Obama - Bring Two Psychiatrists When You Meet Ahmadinejad!

Jim Rogers ain't buying a stock recovery any time soon but he remains enamored with commodities. (See 1 below.)

Can Bernanke re-tube the toothpaste, ie help us avoid hyper-inflation? (See 2 below.)

Amity Shlaes writes about the University of Chicago and Keynes. Confidence index and Trust index. (See 3 below.)

If "The Greenies" would ony allow more black. (See 4 below.)

Obama might consider sitting down and talking to this Islamic Cleric for starters. It might prove useful in his subsequent foray with Iran (See 5 below.)

After his meeting with Jordan's King, is Obama gearing up for the full court press to force Israel's hand by bludgeoning them into accepting the Saudi plan as the basis for negotiations with the Palestinians?

There is nothing in the Saudi plan that is particularly irksome if it stops short of demanding Israel accept the Right of Return and they must accept a complete withdrawal to '67 borders. Both of these conditions should prove deal killers if Netanyahu intends to protect Israel. (See 5 below.)

Krauthammer outlines Obama's "Foundation Sting" in four parts. Could it be that Obama is offering us "The Raw Deal?" (See 6 below.)

Denial has been overplayed and now commands little currency except with the most rabid of haters. These are the nut cases Obama will have to placate. It will be interesting to see how Obama handles them. Obama would be wise to bring two psychiatrista along - one to analyze the Iranians and one to analyze himself.

I have argued for years all candidates seeking the presidency should required to take Rorschach Tests. (See 7 below.)

I often make the point that Liberals are humorless and ill tempered when their pet theories are challenged.

Lo and behold a young twerp named Perez Hilton went catatonic after Miss California answered a question he posed. He could not accept her viewpoint. Not only did he vote against her but he also went to his blog site and castigated her for expressing herself openly, honestly and respectfully. This, in the land of supposed 'free speech.'

We probably have the worst White House press secretary in recent history but even Gibbs should not be blamed for failing to explain Obama's disengenuousness when it comes to Gitmo and Bagram detainees. It also might be difficult for Gibbs to explain Obama's flip flop on prosecuting former Bush attorneys for giving legal advice. This from our healing messiah. But we have no reason to be shocked. He flip flopped through the entire campaign and no one in the press and media challenged him. (See 8 below.)


Dick


1) Q&A: Jim Rogers Isn't Buying a U.S. Stock Recovery


The legendary investor is sticking for now with the two Cs: China and commodities.

Well, bank executives and investors can breathe a sigh of relief: Jim Rogers has covered the short positions on financial stocks he put in place ahead of last year's massive meltdown.

But just because this influential investor isn't betting that big banks will fall much further doesn't mean he's confident they will stage a lasting rally either. He feels similarly about U.S. stocks in general.


"I am skeptical about the rally, and the world economy for the next year or two or three," he says. "But if stocks go down, I can make money with commodities."

Rogers, now 66, gained fame as George Soros' hedge-fund partner in the 1970s and 1980s. After retiring from professional money manager in his late 30s, the Alabama native tooled around Europe, Asia, Africa, and Latin America visiting emerging markets, one by one. His resulting book, Investment Biker, helped to popularize emerging market investing at the outset of a bull market for the sector.

He also helped to popularize commodity investing, which for decades was the province of niche investors. In the 1990s, he developed commodity indexes based on futures contracts that in recent years have been turned into exchange-traded funds available to all investors. His 2004 book, Hot Commodities, came ahead of a surge prices for energy, metals, and agriculture.

Since its inception in July 1998, the Rogers International Commodities Index has gained 158%, while the S&P 500 has fallen 23%. And that gain for the commodities index comes despite the fact that it's lost more than half of its value since last July. At these levels, Rogers has been a buyer.



These days, Rogers, now 66, is sticking close to home in Singapore with his wife, Paige Parker, and two small daughters. He's about to release his latest book, A Gift to My Children: A Father's Lessons for Life and Investing (Random House), in which he encourages other people's children to travel widely and learn Mandarin so they can reap the rewards of China's economic boom.

Recently, Rogers talked to Barrons.com by phone from his Singapore home.

Q: When you last did a lengthy interview with Barron's magazine a year ago (see "Light Years Ahead of the Crowd," April 14, 2008) you were lightening up on emerging markets investments. Well, you called that one right. But now that many of those markets have fallen from their highs of recent years, are you more optimistic?

A: No. I've sold all emerging markets stock except the ones in China. I bought more Chinese shares in October and November during the panic, but I have not bought China or any other stock markets including the U.S. since then. I'm not buying anything in China right now because the Chinese market ran up maybe 50% since last November. It's been the strongest market in the world in the past six months and I don't like jumping into something that has been that run up. Still, I'm not thinking of selling these stocks either. I think if it goes down I'll buy more. I think you will find that it's the single strongest market in the world since last fall.

Q: In your latest book, you talk of China as the great investment opportunity of the 21st century, just as the U.S. was in the 20th century. What percentage of a typical American investor's portfolio should be in China?

A: If they can't even find China on a map, I don't think they should have anything in China. They should know something about China before they invest there. If they have the same convictions that I do then they should probably have a lot. If you asked me that question in 1909 about the U.S. stock market, I would have said to put 100% of your money in the U.S.

Q: Might it make sense to have a greater weighting in a diversified mix of Chinese stocks than in U.S. stocks?

A: Well yes. Just as in 1909, if you were German or Chinese, you should have had the largest percentage of your money in the United States. The idea of investing is to make money, not to have some sort of political agenda.

Q: That being said, you currently think Chinese stocks are bid-up now, so you're not buying at these levels. So what have you been buying lately?

A: I have been buying commodities through the Rogers commodity indexes I developed because my lawyer won't let me buy individual commodities. I recently bought the all four Rogers indexes -- the ElementsRogers International Commodities Index (ticker: RJI) as well as the three specialty indexes, the International Metals (RJZ), the International Energy (RJN), and the International Agriculture (RJA.) That's how I invest in commodities and that's what I bought last week. I have been buying these shares since last fall and up to last week.

Q: Though you got out of emerging markets last year before they fell hard, you seemed be caught by surprise by the fall-off in commodity prices last year. Is that right?

