Reda was the Israeli Consul General in Atlanta and was one of my first speakers in my JEA Speaker Series!
Another form of Apartheid!
Why is everyone so cross with America? (See 1 below.)
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A dear friend and fellow memo reader responded to my recent posting of Stratfor's Friedman regarding his article about Israel's Defensible borders. A must read response.
My friend knows from whence he speaks as a senior officer of the IDF and military historian.
What, however, is not discussed by him or Friedman is though military co-operation between The Pentagon and Israel is the best ever it is dangerous to buy Obama argument regarding his willingness to provide Israel with all kind of military equipment, ie. the new defensive Iron Dome, as proof of his 'sensitivity' towards Israel's safety.
The irrational problem with this argument is that if you force a friend to move into a dangerous neighborhood, make him take down the wall around the house and then provide his family with guns can you really claim to have helped him and that you have his best interests at heart?
Every time you force upon Israel a decision making them more vulnerable it is insane to then argue you have offset this threat because of your willingness to deliver better equipment to assist Israel in defending against this fact.
'I will allow someone to put a gun to your head but here is a helmet.'(See 2, 2a and 2b below.)
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Leaning tower of pizza? (See 3 below.)
And then we have what the real stimulus is all about, ie. many high paying government jobs low paying private sector jobs simply to save one job - Obama's! (See 3a below.)
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Glick reports on how Egyptian riots for democracy have backfired. (See 4 below.)
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The president of the United States is responsible for presenting Congress a budget to debate. Our 'unserious' president is not 'serious' about this responsibility because doing so means revealing facts he would rather hide and losing political leverage.
Obama would much prefer to demagogue Republicans, hoping they will submit their own budget so he can make them debate themselves. It is a clever political ploy and when it comes to cleverness Obama is a pro because he knows how gullible Americans are. However, when it comes to responsibility he is a fraud.
Being a contrarian I am of the view Obama may wind up beating himself with assistance from his sick economic recovery. This helps explain why the Republican field is so wide open and why more and more prospective candidates believe there is a better than even chance Obama's media darlings will be wrong. (See 5 below.)
However, Marc Faber brings up some very relevant points by stating what Obama has going for him - a preponderance of large groups totally dependent upon government support and largess, ie voting 'blocks' of economic 'blockheads' motivated solely by self-interest. (See 5a below.)
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An insightful article sent to me by a friend and fellow memo reader who was driven out of Egypt.
Professor Sharon lists ten rules for negotiating with Arabs. My view has always been - when your opponent is on his knees you have more leverage.(See 6 below.)
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Bob Doll makes a Pollyanish case for America.
Yes, we have long term strengths but they are being sapped by short term weaknesses that have serious longer term implications.
If and when the dollar no longer becomes acceptable it will create havoc on our economy and result in serious inflationary implications. We are fast approaching that day because of government growth, spending and crippling legislative restraints, ie. tens of thousands of pages of costly gobbledygook regulations etc. (See 7 and 7a below.)
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Dick
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1) IF YOU CROSS THE NORTH KOREAN BORDER ILLEGALLY YOU GET 12 YEARS HARD LABOR.
IF YOU CROSS THE IRANIAN BORDER ILLEGALLY YOU ARE DETAINED INDEFINITELY.
IF YOU CROSS THE AFGHAN BORDER ILLEGALLY, YOU GET SHOT.
IF YOU CROSS THE SAUDI ARABIAN BORDER ILLEGALLY YOU WILL BE JAILED.
IF YOU CROSS THE CHINESE BORDER ILLEGALLY YOU MAY NEVER BE HEARD FROM AGAIN.
IF YOU CROSS THE VENEZUELAN BORDER ILLEGALLY YOU WILL BE BRANDED A SPY AND YOUR FATE WILL BE SEALED.
IF YOU CROSS THE CUBAN BORDER ILLEGALLY YOU WILL BE THROWN INTO POLITICAL PRISON TO ROT.
IF YOU CROSS THE U.S. BORDER ILLEGALLY YOU GET !!!
A JOB, A DRIVERS LICENSE, SOCIAL SECURITY CARD, WELFARE, FOOD STAMPS, CREDIT CARDS,
SUBSIDIZED RENT OR A LOAN TO BUY A HOUSE, FREE EDUCATION, FREE HEALTH CARE,
A LOBBYIST IN WASHINGTON BILLIONS OF DOLLARS WORTH OF PUBLIC DOCUMENTS PRINTED IN YOUR LANGUAGE THE RIGHT TO CARRY YOUR COUNTRY'S FLAG WHILE YOU
PROTEST THAT YOU DON'T GET ENOUGH RESPECT AND, IN MANY INSTANCES, YOU CAN VOTE.
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2)Hi Dick,
I read George Friedman's piece in your recent post, and I wish I had the time to refute it point by point. Since I don't, the following will have to suffice:
1 - the 1967 Israeli victory was based on the fact that the Arab forces collapsed. Had the Egyptian and Syrian armies fought with anywhere near the competence they showed in 1973 (which was good, not great), the outcome may have been very different. Israel lost over 700 men killed in those six days, against a thoroughly demoralized, disintegrating opposition. It was more an Arab defeat than an Israeli victory (with all due respect to the IDF).
2 - Predicating a state's defense on pre-emptive war is bad strategy. It not only relies on intelligence that may fail (as it did in 1973, when the Arabs attempted deception and succeeded), it also means that in a crisis, the BEST option is to go to war. If the Arabs had tried to deceive in 1967, instead of moving their forces and declaring their objective to be Israel's destruction, it is not clear that Eshkol would have agreed to pre-empt. Then the Arab attack, if it came, would have been launched into the Negev and Galilee, with the Iraqi force (which was stopped before it crossed the Jordan River) attacking across Israel's 9-mile wide corridor to the coast north of Tel Aviv. Strategic depth provides not only battle maneuver room, but also policy maneuver room.
3 - Poor logistics planning, along with the intelligence failure, (both were the result of overconfidence and mis-learned lessons from the 1967 War), led to the ammunition and equipment crisis during the 1973 War, but the Soviet resupply of the Egyptians and Syrians made the American airlift critical. The IDF wiped out the Arab armies twice, so by the third week of the war, they were fighting a Soviet-supplied third round. America stepped in to (among other things) prevent a Soviet success, and even under those circumstances, Kissinger was reluctant to resupply Israel. Proper planning along with the fall of the Soviet Union have changed this equation. This doesn't mean that having the US as an ally isn't important, but as John Mearsheimer (who everyone loves to hate) wrote: "when a state dials 911, nobody answers." The international system is a self-help system; if you can't defend yourself with what you have, you are in danger of annihilation. Better to have the strategic assets than to rely on others.
