Obama - Taking a Page From Jimmmy Carter's Playbook?

Porter Stansberry sees through Obama and does not like what he finds.

He also believes we are in for a heap of trouble because our government has not been honest with us and we have disregarded the warnings. (See 1 below.)
---
Ne'eman on Egypt and an Egyptian student gives blow by blow analysis. (See 2 and 2a below.)

Jeff Jacoby and the freedom agenda. (See 2b below.)
---
Inflation no longer in the wings. It is in the orchestra front and center. Will it impact employment and consumer purchasing?

Life is full of trade offs. (See 3 and 3a below.)
---
According to this intelligence report Obama has demanded Mubarak's ouster.

Is Obama getting ready to pull a Carter? (See 4 below.)
---
Even Obama's health care along with everything else he touches has become a house of cards. (See 5 below.)
---
Dick
-------------------------------------------------------------------------------------
1)The U.S. government wants to take you down with it
By Porter Stansberry


Have you ever wondered why the State of the Union speech involves so much pomp and posing?

You don't have to be an astute political analyst to realize the whole charade is propaganda designed to make people feel good about the government. But why bother?

Why risk embarrassing yourself on Jon Stewart's "Daily Show" program by saying something stupid… or something that's exactly the opposite of what you promised last year?

For example, in 2009, President Obama said, "Done right, earmarks have given legislators the opportunity to direct federal money to worthy projects that benefit people in their districts and that's why I've opposed their outright elimination."

But this week, the same president, standing in the very same room, talking to essentially the same audience, said exactly the opposite. He was grandstanding to the new political mood and scolded the assembled lawmakers. He issued a "warning" that he would veto any bill that contained so much as a single earmark.

What a phony. What a liar. Why go on national TV and prove it?

If Obama doesn't want to, who's going to force him? His government is the world's only superpower, with troops in more than 100 countries. It listens to every phone call that's dialed. It reads every e-mail that's sent. It watches every road. It looks at every financial transaction.

Our government is so powerful, it can borrow $0.40 of every dollar it spends while demanding the rest of the world use its paper money. Its own courts are afraid of ruling against it, to the point of ignoring the plain language of its own Constitution.

So… why bother with this charade?

The most important element to a stable society is the idea (the lie, mostly) that the government is legitimate. Government is violence and coercion. Government is force. And for that force to be tolerated by millions, it must appear to be legitimate.

Any information or argument that the government is corrupt or inept is dangerous because it threatens its legitimacy. That's why there's such a tremendous fight over the obvious corruption between state employee unions and elected officials. That's why no one wants to explain to the American people that our federal government is bankrupt. We're printing money because it's better to steal from our creditors than admit our government is inept.

And that's why the State of the Union is such a spectacle. See The State in all its glory…

But remember this: Our State, as powerful as it is, relies on an assumption that's made collectively by millions of Americans.

We must believe the people we saw on TV listening to the president are fundamentally good and honest people. We must never come to doubt the character of those people or the process they used to gain power.

If that happens, our State, even though it's the most powerful in the world, could quickly collapse. It is nothing without the consent of the governed. And our consent depends entirely on its legitimacy.

I believe our government is in imminent danger of losing its legitimacy. Why?

Our federal government is bankrupt and threatening to bankrupt several generations of Americans. At some point – one that is rapidly approaching – Americans will repudiate these debts and the legitimacy of the government that incurred them.

Unaffordable foreign debts and the obvious perfidy of "quantitative easing" will soon render our currency worthless. It is a shame upon the honor of our country that we would even consider using the printing press to finance our debts… It is a high crime that we have done so. The world will long remember the way we have treated our creditors.

Over the last 50 years, the government became a socialist tool. It steals assets from responsible, hard-working citizens and distributes them to others, mainly on the basis of political patronage. At some point, these policies become self-destructive. So many people end up on the dole, the government has no way to finance their needs. We have reached that point. Today, more than half of all voters pay zero federal income taxes.

Our aggressive foreign policy has created billions of enemies overseas while propping up regimes that would disgust most Americans – like the Saudis.

Most critically… our government is for sale. As the price of influence in Washington continues to escalate, it will become impossible to deny the patently obvious truth: Government policy is awarded to the highest bidder and our "free" elections are essentially rigged by the massive sums spent on advertising for candidates.

While I look forward to the day my fellow citizens begin to see their government as it really is, I also fear that day… for it will surely mark the beginning of an "interesting" moment in history.

The leadership of the United States is pretending this day of reckoning will never occur… that Bernanke can successfully paper over these debts along with however many trillions of additional dollars are necessary. This is the absolute height of ignorance. The destruction of our currency and our country's standing in the world's economy is certain.

We are already at the point where our government's debt cannot be financed at any legitimate rate of interest… And yet our leaders show zero interest in doing anything to prevent this unmitigated financial disaster.

As many of you know, I've produced a video about these real problems and my suggestions for dealing with them. If you haven't watched it yet, I strongly encourage you to do so.