A: Yes, I was surprised. I did not expect commodities to go down that much and in retrospect it was a period of forced liquidation for many (professional) investors. You know AIG went bankrupt, which was huge in commodities. Lehman Brothers was big in commodities.

But at least I was shorting the investment banks at the time and other financials such as Citigroup and Fannie Mae. So I was hedged by being long commodities and short the other things such as financials and as you know most of them were down from 80% to 100%, so I more than made up on my shorts than I lost on my longs. So thank God for (the stock decline in) Citigroup and thank God (for the decline) in Fannie Mae.

Q: Now despite the recent stock-market rally that started in March, many U.S. stocks are trading well off their 2007 highs. How come you see no value to this market?

A: I am not buying U.S. companies mainly because I think we may have seen a bottom but I don't think we have seen the bottom. I am skeptical about the rally, the world economy for the next year or two or three. But if stocks go down, I can make money with commodities. In the 1970s, commodities went through the roof even though stocks were a disaster. In the 1930s, commodities rallied first and went up the most long before stocks pulled it together.

Q: Can you summarize the reasons for your bullishness about commodities?

A: It depends on the supply and demand. And we have had a dearth of supply. Nobody has invested in productive capacity for 25 or 30 years now. The inventories of food are the lowest they have been in 50 years and you have a shortage of farmers even right now because most farmers are old men because it has been such a horrible business for 30 years. And as for metals, nobody can get a loan to open a mine as you know. Who is going to give you money to open a zinc mine? It takes at least 10 years to open a mine so it's going to be 15 or 20 years before we see new mines come on. Nobody has been opening mines for 30 years and they are not going to. And in the meantime reserves are declining. As for oil, the International Energy Agency came out recently with a study showing that oil reserves worldwide were declining at the rate of 6% or 7% a year.

That does not mean that if suddenly the U.S. goes bankrupt that everything won't collapse in price. But I would rather be in commodities because it's the only thing I know where the fundamentals are improving. They are not improving for Citibank or General Motors but the supply situation in commodities is such that when demand comes back, then commodities are going to be the best place to be in my view.

Q: What do you think of bonds?

A: I am anticipating shorting bonds -- the U.S. long bond. It's about the only real bubble around that I can see right now -- other than the U.S. dollar. I am not shorting bonds at this moment because I've shorted plenty of bubbles in my day, and I have learned that you better wait because they go up higher than any rational person can anticipate. But my plan is to short the long bond in the U.S. sometime in the foreseeable future.

Q: I've read that you think the penchant of the last two presidential administrations for bailing out failing U.S. companies is a big mistake and will contribute to prolonging this recession. You argue that it's best to let these companies all go bankrupt. How bad can the economy get?

A: Yes, politicians are making mistakes. In Japan, the problem has lasted for 19 years. I hope that it doesn't last 19 years in the U.S. The approach that works is to let them (U.S. banks and automakers) collapse and clean out the system. The idea that phony accounting is the solution (through changes in mark-to-market rules) is ludicrous. And the idea that a debt problem and an excessive spending problem can be cured with more debt and more spending is ludicrous.

It's laughable on its face, but politicians think they've got to do something. Unfortunately, they are doing the wrong things and they are going to make it worse.

Q: Thanks for your time.


2)Putting the Toothpaste Back into the Tube: Federal Reserve chairman Ben Bernanke needs to spell out how he plans to head off hyperinflation.
By Andy Kessler



So how is Fed chairman Ben Bernanke going to get all that toothpaste back into the tube? The Fed has been cranking money out like water over Niagara Falls. The monetary base has increased by a trillion dollars in just the last six months. And he's not done, furiously printing dollars (bank credits, really) and buying Treasuries in an attempt to flood the economy with dollars. When will it end? $3 trillion? $4 trillion? And then what? A functioning economy doesn't need all that cash sloshing around. Is runaway inflation our next crisis?

Let's go back to fundamentals for a second. Money is a placeholder of value--the price of a cold Heineken or the value of work already done, a hole dug, a piece of software written, whatever. When things work just right, prices seek the right level and we get a match between that cold beer and the sweat from working for it.

Money supply is how much money is floating around the economy to handle all the transactions. No one quite knows how much money is needed. The classic formula is the output of the economy equals the amount of money times the velocity of money, or how many times the same dollar is spent during the year. You buy the beer, the bartender buys beer nuts, the nut farmer buys a Ford pickup truck, the auto worker buys a cell phone, which you the programmer just finished writing the location-based service code for, so you are out celebrating buying a beer and on and on. Of course, no one really knows what the velocity of money is. If times are tough, you may hold off buying that Heineken for a few months, and when times are good you may party every night.

I like to think of the economy as a giant bucket filled with money (money supply) sloshing around the bucket (velocity). We all hope the bucket is filled to the rim. But, in normal times, the economy grows every year. Population increases, too, so the size of the bucket has to grow to handle the transactions of more people who like to eat and drink. So more money needs to be created to fill the bigger bucket. That's pretty straightforward.

But now the hard part. Someone is out there inventing something useful, refrigeration, steamships, ATM machines--something productive that increases the output per worker hour. Productivity increases the size and wealth of the economy above and beyond population growth. How much? Who knows? Still, more money needs to be created to fill the bigger bucket/economy. And to make matters worse, since no one knows what the velocity of money is, no one really knows how much money supply is needed so the economy will work just right. It's virtually impossible to fill the bucket up just to the rim. The Fed has to guess.

As we have all been taught, too much money chasing too few goods creates inflation, the price level goes up above and beyond what it should. That's bad, because you get less stuff for the same unit of work. On the flip side, with too little money chasing too many goods you get deflation, the price level goes down below what it normally would. Hey, you actually get more for your dollar. Woohoo! Except eventually someone is either going to cut your salary or you'll lose your job, because the price is dropping and the economy is smaller. That's bad, too.

Okay, there are lots more moving parts than just a simple bucket, including the size of government, regulations, and not least the taxing of the citizens/serfs. And I don't just mean income tax, state tax, sales tax, gas tax, property tax. One of the easiest ways to "tax" is to debase the currency, just print more and more of it and spend it on chariots and crowns and castles and the Department of Labor. This is why for many, many moons, gold and silver were the money supply. It's the only thing people would trust. They are rare earth elements, which means there is only so much of them. Hence stable money supply. Gold, even today, increases by about 1 percent every year from new discoveries. With a gold standard, money supply would grow 1 percent, which everyone used to think was just right.

