Digesting Full Plate - Choking On Too Rich A Diet?

Is Obama's method of governing getting creepier and creepier? Does anyone care anymore? Where are the media and newspaper folks? You decide. (See 1 below)

At least one Barak may be doing the right thing. This time in Israel. (See 2 below.)

Geithner to the rescue? Doomed from the start? (See 3 and 3a below.)

Digesting a full plate so chow down now or pass it off for a later time because it is too rich a diet under currentr circumstances? (See 4 below.)

Obma is not angry he is just making everyone else angry by his populist governing style of bobbing and weaving, pitting group against group then standing on the sideline as a healing observer. He remains a fraud in my eyes. (See 5 below.)

Times have 'changed' alright. (See 6 below.)

Friedman's view off Iran's view of Obama. Will Obama offer Iran what they want and can he? (See 7 and 7a below.)

A review of Mark Levin's new book. (See 8 below.)

Barry Rubin writes Middle East not ready for democracy but whever said they were? (See 9 below.)

I never met a rally I did not like but what does all this swiftness mean? Will a trillion more do the trick? (See 10 below.)

Dick

1)The Permanent Campaign Gets Creepy: Where is the outrage from our liberal friends?
By Mark Impomeni



Imagine that the President of the United States is sending personal representatives to the homes of private citizens and asking them to sign a “pledge of support” for his Administration’s policies. Imagine that those representatives are asking citizens for their names and e-mail addresses so that the “post-election” organization set up by the president can follow up with them; perhaps taking the addresses of those who refuse to sign. Imagine what the reaction of the online left would be to such activity. Cries of “Fascism!” “Police state!” and “Voter intimidation!” would ring out from the online left in opposition to the Republican Administration’s tactic.

Now imagine that the president doing this is not a Republican, but is President Barack Obama.

President Obama’s appearance on “The Tonight Show”…was only a small part of the president’s so-called permanent campaign. A bigger move comes Saturday, when Obama will ask 13 million people on his campaign e-mail list to go door-to-door to raise support for his agenda.

The Pledge Project Canvass is an unprecedented effort by a president to reach beyond Congress and tap grassroots supporters for help. Volunteers recruited online by Obama’s Organizing for America, a post-election group, will ask citizens to sign a pledge in support of the president’s policies on energy, health care and education.

Those who pledge will be asked for their e-mail addresses so the Obama-ites can keep in touch.

“This is just the beginning for us,” said Jeremy Bird, deputy national director of Organizing for America, in an online video to Obama supporters this week.


During the 2004 campaign, attendees at Bush/Cheney events were asked to sign a form endorsing President Bush for reelection. The forms were an attempt by the Republican Party to keep Democratic operatives from infiltrating campaign events and disrupting the campaign’s message. Democrats and the Kerry/Edwards campaign derided Republicans for requiring the forms, saying that it was an effort to shield the president from difficult questions.

But the Bush/Cheney election campaign’s actions were positively mild compared to this effort by the sitting Obama Administration. Privacy advocates should be screaming from the rafters about the prospect of a quasi-official representative of the government asking citizens to sign a pledge of support. Voting rights groups should be fretting about government intimidation of the electorate. But no. Instead, we get election experts marveling at the community organizing skills of the new Big Brother president.

“What Obama is doing is a very new approach,” said Lawrence Jacobs, director of the Center for the Study of Politics and Governance at the University of Minnesota.

That approach began during the campaign, when Obama tapped into an array of social networking tools on sites such as Facebook and Twitter to rally voters and raise funds. This weekend’s effort is the next logical step, Bird said in an interview.

“This is taking that online social networking and moving it to offline social networking,” he said.

And where are our friends in the left blogosphere on this? Surely, they did not approve of President Bush’s endorsement entry requirement from 2004. Do they now align themselves with the idea of a sitting administration asking citizens to pledge their loyalty to one man’s policies? Do they approve of jack-booted, clipboard-wielding, presidentially-authorized canvassers fanning out across the country collecting signatures and taking names? Markos? Josh? Arianna? Anybody?

The linked article tries to compare President Obama’s efforts to those of other presidents to drum up support for their initiatives. Those efforts have all involved the president himself embarking on a publicity tour. Obama has done that, too. But no president has ever launched a signature pledge drive utilizing an army of volunteers tied to his official campaign organization outside of a reelection campaign.

However shrewd and revolutionary it may be from an organizing standpoint, the government is not, and ought not be a community organizing group. It’s creepy. Campainging is what Obama does best, however. We are likely to see many more pledge drives like this one, and equally likely to hear absolutely nothing about it from the media and the left.

2) Love's Labor's Lost
By Shmuel Rosner
How Ehud Barak may resurrect his career, destroy his party, and save his country this week.


As the leftist Labor Party slowly awakens from the shock of winning only 13 seats in Israel's elections last month (a historical low for the party), Ehud Barack has begun pushing his party to join Binyamin Netanyahu's fledgling right-wing coalition. His critics paint him as narcissistic opportunist who is sacrificing his party's future to save his own career. His supporters claim he is putting the interest of the country before that of the party.


This Tuesday, the party's central committee will convene to vote on whether to accept or reject Netanyahu's proposal. The showdown may lead to Barak's political demise--losing the vote will effectively end his stint as party leader. The results of the vote will not only determine the future of the party that ruled Israel in its formative years and essentially created the country as we know it today, as well as determine the future of Israel's most decorated military man and once most celebrated politician. It could also determine the future of the country in one of the most pivotal moments of its history.




Those highlighting Barak's personal motives have a strong case. "It's desperation meets desperation," wrote the authoritative columnists of Israel's leading paper, Yediot Aharonot, Nahum Barnea and Shimon Shifer--describing Netanyahu's desperation for a workable government and Barak's desperation as a man "who has nothing, not a comfortable chair in the defense ministry, not the title of head of opposition," and threatened by the possibility of being removed from being the head of his party. Barnea and Shifer point out, as most political commentators did this weekend, the hypocrisy of Barak's promise not long ago to serve the country from the opposition. "We are not afraid to sit in the opposition and serve the people from there," he said in early February.


With Barak's military record, Israeli commentators are finding it hard to avoid the "fight of his life" clichZs and "political battlefield" metaphors. But doomsday scenarios don't only involve Barak: Either result in this week's vote could lead to the destruction of Labor, as both camps refuse to promise to accept the party's Central Committee decision. Though Barak has promised to "stay in the Labor Party," some believe that if he loses the vote, he might bolt from the party with some Labor allies and join the Netanyahu coalition as an independent faction. But even if he wins the vote and the party officially decides to join the coalition, Labor parliamentarians who oppose Barak might refuse to vote for the government in the Knesset. They claim that joining Netanyahu will be the last straw on the way to Labor's elimination, with Kadima's Tzipi Livni becoming the only alternative for left-of-center voters who do not want to vote for a fringe party. Labor will lose its one last chance to reshape, reorganize, and recover from defeat--its one last chance to avoid complete irrelevance.


