Has Government and Obama Gone Wild?

Netanyahu starts with a brilliant group of advisors. (See 1 below)

Contrast Netanyahu's actions with Sowell's take on Obama. (See 1a)

I have a very dour view what the rising trend in anti-Semitism portends. I have written repeatedly that when anti-Semitism is on the rise it is generally followed by war and I believe we are marching steadily in that direction.

Economic distress creates an opportunity to project hatred and it is beginning to take a variety of forms.

Arabs have cleverly exploited their own failures and mistakes by blaming Israel and enlisting the press and media to ignore facts. Israel, this tiny nation surrounded by a sea of Arab and Muslim nations bent on their destruction, is the cause of all the world's ills. Meanwhile Islamic fascism spreads like a virus and soon to become a nuclear armed one to boot.

The West cowers and I see Czechoslovakia all over again. We never seem to learn. I have little faith in Obama's judgement when it comes to standing firm against the various threats we face. Yes, he has moved decisively in Afghanistan but, as Sowell points out below, Russia, Iran, N Korea and China have taken his measure and are not deterred. In fact they have become more emboldened.

After 6 years of failed efforts at negotiations Britain's Foreign Secretary says give Iran more time to negotiate with Obama.(See 2, 2a and 2b below.)

A recent article that appeared in a Pittsburgh newspaper about Sweet-Tammys. (See 3 below.)

Newsweek artcle asserts Nobel winning economist,Paul Krugman, has turned on Obama - how can that be? (See 4 below.)

Daniel Howes writes Obama has become both president and CEO of Capitalism.

Borrow money from the government and, like a snake, it can and will turn on and bite you. Obama has sent a clear message that he will not tolerate what he will not tolerate.

Yes, Obama is acting bold but will the government be capable of running what Obama has chosen it should control? Highly unlikely. I get a strange feeling Obama is enjoying playing president as opposed to being president. Obama may pull it off but he could also be facing his economic and political Waterloo. (See 5 and 5a below.)

Dick



1)Netanyahu names professionals to his new inner military-security cabinet


During his years in opposition, the incoming Israeli prime minister Binyamin Netanyahu turned over ideas for making his next government substantially more effective and efficient than any of its predecessors, including his own, which ended disastrously ten years ago. Preparing to take over as Israel's 32nd prime minister this week, he bound 7-8 ministers and senior officials into a powerful new body to assist him in top-level decision-making on military, diplomatic, security and intelligence policy-making and actions.

Its members fall into two main groups, military and strategic-intelligence. Their input will guide Netanyahu's steps on such critical matters as whether to strike Iran's nuclear facilities or the tenor of his government's relations with the Obama administration.

It will be up to him as prime minister to pick his way among the divergent views offered him, because the members of the two teams, far from being yes-men, are individualists on the security issues in their fields of expertise.

While taxed with pulling together to produce the best strategic, economic and military guidelines for the country, each at the same time will want to leave his imprint on the next chapter in Israel's history.

The four ministers are ex-chief of staff Moshe Yaalon, strategic affairs, Avigdor Lieberman, foreign affairs, Dan Meridor, intelligence and nuclear energy, and Benny Begin, minister without portfolio.

Dr. Uzi Arad, who is in line as Netanyahu's national security adviser, and the heads of Israel's three intelligence arms, Mosad, Shin Bet and AMAN will be attached to the team.

Military sources note, that political views aside, this group ranks as Israel's A-team in terms of professional competence in the most sensitive policy areas Netanyahu will be called on to confront in his first weeks in office.

Yaalon's appointment as czar for strategic affairs aspires to learn from Lieberman's failings in this capacity in the outgoing Olmert administration. One of his advantages is that he will have no hang-ups about working with defense minister Ehud Barak. Because they respect each other and because as a former army man, he will defer to the defense minister both as his superior in the chain of command and the more experienced in military affairs, Yaalon will not find it hard to cooperate with Barak.

New to politics, his ranking will approximate that of deputy defense minister, a post which Barak handed formally to his fellow-Laborite Matan Vilnai, who will focus mainly on organization.

If this teaming-up works out, the new government will boast a four-man military leadership made up of Netanyahu, Barak, Yaalon and chief of staff Lt. Gen. Gaby Ashkenazi.

Dan Meridor's task is more complex and chancy: He must carve out a new niche as boss of intelligence and nuclear affairs, the first minister to officiate in this task in any Israeli government. His function is political and diplomatic, unlike Egypt's intelligence minister Gen. Omar Suleiman, who comes form the army.

In filling this complicated slot, Netanyahu acted on a recommendation common to every inquiry commission examining the lapses and errors in Israel's conduct of previous wars and all the secret panels dissecting the competence of its intelligence services. They all recommended the concentration of Israel's clandestine spy and security agencies in one hand for the sake of operational coordination.

Meridor will have his work cut out to assert interdepartmental authority over the innately reclusive Mossad (external intelligence), Shin Bet (domestic intelligence) and AMAN (military intelligence), as well as the foreign ministry's research and intelligence department and the national security council.

The weights tied to his feet include bad relations with the new prime minister. To have any hope of changing the policies bequeathed by the outgoing Ehud Olmert, Meridor will have to cultivate Netanyahu's close adviser and friend, Uzi Arad, who is an old intelligence hand, in the same way as Yaalon and Barak will need to work in harmony.

On the credit side, the new intelligence minister and prime minister share a friend in Benny Begin, who both admire. If Begin can bury the hatchet between them, Israel will acquire the services of a powerful intelligence-strategic policy-making team of four at one end of the spectrum to match the military grouping at the other.

As prime minister, Netanyahu will be supplied with first-rate, professional position papers from the two groupings. He will have the option of balancing them against each other before reaching decisions.

1a) A Rookie President
By Thomas Sowell

Someone once said that, for every rookie you have on your starting team in the National Football League, you will lose a game. Somewhere, at some time during the season, a rookie will make a mistake that will cost you a game.