Best,
2a) Iran has secretly stocked enriched uranium for four nuclear bombs
The Wisconsin Project on Nuclear Arms Control, American's scientific watchdog on world nuclear weapons production, estimates that by Dec. 2008, Iran had accumulated enough U-235 to fuel one nuclear bomb; by 2009, enough for a second, by August 2010 material for a third bomb and by April 2011, enough enriched uranium for a fourth bomb.
These estimates presuppose an Iranian decision to further process low-enriched material to weapons grade - a process taking no more than a couple of months.
Iran, says the Wisconsin Project, is consolidating its status as a "virtual" nuclear weapon state – meaning it can set about building a bomb whenever its rulers so decide.
In its twice-annual report published Thursday, June 2, Wisconsin revealed three further developments in Iran's nuclear drive:
1. Since November 2010, when Iran stopped enriching uranium in all cascades at the Natanz plant for about a week (the report does not give the reason for the stoppage –possibly a Stuxnet virus invasion of its computer control system), the enrichment rate has increased. The 5,000 centrifuges spinning in February 2011 increased to nearly 6,000 in May 2011.
Iranian sources add: Prof. Ferei-doon Abbasi Davani has taken over as director of the enrichment complex at Natanz. He was formerly in charge of combating the Stuxflex worm. Last November, Prof. Abbasi Dayani escaped with light injuries from an attack by a pair of motorcyclists who attached a sticky bomb to his car. It occurred near the Imam Hossein University in Tehran where most of Iran's secret nuclear labs are located.
2. Wisconsin quotes the International Atomic Energy Agency's May 2011 report that one of its seals was broken in the "feed and withdrawal area" of the Natanz enrichment plant.
This means that Iran took action to conceal the real amount of is enriched uranium stockpile from the nuclear watchdog and the fact, as Wisconsin reports, that it has accumulated enough material for building four nuclear bombs. Its steady progress will go undetected until the next IAEA inventory in October or November.
Intelligence sources point out that Tehran has won a period of six to seven months for keeping its nuclear activities hidden from oversight with no one in the West or in Israel able to find out what is going on at the Natanz enrichment plant.
3. Wisconsin goes on to state: "Uncertainties about the number of centrifuges operated by Iran make it difficult to draw a conclusion about the performance of individual machines." More machines may be switched on when IAEA inspectors are not present while less, more advanced centrifuges, may take over after the inspection is over.
These revelations are highly pertinent to the controversy taking place in Israel over the surprising comments by ex-Mossad Director Meir Dagan. Dubbed "Mister Stop the Bomb" for reputedly directing covert operations that held off Iran's nuclear threat for five or six years – though this may an exaggeration - Dagan suddenly began speaking out strongly against any Israeli attack on Iran's nuclear program. Wednesday, June 1, he implicitly warned that such an attack would precipitate a regional war in which Israel would fare badly.
Israel's political and defense establishments have always had their doves but Dagan is sounding like one for the first time.
The controversy around his comments reflects a similar argument afoot in US political and defense circles over whether the time has come to smash Iran's nuclear capability or stand by and let the Islamic Republic becomes a "virtual nuclear weapon state."
In the last three years, the two schools of thought for and against military action against Iran have been joined by a third, which affirms that the US and Israel can live with an Iran armed with one or two nuclear bombs because this number would be dwarfed even by Israel's reputed stock let alone the American arsenal. Therefore, until Iran stockpiles a serous arsenal of weapons, it does not constitute an existential threat to Israel.
The Wisconsin Project's latest report explodes this argument because it exposes the steady accumulation of materials for four bombs in two-and-a-half years and Iran's dogged advance toward a serious arsenal unless it is stopped.
That is the reason why the military option is back on the table in Jerusalem.
2b)Ahmadinejad predicts US demise, Israel's disappearance
By JPOST.COM STAFF
Speaking at Khomeini shrine, Iranian president says "war on hegemony" close to its end, "monotheistic movement" will see success.
Iranian President Mahmoud Ahmadinejad declared on Friday that the "war on hegemony" was approaching its end, predicting the imminent collapse and subsequent disappearance of the United States and Israel, Iranian Press TV reported.
Ahmadinjead was speaking on the 22nd anniversary of the passing of Ayatollah Ruhollah Khomeini, the imam who took over Iran and established the current Islamic Republic.
Amhadinejad declared that hegemony is the "last impediment to the monotheism front," and that with its demise the "monotheistic movement" would achieve lasting "prosperity." He explained that the predominant goal of the "war on hegemony" is to deal with "US domination and Israel's existence."
The Iranian president kept an optimistic tone during his speech at Khomeini's shrine, saying "I am certain that the region will soon witness the collapse of Israel and the US," DPA reported.
Ahmadinejad has for half a decade been calling for the removal of what he often calls the "Zionist entity" from the Middle East, rhetoric also used by Hezbollah and Hamas of whom Iran supports in their attacks against Israelis.
In 2005, the Iranian president evoked strong international condemnation when said Israel should be wiped off the Middle East map and moved to the United States or Europe.
Commemorating president said that Iranians must remain vigilant as "the enemy presses ahead with its schemes," Press TV reported.
-------------------------------------------------------------------------------------------------------------------------3)Cain: With All Due Respect, Obama Couldn't Run a Pizza Joint
By David A. Patten
Fast-rising GOP presidential candidate Herman Cain, the former Godfather’s Pizza CEO emerging as a strong contender in the Iowa caucuses, blasted President Barack Obama’s leadership abilities in an exclusive Newsmax interview, saying Obama “could not run one Godfather’s pizza restaurant.”
Cain, who has been rising fast in the polls after his impressive showing in last month’s presidential debate in South Carolina, called the president as an indecisive leader who has lost most Americans' confidence.
“The president has demonstrated that he lacks leadership in a whole lot of ways [and] could not run a company,” Cain told Newsmax. “And I don’t mean to be disrespectful: He could not run one Godfather’s pizza restaurant.
“Instead of being decisive, he dithers,” Cain said. “Instead of having a management structure where he can entrust to some key people responsibility, he has an organization that is unmanageable. When he added 36 czars to go with the ones he already inherited, that is an unmanageable structure. So nobody knows who’s in charge."
Although GOP attacks charging Obama with weak leadership have been muted since the successful U.S. operation to take out Osama bin Laden, those complaints have resurfaced with the growing frustration over the lack of a plausible plan from the administration on reining in entitlements and deficit spending.
“So he’s not decisive, he dithers. He has a structure that doesn’t work,” Cain said. “He’s inconsistent, and he’s broken a lot of promises, and he is losing the confidence not only of a lot of his supporters, but has lost clearly a lot of confidence from the American people.”
