When In Trouble Travel - Then Get In More Trouble?

Time for a little humor: A fellow was stopped by the police at midnight and was asked where he was going. “I’m on the way to listen to a lecture about the effects of alcohol abuse on the human body.” The policeman asked him, “Really? And who’s going to give a lecture at this time of night?” ... "my wife."
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Republicans need to accomplish more than holding hearings on the Obama Administration's abuses but those they do should prove quite revealing. (See 1 below.)
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2012 and what else could be in store for Democrats. (See 2 below.)
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Bernanke taken to task. Issuing more balloons of debt is not the solution to getting people back to work. (See 3 and 3a below.)

No we are not in declne we are at the crossroads according to David Brooks.

I agree with the young State Department lady and have previously written that if we play our cards right we can remain a powerful nation among other rising giants just no longer the sole dominant one.

What it is going to take is political discipline that is fiscally responsible, policies that unburden our productivity along with tax policies that are sane and equitable. A tall order but possible once we rid ourselves of Obama type ideological, populist thinking.(See 3b below.)
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In the Middle East relationships run hot and cold. Have matters cooled between Syria and Iran? If so are they permanent or just temporary? (See 4 below.)
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Obama interjected construction in Israel into the peace negotiations. An issue that had never been a problem before but now Obama is stuck with having given Abbas a wedge to continue on his own path of non-recognition of Israel's sovereign right to build and house its population on land it will retain.

Does Obama remain a conflicted man based on his own diaspora type childhood? (See 5 and 5a below.)
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What say you Yeminis regarding al-Awlaki? (See 6 below.)
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Clueless? Do those who voted not have a grasp on matters or do those that lost not have a grasp? You decide. (See 7 below.)
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Dick
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1)Rep. Issa Plans Hundreds of Hearings

President Barack Obama may have implemented the most sweeping legislative agenda since LBJ, but that agenda is being challenged. Rep. Darrell Issa, R-Cal., the likely new chairman of the House Committee on Oversight and Government Reform plans to broaden his own committee’s agenda, including hundreds of hearings and investigations of the bank bailout, the fiscal stimulus package and possibly healthcare reform, Politico reports.

The conservative Republican says he wants each of his seven subcommittees to hold “one or two hearings each week. I want seven hearings a week, times 40 weeks.”

Issa also plans to name aggressive conservative Reps. Jason Chaffetz of Utah, Patrick McHenry of North Carolina and Jim Jordan of Ohio to chair some of his subcommittees. And he intends to refer some inquiries to other committees, thereby enlisting other chairmen in the cause too.
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2)Bad news Democrats — 2012 could be worse than 2010
By CHARLES BABINGTON

Last week's election was bad for Democrats. The next one could be worse. Senate Democrats running in 2012 will be trying to hold their jobs in states where Republicans just scored major congressional and gubernatorial victories — Florida, Pennsylvania, Ohio, Michigan, Wisconsin, New Mexico and Virginia.

The Democrats' problems don't end with senators.

President Barack Obama carried those states in 2008, and he will need most of them to win re-election in two years. But this time they all will have Republican governors. These GOP governors can try to inhibit the president's policies and campaign operations. They also can help steer next year's once-a-decade House redistricting process in the GOP's favor.

Moreover, Democrats must defend Senate seats in hotly contested Missouri, and in four states that Obama has little chance of winning, assuming he even tries: North Dakota, Nebraska, West Virginia and Montana.

"The 2012 Senate landscape shows a daunting picture for the Democrats," said Sen. John Cornyn, R-Texas, chairman of the GOP's Senate campaign committee. "They're not only defending twice as many seats as Republicans, but a number of them are in states where the Obama-Reid agenda is deeply unpopular."

Harry Reid of Nevada is the Senate majority leader.

The 2012 Senate map is much kinder to Republicans, who must defend 10 seats to the Democrats' 23. Except for Republican Sen. Scott Brown, who will fight an uphill re-election battle in Massachusetts, the GOP probably will be favored to keep the Senate seats it now holds.

Of course, countless things can happen between now and the next election, and Democrats might do extremely well in 2012. Obama could bounce back from midterm setbacks just as President Bill Clinton did in 1996, when he easily won re-election after Democrats lost the House and Senate two years earlier. The slow economic recovery could quicken, with a rise in employment.

Obama's spot at the top of the ticket also could help Democratic candidates spur turnout among liberals, minorities and young voters. But it might hurt candidates in states where Obama appears unpopular, such as West Virginia. Democratic Gov. Joe Manchin won a tough Senate race there last week to succeed the late Robert C. Byrd, but he must seek a full six-year term in 2012.

Democrats will try to win back some of the 60 House seats they lost to Republicans last week, but several factors will work against them. Republicans won gubernatorial and state legislative races in dozens of states. That will give them total or substantial control of the often partisan redrawing of House districts that will occur next year, following the latest U.S. Census. It's likely to result in several new GOP-leaning districts in states such as Texas at the expense of Democratic-leaning districts in the Rust Belt.

