Weasels Not welcome!

Even were we to assume Conservative policies could solve our nation's many social, fiscal and foreign policy problems it is highly problematic, at this time, the Republican Party has much of a chance of doing so.

They certainly could benefit, and may even, from an Obama implosion but that is an un-enviable position to be in because no one, even the most partisan, wishes that to befall our nation.

Second, though Republicans may have begun to return to their principles they proved incapable of staying on message and governing accordingly when they had the opportunity and were in power.

Third, they corrupted themselves. Their internal leadership failed and thus, even as they try to return to their roots by espousing their renewed convictions, few voters, I suspect,are now willing to give them the benfit of the doubt. Why? Because they are viewed though the cynical prism that politicians will be politicians and regaining office is their goal not serving the nation's best interest. Clinton said: "you gotta do what you gotta do." Is, is, is and that pretty much said it all.

The best hope for true Conservatives, whether Democrats or Republicans, is to rebut consistently and offer constructive common sense programs that are in the nation's best interest, leave no room for doubt as to their sincerity and are unabashedly put forth even if doing so carries political risk of defeat.

Our nation was founded by those who believed in what they were undertaking and who did so at personal risk both to life and economic security. Weasels were not welcomed nor were they at the recent CPAC Meeting..

The Republican base is far too narrow. To broaden it they are conflicted between watering down their principles and becoming the party of 'me tooism.' That sunk Romney and eventually McCain. Palin was unprepared for 'prime time.'

From my perspective the Demwits will eventually fall on their own sword and if Conservatives can stay true to their convictions, and in the process tolerate losing a few elections, and come with up solid and truly appealing candidates they will be returned to power. Eventually the nation will be well served and we will be a better one for it.

The depression we are in is a wake up call from which we can learn valuable lessons. The best one is to re-examine what made the wheels fly off and I suspect we will find it was our love affair with unbridled Liberalism and belief that future generations should pay the bill.

Though Obama has been president since the first week in January he actually began taking over four months ago with his first speech about the economy - GW basically bowed out and allowed Obama to take center stage. Since then, the market has dropped some 3000 Dow Points. To most objective observers this would suggest lack of confidence due to any plan of action that makes sense. Most of Obama's policies, to date,have been ad hoc.

A tennis friend of mine and fellow memo reader summarized his own frustrations as follows: (See 1 below.)

Now Obama is proposing trading GW's missile defense for some vague pledge of co-operation by Russia vis a vis Iran. In doing so he has left Poland's leaders out to dry.

Obama's Secretary of State is in the Middle East dangling $300 million to rebuild Gaza as a reward for Palestinian support of Hamas' rocketing Israel and another $600 million to help Abbas stay in office in the West Bank so he and Fatah can survive a merger with Hamas. More American tax dollars being thrown down the drain as Hamas rockets continue raining on Israel and Netanyahu will not tolerate this nor would any sovereign nation. (See 2 below.)

Thjis week, Obama proposed policies which will penalize mortgagees. This will hurt the housing market and when you harm housing you further weaken banks and when you further weaken banks you cannot calm financial markets with more bails outs. Why? Because, perversely, bail outs send signals that matters are really in terrible shape and investors react accordingly - they panic as they have.

The Chairman of Bankamerica acknowledged as much when he said accepting money from the government actually caused more problems because investors mis-interpreted by thinking his bank was in worse shape than it was.

The tragic mistake our neophyte president is repeatedly making is his pedagogic and dangerous belief he can simultaneously push forward whith his extreme socially liberal agenda while we are in an economically depressed state.

He is stunningly tone deaf to the market's extreme unction with his urgent imposition of growing government to the detriment, nay destruction, of capitalism. No wonder the financial markets are sinking and trillions of security values have been and are being erased.

How can Obama talk about PE Ratios when no one knows what earnings will be. By doing so, he simply displays ignorance. Does Obama believe our economy is a python capable of digesting his outsized budget while the world is experiencing severe delveraging? Lamentably, it would appear he does.

Or perhaps he wants the economy to tank so he can rush through more legislation placing ever greater parts of our economy under government control.

Those who support Obama and voted for him, when I ask them what they now think, offer these responses among others:

a) He inherited a mess.

b) He has not been in office but a few weeks.

c) He is doing his best, is very intelligent and has equally smart advisors.

d) What he is proposing is what we need, ie. government run health care system, caps on energy etc.

Were this happening on GW's watch I suspect they would not be so dis-passionate.

I repeat, Obama misconstrued his election and his rapacious desire to aggressively pursue his agenda is boomeranging and as long as he remains arrogantly insensitive to his contribution to the problems we face matters will worsen.

Eventualy Obama will get it right because he lacks experience and experience does not count. Only words matter and he is full of words.

For those who are interested this is what Newt says about the current situation. (See 3 below.)

Stratfor on Russia's Finanical Crisi and the six pillars. (See 4 below.)

Let's hear it from Iran. (See 5 below.)