We now have a rookie President of the United States and, in the dangerous world we live in, with terrorist nations going nuclear, just one rookie mistake can bring disaster down on this generation and generations yet to come.

Barack Obama is a rookie in a sense that few other Presidents in American history have ever been. It is not just that he has never been President before. He has never had any position of major executive responsibility in any kind of organization where he was personally responsible for the outcome.

Other first-term Presidents have been governors, generals, cabinet members or others in positions of personal responsibility. A few have been senators, like Barack Obama, but usually for longer than Obama, and had not spent half their few years in the senate running for President.

What is even worse than making mistakes is having sycophants telling you that you are doing fine when you are not. In addition to all the usual hangers-on and supplicants for government favors that every President has, Barack Obama has a media that will see no evil, hear no evil and certainly speak no evil.

They will cheer him on, no matter what he does, short of first-degree murder-- and they would make excuses for that. Even former Reagan speech writer Peggy Noonan has gushed over President Obama and even crusty Bill O'Reilly has been impressed by Obama's demeanor.

There is no sign that President Obama has impressed the Russians, the Iranians or the North Koreans, except by his rookie mistakes-- and that is a dangerous way to impress dangerous people.

What did his televised overture to the Iranians accomplish, except to reassure them that he was not going to do a damn thing to stop them from getting a nuclear bomb? It is a mistake that can go ringing down the corridors of history.

Future generations who live in the shadow of that nuclear threat may wonder what we were thinking about, putting our lives-- and theirs-- in the hands of a rookie because we liked his style and symbolism?

In the name of "change," Barack Obama is following policies so old that this generation has never heard of them-- certainly not in most of our educational institutions, where history has been replaced by "social studies" or other politically correct courses.

Seeking deals with our adversaries, behind the backs of our allies? France did that at Munich back in 1938. They threw Czechoslovakia to the wolves and, less than two years later, Hitler gobbled up France anyway.

This year, President Obama's attempt to make a backdoor deal with the Russians, behind the backs of the NATO countries, was not only rejected but made public by the Russians-- a sign of contempt and a warning to our allies not to put too much trust in the United States.

Barack Obama is following a long practice among those on the left of being hard on our allies and soft on our enemies. One of our few allies in the Middle East, the Shah of Iran, was a whipping boy for many in the American media, who vented their indignation at his regime-- which now, in retrospect, seems almost benign compared to the hate-filled fanatics and international terrorism sponsors who now rule that country.

However much Barack Obama has proclaimed his support for Israel, his first phone call as President of the United States was to Mahmoud Abbas, President of the Palestinian National Authority.

Our oldest and staunchest ally, Britain, has been downgraded by President Obama's visibly less impressive reception of British Prime Minister Gordon Brown, compared to the way that previous Presidents over the past two generations have received British Prime Ministers. President Obama's sending the bust of Winston Churchill in the White House back to the British embassy at about the same time was either a rookie mistake or another snub.

We can lose some very big games with this rookie.



2) New Broadway Play About Hero Who Is … Religious!
By Dennis Prager


The older I get, the less I find evil interesting and the more I find goodness interesting. Contrary to conventional wisdom, it is great goodness, not great evil, that needs to be explained. In fact, given the ubiquity of gratuitous cruelty and other expressions of evil — and the apparent ease with which many ordinary people can be transformed into monsters — evil may be more explicable than goodness.


Given all this, one would therefore assume that there would be many studies of goodness and of good people. Yet, there are probably 100 books, studies, and articles about evil for every book, study, or article about goodness. This emanates in large measure from the modern, i.e., post-religious, belief ("faith" would be a better word) that people are born good. Consequently, it is evil that is deemed aberrant and therefore needs to be explained, not good, which is deemed normal and therefore needs little explanation.


Just as studies of goodness are deemed less interesting than studies of evil, portrayals of goodness are deemed less interesting than portrayals of evil. Again, the ratio is probably at least a 100-to-1.


Yet, true stories of goodness, well told, are the greatest stories. While stories of evil have the benefit of sensationalism and appeal to voyeurism, stories of goodness uplift, inspire, make us cry, give us hope, provide real models to emulate, and ultimately may even make us a little better.


One problem, however, is that it is much easier to depict evil in a riveting manner than to so depict goodness. Stephen Spielberg achieved the latter in Schindler's List, but that was the exception that proves the rule. Now, however, another exception has come along. Playwright Dan Gordon and director Michael Parva have made goodness riveting in the new Broadway play, "Irena's Vow."


The Irena of the title is Irene Gut Opdyke, who, at the time of the play's World War II's setting, was a pretty 19-year-old blond Polish Roman Catholic to whom fate (she would say G-d) gave the opportunity to save 12 Jews in, of all places, the home of the highest-ranking German officer in a Polish city. Ultimately discovered by the Nazi officer, she was offered the choice of becoming the elderly Nazi's mistress or the Jews all being sent to death camps.


As it happens, I interviewed Opdyke on my radio show 20 years ago and again 12 years later, and she revealed to me how conflicted she was about what she consented to do not only because she became what fellow Poles derided as a "Nazi whore" but because as a deeply religious Catholic she was sure she was committing a grave sin by regularly sleeping with a man to whom she was not married and worse, indeed a married man, which likely rendered her sin of adultery a mortal sin.


What she did therefore, was not only heroic because she had to overcome daily fear of being caught and put to death, but because she also had to overcome a daily fear of committing a mortal sin before G-d.


Aside from my lifelong interest in altruism and especially in understanding the motivations of rescuers of Jews during the Holocaust, I had an unwitting role in the making of "Irena's Vow." According to the playwright, Gordon, the play came about because he heard Opdyke on my radio show 20 years ago. He immediately contacted her, they became friends, and the rest is history.


We never know all the good (or bad) we have done. So Gordon's attribution of the genesis of his play to me is very gratifying. If there was a dry eye on opening night this past Sunday when I attended, it surely wasn't near my seat.