Democrats may find it especially hard to win back Southern seats lost last week by white Democrats, who are becoming almost extinct in much of the former Confederacy. And if Speaker Nancy Pelosi remains her party's House leader, Republicans will tell voters that Democrats did not learn their lesson from the 2010 election and need more convincing.

In the new Congress in January, Democrats will hold a 53-47 edge in the Senate. A mere handful of losses in the next election would put Republicans in control.

Democratic spokesman Eric Schultz said it's too early to count anyone out. "Republican overconfidence ran deep this cycle, too," he said, "but we proved that strong candidates running aggressive campaigns can beat expectations."

Still, an early state-by-state look at 2012 races shows the magnitude of Democrats' challenges.

In Pennsylvania, Democratic Sen. Bob Casey will seek a second term in a state that just elected Republicans to replace Democrats for governor, senator and five House seats. Sen. Herb Kohl of Wisconsin, 74, will run or retire in a state that just ousted his Democratic colleague, Sen. Russ Feingold, and switched the governor's office and both legislative chambers from Democratic control to Republican.

Florida Sen. Bill Nelson will face voters who elected a Republican governor and kept the other U.S. Senate seat in GOP hands. The same thing happened in Ohio, where Sen. Sherrod Brown will seek a second term. Obama won both those states in 2008, and they will be fiercely contested again.

Sen. Jon Tester of Montana, who narrowly won his first term in 2006, will run again in a state that has gone Republican in all but two presidential elections since 1948.

In Nebraska, Democratic Sen. Ben Nelson likely will seek a third term in a state that Obama lost by 15 percentage points. Nelson, perhaps the Senate's most conservative Democrat, caught a break when GOP Gov. Dave Heineman said he would not run for Senate. But another potentially strong challenger, Nebraska Attorney General Jon Bruning, may jump in.

Democratic Sens. Jim Webb of Virginia and Claire McCaskill of Missouri could face rematches in their bids for a second term in 2012. Republicans scored impressive victories in both those states last week.

Former Virginia Gov. and Sen. George Allen, whom Webb narrowly beat four years ago, might run again. The same goes for former Sen. Jim Talent of Missouri, who lost to McCaskill in a close contest.

Other Democratic senators facing re-election in states that just gave big victories to Republicans include Debbie Stabenow of Michigan and Jeff Bingaman of New Mexico.

Few states are more daunting for Democrats than North Dakota, which last voted for a Democratic presidential nominee in 1964. Nonetheless, Democrat Kent Conrad has won a remarkable five Senate elections there, and presumably will try again in 2012. He's lucky that popular GOP Gov. John Hoeven just grabbed the open seat being vacated by Democratic Sen. Byron Dorgan. But another viable Republican might step up.

Not all the problems fall on Democrats. In Maine, centrist Republican Sen. Olympia Snowe has proven a savvy campaigner. But tea party activists just elevated Paul LePage to the governor's office, and the libertarian-leaning conservatives may try to knock off Snowe in the 2012 Republican primary.

In Nevada, a toss-up state in recent elections, Republican Sen. John Ensign is dogged by a staff-and-sex scandal. Re-election may prove tough for him, and Republicans might seek another nominee.

Perhaps no Senate contest will inspire Democrats more than Massachusetts, where they are burning to take back the seat long held by liberal hero Edward M. Kennedy. The state leans heavily Democratic. But Brown stunned the political establishment in the January special election, and it's possible he has more magic up his Republican sleeve.
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3)Bernanke's Cowardice Has Sealed Our Fate
By Monty Pelerin

The day after the election, the Federal Reserve launched QE2, the second round of Quantitative Easing. This public relations euphemism attempts to hide the fact that the Fed is "printing money" (the Fed actually does it electronically these days). "Cheating, debasing, and inflating," as in stealing from the public, is a more accurate description.


Bernanke indicated that from 600 to 850 billion additional dollars would be created. To put this in perspective, the TARP package was in this range. The total Federal Reserve balance sheet was $829 billion at the end of 2004 and only $869 billion in August 2007. At the end of 2009, it had ballooned to over $2,200 billion. This announcement means it is headed to $3,000 billion (3 trillion).


Ben Bernanke weakly defended his action with the following justifications:

•Further support to the economy is needed.
•Easier financial conditions will promote economic growth.
•Higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending.

The first two statements are true as stated, but unlikely to be affected by additional QE. The third is partially true, although it is unclear that Bernanke's action will raise stock prices. Furthermore, empirical data is not supportive of the alleged relationship between stock prices and spending (see the Kass reference below).


Many economists and analysts believe that the Fed actions will not help. Several believe they will actually make conditions worse (two examples are Doug Kass and Pimco's El Erian).


The Real Reason for QE2


Mr. Bernanke's justification for committing nearly another trillion dollars does not meet the "smell" test. In prior life, Professor Bernanke would flunk an Econ 101 student for such weak justification (of course, we know no one really gets an F at Princeton, no matter how deserved).



Mr. Bernanke's performance was a charade meant to hide the fact that the government is now illiquid! Mr. Bernanke instituted QE2 because the Federal Government has reached the point where it cannot pay its bills.