But there are a couple of problems with that whole 1 percent business. The new wealth from more gold goes to the miner who found it, and then it starts circulating in the economy so others can use it. Doesn't seem quite fair. Plus, the 1 percent yearly increase in gold and therefore money supply basically covers population growth and completely ignores productivity and innovation, which get stifled because there's not enough money to increase output, even with new tools and inventions. So a gold standard implies a static world. No thanks.

Periods of rapid economic growth would often follow huge gold discoveries. The Spanish "found" Inca gold in the 1500s, which the British and French eventually stole or traded for, which funded the Industrial Revolution. The Gold Rush of 1849 funded the post-Civil War expansion. More gold, more money supply, more room for innovation.

Even without more gold, goldsmiths and money changers learned long ago to hold gold for their clients, maybe even paying them a small interest rate for the privilege of holding their gold, and then turn around and lend out money (often creating their own currencies) backed by that gold. And not $1 for each $1 in gold held. No, no, no. They might as well lend out ten times as much money as the gold they held, figuring not all the "depositors" would want their gold back at the same time. Money from nothing (and your checks for free). Sort of, anyway. This sleight of hand, called fractional reserve banking, was an easy way to increase money supply to again, make room for productivity and wealth creation. But increase by how much? No one knew, which is why there were occasionally bank runs and panics and depressions that followed easy credit, one of the hazards of this flimsy system. Sixteen of them since 1812. As American as apple pie!

But banking did increase the money supply beyond the amount of gold that could be extracted. In fact, since Adam and Eve, 160,000 tons of gold have been panned and mined from Mother Earth. At $35 per ounce under the gold standard, that came to $180 billion in value, not nearly enough to support all the value created by entrepreneurs; heck, Google is worth almost that much.

In the long run, the economy grew faster than population, ushering in railroads and interstate highways and even Carrot Top performing at the Luxor in Las Vegas. Now that's wealth. So something eventually went right. One something was the Federal Reserve, created in 1913 to control how much money is in circulation. The Fed would create a monetary base, originally backed by the gold in Fort Knox, that private banks would then lend against.

One of the tasks of the Federal Reserve is to serve as the lender of last resort, which they unfortunately learned after the stock market crash of 1929 and the bank runs that followed. Roughly 40 percent of banks failed, wiping out $2 billion in deposits. Some 30 percent of the money supply disappeared. So did a similar percentage of GDP, and unemployment hit 25 percent. You can see that lost money supply is not a good thing.

The other big something happened in 1933. The Federal Deposit Insurance Corp, the FDIC, was set up to insure depositors' money, relieving people of the need to line up to get their money out at the first sign of a bank's weakness. No more bank runs. Not many, anyway. (We can argue if the FDIC is really an insurance policy, as it undercharges banks for the privilege of insuring against bank runs, and you and I, the taxpayers, make up the difference. Still, it's a decent bargain--a backstop to panics, ordinary bank-run panics anyway!)

Twin bargains. Twin safety nets for fractional reserve banking, so we don't have to go back to the stifling days of gold. But that still means the Federal Reserve has to figure out how much money to create to fill the bucket--an almost impossible task.

The Fed has few levers. Interest rates are set in order to try to create just the right amount of money, with the Fed looking at prices, consumer prices and producer prices, as a surrogate for the price level. Prices are everything. Even though lower costs of computers and cell phones and LCD TVs are a positive for the economy and a wealth creator, as the productive use of technology always creates wealth, it is often interpreted as deflationary or at least dis-inflationary, and even as our technotoys get cheaper, interest rates may still be cut to "stimulate" the economy.

Sometimes, when too much money is created, it doesn't show up in consumer or producer prices, but flows into the stock market, or housing, and it appears to everyone as new wealth. Sometimes it is--Apple going from $15 to $100 was wealth creation based on the iPod and the iPhone, although the move of the stock to $175 was probably excess money creation.

But the run-up in house prices was worse. Incomes go up from real wealth, and some of that money goes into housing. But housing is often a false signal: Too much money, especially leveraged, can increase housing beyond what wealth created.

A shadow banking system--Lehman, Bear Stearns, Merrill Lynch--was borrowing short-term in money markets at, say 2 percent, and instead of the classic 10:1 leverage of banks, they were levering up 30:1, sometimes 50:1, creating money out of thin air well beyond the intention of the Federal Reserve. It didn't show up in prices, mainly because of a huge and productive tech sector as well as the waves of cheap Chinese laborers who were providing cheap shoes and toys and furniture to Wal-Mart, "hiding" the over-creation of money. But it did create a shadow economy of home builders, linoleum layers, decorators, Home Depot Expo salesfolks, and on and on.

And that was shadow wealth. The only real wealth is wealth that is productively created. The rest is just paper. After the collapse of the banking system, sunny and shadow, hoarding became the order of the day. The world rushed into U.S. Treasuries. Short-term rates as a result are almost zero. The dollar has been a safe harbor, jumping versus the euro and the yen. No one wants to spend money, on houses, on cars, or even, gasp, on big screen TVs. So the velocity of money has shrunk. To what? Well, no one really knows.

So to make up for lower velocity, to keep the economy from shrinking like a raisin, the Fed has been increasing the monetary base to increase the amount of money in circulation. But it's hard. Even with TARP funds, banks don't want to lend, so their 10:1 increase of Fed money isn't happening, let alone 50:1 Bear Stearns-style money creation. Bernanke has therefore been buying U.S. Treasuries, with cash, to increase the money supply. Which is pretty funny since he is also selling U.S. Treasuries out the back door to fund the $787 billion stimulus package and the $1.3 trillion Obama budget deficit.

The Fed can put all the cash it wants or thinks it needs into the economy, but someday, maybe soon, maybe in a year or two, the economy will start growing again. People will stop hoarding dollars. Their 2004 Taurus will be looking a little old. Baby needs a new pair of shoes. Banks will start lending again to businesses and maybe even to home buyers. As money starts getting spent, all that money's velocity starts increasing. Oops, there goes the price level. With so much money floating around, chasing too few goods, inflation is a-comin'. The Fed will have to start pulling all that extra money off the street and back into its vaults. And in just the right amount.

