The losers and their supporters in the press and media have now begun to tell the winners they must compromise, reach across the aisle, listen and do the work of the people. Obama even urged civility. Hard to hear his new message from the back of the bus, while slurping Slurpees.
Last night most Americans soundly rejected Obama's radical ideology and the furthest thing establishment Republicans should do is compromise but I fear they will because they want to be re-elected and believe that is the best way to do so.
Obama now wants to engage and listen to serious Republican ideas but for the last two years arrogant hubris dictated his actions and he refused to give Republicans their seat at the table. Now that Obama has driven the nation's car into the ditch, piled up debt that will cause more pain if continued and plenty more if paid down, he still seems not to get last night's message. What I heard were a lot of passionless words about how he was dealt a difficult hand and had to respond quickly. Obama has yet to equate that last night's vote was a rejection of his leadership and policies.
It is going to be a very long two years as Republicans, with Tea Partiers on their backs, try to move the ship of state in a different direction while Obama and his remaining disciples resist the unwinding of the legislation already passed.
In my biased view, Obama lacks the leadership skills and remains disingenuous but he is clever enough to resist the change that he said we needed, brought about and which has now been rejected.
I was not comforted by his press conference responses today but then I did not expect to be, so I doubt the markets will be overly impressed either.
What I believe I heard was the same old garbage ideology wrapped in softer language.
Big Ears remains tone deaf in my opinion!
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The article was written before the election but is a reminder of the dangers of progressiveness. (See 1 below.)
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This from a dear friend in California responding to my view that California is not inhabited by real people: "Greetings from California, where we bucked the national tide and elected a moron to the state house and returned an idiot to the senate."
I sent the attached letter to the editor of the Orange County Register… we’ll see if they print it. (See 2 below.)
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More commentary on election. (See 3, 3a and 3b below.)
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Netanyahu partially relents and backroom deals force Abbas' hand so is it back to negotiations? (See 4 below.)
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An Israeli view of our mid term election. (See 5below.)
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Dick
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1)Progressive Determination to Undermine American Elections
By Arnold Ahlert
The progressive assault on America continues, and their favorite whipping boy remains Arizona. A three-judge panel from the Ninth Circuit Court of Appeals has overturned that state's requirement that people show proof of citizenship to register to vote, calling it "inconsistent" with the National Voter Registration Act. In other words, a United States court considers that proving one is an American citizen in order to vote in an American election an "undue burden." How in the world did we come to this?
The National Voter Registration Act, or as it's more familiarly known, the Motor Voter Bill, was passed by a Democratically-controlled Congress in 1993 and signed into law by president Bill Clinton. It was called the Motor Voter Bill because it allowed people to register to vote when they applied for driver's licenses or social services. Such registration can be done either in person or by mail. The Act was established for four primary reasons: to establish procedures increasing the number of eligible citizens who register to vote in Federal elections; to enhance the participation of eligible citizens as voters in elections for Federal office; to protect the integrity of the electoral process; and to ensure that accurate and current voter registration rolls are maintained.
Here's the kicker: the federal law requires applicants to "attest to their citizenship under penalty of perjury," but, according to this court's ruling, such registration does not require providing documentary proof of such citizenship. What does this mean?
It means registering to vote is based on nothing more than an honor system. How's that honor system working out? In the 2008 election, just one community activist group, the radical leftist, and now-disgraced ACORN, submitted 1.3 million voter registration applications.
400,000 of them were rejected.
Why would ACORN and other groups submit bogus registration forms knowing that would more than likely be disqualified? John Samples, Director of the Center for Representative Government at The Cato Institute testified before the Committee on Rules and Administration, United States Senate, on May 14th, 2001:
"The Act made it harder to verify the identity of voters seeking to register. It also considerably complicated the states' task of keeping the registration rolls clean. For example, to remove a voter who has moved from the rolls of a voting district, the local jurisdiction has two choices. First, they could get written confirmation of the move from the citizen. Lacking that, the jurisdiction had to send a notice to the voter. If the notice card was not returned and the person did not vote in two general elections for Federal office after the notice was sent, then the jurisdiction could remove their name from the rolls."
"The cost of these mailings is significant. In Indiana, for example, such a mailing would have a price tag of about $2 million or about twice the Election Division's entire annual budget (emphasis mine). Given this price tag and the limited resources of most local election boards, we should not be surprised that the registration rolls throughout the nation are enormously inaccurate. In some counties, election administrators report, the voting roll numbers are bigger than the voting-age population."
In short, the objective is to overwhelm the system, and the only entity with the ability to put a stop to these and other attempts to commit voter fraud is the Voting Rights Section of United States Department of Justice.
Where do they stand on the issue? I refer you to the testimony of former Department of Justice Voting Section Chief, Christopher Coates, before the United States Civil Rights Commission earlier this year. Coates was testifying mostly about the dropping of the 2008 voter intimidation case against the New Black Panther Party. But the far more damning part of his testimony was virtually ignored by the mainstream media:
"The NVRA (National Voter Registration Act) has three provisions that have led to enforcement activity by the Voting Section…During the Bush administration the Voting Section began filing cases under the list management provision of Section 8 to compel states and local registration officials to remove ineligible voters. These suits were very unpopular with a number of groups that work in the area of voting rights…"
"As chief of the Voting Section I assigned attorneys to work on the matter…During the time I was Chief, no approval was given to this project and it is my understanding that no approval has ever been given for that Section 8 maintenance project to date. That means we have entered the 2010 election cycle with eight states appearing to be in major non-compliance with the list requirements of Section 8 of the NVRA and yet the Voting Section which has the responsibility to enforce that law has yet to take any action…"
"I do not believe the Voting Section has recently been involved in any list maintenance enforcement during the Obama administration."
In keeping with their whacky reputation, this latest ruling by the 9th Circuit Panel, which included former Supreme Court Justice Sandra Day O'Conner sitting in as a "temporary judge," overturned a previous ruling--by the same 9th Circuit which ruled Arizona's Prop 200 did not violate the NVRA.
Thankfully, this decision can't affect this election since the deadline for registration has already passed. But there is little question where the American left is headed with this. The voter registration movement was one of the pet projects of two Columbia University sociologists named Richard Andrew Cloward and Frances Fox Piven. If those names ring a bell, perhaps it's because they are also the authors of the "Cloward-Piven Strategy," a plan designed to destroy capitalism by overloading government with impossible demands as a means of fomenting economic crisis and eventual collapse. And who did both men cite as their "inspiration?"
Community organizer Saul Alinsky. The same Saul Alinsky who wrote "Rules For Radicals," and whose Marxist theories were taught in a series of workshops--by the president of the United States, Barack Obama.
What's the best way to destroy our democratic republic? Getting enough Americans to question the integrity of our election process has to be high on the list. And since every case ever litigated in this country with regard to voter ID has had Democrats lined up on the side where less proof is required for voting--using the phony "disenfranchisement" argument as an excuse---an unmistakable pattern is emerging. A pattern which can be reduced to one simple idea:
The acquisition and/or maintenance of power by any means necessary.
Every state needs to have a law requiring both proof of citizenship and a photo ID requirement to vote. Even a mail-in vote--or should I say especially a mail-in vote--should also be accompanied by a picture. States should also write laws by which state-issued ID cards can be given to those who claim that producing a birth certificate, a driver's license or any other form of ID constitutes an "undue burden." Maintaining the integrity of our election process far outweighs any individual undue burdens, and the overwhelming majority of Americans know it. Those who are determined to fight such commonsense provisions aren't fooling anyone, except perhaps their fellow travelers. There is absolutely no reasonable argument to offer against making sure that Americans, and only Americans, vote in American elections--none.
One more compelling reason for decent Americans to get out and vote next Tuesday. Maybe the most important one of all.