Regards,

Porter Stansberry
-----------------------------------------------------------------------------------
2)Egypt: Revolution or a "Correction"?
By Yisrael Ne'eman


Massive demonstrations are rocking Egypt for over a week already – with the single agreed upon demand that Pres. Hosni Mubarak must resign. No doubt the Mubarak administration was downright oppressive. Sparked by the Tunisian example forcing Pres. Ben Ali from power the Egyptian public collected the courage needed to confront Mubarak's dictatorship where elections are rigged (the last one just this past November) and the regime is propped up by the Muhbarat internal security police and the military. This regime is a continuation of the 1952 Free Officers Revolution led by the famed Gamal Abdul Nasser. Anwar Sadat succeeded Nasser and Mubarak was Vice President when Sadat was assassinated in 1981. None allowed for democracy and the regime became more unpopular over the years, in particular as corruption abounded and socio-economic reforms failed. Nasser originally came into power promising the people power and a better life and now almost sixty years later Mubarak represents the colossal failure of the Arab nationalist movement.


Essentially in the Arab world there are two forms of rule, neither democratic. We are either speaking of a form of secular military dictatorship as we see in Egypt, and let's remember that Mubarak was commander of Egypt's air force before entering politics, or rule by Islamists. One might counter that monarchies exist such as in Jordan and Morocco, but here too they are dependent on the military and an assortment of police forces, secret or otherwise.


The question of "the will of the people" has been raised constantly over the past few weeks, whether in relation to Tunisia, Egypt or other Arab countries likely to be affected by the revolt on the Nile. The people are united in demanding the fall of the present regime led by Mubarak and there appears little doubt the scenario will be completed. The question is, "What next?"


Watching the protests on AlJazeera one gets the impression that it is all about freedom, liberty and democracy. True there are certain educated youth who understand these concepts but they are far from indicative of the whole. Organizing through "Facebook," "Twitter" and the internet they were the first to protest, but they themselves are not an integral political movement. Small ideological cadres bent on forcing socio-economic and of course political change make revolutions and in the ensuing upheaval remove the previous power, bringing their own ideals to the fore. Hence it was with the French (1789), Russian-Bolshevik (1917), Moaist Chinese (1949) and Iranian (1979) Revolutions just to name a few. All were ideologically driven by "purist" understandings whether it be rationalism, communism or religion – Islam in this case.

Destroying the old regime is the first step, but how does one rally around the new one? More often than not there are varying ideologies and loose coalitions assembled to oust the former oppressors. Representatives of these differing perspectives form alliances to rule in the glow of victory, after all, they were shoulder to shoulder battling the old regime. But this is only the beginning. One of the groups may appear dominant but allows for joint process during the transitional, moderate period. The most solidified of the ideological hard line groups will garnish popular support and turn on the others. This often leads to a reign of terror and destruction of all other opposition forces whether they be remnants from the old guard or previous allies hailing from the grand coalition responsible for the fall of the government. The Iranian Revolution as of late was an excellent example of such events.

As far as the Egyptians are concerned there is no multi-ideological forum to choose from. The call for democracy may be bantered about, but the only solidified deep rooted ideological understandings are those of Islam, or in this case the Muslim Brotherhood, begun in Egypt in 1928 under Sheikh Hassan al-Banna. Liberal democracy is not a realistic option, as much as the West wants it to be. It is understood to clash with Islam and is often condemned as paganism or idolatry. "Islam is the Answer" is a well known slogan. Islam is not only a religion but an entire lifestyle and value system. Humans are responsible for liberal democracy while Islam is ordained by Allah. There is no comparison especially if one did not grow up in reverence of rational thinking and individual human rights.


Human rights and democracy can be slogans for overthrowing the regime, as is most likely, however they will not be the foundations of the next Egyptian government. Some ask whether the Islamists would be adverse to using a democratic apparatus to gain power. Opinions are split, but it appears they would. The precedent setting alliance with the West and in particular the US when working to defeat the Soviet Union in Afghanistan in the 1980s is given as an example. Nowadays Islamists speak of defeating those temporary liberal democratic allies of yesteryear.


Those who are truly dedicated to democracy are first loyal to that system of self-rule, the political party – whether of a religious nature or not, is subservient to the democratic state and not vice-versa. Devout Muslims understand Islam itself to be the state and not just one variation or political perspective within the national elective structure. Islam is not to be voted into power or out of power – Islam is the power, an eternal one. Anything else is a contradiction of the Koran and Sharia law as given by Allah. From an Islamist point of view democracy is a tool to be used to the reigns of state and then one liquidates the tool. Using democracy can give one a tactical advantage if one does not have the backing necessary to attain power immediately. It also can be legislated out of existence (see the German example of the 1930s) or limited to the point of elimination where only approved Islamic candidates can run for public office – just ask the Iranians.


The military is not interested in a democratic system either, but can go through the pretenses of having one, rigging elections as Egypt and the Arab world have done until now. Or you can take your example from Hezbollah and shoot your way into power as happened in 2008 or take a softer approach and only threaten to use force like Hassan Nasrallah did this past month resting on his reputation of being good to his word.


The democratic option is barely viable. Most likely we are looking at a "correction" with the removal of Mubarak, at least in the short run. The military will impose its will while gaining the support of the people and some sort of reforms will take place allowing for more Islamic influence. Whether it will be a transitional regime or become solidified in place is impossible to know at this stage.


On the other hand, should the Muslim Brotherhood gain control of the Egyptian State either through street power or elections their loyalty will not be to democracy. We could be looking at a rerun of the Iranian revolution, even if somewhat less intense. Should that be the case relations with the West will be very difficult and the litmus test will be whether Egypt cancels its peace agreement with Israel, something the Muslim Brotherhood has promised to do should they attain office.

