Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: We the Well-armed People
on: March 18, 2009, 08:52:49 AM
|**I read this yesterday, and i'm still pissed off. WTF???**http://www.washingtonpost.com/wp-dyn/content/article/2009/01/13/AR2009011302840_pf.html
Marine Amputee Acquitted On Gun Possession Charges
By Keith L. Alexander
Washington Post Staff Writer
Wednesday, January 14, 2009; B01
After being deadlocked twice, a D.C. Superior Court jury yesterday acquitted a Marine amputee on felony charges of gun possession stemming from an arrest while he was on the way to Walter Reed Army Medical Center.
In the 2006 incident, Cpl. Melroy H. Cort, 24, and his wife, Samantha, were en route from their home in Columbus, Ohio, to Walter Reed. Cort's legs had been amputated above the knees when he was wounded by a makeshift bomb in Ramadi during his third tour of duty in Iraq.
The couple's car got a flat tire, forcing them to pull over at a car repair shop in the 5000 block of Georgia Avenue NW. While there, Cort said, he reached into the glove compartment, removed a 9mm pistol and put it in his jacket pocket.
A witness who noticed Cort handling the gun called police, who arrested and handcuffed Cort while he was sitting in his wheelchair. He was charged with three counts of carrying a pistol without a license, possession of an unregistered firearm and possession of ammunition. He spent the night in the D.C. jail before returning to Walter Reed.
He was assigned a public defender, who encouraged him to plead guilty. But Cort refused, because a felony on his record could cost him his military benefits. So he decided to represent himself.
"I had to fight for myself," he said yesterday. "I wasn't going to plead guilty and lose everything."
During his trial, which began Friday before Judge Lynn Leibovitz, the two arresting officers testified that Cort had thrown up his hands and told them he had a gun in his pocket when they approached him.
Taking the stand in his defense, Cort tried to tell his personal story: How he enlisted in the Marines in 2004 after graduating from Ohio's Wright State University with a business degree. How he went to Iraq in 2004 and 2005, when he was was critically injured. How he was fitted with prosthetic legs and honorably discharged in 2007.
But Leibovitz ordered him to discuss only the case at hand.
Cort, who said he had a permit to carry the gun in Ohio, said he had it with him because he had moved out of his house in anticipation of an extended stay at Walter Reed.
He said his commanding officer had advised him to take the gun to the armory on Walter Reed's base as soon as he arrived.
Cort said 12 rounds of ammunition were in his car trunk, but police said the ammunition was in the gun's clip.
Although acquitting him of the gun charges, the jury found Cort guilty of possessing ammunition, a misdemeanor. He was sentenced to time already spent in the D.C. jail.
Cort, his wife and their 3-month-old daughter, Charlott, now plan to drive home to Columbus, where Samantha Cort is in real estate. Cort said he plans to appeal the verdict and tend to his family.
"I just plan to take care of my daughter," Cort said.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Money for ACORN, HAMAS but not for wounded vets.....
on: March 16, 2009, 08:53:50 PM
American Legion commander “angered” after meeting Obama
posted at 7:00 pm on March 16, 2009 by Ed Morrissey
Apparently, the Obama administration hasn’t backed away from its plans to start offloading costs for wounded veterans to third-party insurance, which will make acquiring such insurance nearly impossible. The commander of the American Legion emerged from a meeting with President Obama “angered” at Obama’s insistence on generating revenue from those who sacrificed for American security:
The leader of the nation’s largest veterans organization says he is “deeply disappointed and concerned” after a meeting with President Obama today to discuss a proposal to force private insurance companies to pay for the treatment of military veterans who have suffered service-connected disabilities and injuries. The Obama administration recently revealed a plan to require private insurance carriers to reimburse the Department of Veterans Affairs (VA) in such cases.
“It became apparent during our discussion today that the President intends to move forward with this unreasonable plan,” said Commander David K. Rehbein of The American Legion. “He says he is looking to generate $540-million by this method, but refused to hear arguments about the moral and government-avowed obligations that would be compromised by it.”
The Commander, clearly angered as he emerged from the session said, “This reimbursement plan would be inconsistent with the mandate ‘ to care for him who shall have borne the battle’ given that the United States government sent members of the armed forces into harm’s way, and not private insurance companies. I say again that The American Legion does not and will not support any plan that seeks to bill a veteran for treatment of a service connected disability at the very agency that was created to treat the unique need of America’s veterans!”
Commander Rehbein was among a group of senior officials from veterans service organizations joining the President, White House Chief of Staff Rahm Emmanuel, Secretary of Veterans Affairs Eric Shinseki and Steven Kosiak, the overseer of defense spending at the Office of Management and Budget (OMB). The group’s early afternoon conversation at The White House was precipitated by a letter of protest presented to the President earlier this month. The letter, co-signed by Commander Rehbein and the heads of ten colleague organizations, read, in part, ” There is simply no logical explanation for billing a veteran’s personal insurance for care that the VA has a responsibility to provide. While we understand the fiscal difficulties this country faces right now, placing the burden of those fiscal problems on the men and women who have already sacrificed a great deal for this country is unconscionable.”
The Obama administration explains that it wants private insurers who sell coverage to vets to pay their fair share, but there are two things wrong with that argument. First, the United States has a moral obligation to provide treatment for those wounded in the service of their country. That’s a commitment we make to the people who enlist in military, and should not get outsourced.
Second, vets with service-related injuries and illnesses can only get third-party insurance because insurers know the US will cover all service-related medical treatment through the VA. If the government reneges on that commitment, it will put insurers on the hook for veterans already enrolled — but it will make it a lot harder for the next set of veterans to get insured. It will also raise costs to the rest of the insured by those companies, when the burden should fall on all Americans equally.
If the country needs more revenue streams, it should find some other way to find them than the backs of our wounded veterans. They’ve sacrificed enough. Shame on the Obama administration for attempting to weasel out of our commitment.
Update: This Ain’t Hell wonders when General Eric Shinseki will resign in protest.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Even Obama supporters worried about White House incompetence
on: March 16, 2009, 01:16:13 PM
Even Obama supporters worried about White House incompetence
posted at 9:37 am on March 16, 2009 by Ed Morrissey
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I guess we can officially say that the honeymoon’s over. The New York Daily News, not exactly a pillar of conservative thought, finds itself wondering aloud about whether Barack Obama and his team have the competence to lead the nation. The whispers have grown into a chorus:
Not long ago, after a string of especially bad days for the Obama administration, a veteran Democratic pol approached me with a pained look on his face and asked, “Do you think they know what they’re doing?”
The question caught me off guard because the man is a well-known Obama supporter. As we talked, I quickly realized his asking suggested his own considerable doubts.
Yes, it’s early, but an eerily familiar feeling is spreading across party lines and seeping into the national conversation. It’s a nagging doubt about the competency of the White House.
Well, what did people expect? For the first time in decades and perhaps ever, America chose a President without executive experience in the public or private sectors, and without military command experience. If people expected smooth performance and cool competence from that kind of resume, then the best that can be said about them is that they indulged in self-delusion on a massive scale.
For the rest of us, this comes as no surprise at all. The failed appointments have managed to be less embarrassing than the ones that “succeeded”, such as Tim Geithner and Vivek Kundra. The administration keeps promising plans that never get delivered, and Obama all but abdicated to Nancy Pelosi during the Porkulus debacle. And that doesn’t even begin to cover Obama’s embarrassing performance during Gordon Brown’s visit, and Hillary Clinton’s shameful “I don’t understand multiparty democracy” tour at the EU.
Obama is in over his head, and so are his closest aides, such as Geithner, Hillary, and the entire team. The best we can hope is that on-the-job training can work quickly.
Update: Worse than Bush? Kevin McCullough makes that argument in his weekly column.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / How do you say "empty suit" in Russian?
on: March 14, 2009, 10:16:32 PM
Russia takes the Biden Challenge
posted at 10:02 am on March 14, 2009 by Ed Morrissey
Joe Biden warned us that Barack Obama would get tested by unfriendly nations in the first six months of his administration because of his inexperience. That prediction now looks like sunny optimism. Just days after China aggressively challenged the US Navy in international waters in the South China Sea, Russia now says they may start basing bombers in Venezuela — and Cuba:
A Russian Air Force chief said Saturday that Venezuelan President Hugo Chavez has offered an island as a temporary base for strategic Russian bombers, the Interfax news agency reported.
The chief of staff of Russia’s long range aviation, Maj. Gen. Anatoly Zhikharev, also said Cuba could be used to base the aircraft, Interfax reported. …
Zhikharev said Chavez had offered “a whole island with an airdrome, which we can use as a temporary base for strategic bombers,” the agency reported. “If there is a corresponding political decision, then the use of the island … by the Russian Air Force is possible.”
Interfax reported he said earlier that Cuba has air bases with four or five runways long enough for the huge bombers and could be used to host the long-range planes.
It took John Kennedy more than a year to precipitate a military standoff with the Soviet Union over Cuba in the 1962 missile crisis. It’s taken the Obama Amateur Hour less than two months.
Recall that Barack Obama ran in part on a campaign to “restore diplomacy” in foreign relations. Hillary Clinton made a big show of bringing a “reset button” to her first meeting with her Russian counterpart Sergei Lavrov, in which the button was labeled incorrectly and not spelled in Cyrillic. This followed her bumbling show at the EU, making it clear to the Russians that our foreign service was in complete disarray, run by imcompetents.
Can you imagine Russia trying this with George Bush? For that matter, can you imagine Bush losing Kyrgyzstan — and a vital military route — to Putin? Russia is doing this now because Putin and Medvedev understand that they can get away with it.
The Kremlin later said that Zhikarev spoke “hypothetically”. We’ll see. I’d guess that it won’t take long for Moscow to start landing bombers 90 miles off our coast if the Obama administration continues the feckless performance we’ve seen thus far.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: China
on: March 13, 2009, 08:53:57 AM
From The Times
March 12, 2009
US warships head for South China Sea after standoff
Tim Reid in Washington
A potential conflict was brewing last night in the South China Sea after President Obama dispatched heavily armed American destroyers to the scene of a naval standoff between the US and China at the weekend.
Mr Obama’s decision to send an armed escort for US surveillance ships in the area follows the aggressive and co-ordinated manoeuvres of five Chinese boats on Sunday. They harassed and nearly collided with an unarmed American vessel.
Washington accused the Chinese ships of moving directly in front of the US Navy surveillance ship Impeccable, forcing its crew to take emergency action, and to deploy a high-pressure water hose to deter the Chinese ships. Formal protests were lodged with Beijing after the incident.
On a day that Mr Obama and his senior officials met the Chinese Foreign Minister, Yang Jiechi, in Washington, Beijing showed no sign of backing down. Its military chiefs accused the unarmed US Navy ship of being on a spying mission.
The US keeps a close eye on China’s arsenal, including its expanding fleet of submarines in the area. Washington says that the confrontation occurred in international waters, but Beijing claims nearly all the South China Sea as its own, putting it in conflict with five other nations that have claims over different parts of the waters.
The episode complicated fragile military relations between the US and China, which appeared to have improved after the two held defence talks in Beijing last month.
Mr Obama yesterday urged more military dialogue with China to avoid similar incidents after talks with Mr Yang, the White House said. “The President also stressed the importance of raising the level and frequency of military-to-military dialogue,” it said.
A hotline was established between the Chinese Defence Ministry and the Pentagon in April last year, but it was not used during or after Sunday’s standoff, defence officials said. The US Government immediately protested to Chinese authorities after the incident, about 75 miles south of Hainan Island.
Beijing has rejected the US account and demanded that the United States cease what it calls illegal activities in the South China Sea. The Chinese maintain the area is part of the country’s exclusive economic zone.
Washington insists that the area is part of international waters and that US ships have a legal right to operate there.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Legal issues
on: March 11, 2009, 12:11:14 PM
What we know:
Obama has, and has had a US passport issued by the State Dept.
To be issued a US passport, one must give proof of US citizenship by birth or naturalization.
No one has come forward claiming Obama was naturalized as either a child or adult.
Therefore: It is reasonable to assume the US State Depertment accepted his birth cert as proof of his US citizenship.
How long are we going to keep flogging this horse? I'm seeing signs of rigor mortis.....
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Now THIS IS a threat
on: March 10, 2009, 07:48:45 PM
March 9, 2009
Clinton Announces Million-Dollar Scholarship Program for Palestinian Students
Ramallah, West Bank — Secretary of State Hillary Rodham Clinton has announced a new million-dollar scholarship program to help Palestinian students enroll at Palestinian and American universities.
Mrs. Clinton announced the Middle East Partnership Initiative during a visit to this Palestinian town last week. The four-year program will support about 10 scholarships each year for disadvantaged students to attend four-year courses at Palestinian universities. The program will also offer 25 “opportunity grants” to enable promising but disadvantaged young Palestinians to apply to American-accredited institutions in the United States or the Middle East, a State Department official told The Chronicle.
Once funds are approved by Congress, Mrs. Clinton hopes to begin the program in the 2010-11 academic year. The money is in addition to $900-million in aid to the Palestinian Authority announced by the secretary last week at the donors’ conference, in Sharm el Sheikh, Egypt.
During her visit to an American-sponsored English-language teaching program in Ramallah, Mrs. Clinton said the opportunity grants would create “a larger pool of capable young men and women from places like the West Bank and Gaza” who can “compete along with students in other countries for the opportunity to further their academic training in America.” The secretary spoke on a youth program aired by Palestinian Authority TV.
Last year several Palestinian students from Gaza who were awarded Fulbright scholarships ran into difficulty entering Israel to complete the application process, and two of them were subsequently denied entry visas to the United States on security grounds.