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2)Sirs:
Oh, somewhere in this favored land the sun is shining bright;
The band is playing somewhere, and somewhere hearts are light,
And somewhere men are laughing, and somewhere children shout;
But there is no joy in Mudville – Brown and Boxer are in, not out.
With apologies to Ernest Lawrence Thayer.
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3)The Dialectic of Obama
By Thomas Lifson
America's left, and the party it dominates, faced a reckoning yesterday. Two short years ago, exultant progressives believed America had shifted permanently to the left. Now that sweet taste of victory has turned to acrid ashes in their mouths.
The scores of congressional Democrats, along with even more state officeholders, who lost their coveted positions need a way of comprehending the disaster which has befallen them. The scapegoats offered by President Obama and his surrogates -- Tea Partiers, witches, foreign money, and Fox News -- will not suffice. President Obama himself, the man with a winning smile, a slender build, and a way with teleprompters, cannot escape blame for the disaster at the polls. Former friends, including many who rode his coattails, see in him the cause of their expulsion from the political paradise of high elective office.
How could it go so wrong so fast? How could a man once seen as a savior turn out to be a disaster for those who embraced him?
For our bewildered friends on the left, an explanation is necessary, one couched in terms from the progressive framework -- dialectical analysis, the means that Hegel created and Karl Marx adopted for understanding history. Dialectics constitutes the Marxian foundation on which modern progressive strategy is built.
Barack Obama himself is almost certainly familiar with the Marxist analytical framework for understanding what moves history. He was mentored by Frank Marshall Davis, a Communist Party member. The typical white grandparents who raised him moved in communist circles after leaving Kansas for Mercer Island, WA and Honolulu. I doubt very much if Davis ever got very specific with young Barry on the complexities of dialectical materialism, the formal basis for communist theory. And because the president's college transcripts are a closely guarded secret, we cannot know if he took any courses on Marxist theory while at Occidental College and Columbia University. But he surely understands its basics.
The Marxist theory of history teaches that it moves forward through a dialectical process, powered by conflict. Thesis -- an action or idea -- generates a reaction, its antithesis, which results in contradictions and conflict. The wise dialectical thinker understands that by heightening contradictions (or not letting a crisis go to waste, in the immortal words of Rahm Emanuel), the final outcome -- the synthesis -- can be shaped in radical directions. Among those who took this lesson was Saul Alinsky, for example, who wanted to "rub raw the resentments of the people" in order to hasten revolution through peaceful means, inspiring young Barack Obama to become a community organizer.
The dialectical game plan of the Obama presidency was obvious: use the ongoing financial crisis sparked by subprime mortgage lending to generate momentum for fundamental restructuring of the economy. Blame Bush and big business for the problems, and use resentment arising from real economic suffering to push for game-changers like ObamaCare and Cap and Trade, putting government in charge of the commanding heights of the economy. Once private enterprise was so constrained and limited, further systemic changes would be child's play. With everyone dependent on government approval for health care, carbon emissions, college loans, and jobs, no countervailing forces would be strong enough to limit the power of the statists. No longer would the power of capitalism dictate the terms under which Americans live.
But problems with this model of change arose quickly. It turned out that Americans' modal impulse in times of trouble is not to seek a government solution, because they are skeptical of the effectiveness of such bureaucracies. A segment of the public, of course, is happy to have government provide for their needs, but it is neither large enough nor motivated enough to become a revolutionary vanguard. Although purple-shirted SEIU thugs managed to bite a finger off here and demonstrate at an executive's house there, and New Black Panthers wielded nightsticks at polling places, the efforts failed to ignite a popular uprising and even generated a backlash, despite the efforts of progressive media allies to suppress information about them.
The American national character is built on the bedrock of self-reliance. Having spent some of his formative years in Indonesia and the remainder in the company of communists in Hawaii, Barack Obama failed to understand the dialectical forces at work. Rick Santelli's famous television rant which sparked the Tea Parties might as well have been spoken in Sanskrit, for all the understanding it evoked from Obama. There was discontent rubbed raw, all right, but it inclined people more to demand freedom from looming government restrictions of regulation and onerous debt obligations than to demand succor from a generous state. The objective conditions, to use a favorite phrase of Marxian discourse, were not as favorable as had been assumed.
A second faulty assumption contradicted the Obamian understanding of the dialectical dynamics. The power of progressive media to control the national news agenda was vastly overestimated. Despite the intense efforts expended to demonize Fox News, the mere existence of a voice not playing along with the narrative propounded by the progressive media was enough to break the mass trance which had been so effectively propagated during the campaign. Actually governing also turns out to be a lot more difficult and rocky than delivering familiar campaign speeches, so dissonant voices pointing out the flaws undermine the sense of mastery and inevitability manufactured around Obama's public persona.
It was not just Fox News, of course. Enterprising internet sites, talk radio, and the few conservative newspapers dug up all manner of information which broke the spell. Worst of all, social media (like Mybarackobama.com) turned out to be a model just as well-adapted to conservatives as to leftists.
The real killer, when it came to the social forces, was the intersection of self-reliance, information, and social media. The Tea Party phenomenon, a self-organizing, spontaneous rebellion aimed at overthrowing the brand-new progressive dominance of government, was fatally misunderstood by just about everyone on the left. The only model they had for understanding it was their own experience of mass mobilization: top-down, centralized, and funded by wealthy special interests. A "starfish" organization with no head, and which generates and regenerates when opposed, is not something which can be effectively fought by believers in the wisdom of democratic centralism.
But the coup de grâce, the one thing nobody on the left had counted on, was that flawed document, the United States Constitution. Tea Partiers began reading the Tenth Amendment and asking awkward questions about the power the central state was arrogating. No matter how many times you call people "fringe," "wingnuts," or "dangerous radicals," it is difficult to make the nasty labels stick when all that is being asked for is adherence to the Constitution. The doctrine of a "living Constitution" has been so thoroughly accepted in progressive circles of journalism and academia that nobody ever took seriously the notion that the actual words of the document would cause problems for them. But for people who have to read and apply rules in daily life -- for example, when paying taxes -- the notion that a living Constitution could kill a portion of the actual Constitution makes no sense. Those honored with public office, the president most prominently, take an oath to protect and defend the Constitution. Demeaning those who cite it is a losing proposition.
Thus, the Tea Party antithesis to the Obama thesis has turned out to be larger, more powerful, and more deeply rooted than anticipated. The result -- the synthesis -- began to unfold yesterday, and it will continue to manifest through the next few elections. The dialectic of Obama is turning out to be a force returning America to its constitutional moorings.
Thomas Lifson is editor and publisher of American Thinker.
3a)A Post-Election Resolution
By Steve McCann
For those of us who believe in American exceptionalism and individual liberty and freedom, the results of the mid-term election have validated our belief in our fellow citizens.
This has been, up until November 2, 2010, a dismal twenty months.
The people of the United States have seen their President go around the world denigrating the sacrifices that have freed untold millions, and belittling the American inventiveness and can-do spirit that have made lives better for virtually all peoples of the world.
The Administration and the 111th Congress have unleashed a torrent of spending threatening to inundate present and future generations with unsustainable debt -- resulting in a dramatically reduced standard of living and subservience to those who hold our bonds and do not have the nation's or its citizens' best interest at heart.
The passage of the health care reform act galvanized the still-unconvinced that President Obama, his fellow travelers in Congress and the media were only interested in controlling the day-to-day activity of each of us, and not in truly reforming the health care system.
As Election Day approached, many of us refused to despair about the future, but instead we chose to take matters into our own hands, and turn to the mechanism bequeathed to us by the founding fathers to begin the long journey to repair the damage that has been wrought by those entrusted to serve the people.
