Saturday, December 31, 2011

Thought Tea Was a Stimulant - Guess Trash Behaviour Has Replaced it!

Perhaps when the budget is reduced to that of a single household it is easier to understand how stupid we are to allow politicians to do what they have been doing for eons and President Number 4 has simply accelerated the insanity.

There seems to be something wrong here. I thought tea was a stimulant. Guess trash behaviour has replaced it. (See 1 below.)
Closing Hormuz is a financial threat to world security but its cost to Iran would be even more devastating so perhaps they do intend to shoot themselves in the foot. If so they will no longer be able to walk because they will cripple themselves more than the world. (See 2 below.)
In Obama we trusted and in Obama we lost our freedom because he does not trust Americans and thus, we shall go down in flames according to his cousin? You decide. (See 3 below.)
Every once in a while I post something worth re-posting. I believe George Friedman's recent piece is just that. Long but very worth while.

What Friedman points out is that any effective American president must be willing to be ruthless when push comes to shove because we remain the dominant power not by choice but by a variety of factors, one of which is default. Therefore, when America's interests are challenged the president must respond but his response must also be rooted in a moral purpose. (See 4 below.)
Carolyn Glick challenges  'President Number Four's' foreign policy accomplishments. (See 5 below.)
Canada shows us the way but 'President Number Four' is either too smug to listen or too dumb to understand.

Does 'President Number Four'  intend to fall back on the racial politics of his Attorney General? (See 6 and 6a below.)
Happy Healthy New Year To You and Yours!
1)The Democrats have said that the Occupy Party was their answer to and "just like" the Tea Party. The data below conclusively indicates it was NOT "just like the TEA party." Amazingly, this listing only covers reported actions and events.

2)Iran raises anti-US threat level. Israel's C-of-S warns of potential for regional war

Thursday afternoon, Dec. 29, Tehran raised the pitch of its threats to the United States when Dep. Chief of the Revolutionary Guards Gen. Hossein Salami declared: "The United States is in no position to tell Tehran what to do in the Strait of Hormuz," adding, "Any threat will be responded [to] by threat… We will not relinquish our strategic moves in Iran's vital interests are undermined by any means."

The Iranian general spoke after the USS John C. Stennis aircraft carrier and its strike group passed through the Strait of Hormuz to the Sea of Oman and into the area where the big Iranian naval war game Veleyati 90 is taking place.

At around the same time, Israel's chief of staff Lt. Gen. Benny Gantz spoke of "the rising potential for a multi-arena event," i.e. a comprehensive armed conflict. Facing in several directions as we are "between terrorist organizations and Iran's progress toward a nuclear weapon… we can't afford to stay on the defensive and must come up with offensive measures," he said.

US and NATO task forces in the Persian Gulf have been placed on alert after US intelligence warned that Iran's Revolutionary Guards are preparing Iranian marine commandos to sow mines in the strategic Strait of Hormuz.

The new deployment consists of USS Combined Task Force 52 (CTF 52), which is trained and equipped for dismantling marine mines and NATO Maritime Mine Counter measures Group 2 (SNMCMG2). The American group is led by the USS Arden mine countermeasures ship; NATO's by the British HMS Pembroke minesweeper. Other vessels in the task forces are the Hunt-class destroyer HMS Middleton and the French mine warfare ships FS Croix du Sud and FS Var.

Also on the ready are several US Expeditionary Combat Readiness units of the US Fifth Fleet Bahrain command. Seventeen of these special marine units are attached to the Fifth Fleet as America's answer to the Iranian Navy's fast assault boats and marine units.

US military sources indicate the United States has countermeasures for sweeping the waterway of mines and making it safe for marine passage after no more than a 24-48 hour interruption.
At the same time, leading military and naval officials in Washington take Tehran's threats seriously. They don't buy the proposition advanced by various American pundits and analysts that Iran would never close the Strait of Hormuz, through which one third of the world's oil passes, because it would then bottle up its own energy exports. Those officials believe Tehran hopes the mines in the waterway will blow up passing oil tankers and other shipping. It doesn't have to be sealed hermetically to endanger international shipping; just a few mines here and there and an explosion would be enough to deter shippers and crews from risking their vessels.

As Adm. Habibollah Sayari commander of the Iranian Navy put it Wednesday, Dec. 28: "Shutting the strait for Iran's armed forces is really easy – or as we say in Iran, easier than drinking a glass of water." He went on to say: "But today, we don't need [to shut] the strait because we have the Sea of Oman under control and can control transit."

Middle East marine sources said the Iranian admiral's boast about the Sea of Oman was just hot air. For the big Iranian Velayati 90 sea exercise which began Saturday, America has deployed in that sea two large air and sea strike groups led by the USS John C. Stennis aircraft carrier and the USS Bataan aircraft amphibious ship.

And they are highly visible: Thursday morning, Dec. 29, Iranian Navy's Deputy Commander Rear Adm. Mahmoud Mousavi reported an Iranian Navy aircraft had shot footage and images of a US carrier spotted in an area where the Velayat 90 war games were being conducted – most probably the Stennis. Its presence, he said, demonstrated that Iran's naval forces were "precisely monitoring all moves by extra-regional powers" in the region.

Clearly, the US navy is very much on the spot in the Sea of Oman and other areas of the Iranian war game.

Middle East sources warn however that the repeated threats to close the Strait of Hormuz coming from Tehran this week and the framework of its naval exercise clearly point to the manner in which Iran intends to hit back for the tough new sanctions which the West plans to approve next month. The new round is expected to shear off 80 percent of the Islamic Republic's revenues.

The European Union's 27 member-states meet in January to approve an embargo on Iranian oil, with effect on 25 percent of Iran's energy exports. Next month, too, President Barack Obama plans to sign into law an amendment authorizing severe penalties for foreign banks trading with Iran's central bank, CBI, including the loss of links with American banks and financial institutions.
Tehran is expected to strike back hard by sowing mines in Hormuz and in the waters opposite the oil fields and terminals of fellow Persian Gulf oil producers, including Saudi Arabia.

It would not be the first time. In 1987 and 1988, sea mines were sown in the Persian Gulf for which Iran never took responsibility. It was generally seen as Tehran's payback for US and Gulf Emirates' backing for Iraq in its long war with the Islamic Republic. A number of oil tankers and American warships were struck by mines, including the USS Samuel B. Roberts. Such disasters can be averted today by means of the sophisticated countermeasures now in US hands.
3) WOLF: In Obama he trusts
Why our president fails
By Dr. Milton R. Wolf

There's something profoundly tragic about the failed presidency of Barack
Obama. He was supposed to be a new kind of president, a man who embodied
hope and would transcend petty politics and even race. Instead, we're left
with a downgraded America that is stagnating under the weight of its bloated
government. As tragic as that alone is, even this is but a mere symptom of
Mr. Obama's larger fundamental failure: He simply does not trust the
Americans who entrusted him with the presidency.

Most presidents, we believe, ascend to the Oval Office, but for the 44th
president, the reverse seems true. Whatever majesty the White House can
muster must rise to the grandiosity of Barack Obama. "We are the ones we
have been waiting for," said the man who writes autobiographies and later
would claim to control the rise of the oceans.

As recently as this month, the food-stamp president of 13 million unemployed
Americans declared himself the fourth-most-accomplished president in the
history of the United States, eclipsing, in his own mind, President Reagan
and even our nation's father, George Washington. That in only three years.
Barack the Magnificent won't allow trivialities like $15 trillion debts or
historic national credit downgrades dissuade him.

Mr. Obama may care deeply for America, but he believes in only one thing:
Barack Obama. And you are not Barack Obama.

Where once the American flag was hailed universally as the ultimate symbol
of freedom, we who live under it have slowly but surely surrendered our
liberties to an insatiable government. Consider our decline in just the past
two generations. Our grandfathers, who stood against evil and shed their
blood to stop it, never would have tolerated their own government becoming
so totalitarian that it would dictate to them what car they should drive,
what (if any) health insurance they should choose or even what light bulb
they should buy.

Has our generation been worthy of earlier Americans' sacrifices? Or have we
surrendered their hard-fought victories in return for false promises of a
big-government utopia that never materializes? Look no further than the
politicians we elect. We have chosen as our president a man who believes we
are unworthy, not of the previous generations' sacrifices, but rather
unworthy of freedom itself.

The sum total of Mr. Obama's political philosophy, the unifying theme of his
presidency, amounts to this: You cannot be trusted to live as a free

President Obama's first major legislative action, the failed $787 stimulus,
revealed his fundamental distrust of free Americans. A president who
actually trusts his people would stand aside as they freely chose how to
invest their capital and their labor. Mr. Obama, on the other hand, simply
doesn't believe you are smart enough to know what's best for you. He
commandeered nearly $1 trillion dollars from the taxpayers and redirected it
as he saw fit. That he squandered billions on crony boondoggles such as the
Solyndra solar-panel company or laughable efforts to measure the malt-liquor
habits of Buffalonians and the like is evidence merely of his incompetence.
That he trusted only himself to allocate taxpayers' money in the first place
- even if he had had the capacity to do so brilliantly - is evidence of a
much larger offense: This president distrusts his subjects.

Obamacare is a modern-day monument to government arrogance. So untrustworthy
are Americans that they cannot be allowed to decide for themselves whether
to purchase health insurance or, if so, how much. Likewise, physicians are
too untrustworthy to provide you with care without first consulting the
government's "best practices" guidelines. Obamacare would solve both.
Untrustworthy bankers would become angelic under the restrictions of
Dodd-Frank. Untrustworthy bloggers would fall in line under the Stop Online
Piracy Act. Untrustworthy manufacturers would create the only jobs worth
having under the dictates of the National Labor Relations Board. And
untrustworthy energy consumers would act responsibly only under the
restrictions of "cap and trade" or at least a dictatorial Environmental
Protection Agency.