Micaela Schweitzer-Bluhm, a spokeswoman for the U.S. Consulate in Jerusalem, said efforts were being made to enable Gazans to participate in American-sponsored projects despite the security challenges.
“We’ve had several dozen Gazans participate in our programs over the last few months, both educational and professional,” said Ms. Schweitzer-Bluhm.
“It is difficult,” she said. “It’s a challenge to bring Gazans to participate in these programs, but we go through great lengths to try and facilitate their participation, and we have advance coordination with the Israelis to get them the necessary permits.” —Matthew Kalman
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Political Economics
on: March 09, 2009, 01:41:20 PM
- Works and Days - http://pajamasmedia.com/victordavishanson
Oh, the Debts We Will See!
Posted By Victor Davis Hanson On March 8, 2009 @ 11:12 pm In Uncategorized | 40 Comments
Going broke without style…
$3.6 trillion budget. $1.7 trillion annual deficit. $800 billion plus borrowing stimulus. $600 billion plus in outlays for new nationalized health care, and then another $600 billion again for cap-and-trade.
These numbers are so fantastic, so absolutely crazed, that the thought of ever paying them off boggles the mathematical senses. (I have surreal nightmares that as we haggle with the Chinese for another $500 billion dollar note to fund cap-and-trade, or another DMV-like national health care center, the USS Carl Vinson radios that it is broke and has no credit to buy supplies off Dubai, or its F-18s sit in rows on its deck, gathering brine for want of parts to take off).
“They” will pay
How many of those diabolical rich making $250,000 and above are there left to gouge to pay for this all? It simply doesn’t compute. One is left with the only possibility that we slash defense, or we will inflate our way out, since no foreign debtor will want to supply those staggering sums of cash.
Athens in the fourth century B.C. chose to mint “redheads”, silver coins with bronze cores that were quickly exposed once the patina around the coins’ imprinted busts wore off. Rome did the same thing, and by the fourth century AD simply flooded its provinces with money of little real value. Germany paid off its war debts to France in the 1920s, with deliberately inflated German marks. I lived in Greece during the oil-embargo hyperinflation of 1973, and remember buying individual eggs with three or four inked-in price figures crossed out, as the store-keeper kept upping the price each day. (And I remember farming in the early 1980s when full-strength Roundup herbicide seemed to go from $60 to $70 to $100 a gallon in a single year).
What, me worried?
I don’t think any one knows what is quite going on. I recently gave a lecture, and a Wall Street grandee afterwards approached the dais, asking me for advice (me, who could not even turn a profit growing raisins, and was a lousy peddler of family fruit for years at Farmers’ Markets), saying in effect something like the following: “Mr. Hanson—Consider: Real estate bad—not going to put money there when I’m not sure where the bottom is. Stocks worse—had I got out at New Year’s, I’d have thousands more than I do now. Cash pathetic—the interest doesn’t even cover what’s lost to inflation. So what’s left—the dole?”
I had no advice, of course, other than some vague warning that we are in a war against capital, sort of similar to what Sallust and Cicero claim that Catiline and his band of dissolute and broke aristocrats were planning, with his calls for cancellation of debts and redistribution of property.
Here are the possible exegeses.
(a) Clueless. Obama, the community organizer from Chicago with a mere two years plus in the Senate, is clueless. He has never run a business, never served as an executive, never done anything in matters of commerce other than speak and write and authorize spending bills as part of his government job. The result is that he listens to the last person he speaks with—and with dozens of advisors with dozens more agendas, we are seeing a herky-jerky, now this, now that, everything but the kitchen sink, sort of governance. This version of the President is a nice guy who wants to please everyone and will please no one.
(b) Not so clueless. Or Obama has a pretty certain, calculated European objective of high taxes, big-spending programs, utopian foreign policy initiatives, and a therapeutic sense of ensuring we are all going to be equal by result. In that sense, the recession was a godsend, since he has a brief window of about six months of fright and uncertainty to ram through programs that will last a lifetime, and whose expense will ensure a vast redistribution of income. His closest advisors are life-long government technocrats who are inured to spending others’ money and can use tax-free public appurtenances (salaries, perks, benefits, travel, etc.) to emulate the grand lifestyles of those they detest in corporations and on Wall Street. So we will get a new technocrati overseer class to replace the now disgraced masters of the universe on Wall Street. This manifestation of Obama is a hustler of the first order, and almost everything he says from FISA and earmarks to raising the ethical bar on appointments and limits on spending is, well, made up as he goes along, with the assurance that the media is still ga-ga.
(c) A Mean streak. Or there is not so much chaos or European utopianism at work as a sort of primeval dislike of capitalists and those who have access to money—an angry President Obama whose furor now and again peeks through (remember the clingers’ speech, the accidental middle finger scratches, and the Robespierre rhetoric). Never mind the hypocrisy involved, or the mega-fortunes at play in the rise of Obama’s candidacy. Instead concentrate on the effects, both direct and insidious, of his initiatives on capital of the near-do-well. This is a quadruple whammy:
1) Aggregate tax rates are going to approach 70% in some states, effectively destroying the idea that anyone from the lower classes can ever achieve wealth in a single lifetime, and pass some of it on to his children (increases in estate taxes will be next).
2) The pulverizing of the Dow (cf. Obama’s flippant talk of gyrations and advice to invest now at rock bottom prices, as if those who were wiped out have disposable cash to buy more stocks) means that the aggregate wealth in 401(k)s and stocks for millions—along with equity in homes— of the upper middle classes has effectively vanished. In some cases, the lawyer or contractor who a year ago had $400K put away in retirement funds and $300K in home equity has effectively lost half, if not more, of his hard-won wealth. And when one computes the additional taxes on future income he will pay, it will be almost impossible in his remaining lifetime to make it back.
3) The promises of free health and free education for everyone most surely will come with salary considerations and mean-testing (we are seeing that already with ideas floating about charitable contributions). In other words, the more you of the upper middle class will pay for new expansive entitlements, the more likely you will not be eligible to use the full extent of them.
4) The power of anti-“rich” rhetoric is already beginning to demonize the wealthy as those who have somehow done something wrong in paying the full ticket for their children’s’ educations, or their own health care, or their full mortgage payments. Of all the things that worry me about Obama, the most troublesome is his conflation of the super wealthy—who are so rich that even Obama cannot touch them and who often are his most fervent supporters—with the entrepreneurs, the scramblers of the small business class who make between, say, $250,000 and $600,000.
These already pay over 50% in various taxes, are eligible for almost no government support, do not have access to insider government breaks and special legislation, pay their own way—and create both jobs and new innovations critical to the performance of the U.S. economy. Yet between Wall Street and DC they have been targeted for extinction.
Recently David Frum contrasted what he thought was the ungainly (both physically and morally) image of Rush Limbaugh with that of the suave Barack Obama to underscore how the Republicans must change and assume new leadership. I replied to that charge in a recent corner posting on nationalreview.com, and thought it was rather incoherent in that Limbaugh never claimed to be a national political leader and middle-way conservatives were simply following White House talking points.
Rumors also circulated that Rahm Emanuel, with Clinton emeriti, like Paul Begala and James Carville, are coordinating attacks on the talk show host from the White House. Now the New York Daily News prints a derivative hit piece by a senior correspondent David Saltonstall (note the melodramatic reference to Limbaugh’s four-part name) that has quips like:
“Rush Hudson Limbaugh 3rd, 58, is a thrice-divorced, formerly drug-addicted college dropout who casts himself as a working class hero, yet drives his $450,000 Mercedes-Benz Maybach 57S home to a 24,000-square-foot  Florida mansion every night (one of five houses on the property).”
Questions, however, arise. Do we really wish to go after the personal lives of entertainers and commentators, who are not in public office, as is true of say, a Bill Clinton, Larry Craig, or Ted Kennedy? Won’t this also open up a can-of-worms—such as ‘If Limbaugh abused prescription drugs, what about the President of the United States who admitted to using illicit drugs like marijuana and cocaine (“blow”)?’ Or “Is Limbaugh more honest for being rich and fiscally conservative or a John Kerry for being even richer and liberal”? Or “Is it worse for Limbaugh to use his own money to fly in his own jet, or for a Nancy Pelosi to use ours to fly in ours (and whose is the bigger anyway?).
I don’t recall Limbaugh ever saying he was a “working class hero” and worry more about how Connecticut Senator Chris Dodd got his various houses than I do the five homes of private citizen Rush Limbaugh. I think this invective all started because Limbaugh gave a speech to some conservatives and reiterated that he wished Obama’s socialist program initiatives to fail—from that point on, he morphed into the supposed lead target of the Obama hit team, that is rapidly becoming Nixonian in its attack on “enemies” like Hannity or Limbaugh. Wanting the Congress to say no on the President’s proposals for socialized medicine, in preference for refining the present system, is not the same as declaring America’s war in Iraq as lost (or hoping it so).
My take? If the multilateral White House insults the visiting British Prime Minister by a less than formal reception ceremony, and sends him packing with a gift box of CDs, and then pleads in its defense it is frazzled and overworked, what is it then doing spending hours to focus on and demonize a talk show host?
I’ve come rapidly to the point where I simply do not believe (cf. the claim that all those companies every thirty minutes are going broke due to the lack of federal health care) that what our President says is at all accurate. And worse have come to think that he knows it is not, and, worse still, knows that the media largely know too but will do their part as disciples must. In short, we are soon to see an end to things as they once were for the last quarter-century.
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Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: China
on: March 09, 2009, 01:17:06 PM
"U.S. Hegemony Ends"
By William R. Hawkins
FrontPageMagazine.com | Monday, March 09, 2009
The United States and the People’s Republic of China resumed military-to-military talks February 27-28 in Beijing. The tone of the Defense Policy Coordination Talks (DPCT) showed the same American desire to accommodate China’s rise to peer power status that was shown a week earlier by Secretary of State Hillary Clinton’s trip to the Chinese capital.
Deputy Assistant Secretary of Defense David Sedney, a hold over from the Bush Administration, led the U.S. delegation that included officials from the Defense Department, the State Department, the Pacific Command and the Joint Chiefs of Staff. Among the Chinese participants were mid-level officers from the People’s Liberation Army, navy and air force as well as some civilians termed “military scholars.” Sedney held 13 hours of talks on Feb. 27 with a delegation led by Maj. Gen. Qian Lihua, the Chinese Defense Ministry's head of foreign affairs. A shorter meeting took place the next morning with Lt. Gen. Ma Xiaotian, deputy chief of the General Staff for the PLA.
This was the fifth meeting of the DPTT since its inception in 2005. China had suspended most military contacts last October over Washington's agreement to sell $6.5 billion in advanced weaponry to Taiwan, the self-governing island democracy that the mainland Communist regime claims is a renegade province. When Sedney journeyed to Beijing last December to ask that the DPCT meetings resume, he was turned down. China’s leaders were clearly waiting for the Obama Administration to take office.
Beijing took a hard line towards the talks. China’s state-run news agency Xinhua quoted Maj. Gen. Qian as saying that contacts would remain tenuous unless the U.S. removes remaining obstacles to improvement. “China-U.S. military relations still stay at a difficult period. We expect the U.S. side to take concrete measures for the resumption and development of our military ties,” said Qian.
The Obama administration seems in the mood to make concessions. After the DPCT meeting, Sedney told a news conference, “The focus was not at all on obstacles. The focus was on how we can move forward, how we can make progress, and how we can try to make joint efforts...to achieve common goals.” On major points, it was Beijing’s goals of expanding its influence in key regions that were advanced with American blessings.
Sedney thanked Beijing for hosting the Six Party Talks on North Korea, as had Secretary Clinton during her visit. Yet, two days before the DPCT, China had hosted a delegation from North Korea as part of the celebration of 2009 as the “Year of China-DPRK Friendship” marking 60 years of their alliance. Just as China sent the PLA to fight against the U.S.-led UN forces during the Korean War, China has used the Six Party Talks to diplomatically protect the Pyongyang regime from any concerted action that could endanger its rule. According to the official newspaper The People’s Daily, “Jia Qinglin, chairman of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), told a delegation from the Workers' Party of Korea (WPK) that Sino-DPRK relations, fostered by leaders of older generations, had been continuously developed…but also looking into the future.”
Sedney praised China's contribution to the anti-piracy flotilla patrolling the Gulf of Aden off the Somali coast. Beijing sent two destroyers and a supply ship to the region in December. This naval deployment into the Indian Ocean marks a significant projection of Chinese influence towards East Africa where Beijing has been supporting the Sudan regime’s genocidal rule in exchange for control of its oil fields. The deployment also puts Chinese forces closer to the Persian Gulf and its ally Pakistan as tensions increase in Afghanistan and with India.
Sedney said he discussed possible Chinese contributions to non-military programs in Afghanistan. For what possible reason would the U.S. want to encourage any direct Chinese participation in Afghanistan? When the U.S. invaded Afghanistan, China was working with the Taliban regime building its infrastructure and an air-defense system.
The Taliban was the creation of Pakistan in an attempt to conquer Afghanistan so as to cover its western flank in its confrontation with India to the east. China supported its ally because of its own strategic rivalry with India. As the U.S. has tried to exert more pressure on Islamabad to take action against Taliban sanctuaries on its soil, Beijing has stepped up its diplomatic support for Pakistan, along with investment funds and arms.
President Barack Obama warned Islamabad that it would he held accountable for security along the Pakistan-Afghan border on February 10. The next day, Pakistan Foreign Minister Shah Mahmood Qureshi reaffirmed his country’s "all weather" alliance with China. Last October, newly elected Pakistan President Asif Ali Zardari made as his first foreign trip a pilgrimage to Beijing. Just before he left, he told a press conference, "China is the future of the world. A strong China means a strong Pakistan.”
