Friday, November 28, 2008

Camelot 2 or "Briga-Doom!"

We have been overstored for years. It worked as long as the economy was humming and customers could indebt themselves. The music has now stopped, the band has gone home. New commercial reality is about to hit the skids according to this report. (See 1 and 1a below.)

Just as I have written "media and press" mia culpas are starting to surface as members of the "fourth estate" look inward. Is the foundation is being laid so they can distance themselves from Obama as they seek to restore their credibility? Like U.S, autmakers, who made lousy cars in the 70's and lost customer loyalty, the press and media have lost a share of audience and are not likely to get it back because they proved their objectivity cannot be trusted.

Once customers have flown the coop they are hard to retrieve!(See 2 below.)

Oh well! This is your government! Best money can buy! (See 3 below.)

Strassel makes my point - don't hire whom you can't fire! (See 4 below.)

It shouldn't take Pelosi much longer to figure how to save Rangel and herself from unwanted grief. Rangel is as slick as they come and it is doubtful he will get more than a wrist slap.

Comment from a fellow memo reader: When a Repblican missteps,he resigns,is tried and goes to jail.If it happens to a Democrat(bums like Rangel,Jefferson and more)they scream racism and they go merrily on their way.I would like to see the day come
when all this p,c. crap is over. Come to think of it,I won't live to be
120. (See 5 below.)

Karl Rove has been very objective in his analysis of and advice to Obama. (See 6 below.)

Tom Friedman writes about stupidity on Wall Street. He could spend the same time writing about his own profession. (See 7 below.)

Victor Davis Hanson gets it off his chest.(See 8 below.)

Now I would like to get a few thoughts off my own chest.

a)The Obama's have every right to send their children to a private school. What I find so hypocritical is that the president-elect won't allow the same for children of his own race. Education is their only way out of the trap and sending "wealth distribution" checks is the wrong message and policy. The D.C. schools expend over 20% more per pupil than the nation as a whole and yet they have one of the worst educational track records. Why does Obama oppose Choice? Because it flies in the face of his NEA Union friends - plain and simple.

If he really cared about his own message of "change" he would do for the children of this nation, and particularly the black children, what he has done for his own.

b) Robert Rubin was on the Board of Citigroup and urged they get into trading that eventually crippled them. He also was a partner in Goldman Sachs. Many of the people Obama has selected for his economic team were trained by or were disciples of Rubin. Seems everything Rubin has touched of late or was associated with has blown up.

The press has tagged Obama's economic team "The Dream Team." If this "Dream Team" implements the themes and policies Obama campaigned on instead of having Camelot 2 we will have Briga-doom!

c) If Obama really wants to increase employment in the private sector he should start by firing among the federal bureaucracy. He could being with closing the Departments of Education and Energy. Cutting government would go a long way towards setting us on the right track.

d) Obama chastises auto executives for coming with their hat in hand and no clear program of how they will spend the money, yet he has informed us he will be asking for some 1/2 trillion and has not given much detail how he will spread this largess. We have an inkling and the only thing concrete is that he will use a lot of it building infrastructure etc. If he really believes this is how to get people back to work he is more naive than I thought him to be.

If he wants to get the economy jump started he would be wise to eliminate double taxation on dividends, reduce the corporate tax rate and/or simplify the entire tax code and come up with either a two tier tax rate, allow only two deductions - one for interest on one home and the other for charitable contributions and then set a $20,000/family exemption or got to a VAT tax approach. Personally I prefer the former concept. Government revenue from taxes should not constitute more than 17% of GDP.


1) Meltdown far from over, new mortgage crisis looms

Black Friday's retail shoppers hunting for holiday bargains won't be enough to stave off what's likely to become the next economic crisis. Malls from Michigan to Georgia are entering foreclosure, commercial victims of the same events poisoning the housing market.

Hotels in Tucson, Ariz., and Hilton Head, S.C., also are about to default on their mortgages.

That pace is expected to quicken. The number of late payments and defaults will double, if not triple, by the end of next year, according to analysts from Fitch Ratings Ltd., which evaluates companies' credit.

"We're probably in the first inning of the commercial mortgage problem," said Scott Tross, a real estate lawyer with Herrick Feinstein in New Jersey.

That's bad news for more than just property owners. When businesses go dark, employees lose jobs. Towns lose tax revenue. School budgets and social services feel the pinch.

Companies have survived plenty of downturns, but economists see this one playing out like never before. In the past, when businesses hit rough patches, owners negotiated with banks or refinanced their loans.

But many banks no longer hold the loans they made. Over the past decade, banks have increasingly bundled mortgages and sold them to investors. Pension funds, insurance companies, and hedge funds bought the seemingly safe securities and are now bracing for losses that could ripple through the financial system.

"It's a toxic drug and nobody knows how bad it's going to be," said Paul Miller, an analyst with Friedman, Billings, Ramsey, who was among the first to sound alarm bells in the residential market.

Unlike home mortgages, businesses don't pay their loans over 30 years. Commercial mortgages are usually written for five, seven or 10 years with big payments due at the end. About $20 billion will be due next year, covering everything from office and condo complexes to hotels and malls.

The retail outlook is particularly bad. Circuit City and Linens 'n Things have sought bankruptcy protection. Home Depot, Sears, Ann Taylor and Foot Locker are closing stores.

Those retailers typically were paying rent that was expected to cover mortgage payments. When those $20 billion in mortgages come due next year — 2010 and 2011 totals are projected to be even higher — many property owners won't have the money.

Some will survive, but those property owners whose loans required little money up front will have less incentive to weather the storm.

Refinancing formerly was an option, but many properties are worth less than when they were purchased. And since investors no longer want to buy commercial mortgages, banks are reluctant to write new loans to refinance those facing foreclosure.

California, New York, Texas and Florida — states with a high concentration of mortgages in the securities market, according to Fitch — are particularly vulnerable. Texas and Florida are already seeing increased delinquencies and defaults, as are Michigan, Tennessee and Georgia.

The worst-case scenario goes something like this: With banks unwilling to refinance, a shopping center goes into foreclosure. Nobody can buy the mall because banks won't write mortgages as long as investors won't purchase them.

"Credit markets have seized up," corporate securities lawyer Michael Gambro said. "People are not willing to take risks. They're not buying anything."

That drives down investments already on the books. Insurance companies are seeing their stock prices fall on fears they are too invested in commercial mortgages.

"The system has never been tested for a deep recession," said Ken Rosen, a real estate hedge fund manager and University of California at Berkeley professor of real estate economics.

One hope was that the U.S. would use some of the $700 billion financial bailout to buy shaky investments from banks and insurance companies. That was the original plan. But Treasury Secretary Henry Paulson has issued a stunning turnabout, saying the U.S. no longer planned to buy troubled securities. For those watching the wave of commercial defaults about to crest, the announcement was poorly received.

"He's created havoc in the marketplace by changing the rules," Rosen said. "It was the stupidest statement on Earth."

The Securities and Exchange Commission is considering another option that might ease the crisis, one that would change accounting rules so banks don't have to declare huge losses whenever the market declines.

But the only surefire remedy is for the economy to stabilize, for businesses to start expanding and for investors to trust the market again. Until then, Tross said, "There's going to be a lot of pain going forward."

1a) By Palash R. Ghosh

Investors reacted enthusiastically on Monday to news of a proposed $20 billion

government bailout of Citigroup (C). The stock market surged, as Citi shares

skyrocketed 57.8%, while the S&P Financials sector soared 18.8%, its greatest

single-day performance ever.

But fundamentally, nothing has really improved for Citigroup, or the financial

services sector as a whole.

In fact, things are likely to worsen into next year. And, more importantly,

haven't we already been through this routine with American International Group

(AIG) and others?

Market psychology is a funny thing. It is usually driven by two emotions

(namely fear or greed) and has little to do with fundamentals. Sentiment may

drive a short-term rally, but that can run out of gas pretty quickly. On the

other hand, given the immense amount of bad news in financial markets these

days, an external event like this bailout may actually move investors off the


There is not much rhyme and reason with market psychology.

Katie Stockton, chief market technician at MKM Partners, said Citigroup's

bailout pumped up market psychology largely because we are already in an

extremely oversold market.

"The market has needed a positive catalyst (or series of catalysts) in order

to mount a significant relief rally," she said.

"Because the market was so oversold ahead of the Citigroup news, it's fair to

say it contributed to improvement in sentiment. Oversold markets tend to be

more welcoming and responsive to positive news."

Gregg Fisher, president and chief investment officer of Gerstein Fisher, a New

York investment advisory firm, believes psychology and sentiment can be

significant factors on market performance and shouldn't be ignored.

"The market's value has been fluctuating by something like $1 trillion daily,"

he said. "The underlying values of those companies are certainly not changing

that much. Much of this price volatility is being driven by psychology - fear

and greed."

In the short run, good news results in more confidence, which can lead to more

good news, Fisher added. "It creates a feedback loop," he said.

"It can also work similarly on the downside. It may not be logical or

rational, but psychology - which includes the interpretation of external events

- can impact investors and share prices."

Indeed, we find ourselves in a manic depressive market. Huge swings have

become the norm and market psychology seems to turn on the proverbial dime.

On Monday, the government bailout seemed to provide relief to the market. The

following day, as most shares came back to earth, perhaps some investors

realized that things are even worse than they initially thought if the

government has to inject such tremendous amounts of money into top-tier

financial institutions.

Clifford Michaels, president of Institutional Investment Advisors, a New York

money management and financial planning firm, takes a dim view of the bailouts.

"It makes me concerned that huge dominant companies like AIG and Citigroup

even need to get bailed out," he said. "Even worse, when we see AIG having to

repeatedly return to the well, that sends a really bad signal."

In fact, AIG shares have slumped almost 22% since news of its $85 billion


"We are seeing acts of Fed intervention practically every few weeks, almost

like it has become a trend," Michaels said. "In this type of environment - of

repeated governmental involvement - investor psychology shifts from positive to

neutral and then goes negative."

Still, Michaels noted that even some of his more conservative clients have

responded favorably to the government's bailouts of both AIG and Citigroup, on

the presumption that these companies' woes have ended.

"They see only upside for these stocks now," he said.

"They are seeking to speculate on these companies, and that has nothing to do

with fundamentals."

Others take a more philosophical view.

"We use news stories to explain the ups and downs of the stock market because

we are a cause and effect society," said Joseph "Big Joe" Clark , managing

partner at Financial Enhancement Group. "But the bottom line is that money

managers are afraid to be caught with cash if the market blasts off. Investors

waiting for cheap entry points are afraid to miss the bottom every time the

market soars. The fear of America is to the downside, but the fear of asset

managers is missing the upside."

Michaels concedes that Citigroup is too large and complex to be allowed to

fail, what with its tentacles spread all across the globe.

"If Citigroup collapsed, investor confidence would take a decisive move

downward," he said. "But this bailout - a lifeline, if you will - doesn't solve

their problems. All it does is gives them more time to put their house in

order. And hopefully they have a sense of urgency about it."

2) By Jon Friedman

I'm starting to feel a little guilty about the media's treatment of

President-elect Barack Obama, and I may not be the only one.

Chalk it up to a phenomenon I'd like to call "Obama-remorse." You know how you

feel buyer's remorse after you've spent a lot of dough on some big-ticket item,

only to realize that you might have made a mistake? Well, it's going to happen

to the president-elect as well.

Perhaps this sort of recognition prompted Washington Post media writer Howard

Kurtz to do an incisive piece called "A Giddy Sense of Boosterism" on Nov. 17.

As Kurtz noted, the media have tripped over themselves to celebrate and cash in

on Obama's victory.

NBC News is preparing a DVD called "Yes, We Can: The Barack Obama Story." ABC

and USA Today are racing to publish a book on the election. HBO is readying a

documentary on the campaign, too.

As I see it, the media are having second thoughts about their performance over

the past year.

First, they gave Sen. Hillary Clinton the cold shoulder and all but rolled out

a red carpet for Obama during the Democratic primary season. Perhaps Amy

Poehler's eerily spot-on send-up of Clinton on "Saturday Night Live" helped

reduce the New York senator to a caricature, making it even easier for the

reporters to consign her to a complementary role.

Once Clinton was dispatched, they lavished favorable attention on Obama, as

his opponent, Republican Sen. John McCain, was forced to watch from the


Yes, I'm thrilled that he won the election, underscoring the American ideal

that we live in a forward-thinking democracy, where any man or woman can rise

to the highest office in the land. And I'm proud that even Obama's staunchest

foes - particularly the man he defeated, John McCain - seem to be willing to

accept his victory and pledge to help him turn around the economy and cure the

nation's other ills.

Adulation Express

But I also feel guilty because I know that the media's Adulation Express,

never to be confused with McCain's old Straight Talk Express, is going to hit a

few speed bumps before it inexorably grinds to a halt.

It's inevitable. Look at what happened to Sarah Palin, McCain's running mate.

When McCain first nominated her, she could do no wrong in the media's eyes.

She was hailed for her aw-shucks demeanor, in contrast to the inveterate

Beltway sharpies, and for her unlikely ascent to such a big job. (I suspect

that Tina Fey's brilliant impersonation of her on "SNL" owed as much to Palin's

newness as it did to Fey's uncanny ability to look and sound like the governor

of Alaska . Most "SNL" viewers had no frame of reference for Palin, other than

her speech at the Republican National Convention, so Fey didn't have to worry

about competing with a hardened image of Palin.)

It's inevitable, too, that Obama will eventually have his turn under the

microscope. When the media start picking apart some of his Cabinet choices or

his pronouncements on the state of the economy or his declarations about Iraq ,

he may be surprised to find the afterglow of his stunning victory turning sour

so fast.

3) A Washington, DC airport ticket agent offers some examples of why our
country is in trouble- ( I wish we had names so we know who NOT to re-elect! )

1. I had a New Hampshire Congresswoman ask for an aisle seat so that her
hair wouldn't get messed up by being near the window. (On an airplane?!)

