If Liberals can say something and, by their very saying it, believe it to be so and assume/demand/expect everyone else to fall in line then perhaps we should accord the same privilege to Noonan. (See 1 and below.)
Nothing new here. Sticking the knife in Israel's back? Message to Netanyahu - trust Obama at Israel's peril!
I believe, in the ensuing months, Obama will become frantic and will do anything in order to win re-election. Consequently, you will see more and more extreme and bizarre behaviour.(See 1a below.)
Hurt sees a heap of hurt for Obama last week. Perhaps. You decide.(See 2 below.)
Krauthammer discusses Obama's desire for flexibility.
I would argue we should give Obama all the slack he needs, disconnect him from The White House and buy him Jan Fonda's 'Work Out" tape routine! (See 3 below.)
Ironically Pete DuPont has to attack Obama re his failed energy policies because Pete represents a coal region and his family made fortunes off polluting chemicals.
This is the same Pete, who lacerated GW over Iran, yet read the same intelligence material, believed what he read and initially supported the Iran War.
Can Pete be trusted? You decide.(See 4 below.)
Ah, but Republicans have to wrestle with the same trust issue because they have gone along with promiscuous spending for decades and now expect the public to believe they are finally serious.
When so called Conservatives cannot muster the necessary testicular fortitude, they have no right to expect voter support except under the most egregious actions by their opponents. This is how Republicans, from time to time, ascend to Congressional power but that is not a prescription for long term seniority.
Kim Strassel alludes to this in her recent op ed piece pertaining to weak knee evidence beginning to surface over the possibility 'The Supremes' may conclude 'Obamascare' is constitutionally frightening. (See 5 below.)
Will our economic future be defined by debt? (See 6 below.)
We are in Winter Park, Florida for our granddaughter's naming. Winter Park is the old and elegant Florida I remember from my youth and the home of Rollins College - probably one of the most beautiful college campuses in America.
Winter Park is a short drive from Sanford where outsiders are marching on the city and threatening to boycott businesses until they put 'Leo" Zimmerman in jail. They are being led by America's pre-eminent shakedown pirate, Al Shaprton, and his motley crew of anointed vigilantes..
Merchants are being held hostage in hopes they will prevail by forcing city fathers to embrace a policy of thuggish mob rule type injustice. I hope their crude demogogic efforts will fail and justice will be allowed to determine the final outcome of this seamy affair.
This is priceless and so full of logic it was impossible for this bureaucrat to respond: http://videos2view.net/smackdown.htm
Obama increasingly comes across as devious and dishonest.
By PEGGY NOONAN
Something's happening to President Obama's relationship with those who are inclined not to like his policies. They are now inclined not to like him. His supporters would say, "Nothing new there," but actually I think there is. I'm referring to the broad, stable, nonradical, non-birther right. Among them the level of dislike for the president has ratcheted up sharply the past few months.
It's not due to the election, and it's not because the Republican candidates are so compelling and making such brilliant cases against him. That, actually, isn't happening.
What is happening is that the president is coming across more and more as a trimmer, as an operator who's not operating in good faith. This is hardening positions and leading to increased political bitterness. And it's his fault, too. As an increase in polarization is a bad thing, it's a big fault.
The shift started on Jan. 20, with the mandate that agencies of the Catholic Church would have to provide services the church finds morally repugnant. The public reaction? "You're kidding me. That's not just bad judgment and a lack of civic tact, it's not even constitutional!" Faced with the blowback, the president offered a so-called accommodation that even its supporters recognized as devious. Not ill-advised, devious. Then his operatives flooded the airwaves with dishonest—not wrongheaded, dishonest—charges that those who defend the church's religious liberties are trying to take away your contraceptives.
What a sour taste this all left. How shocking it was, including for those in the church who'd been in touch with the administration and were murmuring about having been misled.
Events of just the past 10 days have contributed to the shift. There was the open-mic conversation with Russian President Dmitry Medvedev in which Mr. Obama pleaded for "space" and said he will have "more flexibility" in his negotiations once the election is over and those pesky voters have done their thing. On tape it looked so bush-league, so faux-sophisticated. When he knew he'd been caught, the president tried to laugh it off by comically covering a mic in a following meeting. It was all so . . . creepy.
