jefferies Commodity Index has now fallen by 51% from its peak in July (see chart below).

But as I’ll explain in a moment, commodity prices are set for a rebound. And if you are willing to take a longer term view, this is a once-in-a-lifetime opportunity.

Commodity prices reflect future expectations about the global economy. Less business activity and infrastructure spending means less demand for commodities.

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China’s economic rescue programs could be devastating for American investors, says Manraaj Singh. The country is sitting on $2 trillion in US dollar reserves. And it will likely sell a large chunk of this to fund its domestic bailout.  Manraaj says this makes US dollar-denominated investments a ticking time bomb.

This from Fleet Street Invest:

The fools in Washington, Wall Street and in the City cheering on China’s spending binge are really missing the big question. Where exactly is all that money going to come from?

I’ll tell you. China will pay for its economic boost by destroying the US dollar. Let me explain… China is sitting on some $2 trillion in foreign currency reserves. Between 60 and 70% of that is invested in dollar assets like US Treasury bonds and government-backed companies.

All that cash has effectively subsidised American consumers. It has allowed them to live far beyond their means. But

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