In a February 23 editorial, The People’s Daily addressed U.S. strategy in Afghanistan, with a focus on improving Pakistan’s position against India. “It is clear that without Pakistan's cooperation, the US cannot win the war on terror. Therefore, to safeguard its own interests in the fight against terrorism in South Asia, the US must ensure a stable domestic and international environment for Pakistan and ease the tension between Pakistan and India.” This means supporting Pakistan’s position on Kashmir, the Indian province against which Pakistan-based terrorists have operated for decades. India-Pakistan tensions have been high since the November 26 terrorist attacks in Mumbai which killed 179 people.
Afghanistan's foreign minister Rangin Dadfar Spanta said on January 21 that India and Afghanistan were both victims of terrorism. “Afghanistan believes there are some entities in our region that are using terrorism as a tool for foreign policy. We have to end this. We share your pain, the pain of the Indian people because Afghanistan is the victim of same terror with same sources," Spanta said after a meeting with Indian Foreign Minister Pranab Mukherjee in Kabul.
China, of course, does not want the U.S. to take this view of the situation, as it would further what Beijing fears most; closer U.S.-Indian ties against a common threat from the Pakistani-Chinese alignment. The Chinese line is that Washington must support Pakistan against India in order to win Islamabad’s cooperation against the Taliban. This would isolate India, a primary goal of Chinese strategy.
The editorial declared, “the US must make sure that Russia is appeased. The Central Asia region, where Afghanistan lies, used to be Russia's backyard. Following the September 11 terrorist attacks, the US raised its anti-terrorism war banner to move deep into this region and revoked the color revolution in Kyrgyzstan. To Russia, all this feels just like a thorn in the flesh.” The editorial noted that Kyrgyzstan has expelled the U.S. from its Manas air base.
So, again, why would the Obama administration want China to become more involved in Afghanistan? Larry Wortzel, Vice-Chairman of the U.S.-China Economic and Security Review Commission, a bipartisan panel of experts created by Congress, asked Sedney this question at a hearing on March 4. Sedney’s response was that the U.S-NATO mission in Afghanistan is short on resources, and the Chinese could help by providing economic assistance and expanded trade. The Chinese model of trade would not help the Afghans, and any economic assistance would be used to buy influence with government and tribal elites that would undermine American objectives. Inviting China into Afghanistan is an act of desperation that has not been thought through.
The day after the Afghanistan editorial (and two days after Secretary Clinton left China), The People’s Daily ran another opinion piece entitled,” The U.S. Hegemony ends, the era of global multipolarity enters.” It started by reveling in the economic crisis that has swept America and “signals a swift reduction of U.S. strength as a unipolar power.” Its conclusion was stark. “Does the decline of U.S. geopolitical hegemony make multilateral global governance more likely? Perhaps it is still too early to rush any conclusion, but at least one thing is certain: the U.S. strength is declining at a speed so fantastic that it is far beyond anticipation. The U.S. is no longer 'King of the hill,' as a new phase of multipolar world power structure will come into being in 2009, and the international order will be correspondingly reshuffled.”
The opening hands played by the Obama administration with China would indicate that Washington agrees with Beijing’s assessment.
William Hawkins is a consultant on international economics and national security issues.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: China
on: March 09, 2009, 12:33:18 PM
Clinton Urges Continued Investment in U.S.
By Glenn Kessler
Washington Post Staff Writer
Monday, February 23, 2009; A12
BEIJING, Feb. 22 -- Secretary of State Hillary Rodham Clinton on Sunday urged China to keep investing its substantial foreign-exchange reserves in U.S. Treasury securities, arguing that "we are truly going to rise or fall together."
China is the biggest foreign holder of U.S. debt, which helped finance the spending binge the United States went on before the current economic crisis. Some experts have expressed concern that China's substantial holding of U.S. debt gives it increased leverage in dealings with Washington because any halt in Chinese purchases would make it more difficult to finance the government bailout and stimulus packages.
Clinton, in unusually direct comments during an interview with China's Dragon TV before returning to Washington, said that reality made it an imperative for China to keep purchasing U.S. Treasury bonds, because otherwise the U.S. economy would not recover and China would suffer as well.
"Our economies are so intertwined," she said. "The Chinese know that in order to start exporting again to its biggest market . . . the United States has to take some drastic measures with the stimulus package. We have to incur more debt."
"The Chinese are recognizing our interconnection," Clinton added. "We are truly going to rise or fall together. By continuing to support American Treasury instruments, the Chinese are recognizing" that interconnection.
At a joint news conference with Clinton on Saturday, Foreign Minister Yang Jiechi sidestepped a question about whether China was looking for alternative investments for its foreign exchange reserves. He said China looks for safety, good value and liquidity for its investments.
Treasury bonds are "a good investment [and] a safe investment," Clinton told the interviewer Sunday.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / The PLAN probes Barry for signs of a spine
on: March 09, 2009, 12:05:59 PM
PENTAGON: CHINESE SHIPS HARASSING U.S. VESSELS
By CLEMENTE LISI
March 9, 2009 --
WASHINGTON - Five Chinese vessels "shadowed and aggressively maneuvered'' towards a US Navy ship in the South China Sea -- at one point closing to within 25 feet of the boat, the Pentagon said today.
The US ship was operated by a civilian crew under contract with the Defense Department.
The Chinese vessels "shadowed and aggressively maneuvered in dangerously close proximity" to the USS Impeccable, which was conducting routine operations Sunday in international waters, the Defense Department said.
The Defense Department identified the Chinese vessels as a Navy intelligence ship, a bureau of maritime fisheries patrol vessel, a state oceanographic administration boat and two other small patrol vessels.
Two Chinese vessels surrounded the Impeccable, while two closed to within 50 feet waving Chinese flags and telling the US Navy ship to leave at once. The Navy ship responded by spraying one of the vessels with its fire hoses, but the Chinese ship responded by closing in further to within 25 feet.
US officials said the Impeccable informed the Chinese ships by radio that it was leaving the area and requested a safe path to navigate. That's when two of the Chinese vessels stopped directly in front of the American ship and dropped pieces of wood in its path, according to the Defense Department.
The US ship was eventually allowed to leave.
"We will be certainly letting the Chinese officials know of our displeasure with respect to this careless and reckless, unprofessional ... maneuver," said Pentagon spokesman Bryan Whitman.
U.S. officials said a protest was to be delivered to Beijing's military attache at a Pentagon meeting today.
"The unprofessional maneuvers by Chinese vessels violated the requirement under international law to operate with due regard for the rights and safety of other lawful users of the ocean," said Marine Maj. Stewart Upton, a Pentagon spokesman.
The incident came just a week after China and the U.S. resumed military-to-military consultations following a five-month suspension over American arms sales to Taiwan.
It also comes as Chinese Foreign Minister Yang Jiechi is due in Washington this week to meet with U.S. officials.
And it brings to mind the first foreign policy crisis that former President George Bush suffered with Beijing shortly after he took office - China's forced landing of a spy plane and seizure of the crew in April of 2001.
The Pentagon said the incident came after several other incidents involving the Impeccable and another U.S. vessel Wednesday, Thursday and Saturday.
It described those as the following:
- On Wednesday, a Chinese Bureau of Fisheries Patrol vessel used a high-intensity spotlight to illuminate the entire length of the ocean surveillance ship USNS Victorious several times as it was operating in the Yellow Sea, about 125 nautical miles (231 kilometers) from China's coast, the Pentagon said, adding that the Chinese ship Victorious' bow at a range of about 1400 yards (1,280 meters) in darkness without notice or warning. The next day, a Chinese Y-12 maritime surveillance aircraft conducted 12 fly-bys of Victorious at an altitude of about 400 feet and a range of 500 yards. (457 meters)
- On Thursday, a Chinese frigate approached USNS Impeccable without warning and crossed its bow at a range of approximately 100 yards (91 meters), the Pentagon said. This was followed less than two hours later by a Chinese Y-12 aircraft conducting 11 fly-bys of Impeccable at an altitude of 600 feet (183 meters) and a range from 100-300 feet. The frigate then crossed Impeccable's bow yet again, this time at a range of approximately 400-500 yards (366 meters-457 meters) without rendering courtesy or notice of her intentions.
- On Saturday, a Chinese intelligence collection ship challenged USNS Impeccable over bridge-to-bridge radio, calling her operations illegal and directing Impeccable to leave the area or "suffer the consequences."
With Post wire services
Politics, Religion, Science, Culture and Humanities / Politics & Religion / What will Barry do?
on: March 08, 2009, 08:28:46 PM
N. Korea warns intercepting 'satellite' will prompt counterstrike+
Mar 8 05:45 PM US/Eastern
PYONGYANG/BEIJING, March 9 (AP) - (Kyodo)—North Korea warned Monday that any move to intercept what it calls a satellite launch and what other countries suspect may be a missile test-firing would result in a counterstrike against the countries trying to stop it.
"We will retaliate (over) any act of intercepting our satellite for peaceful purposes with prompt counterstrikes by the most powerful military means," the official Korean Central News Agency quoted a spokesman of the General Staff of the Korean People's Army as saying.
If countries such as the United States, Japan or South Korea try to intercept the launch, the North Korean military will carry out "a just retaliatory strike operation not only against all the interceptor means involved but against the strongholds" of the countries, it said.
"Shooting our satellite for peaceful purposes will precisely mean a war," it added.
North Korea earlier announced it is preparing to put a communications satellite into space, but outside observers suspect it may in fact be a test-firing of a long-range ballistic missile.
The United States, Japan and South Korea have said that even if Pyongyang calls the launch a missile test, it would violate existing U.N. Security Council resolutions.
The same North Korean statement said the country's military will cut off communications with its South Korean counterparts during the U.S.- South Korean exercises for the duration of the exercises beginning Monday.
A separate, more rare statement by the KPA's Supreme Command was quoted by the KCNA as saying that its soldiers are under orders to be "fully combat-ready" during U.S.-South Korean military exercises beginning Monday.
The North's armed forces have been ordered to "deal merciless retaliatory blows" should there be any intrusion "into the sky and land and seas of the DPRK even an inch."
DPRK stands for Democratic People's Republic of Korea, North Korea's official name.
North Korea has demanded a stop to this month's U.S.-South Korean exercises, and said earlier it cannot guarantee the security of South Korean civilian airplanes flying through its territorial airspace while they are under way.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Gee, being president is HARD
on: March 08, 2009, 08:18:19 PM
Sunday, March 08, 2009
From Jim Geraghty at NRO's Campaign Spot. Every new administration--and president--goes through an adjustment process, but this is ridiculous. Mr. Geraghty notes that President Obama is "overwhelmed" by the demands of his new office, as reported by the U.K. Telegraph:
Sources close to the White House say Mr Obama and his staff have been "overwhelmed" by the economic meltdown and have voiced concerns that the new president is not getting enough rest.
British officials, meanwhile, admit that the White House and US State Department staff were utterly bemused by complaints that the Prime Minister should have been granted full-blown press conference and a formal dinner, as has been customary. They concede that Obama aides seemed unfamiliar with the expectations that surround a major visit by a British prime minister.
But Washington figures with access to Mr Obama's inner circle explained the slight by saying that those high up in the administration have had little time to deal with international matters, let alone the diplomatic niceties of the special relationship.
Allies of Mr Obama say his weary appearance in the Oval Office with Mr Brown illustrates the strain he is now under, and the president's surprise at the sheer volume of business that crosses his desk.
Equally disconcerting, the Telegraph goes on to say that the commander-in-chief has failed to "even fake an interest in foreign policy." That assessment came from a Washington "insider" with close ties to the administration.
This account is troubling, on a couple of levels. First, in regard to Obama's meeting with Gordon Brown, there is no excuse for the diplomatic faux pas. Both the White House and the State Department have permanent, professional protocol staffs who work these events on a daily basis. If the Obama team was unsure of how to "handle" a meeting with a British Prime Minister, all they had to do was ask.
Apparently, no one did, since Mr. Brown was not afforded the press conference or formal dinner that normally accompany a U.S.-British summit. Additionally, protocol experts could have prevented the embarrassment over those cheesy DVDs given by Mr. Obama to the British leader.
More disturbing is the notion that Mr. Obama is exhausted by his new job--only two months after taking the oath of office. True, the president entered the Oval Office during trying times, but he is not the only chief executive to face such circumstances. FDR inherited the worst economy in U.S. history; Ronald Reagan faced a severe economic downturn and an expansionist Soviet Union; George W. Bush confronted the twin challenges of 9-11 and war only nine months into his administration.
While each man used different approaches in facing their respective crises, all had something in common. To our knowledge, none complained about the burdens of office so early in their tenure. Each man understood that such comments would do nothing to resolve the challenges they faced, or enhance their reputation as a leader.
To be fair, none of these complaints have come directly from President Obama. But the Telegraph's sources are well-placed, lending credence to their account. So, it's not hard to imagine a new president and administration discovering that governance is far harder than campaigning.
It also seems clear that Mr. Obama and his advisers are focused on the economy, at the expense of everything else. But we also recall a famous maxim from President George H.W. Bush, who observed that "what you don't know about domestic policy can prevent your re-election; what you don't know about foreign policy can get a lot of people killed."
As President Obama is about to discover, his sabbatical from international issues will soon come to an abrupt end, with potentially disastrous consequences. His recent decisions on Iraq and Afghanistan were comparatively easy, following courses already established by the Bush Administration.
Now comes the hard part. North Korea is about to launch a long-range ballistic missile over South Korean and/or Japanese territory. Will he order U.S. forces to shoot it down, or allow the test to proceed and (possibly) jeopardize relations with our most important regional allies?