If the Fed does not buy government bonds (print money), checks will stop for programs like Social Security, Medicare and Medicaid reimbursements, military pay, etc.


The Madoff Model of government just ended. There are no longer enough bond buyers or taxpayers to pay for the profligate spending of the US government.


For more than a decade, responsible economists and analysts warned how this situation had to end. That point has apparently just been reached as a result of some of these reasons:


•We are increasingly viewed overseas as a profligate, fiscally irresponsible country with no willingness to change.
•Our debt levels have become dangerously high, raising the probability of sovereign default.
•Our annual deficit is three to four times larger than ever before, and it looks like there is no political will to address it. Interest rates are too low to compensate for the perceived risk.
•Foreign countries that supported us are now either unwilling or unable to purchase our debt.
Solving Insolvency


The root cause of the liquidity problem is insolvency. Insolvency is a condition where eventually, obligations cannot be met. Illiquidity then results. QE2 provides liquidity but does nothing to solve the insolvency issue.


Unless the insolvency problem is solved, illiquidity will continue. From a mathematical standpoint, it is possible to solve the insolvency problem. From a practical or political standpoint, it is likely impossible.


Our funded federal debt is almost 100% of GDP. Our unfunded social obligations are about another $100 trillion. The total net worth of the country is about $55 trillion. Government has promised benefits twice what everything in the country is worth. To understand the math, see "Spiraling to Bankruptcy."



Laurence Kotlikoff referred to a recent International Monetary Fund assessment of the U.S. financial condition:


... the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: "The U.S. fiscal gap associated with today's federal fiscal policy is huge for plausible discount rates." It adds that "closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP."


The government would have to double every tax it collects (including payroll taxes) to run 5% surpluses for decades in order to bring government obligations into manageable range. Such tax increases would plunge the U.S. and probably the world into an economic Dark Age.


Alternatively, current government spending could be cut by about 50%. Managing spending forward so that a 5% surplus is maintained would also work.


Bernanke's Morton's Fork


Mr. Bernanke was faced with two choices, neither of which were good. He could have refused to initiate another round of QE, which would have forced the government to make tough decisions. Such action might have put the economy into another Great Depression. He likely would have lost his job and been blamed for any economic difficulties that followed.


He chose the other option -- provide the needed funds. As such, he chose to be the Enabler-in-Chief, reinforcing the out-of-control government fiscal policies. This choice likely enabled him to keep his job (for the time being) and made him appear to be the White Knight responsive to economic needs.


Unfortunately for the country, his choice makes matters worse -- much worse.


The Road Ahead


With QE2, the government will be able to pay its bills. If the shortfall were temporary, Bernanke's actions might be considered prudent. Of course, if the shortfall were temporary, the government would be able to borrow in the marketplace.


Without a solution to spending excesses and social commitments that cannot be met, there is no end to our shortfalls. Welcome to QE2, soon to be followed by QE3, QE4...and hyperinflation.


QE2 is just another step toward "banana republic" status. We are on the same road traveled by Argentina, Brazil, Zimbabwe, Weimar Germany, and many others who destroyed their currencies.


These countries did not intend for that result to happen. Each step was justified based on the expediency of keeping the government going. As Hayek pointed out, "I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments."


In every case, including our own, the government had already failed. Its attempt to survive made matters much worse for its citizens.


QE2 may only represent the first step, but its effects alone are apt to be profound. Pimco's Bill Gross anticipates it will produce a 20% decline in the value of the dollar. If you were China or Japan, would you want to buy Treasury Bonds? Would you continue to hold dollar-denominated assets? These types of considerations trigger currency runs.


Mr. Bernanke has deferred the day of reckoning. His action will not prevent government collapse -- it will ensure it, along with collapses in the currency, economy, and likely society itself. This little man, unelected and accountable to no one, has just sentenced the country to an Economic Apocalypse.


Milton Friedman's concern seems especially appropriate:


The power to determine the quantity of money ... is too important, too pervasive, to be exercised by a few people, however public-spirited, if there is any feasible alternative. There is no need for such arbitrary power ... Any system which gives so much power and so much discretion to a few men, [so] that mistakes - excusable or not - can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic - this is the key political argument against an independent central bank.


How Will This End?


There is no pleasant ending. Political activity over the past fifty years guaranteed that. As Ludwig von Mises observed, "Credit expansion can bring about a temporary boom. But such a fictitious prosperity must end in a general depression of trade, a slump."



The best solution is for Mr. Bernanke to cease and desist his QE policy. That would require the political class to face its problems. It would require a massive rollback of the welfare state and government. It would require resizing government to a level that productive citizens would support. Transitional hardships would occur, including civil unrest and possibly a depression.


The worst solution is the one that Mr. Bernanke has selected. If he stays on this course, fiat money will become worthless. So will Social Security checks, because they will have no purchasing power. All fixed income and savings will be wiped out. The middle class will be financially destroyed.


Markets will cease to function except on a barter system. Food and other necessities will be in short supply, possibly to the extent of health risks developing. Unimaginable civil unrest is likely.


