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Another view of what is happening in Detroit. (See 1 below.)
Comment from dear friend, fellow memo reader re previous memo regarding Detroit: "As for Detroit's problem, it is a mirror image of most large cites that are near bankrupt.They all have DEMOCRAT mayors,and are enthralled with labor union hierarchy's...........................W."
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American demographics changing the landscape. (See 2 below.)
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An analysis of the Israeli election from a well placed friend of a friend.
I happened to be with Israel's Consul General for the South East this evening and we chatted a bit about the recent election there. He was genuinely pleased and confirmed the fact that most Israelis understand they need to be militarily strong but they also do not wish to exclude the needs of the social component of their society. He was quite pleased to note many important portfolios were now handled by very competent Ministers.possessing extraordinary experience and he hoped the growing disparity of wealth would be addressed.
He was quite upbeat and based on his assessment with justification. (See 3 below.)
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I am at the point in Shlaes' biography of Coolidge where Harding and Coolidge have been elected. America's post War economy was undergoing similar problems as now and Harding told everyone : "...No altered system will work a miracle...Any wild experiment will only add to the confusion. Our best assurance lies in efficient administration of our proven system..." Harding stated his goal was to find the way back to the "Old Deal."
Contrast this with Obama's desire to bring about radical change, to spend us into greater poverty than we already are in and to expand government both in size and scope and then divide the nation by pitting wealthy Americans against less wealthy Americans , playing the racial card, etc..
We have been through the New Deal, The Raw Deal and now The Change Deal. We need to go back to the 'What Works Deal."
It reminds me of my own physical situation. I have had two knee surgeries in five months, and a knee manipulation in between and I have a serious scar tissue problem that prevents me from getting sufficient flexing and extension. I was recently advised the best thing is no more trauma. Let the body take over, keep with pool therapy and hopefully the knee will calm down. allow the scar tissue to reabsorb and the swelling to subside.
Activism works when it is called for but lunacy and activism is not a good combination and that is what Obama has been prescribing and, to make matters worse, he has the unmitigated gall to lie!
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Not sure Obama and his crowd want to hear this:I
http://www.youtube.com/embed/9RABZq5IoaQ?feature=player_embedded
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Dr. Ben Carson continues straight talk! (See 4 below.)
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Dick
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1)It Can Always Get Worse
By Porter Stansberry
The Penobscot Building is a hallmark of downtown Detroit.
It was built in 1928. At 47 stories, it was the eighth-tallest building anywhere in the world when it was completed. It was the absolute tallest building anywhere in the world outside of Chicago and New York. It remained the tallest building in Michigan for almost 50 years.
It's much more than merely a local landmark. It is Detroit's trademark tower. The landlord lights the tower at night to celebrate Christmas and Independence Day. The building is ornate and beautiful, done in an art-deco style reminiscent of Rockefeller Center in New York. Yes… two other buildings in Detroit are now taller, bigger, and newer… but the Penobscot Building is still, even after all these years, considered Class-A commercial space. She's the grand dame.
Buildings like Penobscot would cost hundreds of dollars per square foot to build… perhaps even $1,000 a square foot, considering all the ornate stone work on the exterior. That's not including the value of the land where the building sits – square in the middle of Detroit's financial center.
We all know commercial real estate hasn't done much in terms of price appreciation since the crash of 2008. Class-A commercial space like this is selling for around $200 per square foot, on average. My company, for example, is in negotiations to buy an office building in Delray Beach, Florida for around $240 per square foot. At 776,000 square feet, a building like Penobscot, in good condition, might cost $150 million-$200 million to buy, on average, in cities across the U.S.
Unfortunately for the previous owners, Detroit isn't anyone's idea of a great place to start a business or to move headquarters. Class-A commercial real estate in Detroit has been trading around $28 per square foot in the last year. That's roughly 86% less than the national average… And probably 90% less than new construction.
While owners are not technically giving these properties away (at least not yet), these prices indicate the city has suffered a total collapse. Surely things can't get any worse, right?
That's exactly what many investors thought back in 2007, too. And I admit… I was one of them. In fact, I asked my analyst Tom Dyson to spend some time in Detroit. I wanted him to find a few different ways for our subscribers to buy assets there. After spending a few weeks in Detroit, Tom came back with lots of good ideas. One was to buy the skyscrapers, which were selling at the cheapest prices available anywhere in the world.
Why on Earth was I interested in Detroit?