No doubt the West wants to see a "correction" whereby the military remains in control but allows for more freedoms and a gradual move towards a more democratic framework. Add to this the grand hopes of secular liberalism. In all scenarios Mubarak is finished along with much of the old guard. The West and Israel in particular just hope that the international stability projected by Egypt since the mid-1970s is not overthrown with Mubarak & Co. the man and regime so completely identified with those policies.

Egypt is the lynchpin to the Middle East. Whatever happens in Cairo reverberates throughout the Arab and Muslim world. To ensure stability the West wants a step by step process, not a revolution.


2a)The Story of the Egyptian Revolution
By Sam Tadros

A friend of mine in academia forwarded this e-mail to me from an Egyptian student whose good sense he vouches for. The student tells a story very different from what most of you are seeing on television or reading in your papers.


My apologies for the length of this article, but I see it as extremely important to tell the whole story as it happened.


The Story of the Egyptian Revolution


One week ago, Egypt was a stable authoritarian regime, prospects of change were minimal and every expert in Washington would have betted on the endurance of its regime. Today, Egypt is in a state of chaos. The regime, even after using its mightiest sword is not able to control the country and the streets of Egypt are in a state of utter lawlessness. As the world stands in awe, confusion, and worry at the unfolding events, perhaps it is important to write the evolving story that is happening in Egypt before any reflections can be made on them.


Contrary to pundits, it turns out that the Egyptian regime was neither stable nor secure. The lack of its stability is not a reflection of its weakness or lack of a resolve to oppress. It is a reflection of its inherent contradiction to the natural desire of men to enjoy their basic freedoms. Egyptians might not know what democracy actually means, but that does not make the concept any less desirable. Perhaps it is precisely its vagueness and abstraction that makes the concept all the more desirable.


For two weeks calls were made using new social media tools for a mass demonstration on the 25th of January. Observers dismissed those calls as another virtual activism that would not result in anything. Other calls in the past had resulted in very small public support and the demonstrations were limited to the familiar faces of political activists numbering in the hundreds. As the day progressed, the observers seemed to be correct in their skepticism. While the demonstrations were certainly larger than previous ones, numbering perhaps 15,000 in Cairo, they were nothing worrisome for the regime. They were certainly much smaller than the ones in 2003 against the Iraq War. The police force was largely tolerating and when they decided to empty Tahrir Square, where the demonstrators had camped for the night, it took them less than 5 minutes to do so.


But beneath that, things were very different. The social media tools had given people something that they had lacked previously, an independent means of communication and propaganda. Hundreds of thousands of young Egyptians in a matter of minutes were seeing the demonstration videos being uploaded on youtube. For an apolitical generation that had never shown interest in such events the demonstration was unprecedented. More remarkable they were tremendously exaggerated. At a moment when no more than 500 demonstrators had started gathering in that early morning, an Egyptian opposition leader could confidently tweet that he was leading 100,000 in Tahrir Square. And it stuck.


It should come as no surprise to anyone that after 58 years of organized state propaganda, people would not believe for a second the government's media machine and its coverage of the events. Why they chose to believe the alternative propaganda needs more explaining. People believed the twitter messages and the facebook postings because they wanted to believe them. Tunisia had broken the barrier for many people. It mattered not that the situation and ruling formula in Tunisia is very different than the one in Egypt. Perceptions were more important than reality. If the Tunisians could do it, then so could we. With 15,000 demonstrating in Cairo, Egyptians were already texting each other with stories of the President's son escape. The only debate being whether Hosni Mubarak would escape to London or Saudi Arabia.


The next day the demonstrations continued with a promise of a return on Friday the 28th after Friday Prayers in Mosques. The regime started panicking at this moment. This was simply something they did not understand. Imagine for a second Mubarak's advisors trying to explain to the 83 year old dictator what twitter is in the first place. What was more worrying for them was that the only real force in Egyptian politics, the Muslim Brotherhood, announced its intention of joining the demonstrations. Suddenly they were faced with the prospect of hundreds of thousands of demonstrators from every Mosque in the country. They acted as every panicking authoritarian regime would act. They acted stupidly.


The internet was cut off in Egypt. Mobile phone companies were ordered to suspend services. With tools of communication disrupted the regime was hopeful that they had things under control. Simultaneously they started standard arrests of Muslim Brotherhood leaders. Things seemed for them under control. But they weren't. With every stupid panicking move by the regime, the narrative of its weakness was only reinforced for the people. People saw a regime that was scarred of the internet and they rightfully calculated that this was their golden opportunity.


Friday was an unprecedented event in Egypt. While it is impossible to guess the number of protestors on the streets that day, it is safe to say that they exceeded one million. Every Mosque was a launching site for a demonstration. The Islamists were out in full force. The slogans that day were quite different than the previous ones. Islamic slogans and activists were clearly visible. The security forces were faced with wave after wave of protestors that came from every street. In 4 hours, the security forces were collapsing.


Whether Mubarak was fully previously told about the deteriorating situation for the previous days or whether it was at this moment that he suddenly realized the gravity of the situation remains unknown. One thing is sure; the regime was not prepared for this. It is at this moment that the decision was taken to call in the army, announce a curfew, and withdraw the security forces. In reality the army did not deploy immediately. The troops and tanks that appeared in the streets were the Presidential Guard units deployed in Cairo.


