Only for dreamers - pacifism does not placate terrorists!

What Obamamanians, Liberal and even professed Conservative Congresspersons seem not to fathom:

a) Government expands generally at the cost of private business and overall economic efficiency.

b) Anchorless government spending is the root of the problem.

c) Increased taxation, at any time, is counterproductive just as taking people off tax rolls. Every citizen should have some taxed skin in the game. A simplified and equitable tax structure is synonymous with a strong, participating and healthy society.

d) Whatever government touches or finances it tends to make worse or winds up costing more because of waste, corruption and stupidity - education, public dependency (welfare), foreign assistance, housing for those cannot afford to meet their financial obligations, oversight "before the fact", simplification and de-regulation and the list is endless.

What the government is generally good at is often destructive. Nevertheless, government fields a superb military mainly because it fills its ranks through voluntarism and proceeds to impose discipline - something government does not impose on itself.

We need government if we are to live in a civil and orderly society capable of conducting commerce and protecting citizens. To accomplish this, we need to elect those who understand their role, do not become imbued with their own self importance, are willing to voluntarily leave after a reasonable period of time served, go back home and become subject to the same circumstances they helped mold for the governed.

e) Government,like business entities, can become too cumbersome and out of touch and failing to deliver the desired services promised and paid for through taxation faith and trust in government disappears and that is unhealthy.

f) Dependency upon government is the wrong model and lays the foundation for an ultimate collapse. (Read: "F Hayek's Road to Serfdom.")

g) A financially weakened government becomes beholden to others and thus puts itself at risk of being incapable of protecting its vital interests.

h) A weakened America invites attacks and world instability. However, a strong America, un-curbed in the use of its power cannot sustain itself and invites backlash. America must have allies, should spread the principle of freedom and be clear in what its vital interests are but it should never lose sight of its limitations and/or the enormity of its responsibilities to promote world order. Balancing these conflicting equities demands creative diplomacy and a State Department that serves and implements rather than leads and acts independently.

The wheels have come off the train, most likely severe inflation is ahead once we right the ship of state. Even more momentous problems are within sight and just down the road. Whomever becomes president, he will have limited options, the problems we face are significant and will take time to correct and Americans, by nature, are an impatient lot. A year or two at most is about all the time presidents are given before the press of the next campaign begins to bear down on them should they care to seek a second term.

i) Curb and/or destroy the incentive to acquire wealth and you will have less wealth, less risk takers, less employment and less growth. Taxing the rich is populism at its worst. It pits class against class. You cannot elevate the bottom by lowering the top.

j) An educated populace is essential and education should be rigorous and course requirements demanding. Education should be conducted in a safe environment and emphasize basics. There is too much emphasis on attending college and not enough on achieving vocational excellence. Competition and choice are critical and should be the driving forces behind education. The ability to reason should also be a critical part of course curriculum.

Schools cannot replace the family environment and America's family unit is in need of rebuilding. Government cannot rebuild what it helped destroy.

Addressing the above critical components is what it will take to return our nation to a path of prosperity and competitiveness. I see no evidence of this on the horizon. (See 1 below.)

Daniel Barenboim and Edward Said began a combined orchestra of Israeli and Arab youths in 1999. Said died shortly thereafter. The orchestra has played concerts in cities around the world and even in Ramallah. Barenboim has been criticized by many Israelis for his view that Arabs are entitled to a homeland and Israel is obligated to remove settlements etc.. There is no doubt Barenboim is correct and the orchestra and their combined efforts have proven if youth were left to their own devices there could be peace and unity. Alas, politicians and leaders get in the way and stoke the flames of discord.

Palestinians persist in teaching hatred in their schools and seem not to understand that which they complain about is largely a consequence of their own actions. Israeli occupation is not something Israel wants but came as a result of Arabs constantly attacking Israel and then proceeding to be defeated. Palestinians became Israel's tar baby only because they chose the wrong path - the path of war.

Israelis have a right to live in peace whether Arabs like it or not. Arab persistence in attacking Israel and murdering its people makes it impossible for Israelis to live safely and in freedom. So they put up protective barriers and yes, these same barriers restrict Palestinian freedom. If Palestinians want to be free and have their own homeland then all they need to do is take a page from their own youth in Berenboim and Said's orchestra.

To date this conflict remains a Gordian knot. Berenboim and Said, through the universal message of music, have proven the problem is soluble. Its solution is not a simple matter but it is inevitable that radical Islamists in the Middle East who persist in believing war is preferable to peace will lose in the end either because exhaustion will defeat them or because their message will ultimately be rejected by saner minds. Tragically, this will not come about through appeasement but only through military force and political defeat.

Though there may be no military solution overwhelming force is the only practical way to diminish radical Islamist's influence in order to create an environment in which diplomatic initiatives for peace can flourish. This is what GW hoped to accomplish in Iraq. If allowed to be carried to a successful conclusion peace and stability might spread from Iraq throughout the region. Democrats have consistently thrown sand in the gears. They have done everything they could to defeat any semblance of achieving such a goal. They based their argument on the war's cost yet Fannie and Freddie, which they supported, cost more. They based their argument on the fact that Iraq was un-winnable yet, persistence has proven them wrong. They unrealistically demanded withdrawal while ignoring the consequences of a precipitous withdrawal's aftermath. If Democrats win their long sought political victory and implement their misguided policy bordering on appeasement everything we have accomplished, with all its tragic costs, mistakes and poor planning, will be for naught. In fact we will be confronted by a far greater confrontation at a later date.