For statists like Mr. Obama, no matter how bloated our government has
become, America is forever just one legislative act away from utopia, if
only those untrustworthy Americans would just get in line. The man who ran
on hope has instead embraced a tragic pessimism that views all free
Americans with disdain as either incompetent rubes in need of his salvation
or unrighteous villains in need of his rules. Either way, Mr. Obama embraces
a command-and-control government and rejects American freedom.

Mr. Obama's distrust of Americans is his fatal flaw, and Republicans would
be wise to exploit it fully. The GOP should resist the temptation simply to
become a cleverer version of autocrats who pull the same powerful levers of
government but in different directions. Instead, they should become the
party that embraces liberty.

If the 2012 election is between Republicans and Democrats or even between
conservatives and liberals, Republicans might win. But if the election is
instead between a bloated, ineffectual government that distrusts its
subjects and Americans who still yearn to breathe free, Republicans will
win. Only then will voters have a dramatic choice between a party that
trusts Americans to be free and a party that does not.

Dr. Milton R. Wolf, a Washington Times columnist, is a radiologist and
President Obama's cousin. He blogs at
4)The Unintended Empire
By George Friedman, STRATFOR

The American president is the most important political leader in the world. The reason is simple: he governs a nation whose economic and military policies shape the lives of people in every country on every continent. The president can and does order invasions, embargos, and sanctions. The economic policies he shapes will resonate in billions of lives, perhaps over many generations. During the next decade, who the president is and what he (or she) chooses to do will often affect the lives of non-Americans more than the decisions of their own governments.

This was driven home to me on the night of the most recent U.S. presidential election, when I tried to phone one of my staff in Brussels and reached her at a bar filled with Belgians celebrating Barack Obama's victory. I later found that such Obama parties had taken place in dozens of cities around the world. People everywhere seemed to feel that the outcome of the American election mattered greatly to them, and many appeared personally moved by Obama's rise to power.

Before the end of Obama's first year in office, five Norwegian politicians awarded him the Nobel Peace Prize, to the consternation of many who thought that he had not yet done anything to earn it. But according to the committee's chair, Obama had immediately and dramatically changed the world's perception of the United States, and this change alone merited the prize. George W. Bush had been hated because he was seen as an imperialist bully. Obama was being celebrated because he signaled that he would not be an imperialist bully.

From the Nobel Prize committee to the bars of Singapore and São Paolo, what was being unintentionally acknowledged was the uniqueness of the American presidency itself, as well as a new reality that Americans are reluctant to admit. The new American regime mattered so much to the Norwegians and to the Belgians and to the Poles and to the Chileans and to the billions of other people around the globe because the American president is now in the sometimes awkward (and never explicitly stated) role of global emperor, a reality that the world—and the president—will struggle with in the decade to come.

The American Emperor

The American president's unique status and influence are not derived from conquest, design, or divine ordination but ipso facto are the result of the United States being the only global military power in the world. The U.S. economy is also more than three times the size of the next largest sovereign economy. These realities give the United States power that is disproportionate to its population, to its size, or, for that matter, to what many might consider just or prudent. But the United States didn't intend to become an empire. This unintentional arrangement was a consequence of events, few of them under American control.

Certainly there was talk of empire before this. Between Manifest Destiny and the Spanish American War, the nineteenth century was filled with visions of empire that were remarkably modest compared to what has emerged. The empire I am talking about has little to do with those earlier thoughts. Indeed, my argument is that the latest version emerged without planning or intention.

From World War II through the end of the Cold War, the United States inched toward this preeminence, but preeminence did not arrive until 1991, when the Soviet Union collapsed, leaving the U.S. alone as a colossus without a counterweight.

In 1796, Washington made his farewell address and announced this principle: "The great rule of conduct for us in regard to foreign nations is in extending our commercial relations, to have with them as little political connection as possible." The United States had the option of standing apart from the world at that time. It was a small country, geographically isolated. Today, no matter how much the rest of the world might wish us to be less intrusive or how tempting the prospect might seem to Americans, it is simply impossible for a nation whose economy is so vast to have commercial relations without political entanglements or consequences. Washington's anti-political impulse befitted the anti-imperialist founder of the republic. Ironically, the extraordinary success of that republic made this vision impossible.

The American economy is like a whirlpool, drawing everything into its vortex, with imperceptible eddies that can devastate small countries or enrich them. When the U.S. economy is doing well, it is the engine driving the whole machine; when it sputters, the entire machine can break down. There is no single economy that affects the world as deeply or ties it together as effectively.

When we look at the world from the standpoint of exports and imports, it is striking how many countries depend on the United States for 5 or even 10 percent of their Gross Domestic Product, a tremendous amount of interdependence. While there are bilateral economic relations and even multilateral ones that do not include the United States, there are none that are unaffected by the United States. Everyone watches and waits to see what the United States will do. Everyone tries to shape American behavior, at least a little bit, in order to gain some advantage or avoid some disadvantage.

Historically, this degree of interdependence has bred friction and even war. In the nineteenth and early twentieth centuries, France and Germany feared each other's power, so each tried to shape the other's behavior. The result was that the two countries went to war with each other three times in seventy years. Prior to World War I, the English journalist (later a member of Parliament) Norman Angell wrote a widely read book called The Great Illusion, in which he demonstrated the high degree of economic interdependence in Europe and asserted that this made war impossible. Obviously, the two World Wars proved that that wasn't the case. Advocates for free trade continue to use this argument. Yet, as we will see, a high degree of global interdependence, with the United States at the center, actually increases—rather than diminishes—the danger of war.

That the world is no longer filled with relatively equal powers easily tempted into military adventures mitigates this danger somewhat. Certainly the dominance of American military power is such that no one country can hope to use main force to fundamentally redefine its relationship with the United States. At the same time, however, we can see that resistance to American power is substantial and that wars have been frequent since 1991.

While America's imperial power might degrade, power of this magnitude does not collapse quickly except through war. German, Japanese, French, and British power declined not because of debt but because of wars that devastated those countries' economies, producing debt as one of war's many by-products. The Great Depression, which swept the world in the 1920s and 1930s, had its roots in the devastation of the German economy as a result of World War I and the disruption of trade and financial relations that ultimately spread to encompass the world. Conversely, the great prosperity of the American alliance after 1950 resulted from the ­economic power that the United States built up—undamaged—during World War II.

Absent a major, devastating war, any realignment of international influence based on economics will be a process that takes generations, if it happens at all. China is said to be the coming power. Perhaps so. But the U.S. economy is 3.3 times larger than China's. China must sustain an extraordinarily high growth rate for a long time in order to close its gap with the United States. In 2009, the United States accounted for 22.5 percent of all foreign direct investment in the world, which, according to the United Nations Council on Trade and Development, makes it the world's single largest source of investment. China, by comparison, accounted for 4.4 percent.

The United States also may well be the largest borrower in the world, but that indebtedness does not reduce its ability to affect the international system. Whether it stops borrowing, increases borrowing, or decreases it, the American economy constantly shapes global markets. It is the power to shape that is important. Of course, it should also be remembered that every dollar the United States borrows, others lend. If the market is to be trusted, it is saying that lending to the United States, even at currently low interest rates, is a good move.

Many countries have impacts on other countries. What makes the United States an empire is the number of countries it affects, the intensity of the impact, and the number of people in those countries affected by these economic processes and decisions.

In recent years, for instance, Americans had a rising appetite for shrimp. This ripple in the U.S. market caused fish farmers in the Mekong Delta to adjust their production to meet the new demand. When the American economy declined in 2008, luxury foods like shrimp were the first to be cut back, a retrenchment that was felt as far away as those fish farms in the Mekong Delta. Following a similar pattern, the computer maker Dell built a large facility in Ireland, but when labor costs rose there, Dell shifted operations to Poland, even at a time when Ireland was under severe economic pressure. The United States is similarly shaped by other countries, as were Britain and Rome. But the United States is at the center of the web, not on the periphery, and its economy is augmented by its military. Add to that the technological advantage and we can see the structure of America's deep power.

Empires can be formal, with a clear structure of authority, but some can be more subtle and complex. The British controlled Egypt, but Britain's formal power was less than clear. The United States has the global reach to shape the course of many other countries, but because it refuses to think of itself as an imperial power, it has not created a formal, rational structure for managing the power that it clearly has.

The fact that the United States has faced reverses in the Middle East in no way undermines the argument that it is an empire, albeit an immature one. Failure and empire are not incompatible, and in the course of imperial growth and expansion, disasters are not infrequent. Britain lost most of its North American colonies to rebellion a century before the empire reached its apex. The Romans faced civil wars in recurring cycles.

While the core of U.S. power is economic—battered though it might seem at the moment—standing behind that economic power is its military might. The purpose of the American military is to prevent any nation aggrieved by U.S. economic influence, or any coalition of such nations, from using force to redress the conditions that put it (or them) at a disadvantage. Like Rome's legions, American troops are deployed preemptively around the world, simply because the most efficient way to use military power is to disrupt emerging powers before they can become even marginally threatening.