Some months ago during an interview on a radio talk show, a caller asked if I knew of any nation in the history of mankind that had ever successfully emerged from the financial and societal abyss into which we were entering. I replied that I did not; however, if any country in the history of mankind could, it was the United States.
We could, as we have a written Constitution with a mechanism to allow us to do so, and a unique and fiercely independent American character.
On March 4, 1789, the Constitution of the United States of America was declared ratified and in effect. The citizens of this nation, 220 years ago, were given perhaps the greatest political document in history and the means to not only create a great country but to sustain it against those who would choose to use a powerful central government to impose tyranny and oppression.
The founders of the United States knew of the basic flaw in human nature: the desire to achieve power and control over others. Thus a political and governmental system was set up that deliberately limited the authority of a central government and made the rights of the individual paramount, as well as put into place a mechanism, the tri-partite structure of the federal government and the terms of those in Congress and the White House, to allow the citizen to maintain these rights.
Unfortunately, with the unprecedented prosperity we have enjoyed as a nation over the past century, many simply chose to ignore the first responsibility of citizenship: stay engaged and vigilant against those who would use the power to tax and spend to in order to amass authority over the citizenry.
Over this same period, and parallel to the apathy of the populace, a concerted effort has been underway to undermine the basic tenets of the Constitution. The Courts, Congress and the Executive have succeeded in empowering the central government beyond anything the founders could have anticipated.
However, the empowerment of the individual to be active, organize and vote is the one area in which these forces cannot overturn the Constitution, nor can they change the basic character of the American people and their desire to be free and able to determine their own destiny.
It has always been a source of pride in American families to trace their ancestry and celebrate the courage and determination of their forefathers; whether they came on the Mayflower, by steerage into Ellis Island or suffered and persevered through forced servitude.
These pioneers injected into our uniquely American character a fierce desire to be independent, free and the final arbiter of one's success or failure. There resides deep within the soul of this country a deep mistrust of a powerful central government which stems from the firsthand experience of these immigrants, from whom virtually all Americans today descend.
While many are now more dependent on government largess than ever before, this basic character of the American people has not changed. Every poll taken over the past thirty years shows this to be a right of center country, a plurality conservative and fearful of those in Washington D.C.
The vast majority of the people of the United States are not amenable to a massive government controlling all aspects of their lives while jeopardizing the future of their children and grandchildren.
For those of us who immigrated to this country from the devastation and destruction of war and tyranny, we who have seen the worst side of human nature, we who are now blessed to live in a nation that alone in the world has a written constitution empowering the individual and a history of defending those rights, there is an enormous sense of pride in our fellow citizens and a renewed hope for the future.
Let us all be resolved to be certain that the United States will become the first nation to successfully step back from the abyss of the fall of great nations and continue as the foremost country in the history of mankind.
I know now that we will.
3b)Unaligned Voters Tilt Rightward En Masse.
By GERALD F. SEIB
A massive swing by independent voters propelled the Republican Party to a series of key victories, bringing the GOP back from a near-death experience just two years ago, and delivering a rebuke to the president who rode the same independent wave into the White House.
In House races nationally, Republicans won the votes of independents—voters who said they aren't affiliated with any party—by a 55% to 40% margin, a compilation of exit polls from across the country showed.
That represents a stunning reversal from the last midterm election, in 2006. In that voting, which brought Democrats to power in the House, independents favored Democratic candidates, 57% to 39%.
In other words, independents' preference did an almost complete turnabout over the last four years: They favored Democrats by 18 points then, Republicans by 15 points Tuesday.
Independents also were a crucial element of the coalition that President Barack Obama used to win the White House two years ago, when, according to exit polls, he carried them by 52% to 44%.
In a nutshell, these independents Tuesday made up about a quarter of all voters, and provided the margin of victory for the GOP, because voters who identify with the two major parties stayed largely in line. Some 92% of Democrats voted for the Democrat in their local House race, and 95% of Republicans voted for the GOP candidate.
But the very fickleness that independents demonstrated in these two midterm elections means there's no guarantee they'll remain loyal to the GOP, any more than they stuck with President Obama and his Democrats.
Even more important, Tuesday's vote appeared to be more a protest against what Washington has been doing than a clear declaration of a mandate for a new course.
In effect, this year's congressional election brought forth a kind of primal scream from the independents. They expressed a high level of anger at the government, and were far more likely than voters overall to say the new Congress' top priority ought to be dealing with the federal budget deficit.
"Independents aren't liberal spenders," said Republican pollster Whit Ayres. "They're just not. And that, more than anything else, drove independents into the Republican camp." For them, he said, the Democrats' big health-care overhaul was the "coup de grace" that symbolized government grown too large.
Still, for all the decisiveness of the independents' shift, this election hasn't resolved the most fundamental question facing the country: What should the role of government be in the 21st century?
Instead it has simply set up what figures to be a two-year debate over that question in Washington, and ensures that it will be a focal point of the 2012 election.
Thanks to independents—along with other crucial swing blocs, such as suburban women, blue-collar workers and retirees, all of whom also shifted toward the Republicans—the GOP now has the strength to stop pieces of the Obama agenda and, perhaps in some instances, roll it back.
The testing ground figures to be the coming twin debates over government spending and the federal deficit. In the exit polling, 39% of voters overall said reducing the budget deficit should be the highest priority for the next Congress; 46% of independents said it should be the top priority.
And while this year's campaign has produced plenty of evidence of unhappiness over government spending, it hasn't produced many signs that voters are prepared to take the tough, specific steps that would really tackle budget deficits—or reward politicians who prescribe such bitter medicine.
When The Wall Street Journal/NBC News poll asked Americans this summer about a variety of ways to cut the deficit, more than three-quarters of those polled said it would be "unacceptable" to cut federal spending on education. More than 60% said it also would be unacceptable to raise the retirement age to 70 to reduce Social Security expenses, or to gradually raise the eligibility age for Medicare.
Tellingly, the survey found that independent voters, for all their dismay with Washington, may not be any more open than other Americans to taking those difficult steps.
It's possible, of course, that the rise of the tea-party movement, with its clarion calls to cut the size of government, will succeed in shifting public sentiment toward accepting more cuts in such prized government services as Medicare. Certainly the more expansive Republican contingents in the House and the Senate are likely to test that attitude.
In Tuesday's voting, four in 10 of those who answered exit polls said they were supporters of the tea-party movement. Just 31% said they were opponents of the tea party.
It appears that the movement did what GOP leaders who embraced it had hoped above all: It energized core Republican voters at the grass roots in a way the party's traditional leaders couldn't.
Now, though, the danger for Republicans is that those tea-party activists, so crucial to creating a GOP wave, are more gung-ho about slashing the government than are independent voters.
All of which suggests that the question of how far voters truly want to venture in shrinking government will be the crux of the debate in the new Congress—and in the next presidential campaign, as President Obama seeks another term.
Along the way, the fidelity of those independent voters to the Republican cause they have just advanced will be tested as well.
"Obviously the real issue is the independents," said Democratic pollster Peter Hart. "If they are swinging to the GOP, then their share of the electorate will increase after 2010"—which could produce a long-term shift in the fine balance of power between the two major parties.
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4)Mid East talks resume January. Netanyahu relents on building freeze
His concession enables resumption of talks. Direct Israeli-Palestinian talks, interrupted in September after less than a week, will resume in January, 2011 straight after the New Year, following a quiet deal between the US, Israel, Egypt and Saudi Arabia, Washington sources disclose. Obama administration officials while admitting that two months is a long time in the Middle East are upbeat after four developments swept aside the last roadblocks:
1. Israeli Prime Minister Binyamin Netanyahu agreed to a second settlement construction freeze on a limited scale. The first 10-month moratorium ran out in September.
Washington sources declined to say whether the second freeze was total or partial and what exceptions were allowed to enable Netanyahu to get a decision through his security cabinet.
