The history of semiconductor manufacturing is peppered with one amazing story after another. The industry has overcome issue after issue to make chips smaller, faster and cheaper. Lately, insulation has become so thin that electricity leakage has been a real issue. But, once again, a solution is at hand.

Intel and IBM claim to be on the verge of manufacturing semiconductors with new metallic alloys. These new chips will have faster processors, but use less energy - an advancement that will allow cell phones (and other devices) to do more demanding tasks (e.g. play videos) with less battery drain.

This type of progress is symbolic of the entire New Era Economy. Productivity is booming. And rapid productivity growth explains why corporate profits, jobs and income growth have all accelerated at the same time.

Some forecasters have refused to accept this explanation and for the past few years have argued that rising oil prices, a housing slowdown, or some other calamity would bring the economy down very soon. These "fragile-economy" forecasters just can't shake their pessimism.

Others have called this a Goldilocks Economy, because productivity not only pushes growth up, but pulls inflation down. What could be better than high growth, low inflation and low interest rates?

But there is a third view, which argues that much like the story Goldilocks, the bears of inflation and higher interest rates are on their way home.

Despite rapid increases in productivity, the Cleveland Fed's weighted-median CPI (a measure which excludes the impact of big and small price increases) is up 3.7% during the year-ended December 2006. This is a sharp acceleration (a near doubling) from the 1.9% YOY growth rate in January 2004. While productivity helps contain prices, if monetary policy is too accommodative, inflation can still rise.

The fragile-economy crowd is too pessimistic on growth, while the Goldilocks crowd is blind to the inflation that is already here. The market, however, has recently pushed interest rates up sharply (the 10-year is up 44 basis points) and begun to price in greater odds of Fed rate hikes. The price of gold is back above $640/oz., and the dollar remains weak.

One last point: Inflation does not result from job creation, rising wages or strong growth, it's caused by "too much money chasing too few goods." Hiking interest rates a few more times to quell inflationary pressures will not hurt our high-productivity economy. Not hiking interest rates would be the real mistake and a very sad development when the Fed is on the verge of getting it just right.

According to a new report by a UK think-tank, young British Muslims are getting more radical:

> 37% of British Muslims aged 16-24 want to live under Sharia - compared to 28% overall and only 17% of those over 55.

> 36% of British Muslims aged 16-24 believe Muslims who convert to other religions should be punished by death - compared to 19% of those over 55.

> 74% of British Muslims aged 16-24 prefer Muslim women wear a veil - only 28% of those over 55 agree.

And the most concerning number of all:

> 13% of British Muslims aged 16-24 agree with the statement "I admire organizations al-Qaeda that are prepared to fight the West." Only 3% of those over 55 agreed with the same statement.

Here's a link to the full report by the Policy Exchange - a pdf that runs some 100 pages - which appears to be chock full of interesting info and insights.

They're getting ready to party in Miami - and not because of the Super Bowl:

One day, very possibly one day soon, ailing Cuban leader Fidel Castro will die -- and a nascent committee sponsored by the city of Miami wants to be ready.

So it's planning a party.

The event, still in the very early planning stage, would be held in Little Havana's Orange Bowl stadium -- and might include commemorative T-shirts, a catchy slogan and bands that will make your hips shake.

Daniel Finkelstein of the Times of London has put together a list of "ten bloggers who can make or break Hillary Clinton." See what you think.

As you might expect, I read a lot of opinion columns. Rarely have I ever seen a U.S. newspaper publish a race-based rant like the one by Lafe Tolliver in the Toledo Blade on Saturday.

Tolliver is incensed that the Supreme Court is set to review the Constitutionality of government-mandated race-based admissions guidelines (based on programs in Seattle and Louisville), which Tolliver sees as a direct assault on Brown v. Board:

So now we get Brown decided and here it is 50 years later and whites are still whining: "We want it all. We do not want to share with black folks. Let's go back to racial polarization." That would be the logical outcome of a cowardly Supreme Court decision if they were to eviscerate Brown and its progeny.