Cain, a conservative talk-show host and a respected voice in management circles, is a turnaround specialist who is credited with saving Godfather’s Pizza from bankruptcy during his tenure as its CEO. Cain also served a stint as chairman of the National Restaurant Association, and was chairman of the Federal Reserve Bank of Kansas City from 1995-1996.
Cain’s broadside against Obama might have gone unnoticed before his abrupt emergence on the national political scene. A new Public Policy Polling survey released Wednesday shows Cain is now tied with former Alaska Gov. Sarah Palin in Iowa, behind only former Massachusetts Gov. Mitt Romne, who officially announced his candidacy on Thursday.
Palin and Cain each had 15 percent, compared with 21 percent for Romney. Unlike Cain, however, Palin has yet to toss her hat in the ring.
The Public Policy survey was the third poll in the past week showing Cain near the top of the GOP heap -- all the more impressive considering that he’s still battling relatively low levels of name recognition.
Other highlights from Cain’s exclusive Newsmax interview:
Regarding criticism that he has stumbled over foreign policy issues, Cain openly concedes: “That’s a legitimate criticism of me.” But his common-sense experience and problem-solving skills, he says, can overcome any lack of foreign-policy expertise. “People need to keep in mind: What president has ever taken office who knew everything?” Cain asks. He says that he plans to surround himself with foreign-policy experts, and will ask the right questions to pursue a commonsense approach.
Cain believes the Obama administration has greatly exaggerated to impact failing to raise the debt ceiling would have on the U.S. economy. Cain says that he would consider furloughing federal employees and temporarily shutting down some government operations, rather than increasing the government’s authority to borrow more money, about half of which comes from foreign governments. “I would furlough some federal employees. This is what a businessman does, when it comes to having to save a business,” he says. “You do what you have to do, and make some tough choices.”
He reiterates that he had no problem with the concept of a TARP program to save the banking system from a global financial meltdown. But the implementation of TARP, he says, “was a disaster,” adding: “They picked winners and losers, they used the money for things other than banks, they tried to force money on banks that didn’t want it. The administration used it purely as a discretionary tool.”
He predicts that the GOP presidential nominee will be a grass-roots conservative, rather than an establishment Republican. As evidence of the strength of the grass-roots fervor shaping the political process, he tells Newsmax that donations to his campaign “have gone up dramatically.”
Cain tells Newsmax he now has “almost 175,000 online volunteers ready to go to work for the Herman Cain presidential campaign.”
© Newsmax. All rights reserved.
3a) The Chevy Volt MUST NOT be allowed to fail!
The "Dirty Little Secret Behind the Chevy Volt".... The Rest of the Story..............
The Volt story is not new, but its impact will live on as we continue trying to "stimulate" the economy and reward our followers. The key point here is that GE is not buying these cars, we are with our tax dollars. Another sideline to obama's appointment of Immelt, who was supposed to create jobs for America, was that he was the one who decided to move all of their light bulb manufacrturing to Mexico. Did I miss something in his assignment as to what country he was to create jobs for?
Patrick Michaels is a senior fellow in Environmental Studies at the Cato Institute and the editor of the forthcoming Climate Coup: Global Warming's Invasion of our Government and our Lives, as well as the author of several other books on global warming.
His Forbes column on the Chevy Volt is a case study in the nexus between big government corruption and big business rent-seeking.
Michaels briefly recaps the well-known consumer fraud in which GM has touted the Volt as an all-electric mass production vehicle on the supposed basis of which its sales receive a $7, 500 taxpayer subsidy, which still renders it overpriced and unmarketable.
Michaels notes that "sales are anemic: 326 in December, 321 in January, and 281 in February." There seems to be a trend here.
Michaels adds that GM has announced a production run of 100,000 in the first two years and asks what appears to be a rhetorical question: "Who is going to buy all these cars?"
But wait! Keep hope alive! There is a positive answer to the question.
Jeffrey Immelt's GE will buy a boatload of those uneconomic GM cars. Here the case study opens onto the inevitable political angle: Recently, President Obama selected General Electric CEO Jeffrey Immelt to chair his Economic Advisory Board.
GE is also awash in windmills waiting to be subsidized so they can provide unreliable, expensive power.
Consequently, and soon after his appointment, Immelt announced that GE will buy 50, 000 Volts in the next two years, or half the total produced.
Assuming the corporation qualifies for the same tax credit, we (you and me) just shelled out $375, 000, 000 to a company to buy cars that no one else wants, so that GM will not tank and produce even more cars that no one wants. And this guy is the chair of Obama's Economic Advisory Board?
But of course. Michaels includes this hilarious detail in his case study:
In a telling attempt to preserve battery power, the heater is exceedingly weak. Consumer Reports their tests averaged a paltry 25 miles of electric-only running, in part because it was testing in cold Connecticut . (The [GM] engineer at the Auto Show said cold weather would have little effect.) It will be interesting to see what the range is on a hot, traffic-jammed summer day, when the air conditioner will really tax the batteries. When the gas engine came on, Consumer Reports got about 30 miles to the gallon of premium fuel; which, in terms of additional cost of high-test gas, drives the effective mileage closer to 27 mpg.
A conventional Honda Accord, which seats 5 (instead of the Volt's 4), gets 34 mpg on the highway, and costs less than half of what CR paid, even with the tax break.
The story of the GM Volt deserves a place in the Harvard Business School curriculum....but of course, it won't. It's a classic tale of the GOVERNMENT deciding what the public needs, not the marketplace.
PS.- The other reason behind this stimulating story is Obama must keep the UAW in business, because Obama owes them for his election. Starting to make sense yet.
-------------------------------------------------------------------------------------------------------------------------4)The real Egyptian revolution
By Caroline B. Glick
What the West's intoxication with the myth of the Arab spring has already sprung
The coverage of recent events in Egypt is further proof that Western elites cannot see the forest for the trees. Over the past week, leading newspapers have devoted relatively in-depth coverage to the Egyptian military authorities' repressive actions in subduing protesters in Tahrir Square in Cairo, particularly during their large protest last Friday.
That is, they have provided in-depth coverage of one spent force repressing another spent force. Neither the military nor the protesters are calling the shots anymore in Egypt, if they ever were. That is the job of the Muslim Brotherhood.
The proximate cause of last Friday's mass demonstration was what the so-called Twitter and Facebook revolutionaries consider the military's slowness to respond to their demand for ousted President Hosni Mubarak's head on a platter. The military responded by announcing that Mubarak and his sons will go on trial for capital crimes on August 3.
