Are you a racist test (See below.)
Do you like him any better now?
Then you're not a racist.
My friend returns from her summer sabbatical and hails forth.
Another friend also discusses why Obama's programs have failed. I challenge anyone to read Newt's original "Contract With America" and, in light of history, tell me it was radical. Yet, when he proposed it he was attacked as offering "A Contract on America."
If you are unwilling to admit the problem exists you will never come up with a solution. Obama's programs are not working. The belief we could spend our way out of the mess we spent ourselves into is not the solution.
Both progressives and conservatives, who feared losing elections and threw away their principles and became 'progressive lights,' are largely responsible. However, voters who tolerated these policies are due their share of blame as well - Pogo was right: "The enemy is us."
Spending beyond one's means leads to debasement of a nation's currency and this carries implications beyond economics. The erosion of purchasing power also results in the erosion of a nation's character and its values.
When times are good voters tend to ease, they often feel freer to opt for 'change.' When times are bad and things seem to not be working voters also are more receptive to 'change.' Thus, policies that once worked for Conservatives may no longer produce favorable electoral results. However, that should be no reason to forgo one's principles which Republicans, to their detriment, often do. Consequently, voters are less willing to return to conservative candidates who walked away from their principles in their desire to get re-elected. This is the problem Republicans now face.
Obama's unpopularity may work to Republican's advantage but their own record of wasteful spending remains a hurdle and voters have every right to be wary of political promises made by those who now say they have learned and are contrite.
True conservatism that both demands and produces a balanced budget through actual fiscal responsibility and addresses reasonable social needs is good for the nation. Any party that can hew that course consistently deserves to be elected and re-elected but there will be times, as I indicate above, when this may be out of step with the voter's changed mood. That is the time when being purist really counts because it will pay off big time in future elections.
A victory lost can turn into bigger and sustained victories at more propitious times. Whether Republicans can learn this remains the $64 question. (See 1, 1a and 1b below.)
What follows maybe the best quote of the year. It comes from Warren Buffet:
"If you go to the Middle East looking for oil, you don't need to stop in Israel. But, if you go looking for brains, energy, and integrity, it is the only stop."
Since it did not work the first time let's try it again. Or, when going in the wrong direction speed up and get there faster! (See 2 below.)
Low interest rates come at a high cost. (See 3 below.)
Gibbs hangs in there. (See 4 below.)
Iran become more bellicose and beefs up its attack fleet of fast hit and run torpedo ships. (See 5 below.)
Israeli political leadership taken to task. (See 6 below.)
1)Why Can’t You Selfish Ingrates Feel the First Couple’s Pain?
The Golden Rule implies that I should put myself in their shoes, so let's get that over with.
By Kyle-Anne Shiver Share
Honestly, I haven’t heard such caterwauling and bellyaching in this country since Jimmy Carter was president. All I’ve heard this whole summer has been a rising cacophony of complaint. In every posh place I’ve been, whether church or Wal-Mart or Home Depot or the bagel shop, whether my primary polling place or regular citizens confab, whether neighborhood barbeques or my favorite stateside beach, the self-indulgent topic du jour has been the plight of the people.
The plight of the people and that sorry lot of nincompoops running the national machinery up there in Washington, D.C., are the only things folks are talking about this summer.
Unbridled scorn. Ungracious contempt for the president’s policies and even for his wife’s Marie Antoinette inclinations. Snarling sarcasm not even bothering to veil itself in polite platitudes. Unfettered resentment coming from the mouths of ordinarily apolitical gentlemen, forming the same trite question over and over again in sardonic mockery: “Can’t the president feel our pain?”
A collective national belch hurled in the faces of the ivory-towered elitists emits from the people in the most rude disdain they can summon.
It’s as though the normally silent, working-too-hard-to-notice-anything-political majority has suddenly awakened from a 35-year slumber and bellowed with a single voice at the top of their lungs:
Enough with the liberal dream schemes that have bankrupted the socialist democracies of Europe and every state in the union that’s tried them. Enough with the profligate spending of other people’s money. Enough with the corruption and greed and high-handedness. Enough with purely racist policies masquerading as “affirmative action” and “color quotas.” Enough with the junk science. Enough with the “Can we get away with it? Yes, we can” shredding of the Constitution.
While the nation moans and wallows in its discontent, the president says we ought to be “thanking him.”
Well, I for one, have decided to give the president and his lovely better half a break. As Lindsey Graham might intone, the Golden Rule demands it. Yes, demands that we summon our inner self-sacrificial doormat sides, lay down our weary burdens, and give a heaping spoonful of empathy to our first couple.
Oh, where to start? The back-breaking, mind-wrenching toil of our first couple is so ubiquitously evident every single day that it’s just nearly impossible to choose the entry site for efficient, surgical empathy.