It is rare to see a play on Broadway that is preoccupied with goodness. It is even more rare to see Broadway play extol the goodness of a religious person. When was the last Broadway show about a Christian hero? In this upside-down age that is hypersensitive to any criticism, no matter how fair, of any aspect of Islam but which regularly depicts many American Christians as buffoons and quasi-fascists, one can only hope that this play has a long run. Likewise, in an age when art increasingly celebrates the ugly and the bad, one can only hope that a million young people see a play that celebrates the goodness that G-d-based morality can produce.

Dennis Prager hosts a national daily radio show based in Los Angeles. He the author of, most recently, "Happiness is a Serious Problem". The Stages of Anti-Semitism
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2a)n An avant-garde play revives an ancient hatred.
By BRET STEPHENS.



Here's a sketch for a racist play about "moral decline" in black America since the civil rights era.

Act I: Heroic protestors gather at the Edmund Pettus Bridge in Selma, Ala., in 1965 to march in defiance of a segregationist state. Act II: The scene moves to San Francisco in the early 1970s, where the radical politics of the Black Panthers quickly give way to robbery and murder. Act III: A New York City crack house, circa 1985. Act IV: the trial of O.J. Simpson. Act V: The present, in which a black man on a prison furlough goes on a murder spree.

Appalled? I hope so.

Now substitute the word "Jewish" for "black" and change the scene to Europe and Israel and you have, roughly, the plot of celebrated British playwright Caryl Churchill's "Seven Jewish Children," which debuted last month to some controversy and much acclaim at London's Royal Court Theater. It is now in the U.S., playing in small but respectable venues to sophisticated audiences that -- judging from the performance I attended in New York last Thursday -- are overwhelmingly disposed to like it.

Ms. Churchill's short play unfolds over seven scenes, beginning, dimly, sometime during the Holocaust and concluding, sharply, with Israel's war with Hamas. Characters appear as parents or older relatives of an offstage child, and the dialogue revolves around what the girl should or should not know about her political circumstances as they unfold over the decades.

So, for the first scene we have the line, "Don't tell her they'll kill her" -- the "they" presumably referring to Nazis. Yet by the final scene the tables have turned. Now it's the Jews who behave like Nazis: "Tell her," says one of the play's Zionist elders, "I wouldn't care if we wiped them out . . . tell her we're better haters, tell her we're chosen people, tell her I look at one of their children covered in blood and what do I feel? Tell her all I feel is happy it's not her." (My emphases.)

Just what is this supposed to mean? Michael Billington of the Guardian grasped Ms. Churchill's point when he wrote that the play captured "the transition that has overtaken Israel, to the point where security has become the pretext for indiscriminate slaughter." Ms. Churchill herself has written that she "wanted [the play] in some small way to reflect the shock and enormity of what happened in Gaza. I think it does that relatively mildly." (My emphasis again.)

All this makes perfect sense -- provided you're willing to reduce the Arab-Israeli conflict to caricature, magnify it to the exclusion of all others, assign blame (and moral agency) wholly to one side, and suppose that Israelis use the memory of the Holocaust cynically or neurotically as an alibi for gratuitous and wanton bloodletting.

In other words, if you're prepared to manipulate history as dishonestly as our vile little "play" about black America does, then it's easy to draw a damning moral. And if you're clever enough to cast the indictment as a story about some blacks or some Jews, or as one of generational decadence, then you might also acquit yourself of charges of racism or anti-Semitism, since you can point to a few Jews or blacks worthy of your considered respect.

Of course Ms. Churchill does just that, even as she mocks Jewish claims to statehood ("Tell her her great great great great lots of greats grandad lived there"). Of course she cites the authority of Israel's many internal dissenters and Jewish critics as another method of self-justification, thereby using Israel's own openness as a club with which to bludgeon it. Yet if you say, for instance, that Israel is a fascist state and cite the testimony of Israelis who freely argue as much, then you have done nothing except instantly disprove your own premise.

But logic is not the issue here, nor, really, are the facts: Try arguing either with someone determined to ignore them. The issue is about taboo -- a word easy to mock until you realize it often upholds what is best in society. Racism has become taboo in American society, and that's a very good thing. Anti-Semitism used to be taboo, but that's been eroded by an obsessive criticism of Israel that seems to borrow freely from the classic anti-Semitic repertoire ("tell her they're filth") while adopting the brilliant trick of treating Jewish victimization as a moral ideal from which modern Israel has sadly deviated.

Readers may wonder why Ms. Churchill's trite agitprop, a cultural blip on the vast American stage, deserves a column. Maybe it doesn't; maybe it's best ignored. But I'm reminded of what a better Churchill -- Winston -- wrote about the German decision in 1917 to put V.I. Lenin on a sealed train to Petersburg, "in the same way you might send a phial containing a culture of typhoid or cholera to be poured into the water supply of a great city." Something foul has now gotten into our water, too.

2b) UK: Not the time to rush for more Iran sanctions


Foreign Secretary Miliband says world powers should refrain from imposing new sanctions due to 'Tehran's chance to normalize ties with US'

Big powers should not rush to impose new sanctions on Iran at a time when Tehran has a good chance to move to normal ties with Washington, British Foreign Secretary David Miliband said on Tuesday.


In a sharp change in US policy, President Barack Obama has offered a new start in relations with Iran after decades of deep mistrust between the two countries which are also locked in a dispute over Iran's nuclear program.


Britain, a close US ally and one of the six powers that have been trying to persuade Iran to abandon uranium enrichment, has backed the new US approach.

Miliband told Britain's parliament the US offer "represents the best chance Iran will ever have to normalize its relations with the rest of the world and above all to normalize its relations with the US"


Asked how long Britain would wait before seeking more United Nations' or European Union sanctions against Iran over its nuclear program, Miliband said: "Now is not the time to be rushing for more sanctions."