Next, a boy of 17 is shot and killed under disputed and unclear circumstances. The whole issue is racially charged, emotions are high, and the only memorable words from the president's response were, "If I had a son he'd look like Trayvon" At first it seemed OK—not great, but all right—but as the story continued and suddenly there were death threats and tweeted addresses and congressmen in hoodies, it seemed insufficient to the moment. At the end of the day, the public reaction seemed to be: "Hey buddy, we don't need you to personalize what is already too dramatic, it's not about you."
Now this week the Supreme Court arguments on ObamaCare, which have made that law look so hollow, so careless, that it amounts to a characterological indictment of the administration. The constitutional law professor from the University of Chicago didn't notice the centerpiece of his agenda was not constitutional? How did that happen?
Maybe a stinging decision is coming, maybe not, but in a purely political sense this is how it looks: We were in crisis in 2009—we still are—and instead of doing something strong and pertinent about our economic woes, the president wasted history's time. He wasted time that was precious—the debt clock is still ticking!—by following an imaginary bunny that disappeared down a rabbit hole.
The high court's hearings gave off an overall air not of political misfeasance but malfeasance.
All these things have hardened lines of opposition, and left opponents with an aversion that will not go away.
I am not saying that the president has a terrible relationship with the American people. I'm only saying he's made his relationship with those who oppose him worse.
In terms of the broad electorate, I'm not sure he really has a relationship. A president only gets a year or two to forge real bonds with the American people. In that time a crucial thing he must establish is that what is on his mind is what is on their mind. This is especially true during a crisis.
From the day Mr. Obama was sworn in, what was on the mind of the American people was financial calamity—unemployment, declining home values, foreclosures. These issues came within a context of some overarching questions: Can America survive its spending, its taxing, its regulating, is America over, can we turn it around?
That's what the American people were thinking about.
But the new president wasn't thinking about that. All the books written about the creation of economic policy within his administration make clear the president and his aides didn't know it was so bad, didn't understand the depth of the crisis, didn't have a sense of how long it would last. They didn't have their mind on what the American people had their mind on.
The president had his mind on health care. And, to be fair-minded, health care was part of the economic story. But only a part! And not the most urgent part. Not the most frightening, distressing, immediate part. Not the 'Is America over?' part.
And so the relationship the president wanted never really knitted together. Health care was like the birth-control mandate: It came from his hermetically sealed inner circle, which operates with what seems an almost entirely abstract sense of America. They know Chicago, the machine, the ethnic realities. They know Democratic Party politics. They know the books they've read, largely written by people like them—bright, credentialed, intellectually cloistered. But there always seems a lack of lived experience among them, which is why they were so surprised by the town hall uprisings of August 2009 and the 2010 midterm elections.
If you jumped into a time machine to the day after the election, in November, 2012, and saw a headline saying "Obama Loses," do you imagine that would be followed by widespread sadness, pain and a rending of garments? You do not. Even his own supporters will not be that sad. It's hard to imagine people running around in 2014 saying, "If only Obama were president!" Including Mr. Obama, who is said by all who know him to be deeply competitive, but who doesn't seem to like his job that much. As a former president he'd be quiet, detached, aloof. He'd make speeches and write a memoir laced with a certain high-toned bitterness. It was the Republicans' fault. They didn't want to work with him.
He will likely not see even then that an American president has to make the other side work with him. You think Tip O'Neill liked Ronald Reagan? You think he wanted to give him the gift of compromise? He was a mean, tough partisan who went to work every day to defeat Ronald Reagan. But forced by facts and numbers to deal, he dealt. So did Reagan.
An American president has to make cooperation happen.
But we've strayed from the point. Mr. Obama has a largely nonexistent relationship with many, and a worsening relationship with some.
Really, he cannot win the coming election. But the Republicans, still, can lose it. At this point in the column we usually sigh.
1a)Bolton Charges Obama Purposely Undermining Israel
By David A. Patten
Former U.N. Ambassador John Bolton blasted the Obama administration Wednesday afternoon for putting “just merciless” behind-the-scenes pressure on the Israeli government in order to persuade Israeli leader Benjamin Netanyahu not to launch an attack on Iran.