Beyond bloodlust, the supposedly liberal, young sweethearts of the Western media are demanding a cancellation of the results of the referendum held in March on the sequencing of elections and constitutional reform. Voting in that referendum was widely assessed as the freest vote in Egyptian history. Seventy-seven percent of the public voted to hold parliamentary and presidential elections in September and to appoint members of a constitutional assembly from among the elected members of the next parliament to prepare Egypt's new constitution.
The protesters rightly assert that the early elections will pave the way for the Muslim Brotherhood's takeover of Egypt since the Brotherhood is the only well-organized political force in Egypt. But then, the liberals said they wanted popular rule.
The Facebook protesters demanded Mubarak's immediate removal from power in January. They would not negotiate Mubarak's offer to use the remainder of his final term to shepherd Egypt towards a quasi-democratic process that might have prevented the Brotherhood from taking over.
In their fantasy world — which they inhabit with Western intellectuals — the fates of nations are determined by the number of "likes" on your facebook page. And so, when they had the power to avert the democratic Islamist takeover of their country in January, they squandered it.
Now, when it is too late, they are trying to win through rioting what they failed to win at the ballot box, thus discrediting their protestations of liberal values. Their new idea was spelled out last week at an EU-sponsored conference in Cairo. According to the Egyptian media, they hope to convince the military they protest against to stack the deck for the constitutional assembly in a way that prevents the Brotherhood from controlling the proceedings. As Hishan El-Bastawisy, a former appellate judge and presidential hopeful explained, "What we can push for now is that the Supreme Council of the Armed Forces has to put some guarantees of choosing the constituent assembly in the sense that it does not reflect the parliamentary majority."
So much for Egypt's liberal democrats.
As for the military, its actions to date make clear that its commanders do not see themselves as guardians of secular rule in Egypt. Instead, they see themselves as engines for a transition from Mubarak's authoritarian secularism to the Brotherhood's populist Islamism.
Since forcing Mubarak to resign, the military junta has embraced Hamas, the Palestinian branch of the Muslim Brotherhood. They engineered the Palestinian unity government which will pave the way for Hamas's victory in the Palestinian Authority's legislative and presidential elections scheduled for the fall.
Then there is the Sinai. Since the revolution, the military has allowed the Sinai to become a major base not only for Hamas but for the global jihad. As Prime Minister Binyamin Netanyahu warned on Monday, Egyptian authorities are not asserting their sovereignty in the Sinai and jihadists from Hamas, al Qaida and other groups are inundating the peninsula.
Last week's move to open Egypt's border with Gaza at the Rafah passage is further proof that the military has made its peace with the Islamic takeover of Egypt. While the likes of the New York Times make light of the significance of the move by pointing to the restrictions that Egypt has placed on Palestinian travel, the fact is that the Egyptians just accepted Hamas's sovereignty over an international border.
Many in the West argue that given Egypt's increasingly dire economic situation, there is no way the military will turn its back on the US and Europe. By all accounts, Egypt is facing economic collapse. By summer's end it will be unable to feed its population due to grain shortages. By November, its foreign reserves will have dried up.
But rather than do everything they can to convince foreign investors and governments that Egypt's market is safe, the military junta is taking steps that destroy the credibility of the Egyptian market. To please both the Mubarak-obsessed protesters at Tahrir Square and the Muslim Brotherhood, the military refuses to reinstate natural gas shipments to Israel.
Not only is Egypt denying itself hundreds of millions of dollars in revenues by cutting off gas shipments to Israel, (and Jordan, Syria and Lebanon). It is destroying its reputation as a credible place to do business. And according to the New York Times, it is also making it impossible for the Obama administration to assist the Egyptian economy.
The Times' reported this week that the US tied President Barack Obama's pledge of $1 billion in debt forgiveness and $1 billion in loan guarantees to the Egyptian authorities asserting sovereignty in northern Sinai. Presumably this means they must renew gas shipments to Israel and fight terror.
The fact that the military would rather facilitate Egypt's economic collapse than take the unpopular step of renewing gas shipments to Israel ought to end any thought that that economic interests trump political sentiments. This situation will only get worse when the Muslim Brotherhood takes over Egypt in September.
And make no mistake. They intend to take over. As they did in the lead up to March's constitutional referendum, the Brotherhood is using its mosques as campaign offices. The message is clear: If you are a good Muslim you will vote for the Muslim Brotherhood.
When Mubarak was first overthrown in January, the Brotherhood announced it would only contest thirty percent of the parliamentary seats. Last month the percent rose to fifty. In all likelihood, in September the Brotherhood will contest and win the majority of the seats in the Egyptian parliament.
When Mubarak was overthrown, the Brotherhood announced it would not run a candidate for president. And when Brotherhood Shura governing council member and Physician's Union leader Abdel Moneim Aboul Fotouh announced last month that he is running for president, the Brotherhood quickly denied that he is the movement's candidate. But there is no reason to believe them.
According to a report Thursday in Egypt's Al Masry al Youm's English edition, the Brotherhood is playing to win. They are invoking the strategies of the movement's founder Hassan al Banna for establishing an Islamic state. His strategy had three stages: indoctrination, empowerment, and implementation. Al Youm cites Khairat al-Shater, the Brotherhood's "organizational architect" as having recently asserted that the Brotherhood is currently in the second stage and moving steadily towards the third stage.
Now that we understand that they are about to implement their goal of Islamic statehood, we need to ask what it means for Egypt and the region.
Sunday Brotherhood Chairman Mohammed Badie gave an interview to Egyptian television that was posted on the Muslim Brotherhood's English website iquwanweb.com. Badie's statements indicated that the Brotherhood will end any thought of democracy in Egypt by taking control over the media. Badie said that the Brotherhood is about to launch a public news channel, "with commitment to the ethics of the society and the rules of the Islamic faith."
He also demanded that state radio and television begin broadcasting recordings of Banna's speeches and sermons. Finally, he complained about the anti-Brotherhood hostility of most private media organs in Egypt.
As for Israel, Badie was asked how a Brotherhood-led Egypt would react if Israel takes military action against Hamas. His response was honest enough. As he put it, "The situation will change in such a case, and the Egyptian people will have their voice heard. Any government in power will have to respect the choice of the people, whatever that is, like in any democracy."
In other words, the peace between Israel and Egypt will die of populist causes.
So far, Israel's responses to these strategically disastrous developments have been muted and insufficient. Wednesday the Defense Ministry announced that Israel is speeding up construction of the border fence between Egypt and Israel. The 210 km long fence is scheduled to be completed by the end of 2012.
While this is an important move given Gaza's effective fusion into the Sinai with the border opening, it does not address the looming threat from Egypt itself. It does not address the fact that with Mubarak's ouster, a previously all-but unthinkable outbreak of hostilities with Egypt has now become eminently thinkable.