American military presence is substantially understated by any public measure. U.S. Special Operations teams operate covertly in many regions, notably Africa. Nor does it include training missions, technical support, and similar functions. Some U.S. troops are fighting wars, some are interdicting drugs, some are protecting their host countries from potential attacks, and some are using their host countries as staging areas in case American troops are needed in another country nearby. In some cases these troops help support Americans who are involved in governing the country, directly or indirectly. In other cases, the troops are simply present, without controlling anything. Troops based in the United States are here not to protect the homeland as much as to be available for what the military calls power projection. This means that they are ready to serve anywhere the president sees fit to deploy them.

As befits a global empire, the United States aligns its economic system and its military system to stand as the guarantor of the global economy. The United States simultaneously provides technologies and other goods and services to buy, an enormous market into which to sell, and armed forces to keep the sea-lanes open. If need be, it moves in to police unruly areas, but it does this not for the benefit of other countries but for itself. Ultimately, the power of the American economy and the distribution of American military force make alignment with the United States a necessity for many countries. It is this necessity that binds countries to the United States more tightly than any formal imperial system could hope to accomplish.

Empires, the unintended consequence of power accumulated for ends far removed from dreams of empire, are usually recognized long after they have emerged. As they become self-aware, they use their momentum to consciously expand, adding an ideology of imperialism—think of Pax Romana or the British "white man's burden"—to empire's reality. An empire gets writers like Virgil and poets like Rudyard Kipling after it is well established, not before. And, as in both Rome and Britain, the celebrants of American empire coexist with those who are appalled by it and who yearn for the earlier, more authentic days.

Rome and Britain were trapped in the world of empire but learned to celebrate the trap. The United States is still at the point where it refuses to see the empire that it has become, and whenever it senses the trappings of empire, it is repelled. But the time has come to acknowledge that the president of the United States manages an empire of unprecedented power and influence, even while it may be informal and undocumented. Only then can we formulate policies over the next decade that will allow us to properly manage the world we find ourselves in charge of.

Managing the Imperial Reality

Over the past twenty years, the United States has struggled to come to grips with the reverberations of being "last man standing" after the fall of the Soviet Union. The task of the president in the next decade is to move from being reactive to having a systematic method of managing the world that he dominates, a method that faces honestly and without flinching the realities of how the world operates. This means turning the American empire from undocumented disorder into an orderly system, a Pax Americana—not because this is the president's free choice, but precisely because he has no choice.

Bringing order to empire is a necessity because even though the United States is overwhelmingly powerful, it is far from omnipotent, and having singular power creates singular dangers. The United States was attacked on September 11, 2001, for example, precisely because of its unique power. The president's task is to manage that kind of power in a way that acknowledges the risks as well as the opportunities, then minimizes the risks and maximizes the benefits.

For those who are made squeamish by any talk of empire, much less talk of bringing order to imperial control, I would point out that the realities of geopolitics do not give presidents the luxury of exercising virtue in the way we think of it when applied to ordinary citizens. Two presidents who attempted to pursue virtue directly, Jimmy Carter and George W. Bush, failed spectacularly. Conversely, other presidents, such as Richard Nixon and John F. Kennedy, who were much more ruthless, failed because their actions were not directed at and unified by any overriding moral purpose.

In bringing order to empire, I propose that future presidents follow the example of three of our most strikingly effective leaders, men who managed to be utterly ruthless in executing a strategy that was nonetheless guided by moral principle. In these cases, moral ends did in fact justify means that were not only immoral but unconstitutional.

Abraham Lincoln preserved the Union and abolished slavery by initiating a concerted program of deception and by trampling on civil liberties. To maintain the loyalty of the border states, he never owned up to his intention to abolish slavery made clear in the great debates of 1858. Instead he dissembled, claiming that while he opposed the spread of slavery beyond the South, he had no intention of abolishing the right to own slaves in states where owning them was already legal.

But Lincoln did more than prevaricate. He suspended the right to habeas corpus throughout the country and authorized the arrest of pro-secession legislators in Maryland. He made no attempt to justify these actions, except to say that if Maryland and the other border states seceded, the war would be lost and the nation would be dismembered, leaving the Constitution meaningless.

Seventy-five years later, in the midst of another grave crisis for the nation, Franklin Roosevelt also did what needed to be done while lying to hide his actions from a public that was not yet ready to follow his lead. In the late 1930s, Congress and the public wanted to maintain strict neutrality as Europe prepared for war, but Roosevelt understood that the survival of democracy itself was at stake. He secretly arranged for the sale of arms to the French and made a commitment to Winston Churchill to use the U.S. Navy to protect merchant ships taking supplies to England—a clear violation of neutrality.

Like Lincoln, Roosevelt was motivated by moral purpose, which meant a moral vision for global strategy. He was offended by Nazi Germany, and he was dedicated to the concept of democracy. Yet to preserve American interests and institutions, he formed an alliance with Stalin's Soviet Union, a regime that in moral terms was every bit as depraved as the Nazis. At home he defied a Supreme Court ruling and authorized wiretapping without warrants as well as the interception and opening of mail. Yet his most egregious violation of civil liberties was to approve the detention and relocation of ethnic Japanese, regardless of their citizenship status. Roosevelt had no illusions about what he was doing. He was ruthlessly violating rules of decency in pursuit of moral necessity.

Ronald Reagan also pursued a ruthless path toward a moral purpose. His goal was destruction of what he called the evil empire of the Soviet Union, and he pursued it—in part by ramping up the arms race, which he knew the Soviets could not afford. He then went to elaborate and devious lengths to block Soviet support for national liberation movements in the Third World. He invaded Grenada in 1983 and supported insurgents fighting the Marxist government of Nicaragua. This led to the elaborate ruse of engaging Israel to sell arms to Iran in its war with Iraq and then funneling the profits to the Nicaraguan insurgents, as a way of bypassing a law specifically designed to prevent such intervention. We should also remember Reagan's active support for Muslim jihadists in Afghanistan fighting the Soviets. As with Roosevelt and Stalin, a future enemy can be useful to defeat a current one.

The decade ahead will not be a time of great moral crusades. Instead, it will be an era of process, a time in which the realities of the world as presented by facts on the ground will be incorporated more formally into our institutions.

During the past decade, the United States has waged a passionate crusade against terrorism. In the next decade, the need will be for less passion and for more meticulous adjustments in relations with countries such as Israel and Iran. The time also calls for the creation of alliance systems to include nations such as Poland and Turkey that have newly defined relations with the United States. This is the hard and detailed work of imperial strategy. Yet the president cannot afford the illusion that the world will simply accept the reality of overwhelming American hegemony, any more than he can afford to abandon the power. He can never forget that despite his quasi-imperial status, he is president of one country and not of the world.

That is why the one word he must never use is empire. The anti-imperial ethos of America's founding continues to undergird the country's political culture. Moreover, the pretense that power is distributed more evenly is useful, not just for other countries but for the United States as well. Even so, in the decade ahead, the informal reality of America's global empire must start to take on coherent form.

Because a president must not force the public to confront directly realities that it isn't ready to confront, he must become a master at managing illusions. Slavery could not have survived much beyond the 1860s, no matter how much the South wanted it to. World War II could not have been avoided, regardless of public leanings toward isolationism. Confrontation with the Soviet Union had to take place, even if the public was frightened by those crises. In each case, a strong president created a fabric of illusions to enable him to do what was necessary without causing a huge revolt from the public. In Reagan's case, when his weapons-dealing machinations came to light as "the Iran-contra affair," complete with congressional hearings and indictments and convictions for many of the participants, his well-maintained persona as a simpleminded fellow shielded his power and his image from the fallout. The goings-on in Israel, Iran, and Nicaragua were so complex that even his critics had trouble believing that he could have been responsible.

A Global Strategy of Regions

America's fundamental interests are the physical security of the United States and a relatively untrammeled international economic system. As we will see when we turn to the current state of the world economy, this by no means implies a free trade regime in the sense that free-market ideologues might think of it. It simply means an international system that permits the vast American economy to interact with most, if not all, of the world. Whatever the regulatory regime might be, the United States needs to buy and sell, lend and borrow, be invested in and invest, with a global reach.

One quarter of the world's economy can't flourish in isolation, nor can the consequences of interaction be confined to pure economics. The American economy is built on technological and organizational innovation, up to and including what the economist Joseph A. Schumpeter called "creative destruction": the process by which the economy continually destroys and rebuilds itself, largely through the advance of disruptive technologies.

When American economic culture touches other countries, those affected have the choice of adapting or being submerged. Computers, for example, along with the companies organized around them, have had profoundly disruptive consequences on cultural life throughout the world, from Bangalore to Ireland. American culture is comfortable with this kind of flux, whereas other cultures may not be. China has taken on the additional burden of trying to adapt to a market economy while retaining the political institutions of a Communist state. Germany and France have struggled to limit the American impact, to insulate themselves from what they call "Anglo-Saxon economics." The Russians reeled from their first unbuffered exposure to this force in the 1990s and sought to find their balance in the following decade.

In response to the American whirlpool, the world's attitude, not surprisingly, is often sullen and resistant, as countries try to take advantage of or evade the consequences. President Obama sensed this resistance and capitalized on it. Domestically, he addressed the American need to be admired and liked, while overseas he addressed the need for the United States to be more conciliatory and less overbearing.

While Obama identified the problem and tried to manage it, resistance to imperial power remains a problem without a permanent solution. This is because ultimately it derives not from the policies of the United States but from the inherent nature of imperial power.

The United States has been in this position of near hegemonic power for only twenty years. The first decade of this imperial period was a giddy fantasy in which the end of the Cold War was assumed to mean the end of war itself—a delusion that surfaces at the end of every major conflict. The first years of the new century were the decade in which the American people discovered that this was still a dangerous planet and the American president led a frantic effort to produce an ad hoc response. The years from 2011 to 2021 will be the decade in which the United States begins to learn how to manage the world's hostility.