Well, I’ll just pick something arbitrarily.
Did you selfish ingrates out there in the heartland know that the president had to spend his own birthday without the companionship of his wife and daughters? I’ll bet you didn’t.
Now, the whole dead-as-a-doornail “mainstream” press covered this wretched tale from sunup to sundown on Barack’s birthday, but since no real American bothers with the stateside Pravda any more, it’s unlikely that readers here even know about the president’s latest emotional torment. Oh, Barack did have Oprah and a couple of other Chicago no-accounts with him, but still, having to spend his birthday without his oh-so-close-knit-family with him must have been for Barack an insufferable cruelty. Perhaps the president could form a support group with soldiers in his war over there in Afghanistan and they could help each other come to grips with holiday-separation anxiety.
Well folks, how’s that for surgical empathy? I think I might be getting the hang of this Golden Rule thing.
So, upon what mission of mercy was our first lady shackled while Barack poured out his troubles to Oprah’s ample ear? Poor Michelle. She was in Marbella; that’s in Spain. Michelle and her entourage feasted on the delights only affordable to ultra-rich European oligarchs, while simultaneously keeping a promise to spend time with a dear friend who had lost her father this past year. Sigh. All during her days of luxurious beaching and sightseeing, Michelle wore sackcloth and ashes to publicly demonstrate her self-sacrificial act.
Though we selfish-ingrate taxpayers might have preferred her to beef up one of our own flailing local economies with an American “royal” visit, Michelle thought honoring her friend’s request to visit Spain would demonstrate far more meaningful empathy. And really now, could Michelle possibly have considered it more good-motherly to show her daughter a bit of our tacky little country when the crime-besotted, drug-drenched, gangster-ridden Marbella beckoned so enticingly educational a mere ocean and thousands of miles away? It only cost a few hundred thousand dollars of peasants’ wages, after all.
Oh dear, I know what you’re thinking, you dastardly, greedy small-business owners out there in America’s heartland. The lodging for all those people. Not just the first lady and her entourage, but all those security people who must accompany her everywhere she goes. Ca-ching. Ca-ching. All that food that could have been served by job-hungry American workers, bought from struggling American farmers, cooked by begging American chefs, charged by floundering American restaurants. Yes, yes, I understand your bewilderment at Michelle’s seemingly insensitive refusal to give you the same empathy she demands. I do. I really do understand. But this is Michelle’s moment to receive our empathy and you should be content knowing how much more blessed you are in the giver’s spot, just this once.
Anyway, Michelle’s entire Marie Antoinette episode in Spain ought to send us icky working-hard-at-it Americans the loud-and-clear message that the first lady is still not thoroughly proud of her country. We gave her husband the presidency. We’ve surely bought enough of Barack’s books now to have paid off those burdensome college loans. We’ve ogled and ooh-ed and ah-ed over everything from her biceps to his hoops-shooting prowess. We’ve plastered their pictures on everything solid in the entire country. But we’re still not there yet. And every single selfish-ingrate, taxpaying American citizen had better start revving up that first-couple empathy and pour it on so that maybe — if we’re really, really lucky — we can finally earn Michelle Obama’s pride in America.
Let’s see now. What other surgical empathy might we commoners summon for our downtrodden first couple?
Well, there’s the president’s golf game. Knowing golfers as I do, I doubt seriously whether Barack is ever truly satisfied with his score, but he’s certainly getting plenty of oh-so-grueling practice time. And, of course, back in April of ’09, Barack met with Tiger in the Oval, sharing golf tidbits no doubt. Then, Barack and Tiger took time out from their back-breaking party schedules to do a photoshoot for Golf Digest. The glossy-mag cover heralded the twosome’s friendship with the title: “Ten Tips Obama Can Take from Tiger.”
That paragraph came off a bit snarky, I suppose. You’re wondering, dear reader, where’s my empathy? Be patient, please, I’m getting there. It was just downright horrible how the timing of that Golf Digest hit the newsstands. There, our poor, pitiful president was hunched down over a challenging putting green with Tiger’s formidable manhood dwarfing Barack in the shot, while at the very same time, our president’s mouthpieces were selling the line that Barack was hard at thoughtful dithering over his Afghanistan troop surge, and as if that weren’t enough for White House discomfort, this cover also hit while Tiger’s adulterous affairs — too numerous to count — were breaking wide open.
Even the most beleaguered citizen just had to feel the president’s pain that awful week.
Well, dear readers, my heart is so plum full of chest-bursting empathy for our first couple now that I could go on forever with this exercise.
However, I must bid empathy adieu. I’m headed to my voting booth to cast my run-off primary choice now. And the very last place on earth a self-respecting American ought to be indulging gratuitous empathy is the voting booth.