Barak's supporters--who claim that he is "consider[ing] what is best for the party, and far more important--what is best for the country," as he himself recently argued--have become the subject of much ridicule by the country's elite pundits. "All this talk about 'country'," wrote Ben Caspit of Maariv, "is hard to believe." Yossi Verter of Haaretz wrote that Barak "waived the white flag" because he doesn't believe the Labor has a real chance to overcome the verdict of voters. As was demonstrated in the elections, neither the public nor its pundits have much love for Barak. He has earned his reputation as a lousy politician, instrumentalist in his dealings with others and dismissive of his party's apparatus. He has very few friends, and many enemies. Thus, joining Netanyahu is really his only hope. Netanyahu, strangely, is one of few people who still has respect for Barak, valuing his strategic and military expertise and admiring his ability to remain cool-headed in times of crisis.




As happens in cases in which the villain can be easily recognized, the ability of people to separate their feelings from the broader picture is often limited. Those arguing that Barak's behavior is problematic, that he fails to separate Israel's needs from his own personal political fate, have every right to be angry, even appalled, by his manipulative ways and egotistic calculations. They can also persuasively argue that Barak's intention of bringing the party into the coalition endangers its hope for a better outcome in future elections--even possibly destroying it completely.


However, all this still doesn't mean that a government in which Barak's party is a member isn't better for Israel than the government Netanyahu will have without Labor. Labor will add to this government's political stability, will make Netanyahu less dependent on the more radical elements of this coalition, and will assist it by giving it more international legitimacy. (The world is not eagerly awaiting Netanyahu.) New elections within a year--a narrow coalition cannot survive for much longer--would certainly not be in Israel's interests.


By joining the coalition, Barak reinforces the negative view most Israelis have of his personal qualities, and it might jeopardize Labor's future. But as legitimate as it is to question Barak's motives, a coalition with Labor as an active member is better for the country.

3) My Plan for Bad Bank Assets: The private sector will set prices. Taxpayers will share in any upside.
By TIMOTHY GEITHNER

The American economy and much of the world now face extraordinary challenges, and confronting these challenges will continue to require extraordinary actions.


No crisis like this has a simple or single cause, but as a nation we borrowed too much and let our financial system take on irresponsible levels of risk. Those decisions have caused enormous suffering, and much of the damage has fallen on ordinary Americans and small-business owners who were careful and responsible. This is fundamentally unfair, and Americans are justifiably angry and frustrated.

The depth of public anger and the gravity of this crisis require that every policy we take be held to the most serious test: whether it gets our financial system back to the business of providing credit to working families and viable businesses, and helps prevent future crises.

Over the past six weeks we have put in place a series of financial initiatives, alongside the Recovery and Reinvestment Program, to help lay the financial foundation for economic recovery. We launched a broad program to stabilize the housing market by encouraging lower mortgage rates and making it easier for millions to refinance and avoid foreclosure. We established a new capital program to provide banks with a safeguard against a deeper recession. By providing confidence that banks will have a sufficient level of capital even if the outlook is worse than expected, more credit will be available to the economy at lower interest rates today -- making it less likely that the more negative economy they fear will take place.


We started a major new lending program with the Federal Reserve targeted at the securitization markets critical for consumer and small business lending. Last week, we announced additional actions to support lending to small businesses by directly purchasing securities backed by Small Business Administration loans.

Together, actions over the last several months by the Federal Reserve and these initiatives by this administration are already starting to make a difference. They have helped to bring mortgage interest rates near historic lows. Just this month, we saw a 30% increase in refinancing of mortgages, which means millions of Americans are taking advantage of the lower rates. This is good for homeowners, and it's good for the economy. The new joint lending program with the Federal Reserve led to almost $9 billion of new securitizations last week, more than in the last four months combined.

However, the financial system as a whole is still working against recovery. Many banks, still burdened by bad lending decisions, are holding back on providing credit. Market prices for many assets held by financial institutions -- so-called legacy assets -- are either uncertain or depressed. With these pressures at work on bank balance sheets, credit remains a scarce commodity, and credit that is available carries a high cost for borrowers.

Today, we are announcing another critical piece of our plan to increase the flow of credit and expand liquidity. Our new Public-Private Investment Program will set up funds to provide a market for the legacy loans and securities that currently burden the financial system.

The Public-Private Investment Program will purchase real-estate related loans from banks and securities from the broader markets. Banks will have the ability to sell pools of loans to dedicated funds, and investors will compete to have the ability to participate in those funds and take advantage of the financing provided by the government.

The funds established under this program will have three essential design features. First, they will use government resources in the form of capital from the Treasury, and financing from the FDIC and Federal Reserve, to mobilize capital from private investors. Second, the Public-Private Investment Program will ensure that private-sector participants share the risks alongside the taxpayer, and that the taxpayer shares in the profits from these investments. These funds will be open to investors of all types, such as pension funds, so that a broad range of Americans can participate.

Third, private-sector purchasers will establish the value of the loans and securities purchased under the program, which will protect the government from overpaying for these assets.

The new Public-Private Investment Program will initially provide financing for $500 billion with the potential to expand up to $1 trillion over time, which is a substantial share of real-estate related assets originated before the recession that are now clogging our financial system. Over time, by providing a market for these assets that does not now exist, this program will help improve asset values, increase lending capacity by banks, and reduce uncertainty about the scale of losses on bank balance sheets. The ability to sell assets to this fund will make it easier for banks to raise private capital, which will accelerate their ability to replace the capital investments provided by the Treasury.

This program to address legacy loans and securities is part of an overall strategy to resolve the crisis as quickly and effectively as possible at least cost to the taxpayer. The Public-Private Investment Program is better for the taxpayer than having the government alone directly purchase the assets from banks that are still operating and assume a larger share of the losses. Our approach shares risk with the private sector, efficiently leverages taxpayer dollars, and deploys private-sector competition to determine market prices for currently illiquid assets. Simply hoping for banks to work these assets off over time risks prolonging the crisis in a repeat of the Japanese experience.

Moving forward, we as a nation must work together to strike the right balance between our need to promote the public trust and using taxpayer money prudently to strengthen the financial system, while also ensuring the trust of those market participants who we need to do their part to get credit flowing to working families and businesses -- large and small -- across this nation.

This requires those in the private sector to remember that government assistance is a privilege, not a right. When financial institutions come to us for direct financial assistance, our government has a responsibility to ensure these funds are deployed to expand the flow of credit to the economy, not to enrich executives or shareholders. These provisions need to be designed and applied in a way that does not deter the participation by the private sector in generally available programs to stabilize the housing markets, jump-start the credit markets, and rid banks of legacy assets.

We cannot solve this crisis without making it possible for investors to take risks. While this crisis was caused by banks taking too much risk, the danger now is that they will take too little. In working with Congress to put in place strong conditions to prevent misuse of taxpayer assistance, we need to be very careful not to discourage those investments the economy needs to recover from recession. The rule of law gives responsible entrepreneurs and investors the confidence to invest and create jobs in our nation. Our nation's commitment to pursue economic policies that promote confidence and stability dates back to the very first secretary of the Treasury, Alexander Hamilton, who first made it clear that when our government gives its word we mean it.