Mr. Obama also faces tough choices on Iran. Recent assessments indicate that Iran has the material and the technical know-how to build an atomic bomb within the next two years. Does he stick with the diplomatic track--despite years of failure--consider U.S. military options, or give Israel a green light to strike Iran's nuclear facilities?
But the list of potential crises doesn't end there. Is the administration prepared for a possible energy crises, in response to the Iranian nuclear issue, or as a separate issue? With oil still trading below $50 a barrel, countries like Venezuela, Iran and Russia would welcome a run-up in prices, generating billions more for their economies. Iran in particular could "manufacture" a crisis, leading to months of higher oil prices, at a time when our economy can least afford it.
If Mr. Obama is already overwhelmed by the requirements of his office, just wait a few months. His learning curve is just beginning.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Why Israel can't negotiate peace
on: March 08, 2009, 04:08:48 PM
March 6, 2009
Egyptian cleric: The Jews "are enemies not because they occupied Palestine. They would have been enemies even if they did not occupy a thing."
They keep telling us that it isn't about "stolen land," and that land concessions and even the creation of a Palestinian state will not end the conflict. And we keep refusing to believe it.
"Egyptian Cleric Muhammad Hussein Ya’qoub: The Jews Are the Enemies of Muslims Regardless of the Occupation of Palestine," from MEMRI TV, January 17 (just posted), with thanks to Sr. Soph:
Following are excerpts from a speech delivered by Egyptian cleric Muhammad Hussein Ya’qoub, which aired on Al-Rahma TV on January 17, 2009.
Muhammad Hussein Ya’qoub: If the Jews left Palestine to us, would we start loving them? Of course not. We will never love them. Absolutely not. The Jews are infidels – not because I say so, and not because they are killing Muslims, but because Allah said: “The Jews say that Uzair is the son of Allah, and the Christians say that Christ is the son of Allah. These are the words from their mouths. They imitate the sayings of the disbelievers before. May Allah fight them. How deluded they are.” It is Allah who said that they are infidels.
That's Qur'an 9:30.
Your belief regarding the Jews should be, first, that they are infidels, and second, that they are enemies. They are enemies not because they occupied Palestine. They would have been enemies even if they did not occupy a thing. Allah said: “You shall find the strongest men in enmity to the disbelievers [sic] to be the Jews and the polytheists.”
Third, you must believe that the Jews will never stop fighting and killing us. They [fight] not for the sake of land and security, as they claim, but for the sake of their religion: “And they will not cease fighting you until they turn you back you’re your religion, if they can.”
This is it. We must believe that our fighting with the Jews is eternal, and it will not end until the final battle – and this is the fourth point. You must believe that we will fight, defeat, and annihilate them, until not a single Jew remains on the face of the Earth.
It is not me who says so. The Prophet said: “Judgment Day will not come until you fight the Jews and kill them. The Jews will hide behind stones and trees, and the stones and tree will call: Oh Muslim, oh servant of Allah, there is a Jew behind me, come and kill him – except for the Gharqad tree, which is the tree of the Jews.” I have heard that they are planting many of these trees now. [...]
That Hadith can be found at Sahih Muslim 6985.
As for you Jews – the curse of Allah upon you. The curse of Allah upon you, whose ancestors were apes and pigs.
That's Qur'an 2:62-65; 5:59-60; and 7:166.
You Jews have sown hatred in our hearts, and we have bequeathed it to our children and grandchildren. You will not survive as long as a single one of us remains.
Oh Jews, may the curse of Allah be upon you. Oh Jews... Oh Allah, bring Your wrath, punishment, and torment down upon them. Allah, we pray that you transform them again, and make the Muslims rejoice again in seeing them as apes and pigs. You pigs of the earth! You pigs of the earth! You kill the Muslims with that cold pig [blood] of yours.
And now the learned analysts will turn to one another and repeat once again that the Israeli/Palestinian conflict has nothing to do with theology, nothing to do with Islam.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Strangely Silent
on: March 08, 2009, 03:48:53 PM
I have certainly been one of the chief defenders of President Obama's relationship to Israel here so it it would be inconsistent not to criticize him when there is cause.
I am deeply disturbed by recent comments from the Hill especially some of Hillary Clinton's comments(clearly a member of the Obama administration so he would bear the blame as well) Taking to Iran is useless.
I am not a fan of giving Hamas money and I fully support Shelley Berkley wanting to put conditions on the money
**How about NO MONEY? Would you give money to fund a local KKK chapter, hoping it would moderate their hatred?**
However addressing your complaints about President Obama giving the Palestinians money. Do you really think Senator McCain would have watched the Palestinians starve to death on the front page on the NYT?
**I gurantee that the "Palestinians" would not starve if we didn't so much as one cent.**
It is a politically untenable situation. The fact that it would be better if we didn't hear about Palestinians is a different story. No one deserves to starve to death but I would put those who didn't provide so much succor to mass murder higher on the list to help. Gaza is a million welfare victims who do you think has been paying for them all along. I notice you specifically didn't mention Israeli aid is being doubled. Do you really expect Obama to be to the right of Aipac and JPOST on Aid?
**I expect Obama to look out for our (America's) best interests. Funding HAMAS isn't part of that.**
When the conversation is intelligent, respectful, and about ideas I actually really enjoy arguing. I would have picked another site if I was always looking for agreement. I think arguing about ideas gives them a strength that agreeing about ideas does not. It does get exhausting though. Thank you all for many intelligent conversations.
However, Lately for a variety of reasons that I am not interested in discussing further every time I visit this forum I have a negative response. Every time I go to post all I seem capable of writing is snarky comments or a harangue. I deleted these kind of comments before they were posted. I'm sure you all could handle my negatively but that is not the person I want to be. Normally when I get upset I calm down eventually. However it has been over a month and I haven't calmed down. If and when I feel capable of posting like a reasonable human being I will return. I will be taking a vacation until then. I have a lot of reading and other projects I want to catch up on anyway. This forum needs to enhance and not detract from the rest of my life. As Long as it is still being read I will continue to post in in The Power of the Word Thread.
I do understand that I started lot of these fights and I didn't mean to start fights I couldn't handle. I apologize for that and for any pain any my comment caused to anyone. I am not looking to stir up trouble right now. I am NOT fishing for compliments or looking to be persuaded. Usually reasoning with a crazy person doesn't work anyway. I had originally planned on just doing a slow fade out but I am fan of closure. My Mother refers to this place as the forum I can't leave so....
**I look forward to your return when you are ready.**
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Political Economics
on: March 08, 2009, 10:28:05 AM
- Pajamas Media - http://pajamasmedia.com
Obama Just Doesn’t Get It
Posted By Jennifer Rubin On March 8, 2009 @ 12:03 am In . Feature 01, . Positioning, Politics | 24 Comments
George W. Bush, his critics said, was isolated and unaware of how badly things were going in Iraq. He was caught up in a messianic vision to bring democracy to the Middle East. Meanwhile, he stubbornly clung to grandiose domestic policy proposals (e.g., social security reform and immigration reform) when the timing was simply not right. Some of that has been disproved by subsequent events (e.g., we did bring democracy to Iraq) or revelations about his own intimate involvement in reworking a failing Iraq strategy. But the image remained of an isolated and out-of-touch president.
As queasy as it might make us feel, we might consider that we have gone from the frying pan into the fire. Obama does not perceive things are substantially worse or that his “strategy” is failing. He also seems to have the timing terribly off as he discusses an onslaught of taxes and regulation while the economy is staggering. And to make matters worse we have no General Petraeus to help guide us back from the brink of ruin. We have instead Tim Geithner.
In a  brilliant posting, small business owner Jim Prevor makes clear that the president is frightfully oblivious to the real world impact of the stock market crash on the lives of ordinary Americans (and hence on our prospects for recovery). Prevor explains:
Every stock market investor quickly learns that the math of markets is forbidding. After all, if stock prices go down by 50 percent, they have to rally by 100 percent to get one back to even.
Yet this doesn’t begin to explain the problem. In political polling, all’s well that ends well. But this is most decidedly not true in the stock market.
If a family needs $25,000 to pay tuition and it sells stocks to raise the money, that money is not available to benefit from any future upswing in market values. So even if Obama orchestrates a miraculous rebound, countless millions of people will have been permanently hurt.
And for individuals and businesses who tried to use prudent margin, Obama seems oblivious to people sitting at their desks desperately trying to navigate not only margin calls but announcements that their brokerage firm has decided the maintenance requirement on certain stocks has been raised and, suddenly, people have to sell anything of quality because they need to raise cash. They get stuck with illiquid portfolios and the selling pressure on anything of quality is immense.
These people and businesses are wiped out, whatever the long term effect of the President’s policies.
And yet the president flicks away the real world news, while his supporters point to poll numbers. That’s right– we have 8.1% unemployment and a stock market crash; they take refuge in a popularity poll more than three and half years before the president would again face the voters. (To its credit the Bush team never boasted about polls numbers or showed much concern when their fortunes changed.) And in their spare time they devise a juvenille plot to attack a radio talk show host.
Rather than ruminating on the worsening economy, Obama is cheered by polls and fixated on redesigning America. The cratering economy doesn’t give him pause. Instead it encourages him to speed up before the voters catch up with him.
And he seems intent on running “victory laps” over the stimulus bill passed weeks ago. Surely  campaign-style events touting his handiwork don’t do much to improve the economic outlook going forward. And his cheesy  recovery logo only reinforces the sense that he is obsessed with garnering credit, keeping his poll numbers high and reinforcing awareness of government’s growing presence in citizens’ lives. None of this has much to do with improving the climate for job development, economic growth and private sector confidence.
Defenders of the president dismiss the notion that Obama’s policies and rhetoric are in any way responsible for our current plight. It happened on Bush’s watch! Of course it did. But they misstate their opponents’ criticism — another straw man in a growing army of them. The question is not whether Obama caused the recession, but whether he is making it worse. Even the  AP spots the fallacy of the Obama administration’s defense: “Although the administration likes to say it ‘inherited’ the recession and trillion-dollar deficits, the economic wreckage has worsened on Obama’s still-young watch.” And it is simply folly to deny that the devastation of wealth in the stock market has made things worse and further unnerved Americans. The stock market crash is the greatest anti-stimulus development of his presidency. Obviously, consumers and homeowners feel even less financially secure than they did when the Dow was 3000 points higher.
 Donald Luskin writes:
What will our world look like when President Obama “reforms” health care by nationalizing it given that it represents about one sixth of U.S. economic activity (and the part that’s still working)? What will happen to the cost and availability of electricity when he puts in place a “cap-and-trade” tax on carbon emissions? What will happen to Wall Street when taxes are raised on hedge fund and private-equity managers? What will happen to all of us when all our taxes go up and our deductions go down?
I have a pretty decent idea that none of that will lead to anything good at least not economically. You may disagree. But can’t we at least agree that President Obama is stirring the pot by ramming all these things through now, at a time when he ought to be calming things down so we can all catch our breath and the economy can get back on its feet?
Perhaps if the Treasury Department was fully staffed or if Paul Volker was not apparently banished to an undisclosed location, the president might have a better grip on why his anti-business, anti-wealth-creating policies and rhetoric have sent the markets skidding. Maybe if the national press were less invested in his New Deal II vision, he would confront daily criticisms and aggressive questioning about his schemes. And if he spent more time talking to agitated wealth creators, investors, retirees and middle class parents and less time at photo-ops and campaign-style rallies with handpicked fans, he might internalize what it means to lose half or more of your retirement or college fund.
But on he strides, into the Brave New World of a government-directed economy. (Incidentally, if Tim Geithner is not the best advertisement for limited government I don’t know what is.) And the scariest part of the first six weeks of this administration? The realization that, contrary to his defensive remark in his joint address to Congress, he really doesn’t “get it.”
Article printed from Pajamas Media: http://pajamasmedia.com
URL to article: http://pajamasmedia.com/blog/obama-just-doesnt-get-it/
URLs in this post:
 brilliant posting: http://www.weeklystandard.com/weblogs/TWSFP/2009/03/when_it_comes_to_real_life_exp.asp
 campaign-style events: http://www.commentarymagazine.com/blogs/index.php/rubin/57672
 recovery logo: http://blogs.wsj.com/economics/2009/03/04/stimulus-logo-branding-the-us-recovery/
 AP: http://news.yahoo.com/s/ap/20090307/ap_on_an/the_obama_economy_analysis_1
 Donald Luskin: http://www.smartmoney.com/Investing/Economy/Even-Worse-Than-the-Great-Depression
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: North Korea
on: March 08, 2009, 10:10:44 AM
Friday, March 06, 2009
The Airliner Threat
It its latest attempt at sabre-rattling, North Korea has threatened to shoot down a South Korean airliner during next week's exercises between ROK military forces and their American counterparts.
Reuters has the warning, issued by the official Korean Central News Agency:
"Security cannot be guaranteed for South Korean civil airplanes flying through the territorial air of our side and its vicinity ... above the East Sea of Korea (Sea of Japan) in particular, while the military exercises are under way," the North's KCNA news agency quoted a statement from a government official as saying.
In response, South Korean airlines have announced plans to re-route flights approaching Seoul from the east, placing them farther away from North Korean territory. Singapore Airlines, which also operates a number of flights into and out of Seoul, has adopted a similar policy. Other carriers, including Japan Airlines, All Nippon Airways and Air China, said they have no plans to alter their flight routes.
There was no word from U.S. carriers that service South Korean destinations, including Northwest Airlines and United.
Pyongyang's warning is almost certainly a prelude to the expected launch of a Tapeodong-2 long-range missile, now being prepared at a test site on North Korea's east coast. DPRK officials claim the rocket will be used to put a satellite into orbit, but western analysts dispute that statement. There were no signs of a satellite deployment during previous TD-2 launches in 1998 and 2006. Intelligence officials in the U.S., Japan and South Korea believe the launch is nothing more than a test of the extended-range missile, capable of hitting U.S. territory throughout the Pacific.