Just wondering, though, does Big Pharma make a pill that squelches one’s gag reflex and wakes one only on election days? If so, I would gladly invest the whole farm, plough and all, in such a wonder drug right about now.
Kyle-Anne Shiver is an independent journalist and a frequent contributor to American Thinker. She welcomes your comments at www.kyleanneshiver.com.
Before I get to the primary focus of this week's newsletter--the Obama administration's dismal failure on jobs and on maintaining the confidence of the American people--I want to update you on last week's topic, an all-out effort to prevent the Democrats from using a lame duck session to pass all the radical left-wing bills on their agenda before a new, much more conservative Congress takes over in January.
Yesterday, Congress voted on a resolution offered by Tom Price that would have prevented a lame duck session of Congress after this election. It was defeated by a vote of 236 to 163. Six Democrats voted for the resolution. One Republican voted against.
However, this is not the end of the fight. It is the beginning. In just one week, over 85,000 Americans have signed letters to their representatives telling them to take the No Lame Duck Pledge.
By continuing to pile on the pressure, and make this a big issue in the fall, we can still box in the Democrats so that they are unable to justify holding a lame duck session after the election.
Please visit AmericanSolutions to sign up for this important effort.
A jobs failure
What do 9.5% and 71% have in common?
They are both proof of the failure of the Obama-Pelosi-Reid secular-socialist machine.
9.5% was the unemployment rate in June. The Obama administration warned that unless its big government stimulus bill was passed, that unemployment would rise above 8%. The bill was passed (in a panic, without being read) and nevertheless, unemployment rocketed past 8% to settle at 9.5%.
What's more, the 9.5% unemployment rate is likely too rosy a picture of the American economy. The real unemployment rate -- which includes those who are underemployed and those who have given up looking for a job and left the workforce--may be as high as 22% according to some analyses.
The stimulus has clearly failed to create jobs as promised.
Furthermore, the radicalism of the administration and Congress' domestic policies has hampered the natural resiliency of the American economy, artificially extending the recession.
See the failure to believe the failure
Several charts illustrate the gravity of the left's failure economically.
The first, produced by American Solutions, shows the Obama Jobs Gap. That's the difference between the rate of job creation needed to return the U.S. to 5% unemployment by 2015 and the actual track record of this administration. The Obama Jobs Gap surpassed 1 million in July.
Another chart, produced by the Heritage Foundation, shows the Obama Jobs Deficit. That's the difference between the 3.5 million jobs President Obama promised to create by December 2010 during the 2008 campaign and the 4.1 million lost during his administration. That's an Obama Jobs Deficit of 7.6 million jobs.
Another, from Calculated Risk, shows just how long it is taking our economy to recover compared to past recessions, and that with last month's loss of 131,000 jobs, the trend lines are heading in the wrong direction.
Despite the indisputable data, last week in the New York Times, Treasury Secretary Tim Geithner boldly declared, "Welcome to the Recovery."
At 9.5% unemployment, most Americans don't feel welcomed to a recovery. They might welcome, however, a return to reality at the White House.
Choosing Unemployment over a Job
An article in the Wall Street Journal Monday painted a frustrating picture of the joblessness situation, showing that, despite our high unemployment, many firms are having trouble filling job openings. According to the Federal Reserve Bank of Atlanta, if job openings were getting filled at a normal rate, the unemployment rate would be 6.8% instead of 9.5%.
So there are actually many jobs out there that need to be filled. Yet, in the worst recession since the Great Depression, many employers can't make hires.
The article cites several reasons for this phenomenon, a few of which are long term trends such as our education system not producing enough qualified engineers. But others factors fall squarely on the backs of this administration and Congress.
For instance, the extension of unemployment benefits has given people a perverse incentive to stay on unemployment rather than accept a job. The part-owner of a machine parts company, Mechanical Devices, is looking for as many as 40 new engineers, but is quoted in the article as saying many applicants at job fairs were "just going through the motions so they could collect their unemployment checks." The article also quotes an engineer who admits he turned down more than a dozen offers because the salary would have been less than he made on welfare.
This story encapsulates the problem of the long-term unemployed. The depth and length of this recession is at risk of creating a permanent pool of unemployed Americans, who get so used to being unproductive that they are willing to accept welfare indefinitely instead of taking a job.
Uncertainty Also Prevents Job Creation
As I travel to different cities across the country with American Solutions hosting Real Jobs Summits, I always try to hold meetings with the local members of our Jobs and Prosperity Task Force. Comprised solely of small business owners, these meetings always offer a useful perspective about the real world consequences of the administration and Congress' radical agenda.