2. Saudi King Abdullah and Egyptian President Hosni Mubarak put their weight behind persuading Palestinian leader Mahmoud Abbas to return to the negotiating table with Israel as his only option. They told to cancel all plans for UN Security Council recognition of a unilateral declaration of Palestinian statehood within -re-1967 boundaries. The PA chairman has complied with their demands.
3. In the two months before the talks resume, Abbas agreed to join the Saudi-Egyptian effort to patch up the quarrel between his Fatah and the Hams extremists with a view to signing a reconciliation accord by early January so that the Palestinians would be represented by a unified West Bank-Gaza Strip delegation.
Abbas has taken the first step of withdrawing from the Fatah-Hamas talks which began last month in Damascus under the Syrian aegis.
4. A high-ranking US official will shuttle between Jerusalem and Ramallah in the weeks remaining up to January to make sure the Israelis and Palestinians stick to the deal and don't change their minds. debkafile's Washington sources report that President Barack Obama has not yet decided to whom to assign the task, but Secretary of State Hillary Clinton is a favorite.
5. The one official who will not longer be seen on the Israel-Palestinian peace track is George Mitchell. He secretly resigned as Presidential Special Envoy last month but agreed to delay the announcement until his successor is in place.
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5)Will Obama change course?
Midterm election defeat result of president’s failure to heed feelings of American public
By Yitzhak Benhorin
The writing was on the wall. A year ago, conservative Scott brown won the special vote for late Ted Kennedy’s Senate seat. A Republican victory in the liberal Massachusetts, the Kennedy and Democratic Party stronghold, was akin to an earthquake that shook the whole of America; yet surprisingly, the shockwaves did not reach Washington. The result was the scathing Democratic defeat in Congress.
The White House spin in the race a year ago was that it was a local failure by Democratic candidate Martha Coakley who was vacationing in the Caribbean while the attractive Republican candidate worked hard to connect with the voters. It’s hard to understand how the people who led Obama to the spectacular victory in 2008 lost touch with the public the moment they entered the White House. Officials in Washington failed to grasp the message conveyed by the public: Grave concerns not only about their livelihood and pensions, but also about the future of their sons and grandsons, sailing aboard the Titanic towards oblivion.
When America was licking the wounds of the economic crisis, White House officials were formulating the healthcare legislation, instead of focusing on unemployment. History will be kind to Barack Obama, as this is a noble law that America had to legislate in order to assist the tens of millions of Americans, including many children, who were lacking any medical protection. However, this law was pushed to Capitol Hill at the worst political timing.
When people are anxious about their livelihood and their and their children’s basic needs, they are not available to help others who lack health insurance. People have lost their livelihood, homes, cars, and ability to pay for their children’s college education. It’s hard to appease such people with altruistic gestures to the weak.
Those who pushed for the legislation were members of the Democratic Party’s leftist camp, who said: This is our finest our, with a liberal president and control of both houses of Congress. The tone was set by the president and his associates, who ran on a social platform in 2008, as well as Congress members from liberal districts, headed by Nancy Pelosi, the house speaker from America’s most liberal district, San Francisco.
Congress members in more moderate states attempted to stay away from this legislation. They knew it threatened their political future. They hesitated, protested, hid, and eventually were trapped in the web of pressure exerted by Obama, Rahm Emanuel, and Pelosi. Last night, they paid the price for it.
Obama had been stunningly successful in his 22 months in office: He passed the healthcare legislation, which the Democrats have been dreaming about for 60 years. He passed the law regularizing the monitoring of Wall Street, in the hopes of averting another economic crisis. However, Democratic candidates shunned these issues like the plague instead of boasting them. These achievements were not at all mentioned during the election campaign. Many Democrats attempted to prove that they object to Obama, but in such cases it made sense to just vote Republican, and that’s what happened.
Americans hate taxes
Obama will be remembered in the annals of US history as the man behind the healthcare legislation, just like Franklin Roosevelt was renowned for passing the Social Security Act in 1935. Yet following this great social achievement, Roosevelt sustained a blow when the Democrats lost 80 seats in Congress. Obama only lost about 60 seats. The lesson is that Americans hate a big government in Washington, and more than that they hate to pay taxes. That’s what happened then, and now.
The public bitterness wave swept over America yesterday. It was a referendum on Obama’s policy, and the message conveyed to Washington was clear. Now we need to see what Obama will be doing: Will he ignore the message, or will he decide to turn a new leaf?
His chances of recovery are better than what many think or hope for. Despite the low approval rating for his presidency, Obama continues to enjoy great public sympathy on the personal level. Despite the grim results of the midterm elections, the public does not blame Obama for the economic crisis. A CNN poll among voters showed that the main culprit in the view of Americans are the bankers (35%), followed by former President George W. Bush (29%). Only 24% blame Obama.
In order to overcome the defeat, Obama needs to take decisions of the type taken by Bill Clinton after he lost the Democratic majority in both houses of Congress after two years at the White House. Obama must put ideology aside and start running America pragmatically. He must seek issues where he can find the common denominator with the Republications in Congress – moves that would achieve budgetary balance and focus on unemployment.
The change required of Obama is not only ideological, but also personal. The president will have to replace some of his close associates and bring into the White House people who are not connected to him personally or ideologically.
Now that the American public spoke, we shall see the emergence of Republican presidential candidates. The Republican establishment is making an effort to undermine Sarah Palin’s undeclared plan to get the nomination. Barack Obama’s White House is crossing its fingers for her, believing that the former Alaska governor is Obama’s insurance policy for another four years at the White House.
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Wednesday, November 3, 2010
Tuesday, November 2, 2010
The Hour is Late and Time Is No Longer Our Ally!
Tonight will obviously prove a fascinating evening as results trickle in from around the nation.
Our nation is at a crossroad because China and other emerging powers are in the ascendancy and we are either going to continue our relative decline or we must learn to live among others who now have intentions and opportunities that will challenge our own.
We have lost our productive edge in so many fields of endeavor, we are overburdened with unfunded obligations and unsustainable budget deficits.
As I have written many times, we have a political system that is dysfunctional considering the enormity of our problems and currently have a totally unqualified and highly contentious president.
One of the most pressing issues involves Iran and its campaign to dominate the Middle East and extend its power through nuclear means. Once again, this president's policies have proven wholly inadequate. Obama does not seem to have the stomach for taking a tough stand and following through but rather seems to have more of an appetite for crafting vapid speeches comprised of meaningless words.
He promised much and, except for unwanted legislation, has delivered very little. He has lied and used deceit to get what he wanted in total disregard of the nation's better interests and voter's desires. Consequently, many of the races tonight will prove to be a referendum on Obama regardless of how the spin-meisters spin it and they should.
After the results are in, the 2012 election cycle will begin to dictate the nation's political path and discord might heighten unless those elected can reach agreement and do what circumstances dictate - not compromise. We have had enough compromises. Watered down solutions don't work. The patient needs a full does not half measures.
Being cynical and having lived long enough to observe the way Disney East works I am not overly encouraged.
The stock market and Wall Streeters, historically, like gridlock because they distrust politicians as they have every right to but when the problems are as momentous as they now are gridlock is unacceptable. Obama's solutions have proven anathema so the road ahead is going to be difficult and far from smooth.
The hour is late and time is no longer our ally.
Dick
Our nation is at a crossroad because China and other emerging powers are in the ascendancy and we are either going to continue our relative decline or we must learn to live among others who now have intentions and opportunities that will challenge our own.
We have lost our productive edge in so many fields of endeavor, we are overburdened with unfunded obligations and unsustainable budget deficits.
As I have written many times, we have a political system that is dysfunctional considering the enormity of our problems and currently have a totally unqualified and highly contentious president.