2. I got a call from a candidate's staffer, who wanted to go to Capetown. I
started to explain the length of the flight and the passport information,
and then she interrupted me with, 'I'm not trying to make you look stupid, but
Capetown is in Massachusetts ...' Without trying to make her look stupid,
I calmly explained, 'Cape Cod is in Massachusetts, Capetown is in Africa. Her
response - click.

3. A senior Vermont Congressman called, furious about a Florida package we
did. I asked what was wrong with the vacation in Orlando .. He said he was
expecting an ocean-view room. I tried to explain that's not possible, since
Orlando is in the middle of the state. He replied, 'Don't lie to me, I
looked on the map and Florida is a very thin state!' (OMG)

4. I got a call from a lawmaker's wife who asked, 'Is it possible to see
England from Canada?' I said, 'No.' She said, 'But they look so close on the
map.' (OMG, again!)

5. An aide for a cabinet member once called and asked if he could rent a
car in Dallas. I pulled up the reservation and noticed he had only a 1-hour
layover in Dallas. When I asked him why he wanted to rent a car, he said,
'I heard Dallas was a big airport, and we will need a car to drive between
gates to save time.' (Aghhhh)

6. An Illinois Congresswoman called last week. She needed to know how it
was possible that her flight from Detroit left at 8:30 am and got to Chicago at
8:33 am. I explained that Michigan was an hour ahead of Illinois, but she
couldn't understand the concept of time zones. Finally, I told her the plane
went fast, and she bought that.

7. A New York lawmaker called and asked, 'Do airlines put your physical
description on your bag so they know whose luggage belongs to whom?' I said,
'No, why do you ask?' She said, 'Well, when I checked in with the airline, they put a tag on my luggage that said (FAT). I am a little overweight, but I think that's very rude. After putting her on hold for a minute while I looked into it (I was laughing). I came back and explained the city code for Fresno, CA is (FAT - Fresno Air Terminal), and the airline was just putting the destination tag on her luggage.

8. A Senator's aide called to inquire about a trip package to Hawaii...
After going over all the cost info, she asked, 'Would it be cheaper to fly to
California, and then take the train to Hawaii ?'

9. I just got off the phone with a freshman Congressman who asked, 'How do
I know which plane to get on?' I asked him what exactly he meant, to which he
replied, 'I was told my flight number is 823, but none of these planes have
numbers on them.'

10. A lady Senator called and said, 'I need to fly to Pepsi-Cola, Florida .
Do I have to get on one of those little computer planes?' I asked if she
meant fly to Pensacola, Fl. on a commuter plane. She said, 'Yeah, whatever,

11. A senior Senator called and had a question about the documents he needed
in order to fly to China. After a lengthy discussion about passports, I
reminded him that he needed a visa. 'Oh, no I don't. I've been to China many
times and never had to have one of those.' I double-checked and sure enough,
his stay required a visa. When I told him this he said, 'Look, I've been to
China four times and every time they have accepted my American Express!'

12. A New Mexico Congresswoman called to make reservations. 'I want to I go
from Chicago to Rhino, New York ', she said. I was at a loss for words.
Finally, I said, 'Are you sure that's the name of the town?' 'Yes, what
flights do you have?' replied the lady. After some searching, I came back
with, 'I'm sorry, ma'am, I've looked up every airport code in the country
and can't find a Rhino anywhere.' The lady retorted, 'Oh, don't be silly!
Everyone knows where it is. Check your map!' So I scoured a map of the
state of New York and finally offered, 'You don't mean Buffalo, do you?' The
reply? 'Whatever! I knew it was a big animal.'

Now you know why the Government is in the shape that it's in and who is
causing it to happen.

4) Hillary of State How much will this cost the Obama administration?

One rule of employee relations? Never hire someone you can't afford to fire. Barack Obama's offer to let Hillary Clinton be secretary of state has already been marked down as a brilliant co-option of his former rival. But nothing comes for free, and the question is just how big a price Mr. Obama will pay in the end.

For now, he is getting only praise for his surprise pick. The move fits neatly into the media narrative that Mr. Obama is drafting a team that will challenge his thinking. It's also being described as a gesture that could heal party wounds and mollify Clinton supporters Mr. Obama never won to his side.

The actual motivation? Short term, Mr. Obama understands his real struggles are going to be in the Senate, where he will need 60 votes. Left there with nothing but a potential future run against Mr. Obama, Mrs. Clinton would be tempted to use her position to highlight her differences with the sitting president. Even as a junior senator, she could gum up his works. Mr. Obama does not need that.

The job at State all but eliminates this threat. As the nation's top diplomat, Mrs. Clinton will be barred, both by law and by custom, from partisan politics. She'll have to dismantle her extensive political operation, and end the patronage that has earned her continued loyalty.

There's arguably also not enough time for Mrs. Clinton to make her mark as secretary of state, and find a reason to break with her boss, and piece back together her empire, and get into a presidential race. They both know that in taking this cabinet post, Mrs. Clinton is clearing herself from Mr. Obama's political path.

Having lived with, up close, the Clinton political threat, Mr. Obama might be forgiven for agreeing to just about anything to forestall a repeat. But no one should forget that this is Mrs. Clinton we are talking about -- with all her ambitions, all her frustrations, all her family relations and all her past. The price of neutralizing Mrs. Clinton as an outside rival, by bringing her inside, could make today's bailouts look cheap.

The early media pronouncement is that Mr. Obama is getting, for this post of top diplomat, a woman with great "experience." Oh, how short memories are. Mrs. Clinton staked her early primary claim on foreign policy. So determined was she to out-tough Mr. Obama that she walked into wild exaggerations -- Bosnian sniper fire and Northern Ireland peace, to name a few.

Egged on by former Clintonite Gregory Craig (Mr. Obama's newly picked White House general counsel), the media reported on just how little "experience" she'd had as the former first lady. Mrs. Clinton worked hard on foreign policy in the Senate, but it still remains far from clear how talented she'll prove at this job. Mr. Obama is taking a flyer on one of his bigger promises -- that of changing American foreign policy.

His onetime rival will also have plenty of leeway to go rogue. The State Department is traditionally hard to rein in, and Mrs. Clinton has insisted she also be free of traditional constraints. She's demanded the right to staff her department with her own people. And while national security advisers are often more powerful than secretaries of state, she wants the ability to circumvent that position and go directly to Mr. Obama.

This is the stuff ugly internal disputes are made of.

As for the issues, there are plenty on which the rivals disagreed in the primaries, from how tough to be on Iran to how strongly to stand with Israel. And let's not forget any differences between Mr. Obama and Bill Clinton -- since no matter how many promises to the contrary, he will be co-secretary of state.

Speaking of Bill, Mr. Obama famously noted during the primary that it was time to move beyond the Clinton era. Instead, he's dragging that baggage back into the White House living room. The Obama team is combing through the hundreds of thousands of donors to Mr. Clinton's foundation. Those papers surely contain compromising conflicts. There was good reason the Clintons have always refused to make that information public.

Mr. Obama can now sit on those documents, renege on his pledges to be one of the most "transparent" presidencies in history, and endure the rightful outrage that will follow. Or he can release them, and guarantee a feeding frenzy. Either option will prove an unpleasant side story to his more pressing policy concerns. And that's just the immediate issue. There are also the 1990s Clinton documents, which remain under wraps at the Clinton library, but not forever.

Having made the grand gesture, Mr. Obama can now only get rid of Mrs. Clinton at risk of another party rift. The president-elect now owns Mrs. Clinton's past, and future, behavior. That could turn out to be some deal.

5) Rangel Probe Will Be Done in Weeks, Pelosi Says

House Speaker Nancy Pelosi said the far-reaching ethics investigation of Rep. Charles Rangel (D) will conclude by early next year.

Pelosi issued a statement late Wednesday saying she has been assured that the report by the House ethics committee will be completed before this session of Congress ends Jan. 3.

"I look forward to reviewing the report at that time," said Pelosi, who has resisted calls from Republicans to remove Rangel from his powerful position as chairman of the tax-writing Ways and Means Committee.

Her announcement puts a deadline on an investigation that could have dragged on for many more months, considering how many issues surrounding the personal finances and ethics of the long-serving lawmaker have now been brought before the committee.

Rangel is under scrutiny for not paying taxes on income from a Dominican Republic beach house he owns. The ethics panel is also looking at his living arrangements in New York for three rent-stabilized apartments, as well as his effort to drum up donors for a college center named in his honor.

Fundraising for the Rangel Center was the subject of new reports this week that a businessman pledged $1 million to the effort while seeking Rangel's help in blocking a change in tax laws that would have cost his company millions more.

The lawmaker, who has been in Congress for nearly 40 years, denied any improprieties in seeking to protect the company's offshore tax shelter, saying: "At no time -- ever -- did I entertain, promote, or secure a tax break or any special favor for anyone as an inducement or reward for a contribution" to the Rangel Center.

He has also denied anything untoward in his use of the New York apartments.

As for his personal tax issues, Rangel has paid more than $10,000 owed in back taxes but insisted he never intentionally dodged any taxes.

6) Thanksgiving Cheer From Obama

When President-elect Barack Obama's economic transition team met this month, everyone was there -- inflation fighters, business leaders, union firebrands and leftist economists -- creating confusion about where the new administration was headed.

Mr. Obama's announcement of his economic team on Monday provided surprisingly positive clarity. He picked as Treasury Secretary Tim Geithner, the respected, soft-spoken New York Fed president. Mr. Geithner has been a key player with Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke in confronting the financial crisis. Every major decision in the rescue effort came only after the three agreed.

The National Economic Council director-designee, Larry Summers, is another solid pick. Mr. Summers has been an advocate for trade liberalization, he was the Clinton administration's negotiator for the financial deregulation known as Gramm-Leach-Bliley, and he even attempted to rein in Fannie Mae and Freddie Mac in the 1990s.

Mr. Obama also named a respected monetary expert -- Christina Romer -- to head up his Council of Economic Advisors. On Tuesday he selected a first-rate thinker, Peter Orszag, to be director of the White House's Office of Management and Budget.

The only troubling personnel note was Melody Barnes as Domestic Policy Council director. Putting a former aide to Ted Kennedy in charge of health policy after tapping universal health-care advocate Tom Daschle to be Health and Human Services secretary sends a clear signal that Mr. Obama didn't mean it when his campaign ads said he wouldn't run to the "extremes" with government-run health care.

He did not reduce confusion on a Detroit bailout by saying he supported a "sustainable auto industry." America already has that in 69 foreign-owned auto plants that employ 92,700 Americans. The question is this: Does Mr. Obama want a sustainable U.S.-owned auto industry? If so, will he require changes in the Big Three's management, labor agreements and cost structure in return for aid? All he'd say Monday was that the industry needed to develop a plan.

And despite the president-elect's declaration Monday that "we have a consensus, which is pretty rare, between conservative and liberal economists," there is no agreement about the elements of a stimulus package.

Stanford economist Michael Boskin reminds us that conservatives favor permanent, or long-lived, measures to revive the economy -- incentives like lower income-tax rates, actions to speed recovery of capital costs like bonus depreciation, and steps with an immediate effect on job creation such as cuts in corporate tax rates.

So far, Mr. Obama has only offered unspecified subsidies for "green jobs" and infrastructure spending. Politicians like infrastructure spending because it gives them something concrete to point to. But though Japan spent $516 billion on infrastructure in the 1990s, it didn't stimulate their economy. What makes Mr. Obama think it will work in America? The reason infrastructure is a poor stimulant is that there is a long lag time between project approval and when dollars actually get spent, even for projects on the drawing board.

Mr. Obama suggests that giving consumers up to $500 (his "tax cut for 95% of Americans") will stimulate consumption. Congressional Democrats have demanded rebates like this for people who don't pay income taxes in every stimulus package -- with negligible results. As Harvard economist Martin Feldstein pointed out in these pages in August, a mere 10% to 20% of this year's rebate was spent.

During the campaign, Mr. Obama defined madness as "doing the same things over and over again and expecting something different." He should take those words to heart in preparing his stimulus package

Mr. Obama has less than a month to work out the dimensions of the stimulus and auto legislation he wants passed before his Jan. 20 inauguration. If he continues to hesitate, Congress will give him a mish-mash of spending, rebates, subsidies and pork that won't create the 2.5 million jobs in two years he promises. Congress is hard to stop from budgetary excesses in ordinary times. And these are not ordinary times.

After hearing Mr. Obama's campaign attacks on "the swelling budget deficit," it is jarring to hear him now suggest the deficit will need to be larger to accommodate more spending. He has to be mindful that voters have not been prepared for the numbers now being thrown around.

But, overall, Monday's announcement of Mr. Obama's economic team was reassuring. He's generally surrounded himself with intelligent, mainstream advisers. Investors, workers and business owners can only hope that, over time, this new administration's economic policies bear more of their market-oriented imprint.

5) All Fall Down

I spent Sunday afternoon brooding over a great piece of Times reporting by Eric Dash and Julie Creswell about Citigroup. Maybe brooding isn’t the right word. The front-page article, entitled “Citigroup Pays for a Rush to Risk,” actually left me totally disgusted.

Why? Because in searing detail it exposed — using Citigroup as Exhibit A — how some of our country’s best-paid bankers were overrated dopes who had no idea what they were selling, or greedy cynics who did know and turned a blind eye. But it wasn’t only the bankers. This financial meltdown involved a broad national breakdown in personal responsibility, government regulation and financial ethics.

So many people were in on it: People who had no business buying a home, with nothing down and nothing to pay for two years; people who had no business pushing such mortgages, but made fortunes doing so; people who had no business bundling those loans into securities and selling them to third parties, as if they were AAA bonds, but made fortunes doing so; people who had no business rating those loans as AAA, but made a fortunes doing so; and people who had no business buying those bonds and putting them on their balance sheets so they could earn a little better yield, but made fortunes doing so.