For all the challenges we face, we still have a diverse and resilient financial system. The process of repair will take time, and progress will be uneven, with periods of stress and fragility. But these policies will work. We have already seen that where our government has provided support and financing, credit is more available at lower costs.

But as we fight the current crisis, we must also start the process of ensuring a crisis like this never happens again. As President Obama has said, we can no longer sustain 21st century markets with 20th century regulations. Our nation deserves better choices than, on one hand, accepting the catastrophic damage caused by a failure like Lehman Brothers, or on the other hand being forced to pour billions of taxpayer dollars into an institution like AIG to protect the economy against that scale of damage. The lack of an appropriate and modern regulatory regime and resolution authority helped cause this crisis, and it will continue to constrain our capacity to address future crises until we put in place fundamental reforms.

Our goal must be a stronger system that can provide the credit necessary for recovery, and that also ensures that we never find ourselves in this type of financial crisis again. We are moving quickly to achieve those goals, and we will keep at it until we have done so.

3a) The Geithner Disaster
By John B. Judis


Being Treasury secretary is usually not a job that calls for great political skills. But with a banking crisis crippling the economy and threatening to turn a recession into a depression, Tim Geithner has been plunged into the center of politics--as both the person responsible for what the administration should do, and as the main exponent of that policy. But he has faltered in crafting an effective policy and failed miserably in putting it forward. His performance on the bank bailout could undermine passage of Obama's economic program by depriving the president of the political capital he needs to get it through Congress.




To understand why Geithner has performed so poorly, you have to understand the nature of American populism, and how pervasive it is. Americans don't generally resent the rich, nor do they automatically applaud tax increases on them or the restoration of the estate tax. Historically, from the Jacksonians to the present, American populism has focused on the specter of banks and speculators--summed up in the last century as "Wall Street"--controlling and undermining the real economy of factories, farms, and offices, and in the process creating a whole class of people who live off unearned wealth at the expense of those who people who "work hard and play by the rules."


Most times, these populist sentiments are confined to the margins of American society. But when the economy has turned downward, and when unscrupulous or irresponsible speculation has played a role in that downturn, these sentiments have become widespread and deeply felt. In almost everything that Geithner has done, he has roused this populism by appearing to be a patron of Wall Street. Whatever its merits, his bailout plan offers generous subsidies to banks and private investors while protecting bank management and creditors. He clearly didn't anticipate or take seriously the uproar over compensation to the executives at bailout companies like Merrill Lynch and AIG. And he has resorted to secrecy--fuelling fears of conspiracy--in concealing AIG's payments to counter-parties.


Some of his hires have also picked the scab of this populism. He chose as his chief of staff a Goldman Sachs lobbyist, who had actually lobbied against a bill to restrain executive pay. Geithner also recently hired as a key advisor Lewis Alexander, Citibank's chief economist, whose thinking seems sadly typical of Wall Street: In December 2007, he told Bloomberg News that the subprime mortgages did not pose a severe problem and that a recession was not imminent. "The distribution of those losses is relatively broad," Alexander said. "You are seeing relatively robust corporate performance around the world."


In addition, Geithner's performance has sowed distrust and uncertainty about the administration's ability to revive the economy--which can affect the economy itself by discouraging consumption and investment. Particularly egregious was his tentative, foggy introduction last month of a bank bailout plan. In his defense, Geithner could argue that it is better to have a well thought-out plan that can work than a half-baked plan that can fail. But consider the example of Franklin Roosevelt, whose initial economic plan contained elements that were ill-conceived--like the National Recovery Administration, which the Supreme Court put out of its misery. But Roosevelt's speed and decisiveness bolstered confidence, and also allowed him to quickly determine what did and didn't work.


Geithner's vagueness, in contrast, has stirred unease. In a report last Thursday, the IMF criticized the plan's lack of "essential details." According to the Financial Times, the lack of details may also have been a factor in the Federal Reserve's decision to pump $1.2 trillion into the economy. Though this could pose problems of inflation down the road, the Fed felt like it had to make such a drastic move partly because of "problems rolling out the US financial rescue plan."




Then there is the bailout plan itself. On the basis of Geithner's statements and recent leaks, it appears to be an alternative to temporary nationalization or receivership--somewhat similar to the original plan put forward last fall by Former Treasury Secretary Henry Paulson. Instead of the government taking over insolvent banks, replacing their top staff, writing off their bad loans, and injecting new capital reserves into them, Geithner plans to heavily subsidize private investors who want to buy bad loans from the banks, which will wipe the loans from their books and provide new capital for the banks.


As my colleague Noam Scheiber has suggested, Geithner's plan could work if the bad loans and seamy securities that the banks hold are actually worth something--say, 60 percent rather than 30 percent of their original value. If not--and there are plenty of skeptics who question that--then Geithner's plan will transfer more money from taxpayers to private investors and bankers without reviving the big banks. That will amplify the growing populist outcry against the Geithner and the Obama administration, and make it more difficult to do what is necessary to revive the economy.


When Geithner first announced his plan, some people thought it was intended to lay the groundwork for temporary nationalization: Banks would be subjected to stress tests, the tests would show they are insolvent, and the government could then step in. But the stress tests have been watered down, with the worst-case scenario (as opposed to the "baseline" realistic scenario) tracking closely to the realistic scenarios that investment firms predict for 2010. That raises the possibility that the tests may not justify bolder steps than the Treasury is presently publicizing, but will merely justify its present course of action.


There is one area where Geithner's proposals have been clear and bold--and that is in challenging the world's other major industrial nations, the members of the G-20, to ante up more money to stimulate their own economies and fund the International Monetary Fund. But so far, most of the other nations, led by France and Germany, are refusing to go along on the stimulus, preferring to free-ride on America's debt burden being created by its stimulus plan and bank bailout.


And Geithner does not seem to have done a good job persuading his fellow finance ministers. One British official, who came to the United States with Prime Minister Gordon Brown to prepare for next month's G-20 meeting in London, said it was "unbelievably difficult" to deal with the Obama administration. "There is nobody there. You cannot imagine how difficult it is," one cabinet secretary told the London Times, apparently referring to Geithner's Treasury department. Officials from another G-20 nation, speaking off the record, also complained about the lack of response they received from Treasury.




One friend recently compared Geithner to Dean Rusk, who served as secretary of state under John Kennedy and Lyndon Johnson. A colorless bureaucrat who rose within the ranks of the foreign policy establishment, Rusk failed to raise questions about American intervention in Vietnam. Instead, he became a stalwart proponent of the war even as the prospects of success plummeted. But if Geithner's recent missteps are any indication, the Treasury secretary could also turn out to be Obama's George McClellan, who served dismally as Lincoln's general-in-chief during the first year of the Civil War and almost cost the Union the war.


That doesn't mean that Obama should follow Lincoln's example--and the Republicans' advice--and get rid of Geithner. Too much of what Geithner has done can also be attributed to, or blamed on, Obama himself and on National Economic Council head Larry Summers. And after all, Geithner has only been around for three months, and people do tend to learn on the job. But it does mean that Obama had better make sure his Treasury secretary does begin to learn from experience--and soon.