Presidents in the coming decade must craft a strategy that acknowledges that the threats that resurfaced in the past ten years were not an aberration. Al Qaeda and terrorism were one such threat, but it was actually not the most serious threat that the United States faced. The president can and should speak of foreseeing an era in which these threats don't exist, but he must not believe his own rhetoric. To the contrary, he must gradually ease the country away from the idea that threats to imperial power will ever subside, then lead it to an understanding that these threats are the price Americans pay for the wealth and power they hold. All the same, he must plan and execute the strategy without necessarily admitting that it is there.

Facing no rival for global hegemony, the president must think of the world in terms of distinct regions, and in doing so set about creating regional balances of power, along with coalition partners and contingency plans for intervention. The strategic goal must be to prevent the emergence of any power that can challenge the United States in any given corner of the world.

Whereas Roosevelt and Reagan had the luxury of playing a single integrated global hand—vast but unitary—presidents in the decade ahead will be playing multiple hands at a highly fragmented table. The time when everything revolved around one or a few global threats is over. The balance of power in Europe is not intimately connected to that of Asia and is distinct from the balance of power that maintains the peace in Latin America. So even if the world isn't as dangerous to the United States as it was during World War II or the Cold War, it is far more complicated.

American foreign policy has already fragmented regionally, of course, as reflected in the series of regional commands under which our military forces are organized. Now it is necessary to openly recognize the same fragmentation in our strategic thinking and deal with it accordingly. We must recognize that there is no global alliance supporting the United States and that the U.S. has no special historical relationships with anyone. Another quote from Washington's farewell address is useful here: "The nation which indulges towards another a habitual hatred or a habitual fondness is in some degree a slave. It is a slave to its animosity or to its affection, either of which is sufficient to lead it astray from its duty and its interest." This means that NATO no longer has unique meaning for the United States outside of the European context and that Europe cannot be regarded as more important than any other part of the world. Nostalgia for "the special relationship" notwithstanding, the simple reality today is that Europe is not more important.

Even so, President Obama ran a campaign focused on the Europeans. His travels before the 2008 election symbolized that what he meant by multilateralism was recommitting the United States to Europe, consulting Europe on U.S. actions abroad, and accepting Europe's cautions (now that they have lost their empires, Europeans always speak in terms of caution). Obama's gestures succeeded. The Europeans were wildly enthusiastic, and many Americans were pleased to be liked again. Of course, the enthusiasm dissipated rapidly as the Europeans discovered that Obama was an American president after all, pursuing American ends.

All of which brings us to the president's challenge in the decade ahead: to conduct a ruthless, unsentimental foreign policy in a nation that still has unreasonable fantasies of being loved, or at least of being left alone. He must play to the public's sentimentality while moving policy beyond it.

An unsentimental foreign policy means that in the coming decade, the president must identify with a clear and cold eye the most dangerous enemies, then create coalitions to manage them. This unsentimental approach means breaking free of the entire Cold War system of alliances and institutions, including NATO, the International Monetary Fund, and the United Nations. These Cold War relics are all insufficiently flexible to deal with the diversity of today's world, which redefined itself in 1991, making the old institutions obsolete. Some may have continuing value, but only in the context of new institutions that must emerge. These need to be regional, serving the strategic interests of the United States under the following three principles:

1. To the extent possible, to enable the balance of power in the world and in each region to consume energies and divert threats from the United States.
2. To create alliances in which the United States maneuvers other countries into bearing the major burden of confrontation or conflict, supporting these countries with economic benefits, military technology, and promises of military intervention if required.
3. To use military intervention only as a last resort, when the balance of power breaks down and allies can no longer cope with the problem.

At the height of the British Empire, Lord Palmerston said, "It is a narrow policy to suppose that this country or that is to be marked out as the eternal ally or the perpetual enemy of England. We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow." This is the kind of policy the president will need to institutionalize in the coming decade.

Recognizing that the United States will generate resentment or hostility, he must harbor no illusions that he can simply persuade other nations to think better of us without surrendering interests that are essential to the United States. He must try to seduce these nations as much as possible with glittering promises, but in the end he must accept that efforts at seduction will eventually fail. Where he cannot fail is in his responsibility to guide the United States in a hostile world.
5)Obama's foreign policy failures have yet to explode, but when they do . . .
By Caroline B. Glick

At a minimum, forewarned is forearmed

In recent months, a curious argument has surfaced in favor of US President Barack Obama. His supporters argue that Obama's foreign policy has been a massive success. If he had as much freedom of action on domestic affairs as he has on foreign affairs, they argue, his achievements in all areas would be without peer.

Expressing this view, Karen Finney a former Democratic spokeswoman who often defends the party in the US media told the Huffington Post, "Look at the progress the president can make when he doesn't have Republicans obstructing him."

According to a Gallup poll from early November, the US public also believes that Obama's foreign policy has been successful. Whereas 67 percent of Americans disapproved of Obama's handling of the economy and the federal budget deficit, 63 percent of Americans approved of his terrorism strategy. So too, 52 percent approved of his decision to remove US forces from Iraq. In general 49 percent of Americans approved of Obama's handling of foreign affairs while 44 percent disapproved.
These support levels tell us a great deal about the insularity of the American public. For when one assesses the impact to date of Obama's foreign policy it is impossible to avoid the conclusion that if the US public was more aware of the actual consequences of his policies, his approval rating in foreign affairs would be even lower than his approval rating in domestic policy. Indeed, a cursory examination of the impact so far of Obama's foreign policies in country after country and region after region indicates that his policies have been more damaging to US national interests than those of any president since Jimmy Carter. And unlike Obama, Americans widely recognized that Carter's foreign policies were failed and dangerous.

The failure of Obama's foreign policies to date has been nowhere more evident than in the Middle East.

Take Iraq for instance. Obama and his supporters claim that the withdrawal of all US forces from Iraq is one of his great accomplishments. By pulling out, Obama kept his promise to voters to end the war in "a responsible manner." And as the polling data indicate, most Americans are willing to give him credit for the move.

But the situation on the ground is dangerous and getting worse every day. Earlier this month, just ahead of the departure of the last US forces from Iraq, Iraq's Prime Minister Nuri al-Maliki visited with Obama at the White House. Immediately after he returned home, the Shiite premier began a ruthless campaign against his Sunni coalition partners in a no-holds barred bid to transform the Iraqi government and armed forces into partisan institutions controlled by his Dawa Party.

Forces commanded by Maliki's son arrested and allegedly tortured several of the Sunni Vice President Tariq al Hashimi's bodyguards. They forced the guards to implicate Hashimi in terror plots. Maliki subsequently issued an arrest warrant for Hashimi. So too, he issued an arrest warrant for the Sunni Deputy Prime Minister Saleh Mutlaq and fired him without permission from the Iraqi parliament.

Hashimi and Mutlaq are now in hiding in Erbil. Maliki is demanding that the Kurdish regional government extradite them to Baghdad for trial.

Maliki's actions have driven Sunni leaders in the Sunni provinces of Diyala, Anbar and Salahadin to demand autonomy under Iraq's federal system. He has responded by deploying loyal forces to the provinces to fight the local militias.

The situation is so explosive that three prominent Sunni leaders, former prime minister Ayad Allawi, who heads the Iraqiya party, Parliament Speaker Osama Nujaifi, and Finance Minister Rafe al-Essawi published an op-ed in the New York Times on Tuesday begging Obama to rein in Maliki in order to prevent Iraq from plunging into civil war.

Then there is Egypt. Obama's decision in February to abandon then president Hosni Mubarak, the US's most dependable ally in the Arab world in favor of the protesters in Tahrir Square was hailed by his supporters as a victory for democracy and freedom against tyranny. By supporting the protesters against the US ally, Obama argued that he was advancing US interests by showing the Muslim world the US favored the people over their leaders.

Ten months later, the Egyptian people have responded to this populist policy by giving jihadist parties a two-thirds majority in Egypt's parliamentary elections. For the first time in thirty years, the strategic anchor of US power in the Arab world — the Egyptian-Israeli peace treaty — is in danger. Indeed, there is no reason to believe it will survive.

According to the Gallup poll, 48 percent of Americans approve of Obama's handling of the war in Afghanistan and 44 percent disapprove. Here too, it is far from clear what there is to approve of. Against the public entreaties of the US commanders on the ground, Obama is carrying through on his pledge to withdraw all US surge troops from Afghanistan by the US presidential elections in November. In the meantime, the US is engaged in negotiations with the Taliban. The purpose of these negotiations is to reach a political agreement that would set the conditions for the Taliban to return to power after a US pullout. That is, the purpose of the talks is to set the conditions for a US defeat in Afghanistan.

The administration hails its success in overthrowing Libyan dictator Muammar Qaddafi without sacrificing a single US soldier. And certainly, this was a success. However, Qaddafi's opponents, who are now taking charge of the country, are arguably worse for the US than Qaddafi was. They include a significant number of al Qaida terrorists and are dominated by jihadist forces. Attempts by the NATO-backed provisional government to convince them to disarm have failed completely.
Since Qaddafi was overthrown, large quantities of advanced weapons from his arsenal — allegedly including stockpiles of weapons of mass destruction — have gone missing. Significant quantities of Libyan shoulder-to-air missiles have made their way to Gaza since Qaddafi's overthrow.
In Syria, while the administration insists that dictator Bashar Assad's days in power are numbered, it is doing essentially nothing to support the Syrian opposition. Fearing the instability that would ensue if a civil war were to break out in Iran's Arab protectorate, the US has chosen to effectively sit on its hands and so cancel any leverage it ought to wield over the shape of things to come.