Bolton added that reported intelligence leaks by the administration could hurt Israel’s chances of successful knocking out Iran’s nuclear facilities.
Bolton’s comments on Fox News followed revelations Wednesday that the Israeli government has made arrangements with the government of Azerbaijan to use its airbases, which it would presumably employ to help it attack Iran.
Landing jets in Azerbaijan would make an Israeli attack on Iran’s nuclear infrastructure much more effective, military experts say. It would greatly reduce the flight time, and refueling requirements, for Israel’s F-16 and F-15 jets.
Foreign Policy broke the news of the alleged Israel-Azerbaijan connection. It attributed the report to a “senior administration official.” Another U.S. intelligence source said the administration is “not happy” about Israel’s efforts to strengthen its ties with Azerbaijan in order to defend itself.
Bolton sees the administration’s leak of sensitive information as part of a larger problem.
“I think the Obama administration has long believed that an Israeli attack was worse than an Iranian nuclear weapon,” Bolton told Fox. “The president says that containment and deterrence of Iran is not his policy, and I think today that’s true. But it’s his plan B, it’s his backup plan when his current efforts at sanctions fail, diplomacy fails, and Iran gets nuclear weapons.
“And I think the pressure the administration has put on Israel has been just merciless behind the scenes,” he adds.
So far, Bolton says, Israeli officials show no intention of backing down from what they see as the existential threat of a nuclear-capable Iran. But the Azerbaijan leak indicates the administration is upping the ante.
“So the Obama administration has torqued it up a notch, and now they’re going to reveal very sensitive, very important information that will allow Iran to defeat an Israeli attack,” said the former UN ambassador. “I think that’s what’s going on.”
Last month, Israel inked a $1.6 billion arms deal for drones and an anti-aircraft missile defense system with Azerbaijan. Many foreign policy experts, however, remain highly skeptical that Azerbaijan would help Israel attack its powerful Persian neighbor to the south.
Bolton is the author of the Newsmax Magazine April cover story “Showdown: Iran’s Plan for a Second Holocaust Must Be Stopped.” He suggested he has no independent knowledge of whether Israeli has struck a bargain to use Azerbaijan’s airfields.
Bolton added that the leak could impair Israel’s ability to defend itself.
“Releasing this information, so that the Iranians now know about it, takes away a potentially very powerful mode of attack that hitherto the Israelis have been able to keep secret,” he said.
© 2012 Newsmax. All rights reserved
2)HURT: Brutal week for Obama, the worst of his presidency
By Charles Hurt
The past seven brutal days will go down as one of the worst weeks in history for a sitting president. It certainly has been, without any doubt, the worst week yet for President Obama.
Somehow, Mr. Obama managed to embarrass himself abroad, humiliate himself here at home, see his credentials for being elected so severely undermined that it raises startling questions about whether he should have been elected in the first place — let alone be re-elected later this year.
• Last Friday, Mr. Obama wandered into the killing of Trayvon Martin. Aided by his ignorance of the situation, knee-jerk prejudices and tendency toward racial profiling, Mr. Obama played a heavy hand in elevating a tragic situation in which a teenager was killed into a full-blown hot race fight.
Americans, he admonished, need to do some “soul-searching.” And then, utterly inexplicably, he veered off into this bizarre tangent about how he and the poor dead kid look so much alike they could be father and son. It was election-year race-pandering gone horribly wrong.
• By the start of this week, Mr. Obama had fled town and was racing to the other side of the planet just as the Supreme Court was taking up the potentially-embarrassing matter of Obamacare. While in South Korea he was caught on a hidden mic negotiating with the president of our longest-standing rival on how to sell America and her allies down the river once he gets past the next election.
• Meanwhile, back at home, the Supreme Court took up the single most important achievement of Mr. Obama’s presidency and, boy, was it embarrassing. The great constitutional law professor, it turns out, may not quite be the wizard he told us he was.
By most accounts, Mr. Obama and his stuttering lawyers were all but laughed out of the courthouse. They were even stumbling over softball questions lobbed by Mr. Obama’s own hand-picked justices.
• Mr. Obama closed his week pulling off a nearly unimaginable feat: He managed to totally and completely unify the nastily-fighting Democrats and Republicans in Congress. Late Wednesday night, they unanimously voted — 414 to zip — to reject the budget Mr. Obama had presented, leaving him not even a thin lily’s blade to hide behind.