Citigroup was involved in, and made money from, almost every link in that chain. And the bank’s executives, including, sad to see, the former Treasury Secretary Robert Rubin, were clueless about the reckless financial instruments they were creating, or were so ensnared by the cronyism between the bank’s risk managers and risk takers (and so bought off by their bonuses) that they had no interest in stopping it.

These are the people whom taxpayers bailed out on Monday to the tune of what could be more than $300 billion. We probably had no choice. Just letting Citigroup melt down could have been catastrophic. But when the government throws together a bailout that could end up being hundreds of billions of dollars in 48 hours, you can bet there will be unintended consequences — many, many, many.

Also check out Michael Lewis’s superb essay, “The End of Wall Street’s Boom,” on Lewis, who first chronicled Wall Street’s excesses in “Liar’s Poker,” profiles some of the decent people on Wall Street who tried to expose the credit binge — including Meredith Whitney, a little known banking analyst who declared, over a year ago, that “Citigroup had so mismanaged its affairs that it would need to slash its dividend or go bust,” wrote Lewis.

“This woman wasn’t saying that Wall Street bankers were corrupt,” he added. “She was saying they were stupid. Her message was clear. If you want to know what these Wall Street firms are really worth, take a hard look at the crappy assets they bought with huge sums of borrowed money, and imagine what they’d fetch in a fire sale... For better than a year now, Whitney has responded to the claims by bankers and brokers that they had put their problems behind them with this write-down or that capital raise with a claim of her own: You’re wrong. You’re still not facing up to how badly you have mismanaged your business.”

Lewis also tracked down Steve Eisman, the hedge fund investor who early on saw through the subprime mortgages and shorted the companies engaged in them, like Long Beach Financial, owned by Washington Mutual.

“Long Beach Financial,” wrote Lewis, “was moving money out the door as fast as it could, few questions asked, in loans built to self-destruct. It specialized in asking homeowners with bad credit and no proof of income to put no money down and defer interest payments for as long as possible. In Bakersfield, Calif., a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000.”

Lewis continued: Eisman knew that subprime lenders could be disreputable. “What he underestimated was the total unabashed complicity of the upper class of American capitalism... ‘We always asked the same question,’ says Eisman. ‘Where are the rating agencies in all of this? And I’d always get the same reaction. It was a smirk.’ He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S.& P. couldn’t say; its model for home prices had no ability to accept a negative number. ‘They were just assuming home prices would keep going up,’ Eisman says.”

That’s how we got here — a near total breakdown of responsibility at every link in our financial chain, and now we either bail out the people who brought us here or risk a total systemic crash. These are the wages of our sins. I used to say our kids will pay dearly for this. But actually, it’s our problem. For the next few years we’re all going to be working harder for less money and fewer government services — if we’re lucky.

ByVictor Davis Hanson

1. Four years of high-school Latin would dramatically arrest the decline in American education. In particular, such instruction would do more for minority youths than all the ‘role model’ diversity sermons on Harriet Tubman, Malcolm X, Montezuma, and Caesar Chavez put together. Nothing so enriches the vocabulary, so instructs about English grammar and syntax, so creates a discipline of the mind, an elegance of expression, and serves as a gateway to the thinking and values of Western civilization as mastery of a page of Virgil or Livy (except perhaps Sophocles’s Antigone in Greek or Thucydides’ dialogue at Melos). After some 20 years of teaching mostly minority youth Greek, Latin, and ancient history and literature in translation (1984-2004), I came to the unfortunate conclusion that ethnic studies, women studies—indeed, anything “studies”— were perhaps the fruits of some evil plot dreamed up by illiberal white separatists to ensure that poor minority students in the public schools and universities were offered only a third-rate education.

2. Hollywood is going the way of Detroit. The actors are programmed and pretty rather than interesting looking and unique. They, of course, are overpaid (they do to films what Lehman Brothers’ execs did to stocks), mediocre, and politicized. The producers and directors are rarely talented, mostly unoriginal—and likewise politicized. A pack-mentality rules. Do one movie on a comic superhero—and suddenly we get ten, all worse than the first. One noble lion cartoon movie earns us eagle, penguin and most of Noah’s Arc sequels. Now see poorer remakes of movies that were never good to begin with. I doubt we will ever see again a Western like Shane, the Searchers, High Noon, or the Wild Bunch. If one wishes to see a fine film, they are now usually foreign, such as Das Boot or Breaker Morant. Watching any recent war movie (e.g., Iraq as the Rape of Nanking) is as if someone put uniforms on student protestors and told them to consult their professors for the impromptu script.

3. All the old media brands of our youth have been tarnished and all but discredited. No one picks up Harpers or Atlantic expecting to read a disinterested story on politics or culture. (I pass on their inane accounts of ‘getaways’ and food.) The New York Times and Washington Post are as likely to have op-eds as news stories on the front page. Newsweek and Time became organs for paint-by-numbers Obamism, teased with People Magazine-like gossip pieces (at least, their editors still cared enough to seem hurt when charged with overt bias). NBC, ABC, and CBS would now make a Chet Huntley or Eric Sevareid turn over in his grave. A Keith Olbermann would not have been allowed to do commercials in the 1950s. Strangely, the media has offered up fashionably liberal politics coupled with metrosexual elite tastes in fashions, clothes, housing, food, and the good life, as if there were no contradictions between the two. No wonder media is so enthralled with the cool Obama and his wife. Both embody the new nexus between Eurosocialism in the abstract and the hip aristocratic life in the concrete.

4. After the junk bond meltdown, the S&L debacle, and now the financial panic, in just a few years the financial community destroyed the ancient wisdom: deal in personal trust; your word is your bond; avoid extremes; treat the money you invest for others as something sacred; don’t take any more perks than you would wish others to take; don’t borrow what you couldn’t suddenly pay back; imagine the worse case financial scenario and expect it very may well happen; the wealthier you become the more humble you should act. And for what did our new Jay Goulds do all this? A 20,000 square-foot mansion instead of the old 6,000 sq. ft. expansive house? A Gulfstream in lieu of first class commercial? You milk your company, cash in your stock bonuses, enjoy your $50 million cash pile, and then get what—a Rolex instead of a reliable Timex? A Maserati for a Mercedes, a gold bathroom spout in preference to brushed pewter? The extra splurge was marginal and hardly worth the stain of avarice on one’s immortal soul.

5. California is now a valuable touchstone to the country, a warning of what not to do. Rarely has a single generation inherited so much natural wealth and bounty from the investment and hard work of those more noble now resting in our cemeteries—and squandered that gift within a generation. Compare the vast gulf from old Governor Pat Brown to Gray Davis or Arnold Schwarzenegger. We did not invest in many dams, canals, rails, and airports (though we use them all to excess); we sued each other rather than planned; wrote impact statements rather than left behind infrastructure; we redistributed, indulged, blamed, and so managed all at once to create a state with about the highest income and sales taxes and the worst schools, roads, hospitals, and airports. A walk through downtown San Francisco, a stroll up the Fresno downtown mall, a drive along highway 101 (yes, in many places it is still a four-lane, pot-holed highway), an afternoon at LAX, a glance at the catalogue of Cal State Monterey, a visit to the park in Parlier—all that would make our forefathers weep. We can’t build a new nuclear plant; can’t drill a new offshore oil well; can’t build an all-weather road across the Sierra; can’t build a few tracts of new affordable houses in the Bay Area; can’t build a dam for a water-short state; and can’t create even a mediocre passenger rail system. Everything else—well, we do that well.

6. Something has happened to the generic American male accent. Maybe it is urbanization; perhaps it is now an affectation to sound precise and caring with a patina of intellectual authority; perhaps it is the fashion culture of the metrosexual; maybe it is the influence of the gay community in arts and popular culture. Maybe the ubiquitous new intonation comes from the scarcity of salty old jobs in construction, farming, or fishing. But increasingly to meet a young American male about 25 is to hear a particular nasal stress, a much higher tone than one heard 40 years ago, and, to be frank, to listen to a precious voice often nearly indistinguishable from the female. How indeed could one make Westerns these days, when there simply is not anyone left who sounds like John Wayne, Richard Boone, Robert Duvall, or Gary Cooper much less a Struther Martin, Jack Palance, L.Q. Jones, or Ben Johnson? I watched the movie Twelve O’clock High the other day, and Gregory Peck and Dean Jagger sounded liked they were from another planet. I confess over the last year, I have been interviewed a half-dozen times on the phone, and had no idea at first whether a male or female was asking the questions. All this sounds absurd, but I think upon reflection readers my age (55) will attest they have had the same experience. In the old days, I remember only that I first heard a variant of this accent with the old Paul Lynde character actor in one of the Flubber movies; now young men sound closer to his camp than to a Jack Palance or Alan Ladd.

7. We have given political eccentricity a bad name. There used to be all sorts of classy individualists, liberal and conservative alike, like Everett Dirksen, J. William Fulbright, Margaret Chase Smith, or Sam Ervin; today we simply see the obnoxious who claim to be eccentric like a Barbara Boxer, Al Franken, Barney Frank, or Harry Reid. The loss is detectable even in diction and manner; Dirksen was no angel, but he was witty, charming, insightful; Frank is no angel, but he merely rants and pontificates. Watch the You Tube exchange between Harvard Law Graduate Frank and Harvard Law Graduate Rains as they arrogantly dismiss their trillion-dollar Fannie/Freddie meltdown in the making. I suppose it is the difference between the Age of Belief and the Age of Nihilism.

8. Do not farm. There is only loss. To the degree that anyone makes money farming, it is a question of a vertically-integrated enterprise making more in shipping, marketing, selling, packing, and brokering than it loses on the other end in growing. No exceptions. Food prices stay high, commodity prices stay low. That is all ye need to know. Try it and see.

9. As I wrote earlier, the shrill Left is increasingly far more vicious these days than the conservative fringe, and about like the crude Right of the 1950s. Why? I am not exactly sure, other than the generic notion that utopians often believe that their anointed ends justify brutal means. Maybe it is that the Right already had its Reformation when Buckley and others purged the extremists—the Birchers, the neo-Confederates, racialists, the fluoride-in-the-water conspiracists, anti-Semites, and assorted nuts—from the conservative ranks in a way the Left has never done with the 1960s radicals that now reappear in the form of Michael Moore, Bill Ayers, Cindy Sheehan,, the Daily Kos, etc. Not many Democrats excommunicated for its General Betray-Us ad. Most lined up to see the premier of Moore’s mythodrama. Barack Obama could subsidize a Rev. Wright or email a post-9/11 Bill Ayers in a way no conservative would even dare speak to a David Duke or Timothy McVeigh—and what Wright said was not all that different from what Duke spouts. What separated Ayers from McVeigh was chance; had the stars aligned, the Weathermen would have killed hundreds as they planned.

10. The K-12 public education system is essentially wrecked. No longer can any professor expect an incoming college freshman to know what Okinawa, John Quincy Adams, Shiloh, the Parthenon, the Reformation, John Locke, the Second Amendment, or the Pythagorean Theorem is. An entire American culture, the West itself, its ideas and experiences, have simply vanished on the altar of therapy. This upcoming generation knows instead not to judge anyone by absolute standards (but not why so); to remember to say that its own Western culture is no different from, or indeed far worse than, the alternatives; that race, class, and gender are, well, important in some vague sense; that global warming is manmade and very soon will kill us all; that we must have hope and change of some undefined sort; that AIDs is no more a homosexual- than a heterosexual-prone disease; and that the following things and people for some reason must be bad, or at least must in public company be said to be bad (in no particular order): Wal-Mart, cowboys, the Vietnam War, oil companies, coal plants, nuclear power, George Bush, chemicals, leather, guns, states like Utah and Kansas, Sarah Palin, vans and SUVs.

Well, with that done—I feel much better

See my latest posting at http://Dick-Meom.Blogspot.Com/. Updated daily.

Thursday, November 27, 2008

Never Learned History? Then Try Hysteria!

All Obama has to do is sit down and reason with these terrorists. They will listen. I have no doubt. Then he can go to Iran and offer them some of our worthless dollars and I have no doubt they too will suspend their nuclear production just as N Korea has. It is all so simple and logical. Why did not GW think of this before wrecking Iraq and spending all that money fighting terrorists? (See 1 below.)

Is the president elect constrained by reality? Can he possibly campaign one way and morph into a GW 2? Is this happening before he even takes office?

Perhaps doves will coo because he is their dove. Where is Murtha? (See 2 below.)

More reality? (See 3 below.)

For the moment Franken is prevented from stealing the election. Frankly, I would have enjoyed watching Franken. What our nation needs is more comic relief and buffoons in the Senate to balance the octogenarians who can hardly stay awake during roll call. (See 4 below.)

Could Victor Davis Hanson be on to something - government by hysteria? As I have oft repeated, when you have no learned anything about history try hysteria. (See 5 below.)

Ten reasons why hope springs eternal for Conservatives? Is Jennifer Rubin grasping at straws?(See 6 below.)

"Zig Zag Zell," one of Georgia's best governors and Senators, comes out for Saxby. Ex Marine Zell had his belly full of the Senate and retired to go back home and teach. If we only had more of his kind in the Senate we could accomplish some positive things for this nation. Zell is a Democrat with brains! More than that he has integrity and guts to speak his mind.

Zell is a Christian Lieberman but far more colorful and a very good pubic speaker. (See 7 below.)

Mumbai attacks continue. (See 8 below.)


1) Mumbai Terror Attack Updates Day 2

- Group of hostages leaves Chabad Center on second night of Mumbai's seizure by Islamist terrorists.

- It is feared that none were Israelis although several are known to be held in the building.

- Israel-India flights continue on schedule. One carried a group of Israeli doctors for Mumbai.

- The Islamist terrorists attacking Mumbai for the second day came from outside the country, believed Pakistan.

- Indian security sources report many Israeli hostages in the Oberoi Hotel, which the terrorists still control amid sustained gunfire in the lobby.