One of the most pressing issues involves Iran and its campaign to dominate the Middle East and extend its power through nuclear means. Once again, this president's policies have proven wholly inadequate. Obama does not seem to have the stomach for taking a tough stand and following through but rather seems to have more of an appetite for crafting vapid speeches comprised of meaningless words.
He promised much and, except for unwanted legislation, has delivered very little. He has lied and used deceit to get what he wanted in total disregard of the nation's better interests and voter's desires. Consequently, many of the races tonight will prove to be a referendum on Obama regardless of how the spin-meisters spin it and they should.
After the results are in, the 2012 election cycle will begin to dictate the nation's political path and discord might heighten unless those elected can reach agreement and do what circumstances dictate - not compromise. We have had enough compromises. Watered down solutions don't work. The patient needs a full does not half measures.
Being cynical and having lived long enough to observe the way Disney East works I am not overly encouraged.
The stock market and Wall Streeters, historically, like gridlock because they distrust politicians as they have every right to but when the problems are as momentous as they now are gridlock is unacceptable. Obama's solutions have proven anathema so the road ahead is going to be difficult and far from smooth.
The hour is late and time is no longer our ally.
Dick
Monday, November 1, 2010
I Didn't Know Him But He Knew Me!
A worthy economic read. I concur with a good bit of what Lewitt has written. (See 1 below.)
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Obama's failures are inescapable and are his. No one else's despite his protestation He lacks the character demanded of a leader of a great nation.
Obama has gone from labeling those who don't agree as enemies, he has placed his opponents in the back of the bus, he has suggested they oppose everything he has tried to accomplish while sucking on Slurpee's but has yet to look in the mirror.
Granted, whatever the results of today's election the public have not fallen in love with Republicans, simply out of love with Obama, his Far Left crowd and their extreme legislation.(See 2, 2a, 2b and 2c below)
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A wounded president can become a feast on which the jackals within his own part could begin to feast. (See 3 below.)
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California may go with Brown and if it does this will signify it no longer much cares about its future. (See 4 below.)
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The Republican Party is not without its own schism. (See 5 below.)
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For Israelis the question is not whether there will be another war but when and what the casualty rate will be. A retiring IDF Intelligence says it will be high. (See 6below.)
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Bombs and high casualties in Baghdad and Lebanon about to fall. This is, in large part, the consequence of Obama's passive and confused Middle Eastern diplomacy. (See 7 below.)
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The West goes forward in denial and with its head in the sand. That posture may bring comfort now but it will bring disaster in the future according to Caroline Glick. (See 8 below.)
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Tom Sowell asks Guess Who? I respond Guess who is coming to dinner - eventually inflation! May take a while but it will come.(See 9 below.)
Dick
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1)Keynesian Confusion
By Michael E. Lewitt
“At the present moment people are unusually expectant of a more fundamental diagnosis; more particularly eager to receive it; eager to try it out, if it should be even plausible. But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slave of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”
John Maynard Keynes (1936)
Ironically, John Maynard Keynes himself remains by far the most influential of the defunct economists from whom the madmen in authority are distilling their frenzy today. Economists occupy a world in which their theoretical musings have enormous real world consequences. Unlike their colleagues in the hard sciences, however, economists do not have the luxury of testing out their theories before inflicting them on the rest of us. The Keynesian experiment being run by governments and central banks over the past two years is a case in point.
Keynesian policies are inflicting untold damage on the U.S. and global economies today. Things did not have to be this way; Keynes did not have to be misread. His antidote for slow economic growth and high unemployment – massive doses of government spending – was appropriate in midst of the 2007-8 financial crisis, just as it was sensible during the 1930s global depression that Keynes was experiencing while he was writing The General Theory. In end of world scenarios, government spending is the last resort. But once the economy stabilizes – even at a diminished rate of growth - Keynesian medicine will cripple the patient if it is not withdrawn and replaced with a healthy fiscal regimen. Unfortunately, policymakers – in particular the current and past Chairmen of the Federal Reserve – have shown themselves to be either unwilling or incapable of making the transition from crisis management to post-crisis management of monetary policy. As a result, today’s Federal Reserve is missing the second great lesson of Keynes’ work, the “paradox of thrift.”
The most extended discussion of the paradox of thrift occurs in Chapter 23 of The General Theory, which is actually part of a series of chapters contained in Book IV entitled “Short Notes Suggested by the General Theory.” The discussion of the paradox of thrift in this chapter is primarily devoted to a historical survey of the idea and is relatively disjointed. Keynes’ clearest description of the concept comes much earlier in The General Theory when he writes the following:
“The reconciliation of the identity between saving and investment with the apparent ‘free-will’ of the individual to save what he chooses irrespective of what he or others may be investing, essentially depends on saving being, like spending, a two-sided affair. For although the amount of his own saving is unlikely to have any significant influence on his own income, the reactions of the amount of his consumption on the incomes of others makes it impossible for all individuals simultaneously to save any given sums. Every such attempt to save more by reducing consumption will so affect incomes that the attempt necessarily defeats itself. It is, of course, just as impossible for the community as a whole to save less than the amount of current investment, since the attempt to do so will necessarily raise incomes to a level at which the sums which individuals choose to save add up to a figure exactly equal to the amount of investment.”
In order for the fallacy of thrift to slow economic growth, the capital that consumers and businesses are saving would normally have to be available to recirculate in the economy through loans or investments. This recirculation is precisely what is not happening today, or at least not nearly at the rate necessary to lift growth to a level that would create significant job growth. And this is the Keynesian lesson that fiscal and monetary policymakers appear to have forgotten as they have forged their post-crisis strategy – rather than indiscriminately easing monetary conditions, it is necessary to create an environment in which savings-conscious consumers and corporations are willing to allow their funds to recirculate.
The reason that the current recovery is below par is that the economy is experiencing a massive paradox of thrift. A combination of factors has led individual economic actors – both consumers and corporations – to believe that it is in their best individual interest to save rather to spend, to repay debt rather than borrow. The result has been an increase in the personal savings rate from slightly negative to approximately 6-7 percent, and a significant improvement in corporate balance sheets (corporations are now sitting on approximately $1 trillion of cash). This has improved the financial condition of these individual economic actors, but deprived the broader economy of consumption and investment spending.
Unwise economic policy choices have led to the current situation. Consumers are saving instead of spending because the value of their homes has declined significantly, which is a result of the pro-cyclical monetary policy and lack of regulation that contributed to the housing debacle. Businesses are limiting their hiring and expansion plans due to the increasing regulatory burden being placed on them by the government, by fears of impending tax increases, and by the general anti-business tone coming out of Washington D.C. Investors are fleeing the stock market because regulators don’t have the guts to stand up to Wall Street and address dangerous practices such as the repeal of the uptick rule, naked CDS on systemically important institutions (which allows speculators to mount bear raids on companies such as BP plc), and flash and algorithmic trading. The combination of all of these policy failures has led to a massive crisis of confidence in the American model of capitalism, which has become as badly corrupted as the Japanese model that is responsible for Japan’s decades of deflation and economic paralysis. And our current politics offers little prospect for change.
This is the landscape investors are facing as we enter one of the most important weeks in American politics and markets in a long time. HCM is devoting so much time to a discussion of policy and politics because these are the forces that are driving financial markets today. The performance of individual companies is far less important than macroeconomic factors in determining investment performance. The United States is on the verge of two important events that will affect not only its own immediate future but the future of the global economy: the November 2 mid-term elections, and the November 3 meeting of the Federal Reserve’s Open Market Committee. The mid-term elections are expected to produce a significant shift in power in the U.S. Congress, with Republicans expected to regain control of the House of Representatives, move into an unassailable blocking position in the Senate, and make major gains at the state level as well. The financial markets have been treating these two early November dates as early Christmas presents, but the post-holiday hangover may be brutal. Financial markets should be careful what they wish for on November 2 and 3. Despite likely short-term market gains, they may ultimately be staring at coal in their stockings.