Facing the prospect of a Muslim Brotherhood ruled Egypt in September, Israel's government must begin preparing both diplomatically and militarily for a new confrontation with Egypt.
The West's intoxication with the myth of the Arab spring means that currently, the political winds are siding with Egypt. If Egypt were to start a war with Israel, or simply support Hamas in a war against Israel, at a minimum, Cairo would enjoy the same treatment from Europe and the US that the Hizbullah-dominated Lebanese government and army enjoyed in 2006. To block this possibility, the government must begin educating opinion shapers and political leaders in the West about the nature of the Muslim Brotherhood It must also call for a cut-off of US military aid to Egypt.
Militarily, the government must increase the size of the IDF's Southern Command. The Egyptian armed forces have more than a million men under arms. Egypt's arsenal includes everything from F-16s to Abrams tanks to first class naval ships to ballistic missiles to sophisticated pontoon bridges for crossing the Suez Canal.
The IDF must expand its draft rolls and increase its force size by at least one division. It must also begin training in desert warfare and develop and purchase appropriate conventional platforms.
With the Iranians now apparently moving from developing nuclear capabilities to developing nuclear warheads, and with the Palestinians escalating their political war and planning their next terror war against Israel, it serves to reason that no in the government or the IDF one wants to consider the strategic implications of Egypt's reversion from peace partner to enemy.
But Israel doesn't get to decide what our neighbors do. We can only take the necessary steps to minimize their ability to harm us.
It's time to get cracking.
JWR contributor Caroline B. Glick is the senior Middle East Fellow at the Center for Security Policy in Washington, DC and the deputy managing editor of The Jerusalem Post, where her column appears.
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5)Money Expert Taylor: Fed, Congress Can’t Stop Recession in ‘Miserable’ 2012
By Forrest Jones
The United States is headed for another recession as the Federal Reserve and Congress have no more tools left to keep the economy moving enough to avoid another slowdown, says John Taylor, founder of the world’s largest currency-hedge fund.
The economy is due to cool off anyway, as the last recession began in 2007, and an end to money printing and stimulus spending will send the economy tanking anew.
“I am afraid that cutting the deficit means cutting final demand. It means the economy is going to slow," Taylor told CNBC. "It might not be a bad thing to cut the deficit but unfortunately, when you cut the deficit, you’re going to get a recession — you’re going to get a slowdown. The more you cut the deficit, the worse it’s going to be,” says Taylor, founder and CEO of FX Concepts, a New York hedge fund.
“I must say that next year is going to be truly miserable,” says Taylor, who manages about $8.5 billion and uses statistical models to help predict future movements in assets.
A recession will boost Republicans’ chances of taking back the White House in the 2012 elections, even if their spending-cut policies help throw the country back into recession, Taylor says.
Furthermore, the Federal Reserve might try more quantitative easing (QE), where it prints money in hopes banks take that money and fuel economic growth, but such polices haven’t worked in the recent past and won’t work in the future.
“I don’t think QE works very well because basically it puts money into the banks’ hands, and the banks aren’t lending it out. The banks are investing in markets and driving market prices up,” Taylor says.
In other words, only the markets here and abroad benefit from quantitative easing, but not normal people.
“It is not putting money into the hands of the consumer or of the small-business man.”
Nevertheless, such a scenario will unveil a counter-intuitive trading opportunity: the U.S. dollar.
Politicians will be forced to act and prep the economy for more long-term recovery.
“The more trouble we have for the debt ceiling the stronger the bond market will be and the stronger the dollar will be. It means we are going to do something,” Taylor says, referring to the $14.3 trillion government debt limit, which was recently broken and currently under analysis by lawmakers for an upward revision.
“And when we do something obviously that’s going to really drive the dollar up. Europe can’t do anything, Europe is falling apart. We can handle the austerity. We need the austerity in the long run.”
Bond markets are showing that many market players feel darker times are around the corner thanks to continued high unemployment rates, weak housing prices and sluggish economic growth in general.
The yield on the benchmark 10-year Treasury note fell below 3 percent recently, the first time since December, on evidence the economic recovery is losing momentum — and losing it fast.
"It does look like we have a pretty weak rebound, even weaker than we had considered," says Jason Brady, a managing director for Thornburg Investment Management in Santa Fe, New Mexico, according to Reuters.
5a)Marc Faber Interview: Here is What Faber is Bullish About
Insider Monkey, your source for free hedge fund data, interviewed Marc Faber during the Ira Sohn Conference. People tend to focus on the “Doom and Gloom” side of the glass when they think of Marc Faber, but he is bullish about real estate, equities, precious metals, and commodities. Our first question to Faber was about Barack Obama. Here is our interview with Marc Faber:
Faber: He is by far one of the worst Presidents the US has had. I’m very upset that none of what he said he would do, mainly change, has actually occurred. So I think he’s certainly intellectually dishonest. And he’s probably made the geopolitical situation worse and also the economic situation worse. And he’s actually vote-buying through handing out money and through increased transfer payments.
IM: Don’t you think he has his priorities straight?
Faber: No I don’t think so, because the priority would be to essentially make the US competitive, and by pursuing expansionary fiscal policies that enlarge the government, you atrophied the private sector. In other words, the private sector is hurt by too much government involvement.
Like my friends, they say, we have to pay more and more tax for government officials to harass us more and more and implement more and more regulation. And that of course is not a way to create prosperity. If you have a large corporation or a corporation, you are more likely to hire people outside the US than in the US .
IM: So what advice would you give for the next election cycle?
Faber: I think he will be reelected because we have some kind of a tyranny of the masses. You have essentially more people getting handouts than large tax payers. And so they are huge voting block. Then you have the unions, also large voting block. And then you have the government officials. They don’t want to have cutbacks in government and be fired. They essentially are paid more than the private sector. So again a large voting block.
I think it is quite likely that he will be reelected. But that is the problem of the US. In a maximum of 2-4 years, he will be gone, but the big people who vote in the US will still be there. And I think that in today’s presentations many observers have expressed a view that it’s very difficult to cut entitlements. In other words, social security, Medicare, and Medicaid because nobody wants to do that.
Nobody wants to accept that because everybody lives from that, so essentially the fiscal deficit will stay very large, and it will mean that over time the US dollar will lose its purchasing power, more money will have to be printed, more quantity of easy measures will have to take place, and so forth.
And eventually, the children, your children will be affected by all this.
IM: So is it safe to say that you’re a critic of the Bush tax cuts as well?