Finally, two items sent to me by dear freinds and fellow memo readers. I have not checked to see if (6 below) was actually published in The WSJ but if the writer was outraged a year ago no telling how much more she is now. (See 6 and 7 below.)


Dick

1) So, Let's Recap the first month of Obama's term--

1. The American people elect a black president with a total of 142 days experience as a US Senator from the most politically corrupt state in America whose governor is ousted from office. The President's first official act is to order the close of Gitmo and make sure terrorists civil rights are not violated.

2. The U.S. Congress rushes to confirm a black Attorney General, Eric Holder, whose law firm we later find out represents seventeen Gitmo Terrorists.

3. The CIA Boss appointee, Leon Panetta has absolutely no experience, has a daughter Linda we find out, who is a true radical anti-American activist and a supporter of all the Anti-American regimes in the western hemisphere.

4. We got the most corrupt female in America as Secretary of State; bought and paid for.

5. We got a Tax Cheat for Treasury Secretary, who does not understand the IRS Tax Code but files his own taxes.

6. A Commerce Secretary nominee who withdrew due to corruption charges.

7. A Tax cheat nominee for Chief Performance Officer who withdrew under charges.

8. A Labor Secretary nominee who withdrew under charges of unethical conduct.

9. A Secretary of Human and Health Services nominee who withdrew under charges of cheating on his taxes.

10. Multiple appointments of former lobbyists after an absolute campaign statement that no lobbyists would be appointed.

And that's just the first month?

America is being run by the modern-day Three Stooges ~ Barrack, Nancy, and Harry ~ and they are still trying to define stimulus..."it's
spending"...

The congress passes the $800,000,000,000 (that's $800 billion) pork loaded spending bill where the government gives you a smidgen of your tax dollars ($13 per week) making you feel so good about yourself [stimulated] that you want to run out to Wal-Mart and buy a new Chinese-made HDTV and go home and watch Telemundo!

Only in America, what a country...

2) That Surreal Gaza Reconstruction Conference
By Daniel Pipes


Was I the only one rubbing my eyes in disbelief yesterday, as the Egyptian government hosted an "International Conference for the Reconstruction of Gaza"?


Husni Mubarak of Egypt addresses the Gaza donors' conference.

It took place in Sharm El-Sheikh, attended by delegations from 71 states, plus 16 regional, international, and financial organizations. Its stated goal was to raise US$2.8 billion, of which $1.3 was for rebuilding what had been destroyed in the course of Israel 's recent war on Hamas (the rest would be sent to the Palestinian Authority to help improve its standing). The actual amount raised at the conference was $4.5 billion which, when added to previously committed funds, means the grant total for Gaza and the PA comes to $5.2 billion, to be disbursed over a two-year period. A delighted Egyptian foreign minister called the amount "beyond our expectations." U.S. Secretary of State Hillary Clinton called it "a very productive conference"


Among the larger donations included a Gulf Cooperation Council contribution of $1.65 billion over five years and a U.S. government pledge of $900 million from the American taxpayer (of which $300 million will go for Gaza rebuilding).
Husni Mubarak of Egypt, Nicholas Sarkozy of France, Silvio Berlusconi of Italy, Ban Ki-moon of the United Nations, Amr Moussa of the Arab League, and Mahmoud Abbas of the Palestinian Authority gave speeches.


Why my disbelief at this spectacle: I wonder if those eminentoes and worthies really believe that warfare in Gaza is a thing of the past, and that the time for reconstruction is nigh?


They must not read dispatches from southern Israel , which report the daily warfare that continues there. Take a representative news item from Yedi'ot Aharonot, dated February 28, "Experts: Grads in Ashkelon were advanced."
the two Grad rockets that landed in Ashkelon Saturday morning[, Feb. 28,] were new and improved models, capable of greater destruction than those usually fired from Gaza . One of the rockets hit a school in the southern city, and succeeded in penetrating the fortification used to protect it from projectiles. … The Grad rockets that hit Ashkelon were two of only five or six locally manufactured 170 mm rockets ever fired at Israel , experts say. The rarely used rockets have a range of 14 km (8.6 miles) and are capable of massive damage, evident from the destruction witnesses described on the scene of Saturday's attack.

In an official protest to the United Nations, the Israel 's Ambassador Gabriela Shalev noted that "there have been nearly 100 rocket and mortar attacks from the Gaza Strip" since the ceasefire on January 18, or over two per day. These have been increasing in number, with 12 rockets were fired at Sderot on March 1 alone.
Responding to these attacks, the Israeli cabinet resolved on March 1 that "should the firing from the Gaza Strip continue, it would be met by a painful, sharp, strong and uncompromising response by the security forces." Prime Minister-designate Binyamin Netanyahu echoed this bellicosity, reportedly telling a European leader that he would not sacrifice Israel 's security "for a smile."


(Saudi foreign minister Saud Al-Faisal, in unexpected agreement, noted that rebuilding Gaza would be "difficult and fool-hardy, so long as peace and security do not prevail" there.)