I wasn't naïve. I knew a lot about the city's history. I've probably written as much about Detroit's woes as just about any financial analyst. I've long believed that Detroit is a kind of petri dish… a place where various ideas about how governments and societies ought to be organized were tested. It's a long story…
The short version is simple enough to understand… Since 1960, Detroit has been ruled by the Democratic Party. In particular, it's been ruled by the African-American wing of the Democratic Party, which came to power through the Civil Rights movement. These politicians have imposed their taxes and plans on the city, in progressively more authoritarian ways. The result has been a complete collapse of civil society. A huge percentage of the hard-working, honest people fled the city, leaving those who remained to be preyed upon by a government nearly consumed with avarice, greed, and corruption.
The situation was further powered by the economic might of the major car companies, which themselves had been captured, in effect, by the Democratic Party's union operatives.
Anyone who's spent any time studying the outcome of socialist societies or the real impact of unions on an industry won't be surprised by the outcome. Detroit lost 80% of its population and nearly all of its working and middle classes. What was left was the poorest, most violent city in America.
I believe it's a warning to all of us… about what might happen if we continue down the path we're on today. Anyone who believes more debt, taxes, and government will save our economy and lead us to prosperity ought to move to Detroit for a year. Let me know how it turns out.
In any case, the point I'm trying to make is… I wasn't ignorant of the risks Detroit posed. I simply figured things couldn't possibly get any worse.
You have to remember… as early as March 14, 2007, when I published my first "Letter From the Chairman," I was predicting that a GM bankruptcy filing was inevitable. Lots of people forget this, but with the stock then trading around $40 per share, my call was so far outside the consensus… many subscribers thought I was out of my mind…
Yes, I thought it was likely that Chrysler would go under too, as its balance sheet was in the same poor shape. Ford was different, only because it had borrowed a huge chunk of cash in 2006, money that did, in fact, see it through the crisis.
So… why was I bullish on Detroit real estate in 2007 if I was expecting a GM bankruptcy?
Because a real bankruptcy of GM… a true liquidation of the company's assets and restructuring of its liabilities would have transformed Detroit into one of the most vibrant and fastest-growing cities in the world. I was even looking to buy a house there. Yes, really.
You have to imagine what might have been…
Imagine what would have happened if the company's pension obligations had been discharged through the bankruptcy process. Imagine if all the real estate, all the machines… all the brands… and all the employees… would have been set free from the corrupt regime that's been slowly strangling them for decades.
Believe me, the people of Michigan can build cars that are just as good as the Germans and just as cost-effective as folks in Tennessee and South Carolina. The differences between GM's operations in Michigan and BMW's in South Carolina come down to legacy costs (pensions) and union rules. When the local economy has to support a union-enforced "jobs bank" – where employees are literally paid to sit in a cafeteria all day – the local economy is doomed.
That's not just because of the lost productivity and the expense of paying those 10,000 folks. It's because of what a "job bank" communicates. It's a constant message of hopelessness, futility, and dependency. These ideas, these expenses, this hopelessness have been dogging Michigan for almost 30 years.
But bad ideas don't last forever…
I assumed the failure of GM would wipe away this stain. Surely GM's assets would be auctioned off to the highest bidder. Surely the pensions would be restructured, the insane job banks destroyed. And the union rules gutted.
Call me a heartless capitalist if you must… but then explain under what other set of conditions could 70,000 employees at GM today be expected to care for the 700,000 retirees depending on them? (Yes, those are the real numbers.)
If GM's managers were to have any hope of honoring even a part of the commitment the company owed to its retired workers, the existing employees would have to be free to work in the most efficient ways. They'd have to become some of the most productive workers anywhere in the world.
You don't find those kinds of people sitting in a jobs bank.
Post-bankruptcy… the entire culture in Detroit might have changed. It has happened before in many different industries that failed after decades of union oppression. Witness the transformation of the U.S. steel industry after the industry collapsed in the late 1990s.
But… as you probably know… that's not what happened in Detroit.
Rather than letting the free market take its course, the U.S. government refused to allow the existing bankruptcy laws to shape the outcome. Instead, the president (Barack Obama) appointed one of the most corrupt political operatives in America – Steve Rattner, who was under investigation at the time for bribing state pension officials in New York – to oversee a "reorganization." His real job was to deliver still more power to the unions who'd help re-elect Obama. And sadly, that's what he did.
The government and the bondholders both had about $50 billion invested in GM. So after the bankruptcy and restructuring, it was surprising to find that the union was awarded 40% of the restructured company's equity, wiping out about 80% of the bondholder's claims. Worse, nothing… not one thing… was done to address the company's soaring pension obligations.
And so… what do you think the outcome has been?
When union rules, unlimited medical obligations, and pensions have destroyed one of the greatest industrial corporations in American history… what do you think will happen when you leave the union with 40% of the restructured entity and take away none of its power and pension claims?