- Heavy battles resume in the Taj Palace Hotel.

- Indian naval troops board the MV Alpha freighter suspected of having sailed the terrorists to Mumbai's shore from Karachi, Pakistan.

- Anti-tanks missiles handed out to Indian commando force battling terrorists at Taj Palace hotel.

- Indian general: Four or five terrorists inside Chabad Center.

- Islamist shooting attacks and blasts spread to southern Mumbai away from the hotel district ---

- Terrorists hurl grenades at Indian forces surrounding Chabad Center and the Oberoi hotel.

- Fighting flares up anew in the Taj Palace Hotel said to have been cleared Thursday. Some hostages escaped and many bodies were found in guests' rooms.

- Terrorists are still holed up at the Oberoi Hotel and Chabad Center with hostages, including Israelis, under police-commando siege.

- A woman and child held at Chabad center came out of the building.

- The Mumbai stock exchange stayed shut.

- Police sappers defused bombs containing RDX strewn across the town.

- International airlines canceled flights to the beleaguered Indian town.

- The terrorists wear elite military unit uniforms. Each has an automatic rifle, grenades and military-style kit.

2) Doves keep the faith as Obama team tilts right

Leading opponents of the war have mostly been silent as president-elect Barack Obama, who first built his national image on the foundation of his early opposition to the Iraq war, assembles a group of national security hands that is anything but a team of doves.

It's a disorienting moment for the peace wing of the Democratic Party, at once elated America selected a new president opposed to the Iraq war and momentarily disoriented by the imminent removal of a commander-in-chief whose every action they've opposed for the past eight years.

“Shock has paralyzed them for the moment,” said Steven Clemons, a senior fellow at the New America Foundation who writes The Washington Note, a popular foreign policy blog. “We are in an Obama bubble now. And it’s tough to step out and be first to deflate the bubble.”

Especially, he added, before that bubble takes shape.

“You’ve got some people like myself who are saying there may be an interesting design in what Obama is trying to do. Maybe it doesn’t fit easily in a neatly sculpted box of liberal pacifist and warmonger hawk. Maybe it’s more complex than that.”

Still, it’s clearly a team that tilts to the right of Democratic foreign policy thought.

Vice-president-elect Joe Biden initially backed the war in Iraq and has supported other military interventions in his long Senate career. Sen. Hillary Rodham Clinton also supported the Iraq war resolution, a vote that Obama framed as a critical failure of judgement during the primary. She's also taken a harder line on Iran than the president-elect—and is in line to be his Secretary of State.

Jim Jones, a retired Marine General who advised Clinton, Obama and John McCain during the campaign and has refused to disclose his partisan leanings, is slated for National Security Adviser. And running the Pentagon? For at least the first year of his administration, it’s virtually certain that the new president will retain Robert Gates—the Secretary of Defense appointed by President Bush.

Liberals scored one victory, though, when a top candidate to take over the CIA withdrew from consideration this week after concerns surfaced over his views on the agency’s interrogation methods. In a letter taking his name out of consideration, John Brennan said he didn’t want to be a “distraction” to the president-elect.

Yet most leaders on the left are keeping to themselves any criticisms of the centrist quartet that will help shape and implement Obama’s foreign policy.

For now there is a measure of trust from liberals who believe Obama will hold to the principles he espoused during the campaign: end the war in Iraq, negotiate with adversaries and restore America’s standing in the global community.

“We should have a simple sign on our wall saying, ‘It’s the policy stupid,’” said Tom Andrews, the former Maine congressman, riffing off James Carville's 1992 Clinton campaign mantra. “Many will give President-elect Obama the benefit of the doubt about who is executing the policy as long as there is no comprise or backtracking on the policy itself,” added Andrews, who now heads the group “Win Without War.”

There is, Andrews noted, a reluctance to carp before Obama is even sworn in. “He hasn’t been president for one second yet,” the former congressman observed.

Progressives who knew Obama before his ascent onto the national stage also suggest that he’s remaining on the same course he's always charted – one that hews closer to the middle than those on the right will give him credit for or those on the left would prefer.

Maryiln Katz, a veteran of the peace movement dating back to her days as a member of Students for a Democratic Society, helped organize the October 2002 rally in Chicago’s Federal Plaza where Obama declared his opposition to what he called a “dumb war.”

But, Katz recalled, the then-state senator also made certain to point out he was no pacifist.

“He asserted his own position in contradiction to [the] anti-war movement,” she said. “He wasn’t us. He didn’t pander to the crowd.”

But Katz, a well-connected Chicago public-relations executive, said that some liberals chose to ignore the part of the speech where Obama stressed that he was not against military force and actually urged more aggressive pursuit of al Qaeda.

“A lot of people took his position on Iraq and projected our politics onto him,” she said. “And that was never him. It was never true.”

Still, President Obama sounds a lot better than President Bush to a peace movement whose members have spent the last seven years in a posted of principled, if often powerless, opposition—and who now have to find a new point of orientation.

“It’s a real challenge to those of who have grown up in opposition to everything,” said Katz. “How do we behave in a way that it expands the progressive point of view? How do you maintain an independent NGO, issue-based infrastructure based on something other than a culture of complaint?”

Some clues could come in Chicago, where from January 1st to the 19th (MLK Day and the day before Obama’s inauguration), a coalition of liberal groups will rally in Hyde Park at what they're calling “Camp Hope” to push for various liberal priorities at home and abroad. Still, the language of their "presence" -- they do not call it a protest—highlights the confusion as to how to relate to an incoming president who is, at the least, less adversarial to their agenda.

The group will congregate daily to "congratulate Senator Obama as our new President-elect and recommit ourselves to progressive actions he promoted on his campaign trail," states the message on their Web site, which adds, “We earnestly hope his presidency will signal the dawning of long-needed progressive change in the United States.”

To be sure, there are some voices who haven't hesitated to take on the president-elect when he's departed from their line, but those voices have found themselves increasingly marginalized by the press and those in the peace movement willing to give Obama a chance.

"He is violating the people's mandate," complained Jodie Evans, a Code Pink co-founder who emailed from Tehran, where she was meeting with government officials and other peace activists. "The people elected him over her precisely because of their different foreign policy stances. Here we are in Iran, working to establish citizen diplomacy, hearing the concerns of the Iranian people and how it feels to have [Clinton] say she wants to obliterate Iran. Those comments are not taken lightly and [are] seen as policy positions here."

Evans, who with her husband helped raise money for Obama during the primary and general election, hinted at how the new president-elect has kept the left-wing at bay since winning the election—by focusing on the issue that first brought them to his side.

Recalling her interaction with Obama at fundraisers, the veteran liberal activist said: "It has gotten to the point where he sees me coming and before I am close he just keeps repeating, 'Jodie, I PROMISE, I will end the war, I promise I will end the war.' It is effective in limiting the amount of time I have to complain about what ever is up [to] at the moment."

Those vested in power, though, are less inclined to complain just yet.

"My immediate reaction was that I feel sure that President Obama knows that he was elected on a campaign of change, and that includes on foreign policy," said Rep. Lynn Woolsey (D-CA), a Bay Area liberal who co-chairs the House Progressive Caucus, when asked about the new commander-in-chief. “Regardless of who advises him, he must and I believe he will embrace a bold agenda that uses our non-military power,”

Woolsey said others in the peace movement are holding their fire because they are “so relieved that we will have a leader they can trust,” even as, she said, they are “counting on the progressives in the Congress to keep his feet to the fire."

So far, though, Obama's yet to feel the flame.

Observed Clemons: “It’s very hard for even leaders of the left to poke holes because too many of their followers will say, ‘give the guy a break—he hasn’t even been in there yet.' You should see the ridicule or hate at anyone that tries to poke a hole in the Obama myth right now

3) The New Republic: Trading Up
By Bradford Plumer

The recession's here. Let's tax carbon!

The first hundred days of any presidency rarely go off as planned, but, for now, Barack Obama seems to know what's at the top of his to-do list. In late October, he told Time's Joe Klein that "a new energy economy" would "be my number-one priority when I get into office." But then, as if to cut off a lurking objection, Obama quickly tacked on a qualifier: "assuming, obviously, that we have done enough to just stabilize the immediate economic situation." The caveat seemed to nod at a nascent conventional wisdom: Now that the United States is staring down the barrel of a nasty recession, many Washington types wonder if Obama will have to tear up that to-do list and rein in his ambitious climate and energy proposals.

True, not all of Obama's green ideas are controversial: You can't pick up a newspaper op-ed page these days without seeing yet another economist argue that government spending on clean energy and eco-friendly infrastructure could provide the Keynesian boost necessary to haul the economy out of its mire. But the linchpin of Obama's energy platform wasn't new spending; it was an economy- wide cap on carbon-dioxide emissions, in which a decreasing number of tradeable pollution permits would be auctioned off each year, so as to ratchet down greenhouse gases and help avert drastic global warming. Energy experts tend to agree that it's not enough for the government to fund alternative-energy sources; the only way to usher in the "new energy economy" Obama envisions is to make it costlier to burn fossil fuels. But that's the catch: Since Obama's cap-and-trade proposal would essentially act as a tax and increase the price of oil, gas, and coal, he downplayed this aspect of his plan on the trail--and it's the one idea that now looks most vulnerable. As House energy and commerce chair John Dingell recently told The Wall Street Journal, "In times of economic downturns, members [of Congress] are extremely reluctant to add burdens to the economy, and we're going to confront that problem."

The queasiness is understandable. On the surface, it really doesn't sound like a hot idea to impose broad new regulations on a struggling economy. In this case, though, the fear is misguided. Global warming is urgent enough that the next administration will need to go all-out on the issue, passing not just a green stimulus package but especially a cap on carbon. And, not only is the recession a poor excuse to hold back, it may even be all the more reason to act.

If there's any upside to a recession (and it's hardly much consolation), it's that the accompanying decline in energy use gives us some breathing room to meet long-term emissions targets. (The rough consensus among climate scientists is that the world should aim to cut greenhouse-gas emissions 50 percent below 1990 levels by 2050, a goal that sounded increasingly preposterous in recent years as countries were belching up carbon dioxide at a pace exceeding even the direst forecasts of the Intergovernmental Panel on Climate Change.) The downside, however, is that the fall of oil and gas prices is forcing investors to shelve alternative-energy projects: The WilderHill index of clean-tech stocks has tumbled more than 50 percent since September, and even T. Boone Pickens is putting aside his beloved wind farms for now. The main reason the solar and wind industries aren't facing total collapse is government policy: Some 30 states have laws requiring utilities to get a fixed percentage of their electricity from renewable sources by a certain date.

More problematic still, a recession makes it trickier for politicians to contemplate new environmental rules. Conservatives like Oklahoma Senator James Inhofe have been thundering that an emissions cap--or any policy that raises the price of carbon--will be the death blow for an already atrophying economy. Now, climate-change skeptics are always saying that carbon caps will put us in the poorhouse, recession or no. (Last year, when the economy was still chugging along, the Chamber of Commerce aired an anti-cap-and-trade ad showing a family forced to cook breakfast by candlelight and huddle together in bed for warmth.) The question is whether Obama should pay these naysayers more heed during a slump, or whether he should follow the example of European leaders like Nicolas Sarkozy, who, despite the financial crisis, are working to tighten the EU's emissions-trading regime.

As it turns out, a recession isn't a bad time to get started on climate legislation. Even if Congress raced to pass a cap-and-trade bill in 2009, it would take some time--likely a few years--just to set up a complex new regulatory regime. Moreover, as David Wheeler, a climate-policy expert at the Center for Global Development, points out, an economic slump actually offers a prime opportunity to start trading: If Congress sets the initial economy-wide cap at pre-recession levels, then pollution permits will be exceedingly cheap as long as the economy--and hence energy use--is still shrinking. (Indeed, the downturn in Europe has caused the price of carbon to hit rock-bottom levels.) This would give companies time to learn the system and plan for the future without being assailed right away by high prices.

Congress could then use the interim years to go full speed ahead on a green stimulus package. Both Obama and Al Gore have stressed the need for a new electric grid that could link up to faraway wind and solar farms and better manage electricity demand. It's a good idea: According to a new report by the North American Electric Reliability Council, any attempt to make major emissions cuts could put unbearable strain on the grid unless it's revamped. Other programs to boost the energy efficiency of the economy--retrofitting buildings, say, or capturing and using waste heat from factories--are also needed. All these measures would help utilities and businesses make reductions more cheaply once the cap does start clamping down.

Granted, no cap on greenhouse gases will be totally cost-free. But it's important to be clear about what those costs really are. One recent survey of five respected economic models from academic and government groups found that cap-and-trade policies like the Lieberman-Warner bill considered by Congress this summer would shave off about three-hundredths of a percentage point of the country's annual GDP growth. (The size of the U.S. economy, in other words, would reach $26 trillion in April rather than January of 2030.) Jay Apt, a professor at Carnegie Mellon's Electric Industry Center, explains that the bulk of cuts under a cap-and-trade regime would likely come from the country's electric utilities--and he estimates that the electric-power sector could avoid or capture 80 percent of its emissions for about $65-$90 billion per year, on average. That, he notes, is comparable to the cost of compliance at the peak of the original Clean Air Act, which, contrary to doomsday predictions from industry lobbyists, didn't put any noticeable dents in the economy. (The law did, however, help midwife new businesses that sold scrubbers, particulate matter filters, and flue gas desulfurization technologies to the rest of the world.)

