“Witnessing Republicans and Democrats bicker over the U.S. debt is like watching two drunks argue over a bar bill on the Titanic."
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Only in the South:
A possum is a flat animal that sleeps in the middle of the road.
Onced and Twiced are words.
Ya'll is singular. All ya'll is plural.
The local papers cover national and international news on one page, but require 6 pages for local high school sports, the motor sports, and gossip.
Finally, why do southern women not like to engage in group sex? Because they would have to write too many thank you notes.
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Long time, like family, friend's lament for his home state of California: "For your Happy New Year reading..Check out the L.A. Times article below. California is an epic example of liberalism run amok. We can't carry firearms in the open (one might argue that this violates the 2nd Amendment) but we can fast track child actors and rewrite gay into the history books.
I weep for my state." (See 1 below.)
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Sent this earlier but brings it down to level where more understandable:"I'm raising my debt limit
http://www.youtube.com/watch?v=Li0no7O9zmE
DEBT LIMIT - A GUIDE TO AMERICAN FEDERAL DEBT M...By Johnny American."
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Response from dear friend and fellow memo reader regarding my two scenarios: "Happy New Year to you and Lynn! I predict all the optimistic scenarios with the exception of the repeal of the health care bill. But that might not be a negative. If congress continues to do nothing in the New Year, and they are very good at it, then we will have a $1.2 trillion spending cut, and a $3.2 trillion increase in revenue with the expiration of the Bush tax cuts. I believe that the US economy will grow increasingly stronger and that US equities markets will do well. I doubt that Obama could defeat a Romney/Christie ticket or a Romney/Bush ticket. I do think that Obama would defeat any other of the current GOP nominee candidates."
My response: "Interesting. Doubt Bush tax cut elimination will produce that level of income and don't believe either party will allow such a drastic across board cut because of impact on defense. Christie will not run and if he did he would lose all credibility because of his refusal to run. I am pushing Jeb Bush .
Romney a decent person but no sex appeal politically speaking. Yes, economy will improve slowly but Europe remains the wild card." (See 6 below.)
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George Will turns optimistic on the assumption, even if Obama is re-elected, Republicans can block his extra marital affairs with Socialism and the American people will begin to see the light.
Will could be correct that Obama will prove a blip on a screen over time but rather than assume he cannot lose, I would prefer the Republican nominee be capable of crafting a campaign message that awakens Americans to the threat Obama is as long as he presides in office. (See 2 below)
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President Number Four to BAC: 'since you were unwilling to make loans to those who could not repay we are going to sock it to you - so there!' (See 3 below.)
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Iran inches closer and closer to nuclear status. (See 4, 4a and 4b below.)
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Though the markets act well technically, I share Bridgewater's concerns. How do you resolve the Euro Issue? (See 5 below.)
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Kim on Mitt. (See 6 below.)
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Stratfor is hacked. Will it survive? Done in by Dunn? You decide!(See 7 below.)
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President Number Four and the Peace Negotiations. No longer desires getting his fingers burned during an election season and as a consequence of some previously questionable decisions which have backfired. (See 8 below.)
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Dick
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1) New year brings new laws in California
Of 760 bills signed by California Gov. Jerry Brown in 2011, most take effect Jan. 1. Here are some highlights.
By Patrick McGreevy, Los Angeles Times
Reporting from Sacramento— Californians will no longer be able to carry handguns openly in public, buy alcohol at self-serve checkout stands or purchase shark fins for their soup under hundreds of new laws that take effect Jan. 1.
Other measures bar minors from tanning beds, allow students to be suspended for cyber-bullying and require booster seats for children in cars until they are 8 years old or at least 4 feet, 9 inches tall.
Despite another year of budget shortfalls, the 760 bills that Gov. Jerry Brown signed into law in 2011 included several that cost money. Among them: new funding for a bullet train and a campaign to boost enrollment for food stamps as the economy remains sluggish.
Some bills took effect immediately after the governor signed them. One allows an NFL stadium proposed for downtown Los Angeles to receive expedited legal review of any challenges over environmental issues. Another prohibits cities and counties from outlawing male circumcision.
Brown faced a backlash for signing some of the proposals, including one allowing illegal immigrants to receive private financial aid administered by California's public colleges. (Another permitting access to taxpayer-provided aid takes effect in 2013.)
Known as the California Dream Act, the pair of measures drew fire from the public and some lawmakers who consider them unfair to students born in the United States. But Assemblyman Gil Cedillo (D-Los Angeles) said his legislation recognizes the value of young people who graduate from high school in California regardless of where they were born.
"It's important for California and the future of our economy to take advantage of the investment we have made in these young men and women,'' Cedillo said.
Brown was also criticized for signing a law requiring public schools to include the contributions of gay, lesbian, bisexual and transgender people in history lessons and instructional material, although new textbooks for lower grades are not planned for three years.
One of the most contentious issues was the ban on the open carrying of handguns, which put California in the minority of states that have adopted such restrictions. Some gun-rights advocates say the new law will not keep them from appearing in public with weapons that are not covered by the ban.
"Law-abiding citizens will start openly carrying unloaded long guns in public because their basic and fundamental civil right to self-defense, as enumerated in the 2nd Amendment, is clearly being infringed upon,'' said Yih-Chau Chang, a spokesman for the firearms advocacy group Responsible Citizens of California.
Assemblyman Anthony Portantino (D-La Cañada Flintridge) said he introduced the measure in response to law enforcement officials who felt that public safety was jeopardized by gun owners wearing firearms on their hips at coffee shops and other public venues as they called attention to a right to bear arms.
Laws taking effect also include:
Athlete safety: requires school districts to develop a process for identifying cases in which students suffer concussions in sports mishaps and require a parent to give written permission for the athlete to return to the lineup.
Audits: gives the state auditor broad new powers to investigate misuse of taxpayer funds by cities and counties, in response to the financial scandal in the city of Bell.
Autism: requires health insurers to include coverage for autism.
Baby food: bans stores from selling expired infant food and formula.