You will never guess what happens… Take a look at this chart…
[Editor's note: GM shares are up since Porter wrote this essay. However, they remain more than 30% off their January 2011 peak.]
Former GM President Charles Erwin Wilson is famously quoted as saying, "What's good for GM is good for America."
But the inverse is certainly true, too. What's bad for GM is also bad for America. By postponing the liquidation of GM's assets and preventing a genuine restructuring of its obligations our political leaders and their union backers have condemned Detroit's economy to still more decline – perhaps additional decades of decline.
You can see this by looking at the local real estate. Rather than rebounding after GM's government-led bailout, Detroit's commercial real estate sector has continued to collapse.
Take the Penobscot Building I mentioned earlier. It was bought in 2005 for $14 million, or about $18 per square foot. It seemed like an incredible deal at the time. But just last week, the building sold again after a long, drawn-out bankruptcy proceeding.
The buyer, a Toronto-based real estate company, paid $5 million. That's $6.44 per square foot, a 64% decline since only 2005. And to us, 2005 looked like the bottom. As unpleasant as it is to imagine, things can certainly get worse.
What should we do about it?
As I've long explained, the ultimate endgame to this crisis will be a massive collapse in the global monetary system. We're not there yet. You've still got time to buy real assets like gold, real estate, agricultural real estate, timber, and oil and gas reserves. You've got time to buy certain kinds of operating companies that tend to prosper during periods of inflation – businesses like insurance companies. These kinds of investments will survive the ongoing global currency "reset."
But the one key thing to remember is, while there will be lots of volatility (lots of ups and downs), this crisis won't go away until the debts are handled. And as we've seen with GM, the political class will do almost everything but deal with the root of these problems.
That means these problems won't be solved for a long, long time. And I believe… despite the low yields we're looking at in the Treasury… despite the huge run we've seen in gold and silver… that things will still get a lot worse in the real economy before they get better.
Regards,
Porter Stansberry
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2)Census: Record 1 in 3 US Counties Are Now Dying
A record number of U.S. counties — more than 1 in 3 — are now dying off, hit by an aging population and weakened local economies that are spurring young adults to seek jobs and build families elsewhere.
New 2012 census estimates released Thursday highlight the population shifts as the U.S. encounters its most sluggish growth levels since the Great Depression.
The findings also reflect the increasing economic importance of foreign-born residents as the U.S. ponders an overhaul of a major 1965 federal immigration law. Without new immigrants, many metropolitan areas such as New York, Chicago, Detroit, Pittsburgh and St. Louis would have posted flat or negative population growth in the last year.
"Immigrants are innovators, entrepreneurs, they're making things happen. They create jobs," said Michigan Gov. Rick Snyder, a Republican, at an immigration conference in his state last week. Saying Michigan should be a top destination for legal immigrants to come and boost Detroit and other struggling areas, Snyder made a special appeal: "Please come here."
The growing attention on immigrants is coming mostly from areas of the Midwest and Northeast, which are seeing many of their residents leave after years of staying put during the downturn. With a slowly improving U.S. economy, young adults are now back on the move, departing traditional big cities to test the job market mostly in the South and West, which had sustained the biggest hits in the housing bust.
Also seeing big declines now are rural and exurban areas, along with industrial sections of the Rust Belt.
Census data show that 1,135 of the nation's 3,143 counties are now experiencing "natural decrease," where deaths exceed births. That's up from roughly 880 U.S. counties, or 1 in 4, in 2009. Already apparent in Japan and many European nations, natural decrease is now increasingly evident in large swaths of the U.S.
Despite increasing deaths, the U.S. population as a whole continues to grow, boosted by immigration from abroad and relatively higher births among the mostly younger migrants from Mexico, Latin America and Asia.
"These counties are in a pretty steep downward spiral," said Kenneth Johnson, a senior demographer and sociology professor at the University of New Hampshire, who researched the findings. "The young people leave and the older adults stay in place and age. Unless something dramatic changes — for instance, new development such as a meatpacking plant to attract young Hispanics — these areas are likely to have more and more natural decrease."
The areas of natural decrease stretch from industrial areas near Pittsburgh and Cleveland to the vineyards outside San Francisco to the rural areas of east Texas and the Great Plains. A common theme is a waning local economy, such as farming, mining or industrial areas. They also include some retirement communities in Florida, although many are cushioned by a steady flow of new retirees each year.
In the last year, Maine joined West Virginia as the only two entire states where deaths exceed births, which have dropped precipitously after the recent recession. As a nation, the U.S. population grew by just 0.75 percent last year, stuck at historically low levels not seen since 1937.