4) Obama vs. the Dodgers
By E. J. Dionne

President Obama's biggest task at his Tuesday news conference will not be to defend Treasury Secretary Tim Geithner or to push aside the administration's bungling of the AIG bonus imbroglio. It will be to challenge Washington's habit of evading substantive issues by transforming them into procedural questions.

A deep narrative is taking root in the political class and it goes something like this: Obama is biting off way more than he can chew, "overloading" the system and dealing with all sorts of "side issues," when he should be focusing solely on the broken economy. He is said to be asking Congress to do too much.

Note that anyone who makes an argument of this sort is freed from responsibility to mention any of the specific problems Obama is proposing to take on. Insisting the economy trumps everything means you don't have to say a thing about health care reform, energy, education and taxes.

And that's the beauty of the critique of excessive ambition. It's far easier to talk about an overloaded system than to tell those without health insurance that they will have to wait a few more years, or to be honest in saying that balancing the budget long-term will require raising taxes. It's much easier to use the economic crisis as an excuse for inaction than to defend the status quo.

And the more time passes from last November's election, the weaker Obama's mandate to pursue his promises will become. By next year, the focus will be on the midterm elections.

The AIG flap and Friday's dismal report from the Congressional Budget Office predicting the deficit will surpass $1.8 trillion this year will only strengthen the forces of evasion.

Obama's biggest problem on the AIG bonuses is that his administration spoke with multiple voices. Initially, top officials wanted to defend the decision to pay them as a necessary evil. Then Obama realized that the episode threatened his entire banking rescue plan, so he took on the role as denouncer in chief.

Administration officials I talked with were profoundly frustrated at how AIG had driven everything else off the news and dominated the agenda in Congress. Well, sure, the news and Congress are fickle. But an administration that has devoted so much public rhetoric to the need to fix an unjust "bubble" economy should have realized that it would suffer mightily if it were seen as complicit in Wall Street-style business as usual. It was as if the administration's right hand (Treasury) did not know what its left hand (almost everyone else) was doing.

And then came the bad news on rising deficits. The CBO report was not unexpected: Everyone knew that a sinking economy would batter government revenues. The scary new numbers provided the evaders with more reasons to build roadblocks to Obama's program.

Short-term, the report will increase pressure to cut Obama's 2010 budget. But such cuts would be modest and symbolic. They would almost certainly come from domestic discretionary spending, budget talk for the relatively small part of the budget that does not go to defense, Social Security, Medicare and Medicaid. Such cuts now would just weaken efforts to stimulate the economy -- which, if you'll excuse the directness, would be stupid.

Obama's top budget officials seem confident they can deal with this immediate difficulty. His larger challenge is to take on the politics of evasion promoted by those who would indefinitely delay health care reform, energy conservation and the expansion of educational opportunities. Already, his lieutenants are signaling how he will cast the choice: between "taking on the country's long-term challenges" or just "lowering our sights and muddling through," as one senior aide put it.

Whatever rhetorical strategy the president pursues, the burden in the argument should be on those who insist that the government is incapable of, say, repairing the banking system and fixing health care at the same time.

As a practical matter, Congress is already well into the task of writing a health care bill, and there is no reason it cannot be passed by the late summer or fall. There is certainly no way government can walk away from its responsibilities on education. And at least some first steps can be taken on energy and the environment.

As we all know, Obama promised change we can believe in. The operative verb in that slogan was "believe." His task is to restore faith that what he had in mind is still possible.

5) Obama: Anger isn't governing strategy
By PHILIP ELLIOTt

President Barack Obama says he cannot "govern out of anger" just because of public outrage over bonuses paid at financial institutions kept afloat by taxpayer dollars.

Obama's declaration came as he pushed for a $3.6 trillion federal budget proposal that already is opposed from within his own party. As he seeks lawmakers' support for his first budget, he took a political risk in signaling discomfort with a separate plan that slaps a punitive, 90 percent tax on bonuses paid to American International Group employees.

Obama, a law professor-turned-chief executive, said during an interview broadcast Sunday that he does not like the idea of "passing laws that are just targeting a handful of individuals" or using the tax code to punish people.

"Let's see if there are ways of doing this that are both legal, that are constitutional, that uphold our basic principles of fairness, but don't hamper us from getting the banking system back on track," Obama said on CBS' "60 Minutes."

In a wide-ranging interview broadcast Sunday night, Obama said he expected the Senate would produce a much different and more acceptable version of the bill — one he could sign.

The AIG tax plan passed through the House with popular support from Americans frustrated the company received $170 billion in bailout money to avoid collapse, yet found $165 million to pay executives as bonuses.

Earlier Sunday, White House economic adviser Austan Goolsbee said his boss understood the nation's anger and that the easiest thing would be for AIG executives to return the bonuses. "He's going to look at what comes out of the House, what comes out of the Senate, see what ideas we have," Goolsbee said.

More pressing for Obama, however, was his own federal budget proposal.

Senate Republicans warned of deficits that could climb to $20 trillion in coming years and a weakened dollar if Obama and his Democratic allies get their proposal passed.

But even some of Obama's fellow Democrats aren't in favor of the proposal, which makes changes to farm and energy policies. Fiscal conservatives also bemoan its impact on deficits; it could generate $9.3 trillion in red ink over the next decade.

Obama used the CBS interview to yet again defend Treasury Secretary Timothy Geithner and his plans to resuscitate the ailing financial system.

Geithner was set on Monday to detail plans to use $100 billion in federal bailout funds to leverage as much as $1 trillion in so-called toxic assets off the books of endangered banks.

Meanwhile, Sen. Judd Gregg, R-N.H., predicted Obama's ambitious $3.6 trillion budget, including massive spending to save the economy, would put the country into bankruptcy and would never pass Congress.

"The practical implications of this is bankruptcy for the United States. There's no other way around it," Gregg said.

6)Great Orators of the Democratic Party






'One man with courage makes a majority.'

- Andrew Jackson


'The only thing we have to fear is fear itself.'

- Franklin D. Roosevelt


'The buck stops here.'

- Harry S. Truman



'Ask not what your country can do for you; ask what you can do for your country.'

- John F. Kennedy






And for today's Democrats...





'It depends what your definition of 'IS' is?''

- Bill Clinton



'That Obama - I would like to cut his NUTS off.'

- Jesse Jackson



'Those rumors are false ..... I believe in the sanctity of marriage.'

- John Edwards



'I invented the Internet'

- Al Gore



'The next Person that tells me I'm not religious, I'm going to shove my rosary beads up their ASS.'

- Joe Biden



' America is--is no longer, uh, what it--it, uh, could be, uh what it was once was...uh, and I say to myself, 'uh, I don't want that future, uh, uh for my children..'

- Barack Obama



'I have campaigned in all 57 states.

- Barack Obama



'You don't need God anymore, you have us democrats.'