Bail: requires that people extradited to California to face criminal charges face $100,000 in bail in addition to any bail already issued for the underlying offense.
Ballot measures: requires all ballot initiatives and referenda to be decided in November general elections, which typically have higher turnout — and more liberal voters casting ballots — than do June primaries. Excludes measures placed on the ballot by the Legislature.
Beer: bars the importation, production and sale of beer to which caffeine has been directly added as a separate ingredient, in response to incidents in which young people have been hospitalized with severe intoxication after drinking the beverages.
Bullet train: provides $4 million for planning work on a section of a high-speed rail system proposed between Los Angeles and San Diego.
Child actors: streamlines the process for obtaining state permission for minors to work in the entertainment industry by allowing parents to get temporary permits online rather than through the mail.
Clemency: requires governors to give prosecutors a chance to weigh in at least 10 days before acting on requests for commutation of prison terms. The law was proposed after former Gov. Arnold Schwarzenegger acted on his last day in office to reduce a prison sentence for the son of former Assembly Speaker Fabian Nuñez.
Cyber-bullying: allows schools to suspend students for bullying classmates on social networking sites such as Facebook.
Development projects: grants large construction projects chosen by the governor faster judicial reviews of environmental challenges.
Dream Act: The portion of the California Dream Act taking effect this year makes illegal immigrants accepted at California public universities and community colleges eligible for privately funded scholarships administered by the schools.
Drugs: outlaws the supplying of a drug or compound containing dextromethorphan to a person younger than 18 without a prescription.
Drunk drivers: authorizes courts to revoke, for up to a decade, the driver's license of any person convicted of three or more DUIs in a 10-year period. Another law bars police agencies that set up drunk-driving checkpoints from impounding cars from sober but unlicensed drivers if there is a legal driver available to take the wheel.
Elder abuse: allows wage garnishments against anyone convicted of elder abuse or financial abuse of a dependent adult.
Farmworkers: requires that, if the Agricultural Labor Relations Board refuses to certify an election because of employer misconduct, the affected labor organization shall be certified as the exclusive bargaining representative.
Food stamps: eliminates the requirement that food stamp recipients be fingerprinted to prevent fraud. Another law calls for state agencies to promote more enrollment in the federal food stamp program.
Foster care: allows foster care for eligible youths to extend beyond age 18, up to age 21, when the Legislature provides the money. Another measure requires California State University campuses and community colleges to give foster youths priority to enroll in classes.
Gas pipelines: mandates automatic shut-off valves and improved maintenance in vulnerable sections of pipelines, in response to the deadly explosion in San Bruno in 2010.
Human trafficking: requires large retailers and manufacturers to publicly report what steps they take to make sure those providing their supplies and products are not engaging in slavery and human trafficking.
Infused drinks: allows bars to infuse alcohol with fruits and vegetables for use in cocktails.
Insurance: prohibits doctors, when treating workers' compensation patients, from prescribing drugs in which they have a financial interest.
Iran: mandates that the state's pension boards divest their funds from companies that are part of the defense or nuclear industries in Iran.
Job applicants: bars employers from using credit reports in deciding whether to hire someone.
Labor: prohibits local officials from banning union labor agreements for publicly funded construction projects.
Lap-Bands: requires periodic inspections of outpatient surgery centers that perform Lap-Band operations and other procedures. The law is a response to the 2007 death of singer Kanye West's mother after liposuction and breast augmentation surgery at a Westside clinic.
Libraries: restricts the privatization of public libraries by requiring that they continue to pay government-scale wages.
Lying politicians: forces elected officials to forfeit office if convicted of falsely claiming they have been awarded military decorations.
Marijuana: gives cities and counties clearer authority to regulate the location and operation of medical marijuana dispensaries. Another law creates new penalties for the possession of synthetic cannabis products, which have been sold in convenience stores and tobacco shops.
Maternity leave: requires employers to maintain and pay for health coverage while women are on maternity leave.
Medical consent: gives children 12 and older the authority to get medical care for the prevention of sexually transmitted disease, including the HPV vaccine, without parental consent.
Missing persons: requires law enforcement agencies to submit a missing persons report to the state attorney general when the person being sought is 21 or younger, a change from the current cutoff age of 16.
Needles: empowers cities and counties to allow pharmacists to furnish a customer with up to 30 hypodermic needles and syringes without a prescription. Another law permits the state Department of Public Health to allow select groups to provide hypodermic needles and syringe exchange services in any area where it determines that conditions exist for the rapid spread of HIV.
Presidential primary: moves the state's presidential primary election from February to June and consolidates it with the statewide primary election to save $100 million.
Prison phones: makes it a crime for cellphones to be smuggled into state prisons and allows increased time behind bars for inmates caught with them.
Prostitution: imposes a special court fine of $25,000 on defendants convicted of prostitution involving a minor.
Protests: makes it a misdemeanor to create a disturbance on or next to an elementary or middle school campus where the action threatens the physical safety of students.
Puppies: outlaws the selling of live animals on any street, sidewalk, parking lot or other public right-of-way.
Raves: requires any state agency that plans an event with more than 10,000 people on state property to conduct a threat assessment before the event.
Recycling: establishes as state policy that 75% of solid waste should be diverted from landfills to recycling and other processes by 2020.
Restaurants: may use up their supplies of shark fins — a delicacy in Chinese cooking — purchased before Jan. 1. After that, sale and possession of shark fins will be illegal.
Saving parks: allows nonprofits to take over the operation of state parks that otherwise would be closed because of budget problems.
Senior care: mandates that residential care facilities for the elderly notify residents within 10 days if the state determines that a serious health and safety violation occurred at the facility.
Sexual orientation: encourages state university systems to collect data on students' sexual orientation and encourages the legislative analyst to use it to recommend improvements in the quality of life for gay, lesbian, bisexual and transgender students.
Student government: authorizes illegal immigrants who are students to receive grants, fee waivers and reimbursement for serving in student government at public colleges.
Tax break: provides a tax credit to California farmers for the cost of fresh fruit and vegetables donated to California food banks.