What the hell are the donor countries doing, getting in the middle of an on-going war with their high-profile supposed reconstruction effort? My best guess: this permits them subtly to signal Jerusalem that it better not attack Gaza again, because doing so will confront it with a lot of very angry donor governments – including, of course, the Obama administration.


Adding to the surreal quality is a blithe disregard for Israel 's security needs. Consider the attitude of Douglas Alexander, international development secretary for Britain 's Labour government, who pledged £30 million of his taxpayers' funds to rebuild houses, schools, and hospitals in Gaza . "There is a desperate need for tough restrictions on the supply of goods to be relaxed," he said, demanding next that " Israel must do the right thing and allow much-needed goods to get through to those men, women and children who continue to suffer."


That's very humanitarian of Mr. Alexander, but he willfully ignored Israeli expectations that Hamas will confiscate steel, concrete, and other imported construction materials to build more tunnels, bunkers, and rockets. After all, Hamas appropriated prior deliveries intended for civilians, and so blatantly that even the usually docile United Nations Relief and Works Agency protested.


Husni Mubarak might warn Hamas not to treat the donors' pledges as a "conquest of war," but it will assuredly do precisely that. U.S. Rep. Mark Kirk (Republican of Illinois) got it right: "To route $900 million to this area, and let's say Hamas was only able to steal 10 percent of that, we would still become Hamas' second-largest funder after Iran ."
So, under the cheery banner of building, in Clinton's words, "a comprehensive peace between Israel and its Arab neighbors," donor states are not only defying Israel to protect itself from rocket fire but they are funneling matériel to Hamas.
Is this ignorance or mendacity? I suspect the latter; no one is that dumb.

3) Exactly Wrong on the Economy
By Newt Gingrich

I'm beginning this week by doing something I don't usually do: thanking the New York Times.

Last week, this was the Times headline over a story about President Obama's budget:

"A Bold Plan Sweeps Away Reagan Ideas"

And so I want to thank the New York Times for portraying the Obama budget for what it is: The most audacious attempt in generations to create a government-centered, bureaucratically controlled country.


"Never Let A Crisis Go To Waste"
We should have seen it coming.

Way back in November, when the Obama team was still flush with victory in the election, Obama White House Chief of Staff Rahm Emanuel laid out what he called "Rule One":

"Never let a crisis go to waste."

The Obama budget plan unveiled last week is proof that the goal of the administration is not economic recovery. The goal is an unprecedented shift of power to politicians and bureaucrats.


Which America Do We Want?
Ronald Reagan believed that at the center of American life was the individual. The entrepreneur. The worker. The doer. The family man and woman.

The Obama budget reveals a very different vision of the men and women at the center of American life.

They are the politicians. The bureaucrats. The interest groups that support an ever expanding government sector.

And so the American people are presented with a real choice: Which America do we want?

An America in which citizens and entrepreneurs are free and hold the power?

Or an American in which politicians and bureaucrats dominate and are in charge?


The New Religion of the Secular Left
The first month and a half of the Obama Administration has presented Americans with another choice to make.

The choice is captured best in the administration's announcement last week that it intends to rescind the Bush Administration rule that allowed doctors, nurses, pharmacists and other health care workers to refuse to perform acts that violate their religious and moral beliefs.

I'll have more to say about this in the future. But for now, let me just point out what it bodes for religious freedom in America.

The Obama Administration's reversal of what has become known as the "conscience provision" to protect doctors and nurses who have a moral objection to participating in or performing abortions is a direct assault on religious liberty.

It marks the establishment of a state-sponsored religion of secular leftism. And it gives this new religion the right to eliminate the religious liberty of all others that it deems inappropriate.

It, too, presents the American people with a choice of two competing futures. A future of traditional American respect for religious freedom. Or a future in which the values of the secular left over-ride our religious liberty wherever they come into conflict.


The U.S. Has the Second Highest Business Taxes in the World
Concentrating more power in Washington politicians and bureaucrats means government dictating what it deems are the "right" choices to individuals and businesses, rather than giving them the freedom and incentive to make their own choices.

For example, in his address to the joint session of Congress last week, the President announced his intention to punish "corporations that ship our jobs overseas."

The United States imposes the second highest business taxes of any industrialized nation in the world. While countries like Ireland tax corporations at 12.5%, and even our neighbor Canada is moving its national business tax rate to 15% (the lowest among the G-7 countries), the United States taxes businesses at a whopping 35%. And a number of states have corporate income taxes on top of that.

Inevitably, high taxes in the U.S. cause some businesses to locate some or all of their business in lower tax countries overseas.


Don't Punish Businesses for Locating Overseas. Encourage Businesses to Come to America to Create American Jobs
But if President Obama were serious about wanting to create jobs, he wouldn't be thinking up ways to punish companies for wanting to relocate overseas

If President Obama were serious about creating and keeping American jobs he would be thinking of ways to make companies want to bring their jobs and capital to America - and keep them here.