So, in one week, Mr. Obama got caught whispering promises to our enemy, incited a race war, raised serious questions about his understanding of the Constitution, and then got smacked down over his proposed budget that was so wildly reckless that even Democrats in Congress could not support it.
It was as if you lumped Hurricane Katrina and the Abu Ghraib abuses into one week for George W. Bush. And added on top of that the time he oddly groped German Chancellor Angela Merkel and got caught cursing on a hot mic.
Even then, it wouldn’t be as bad as Mr. Obama’s week. You would probably also have to toss in the time Mr. Bush’s father threw up into the lap of Japan’s prime minister. Only then might we be approaching how bad a week it was for Mr. Obama.
Not that you will see any trace of embarrassment in the face of Mr. Obama. He has mastered the high political art of shamelessness, wearing it smugly and cockily. Kind of like a hoodie.
--------------------------------------------------------------------------------------------------3)The ‘flexibility’ doctrine
By Charles Krauthammer
“On all these issues, but particularly missile defense, this can be solved, but it’s important for him [Vladimir Putin] to give me space. . . . This is my last election. After my election, I have more flexibility.”
You don’t often hear an American president secretly (he thinks) assuring foreign leaders that concessions are coming their way, but they must wait because he’s seeking reelection and he dares not tell his own people.
Not at all, spun a White House aide in major gaffe-control mode. The president was merely explaining that arms control is too complicated to be dealt with in a year in which both Russia and the United States hold presidential elections.
Rubbish. First of all, to speak of Russian elections in the same breath as ours is a travesty. Theirs was a rigged, predetermined farce. Putin ruled before. Putin rules after.
Obama spoke of the difficulties of the Russian presidential “transition.” What transition? It’s a joke. It had no effect on Putin’s ability to negotiate anything.
As for the U.S. election, the problem is not that the issue is too complicated but that if people knew Obama’s intentions of flexibly caving on missile defense, they might think twice about giving him a second term.
After all, what is Obama doing negotiating on missile defense in the first place? We have no obligation to do so. The Anti-Ballistic Missile Treaty, a relic of the Cold War, died in 2002.
We have an unmatched technological lead in this area. It’s a priceless strategic advantage that for three decades Russia has been trying to get us to yield. Why give any of it away?
To placate Putin, Obama had already in 2009 abruptly canceled the missile-defense system the Poles and Czechs had agreed to host in defiance of Russian threats. Why give away more?
It’s unfathomable. In trying to clean up the gaffe, Obama emphasized his intent to “reduce nuclear stockpiles” and “reduce reliance on nuclear weapons.” In which case, he should want to augment missile defenses, not weaken, dismantle or bargain them away. The fewer nukes you have for deterrence, the more you need nuclear defenses. If your professed goal is nuclear disarmament, as is Obama’s, eliminating defenses is completely illogical.
Nonetheless, Obama is telling the Russians not to worry, that once past “my last election” and no longer subject to any electoral accountability, he’ll show “more flexibility” on missile defense. It’s yet another accommodation to advance his cherished Russia “reset” policy.
Why? Hasn’t reset been failure enough?
Let’s do the accounting. In addition to canceling the Polish/Czech missile-defense system, Obama gave the Russians accession to the World Trade Organization, signed a START Treaty that they need and we don’t (their weapons are obsolete and deteriorating rapidly), and turned a scandalously blind eye to their violations of human rights and dismantling of democracy. Obama even gave Putin a congratulatory call for winning his phony election.
In return? Russia consistently watered down or obstructed sanctions on Iran, completed Iran’s nuclear reactor at Bushehr, provides to this day Bashar al-Assad with huge arms shipments used to massacre his own people (while rebuilding the Soviet-era naval base in the Syrian port of Tartus), conducted a virulently anti-American presidential campaign on behalf of Putin, pressured Eastern Europe and threatened Georgia.
On which of “all these issues” — Syria, Iran, Eastern Europe, Georgia, human rights — is Obama ready to offer Putin yet more flexibility as soon as he gets past his last election? Where else will he show U.S. adversaries more flexibility? Yet more aid to North Korea? More weakening of tough Senate sanctions against Iran?