Of course, it's one thing to suggest that emissions restrictions won't be half as crippling as opponents claim, but is it possible that cap-and-trade could actually bolster the economy? Perhaps. If, for instance, the revenues raised by auctioning off pollution permits were rebated to consumers, most families could see their incomes rise, according to one University of Massachusetts study. What's more, the certainty that clear rules on carbon are finally on the way could help get private investment flowing again. As Chuck Gray, the executive director of the National Association of Regulatory Utility Commissioners, explained, "climate-change legislation is essential no matter what the economic situation," because "it will remove many of the uncertainties that are preventing state regulators, utilities, and others from planning and financing new electricity investments." Venture capitalists have lately been dipping their toes in the clean-tech pool--investing $2.2 billion in more than 200 deals in 2007--but many financiers, as a recent New York Times Magazine story made clear, are still waiting for a more supportive policy framework to emerge. Sounds like cap-and-trade should be at the top of someone's to-do list after all.

4)Senate recount: Franken loses bid to add ballots: The state Canvassing Board's rejection of Al Franken's bid to count rejected absentee ballots stirred new rancor.

4th time
Looks like Coleman will win for the 4th time. Those who voted for Franken now need to go get some education and learn how politics works … read more before voting for someone who has no right running for senate.

Democrat Al Franken suffered a setback Wednesday when the state Canvassing Board unanimously turned down his campaign's request to include rejected absentee ballots in the U.S. Senate recount, prompting a Franken attorney to threaten to go all the way to Washington if necessary to get them considered.

"Whether it is at the county level, before the Canvassing Board, before the courts or before the United States Senate, we don't know yet. But we remain confident these votes will be counted," said Marc Elias, the campaign's lead recount attorney, who added that he won't appeal the board's decision.

Senate Majority Leader Harry Reid, D-Nev., termed the Canvassing Board's decision "cause for great concern" and called on Minnesota officials to "ensure that no voter is disenfranchised."

Cullen Sheehan, campaign manager for Republican Sen. Norm Coleman, called Elias' and Reid's statements "a troubling new development." He asked Franken to accept the recount results if he loses, and to promise Minnesotans "that he will not allow this election to be overturned by the leadership of the Democratic Senate."

With 88 percent of the vote recounted by Wednesday night and the number of challenged ballots surpassing 5,600, Coleman's advantage over Franken was 282 votes, according to a Star Tribune compilation of results reported to the Secretary of State's office and gathered by the newspaper. That was 67 more votes than the margin Coleman held at the start of the recount. His campaign had challenged 147 more ballots than Franken's.

The board members -- Secretary of State Mark Ritchie, Minnesota Chief Justice Eric Magnuson, Associate Justice G. Barry Anderson, Ramsey County Chief District Judge Kathleen Gearin and District Judge Edward Cleary -- agreed at their hour-long meeting Wednesday that the panel doesn't have authority under state law to include rejected absentee ballots in a recount. The board said it was not ruling on the merits of the Franken argument.

Board members gave Franken a glimmer of hope when they said they will consult with the attorney general's office and both campaigns to decide whether local election officials should sort through rejected ballots. That would help determine whether ballots were wrongly excluded and also help prepare for a court challenge that all seemed to expect.

Ritchie estimated that 12,000 absentee ballots were rejected. A Star Tribune analysis of those rejected in 39 counties shows that 84 ballots appear to have been turned aside without officials giving one of the four reasons specified in state law. The analysis did not include ballots from Hennepin County.

Another important factor in the race is the 5,600 ballot challenges made to date. In those cases, the campaigns have challenged an election official's decision on the voter's intent, and the Canvassing Board will be the final arbiter. On Wednesday, board members urged both campaigns to reduce the challenge total by weeding out frivolous challenges from their respective stacks.

The board will meet Dec. 16 to rule on challenged ballots and certify the final results in the statewide recount, which began last week and will continue through Dec. 5. The board aims to be done by Dec. 19, but it will take as long as needed.

Behind the board's decision

At Wednesday's meeting, Justice Anderson moved to reject the Franken request on the grounds that the board didn't have the authority to include the rejected ballots in the recount. His colleagues quickly agreed, although Cleary and Gearin said they were reluctant to do so.

The two Ramsey County judges said they believed that absentee ballots that were wrongly rejected should be included in the tally, and urged that they be separated into a "fifth pile" that could be reviewed by local election officials for possible inclusion in their counts. (Ballots rejected for the four reasons specified in state law would go into four other piles.)

Anderson said the "fifth pile" plan would help identify issues for the litigation almost certain to come, but suggested that some input from the attorney general's office may help. Magnuson said that at some point "you have to stop counting," and asked Ritchie when that time will come.

"When we sign the paper" certifying the results, Ritchie replied.

In the end, the Canvassing Board agreed to encourage elections officials to begin sorting rejected absentee ballots, while awaiting further instruction and advice from the attorney general, the campaigns and other interested parties.

Fritz Knaak, the senior counsel for the Coleman campaign, said he believed many counties were already separating out valid absentee ballots that had been rejected. In any event, he said, the campaign's analysis indicates that there are so few of them out there -- perhaps a dozen, he said -- that they wouldn't make much difference in the recount anyway.

Knaak said he wasn't surprised by the board's decision on the Franken request, which he characterized as "a strategy ... preparing themselves for an election challenge."

Cutting the challenges

Knaak welcomed the board's directive on challenged ballots, saying that both sides know that there has been "a big mass of ballots" that never should have been disputed. He said he planned to talk to Elias about looking for ways to whittle down the ballots to make things easier for the Board next month.

Elias said that the Franken campaign plans eventually to withdraw an unspecified number of challenges, but declined to say how many or when. He dismissed a late-night call Tuesday by the Coleman camp for a truce in ballot challenges as a gimmick to "try to shape what the press does," noting that Coleman is still ahead of Franken in overall challenges.

Elias said the campaign was disappointed by the Canvassing Board's ruling but won't appeal it. He said he was encouraged, however, that it left open the possibility of sorting the ballots.

Ritchie is a DFLer, and Magnuson and Anderson were appointed by Republican Gov. Tim Pawlenty. Gearin was elected to the bench in 1986, and Cleary was appointed in 2002 by Independent Gov. Jesse Ventura.

5) The Hysterical Style
By Victor Davis Hanson

Politicians now predict the implosion of the U.S. auto industry. Headlines warn that the entire banking system is on the verge of utter collapse. The all-day/all-night cable news shows and op-ed columnists talk of another Dark Age on the horizon, as each day another corporation lines up for its me-too bailout.

News magazines depict President-elect Obama as the new Franklin Delano Roosevelt, facing a crisis akin to the Great Depression. Columnists for The New York Times even dreamed that George Bush might just resign now to allow the savior Obama a two-month head start on his presidency.

We are witnessing a new hysterical style, in which the Baby Boomer "me generation" that now runs America jettisons knowledge of the past and daily proclaims that each new development requires both a radical solution and another bogeyman to blame for being mean or unfair to them.

We haven't seen such frenzy since the Y2K sham, when we were warned to stock up on flashlights and bottled water as our nation's computers would simply shut down on Jan. 1, 2000 -- and with them the country itself.

Get a grip. Much of our current panic is psychological, and hyped by instantaneous electronic communications and second-by-second 24-hour news blasts. There has not been a nationwide plague that felled our workers. No earthquake has destroyed American infrastructure. The material United States before the September 2008 financial panic is largely the same as the one after. Once we tighten our belts and pay off the debts run up by Wall Street speculators and millions of borrowers who walked away from what they owed others -- and we can do this in a $13 trillion annual economy -- sanity will return.

Gas, now below $2 a gallon, is still falling, saving Americans hundreds of billions of dollars. As housing prices settle, millions of young Americans will buy homes that just recently were said to be out of reach of a new generation.

If it was once considered a sign of economic robustness that homes doubled in value in just a few years, why is it seen as a disaster that they now sell on the way down for what they did recently on the way up? If we were recently terrified that gas would reach $5 a gallon, why do we now just shrug that it might fall to $1.50?

Unemployment is still below 7 percent; it was around 25 percent when Franklin Roosevelt became president. Less than 20 banks have failed, not the 4,000 that went under in the first part of 1933.

We all wish Barack Obama to succeed as president. But there is no more reason to panic and circumvent the Constitution for his early assumption of office than there was for Bill Clinton to prematurely step aside in November 2000 in favor of then President-elect George Bush.

We have now forgotten that by year-end 2000, the American economy was sliding into recession. Lame-duck President Clinton had been impeached. Vice President Al Gore had ostracized him from his presidential election campaign. In the presidential transition, Clinton was considering pardons for Puerto Rican terrorists and most-wanted fugitive Mark Rich.

George Bush is neither the source of all our ills nor the "worst" president in our history. He will leave office with about the same dismal approval rating as the once-despised Harry Truman. By 1953, the country loathed the departing Truman as much as they were ecstatic about newly elected national hero Dwight Eisenhower -- who had previously never been elected to anything.

As for Bush's legacy, it will be left to future historians to weigh his responsibility for keeping us safe from another 9/11-like attack for seven years, the now increasingly likely victory in Iraq, AIDS relief abroad, new expansions for Medicare and federal support for schools versus the mishandling of Hurricane Katrina, the error-plagued 2004-7 occupation of Iraq, and out-of-control federal spending. As in the case of the once-unpopular Ulysses S. Grant, Calvin Coolidge and Harry Truman, Bush's supposedly "worst" presidency could one day not look so bad in comparison with the various administrations that followed.

But these days even that modest assessment that things aren't that bad -- or all that different from the past -- may well elicit a hysterical reaction from an increasingly hysterical generation.

6) Ten Reasons for Conservatives to Be Thankful
By Jennifer Rubin

Republicans were the turkeys in 2008, but they still have much to be grateful for this Thanksgiving.

Thanksgiving brings time for reflection and appreciation. We all have many reasons to be grateful for the blessings in our personal lives. But in a year in which so little has gone right politically for conservatives it is good to recall ten things which should engender gratitude — and indeed rejoicing — from conservatives.

First, President-elect Barack Obama won by assuring voters he would pursue tax cuts, victory in Afghanistan, prevent Iran from acquiring nuclear weapons, and go “line by line” through the federal budget to eliminate waste and unneeded programs. We can doubt his sincerity or ability to achieve these ends, but he won by recognizing and espousing center-right principles. If he pursues some or all of them, the country will be the better for it. If he doesn’t, he is unlikely to succeed or maintain the broad-based popularity needed to keep Democrats in power.

Second, Hillary Clinton, James L. Jones, and Robert Gates are on tap to fill key national security roles. This is not the crew to bug out of Iraq before the job is done, repeal FISA, rush off to meet with Ahmadinejad, or support a 25% cut in defense spending. On national security, the president-elect in essence has conceded that the Left’s vision is impractical and dangerous. To echo Ronald Reagan on the Cold War, conservatives can rightly crow to the Left in the Democratic Party: “We win, you lose.”

Third, Congressional Republicans have not been a source of pride for the GOP, but the elevation of Eric Cantor to minority whip and Mike Pence to the Republican conference slot puts two of the more articulate and attractive Republicans in the spotlight. They won’t win very many votes, but they can paint stark differences and begin to restore intellectual vigor to Republicans inside the Beltway.

Fourth, Mitch McConnell. If your numbers are down, your morale is low, and you are facing a savvy Democratic president, there is no one better situated to prevent the worst and eke out small victories. And given his toughly contested Senate race, we can look forward to an equally vigorous race against Harry Reid in 2010.

Fifth, Republican governors make up a diverse, attractive, and effective group of leaders. From the ranks of Bobby Jindal, Sarah Palin, Jon Huntsman, Mitch Daniels, Haley Barbour, Tim Pawlenty, and Mark Sanford will come conservative ideas, articulate spokesmen, and a raft of contenders for 2012. If President Obama fails to bring about economic recovery with a reenactment of the New Deal, this group stands ready to present alternative plans for reviving the economy.

Sixth, the MSM has never been in lower repute. Reporters and editors from their own ranks concede their bias. The stock of major media companies is plummeting. They are in bigger trouble than the Big Three auto companies. And they show even less inclination to reform. That means the opportunity exists for conservative and new media to cultivate large audiences. If alternative media outlets continue to offer hard-nosed reporting and balance the fawning analysis of the MSM, they can become the media of choice for more and more Americans.

Seventh, there is a rich — and sometimes contentious — intellectual community on the Right in think tanks, new media, and grassroots organizations which did not exist in other moments of crisis for conservatives (e.g., post-Watergate). Yes, they sometimes devolve into acrimonious bickering. But they also provide the potential for intellectual and political rebirth. There is no shortage of ideas or voices on the Right.

Eighth, we complete seven years without a terrorist attack on American soil. Despite the many criticisms of the Bush presidency, he achieved what few thought possible — a perfect record in foiling terrorist plots which would have struck our homeland and killed more Americans. If the president-elect follows the advice of Attorney General Mukasey, a good deal of the homeland security architecture erected during this administration will remain in place and will continue to afford protection for Americans. (For example, just as he did in his final vote on extending FISA, President-elect Obama’s assessment of the Guantanamo detainee cases may lead him to the same conclusion which the Bush administration reached on an important aspect of security — we need an appropriate non-civilian legal system and a secure location for dealing with very dangerous people in an unconventional war of undetermined length.)

Ninth, President George W. Bush and General David Petraeus persevered against tremendous odds and have placed us on the verge of one of the great military turnarounds in our history. We can disagree about the wisdom of the decision to go to war in Iraq, but a victory with a stable Iraq allied with the U.S. and a humiliated al-Qaeda is now within our grasp. By avoiding defeat and empowering an Arab nation to take up arms and defeat Islamic terrorists, Bush and Petraeus furthered the security of the U.S., the region, and our allies around the world.

Tenth, Republicans in Washington and around the country will no longer have George W. Bush tied around their necks. For example, Virginia Attorney General Robert McDonnell can run for governor on his own merits — likely against Clinton operative Terry McAuliffe — without need to defend an incumbent president as did Virginia Republicans in two losing Senate races and one failing governor’s race during the Bush years. That will be duplicated in races around the country as Republicans, freed from a horribly unpopular president, can run on their own ideas and contrast themselves with their Democratic opponents. A huge weight has been lifted.

