More news, from our team at The Rude Awakening...

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Dan Denning, reporting from Australia:

"There is a vast expanse of offshore U.S. territory that is off-limits to U.S. energy companies. But this new frontier might be hosting oil exploration very soon."

For the rest of this story, and for more market insights, see today's issue of The Rude Awakening:

America's Sunken Treasure

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Bill Bonner, with more thoughts, opinions...etc...

*** "The value of a thing varies inversely with its availability," we told our audience in Paris on Monday night. We were giving a little speech at the stock exchange - to a group of dear readers (yes, the DR is translated into French).

"The trouble for central bankers is age-old and insoluble," we continued.

"They can control the quantity of the currency...or its quality, but not both at the same time."

And then we made our point: "Since Mr. Greenspan let the quantity of dollars run wild, his successor, Ben Bernanke, will be haunted by quality concerns."

"But isn't Europe pretty much in the same boat?" one of the attendees wanted to know.

"Debt levels per capita are not that much lower in Europe...."

"It's not the same at all," replied colleague Philippe Bechade. "The debt numbers are not that different, but we don't have so many people living so close to the edge. We never had a mortgage refinancing boom. We never had a consumer spending boom. And now we have one thing that Americans don't have. We have savings. In fact, many economists worry that we save too much. Our economy grows slowly...but it grows.

"And it doesn't seem to be in any danger of a debt-driven collapse. Part of the explanation for this is that the ECB [the central bank of Europe] did not favor quantity over quality...at least not to the extent of our American friends. Many we just have more history of currencies going bad.

But the ECB has always tried to preserve the value of the euro...even if it means high unemployment."

*** Addison has been getting around too. He writes:

At the very least, your editors at the Daily Reckoning are a menace to society.

Last night, we were invited to attend a dinner party by a new friend, John Henry, direct descendent to the revolutionary war hero Patrick Henry, and former VP at Mobil. Whiskey and Gunpowder's Greg Grillot attended with us.

Mr. Henry, concerned about the shape of the Republic his great-ancestor helped to forge, started a meeting group in the tradition of the 19th century Parisian salon - a gathering of Europe's the leading intellectual thinkers of the day, who ate, drank and discussed their way through the evening. John calls his gathering The Empire Salon. It was held in the law offices of a colleague situated on the NW corner of DuPont Circle in DC.

The author presenting his work was a gentleman by the name of Robert Merry, the president and editor-in-chief of the Washington based Congressional Quarterly. Merry's book, The Sands of Empire, is an exploration of the idea of progress in Western civilization.

There are two reigning interpretations of history in the Western tradition, Merry asserts: the linear and the cyclical. The linear ideal assert that we're on a progressive road to human perfection...and the cyclical suggests that while technology and science may build on previous discoveries, in love and war humans will repeat their mistakes time and again.

It's no secret what camp The Daily Reckoning falls in to. But we didn't realize how far in the minority we were. There were roughly a hundred people at the dinner. With a name like The Empire Salon, hosted by a descendent of Patrick Henry, we imagined we'd find ourselves in a room full of revolutionaries risking their lives to defend the freedoms guaranteed by the Republic.

Ha!

We could count on three fingers how many people shared our view. The author, John Henry and a gentleman whose business card reads: "President, Middle East Policy Council." The paneled room was full of policy wonks.

Incredibly intelligent, highly educated - Cambridge, Harvard, Columbia, yada, yada - wonks. But wonks all the same. The overriding critique of the "cyclical view" echoed what President Bush suggested in 2002: nothing good in the world happens unless the United States is involved.

We knew we were contrarians. But in a room full of 100 Washington think-tankers, we expected to find more than three who were at least critical of the will to empire. How could we be so misguided?

Oh, but it gets worse. After dinner and the speech were over, we went out for drinks with Mr. Henry, Mr. Merry, Mr. Grillot... and a lobbyist for the AFL-CIO. Despite a valiant effort to keep the conversation civilized, your editors were invited to leave after calling the lobbyist an "obsequious sycophant."