North Korea is expected to announce a "closure area" for air and naval traffic in preparation for the test. The restricted area may extended into commercial air corridors over the Sea of Japan --the same routes used by airliners flying into Seoul from the east. However, the launch of a single missile, from a location on the North Korean coast, would pose a minimal threat to commercial air traffic.
But the warning statement--and anticipated closure area--will achieve an important goal: minimizing air traffic over the Sea of Japan during the upcoming missile test. That will make it for North Korean air defenses to keep tabs on U.S. platforms expected to monitor the launch, namely the RC-135S "Cobra Ball," and the RC-135V/W "Rivet Joint."
Cobra Ball is a dedicated Measures and Signatures Intelligence (MASINT) aircraft, configured to track ballistic missile flights at long range. Normally based at Offut AFB, Nebraska, at least one RC-135S will be deployed to Kadena AB, Japan in preparation for the North Korean test. Rivet Joint is a dedicated SIGINT platform, used to monitor enemy communications and threat emitters, providing additional threat warning to Cobra Ball and other allied assets.
Indeed, the greatest risk to our reconnaissance platforms--and commercial airliners--comes from North Korean fighters and long-range surface-to-air missiles (SAMs), not the TD-2. The DPRK maintains a number of older fighters, mostly MiG-21s and MiG-19s, on alert at bases on it eastern coast. While both have limited ranges, they could (potentially) intercept an RC-135 operating within 150 NM of the DPRK coastline, or a commercial jet approaching ROK airspace.
A second threat comes from the aging SA-5 "Gammon" SAM system, purchased from Russia more than 20 years ago. North Korea has two SA-5 complexes, located an Ongo-dak and Tokchae-san. Together, they provide overlapping coverage of the eastern coast, and airspace south of the DMZ. With a range of at least 150 NM, the SA-5 is optimized for engagements against large, non-maneuvering targets like reconnaissance aircraft and commercial airliners.
In response, Washington and Seoul should make it very clear that any provocative move by Pyongyang will result in a strong military response. The U.S. and South Korea have a variety of assets that could target the SA-5 sites and airfields housing MiG-21s and MiG-19s. If North Korea sends its fighters on an intercept mission, they should be shot down. If one of the SA-5 complexes "paints" a recce flight or an airliner, the site will be hit with an ATACMS, anti-radiation missiles, cruise missiles or a combination of those weapons.
It's no accident that North Korea has grown increasingly bold in its provocations toward the U.S. and our allies in the Far East. Sensing weakness and indecision in the Obama Administration, Kim Jong-il is quite willing to test the limits of our patience--and response options.
Less than two months into Mr. Obama's term, Pyongyang has announced plans to launch another TD-2 (on a flight path that may carry it over Japan); vowed military against South Korea, and threatened to disrupt commercial air service along busy east Asia corridors. The U.S. response? Nothing more than mild diplomatic warnings. No wonder Mr. Kim is feeling his oats.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Gee, being president is HARD
on: March 07, 2009, 06:20:19 PM
Great news: Obama fumbled Brown visit because he’s in over his head
posted at 4:19 pm on March 7, 2009 by Ed Morrissey
After insulting Gordon Brown during the British prime minister’s visit this week by ignoring protocol and cheaping out on the traditional gift exchange, the UK media has erupted in outrage. The Obama White House has now started to recognize the firestorm the new President created with our closest ally, and wants to assure the Brits that he meant no disrespect. Instead, Obama apparently wants to assure them that he’s simply in over his head and floundering (via Radio Equalizer):
Sources close to the White House say Mr Obama and his staff have been “overwhelmed” by the economic meltdown and have voiced concerns that the new president is not getting enough rest.
British officials, meanwhile, admit that the White House and US State Department staff were utterly bemused by complaints that the Prime Minister should have been granted full-blown press conference and a formal dinner, as has been customary. They concede that Obama aides seemed unfamiliar with the expectations that surround a major visit by a British prime minister. …
Allies of Mr Obama say his weary appearance in the Oval Office with Mr Brown illustrates the strain he is now under, and the president’s surprise at the sheer volume of business that crosses his desk.
A well-connected Washington figure, who is close to members of Mr Obama’s inner circle, expressed concern that Mr Obama had failed so far to “even fake an interest in foreign policy”. …
The American source said: “Obama is overwhelmed. There is a zero sum tension between his ability to attend to the economic issues and his ability to be a proactive sculptor of the national security agenda.
“That was the gamble these guys made at the front end of this presidency and I think they’re finding it a hard thing to do everything.”
I’m not sure which is worse. At least if he meant to snub Brown, it would suggest a certain competence at this brand of diplomacy. Instead, we’re told that the Obama White House and their staff are just a bunch of incompetents who got in over their heads.
Which is, of course, the point we made continuously over the last two years.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Political Economics
on: March 07, 2009, 12:27:16 PM
- Works and Days - http://pajamasmedia.com/victordavishanson
Posted By Victor Davis Hanson On March 6, 2009 @ 12:02 am In Uncategorized | 58 Comments
Why is Wall Street Worried?—Let us count the ways.
1) The proverbial Wall Street capitalists believe that, with new federal income tax rates, the removal of FICA ceilings, increases in capital gains rates, decreases in deductions, and simultaneous tax raises, not only will Obama remove incentives for innovation and productivity, but that he does not seem to care about—or perhaps appreciate—he consequences?
2) On the spending side, investors see too many subsidies and entitlements that may Europeanize the populace and erode incentives, while creating so much debt that in the next decade, should interest rates rise, the federal budget will be consumed with servicing borrowing and entitlement obligations. A redistributive economy in which government ensures an equality of result is Wall Street’s worst nightmare. Debt can only be paid back by floating more foreign debt, issuing more US bonds at home, raising taxes, or printing money—all bad options in the mind of the investor.
3) Too many are beginning to think Obama is, well, a naïf—and hence dangerous. He chest-thumps speeches Geithner cannot deliver. He says we are near the Great Depression—but then, after the stimulus package passes, suddenly hypes future growth rates to suggest that we will be out a recession, soon after all? Add in all the talk of high-tax, Al-Gorist cap-in-trade, wind and solar, socialized medicine in the midst of a financial crisis, and at best Obama comes across as confused and herky-jerky, and at worse, clueless on the economy—as if a Chicago organizer is organizing a multi-trillion-dollar economy. Talking about ‘gyrations’ and confusion about profits and earnings, and offering ad hoc advice about investing do not restore authority.
`4) Given the amount of debt the US is incurring (and the decades needed to pay it off), given the loose talk about the ‘rich’, and given the rumors about nationalization, investors are unsure whether the United States will remain a safe haven for investment, or even offer a climate for profit-making, since it would either be taxed to the point of seizure, or its beneficiaries would be culturally and socially demonized. Ultimately perhaps some will accept that as the price of doing business in a socialist US, but for now it creates doubt. This is not a defense of Wall Street (a year ago Richard Fuld and Robert Rubin were our Zeuses on Olympus who strutted like gods), simply a warning that we are going from excess to stasis, and the cure will be as bad as or worse than the disease.
5) Uncertainty. Who is now our Commerce Secretary? Which cowards is the Attorney General talking about? What did Geithner mean about pernicious oil and gas companies? What is with this Solis, and card check? How hard is it to ensure a Richardson or Daschle is clean? In other words, market watchers see after five weeks chaos, and think there is no sure and steady paradigm in which they can make careful business decisions and anticipate with some surety future risk.
So the perfect storm forms, and millions of individuals come to millions of identical conclusions: “Cut your losses with these guys, and get your cash out before it gets worse” rather than “Wow, what bargains! I gotta get in before the window of profit opportunity closes.”
But is there an alternative?
Do Republicans offer an antithesis? Can they explain the Bush deficits and take responsibility for them, as well as the Republican congressional creepiness from 2002-06 (Craig, Stevens, Cunningham, Foley, etc)? And most importantly, will they offer counterproposals—a stimulus much smaller, mixtures of loan guarantees, tax cuts, and (some) public works alone, coupled with spending caps as soon as GDP growth returns? Can they articulate how the market corrected, say, in 1980-3, without our government going socialist? Can we get a plan not merely to balance the budget, but to pay off the debt? If not, legitimate criticisms of Obama fall on deaf ears without some positive alternative.
The rants of Sec. Geithner about oil and gas companies and global warming were quite unusual. Does he grasp that the transition to his solar and wind nirvana requires some rather tough hombres working tonight on rigs in the Gulf, and some brave engineers driving a Jeep in a Libya or out in the Kuwaiti desert looking for more oil, or some poor fellow freezing out in the Arctic Circle so that Mr. Geithner can be driven in his government limo to the hearings? Solar panels do not power the President’s chopper—yet. And Hillary flew to the Middle East on fossil fuel engines not via clipper ship.
Meanwhile, note that the campaign flip-flop positions of supporting off-shore drilling, nuclear, shale oil, and coal, are now insidiously back to the original positions of ‘no—maybe’.
The Utopian Ranters
Energy Secretary Chu ranted that we warmed up the planet so Californians must the pay the price by seeing their farms dry up and blow away. Attorney General finger pointed and labeled us “cowards.” So why the attack on oil companies by Geithner—and why these lectures about our supposed racism and environmental crimes? What deep psychological need does it fulfill for a Holder, our first African-American AG, to blast us as cowardly racists, or why does an elite like Geithner think fossil fuels are not the linchpin that our economy still for a bit hinges upon? They all need to go back to work, ensure the debt is paid down, and quiet down the Harvard Yard sermons.
The Worst of Both Worlds
There is much talk about Obama merely returning to the tax rates of the Clinton administration. But that is misleading for two unfortunate reasons: (1) Clinton did not tamper with FICA ceilings and other deductions in addition to the income tax hikes; (2) he had spending limits imposed by the post 1994-Congress, so at least his income tax increases led to a balanced budget. But Obama is not only raising taxes far higher in aggregate than did Clinton with the present trillion-some spending hikes, but ensuring that we will still end up with astronomical deficits. So we get the tax hikes of Clinton—but without the balanced budgets; and we get far higher deficits than under Bush—but sans the tax cuts.
Fear of Government–Part Two.
Last week I wrote of my encounters with municipal garbage trucks spewing garbage, and city bus drivers doing rolling stops into the cross walk, one hand with cigarette, one hand with cell phone—as a reflection of the old Roman worry “Who will police the police?”
In a world of government employees there is no real redress of grievances, but real difficulty of accountability (what government employee fines the government-employed bus driver for violating state law concerning driving while on a cell phone?). My latest example was Thursday afternoon.
As I drove out of the parking lot of the San Jose parking lot, of the six exit pay stations, only one was open. But at the window, a city tractor and a city pick-up were parked and idled blocking the exit. The drivers were both out and talking to the parking attendant about their “lost” ticket. After watching them all nonchalantly talk—joined by the other parking attendant with his booth closed on “break”—I got out and asked the four ‘what’s up’?
You know what followed—abuse, yelling, ‘how dare you question us!’, etc. A number of backed-up drivers like me now got out and were yelling back, and finally the city employees moved through and unblocked the exit while the idle attendant ran back to open a second station to handle the irate idling cars. Total elapsed time? 24 minutes of waiting. Imagine four employees blocking the only way out the San Jose parking lot, while cars line up, their drivers watching the four josh around and apparently laugh at the fee-paying customers.
I had nightmares that this is what the new 40% government GDP USA will look like by 2012—$20 trillion now in aggregate debt to ensure a nation of city-employees lounging around the toll booth, while cars line up and drivers cool their heels. No success, no failure, no stress, no calm—just endless existence.
Article printed from Works and Days: http://pajamasmedia.com/victordavishanson
URL to article: http://pajamasmedia.com/victordavishanson/obamafusion/
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Imagine the outrage if Bush had done this....
on: March 06, 2009, 11:21:05 PM
March 05, 2009
Beware Obama's Bearing Gifts (Part 2)
I fear this may become a continuing series. Which would suck, because I really don't like thinking about the Obamas.
However, the President has now given British Prime Minister Gordon Brown a gift to commemorate his visit to America. You will recall that lat night I wrote about the craptacular response of Michelle "The Klingon with Klass" Obama to the gifts her children received from the Browns.
But before I reveal the President's gift, let's review what he received from PM Brown so that a little perspective can be had:
Mr Brown's gifts included an ornamental desk pen holder made from the oak timbers of Victorian anti-slaver HMS Gannet, once named HMS President.
Mr Obama was so delighted he has already put it in pride of place in the Oval Office on the Resolute desk which was carved from timbers of Gannet's sister ship, HMS Resolute.
Another treasure given to the U.S. President was the framed commission for HMS Resolute, a vessel that came to symbolise Anglo-US peace when it was saved from ice packs by Americans and given to Queen Victoria.
Finally, Mr Brown gave a first edition set of the seven-volume classic biography of Churchill by Sir Martin Gilbert.
Those are classy gifts, and fully uphold the spirit of the US/UK special relationship. They are tasteful and, in the particular case of the pen made from the anti-slaver ship HMS Gannet, imbued with additional symbolic meaning that elevates them to a status in which one would not be surprised to find it on prominent display in the National Archives or in the Obama Presidential Library (opening, January 2013 with any luck).
So how did "Smart Diplomat in Chief" reciprocate? Did he, perhaps, have a pen forged out of the remnants of a M4-Sherman to commemorate the Patton-Montgomery deliverance of North Africa from Nazi control?
No, no, no. You see, that would take thought, and it isn't something you can just pick up on the spur of the moment at the White House Gift Shop. So what did our Boy President Barry give the Brits? What vestige of Americana will Gordon Brown receive on behalf of the British people to commemorate Brown's historic meeting with the American President?