All of this may seem small comfort to conservatives who finish the year on a losing streak. But Republicans were counted out in 1964, 1976, and 1992. Their resources are greater and their ranks are larger now than at any of those times. They can be thankful as well for the truism that nothing in politics is permanent. So for all these things — as well as the many blessings in their own lives — conservatives should indeed be grateful.

7)Zell Miller lauds Chambliss in U.S. Senate race: Martin gets backing of police group, calls Chambliss ad ‘offensive’

Gainesville — Former Democratic U.S. Sen. Zell Miller said Wednesday that incumbent Republican U.S. Sen. Saxby Chambliss is the “last man standing” to prevent a “far-left agenda” from sailing though the U.S. Senate.

Miller spoke to about 200 people at a luncheon rally for Chambliss, who faces Atlanta Democrat Jim Martin on Dec. 2 in a hotly contested runoff that could tilt the balance of power in the upper chamber of the U.S. Congress. Miller urged attendees to back Chambliss to prevent a rubber stamp congress for the Democratic agenda, which Miller said will move the country to the left.

“(U.S. Sen.) Harry Reid (D-Nev.) has got Jim Martin warming up in the bullpen to come in and help move it along,” Miller said.

Democrats now have 58 seats in the Senate and are pushing for a 60-vote, filibuster-proof super majority. Only Senate races in Georgia an Minnesota remain to be decided.

In Atlanta, Martin dismissed Miller’s endorsement at a Wednesday afternoon press conference where the Democratic candidate was endorsed by the International Brotherhood of Police Officers.

“Gov. Miller has lost his rudder,” Martin said. “No one knows where he stands.”

Martin also slammed Chambliss for an attack ad where Marin is accused of being soft on crime. Martin’s daughter was kidnapped years back when she was 8 years old. She escaped unharmed, but Martin said the incident reinforced his support of police and tough laws for criminals.

“For Saxby Chambliss to accuse me of being week on crime is not only wrong, but it is offensive to both me and my family,” Martin said.

The Chambliss-Martin showdown has focused national attention on the state, bringing in a long list of political bigshots for both candidates. Alaska Gov. Sarah Palin comes to town Monday, the day before the runoff.

But both campaigns are also employing state politicians in an effort to turn out the vote in an election that will probably see low turnout. That makes the runoff unpredictable and both sides are trying to urge voters back to the polls.

“We need North Georgia to turn out in a very, very big way,” Chambliss told the crowd.

It was the second public appearance for Chambliss by Miller, who in the 2002 U.S. Senate race backed Chambliss’s opponent, former Democratic U.S. Sen. Max Cleland.

Miller criticized President-elect Barack Obama for what he called “this income redistribution, spread the wealth kind of thing.”

Under Obama’s plan, Miller said: “You rob Peter to pay Paul hoping Paul is going to vote for you.”

8) Terrorists mount second attack on Mumbai's main railway station. Still no word on Beit Chabad hostages

Helicopters drop Indian commandoes on Chabad Center, Mumbai
Friday, on Day 3 of the assault on Mumbai, the terrorists mounted a second attack on Mumbai's main rail station already hit Wednesday. The fresh attack indicates Islamist gunmen are on the loose outside the primary three hostage locations seized Wednesday.

Early Friday, Indian commandos were dropped on the roof of the Chabad Cente 36 hours after its seizure by Islamist gunmen.

Some sources report Rabbi Gavriel Holzman, his family and others were found alive; others say that none of the hostages survived. Voices of a woman and child were heard Friday morning. Later five explosions rang out from the building.

Soldiers fired smoke bombs into the building and are clearing it room by room from the top fifth and fourth floors. The operation was agreed by the Indian and Israeli governments when it appeared that the chances of finding living hostages in the Chabad Center were declining.

From the Oberoi Hotel, Indian police report more than 100 guests have been evacuated so far, including 20 airline crew members, but the operation there continues. The Israeli consul Orna Sagiv says she cannot tell if they include Israelis as the Indian police prevent access to the rescued hostages. She reported 30 Israelis missing in India, but said not all may have been in Mumbai when the attack began.

At least 125 people have been killed and 327 injured across the city, a figure expected to rise before the episode is over.

Indian sources identify some of the terrorists as Pakistani British citizens. The ship which brought them to Mumbai is thought to be an Indian vessel hijacked and sailed to Karachi, Pakistan. French foreign minister Bernard Kouchner is certain they are al Qaeda.

Indian police report 400 hostages freed from the Taj Mahal Palace Hotel. However two days after the terrorist assault on Mumbai, Indian police and special forces had not finished their takeover of the three locations seized by the Islamists. While some of the released hostages are Westerners, many are Indians allowed by their captors to go free. Military sources expect the operation to continue well into Friday, Nov. 28.

Wednesday, November 26, 2008

Imperious Rangel - Will Pelosi Blow The Whistle?

Olmert hangs on but how much longer can he do so considering the prospective charges against him? Politicians don't go easily and crooked ones even less so. (See 1, 1a and 3 below.)

Saudi Interior Minister appeals to his nation to disavow extremism. (See 2 below.)

A New York Times editorial calls for Rangel's investigation to continue because of an alleged sweetheart deal. Rangel is accused of arranging special tax favors for an oil company which then contributed mega bucks to Rangel's pet project. This is how imperious politicians operate in D.C. Congress is nothing shy of a massage parlor. It will be interesting to see if Pelosi blows the whistle on Rangel whose ethical skin needs scrubbing.

Rangel, Chairs The House Ways and Means Committee - one of the most powerful of all because it deals with tax policies. Rangel, in another matter, also failed to report income on several properties he owned. Rangel is one of the oiliest, slickest politicians around so it is ironic that he is accused of being involved in an oil deal. With The New York Times on his tail even Pelosi might not be able to save him. He represents Harlem so there is little chance his constituents will turn against him.

It will also be interesting to see whether the New York Times pursues Rangel or will someone get to them. Stay tuned.(See 3 below.)

Growing up in days when government, lawyers, politically correct do gooders did not control our lives. Humorous but sad and ever so true. (See 4 below.)

Now that a lot of people are getting killed, Peter Foster writes: 'it is time to be concerned about terrorists attacking India.' I think I understand what he means. It seems, however, he is suggesting numbers count more than the act itself.

Without overreacting, the ball is now in Obama's court and his testing has begun. It is possible his innate intelligence will eventually dictate his actions and he might be tougher than his campaign speechifying suggests. On the other hand, Obama's heart on his sleeve could dictate his behaviour and he might seek a meaningless visit with terrorists and try to reason with them.

It will be interesting to see whether he "changes!"

Meanwhile India is being welcomed to the same world Israelis live with daily. It will probably happen here again as well. Eventually terrorism might goad the world into action. If not the tragedies will continue, casualties will mount and eventually could culminate in a nuclear confrontation. Most people today cannot spell Chamberlain much less know who he was.

One thing is for sure and I have written and said it over and over again - feed a bully (read terrorist) and increase his appetite.)(See 5 and 5a below.)

In times like these a little humor can go a long way. This is about a nosy thief! (See 6 below.)

Stratfor offers brief review and analysis of Mumbai. (See 7 below.)

I seldom give market advice but in the past few months many, many of my friends have been having knee, shoulder and hip surgeries and thus I suspect titanium stocks might be a good buy. I play tennis as often as my own knees permit and there is more titanium in my fellow tennis player's bodies than in our racquets. At least we are out there playing.


1) Attorney-General plans to indict Olmert

Ehud Olmert is now much closer to standing trial on criminal charges than any Israeli prime minister has ever been.

Mazuz also intends to charge Olmert's longtime close aide, Shula Zaken, according to the ministry's statement.

The Justice Ministry statement said the hearing would be held at a time agreed upon by both sides. If the experience of former president Moshe Katsav is anything to go by, Olmert's hearing should take place in about four months.

Kadima leadership candidate Tzipi Livni did not respond publicly to the attorney-general's decision and her spokesman was unavailable for comment.

But Kadima officials revealed that she did try to pressure Olmert to suspend himself via ministers and MKs who were once close to him and are now loyal to her such as Finance Minister Ronnie Bar-On and Vice Premier Haim Ramon.

If Olmert suspends himself, Livni would take over because of her status as vice prime minister.

Livni will remain silent until noon Thursday, when there will be a Kadima faction meeting in which the party's MKs might collectively call on him to let Livni become prime minister and improve her chances of winning the February 10 election.

Olmert's lawyers, Eli Zohar, Nevot Tel-Tzur and Ro'i Blecher, said the prime minister vigorously denied the allegations and was shocked to see the state mention suspicions against him that he had never been questioned about during his 10 interrogation session with police investigators.

The prime minister's spokesman, Amir Dan, said it had been obvious the prosecution would have to indict him "after it suffered a severe blow in the Talansky affair and forced a serving prime minister to resign."

In the Rishon Tours affair, Olmert is suspected of collecting $85,000 more than the cost of speaking tours he made abroad on behalf of nonprofit organizations and working trips he made in his ministerial capacity. He allegedly double-billed or overcharged the nonprofit organizations and the state and used the money to finance private trips for himself and his family or to upgrade flights.

The organizations on whose behalf Olmert spoke abroad included Akim, Israel Bonds, Yad Vashem, the Simon Wiesenthal Center, the March of Life, the Soldiers Welfare Association, Keren Hayesod, the World Jewish Congress and ORT.

When he flew to speak for more than one organization on the same trip, Olmert allegedly charged each one the full price of the ticket. Sometimes, he brought other people along with him and charged the various organizations the full price of their tickets, too.

Zaken and another employee in Olmert's office, Rachel Raz-Risbi, were allegedly responsible for telling each organization it would have to pay the full price of his ticket. Olmert's travel agency, Rishon Tours, would send the bills and receipts to the organizations in accordance with instructions from Zaken and Raz-Risbi.

In some cases, the price that was charged to individual organizations was allegedly "significantly" higher than the cost of the actual ticket. In others, the travel agency supposedly published a fictitious itinerary for Olmert's trip.

Olmert behaved the same way toward the state, according to the Justice Ministry statement. When he went on a trip that included a speaking tour and ministerial work, he would charge the nonprofit organization and the state the full price of the ticket.

In doing so, he also deceived the state comptroller, to whom he had to give a report on his income, and the Tax Authority.

Olmert is suspected of having obtained something by deceit, fraud and breach of faith, making false entry in the documents of a corporate body, and deceitfully concealing income. Zaken faces indictment on the first three of the above charges.

The Rishon Tours affair is one of six criminal investigations being conducted against the prime minister. Ironically, it is also the most recent. It began in June as an offshoot of the Talansky affair, in which Olmert is suspected of receiving hundreds of thousands of dollars, some of it in cash, from an American Jewish supporter and businessman, Morris Talansky. On September 7, the police completed their investigation of the two affairs and recommended indicting the prime minister.

The Talansky investigation has become bogged down because Talansky has refused to return to testify in Israel as he is currently under investigation in the US and is concerned that information he divulges in his trial here might be used against him there.

The police have also completed the investigation of the Bank Leumi affair, in which Olmert is suspected of having intervened in a public tender for the sale of the core ownership of the bank to help a business acquaintance. In this case, the police have recommended closing the file.

The other investigations involve Olmert's term as minister of industry, trade and labor. He is suspected of making political appointments and giving favorable treatment to businessmen seeking government grants for new factories who were represented by his close friend, Uri Messer.

Another investigation involves Olmert's purchase of a home in Jerusalem's German Colony at a price below market levels. He is suspected of repaying the contractor by persuading the city to ease restrictions and grant him better building terms than he would have otherwise received. These cases are still under police investigation.

MKs from Meretz, Labor, Hatikva and the Likud released statements on Wednesday night urging Olmert to suspend himself following Mazuz's declared intention to put the prime minister on trial.

MK Zehava Gal-On (Meretz) called on Olmert to suspend himself, saying every day the prime minister stayed in office was "pointless," because he "lacks the moral and public virtues that are necessary in order to lead."

MK Ophir Paz-Pines (Labor) also called on the prime minister to resign.

"This is a tragic day for the State of Israel. We've reached a new low point," Pines said in a statement.

"Olmert should immediately suspend himself as he publicly and explicitly promised to do. It is wrong for a person accused by the state of criminal charges to continue sitting in the prime minister's seat," Pines added.

Right-wing politicians such as MK Arye Eldad (Hatikva) were supportive of Mazuz's plan to put Olmert to trial.

"The public knows that a criminal is leading Kadima's government," Eldad said, adding that he was disappointed with the slow-moving legal system.

Eldad said he was "constantly amazed at Olmert's chutzpa - as he continues to give away territories to the Arabs and promises withdrawals, while his only mandate is over the attorneys who will represent him during his trial."

MK Michael Eitan (Likud) expressed concern with the implications for Israel's foreign policy.

"Olmert should announce he is freezing all negotiations until a new government is elected," he said.

"A transitional government led by an indicted man is a government that lacks the legal and moral legitimacy required to lead a nation in diplomatic moves with far-reaching consequences," Eitan said.

Another Likud MK, Yuli Edelstein, also praised Mazuz's plan to put Olmert on trial, but said it came too late.

"His political verdict should have been given a long time ago, but his party members wouldn't let go of their seats and backed his corrupt actions," Edelstein said.

Gil Hoffman contributed to this report.

1a) Livni urges Olmert to take leave as threat of indictment looms
By Tomer Zarchin

Kadima Chairwoman Tzipi Livni on Thursday called on Prime Minister Ehud Olmert to suspend himself immediately in light of the indictment facing him over the Rishon Tours scandal.

Livni, who also serves as foreign minister, summoned an emergency meeting of Kadima on Thursday to discuss the repercussions of a potential indictment against Olmert.

"The prime minister must take leave. There is no other option," Livni said.

"This is a dramatic day," Livni said. "The Kadima Party cannot afford to follow these norms. There has been a change in Israel. This isn't Olmert's personal matter but a public matter."