Don't worry. Justice Clarence Thomas will not save the court and pull this chestnut out of the fire. Justice Thomas, who was a direct benefactor of affirmative action, is so happy to be around the white justices that he will gladly carry their water and wood. He will not fight for minority rights. He is not a lion like Thurgood Marshall. I believe that he considers himself to be an honorary white person. In my opinion, he has a personal disdain for people of color. (See Frantz Fanon's work, "Black Skin ...White Mask.")

The ripple effect of overturning Brown would be tantamount to an economic and political tsumani (sic) in American society. Sympathetic laws, be they state or local, would be cannon fodder for a myriad of challenges by whites who never warmed up to the idea of someone not looking like them getting what they have taken as their inherited DNA white-skin privileges.

A reversal of Brown would broadcast the following thesis: "White people have had unchecked access to money and power and privileges for hundreds of years and we want it to stay that way. Blacks have had a smidgen of the same for about 50 years and that is too long. We want to go back and have it all... again."

What Tolliver obviously doesn't understand is that this type of screed only breeds resentment, division, and ultimately hurts the cause of racial justice and equality in America.

It's tragic yet humorous that President Bush is constantly accused of being out of touch with reality when Nancy Pelosi can get away with saying things like this: "I believe redeployment of our troops is a step toward stability in the region.''

If Pelosi thinks we're losing the war or that it's not worth the sacrifice, fine. Say it loud and proud. But at least be honest about the consequences of what that means and stop pretending that the region is somehow going to be safer or more stable without American troops.

In America Alone, Mark Steyn writes, "demography doesn't explain everything, but it accounts for a good 90 percent." Those who share Steyn's keen interest in demographics will appreciate this story about Steve Murdock, the Texas state demographer. Here is how Murdock sees demography changing the future of the Lone Star state:

Texas is changing. It is growing older and browner, with the elderly and Hispanic populations growing at an unprecedented rate. And as the populations increase, so will the challenges.

If current trends continue, Texas' work force will be less educated and less skilled. State services, already burdened, may be strained to a point never experienced before. The numbers provided by Murdock support the dire warnings:

Hispanics may represent 53 percent of the population by 2030, compared to 30.3 percent for Anglos and 9.2 percent for blacks.

More than half of Hispanics 25 and older had failed to finish high school in 2000; fewer than 20 percent had completed some college, and only about 10 percent had a college degree.

Hispanics could occupy 38 percent to 52 percent of the Texas work force by 2030.

By 2030, 16 percent to 20 percent of the population will be 65 or older, an increase of about 10 percent over 2000. Most will be Anglos. Of Texans older than 65 in 2000, 72.6 percent were Anglo, 16.7 percent Hispanic.

The aging population -- coupled with a segment that is less educated and, thus, earning less money -- will strain social services, including those for the elderly.

"An educated work force raises income levels, which generates businesses activity and increases the market for goods and services," Murdock said. "It also increases investments for new businesses, which in turn increases tax revenues. Higher education equals higher incomes."

Sen. Pete Gallego, D-Alpine, said education is perhaps the most important issue facing the state.

"This is really a wake-up call," he said. "The conclusion is that by the year 2025, if we keep doing what we're doing now, Texas will have the economy of a Third Word country. I have a son who will be 21 in 2025, and that's just not the kind of Texas I want to turn over to him."

If these demographic trends pose challenges, however, they also present opportunities.

"Growth is a double-edged sword," Murdock said. "With challenges come opportunities. The key is to have the opportunities be greater than the challenges."

Governor Rick Perry has taken some serious heat for defending a law giving tuition breaks to the children of undocumented immigrants attending state universities. But you can understand the difficult spot he's in as chief executive of the state: Unless you're going to round up all the illegal immigrants and deport them - which is not only impractical but would devastate the state's economy - you'd better try and find ways of educating them, or face the undesirable consequences of an aging, undereducated population.

Ralph Nader. He's arguably the most hated man in Democratic politics - and he couldn't care less. John DeSio of the NY Press catches Nader venting his spleen on the 2008 race:

He will not say if he is planning a third straight run for the presidency in 2008, offering only that it is way too early for him to make that decision. Still, Nader is not shy when it comes to criticizing the Democratic Party's current frontrunners.