Work rules: establishes an employee's right to as many as three days of bereavement leave within three months following the death of a spouse, child, parent, grandchild, sibling or domestic partner.
Wine: provides a special permit that makes it easier for California firms to sell wine over the Internet, by phone or by direct mail.
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2)George Will Predicts That All Will Be Well in 2012
By Helen Whalen Cohen
In his latest column, George Will predicts that conservatives won't unseat the president in 2012. In spite of this, it will be good year. He gives two reasons for this: first, that the populace will become less enchanted with the presidency overall and second, that as Americans realize the abundance of natural resources in this country, they will reject rationing and be less inclined to let government control behavior. As long as Republicans gain control of the Senate and keep the House, they will be able to prevent agencies from becoming "unconstrained instruments of presidential decrees". In a year when Americans aren't buying Chevy Volts and the Kyoto Protocol on its way out the door, the electorate is already heading in the right direction. We will be primed for 2013 or 2017
Although they have become prone to apocalyptic forebodings about the fragility of the nation’s institutions and traditions under the current president, conservatives should stride confidently into 2012. This is not because they are certain, or even likely, to defeat President Obama this year. Rather, it is because, if they emancipate themselves from their unconservative fixation on the presidency, they will see events unfolding in their favor. And when Congress is controlled by one party, as it might be a year from now, it can stymie an overreaching executive.
In 2011, for the first time in 62 years, America was a net exporter of petroleum products. For the indefinite future, a specter is haunting progressivism, the specter of abundance. Because progressivism exists to justify a few people bossing around most people and because progressives believe that only government’s energy should flow unimpeded, they crave energy scarcities as an excuse for rationing — by them — that produces ever-more-minute government supervision of Americans’ behavior.
...
In any case, nothing that happens this November will bring an apocalypse. America had 43 presidencies before the current one and will have many more than that after the end of this one in 2013 or 2017. Decades hence, it will look like most others, a pebble in the river of U.S. history.
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3) Obama Has Learned Nothing From the Mortgage Meltdown Mess
Just days before Christmas, the Obama administration gave Bank of America a big lump of coal, levying a hefty $335 million dollar fine on the company for discriminating against minorities in its lending practices.
Supposedly Countrywide, a mortgage company bought by Bank of America in 2008, had not given out enough low interest rate loans to minorities from 2004 to 2008.
What the large fine reveals is that President Obama hasn't learned anything from the recent financial crisis.
What the president sees as discrimination in awarding a mortgage, lenders saw as wise business decisions.
If a borrower can't afford a down payment, Obama appears to view charging a higher interest rate as discrimination. Lenders also think that they shouldn't treat borrowers whose sole source of income is welfare or unemployment insurance, the same as those applicants who have a job. But Obama, again, appears to view this as discrimination.
There is obviously a problem with no down payments: if the price of the house falls so that it is worth less than the loan, people will default and walk away. Similarly, when unemployment insurance or welfare runs out, borrowers might find they can't keep paying their mortgage.
The Equal Credit Opportunity Act the Obama administration used to impose this fine was exactly what helped cause the mortgage crisis by forcing lenders to make risky loans that they didn't want to make.
Yet, just last month, Obama put the blame for these risky loans going bad on banks for their "breathtaking greed" that "plunged our economy and the world into a crisis."
It's hard to believe that Countrywide, a leading lender of subprime mortgages, wasn't already doing too much to make these risky loans. Indeed, it was the poster child for doing what the government wanted.
In 2002, Countrywide had adopted its "No Income/No Asset Documentation Program." Borrowers could get a loan with just 5 percent down. The big government mortgage bundlers, Fannie Mae and Freddie Mac, bought these mortgages and encouraged Countrywide to expand the program. By the first half of 2006, almost two-thirds of Countrywide's subprime loans had absolutely no down payment.
Certainly President Obama push to encourage banks to make risky loans isn't unique -- in truth, he is just doing what Presidents Clinton and Bush also did.
Starting with the Clinton administration and continuing through the administration of George W. Bush, if lenders didn't give out loans under these conditions to minorities, it was viewed as evidence of discrimination. The motive for encouraging risky loans was a noble one: to increase home ownership. It was meant to help people who couldn't, under the previous standards, afford a home mortgage.
But with hindsight of the disaster these regulations created, Obama has no excuse. These regulations should be scraped and the last thing that should be happening is for banks to feel pressure to make more such risky loans.
Obama's actions show that we have never left the world where the Federal Reserve and other government agencies told mortgage lenders: "discrimination may be observed when a lender's underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants."
This is a world where the Federal Reserve told banks that the "outdated" criteria included:
Credit History: Lack of credit history should not be seen as a negative factor.... In reviewing past credit problems, lenders should be willing to consider extenuating circumstances. For lower-income applicants in particular, unforeseen expenses can have a disproportionate effect on an otherwise positive credit record. In these instances, paying off past bad debts or establishing a regular repayment schedule with creditors may demonstrate a willingness and ability to resolve debts.... Down Payment and Closing Costs: Accumulating enough savings to cover the various costs associated with a mortgage loan is often a significant barrier to homeownership by lower-income applicants. Lenders may wish to allow gifts, grants, or loans from relatives, nonprofit organizations, or municipal agencies to cover part of these costs. . . . Sources of Income: In addition to primary employment income, Fannie Mae and Freddie Mac will accept the following as valid income sources: overtime and part-time work, second jobs (including seasonal work), retirement and Social Security income, alimony, child support, Veterans Administration (VA) benefits, welfare payments, and unemployment benefits.
Is this really how we want mortgage lending to operate?
It was bad enough that the lenders were forced during the last couple of decades to made such risky loans. Obama's decision to punish Countrywide because it didn't go even further with these bad loans sends the wrong message. Instead of working through the bad loans we already had, Obama now wants to continue forcing loans to those who are poor risks.
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4)Iran Says It's Produced First Nuclear Fuel Rod
TEHRAN, Iran — Iranian scientists have produced the nation's first nuclear fuel rod, a feat of engineering the West has doubted Tehran capable of, the country's nuclear agency said Sunday.