3) Business sweet for new Squirrel Hill bakery
By Michael Machosky, TRIBUNE-REVIEW

Sweet Tammy's
Location: 2119 Murray Ave., Squirrel Hill

Hours: 8 a.m. to 5 p.m. Sundays, appointment only Mondays, 7 a.m. to 7 p.m. Tuesdays-Thursdays, 7 a.m. to 2:30 p.m. Fridays. Major credit cards accepted.

Details: 412-224-2306

About the writer
Michael Machosky can be reached via e-mail or at 412-320-7901.



With the national economy sinking deeper into the doldrums, it doesn't seem like a great time to be starting up a high-end bakery.

But Daniel Berkowitz, 31, and wife Tamara, 28, the baker, decided that their dream couldn't wait, and opened Sweet Tammy's in Squirrel Hill, anyway. Fortunately, they've found that upscale bakeries tend to run counter to economic trends.

"As people cancel their trips and vacations and larger pleasurable spending, they feel more entitled to treat themselves to a little indulgence," Daniel Berkowitz says. "We're seeing an interesting uptick in people -- the market goes down, and they're buying cupcakes. I used to be in the beer business, and we used to say that when people get hired, they drink, but when they get fired, they really drink. I think people have the same relationships with baked goods."

They came to Pittsburgh sight unseen, after Berkowitz was offered a cooking job.

"We actually moved to Pittsburgh Super Bowl weekend 2006," he says. "It was awesome. We thought that happened every Sunday."

"In April, when my wife decided she wanted to open a bakery and the space became available in Squirrel Hill, we went for it," Berkowitz says. "Things wound down at my previous job, so I'm working here as well. We call ourselves 'Mom-and-Pop 2.0.'"

Starting a business is never easy, but the location had some built-in advantages.

"We really fell in love with the neighborhood," Berkowitz says. "We live literally a block from the bakery -- it's a great commute. We tell everybody in and out of the city, that this is one of the few cities in the U.S. where you can do that. A young couple can come and start a business and live near the business. The cost of living is so reasonable, we can actually afford to do this at our age."

Sweet Tammy's fills the space on Murray Avenue vacated by Simple Treat, Squirrel Hill's last kosher bakery. Inside, it has been totally transformed -- with elegant crystal chandeliers, a stained-glass panel on the kitchen door and a massive custom-designed glass display case.

"We call it 'Nouveau Victorian,'" Berkowitz says. "Our whole dream was to re-create a Viennese pastry shop, or a Victorian pastry shop, on Murray Avenue. We think it's really keeping with the grand period for Pittsburgh, which was the Victorian period. When we poked around the space and looked at some of the original architectural elements, we envisioned what it would look like if we opened the shop around the turn of the century."

Typical offerings include Snickerdoodle Cookies, Chocolate Chip Sandwich Cookies, Peanut Butter Sandwich Cookies, Raspberry Linzer Cookies, and Black & White Cookies (all $1.25 each).

"We do everything by hand, with no mixes or pre-made anything," Berkowitz says. "All our products are certified non-dairy and kosher. We are a kosher bakery, but when you use the term 'kosher bakery,' people think of a very specific kind of place. We're trying to change that model and show that just because you're kosher, you don't have to offer just a certain kind of product. You can offer fresh, new, innovative products and still make them kosher.

"The favorites are the Coconut Macaroons, and our Caramel Blondie bars. And on the other end of the spectrum, our wedding cakes."

It also helps to be diversified. Sweet Tammy's serves local La Prima coffee, and features bins of candy along the wall -- jellybeans, candy corns, jawbreakers, all kinds of gummi things. Eventually, they hope to develop an online presence, and ship Sweet Tammy's sweets all over the country.

"Our vision is to be headquartered in Pittsburgh, but to have a national distribution reach," Berkowitz says. "Again, the overhead of doing business in Pittsburgh is so much lower. I can distribute product to New York, and be cheaper than guys who are based in Brooklyn."

"Mom-and-pop businesses are by no means dead. I think, if anything, this economy has shown us that some of the jobs and positions that people held in such esteem aren't as good as making an honest living close to home."

4) Obama’s Nobel Headache: Paul Krugman has emerged as Obama's toughest liberal critic. He's deeply skeptical of the bank bailout and pessimistic about the economy. Why the establishment worries he may be right.
By Evan Thomas

Traditionally, punditry in Washington has been a cozy business. To get the inside scoop, big-time columnists sometimes befriend top policymakers and offer informal advice over lunch or drinks. Naturally, lines can blur. The most noted pundit of mid-20th-century Washington, Walter Lippmann, was known to help a president write a speech—and then to write a newspaper column praising the speech.

Paul Krugman has all the credentials of a ranking member of the East Coast liberal establishment: a column in The New York Times, a professorship at Princeton, a Nobel Prize in economics. He is the type you might expect to find holding forth at a Georgetown cocktail party or chumming around in the White House Mess of a Democratic administration. But in his published opinions, and perhaps in his very being, he is anti-establishment. Though he was a scourge of the Bush administration, he has been critical, if not hostile, to the Obama White House.


In his twice-a-week column and his blog, Conscience of a Liberal, he criticizes the Obamaites for trying to prop up a financial system that he regards as essentially a dead man walking. In conversation, he portrays Treasury Secretary Tim Geithner and other top officials as, in effect, tools of Wall Street (a ridiculous charge, say Geithner defenders). These men and women have "no venality," Krugman hastened to say in an interview with NEWSWEEK. But they are suffering from "osmosis," from simply spending too much time around investment bankers and the like. In his Times column the day Geithner announced the details of the administration's bank-rescue plan, Krugman described his "despair" that Obama "has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they're doing. It's as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street."