Americans Solutions has created 12 American Solutions for Jobs and Prosperity. Our No. 3 recommendation for jobs and prosperity is for America to match Ireland's 12.5% business tax.

That would do more than anything in the President's budget to accomplish his often-repeated goal of "creating and saving" American jobs.


What Entrepreneur Wants Chris Dodd to Dictate How Much He Can Earn?
As it stands, what entrepreneur in his or her right mind would risk the time, effort and capital to start a business in America?

So Sen. Chris Dodd (D-Conn.) can act as income dictator and tell them how much they can earn?

So a hidden energy tax can dramatically increase the cost of manufacturing, not to mention heating the business and transporting employees?

So union bosses can deny American workers the right to a private ballot?

Who wants to create a job in America at a time when Washington, D.C., not New York or Silicon Valley, is fast becoming the controlling center of American business?

Who wants to create jobs in America if politics trumps economics when it comes to determining who succeeds and who fails?


Yes to Bureaucracies, No to Charities
It's not just in the area of jobs that the Obama budget sends a message that he would shift power dramatically from the people to the politicians.

At a time when charitable donations are suffering because of the economic downturn, President Obama's budget discourages charitable giving by those Americans with the most to give by limiting the charitable giving deduction.

And at a time when cratering housing prices are driving the recession, President Obama's budget discourages home ownership by those Americans who could most positively impact housing prices by limiting the mortgage interest deduction.

President Obama's Budget Message: Bureaucratic government is the solution, and we no longer have a choice about it.


Attorney General Holder: Come to Detroit. Let's Talk About Cowardice
Another clue to how the Obama Administration views the intelligence and capability of the American people came when Attorney General Eric Holder recently called America "a nation of cowards" when it comes to race.




Photo Credit: Callista Gingrich, Gingrich Productions
See more of Callista's pictures at GingrichProductions.com
In my speech to the Conservative Political Action Conference (CPAC) on Friday I issued a challenge to Attorney General Holder that I repeat here:

Mr. Attorney General, the American people aren't cowards. Quite the opposite. They have the courage to demand that their leaders tell them the truth.

So in the spirit of courageous truth telling, I invite you to come to Detroit to discuss politics and race. I invite you to discuss the failure of the policies and institutions that you support in a city which those policies and institutions have failed more than any other.

Let's have the courage to debate the failure of the Detroit school system. Let's have the courage to discuss the bad policies, bad ideas and bad bureaucracies that have taken Detroit from No. 1 in the nation in per capita income to No. 62.

This is a serious invitation to the Attorney General to have a dialogue with me about what the residents of cities like Detroit need most: More talk about race, or leadership that believes they have a God-given right to life, liberty and the pursuit of happiness just like the rest of us.


Let's Have a Debate, America
I've had some strong words for the Obama Administration today, but my real message is to the American people:

Now that President Obama has revealed the direction in which he wants to take the country, let's have a debate. Let's choose up teams.

If you believe the best way to create jobs is to give more money to bureaucrats in Washington and more power to politicians in Congress, you have a team.

If you think the best way to create jobs is to make life easier for people who want to work hard, take risks and create businesses and wealth, you have a team.

If you think America should be a place where politics trumps economics and religion, you have a team.

But if you think America is a place where freedom trumps it all, you have a team.

Let's let the American people choose. Which America do you want?


4) The Financial Crisis and the Six Pillars of Russian Strength
By Lauren Goodrich and Peter Zeihan

Under the leadership of Vladimir Putin, Russia has been re-establishing much of its lost Soviet-era strength. This has given rise to the possibility — and even the probability — that Russia again will become a potent adversary of the Western world. But now, Russia is yet again on the cusp of a set of massive currency devaluations that could destroy much of the country’s financial system. With a crashing currency, the disappearance of foreign capital, greatly decreased energy revenues and currency reserves flying out of the bank, the Western perception is that Russia is on the verge of collapsing once again. Consequently, many Western countries have started to grow complacent about Russia’s ability to further project power abroad.

But this is Russia. And Russia rarely follows anyone else’s rulebook.
The State of the Russian State
Russia has faced a slew of economic problems in the past six months. Incoming foreign direct investment, which reached a record high of $28 billion in 2007, has reportedly dried up to just a few billion. Russia’s two stock markets, the Russian Trading System (RTS) and the Moscow Interbank Currency Exchange (MICEX), have fallen 78 and 67 percent respectively since their highs in May 2008. And Russians have withdrawn $290 billion from the country’s banks in fear of a financial collapse .

One of Moscow’s sharpest financial pains came in the form of a slumping Russian ruble, which has dropped by about one-third against the dollar since August 2008. Thus far, the Kremlin has spent $200 billion defending its currency, a startling number given that the currency still dropped by 35 percent. The Russian government has allowed dozens of mini-devaluations to occur since August; the ruble’s fall has pushed the currency past its lowest point in the 1998 ruble crash.