The army was actually still far away from deploying in Cairo. Because no one had imagined that the situation would totally be out of control, the level of alert of the army was never raised. Officers were not called from their vacations and the whole top command of the Egyptian army was actually thousands of miles away in Washington for strategic prearranged discussions at the Pentagon. Moreover, the plan of deployment of the army never imagined a scenario where people would defy it. No one imagined that the army would be required to put a tank in every street. They thought that the mere mention of the army being called in, the sight of a few tanks, and the announcement of the curfew, would make people immediately go home scared. People did not.


The Egyptian army is hugely popular. This is due to the established mythology of Egyptian politics. The army, which is in all aspects the regime, is seen as separate by the people. The army is viewed as clean (not like the corrupt government), efficient (they do build bridges fast), and more importantly the heroes that defeated Israel in 1973 (it is no use to debate that point with an Egyptian). With the troops and tanks appearing in the streets, people actually thought the army was on their side, whatever that might mean. With an announced Presidential addressed that kept being delayed; Egyptians prepared themselves for an announcement of Mubarak's resignation.


Mubarak was at a loss. The troops could not possibly shoot people. That would not only destroy the army's reputation, but more importantly the troops practically could not do it. These guys after all were not trained for this. They do not have rubber bullets or tear gas. They only have live ammunition and tanks and the thought of actually using them in this situation was never an option. To the surprise of the regime, people just celebrated the army's arrival and started dancing in the streets defying the curfew. More importantly something else was happening as well. The looting was starting.


The decision to withdraw the security forces was a natural decision. First they were utterly exhausted and needed the rest to regroup. Secondly, as the security forces had become the symbol of the regime's oppression their withdrawal was seen as necessary to calm things. Thirdly and most importantly, in the protocol of operations there could not possibly be two forces with arms in the same street receiving orders from two different structures of command. Even with the best of coordination, a disaster is bound to happen.


What was not calculated however is the fact that suddenly a vacuum was created. The security forces were withdrawn and the army was not deployed yet. In this gap an opportunity presented itself for everyone. The scenes were unbelievable. First there was massive anger vented at symbols of state oppression such as the ruling party's headquarters. More drastically, in what can only be described as systematic targeting, police stations everywhere were attacked. Every police station in Cairo was looted, the weapons in them stolen and then burned. At the same time, massive looting was taking place. Even the Egyptian Museum, which hosts some of the world's greatest heritage, was not spared.


Saturday was indescribable. Nothing that I write can describe the utter state of lawlessness that prevailed. Every Egyptian prison was attacked by organized groups trying to free the prisoners inside. In the case of the prisons holding regular criminals this was done by their families and friends. In the case of the prisons with the political prisoners this was done by the Islamists. Bulldozers were used in those attacks and the weapons available from the looting of police stations were available. Nearly all the prisons fell. The prison forces simply could not deal with such an onslaught and no reinforcements were available. Nearly every terrorist held in the Egyptian prisons from those that bombed the Alexandria Church less than a month ago to the Murderer of Anwar El Sadat was freed, the later reportedly being arrested again tonight.


On the streets of Cairo it was the scene of a jungle. With no law enforcement in town and the army at a loss at how to deal with it, it was the golden opportunity for everyone. In a city that is surrounded with slums, thousands of thieves fell on their neighboring richer districts. People were robbed in broad daylight, houses were invaded, and stores looted and burned. Egypt had suddenly fallen back to the State of Nature. Panicking, people started grabbing whatever weapon they could find and forming groups to protect their houses. As the day progressed the street defense committees became more organized. Every building had its men standing in front of it with everything they could find from personal guns, knives to sticks. Women started preparing Molotov bombs using alcohol bottles. Street committees started coordinating themselves. Every major crossroad had now groups of citizens stopping all passing cars checking their ID cards and searching the cars for weapons. Machine guns were in high demand and were sold in the streets.


I do not aim to turn this into a personal story, but those people are my friends and family. It is a personal story to me. My neighbors were all stationed in my father-in-law's house with men on the roof to lookout for possible attackers. A friend of mine was shot at by a gang of thieves and another actually killed one of them to defend his house and wife. Another friend's brother arrested 37 thieves that day. The army's only role in all of this was to pass by each area to pick up the arrested thieves. Army officers informed the street committees that anyone with an illegal weapon should not worry and should use it. Any death of one of the thieves would not be punished.


On the political front the story was evolving. More troops were pouring into Cairo. Mubarak decided to appoint Omar Suliman as Vice President and Ahmed Shafik as Prime Minister. Both are military men, Suliman being the Chief of the Egyptian Intelligence Service and Shafik being the former commander of the Air Forces. To understand the moves one has to understand the nature of the ruling coalition in Egypt and the role of the army in it.


The Egyptian regime has been based since 1952 on a coalition between the army and the bureaucrats. In this regard it fits perfectly into O'Donnell's Bureaucratic Authoritarian model. The army is fully in control of both actual power and the economy. Ex-army officers are appointed to run state enterprises and high level administrative positions. More importantly the army has an enormous economic arm that runs enterprises as diverse as construction companies and food distribution chains. In the late 90's this picture began to change.


It is no news for anyone following Egyptian politics that Gamal Mubarak, the President's son was being groomed to follow his father. In reality, the elder Mubarak was never fully behind that scenario. Whether it was a real assessment of his son's capabilities or of the acceptance of the army to such a scenario, Mubarak was hesitant. It was his wife who was heavily pushing that scenario. Gamal, step by step started rising inside the ruling NDP party. With him he brought two groups to the ruling coalition. First were the Western educated economic technocrats trained in international financial institutions they shared what is generally described as neo-liberal economic policies labeled the Washington Consensus. Secondly was the growing business community that was emerging in Egypt. Together they started the process of both restructuring the Egyptian economy and the ruling party.