The most common theme I hear at these meetings is uncertainty. Small business owners are so paralyzed by the radicalism of the Democrats' agenda that they are afraid to hire new workers or otherwise invest in their businesses because they are unable to predict with any degree of confidence anything from how much they will owe in taxes in the future to the price of energy if an energy tax is passed.
A major source of uncertainty is the new health care bill, the details of which Speaker Pelosi proudly boasted ignorance of by saying "We have to pass the bill in order to know what's in it." With so much uncertainty surrounding how the bill will affect Americans, employers don't know how to project the future costs of health care. So they simply don't hire.
The second election repudiating Obamacare
The other number that indicates the failure of the Obama-Pelosi-Reid secular socialist machine is 71%.
71% is the percentage of voters in Missouri -- a swing state -- who in a vote last week rejected a federally imposed individual health insurance mandate, a key provision in Obamacare that requires all Americans to buy health insurance.
This is actually the second time an election has repudiated the Democrats' big government health care plan. The special election to replace Ted Kennedy became a referendum on Obamacare and the results there were equally stunning. Republican Scott Brown -- an ardent opponent of the health care bill -- was elected to replace a man who called government-provided health care for every American the "cause of his life."
The latest national polls show that a majority of Americans favor repealing the health care bill. Even more Americans believe the bill will cause health care costs to go up.
This series of repudiations means that the President and Congress's signature achievement - centralized health care -- is being firmly rejected by the American people.
President Obama, Speaker Pelosi, and Senator Reid are clearly failures at delivering the results they promised. They promised jobs and an economic turnaround. What they've delivered instead is economic stagnation.
They're also clearly failures at maintaining the support of the American people for their policies. Their most significant victory -- the big government health care bill -- is so unpopular that most Americans want it completely repealed.
71% repudiation at the polls.
This is what failure looks like. And it is indisputable.
1b)A Far Better ‘National Discussion’
By Arnold Ahlert
It's hard to take a "war"--as in culture war--and reduce it to a single battle. But the symbolism provided by two particular people is highly indicative of where we are today. In 2008, New York Governor Eliot Spitzer was forced to resign in disgrace due to the fact that he had spent thousands of dollars on prostitutes. The particular prostitute most closely associated with Spitzer was one Ashley Dupre. Forgetting the law for a moment--including Spitzer's money transfers to a corporate front operated by the prostitution ring, for which he was never prosecuted--one might think that two such people would find life substantially more difficult going forward. One would be completely wrong: Eliot Spitzer has a TV show on CNN, and Ashley Dupre writes a regular column for the Sunday NY Post.
This, in a nutshell, is what is wrong with America today. Bad behavior--or far more accurately, illegal and prosecutable behavior by both parties--is not merely ignored, but rewarded. Even worse, it's completely beyond doubt that, somewhere in America, some schlub and the skank he paid for sex are cooling their heels in jail cells.
In other words, some johns and some hookers are "more equal than others."
Sometimes I wonder about the unspoken or unseen ramifications of such an outcome. For example, what's an aspiring and hard-working student aiming for a career in television supposed to think when he or she knows that the hacks at CNN hired Spitzer precisely because of his outrageous behavior? What are aspiring columnists supposed to think when there's one less writing job available because those "clever" folks at the NY Post think turning a hooker into a sex advice columnist is a great idea?
Americans have long been ambivalent about the difference between fame and infamy. Some of the most despicable people on earth have utterly fascinated us for decades. Bonnie and Clyde were treated like stars by the media at the time, despite the reality that they were bank robbers--and cop-killers. And as recently as two weeks ago, director Oliver Stone, prior to apologizing for it, insisted that Americans need to put the duo of Adolf Hitler and Josef Stalin "in context." According to Stone, two of the top three mass murderers in the history of the world can't be judged as "only bad or good."
Perhaps Mr. Stone might care to explain what factors "mitigate" the extermination of thirty-five million people.
No doubt Ollie would give it his best effort--and no doubt a number of Americans would agree with him. We are up to our societal necks in the kind of moral relativism that allows for such profoundly misguided thinking. There are substantial numbers of Americans who truly believe right and wrong are completely contextual, or can be "adjusted" as they go along. And the only restraining mechanism on them can be reduced to three words:
Don't get caught.
There is no doubt in my mind that Eliot and Ashley would be up to their old tricks as it were if their behavior had remained undetected. In today's America, there literally millions of ways to rationalize almost anything. Legions of guys just like Spitzer tell themselves they are "above" such mundane restraints as monogamy, even as legions of young girls tell themselves married women "get men to spend money on them, and I'm just skipping the marriage part."
Although he was referring to a different subject, the late Patrick Moynihan's words ring truer than ever: America is in a constant process of "defining deviancy down." That which used to shock no longer does. In fact, "shocking," "outrageous," and "disgusting" might be the quickest route to fame and fortune these days.