If you are of the establishment persuasion (and I am), reading Krugman makes you uneasy. You hope he's wrong, and you sense he's being a little harsh (especially about Geithner), but you have a creeping feeling that he knows something that others cannot, or will not, see. By definition, establishments believe in propping up the existing order. Members of the ruling class have a vested interest in keeping things pretty much the way they are. Safeguarding the status quo, protecting traditional institutions, can be healthy and useful, stabilizing and reassuring. But sometimes, beneath the pleasant murmur and tinkle of cocktails, the old guard cannot hear the sound of ice cracking. The in crowd of any age can be deceived by self-confidence, as Liaquat Ahamed has shown in "Lords of Finance," his new book about the folly of central bankers before the Great Depression, and David Halberstam revealed in his Vietnam War classic, "The Best and the Brightest." Krugman may be exaggerating the decay of the financial system or the devotion of Obama's team to preserving it. But what if he's right, or part right? What if President Obama is squandering his only chance to step in and nationalize—well, maybe not nationalize, that loaded word—but restructure the banks before they collapse altogether?

The Obama White House is careful not to provoke the wrath of Krugman any more than necessary. Treasury officials go out of their way to praise him by name (while also decrying the bank-rescue prescriptions of him and his ilk as "deeply impractical"). But the administration does not seek to cultivate him. Obama aides have invited commentators of all persuasions to the White House for some off-the-record stroking; in February, after Krugman's fellow Times op-ed columnist David Brooks wrote a critical column accusing Obama of overreaching, Brooks, a moderate Republican, was cajoled by three different aides and by the president himself, who just happened to drop by. But, says Krugman, "the White House has done very little by way of serious outreach. I've never met Obama. He pronounced my name wrong"—when, at a press conference, the president, with a slight note of irritation in his voice, invited Krugman (pronounced with an "oo," not an "uh" sound) to offer a better plan for fixing the banking system.

It's possible that Krugman is a little wounded by this high-level disregard, and he said he felt sorry about criticizing officials whom he regards as friends, like White House Council of Economic Advisers chair Christina Romer. But he didn't seem all that sorry.

Krugman is having his 15 minutes and enjoying it, although at moments, as I followed him around last week, he seemed a little overwhelmed. He is an unusual mix, at once nervous, shy, sweet and fiercely sure of himself. He enjoys his outsider's power: "No one has as big a megaphone as I have," he says. "Aside from the world going to hell, it's great." He is in much demand on the talk-show circuit: PBS's "The NewsHour" and "Charlie Rose" on Monday last week, ABC's "This Week With George Stephanopoulos" this past Sunday. Someone has even cut a rock video on YouTube: "Hey, Paul Krugman, why aren't you in the administration?" A singer croons, "Hey, Paul Krugman, where the hell are you, man? We need you on the front lines, not just writing for The New York Times." (And the cruel chorus: "All we hear [from Geithner] is blah, blah, blah.")

Krugman is not likely to show up in an administration job in part because he has a noble—but not government-career-enhancing—history of speaking truth to power. With dry humor, he once told a friend the story of attending an economic summit in Little Rock after Bill Clinton was elected president in 1992. As the friend recounted the story to NEWSWEEK, "Clinton asked Paul, 'Can we have a balanced budget and health-care reform?'—essentially, can we have it all? And Paul said, 'No, you have to be disciplined. You have to make choices.' Then Paul says to me (deadpan), 'That was the wrong answer.' Then Clinton turns to Laura Tyson and asks the same questions, and she says, 'Yes, it's all possible, you have your cake and eat it too.' And then [Paul] says, 'That was the right answer'." (Tyson became chairman of Clinton's Council of Economic Advisers; she did not respond to requests to comment.) Krugman confirmed the story to NEWSWEEK WITH a smile. "I'm more tolerant now," he says. But at the time, he was bitter that he was kept out of the Clinton administration.

Krugman has a bit of a reputation for settling scores. "He doesn't suffer fools. He doesn't like hauteur in any shape or form. He doesn't like to be f––ked with," says his friend and colleague Princeton history professor Sean Wilentz. "He's not a Jim Baker; he's not that kind of Princeton," says Wilentz, referring to the ur-establishment operator who was Reagan's secretary of the Treasury and George H.W. Bush's secretary of state. But Wilentz went on to say that Krugman is "not a prima donna, he wears his fame lightly," and that Krugman is not resented among his academic colleagues, who can be a jealous lot. Krugman's fellow geniuses sometimes tease him or intentionally provoke his wrath. At an economic conference in Tokyo in 1994, Krugman spent so much time berating others that his friends purposely started telling him things that they knew weren't true, just to see him get riled up. "He fell for it every time," said a journalist who was there but asked not to be identified so she could speak candidly. "You'd think that eventually, he would say, 'Oh, come on, you're just jerking my chain'." Krugman says he doesn't recall the incident, but says it's "possible."




Born of poor Russian-immigrant stock, raised in a small suburban house on middle-class Long Island, Krugman, 56, has never pretended to be in the cool crowd. Taunted in school as a nerd, he came home one day with a bloody nose—but told his parents to stay out of it, he would take care of himself. "He was so shy as a child that I'm shocked at the way he turned out," says his mother, Anita. Krugman says he found himself in the science fiction of Isaac Asimov, especially the "Foundation" series—"It was nerds saving civilization, quants who had a theory of society, people writing equations on a blackboard, saying, 'See, unless you follow this formula, the empire will fail and be followed by a thousand years of barbarism'."

His Yale was "not George Bush's Yale," he says—no boola-boola, no frats or secret societies, rather "drinking coffee in the Economics Department lounge." Social science, he says, offered the promise of what he dreamed of in science fiction—"the beauty of pushing a button to solve problems. Sometimes there really are simple solutions: you really can have a grand idea."

Searching for his own grand idea (his model and hero is John Maynard Keynes) Krugman became one of the top economists in the country before he turned 30. He took a job on the Council of Economic Advisers in the Reagan administration at the age of 29. His colleague and rival was another brilliant young economist named Larry Summers. The two share a kind of edgy braininess, but they took different career paths—Summers as an inside player, working his way up to become Treasury secretary under Clinton and president of Harvard, then Obama's chief economic adviser. Krugman preferred to stay in the world of ideas, as an "irresponsible academic," he puts it, half jokingly, teaching at Yale, MIT, Stanford and Princeton. In 1999 he almost turned down the extraordinary opportunity to become the economic op-ed columnist for The New York Times. He was afraid that if he became a mere popularizer he'd blow his shot at a Nobel Prize.