- Nancy Pelosi (said back in 2006)





'Paying taxes is voluntary.'


- Sen. Harry Reid


'Bill is the greatest husband and father I know. No one is more faithful, true, and honest than he.'

- Hillary Clinton (said back in 1998)

7) Iran's View of Obama
By George Friedman


U.S. President Barack Obama released a video offering Iran congratulations on the occasion of Nowruz, the Persian New Year, on Friday. Israeli President Shimon Peres also offered his best wishes, referring to “the noble Iranian people.” The joint initiative was received coldly in Tehran, however. Iran’s supreme leader, Ayatollah Ali Khamenei, said the video did not show that the United States had shifted its hostile attitude toward Iran.

The video is obviously part of Obama’s broader strategy of demonstrating that his administration has shifted U.S. policy, at least to the extent that it is prepared to open discussions with other regimes (with Iran being the hardest and most controversial case). The U.S. strategy is fairly straightforward: Obama is trying to create a new global perception of the United States. Global opinion was that former U.S. President George W. Bush was unwilling to engage with, and listen to, allies or enemies. Obama’s view is that that perception in itself harmed U.S. foreign policy by increasing suspicion of the United States. For Obama, offering New Year’s greetings to Iran is therefore part of a strategy to change the tone of all aspects of U.S. foreign policy.

Getting Peres to offer parallel greetings was undoubtedly intended to demonstrate to the Iranians that the Israelis would not block U.S. initiatives toward Iran. The Israelis probably were willing to go along with the greetings because they don’t expect them to go very far. They also want to show that they were not responsible for their failure, something critical in their relations with the Obama administration.

The Iranian response is also understandable. The United States has made a series of specific demands on Iran, and has worked to impose economic sanctions on Iran when Tehran has not complied. But Iran also has some fairly specific demands of the United States. It might be useful, therefore, to look at the Iranian view of the United States and the world through its eyes.

From the Iranian point of view, the United States has made two fundamental demands of Iran. The first is that Iran halt its military nuclear program. The second, a much broader demand, is that Iran stop engaging in what the United States calls terrorism. This ranges from support for Hezbollah to support for Shiite factions in Iraq. In return, the United States is prepared to call for a suspension of sanctions against Iran.

For Tehran, however, the suspension of sanctions is much too small a price to pay for major strategic concessions. First, the sanctions don’t work very well. Sanctions only work when most powers are prepared to comply with them. Neither the Russians nor the Chinese are prepared to systematically comply with sanctions, so there is little that Iran can afford that it can’t get. Iran’s problem is that it cannot afford much. Its economy is in shambles due more to internal problems than to sanctions. Therefore, in the Iranian point of view, the United States is asking for strategic concessions, yet offering very little in return.

The Nuclear Question
Meanwhile, merely working on a nuclear device — regardless of how close or far Iran really is from having one — provides Iran with a dramatically important strategic lever. The Iranians learned from the North Korean experience that the United States has a nuclear fetish. Having a nuclear program alone was more important to Pyongyang than actually having nuclear weapons. U.S. fears that North Korea might someday have a nuclear device resulted in significant concessions from the United States, Japan and South Korea.

The danger of having such a program is that the United States — or some other country — might attack and destroy the associated facilities. Therefore, the North Koreans created a high level of uncertainty as to just how far along they were on the road to having a nuclear device and as to how urgent the situation was, raising and lowering alarms like a conductor in a symphony. The Iranians are following the same strategy. They are constantly shifting from a conciliatory tone to an aggressive one, keeping the United States and Israel under perpetual psychological pressure. The Iranians are trying to avoid an attack by keeping the intelligence ambiguous. Tehran’s ideal strategy is maintaining maximum ambiguity and anxiety in the West while minimizing the need to strike immediately. Actually obtaining a bomb would increase the danger of an attack in the period between a successful test and the deployment of a deliverable device.

What the Iranians get out of this is exactly what the North Koreans got: disproportionate international attention and a lever on other topics, along with something that could be sacrificed in negotiations. They also have a chance of actually developing a deliverable device in the confusion surrounding its progress. If so, Iran would become invasion- and even harassment-proof thanks to its apparent instability and ideology. From Tehran’s perspective, abandoning its nuclear program without substantial concessions, none of which have materialized as yet, would be irrational. And the Iranians expect a large payoff from all this.

Radical Islamists, Iraq and Afghanistan
This brings us to the Hezbollah/Iraq question, which in fact represents two very different issues. Iraq constitutes the greatest potential strategic threat to Iran. This is as ancient as Babylon and Persia, as modern as the Iran-Iraq war of the 1980s. Iran wants guarantees that Iraq will never threaten it, and that U.S. forces in Iraq will never pose a threat to Iran. Tehran does not want promises alone; it wants a recognized degree of control over the Iraqi government, or at least negative control that would allow it to stop Baghdad from doing things Iran doesn’t want. To achieve this, Iran systematically has built its influence among factions in Iraq, permitting it to block Iraqi policies that Iran regards as dangerous.

The American demand that Iran stop meddling in Iraqi policies strikes the Iranians as if the United States is planning to use the new Baghdad regime to restore the regional balance of power. In fact, that is very much on Washington’s mind. This is completely unacceptable to Iran, although it might benefit the United States and the region. From the Iranian point of view, a fully neutral Iraq — with its neutrality guaranteed by Iranian influence — is the only acceptable outcome. The Iranians regard the American demand that Iran not meddle in Iraq as directly threatening Iranian national security.

There is then the issue of Iranian support for Hezbollah, Hamas and other radical Islamist groups. Between 1979 and 2001, Iran represented the background of the Islamic challenge to the West: The Shia represented radical Islam. When al Qaeda struck, Iran and the Shia lost this place of honor. Now, al Qaeda has faded and Iran wants to reclaim its place. It can do that by supporting Hezbollah, a radical Shiite group that directly challenges Israel, as well as Hamas — a radical Sunni group — thus showing that Iran speaks for all of Islam, a powerful position in an arena that matters a great deal to Iran and the region. Iran’s support for these groups helps it achieve a very important goal at little risk. Meanwhile, the U.S. demand that Iran end this support is not matched by any meaningful counteroffer or by a significant threat.

Moreover, Tehran dislikes the Obama-Petraeus strategy in Afghanistan. That strategy involves talking with the Taliban, a group that Iran has been hostile toward historically. The chance that the United States might install a Taliban-linked government in Afghanistan represents a threat to Iran second only to the threat posed to it by Iraq.

The Iranians see themselves as having been quite helpful to the United States in both Iraq and Afghanistan, as they helped Washington topple both the Taliban and Saddam Hussein. In 2001, they offered to let U.S. aircraft land in Iran, and assured Washington of the cooperation of pro-Iranian factions in Afghanistan. In Iraq, they provided intelligence and helped keep the Shiite population relatively passive after the invasion in 2003. But Iranians see Washington as having betrayed implicit understandings that in return for these services, the Iranians would enjoy a degree of influence in both countries. And the U.S. opening to the Taliban is the last straw.