As to Iran, Obama's policies have brought about a situation where the regime in Teheran does not fear a US military strike on its nuclear installations. Obama's open opposition to the prospect of an Israeli strike against Iran's nuclear installations has similarly convinced the regime that it can proceed without fear in its nuclear project.

Iran's threat this week to close the Straits of Hormuz in the event that the US imposes an embargo on Iranian oil exports is being widely characterized by the US media as a sign of desperation on the part of the regime. But it is hard to see how this characterization aligns with reality. It is far more appropriate to view Iran's easy threats as a sign of contempt for Obama and for US power projection under his leadership.

If Iran's ambitions to acquire nuclear weapons are thwarted, it will be despite Obama, not because of him.

Then there is the so-called peace process between Israel and the Palestinians. Due to Obama's unbridled hostility towards Israel, there is no chance whatsoever that Israel and the PLO will reach a peace deal for the foreseeable future. Instead, Fatah and Hamas have agreed to unify their forces. The only thing standing in the way of a Hamas takeover of the PLO is the US Congress's threat to cut off US aid to the Palestinian Authority. For his part, Obama has gone out of his way to discredit the Congressional threat by serving as an indefatigable lobbyist for maintaining US financial support for the PA.

Of course, the Middle East is not the only region where the deleterious consequences of Obama's foreign policy are being felt. From Europe, to Africa, to Asia, to Latin America, Obama's determination to embrace US adversaries like Vladimir Putin and Hugo Chavez has weakened pro-US forces and strengthened US foes.

So how is that that while Carter was perceived by the majority of the American public as a foreign policy failure, a large plurality of Americans views Obama's foreign policy as a success?
Obama's success in hiding his failures from the American public owes to two related factors. First, to date the US has not been forced to contend directly with the consequences of his failures.

Carter's failures were impossible to ignore because the blowback from his failures was immediate, unmistakable and harsh. His betrayal of the Shah of Iran led directly to the takeover of the US Embassy in Teheran and the hostage crisis. Carter could not spin to his advantage the daily stories about the hostages. He could not influence CBS evening news anchor Walter Cronkite's decision to end every broadcast by reminding viewers how many days the hostages had been in captivity.

So too, the consequences of Carter's weakness in confronting the Soviet Union were impossible to ignore or minimize with images of Soviet tank columns invading Afghanistan dominating the news.
To date, Obama's foreign policy failures have yet to explode in a manner that can make the average American aware of them.

Then too, Obama and his advisors have been extremely adept in presenting his tactical achievements as strategic victories. So it is that the administration has successfully cast the killing of Osama bin Laden as a strategic victory in the war on terror. Obama has upheld the mission, as well as the killing of al Qaeda leader Anwar al-Awlaki as proof of his competence in securing US interests. And to a large degree, the US public has accepted his claims.

Because it is impossible to know when Obama's failures will begin to directly impact the America people, it is possible that he will not pay a political price for them in the 2012 elections. Be that as it may, the Republican presidential contenders would provide an invaluable service to both themselves and the American public as a whole if they make exposing Obama's disastrous stewardship of US foreign policy a central plank of their campaigns.

At a minimum, forewarned is forearmed. And the dimensions of Obama's failures are so enormous, that it is clear that the American people will suffer their consequences for years to come.
6)Tax Cuts, Less-Intrusive Gov't Help Canada Soar

Success: Away from the low growth and high regulation of an America under Washington's thumb, our northern neighbor is economically strong. As 2011 ends, Canada has announced yet another tax cut — and will soar even more.

The Obama administration and its economic czars have flailed about for years, baffled about how to get the U.S. economy growing.

In reality, the president need look no further than our neighbor, Canada, whose solid growth is the product of tax cuts, fiscal discipline, free trade, and energy development. That's made Canada a roaring puma nation, while its supposedly more powerful southern neighbor stands on the outside looking in.

On Thursday, Canadian Prime Minister Stephen Harper announced that he will slash corporate taxes again on Jan. 1 in the final stage of his Economic Action Plan, dropping the federal business tax burden to just 15%.

Along with fresh tax cuts in provinces such as Alberta, total taxes for businesses in Canada will drop to 25%, one of the lowest in the G7, and below the Organization of Economic Cooperation and Development average.

"Creating jobs and growth is our top priority," said Minister Jim Flaherty. "Through our government low-tax plan ... we are continuing to send the message that Canada is open for business and the best place to invest."

It's not just that Canada's conservative government favors makers over takers. Harper's also wildly popular for shrinking government. "The Harper government has pursued a strategic objective to disembed the federal state from the lives of citizens," wrote University of Calgary Professor Barry Cooper, in the Calgary Herald.

Harper also has made signing free trade treaties his priority. Canada now has 11 free trade pacts in force, and 14 under active negotiation — including pacts with the European Union and India, among others.

"We believe in free trade in Canada, we're a free-trading nation. That's the source of our strength, our quality of life, our economic strength," Flaherty said last month.

Lastly, Canada has pursued its competitive advantage — oil. And it did so not through top-down "industrial policy," but by getting government out of the way.

Harper has enacted market-friendly regulations to accomplish big things like the Keystone Pipeline — and urged President Obama to move forward on it or else Canada would sell its oil to China.

These policies have been well-known since the Reagan era. But in a country that's been institutionally socialist since the 1950s, Harper's moves represent a dramatic affirmation for free market economics.

For Canada, they've had big benefits.

Canada's incomes are rising, its unemployment is two percentage points below the U.S. rate, its currency is strengthening and it boasts Triple-A or equivalent sovereign ratings across the board from the five top international ratings agencies, lowering its cost of credit.

Is it too much to ask Washington to start paying attention to the Canadian success story?

These sound principles work every time they are tried, and they have led to a transformation in Canada.

Imagine what they could do in the U.S.

6a)Holder's Racial Politics
The AG's attack on voter ID laws may backfire legally and politically.

Eric Holder must be amazed that President Obama was elected and he could become Attorney General. That's a fair inference after the Attorney General last Friday blocked South Carolina's voter ID law on grounds that it would hurt minorities. What a political abuse of law.

In a letter to South Carolina's government, Assistant Attorney General for Civil Rights Thomas Perez called the state law—which would require voters to present one of five forms of photo ID at the polls—a violation of Section 5 of the 1965 Voting Rights Act. Overall, he noted, 8.4% of the state's registered white voters lack photo ID, compared to 10% of nonwhite voters.

This is the yawning chasm the Justice Department is now using to justify the unprecedented federal intrusion into state election law, and the first denial of a "pre-clearance" Voting Rights request since 1994.

The 1965 Voting Rights Act was created to combat the systematic disenfranchisement of minorities, especially in Southern states with a history of discrimination. But the Justice position is a lead zeppelin, contradicting both the Supreme Court and the Department's own precedent. In 2005, Justice approved a Georgia law with the same provisions and protections of the one Mr. Holder nixed for South Carolina. In 2008, the Supreme Court ruled 6-3 in Crawford v. Marion County Election Board that an Indiana law requiring photo ID did not present an undue burden on voters.

A second case offers a further glimpse into the High Court's perspective on the modern use of Section 5. In 2009's Northwest Austin Municipal Utility District v. Holder, the Court declined to decide the question of the constitutionality of Section 5, writing that while it imposes "substantial federalism costs," the "importance of the question does not justify our rushing to decide it." But the Justices didn't stop there.

They also cast real doubt on the long-term viability of the law, noting in an 8-1 decision by Chief Justice John Roberts that it "imposes current burdens and must be justified by current needs." That such strong criticism was signed by even the Court's liberals should concern Mr. Holder, who may eventually have to defend his South Carolina smackdown in court.

South Carolina Governor Nikki Haley tells us she "will absolutely sue" Justice over its denial of her state's law and that challenge will go directly to federal district court in Washington, D.C. From there it may be appealed directly to the Supreme Court, which would have to consider whether South Carolina can be blocked from implementing a law identical to the one the High Court approved for Indiana, simply because South Carolina is a "covered" jurisdiction under the Voting Rights Act.

In such a scenario, Mr. Holder's tactics could well doom Section 5 itself. That's a big gamble for the sake of trying to stir up election-year minority voter turnout.

Civil-rights groups claim this Justice offensive is needed to counteract a voting environment in which little has changed since Jim Crow. But South Carolina's law, like Indiana's and Georgia's, explicitly addresses potential disenfranchisement by offering state-issued IDs free of charge. When civil-rights groups fretted about the ability of minority voters to get to the local Department of Motor Vehicles to pick up a free state-issued ID card, Governor Haley created an 800 number to offer free rides to anyone who couldn't afford the transportation. About 30 people called.

In October, the South Carolina Department of Elections reported that some 240,000 state voters lacked ID cards. The DMV now says more than 200,000 of those had allowed their IDs to expire, lived in other states or were dead.

The Voting Rights Act was once needed to counteract the gap between black and white voter registration. By 2009 the gap had narrowed to a few percentage points in some covered states while blacks out-registered whites in others. Yet Justice retains a federal veto on election-law changes no matter how innocuous or racially neutral. Section 5 has become a vehicle not to pursue equal access to the polls but to play the grossest kind of racial politics.

As African-American men at the most exalted reaches of government, Messrs. Obama and Holder are a testament to how much racial progress the country has made. It's a shame to see them pretending little has changed so they can scare up some votes.