Former North Carolina Senator John Edwards is becoming more progressive and has a good agenda on poverty, but he prefers Ohio Congressman and 2004 fringe candidate Dennis Kucinich. Illinois Senator Barack Obama, the current media golden boy of all potential candidates, is far too new to the political arena to even be seriously evaluated as a contender. But Nader saves particular ire for New York's own Democratic candidate Senator Hillary Clinton, who made it official over the weekend that she would seek her party's nomination.

For Nader, Hillary Clinton is the problem, not the solution. "I think she'd be a step down from Bill, who is not very high to begin with," says Nader.

As disappointed as I was to see John Kerry give up the dream earlier this week, the prospect of the entertainment value created by a Ralph Nader candidacy would cheer me up quite a bit...

Peggy Noonan begins her salute to Chuck Hagel's courage today by writing: "We all complain, and with justice, about the falseness of much that is said in Washington, and the cowardice that leaves a great deal unsaid."

I wonder if Noonan's feelings will change after she reads this interview with Hagel in GQ Magazine in which he calls the president and members of his administration liars:

GQ: And producing a National Intelligence Estimate that turned out to be doctored.
Hagel: Oh yeah. All this stuff was doctored. Absolutely. But that's what we were presented with. And I'm not dismissing our responsibility to look into the thing, because there were senators who said, "I don't believe them." But I was told by the president--we all were--that he would exhaust every diplomatic effort.

GQ: You were told that personally?
Hagel: I remember specifically bringing it up with the president. I said, "This has to be like your father did it in 1991. We had every Middle East nation except one with us in 1991. The United Nations was with us."

GQ: Did he give you that assurance, that he would do the same thing as his father?
Hagel: Yep. He said, "That's what we're going to do." But the more I look back on this, the more I think that the administration knew there was some real hard question whether he really had any WMD. In January of 2003, if you recall, the inspectors at the IAEA, who knew more about what Saddam had than anybody, said, "Give us two more months before you go to war, because we don't think there's anything in there." They were the only ones in Iraq. We hadn't been in there. We didn't know what the hell was in there. And the president wouldn't do it! So to answer your question--Do I regret that vote? Yes, I do regret that vote.

GQ: And you feel like you were misled?
Hagel: I asked tough questions of Wolfowitz and Rumsfeld before the war: How are you going to govern? Who's going to govern? Where is the money coming from? What are you going to do with their army? How will you secure their borders? And I was assured every time I asked, "Senator, don't worry, we've got task forces on that, they've been working, they're coordinated," and so on.

GQ: Do you think they knew that was false?
Hagel: Oh, I eventually was sure they knew. Even before we actually invaded, I had a pretty clear sense of it--that this administration was hell-bent on going to war in Iraq.

GQ: Even if it meant deceiving Congress?
Hagel: That's right.

This is, quite frankly, almost indistinguishable from the antiwar left's "Bush Lied, Troops Died" cry we've heard for so long. Maybe this is really what Hagel believes. Fair enough.

But a bit later on in the interview Hagel says "I have never doubted the motives of those who wanted to go to war so badly." Come again? He just said the Bush administration "doctored" intelligence and lied to take us to war in Iraq knowing (or having a good idea, at least) that Saddam didn't have weapons of mass destruction. That sounds like "doubting the motives" of the President and his administration to me - not to mention impugning their character. Hagel appears to be trying to have it both ways, which isn't very honest, let alone "courageous."

To whatever Kevin Drum was on when he wrote this about 2008:

the Republican field is remarkably weak this cycle. Compared to Democrats, who have half a dozen genuinely strong contenders, John McCain is really the only high-profile candidate they've got, and even he's hardly setting the world on fire. It's pretty amazing, really. From being on top of the world a mere two years ago, Republicans are having trouble just treading water these days.

Rudy Giuliani either slipped Kevin's addled mind or isn't high profile enough. And on the Democratic side, there is Hillary, Obama, and Edwards. That's only half of a "half dozen." Who are the three other "genuinely strong contenders" for the nomination? Joe Biden? Christopher Dodd? Please. At best you could say Bill Richardson has the potential to become a "genuinely strong contender," but he certainly isn't one right now.

Assuming Al Gore doesn't jump in (a fairly safe assumption), Democrats have three top tier candidates. Republicans have two. And while Mitt Romney is currently well back of McCain and Giuliani he has the organization and the potential to become a top-tier candidate in fairly short order.