Last October, he won his Nobel. Most economists interviewed by NEWSWEEK agreed that he richly deserved it for his pathbreaking work on global trade—his discovery that traditional theories of comparative advantage between nations often do not work in practice. He was stepping into the shower at a hotel when his cell phone rang with the news that he had achieved his life's ambition. At first, he thought the call might be a hoax. His wife Robin's reaction, once the initial thrill wore off, was, "Paul, you don't have time for this." He is, to be sure, insanely busy, producing two columns a week, teaching two courses and still writing books (his latest is "The Return of Depression Economics and the Crisis of 2008"). He posts to his blog as many as six times a day. Last Thursday morning, he was gleeful because he was able to thump a blogger who insisted, wrongly, that Keynes did not use much math in his work.

In class that day, discussing global currency exchange with a score of undergraduates, he was gentle, bemused, a little absent-minded, occasionally cracking mordant jokes (on trade with China: "They give us poisoned products, we give them worthless paper"). He says he plans to reduce his teaching load a little, and his colleagues say his best academic work is behind him. "His academic career culminated with him winning the prize," says his Princeton colleague and friend Gene Grossman. "He's not that engaged anymore with academic research. He has a public career now. That's what he views as his main avocation now—as a public intellectual."

He has made enemies in the economics community. "He's become more and more outspoken. A lot of what he says is wrong and not considered," says Daniel Klein, professor of economics at George Mason University. A longtime mentor, MIT Nobel laureate Robert Solow, who taught Krugman as a grad student, remembers him as "very unassertive, mild-mannered. One thing he still has is a smile that plays around his face when he's talking, almost like he's looking at himself and thinking, 'What am I doing here?' " But, Solow added, "when he started writing his column, his personality adapted to it."

Academic life, bolstered by book and lecture fees, has been lucrative and comfortable. Krugman and Robin (his second wife; he has no children) live in a lovely custom-built wood, stone and glass house by a brook in bucolic Princeton. Krugman pointed out that unlike some earlier Nobel Prize winners, he has not asked for a better parking place on campus. (He was not kidding.)

Arriving at the Times just before Bush's election in 2000, he was soon writing about politics and national security as well as economics, sharply attacking the Bush administration for invading Iraq. Someone at the Times—Krugman won't say who—told him to tone it down a bit and stick to what he knew. "I made them nervous," he says. In 2005, Times ombudsman Daniel Okrent wrote, "Op-Ed columnist Paul Krugman has the disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults." Krugman says that Okrent "caved" to the criticism of conservative ideologues who were out to get him. ("I tried to be an honest broker," says Okrent. "But when someone challenged Krugman on the facts, he tended to question the motivation and ignore the substance.") It's true that during the Bush era Krugman was the target of cranks and kooks, but it is also true that in areas outside his expertise he sometimes gets his facts wrong (his record has improved lately). Krugman is unrepentant about his Bush bashing. "I was more right in 2001 than anyone in the pundit class," he says.

Ideologically, Krugman is a European Social Democrat. Brought up to worship the New Deal, he says, "I am not overflowing with human compassion. It's more of an intellectual thing. I don't buy that selfishness is always good. That doesn't fit the way the world works." Krugman is particularly passionate about the growing gap between rich and poor. Last week he raced down to Washington to testify on the subject before the House Appropriations Committee. In the 2008 election, Krugman first leaned toward populist John Edwards, then Hillary Clinton. "Obama offered a weak health-care plan," he explains, "and he had a postpartisan shtik, which I thought was naive."

Krugman generally applauds Obama's efforts to tax the rich in his budget and try for massive health-care reform. On the all-important questions of the financial system, he says he has not given up on the White House's seeing the merits of his argument—that the government must guarantee the liabilities of all the nation's banks and nationalize the big "zombie" banks—and do it fast. "The public wants to trust Obama," Krugman says. "This is still Bush's crisis. But if they wait, Obama will be blamed for a fair share of the problem."

Obama administration officials are dismissive of Krugman's arguments, although not on the record. One official made the point that pundits can have a 60 percent chance of being right—and just go for it. They have nothing to lose but readers, and Krugman's many fans have routinely forgiven his wrong calls. The government does not have the luxury of guessing wrong. If Obama miscalculates, he could truly crash the stock market and drive the economy into depression. Krugman's suggestion that the government could take over the banking system is deeply impractical, Obama aides say. Krugman points to the example of Sweden, which nationalized its banks in the 1990s. But Sweden is tiny. The United States, with 8,000 banks, has a vastly more complex financial system. What's more, the federal government does not have anywhere near the manpower or resources to take over the banking system.

Krugman swats away these arguments, though he acknowledges he's not a "detail" man. He believes he is fighting a philosophical battle against the plutocrats and money-changers. Although he thinks Geithner has been captured by Wall Street, he has hope for Summers. "I have a strong suspicion that if Larry was on the outside and I was on the inside, we'd be reversing roles," he says, but adds, "Well, not entirely. Larry has more faith in markets. I'm more of an interventionist."

Last week Krugman and Summers were "playing phone tag." ("It doesn't necessarily mean that much," says Krugman. "We've known each other all our adult lives." Summers initiated the call; Krugman suspects he wanted to talk him through the administration's plan.) In Friday's column, Krugman tweaked Summers directly for his faith in markets, though he grudgingly gave the Obamaites credit for calling for extensive regulation of the financial world. Krugman thinks that Obama needs some kind of "wise man" to advise him and mentions Paul Volcker, the former Fed chairman who tamed inflation for Reagan and now heads an advisory panel for Obama. How about Krugman himself for that role? "I'm not a backroom kind of guy," he says, schlumped over in his Princeton office, which overflows with unopened mail. He describes himself as a "born pessimist" and a "natural rebel." But he adds, "What I have is a voice." That he does.