Gordon Brown has been given a collection of 25 classic American films on DVD as his official gift from Barack Obama.
I think I'd ask for the pen back. But that's just me. The Brits, stiff upper lip and all, are much more guarded in their response.
No 10 had tried to keep the present a secret, refusing to answer reporters who asked what President Obama had given to mark the reaffirmation of the special relationship.
However, the Evening Standard discovered the truth through White House insiders.
One reason for the secrecy might be that the gift seems markedly less generous and thoughtful than the presents taken to Washington by the Prime Minister.
You don't say.
Just out of curiosity, I decided to take a guess at some of the movies that might be included in the DVD set, so I could figure out just how benevolent the Obama's were.
Let's see. How about the Wizard of Oz, Gone With the Wind and Casablanca?
You can buy a Wizard of Oz DVD for $2-$8 dollars online.
You can snag a copy of Gone With the Wind for $3.99 online.
And Casablanca (which you know is in there because it translates to "White House" and Obama can get in a plug for himself) will set you back $3.99 as well.
On the other hand, maybe it's just 25 Blaxpoitation films starring Jim Brown and Pam Grier. Who the hell knows?
(1974's "Foxy Brown" sells for $10.98 by the way. It might actually be less embarrassing if the Obamas did give the British PM 25 Blaxploitation films!)
In any event, I suppose that, as opposed to some lousy pen carved from the timbers of an anti-slaver ship, DVD's are fun for the whole family! Brown could always give them to the BBC to supplement their late night lineup perhaps. Think outside the box, people!
I'm gonna miss England when the Muslims take it over. My only solace is that I bet the British are saying the same thing about the United States.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Political Economics
on: March 06, 2009, 05:38:27 PM
March 6, 2009
Banana Republic, U.S.A
By Thomas E. Woods, Jr.
Barack Obama is already making the Clinton and Bush years seem like the good old days.
Close to a trillion dollars are being tossed around in a "stimulus" package that no one in his right mind-and I do not here include the mainstream of the economics profession, which has disgraced itself in this crisis-expects to bring about recovery. Economist Robert Wenzel rightly describes the stimulus as "just the insiders raiding the till while there is still money in it." Trillions of dollars are likewise being thrown at financial institutions that (if we actually believe in the free market) richly deserve to go bankrupt. Nationalization of the banks is being openly discussed-an outcome our rulers assure us they would undertake only as a last resort, deploring every minute of it, and only for our own good.
We are learning what it is like to live in an Orwell novel. Our television screens are filled with people offering choices between idiotic and suicidal option A and idiotic and suicidal option B. We are being told that we must at least partially nationalize our banks, prop up zombie companies, lower interest rates to zero, and pass stimulus packages in order to escape the fate of Japan-which, um, partially nationalized its banks, propped up zombie companies, lowered interest rates to zero, and passed eight stimulus packages. We have a president who tells us we cannot rely on the free market to get us out of this mess because the free market is what got us here, as if the Federal Reserve and its bubble-inducing monetary policy never existed.
F. A. Hayek won the Nobel Prize in 1974 for showing how central bank manipulation of interest rates gives rise to the kind of boom-bust cycle we are experiencing now, and that such phenomena are not caused by the unhampered market. If by some miracle you manage to hear this point of view on television, it will be sandwiched between hours and hours of Keynesian droning.
Of course, the rationale we're being given for the insanity is that these are crisis times, and the usual rules go out the window. That's what Paul Krugman means when he speaks of "depression economics"-a special set of economic principles come into play in times like this that differ radically from those we would abide by under normal conditions. And so we see once again why Keynesian economics swept the board so successfully: it tells the regime just what it wants to hear. It provides intellectual cover for the expansion of government power and the seizure of private property that state officials want to engage in anyway.
"Never allow a crisis to go to waste," said chief of staff and former Freddie Mac board member Rahm Emmanuel. He needn't worry. The Keynesian economists who suddenly dominate public life in America, years after everyone else assumed Keynes and his fallacies were long dead and buried, will weave every apologia under the sun for whatever activity Emmanuel and the president he serves choose to undertake. The all-purpose pretext is ready at hand: why, we've got to do something about this terrible crisis.
Indeed we should do something-but, as usual, it's exactly the opposite of what the federal government intends to do. We should cut the government's budget as drastically as possible, thereby releasing resources for use by the productive sector. (That worked pretty well in stopping the terrible depression of 1920-21.) We should stop the Fed from interfering in the recovery process. We should let the private economy sort out which activities undertaken during the artificial Greenspan boom are genuine wealth-generating activities and which are wealth-destroying bubble activities. The latter should be promptly liquidated so their resources can be better employed by the former.
Meanwhile, we still have some conservatives, frozen in the 1980s, calling for reductions in marginal income tax rates, among other feckless suggestions. Tax reductions are desirable, to be sure, but the crisis we are facing is a systemic one that is not going to be fixed by marginal changes here and there. We need to start talking big changes. We need to open up questions the regime has long since considered closed. We need to talk about the monetary system, the Fed, entitlements, and much else.
In other words, if the Left can advocate $1 trillion-plus annual deficits as far as the eye can see, why can't supporters of the free market be equally bold in the opposite direction?
Conservatives' rediscovery of government frugality has been a refreshing thing to behold. The important thing now is for conservative intellectuals to be sure they know sound economics. For instance, the problem with the stimulus package isn't the "pork," however evil, stupid, and counterproductive it surely is. The problem is the Keynesian nonsense on which the very idea of "fiscal stimulus" is based. The problem is the mistaken view that "spending" is what the economy needs now, and that all our efforts must be expended on ways to revive consumer spending and borrowing.
The president has unveiled a program to help troubled homeowners make their mortgage payments and stay in their homes. He is going to encounter the same problem Charles Murray identified in the mid-1980s in his book Losing Ground: American Social Policy 1950-1980. There Murray famously argued that poverty persisted in the United States not in spite of anti-poverty programs, but because of them. Before evaluating the empirical evidence, though, Murray first explained why, from a theoretical point of view, we should in fact expect this perhaps counterintuitive result.
Murray challenged his readers to devise a social program that would not cause net harm. He gave the example of a government program aimed at discouraging smoking. I can't reproduce his whole argument here, which is quite lengthy, but his point is that the reward the government offers for people who quit has to be substantial enough to persuade them to go to the trouble of quitting, but not so substantial as to encourage nonsmokers to start smoking. Just as Murray says, this task turns out to be borderline impossible. It is especially difficult when the program in question makes it more desirable to be out of work. Given man's inclination to acquire wealth with the least possible exertion, such programs threaten to drag additional people into a cycle of dependency that mankind's inclination to sloth will only reinforce over time.
For similar reasons, every attempt to solve the problems caused by a housing bubble that the Fed should not have blown up in the first place, such as the proposed measures for mortgage relief, will exacerbate the problems, thereby leading to still more government intervention, in the very pattern Ludwig von Mises identified in his famous essay "Middle-of-the-Road Policy Leads to Socialism." That is the fallacy in the usual statement that "it would cost only $X billion to give every American who needs it" this or that benefit. Once people realize the government is giving out a benefit for free, more and more people will place themselves in the condition that entitles them to the benefit, thereby making the program ever more expensive.
The best outcome I can see is that under Obama the United States will experience the kind of economic stagnation that is now routine in Western Europe, with high unemployment and sluggish (if any) growth, and people standing around pretending not to know what could be causing it. A smaller and smaller core of productive firms and individuals will be expected to support a larger and larger demand for bailouts and other corporate and individual welfare. Who is John Galt, indeed.
The worst outcome, which we cannot dismiss out of hand, is a hyperinflationary destruction of the currency or, barring that, the reduction of America to banana-republic conditions.
Regardless of which of these outcomes actually occurs, the Obama administration will have moved the country farther away from a market economy than it has ever been in peacetime (barring perhaps the early years of the New Deal and its outright cartelization of industry), accelerating trends already at work under the Bush administration. If you want to succeed in the so-called private sector, you had better have some friends in Washington, because that's where credit and capital will be allocated from.
And if you want to hold on to your wealth, assume the dollar is going to collapse. The euro is under terrific strain right now, and so the dollar may continue its artificial rally in the near term, but in light of the accelerating demands of the predatory sector (that is, the government) on the shrinking productive sector, the dollar's bust has to come. The printing press will be the regime's only way out. If this crisis doesn't do it, the looming entitlement disaster will finish off the dollar. How else are $70 trillion in entitlement liabilities going to be paid for? Floating a few more bonds?
Things could get very bad indeed. If we are to have any chance of beating back these unprecedented incursions of the state, supporters of the free market need to know their position cold. I wrote my just-released book Meltdown for this reason: to educate Americans about the causes of the crisis, to be sure, but also to give supporters of the free market the ammunition they need to make their case effectively.
Even that may prove not to be enough. We may have to be consoled with the knowledge that at least we fought with all our strength. And fight we must, as Ludwig von Mises urged: "No one can find a safe way out for himself if society is sweeping toward destruction. Therefore, everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interest of everyone hangs on the result."
Thomas E. Woods, Jr. is senior fellow in American history at the Ludwig von Mises Institute. He is the author of nine books, including two New York Times bestsellers: The Politically Incorrect Guide to American History and the just-released Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Why the Aussies could have predicted Geithner’s incompetence
on: March 06, 2009, 05:24:58 PM
Why the Aussies could have predicted Geithner’s incompetence
posted at 5:12 pm on March 6, 2009 by Ed Morrissey
Remember when the Obama administration and its allies in Congress urged the confirmation of Tim Geithner despite his tax problems? They claimed that Geithner was “uniquely qualified” to lead the nation out of an economic collapse, and that no other candidate could possibly replace Geithner. Former Australian prime minister Paul Keating must have thought the Democrats and American media had discovered a completely different Tim Geithner than the one he knew:
If anyone in the US media had thought to ask a former Australian prime minister for his assessment, they would have heard a different view. And they would not have been so surprised at Geithner’s performance since.
In a speech to a closed gathering at the Lowy Institute in Sydney on Thursday, Paul Keating gave a starkly different account of Geithner’s record in handling the Asian crisis: “Tim Geithner was the Treasury line officer who wrote the IMF [International Monetary Fund] program for Indonesia in 1997-98, which was to apply current account solutions to a capital account crisis.”
In other words, Geithner fundamentally misdiagnosed the problem. And his misdiagnosis led to a dreadfully wrong prescription.
In fact, Geithner bungled the job so badly that Asian nations still refuse to “stick their head in the IMF noose,” as Keating puts it. Despite 7% compound growth over several years afterwards, Indonesia still couldn’t get itself out of the hole Geithner dug for them. Soeharto lost power, and countries like China paid attention. Instead of working more cooperatively, China built up big reserves instead, creating a debt imbalance that helped make the current financial crisis much worse than it might have been.
Geithner’s performance since his confirmation hasn’t surprised Keating at all. The dithering on bank issues has left the US with few realistic options outside of nationalization on some scale. The vacillation and fumbled rollouts of economic policy have left the markets with no confidence at all in his leadership, leading to a flight from capital investment clearly shown in the stock market performance of the last few weeks. Keating understands that lack of confidence from his own experiences with Geithner, but the US has just begun to figure out Geithner’s incompetence.
That sound you hear from down under? Laughter at the gullibility of Congress and the media in buying the argument that a man who couldn’t figure out his own taxes had the only qualifications for handling American economic policy. Our mainstream media never reported on this botch-up until it was far too late to do anything about it.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Big Picture WW3: Who, when, where, why
on: March 06, 2009, 03:42:50 PM
|**Meanwhile, this administration can't even lick Putin's boots competently.**http://www.politico.com/news/stories/0309/19719.html
Clinton gift gaffe: 'Overcharge'
By DAVID S. CLOUD | 3/6/09 3:58 PM EST
GENEVA—Secretary of State Hillary Clinton opened her first extended talks with Russian Foreign Minister Sergei Lavrov by giving him a present meant to symbolize the Obama administration’s vow to “press the reset button” on U.S.-Russia relations.
She handed a palm-sized box wrapped with a bow. Lavrov opened it and pulled out the gift: a red button on a black base with a Russian word peregruzka printed on top.
“We worked hard to get the right Russian word. Do you think we got it?” Clinton asked.
“You got it wrong,” Lavrov said.
Instead of "reset," Lavrov said the word on the box meant “overcharge.”
Clinton and Lavrov laughed.
“We won’t let you do that to us,” she said. Trying to recover, Clinton said the new administration was serious about improving relations with Moscow. “We mean it, and we’re looking forward to it.”
Lavrov said he would put the button on his desk and he and Clinton pushed the button together, before sitting down for their meeting.
A State Department official said the misspelling on the button was being corrected, in time for the post-meeting news conference.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Homeland Security
on: March 06, 2009, 10:55:24 AM
FBI Watching Somali Muslims In Minneapolis
CBS Evening News: 20 From Same Mosque Have Repatriated, One Became A Suicide Bomber; Mosque Officials Deny Radical Agenda
MINNEAPOLIS, March 3, 2009 | by Dean Reynolds
Breeding Terror In Minneapolis
U.S. officials have become concerned over some 20 U.S. citizens who have joined Somalia's Civil War. As Dean Reynolds reports, these Minneapolis residents could bring their skills stateside. | Share/Embed
(CBS) On election night last November, the outcome was wildly celebrated by Somalis living in Minneapolis, 70,000-strong, mostly refugees from their war-torn country. It is the largest Somali community in the United States, reports CBS News correspondent Dean Reynolds.
But the evening was noteworthy for something else, too. That night, the latest in a line of young Somalis who grew up here, departed unannounced for Somalia itself, joining a civil war in a country few had ever seen and causing concern in the United States.