A Greater Depression is assured. Unlike the first Great Depression, citizens would be without any financial wherewithal. Their savings and fixed income will have been stolen from them via hyperinflation. In short, it would be the worst economic hell imaginable.


Mr. Bernanke was unwilling to tell you what is happening. His action has moved us into the eye of a massive storm. Do not be lulled into complacency, for as von Mises stated, "A fiat-money inflation can be carried on only as long as the masses do not become aware of the fact that the government is committed to such a policy."


Now you know, and others will pick up on this quickly. Make like the political elite and protect yourselves from the Category Six economic hurricane that Mr. Bernanke is stoking.


The history of government management of money has, except for a few short happy periods, been one of incessant fraud and deception.
- Friedrich Hayek


3a)Is the American Dream Over?
By Steve McCann

A major topic of conversation within the corridors of power in Europe and Asia is the decline and potential end of the United States as a major global economic power. This is in part a reaction to the desperate and foolhardy monetary policies of the Federal Reserve, trying as they are to mitigate the effect of enormous national debt and a restructured economy bequeathed to the American people by the "progressives" in the governing class over the past fifty years. But it is also a realization of what will happen to the global economic structure if the United States does not regain its previous world standing.


Recently, Der Speigel in Germany ran a six-part article entitled "Is the American Dream Over?" As expected for a left-wing publication, there is the obligatory demonization of conservatives and the Tea Party movement and a lack of acknowledgment that the policies advocated by the social democrats in Europe and the United States are the root cause of the nation's financial problems. From the article:


The United States is a confused and fearful country in 2010. American companies are still world-class, but today Apple and Coca-Cola, Google and Microsoft are investing in Asia, where labor is cheap and markets are growing and hardly at all in the United States. Some 47% of Americans don't believe that the American Dream is realistic.


However, the essay does conclude that the American dream is over if the United States does not start producing products that are needed and become competitive in the world and domestic markets. Further, the U.S. must cease using the valuation of the dollar as a weapon to monetize its debt (which will ultimately bring down the global economy, with Europe and the America the hardest hit).


In an interview, Rolf Langhammer, Vice President of the Kiel Institute for the World Economy, when questioned on the issue of trade between China and the United States and the value of their respective currencies, said,


In many cases, companies that are based in the US can't survive on the global market because they don't have innovative products or the qualified workforce required to develop them. When China allowed the yuan to gradually appreciate by some 20% between 2005 and 2008; there were no signs that this helped US businesses on a global market. The crucial thing is that a country must be positioned with the range goods it wants to export. The US is still lagging far behind in that respect.


Yet the current policymakers in Washington, D.C. are focused on a schizophrenic economic policy of printing more dollars -- which threatens not only domestic inflation, but also a global currency war -- while continuing government spending on an unsustainable basis and suffocating businesses with higher taxes and new mandates and regulations.


The domestic and foreign consumption of goods and services produced in the United States is vital to reduce deficits, stabilize the dollar, and reset the U.S. economy. The overall structure of the economy must be addressed.


The service sector now accounts for over 81% of the U.S. Gross Domestic Product. An economy so dependent on services, which have no intrinsic uniqueness and comparatively low productivity, is highly susceptible to the vagaries of global and domestic economic factors. The rapid advancement in technology allows many of these services to be performed by fewer employees and, in some cases, in other countries with lower labor costs.


The statistics concerning the manufacturing sector of the U.S. economy are devastating. Per the Bureau of Labor Statistics, the percentage of workers employed in industry has declined from 21% of the workforce in 1980 to 9% in 2010. That represents a loss of nearly nine million jobs. The value of manufacturing shipments, inventories, and orders between the first nine months of 2010 and 2000 has declined 21.2% (adjusted for inflation).


Manufacturing's share of the U.S. economy stood at 11.9% in 2007. By comparison, manufacturing accounted for 16% of the economy in 1993 (a decline of over 25%). That trend is continuing. As a point of reference, the postwar peak was 28.3% in 1953. This same sector accounts for 23% of the German and 34% of the Chinese economy. Both countries are quickly recovering from the recent global financial crisis as compared to the stagnation the U.S. is experiencing.


This decline in the manufacturing base has also had a major impact on the massive trade deficit that has enriched other countries. Due to the lack of viable products produced in the United States and demanded by the American citizen, imports from other nations have taken up the slack. In 2008, U.S. manufacturers produced $912 billion worth of manufactured goods that were exported to other countries. These exports helped pay for somewhat more than half of the $1.5 trillion of manufactured imports U.S. consumers and producers consumed. This trend has been ongoing for over 25 years.


Unless and until there is a national policy established to re-industrialize the United States and reduce the size of government spending at all levels from the current 45% of the Gross Domestic Product back to the historical average of 34%, the naysayers from around the world will be justified in questioning the end of the American dream.


The steps necessary to restructure the economy and save the United States from the fate looming over the horizon are basic and achievable.


First, the American public must become aware of the true and potentially devastating nature of the nation's problems. Politicians must be willing to tell the unvarnished truth and articulate potential solutions which will require sacrifice by all citizens in order to get government spending under control.