Back to Bill...

*** We spent the week traveling...first to Paris and then to Waterford, Ireland. The French seemed resentful, cynical and tired. The Irish, on the other hand, are optimistic, forward-looking and cheerful. What accounts for the difference? More below...

*** It looks more and more as though the great consumer spending bubble is losing air. From out where the buffalo roam comes a discouraging word:

Foreclosures are soaring in the Denver area, up 30% over a year ago. The national press reports another cloud: mortgage rates are at a 31-month high following the Fed's recent rate hike. And if you wanted to buy a house, you would be spoiled for choice - inventories are 40% higher than a year ago. Developers are beginning to offer incentives. Yes, dear reader, now you can get your granite countertops for free - and as much as $50,000 off in some condo developments. Where you are spoiled for choice, you will soon be spoiled for price. Count on it.

Equity extraction seems to be coming to an end for the simple, obvious reason that there is less equity to extract...and the less obvious reason that - at higher mortgage rates - it costs more to take it out.

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The Daily Reckoning PRESENTS: Although the River Liffey runs through Dublin like it always has, something has shifted in Ireland - for the better. What brought about this dramatic change? Bill Bonner explores...

ERIN RISEN

by Bill Bonner

"A shadow of cloud on the stream Changes minute by minute"

Easter 1916

W.B. Yeats

"Ireland has arrived," writes David McWilliams in the airline magazine for Aer Arann, the little commuter line we took from London to Waterford.

We saw the evidence with our own eyes. Driving around the countryside, we saw many substantial houses under construction...condominium developments...along with shopping malls and fancy automobiles. Except for the hedgerows, and the fact that people drive on the wrong side of the road, it might have been a suburb of Atlanta or Cincinnati.

"We are richer than any of us imagined possible ten years ago," continues Mr. McWilliams. "No Irish person has to emigrate, none of us need pay for education and even our university are free. Unemployment is the lowest in our history. We have more choice than ever, the place is more tolerant and non-one can be legally discriminated against. We have more cash in our back pocket than almost anyone in Europe. We are better off than 99% of humanity. We are at the top of foreigner's lists as places to live. Unlike many of our rich neighbors, in survey after survey we claim to be very happy. We no longer need to beg from others in the EU; in fact, we are giving them cash. We are a success. We have money and time."

"Yes, it's not like it used to be," said our cab driver. "You won't see any more houses with thatched roofs, for example. Nobody knows how to put on the thatch. And then you can't get insurance for them. Too bad, I liked to see a nice thatch roof...and it was so warm and cozy in winter. But nothing is like it used to be."

The River Liffey still flows through Dublin just as it always has. But it's not the same water...and not the same city either. Nowadays, you're likely to enter a pub and be served, not by a smiling publican with a round bog-trotters' face, a turned up Paddy nose and a lilting Irish voice, but by an immigrant from Slovakia or Serbia. "Vot do you vant?" she asks you.

We attended a conference held in an old castle on a private 300-acre island near Waterford. The place had been converted to a resort, with tennis courts and golf course. Soon, developers are planning to build high-end houses. Our cab driver filled us in.

"If they can get planning permission...that is. I remember when this place was for sale, 20 years ago it's been. Somebody came along and paid 300,000 Irish pounds for it. And people called him a silly fool for spending that much money. But now they're planning on selling each lot - without a house...just an empty building lot - for a million euros. I don't have to tell you. I wish I was the fool."

At lunch, we noticed that both of the serving staff were foreigners. One must have been Polish. The other, perhaps Greek or Bulgarian. For 500 years, boats on the Liffey carried out Ireland's biggest and most successful exports - the Irish themselves. Now they import people.

The Irish left to find work...to get away from the revolutions, uprisings, massacres and suppression...to get free from their English masters...to make their fortunes...or to avoid starving to death. They left for Baltimore, New York, Boston...Sydney and Buenos Aires - a vast diaspora that helped to fill up the New World. Even there, they were not especially welcome. "No Irish need apply," said the signs. The Irish were riff-raff.