Obama’s Greetings in Context
Iran views Obama’s New Year greetings within this context. To them, Obama has not addressed the core issues between the two countries. In fact, apart from videos, Obama’s position on Iran does not appear different from the Bush position. The Iranian leadership does not see why it should respond more favorably to the Obama administration than it did to the Bush administration. Tehran wants to be very sure that Obama understands that the willingness alone to talk is insufficient; some indications of what is to be discussed and what might be offered are necessary.

Many in the U.S. administration believe that the weak Iranian economy might shape the upcoming Iranian presidential election. Undoubtedly, the U.S. greetings were timed to influence the election. Washington has tried to influence internal Iranian politics for decades, constantly searching for reformist elements. The U.S. hope is that someone might be elected in Iran who is so obsessed with the economy that he would trade away strategic and geopolitical interests in return for some sort of economic aid. There are undoubtedly candidates who would be interested in economic aid, but none who are prepared to trade away strategic interests. Nor could they even if they wanted to. The Iran-Iraq war is burned into the popular Iranian consciousness; any candidate who appeared willing to see a strong Iraq would lose the election. American analysts are constantly confusing an Iranian interest in economic aid with a willingness to abandon core interests. But this hasn’t happened, and isn’t happening now.

This is not to say that the Iranians won’t bargain. Beneath the rhetoric, they are practical to the extreme. Indeed, the rhetoric is part of the bargaining. What is not clear is whether Obama is prepared to bargain. What will he give for the things he wants? Economic aid is not enough for Iran, and in any event, the idea of U.S. economic aid for Iran during a time of recession is a non-starter. Is Obama prepared to offer Iran a dominant voice in Iraq and Afghanistan? How insistent is Obama on the Hezbollah and Hamas issue? What will he give if Iran shuts down its nuclear program? It is not clear that Obama has answers to these questions.

Rebuilding the U.S. public image is a reasonable goal for the first 100 days of a presidency. But soon it will be summer, and the openings Obama has made will have to be walked through, with tough bargaining. In the case of Iran — one of the toughest cases of all — it is hard to see how Washington can give Tehran the things it wants because that would make Iran a major regional power. And it is hard to see how Iran could give away the things the Americans are demanding.

Obama indicated that it would take time for his message to generate a positive response from the Iranians. It is more likely that unless the message starts to take on more substance that pleases the Iranians, the response will remain unchanged. The problem wasn’t Bush or Clinton or Reagan, the problem was the reality of Iran and the United States. Only if a third power frightened the Iranians sufficiently — a third power that also threatened the United States — would U.S.-Iranian interests be brought together. But Russia, at least for now, is working very hard to be friendly with Iran.

7a) Children of Adam


Does the name Muhammad Qalibaf ring a bell? He is the mayor of Teheran and may be tapped by Iran's supreme leader Ayatollah Ali Khamenei to replace Mahmoud Ahmadinejad as president.


Qalibaf's selection could signal that the ayatollah wants a change of tone in his country's foreign relations. If that happens, or if by some fluke Mehdi Karroubi or Mir Hosein Mousavi - both former high-ranking officials - wind up capturing the presidency following first-round elections scheduled for June 12, we will be witnessing Khamenei's considered response to President Barack Obama's March 20 overture for improved relations.

On the occasion of the Persian New Year, Obama told the people of Iran and its leaders: "The United States wants the Islamic Republic of Iran to take its rightful place in the community of nations. You have that right - but it comes with real responsibilities, and that place cannot be reached through terror or arms…."

The president proffered "a future with renewed exchanges among our people, and greater opportunities for partnership and commerce. It's a future where the old divisions are overcome…."

Before wishing Iranians Eid-eh Shoma Mobarak he said, "There are those who insist that we be defined by our differences. But let us remember the words that were written by the poet Saadi, so many years ago: 'The children of Adam are limbs to each other, having been created of one essence.'"

Khamenei's instant retort before the multitudes in Mashad: "You change [and] our behavior will change. They say, 'We have extended a hand toward Iran.' What kind of hand is this? If the extended hand is covered with a velvet glove but underneath it the hand is made of cast-iron, this does not have a good meaning at all.



"They are talking of extending a hand to Iran on the occasion of the New Year... At the same time, they are accusing Iran of terrorism and manufacturing nuclear weapons. We ask: Have you lifted the unjust sanctions against the Iranian people and returned [Iranian] assets you hold? Have you ended your absolute support for the Zionist regime?"

Khamenei concluded on a conciliatory note: "We have no experience of this new president... We will wait and see. If you change your attitude, we will change, too. If you do not change, then our nation will build on its experience of the past 30 years."

The most likely "change," in a world in which Obama has emerged as a formidable rhetorical adversary, would be to replace the coarse, populist Ahmadinejad with the more personable Qalibaf.

IF THAT happens, Westerners of the "Walter Duranty School of International Relations," those who promote the notion that Iran's regime is essentially pragmatic and that it is "Israeli bellicosity" which needs reining in, will appear ever more convincing. Duranty was the Pulitzer Prize-winning journalist who sought to convince Americans during the 1930s that Stalin's Soviet Union was essentially pragmatic and downplayed the regime's genocidal crimes.

Today's Durantyites argue that Obama's New Year speech contained warmed-over Bush administration accusations about Iran supporting terrorism and secretly working on nuclear weapons. They insist that Iran is no rogue state; that it treats its Jews with kid gloves; that its support for Hizbullah and Hamas is legitimate because, if presented with incentives, these "resistance groups" will quickly go mainstream; and that, finally, all the excited talk about the Iranian nuclear weapons is groundless.

But even Western "realists" who reject Durantyite appeasement talk paternalistically about coaxing Iran into behaving more responsibly. They intuit that Iran's "true interest" lies in improved relations with the civilized world. It's only the mullahs' "well-grounded mistrust" of the West makes them exceedingly cautious.

WERE THE stakes not so high, America's astute president, having inherited a calamitous economy, two wars and much else, could be forgiven for seeking to avoid confrontation with Iran - even if he rejects the apologists' line outright and thinks the realists are, well, unrealistic.

In his heart of hearts, Obama surely knows that Khamenei's "price" for good relations is America's total capitulation to Persian imperial designs.

To point this out is not to beat the drums of war, but to appeal for American clear-sightedness.


8) Mark Levin's Liberty and Tyranny: A Conservative Manifesto
By Thomas Lifson


Mark Levin's new book, published today, is essential reading. It is a remarkable work on several different levels. It takes no degree of clairvoyance to predict that it will become an enormous best seller and very soon begin to influence the national political debate.


Liberty and Tyranny artfully presents a harmonious marriage of the timeless with the timely. One the one hand, the book is a thorough yet compact briefing on the major political issues of this era. On the other hand, the author brings to bear the principles of the American Founders and Framers of the Constitution (and the great thinkers who guided them), illustrating, dissecting, and explaining our current political arguments, while enlightening the reader with the genuine wisdom bequeathed to all of us -- the sacred trust of the Founders, embodied in the Declaration of Independence, The Constitution, and Federalist Papers, all of which are quoted and applied with insight and precision.