Friday, December 30, 2011

Two Scenarios - What Can Go Right and/or Wrong!

Dear God,
My prayer for 2012 is for
a fat bank account & a thin body.
Please try not to mix them up like you did last year.


We just returned from a week trip to visit our Black Belt pregnant daughter in Orlando, her husband and his family for the Christmas/Channukah season and then we spent a few days on Amelia island before we took the back road return trip (Highway 17 through Jekyll Island, Brunswick, Darien etc.)  Along the way we saw a lot of small Post Offices and I began to think about what the impact would be if these, obviously unprofitable locations, closed.

Two thoughts came to mind.  First, if the government turned the job over to WalMart's management I suspect the delivery of our mail would improve , the department's horrendous losses would narrow and second, I asked myself what if the U.S. Government  was also in charge of picking up our trash and garbage.

It should be abundantly clear, to most anyone that can see, big government is not efficient nor generally capable of delivering in a cost efficient manner.  Sad but history is on my side..

Another thought I had was now that the elder Bush has given a nod to Romney, Romney would be well advised to urge Jeb Bush to run as his Vice President.  Jeb was a good governor, would solidify the South and thus  help swing Florida as well as appeal to Spanish citizens having married one.

Jeb said he did not want to run for the presidency but one day he might choose to do so and here is an opportunity to help his own party and the nation as well. Romney and Jeb would make a great team that should have broad appeal.
This from an old and dear friend: "Dear Dick and Lynn,Bunny and I want to wish you and your family a Happy New Year.

I am hoping that we are in for some serious political reawakening and changes to happen in 2012, but I fear that the Public (read government) School system has done it's work well. Most of the electorate are more interested in "bread and circuses" than they are in what is really important. We are at the edge of the cliff, and the lemmings are leading us over the precipice. I truly fear for the fate of our Nation, but the dumb masses are now in control.

Until all members of government, executive, legislative and judicial branches, are subject to the same laws as the rest of us, there is no reliable future. As a member of the financial industry, you (and I) were very aware of the insider trading rules, but they don't apply to the legislative branch. Members of that branch don't have to go on Medicare and its alternatives when they become eligible, nor do they have to face the hardships of wondering whether the government will "take away Social Security", and providers threaten to discontinue treating Medicare covered patients because they loose money on everyone they treat. Of course, I'm sure our present legislators may look on this fact and then say that even though they loose on every patient, they can make it up in the volume of new patients they will be seeing.

Alexis-Charles-Henri Clérel de Tocqueville predicted this would happen 200 years ago.
It is time for predictions and mine for the markets in the New Year is predicated on two hypothesis.

If you are optimistic then this is the scenario for you;

What can go right:

a) Europe will escape a recession and we will avoid the impact.

b) China will continue its growth but at a slower pace, ie. 7 to 8 %.

c) The effect of inflation/deflation will not be evident.

d)There will be no Middle East confrontation.

e) Oppressive debt will not become a bigger problem.

f) 'Obamascare' is ruled by The Supreme Court to be illegal and/or an over-reach and its effect sharply curtailed.

g) Obama loses the election, Republicans control the Senate and our new president is rational, practical, tough and can get Congress to right our ship of state.

If you are a pessimist then this is the scenario that should concern you:

What can go wrong:

a) Europe will experience a downturn which will have an effect on our own modest recovery.

b) China will continue to grow but the cumulative effect of a downturn in Europe and slower U.S. growth  will reduce China's growth rate by several per cents.

c) Deflation will become more of a concern.

d)  The Middle East could flare up if Iran continues to make nuclear progress, Iraq fails to remain stable, N Korea creates problems in that area of the world and a terrorist strike creates social and/or financial havoc.

e)  There is no way mounting debt can avoid impacting our way of life and the Republic's economic survival and well being.

f) The Supreme Court upholds 'Obamascare' as legal and fully enforceable.

g)  Obama wins re-election, persists in his policies that are so injurious to our nation and Democrats continue to control the Senate.

If the optimistic scenario occurs then technology, health care, energy and industrial investments should do well.

If the pessimistic scenario holds then  technology, health care, energy, defensive consumer companies and precious metal investments should be places to hide along with very short term debt instruments serving as a cash reserve.
A Happy and Healthy New Year!

Monday, December 26, 2011


Bernie Marcus is to Speak Feb 20. Bernie's speech will be partisan but it is also a message anyone interested in our nation's future welfare should hear. I invite you to attend and if you do please make your check payable to "SIRC" and mail to:
Russ Peterson
28 Shellwind Drive
Savannah, GA 31411.

Details below.


Fed bailout facts finally documented and revealed.   (See 1 below.)
When Obama feels threatened his heavy hand approach  works through Holder to squash those in opposition to his ideas. (See 2 below.)
Sound advice but can they execute.  History leaves one in doubt.  (See 3 below.)
Ne'eman writes about Egypt's incomplete revolution. (See 4 below)
Back from a trip to see our black belt pregnant daughter and a brief vacation at Amelia Island.

Happiest and Healthiest of New Years!
1)Fed Once-Secret Loan Crisis Data Compiled by Bloomberg Released to Public

Fed’s Once-Secret Data Compiled by Bloomberg Released to Pub

Fed’s Once-Secret Data Compiled by Bloomberg Released to Pub
Andrew Harrer/Bloomberg
A man walks past the Federal Reserve building in Washington.
A man walks past the Federal Reserve building in Washington. Photographer: Andrew Harrer/Bloomberg
Dec. 7 (Bloomberg) -- Matthew Winkler, editor-in-chief of Bloomberg News, talks about Bloomberg News' response to Federal Reserve Chairman Ben S. Bernanke's letter to four senior lawmakers yesterday that said recent news articles about the central bank's emergency lending programs contained "egregious errors." Winkler speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)

Bloomberg News today released spreadsheets showing daily borrowing totals for 407 banks and companies that tapped Federal Reserve emergency programs during the 2007 to 2009 financial crisis. It’s the first time such data have been publicly available in this form.
To download a zip file of the spreadsheets, go to For an explanation of the files, see the one labeled “1a Fed Data Roadmap.”

The day-by-day, bank-by-bank numbers, culled from about 50,000 transactions the U.S. central bank made through sevenfacilities, formed the basis of a series of Bloomberg News articles this year about the largest financial bailout in history.

“Scholars can now examine the data and continue the analysis of the Fed’s crisis management,” said Allan H. Meltzer, a professor of political economy at Carnegie Mellon University in Pittsburgh and the author of three books on the history of the U.S. central bank.

The data reflect lending from the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, theCommercial Paper Funding Facility, the Primary Dealer Credit Facility, the Term Auction Facility, the Term Securities Lending Facility, the discount window and single-tranche open market operations, or ST OMO.

Bloomberg News obtained information about the discount window and ST OMO through the Freedom of Information Act. While the Fed initially rejected a request for discount-window information, Bloomberg LP, the parent company of Bloomberg News, filed a federal lawsuit to force disclosure and won in the lower courts. In March, the U.S. Supreme Court decided not to intervene in the case, and the Fed released more than 29,000 pages of transaction data.

Additional Data

The Fed later supplied additional data to fill in gaps in its initial response. Bloomberg News is updating an interactivegraphic it first published in August to add the new information.

Congress required the Fed to post data to its website in December 2010 on six broad-based programs, its assistance toBear Stearns Cos. and American International Group Inc. (AIG) and more general information on its mortgage-backed securities purchases and so-called foreign-currency liquidity swaps. Those data were presented in spreadsheets that made it difficult to gauge how much individual banks were borrowing from the various programs on any given day.

Some reported totals from media outlets and government studies varied widely. In connection with today’s release, here’s a by-the-numbers explanation of the variations:

$1.2 trillion -- The Fed’s actual lending to banks and financial companies at its single-day peak, Dec. 5, 2008, through the seven programs Bloomberg News studied in depth.

Emergency measures that targeted specific companies -- Bear Stearns, AIG, Citigroup Inc. and Bank of America Corp. -- were excluded from Bloomberg’s analysis because they were previously disclosed. Loans to these companies from the other seven programs were included.

Bloomberg excluded foreign-currency liquidity swaps because names of commercial banks that borrowed under the program haven’t been disclosed to the public.

$1.5 trillion -- The Fed’s own number to represent its peak lending. This amount included the foreign-currency liquidity swaps, according to the Fed website. Under the swap lines, the Fed lends dollars to foreign central banks, which in turn lend the money to local banks. Only the names of central banksinvolved in the transactions have been made public.

The Fed’s tally of peak lending differed from Bloomberg’s in other ways, too. It included the Term Asset-Backed Securities Loan Facility, or TALF, which Bloomberg excluded. That program’s borrowers were investors rather than banks. Also, the Fed didn’t include ST OMO. Bloomberg did, based on a March 7, 2008, news release in which Fed officials said they would use the program“to address heightened liquidity pressures in term funding markets.”

$7.77 trillion -- The amount the Fed pledged to rescue the financial industry, according to Bloomberg research that examined announced, implied or actual upper limits on lending and guarantees. This number, which represents potential commitments, not money out the door, was first published in March 2009, when it peaked.

“One of the keys to understanding why we’ve avoided another Great Depression, so far, is to see how bold the Fed was in 2008 and 2009,” said Niall Ferguson, a Harvard University history professor. “That boldness consisted of a range of contingency commitments that backstopped the banking system. Just because they weren’t used doesn’t mean they weren’t important.”