The Mid-Term Elections
The mid-term elections promise a big victory for the Republicans, a party whose brand was so severely devalued a mere two years ago that the media was already writing about President Obama’s second term agenda. But a Republican resurrection is hardly likely to improve economic or social conditions; the Republicans’ rigid anti-tax, anti-regulatory agenda has inflicted great damage on this country. The repudiation of Congress that will occur on November 3 should be considered bi-partisan – both parties have been abject failures. The political process has become deeply corrupted and dysfunctional. Returning the party to power that presided over 8years of budget profligacy and regulatory malpractice between 2000 and 2008 is hardly a great accomplishment; it merely promises to temper the worst anti-business and anti-growth policies of the Obama administration and its Congressional minions. Many believe that political gridlock will ensue, although we would not be surprised to see progress made on several policy fronts such as a compromise on taxes and perhaps some marginal budget cuts (not entitlement reform unfortunately). Those promoting a Republican victory argue that at least things won’t get worse for the economy if the Obama agenda is stopped in its tracks, but the economy will get worse if America’s ill-advised fiscal and tax policies remain in place.
After the election, HCM expects a dangerous outbreak of populism that will most likely take the form of protectionist economic measures primarily aimed at China. If this occurs, it will not be good for the financial markets. There are already rising pressures in Congress to take action against China, and we will have to see if these sentiments will fade after the election. Our expectation is that they will not. The demagogic danger is a real one and it is growing. With more than one in eight Americans on food stamps, new revelations about mortgage foreclosure abuses, and the appearance on the scene of politicians of the ilk of New York gubernatorial candidate Carl Paladino, Delaware Senatorial candidate Christine O’Donnell, and Ohio Congressional candidate Rich Lott, who used to spend his spare time engaging in Nazi reenactments (with his son!) and was actually endorsed by future House Speaker John Boehner, it is a small leap to protectionist legislation aimed at China and other countries that can be scapegoated for America’s own failures. The way to combat China’s currency policy is not through punitive measures but through policies that improve America’s competitive economic position, a concept that is unlikely to gain currency in today’s devalued marketplace of ideas. Instead, bad ideas are likely to gain ascendancy and provide political cover for American politicians trying to avoid making the tough choices needed to right the American economy. We may not need our politicians to be nuclear scientists, but this country isn’t going to served by electing outright idiots either.
QE2
One day after the mid-term elections, the Open Market Committee is expected to announce the details of its plan to engage in a second round of quantitative easing (QE2) pursuant to which the central bank will intervene directly in the financial markets to purchase as much as US$1 trillion of Treasury securities. The stated purpose of QE2 is to prevent inflation from dropping below the Federal Reserve’s target of 2 percent, which is somehow supposed to stimulate economic growth. This ignores the fact that record low interest rates over the past two years have failed to do precisely that. Nonetheless, all of the Fed’s jawboning about its plans has had a significant impact on the financial markets. The Dow Jones Industrial Average is up about 12% since Fed Chairman Ben Bernanke began hinting that further quantitative easing was coming two months ago. Inflation expectations have shifted sharply upward, with a recent 5-year TIPs auction resulting in a negative real yield of -0.55 percent (see Graph 1 below). On the other hand, the yield on 10-year and 30-year Treasuries has increased by about 30 and 40 basis points, respectively, since the Fed announced its intentions. Markets are heeding the history lesson that monetary policy plays a key role in shaping post-crisis economies; the problem thus far is that the markets aren’t doing what the Fed wants them to do. If the Fed does not play small ball with QE2, however, we would expect rates to drop back down in the near term. We doubt, however, that reducing already low rates is going to stimulate much of anything other than more frustration on the part of savers.
HCM has a hard time making a case that inflation is either a serious or imminent threat despite the signals coming from the market. Hedge fund star John Paulson recently told investors that he believes that inflation will rise to the double-digits by 2012, a forecast we find excessive in degree and timing although not ultimately in direction (calling for higher inflation in the future is an easy call; the tough call is deciding when inflation will hit). There is still too much excess capacity in too many areas of the economy – finance, real estate, housing – to create significant near-term inflationary pressures. The type of inflation Mr. Paulson is predicting really speaks to a different type of scenario that would involve a collapse of the U.S. dollar and with it the U.S. economy, which would be consistent with reports that Mr. Paulson holds 80 percent of his considerable personal assets in gold. HCM is a strong believer in gold and even a stronger believer in a dollar collapse and continuing U.S. economic weakness barring a 180 degree change in policy, but we don’t see it happening as quickly as Mr. Paulson.
Opinion among the Fed governors concerning the wisdom and prospects for quantitative easing is hardly uniform. For example, during an October 19 speech before the New York Association for Business Economics, Richard W. Fisher, the president of the Federal Reserve Bank of Dallas admitted that “[i]n my darkest moments, I have begun to wonder if the monetary accommodation we have already engineered might even be working in the wrong places.” St. Louis Federal Reserve Bank President James Hoenig has been a consistent dissenter from recent Fed decisions and in HCM’s opinion is the lone voice of reason in a sea of Keynesian insanity. Despite these doubts, the central bank is intent on mounting another feckless attack on the powerful deleveraging trends at work in the post-crisis world.
In a twist that must have amused the Fed’s harshest critics, it was reported that the Fed surveyed government bond dealers and investors about their expectations of the initial size of any new program of debt purchases and the time period over which it would be completed. It also asked firms how often they expected the program to be reevaluated by the Fed and to estimate its ultimate size. Coming less than a week before the Open Market Committee, this request is consistent with the tradition of the Fed cow-towing to the financial markets. Former Chairman Alan Greenspan used to rely on the wisdom of the stock market, and declared to the world that it was a “conundrum” when interest rates did not respond to Fed policy moves in accordance with his ideology. Ben Bernanke’s Fed doesn’t even wait for the markets to opine – it asks the markets in advance about their expectations, presumably so the central bank will not disappoint them and see them drop (God forbid!). That’s one way to avoid conundrums, but it is no way to manage monetary policy. The markets are counting on a $1 trillion program of quantitative easing over a reasonably short period of time; anything less could cause a sell-off in equities. The markets, as usual, are only focusing on the short-term and ignoring the long-term risks created by ill-advised monetary policies. QE2 may sustain the markets for a brief period of time, but sooner rather than later the markets are going to have to pay the piper for the mountains of debt and extended period of artificially low interest rates that this policy has promulgated.
As I have written in El Mundo and spoken about at the recent Value Investing Congress in New York, QE2 is not only unlikely to work but is certain to contribute to future financial instability. The financial system is already sitting on US$1 trillion of excess reserves. The reason that these reserves are not being used to grow the economy through capital spending or to create jobs is not that interest rates are too high. Rather, reserves are going unutilized because of a profound lack of confidence on the part of economic actors bred by anti-growth policies promoted by the Obama administration (particularly healthcare reform) and the threat of significantly higher taxes (as much as US$6 trillion over the next 10 years if current plans aren’t altered. ) QE2 will do nothing to address these factors suppressing demand for funds. QE2 is a monetary policy tool being used to address a problem that has nothing to do with monetary policy. As such, it is misguided and is unlikely to work. What it will do, however, is further swell the Federal Reserve’s balance sheet and lower the value of the dollar, neither of which will contribute to the long-term strength of the American or global economy.