Far more importantly however, is the effect defining deviancy down has on government: it is my contention that the expansion of the state at every level is directly attributable to our moral meltdown. For example, there is no longer any real stigma attached to having a child--or several children by several different men--out of wedlock, and paying for their upkeep with a welfare check. People are no longer ashamed of taking a government handout even if they are perfectly capable of working. People who paid for more house than they could afford, expect a bailout. Nearly half the country is content to pay no income taxes to underwrite the greatest nation on earth.
In fact, government today spends billions upon billions of dollars subsidizing what used to be considered rotten behavior. And it does so in ways that actually encourage more rotten behavior--as the phrase "too big to fail" so aptly illustrates.
Regular readers of my columns know I spend a lot of time talking about morality. The reason for this is simple: no society, even one with a document as brilliantly written as the Constitution, can withstand large-scale confusion regarding right and wrong. If one takes the Constitution for what it really is--a contract between the people and the government--that which is written down only has meaning if both parties maintain "good faith."
Nothing destroys good faith quicker than moral ambiguity. Think about how many Supreme Court decisions have been 5-4 votes with the exact same members ending up on the exact same side, even on issues which should have been slam dunks. Think about the fact that, for the first time in five thousand years, the definition of the word "marriage" is up for grabs. Think about the fact that many Americans consider overt law-breaking OK because they refuse to make the distinction between "legal" and "illegal" alien--or that perjury and obstruction of justice is excusable when it's "only about sex."
What happened? Secular Humanism happened. Those who rejoiced when it was declared that "G0d is dead" thought they were ushering in an age of enlightened thinking. What we got instead was a societal free-for-all--millions of Americans "doing their own thing" completely freed from the burden of taking responsibility for the consequences. Completely unencumbered by former brake pedals of society known as guilt and shame.
Much like government debt, such a societal ethos is also unsustainable. A society which makes little distinction between right and wrong, good and evil--or needy and lazy--is headed for the ash heap of history.
People like Eliot Spitzer and Ashley Dupre, along with countless others, are the proverbial canaries in the coal mine. That they are where they are today--along with the enablers who put them there--is an indication that "playing it straight" is rapidly becoming a sucker's bet. Why bother to learn writing or the skills necessary to perform on TV if something as easy as a well-publicized roll in the sack will take you to the same place? Why bother being good when bad works just as well--if not better?
Countless times I've heard we need a "national discussion" regarding race. I think a national discussion about morality is far more important. I trust the American public can spot the difference between those who are sincere--and those who are demagoguing phonies hiding behind ideological bromides.
Maybe we can't stuff the proverbial genie back in the bottle. But if we don't make the effort, I suspect future generations will marvel about a society that seemingly had everything--and tossed it all away for little more than an instant gratification that became far more fashionable than hard work and moral restraint.
Are Americans ready for this kind of conversation?
2)HUD Just Announced A Homeowner Bailout
By Joe Weisenthal
Well, it's not exactly of the magnitude to be an August surprise but it is August, and it is a new homeowner bailout...
HUD has just announced the following:
The Obama Administration today announced additional support to help homeowners struggling with unemployment through two targeted foreclosure-prevention programs. Through the existing Housing Finance Agency (HFA) Innovation Fund for the Hardest Hit Housing Markets (the Hardest Hit Fund), the U.S. Department of the Treasury will make $2 billion of additional assistance available for HFA programs for homeowners struggling to make their mortgage payments due to unemployment. Additionally, the U.S. Department of Housing and Urban Development (HUD) will soon launch a complementary $1 billion Emergency Homeowners Loan Program to provide assistance – for up to 24 months – to homeowners who are at risk of foreclosure and have experienced a substantial reduction in income due to involuntary unemployment, underemployment, or a medical condition.
“We remain committed to helping struggling homeowners, and this program will provide additional assistance to states hit hardest by unemployment,” said Assistant Secretary for Financial Stability Herb Allison. “This is part of the Administration’s comprehensive housing policy that has helped to stabilize a fragile housing market and allows responsible homeowners the chance to reduce their monthly mortgage payments to affordable levels.”
“HUD’s new Emergency Homeowner Loan Program will build on Treasury’s Hardest Hit initiative by targeting assistance to struggling unemployed homeowners in other hard hit areas to help them avoid preventable foreclosures,” said Bill Apgar, HUD Senior Advisor for Mortgage Finance. “Together, these initiatives represent a combined $3 billion investment that will ultimately impact a broad group of struggling borrowers across the country and in doing so further contribute to the Administration’s efforts to stabilize housing markets and communities across the country.”
Hardest Hit Fund
President Obama first announced the Hardest Hit Fund in February 2010 to allow states hit hard by the economic downturn flexibility in determining how to design and implement programs to meet the local challenges homeowners in their state are facing.