The Kremlin now faces three options. First, it can continue defending the ruble by pouring more money into what looks like a black hole. Realistically, this can last only another six months or so, as Russia’s combined reserves of $750 billion in August 2008 have dropped to just less than $400 billion due to various recession-battling measures (of which currency defense is only one). This option would also limit Russia’s future anti-recession measures to currency defense alone. In essence, this option relies on merely hoping the global recession ends before the till runs dry.

The second option would be to abandon any defense of the ruble and just let the currency crash. This option will not hurt Moscow or its prized industries (like those in the energy and metals sectors) too much, as the Kremlin, its institutions and most large Russian companies hold their reserves in dollars and euros. Smaller businesses and the Russian people would lose everything, however, just as in the August 1998 ruble crash. This may sound harsh, but the Kremlin has proved repeatedly — during the Imperial, Soviet and present eras — that it is willing to put the survival of the Russian state before the welfare and survival of the people.

The third option is much like the second. It involves sealing the currency system off completely from international trade, relegating it only to use in purely domestic exchanges. But turning to a closed system would make the ruble absolutely worthless abroad, and probably within Russia as well — the black market and small businesses would be forced to follow the government’s example and switch to the euro, or more likely, the U.S. dollar. (Russians tend to trust the dollar more than the euro.)

According to the predominant rumor in Moscow, the Kremlin will opt for combining the first and second options, allowing a series of small devaluations, but continuing a partial defense of the currency to avoid a single 1998-style collapse. Such a hybrid approach would reflect internal politicking.

The lack of angst within the government over the disappearance of the ruble as a symbol of Russian strength is most intriguing. Instead of discussing how to preserve Russian financial power, the debate is now over how to let the currency crash. The destruction of this particular symbol of Russian strength over the past ten years has now become a given in the Kremlin’s thinking, as has the end of the growth and economic strength seen in recent years.

Washington is interpreting the Russian acceptance of economic failure as a sort of surrender. It is not difficult to see why. For most states — powerful or not — a deep recession coupled with a currency collapse would indicate an evisceration of the ability to project power, or even the end of the road. After all, similar economic collapses in 1992 and 1998 heralded periods in which Russian power simply evaporated, allowing the Americans free rein across the Russian sphere of influence. Russia has been using its economic strength to revive its influence as of late, so — as the American thinking goes — the destruction of that strength should lead to a new period of Russian weakness.
Geography and Development
But before one can truly understand the roots of Russian power, the reality and role of the Russian economy must be examined. From this perspective, the past several years are most certainly an aberration — and we are not simply speaking of the post-Soviet collapse.

All states economies’ to a great degree reflect their geographies. In the United States, the presence of large, interconnected river systems in the central third of the country, the intracoastal waterway along the Gulf and Atlantic coasts, the vastness of San Francisco Bay, the numerous rivers flowing to the sea from the eastern slopes of the Appalachian Mountains and the abundance of ideal port locations made the country easy to develop. The cost of transporting goods was nil, and scarce capital could be dedicated to other pursuits. The result was a massive economy with an equally massive leg up on any competition.

Russia’s geography is the polar opposite. Hardly any of Russia’s rivers are interconnected. The country has several massive ones — the Pechora, the Ob, the Yenisei, the Lena and the Kolyma — but they drain the nearly unpopulated Siberia to the Arctic Ocean, making them useless for commerce. The only river that cuts through Russia’s core, the Volga, drains not to the ocean but to the landlocked and sparsely populated Caspian Sea, the center of a sparsely populated region. Also unlike the United States, Russia has few useful ports. Kaliningrad is not connected to the main body of Russia. The Gulf of Finland freezes in winter, isolating St. Petersburg. The only true deepwater and warm-water ocean ports, Vladivostok and Murmansk, are simply too far from Russia’s core to be useful. So while geography handed the United States the perfect transport network free of charge, Russia has had to use every available kopek to link its country together with an expensive road, rail and canal network.

One of the many side effects of this geography situation is that the United States had extra capital that it could dedicate to finance in a relatively democratic manner, while Russia’s chronic capital deficit prompted it to concentrate what little capital resources it had into a single set of hands — Moscow’s hands. So while the United States became the poster child for the free market, Russia (whether the Russian Empire, Soviet Union or Russian Federation) has always tended toward central planning.

Russian industrialization and militarization began in earnest under Josef Stalin in the 1930s. Under centralized planning, all industry and services were nationalized, while industrial leaders were given predetermined output quotas.

Perhaps the most noteworthy difference between the Western and Russian development paths was the different use of finance. At the start of Stalin’s massive economic undertaking, international loans to build the economy were unavailable, both because the new government had repudiated the czarist regime’s international debts and because industrialized countries — the potential lenders — were coping with the onset of their own economic crisis (e.g., the Great Depression).

