For some time now, I’ve been telling you that Condi Rice may replace Dick Cheney (who would step down for “health reasons”) as Bush’s Vice-President, putting her in the catbird seat for the GOP presidential nomination in ’08. I expect this to take place by summer 2006.

As I discussed last month in 44, her candidacy would be do more damage to the Democrat Party than Katrina did to the Gulf Coast. She is the only candidate the GOP can put up who could defeat Hillary.

(Try this on as a barf alert: John McCain as Hillary’s running mate. Denied the GOP nomination, he’ll bolt his party and team with Hil who’s got the Dem nomination sewed up. Yep, that’s the latest hot DC buzz.)

Now it’s time for the other shoe to drop.

There has been global outrage about the proposal from the Cyprus government to have a significant one-time tax on those who have deposits in Cypriot banks. It has been correctly called a theft of private capital. What many fail to realize is that from the beginning, governments have been engaged in this type of theft, including the U.S. government.

As the debt crisis deepens, governments are likely to increasingly engage in various forms of capital expropriation despite the fact that such activities are economically destructive and morally offensive. The U.S. government is now doing precisely what the Cypriot government is proposing, but only with a lighter and more subtle touch.

There are a number of actions governments take to expropriate capital without explicitly saying so.  For example, if you have a savings account, a CD or money market fund, there is a good chance that you are receiving less than 1 percent interest on the money, thanks to the Federal Reserve, while government-caused inflation is running at roughly 2 percent.

Thus, you are, in effect, suffering a 1 percent expropriation of your savings each year -- without Congress ever having voted for such expropriation. It gets worse.

In a week where California Governor Arnold Schwarzenegger appointed a hyper-leftwing pro-abortion lesbian “married” to her “partner” as his chief of staff, and South Africa’s Constitutional Court ordered Parliament to legalize homosexual “marriage,” the moral sanity exhibited by the Catholic Church was a welcome relief.

On Wednesday, November 29, the Vatican issued an Instruction entitled, Concerning the Criteria of Vocational Discernment Regarding Persons with Homosexual Tendencies in View of their Admission to Seminaries and Holy Orders, which now has the authority of canon law.

Pope Benedict is taking a moral stand, standing firmly against the shrieking gales of limp-wristed liberalism. He is determined not only to rid his church of pederastic perverts, but is determined that his church is the moral rock of St. Peter that it is supposed to be.

Half the world economy is one accident away from a deflation trap. The emerging market bloc makes up half the world economy, far higher than in any previous crisis. Roughly $4 trillion of foreign funds swept into emerging markets after the Lehman crisis, much of it by then "momentum money" late to the party.

One country after another is now having to tighten into weakness. Neil Shearing from Capital Economics says Brazil, India and Russia are all suffering from the 1970s curse of "stagflation," unable to stimulate their economies to revive growth.

Mr. Shearing said the BRICS bloc (Brazil, Russia, India, China and South Africa) are in worse shape than many of the other emerging market states, but the strains are spreading.

While every story is different, the common theme for the BRICS is that they have exhausted their catch-up growth models, let credit booms get out of hand and failed to push through reforms while the going was good. Productivity rates have plummeted almost everywhere.  That most certainly includes China.