Under the additional assistance announced today, states eligible to receive support have all experienced an unemployment rate at or above the national average over the past 12 months. Each state will use the funds for targeted unemployment programs that provide temporary assistance to eligible homeowners to help them pay their mortgage while they seek re-employment, additional employment or undertake job training.
States that have already benefited from previously announced assistance under the Hardest Hit Fund may use these additional resources to support the unemployment programs previously approved by Treasury or they may opt to implement a new unemployment program. States that do not currently have Hardest Hit Fund unemployment programs must submit proposals to Treasury by September 1, 2010 that, within established guidelines, meet the distinct needs of their state.
-------------------------------------------------------------------------------------3)The High Costs of Very Low Interest Rates
Money that should be invested to create jobs is instead funding government debt, while worried consumers sit on the sidelines
By JOHN C. MICHAELSON
The prevailing view among economists, policy makers and Federal Reserve Board governors is that a zero or near-zero short-term interest rate stimulates the economy—the lower the rate, the better. It is time to re-examine this conventional wisdom. In fact, lowering interest rates too much may not stimulate recovery, but actually slow it. Yes, there are benefits from zero rates, but not nearly enough to outweigh their pernicious consequences.
In the first place, the Fed's policy of zero or near-zero interest rates means negligible returns on savings. Consumers thus have less to spend and those nearing retirement need to save more. The owners or managers of pension plans, foundations, trusts and the like must also make higher contributions to make up for lower investment earnings in order to meet their obligations. In the case of public pension plans, these higher contributions contribute to local and state fiscal crises.
Meanwhile, banks are able to make adequate returns by borrowing at near-zero rates and investing almost risk free and without effort in longer-term government debt, federal government-guaranteed debt, or in relatively riskless investment-grade debt—all at 3% to 4%. They have little incentive to go out and make loans to job-creating businesses that might have a higher yield but entail significant risk and effort.
In human terms, the Fed's policy means emergency room nurses in Texas work longer hours to make up for low yields on CDs, dairy farmers in Iowa forgo equipment purchases to save more for retirement, charities for the homeless in Manhattan reduce services as foundations cut grants, and local governments from Albany to Sacramento close libraries to fund pension plan deficits.
The Fed and the U.S. Treasury are unable for many reasons to directly inject sufficient capital into the banking system to restore it to health. Thus the primary goal of the Fed's policy is to provide nearly free capital to banks as a backdoor way of recapitalizing them. Secondarily, the low interest rate policy is intended to stimulate consumption, increase lending and spur investments to create jobs.
But the beneficiaries of the Fed's wealth transfer are not following the playbook. Overleveraged consumers are not spending or buying homes, and financial institutions are not increasing job-creating lending. Many companies are generating record returns for shareholders (and repaying TARP funds to lessen government oversight), but they are not investing.
True enough, large, creditworthy or too-big-to-fail companies are able to borrow at very low rates. But this is not leading to materially increased investment. Almost every large company chief financial officer will tell you that slightly cheaper credit has little impact on most investment decisions. Increased demand and growth prospects are far more important. Meanwhile, U.S. corporations are sitting on nearly $2 trillion in cash.
What is especially frustrating is that supporters of 0% interest rates have a stark example of the policy's failure staring them in the face: Japan. Following the bursting of its credit bubble in 1990, Japan eventually brought its equivalent of the Fed rate down to a then-unprecedented 0.25%. The nation proceeded to suffer a "Lost Decade" of economic stagnation that has never really ended.
It is accepted wisdom among economists that this happened despite the stimulative benefit of 0% rates, and that the Bank of Japan's colossal mistake was not bringing them down fast enough. Fed Chairman Ben Bernanke has studied the Japanese crash and believes this interpretation. He does not question whether 0% rates contributed to the Lost Decade.
In fact, Japan got caught in a cycle in which 0% interest rates led to anemic private consumption and investment. The Japanese government then made up for this private-sector shortfall by borrowing and spending. National debt ballooned, eventually making it perilous to raise rates because of the higher costs of servicing the debt—thus trapping Japan in a cycle of depressed consumption and investment, prompting yet more spending and borrowing to keep the economy afloat.
The U.S. is not Japan; our economy is far more resilient and remains the most dynamic in the world. But the U.S. is in danger of entering the same cycle as Japan as the economy falters and pressure builds for another round of stimulus spending financed by more government borrowing. To avoid this trap, and to encourage private-sector demand growth to stimulate productive lending, the Fed should begin to raise short-term rates.
From a public policy perspective, rising short-term rates means that more funds will flow to borrowers who will invest them in job-creating activities and increase consumption. And from a recovery perspective, increased returns on cash will cause Americans to feel more confident about their economic future.