Think of it as an outstanding tutorial in applied political philosophy, and you will begin to grasp the scope of Mark Levin's achievement. The fact that the book is lucid, unpretentious, and utterly accessible to anyone who cares to focus and think, means that it will elevate the quality of political thought and dialogue across a broad swath of the American populace.


If you care passionately about America, and worry for its future -- and who doesn't, given the current national leadership? -- then you owe it to yourself to buy and devour this marvelous work. It is an essential antidote to what ails America at the moment.

Each chapter is a well-constructed essay, so the reader is quite free to read it a little at a time. But, unlike so many contemporary political works, it is also a well-constructed and coherent whole. So you may be tempted to stay up all night reading it as soon as a copy comes into your hands.


Conservatives who read Liberty and Tyranny will be supplied with ample ammunition to outsmart, outthink and out-reason their liberal friends who are brave enough to actually engage in a serious political debate with them.


The overall plan of the book is simple and logical. Chapter One, "On Liberty and Tyranny," lays out the basic conceptual scheme. Levin contrasts two opposing political philosophies currently in contention: The Conservative versus the Statist. He grounds the Conservative in the values and insights on human nature of the American Founders, and does so economically and convincingly. For the other side of the debate, he quite correctly rejects the label "liberal", because in current usage the term has become entirely divorced from its literal meaning. He writes:


The Modern Liberal believes in the supremacy of the state.... For the Modern Liberal, the individual's imperfection and personal pursuits impede the objectives of a utopian state. In this, Modern Liberalism promotes what French Historian Alexis de Tocqueville called soft tyranny, which becomes increasingly more oppressive, partially leading to hard tyranny.... As the word "liberal" is, in its classical meaning, the opposite of authoritarian, it is more accurate, therefore, to characterize the Modern Liberal as a Statist. (p.4)


The following nine chapters, plus an epilogue containing Levin's own manifesto -- the political changes he posits as desirable (and with which I agree) -- are organized thematically, with titles such as On Prudence and Progress, On Faith and the Founding, On the Welfare State, and On Self Preservation (i.e., national security), wherein he encapsulates nearly all the major political issues of our day, providing essential up-to-date information, while also weaving in the wisdom a timeless thinkers ranging from Alexander Hamilton to St Augustine. As the book progresses, the chapters become more and more focused on current political disputes. But the beauty of the structure is that the principles discussed in the earlier chapters are brought to bear on the subsequent topics.


I am proud to note that American Thinker's Lee Cary is quoted in the book's chapter, "On Immigration." Considering the company Dr. Cary is keeping as a source for the book, this is a high honor indeed, both for him and for AT.


The epilogue, wherein Mark tells us what we conservatives can do, and where he outlines what changes he sees as necessary to beat back the now-ascendant forces of statism, may certainly spark some disagreement, because Mark pulls no punches. He is setting a lofty target, but one that is amply justified by the clear-headed research and writing that went into the body of the text.


Fans of Mark Levin's syndicated radio show will recognize the voice of the hard-hitting champion of conservatism they know and love. But there is also, for those unfamiliar with Mark's radio work (but perhaps propagandized by liberal media into dismissing him as a crazy right wing radical), a remarkable and persuasive tone, based on solid research, extensively documented, and unchallengeable reason. This book could actually change some minds, especially as the nation’s peril becomes more and more apparent.


All in all, Mark Levin has given us a remarkable gift. Read this book, and buy copies for those you care about, too. Anyone from a clever high schooler to a scholar of political philosophy can benefit from reading Liberty and Tyranny.

9) Middle East still not ready for democracy
By Barry Rubin

Democracy is a great idea; open elections are ideally the best way to choose governments; dialogue with everyone is wonderful in theory. But in the Middle East, unfortunately, as a policy this would be a disaster.


It is not Western policy but local conditions which are going to determine whether there will be democracy in the Arabic-speaking world. In my book, The Long War for Freedom: The Arab Struggle for Democracy in the Middle East (Wiley), I analyze both the debate and the existing groups. The assessment must be pessimistic.


Would we like to see liberal democracy and moderation prevail with rising living standards and more freedom? Of course, but the real question is what effect certain policies would have.


The Western debate gets stranger and stranger. Among the policymaking classes, there's a prevailing view that the Bush administration was a disaster. The rather misleading description for those who advocated a US policy of promoting democracy and overthrowing dictators — "neo-conservative" — has become among such people a curse word implying stupid and evil.


Why, then, does the debate seem to be between those who now run most Western governments and want to engage with the worst, most dangerous extremists and those who want to promote democracy by opening up the political process to the... worst, most dangerous extremists?






WHATEVER BECAME of good old-fashioned realism, the breakfast of champions in diplomacy for centuries? Realism, a term that has been hijacked lately far more than Islam, means to base a policy on the actually existing situation rather than one's wish-list, building alliances on the basis of common interests. It does not mean embracing your worst enemies while kicking those with common interests in the groin. Nor does it mean acting like the nerdy kid groveling in the hope that it will make the popular guys like him. And it also doesn't mean ignoring adversaries' ideologies and goals.


Is it really so hard to understand that US policy should be based on working closely with Morocco, Tunisia, Algeria, Egypt, Jordan, Israel, Iraq, Lebanon (moderates, not Iranian-Syrian agents), Saudi Arabia and the smaller Gulf emirates? Is it really so hard to understand that US policy should also be based on combating Iran, Syria, Sudan, Hizbullah, Hamas and the Muslim Brotherhoods, as well as al-Qaida?


We saw what happened in Iran after experts predicted in 1978 that anything would be better than the shah and that moderates would inevitably prevail.


We saw what happened with the Palestinian elections, for while Fatah was no prize, Hamas is far worse and eager for bloodshed. We are about to see what will happen with Lebanese elections which are nominally democratic but influenced by Iranian-Syrian money and intimidation, as a government emerges likely to lead Lebanon into the Iranian bloc.


In Turkey, the several-times-elected AK regime, although still presented internationally as a model moderate Muslim government, is engaged in systematically Islamizing institutions and taking the country down a road leading closer to Teheran than to Washington.






I DO NOT LIKE saying this because I know many courageous liberal dissidents and would like them to win. US and Western policy should always press for their rights, against their imprisonment.


But why should the United States pursue a policy that we have every reason to believe will be catastrophic: namely, pushing for a situation in which radical Islamists are more likely to take over.


Examples have been given of people who might be expected to be liberal preferring to back Islamist parties. But Egypt is virtually the only place this seems to be happening. Elsewhere, people who might be expected to be liberal are supporting the existing regimes out of fear of Islamists. I think that Egypt is a misleading case for that reason. And in Egypt, the leading "liberal" group has now been taken over by the Muslim Brotherhood and spouts a very radical anti-American line.


Do we really want to contribute to subverting the Egyptian regime, with all its faults, and making the Brotherhood more powerful? The reaction is arrogance on the part of the radicals and despair among the moderates. The liberals conclude, you hear this all the time in Turkey, that America wants the Islamists to win.