Hussein Samatar's 17-year old nephew left without a word to his family.
"He was an A student," says Samatar. "He has everything to hope for to attend any Ivy League school that he wanted to. Why he would do it is a mystery to us."
Some 20 vanished last year - all American citizens - an exodus the FBI has noticed for a troubling reason.
"A man from Minneapolis became what we believe to be the first U.S. citizen to carry out a terrorist suicide bombing," said agency director Robert Mueller.
The October attack by 27-year-old Shirwa Ahmed killed 30 near Mogadishu, and there is alarm that the skills acquired abroad could be brought back to America.
"He could have done it here," says Omar Jamal, a Somali advocate in Minnesota. "We don't see anything that would have prevented him from doing this right here in the heart of Minneapolis."
This much seems clear:
"It appears that this individual was radicalized in his hometown in Minnesota," Mueller said.
The missing men all came from one local mosque, according to the FBI. But officials at the mosque deny that they play any role in turning young people into radicals, Reynolds reports.
This week they held an open house to answer critics and confront recent harassment.
"We absolutely deny that such things happen in this mosque," says Omar Hurre, executive director at the Abubakar Islamic Center.
But Somalis here are deeply troubled. Who is behind this exodus? Who is paying for it? And who may be the next to go?
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Political Economics
on: March 06, 2009, 10:26:21 AM
Obama's Radicalism Is Killing the Dow
A financial crisis is the worst time to change the foundations of American capitalism.
By MICHAEL J. BOSKIN
It's hard not to see the continued sell-off on Wall Street and the growing fear on Main Street as a product, at least in part, of the realization that our new president's policies are designed to radically re-engineer the market-based U.S. economy, not just mitigate the recession and financial crisis.
The illusion that Barack Obama will lead from the economic center has quickly come to an end. Instead of combining the best policies of past Democratic presidents -- John Kennedy on taxes, Bill Clinton on welfare reform and a balanced budget, for instance -- President Obama is returning to Jimmy Carter's higher taxes and Mr. Clinton's draconian defense drawdown.
Mr. Obama's $3.6 trillion budget blueprint, by his own admission, redefines the role of government in our economy and society. The budget more than doubles the national debt held by the public, adding more to the debt than all previous presidents -- from George Washington to George W. Bush -- combined. It reduces defense spending to a level not sustained since the dangerous days before World War II, while increasing nondefense spending (relative to GDP) to the highest level in U.S. history. And it would raise taxes to historically high levels (again, relative to GDP). And all of this before addressing the impending explosion in Social Security and Medicare costs.
To be fair, specific parts of the president's budget are admirable and deserve support: increased means-testing in agriculture and medical payments; permanent indexing of the alternative minimum tax and other tax reductions; recognizing the need for further financial rescue and likely losses thereon; and bringing spending into the budget that was previously in supplemental appropriations, such as funding for the wars in Iraq and Afghanistan.
The specific problems, however, far outweigh the positives. First are the quite optimistic forecasts, despite the higher taxes and government micromanagement that will harm the economy. The budget projects a much shallower recession and stronger recovery than private forecasters or the nonpartisan Congressional Budget Office are projecting. It implies a vast amount of additional spending and higher taxes, above and beyond even these record levels. For example, it calls for a down payment on universal health care, with the additional "resources" needed "TBD" (to be determined).
Mr. Obama has bravely said he will deal with the projected deficits in Medicare and Social Security. While reform of these programs is vital, the president has shown little interest in reining in the growth of real spending per beneficiary, and he has rejected increasing the retirement age. Instead, he's proposed additional taxes on earnings above the current payroll tax cap of $106,800 -- a bad policy that would raise marginal tax rates still further and barely dent the long-run deficit.
Increasing the top tax rates on earnings to 39.6% and on capital gains and dividends to 20% will reduce incentives for our most productive citizens and small businesses to work, save and invest -- with effective rates higher still because of restrictions on itemized deductions and raising the Social Security cap. As every economics student learns, high marginal rates distort economic decisions, the damage from which rises with the square of the rates (doubling the rates quadruples the harm). The president claims he is only hitting 2% of the population, but many more will at some point be in these brackets.
As for energy policy, the president's cap-and-trade plan for CO2 would ensnare a vast network of covered sources, opening up countless opportunities for political manipulation, bureaucracy, or worse. It would likely exacerbate volatility in energy prices, as permit prices soar in booms and collapse in busts. The European emissions trading system has been a dismal failure. A direct, transparent carbon tax would be far better.
Moreover, the president's energy proposals radically underestimate the time frame for bringing alternatives plausibly to scale. His own Energy Department estimates we will need a lot more oil and gas in the meantime, necessitating $11 trillion in capital investment to avoid permanently higher prices.
The president proposes a large defense drawdown to pay for exploding nondefense outlays -- similar to those of Presidents Carter and Clinton -- which were widely perceived by both Republicans and Democrats as having gone too far, leaving large holes in our military. We paid a high price for those mistakes and should not repeat them.
The president's proposed limitations on the value of itemized deductions for those in the top tax brackets would clobber itemized charitable contributions, half of which are by those at the top. This change effectively increases the cost to the donor by roughly 20% (to just over 72 cents from 60 cents per dollar donated). Estimates of the responsiveness of giving to after-tax prices range from a bit above to a little below proportionate, so reductions in giving will be large and permanent, even after the recession ends and the financial markets rebound.
A similar effect will exacerbate tax flight from states like California and New York, which rely on steeply progressive income taxes collecting a large fraction of revenue from a small fraction of their residents. This attack on decentralization permeates the budget -- e.g., killing the private fee-for-service Medicare option -- and will curtail the experimentation, innovation and competition that provide a road map to greater effectiveness.
The pervasive government subsidies and mandates -- in health, pharmaceuticals, energy and the like -- will do a poor job of picking winners and losers (ask the Japanese or Europeans) and will be difficult to unwind as recipients lobby for continuation and expansion. Expanding the scale and scope of government largess means that more and more of our best entrepreneurs, managers and workers will spend their time and talent chasing handouts subject to bureaucratic diktats, not the marketplace needs and wants of consumers.
Our competitors have lower corporate tax rates and tax only domestic earnings, yet the budget seeks to restrict deferral of taxes on overseas earnings, arguing it drives jobs overseas. But the academic research (most notably by Mihir Desai, C. Fritz Foley and James Hines Jr.) reveals the opposite: American firms' overseas investments strengthen their domestic operations and employee compensation.
New and expanded refundable tax credits would raise the fraction of taxpayers paying no income taxes to almost 50% from 38%. This is potentially the most pernicious feature of the president's budget, because it would cement a permanent voting majority with no stake in controlling the cost of general government.
From the poorly designed stimulus bill and vague new financial rescue plan, to the enormous expansion of government spending, taxes and debt somehow permanently strengthening economic growth, the assumptions underlying the president's economic program seem bereft of rigorous analysis and a careful reading of history.
Unfortunately, our history suggests new government programs, however noble the intent, more often wind up delivering less, more slowly, at far higher cost than projected, with potentially damaging unintended consequences. The most recent case, of course, was the government's meddling in the housing market to bring home ownership to low-income families, which became a prime cause of the current economic and financial disaster.
On the growth effects of a large expansion of government, the European social welfare states present a window on our potential future: standards of living permanently 30% lower than ours. Rounding off perceived rough edges of our economic system may well be called for, but a major, perhaps irreversible, step toward a European-style social welfare state with its concomitant long-run economic stagnation is not.
Mr. Boskin is a professor of economics at Stanford University and a senior fellow at the Hoover Institution. He chaired the Council of Economic Advisers under President George H.W. Bush.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: The Cognitive Dissonance of His Glibness
on: March 05, 2009, 10:12:29 PM
- Pajamas Media - http://pajamasmedia.com
Laughing at the Contradictions of Socialism in America
Posted By Oleg Atbashian On March 5, 2009 @ 12:35 am In . Column2 01, . Positioning, Culture, History, Humor & Fun, Politics, US News | 86 Comments
There was a time in recent American history when certain Soviet jokes didn’t work in translation — not so much because of the language differences, but because of the lack of common sociopolitical context. But that is changing. As President Obama is preparing us for a great leap towards collectivism, I find myself recollecting forgotten political jokes I shared with comrades while living in the old country under Brezhnev, Andropov, and Gorbachev. (I was too young to remember the Khrushchev times, but I still remember the Khrushchev jokes.) I also noticed that the further America “advances” back to the Soviet model, the more translatable the old Soviet jokes become. Not all Soviet advancements have metastasized here yet, but we have four more glorious years to make it happen.
One of my favorite political jokes is this:
The six dialectical contradictions of socialism in the USSR:
There is full employment — yet no one is working.
No one is working — yet the factory quotas are fulfilled.
The factory quotas are fulfilled — yet the stores have nothing to sell.
The stores have nothing to sell — yet people got all the stuff at home.
People got all the stuff at home — yet everyone is complaining.
Everyone is complaining — yet the voting is always unanimous.
It reads like a poem — only instead of the rhythm of syllables and rhyming sounds, it’s the rhythm of logic and rhyming meanings. If I could replicate it, I might start a whole new genre of “contradictory six-liners.” It would be extremely difficult to keep it real and funny at the same time, but I’ll try anyway.
Dialectical contradictions are one of the pillars in Marxist philosophy, which states that contradictions eventually lead to a unity of opposites as the result of a struggle. This gave a convenient “scientific” excuse for the existence of contradictions in a socialist society, where opposites were nice and agreeable — unlike the wild and crazy opposites of capitalism that could never be reconciled. Hence the joke.
Then I moved to America, where wild and crazy opposites of capitalism were supposedly at their worst. Until recently, however, the only contradictions that struck me as irreconcilable were these:
America is capitalist and greedy — yet half of the population is subsidized.
Half of the population is subsidized — yet they think they are victims.
They think they are victims — yet their representatives run the government.
Their representatives run the government — yet the poor keep getting poorer.
The poor keep getting poorer — yet they have things that people in other countries only dream about.
They have things that people in other countries only dream about — yet they want America to be more like those other countries.
Without capitalism there’d be no Hollywood — yet filmmakers hate capitalism.
Filmmakers hate capitalism — yet they sue for unauthorized copying of their movies.
They sue for unauthorized copying — yet on screen they teach us to share.
On screen they teach us to share — yet they keep their millions to themselves.
They keep their millions to themselves — yet they revel in stories of American misery and depravity.
They revel in stories of American misery and depravity — yet they blame the resulting anti-American sentiment on conservatism.
They blame the anti-American sentiment on conservatism — yet conservatism ensures the continuation of a system that makes Hollywood possible.
I never thought I would see socialist contradictions in America, let alone write about them. But somehow all attempts to organize life according to “progressive” principles always result in such contradictions. And in the areas where “progressives” have assumed positions of leadership — education, news media, or the entertainment industry — contradictions become “historically inevitable.”
If one were accidentally to open his eyes and compare the “progressive” narrative with facts on the ground, one might start asking questions. Why, for instance, if the war on terror breeds more terrorists, haven’t there been attacks on the U.S. soil since 2001? Why, if George W. Bush had removed our freedom of speech, was nobody ever arrested for saying anything? And if Obama has returned us our freedoms, why was a man harassed by police in Oklahoma for having an anti-Obama sign in his car? Why would anyone who supports free speech want to silence talk radio? And why is silencing the opposition called the “Fairness Doctrine”?
After the number of “caring,” bleeding-heart politicians in Washington reached a critical mass, it was only a matter of time before the government started ordering banks to help the poor by giving them risky home loans through community organizers. Which resulted in a bigger demand, which resulted in rising prices, which resulted in slimmer chances of repaying the loans, which resulted in more pressure on the banks, which resulted in repackaging of bad loans, which resulted in a collapse of the banks, which resulted in a recession, which resulted in many borrowers losing their jobs, which resulted in no further mortgage payments, which resulted in a financial disaster, which resulted in a worldwide crisis, with billions of poor people overseas — who had never seen a community organizer, nor applied for a bad loan — becoming even poorer than they had been before the “progressives” in the U.S. government decided to help the poor.
As if that were not enough, the same bleeding hearts are now trying to fix this by nationalizing the banks so that they can keep issuing risky loans through community organizers. In other words, to prevent the toast from landing buttered side down, they’re planning to butter the toast on both sides and hope that it will hover in mid-air. Which also seems like a sensible alternative energy initiative.
If that doesn’t fix the problem, there’s always the last resort of a liberal: blame capitalism. It’s always a win-win. Today government regulators may be blaming capitalism for the crisis caused by their dilettantish tampering with the economy, but who do you think they will credit after market forces resuscitate the economy?
Years ago, living in America made me feel as though I had traveled in a time machine from the past. But after the recent “revolutionary” changes have turned reality on its head — which is what “revolution” literally means — I’m getting an uneasy feeling I had come from your future.
As your comrade from the future, I also feel a social obligation to help my less advanced comrades in the American community, and prepare them for the transition to the glorious world of underground literature, half-whispered jokes, and the useful habit of looking over your shoulder. Don’t become a  nation of cowards — but watch who might be listening.
Let’s start with these few.
Liberals believe they’re advancing people’s power — yet they don’t believe people can do anything right without their guidance.
People can’t do anything right — yet the government bureaucracy can do everything.
The government bureaucracy can do everything — yet liberals don’t like it when the government takes control of their lives.
Liberals don’t like it when the government takes control of their lives — yet they vote for programs that increase people’s dependency on the government.
They vote for programs that increase people’s dependency on the government — yet they believe they’re advancing people’s power.
Bush and the media:
The media said Bush was dumb — yet he won over two intelligent Democrats.