Paying higher rates to attract deposits will force banks to look for lending opportunities beyond government type credits. Investors, companies and banks will also become less tolerant of underperforming assets and seek to move those assets more swiftly to superior owners and operators, creating additional efficiencies and job-creating growth.
Yes, there are risks. But first of all, I am recommending raising short-term rates only—and only from near zero to a reasonably low level. Second, the current policy is not working. Contrary to conventional wisdom, raising short-term interest rates from current levels would increase consumption, productive lending and job-creating investment, helping to restore confidence and get the long-awaited recovery going.
Mr. Michaelson is co-founder of Imperium Partners Group, LLC, an investment manager based in New York City.
4).Gibbs stands by remarks on liberals — sort of
By JENNIFER LOVEN
White House press secretary Robert Gibbs said Wednesday he might have said things differently when he lashed out at liberals he called the "professional left" and suggested some of them should be drug tested.
But he told his daily White house briefing that he's certainly not leaving his job over the remark, as at least one Democratic congressman has suggested.
And he stuck to his line that President Barack Obama has accomplished or made great strides on key goals and promises despite criticism from some liberals that he has not done enough.
Gibbs found himself in hot water with some liberals after his remarks in an interview with "The Hill" newspaper. The spokesman said that liberals who likened Obama to former President George W. Bush on many policies should be "drug tested."
One Democratic congressman, Minnesota's Keith Ellison, suggested Gibbs resign.
Asked if he regretted his choice of words, Gibbs said, "many times I could have said thing slightly differently."
But, he added with a chuckle, "There's no truth to the rumor that I've added an inflatable exit to my office."
It was a reference to JetBlue flight attendant Steven Slater, who became angry at a passenger, cursed the passenger out over the plane's loudspeaker on Monday and then slid down the inflatable emergency slide to the tarmac at New York's Kennedy Airport.
Gibbs said he hasn't talked to Obama directly about his choice of words, which he called "born out of frustration."
He said that many of Obama's campaign promises, led by the sweeping health care overhaul, have been brought to fruition, and suggested that "those are accomplishments that we all should be proud of, regardless of whether it encompasses 100 percent of what we had wanted in the beginning."
In the interview in which he dubbed some liberals the "professional left," Gibbs contended that some progressives critical of Obama wouldn't be satisfied until the Pentagon was eliminated and Canadian-style health care ushered into the U.S. Some of them wouldn't even be happy if anti-war congressman Dennis Kucinich were president, according to Gibbs.
Asked if he had put his foot in his mouth or had said something he meant, Gibbs said: "I think I have both my feet firmly planted on the floor and nothing in my mouth to speak of." It was the first time he has commented on the controversy.
-------------------------------------------------------------------------------------5)USS Truman posted opposite Hormuz as Iranian threats spiral
To meet increasingly defiant Iranian threats to US regional military forces, Washington has detached the USS Truman carrier from support duty for Afghanistan in the Arabian Sea and reassigned it to Dubai opposite the Gulf of Oman and the Straits of Hormuz with thousands of marines aboard.
Reporting this, sources note the possible Iranian submarine attack on a Japanese oil supertanker last month near Hormuz underlined the urgency of heightened security for keeping the vital straits open.
Tuesday, Aug. 10, Rear Admiral Ali Fadavi, commander of the Iranian Revolutionary Guards Navy (which is Iran's only real naval force), remarked: "Aircraft Carrier USS Truman is currently at Jebel Ali" - 35 kilometers southwest of Dubai - "and will quickly leave the region."
Speaking to reporters at the Bandar Abbas naval base, the admiral announced the addition of twelve torpedo and missile cruisers to the IRGC Navy and the purchase of a British Bladerunner speedboat. "What worries the Americans is that we have equipped (the speedboat) with military gear," he said.
Iranian sources note Tehran keeps track of - and responds instantly with fleet deployments of its own - to every US naval movement in a broad radius from its shores - from the Red Sea in the North, to the Gulfs of Aden and Oman in the East, the Horn of Africa in the west and the southern approaches to the Indian Ocean.
By announcing Iran had equipped the speedboats with military gear added, Fadavi unveiled Iran's counter-threat to US air carriers in general and the USS Truman in particular. Our military sources report that the souped-up Bladerunners have a speed of 61/5 MPH. The Russian-made Shkval torpedoes they carry travel up to 360 knots per hour, the fastest of any comparable torpedo in service today, a speed which defies radar detection.
Two days earlier, on Aug. 8, Iran launched four Ghadir-type mini-submarines from the same base at Bandar Abbas.