The Kadima head added that this was a difficult day for the state following the attorney general's announcement Wednesday night that an indictment against Olmert is imminent.

"Despite the discomfort and despite the fact that none of us is eager to do so, Kadima was established in order to impart worthy norms of behavior," Livni said, calling on faction members identified with Olmert to put aside their allegiance. "We have no other choice," Livni said. "We are here together and we have to work as a faction."

Attorney General Menachem Mazuz told Olmert on Wednesday that he is considering filing an indictment against him for allegedly using state funds from multiple state bodies to finance private trips abroad.

Mazuz told Olmert's former bureau chief, Shula Zaken, he is considering indicting her, as well.

The attorney general made his decision a few weeks ago but prefered to wait until Olmert returned from his just-completed Washington D.C trip. He will issue a final decision on the matter pending the outcome of a hearing he will hold for Olmert.

The Rishon Tours affair involves suspicion that during Olmert's stint as minister of industry, trade and labor (2003-2006), and as mayor of Jerusalem (1993-2003), he financed his own and his family's private flights through money obtained fraudulently from public bodies. He may face charges of fraud, breach of faith and falsifying corporate documents, and income tax evasion.

Olmert's attorneys, Eli Zohar, Navot Telzur and Roy Blecher said in response to Mazuz's announcement: "The prime minister utterly rejects the suspicions against him in the matter of Rishon Tours. The decision to summon the prime minister to a hearing on this matter, when other affairs are still under investigation and/or no decision has been made, is a surprising and even unreasonable one."

Mazuz ordered a criminal file opened against Olmert in June in the Rishon Tours affair, with suspicions emerging that he had allegedly defrauded several organizations, among them the AKIM organization for developmentally delayed children, Israel Bonds, Yad Vashem, the Simon Weisenthal Center, the March of the Living, Keren Hayesod, the World Jewish Congress and ORT. Olmert is suspected of demanding, through Zaken and another staff member, Rachel Raz-Risbi, reimbursment from two or more groups for his flights as well as from the state.

It is believed that some $85,000 accumulated in an account at Rishon Tours, which was used for Olmert family trips abroad and for upgrades.

Olmert's attorneys were informed Wednesday by letter of suspicions that with Olmert's knowledge and on his instruction the bodies funding his trips were systematically presented with false documents stating that they were paying for his flight and occasionally for those accompanying him, and that it was concealed from these bodies that other groups were also being asked to pay for the trips.

In their statement Wednesday, the prime minister's lawyers also said Olmert was "shocked to read in Attorney General Menachem Mazuz's letter details and claims about which he had not been complete opposition to the statement by the attorney general, the prime minister was presented with no evidence on which to base the idea that he was aware of the alleged acts."

According to the State Prosecutor's Office, these alleged acts of fraud were also commited against the state, since some of his trips were made as part of his ministerial post and were funded by the state. Olmert is suspected of presenting false documents to officials in the Industry, Trade and Employment Ministry.

The State Prosecutor's Office claims that by these alleged acts, Olmert also unlawfully received payment or benefit deriving from his post.

Olmert is also suspected of fraudulently concealing this income from the State Comptroller. The State Prosecutor further suspects that Olmert concealed the income from the tax authorities in his annual tax returns.

The State Prosecutor notes that Olmert's conduct in general constitutes taking advantage of his position over the years for monetary benefit with trips paid for by public organizations and by the state in a manner opposed to norms and rules obligating a minister and a public servant, and that such acts constitute fraud and breach of faith.

The State Prosecutor's Office has also not yet decided whether to indict Olmert on allegations that he accepted illicit funds over many years from a Long Island businessman, Morris Talansky. In his preliminary deposition in Jerusalem on May 27, Talansky testified that he gave Olmert $150,000, mostly in cash, for political campaigns and travel expenses.

Contacts with American authorities to allow Talansky to complete his preliminary testimony have not yet been concluded. Talansky has said that because of the investigation against him in the United States, he does not intend to come to Israel to complete his testimony unless he is given a kind of immunity, because of concerns his testimony here may implicate him in the U.S.

Justice officials said Wednesday that the claim that Mazuz is delaying his decision regarding Olmert until after the elections is unfounded. The officials also said that even if Olmert is charged on other counts, it has been decided not to wait with an indictment until the conclusion of the investigations by the state prosecutor on these matters.

Sources said Wednesday that the investigation by State Prosecutor Moshe Lador of suspicions that Olmert interfered in the privatization of Bank Leumi to benefit a friend is at a very advanced stage and a decision is expected soon.

The police are still investigating allegations that Olmert, while serving as the industry, trade and labor minister, allegedly granted large state investment funds to a company which his close associate and former law partner, Uri Messer, had been hired to represent.

Olmert's media adviser, Amir Dan, said "After the State Prosecutor's Office took a hard blow in the Talansky affair and after they brought down a sitting prime minister, it is clear that the Justice Ministry cannot make do with anything else, and there were no other expectations in this matter. As with Talansky's deposition, now too the State Prosecutor's Office is presenting a mistaken, one-sided picture, which will crack and collapse."

Mazuz may be asked soon for an opinion regarding Olmert's possible incapacitation. A senior judicial official said Wednesday that "the matter depends mainly on Olmert," and that Mazuz has said that incapacitation is a matter for public and political discourse, and not a legal issue.

2) Saudi Interior Minister Appeals to Religious and Education Establishments to Fight Ideological Extremism in the Country

Saudi Interior Minister Prince Na'if bin Abd Al-'Aziz has recently published statements in the Saudi press condemning extremism and terrorism in Saudi Arabia and calling for their eradication. In the statements, Prince Na'if contended that his country was not exerting sufficient effort to combat extremist ideologies, and called on Saudi clerics, intellectuals, and institutions of higher education to intensify measures to counter these ideologies.

Following are excerpts from some of Prince Na'if's statements:

Every Citizen Must Act As If He Were a Senior Security Officer

During an October 2, 2008 meeting with senior officials of the Saudi Ministry of Interior, held in his Jeddah residence, Prince Na'if stated: "I appeal to the clerics, the intellectuals, and to all my compatriots - each according to his position and ability - to help [fight terrorism]. An [ordinary] citizen must act as if he were a senior [member of the] security [forces], since a security [officer] is a citizen by virtue of his being a security [officer], and everyone has a responsibility [to act as if he were a security officer]… Everyone should realize that we are dealing not just with people, but with an opposing ideology…" [1]

Prince Na'if also warned about the danger inherent in the Al-Qaeda ideology, stressing that it still posed a threat to the security of Saudi Arabia. [2]

Saudi Mosques Have Failed at the Task of Combating Ideological Extremism

In an address delivered October 15, 2008, at a symposium on what he termed "ideological security," Prince Na'if stated that, as far as security was concerned, Saudi Arabia's efforts to combat terrorism had been both courageous and successful, but that in combating ideological extremism, the Saudi mosques had failed to fulfill the task expected of them - that is, preaching tolerance. He contended that the global increase in crime demanded close cooperation between security [apparatuses] and educational institutions. [3]

Saudi Universities Must Address the Problem of "Ideological Security"

During a meeting with the teaching staff of the Umm Al-Qura University in Mecca, on the sidelines of the aforementioned symposium, Prince Na'if called on [Saudi] universities to "address [the problem of] ideological security using theoretical and practical means available to them." He added: "…In addition to private universities, there are 20 government universities in Saudi Arabia, all capable of promoting the kind of education that would destroy misconceived ideas and replace them with those derived from the Koran, which are correct… We are asking our universities… to carry out research that will help to topple [the current] deviant ideologies, which have nothing to do with Islam and [only] harm it. Among the elements that must fight [such] deviant ideologies, the foremost are our clerics, led by the Mufti… Furthermore, 15,000 mosques in Saudi Arabia hold Friday prayers, and all of them can use their pulpits to guide the public along the right path and prevent it from going astray…" [4]

Terrorism Has Come To Be Regarded as an Integral Part of Islam - And To Be Attributed to All Muslims

Several days later, Prince Na'if reported that 991 extremists had been accused of involvement in terrorist [activities] in Saudi Arabia, and that they would stand trial. He explained that in addition to accusing [Saudi] society of heresy, "these criminal murderers have carried out over 30 terrorist operations against civilians… security personnel, and the motherland…"

Prince Na'if proceeded to describe the damage that terrorists had caused Saudi Arabia, explaining that not only had their activities harmed the country's reputation worldwide, but that terrorism had come to be regarded as an integral part of Islam and to be attributed to all Muslims. He went on to praise Saudi security forces' efforts to combat terrorism, stating that so far they had managed to prevent over 160 terrorist operations. [5]

It should be pointed out that the Saudi Shura Council is currently debating a bill that would punish extremists involved in terrorism and in other activity undermining state security. A Shura Council source disclosed that "the new law will deal with all forms of organized crime as well as with terror-related activity, and the punishment of those involved in such activities will be death."

Prince Na'if said in this regard that various crimes, including bombings, kidnappings, and terrorizing people in the Saudi Kingdom, were crimes of haraba. Such crimes, defined in the Koran as acts of "spreading corruption and chaos around the world," are characterized by the shari'a as especially grievous, and as punishable by death. [6]

[1] 'Okaz (Saudi Arabia), October 3, 2008.

[2] 'Okaz (Saudi Arabia), October 13, 2008.

[3] 'Okaz (Saudi Arabia), October 16, 2008.

[4] Al-Hayat (London), October 18, 2008.

[5] 'Okaz (Saudi Arabia), October 21, 2008.

[6], November 24, 2008.

3) New York Times Editorial

More questions are being raised about the doubtful ethics of Representative Charles Rangel of New York, the chairman of the tax-writing House Ways and Means Committee. The latest sniff of scandal — a breakfast meeting with a donor seeking tax protection — provides more grist for the House ethics inquiry that’s supposed to be under way into Mr. Rangel’s tangled affairs.


According to a report in The Times on Tuesday, Mr. Rangel breakfasted last year with a major donor to his pet legacy: a school of public service at City College of New York that will bear Mr. Rangel’s name. The donor, an oil-drilling executive, says he then escorted the chairman across the dining room of the Carlyle Hotel to meet his company’s waiting lobbyist — a special pleader intent on protecting an off-shore tax loophole.

As events progressed, the loophole was protected, the donor pledged $1 million to the Rangel school and the principals deny that there was any quid pro quo.

Mr. Rangel first called for an ethics inquiry after disclosures about his cut-rate rents in rent-stabilized apartments in Harlem. Then there was the news that Mr. Rangel owned a Dominican villa on which he failed to disclose rental income or pay federal taxes. Mr. Rangel plainly violated congressional regulations when he used his official letterhead to solicit support for his academic center from scores of business and foundation leaders. Throughout, Mr. Rangel has proclaimed his innocence.

Mr. Rangel also says he has no recollection of the lobbyist breakfast encounter, while company officials say it involved only a few minutes and ended with Mr. Rangel restating his opposition to closing the loophole.

Nevermind that the congressman had earlier denounced the boondoggle for costing taxpayers tens of millions annually. He maintains he since concluded that a change would amount to an unfair retroactive tax increase. The Times’s David Kocieniewski reports that congressional colleagues were shocked by the reversal.

We hope that Speaker Nancy Pelosi is shocked into action. She should insist that the ethics investigation move forward — and that Mr. Rangel relinquish his chairmanship during the inquiry. If Mr. Rangel continues to resist, the speaker should permanently reassign the gavel. In a deep economic crisis, the committee, and the country, cannot afford the distraction.

4)TO ALL THOSE WHO WERE BORN IN THE 1930's 40's, 50's, 60's and 70's !!

First, we survived being born to mothers who smoked and/or drank while they carried us.

They took aspirin, ate blue cheese dressing, tuna from a can, and didn't get tested for diabetes.

Then after that trauma, our baby cribs were covered with bright colored-lead-based paints.

We had no childproof lids on medicine bottles, doors or cabinets and when we rode our bikes, we had no helmets,not to mention, the risks we took hitchhiking .

As chilren, we would ride in cars with no seat belts or air bags. Riding in the back of a pick up on a warm day was always a special treat.

We drank water from the garden hose and NOT from a bottle.

We shared one soft drink with four friends, from one bottle and NO ONE actually died from this.

We ate cupcakes, white bread and real butter and drank soda pop with suuar in it, but we weren't overweight because......


We would leave home in the morning and play all day, as long as we were back when the streetlights came on.

No one was able to reach us all day. And we were O.K.
We would spend hours building our go-carts out of scraps and then ride down the hill, only to find out we forgot the brakes. After running into the bushes a few times, we learned to solve the problem .

We did not have Playstations, Nintendo's, X-boxes, no video games at all, no 99 channels on cable, no video tape movies, no surround sound, no cell phones, no personal computers, no Internet or Internet chat rooms..........WE HAD FRIENDS and we went outside and found them!

We fell out of trees, got cut,broke bones and teeth and there were no lawsuits from these accidents.

We ate worms and mud pies made from dirt, and the worms did not live in us forever.

We made up games with sticks and tennis balls and although we were told it would happen, we did not put out very many eyes.

We rode bikes or walked to a friend's house and knocked on the door or rang the bell, or just yelled for them!

Little League had tryouts and not everyone made the team. Those who didn't had to learn to deal with disappointment. Imagine that!!

The idea of a parent bailing us out if we broke the law was unheard of. They actually sided with the law!

This gener=tion has produced some of the best risk-takers, problem solvers and inventors ever!

The past 50 years have been an explosion of innovation and new ideas.

We had freedom, failure, success and responsibility, and we learned


And YOU are one of them!

You had the luck to grow up as a kid, before the lawyers and the government regulated our lives along with the do gooders and forward this your kids so they will know how brave their parents were.

Kind of makes you want to run through the house with scissors, doesn't it?!