He won over two intelligent Democrats — yet the media said his ratings were hopeless.
The media said his ratings were hopeless — yet the 2004 electoral map was red.
The 2004 electoral map was red — yet the media said his policies failed.
The media said his policies failed — yet the economy grew and the war was won.
The economy grew and the war was won — yet the media said we needed “change.”
Liberals have been in charge of education for 50 years — yet education is out of control.
Education is out of control — yet liberal teaching methods prevail.
Liberal teaching methods prevail — yet public schools are failing.
Public schools are failing — yet their funding keeps growing.
Their funding keeps growing — yet public schools are always underfunded.
Public schools are always underfunded — yet private schools yield  better results for less.
Private schools yield better results for less — yet public education is the only way out of the crisis.
Foreign radicals hate America — yet they’re all wearing American blue jeans.
They’re all wearing American blue jeans — yet they disdain American culture.
They disdain American culture — yet they play American music, movies, and video games.
They play American music, movies, and video games — yet they call Americans uncivilized.
They call Americans uncivilized — yet they expect Americans to defend their civilization.
They expect Americans to defend their civilization — yet they think American capitalism is outdated.
They think American capitalism is outdated — yet most of their countries require American handouts.
(* Some Democrat politicians have  similar opinions about their redneck constituents — yet they won’t shut up about how proud they are to have their mandate.)
Liberals and taxes:
Liberals want to help the poor — yet they won’t give money to charities.
They won’t give money to charities — yet they’d like the government to become a gigantic charity.
They’d like the government to become a gigantic charity — yet the money has to be taken from people by force.
The money has to be taken from people by force — yet they call it welfare.
They call it welfare — yet higher taxes make everyone poorer.
Higher taxes make everyone poorer — yet liberals find ways not to pay taxes.
Liberals find ways not to pay taxes — yet they get to be chosen to run the government.
Liberals and the CIA:
The CIA is a reactionary institution — yet its agents always leak information that helps liberals politically.
CIA agents always leak information that helps liberals politically — yet liberals say the CIA is clueless.
Liberals say the CIA is clueless — yet in their movies the CIA is running the world.
In their movies the CIA is running the world — yet they tell us that better intelligence could have prevented the war.
Better intelligence could have prevented the war — yet “enhanced interrogations” of captured terrorists must not be allowed.
Love and marriage:
Sex differences are the result of social conditioning — yet homosexuality is biological.
Homosexuality is biological — yet everybody is encouraged to experiment with it.
Everybody is encouraged to experiment with it — yet venereal diseases are treated at the taxpayers’ expense.
Venereal diseases are treated at the taxpayers’ expense — yet taxpayers have no right to impose standards since there are no moral absolutes.
There are no moral absolutes — yet gay marriage is an absolute must.
Gay marriage is an absolute must — yet family is an antiquated tool of bourgeois oppression.
Article printed from Pajamas Media: http://pajamasmedia.com
URL to article: http://pajamasmedia.com/blog/laughing-at-the-contradictions-of-socialism-in-america/
URLs in this post:
 Image: http://pajamasmedia.com/files/2009/03/time_machine_redsquare.jpg
 nation of cowards: http://online.wsj.com/public/article/SB123514880910734301.html
 better results for less: http://www.cato.org/pub_display.php?pub_id=3231
 similar opinions about their redneck constituents: http://gatewaypundit.blogspot.com/2008/10/now-murtha-calls-voters-in-his-district.html
Politics, Religion, Science, Culture and Humanities / Politics & Religion / No worries, the trainee-president will fix it....
on: March 05, 2009, 10:59:28 AM
The U.S. Financial System Is Effectively Insolvent
Nouriel Roubini 03.05.09, 12:01 AM ET
For those who argue that the rate of growth of economic activity is turning positive--that economies are contracting but at a slower rate than in the fourth quarter of 2008--the latest data don't confirm this relative optimism. In 2008's fourth quarter, gross domestic product fell by about 6% in the U.S., 6% in the euro zone, 8% in Germany, 12% in Japan, 16% in Singapore and 20% in South Korea. So things are even more awful in Europe and Asia than in the U.S.
There is, in fact, a rising risk of a global L-shaped depression that would be even worse than the current, painful U-shaped global recession. Here's why:
First, note that most indicators suggest that the second derivative of economic activity is still sharply negative in Europe and Japan and close to negative in the U.S. and China. Some signals that the second derivative was turning positive for the U.S. and China turned out to be fake starts. For the U.S., the Empire State and Philly Fed indexes of manufacturing are still in free fall; initial claims for unemployment benefits are up to scary levels, suggesting accelerating job losses; and January's sales increase is a fluke--more of a rebound from a very depressed December, after aggressive post-holiday sales, than a sustainable recovery.
For China, the growth of credit is only driven by firms borrowing cheap to invest in higher-returning deposits, not to invest, and steel prices in China have resumed their sharp fall. The more scary data are those for trade flows in Asia, with exports falling by about 40% to 50% in Japan, Taiwan and Korea.
Even correcting for the effect of the Chinese New Year, exports and imports are sharply down in China, with imports falling (-40%) more than exports. This is a scary signal, as Chinese imports are mostly raw materials and intermediate inputs. So while Chinese exports have fallen so far less than in the rest of Asia, they may fall much more sharply in the months ahead, as signaled by the free fall in imports.
With economic activity contracting in 2009's first quarter at the same rate as in 2008's fourth quarter, a nasty U-shaped recession could turn into a more severe L-shaped near-depression (or stag-deflation). The scale and speed of synchronized global economic contraction is really unprecedented (at least since the Great Depression), with a free fall of GDP, income, consumption, industrial production, employment, exports, imports, residential investment and, more ominously, capital expenditures around the world. And now many emerging-market economies are on the verge of a fully fledged financial crisis, starting with emerging Europe.
Fiscal and monetary stimulus is becoming more aggressive in the U.S. and China, and less so in the euro zone and Japan, where policymakers are frozen and behind the curve. But such stimulus is unlikely to lead to a sustained economic recovery. Monetary easing--even unorthodox--is like pushing on a string when (1) the problems of the economy are of insolvency/credit rather than just illiquidity; (2) there is a global glut of capacity (housing, autos and consumer durables and massive excess capacity, because of years of overinvestment by China, Asia and other emerging markets), while strapped firms and households don't react to lower interest rates, as it takes years to work out this glut; (3) deflation keeps real policy rates high and rising while nominal policy rates are close to zero; and (4) high yield spreads are still 2,000 basis points relative to safe Treasuries in spite of zero policy rates.
Fiscal policy in the U.S. and China also has its limits. Of the $800 billion of the U.S. fiscal stimulus, only $200 billion will be spent in 2009, with most of it being backloaded to 2010 and later. And of this $200 billion, half is tax cuts that will be mostly saved rather than spent, as households are worried about jobs and paying their credit card and mortgage bills. (Of last year's $100 billion tax cut, only 30% was spent and the rest saved.)
Thus, given the collapse of five out of six components of aggregate demand (consumption, residential investment, capital expenditure in the corporate sector, business inventories and exports), the stimulus from government spending will be puny this year.
Chinese fiscal stimulus will also provide much less bang for the headline buck ($480 billion). For one thing, you have an economy radically dependent on trade: a trade surplus of 12% of GDP, exports above 40% of GDP, and most investment (that is almost 50% of GDP) going to the production of more capacity/machinery to produce more exportable goods. The rest of investment is in residential construction (now falling sharply following the bursting of the Chinese housing bubble) and infrastructure investment (the only component of investment that is rising).
With massive excess capacity in the industrial/manufacturing sector and thousands of firms shutting down, why would private and state-owned firms invest more, even if interest rates are lower and credit is cheaper? Forcing state-owned banks and firms to, respectively, lend and spend/invest more will only increase the size of nonperforming loans and the amount of excess capacity. And with most economic activity and fiscal stimulus being capital- rather than labor-intensive, the drag on job creation will continue.
So without a recovery in the U.S. and global economy, there cannot be a sustainable recovery of Chinese growth. And with the U.S, recovery requiring lower consumption, higher private savings and lower trade deficits, a U.S. recovery requires China's and other surplus countries' (Japan, Germany, etc.) growth to depend more on domestic demand and less on net exports. But domestic-demand growth is anemic in surplus countries for cyclical and structural reasons. So a recovery of the global economy cannot occur without a rapid and orderly adjustment of global current account imbalances.
Meanwhile, the adjustment of U.S. consumption and savings is continuing. The January personal spending numbers were up for one month (a temporary fluke driven by transient factors), and personal savings were up to 5%. But that increase in savings is only illusory. There is a difference between the national income account (NIA) definition of household savings (disposable income minus consumption spending) and the economic definitions of savings as the change in wealth/net worth: savings as the change in wealth is equal to the NIA definition of savings plus capital gains/losses on the value of existing wealth (financial assets and real assets such as housing wealth).
In the years when stock markets and home values were going up, the apologists for the sharp rise in consumption and measured fall in savings were arguing that the measured savings were distorted downward by failing to account for the change in net worth due to the rise in home prices and the stock markets.
But now with stock prices down over 50% from peak and home prices down 25% from peak (and still to fall another 20%), the destruction of household net worth has become dramatic. Thus, correcting for the fall in net worth, personal savings is not 5%, as the official NIA definition suggests, but rather sharply negative.
In other terms, given the massive destruction of household wealth/net worth since 2006-07, the NIA measure of savings will have to increase much more sharply than has currently occurred to restore households' severely damaged balance sheets. Thus, the contraction of real consumption will have to continue for years to come before the adjustment is completed.
In the meanwhile the Dow Jones industrial average is down today below 7,000, and U.S. equity indexes are 20% down from the beginning of the year. I argued in early January that the 25% stock market rally from late November to the year's end was another bear market suckers' rally that would fizzle out completely once an onslaught of worse than expected macro and earnings news, and worse than expected financial shocks, occurs. And the same factors will put further downward pressures on U.S. and global equities for the rest of the year, as the recession will continue into 2010, if not longer (a rising risk of an L-shaped near-depression).
Of course, you cannot rule out another bear market suckers' rally in 2009, most likely in the second or third quarters. The drivers of this rally will be the improvement in second derivatives of economic growth and activity in the U.S. and China that the policy stimulus will provide on a temporary basis. But after the effects of a tax cut fizzle out in late summer, and after the shovel-ready infrastructure projects are done, the policy stimulus will slacken by the fourth quarter, as most infrastructure projects take years to be started, let alone finished.
Similarly in China, the fiscal stimulus will provide a fake boost to non-tradable productive activities while the traded sector and manufacturing continue to contract. But given the severity of macro, household, financial-firm and corporate imbalances in the U.S. and around the world, this second- or third-quarter suckers' market rally will fizzle out later in the year, like the previous five ones in the last 12 months.
In the meantime, the massacre in financial markets and among financial firms is continuing. The debate on "bank nationalization" is borderline surreal, with the U.S. government having already committed--between guarantees, investment, recapitalization and liquidity provision--about $9 trillion of government financial resources to the financial system (and having already spent $2 trillion of this staggering $9 trillion figure).
Thus, the U.S. financial system is de facto nationalized, as the Federal Reserve has become the lender of first and only resort rather than the lender of last resort, and the U.S. Treasury is the spender and guarantor of first and only resort. The only issue is whether banks and financial institutions should also be nationalized de jure.
But even in this case, the distinction is only between partial nationalization and full nationalization: With 36% (and soon to be larger) ownership of Citi, the U.S. government is already the largest shareholder there. So what is the non-sense about not nationalizing banks? Citi is already effectively partially nationalized; the only issue is whether it should be fully nationalized.
Ditto for AIG, which lost $62 billion in the fourth quarter and $99 billion in all of 2008 and is already 80% government-owned. With such staggering losses, it should be formally 100% government-owned. And now the Fed and Treasury commitments of public resources to the bailout of the shareholders and creditors of AIG have gone from $80 billion to $162 billion.
Given that common shareholders of AIG are already effectively wiped out (the stock has become a penny stock), the bailout of AIG is a bailout of the creditors of AIG that would now be insolvent without such a bailout. AIG sold over $500 billion of toxic credit default swap protection, and the counter-parties of this toxic insurance are major U.S. broker-dealers and banks.
News and banks analysts' reports suggested that Goldman Sachs got about $25 billion of the government bailout of AIG and that Merrill Lynch was the second largest benefactor of the government largesse. These are educated guesses, as the government is hiding the counter-party benefactors of the AIG bailout. (Maybe Bloomberg should sue the Fed and Treasury again to have them disclose this information.)
But some things are known: Goldman's Lloyd Blankfein was the only CEO of a Wall Street firm who was present at the New York Fed meeting when the AIG bailout was discussed. So let us not kid each other: The $162 billion bailout of AIG is a nontransparent, opaque and shady bailout of the AIG counter-parties: Goldman Sachs, Merrill Lynch and other domestic and foreign financial institutions.
So for the Treasury to hide behind the "systemic risk" excuse to fork out another $30 billion to AIG is a polite way to say that without such a bailout (and another half-dozen government bailout programs such as TAF, TSLF, PDCF, TARP, TALF and a program that allowed $170 billion of additional debt borrowing by banks and other broker-dealers, with a full government guarantee), Goldman Sachs and every other broker-dealer and major U.S. bank would already be fully insolvent today.
And even with the $2 trillion of government support, most of these financial institutions are insolvent, as delinquency and charge-off rates are now rising at a rate--given the macro outlook--that means expected credit losses for U.S. financial firms will peak at $3.6 trillion. So, in simple words, the U.S. financial system is effectively insolvent.
Nouriel Roubini, a professor at the Stern Business School at New York University and chairman of Roubini Global Economics, is a weekly columnist for Forbes.com.