After Bloomberg included the $7.77 trillion figure in a Nov. 28, 2011, story, some media outlets mischaracterized it as the Fed’s actual lending. The Fed, in a Dec. 6 memo accompanying a letter Fed Chairman Ben S. Bernanke wrote to lawmakers, called those mischaracterizations “wildly inaccurate.”
$6.8 trillion -- The potential amount the Fed might have lent if“all eligible program applicants request assistance at once to the maximum permitted under the program guidelines,” according to a July 21, 2009, report by the Treasury Department’s Special Inspector General for the Troubled Asset Relief Program, or TARP.

In that report, the officials monitoring the Treasury Department’s $700 billion bailout fund attempted to determine the Fed’s “total potential support” related to the financial crisis.

Most of the difference between the TARP watchdog’s tally and Bloomberg’s involves one program, TALF. The inspector general attributed its $900 billion capacity to the Treasury, which was guaranteeing some of its lending. Bloomberg grouped TALF with the Fed, which created the program.
$16 trillion -- The “total transaction amounts” for Fed lending included in a July 21, 2011, study by the Government Accountability Office, a non-partisan investigative agency that reports to Congress. The Fed’s Dec. 6 memo said it was inaccurate to describe that amount as the total of its lending and guarantees, as some websites did.

The method the GAO used to produce that total differed from Bloomberg’s approach. Bloomberg built spreadsheets to show each borrower’s daily amounts outstanding, and then found the day on which those amounts peaked. The GAO tallied all cumulative loans to arrive at $16 trillion. Its report noted that the total didn’t reflect how loans’ terms varied under different Fed programs.

If a bank borrowed $1 billion overnight for 100 nights, Bloomberg’s analysis would show that the bank had a $1 billion balance at the Fed for 100 days; the GAO method that produced the $16 trillion total would sum up those transactions to $100 billion, even though the bank never owed more than 1 percent of that total.

$1.14 trillion -- A different total for Fed lending that the GAO included in the same July 21, 2011, report. The calculation is similar to, not the same as, Bloomberg’s method of arriving at its peak lending figure. The GAO accounted for differences in loan terms by multiplying each loan amount by the number of days the loan was outstanding and then dividing by the number of days in a year. Bloomberg’s figure represents peak lending on a single day.

$13 billion -- An estimate of the income that 190 banks could have made from investing the Fed loans they took. To arrive at the figure, Bloomberg found the banks’ tax-adjusted net interest margin -- that is, the difference between what they earn on loans and investments and what they pay in borrowing expenses. Such data was available for 190 of the 407 borrowers. That information is included in today’s release.

In those cases, Bloomberg multiplied each bank’s net interest margin by its average Fed debt during reporting periods in which they took emergency loans. In that calculation, Bloomberg excluded loans from the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility because that cash was passed along to money-market funds.

Penalty Rates

In its memo, the Fed said it was incorrect to write, as Bloomberg did, that banks “reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates.”

“Most of the Federal Reserve’s lending facilities were priced at a penalty over normal market rates so that borrowers had economic incentives to exit the facilities as market conditions normalized, and the rates that the Federal Reserve charged on its lending programs did not provide a subsidy to borrowers,” the Fed said.

An October 2008 report by Daniel Thornton, a vice president at the Federal Reserve Bank of St. Louis, said the primary credit rate, which is paid by most borrowers from the Fed’s discount window, had been “consistently lower” than the certificate of deposit and Eurodollar rates since March 2008.

‘Generally Low’

Rates that banks paid at the Term Auction Facility, a lending program created in December 2007 to augment the discount window, “have generally been low relative to rates that depository institutions would have had to pay otherwise,”Thornton said in the report.

David Skidmore, a Fed spokesman, declined to comment on whether Fed programs provided a subsidy relative to actual market rates during the crisis.

Bloomberg’s income-estimate method isn’t perfect. It assumes that the banks used their Fed loans in the same way they did their other capital, for example. Still, in the absence of precise data, the approach provides an indication of banks’income from their Fed loans.

“The net interest margin is an effective way of getting at the benefits that these large banks received from the Fed,”said Gerald A. Hanweck, a former Fed economist who’s now a finance professor at George Mason University in Fairfax, Virginia.

To contact the reporters on this story: Phil Kuntz in New York at; Bob Ivry in New York at

To contact the editor responsible for this story: Gary Putka at
-----------------------------------------------------------------------------------------------------------------------2) Sheriff Joe 'suspicious' of motive behind Obama attacks
Is lawman's probe of president creating panic at White House?
By Bob Unruh

Sheriff Joe Arpaio of Arizona's Maricopa County has been under fire for his immigration law-enforcement policies from protesters who simply object to what he's doing, in a lawsuit alleging his department profiles on race, and from the federal government which has canceled agreements with his department to check for violators who arrive at his jail.

Now he's wondering just how much of that displeasure from Washington is being generated by the perceived White House alarm over his Cold Case Posse investigation checking out suspicions raised by area tea-party officials that Barack Obama may use or try to use fraudulent documents to be on the 2012 presidential ballot in Arizona.

In an interview with WND, the sheriff said, "I am an elected sheriff. I took an oath of office to enforce all the laws of the state of Arizona. I take that very seriously. I do report to the people."

But he said he's considering the possibility there are political connections to the circumstances that have developed.

Freshly updated! Get the latest information on Obama's fraudulent documents in the e-book, "Where's the REAL Birth Certificate?"

"The investigation, I'm not sure that's part of the puzzle or not. I wonder why they are going after me," he said. "I'm a little suspicious of what's going on. The reason I'm suspicious is that the president mentioned me recently."

He was talking about Barack Obama's recent discussion with some Hispanic journalists, and the question one raised about the government's investigation of Arpaio regarding his civil-rights record.

"The president didn't like the way I enforce 1070 (a state law regarding immigration)," he said.

Arpaio has confirmed his "Cold Case Posse" investigating Obama's presidential eligibility will release a preliminary report in February of its findings, which he expects to be "controversial."

He has described the work that is going on as "a serious law-enforcement investigation" and he said the findings will be "based in facts." Arpaio said a comprehensive report will be issued shortly after the February preliminary report.

His investigation was launched after local tea-party members expressed their concern to him about the possibility of fraud in the Obama campaign.

The investigators have experience ranging in a number of law enforcement branches, and are volunteers working without expense to Maricopa County taxpayers.

Those wishing to contribute to the 501(c)3 supporting the Cold Case Posse investigation may send tax-deductible donations to the Maricopa County Sheriff's Office at: MCSO Cold Case Posse, P.O. Box 74374, Phoenix, Ariz., 85087.

The sheriff also confirmed the Obama investigation has broadened beyond an examination of whether or not the birth certificate made public by the White House on April 27 is an authentic document. The probe, he said, is examining Obama's history in regard to his eligibility to be president under Article 2, Section 1 of the U.S. Constitution.

He said his team has amassed hundreds of pages of documentation and taken testimony from dozens of experts in preparation for a final phase of field investigation

In the interview with WND, he cited a tabloid's report that the White House is in a "panic" over the investigation.

That report comes from the Globe, which cited sources inside the White House saying that Michelle Obama "is in a panic" over the review by professional investigators.

Arpaio said he has no reason to doubt the report, as the times he has been quoted by the tabloid, the quotes have been accurate.

"Someone must pick up the Globe at the supermarket and deliver it to the White House," he told WND.

On the issue of immigration, the confrontation between Washington and the sheriff came to a head in recent days when the Department of Homeland Security's Immigration and Customs Enforcement said it no longer would use Arpaio's officers to screen detainees in Maricopa County jails.

That followed shortly after the agency's decision to revoke Arpaio's authority to access its immigration database, and follows a Justice Department review of claims his office violated civil rights of suspects.

Arpaio said his office had nearly 100 deputies trained by the federal government to investigate alleged illegal aliens, and regularly detected dozens and even hundreds to be held for deportation.

That training no longer will be used, and while the federal agency promised to send 50 agents to take over the deputies' duties, only one had been sent so far, the sheriff said.

The ICE agency declined to respond to WND requests for comment.

But thousands of aliens have been identified as suspect in recent years, Arpaio said, with his deputies averaging about 15 a day. The federal agent identified three on the first day on duty, he noted.

He also said ICE had refused to accept some detainees his deputies had identified, and his office had to transport them to the Border Patrol to avoid simply releasing them onto the streets.
3) Don't Abandon Conservative Message, Sell it Better
By Star Parker

Several new polls come as a jolt as they reflect the dismal state of mind of the American people.

As USA Today’s Susan Page sums up the latest USA Today/Gallup poll: the nation is “…more downbeat, more dissatisfied with its political leadership and more concerned about the country’s direction than at almost any point in modern times.”

New Pew Research Center polling shows a whopping 67 percent saying that most members of congress should not be re-elected. This compared to 51 percent saying this in October 2010 before the last congressional election.

President Obama’s current approval rating in the low forties, very low for any president at this point in his term, along with the very sour national mood, should point to shaky re-election prospects for him.

But from what I see, there are serious reasons why Republicans should be worried.

One is lack of excitement Republicans feel toward their own leading candidates.

Gallup now shows a fairly even contest whether it is Romney or Gingrich matched against Obama. But it also shows most of the Obama votes are pro-Obama whereas most of the Romney and Gingrich votes are anti-Obama rather than pro-Romney or pro-Gingrich.

Other new polling data from Pew should deeply concern Republicans.

Seventy seven percent agree that there is “too much power in hands of a few rich people and large corporations.” And only 36 percent say that the country’s economic system “is generally fair to most Americans.”

When the economy is the number one issue of concern to the American people, and when the central issue regarding the economy is the extent to which government should play a role in it, this is not good news for those arguing for less government.