Second, energy independence is essential. There is no viable "green" solution to our energy problem in the near future. Therefore, all geographic areas other than the extremely sensitive must immediately be open to exploration and development with suitable, albeit reasonable, environmental safeguards in place. Vast domestic natural gas and petroleum deposits are available to be exploited onshore and offshore, if regulatory and statutory hurdles are removed, and could generate huge numbers of good-paying jobs.


Third, the permitting process for industrial development, including a recognition that environmental protection has greatly improved over the past two decades, must be streamlined and given a strict timetable established by the federal government and the individual states.


Fourth, a reform of the product liability laws and the entire plaintiff/defendant relationship in court is a necessity.



Fifth, reduce or temporarily end the tax burden on corporate income derived from the production and sale of U.S. products.


Sixth, "buy American" can no longer be just a slogan, but a goal together with reducing the trade deficit by 75% through expanded exports and reduced imports.


Seventh, encourage business investment in research and development through tax credits and grants.


Eighth, assure the health of small businesses through permanent tax reductions and access to capital.


The American worker is still the most productive worker in the world and can compete with anyone. China, with a ticking time bomb of the growing expectations, both economic and political, within a massive population, should not be viewed as an invincible industrial adversary.


It is up to all Americans to continue the American dream. It can be done. It is in our DNA. We cannot allow those in Europe, whose own destiny may be that of becoming the world's largest outdoor museum celebrating its glorious past, to question our future.


3b)The Crossroads Nation
By DAVID BROOKS

Bill Clinton used to talk about building a bridge to the 21st century. President Obama talks about laying down a “new foundation.” But Clinton was always vague about what the land on the other side of that bridge was going to look like, and Obama is vague about what edifice is going to go on top of that foundation.


They are vague because nobody is clear about what sort of country America is going to be in 2030 or 2050. Nobody has quite defined America’s coming economic identity.

In thinking about this question, it probably helps to start at the beginning. Five hundred years ago, agriculture was the major economic activity. One hundred years ago, it was industrial production. Now, of course, we’re living in an information age. Innovation and creativity are the engines of economic growth.

Howard Gardner of Harvard once put together a composite picture of the extraordinarily creative person: She comes from a little place somewhat removed from the center of power and influence. As an adolescent, she feels herself outgrowing her own small circle. She moves to a metropolis and finds a group of people who share her passions and interests. She gets involved with a team to create something amazing.

Then, at some point, she finds her own problem, which is related to and yet different from the problems that concern others in her group. She breaks off and struggles and finally emerges with some new thing. She brings it back to her circle. It is tested, refined and improved.

The main point in this composite story is that creativity is not a solitary process. It happens within networks. It happens when talented people get together, when idea systems and mentalities merge.

Now imagine you are this creative person in the year 2010, 2025 or 2050. You are living in some small town in Ukraine or Kenya or some other place, foreign or domestic. You long to break out and go to a place where people are gathering to think about the things you are thinking about, creating the things you want to create.

If you are passionate about fashion, maybe you will go to Paris. If it’s engineering, maybe it’ll be Germany. But if you are passionate about many other spheres, I suspect you’ll want to be in America.

You’ll want to be in the U.S. because English has become the global language. You’ll want to come because American universities lead the world in research and draw many of the best minds from all corners of the earth.

You’ll want to be there because American institutions are relatively free from corruption. Intellectual property is protected. Huge venture capital funds already exist.

Moreover, the United States is a universal nation. There are already people there with connections all over the world. A nation of immigrants is more permeable than say, Chinese society.

You also observe that America hosts the right kind of networks — ones that are flexible and intense. Study after study suggests that America is one of those societies with high social trust. Americans build large, efficient organizations that are not bound by the circles of kinship and clan. Study after study finds that Americans are not hierarchical. American children are raised to challenge their parents. American underlings are relatively free to challenge their bosses. In this country you’re less likely to have to submit to authority.

From this story you can see that economic power in the 21st century is not going to look like economic power in the 20th century. The crucial fact about the new epoch is that creativity needs hubs. Information networks need junction points. The nation that can make itself the crossroads to the world will have tremendous economic and political power.

In 2009, Anne-Marie Slaughter, now director of policy planning at the State Department, wrote an essay for Foreign Affairs in which she laid out the logic of this new situation: “In a networked world, the issue is no longer relative power, but centrality in an increasingly dense global web.”

Slaughter’s essay was titled “America’s Edge.” That is apt. Americans are now in a depressed state of mind. As China and India rise, nearly two-thirds of Americans believe their nation is in decline.

In fact, the U.S. is well situated to be the crossroads nation. It is well situated to be the center of global networks and to nurture the right kinds of networks. Building that America means doing everything possible to thicken connections: finance research to attract scientists; improve infrastructure to ease travel; fix immigration to funnel talent; reform taxes to attract superstars; make study abroad a rite of passage for college students; take advantage of the millions of veterans who have served overseas.