Can you imagine the kind of pressure a reelected Obama will put on Israel, the kind of anxiety he will induce from Georgia to the Persian Gulf, the nervousness among our most loyal East European friends who, having been left out on a limb by Obama once before, are now wondering what new flexibility Obama will show Putin — the man who famously proclaimed that the “greatest geopolitical catastrophe” of the 20th century was Russia’s loss of its Soviet empire?
They don’t know. We don’t know. We didn’t even know this was coming — until the mike was left open. Only Putin was to know. “I will transmit this information to Vladimir,” Medvedev assured Obama.
Added Medvedev: “I stand with you.” A nice endorsement from Putin’s puppet, enough to chill friends and allies, democrats and dissidents, all over the world.
--------------------------------------------------------------------------------------------------4)The Anti-Energy President
He really meant it when he said prices would "skyrocket."
By PETE DU PONT
Our America today is very different from the America of some years ago. Government spending is greatly increased, as is the regulation of our economy. The growing size and reach of our government is sapping our nation's strength and independence. And our current president's policies have been quite different from our leaders of some years ago.
One of the best examples of these public policy changes is the huge increase in government regulation in how we generate and use energy, with its negative impact on supply, its focus on financing new and inefficient energy industries, and the resulting higher costs.
The policy of the Obama administration has been not to increase the energy supplies that are so critical to our nation's economic health, but to limit them, to increase energy prices, and to make energy more expensive.
Eliminating tax deductions for the oil and gas industries is at the top of the President's list, which would increase the price of gasoline and home heating oil for everyone. But this fits in with the Obama administration's overall inclination to hamper domestic production, whether through slowness in granting new permits or refusal to open new areas for exploration. In fact oil, production on federal lands was flat between 2009 to 2011, while production on nonfederal lands increased almost 7%.
And it is not just petroleum. Mr. Obama's Environmental Protection Agency wants to increase regulation of coal-fueled electricity plants, which produce almost half of our electricity, so as to drive up the price of electricity and force plants to close. None of this should be surprising, for as we know, Obama's energy secretary, Steven Chu, told The Wall Street Journal in 2008 that we must "figure out how to boost the price of gasoline to the levels in Europe."
The president admitted that his cap-and-trade energy proposals, had they come to pass, would cause energy prices to "skyrocket" and bankrupt coal companies. In the Mr. Obama's words, coal fired plants can be built, but if they are, "it will bankrupt them because they're going to be charged a huge sum" for emitting the greenhouse gases.
On the other hand, the current administration is throwing money at "green" energy companies, exemplified by the failed $535 million federal loan guarantee in Solyndra. Alternative energy sources do need to be developed, but it is clear that the federal government is not a wise allocator of taxpayer dollars in this effort. These sources will never be developed to the point of affordability unless the free market is allowed to sort good technologies from bad without the skewing of investment that comes from government trying to pick winners and losers. America badly needs very different national energy policies that will increase our energy supplies, reduce the cost of energy, and get America positively moving again.
Approving the Keystone pipeline so that more energy comes into America is an important first step. The president has twice rejected congressional efforts to approve it.
We must encourage hydraulic "fracking," of underground reserves in shale. Already there are many fracking gas efforts underway, and the government's latest estimates of the gas available from shale are about 500 trillion cubic feet. We currently use about 24 trillion cubic feet per year, so shale gas can add around 20 years to our supply.
The Obama administration must open up more areas for exploration and production, from drilling in the Alaska National Wildlife Refuge to reducing the number of prohibited areas offshore. It simply must do what it can to speed up the permit granting process. And it must recognize that now is not the time, if there ever is a good time, to raise taxes on energy producers.
Finally, a look at the George W. Bush's and Mr. Obama's efforts to increase government regulation—not just in energy, but across the economy—shows the difference between the two presidents. In his first three years in office Mr. Bush put into place 28 major regulations. Mr. Obama's three years have seen 106 major regulations. In dollar terms the Bush regulations cost $8.1 billion and Obama's $46 billion.
