I my last memo, I discussed the political vulnerability of capitalism to insane corporate compensation brought about by consultants being in bed with corporate executives and how it has played into Obama's desire to manipulate opinion to achieve divisiveness. (See the response of a friend and fellow memo reader below.)
"DIck,
"DIck,
Love your comments as always. Especially about executive compensation; way out of line and helps the progressives turn the middle class against the so called "wealthy". Stokes class warfare which is what Obama uses to drum up support for all of his failed policies and initiatives.
As for Israel, I am beyond puzzled as to why there is no outrage over Obama's treatment of Bibi and the lack of support for Israel. When did we, in the US, appoint ourselves as proxy for handling Israel's security. Obama acts like Israel isn't entitled to any say in the deal his stooges are attempting to negotiate; excuse me, capitulate. There is no negotiation taking place here. I used to tell people i worked with if you weren't willing to walk away, you weren't really negotiating. J--- P------"
I would now like to highlight comparable insanity of how markets have been responding to one word, the word "patience."
As I noted in previous memos, Congress created The Federal Reserve, allegedly, to bring stability to our currency. In fact Congress established The Federal Reserve so it could go its merry way and off load its moral responsibility with respect to fiscal and monetary sanity. Once the Constitutional ability of Congress to levy taxes was established the dollar was vulnerable to unbridled spending so, in order to create a veil, Congress established The Federal Reserve which has served as a theoretical curb because it was deemed "independent."
In theory,The Fed is independent but in practice it is as independent as the strength of its Chairman is to defying political pressures and fiscal irresponsibility on the part of Congress. The more recent Fed has served as a handmaiden, in my opinion, to the threatened consequences of a fiscal melt-down brought about, in part, by a liberal Congress that wanted everyone to own a home , whether they could afford same, in order to buy votes, a Fed Chairman who overstayed low interest rates which accommodated such insanity and moral irresponsibility and an accumulated deficit caused by the complete and utter disregard of both political parties that you should not spend what you cannot and refuse to pay for simply because you can.
Now, this Fed must unwind from its flirtation with Q's and the markets hang on every word to determine when the pain of rising interest rates begins just as Europe is implementing, albeit it somewhat delayed, their decline in interest rates as they re-start their own macabre dance with Q's.
Yes, I have simplified the entire dance of monetary imbecility but this is where we are and why markets are experiencing increased volatility.
There is another factor weighing on markets as a consequence of a strong dollar brought about by low interest rates which are soon to rise. No one knows the impact this will have on corporate earnings because many American companies are vulnerable to currency translations due to a large proportion of their sales occurring overseas. Add to this fact, declining oil prices and sales, which are denominated in dollars, are causing misery among producers, a theoretical benefit to the American consumer and pain to those whose currency is declining relative to the dollar and you have an additional level of market uncertainty.
The Fed is no longer willing to be "patient" but softness in personal incomes is forcing their hand to be "patient" so the key for Fed watchers is in Fed action not their words. Crazy? Yes, but when you are in a hole and wish to get out but must keep digging longer than you might desire , strange things can happen.
Again, as you know from past memos, I am not opposed to engaging in foreign relationships but when it comes to hot wars I believe you only engage to win and you cannot win when decisions are shaped by politics and slanted press and media reporting. Leave it up to the politicians and reporting and everything will go down hill. Viet Nam laid the foundation for this.
There are those who will challenge my overly simplified explanation but I am comfortable with my own analysis and believe our current market is in a tug of war between extended valuations and uncertain earnings in the midst of a confused and hesitant Fed trying to unwind from conditions caused by political pressures and a former Fed Chairman who overstayed low rates and accommodating easy money. Add to this cake the icing of an incompetent president challenged by a conflict driven by insane religious Islamist zealots and a nation seeking nuclear weapons in a volatile region and it is little wonder matters are untenable and confused
You decide!
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An analysis of how the Israeli election is being portrayed and understood in America.
In the final analysis the vast majority of Americans will understand Israel is not going to commit suicide simply to appease Europe, Obama and radical liberals who have captured the Democrat party. (See 1 below.)
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In the final analysis the vast majority of Americans will understand Israel is not going to commit suicide simply to appease Europe, Obama and radical liberals who have captured the Democrat party. (See 1 below.)
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Dick
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Read accounts of Israel’s elections in the mainstream liberal media today and you get a sense of the frustration and anger the Obama administration and its press cheering section feel about Prime Minister Netanyahu’s decisive victory. The fulminations in today’s New York Times editorialarticulate this point of view with its denunciations of Netanyahu’s repudiation of a Palestinian state as well as dark warnings about the implications of his comments about Israeli voters needing to offset the impact of Arabs voting for anti-Zionist parties. But even if we leave aside the ad hominem attacks on Netanyahu in which he was denounced as both “craven” and a “demagogue,” the point of the piece was to essentially delegitimize the results. The question remains whether most Americans, including Jewish friends of Israel, will be as clueless as the Times about the reason for Netanyahu’s big win.