The nation with the thickest and most expansive networks will define the age. There’s no reason to be pessimistic about that.
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4)ANALYSIS / Are relations between Syria and Iran cooling off?
New article in Asharq Al Awsat reveals Syria apparently was responsible for confiscating a large shipment of explosives that Iran was planning to send to Hezbollah.
By Zvi Bar'el

Are relations between Syria and Iran cooling off? Has Tehran overdone things in Damascus? Huda al-Husseini, a veteran Lebanese correspondent, has information that seems to point in this direction. In a long and detailed article published last week in the Saudi-owned and London-based newspaper Asharq Al Awsat, she explains that not only were senior Syrian officials far from enthusiastic about Hezbollah's grandiose performance for Mahmoud Ahmadinejad when the Iranian president visited Lebanon last month, but Syria also appears to have been responsible for confiscating a large shipment of explosives that Iran was planning to send to Hezbollah via Italy.

According to the article, a container holding seven tons of RDX explosives was confiscated from the deck of the cargo ship Finland in an Italian port on September 22. The ship belongs to MSC Mediterranean Shipping Company, a Swiss shipping line, and was on its way from Iran to Syria. The explosives, which had been sent by Iran's Revolutionary Guards, can be used as ammunition for M-302 missiles, which have a 150-kilometer range, and M-600 missiles, which have a range of 250 kilometers and carry 500-kilogram warheads. The discovery of the explosives was published at the time in the Italian press.

What is unusual about this revelation, according to Iranian opposition sources who intercepted the Revolutionary Guards' report about the confiscation, is that it was a Syrian citizen who told the Italian authorities about the illegal cargo. According to an investigation carried out on the demand of Hezbollah and the Revolutionary Guards' representatives in Lebanon, employees of the Syrian Defense Ministry were the ones to inform on Iran. It appears that this investigation and its findings were the reason for the urgent visit to Syria at that time by Haidar Moussawi, the head of Iranian intelligence.

Feelings of suspicion and discomfort are apparently developing among Syria, Iran and Hezbollah, and the cargo in Italy is only one part of that trend. Tehran and Damascus were able to trust each other so long as it was clear that the other was not planning to encroach on its sphere of influence. Just as Syria does not intervene publicly or ostentatiously in Iraqi affairs - an area considered to be under Iranian influence - so Damascus expects Tehran to refrain from intervening too crudely in Lebanese affairs, at least not in a manner that portrays Lebanon as an Iranian protectorate rather than a Syrian one. But Ahmadinejad's visit to Lebanon, the presence of Revolutionary Guards there, and the transfer of explosive materials from Iran to Syria in a way that puts Damascus under scrutiny by the committee examining sanctions against Iran, raise questions about the quality of relations between the two countries.

The September incident apparently caused heavy damage to the Revolutionary Guards' efforts to send weapons and explosives from Iran to Syria, since it exposed Iranian sources in European countries and the methods Iran had been using to disguise and ship illegal cargo. One possibility is that, as the Italian authorities apparently suspect, Iran may have used close connections with the Italian mafia in the smuggling attempt. This is bolstered by the fact that it was Italy's anti-mafia unit that uncovered the cargo.

The authors of the Revolutionary Guards report consequently recommended that illegal cargo no longer be sent by sea but rather on land, via Turkey, among other countries.

According to the Iranian sources quoted in the article, a team of Iranian experts went to Syria to study firsthand the means of ensuring secrecy at the missile facilities meant for Hezbollah. The Syrians are investigating how the information was leaked.

Hezbollah as bargaining chip

Syria would like to leave Hezbollah as a bargaining chip in negotiations with Saudi Arabia over the international committee looking into the murder of Rafik Hariri, the former Lebanese president assassinated in 2005, or as a reward for Israel in case of a peace agreement. But Iran has other plans. It would like Lebanon to become an Iranian protectorate, through Hezbollah.

Both Iran and Syria do have a mutual interest in preserving stability in Lebanon. Tehran doesn't want a civil war, which it fears could cause Iran to lose its foothold in Lebanon, and Damascus is interested in ensuring Hezbollah does not cause a war with Israel that could also lead to an attack on Syria.

If the report about the Syrian agents who revealed the presence of the Iranian explosives is true, this does not necessarily mean that the two countries are about to break off ties - but it is a Syrian show of strength of a different kind than we have seen until now. This would not be the first time that Syria and Iran have not seen eye to eye with one another's policies. And as Syrian President Bashar Assad said a few months ago, the fact that the two countries cooperate on certain issues does not necessarily mean that they necessarily like each other.

Informing the authorities of a third country about the presence of explosive material has far-reaching implications. It indicates the extent to which Assad is prepared to tolerate the conduct of Syria, and Hezbollah. It is also a strong hint about what Assad is expecting from Iran and Hezbollah in anticipation of the indictment in the Hariri assassination affair. Hezbollah and Syria will not cooperate with the international tribunal hearing the Hariri case, but neither will Assad permit Lebanon to be shattered. The question now is whether Iran will act in line with its rational interests, or assume that it is sufficiently strong in Lebanon to twist Syria's arm.