For the technocrats it was the fiscal and economic policy that was their domain and they performed miracles. The Egyptian economy under the Nazif government showed unprecedented growth. The currency was devalued, investment was pouring in, and exports were growing. Even the economic crisis did not dramatically effect Egypt. The real disaster in all of this however is that no one actually rationalized or defended those policies to the Egyptian public. The country was moving towards a full capitalist system but no explained why that was needed or why it was ultimately beneficial. While such restructuring is naturally painful for a population that was dependent on the government for all its needs, the people were fed the same socialist rhetoric nonetheless. It mattered very little that the country was improving economically, people did not see that. It is not that the effects were not trickling down, they were. It is that the people were used to the nanny state for so many years that they could not understand why the government was no longer providing them with those services.


Businessmen greatly benefited from the economic improvement. Business was good and political aspirations started to emerge for them. First it was a Parliament seat that they desired. It offered immunity from prosecution after all. With Gamal however, they suddenly had a higher opportunity. Gamal wanted to recreate the ruling NDP party. The NDP, never actually a real party and more of a mass valueless organization of state operation was suddenly turning into a real party. Businessmen like Ahmed Ezz, the steel tycoon saw a golden opportunity. They took full control with Gamal of the party and with it power.


The army never liked Gamal or his friends. Gamal had never served in the military. To add insult to injury his friends were threatening the dominance of the army. The technocrat's neo-liberal policies were threatening the army's dominance of the closed economy and the party was becoming step by step an actual organization that competes with the army officers in filling administrative positions. Suddenly the doors to power in Egypt were not a military career but a party ID card. As long as the President was there however, the army was silent. The army is 100% loyal to the President. He is an October War hero and their Commander in Chief. He is seen as an Egyptian patriot by them who has served his country well. Moreover Gamal Abdel Nasser having conducted his own military coup in 1952 put mechanisms in the army to ensure that no one else would do the same and remove him.


With the unfolding events the army was finally able to put its narrative to the President and have his support behind it. The army's narrative is that Gamal and his friends ruined it. Their neo-liberal policies alienated people and angered them with talks of subsidies removal, while his party gang destroyed the political system by aiming to crush all opposition. Mubarak in the past had mastered the art of playing the opposition. The opposition was always co-opted. Sizes in Parliament differed in various elections, but there was always a place there for the opposition. The last elections in 2010 were different. No opposition was allowed to win seats. By closing the legitimate political methods of raising grievances, the opposition chose the illegitimate ones in the form of street demonstrations.


Today the Egyptians are scared. They have been given a glimpse of hell and they don't like what they see. Contrary to Al Jazeera's propaganda, the Egyptian masses are not demonstrating anymore. They are protecting their homes and families. The demonstration last night had 5,000 political activists participating and not 150,000 as Al Jazeera insists. At this moment, no one outside of those political activists cares less now if the President will resign or not. They have more important concerns now; security and food.


So where are we today? Well the answer is still not clear, yet a couple of conclusions are evident.


1. The Gamal inheritance scenario is finished.


2. Mubarak will not run for another Presidential term. His term ends in October and either he will serve the rest of his term or will resign once things cool down for health reasons, which are real. He is dying.


3. The army is in control now. We are heading back to the "golden age" of army rule. The "kids" are no longer in charge. The "men' are.


4. Until the economy fails again, the neo-liberal economic policies are over. Forget about an open economy for some time.


Immediately the task of the army is to stabilize the situation and enforce order. The security forces have been ordered to reappear in the streets starting tonight. The next task will be to deal with the political activists and the Muslim Brotherhood which now dominates the scene. It is anyone's guess how that will be done, but in a couple of days the Egyptians will probably be begging the army to shoot them. Third stage will be to return to normal life again with people going back to their jobs and somehow food being made available. Later on however will come the political questions.


The long term challenges are numerous. First you have a huge economic loss in terms of property destroyed. The minute the banks will be reopened, there will be a run on them and capital flight will be the key word in town. It is of course quite natural that for some time no one in his sensible mind will invest in Egypt.


Politically, the army will aim at returning to the pre-Gamal ruling formula. People will be appeased by raising salaries and increasing subsidies with the hope of silencing them. Will it be enough? That is doubtful. The Egyptians have realized for the first time that the regime is not as strong as it looked a week ago. If the army did not stop them, how will they ever be silenced? Moreover they are greatly empowered. Egyptians today feel pride in themselves. They have protected their neighborhoods and done what the army has failed to do. This empowerment will not be crushed easily.


Security wise the situation is a disaster. It might take months to arrest all those criminals again. Moreover no one has a clue how the weapons that were stolen will ever be collected again or how the security will ever regain its necessary respect to restore public order after it was defeated in 4 hours. More importantly, reports indicate that the borders in Gaza were open for the past few days. What exactly was transferred between Gaza and Egypt is anyone's guess.