The central economic event of the last decade was the 2008 financial collapse.

Conservatives have made a solid case showing that the cause was government policies pushing lower lending standards to promote home ownership. This case was bolstered this week by a lawsuit filed by the Securities and Exchange Commission against top executives at government mortgage entities Fannie Mae and Freddie Mac, claiming they concealed the large volumes of sub-prime mortgages they were acquiring.

But the message that government caused the economic collapse does not appear to be reaching the grass roots.

President Obama has not backed off an inch in his pitch that the cause was inadequately regulated business. In his recent speech in Osawatomie, Kansas he went on about how “Banks and investors (were) allowed to keep packaging the risk and selling it off.”

Washington’s answer to the crisis reflects Obama’s take on things. The Dodd Frank Act enacted a major new regulatory regime on banks. Yet Fannie Mae and Freddie Mac remain standing, untouched, still sucking up taxpayer funds, and backing practically all new mortgages issued today.

It seems that Obama has captured public sentiment on this central and significant issue.

Some conclude this all means that Republicans must water down the conservative message and nominate a moderate.

But Americans crave answers, clarity, leadership. This call will not be answered by ambiguity.

Obama is no moderate. If Democrats can nominate a hard core liberal, why can’t Republicans offer a clear conservative alternative?

They can and must. But let’s remember basic salesmanship. If you’ve got the best product and its not selling, the problem is not the product but how it’s being sold.

The challenge in selling freedom only increases when times are hard and people become fearful.

The best salesperson is one who is totally sold themselves on their product.

We need a conservative leader who unwaveringly believes that a return to freedom and moral clarity is what this nation needs. And one who can convey this conviction and convince worried, struggling Americans that conservative principles are the recipe for national revival and will make their lives better.
4)Egypt: The Incomplete Revolution
By Yisrael Ne'eman

Overall questions concerning the impact of revolutions in the Arab world during the course of 2011 are difficult to answer but one element stands out – Islam is the dominant element. Egypt, the most populous and most powerful state in the Arab World provides the greatest proof. Egypt as opposed to most countries in the Arab World can be seen as possessing the characteristics of the nation state whether one is a member of the Muslim majority or Coptic Christian minority. In essence life on the banks of the Nile is the overall determining factor. Egypt is not a tribal nor multi-ethnic, multi-religious society even with the differences separating the Upper and Lower Nile populations. The question is whether Egyptians view themselves in the secular nation state definition or whether religion will be the overall determining factor. Egyptian rejection of the nation state will lead to radical change in the Middle East as concerns identity, loyalties and policies.

With a Muslim majority of some 90% in a nation of over 80 million, Egypt is the litmus test for revolution in the Arab/Muslim World. Where Egypt leads, many will follow. If we are truly speaking of revolution, where is Egypt?

In the recent elections it is clear people are voting their identity and not just their pocketbooks. Egyptian identity as a people and nation is at stake. Who and what is Egyptian? Are they Sunni Muslim Egyptian Arabs or Egyptian Arab Sunni Muslims? It always comes down to the noun – "Arab" or "Muslim", all other terms being adjectives of description. Most in the liberal democratic West are oblivious to such ideas, certainly if one speaks of a religious identity. Not only has the separation of religion and state blinded Westerners to Middle Eastern realities but the distain for religion among these European and American secular elites leads to the consistent inability to read the changing map of Arab Muslim realities. Although the economy and corruption play a role in electoral decisions they are not the dominant factor. Here the questions are more of "What does one live for? And what does one die for?" The answer is the same for both queries is Islam. Forcing a change in identity brings about a change in societal rules, meaning the choice of the social contract – Islam or state, democracy or Islamic Sharia law. Some in the West are beginning to understand the magnitude of these shifts and are hoping that hybrid systems and loyalties will be possible.

At the moment this is a delusion, commitment to Islam and democracy are not complimentary. Liberal democracy demands loyalty – in particular to a system defending minorities and awarding equal rights, especially to women. Elections are a tool for an Islamic victory but not part of the system. Holding elections is not a value in itself. Elections are a consequence of an understanding. Do elections serve a purpose to "obtain power" and then the process is to be discarded? Or are elections a permanent pillar in the assurance of expressing "the people's will" and therefore a permanent feature?

The last round of demonstrations was held on Dec. 17 (representing more liberal democratic elements than previous, even if smaller) and was crushed with overwhelming force with barely a word of criticism by Islamists. This certainly represents failure of the more democratic parties and/or the tiny percent supporting the communists (Revolution Continues 2.35%).

As mentioned previously in these columns it is possible to use ideas as pertains to revolutionary theory in an attempt to gauge how far and to what extent an upheaval will impact a certain society. A word of caution is necessary – such theories are neither math nor science, each society has its idiosyncrasies but the general outline takes one from the point of collapse of the old regime, transitional arrangements, the rule of the moderates, the height of the revolution through the rule of the extremists or what is often referred to as the "reign of terror" and finally a return to a semblance of normalcy known as Thermidor, a term taken from the French Revolution.

In Egypt the up front representatives of the old regime are gone, having lost legitimacy due to corruption and repression of the popular will. Hosni Mubarak & Co. are banished and now on trial. But transition still involves elements of the old order and they are plenty in abundance, led by General Tantawi and the newly appointed PM Dr. Kamal al-Ganzury, a former prime minister from the Mubarak 1990s era. Both are seen as holding back the revolution despite certain shifts in policy since the January-February Tahrir protests led to the establishment of a transitional regime pending elections. Polling is under way and the Islamists, whether the hard line Muslim Brotherhood or the fanatical Salafists, are on their way to taking power. Or are they? And just how quickly and with what level of violence can the move be made?

Gaza Hamas PM Ismail Haniya was just in Cairo as a guest of the Egyptian Muslim Brotherhood urging the rule of Islam and Jihad as the answers to all problems facing the Arab/Muslim world. Haniya is the leader of the Palestinian faction. With the election results below as any indication of the overwhelming support for Islamic solutions, we can certainly expect a radical shift within a few months.

Projecting future events is quite difficult; looking for trends is more useful. The tallies for the first and second round of elections at the end of November and middle of December gave the Islamists a popular vote landslide. The Brotherhood (Freedom and Justice Party) took 48.32%, the Salafists 23.83% and al-Wasat 2.35% (moderate Islam) for a total of 74.5% so far. The Egyptian Bloc (social democrats) took 7.72% while the Wafd liberals polled only 7.38%. (Tallies reported in Jadaliyya.) Together these two democratically inclined parties managed less than the two-thirds the support given to the extremist Salafists. One can only expect the third round to bring in even more support for the Brotherhood and Salafists as the more liberal districts voted in the first round.

The Muslim Brotherhood will be the senior coalition partner in any government unless the military attempts direct rule – an unreasonable possibility. The big question will come down to who will be the junior partners or whether they will rule outright on their own? How much influence will the military wield? The Brotherhood is in a dilemma with the need for some democratic fig leaf, at least for international legitimacy. We can expect an alliance with either the Wafd liberals or Egyptian Bloc social democrats to help form a coalition. This way the Brotherhood will have someone to discredit when much goes wrong, which they will. Stabilizing the Egyptian economy is a Herculean task. To ensure their objective of continuing Islamization the Salafists need to remain in the opposition. They may very well be the next group to lead the street against the administration-to-be. The last thing the extremists need is to be associated with the everyday decision making and dysfunctioning of Egyptian society.

The next government can be expected to begin with fairly moderate policies, certainly in comparison to what the Brotherhood truly believes – such as the imposition of Sharia or Islamic law. The moderates are known to share a sense of morality and common decency within their ideological frameworks, at least when first gaining power. However, the economic challenges are already insurmountable and the army will continue to be a player in policy decisions. It will not take long before the people become restless again demanding immediate solutions. In such situations moderate governments cannot deliver as the people become increasingly desperate for "the answer" or solutions to their problems. The "rising expectations" gaps will grow at a quickening pace and lead to the next round of despair, a sense of betrayal and in this case the fanaticism represented by the Salafists or possibly al-Qaeda leaning types will rise to the fore making an even stronger case for those who believe Allah's emissaries have all the answers. It is just a matter of following His directives, these being found in Sharia law and the wisdom of the clerics.

Under such pressures once the street explodes, the more radical forces generally make their moves and in this case the ultimate battle for the heart of Egypt will be engaged. The Brotherhood may very well split between the more liberal types and those shifting towards the Salafists or the entire movement may shift to the right. With Islamization sweeping the Nile the sentiments of the average soldier will count for more than those decisions made by the Supreme Council of the Armed Forces and the military brass at large. Armies generally reflect their societies, Egypt is no different. The officer corps will need to take the loyalties of the lower ranks into consideration, thereby curbing themselves from taking on the more radical Islamists. The military could declare themselves neutral, not wanting to face the danger of insurrection or at least partial disintegration. In the end they will settle for a hybrid arrangement with the Islamists if they manage to avoid a purge, Iranian style.

Islam will dominate Egyptian and Arab politics for decades to come. We are at the beginning of a process, much more dramatic than Egypt's 1952 secular Nasserite Revolution and the Arab nationalist sweep throughout the Middle East the world witnessed sixty years ago. The difference between now and then is that nationalism of whatever stripe is not a universalist ideology, but is constrained to the national group in question. Border issues and wars over territory are almost always an element in national self-assertion but there is no world revolution for export.
Islam in the hands of the fundamentalists is a religion and revolution for export. Jihad is not just a rallying call but a value. Hence world wide ramifications are expected from the great Arab "Awakening" or "Upheaval" of 2011.