Afghanistan and Pakistan are simply another piece in the larger puzzle and radical Islamists operating in those countries must be brought to heel as well. This will take a concerted effort, more cost and suffering. If Obama becomes president this will become his war. Will the press and media push him to the wall as they did GW? Will his own party cut the ground out from under him as they did GW? Will Obama have the will and wisdom to persist in whatever manner is best suited to defeat radical Islamism if it even can be defeated? These remain unanswered questions which the campaign, to date, failed to clarify because it was the "economy stupid" that took center stage.

It would be a wonderful and marvelous thing if the Berenboim's and Said's could Murene away the ills of the world with music, eliminate discord with soothing sounds and defeat radicals with notes. Such is only for dreamers. Pacifism does not placate terrorists. (See 2 below.)

Dick

1)Subject: The Great Contraction



“If you jump off an 80-story building, it could look like you are flying for the first 79 stories.”



That quote got me to thinking about how we have deceived ourselves about incentives, and another apocryphal story. Supposedly, in the former Soviet Union, the bed-making collectives were incentivized to build more beds and got rewarded based on the weight of the beds they built each day. Not surprisingly, they turned to making cast iron beds.



At the same time, the building collectives were receiving incentives based on the speed with which they could add stories to buildings. Not surprisingly, they used a lightweight flooring material.



With two government incentive programs thus working in tandem, beds started falling through the floors.



Now that the U.S. government has to face the perversity of its own incentives, it is worth recalling what created our current financial mess.



First, the government incentivized the making of bad loans through the Community Reinvestment Act – banks that wanted to merge, or win the favor of the Federal Reserve for other reasons, knew that they had to make a certain amount of loans they would otherwise not make to people that were less than creditworthy.



Then came the Basel guidelines, and Basel II, and the banks were encouraged to get rid of non-performing assets. They did this by securitizing the subprime loans and selling them. Fannie and Freddie bought as many of them as they could, because their executives had bonuses based on assets under management – a government based incentive to increase the number of subprime loans.



The banks accommodated – using the same CRA standards to make loans to condominium owners and real estate speculators. The Bank of America announced a plan to lend to illegal aliens. And why not? They could take the fees for the loans, and sell the risk to Fannie and Freddie. Again, Fannie and Freddie – despite accounting irregularities that demonstrated they had no idea what they were doing – kept buying, and kept paying bonuses for increased assets.



Then the investment banks got into the picture, creating a market for the subprime loans, with investment banker bonuses for being the smartest guys in the room and generating fee income for buying subprime loans and selling them to Fannie and Freddie – and others in the marketplace they created. The rating agencies did not understand, but accommodated the market based on Fannie and Freddie’s presence in the market



Banks were incentivized to keep lending – because Congress created a willing market for them – backed by the full faith and credit of the U.S. government, as it turned out.



Now we are paying for the mistakes of failed government policies – of beds falling through ceilings. And Greenspan wants to say that the markets did not work. No, the markets worked fine, for a government that wants the market to work this way. The government’s policies failed the market – and the people.



As a consequence, we are now facing the Great Contraction. The investor class has lost some of its faith in the markets. It will return, of course, at some level – maybe 30% down or 40% down, depending on the value of homes. It could be lower if there is a loss of trust in the financial system overall. But every day is one day nearer to finding the bottom.



The sad thing will be if, as a result of this, investors actually wind up turning more power over to the government that “incentivized” us into a poorer future.

2) US helicopter air-ground raid kills eight inside Syria

Eye witnesses are quoted as describing four US helicopters from Iraq striking a house in al Qaim 17 km from the Iraqi border Sunday night, Oct. 26, and killing 8 people. Eight US soldiers are said to have disembarked for the attack before being flown out. There has been no US comment on the incident.

Asked if the incident was compatible with Israel’s talks with Syria, Israeli foreign minister Tzipi Livni commented: Damascus must stop aiding al Qaeda as well two other terrorist groups, Hizballah and Hamas.

The US and Iraqi charge d'affaires in Damascus have been called to the Syrian foreign ministry to hear the Syrian protest and demand an explanation. They claim four children and their father were killed.

Military sources report previous US strikes on Syrian soil in 2004 and 2005 targeting al Qaeda exit points to Iraq. These attacks were discontinued for three years. Sunday’s operation was an extension of the US-Iraqi offensive to purge the northern Iraqi town of Mosul and their northern Syria havens of al Qaeda elements, the last two strong bastions the jihadists still retain in the region.

Al Qaeda fighters captured by the US military in and around Mosul in recent days revealed that the flow of arms, fighters, cash and explosives from Syria to Iraq continues unabated. This, notwithstanding Syrian foreign minister Walid Muallem’s assurance to US secretary of state Condoleezza Rice that Damascus had halted this traffic when they met in New York in September. The US military struck after catching Syria back at the game in breach of its pledge.

Political sources link the operation in northern Syria with the US presidential campaign 10 days before voting. Both candidates, Barack Obama and John McCain, will no doubt comment and if the attacks continue they could become a focal campaign theme.

US cross-border incursions from Afghanistan firing missiles from drones at Taliban and al Qaeda havens in Pakistan are ongoing. The latest attack took place Sunday night killing up to 20 insurgents.