You seem to wonder after all of this where El Baradei and the Egyptian opposition are. CNN's anointed leader of the Egyptian Revolution must be important to the future of Egypt. Hardly! Outside of Western media hype, El Baradei is nothing. A man that has spent less than 30 days in the past year in Egypt and hardly any time in the past 20 years is a nobody. It is entirely insulting to Egyptians to suggest otherwise. The opposition you wonder? Outside of the Muslim Brotherhood we are discussing groups that can each claim less than 5,000 actual members. With no organization, no ideas, and no leaders they are entirely irrelevant to the discussion. It is the apolitical young generation that has suddenly been transformed that is the real question here.


Where Egypt will go from here is an enigma. In a sense everything will be the same. The army that has ruled Egypt since 1952 will continue to rule it and the country will still suffer from a huge vacuum of ideas and real political alternatives. On the other hand, it will never be the same again. Once empowered, the Egyptians will not accept the status quo for long.


On the long run the Egyptian question remains the same. Nothing has changed in that regard. It is quite remarkable for people to be talking about the prospect for a democratic transition at this moment. A population that was convinced just two months ago that sharks in the Red Sea were implanted by the Israeli Intelligence Services is hardly at a stage of creating a liberal democracy in Egypt. But the status quo cannot be maintained. A lack of any meaningful political discourse in the country has to be addressed. Until someone actually starts addressing the real issues and stop the chatterbox of clichés on democracy, things will not get better at all. It will only get worse.


2b)Egypt and the ‘freedom agenda’
By Jeff Jacoby


George W. Bush launched his second term as president with an inaugural address that put the spread of democratic freedoms at the heart of his international agenda. In one memorable passage, he promised "all who live in tyranny and hopelessness" that "the United States will not ignore your oppression, or excuse your oppressors. When you stand for your liberty, we will stand with you."

Within days, the administration was making it clear that this "Bush doctrine" would apply even to autocratic US allies like Egypt's Hosni Mubarak. When Ayman Nour, a leading Egyptian democracy activist, was arrested on bogus charges and thrown in jail, Secretary of State Condoleezza Rice cancelled a planned trip to Egypt in protest. Her trip was rescheduled only after Nour was released, and upon landing in Cairo in June 2005, she delivered a ringing defense of democracy and the right of peaceful dissenters to be heard.

"Throughout the Middle East, the fear of free choices can no longer justify the denial of liberty," Rice said. "It is time to abandon the excuses that are made to avoid the hard work of democracy."

No one knows how the uprisings now shaking the Arab world from Tunisia to Yemen -- and above all in Egypt, where at least 200,000 protesters yesterday staged the largest demonstration yet against Mubarak's rule -- will end. But a number of Bush's supporters and former aides have been arguing that what is underway in the Arab street vindicates the "freedom agenda" at which so many skeptics had scoffed. "It turns out, as those demonstrators are telling us," writes Elliott Abrams, who was Bush's deputy national security adviser, "that supporting freedom is the best policy of all."

Supporting freedom is the best policy of all, so long as "freedom" is understood to be shorthand for democratic pluralism, the rule of law, property rights, the protection of minorities, and respect for human dignity. Is that what the multitudes in Cairo's Tahrir Square are seeking? No doubt many Egyptians genuinely yearn for liberal democracy. But in a society where 84 percent of the public supports the death penalty for those who leave Islam, and where the only organized, disciplined opposition is the anti-democratic Muslim Brotherhood, it seems safe to assume that many more do not. When Mubarak leaves office -- he promised yesterday not to run for another term -- will an orderly conversion to democracy and civil rights follow? Or will the "Lotus Revolution" be hijacked by illiberal, anti-Western radicals no more interested in popular freedom than Mubarak was?

If US foreign policy in recent years had consistently reflected Bush's "freedom agenda" -- if prodding the Arab world toward a democratic renaissance had become an unmistakable American priority in recent years -- perhaps Egypt would already have made the transition to a moderate, humane, post-Mubarak government. We'll never know. The freedom agenda didn't survive.

Clearly the promotion of freedom and human rights has not been a key objective of the current US administration. When the Iranian government crushed democratic protests in 2009, President Obama refused to get involved, unwilling to "be seen as meddling" in Iranian affairs. He slashed federal funding for programs promoting Egyptian democracy and civil society. In his State of the Union address last week he said nothing about the convulsions that were already underway in Egypt and nothing about Hezbollah's alarming power grab in Lebanon. As for the unprecedented revolution in Tunisia, he gave it a throwaway line near the end of his speech.

Yet it wasn't under Obama that the Bush doctrine was deep-sixed. It was under Bush.

There was no sequel to Secretary Rice's dramatic 2005 exhortation in Cairo. When Mubarak a few months later claimed victory in an "election" so grotesquely rigged that most Egyptians boycotted the polls, US Ambassador Frank Ricciardone publicly fawned over him, going on Egyptian TV to offer "the congratulations of the United States ... for this great accomplishment." Ayman Nour was thrown back in prison, but Rice fought a congressional effort to reduce the nearly $2 billion in aid Egypt annually receives from Washington.

What was true of Egypt was true elsewhere. From Moammar Ghadafy's Libya to Vladimir Putin's Russia, from Saudi Arabia to North Korea, the Bush administration's commitment to liberty and democratic reform all too often receded into little more than lip service -- quotable, perhaps, but ineffective.