With loans and bonds unavailable, Stalin turned to another centrally controlled resource to “fund” Russian development: labor. Trade unions were converted into mechanisms for capturing all available labor as well as for increasing worker productivity. Russia essentially substitutes labor for capital, so it is no surprise that Stalin — like all Russian leaders before him — ran his population into the ground. Stalin called this his “revolution from above.”

Over the long term, the centralized system is highly inefficient, as it does not take the basic economic drivers of supply and demand into account — to say nothing of how it crushes the common worker. But for a country as geographically massive as Russia, it was (and remains) questionable whether Western finance-driven development is even feasible, due to the lack of cheap transit options and the massive distances involved. Development driven by the crushing of the labor pool was probably the best Russia could hope for, and the same holds true today.

In stark contrast to ages past, for the past five years foreign money has underwritten Russian development. Russian banks did not depend upon government funding — which was accumulated into vast reserves — but instead tapped foreign lenders and bondholders. Russian banks took this money and used it to lend to Russian firms. Meanwhile, as the Russian government asserted control over the country’s energy industries during the last several years, it created a completely separate economy that only rarely intersected with other aspects of Russian economic life. So when the current global recession helped lead to the evaporation of foreign credit, the core of the government/energy economy was broadly unaffected, even as the rest of the Russian economy ingloriously crashed to earth.