5a)In Indonesia, Obama Knocks Israel Settlements
By Scott Conroy

President Obama arrived in Indonesia on Tuesday and introduced First Lady Michelle Obama to the country where he lived from the ages of six to 10. He also reflected on the memory of his mother who raised him there.

Speaking at a press conference in Jakarta alongside Indonesian President Suslilo Bambang Yudhoyono, Obama said that he "barely recognized" the country's capital city.

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Scott Conroy RealClearPolitics
Barack Obama

After soaking in the poignant return to his old home, Obama weighed in on two international flash points thousands of miles away: the Middle East and China.

Asked whether the planned construction of new Israeli housing settlements in East Jerusalem might undermine his administration's Middle East peace efforts, Obama said that he had not been fully briefed on the latest developments on Israeli settlements but added a strong note of caution.

"This kind of activity is never helpful when it comes to peace negotiations," Obama said. "And I'm concerned that we're not seeing each side make the extra effort involved to get a breakthrough that could finally create a framework for a secure Israel living side and side -- side by side -- in peace with a sovereign Palestine."

Obama added that his administration would "keep working on it," since it was in the interest of Israelis, Palestinians and the rest of the word to achieve an agreement.

"But each of these incremental steps can end up breaking down trust between the parties," Obama added.

Obama also spoke about China in advance of his meeting with Chinese President Hu Jintao on Thursday at the G-20 economic summit in South Korea, as the controversy over accusations of Chinese currency manipulation continued to simmer.

"What we agreed to in previous meetings of the G-20 is that we need to establish a framework for more balanced growth; we have not yet achieved that balanced growth," Obama said without singling out China in particular. "You're seeing some countries run up very big surpluses and intervening significantly in the currency markets to maintain their advantage when it comes to their currency."

Obama added that it was "good for the United States" for China to continue to pursue its path of economic development, which has expanded the global market and lifted millions out of poverty. The president then added a caveat.

"We do want to make sure that everybody is operating within an international framework and sets of rules in which countries recognize their responsibilities to each other," Obama added. "That's true for the United States, that's true for China, that's true for Indonesia."

After the joint press conference, Obama was regaled at a state dinner, in which he commended Indonesia's president for honoring the memory of his mother and the anthropological research she conducted during her time living in the country.

"She believed that we all share common aspirations -- to live in dignity and security, to get an education, to provide for our families, to give our children a better future, to leave the world better than we found it," Obama said. "She also believed, by the way, in the importance of educating girls and empowering women, because she understood that when we provide education to young women, when we honor and respect women, that we are in fact developing the entire country."

On Wednesday morning, Obama will deliver a speech at the University of Indonesia in front of an expected crowd of thousands before taking off for South Korea.

In his speech, Obama will talk more extensively about his childhood memories of Indonesia and will expound upon his view of America's relationship with the Muslim world, building on many of the themes that he first spoke about in his June 2009 address at Cairo University in Egypt.
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6)Do Yemenis live in a Bizarro World --- or do we?
By Jeffrey Fleishman



"Is he a doctor? I don't think I know him."

Americans may regard the U.S.-born cleric with the beard and hard stare as a new face of terror, but when you mention al-Awlaki in the Yemeni capital, it's as if you've asked someone to solve a complicated bit of arithmetic. Eyes narrow, faces scrunch.

"I don't know who he is. I work all day and don't watch a lot of TV," said Ibrahim Abdulrab, standing over an ironing board with a pile of shirts at his feet.

The radical preacher is on the CIA's assassination list and is believed to be hiding with al-Qaida fighters in Yemen's mountainous tribal lands. He is implicated in a number of plots, including inspiring an Army psychiatrist who is charged with killing 13 people at Fort Hood, Texas, and the recent attempt to blow up aircraft with packages of concealed explosives.

Internet videos, website manifestos and pundit rhetoric are splicing al-Awlaki into the American consciousness. But he is largely unknown here or referred to as an apparition hiding in a distant crevice. Even his al-Qaida in the Arabian Peninsula is scoffed at by many as an invention, a ploy by Washington and Yemeni President Ali Abdullah Saleh to advance larger agendas.

Rumors dart like sparrows across this city, flitting through conversations, sermons and newsrooms. Perceptions are shaped by conjecture and thinly drawn asides. They highlight the ideological and emotional divides between the U.S. and the Middle East on matters ranging from drone strikes in Pakistan to the elusive characters and strange blueprints of global terrorism.

"Al-Qaida in Yemen? A myth," said Mohammed Asari, a university student dressed in a blue blazer and sitting on a motorcycle. "I haven't seen them. They're mentioned on the news, but I don't trust the news. It's full of liars."

He slipped on his sunglasses and rode away, just as another student, Isa Ahmed, strolled into an alley past rows of books for sale on blankets. "Al-Qaida is not real," he said. "They've been created for political reasons. We don't know what's going on or what exists and what doesn't."

In an electronics store, pecking away at a laptop on a slow morning before prayers, Khaled Farih offered a theory.