Faber: I think for me the tax cuts are not the issue. What they should have been accompanied by are spending cuts, and that’s the problem. That the tax cuts occurred, but no spending cuts. Actually spending went up, and the US embarked on expensive foreign expeditions where basically they have no business, in Afghanistan now, more and more involvement in Pakistan and involvement in Libya and so forth and so on.
And what it shows is the duplicity of the US . On the one hand, they go and attack Ghaddafi, who is not a nice man. I’m not defending him. But at the same time, they are kind of supportive of the King of Bahrain and the ruler of Yemen, who are equally vicious. And they are supportive of the Saudi Arabia regime.
IM: What could they possibly do against Saudi Arabia or Bahrain ?
Faber: Well then they shouldn’t do anything at all. They shouldn’t get involved in Libya. But obviously you seem to be a great admirer of Mr. Obama so you keep on admiring him, and you will see how the country will look like if he’s elected for another four years.
IM: It’s all in context. You have to take who’s running and go with that.
Faber: I’m an economist. I’m not a political servant.
IM: Okay. Do you have anything positive to say, against, just the backdrop of your Dr. Doom, Dr. Gloom forecast. Anything positive on the horizon?
Faber: Well the positive aspect of my negative view is essentially that you shouldn’t own cash and government bonds but you should be in assets like real estate or equities or precious metals or in commodities.
That is the positive view. In other words, the more negative you are about the world and the geopolitical trends which will lead to war, the more likely it is that you will do better in equities than say in bonds and cash.
IM: And so that would be your advice to any novice investor right now?
Faber: My advice would be to diversify heavily and have money in other jurisdictions than the United States , in other than US assets. In say Asia , Asian equities, Asian real estate. And I would have some money in custody outside the USA , in Australia or in Singapore or in Hong Kong or in Switzerland and not have all my assets here in the United States .
IM: What assets do you have in the United States ?
Faber: Well we don’t have a lot of assets in the US . We own some corporate bonds and we own some shares, because they are international mining groups, for example, and they’re listed in the US exchange. But they’re not really US companies.
IM: So your forecasted outlook for the US is dire.
Faber: It doesn’t mean that the stock market will go down a lot. Because if you print money, eventually everything goes up. But as we have seen, when you print money certain asset classes go up first too much, like housing, and then they come down, and then they don’t recover for a long time.
I think that real estate value in America is reasonably cheap, but I don’t think that it will go up a lot.
IM: What’s your favorite investment right now?
Faber: Well there’s no such thing as a favorite investment. But I think I tend to invest in Asia in promising countries, in equities, in real estate, and I own precious metals, obviously.
IM: Okay. Dr. Faber, thank you so much.
Faber: You’re welcome. Okay. Good luck with Mr. Obama.
-------------------------------------------------------------------------------------------------------------------------6)How to bargain in the Middle East
No peace, No peace plans, No price for Peace (A short guide to those obsessed with peace)
By Moshe Sharon
Everybody says that his donkey is a horse.
There is no tax on words.
(Two Arab proverbs)
On December 24th 1977, at the very beginning of the negotiations between Israel and Egypt in Ismailia , I had the opportunity to have a short discussion with Muhammad Anwar Sadat the president of Egypt . "Tell your Prime Minister," he said, "that this is a bazaar; the merchandise is expensive." I told my Prime Minister but he failed to abide by the rules of the bazaar. The failure was not unique to him alone. It is the failure of all the Israeli governments and the media.
On March 4, 1994, I published an article in the Jerusalem Post called "Novices in Negotiations" The occasion was the conclusion of the "Cairo Agreement." A short time later, Yasser Arafat, proved yet again that his signature was not worth the ink of his pen let alone the paper to which it was affixed, and his word was worth even less. Then, as in every subsequent agreement Israel was taken aback when her concessions had become the basis for fresh Arab demands.
In Middle Eastern bazaar diplomacy, agreements are kept not because they are signed but because they are imposed. Besides, in the bazaar of the Arab-Israeli conflict, the two sides are not discussing the same merchandise. The Israelis wish to acquire peace based on the Arab-Muslim acceptance of Israel as a Jewish state. The objective of the Arabs is to annihilate the Jewish state, replace it with an Arab state, and get rid of the Jews.
To achieve their goal, the Arabs took to the battlefield and to the bazaar diplomacy. The most important rule in the bazaar is that if the vendor knows that you desire to purchase a certain piece of merchandize, he will raise its price. The merchandise in question is "peace" and the Arabs give the impression that they actually have this merchandise and inflate its price, when in truth they do not have it at all.
This is the wisdom of the bazaar, if you are clever enough you can sell nothing at a price. The Arabs sell words, they sign agreements, and they trade with vague promises, but are sure to receive generous down payments from eager buyers. In the bazaar only a foolish buyer pays for something he has never seen.
There is another rule in the market as well as across the negotiating table: the side that first presents his terms is bound to lose; the other side builds his next move using the open cards of his opponent as the starting point.
In all its negotiations with the Palestinian Arabs, Israel has always rushed to offer its plans, and was surprised to discover that after an agreement had been "concluded" it had become the basis for further demands.
Most amazing is the reaction in such cases. Israeli politicians, "experts" and the media eagerly provide "explanations" for the Arabs' behaviour. One of the most popular explanations is that these or other Arab pronouncements are "for internal use," as if "internal use" does not count. Other explanations invoke "the Arab sensitivity to symbols," "honour," "matters of emotion" and other more patronising sayings of this nature. Does Israel possess no "sensitivities" or does it have no honour? What does all this have to do with political encounters?
It is therefore essential, as the late President Sadat advised, to learn the rules of the oriental bazaar before venturing into the arena of bazaar diplomacy. The most important of all the rules is the Roman saying: "If you want peace -- prepare for war." Never come to the negotiating table from a position of weakness. Your adversary should always know that you are strong and ready for war even more than you are ready for peace.
In the present situation in the Middle East and in the foreseeable future "peace" is nothing more than an empty word. Israel should stop speaking about "peace" and delete the word "peace" from its vocabulary together with such phrases as "the price of peace" or "territory for peace." For a hundred years the Jews have been begging the Arabs to sell them peace, ready to pay any price. They have received nothing, because the Arabs have no peace to sell, but they have still paid dearly. It must be said in all fairness that the Arabs have not made a secret of the fact that what they meant by the word "peace" was nothing more than a limited ceasefire for a limited period.
Since this is the situation, Israel should openly declare that peace does not exist as an option in the Arab-Israeli conflict, and that it has decided to create a new state of affairs in the Middle East, compelling the Arab side to ask for peace; and pay for it. Unlike the Arabs, Israel has this merchandize for sale.