Johnson said the number of dying counties is rising not only because of fewer births but also increasing mortality as 70 million baby boomers born between 1946 and 1964 move into their older years. "I expect natural decrease to remain high in the future," he said.
Among the 20 fastest-growing large metropolitan areas last year, 16 grew faster than in 2011 and most of them are located in previously growing parts of the Sun Belt or Mountain West. Among the slowest-growing or declining metropolitan areas, most are now doing worse than in 2011 and they are all located in the Northeast and Midwest.
New York ranks tops in new immigrants among large metro areas, but also ranks at the top for young residents moving away.
In contrast, the Texas metropolitan areas of Dallas, Houston and Austin continued to be big draws for young adults, ranking first, second and fourth among large metro areas in domestic migration due to diversified economies that include oil and gas production. Phoenix, Las Vegas and Orlando also saw gains.
By region, growth in the Northeast slowed last year to 0.3 percent, the lowest since 2007; in the Midwest, growth dipped to 0.25 percent, the lowest in at least a decade. In the South and West, growth rates ticked up to 1.1 percent and 1.04 percent, respectively.
"The brakes that were put on migration during the Great Recession appear to be easing up," said William H. Frey, a demographer at the Brookings Institution who analyzed the migration data. "Native migrants are becoming more 'footloose' — following the geographic ups and downs of the labor market — than are immigrants, who have tended to locate in established ethnic communities in big cities."
"Immigration levels are not where they were a decade ago, but their recent uptick demonstrates the important safety valve they can be for areas with stagnating populations," he said.
Mark Mather, an associate vice president at the Population Reference Bureau, noted that political efforts to downsize government and reduce federal spending could also have a significant impact on future population winners and losers.
Since 2010, many of the fastest-growing U.S. metro areas have also been those that historically received a lot of federal dollars, including Fort Stewart, Ga., Jacksonville, N.C., Crestview, Fla., and Charleston-North Charleston, S.C., all home to military bases. Per-capita federal spending rose from about $5,300 among the fastest-growing metros from 2000 to 2010, to about $8,200 among the fastest-growing metros from 2011 to 2012.
"Federal funding has helped many cities weather the decline in private sector jobs," Mather said.
Other findings:
• Exurbs, the far-flung suburbs on the edge of metropolitan areas, continue to see their growth fizzle after their heady days during the housing boom. Growth dipped last year to 0.35 percent, the lowest in more than a decade. In 2006, exurban growth was as high as 2.1 percent.
• Roughly 46 percent of rural counties just beyond the edge of metropolitan areas experienced natural decrease, compared to 17 percent of urban counties.
• As a whole, the population of non-metropolitan areas last year declined by 0.1 percent, compared with growth of 1 percent for large metro areas and 0.7 percent for small metropolitan areas.
• In the last year, four metro areas reached population milestones: Los Angeles hit 13 million, Philadelphia reached 6 million, Las Vegas crossed 2 million and Grand Rapids, Mich., passed 1 million.
• Chattahoochee County, Ga., home to Fort Benning, was the nation's fastest-growing county, increasing 10.1 percent in the last year.
The census estimates are based on local records of births and deaths, Internal Revenue Service records of people moving within the United States and census statistics on immigrants.
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2)Census: Record 1 in 3 US Counties Are Now Dying
A record number of U.S. counties — more than 1 in 3 — are now dying off, hit by an aging population and weakened local economies that are spurring young adults to seek jobs and build families elsewhere.
New 2012 census estimates released Thursday highlight the population shifts as the U.S. encounters its most sluggish growth levels since the Great Depression.
The findings also reflect the increasing economic importance of foreign-born residents as the U.S. ponders an overhaul of a major 1965 federal immigration law. Without new immigrants, many metropolitan areas such as New York, Chicago, Detroit, Pittsburgh and St. Louis would have posted flat or negative population growth in the last year.
"Immigrants are innovators, entrepreneurs, they're making things happen. They create jobs," said Michigan Gov. Rick Snyder, a Republican, at an immigration conference in his state last week. Saying Michigan should be a top destination for legal immigrants to come and boost Detroit and other struggling areas, Snyder made a special appeal: "Please come here."
The growing attention on immigrants is coming mostly from areas of the Midwest and Northeast, which are seeing many of their residents leave after years of staying put during the downturn. With a slowly improving U.S. economy, young adults are now back on the move, departing traditional big cities to test the job market mostly in the South and West, which had sustained the biggest hits in the housing bust.