There should be no misunderstanding about the magnitude of Netanyahu’s victory. In the context of Israel’s multi-party system which encourages the growth of splinter parties and in which no party in its history has ever won a majority on its own, the Likud’s winning of 30 seats to its Labor-led Zionist Union rival’s 24 was an unexpectedly decisive result. Combined with the fact that his right wing and religious party allies more-or-less maintained their strength as a whole, the predominance of what Israelis call the “national camp” that has existed since the outbreak of the Second Intifada and the collapse of the Oslo Peace Accords is undiminished. Indeed, far from illustrating that the Likud represented the far right, the vote showed it to be smack in the center of the Israeli political spectrum.
How then do we explain Netanyahu’s comments about a Palestinian state and Arab voters that have been universally denounced in the West and seen, in the eyes of the Timeseditors, as proof that Israeli voters are vulnerable to scaremongering and racism?
It is true that Netanyahu needed to rally his base, large numbers of which were prepared to vote for smaller right wing parties rather than the Likud. The expectation was that pandering to that voter group would cause him to lose moderates. But it didn’t happen because few in Israel were that outraged about Netanyahu writing off the possibility of a Palestinian state. That’s not because they don’t want a two-state solution but because they know the Palestinians have repeatedly rejected one and the chance of sovereignty and peace.
Faced with two Palestinian dictatorships on either of their flanks — Islamist Hamas terrorists in Gaza and corrupt authoritarian Fatah in the West Bank — the prospect of territorial withdrawals to further empower either faction seems irrational to mainstream Israeli voters. Few in Israel outside of the far left expected the Netanyahu or even his rival Isaac Herzog would have the opportunity to sign a peace deal that would create a Palestinian state under any circumstances. Though the election had largely been fought on domestic and economic issues, Netanyahu’s late reminders to the public of their consensus on security helped turn a close election into what is by the standards of the Jewish state, a rout.
Similarly, Netanyahu’s remarks about Arab voters being mobilized by foreign-funded activists to vote didn’t alienate the average Israeli voter because they know that the prospect of a government put into office via the support of the avowedly anti-Zionist Arab parties (a coalition of Islamists, Communists and radical Arab nationalists that rationalize if not support terrorism) that oppose Israel’s existence as a Jewish state and its right to self-defense was a prospect that few contemplated with equanimity.
Simply put, his victory was not achieved by pandering to irrationality but because of the common sense of most Israeli voters who have a far better grasp of the realities of the Middle East than the editors of the Times. As I noted yesterday as the results were being counted, the impact of Netanyahu’s last minute appeals was due to the realism of the voters, not their racism.
But to note this begs the question as to whether Americans and their political leaders will be sufficiently influenced by the massive bias against Netanyahu in most of the media? No one can answer that question with absolute certainty but there are good reasons to be hopeful.
Unlike the sour grapes expressed by the editors of the Times and the sullen silence of the Obama administration (which has yet to congratulate Netanyahu on his stunning victory), most Americans actually do respect democracy. More to the point, they know that Israel is our only democratic ally in a Middle East where the administration’s priority has been to foster a spirit of détente with a vicious Islamist dictatorship in Iran. Just as they assume that they understand their local politics and problems better than the supposed experts in Washington, they assume that Israelis understand the Middle East better than Obama or the editors of the Times. Had they not thought so, support for Israel over the last few years or, in fact, the last generation, as a biased mainstream media consistently blasted Israel for defending its existence against terrorist threats, would not have remained so strong.
There have been s ome voices raised on the left that are essentially calling for Israel to become a partisan issue between Republicans (pro) and Democrats (con). That is a theme we heard a lot of during the weeks prior to Netanyahu’s speech to Congress on the Iranian nuclear threat and it is something that the administration seems to be encouraging despite its pro forma declarations of support for Israel. Yet the reaction to that speech illustrated that such efforts are bound to fall flat. The overwhelming majority of Republicans and what is still a clear majority of Democrats still support the alliance that is rooted in common values that are embedded in the political DNA of this country.
Doomsayers notwithstanding the overwhelming majority of Americans still back Israel and understand that asking them to make suicidal concessions is neither reasonable nor likely to strengthen America’s security. Though many assume that Americans, like Europeans, will eventually abandon Israel because of its refusal to do as Obama and the left demand, sympathy for Zionism and the Jewish state in the U.S. remains strong enough to withstand this challenge. That won’t change simply because the president and the liberal press don’t like Netanyahu or the outcome of a democratic election.
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