"Al-Qaida is an Israeli gang using Islam as a cover," he said. "They want to defame Islam through terrorist acts. Yemen has a lot of enemies and they're all looking for gaps to slip through and destroy us. Al-Qaida might also be the work of the secessionists who want to divide Yemen."

Many Yemenis believe that Saleh, a shrewd tribesman who has ridden atop this country's rambunctious politics for three decades, is inflating al-Qaida's strength as a ruse to attract Western aid. His government has attempted to link terrorist elements to an intensifying separatist movement in the south that analysts fear could ignite a civil war.

But nobody knows; figuring out reality here is like reading road signs in the fog. Besides, there are too many other problems: joblessness, corruption, malnutrition, human rights abuses, and questions like how a man such as Abdulrab — who charges about 24 cents for each shirt he irons — feeds his family.

Don't complain too loudly. The beggar at your elbow may be a spy. Interlopers are everywhere, listening, making phone calls. Or so it seems. Yemenis love intrigue, folding and unfolding possibilities, sketching scenarios to fit a confusing world beyond the old city's fortress walls.

But what of al-Awlaki? A Yemeni judge on Saturday ordered his "forcible arrest." But despite his website and eloquent missives, al-Awlaki, known for public relations savvy and quoting from the Quran and Charles Dickens, drew barely a hint of recognition from shopkeepers, waiters and computer engineers along Sana's streets and alleys.

"Never heard of him," said Adnan Lotef, who served flat bread and tin plates of beans at a cafe not far from men with paint rollers and shovels waiting on corners and hoping for a day's work.
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7)Clueless on a Shellacking
By Ruth Marcus

WASHINGTON -- The day after his shellacking, the bruised president offered a sober, tripartite analysis of voters' message. First, he said, voters are fed up with Washington partisanship and special-interest politics. Second, they feel insecure and uncertain, about their economic circumstances above all.

Sounds familiar so far, right? Except here's the next part, "The third thing they were saying ... is, 'There are things we expect government to do, but we don't think government can solve all the problems. And we don't want the Democrats telling us from Washington that they know what is right about everything.'"

That last pivot is what distinguishes -- you guessed it -- Bill Clinton 1994 from Barack Obama 2010. It's what worries me about the response of the shellackee in chief to the election results -- and, even more, the response of the soon-to-be-former House speaker, Nancy Pelosi. Their instincts have tended more to blaming the dogs for not understanding how good the food is for them, not accepting that it's time to tweak the recipe.

The president's self-diagnosis in his post-election news conference was dominated by the assessment that voters had simply failed to grasp -- and that his failure lay chiefly in explaining clearly enough -- why the administration took the steps it did.

"What is absolutely true is that with all that stuff coming at folks fast and furious -- a recovery package, what we had to do with respect to the banks, what we had to do with respect to the auto companies -- I think people started looking at all this and it felt as if government was getting much more intrusive into people's lives than they were accustomed to," Obama said. "We thought it was necessary, but I'm sympathetic to folks who looked at it and said this is looking like potential overreach."

If only the poor dears had a better grasp.

I write this from a perspective of sympathy with Obama's aims and overall support for his performance over the last two years. But Obama's dismissive analysis omits the non-emergency choices he made -- primarily to press for, and in the end, muscle through the passage of health care reform -- and the ensuing discomfort of voters.

Discomfort that is entirely understandable, even to those of us who supported health care reform.

Clinton campaigned as a different kind of Democrat for whom reinvented, and smaller, government was always part of the agenda. The health care debate interrupted that narrative, and helped set the stage for his midterm losses, but it was set to the background music of a reinvented, smaller government.

In contrast, Obama campaigned, by his own assessment, as a "Rorschach test" Democrat: People saw in his candidacy what they chose to perceive. This deliberate ambiguity -- traditional big-government liberal or post-partisan pragmatist -- helped Obama finesse Democratic Party divides and attract independents during the campaign.

When he began to sketch in the ideological blanks, with cap-and-trade, health care, the auto bailout, et al., voters had no reason to distrust their own perceptions of intrusive government. The administration offered no counternarrative to suggest that this new era of big government had any limits.

As the Brookings Institution's William Galston observes in a post-election analysis, "Obama's agenda required a significant expansion of the scope, power, and cost of the federal government" at a time of record low trust in government. Despite the risk that this mistrust would limit public "tolerance for bold initiatives, he refused to trim his sails, in effect assuming that his personal credibility would outweigh the public's doubts about the competence and integrity of the government he led."

There are reasons to hope that Obama can adjust and reconnect. By the time of his "60Minutes" interview, he sounded more accepting of the notion that he needed not only to communicate better but also to govern more modestly. "The American people don't want to see some massive expansion of government," he said.

I have less confidence in Pelosi's adaptability. "No regrets," Pelosi told ABC's Diane Sawyer. "Should we have been talking about it more, and working on it less -- that's a question." But, she said, "Nine and a half percent unemployment is a very eclipsing event."

Hoo boy. Losing 60-plus seats is a very eclipsing event too. It would be nice to see some recognition that what we have here is not only a failure to communicate. Democrats are making a big mistake if they think their problem was as simple as not enough talking.
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