Also seeing big declines now are rural and exurban areas, along with industrial sections of the Rust Belt.
Census data show that 1,135 of the nation's 3,143 counties are now experiencing "natural decrease," where deaths exceed births. That's up from roughly 880 U.S. counties, or 1 in 4, in 2009. Already apparent in Japan and many European nations, natural decrease is now increasingly evident in large swaths of the U.S.
Despite increasing deaths, the U.S. population as a whole continues to grow, boosted by immigration from abroad and relatively higher births among the mostly younger migrants from Mexico, Latin America and Asia.
"These counties are in a pretty steep downward spiral," said Kenneth Johnson, a senior demographer and sociology professor at the University of New Hampshire, who researched the findings. "The young people leave and the older adults stay in place and age. Unless something dramatic changes — for instance, new development such as a meatpacking plant to attract young Hispanics — these areas are likely to have more and more natural decrease."
The areas of natural decrease stretch from industrial areas near Pittsburgh and Cleveland to the vineyards outside San Francisco to the rural areas of east Texas and the Great Plains. A common theme is a waning local economy, such as farming, mining or industrial areas. They also include some retirement communities in Florida, although many are cushioned by a steady flow of new retirees each year.
In the last year, Maine joined West Virginia as the only two entire states where deaths exceed births, which have dropped precipitously after the recent recession. As a nation, the U.S. population grew by just 0.75 percent last year, stuck at historically low levels not seen since 1937.
Johnson said the number of dying counties is rising not only because of fewer births but also increasing mortality as 70 million baby boomers born between 1946 and 1964 move into their older years. "I expect natural decrease to remain high in the future," he said.
Among the 20 fastest-growing large metropolitan areas last year, 16 grew faster than in 2011 and most of them are located in previously growing parts of the Sun Belt or Mountain West. Among the slowest-growing or declining metropolitan areas, most are now doing worse than in 2011 and they are all located in the Northeast and Midwest.
New York ranks tops in new immigrants among large metro areas, but also ranks at the top for young residents moving away.
In contrast, the Texas metropolitan areas of Dallas, Houston and Austin continued to be big draws for young adults, ranking first, second and fourth among large metro areas in domestic migration due to diversified economies that include oil and gas production. Phoenix, Las Vegas and Orlando also saw gains.
By region, growth in the Northeast slowed last year to 0.3 percent, the lowest since 2007; in the Midwest, growth dipped to 0.25 percent, the lowest in at least a decade. In the South and West, growth rates ticked up to 1.1 percent and 1.04 percent, respectively.
"The brakes that were put on migration during the Great Recession appear to be easing up," said William H. Frey, a demographer at the Brookings Institution who analyzed the migration data. "Native migrants are becoming more 'footloose' — following the geographic ups and downs of the labor market — than are immigrants, who have tended to locate in established ethnic communities in big cities."
"Immigration levels are not where they were a decade ago, but their recent uptick demonstrates the important safety valve they can be for areas with stagnating populations," he said.
Mark Mather, an associate vice president at the Population Reference Bureau, noted that political efforts to downsize government and reduce federal spending could also have a significant impact on future population winners and losers.
Since 2010, many of the fastest-growing U.S. metro areas have also been those that historically received a lot of federal dollars, including Fort Stewart, Ga., Jacksonville, N.C., Crestview, Fla., and Charleston-North Charleston, S.C., all home to military bases. Per-capita federal spending rose from about $5,300 among the fastest-growing metros from 2000 to 2010, to about $8,200 among the fastest-growing metros from 2011 to 2012.
"Federal funding has helped many cities weather the decline in private sector jobs," Mather said.
Other findings:
• Exurbs, the far-flung suburbs on the edge of metropolitan areas, continue to see their growth fizzle after their heady days during the housing boom. Growth dipped last year to 0.35 percent, the lowest in more than a decade. In 2006, exurban growth was as high as 2.1 percent.
• Roughly 46 percent of rural counties just beyond the edge of metropolitan areas experienced natural decrease, compared to 17 percent of urban counties.
• As a whole, the population of non-metropolitan areas last year declined by 0.1 percent, compared with growth of 1 percent for large metro areas and 0.7 percent for small metropolitan areas.
• In the last year, four metro areas reached population milestones: Los Angeles hit 13 million, Philadelphia reached 6 million, Las Vegas crossed 2 million and Grand Rapids, Mich., passed 1 million.
• Chattahoochee County, Ga., home to Fort Benning, was the nation's fastest-growing county, increasing 10.1 percent in the last year.
The census estimates are based on local records of births and deaths, Internal Revenue Service records of people moving within the United States and census statistics on immigrants.