But how? Doing the opposite of what it is doing now. By raising interest rates. By sopping up dollars by not only selling Treasuries, but also selling all those mortgage-backed securities and other toxic stuff bought from Bear Stearns, AIG, Fannie and Freddie, and everyone else. By removing all the backstops it put in for the commercial paper and other markets to keep them functioning. But won't that have the effect of slowing the economy? Sure will. This is a tightrope act. Getting all that toothpaste back into the tube will require the skills of a surgeon and the moxie of a middle linebacker, and someone deaf, dumb, and blind to congressional meddling. And worse, this is something that has never been done before.

My suggestion: Lay out a blueprint for pulling the money back in. Tell Wall Street and Main Street exactly what you are going to do, and when and how your plan will be triggered. When economic activity rises by 2 percent, you are going to increase interest rates by 1 percent and "retire" another $500 billion. That will stop second guessing and congressional quibbling. And I'd get it out quickly, this summer. It's hard to keep a good economy down, especially with 50 billion extra Andrew Jacksons sloshing around the bucket.

Andy Kessler is a former hedge fund manager turned author who writes on technology and markets. His most recent book is The End of Medicine (Collins).


3) Obama, Bush Run Up Nation’s Public Trust Deficit
By Amity Shlaes



How much does consumer confidence matter?

A lot, you would think, if you listened to Washington or watched the news each week. The takeaway is that the consumer is an infant tyrant who must be jollied by politicians. With Washington’s cash in hand, that consumer will then spend, leading us all to recovery.

This confidence in confidence derives partly from the established status of two confidence indexes, that of the University of Michigan and the Conference Board.

The confidence emphasis also comes from the economist John Maynard Keynes. Keynes wrote that market players act suddenly and not always rationally; sometimes, all it takes to restore confidence is new spending money. To Keynes, the market depended on “animal spirits -- a spontaneous urge to action rather than inaction.”

Most of us sense that there’s more to revival than sudden desires for phones or cars, that the consumer isn’t always a mindless mall rat. Rational caution may be beneficial, tax breaks aimed at stimulating consumption, perverse.

“There is something inherently odd in telling people who have no money right now to shop,” says Paola Sapienza of Northwestern University’s Kellogg School. The emphasis on spending obscures other forces in the business cycle, like credit. The freeze in credit endured the warm oceans of cash that made this past winter disconcerting.

Now Sapienza and Luigi Zingales of the University of Chicago are putting forward a new meter to join the old. Instead of measuring Americans’ confidence, this meter tries to capture trust.

Assign Grades

The Chicago Booth/Kellogg School Financial Trust Index, launched this January and updated for March, asks more than 1,000 households how much they trust the big institutions or people that affect economic life -- banks, the equities market, the government, stock brokers. Grades range from 1, for “I do not trust the institution” at all, through 5, for “I trust the institution completely.”

While Sapienza and Zingales do use the word “confidence” at times in their poll, trust is their big theme. And trust is different from confidence because it is not instant or capricious -- trust is built over time -- and therefore relates more to contracts and credit. “Credit is suspicion asleep,” goes the old saying.

The Financial Trust Index gives a mixed picture of the first part of 2009. The good news is that trust in the stock market has risen. Those polled in December 2008 rated their trust for the market at 2.13; that figure was up to 2.18 last month. This is a small change, but at least the right direction. Trust for the government, and by association for another Chicagoan, President Barack Obama, is likewise up slightly.

Negative News

Still, the same Chicago trust-o-meter carries some negative messages. In December the pollsters asked: “Have the government interventions in financial markets over the last three months made you more or less confident in investment in the stock market?”

A full 80 percent replied “less,” an annihilating mark for the performance of George W. Bush, then-Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke. Asked a similar question last month, 67 percent replied “less confident.”

Even a majority of Democrats, 61 percent, reported being less confident (compared with 79 percent in December). You would think the shift would have been more dramatic. This suggests that the early work of Obama and Treasury Secretary Timothy Geithner failed to persuade even their political supporters to invest -- or, perhaps, that the new administration’s work turned off significant numbers of political allies.

Cynical Premise

Why so dark? As Zingales suggested last fall, the trouble began with the Bush bailouts and the cynical premise that saving some Wall Street firms would prevent apocalypse or even benefit the rest. (No accident that the trust-o-meter was created in Chicago, not New York). As Zingales put it post-bailout, “Do we want to live in a system where profits are private but losses are socialized?”

More recent Obama-era ideas like the pending Public - Private Investment Program sound friendly but, again, reward specific partners while leaving others out.

Worse, the very unpredictability of Washington’s actions is making investors hesitant to get back into the market. Keynes may refer to animal spirits. But Sapienza and Zingales argue that the average market player is like someone at the Monopoly board, who walks away when the rules, whether made by Democrat or Republican, change too often.

“You just don’t want to play anymore because you are not sure,” Sapienza put it last week.

My own view is that “trust” work is important. By now everyone has noticed that uncertainty in the economy matters. We’ve also noticed that fiscal stimulus measures don’t seem to work as well as hoped, whether they are Bush’s infantilizing checks of last summer or Obama’s humongo outlays.

The new Financial Trust Index may not yet be delivering particularly glowing news. Still, its very existence is another cause for market optimism.

(Amity Shlaes is a senior fellow at the Council on Foreign Relations and a Bloomberg News columnist. The opinions expressed are her own.)

4) Save the Whales, Kill the Economy
By Investor's Business Daily

Energy: With Ahab-like determination, environmentalists have once again blocked oil exploration in the American Arctic. They may just have succeeded in putting the American economy on ice.

On Friday, a three-judge U.S. Court of Appeals Court panel in Washington, D.C., struck down the Bush administration's five-year plan for offshore oil and gas leasing off Alaska's northern coast.

The plan was vacated, the panel ruled, because of allegedly insufficient environmental review because its "environmental sensitivity rankings are irrational."