Since Putin’s rise, the Kremlin has sought to project an image of a strong, stable and financially powerful Russia. This vision of strength has been the cornerstone of Russian confidence for years. Note that STRATFOR is saying “vision,” not “reality.” For in reality, Russian financial confidence is solely the result of cash brought in from strong oil and natural gas prices — something largely beyond the Russians’ ability to manipulate — not the result of any restructuring of the Russian system. As such, the revelation that the emperor has no clothes — that Russia is still a complete financial mess — is more a blow to Moscow’s ego than a signal of a fundamental change in the reality of Russian power.
The Reality of Russian Power
So while Russia might be losing its financial security and capabilities, which in the West tend to boil down to economic wealth, the global recession has not affected the reality of Russian power much at all. Russia has not, currently or historically, worked off of anyone else’s cash or used economic stability as a foundation for political might or social stability. Instead, Russia relies on many other tools in its kit. Some of the following six pillars of Russian power are more powerful and appropriate than ever:
Geography: Unlike its main geopolitical rival, the United States, Russia borders most of the regions it wishes to project power into, and few geographic barriers separate it from its targets. Ukraine, Belarus and the Baltic states have zero geographic insulation from Russia. Central Asia is sheltered by distance, but not by mountains or rivers. The Caucasus provide a bit of a speed bump to Russia, but pro-Russian enclaves in Georgia give the Kremlin a secure foothold south of the mountain range (putting the August Russian-Georgian war in perspective). Even if U.S. forces were not tied down in Iraq and Afghanistan, the United States would face potentially insurmoun table difficulties in countering Russian actions in Moscow’s so-called “Near Abroad.” Russia can project all manner of influence and intimidation there on the cheap, while even symbolic counters are quite costly for the United States. In contrast, places such as Latin America, Southeast Asia or Africa do not capture much more than the Russian imagination; the Kremlin realizes it can do little more there than stir the occasional pot, and resources are allotted (centrally, of course) accordingly.
Politics: It is no secret that the Kremlin uses an iron fist to maintain domestic control. There are few domestic forces the government cannot control or balance. The Kremlin understands the revolutions (1917 in particular) and collapses (1991 in particular) of the past, and it has control mechanisms in place to prevent a repeat. This control is seen in every aspect of Russian life, from one main political party ruling the country to the lack of diversified media, limits on public demonstrations and the infiltration of the security services into nearly every aspect of the Russian system. This domination was fortified under Stalin and has been re-established under the reign of former President and now-Prime Minister Vladimir Putin. This political strength is based on neither financial nor economic foundations. Instead, it is based within the political institutions and parties, on the lack of a meaningful opposition, and with the backing of the military and security services. Russia’s neighbors, especially in Europe, cannot count on the same political strength because their systems are simply not set up the same way. The stability of the Russian government and lack of stability in the former Soviet states and much of Central Europe have also allowed the Kremlin to reach beyond Russia and influence its neighbors to the east. Now as before, when some of its former Soviet subjects — such as Ukraine — become destabilized, Russia sweeps in as a source of stability and authority, regardless of whether this benefits the recipient of Moscow’s attention.
Social System: As a consequence of Moscow’s political control and the economic situation, the Russian system is socially crushing, and has had long-term effects on the Russian psyche. As mentioned above, during the Soviet-era process of industrialization and militarization, workers operated under the direst of conditions for the good of the state. The Russian state has made it very clear that the productivity and survival of the state is far more important than the welfare of the people. This made Russia politically and economically strong, not in the sense that the people have had a voice, but in that they have not challenged the state since the beginning of the Soviet period. The Russian people, regardless of whether they admit it, continue to work to keep the state intact even when it does not benefit them. When the Soviet Uni on collapsed in 1991, Russia kept operating — though a bit haphazardly. Russians still went to work, even if they were not being paid. The same was seen in 1998, when the country collapsed financially. This is a very different mentality than that found in the West. Most Russians would not even consider the mass protests seen in Europe in response to the economic crisis. The Russian government, by contrast, can count on its people to continue to support the state and keep the country going with little protest over the conditions. Though there have been a few sporadic and meager protests in Russia, these protests mainly have been in opposition to the financial situation, not to the government’s hand in it. In some of these demonstrations, protesters have carried signs reading, “In government we trust, in the economic system we don’t.” This means Moscow can count on a stable population.
Natural Resources: Modern Russia enjoys a wealth of natural resources in everything from food and metals to gold and timber. The markets may take a roller-coaster ride and the currency may collapse, but the Russian economy has access to the core necessities of life. Many of these resources serve a double purpose, for in addition to making Russia independent of the outside world, they also give Moscow the ability to project power effectively. Russian energy — especially natural gas — is particularly key: Europe is dependent on Russian natural gas for a quarter of its demand. This relationship guarantees Russia a steady supply of now-scarce capital even as it forces the Europeans to take any Russian concerns seriously. The energy tie is something Russia has very publicly used as a political weapon, either by raising prices or by cutting off supplies. In a recession, this lever’s effectiveness has only grown.
Military: The Russian military is in the midst of a broad modernization and restructuring, and is reconstituting its basic warfighting capability. While many challenges remain, Moscow already has imposed a new reality through military force in Georgia. While Tbilisi was certainly an easy target, the Russian military looks very different to Kiev &# 8212; or even Warsaw and Prague — than it does to the Pentagon. And even in this case, Russia has come to rely increasingly heavily on its nuclear arsenal to rebalance the military equation and ensure its territorial integrity, and is looking to establish long-term nuclear parity with the Americans. Like the energy tool, Russia’s military has become more useful in times of economic duress, as potential targets have suffered far more than the Russians.
Intelligence: Russia has one of the world’s most sophisticated and powerful intelligence services. Historically, its only rival has been the United States (though today the Chinese arguably could be seen as rivaling the Americans and Russians). The KGB (now the FSB) instills fear into hearts around the world, let alone inside Russia. Infiltration and intimidation kept the Soviet Union and its sphere under control. No matter the condition of the Russian state, Moscow’s intelligence foundation has been its strongest pillar. The FSB and other Russian intelligence agencies have infiltrated most former Soviet republics and satellite states, and they also have infiltrated as far as Latin America and the United States. Russian intelligence has infiltrated political, security, military and business realms worldwide, and has boasted of infiltrating many former Soviet satellite governments, militaries and companies up to the highest level. All facets of the Russian government have backed this infiltration since Putin (a former KGB man) came to power and filled the Kremlin with his cohorts. This domestic and international infiltration has been built up for half a century. It is not something that requires much cash to maintain, but rather know-how — and the Russians wrote the book on the subject. One of the reasons Moscow can run this system inexpensively relative to what it gets in return is because Russia’s intelligence services have long been human-based, though they do have some highly advanced technology to wield. Russia also has incorporated other social networks in its intelligence services, such as o rganized crime or the Russian Orthodox Church, creating an intricate system at a low price. Russia’s intelligence services are much larger than most other countries’ services and cover most of the world. But the intelligence apparatus’ most intense focus is on the Russian periphery, rather than on the more expensive “far abroad.”
Thus, while Russia’s financial sector may be getting torn apart, the state does not really count on that sector for domestic cohesion or stability, or for projecting power abroad. Russia knows it lacks a good track record financially, so it depends on — and has shored up where it can — six other pillars to maintain its (self-proclaimed) place as a major international player. The current financial crisis would crush the last five pillars for any other state, but in Russia, it has only served to strengthen these bases. Over the past few years, there was a certain window of opportunity for Russia to resurge while Washington was preoccupied with wars in Iraq and Afghanistan. This window has been kept open longer by the West’s lack of worry over the Russian resurgence given the financial crisis. But others closer to the Russian border understand that Moscow has many tools more potent than finance with which to continue reasserting itself.


5) Iran: Israel "cancerous tumor," Obama on same wrong path as Bush



Leading a concentrated outpouring of venomous hate, Iran's supreme ruler Ayatollah Ali Khamenei declared Wednesday, March 4, that President Barack Obama is pursuing the same "wrong path" as his predecessor George W. Bush in supporting Israel – "a cancerous tumor" - and he saw no change.

This was Tehran's response to the moderate language coming from the new US president and Obama's willingness to engage in diplomacy to resolve the impasse over its nuclear program.

Addressing a conference in Tehran on the Palestinians, he said: "Another big mistake is to say that the only way to save the Palestinian nation is by negotiations." Negotiations with whom?" he asked. "With an occupying and bullying regime...? or negotiations with America and Britain who committed the biggest sin in creating and support this cancerous tumor…?