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3)Surie and I attended the annual mission to Israel of the Conference of Presidents of Major American Jewish Organizations which took place in early February. Among those with whom we met were: President Shimon Peres, Prime Minister Benjamin Netanyahu, US Ambassador Dan Shapiro, Natan Sharansky, former Foreign Minister Tzipi Livni, Yair Lapid and Naftali Bennet--two new faces on the political scene, Jerusalem Mayor Nir Barkat, Tel Aviv Mayor Ron Huldai, Director General of the Foreign Ministry Rafael Barak, Supreme Court President Asher Grunis and Justice Elyakim Rubinstein, four former Israeli Ambassors to the US and academics and media commentators including Ehud Yaari, one of the best connected and most knowledgeable. This was the fifth Presidents Conference mission in which we participated and what made this one unique was the focus on internal issues facing Israel as well as the external threats it faces. This was not surprising because the recent Israeli elections were focused on those internal issues.
Those elections had two significant results--the emergence of new leaders and the rise in popularity and influence of the centrist parties. And that emergence of the centrist parties played a major role in the nature of the new government which was announced last night. More on that below.
Prior to the election, PM Netanyahu's Likud Party and Foreign Minister Avigdor Lieberman's Israel Beitenu parties merged their lists and ran together. The combined list won 31 seats and, as a result, Prime Minster Netanyahu was asked to form the new government. Mr. Lieberman will not be participating in the new government, at least not for a while, because he is on trial for alleged corruption in appointing an Ambassador as a "payback" for that Ambassador providing Lieberman with confidential information about the criminal investigation.
Yair Lapid's new party, Yesh Atid ("There is a Future") won 19 seats--a remarkable and unexpected showing for a new party with a leader who just entered politics. Prior to founding the party, Lapid was a well known television personality. When he spoke to the mission, he used a teleprompter--a first in my experience in Israel and a bit of a "turnoff." To his credit, however, when he answered questions without the teleprompter, he was knowledgable and articulate. His late father, Tommy Lapid, was a contentious secularist who did not hesitate to criticize and castigate the religious establishment. Yair is also a secularist but in a pluralistic and diplomatic way. Thus, among the candidates on the Yesh Atid list was a haredi (ultra orthodox) rabbi. The main focus of Lapid's campaign was on domestic issues, in particular requiring haredi men to be subject to the draft and attempting to reverse the increasing income disparity. While not emphasizing the issue, he favors a two-state solution to the Israel-Palestinian conflict.
Labor got 15 seats. It was led by another new face, Shelley Yacimovich who also emphasized internal issues and who favors the two-state solution
Habayit Hayehudi (Jewish Home) got 12 seats. It is led by Naftali Bennett, yet another new face. Bennett was a high tech entrepreneur who sold his company for a large sum--he claims it was not as large as others speculate. He then served as Chief of Staff for PM Netanyahu in his first stint as PM and most recently was the spokesperson for the Yesha Council which represents the settlers. While he, too, emphasized domestic issues and favors the draft of haredi men, he strongly opposes the two-state solution and, instead proposes that Israel annex 65 % of the West Bank.
Shas, one of the haredi parties won 11 seats. It is opposed to drafting haredi men and is committed to maintaining state support of the haredi schools.
United Torah Judaism, another haredi party won 7 seats
Hatnuah, a new party formed by Tzipi Livni, former Foreign Minister, won 6 seats. She was the only candidate who focused on the Israel-Palestinian issue during the campaign, pointing to her experience in negotiating with the Palestinians when she was Foreign Minister and Ehud Olmert was Prime Minister.
Kadima, now led by Shaul Mofaz won 2 seats. It had 29 seats in the last Knesset.
The formation of a new government was announced last night. It consists of Likud-Beitenu, Yesh Atid, Jewish Home and Hatnuah--a total of 68 seats, only 7 more than the 61 needed to have a majority. Lapid and Bennett had formed an alliance and taken the position that they would only join the government together. Netanyahu unsuccessfully attempted to divide them. Their alliance is somewhat strange because they disagree on the Israel-Palestinian issue. When asked about that during his appearance before the mission, Bennett said: we agree on 70% of the issues and we'll work out the other 30%.
It is not the coalition that the PM wanted. First, it doesn't include any of the religious parties which were a core of his support in his prior governments. Second, it leaves the possibility that either Lapid or Bennett could bring down the government by leaving the coalition although Yacimovich has said that if the coalition was threatened because it pursued negotiations with the Palestinians.
The conventional wisdom is that the new government will initially concentrate on the haredi draft and economic/social issues. It will also have to deal with the Palestinian issue although, as explained below, that will be tricky.