But QE2 doesn’t only fail to aim at the right target (employment); it doesn’t really aim at anything at all. Instead, QE2 basically sprays money indiscriminately into the economy instead of targeting money at productive activities. Current fiscal and tax policy promotes peculation at the expense of productive growth; examples include the lax rules governing derivatives trading and leveraged buyouts, activities that add nothing to the productive capacity of the economy. Without fiscal and tax policy changes designed to promote productive growth, the excess reserves created by QE2 will end up in the hands of speculators in the financial industry. This will increase systemic leverage and exacerbate existing overcapacity in unproductive areas such as finance and real estate. QE2 without fiscal and tax policy changes is simply a continuation of the boom-and-bust regime that has dominated global financial markets for the past three decades.
The Stock of the Fed is Dropping Quickly
The once Teflon reputation of the Federal Reserve has taken a beating since the financial crisis, but its management of the post-crisis environment has lifted criticism of the central bank to a new and perhaps unprecedented level. Previously, the most strident attacks came from the likes of Congressman Ron Paul and other libertarians; today they are coming from respected market figures such as Morgan Stanley economist Stephen Roach, PIMCO’s Bill Gross, and Jeremy Grantham.
Readers of this publication are well aware that HCM has long admired the work of Morgan Stanley’s Stephen Roach. Mr. Roach is one of the more intellectually honest and outspoken central bank critics on the scene today. On October 12, he addressed the World Knowledge Forum in Seoul, South Korea and delivered one of the harshest public critiques of the Federal Reserve that has been made in many years. The primary thesis of the speech was that policy makers have failed to learn from the policy errors made by Japan. He writes that “it is now debatable as to whether there was ever a clear understanding of the true Lessons of Japan and what they might imply for macro policy management in the modern world.” This is important because “[i]n the aftermath of the Crisis of 2009-09 - and the Great Recession it spawned – a legacy of post-crisis debt and deleveraging is now increasingly global in scope.” The correct lesson of what has happened to Japan over the past two decades is not that Japanese authorities moved with insufficient speed and aggression to deal with credit and asset bubbles. The correct lesson is that such bubbles must be identified earlier and avoided in the first place.
Mr. Roach rightly criticized the Federal Reserve for failing to spot obvious bubbles in advance (the Internet Bubble, Housing Bubble, and Corporate Bond Bubble are three obvious examples). But even worse, he said, is that the Federal Reserve Chairman was leading the intellectual charge supporting the case that these were not bubbles.
“One of the most disturbing features about each of these episodes is that the Chairman of the Federal Reserve – steeped in his ideological convictions that markets always know best – led the charge in denying that they were bubbles. He argued that the NASDAQ bubble was well supported by the productivity renaissance of the New Economy. Housing bubbles could only be local – never national. And the unprecedented tightening of credit spreads was an outgrowth of stunning advances in financial innovation.”
As someone who was fortunate enough to warn in this publication (and elsewhere) of each of these bubbles in advance, HCM welcomes Mr. Roach’s willingness to speak out about the failure of so-called leading economists to miss such obvious imbalances. These imbalances are what cause the types of market crashes that wipe out years of investment performance in the blink of an eye, or create the opportunity to profit from selling short. Moreover, these bubbles are not that difficult to identify if one is willing to look at the facts with an objective eye and not be corrupted by the madness of crowds. As I wrote in The Death of Capital:
“there are clear indicia of when asset prices are rising at unsustainable levels….Any significant departure from long-term valuation trends should capture the concern and attention of central bankers and trigger a response. But the types of deviations from the norm that occurred in the decade preceding the crisis of 2008 were far more than mere departures from long-term trends; they were obvious bubbles that required no special economic knowledge to identify. Stock prices traded at a multiple of 351x earnings on the NASDAQ Stock Exchange at their peak on March 10, 2000; the average price/earnings multiple at previous market peaks had been no higher than 20 before that. The risk premium (known as spread) on Credit Suisse’s High Yield Index reached 271 basis points over Treasuries on May 31, 2007, a record level that exceeded the historical average of 570 to 580 basis points by over 50 percent.”
Unfortunately, we are again heading into dangerous territory as a result of the Federal Reserve’s ill-advised zero interest rate policy, which is being exacerbated by an irrational fear of disinflation that is leading to its truly hare-brained scheme to engage in QE2. You can be sure we will do our best (as we have in the past) to sound the warning when markets get out of hand again. It is only a matter of when, not if, this occurs.
Mr. Roach also criticizes the Federal Reserve for failing to take into account the fact that financial bubbles have a devastating effect on the real economy. “A key lesson from Japan,” he said, “is for the authorities to be especially mindful of the lethal interplay between asset and credit bubbles and related distortions in the real economy. That lesson was totally lost on the Federal Reserve over the past decade.” In the post-crisis environment, monetary policy is being guided by deflation fears fed by Japan’s experience that lead to policies that are likely to exacerbate those very same deflationary risks. Mr. Roach warns: “[t]hat could very well be the single greatest flaw of a narrow and mechanistic inflation-targeting policy rule – a framework that does not allow for the unintended consequences of low nominal interest rates in spurring a steady string of asset and credit bubbles that could well compound deflationary risks over time.” In other words, the Fed’s narrow mandate (or its narrow interpretation of its mandate) is leading it to adopt policies that are exacerbating the very risks it is seeking to mitigate.
Mr. Roach’s solution is to add to the central bank’s mandate a requirement to maintain “financial stability.” Such a requirement would provide monetary authorities “with the political cover to attack asset and credit bubbles before they had dangerously destabilizing impacts on markets and wealth- and credit-dependent economies.” He believes such a change is necessary because we have had “a Federal Reserve that was swayed more by ideology than discipline, and debased by politically-motivated fiscal authorities who have become fixated on short-term stimulus while ignoring longer-term considerations. In this environment, we can no longer count on the promises of policy makers to act in accordance with the lessons they have learned from Japan or from the Great Crisis of 2008-09.” HCM would slightly modify Mr. Roach’s last statement. Policymakers have simply failed to learn the right lessons from the 2008-09 crisis. As we argued above, rather than learning from Keynes that a debt crisis should be solved with more debt, the authorities should have better understood how the paradox of thrift would operate in a post-crisis environment and developed policies to deal with that phenomenon.
Bill Gross was also harshly critical of Federal Reserve policy in his most recent Investment Outlook. In so many words, he accused the U.S. government of running a massive Ponzi scheme, although he softened this comment by noting that public debt always has Ponzilike characteristics. But the Ponzi scheme currently being run by the U.S. government is unprecedented in size and scope. Mr. Gross argued that:
“with growth in doubt, it seems that the Fed has taken Charles Ponzi one step further. Instead of simply paying for maturing debt with receipts from financial sector creditors – banks, insurance companies, surplus reserve nations and investment managers, to name the most significant – the Fed has joined the party itself. Rather than orchestrating the game from on high, it has jumped into the pond with the other swimmers. One and one-half trillion in checks were written in 2009, and trillions more lie ahead. The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullible, they will just write the checks themselves. I ask you: Has there ever been a Ponzi scheme so brazen?”
PIMCO is a huge holder of Treasury and other types of securities that are likely to benefit in the short run from QE2, but Mr. Gross correctly frets about the inevitable inflationary consequences of this policy. Inflation, of course, could decimate PIMCO’s long bond positions when it begins to rear its ugly head (although we assume he is hedged), so Mr. Gross is not only making a principled argument but also to some degree talking his book (which is his right).
Jeremy Grantham, in a Quarterly Letter entitled “Night of the Living Fed,” makes the compelling argument that debt doesn’t correlate with long-term growth rates. Debt, he writes, “is the paper world. It is, in an important sense, not the real world.” He continues:
“In the real world, growth depends on real factors: the quality and quantity of education, worth ethic, population profile, the quality and quantity of existing plant and equipment, business organization, the quality of public leadership (especially from the Fed in the U.S.), and the quality (not quantity) of existing regulations and the degree of enforcement. If you really want to worry about growth, you should be concerned about sliding education standards and an aging population. All of the real power of debt is negative: it can gum up the works in a liquidity/solvency crisis and freeze the economy for quite a while.”