The announcement marks another step in Tehran's efforts to achieve proficiency in the entire nuclear fuel cycle — from exploring uranium ore to producing nuclear fuel — despite U.N. sanctions and measures by the United States and others to get it to halt aspects of its atomic work that could provide a possible pathway to weapons production.
Tehran has long said it is forced to seek a way to manufacture the fuel rods on its own, since the sanctions ban it from buying them on foreign markets. Nuclear fuel rods are tubes containing pellets of enriched uranium that provide fuel for nuclear reactors.
Iran's atomic energy agency's website said the first domestically made rod has already been inserted into the core of Tehran's research nuclear reactor. But it was unclear if the rod contained pellets or was inserted empty, as part of a test.
"Scientists and researchers at the Atomic Energy Organization of Iran have succeeded in producing and testing the first sample of a nuclear fuel rod," said the announcement.
The United States and some of its European allies accuse Iran of using its nuclear program as a cover to develop atomic weapons. Iran denies the charge, saying the program is for peaceful purposes only and is geared toward generating electricity and producing medical radioisotopes to treat cancer patients.
Although the rods are easier to make, Iran is also seeking to produce the pellets with enriched uranium. But so far it is not known whether Iranian nuclear scientists have been able to overcome the technical hurdles to do so.
Tehran focused on domestic production of nuclear fuel rods and pellets in 2010, after talks with the West on a nuclear fuel swap deal ended in failure as Iran backed down on shipping a major part of its stock of enriched uranium abroad in return for fuel.
The announcement on the fuel rod came just a day after Tehran proposed a new round of talks on its nuclear program with six world powers. The last round of negotiations between Iran and the five permanent members of the U.N. Security Council plus Germany was held in January in Istanbul, Turkey, but it ended in failure.
The U.N. has imposed four rounds of sanctions on Tehran over its refusal to halt uranium enrichment, a process that can lead to making a nuclear weapon. Separately, the U.S. and the European Union have imposed their own tough economic and financial penalties.
4a)US rejects Tehran's warning to keep US carriers out of Persian Gulf and threats to close Hormu
In another heated escalation over the strategic Strait of Hormuz, Iran Tuesday, Jan. 3, threatened to take action if the US aircraft carrier which "moved to the Sea of Oman because of our drill returns to the Persian Gulf." Army chief Lt. Gen. Ataolla Salehi said:" Iran will not repeat this warning."
He referred to the USS Stennis as "the enemy's carrier," which "I recommend and emphasize… not return to the Persian Gulf." He avoided naming the US vessel or the details of action Iran might take if it returned.
Military sources report that the Stennis transited the Strait of Hormus Wednesday, Dec. 28 and entered the Sea of Oman where Iran was staging a naval drill. Washington was demonstrating freedom of navigation in the international strait through which one-fifth of the worlds exported oil is shipped and underlining Iran's inability to close it to merchant shipping and US warships.
Iran said that its surveillance aircraft and warships tracked and filmed the US carrier's movements in and around Hormuz which it claims to fully control.
Saturday, Dec. 31, Iran announced a long-range missile test-fire would take place over the strait, thereby causing a five-hour stoppage of shipping traffic. Later, an Iranian general said the missile test was delayed. Iranian and military sources reported that this was a trick to prove Iran capable of closing the Strait of Hormuz in defiance of strong warnings from Washington.
Monday, Jan. 2, the Iranian navy marked the last day of its Hormuz drill by testing shore-to-sea Qader and Nour missiles. The Qader is described by the Iranians as a cruise missile capable of destroying large American air carriers with a single hit.
Tuesday, this claim proved to be the prologue in advance of Iran's virtual closure of the Strait of Hormuz against the return of the USS Stennis into the Persian Gulf and appropriation of its "right" to open and close the waterway at will.
It is hard to see the Obama administration caving in to Tehran's ultimate challenge to the freedom of this vital international waterway. The Stennis or some other American naval vessel must soon be sent through the Strait of Hormuz to test Iran's assumption of control.
Gen. Salehi said: "We are not seeking to act irrationally, but are ready to confront any threat." Another Iranian commander said that Iran's Revolutionary Guards are preparing another military exercise in the Persian Gulf. He did not offer a date.
Military sources add that two more American warships, the USS Bataan and USS Makin Island, are cruising in the area. They are small Marine Corps amphibian craft carrying jets and helicopters. The big air craft carrier USS Carl Vinson, deployed in the Pacific from the third week of December, is on standby to advance to waters opposite Iran in an emergency
4b)US: Iran threats show sanctions starting to bite
By REUTERS
White House: Threats show weakness, isolation; in latest of a series of military gestures, Tehran threatens US over Gulf.
The White House said on Tuesday Iran's threat to take action if a US aircraft carrier moves into the Gulf showed Tehran was increasingly isolated internationally, faced economic problems from to sanctions and wants to divert attention from its deepening problems.
"It reflects the fact that Iran is in a position of weakness," White House spokesman Jay Carney told reporters.
Separately Tuesday, Secretary of State Victoria Nuland said "They are feeling increasingly isolated and they are trying to divert the attention of their own public from the difficulties inside Iran, including the economic difficulties as a result of sanctions," Nuland told a news briefing.
Nuland also said the threats were proof that international pressure was "beginning to bite."
Iran threatened on Tuesday to take action if the US Navy moves an aircraft carrier into the Gulf, Tehran's most aggressive statement yet after weeks of saber-rattling as new US and EU financial sanctions take a toll on its economy.
The prospect of sanctions targeting the oil sector in a serious way for the first time has hit Iran's rial currency, which has fallen by 40 percent against the dollar in the past month.
Queues formed at banks and some currency exchange offices shut their doors as Iranians scrambled to buy dollars to protect their savings from the currency's fall.
Army chief Ataollah Salehi said the United States had moved an aircraft carrier out of the Gulf from because of Iran's naval exercises, and Iran would take action if the ship returned.