What is irrational is that despite a more than three-decade long record of environmental sensitivity at Prudhoe Bay and elsewhere, and despite booming polar bear, caribou and fish populations, the fiction that oil exploration and environmental protection are somehow incompatible and will decimate Arctic wildlife remains enshrined in law.

The Bush administration had started the process of auctioning off leases in the Chukchi and Beaufort Seas, Cook Inlet and in the North Aleutian basin. Shell Oil, which spent more than $2 billion to acquire some of the leases, and its partner ConocoPhillips had planned to start drilling in the Chukchi Sea in 2010.

The stakes are enormous. Alaska's Outer Continental Shelf by itself may hold 27 billion barrels of oil and 132 trillion cubic feet of clean-burning natural gas.

That oil is important in its own right, but as Alaska Gov. Sarah Palin told Interior Secretary Ken Salazar when he visited Anchorage, without it the Alaskan pipeline may have to shut down due to reduced flow.

The trans-Alaska oil pipeline now carries only a third of the 2 million barrels a day it carried from Prudhoe Bay and Alaska's North Slope in 1988. "Once the pipeline shuts down, it will mean the end of oil production from the North Slope," Palin said. Trans-Alaska oil pipeline throughput is slipping by about 7% per year.

Alaska's economy is over 80% dependent on oil activity. Aside from keeping the pipeline open, a recent study predicted that OCS activity in the Beaufort and Chukchi seas could produce around 35,000 jobs.

Environmental groups argue drilling would interrupt whale migration, affect native peoples who hunt to live, risk oil spills devastating to the local ecosystem and further threaten polar bear populations already threatened by climate change and melting Arctic ice.

Each year millions of square miles of sea ice melt and refreeze. The amounts vary from season to season. Despite pictures of floating polar bears taken in summer, data reported by the University of Illinois' Arctic Climate Research Center show global sea ice levels the same as they were in 1979 when satellite observations began.

As for the polar bears, they're doing fine. Dr. Mitch Taylor, a Canadian polar bear expert, notes they evolved from grizzly bears about 250,000 years ago and developed as a distinct species about 125,000 years ago when natural climate change occurred. He recently put the population currently at around 24,000, up 40% since 1974.

Similar arguments were made when Prudhoe Bay opened in the 1970s. It would hurt all manner of critters, we were warned. Except it didn't.

The caribou herds have thrived. Oil platforms offshore have in effect become condos for fish and all forms of marine life. This argument is currently being used to block development in the frozen tundra of ANWR.

Writing recently in Foreign Affairs, Scott Borgerson, an international affairs fellow at the Council on Foreign Relations, noted: "The U.S. Geological Survey (USGS) and the Norwegian company StatoilHydro estimate that the Arctic holds as much as one-quarter of the world's remaining undiscovered oil and gas deposits."

A recent study by the American Energy Alliance found that developing all our offshore oil resources, including Alaska's, would in coming years add $8.2 trillion in additional GDP, generate $2.2 trillion in total new state and federal tax revenues, create 1.2 million new jobs at high wages, and provide $70 billion in added wages to the economy each year.

But it looks like we're going to have a whale of a time getting it.

5) Hamas Racism: Jews are=evil - "Their children will be exterminated."

An Hamas cleric who once participated in an international conference of "Imams and Rabbis for Peace" -- whose delegates vowed to "condemn any negative representation" of each other's religions -- has wholeheartedly espoused Hamas's racist ideology in a recent Friday sermon on Hamas TV.


Ironically, this latest profession of Hamas's genocidal racism was preached and broadcast at the start of the month in which the UN is meeting in the "Durban II" conference in Geneva to condemn Israel as being"racist."

According to the Hamas interpretation of Islam the Jews are inherently evil, seek to rule the world, and are a threat to Muslims and all of humanity. Therefore they are destined to exterminat=on. In the words of Hamas religious leader Ziad Abu Alhaj, "Hatred for Muhammad and Islam is in their [Jews'] souls, they are naturally disposed to it..."

He asserts that because of the Jews' inherent evil, the Jewish State, "Israel ... is a cancer that wants to rule the world." One can fin= the details of the Jews' plan in The Protocols of the Elders of Zion> which he jokingly refers to as "The Protocols of the Imbeciles of Zion" (a play on words in Arabic). He concludes that the Jews are destined to be annihilated:

"The time will come, by Allah's will, when their property will be destroyed and their children will be exterminated, and no Jew or Zionist will be left on the face of this earth."


He also claims that the Jews wanted to murder Muhammad.


This imam, who is preaching the genocide of Jews, participated in the Second World Congress of Imams and Rabbis for Peace in 2006, which also featured many prominent rabbis from Israel. The final statement from=the Seville conference included the pronouncement, ". . . We condemn any negative representation of these [religious beliefs and symbols], let alone any desecration, Heaven forbid. Similarly, we condemn any incitement against a faith or people, let alone any call for their elimination, and we urge authorities to do likewise."

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The following is the text of the Hamas se rmon calling for the extermination of Jews:


"Who is it that is leading the world today in the vicious, all-encompassing war against Islam and Muslims? The answer is clear: it is the Jewish nation. It is the Jews who today are leading the all-encompassing war against Muslims...

We, the Muslims, know the nature of Jews the best, because=the Holy Quran taught us. The prophetic traditions explained at length to Muslims the true nature of Jews... Their war and their hatred for Muhamma and Islam is in their souls, they are naturally disposed to it.

Israel today livesin the heart of Arab-Muslim territory, and it is a cancer that wants to=rule the world. Know, my brothers! The Jews' expansion today brings the=dissemination of an ancient thinking...

They argued with Allah's prophet Moses; they wanted to kill Allah's prophet Jesus, and wanted to murder Allah's prophet=Muhammad...

The Jews want to destroy every inch ... Perhaps their famou= book, which they deny [its authenticity] - known as The Protocols of the Elders of Zion, but we call it, "The Protocols of the imbeciles=of Zion" - in this book, my brothers, the Jews set down their plan to besiege the entire world by land, by air, and by sea - conceptually, economically, and its communications, as is happening today...

The Jews' grandeur today, and their ascent to the world's=throne, is because America, with all of its power, is ruled by the Senate= I won't say 'American' but rather 'Jewish' [Senate] ... The time will come, by the will of Allah, when their property will be destroyed and their children will be exterminated, and no Jew or Zionist will be left on the face of this earth."