5) Commentary: Obama effectively becomes CEO-in-chief
By Daniel Howes

President Obama says he wants to save America's auto industry. He says General Motors Corp., under a new CEO, has 60 days to sharpen its restructuring or submit to bankruptcy. He's giving Chrysler LLC 30 days to complete an alliance with Fiat SpA of Italy lest Detroit's No. 3 carmaker find itself in a federal court.

But what the president didn't say Monday, as he detailed his administration's prescription for Detroit's two sickest automakers, is what he actually did -- oust a sitting CEO, GM's Rick Wagoner, and begin the process of remaking a board of directors deemed to have done too little, too late to prevent GM's slide into the arms of the federal government.

The terror of Wall Street, disgraced New York Gov. Eliot Spitzer, would love it.

In one swift act, the president effectively overruled the oversight and fiduciary responsibilities of GM's directors, duly elected by the automaker's shareholders, because he could -- and the federal government, officially a lender of $13.4 billion to GM, doesn't own a single share of the automaker.

A chilling message? It should be if you run a bank recapitalized with Treasury money, lead an auto supplier likely to tap into a new $5 billion federal fund, are considering a pitch for a government bailout or are Fritz Henderson, the GM president-turned-CEO who has two months to accelerate the automaker's restructuring.

"Firing a CEO is usually what a board does," says Peter Henning, a law professor at Wayne State University who worked in the enforcement division of the Securities and Exchange Commission. "We now have a CEO-in-chief ... overseeing large sectors of the economy. We are certainly in a brave new world."

And it looks like this: the federal government, in a bid to "save" companies determined crucial to the economy, is prepared to use whatever thin financial connections it has to them to broom management, void employment contracts, reload boards of directors and, if necessary, force bankruptcies.

Monday, the president's people -- the president himself -- amped the threat of bankruptcy because without it there can be no deal between GM, its bondholders and the United Auto Workers. Should GM be forced into bankruptcy, as seems increasingly likely, White House pressure to replace the CEO and GM's directors could enable the president's allies to influence the shape and priorities of a new, leaner and smaller GM.

In the Detroit-based auto industry, a crisis crystallized by $4-a-gallon gas, the credit crunch and plunging consumer confidence offers a Democratic White House with close ties to the environmental wing of its party a golden opportunity to turn the General "green" -- even if doing so means beggaring the retiree health care promises of hourly workers.

The argument here isn't whether Wagoner should have been pressured to resign to speed a concessionary deal with bondholders and the UAW that would keep GM out of bankruptcy. GM's massive problems -- $82 billion in losses this decade, a collapsed credit rating, massive outstanding debt made worse by its borrowing from the government -- will partly define Wagoner's legacy.

Nor are GM's directors, sharply criticized for being too beholden to Wagoner & Co., remotely blameless. Their stewardship is marked by a tolerance of incremental change and rejection of boardroom activism (see investor Kirk Kerkorian's Jerry York) that is even more suspect when compared to the dramatic progress made at crosstown rival Ford.

The issue is principle and the lengthening arm of government into commerce. How can corporate governance and the fiduciary responsibility of directors to shareholders be so easily usurped to satisfy the political exigencies of the day? Stunning is too mild a word to describe the precedent set here.

"Certainly they have a large investment in General Motors," says spokesman Steve Harris, referring to the $13.4 billion-and-counting federal lifeline to GM. "We certainly knew that would involve a certain amount of oversight and involvement of government in our activities."

They just didn't know how much. Not since World War II, with the arguable exception of President Harry S. Truman's brief control of the steel industry, has a president exercised such forceful unilateral control over firms in the private sector. And the double-standards? Towering, as if that makes any difference.

What does it say that on the same day President Obama made nice at the White House with the nation's leading bank CEOs -- none of whom have lost their jobs despite sitting on vastly larger sums of taxpayer dough -- the head of the president's auto task force was urging Wagoner to "step aside?"

"There is no standard," Rep. Thaddeus McCotter, R-Livonia, told me. "You cannot look at what happened to Rick Wagoner and draw any policy certitude about what happened to the Wall Street CEOs. How do you reconcile the two images on Friday?"

You don't because you can't.

5a) Obama, the nation's CEO
By Mike Allen and Jim VandeHei

President Obama, with seven days of unprecedented market intervention capped by Monday’s ultimatum to U.S. automakers, has made one thing emphatically clear: He is the most powerful player in American business today.

Obama’s move to oust the CEO of GM and put Detroit on notice that he is prepared to let icons of American industry fail if they refuse to bend to his will was a calculated attempt to send a message, said an official often consulted by the administration. And that message was unmistakable: In any business-government partnership, Obama himself expects to play the dominant role.

“He’s realizing, ‘Hey, the economy’s mine now, and I better do it my way,’” said the official. “So the administration is collaring people and letting them know who’s in charge. The days of saying, ‘It’s not our economy’ have come to an end.”

An Obama administration official said the president’s hard-nosed approach will continue. “We’re not going to reward failure,” the official said. “We’re in an economic crisis, which takes shared responsibility and shared sacrifice. The only way that we will recover is if everybody puts a little skin in the game.”

Officials said the evolution of Obama’s increasingly tough tactics has been partly human: He became exasperated when bailed-out banks continued buying planes and paying bonuses at a time when so many people were losing jobs. He took it as a slap in the face — and knew that Americans seeing it on TV would, too.

In a 150-hour period, starting last Monday, Obama put the government in the business of partnering with investors to buy up $1 trillion in high-risk bad assets. The move single-handedly caused a market rally and breathed life into bank stocks.

His administration then called for a whole new set of government regulations for high-flying hedge funds and other financial institutions. If successful, he will be the first president with the power to take over not only banks but also other financial firms, including big insurance companies (take that, AIG).