It did not name the carrier, but the USS John C Stennis leads a task force in the region, and the US Navy's 5th Fleet website pictured it in the Arabian Sea last week.
"Iran will not repeat its warning ... the enemy's carrier has been moved to the Sea of Oman because of our drill. I recommend and emphasize to the American carrier not to return to the Persian Gulf," army chief Salehi said.
"I advise, recommend and warn them over the return of this carrier to the Persian Gulf because we are not in the habit of warning more than once."
Lieutenant Rebecca Rebarich, spokeswoman for the US 5th Fleet based in Bahrain, said she was not immediately able to respond.
Western sanctions could seriously effect Iran's oil trade
Tehran's threat comes at a time when sanctions are having an unprecedented impact on its economy, and the country faces political uncertainty with an election in March, its first since a 2009 vote that triggered countrywide demonstrations.
The West has imposed the increasingly tight sanctions over Iran's nuclear program, which Tehran says is strictly peaceful but Western countries believe aims to build an atomic bomb.
After years of sanctions that had little impact, the latest measures are the first that could have a serious effect on Iran's oil trade, 60 percent of its economy.
New sanctions signed into law by US President Barack Obama on New Year's Eve would cut off any financial institutions that work with Iran's central bank from the US financial system, blocking the main path for payments for Iranian oil.
The EU is expected to impose new sanctions by the end of this month, possibly including a ban on oil imports.
Even Iran's top trading partner China - which has refused to back new global sanctions against Iran - is demanding discounts to buy Iranian oil as Tehran's options narrow. Beijing has cut its imports of Iranian crude by more than half for January and, paying premiums for crude from Russia and Vietnam to replace it.
-----------------------------------------------------------------------------------------------------------------------5)Bridgewater Takes Grim View of 2012
By TOM LAURICELLA
Bridgewater Associates has made big money for investors in recent years by staying bearish on much of the global economy. As the new year rings in, the hedge fund firm has no plans to change that gloomy view.
Robert Prince, co-chief investment officer at Bridgewater, and his managers at the world's biggest hedge fund firm are preparing for at least a decade of slow growth and high unemployment for the big developed economies. Mr. Prince describes those economies—the U.S. and Europe, in particular—as "zombies" and says they will remain that way until they work through their mountains of debt.
"What you have is a picture of broken economic systems that are operating on life support," Mr. Prince says. "We're in a secular deleveraging that will probably take 15 to 20 years to work through and we're just four years in."
In Europe, "the debt crisis is [a] long ways from over," he says. The economic and financial morass will mean interest rates in the U.S. and Europe will essentially be locked at zero for years.
In this bleak environment, Mr. Prince says stocks remain vulnerable to "air pockets" from shocks, such as bad news out of Europe. But for longer-term investors looking out over the next decade, he says, equities may be a good buy. There is even money to be made in U.S. Treasurys, despite interest rates near record lows, and gold is likely to resume its climb as central banks print money to bolster their economies. Mr. Prince says.
The views of Bridgewater are keenly watched by other investors, given the firm's elevated status in the competitive world of hedge-fund investing. Bridgewater's flagship Pure Alpha Strategy fund is considered one of the top funds in the world. As of the end of November, it was up 25% since the start of the year, according to people familiar with the situation. The average macro fund had lost 3.7%, according to Hedge Fund Research.
Currently, the fund is positioned for higher gold prices, stronger Asian emerging-market currencies and lower yields across high-quality government bond markets, Mr. Prince says.
In 2011, it profited from owning gold, but cut back on that position during the third quarter. It correctly pivoted from being bearish on U.S. Treasurys early in the year to positioning for a rally. It also benefited from rallies in core European bond markets and avoided ugly losses sustained by other macro funds that had bet the euro would fall against the dollar. Instead, it rightly bet that the euro would fall against the Japanese yen.
Founded in 1976 by Ray Dalio, Bridgewater manages $125 billion and has 1,400 employees. Mr. Prince, 53 years old, joined in 1986. The firm's clients are institutions such as pension funds and endowments, along with foreign governments and central banks.
Pure Alpha has been up each year since 2000, and has recorded just three negative calendar years since 1991. In 2008, the fund returned 9.4% after fees, and after a 2% gain in 2009—its smallest of the decade—Bridgewater posted a 44.8% return in 2010.
From its offices by the Saugatuck River in Westport, Conn., Bridgewater plays much the same field as other so-called macro funds. But it tends to be more diversified than its competitors, with numerous smaller bets across a host of currencies, government bonds, stocks and commodities.
In a conference room at Bridgewater's headquarters, where the water from the Saugatuck appeared to almost lap at the glass walls, Mr. Prince paints a grim picture of the challenges facing the U.S. and European economies.
Recent better-than-expected news on the U.S. economy is unlikely to be the start of a healthy expansion, he says. The uptick in economic growth has been fueled by a decline in the savings rate, which, without material income and employment gains, is unlikely to be sustainable as long-term credit growth also remains weak, he says.
The problem for the U.S, says Mr. Prince, is that it is on the wrong side of a long-term debt cycle.
"We were in a leveraging-up period for 60 years, from the early 1950s to 2008," he says. This debt bubble was self-reinforcing on the way up, and "when it tipped over, it set about a self-reinforcing process on the way down."
As evidence for the long slog facing the U.S economy, he notes that the level of leverage, as measured by comparing household income to net worth, is still higher than it was before 2008.
"The most likely environment is moderate growth with wiggles up and down and this is one of those wiggles up," he says.
Against this backdrop, the Federal Reserve will need to do more quantitative easing—buying of government bonds—but Mr. Prince says the purchases will probably be sporadic.
Europe, meanwhile, is headed into a potentially deep recession, with policy makers boxed in by an interconnected banking and sovereign-debt crisis.
"You've got insolvent banks supporting insolvent sovereigns and insolvent sovereigns supporting insolvent banks," he says.
In the U.S., leveraged investors who can borrow money at rates near zero could find a good deal in Treasurys, Mr. Prince says.