So where America is and what it is doing in energy policies has changed a great deal in the past three years, mostly in a regressive direction. Energy is essential for a strong America, but the current administration seems to be doing all it can to keep us from tapping the reliable energy supplies we have right here in our country—coal, oil, and gas—and from our neighbor to the north. Instead we are being pushed towards other energy sources that are inefficient, expensive and will only provide a fraction of the energy a strong America needs.
5)The GOP's Health-Care Eeyores
Some Republicans believe the Democratic spin that it will help the president if the Supreme Court strikes down ObamaCare.
By KIMBERLEY A. STRASSEL
"Good morning, Pooh Bear," said Eeyore gloomily. "If it is
a good morning," he said. "Which I doubt," said he.
–"Winnie the Pooh"
Conservatives are meant to be optimists, yet by the mutterings attending this week's Supreme Court drama, more than a few have been eating thistles with one depressive, gray donkey. To listen to this troop, the worst thing that might happen in this election season is for the court to . . . wait for it . . . kill ObamaCare.
For two years now, that law has animated the right. It was the spur behind the tea party, the reason voters gave Republicans the House. It is why Mitt Romney and Rick Santorum roll out of bed, to promise to immediately dismantle the monstrosity. Conservative think tanks, free-market business groups, the grass roots—all agree this must be the top priority.
And if you are any of the above, it was a darn good week. On every major legal question surrounding the law—the constitutionality of the individual mandate; the question of severability; the issue of Medicaid expansion—the court proved itself aware, and skeptical, of ObamaCare's overreach. Nothing is certain in jurisprudence, and the Supremes could uphold the law. Yet the oral arguments were the single greatest reason for optimism that opponents have had.
And so, cue the donkeys. With all the dreariness of a modern-day Eeyore, they are convincing themselves that something so great as a legal victory must, by necessity, portend political disaster.
Credit for this idea goes to the left, which is scrambling to pre-emptively spin any humiliating court loss. The death of ObamaCare, proclaimed liberal strategist James Carville, "will be the best thing that ever happened to the Democratic Party." The system will disintegrate, he explained, and Republicans will "own it."
Added Senate Majority Leader Harry Reid: A court loss actually puts President Obama in a "better position for the election," since Republicans lose their signature issue. And don't forget, insisted Neera Tanden, president of the liberal Center for American Progress, that it will "galvanize Democrats to use the courts as a campaign issue."
Some Republicans are internalizing these arguments. Iowa Rep. Steve King all but declared in a recent news conference that a court victory would lose Republicans the White House. "If the Supreme Court finds this unconstitutional," he fretted, "there is more risk that President Obama will be re-elected because people will think they are protected from this egregious reach into our freedom." This concern that voters would stay home is ricocheting through the conservative TV and radio waves.
And what if the court upholds some of the law (or all of it)? No good, former top Republican aide John Feehery told the Associated Press, since "a wide swathe of people will say 'if the court says it's kosher, then it's kosher'"—which will also dampen voting enthusiasm.
There's more moaning: What about the policy mess Republicans might be left with? What if voters blame the GOP for the loss of more popular provisions? What if the party gets dinged for having no comprehensive alternative? What if the focus goes back to insurers, elevating Mr. Obama's class warfare? Misery and more misery.
The mistake here is one the Supreme Court didn't make: Confusing politics with the real issues—the Constitution, and liberty. Or, as put by David Rivkin, the attorney who started the 26-state lawsuit against ObamaCare: "These concerns are bogus. We have already won in the sense that the entire court's attention was on the Constitution's structural limitation on governmental power. That's the ultimate indictment—not just of ObamaCare, but of everything this administration has done."
Through that lens, the GOP has no obvious political problem. Republicans can argue that any fallout from partial or full repeal of the law—higher prices, the loss of some provisions—is the fault of a Democratic administration that strapped the market to a shoddily considered, partisan bill that failed judicial muster. And the risk of the same is the GOP argument for why it won't be proposing its own 2,700-page alternative.
As to enthusiasm come November, what better argument can the GOP be handed than proof, via a Supreme Court repeal, that Mr. Obama cannot be trusted with a second term? If the president was willing to impose such a constitutionally suspect bill prior to re-election, what will he do if he never has to face voters again? And what better reminder of the centrality of the court, which Mr. Obama could well alter in a second term?