5) Mumbai attacks: The world can't ignore India's Islamist terrorists any longer
By Peter Foster

India has suffered a gathering wave of Islamist terror attacks over the last five years, but it wasn't until yesterday afternoon that the terrorists really made the outside world sit up and take notice.

Firemen tackle a fire at the Taj Mahal hotel
By targeting one of India's most iconic hotels, The Taj Mahal Palace on Mumbai's waterfront and holding hundreds of its wealthy foreign guests hostage, the Islamists have touched an international nerve at a delicate moment in the story of India's resurgence.

Despite the spate of attacks in recent years, including the 2006 train bombings in Mumbai that killed 180 people and bomb attacks this year in commercially sensitive locations of Bangalore and New Delhi, India has managed to retain its international image as a 'safe' place to visit and invest.

That all changed yesterday as the international news networks were filled with the voices of terrified Americans and Europeans, some of them on their mobile phones direct from the Taj Mahal Hotel, even as the bombs exploded nearby.

Such images will cause damage to India's status as an international investment destination at time when the economy is already suffering serious fallout from the global credit crunch.

Foreign capital, highly instrumental in India's economic resurgence, is fleeing India's economy at an alarming rate (more than £10bn this year), driving up the cost of borrowing and curbing the investment on which India's 'economic miracle' depends.

Mumbai attacks: More than 100 dead, including six foreigners
Reaction from international leaders
India bombings timeline, 2003-2008

Without China's trillion-dollar trade surpluses, India just doesn't have the spare cash to cut taxes and announce multi-billion dollar internal investment programs to prop up domestic demand.

It's an unquantifiable factor, but the fact that every serious investor and businessman to visit Mumbai will know the Taj Palace Hotel like a home from home, will only serve to increase the jitters caused by these attacks.

What will really terrify India's political leaders, however, is the certain knowledge that there is virtually nothing they can do to stop this type of low-tech attack from recurring again and again.

Since 2003, India's homegrown Islamist terrorist have struck with growing frequency - before yesterday's attacks they have bombed Jaipur, Bangalore, Ahmedabad and New Delhi this year alone - and without a single serious break-thorough by Indian police.

What began as a localized threat from Pakistan-backed mujahideen in Kashmir conflict has now spread across India, putting down indigenous roots in socially disenfranchised Muslim communities who have benefited less than most from the years of economic boom.

From a security perspective India is all but ungovernable: a vast landmass that shares porous borders with unstable Islamic states containing a shifting population of 1.1bn people, many of whom go through their entire lives without their names appearing in an official register of any kind.

With cash being the norm for living transactions and with many living in vast slums (45 per cent of all Mumbai's residents live in a slum, for example) it is perfectly possible for people to 'disappear', as the Indian police's failure to solve a single terror major attack in the last five years attests.

Add to this chaotic background the fact that sections of India's disgruntled 130m-strong Muslim minority have proved highly receptive to the extremists message and you are left with near perfect-storm conditions for an outbreak of terrorist activity.

India's political and security leaders have long privately acknowledged and feared this fact; unfortunately for India, yesterday was the day that the terrorists succeeded in bringing it to the attention of the entire world.

5a) Obama's First Test
By Gregor Peter Schmitz

The series of terror attacks in Mumbai comes at a sensitive time for the US. President Bush is no longer in a position to lead, and President-elect Barack Obama has not yet been given the reins. Still, the attacks represent Obama's first foreign policy test.

The mood was a festive one on Wednesday in Washington D.C. Just like every year before Thanksgiving, US President George W. Bush "pardoned" a turkey -- this year's version was named Pumpkin. President-elect Barack Obama and his wife Michelle, for their part, joined TV legend Barbara Walters for a chat. The atmosphere was relaxed -- they talked, for example, about how the Obama daughters would be in charge of making their own beds when they moved into the White House in January.

Bush and Obama quickly issued statements. "President Bush offers his condolences to the Indian people and the families of the innocent civilians killed and injured in the attacks in Mumbai," the White House statement said. "The US government continues to monitor the situation…and stands by ready to assist and support the Indian government." Terror experts from the State Department and the Defense Department quickly began analyzing the situation.

The Obama statement was in a similar vein. "These coordinated attacks on innocent civilians demonstrate the grave and urgent threat of terrorism," Obama spokesman Brooke Anderson said. "The United States must continue to strengthen our partnerships with India and nations around the world to root out and destroy terrorist networks."

Obama also quickly got on the phone with US Secretary of State Condoleezza Rice, who briefed him on the situation. But the exact circumstances of the series of attacks, which killed over 100 people and injured some 250, were unclear on Wednesday evening in Washington. A previously unknown group calling itself Deccan Mujahideen sent out e-mails to media organizations claiming responsibility for the attack. But there are a number of groups in India that could be behind the Deccan Mujahideen, including groups from neighboring Pakistan.

This much is certain: If it is indeed confirmed that Americans and Britons were targeted and that the attacks were inspired by al-Qaida's radical ideology, then the difficult transition phase in Washington has become even more complicated. "If the terror threat spreads from Pakistan and Afghanistan to the important American ally India, that's an enormous problem for the United States," ex-presidential advisor David Gergan said on CNN Wednesday night.

The crisis could be Obama's first big foreign policy test. The world is going to dissect his response. The president-elect has already been in the spotlight for days because of the worsening financial crisis. Given the extent of the economic catastrophe, the January 20th inauguration date seems too far in the future for an ever-growing number of Americans. For three straight days, Obama has held press conferences in order to introduce economics experts who will advise him and stimulus programs that should help the country out of the crisis. His message was clear: "Help is on the way."


At least 60 people were killed and more than 250 people injured in a series of bombs in the Indian capital New Delhi just three days before the popular Hindu festival of lights Diwali.

September 8, 2006
Two devastasting bomb attacks on a Muslim festival killed at least 37 people in the western Indian state of Maharashtra. More than 100 people were injured, some seriously.

July 11, 2006
Seven bombs exploded on packed regional trains and railway stations in the western city of Mumbai (Bombay). A total of 187 people lost their lives and more than 700 were injured in the repeated blasts.

February 19, 2007
A terrorist attack on a train killed 69 people. The so-called "Peace Train" was travelling from New Delhi to the Pakistani city Lahore. An estimated 60 passengers were injured by the two bombs.

August 25, 2007
Two bombs exploded in a street restaurant and at a laser show in a city park, killing 42 people and injuring 50 in the southern Indian city of Hyderabad.

May 13, 2008
At least 63 people were killed and 118 injured during a terror attack in the north-western city Jaipur. Eight bombs were detonated within minutes in the city center of the popular tourist destination.

July 26, 2008
Sixteen bombs exploded, one after another, in the western Indian city Ahmedabad killing at least 56 people and injuring 150.

October 30, 2008
More than 80 people were killed in Assam in north-eastern India's most brutal bombing attack to date. Security services suspected seperatists and Muslim extremist groups were behind the plot.

November 26, 2008

Terrorists killed at least 100 people and took hostages during a series of attacks in Mumbai. An estimated 250 people were hurt. The Islamist organisation Deccan Mudschaheddin claimed responsibility for the attack, news agencies reported.
Now, Obama may also be forced into taking responsibility for foreign policy earlier than expected. Indeed, the attacks could be seen as a personal warning directed against him. During the campaign, his vice-presidential nominee Joe Biden attracted attention for announcing that, in the first six months of his presidency, Obama would be tested on the international stage.

Forcing Obama's Hand?

Al-Qaida may have a special interest in providing such a test. Obama's middle name "Hussein" and his popularity in Arab countries could pose a serious threat to the organization. Contrary to Bush, Obama is difficult to portray as an American infidel. Al-Qaida lieutenant Ayman al-Zawahiri in his remarks on the American election was forced to provide more creative criticism, calling Obama a "house negro." Terrorists may in fact be trying to force Obama into reacting harshly, so that he appears to the world as war-minded as Bush.

But the events have not caught the team unprepared. The US security forces have repeatedly outlined the possibility of a terrorist attack during the transitional phase. American Secretary for Homeland Security Michael Chertoff has long warned of the dangers of handing over power in times of war -- and gave a reminder that former presidents like Bill Clinton and George W. Bush had to react to terror attacks early on.


For that reason, ever since the election, Obama has received the same secret service briefings as the president. The FBI has also started unusually early with their security checks on potential white house employees -- in contrast to Bush's first time in office. Back then, many of his closest security advisors had not completed their checks by the Sept. 11, 2001 terrorist attacks in New York and Washington.

And the Democratic president-elect has also moved with caution when selecting his cabinet. He asked Secretary of Defense Robert Gates -- a Republican with close links to the Bush family -- to stay in office for at least another year. That provoked grumbling among the left wing of the Democrats. But Obama found it more important to avoid an abrupt change in the global security policy given the two US wars in Iraq and Afghanistan and the ongoing terror threat. The Wednesday attacks have validated his approach.

Still, despite the early chorus of praise, Obama remains a novice in foreign affairs -- and he will need advice from old hands. "There are a lot of things that keep me up at night," Obama said in the interview with Barbara Walters: the financial crisis, the US auto industry's decline and the energy crisis. Now he knows all too well that foreign crises too can rob a president of his sleep.

6) BURGLARY IN FLORIDA (You just can't make this stuff up!!)

When southern Florida resident Nathan Radlich's house was burglarized recently, thieves ignored his wide screen plasma TV, his VCR, and even left his Rolex watch. What they did take, however, was a generic white cardboard box filled with a grayish-white powder. (That's the way the police report described it.)

A spokesman for the Fort Lauderdale police said that it looked similar to high grade cocaine and they'd probably thought they'd hit the big time. Later, Nathan stood in front of numerous TV cameras and pleaded with the burglars: 'Please return the cremated remains of my sister,

Gertrude. She died three years ago.'

The next morning, the bullet-riddled corpse of a local drug dealer known as Hoochie Pevens was found on Nathan's doorstep. The cardboard box was there too; about half of Gertrude's ashes remained.

Scotch taped to the box was this note which said: Hoochie sold us the bogus blow, so we wasted Hoochie. Sorry we snorted your sister. No hard feelings. Have a nice day.

And you thought California was the land of fruits and nuts!

7)RED ALERT - Possible Geopolitical Consequences of the Mumbai Attacks Thursday

Brief Summary:

If the Nov. 26 attacks in Mumbai were carried out by Islamist militants as it appears, the Indian government will have little choice, politically speaking, but to blame them on Pakistan. That will in turn spark a crisis between the two nuclear rivals that will draw the United States into the fray.

Brief Analysis

At this point the situation on the ground in Mumbai remains unclear following the militant attacks of Nov. 26. But in order to understand the geopolitical significance of what is going on, it is necessary to begin looking beyond this event at what will follow. Though the situation is still in motion, the likely consequences of the attack are less murky.

We will begin by assuming that the attackers are Islamist militant groups operating in India, possibly with some level of outside support from Pakistan. We can also see quite clearly that this was a carefully planned, well-executed attack.

Given this, the Indian government has two choices. First, it can simply say that the perpetrators are a domestic group. In that case, it will be held accountable for a failure of enormous proportions in security and law enforcement. It will be charged with being unable to protect the public. On the other hand, it can link the attack to an outside power: Pakistan. In that case it can hold a nation-state responsible for the attack, and can use the crisis atmosphere to strengthen the government’s internal position by invoking nationalism. Politically this is a much preferable outcome for the Indian government, and so it is the most likely course of action. This is not to say that there are no outside powers involved — simply that, regardless of the ground truth, the Indian government will claim there were.

That, in turn, will plunge India and Pakistan into the worst crisis they have had since 2002. If the Pakistanis are understood to be responsible for the attack, then the Indians must hold them responsible, and that means they will have to take action in retaliation — otherwise, the Indian government’s domestic credibility will plunge. The shape of the crisis, then, will consist of demands that the Pakistanis take immediate steps to suppress Islamist radicals across the board, but particularly in Kashmir. New Delhi will demand that this action be immediate and public. This demand will come parallel to U.S. demands for the same actions, and threats by incoming U.S. President Barack Obama to force greater cooperation from Pakistan.

If that happens, Pakistan will find itself in a nutcracker. On the one side, the Indians will be threatening action — deliberately vague but menacing — along with the Americans. This will be even more intense if it turns out, as currently seems likely, that Americans and Europeans were being held hostage (or worse) in the two hotels that were attacked. If the attacks are traced to Pakistan, American demands will escalate well in advance of inauguration day.

There is a precedent for this. In 2002 there was an attack on the Indian parliament in Mumbai by Islamist militants linked to Pakistan. A near-nuclear confrontation took place between India and Pakistan, in which the United States brokered a stand-down in return for intensified Pakistani pressure on the Islamists. The crisis helped redefine the Pakistani position on Islamist radicals in Pakistan.

In the current iteration, the demands will be even more intense. The Indians and Americans will have a joint interest in forcing the Pakistani government to act decisively and immediately. The Pakistani government has warned that such pressure could destabilize Pakistan. The Indians will not be in a position to moderate their position, and the Americans will see the situation as an opportunity to extract major concessions. Thus the crisis will directly intersect U.S. and NATO operations in Afghanistan.

It is not clear the degree to which the Pakistani government can control the situation. But the Indians will have no choice but to be assertive, and the United States will move along the same line. Whether it is the current government in India that reacts, or one that succeeds doesn’t matter. Either way, India is under enormous pressure to respond. Therefore the events point to a serious crisis not simply between Pakistan and India, but within Pakistan as well, with the government caught between foreign powers and domestic realities. Given the circumstances, massive destabilization is possible — never a good thing with a nuclear power.

This is thinking far ahead of the curve, and is based on an assumption of the truth of something we don’t know for certain yet, which is that the attackers were Muslims and that the Pakistanis will not be able to demonstrate categorically that they weren’t involved. Since we suspect they were Muslims, and since we doubt the Pakistanis can be categorical and convincing enough to thwart Indian demands, we suspect that we will be deep into a crisis within the next few days, very shortly after the situation on the ground clarifies itself.