Mr. Prince points to the example of Japanese government bonds. An investor who was leveraged three-to-one and bought Japan's bonds at a 2.5% yield in the mid 1990s would have earned a compound average annual return of 12% a year for 15 years, he says.
Meanwhile, gold prices should resume a rally amid continued printing of money by the Fed and other central banks, Mr. Prince says. Those efforts effectively devalue those countries' currencies compared with gold.
Mr. Prince also thinks stocks are attractive from a long-term perspective, especially compared with bonds or cash. Broadly, discounted earnings-growth rates, which reflect the expectations about future earnings implied by current prices, are negative, he says.
A moribund economic outlook "is pretty priced in right now," he says. "If we have a long, drawn out deleveraging process without substantial air pockets, chances are equities are a pretty good bet, ironically."
5a)2012: A U.S. Referendum on Europe
The EU's crisis is not just fiscal and monetary. It's also a crisis of vision and character.
By BRET STEPHENS
The conventional wisdom about this year's presidential election is that it's mostly about domestic issues and barely about foreign policy. That's wrong. What kicks off today in Iowa is America's referendum on whether it wants to become an honorary member of the European Union.
GOP-leaning voters generally get this: Warning against the "European social democrat" model is one of Mitt Romney's better talking points. The problem for Mr. Romney is that he represents something of another European specialty: the dispassionate technocrat, data-driven, post-ideological, lacking in soul. GOP-leaning voters get that, too.
Many on the left also understand American politics as a referendum on Europe, and it wasn't all that long ago that they were more-or-less prepared to say it. For example:
• "Europe is an economic success, and that success shows that social democracy works."
-Paul Krugman, Jan. 10, 2010
• "The European Dream, with its emphasis on collective responsibility and global consciousness. . . . represents humanity's best aspirations for a better tomorrow."
-Jeremy Rifkin, "The European Dream," 2004
• "If we took Europe as a guide, we would do a lot better at capitalism."
-Thomas Geoghegan, "Were You Born on the Wrong Continent?" 2010
These views have now become a bit embarrassing, intellectually speaking. But it hasn't done much to change the basic terms of the debate President Obama will have with whoever emerges as his challenger.
The contours of that debate are familiar enough. Should government be an engine of employment growth? Does government investment in favored industries or technologies make economic sense? May government compel individual economic choices in the name of a social good? Should the rich pay an ever-rising share of the total tax burden? Are higher taxes the best way to close a budget deficit? Is financial regulation generally effective? Are labor unions good for overall employment? Is inclusiveness the best test of fairness? Must environmental concerns (or phobias) take precedence over economic interests? Is consensus-seeking the ideal mode for international conduct?.
To all these questions, Mr. Obama's record answers yes: the Solyndra and Fisker subsidies; the Keystone XL pipeline postponement/cancellation; Dodd-Frank; the SEIU's Andy Stern as the top White House visitor; the growing government work force; the individual mandate; the nonstop rhetorical assaults on Wall Street; federal debt moving north of 100% of GDP; the "balanced approach" to deficit reduction; the perpetual deference to the United Nations.
That's the Obama presidency in a nutshell. It's also how Europe, mutatis mutandis, became what it is today.
There's an alchemistic quality to some of the more common explanations of Europe's crisis. Wizards of finance contrived to lay a European economy low. The contagion spread. Financial fires could not be put out in time. Investors stampeded for the exits.
The mixing of metaphors alone betrays the flimsiness of that analysis. The truth is that what began in Greece (and the U.S. financial crisis before it) simply put a match to already very dry tinder. Uncompromising labor unions have spent decades driving European jobs and industry overseas. Confiscatory tax rates have given every incentive to tax evasion, capital flight and the emigration of the fittest. Work-force rules have diminished productivity and discouraged hiring. National budgets have been strained to breaking by delusional pension promises and the mounting cost of everything a welfare state supposedly offers free, like health and education.
Worst of all, the European model has generated a self-reinforcing combination of prejudice and interest that is almost impossible to break. A cultural bias against "savage Anglo-Saxon neoliberalism" limits the political options for structural economic reform; routine labor strikes, politically entrenched civil services (38% of Belgians work for the state, doing Lord knows what), and other beneficiaries of public largess eliminate all remaining hope. Europe's crisis is not just fiscal and monetary. It's also a crisis of vision and character.
Do the Iowans who will turn out to vote today know all this? I suspect they do. What is happening in Europe is more than an economic crisis: It's the coming apart of a world view that held together for over a century. For Europeans it will probably mean a decade of economic hardship and political risk. For Americans, it's a loud pinging signal coming across the Distant Early Warning Line.
It would be absurd to say that Americans have nothing valuable to learn from the rest of the world, Europe included. But sometimes the most valuable lessons are negative ones. Though he did not mean it quite in this way, Mr. Obama was right to compare his administration to those of FDR and LBJ: Like them, he has driven the U.S. miles down the road toward the social democratic model he so admires. Then again, neither of his predecessors had such visible evidence of where social democracy ultimately leads. What's this president's excuse?
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6)Mr. Good Enough:Mitt Romney lost the nomination in 2008 because of his lack of focus and a reputation for shifting his message. He's learned something this time around.
By KIMBERLEY A. STRASSEL
Voters aren't convinced by Mitt Romney. They're not certain of his convictions; they wonder if he is the leader for these times; they're not sold on his policies or his personality. Yet voters may be about to make the former Massachusetts governor the Republican nominee for the presidency. Mark this down as the triumph of strategy over inspiration.
As Iowans head to their caucuses Tuesday, Mr. Romney has come from behind to lead in the polls. A victory here—where he was once written off—followed by a coup in New Hampshire could well knit up the nomination. That outcome would be the result of a lot of luck, mistakes by his rivals, and a shrewd—and ruthless—campaign by Mr. Romney himself.
If there has been one threat to the governor, it has been the gaping opening for a candidate to his right. Mr. Romney is hardly an easy fit with the GOP base—from his past flip-flops on issues like abortion, to his weak tax proposals, to his concoction and defense of RomneyCare, the Massachusetts health plan that was the model for ObamaCare. The threat of President Obama and his determination to create an entitlement state, combined with the dismal economy, have voters eager for a bold conservative leader.