5a)Obama to ask Israel for direct peace talks based on Arab League peace plan


Washington sources disclose that Abdullah's meeting ended with the US president accepting the extended Arab League Middle East peace plan initiated by Saudi Arabia. This confirmed the statement by his special Middle East envoy George Mitchell on his visit to Jerusalem last week that the Arab peace plan had been incorporated in the Obama Middle East peace plan based on the creation of a Palestinian state.

The new version simply spells out some of the clauses in the original, such as what the Arab governments mean by "normal relations" with Israel. The Jordanian king left with the president a document listing the deal the Arab states are ready to offer Israel for withdrawing to the pre-1967 war lines, i.e. evacuating the West Bank, Golan Heights and historic Jerusalem, and accepting the foundation of a Palestinian state.

The two leaders agreed the document would not be published before Obama presents it to Netanyahu at the White House in June. He will ask the Israeli prime minister for an immediate answer and urge him to accept the Arab peace plan as the basis for direct negotiations with the Palestinians and Syria in which the United States will be actively engaged.

Sources add that the US president is seriously considering making a televised speech before Netanyahu's arrival to play up the Arab proposals on offer provided Israel is ready to make far-reaching concessions to the Palestinians and Syria.

6) The sting, in four parts
By CHARLES KRAUTHAMMER

Franklin Roosevelt gave us the New Deal. John Kennedy gave us the New Frontier. In a major domestic policy address at Georgetown University this week, Barack Obama promised - eight times - a "New Foundation."

For those too thick to have noticed this proclamation of a new era in American history, the White House Web site helpfully titled its speech excerpts "A New Foundation." As it happens, Obama is not the first to try this slogan. President Jimmy Carter peppered his 1979 State of the Union address with five "New Foundations" (and eight more just naked "foundations"). Like most of Carter's endeavors, this one failed, perhaps because (as I recall it being said at the time) it sounded like the introduction of a new kind of undergarment.

Undaunted, Obama offered his New Foundation speech as the complete, contextual, canonical text for the domestic revolution he aims to enact. It had everything we have come to expect from Obama.

• The Whopper: The boast that he had "identified $2 trillion in deficit reductions over the next decade." It takes audacity to repeat this after it had been so widely exposed as transparently phony.

Most of this $2 trillion is conjured up by refraining from spending $180 billion a year for 10 more years of surges in Iraq. Hell, why not make the "deficit reductions" $10 trillion - the extra $8 trillion coming from refraining from repeating the $787 billion stimulus package annually through 2019.

• The Puzzler: He further boasted of his frugality by saying that his budget would reduce domestic discretionary spending as share of GDP to the lowest level ever recorded. Amazing. Squeezing discretionary domestic spending at a time of hugely expanding budgets is merely the baleful residue of out-of-control entitlements and debt service, which will increase astronomically under Obama. To claim these as achievements in fiscal responsibility is testament not to Obama's frugality but to his brazenness.

• The Non Sequitur: "To make sure such a crisis [as we have today] never happens again," Obama proposes his radical health care, energy and education reforms, the central pillars of his social democratic agenda. But Obama's own words contradict this assertion. Notes The Washington Post: "But as his admirable summation of recent history made clear, these pursuits have little to do with the economic crisis, and they are not the key to economic recovery." Obama rarely fails to repeat this false connection. A crisis - and the public's resulting pliability to liberal social engineering - is a terrible thing to waste.

• The Swindle: The Obama administration is spending money like none other in peacetime history. Obama is smart. He knows this is fiscally unsustainable. He has let it be known privately and publicly that he intends to cure the imbalance with entitlement reform.

An excellent strategy. If it takes throwing nearly $1 trillion of "porky" (to quote Sen. Charles Schumer) stimulus spending to soften up a Democratic Congress and make it amenable to real entitlement reform, then fine. Reforming Social Security, Medicare and Medicaid would save tens of trillions of dollars and make the current money-from-helicopters spending almost trivial by comparison.

In the New Foundation speech, Obama correctly (again) identifies the skyrocketing cost of Medicare and Medicaid as the key fiscal problem. But then he claims that Medicaid and Medicare reform is the same as his health care reform, fatuously citing as his authority a one-day meeting of handpicked interested parties at his "Fiscal Responsibility Summit."

Here's the problem. The heart of Obama's health care reform is universality. Covering more people costs more money. That is why Obama's budget sets aside an extra $634 billion in health care spending, a down payment on an estimated additional spending of $1 trillion. How does the administration curtail the Medicare and Medicaid entitlement by adding yet another (now universal) health care entitlement that its own estimate acknowledges increases costs by about $1 trillion?

Which is why in his March 24 news conference, Obama could not explain how - when the near-term stimulative spending is over and his ambitious domestic priorities kick in, promising sustained prosperity and deficit reduction - the deficits at the end of the coming decade are rising, not falling. The Congressional Budget Office has deficits increasing in the last seven years of the decade from an already unsustainable $672 billion annually to $1.2 trillion by 2019.

This is the sand on which the new foundation is constructed. Obama has the magic to make words mean almost anything. Numbers are more resistant to his charms.

7) Op-Ed on Official Iranian News Website: 'You Could Never Find Even One Single Person Who Is an Auschwitz Survivor'

In an April 21, 2009 op-ed on the website of the official Iranian news agency IRNA, titled "Israel Emerges from Auschwitz, the author, Hamid Esmaili, showcases statements by well-known Holocaust deniers and says that "for Zionists, Auschwitz is...the symbol and the embodiment of all those things which constitute the identity and essence of a regime called Israel..."(1)

The following is the op-ed, in the original English.

"Holocaust, From Any Angle, is the Most Significant Excuse Used by the Zionists' Godfather, Theodor Herzl, And His Comrades to Justify Their Efforts to Set Up a Zionist System"

"Holocaust forms the backbone of founding Israel in the Middle East at the expense of making millions of Palestinians displaced from their homeland and collecting homeless Jewish people from across the world in Holy land of Palestine.