"The way to save [the Palestinians] is by standing firm and resisting [euphemism for terror]."

President Mahmoud Ahmandinejad told the conference, which was attended by all the Palestinian factions including Mahmoud Abbas' Fatah, "The story of the Holocaust, a nation without a homeland and a homeland without a nation... are the biggest lies of our era."

He went on to say: "The continuation of the Zionist regime on even one inch of the land of Palestine means the continuation of crime, occupation, threat and insult to the nations."

Alil Jafari, commander of Iran's Revolutionary Guards's contribution to the event attended by 80 delegations was this: "All Israel's nuclear installations are within range of Iranian missiles."

6) This letter was sent to the Wall Street Journal on August 8, 2008 by Alisa Wilson, PhD. of Beverly Hills, CA in response to the Wall Street Journal article titled, "Where's The Outrage?" that appeared July 31,2008.


"Really. I can tell you where the outrage is. The outrage is here, in this middle-aged, well-educated, upper-middle class woman. The outrage is here, but I have no representation, no voice. The outrage is here, but no one is listening for who am I?

I am not a billionaire like George Soros that can fund an entire political movement.

I am not a celebrity like Barbra Streisand that can garner the attention of the press to promote political candidates.

I am not a film maker like Michael Moore or Al Gore that can deliver misleading movies to the public.

The outrage is here, but unlike those with money or power, I don't know how to reach those who feel similarly in order to effect change.

Why am I outraged? I am outraged that my country, the United States of America , is in a state of moral and ethical decline. There is no right or wrong anymore, just what's fair.

Is it fair that millions of Americans who overreached and borrowed more than they could afford are now being bailed out by the government and lending institutions to stave off foreclosure? Why shouldn't these people be made to pay the consequences for their poor judgment?

When my husband and I purchased our home, we were careful to purchase only what we could afford. Believe me, there are much larger, much nicer homes that I would have loved to have purchased. But, taking responsibility for my behavior and my life, I went with the house that we could afford, not the house that we could not afford. The notion of personal responsibility has all but died in our country.

I am outraged, that the country that welcomed my mother as an immigrant from Hitler's Nazi Germany and required that she and her family learn English now allows itself to be overrun with illegal immigrants and worse, caters to those illegal immigrants.

I am outraged that my hard-earned taxes help support those here illegally. That the Los Angeles Public School District is in such disarray that I felt it incumbent to send my child to private school, that every time I go to the ATM, I see "do you want to continue in English or Spanish?", that every time I call the bank, the phone company, or similar business, I hear "press 1 for English or press 2 for Spanish".
WHY? This is America , our common language is English and attempts to promote a bi- or multi-lingual society are sure to fail and to marginalize those who cannot communicate in English.

I am outraged at our country's weakness in the face of new threats on American traditions from Muslims. Just this week, Tyson's Food negotiated with its union to permit Muslims to have Eid-al-Fitr as a holiday instead of Labor Day. What am I missing? Yes, there is a large Somali Muslim population working at the Tyson's plant in Tennessee. Tennessee, last I checked, is still part of the United States. If Muslims want to live and work here, they should be required to live and work by our American Laws and not impose their will on our long history.

In the same week, Random House announced that they had indefinitely delayed the publication of The Jewel of Medina, by Sherry Jones, a book about the life of Mohammed's wife, Aisha, due to fear of retribution and violence by Muslims When did we become a nation ruled by fear of what other immigrant groups want? It makes me so sad to see large corporations cave rather than stand proudly on the principles that built this country.

I am outraged because appeasement has never worked as a political policy, yet appeasing Mahmoud Ahmadinejad is exactly what we are trying to do. An excellent article, also published recently in the Wall Street Journal, went through over 20 years of history and why talking with Iran has been and will continue to be ineffective. Yet talk, with a madman no less, we continue to do. Have we so lost our moral compass and its ability to detect evil that we will not go in and destroy Iran's nuclear program? Would we rather wait for another Holocaust for the Jews - one which they would be unlikely to survive?
When does it end?

As if the battle for good and evil isn't enough, now come the Environmentalists who are so afraid of global warming that they want to put a Bag tax on grocery bags in California; to eliminate Mylar balloons; to establish something as insidious as the recycle police in San Francisco. I do my share
for the environment: I recycle, I use water wisely, I installed an energy efficient air conditioning unit.
But when and where does the lunacy stop? Ahmadinejad wants to wipe Israel off the map, the California economy is being overrun by illegal immigrants, and the United States of America no longer knows right from wrong, good from evil. So what does California do? Tax grocery bags.

So, America , although I can tell you where the outrage is, this one middle-aged, well-educated, upper middle class woman is powerless to do anything about it. I don't even feel like my vote counts because
I am so outnumbered by those who disagree with me."

Alisa Wilson, Ph.D.
Beverly Hills, California

7)What a profound short little paragraph that says it all!!! "You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it." ~~~~~ Dr. Adrian Rogers, 1931