The Romney luck was that no such obvious reformer got into the race. Notable Republican governors—Jeb Bush, Mitch Daniels, Chris Christie—who could have run on executive experience and pro-growth track records took a pass. A younger, ideas generation—Wisconsin Rep. Paul Ryan, Florida Sen. Marco Rubio—decided it was too soon for a run. This helped clear the field.
Not that the Republicans in the race were without resources. Each had the opportunity to unite a conservative coalition but fell from self-inflicted wounds. Tim Pawlenty—as a conservative governor from Minnesota and with his long planning for a presidential run—ought to have posed the greatest challenge. But his waffling on RomneyCare and his overemphasis on the Iowa straw poll (which he lost to Michele Bachmann) sucked the air out of his campaign. His bigger mistake may have been bowing to these defeats, misjudging the opportunity for a comeback in a muddled GOP field.
Rick Perry, also with a state success story to sell, entered the race at a near-perfect time. Yet he failed to do his homework and lost voter confidence with his bumbling debate performances. Ron Paul has inspired the limited-government crowd, even as his refusal to modulate his isolationist views has capped his potential.
Rick Santorum, he of dour countenance, chose a narrowly focused campaign, and until recently it had earned him only a narrow audience. He's now experiencing a surge on the back of evangelical support and a formidable ground organization, which might propel him to a strong Iowa finish. But his slow start, and subsequent poor fund raising, will hamper him in upcoming states.
Mrs. Bachmann made herself unpresidential. Herman Cain, 9-9-9 notwithstanding, forgot the rule about vetting one's own past. Jon Huntsman has failed to lead with his strong suit, namely a strong growth record in Utah.
The man who has lately posed the greatest threat to a Romney victory is the come-from-behind Newt Gingrich, whose snappy debate performances and policy insights touched a conservative chord. His pro-growth message has been a strong final argument but may not be enough to reverse weeks of damaging TV ads. The candidate was initially powerless to rebut the attacks, given his campaign's own major mistake—neglecting its fund raising and organizing.
Which gets us to Mr. Romney's campaign savvy. The governor lost the nomination in 2008 because of his lack of focus and a reputation for conveniently shifting message. Let's just say he learned something.
Throughout this campaign, he's resisted scattershot criticism of rivals, instead carefully pinpointing his biggest threats from the right and homing in on their biggest weaknesses. With Mr. Pawlenty, that job was relatively easy. Mr. Romney stepped back to allow the Minnesotan to implode, his restraint even earning him praise as "presidential."
A greater insight into the Romney machine came with Mr. Perry, whose threat resided in his broad credentials with a conservative audience. Mr. Romney's response was to target a relatively obscure liability—Mr. Perry's modest policy of letting young illegals pay in-state college tuition—and then to elevate it and tear it apart. Romney ads were brutal, comparing Mr. Perry to Barack Obama and Mexican President Vicente Fox on immigration, suggesting that the Texas governor would open the illegal floodgates. It proved a deal killer for many conservatives.
Next up was Mr. Gingrich, whose December surge, particularly among tea party voters, posed a late-game threat. Team Romney was quick to drill into its rival's "tons of baggage," including marital infidelity, the money he accepted from Freddie Mac and, again, the accusation that he supports "amnesty for illegal aliens." Between these and other attack ads, Mr. Gingrich's support was halved in little more than a week.
This is where four years of planning come in handy. Mr. Romney built a campaign war chest and a pro-Romney super PAC. The Romney campaign and the outside organization could spend millions on ads and mailers taking down rivals, allowing the candidate to remain above the fray and concentrate on his more positive message.
That message, by contrast to 2008, has been focused, unwavering, relentless. Mr. Romney has taken positions and stuck with them, even if it has meant defending the likes of RomneyCare. In Iowa, New Hampshire and everywhere else, voters have heard—again, and again, and again—the same two messages: He has the business and management experience to competently turn around the country, and he is the most electable against Mr. Obama.
That has seeped in, especially as voters must now make a selection—voters like 54-year-old Jane Lawler, who came to hear Mr. Romney speak at Homer's Deli here. Mrs. Lawler was leaning toward Mr. Gingrich, but her husband argued that the former House speaker "couldn't gather the troops and get it done." She now agrees. "In the end, I'm looking for someone who can beat Obama," and she notes the need for someone with Mr. Romney's "business acumen."
So while Mr. Romney may not excite them, while he may not be ideal, in light of the other candidate's problems, and given the election stakes, voters are buying his argument that he is, well . . . good enough. Which is why, barring a surprise, or a late entrant, Mr. Good Enough—through good fortune, dogged determination, and the skillful elimination of his rivals—may end up grabbing the conservative ring in this all-important election year.
Then the harder job starts. Mr. Obama may be hobbled by a poor economy and unpopular policies, but he is a first-order campaigner. He will energize his base, and his Republican opponent will have to do the same. It will not be enough for Mr. Romney to argue against Mr. Obama; he will have to inspire Republicans and independents to vote for his own vision.
Mr. Romney offers decent policies, and he's proven himself a hard worker, with growing campaign skills. The question is whether a victory in the primary will give him the confidence to break out, to take some risks, and to excite a nation that wants real change. In a presidential election, good enough might not be enough to win.
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7)The Stratfor Scandal
By J.R. Dunn
News that Stratfor, the "private intelligence service," has been whacked by Anonymous has brought the former organization and its reputation into sharp focus. The fact that Stratfor hadn't bothered to fulfill one of the lowest requirements of cybernetic security -- encrypting sensitive client data -- is one of the most damaging things that can be said about any company in the digital age, much less an "international security organization." This intrusion went quite a bit farther than most -- the Guy Fawkes boys actually managed to extract funds (a reported $500,000 worth) from Stratfor's clients (whom the company insists on calling "members"), which they then gave to charities. The humiliation here is total, and Stratfor will be lucky to survive.