Yes, supporting freedom is the best policy. Not just because freedom is better than stability. Not just because tyranny breeds extremism. But because it is unworthy of a nation as great and free as ours not to promote the values it most esteems. It shouldn't take an upheaval in the Arab street to remind us that it is always in America's interest to promote liberal democracy.
-------------------------------------------------------------------------------------3): Manufacturing Index Raises Global Inflation Fears
By Forrest Jones

A survey of purchasing managers worldwide shows manufacturing is on the rise, more hiring is on the way and so are rising consumer prices, the Financial Times reports.

The composite global PMI index, compiled by JPMorgan and Markit economics, hit 57.2 in January, up from 55.6 in December and the highest reading on this measure since the series began in 1998. That's good news for job seekers.

"The manufacturing recovery has regained traction, but even more pleasing is that the [global manufacturing] labor market has begun to create jobs," says Rob Dobson, senior economist at Markit.

However, economists say, increased manufacturing means increased demand for commodities, and that means higher consumer prices in the end.

"Inflation pressures are coming from all sides, demand and supply, and international commodity prices are now adding to the challenge," says Leif Eskesen, HSBC’s India chief economist.

Some even caution that hiring may not seriously pick up in the U.S. manufacturing sector, at least enough to put a dent in high unemployment rates.

"The employment index has been at a relatively high level for some months now, but manufacturing payrolls have actually continued to decline," says Paul Ashworth, of Capital Economics.

U.S. consumers, meanwhile, are still hesitant to spend and pump up the economy due to unemployment and inflationary fears.

"The U.S. jobless rate remains at the heart of the issue for Americans," James Russo, vice president of The Nielsen Company, tells Reuters. "It has topped 9 percent for 20 months straight, which is the longest streak on record."

3a)Pimco’s Gross: ‘Devil’s Bargain’ Keeps Rates Low, Harms Savers

Policymakers are robbing savers by driving down real interest rates as they keep borrowing costs at record lows in a “devil’s bargain,” Pacific Investment Management Co.’s Bill Gross said in a commentary.

“Central banks and policymakers are taking money from one class of asset holders and giving it to another,” Gross wrote in an investment outlook posted on the firm’s website.

“A low or negative real interest rate for an ‘extended period of time’ is the most devilish of all policy tools. And the asset class holder that it affects, or better yet, infects, is the small saver and institutions such as insurance companies and pension funds.”

The difference between the yield on 10-year Treasury notes and the year-over-year consumer price index, known as the real yield, was 1.90 percent today, down from an average of 2.62 percent since 1991. It narrowed from a high of 5.95 percent in August 2009 as the Federal Reserve has kept the benchmark interest rate in a range of zero to 0.25 percent to spur economic growth.

The drop in real 10-year interest rates has “arguably been responsible” for gains in the stock market and 2 percent to 3 percent annual appreciation in bonds, Newport Beach, California-based Gross wrote. At the same time, it has lowered the returns of small savers and investors in long-term fixed-income assets, he wrote.

“The metaphorical devil’s bargain has its equivalent in the credit markets these days,” Gross wrote. “ To put it bluntly, they are robbing savers and taking money surreptitiously from longer-term asset holders who are incorrectly measuring future inflation,” he wrote.

Reducing Holdings

Gross said investors may want to reduce holdings of Treasurys and U.K. gilts because of the unattractive returns from real yields.

“Old-fashioned gilts and Treasury bonds may need to be ’exorcised’ from model portfolios and replaced with more attractive alternatives both from a risk and a reward standpoint,” he wrote.

Gross cut the proportion of U.S. government and related securities in Pimco’s Total Return Fund to 22 percent of assets in December from 30 percent in November, according to a report placed on the company’s website on Jan. 14. He raised holdings of mortgage debt in December to 45 percent, the highest level since July 2009, from 43 percent as prices of government securities fell.

The real yield on 5-year Treasury Inflation Protected Securities was minus 0.35 percent today, down from the 5-year average of 1.29 percent.

Lost Its ‘Anchor’

The negative yield “is perhaps reflective of a market that has lost its fundamental value anchor,” Gross wrote. “A century-long history of average 5-year real yields would point out that bond investors in Aaa 5-year sovereign space have demanded and received a real interest rate return of 1.5 percent instead of today’s -0.1 percent. We are being shortchanged, in other words, by 160 basis points from the get-go.”

The $239 billion Total Return Fund managed by Gross posted a 7.37 percent gain in the past year, beating 82 percent of its peers, according to data compiled by Bloomberg. The one-month performance is 0.18 percent, beating 43 percent of competitors. Pimco is a unit of Munich-based insurer.
-------------------------------------------------------------------------------------
4)Obama to Egyptian Army: Remove Mubarak now, start transition


President Barack Obama delivered an ultimatum to Egyptian Vice President Omar Suleiman and the army and security chiefs: Mubarak must be removed in the coming hours or else US aid to Egypt will be cut off, Washington sources exclusively report. Pressure on the Egyptian armed forces to oust the president forthwith was further applied by Secretary of State Hillary Clinton who called Vice President Omar Suleiman, US Defense Secretary Robert Gates who called Egyptian defense minister Mohamed Tantawi, and US armed forces chief Adm. Mike Mullen in a telephone call to the Egyptian chief of staff Gen. Sami Enan.,

French President Nicolas Sarkozy, German Chancellor Angela Merkel and UK Prime Minister David Cameron were recruited earlier to lean hard on Egyptian army chiefs to bring Mubarak's presidency to an end in the coming hours.

