Santa Cruz, California.  This HFR will be a bit truncated, as the Seascape Rendezvous begins in just a few hours.  There's a lot of fun stuff this week, so let's get started.

The best international news is the impending death of a monster.  It's from a surprising source - who knew Dan Rather was still functioning?  He's 80 now and has a news show on a small cable channel called HDNet.  On Wednesday (5/30), he reported that Hugo Chavez was in "the end stage" of metastatic rhabdomyosarcoma.

This is an especially virulent cancer that once it metastasizes (spreads throughout the body) is quickly fatal.  Chavez's government has been quite secretive about what type of cancer he has, refusing to disclose any details.  If Rather's source is accurate, Chavez may indeed be dead within a month or two.  And then there will be blood.  Castro will see to that....

More enjoyable int'l news:  Iran has been Flamed.  On Monday (5/28), the discovery of a massive new computer virus dubbed Flame was announced.  Like Stuxnet only 100 times bigger (20GB vs. 200KB), it targets computers in Iran - and Palestinian Arab computers in Israel's so-called West Bank.  Flame is not just copying massive amounts of Iranian data, it's wiping out entire hard drives.

Wonder who could have designed it... that its unidentified programmers did no coding from sundown Fridays to sundown Saturdays in Israel's time zone might be a clue.

Despite pledges to cut spending by the new Republican House majority, it appears spending during the current fiscal year (FY2012), which ends on Sept. 30, will actually be greater than in fiscal 2011. The House Republicans were filled with good intentions, but they got snookered by President Obama and Senate Majority Leader Harry Reid. Fool me once, shame on you. Fool me twice, shame on me.

The Tea Party crowd and other Americans who believe in fiscal responsibility are unlikely to be tolerant of and re-elect Republicans who are so incompetent that they cannot reduce federal spending and continue to fund programs that most of their voters oppose.

The Constitution is clear. Article I, Section 9 states, "No Money shall be drawn from the Treasury but in Consequence of Appropriations made by Law." That is, only Congress can authorize the spending of money.

The House Republicans can insist on reductions in overall spending and, particularly, get rid of unpopular and nonessential programs as a price for passing any of the necessary appropriations bills.  They didn't.  Why should they be reelected in November?

Late last month, something went seriously wrong in the underground tunnels beneath the Iranian nuclear enrichment facility at Natanz.  I don't know if it was an explosion, on-site sabotage, an accident, or a cyber attack, but eight people were killed, and several others are being treated for irradiation.  The tunnel leading to the damaged sector has been walled off. 

And another disaster, several days earlier, took place at the heavy-water facility at Arak, whose existence has been public knowledge since the mid-nineties. Along with the explosion in a gas line leading to a new, secret, nuclear facility in a mountain near Fordow, this makes three setbacks to the Iranian regime's nuclear program. 

Maybe their feng shui has gone negative in anticipation  of the oft-dreaded Year of the Snake, but whatever the explanation - no doubt the supreme leader sees the omnipresent satanic activity of the Jews hard at work - things are not going swimmingly for the terror masters in Tehran.

Why, then, would Obama lead from his behind and support them?

For the first time ever, the HFR Hero of the Week is a dyed-in-the-wool Dem. A bio summary:

Played varsity football at and graduated from Stanford, Rhodes Scholar at Oxford, Yale Law School J.D.  Home town controlled by corrupt Dem crooks, ran against the machine, elected mayor in 2006, had previous crook mayor prosecuted who was sent to federal prison. 

City one of the most crime-infested in America, as mayor he reduces murder rate to lowest since 1941.  Saves a woman's life whose home was on fire, suffering second-degree burns.  Reelected to second term in 2010, numerous awards for city's progress on economic revival and reducing drugs, crime and unemployment.

Last week (12/28), the Financial Times announced, "China has again outshone the U.S. as the top venue for IPOs, initial public offerings." How is it that since 2008, a self-proclaimed communist country raises more capital and has more new firms going public than the great bastion of free-market capitalism, the United States?

Answer: Members of Congress have been killing the U.S. financial markets because of hubris, incompetence and a lust for power and money.

The official Washington line has been that it was "Wall Street" that caused the Great Recession. Thanks largely to the tireless efforts of a former general counsel of the Treasury, Peter Wallison, and his American Enterprise Institute colleague Edward Pinto, we now know the financial crisis would not have occurred but for government housing policy implemented principally through Fannie and Freddie and the Department of Housing and Urban Development (HUD).

And that government housing policy was created by Democrats in Congress.

The reason in a nutshell?  China's vast reserve of cheap workers in the hinterland is vanishing at a vertiginous pace.

We can now discern more or less when the catch-up growth miracle will sputter out. Another seven years or so -- enough to buoy global coal, crude, and copper prices for a while -- but then it will all be over. China's demographic dividend will be exhausted.

Beijing revealed last week that the country's working age population has already begun to shrink, sooner than expected. It will soon go into "precipitous decline," according to the International Monetary Fund.

Japan hit this inflexion point fourteen years ago, but by then it was already rich, with $3 trillion of net savings overseas. China has hit the wall a quarter century earlier in its development path.

The ageing crisis is well-known. It is already six years since a Chinese demographer shocked Davos with a warning that his country might have to resort to mass suicide in the end, shoving pensioners onto the ice.

Less known is the parallel - and linked - labor drain in the countryside. A new IMF paper - "Chronicle of a Decline Foretold: Has China Reached the Lewis Turning Point?" - says the reserve army of peasants looking for work peaked in 2010 at around 150 million. The numbers are now collapsing.

The news is getting so unrelentingly good it's making me nervous.  Might as well revel in the good stuff before we talk about why.

Tuesday (5/15) was Sarah Palin Day in Nebraska.  Actually, it was Deb Fischer's day, thanks to Sarah who had endorsed her US Senate candidacy just a week before.  She was an unknown underfinanced state senator given no chance to beat two prominent statewide officials, one of whom was the darling of the GOP establishment.

Then Mama Grizzly showed up...

The news is even more enjoyable in Wisconsin, where the public unionistas and local Dems are spitting mad over the DNC (Dem national committee) refusing to waste a dime on the Walker recall....

For a really good time, though, we go to North Carolina, where an incredible litany of woes for President Evolve is erupting....

Then there's President Amateur, President Born In Kenya, and, oh, yes, President PW....

Even though some are predicting the end of the world in 2012, there is a possibility it could turn out better than 2011 (a low bar). Many people who are not part of the political class continue to advance civilization and make things better for us -- like the late Steve Jobs.

Potential good news is that not all members of the political class are unprincipled, self-serving, ignorant and shortsighted. We are seeing a growing band of smart, responsible and knowledgeable people being elected to Congress and other political bodies. One example is Rep. Paul Ryan, Wisconsin Republican, who is chairman of the House Budget Committee.

In democratic countries, many politicians get themselves elected by making promises for spending programs that the citizens cannot or are unwilling to pay for. The result is persistent deficit spending that ultimately spirals out of control. The good news is that some democratic countries have learned how to avoid the spending/deficit trap, and those countries can serve as examples for the less prudent majority. (See chart below.)