But should it? Stratfor (Strategic Forecasting, Inc.) has achieved a middling reputation among people who don't know any better as the go-to organization for intelligence and analysis on just about anything. There's rarely a topic in the news that the organization doesn't sound off on, either through its own website or in the form of published "reports." (Stratfor also used to be quoted quite a bit by legacy news organizations, though that seems to have died down in recent years.)
Stratfor's reputation has always been problematic, for a number of reasons. First, there's the "private intelligence service" claim, which seems to suggest more than it could possibly fulfill. It calls to mind the epoch of Sidney Reilly and Erskine Childers, gentleman-adventurers off to amuse themselves who suddenly find that they have the fate of nations in their hands. But that epoch folded its tents a century ago, and there are no gentleman-adventurers these days -- scarcely any gentlemen at all, in fact. Intelligence on all levels has attained a sophistication and complexity unmatchable by private means. I have long suspected that Stratfor's operatives were simply poring through archives and news reports and then packaging the information for the company's paid clients. This is a perfectly legitimate system, and in fact quite a bit of government intelligence-gathering occurs in exactly this way, but it's not what most people think of when they think of an "intelligence service."
Then there's those strangely plodding reports -- teasers published in order to tempt clients into springing for the paying service. Except that teasers of any sort are supposed to be exciting, interesting, and enticing, and Stratfor's reports have been anything but. The reports I've seen have been poorly written and badly organized, and they have featured completely obvious conclusions and recommendations. (My favorite was the report published after Hurricane Katrina in which Stratfor made the argument that New Orleans should not be abandoned because the Mississippi requires a major city at the end of it. How true!) It's difficult to see how any sort of a client base (much less the U.S. Air Force) could have been attracted by this kind of stuff. Intelligence analysis of any sort should reveal knowledge, flair, imagination, and insight. Stratfor has skipped over all this in favor of belaboring the obvious.
Lastly, we have the lack of any visible breakthroughs or worthwhile predictions. Anyone involved in analysis of any kind makes predictions. A lot of people, columnists and correspondents among them, make their livings off it. They often succeed only in making complete asses of themselves, but when they hit, it is valuable, it is enlightening, and it is memorable. Intelligence services operate the same way. In fact, making predictions is their major function. But in all the reports and stories concerning Stratfor, there is not a single case of an impressive, accurate, and useful prediction. There's no lack of bland, obvious statements of the "on the other hand..." variety, but nothing breathtaking or in any way impressive.
There are other complaints. For example, assertions that Stratfor was manipulating its information to support certain agendas. (I was once told by an individual involved in the company that they were taking a certain stance concerning the Gulf War because his daughter was serving as a naval officer in the Persian Gulf. This kind of thing is understandable but not excusable.) But all that is secondary to the simple, undeniable fact of the break-in. That alone puts Stratfor in the clown car with an orange wig and two-foot-long shoes. There are plenty of ways an organization can go wrong and recover, but there is certain kind of error that is almost always fatal -- the type that turns you into a punchline. If you were to make a film about Stratfor, it wouldn't be a thriller -- it would be a comedy.
There's certainly a place for a professionally run and seriously intentioned private intelligence service in the U.S. But Stratfor isn't it. Much as I hate to say it, this is a case where the Anons have done us all a favor.
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8)Why US won't be center stage in new Israeli-Arab talks
By Howard LaFranchi
A new round of Mideast talks is set to start today, and there are three main reasons why the US won't be playing the central role it often does in such negotiations
The United States won't take its usual center-stage position when Israeli and Palestinian negotiators meet today for their first direct talks in more than a year.
The talks, set for Amman, Jordan, are designed to explore the potential for a return to formal direct peace negotiations, which collapsed in October 2010. They will include one meeting between Israeli and Palestinian representatives and another for those envoys to meet with the Quartet, the four world powers — the US, the European Union, Russia, and the United Nations — that have been pressing for a return to the negotiating table.
But the absence of the US from its traditional lead role is a telling sign of three realities, some Mideast experts say:
The US is in a diminished position in the region after the year of the Arab Spring — in which Washington was seen as hesitant to back the protesters — and the failure of President Obama's pledge in September 2010 to reach a peace accord within a year.
The advent of a tough election year means Mr. Obama is unlikely to jump into any peace initiative or to pressure Israel — something a Republican opponent could use against him.
Expectations for tosday's talks are low, offering the US little incentive to employ its diplomatic prestige.
Secretary of State Hillary Rodham Clinton did issue a statement Sunday lauding Jordan's role in arranging the latest talks and underscoring US support for resumed negotiations. "We are hopeful that this direct exchange can help move us forward," she said, adding that "the status quo is not sustainable and the parties must act boldly to advance the cause of peace."
Israel is expected to be represented at the meetings by Yitzhak Molcho, Prime Minister Benjamin Netanyahu's envoy, while the Palestinians are sending negotiator Saeb Erekat. Speaking with reporters in Ramallah Monday, Mr. Erekat said he does not expect the talks to deliver any major breakthroughs.
Today's talks occur under something of a deadline. In late September the Quartet called on the Israelis and Palestinians to deliver within 90 days "comprehensive proposals on territory and security" to serve as bases for direct negotiations.Yet while few experts expect anything significant to happen by the Jan. 26 deadline, most observers say both the Israelis and Palestinians have reasons for agreeing to the Amman talks.
The Palestinians may have their eyes set ultimately on the UN and efforts they launched there last fall to win global recognition.One scenario, Mideast experts say, is that the Palestinian leadership could use the expected failure of the talks to revive its push for official UN recognition of a state of Palestine. The Palestinians could point to both the presumed failure of the Quartet's initiative and to what they argue is Israel's refusal to take serious steps toward peace.
Palestinian leaders continue to call on Israel to halt settlement construction in the occupied territories as a necessary first step for actual peace negotiations to resume. Palestinian negotiator Erekat alluded to this position Sunday when he said Tuesday's talks would take up Israel's "international legal obligations to freeze all settlement construction."Israel has countered that is is willing to resume peace negotiations without conditions.
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