On the regional scene, there is no very good news although some of the potential bad news is long term.
The most pressing and troublesome problems are Iran and Syria.
Both PM Netanyahu and Ambassador Shapiro reiterated the previously stated positions of the US and Israel that a nuclear Iran is not acceptable. Ambassador Shapiro said that a nuclear Iran would "pose a grave threat to the security of the US" and that "we will not let up until we achieve our goal--to prevent Iran from getting a nuclear weapon." Vice President Biden at the recent AIPAC conference reiterated that position, saying--"Presidents don't bluff and this President is not bluffing."
Despite these strong statements, according to Brig General Mike Herzog, now a fellow at the Jewish People Policy Planning Institute, there is real uncertainty in Israel as to whether the US is really committed to prevention. The events since the mission are not encouraging. In the recent round of discussions between the P5 plus 1 (the five permanent members of the Security Council plus Germany) and Iran the P5 plus 1 scaled back its demand that the Iranians close the nuclear facility at Fordo and now demand only that they stop enriching uranium with effective inspection and verification procedures. Experience does not provide a lot of comfort that the Iranians will allow effective inspection and verification procedures.
From all reports, Iran will be the most significant item on the agenda when the Presidents visits Israel this week. While the US and Israel are on the same page--prevention, not containment--they still differ on the timeline needed to prevent. The Israelis "red line" is when Iran has the capability to build a nuclear weapon. The US "red line" is when Iran makes the decision to build. Israel is not sanguine about that test because of the so-called "oops" factor--"oops, the Iranians have the weapon and no one knew it." General Herzog aptly described Israel's dilemna--it must decide whether in light of its more limited capacity, it will strike or wait until Iran crosses the US red line. High on the President's trip agenda is to convince the Israelis that he is not bluffing and that he will act militarily if negotiations and sanctions do not, as they haven't as yet, bring about a change in Iran's program.
Syria is the most immediately volatile situation, mainly because of its stockpile of chemical weapons. As the IDF spokesperson put it: Syria has hundreds of tons of biological and chemical weapons and thousands of projectiles which are being held by a regime which is losing its grip and the probability that they will fall into the wrong hands is high. By the wrong hands, he was referring to segments of the rebels who are affiliated with the most radical Islamist movements--Al Qaeda to name one. Recent reports indicate that the Saudis are now providing more assistance to the rebels and that the US is as well. Russia remains the big problem as they continue to support the Assad regime. There is a consensus that Assad will fall but no one is capable of predicting when that will be and what will happen when he does.
Lebanon remains a huge concern, as well. Israel believes that there are 60,000 rockets in the hands of Hizbollah--more that it had before the second Lebanon war--which can reach all parts of Israel. Many of these are in private homes, schools and hospitals which makes it very difficult to destroy them. And, according the the IDF General, Hizbollah is now stronger than the Lebanese armed forces. Two notes of possible future optimism. If Assad falls, it will break the pivotal link between Iran and Hizbollah. And there are huge gas deposits in the Mediterranean and while there is a small dispute between Israel and Lebanon as to which country has the rights to exploit the reserves, the dispute is resolvable and Lebanese business people, who are reasonable, realize that in order to attract a company to develop those reserves there will need to be assurances of security.
Jordan has been Israel's quietest border for many years and is stable for the moment, King Abdullah having just installed yet another Prime Minister after the recent elections. But, Jordan's economic problems remain. It still is dependent on Egypt for its gas although it has been reported that there were secret negotiations to supply Jordan from the newly discovered gas in the Mediterranean--an arrangement that we were told one year ago by the American Ambassador to Jordan could not happen until the Israel-Palestinian dispute was resolved. Ehud Yaari sees a very big problem for Abdullah if Assad falls. In that event the Palestinian majority in Jordan--Abdullah is a Hashemite--will say to one another: if the Syrians could topple Assad with his strong military and repressive secret service, we can certainly topple Abdullah. Israel is assisting Jordan in any way it can in order to maintain that quiet border.
According to the IDF spokesman, Egypt is "not falling apart." While the Muslim Brotherhood is in power, power doesn't avoid the responsibility to pay the bills. The issue in Egypt is not the shape of the government, he said, it is the shape of the pita bread because those in power realize that if you don't feed the people, you are out. On a very positive note, he said that the IDF liaison with the Egyptian military has never been closer. That, he said, was important particularly because the military controls 40 % of the Egyptian economy and will, therefore, continue to be an influential presence.