At week’s end, the president hauled in CEOs of big banks and later said he had lectured them on how to run better and more trusted businesses.

Most amazingly, he then pushed out Rick Wagoner, the CEO of General Motors, and vowed to let Chrysler fail if it didn’t merge with another company within a month.

Taken alone, the moves are remarkable. Taken together, they amount to a major exercise of presidential power — the imperial presidency applied to the economy to a sweeping degree not seen in decades.

“The message from the Obama administration to the auto industry is loud and clear: Restructure or die,” Harvard Business School’s Rosabeth Moss Kanter said in POLITICO’s Arena discussion. “If the government invests or lends, then, like any bank or investment group, it can demand accountable leadership that can deliver performance.”

But Obama’s move, particularly his dramatic ultimatum to Detroit, puts government in a role better performed by the private sector.

Said David Boaz of the Cato Institute in The Arena: “Rick Wagoner may be a bad CEO, or he may be a victim of difficult conditions facing the legacy auto industry. In either case, board members and investors are the right people to make that decision. I don’t know who should run GM, and neither does President Obama.”




Behind the scenes, Obama seems increasingly comfortable with his assertive role, according to Democratic officials. This mentality pervades the entire White House team — and it was on full display at Friday’s meeting with big bank CEOs. A source familiar with the meeting said that when one of them questioned the price buyers would be able to get for the bad loans known as toxic assets, White House chief of staff Rahm Emanuel jumped in to say: “Let’s do the deal right here.”

Obama, who entered the White House with notably little business experience, is trying to position himself as a common-sense centrist when it comes to bailouts, aides said. He rejected calls from leading liberals to nationalize banks and ignored pleas from Michigan Democrats to be as generous with the auto industry as he has been with the banks.

It should come as no surprise that Obama is trying to claim the middle ground. He picked Timothy Geithner for Treasury, Emanuel as chief of staff and Lawrence Summers as his top domestic adviser for a reason. All three are more in the moderate vein of President Bill Clinton than the liberal lane of House Speaker Nancy Pelosi.

So far, the president has not alienated the business community — and, in some cases, has found ways to win over executives who had been skeptical at best.

“His criticism of industry leaders has been well-placed and dead on, but he’s managed not to demonize or disparage the whole capitalist system,” Democratic strategist Jim Jordan said. “There’s nothing in the world that has the center of gravity to fix so much profoundly broken stuff. It’s got to be the federal government, and he has the confidence and approval rating to be able to try it.”

Obama also has tried to show he’s willing to listen. Some business leaders had complained that no one heard their views because Geithner was so swamped, with few deputies in place and constant demands from the cratering economy and an impatient Capitol Hill.

So Obama has had a series of West Wing meetings with executives in which he has heard about the problems of specific industries, including technology, hospitality and the airlines.

In an interview with CBS’s “Face the Nation,” Obama said he had lectured the bankers: “Show some restraint. ... Let me help you — help me help you. ... It’s very difficult for me as president to call on the American people to make sacrifices to help shore up the financial system if there’s no sense of mutual obligation.”

But participants said he conveyed the message diplomatically, saying little and drawing out almost all of the bankers to find out what was on their minds. They said they felt consulted, not scolded — another victory for the young president.

Obama used a similarly deft touch in letting Midwest lawmakers know about the harsh medicine he planned for the carmakers. In the Oval Office on Sunday evening, Obama called Sen. Carl Levin (D-Mich.) and three other lawmakers for a long conversation in which he argued that the industry could become viable again through the unpopular plan he was about to propose.

Levin praised the president for a “good give-and-take.” But the senator recalled that there was no opportunity to change the president’s mind about his insistence that Wagoner resign as GM’s CEO. Levin said Obama’s mind was clearly made up: “He didn’t ask us about it. He informed us.”

5b) Government Gone Wild: With bailouts, the budget deficit is exploding.
By Brian S. Wesbury and Robert Stein


Back in February, the government said that its $787 billion stimulus bill would create 3.5 million new jobs. This was at the very highest end of the Congressional Budget Office's (CBO) estimate of 1.2 to 3.6 million new jobs.

But even this high-end estimate of U.S. job creation is penny ante, when compared to a leaked memo from Gordon Brown, the British prime minister. He proposed a $2 trillion European stimulus plan that was supposedly going to create 19 million jobs. In other words, Europe can create a new job with just $105,000 of government spending per job, while the U.S. needs $219,000.


But all of this is just a pipe dream. Government spending does not cause a net increase in jobs over the long run; it costs jobs. Every dollar the government spends is either taxed or borrowed from the private sector, which means it "crowds out" private sector job creation. And because government spending is less efficient than private sector spending, the economy actually grows more slowly in the long run as the government gets bigger.

What's interesting is how all these numbers are being bandied about with very little pushback from the press. In recent years, the press has complained loudly about $200 billion deficits as far as the eye can see. And almost everyone in the media suggested that budget deficits lifted interest rates and hurt the economy. But in recent weeks, the press seems to have forgotten its old argument.

The new massive government spending plans are especially frightening with the U.S. now facing $1 trillion deficits. President Obama says that this is all OK, and that he is cutting the deficit in half (to $533 billion using administration math, or $672 billion according to the CBO) in just four years. What he doesn't say, and what no one seems willing to say, is that without his new budget the deficit would have been cut by 75% in four years to about $250 billion. The budget deficit and the size of the government are exploding and no one seems to care.

But it doesn't end there. Americans are the most generous people on the face of the earth, when measured in dollars donated to charities. At the same time, private charity does a great deal of good and often does it more effectively than government. But now the government wants to limit deductions for charitable contributions.

Some conservatives have argued that this might be a good trade-off if marginal tax rates were lowered. They argue that the benefits of higher GDP (resulting from lower tax rates) would outweigh the losses from slimmer donations (as a share of income). That is an economic argument that reasonable people can disagree about.