From now on Israel should be the side demanding payment for peace. If the Arabs want peace, Israel should fix its price in real terms. The Arabs will pay if they reach the conclusion that Israel is so strong that they cannot destroy it. Because of this, Israel's deterrent power is essential.
Therefore, if anyone asks Israel for plans, the answer should be: no "plans," no "suggestions," no "constructive ideas," in fact no negotiations at all. If the Arab side wants to negotiate, let it present its plans and its "ideas." If and when it does, the first Israeli reaction should always be "unacceptable! Come with better ones." If and when the time comes for serious negotiations, once the Arabs have lost all hope of annihilating the Jewish state, here are ten rules for bargaining in the Middle Eastern bazaar:
. Never be the first to suggest anything to the other side. Never show any eagerness "to conclude a deal." Let the opponent present his suggestions first.
. Always reject; disagree. Use the phrase: "Not meeting the minimum demands," and walk away, even a hundred times. A tough customer gets good prices.
. Don't rush to come up with counter-offers. There will always be time for that. Let the other side make amendments under the pressure of your total "disappointment." Patience is the name of the game: "haste is from Satan!"
. Have your own plan ready in full, as detailed as possible, with the red lines completely defined. However, never show this or any other plan to a third party. It will reach your opponent quicker than you think. Weigh the other sides suggestions against this plan.
. Never change your detailed plan to meet the other side "half way." Remember, there is no "half way." The other side also has a master plan. Be ready to quit negotiations when you encounter stubbornness on the other side.
. Never leave things unclear. Always avoid "creative phrasing" and "creative ideas" which are exactly what your Arab opponent wants. Remember the Arabs are masters of language. Playing with words is the Arab national sport. As in the market, so also at the negotiating table, always talk dollars and cents.
. Always bear in mind that the other side will try to outsmart you by presenting major issues as unimportant details. Regard every detail as a vitally important issue. Never postpone any problem "for a later occasion." If you do so you will lose; remember that your opponent is always looking for a reason to avoid honouring agreements.
. Emotion belongs neither in the marketplace nor at the negotiating table. Friendly words as well as outbursts of anger, holding hands, kissing, touching cheeks, and embracing should not be interpreted as representing policy.
. Beware of popular beliefs about the Arabs and the Middle East -- "Arab honour" for example. Remember, you have honour too, but this has nothing to do with the issues under negotiation. Never do or say anything because somebody has told you that it is "the custom." If the Arab side finds out that you are playing the anthropologist he will take advantage of it.
. Always remember that the goal of all negotiations is to make a profit. You should aim at making the highest profit in real terms. Remember that every gain is an asset for the future, because there is always going to be "another round."
The Arabs have been practising negotiation tactics for more than 2000 years. They are the masters of words, and a mine of endless patience. In contrast, Israelis (and Westerners in general) want quick "results." In this part of the world there are no quick results, the hasty one always loses.
Moshe Sharon is Professor of Islamic History at the Hebrew University
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7)The Bullish Case for the U.S. Economy Investment strategist Robert Doll says America's edge is faster population growth, companies that are global in scope, and a culture of innovation and entrepreneurship.
By JAMES FREEMAN
It's been a dreary week for economic news: slow job creation, falling home prices, lagging auto and consumer sales, and a sell-off in stocks. So it seems like a good moment to check in with one of Wall Street's leading perma-optimists, BlackRock Chief Equity Strategist Bob Doll, to see if he's still bullish on America.
To my considerable relief, he doesn't disappoint. "Credit markets are sound. Money growth is good," says Mr. Doll, whose optimism has been the right market call since March 9, 2009, when stocks hit their post-crisis lows. The Dow has since risen more than 85%, and Mr. Doll expects the slow economic expansion to continue.
As intriguing in this moment of U.S. pessimism is the 56-year-old uber-investor's long-term bullishness on American companies and U.S. competitiveness. "You could say we're the best house in a bad neighborhood," says the man who has spent 28 years managing money. "We have fewer problems and more solutions than Europe or Japan."
Mr. Doll is sitting in a conference room at one of BlackRock's two giant offices in midtown Manhattan. While his company remains obscure to most Americans, and has only existed since 1988, it is now the world's largest money manager.
Born as a subsidiary of the private equity firm Blackstone, the company went public in 1999 and after a series of mergers and acquisitions, BlackRock now keeps watch on more than $3.6 trillion of client money. Mr. Doll's job is to allocate almost $30 billion among shares of large U.S. corporations and to advise clients on the most compelling opportunities for equity investment.
Notably, his focus remains the United States, and he believes that the most important reason why America's house remains the nicest in the neighborhood of developed countries is that our family keeps getting bigger.
"Over the next 20 years, the U.S. work force is going to grow by 11%, Europe's going to fall by five, and Japan's going to fall by 17. This alone tells me the U.S. has a huge advantage over Europe and a bigger one over Japan for growth," he says. "And the reason for this is pretty simple. We have higher immigration than both of these, and we make more babies. We have a higher fertility rate. And they are the long-term determinants of population growth and therefore work force growth." Mr. Doll and his wife seem to be doing their part with three children.
But many Americans, whether they favor pundits on the right or the left, may have a hard time accepting that population growth and immigration are the keys to our prosperity. Mr. Doll explains the economics: "The long-term growth rate of any economy is the product of the change in the size of the work force multiplied by the productivity of the work force." Productivity is very hard to predict, he reports, but demographics is easy. "You count noses." And that tally shows a very healthy America.
But doesn't Mr. Doll smell trouble on productivity? It rose just 1.3% in the first quarter compared to the same quarter last year. He says that U.S. productivity is "OK and better than lots of other places." This is a recurring theme of our discussion— that America is the least worst among the major developed economies.
Mr. Doll's optimism comes despite his skepticism about the last several years of heavy government intervention in the economy. His team at BlackRock calculated that, at most, half of the 2009 stimulus program was "true stimulus" for the economy. What about the rest? "Call your congressman and find out where the money went." More than a few readers may be tempted to call BlackRock and ask how they concluded that even half of it was spent effectively.
What about the impact of ObamaCare, the 2010 Dodd-Frank financial reform law, and the president's continuing advocacy of tax increases? "All three of them are retardants to growth," says Mr. Doll.
He also concedes that "we face formidable long-term structural problems that make the U.S. less attractive than it otherwise might be," and yet he has written in these pages about America remaining a "city upon a hill" in the vision of Puritan John Winthrop. Mr. Doll could be making the least inspiring case for American exceptionalism in the history of the republic. "You might say we win by default, which is not a fun way to win," he says.