Finally, the so-called Peace Process which has not been much a process of late. According to the polls, 70% of Israelis favor a two state solution but 80% do not think it is possible. There is virtual unanimity that a final status agreement is impossible at this time. Some say that Israel should do nothing. Others say that Israel should take unilateral action. Three "middle ground" suggestions have been offered. Yaari believes that the status quo is untenable; that talks between Hamas and Fatah are going nowhere and that the Palestinian Authority will eventually collapse and Hamas will take over the West Bank as it took over Gaza. So, in order to avoid that scenario and the eventuality of a one state solution, he proposes an interim agreement which would set provisional borders which would include in Israel the major settlement blocks, provide for Israel's security including an IDF presence in the Jordan Valley and require movement of 40-50,000 settlers. This interim agreement would not deal with the status of Jerusalem or the Right of Return. In a full page Op Ed in the NY Times on March 3d, Dennis Ross, former adviser to the last four US Presidents proposed a 14 point program--6 unilateral actions by Israel and 6 by the Palestinian Authority--and 2 joint actions. One major difference between his plan and Yaari's is that movement of settlers would not be required but they would be given significant economic incentives to move. The third is in an Op Ed by Ari Shavit published in the Times on March 13. He sets out a series of steps which should be taken by both sides. They are worth reading.
It will be interesting to see how the new government approaches this issue. Israel will be under continuing pressure from the International community to take action, particularly on the settlements. But,as indicated above, Bennett is opposed to the two state solution and wants to annex 65 % of the West Bank and Lapid, while supporting a two state solution, is more concerned with domestic issues. Netanyahu supports a two-state solution but his party has moved to the right and a large majority of that party opposes it. Thus, the only strong advocate of a two state solution will be Livni and it remains to be seen how much influence she will have.
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4)
World-renown pediatric neurosurgeon Dr. Benjamin Carson has no problems with losing Obamacare in the quest to find a more affordable, efficient, and patient-friendly healthcare system for the nation.
“There are many more economic models out there that can be used to give us much better healthcare than what we have now,” Carson said on Saturday in a speech to the Conservative Political Action Caucus outside Washington. “If we have to work within the framework of the Affordable Care Act, fine. If we can find a way to defund it, fine.”
His Obamacare suggestion brought rousing cheers from the audience at the Gaylord National Resort in Oxon Hill, Md. “We have to find more efficient ways.”
Carson, director of pediatric neurosurgery at the Johns Hopkins University in Baltimore, added: “Healthcare is one-sixth of our economy. If the government can control that, they can control anything.
“We were asleep at the wheel to let it happen,” he said, referring to Obamacare, “but we still have to find a way to make it work.”
Carson discussed the importance of health savings accounts in controlling spiraling medical costs.
“Eighty percent of the encounters between a patient and a healthcare provider could easily be handled by a health savings account, without the need to insinuate a third party or a bureaucracy that sucks out at least a third of the money,” he said. “There are ways we can do this: We can use bridge insurance and catastrophic insurance.”
The famed neurosurgeon, who also announced that he was retiring from medicine this summer, hinted at a possible White House bid. “What if you magically put me in the White House?” he hypothetically posed, also to cheers, in an earlier part of his speech.
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4)
Ben Carson: Defunding Obamacare: ‘Fine’
By Todd BeamonWorld-renown pediatric neurosurgeon Dr. Benjamin Carson has no problems with losing Obamacare in the quest to find a more affordable, efficient, and patient-friendly healthcare system for the nation.
“There are many more economic models out there that can be used to give us much better healthcare than what we have now,” Carson said on Saturday in a speech to the Conservative Political Action Caucus outside Washington. “If we have to work within the framework of the Affordable Care Act, fine. If we can find a way to defund it, fine.”
His Obamacare suggestion brought rousing cheers from the audience at the Gaylord National Resort in Oxon Hill, Md. “We have to find more efficient ways.”
Carson, director of pediatric neurosurgery at the Johns Hopkins University in Baltimore, added: “Healthcare is one-sixth of our economy. If the government can control that, they can control anything.
“We were asleep at the wheel to let it happen,” he said, referring to Obamacare, “but we still have to find a way to make it work.”
Carson discussed the importance of health savings accounts in controlling spiraling medical costs.
“Eighty percent of the encounters between a patient and a healthcare provider could easily be handled by a health savings account, without the need to insinuate a third party or a bureaucracy that sucks out at least a third of the money,” he said. “There are ways we can do this: We can use bridge insurance and catastrophic insurance.”
The famed neurosurgeon, who also announced that he was retiring from medicine this summer, hinted at a possible White House bid. “What if you magically put me in the White House?” he hypothetically posed, also to cheers, in an earlier part of his speech.
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