They drank too much and had too many children. The Irish slums were dangerous, dirty and desperate. Besides, they were papists.

When, in New Orleans, they began to build the Pontchartrain canal, in the early 19th century, the diggers were laid down by fever. They began with slave labor, but fever got them so often their owners refused to let them continue. So Irish laborers dug the canal. The micks could die as often as they wanted; who would care?

Likewise, on the loading docks of the Old South, black laborers pitched bales of cotton into the cargo ships. But Irish laborers had to catch them. That end of the transaction was considered too dangerous for slaves.

But on the River Liffey they had no choice. They had to leave the green and glorious island; the great river of history carried them away.

What is history but a vast Public Spectacle...a record of absurdities and mishaps for the edification of future generations? Some people - usually fools and knaves - make history. Others suffer it. Decent people who mind their own business and do their best appear in history only as statistics.

An Gorta Mor, the Irish potato famine of the mid-1800s, caused between 500,000 and a million deaths. Millions more avoided starvation only by emigrating. Ireland's population was cut in half - from 8 million to only 4 million during the famine years. How many were killed in the Easter Rising, whose 90th anniversary will be celebrated in less than two weeks?

"A shadow of cloud on the stream/Changes minute by minute," wrote Ireland's greatest poet about that fateful moment in history.

And how many massacred in Portadown?

"We won't make those mistakes," say the living...and then go right ahead with their own absurdities and legislative initiatives.

The proximate cause of the Great Hunger was an act of nature, a fungus.

Behind it acts of parliament...centuries of man-made history. Catholics risked having their land taken away. Those that retained them saw their holdings grow smaller and smaller. The English had taken up much of the land in large plantations. What was left for the Irish was divided, and redivided, so that the typical farm was only a few acres - and much of that was marsh or swampland. The only thing that could be grown on such land that would produce enough calories to feed a family was potatoes. And done on such a small scale, there was no margin for error...there were no savings...no cushion on which the typical family could fall back in times of trouble. When trouble came with the spuds, they were in a jam.

Much is made of how the English authorities caused the problem...and then made it worse through various interventions. But Lord Russell just made history, like Cromwell and Henry VIII before him. The Irish bore it as best they could.

But here at The Daily Reckoning, we would not stoop to making history.

Instead, we study it carefully - usually with amusement - so that we won't have to suffer it ourvelves.

We watch the waters flowing...life... the Liffey ...sometimes bringing good news...and sometimes bearing barges with trouble. We wonder where the clouds and currents come from. For example, what turned Ireland from one of Europe's poorest countries to one of its richest?

"The Irish economy has been booming at an annual growth rate of over 5.6% for 20 years now. In barely 18 years Ireland has made the unbelievable jump from 22nd to the 4th place in OECD prosperity ranking," write Martin De Vlieghere an paul Vreymans of the Flemish think tank, Work for All.

How did Ireland do it? By joining the European Union...and cutting taxes.

"Ireland thanks its success to its clear-cut different tax policy," say the Flemish thinkers. "With 33%, the Irish overall tax burden is the most moderate of Europe. Ireland also has a unique fair flat-tax structure...the key to Ireland's success."

And so the river of history flows in Ireland's direction. But shadows still appear.

The Irish are no longer starving. "According to the national task force...30% of Irish women are overweight and a further 12% are obese...diabetes is the fastest-growing disease in the country," writes McWilliams.

Bill Bonner

The Daily Reckoning

Editor's Note: Bill Bonner is the founder and editor of The Daily Reckoning. He is also the author, with Addison Wiggin, of The Wall Street Journal best seller Financial Reckoning Day: Surviving the Soft Depression of the 21st Century (John Wiley & Sons).

In Bonner and Wiggin's follow-up book, Empire of Debt: The Rise of an Epic Financial Crisis, they wield their sardonic brand of humor to expose the nation for what it really is - an empire built on delusions. Daily Reckoning readers can buy their copy of Empire of Debt at a discount - just click on the link below:

"Now Perhaps Someone Will Listen!"