But can we really win merely by staying ahead of Europe and Japan? So far the answer seems to be yes. People are invariably shocked when Mr. Doll tells them that in 1995 the U.S. produced roughly 25% of the world's goods and services and in 2010, after 15 years that included a tech bust, a terrorist attack and a housing bust that triggered a financial crisis, the U.S. was still producing that same 25% of global GDP.
How is this possible given the rapid rise of China and India? Mr. Doll says the increase in emerging markets' share of the world economy has come "at the expense of mostly Japan and a bit Europe. The U.S. has held its own, which I think is a statement of our ability to be productive in a tough world."
But an investor would still have more upside in developing countries than in the U.S., right? Mr. Doll says that if he were forced to lock up his money in one place for the next 10 or 20 years he would indeed select the developing world and specifically India over China.
China's population will grow only slightly faster than that of the U.S. between now and 2030, he says, whereas he expects India's population to increase 32%, suggesting robust GDP growth. "The one-child birth policy in China will eventually arrest the growth rate of China to a much smaller number."
But in the short run, Mr. Doll likes the U.S. equity market best of all and reports that this is where most of his personal investments are, largely in the funds he oversees. "The U.S. stock market and the U.S. economy are increasingly different animals. It used to be when U.S. economic growth went a certain direction, so did the stock market," because so much of the business done by these companies was domestic. But now 40% happens elsewhere. Mr. Doll estimates that, over the next five years, 70% of the incremental earnings growth of S&P 500 companies will come from outside the U.S.
Among the formidable U.S. companies that he thinks are attractively priced now are Applied Materials, which makes the machines that make computer chips, pharmaceutical giant Bristol-Myers, and Chevron. He also believes that Alcoa "fits the slowly expanding global economy," and he is "increasingly intrigued" by Microsoft, a "blue chip" tech company with a stagnant stock price.
Mr. Doll is less bullish on the future for U.S. jobs. "I hope the number is not as high as seven or eight [percent unemployment] but I think it's higher than five," he says. "Said differently, when I went to school, we studied that full employment was 3% unemployment and then I went into the work world and I never saw three. And I think with almost every passing cycle—for a lot of reasons, technology being cheaper and more reliable than most human beings, as an example—the structural unemployment rate slowly but surely has moved higher. And I think that continues. So I hope it's not seven or eight. I think it's a little lower than that, hopefully six or seven. . . . Sad but true. And that has political and social consequences that I don't think we even know what to do with yet."
Inflation will also be higher, though Mr. Doll doesn't expect the Fed to let it get out of hand. Regulation is still too much of a burden, especially on young companies trying to go public, he adds, and "We need a major overhaul of our tax system if we're going to create more incentives and more productivity."
But even with all our problems, he says, "I think the entrepreneurial spirit is alive and well in the U.S." He argues that we are still the source of technological innovation and home to the greatest universities and the most creative businesses. He sees promising advances in health care and alternative energy technologies. By alternative he doesn't necessarily mean "green" energy, but simply new power sources given that he expects oil prices to keep rising.
Also, it should be noted that his outlook is premised on meaningful spending reductions in Washington. "I think we are moving in an austerity direction," he says. "Six months ago, no one had a plan that said, 'I'm going to be able to cut the deficit by X trillion over Y years." Now, with House passage of a bill by Rep. Paul Ryan (R., Wis.) and the looming vote on the nation's debt limit, he hopefully notes that all sides are at least talking about "trillions over years."
Mr. Doll's optimism—or, more accurately, his lack of pessimism—has at times gotten the best of him, as in 2008. "We turned slightly to the negative side of neutral, but I never said, 'Get out,'" he recalls. "The severity and rapidity of the problems was beyond belief."
Now in 2011, his views may not strike anyone as wildly optimistic. But on Wall Street, Mr. Doll's sobering catalog of U.S. weaknesses is what passes for bullishness. With unemployment hitting 9.1%, Main Street can hardly be any more cheerful.
All of which suggests a political opportunity for someone who can present a credible plan to return to low unemployment and robust economic growth. Optimism about the future is implicit in America's high birth rate. Pundits may continue to try to convince voters to accept a new normal, but Americans are probably aiming higher than the best house in a bad neighborhood.
Mr. Freeman is assistant editor of The Journal's editorial page.
7a)IBD Editorial: Jobs Slump — It's The Policy, Stupid
Recession: Two years into a "recovery," the unemployment rate leaps to 9.1% and just 54,000 new jobs are created. Is this just "bumps on the road to recovery," as the White House insists, or something more dangerous?
This has been the most miserable recovery in modern history. Not only are there not enough jobs being created, but also the economy itself looks to be stalling.
Gross domestic product grew a paltry 1.8% during the first quarter, and most economists expect something similar for the second quarter. Double dip? It's possible.
As we noted earlier last week before the new jobs data came out, the U.S. is already in a growth recession — defined as an economy that's growing too slowly to keep unemployment from rising.
Yet the Obama administration is crowing about its accomplishments as if slowing growth and rising joblessness have nothing to do with its bad policies.
"The initiatives put in place by this administration — such as the payroll tax cut and business incentives for investment — have contributed to solid employment growth overall this year, but this report is a reminder of the challenges that remain," said Austan Goolsbee, Obama's top economic adviser.
"Solid employment growth"? Since the end of last year, job growth has averaged 130,500 a month — about the number of people who enter the workforce each month. That's not "solid" enough.
By the way, the unemployment rate has been below 9% for just five months since Obama took office — and three of those months were in the first 12 weeks of his presidency, before his policies took effect.
Subscribe to the IBD Editorials Podcast Even so, President Obama on Friday visited Chrysler workers, lauding the government's bailout for the re-emergence of the auto industry, which has added 113,000 jobs over the last two years.
What he didn't say was that GM, the bailout's poster boy, lost taxpayers $14 billion, and the total cost of his stimulus and bailout plan has now risen to $830 billion.
Obama was unflappable. "This economy took a big hit — it's taking a while to mend," he told Chrysler workers, reciting high gas prices, Japan's earthquake and the Mideast as the "head winds" facing the economy.
How about the head wind of bad government policies that, based on Congressional Budget Office data, have cost the economy over $760 billion in lost economic output in the past two years — and millions of jobs?
This lost output is the Obamanomics growth tax. Too much tinkering, too much debt, too much spending.
"By failing to alleviate the uncertainty businesses are feeling, Washington continues to stifle hiring," said Chamber of Commerce economist Martin Regalia.
This "uncertainty," by the way, is why businesses, with their $2 trillion in cash, stay on the sidelines. At this point in a recovery, they should be adding hundreds of thousands of workers each month.
That they aren't is a damning indictment of Obama's big-spending, high-debt, Keynesian strategy that has emerged as one of the great failures of economic policy-making in modern times.
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