I don't prefer this situation. I don't like it. But in a world where Islamists seek to overthrow nationalists, in which an Iranian-Syrian led alliance is trying to gain hegemony in much of the region, I feel that Western policy needs to back the regimes against the revolutionaries.


There are some ethnic or religious communities which have an interest in supporting a moderate democratic approach. At present, this includes Iraqi Kurds and Shi'ites; Lebanese Sunni Arabs, Christians and Druse; and the Berbers of the Maghreb. These are, however, special cases.


There are also very systematic campaigns to fool well-intentioned, gullible Westerners. These are often carried out by having moderate statements in English directed to a foreign audience and revolutionary extremist ones in Arabic directed at one's own society. The Egyptian Muslim Brotherhood has created a very nicely done English-language Web site that would make it seem the organization is something between the Democratic Party and the March of Dimes.


If the West engages with Hamas, Hizbullah and the Muslim Brotherhoods, while working to create a situation in which these groups can compete for power more effectively, the results will be disastrous both for the West and for the Arabs who become victims of the resulting Islamist regimes. No argument, no matter how sincerely heartfelt or superficially clever, alters that fact. That is a tragedy, but in policy terms it is also a necessity to deal with the reality of Middle East polities and societies.

10) Dow up nearly 500 on bank plan, rise in home sales
By TIM PARADIS

–Wall Street got the news it wanted on the economy's biggest problems — banks and housing — and celebrated by hurtling the Dow Jones industrials up nearly 500 points. Investors added rocket fuel Monday to a two-week-old advance, cheering the government's plan to help banks remove bad assets from their books and also welcoming a report showing a surprising increase in home sales. Major stock indicators surged more than 6 percent, including the Dow, which had its biggest percentage gain since October.

Although analysts were still hesitant to say Wall Street is squarely on its way to recovery after the collapse that began last fall, they said the banking and housing news bolstered the belief that the economy is starting to heal.

"It's just hard to argue that there isn't an improvement in economic activity on the horizon," said Jim Dunigan, executive vice president at PNC Wealth Management.

The market began turning around two weeks ago on news that Citigroup Inc. was operating at a profit in January and February. A spate of more upbeat economic reports helped the market build on its gains, although the rally stalled last Thursday and Friday.

Analysts said they saw more fundamental strength in Monday's buying than they saw at the start of the rally. Dave Rovelli managing director of trading at brokerage Canaccord Adams, said there appeared to be less short covering, which occurs when traders are forced to buy to cover misplaced bets that stocks would fall. Short covering contributed to the market's surge after the Citigroup news.

"There is definitely new buying," he said. Rovelli also said the approaching end of the quarter can make money managers eager to buy into a market to make the statements they send to clients look stronger.

The market shot higher at the opening and kept going. The Treasury Department said its bad asset cleanup program would tap money from the government's $700 billion financial rescue fund and involve help from the Federal Reserve, the Federal Deposit Insurance Corp. and the participation of private investors.

The government's announcement was what the market had waited weeks to hear. Treasury Secretary Timothy Geithner had announced an outline of the program last month but provided few details then about how it would work, leading to a stock plunge that sliced 380 points from the Dow.

But while analysts were pleased with the market's performance Monday, they were also still cautious.

Subodh Kumar, an independent investment strategist in Toronto, said the Fed's announcement that it would buy government debt and the details on plans to help banks are giving traders hope for recovery.

"The market is shedding some of its excess pessimism. That doesn't mean the market goes straight up," he said.

Meanwhile, the National Association of Realtors' existing home sales report was overwhelmingly positive for the market although it showed a decline in home prices in February. Investors are embracing any sign that a glut in homes for sale may be easing. Monday's data followed a dose of good housing news last week as housing starts for February came in much better than expected.

Collapsing home prices and the damage they have caused banks are at the center of the economy's current problems and are a major focus for the stock market. Banks have sharply curbed lending after becoming weighed down with loans that have gone bad, especially mortgages.

Investors had been largely disappointed in the government's efforts to date to restore the banks to health, but finally seemed encouraged by the long-awaited announcement Monday of details for the government's bad loan cleanup plan.

"The actions that we're getting from a policy standpoint are very helpful in removing the sand from the gears," said Alan Gayle, senior investment strategist at RidgeWorth Investments. "That is going to be good for the financials."

Shares of the country's largest banks, which have been pounded in recent weeks over concerns about their ability to weather the crisis, soared on Monday. Citigroup Inc. jumped 19.5 percent, and Bank of America Corp. added 26 percent.

Even banks seen as being on better footing posted big advances. JPMorgan Chase & Co. rose 25 percent, while Wells Fargo & Co. rose 24 percent.

According to preliminary calculations, the Dow rose 497.48, or 6.8 percent, to 7,775.86, its highest finish since Feb. 13. It was the biggest point gain for the blue chips since Nov. 13 when they rose 552 points and the biggest percentage gain since Oct. 28. when they rose 10.9 percent.

Broader stock indicators also surged. The Standard & Poor's 500 index rose 54.38, or 7.1 percent, to 822.92, crossing the psychological milepost of 800. The Nasdaq composite index rose 98.50, or 6.8 percent, to 1,555.77.

The Russell 2000 index of smaller companies rose 33.61, or 8.4 percent, to 433.72.

More than 10 stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.9 billion shares.

The Dow is now up 1,228 points, or 18.8 percent, from March 9, when it finished at its lowest point in nearly 12 years. The S&P 500 is up 21.6 percent in that time. Still, the Dow and the S&P 500 index are still down more than 45 percent from their peak in October 2007.

Dunigan said the skeptical tone has blanketed Wall Street since the fall has eased since the market began its rally on March 10.

Investors welcomed the rise in home sales Monday although the biggest jump in nearly six years came as first-time buyers pounced on deep discounts of foreclosures and other distressed properties. Analysts say it could be a nascent sign of recovery. But only weeks ago traders might have dwelled on the 15.5 percent drop in median prices.

"It's like putting on a different pair of glasses and you think you saw something different today than you saw yesterday," Dunigan said.

Bond prices were mixed as stocks rose. The moves were moderate as investors remained mindful of the Federal Reserve's plan announced last week to buy government debt to help drive down borrowing costs by reducing interest rates.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.68 percent from 2.64 percent late Friday. The yield on the three-month T-bill was flat at 0.19 percent.

Oil rose $1.73 to settle at $53.80 a barrel and the dollar was mixed against other major currencies. Gold fell. The price of gold has risen in recent weeks as investors have worried about the faltering economy and a weaker dollar.

Homebuilders extended an early rise after the home sales report. KBR Inc. rose 79 cents, or 5.7 percent, to $14.62, while Toll Brothers Inc. rose $1.84, or 10.8 percent, to $18.84. Hovnanian Enterprises Inc. jumped 30 cents, or 25 percent, to $1.48.

Overseas, Britain's FTSE 100 rose 2.9 percent. Germany's DAX index rose 2.7 percent, and France's CAC-40 rose 2.8 percent. Japan's Nikkei stock average rose 3.4 percent.