Sources report all Israelis remaining in Egypt, including news correspondents, were evacuated from Egypt Wednesday night in view of the danger of civil warfare spreading from the first confrontation in Tahrir Square between pro- and anti-Mubarak activists on the ninth day of the campaign for his overthrow.

It turned into a bloody collision with 30 confirmed dead and at least 2,000 injured -most of them protesters.

Obama slapped down his ultimatum when he saw Mubarak had unleashed the strong-arm squads of his National Democratic Party against the anti-government protesters, the day after he told the nation that he would stay for the remainder of his term as president.

The White House shot back: "President Barack Obama has been clear on Egypt that the transition must begin now, and now means now."

Obama hardened his position following three more occurrences:

1. The Egyptian army for the first time abandoned its neutrality and let 50,000 Mubarak supporters enter Tahrir Square where the protesters had been gathering without stopping them for inspection at the checkpoints outside. They stormed into the square on camels and horses, trampled protesters and beat about them with knives, swords, axes and petrol bombs.

Until that moment, the White House had been confident that the Egyptian army was solidly behind a peaceful transition process for displacing the president. But then, alarm signals started flashing.

The US administration is trying to find out if the army has switched its support to the president on the initiative of a local commander, or the entire military command has backtracked and laid the country open to a civil conflict. An Egyptian source stated: The country may be descending into a bloodbath.

2. Information reached Washington that the first appearance of violent Mubarak loyalists in Tahrir Square was not the Egyptian president's final throw but his first. More are planned for the coming days in other parts of the country too, climaxing on Friday, Feb. 4.

The Americans have begun to understand that the 82-year old Egyptian president, although seriously ill, has no plans to go quietly as he promised in his speech to the nation Tuesday night. It is even possible that he may not go voluntarily at all.

3. The first fissures appeared Wednesday in opposition ranks. All ten secular parties agreed to respond positively to the Vice President's invitation to dialogue on constitutional reform, excepting the Muslim Brotherhood, which is the largest and best organized of them all. Its leaders refused to have any truck with the regime or any of its leaders and demanded that Mubarak step down without further delay.
The Brotherhood also heated up its denunciations of America, Britain and Israel.
-----------------------------------------------------------------------------------
5)O's house of cards
Health law starts to tumble down
By MICHAEL A. WALSH


Monday's ruling by federal Judge Roger Vinson that the Patient Protection and Affordable Care Act -- a k a ObamaCare -- is unconstitutional is a signal event in modern American history. For the first time since FDR browbeat the Supreme Court into accepting most of his New Deal, the Leviathan known as the federal government has been rocked back on its heels.

If the administration and the Senate Democrats had any sense, they'd take Judge Vinson's ruling as a gift, not a setback. Because, whether they know it or not, the judge just handed them an opportunity to get health care right.


The House Republicans took a dramatic step forward last month when they passed repeal, and Senate Minority Leader Mitch McConnell announced yesterday that he'll attach a repeal amendment to a bill authorizing funding for the Federal Aviation Administration as the Senate's next order of business.

Good for him. It's imperative that the Republicans keep the momentum going; whether the fate of ObamaCare is eventually decided by the Supreme Court is secondary to deciding its fate in the proper venue -- the legislative branch.

Judge Vinson's lucidly written and cogently argued decision, which approvingly cited the Federalist Papers, John Marshall and the Tenth Amendment, seized upon the Democrats' arrogant decision to not include a "severability clause" in the legislation -- which would've allowed the rest of the 2,000-page law to stand even if parts of it were to be found unconstitutional.

Vinson brought down the whole house of cards when he found that a) the coercive "individual mandate" that would have required every citizen to purchase health insurance was unconstitutional and b) that without the mandate, as the administration itself argued, the law would be unworkable.

"Because the individual mandate is unconstitutional and not severable, the entire act must be declared void," he wrote.

Yet the 78-page opinion isn't just the beginning of the end of ObamaCare on the judicial front. It also represents a significant blow to the fantasy of a "living constitution" -- which means, no constitution at all, just an ever-shifting set of political programs.

In finally containing the infinite elasticity of the Commerce Clause, Vinson has laid down a marker about how far the text of the Constitution can be stretched before it becomes meaningless.

"This case is not about whether the act is wise or unwise legislation, or whether it will solve or exacerbate the myriad problems in our health-care system," the judge wrote. "In fact, it is not really about our health-care system at all. It is principally about our federalist system, and it raises very important issues regarding the constitutional role of the federal government."

For more than a half-century, both Congress and the Supreme Court have treated the Constitution as a series of suggestions to be "interpreted," rather than the supreme law of the land. The game has been to grab some hapless phrase in the text and then use it as a rationale for the expansion of federal power.

But on which planet do the words, "to regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes" mean the Patient Protection and Affordable Care Act?

Now the game is up. Vinson's ruling has unhorsed the shoddy thinking and the aggressive, statist agenda behind ObamaCare. He has also stripped away the emotional protective shield from the legislation by properly framing the issue as one of law, not compassion.

He wrote: "Congress exceeded the bounds of its authority in passing the act with the individual mandate. That is not to say, of course, that Congress is without power to address the problems and inequities in our health-care system."

In other words, having made this mess in the first place, it's now up to congressional Democrats to get on the right side of the issue, vote for repeal and then come together with their Republican brethren in a grand bargain that makes everybody heroes.

But they probably won't. As a turn-of-the-century Tammany congressman once said, "What's the Constitution among friends?"
---------------------------------------------------------------------------------