"Holocaust, from any angle, is the most significant excuse used by the Zionists' godfather, Theodor Herzl, and his comrades to justify their efforts to set up a Zionist system by zooming on the topic and even by distorting historical facts through making frequent references to forged names and non-existing places.

"They founded their claims on the fact that Prophet David and his dynasty ruled the ancient land of Kan'an for some 76 years and used this to prove that the territory belonged to Zionists. In the midst of all this, another fact was neglected: that the land of Palestine had been in possession of Arabs for over four thousand years after that.


"Many Linguists Believe that the Word Holocaust... Was Originally Coined to Refer to a Criminal Incident in Ancient Yemen Committed by Jews Who Burnt Alive a Large Group... of Men, Women, and Children"

"Many linguists believe that the word holocaust, which is a Greek word – holo means all and caust meaning 'to burn to ashes' – was originally coined to refer to a criminal incident in ancient Yemen committed by Jews who burnt alive a large group of chained and handcuffed men, women, and children for their adherence to teachings [of] Jesus Christ (PBUH).

"However, the bitter historical irony is that the word was later exploited by Zionists to establish a regime by building on the false claim that over six million Jews had been killed in Auschwitz ovens, thus triggering the sympathy of the [W]estern people. They embarked on a relentless campaign, producing tens of films, publishing thousands of books and research works to win the sympathy of [W]estern public opinion particularly that of Europe to drive a nation which enjoyed a rich and old civilization and culture out of its homeland."


"In European Countries, Which Claim a Highly Intellectual Atmosphere And Boast of Supporting Research and Scientific Movements... It Is Absolutely Forbidden to Question the Authenticity of Holocaust"

"From among all so-called death camps in Europe which mainly concentrated in Poland, Auschwitz is the most famous one, so the Zionists focused all their documentation on the place and made up many horrifying tales every single of which makes the hair stand on end.

"Many Zionists claimed the establishment of Israel was the God's answer to Auschwitz, while there were others to strongly believe that holocaust encouraged establishment of Israel.

"However, the bitter fact, here, is that in European countries which claim a highly intellectual atmosphere and boast of supporting research and scientific movements and trends, it is absolutely forbidden to question the authenticity of holocaust or even conduct any investigative research on the quality and quantity of the incident. If anybody dares to ignore the law, then the 'anti-Semitism' law would promptly be used to suppress the antagonist voice."


"The World-Famous Holocaust Denier Faurisson... Irritates the Zionist Regime's Puppets"

"The world-famous holocaust denier, Professor Robert Faurisson, is one of those people who once in a time irritates the Zionist regime's puppets by his remarks. He denies the overall incident of burning Jews into ashes by the Nazi Germans. In his latest remarks, he questions the very existence of any gas chambers in Auschwitz, describing the claim as a big lie.

"However, he believes there is still another more dangerous, bigger lie which claims the gas chambers were constructed later on after the end of the war, or that the existing building was one similar to the original one which is not constructed in as good shape as the first, or still that the gas chambers went under reconstruction projects after the end of the second world war.

"He believes many efforts were undertaken after the war to re-make Auschwitz to resemble a death camp, to create the false impression that it was exclusively used as a place to kill Jews, while the whole project was more of a construction attempt rather than a reconstruction plan.

"He mentions documents which were never published publicly, adding: 'I got plans of the four crematoria chambers in Auschwitz and Birkenau which lacked any openings in their roofs. At a single one of these crematoria, although it is in ruins, is it today possible to go and examine the room said to have been a gas chamber and is the presumed scene of the crime …We are told that, in order to kill the Jewish detainees locked inside, an SS man, moving about on the concrete roof of the said gas chamber, poured Zyklon-B pellets through four regular openings situated in the roof.

"'However, one need only have eyes to realize that no such openings have ever existed there. Therefore such a crime cannot have been committed.'


"The Zionists Are Basically Exploiting the Forged Term of 'Holocaust'..."

"Despite all their claims, these very countries never allow people to say a single word against holocaust. They use the anti-Semitism law as a tool to suppress any voices rising against the influential Zionists sitting in Tel Aviv even though what they say is utterly based on scientific research conclusions.

"They are scared of seeing people realize the fact that contrary to what they are trying to pretend, the Zionists see the establishment of the Hitlerite Nazism not as a catastrophe but as a brilliant and unique historical opportunity to get to their objectives; given the fact that it provided the chance for the Jewish agency to materialize its old dream of the congregational movement of Jews from all parts of the world to the so-called 'promised land.'

"The Zionists are basically exploiting the forged term of 'holocaust,' with all its implied political, economic, and psychological applications, to attain two principle objectives. By trying to depict the Jews as victims of holocaust and sanctifying it, the Zionists want to 1) provoke the feelings of the Jewish tribe and 2) bar any broad and global opposition to the Israeli criminal actions against the Palestinians.

"That is exactly for these reasons that the Zionists are reluctant to hear any antagonistic voices from world politicians, thinkers and intellectuals. The remarks made by Iran's President Mahmoud Ahmadinejad [asking] why the Palestinian people must pay the price for the holocaust terrified Tel Aviv leaders. They are fully aware that [the] challenging [of the] dimensions of holocaust by the head of a country which is considered a key player in the international scene would bring despair for them. They know that any breaking of the old-established taboo of making anti-Zionist remarks in the United Nations – before the heads of as many as 200 world countries – would pave the way for other scholars and thinkers who like the Iranian president have serious doubts about the authenticity and nature of Zionist claims about holocaust but lack his courage or the opportunity to publicly express their attitudes.

"Director of the Canadian Association for Free Speech Paul Fromm agrees with President Ahmadinejad's remarks, saying: 'I believe it is wrong to have Palestinians pay the price for the crimes committed by Europeans and for them to lose their country. I also believe that the hollow myth of holocaust was originally made up to project a sense of guilt and shame in northern Europe and North American nations.'

"The myth has so far enabled the Jews to get billions of dollars from Germany and other world countries. The notion of holocaust has also prepared the minds of people in Europe and America to justify the brutality of the Zionist regime against Palestinians.

"Leader of the Islamic Revolution Ayatollah Seyed Ali Khamenei, too, has already elaborated on the objectives the Zionists are pursuing by focusing on the issue of holocaust and the crematoria ovens as a propaganda strategy: the aim is to show the Jews as a victimized tribe.