For these arguments to matter, they must, of course, be made. If a Nominee Romney, for instance, took a repeal of ObamaCare as license to quit talking about a tricky issue, he'd be throwing the game. Whatever the Eeyores say, ObamaCare—upheld or repealed—remains Republicans' most potent issue this fall.
6)A Decade of Debt and Default
By John Maxfield
The last few years seem like a lifetime in and of themselves. Unlike previous economic downturns, most of which spanned a year or two at most, we're still slogging through the mess left by a decade of excesses in the financial and housing sectors.
Have we made any progress?
Figuring out where we're at in the process of recovery is one of the most difficult tasks that analysts and economists face nowadays. Has the housing market finally hit bottom? Are the improvements in the employment figures sustainable? Are financial institutions out of the woods yet?
To complicate matters further, the crisis was and remains truly global in scale, spawning a whole new category of questions. Will Europe remain a single political and monetary unit as countries like Ireland, Portugal, and Greece yearn for weaker currencies to ignite recoveries? Will China's real estate and export corrections turn into crises of their own?
While these issues continue to dominate the financial news and economists' minds, at the end of the day, the solution to the problem is as simple as it is painful. The world must deleverage -- the nasty process of lowering excessive debt after a credit bubble. And it is here that we must look to measure our progress.
Gauging the progress we've made
At the end of January, the McKinsey Global Institute, an arm of the prestigious management consulting firm McKinsey & Co., published an update to its invaluable research on deleveraging. For those of you interested in this topic, I strongly recommend checking it out.
What's clear from the report is that we still have a long way to go in this regard. Indeed, a full two years after the crisis, most of the world's major economies have only just begun the painful process. In fact, in only three of the largest mature economies -- the United States, Australia, and South Korea -- has the ratio of total debt relative to GDP fallen.
Below is a table with data from the report illustrating the debt composition of the 10 largest mature economies. The debt of each component is expressed as a percentage of GDP. For example, Japan's private debt is equal to 67% of GDP, its nonfinancial companies hold debt equivalent to 99% of its GDP, and so on. All told, the island nation's cumulative debt burden is equal to a staggering 512% of its GDP.
Nonfinancial Corp. Debt
Financial Industry Debt
Japan 67% 99% 120% 226% 512%
U.K 98% 109% 219% 81% 507%
Spain 82% 134% 76% 71% 363%
France 48% 111% 97% 90% 346%
S Korea 81% 107% 93% 33% 314%
Italy 45% 82% 76% 111% 314%
U.S 87% 72% 40% 80% 279%
Germany 60% 49% 87% 83% 278%
Austral 105% 59% 91% 21% 277%
Canada 91% 53% 63% 69% 276%
Source: McKinsey Global Institute, Debt and Deleveraging: Uneven Progress on the Path to Growth.
Debt will define our times
Although it's impossible to predict what the endgame will be in this regard, there's little doubt that these obligations will be a defining characteristic of our era. The 1920s were the Roaring '20s. The 1930s were lost to the Great Depression. The 1940s and '50s reaped the economic benefits sowed by war. And so on. The 2010s are set to be known as something like the decade of debt and/or default.
Indeed, which countries default and how they do so will not only dictate history, but also fortunes. For example, if Greece were to default again (as I and others suspect it will) and depart from the euro's monetary union to deal with its fiscal and economic issues, it wouldn't be hard to imagine how companies like Greek shipping giant DryShips (Nasdaq: DRYS ) and the National Bank of Greece (NYSE: NBG ) would suffer from the reinstitution of the drachma and a collapse in international financing. And not to belabor the point, but the same can be said about a company like the Bank of Ireland (NYSE: IRE ) , as its namesake country is struggling to extricate itself from a cumulative public and private debt burden equivalent to 663% of its GDP.
Yet investors who navigate these times wisely will be rewarded handsomely. The recent performance of the financial sector in the United States provides a case in point. Last year, Bank of America (NYSE: BAC ) and Citigroup (NYSE: C ) were two of the most beaten-down stocks of the S&P 500, as investors feared the extent of their liability for fraudulent practices in the mortgage industry. This year, however, they're both flying high. For the year, Bank of America is the top-performing stock on the Dow Jones Industrial Average, up a ridiculous 76%, and Citigroup is up a lesser but still impressive 41%.