This week we enter the realm controversial. The election is over, and now reality will impinge its often unpleasant odor over the political landscape of the hopes and dreams of all sides of the debates. I explore the world of Republican political reality and how it will be affected by the economy over the next four years. We look at Bush's national agenda and muse upon whether it can come to pass. This will, of course, be guaranteed to annoy most of my readers, as those who oppose Bush will not like my suggestions and those who align themselves with him will not enjoy my raining upon their parade before they have had a reasonable time to bask in the glow of victory, or reminding them of real potential problems in 2008.

A quick caveat. I will style this as an open letter to Karl Rove. Although not active in the last few years due to time constraints, I was quite active in Texas politics in the 80's and 90's, working on numerous committees and campaigns, finally serving on the Texas State Republican Committee where I served on a small committee that represented the party to the governor's office when Bush was governor of Texas. You cannot run in such circles in Texas without bumping into Karl Rove from time to time, and we bumped often. I like the man, as do most people who have met him. He is currently the finest political mind in the country - a verifiable second coming of Lee Atwater, the architect of Reagan's victories and the Republican Renaissance of the 80's. I have not always liked how he runs a race (especially if I had a "horse" he was not backing), but I always admired his skills. His horses tended to win.

In March of 2002, I wrote an e-letter entitled "King Dollar and the Guillotine," which as the title suggests was a quite negative view of the future prospects for the dollar. Two weeks earlier, I had written a bullish letter on gold, having been bearish (really more agnostic) on gold for years. Since that time, we have seen gold and the euro rise over 50% from the cycle bottoms in dollar terms. Other currencies have not risen against the dollar at all. The Chinese Renminbi is exactly where it was and has been for many years. Almost three years later, we will review the future prospects for the dollar in this week's letter.

This is the third in a series of letters in which I review my major investment themes. The first two were on secular bear markets and the Muddle Through Economy. You can find them at the archives at www.2000wave.com.

What are the basic premises which determine your investment portfolio? Is there a consistency to your thought, or is your portfolio a blend of ideas which may not agree with one another? How sound do your ideas appear when subjected to critique? This week we start a series on my basic investment premises and then see how those premises should perhaps inform your investment portfolios.

This series comes courtesy of an idea triggered by last week's letter. I was talking about a CIA researcher who was writing about the importance of subjecting the views of an analyst to intense scrutiny. I thought it might prove useful to my readers to review the basic investment themes and models which shape my own strategies, and perhaps offer some of the pros and cons about those ideas. We will let the devil's advocate speak up and see if we can deal with his objections.