"The fact that visiting the holocaust museum is included on the schedule of any ranking official visiting Palestine proves this very point."


"For Zionists, Auschwitz Is...The Symbol and the Embodiment of All Those Things Which Constitute the Identity and Essence of a Regime Called Israel... You Could Never Find Even One Single Person Who Is an Auschwitz Survivor Himself"

"Anyway, Auschwitz occupies the most significant position in the myth of holocaust Zionists are trying so hard to sanctify. For Zionists, Auschwitz is not merely a so-called death camp or a crematorium; it is the symbol and the embodiment of all those things which constitute the identity and essence of a regime called Israel.

"Yes, the Zionists keep telling the most horrifying stories about the Auschwitz, quoting those who survived the death camp, but the point is that you could never find even one single person who is an Auschwitz survivor himself while many World War II veterans are still alive, living their ordinary lives. There are only photos and pictures about Auschwitz.

"Hollywood, too, has been earnestly fulfilling its duty of serving the myth of holocaust and Auschwitz. It employs the whole of its vast and glamorous empire to hire the most outstanding directors and actors to produce tens of works about the prisoners who lives in concentration camps, particularly in Auschwitz. From among the most brilliant works produced so far on the topic by Hollywood is the film recently directed [by] the world-renown[ed] Jewish pianist Roman Polanski, which triggered much controversy.

"At the end of the story of the setting up Tel Aviv regime, the Jews were finally settled down in Palestine instead of Ethiopia or Uganda only to enable the Western countries to get to their goal of getting access to one of world's most strategic and sensitive spots which is also situated at the very heart of the Islamic world.

"The Westerners pretend to regret their oppressive behaviors towards Jews and do everything to get themselves [out] of this nightmare, but at the expense of the Palestinian nation.

"While Europeans have been always boasting of their intellectual attitudes and democratic manners and look worried about what is going on in the remotest deserts in Darfur or the way the military is treating the public in Burma, they seem absolutely reluctant to see the humanitarian tragedy created by Zionists in Gaza, which is virtually turned into the world's biggest death camp in December 2008-January 2009."

Endnote:
(1) IRNA (Iran), April 21, 2009. The text has been lightly edited for clarity.

8) Obama's Gitmo
By WILLIAM MCGURN

Helen Thomas: Why is the president blocking habeas corpus from prisoners at Bagram? I thought he taught constitutional law. And these prisoners have been there . . .

Robert Gibbs: You're incorrect that he taught on constitutional law.

You know we live in interesting times when Helen Thomas is going after Barack Obama. Miss Thomas was asking the White House press secretary last week why detainees at Bagram Air Base in Afghanistan should not have the same right to challenge their detention in federal court that last year's Supreme Court ruling in Boumediene v. Bush gave to Guantanamo's detainees. All Mr. Gibbs could do was interrupt and correct the doyenne of the White House press corps about Mr. Obama's class as a law professor.

The precipitate cause of Miss Thomas's question was a ruling earlier this month by federal district Judge John Bates. Judge Bates says that last year's Supreme Court ruling on Gitmo does apply to Bagram. The administration has appealed, saying that giving detainees such rights could lead to protracted litigation, disclosure of intelligence secrets and harm to American security. The wonderful irony is that, at least on the logic, everyone is right.

Start with Judge Bates. The judge is surely correct when he says the detainees brought in to Bagram from outside the country are "virtually identical" to those held at Guantanamo. He's also correct in asserting that the Supreme Court ruled the way it did out of concern "that the Executive could move detainees physically beyond the reach of the Constitution and detain an individual" at Bagram.

But President Obama's appeal is also right. Though most headlines from the past few days have focused on the release of Justice Department memos on CIA interrogation, the president's embrace of the Bush position on Bagram is far more striking. Mr. Gibbs became tongue-tied while trying to explain that stand. But the Justice Department brief is absolutely correct in asserting that "there are many legitimate reasons, having nothing to do with the intent to evade judicial review, why the military might detain an individual in Bagram."

Finally, critics like Miss Thomas also have it right. In a long and thorough post called "Obama and habeas corpus -- then and now," Glenn Greenwald, a former constitutional law litigator who blogs at Salon.com, exposes the gaping contradiction between past Obama rhetoric on the inviolability of the right to habeas corpus and the new Obama reality. He also quotes Mr. Obama's reaction to Boumediene as a "rejection of the Bush administration's attempt to create a legal black hole at Guantanamo."

Manifestly, Mr. Greenwald believes that "black hole" is simply moving to Bagram. "I wish I could be writing paeans celebrating the restoration of the Constitution and the rule of law," he writes. "But these actions -- these contradictions between what he said and what he is doing, the embrace of the very powers that caused so much anger towards Bush/Cheney -- are so blatant, so transparent, so extreme, that the only way to avoid noticing them is to purposely shut your eyes as tightly as possible and resolve that you don't want to see it, or that you're so convinced of his intrinsic Goodness that you'll just believe that even when it seems like he's doing bad things, he must really be doing them for the Good."

How can all these people be right? The answer is that each is responding to a different contradiction raised by the president's Guantanamo policy. In an impassioned 2006 speech on the Senate floor on the right to habeas corpus, Mr. Obama declared, "I do not want to hear that this is a new world and we face a new kind of enemy." During the campaign, his language implied that all we needed to settle the detainee issue once and for all was to shut down Gitmo.

As president, he is finding out that this very much is a new world, that we do face a new enemy, and that the problems posed by Guantanamo have less to do with the place than the people we detain there.

Put simply, the U.S. needs the ability to detain people we know to be dangerous without the evidence that might stand up in a federal criminal court. Because we can't say when this war will end, moreover, we also need to be able to detain them indefinitely. This is what makes the war on terror different, and why our policies will never fit neatly into a legal approach that is either purely criminal or purely military.

The good news is that Mr. Obama is smart enough to know that the relative obscurity of Bagram, not to mention the approval he has received on Guantanamo, enables him to do the right thing here without, as Mr. Greenwald notes, worrying too much that he will be called to account for a substantive about-face.

The bad news is that we seem to have reached the point where our best hope for sensible war policy now depends largely on presidential cynicism.