The USS Truman Strike force carries 6,000 marines and sailors and Carrier Wing Three consisting of seven Battle Axe squadrons. It leads a flotilla of four more vessels: the guided missile cruiser USS Normandy, the guided missile destroyer USSWinston S. Churchill, the USS Oscar Austin destroyer and the guided missile destroyer USS Ross.
Another carrier, the USS Peleliu and its marine force are in the Arabian Sea waiting for permission to enter Karachi port and render aid to the millions of flood-stricken Pakistanis. The USS Nassau is cruising in the Gulf Aden.
In a bid to further dramatize Iran's readiness for war, IRGC Deputy Chief Gen. Hossein Kan'ani Moghadam announced Tuesday, Aug. 10: "The mass graves that were used for burying Saddam's soldiers [in the Iran-Iraq war of the 1980s] have now been prepared for US soldiers - and this is the reason for digging a large number of graves."
The Iranian media ran this statement as a headline with large photos of the fresh graves.
Military sources report Tehran is also flexing its muscles against the United States in Lebanon. After the Lebanese army's Aug. 3 clash with Israel, the Iranian ambassador called on the Lebanese chief of staff and offered Tehran's support for Beirut. He also proposed Iranian military assistance to take the place of the American hardware which US Congress proposes to cut off after the Lebanese army instigated the clash.
The Iranian diplomat proposed invoking the 2008 Iranian-Lebanese military accord which provides for Iranian arms, including heavy weapons, to be supplied to Lebanon together with Iranian military instructors.
This proposition was dismissed by US State Department spokesman Philip Crowley when he said Tuesday: "Iran's activities compromise Lebanese sovereignty."
Stepping up the pressure on Beirut to abandon its pro-Western orientation, Iranian president Mahmoud Ahmadinejad has announced he will pay a visit Beirut after Ramadan (which began Tuesday night, Aug, 10 and runs for 30 days).
------------------------------------------------------------------------------------6)In search of real leaders
By Sima Kadmon
On Wednesday, the defense minister gave us a brief leadership lesson. He told the Turkel Committee that the political leadership determines the “what,” while the military leadership decided on the “how.” But now we’re asking: What about the “who”?
Is there someone, for heaven’s sake, in our political establishment who would once and for all assume responsibility without saying one thing for the protocol and another thing for public opinion? Someone who would not declare that he is responsible yet a moment later shift the responsibility elsewhere?
When will we see someone who says: It’s me. It wasn’t the army, it wasn’t the forum of top seven government ministers, and it wasn’t the government. I’m responsible for the mistake, for the failure, for the defeat, for the needless killing, for the screw-up. Someone who would say: I was wrong, I will learn the lessons, I will implement the conclusions, and I will fix the flaws.
However, everyone around here assumes overall responsibility, yet then rushes to shift the burden to someone else. In that respect, there is no difference between what Barak did Wednesday and what Netanyahu did Tuesday, with one exception: Barak assumed overall responsibility before the committee, for the protocol, while Netanyahu assumed overall responsibility outside the room, in the hallways.
Yet in the final analysis, none of them truly assumed responsibility. Each one of them said: I’m responsible but Barak, or the army, are at fault.
It would be enough to look at the Rashomon-style performance we’ve seen in the past two days before the committee in order to look away in shame: After the prime minister admitted Tuesday that top government ministers only discussed the media and PR effect of the operation, Barak arrived Wednesday and spoke of a lengthy, in-depth discussion where “ministers without portfolio yet with much brains” asked questions.
God help us all
So we have a question too: Excuse me, were these two figures, Netanyahu and Barak, present at the same session? Are they members of the same ministerial forum? And really, do they in fact live in the same country? What’s going on here?
These people granted the committee a pathetic mandate to draft a report that is not supposed to threaten anyone, yet here they are enlisting the services of top-notch lawyers, withdrawing into their offices, performing endless simulations, and ultimately performing a saber dance.
Now, the questions no longer focus on the decision-making process, but rather, on who told the truth to the committee and who manipulated the truth in a convenient manner.
What was revealed to us in the probe’s testimonies is a PM who cannot be responsible because he was abroad, a defense minister who claims to be “Mr. Security” but whose job – as he explained Wednesday – is to determine the “what” and not the “how,” and a group of seven ministers, including two former army chiefs, said to possess incredible skill but sitting there like Muppets and engaging in a discussion about PR.
By the way, if this was indeed the case and the ministers only dealt with the PR angle, how could it be that the operation’s greatest failure was on the public relations front?
What will ultimately determine where the truth lies among the various versions are the minutes of that miserable discussion held by the top seven ministers. Only then would we be able to see the weight given there to the intelligence briefing, the attention given to the army chief’s words regarding risks versus chances, and which subject participants focused on.
Yet as to what will be revealed in the process, God help us all, because there’s simply nobody else that could help us out there.