Mr. Grantham has long been a critic of Alan Greenspan, Ben Bernanke and the Federal Reserve, but he could hardly contain himself in his last quarterly letter. He provides a great deal of fodder for the growing intellectual case against the pro-cyclical path that monetary policy has taken under its two most recent Chairmen.
Market Recommendations
We still expect the stock and bond markets to maintain their strength through the end of the year, particularly in the aftermath of a Republican victory in the mid-term elections and the announcement of QE2. Our short-term oriented readers should act accordingly. The corporate credit markets are paying absolutely no attention to company quality; anything with a decent coupon is trading up. The risk trade is clearly on.
Readers with a long-term focus should continue to accumulate gold and limit their investments in the credit area to bank loans (through mutual funds), BB/BBB corporate bonds, and stocks that have lower-than-market p/e ratios and pay dividends. We would avoid Treasuries at all costs. Lending to our government at 2.6 percent for 10 years is a great way to become a millionaire - if you’re already a billionaire. Sooner or later, everything being earned on the upside of this liquidity-induced rally will be given back in spades – the only question is when.
-------------------------------------------------------------------------------------2)Why Obama Is No Roosevelt
Roosevelt: 'Your government has unmistakable confidence in your ability to hear the worst without flinching and losing heart.' Obama: We don't 'always think clearly when we're scared.
By DOROTHY RABINOWITZ
Whatever the outcome of today's election, this much is clear: It will be a long time before Americans ever again decide that the leadership of the nation should go to a legislator of negligible experience—with a voting record, as state and U.S. senator, consisting largely of "present," and an election platform based on glowing promises of transcendence. A platform vowing, unforgettably, to restore us—a country lost to arrogance and crimes against humanity—to a place of respect in the world.
We would win back our allies who, so far as we knew, hadn't been lost anywhere. Though once Mr. Obama was elected and began dissing them with returned Churchill busts and airy claims of ignorance about the existence of any special relationship between the United States and Great Britain, the British, at least, have been feeling less like pals of old.
In the nearly 24 months since Mr. Obama's election, popular enthusiasm for him has gone the way of his famous speeches—lyrical, inspired and unburdened by the weight of concrete thought.
About the ingratitude of Democratic voters the president brooded in a September Rolling Stone interview. "If people now want to take their ball and go home," he declared, "that tells me folks weren't serious in the first place." His vice president, Joe Biden, had a few days earlier contributed his own distinctive effort to seduce Democrats back to the fold by telling them to "stop whining."
The results of this charm campaign remain to be seen. What's clear now is that we've heard quite enough about the "angry electorate"—a peculiarly reductive view of citizens who've managed to read all the signs and detect an administration they were not prepared to live with.
Nothing wakened their instincts more than the administration's insistence on its health-care bill—its whiff of totalitarian will, its secretiveness, its display of cold assurance that the new president's social agenda trumped everything.
But it was about far more than health-care reform, or joblessness, or the great ideological divide between the president and the rest of the country. It was about an accumulation of facts quietly taken in that told Americans that the man they had sent to the White House had neither the character or the capacity to lead the country.
Their president was the toast of Europe, masterful before the adoring crowds—but one who had remarkably soon proved unable to inspire, in citizens at home, any belief that he was a leader they could trust. Or one who trusted them or their instincts. His Democratic voters were unhappy? They, and their limited capacities, were to blame.
These are conspicuous breaks in the armor of civility and charm that candidate Obama once showed—and those breaks are multiplying.
At a Democratic fund-raiser a few weeks ago, the president noted, in explanation for the Democrats' lack of enthusiasm, that facts and science and argument aren't winning the day because "we're hard-wired not to always think clearly when we're scared." The suggestion was clear: The Democrats' growing resistance to his policies was a product of the public's lack of intellectual capacity and their fears.
Decades ago another president directly addressed Americans in a time of far greater peril. "Your government has unmistakable confidence in your ability to hear the worst without flinching and losing heart," Franklin Roosevelt told his national audience. The occasion was a fireside chat delivered Feb. 23, 1942. No radio address then or since has ever imparted a presidential message so remarkable in its detail, complexity and faith in its audience.
It was delivered just a few months after Pearl Harbor, a time when the Allied cause looked bleakest. It would be known to history as "The Map Speech." The president had asked Americans to have a map at hand, "to follow with me the references I shall make to the world- encircling battle lines of this war." He took them through those lines, the status of battles around the globe, the enemy's objectives, centers of raw material and far more. By the time they had finished poring over their maps with him they had had a considerable education.
It is impossible to imagine what might have been the effect if the current president, who is regularly compared to FDR—always a source of amazement—had tried anything like a detailed address explaining, say, the new health-care bill. Though this would have required knowledge of what was actually in the bill (a likely problem) and a readiness to share that news (an even greater one).
Despite the ongoing work of legions grinding out endless new and improved proofs that FDR was a despoiler of democracy and our economic system, it is worth remembering the reason virtually all serious historians rank him among the top three of our greatest presidents.
Franklin Roosevelt led the nation through 12 years begun in incomparable national misery virtually to the end of the war. When he died, an anguished country mourned as it had not done since the death of Lincoln. Americans trusted him. The story is told of a man found weeping when Roosevelt's funeral train went past, who was asked if he had known the president. "I didn't know him," he replied. "But he knew me."
The times are now vastly different—no one expects a candidate with the powers of an FDR these days. But the requirements of leadership don't change. Despite charm and intellect, Americans have never been able to see in Mr. Obama a president who spoke to them and for them. He has been their lecturer-in-chief, a planner of programs for his vision of a new and progressive society.
Plenty of suggestions, none of them feasible, are in the air now about how he can reposition himself for 2012, and move to the center. Mr. Obama is who he is: a man of deep-dyed ideological inclinations, with a persona to match. And that isn't going away.
The Democrats may not take a complete battering in the current contest, but there is no doubt of the problems ahead. This election has everything to do with the man in the White House about whom Americans have lost their illusions. Illusions matter. Their loss is irrecoverable.
Ms. Rabinowitz is a member of the Journal's editorial board.
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2a)Democrats Can't Blame the Economy
Imagine if President Obama had moved right after Scott Brown's election. The party would be in better shape today.
By FRED BARNES
A funny thing happened on the way to the midterm election. The economy was in bad shape, with high unemployment, slow growth and a lingering housing crisis. Yet it wasn't the paramount issue in the campaign.
The run-up to today's election has been policy-driven: Democrats are likely to lose their strong majorities because of the policies of President Obama and his congressional allies on spending, the deficit, the national debt and health care.
Those policies aroused an anti-Democratic alliance of Republicans, independents and tea partiers that emerged in the spring of 2009, spurred by alarm over spending, bailouts and escalating debt. By fall 2009, opposition to Mr. Obama's health-care plan solidified what appears to be a majority coalition.
Yes, the economy is always a factor in elections. But a wretched economy doesn't automatically doom Washington's ruling party to disaster in a midterm election. Since World War II, the average midterm loss by the president's party is 24 House and four Senate seats. In 1982, despite a deep recession and joblessness above 10%, Republicans lost only 26 House seats and none in the Senate. The difference between 1982 and today is that President Reagan's policies—cutting spending and taxes, firing striking air-traffic controllers—were popular.
And, by the way, a prosperous economy doesn't guarantee midterm success. In 1994, Republicans capitalized on President Clinton's liberal policies to win a rout despite a generally strong economy. In 1974, the Watergate scandal led to a Democratic landslide. In 1946, when Republicans ran on the slogan "Had Enough?"—referring to the regulations and taxes of wartime and the New Deal—they won 54 House and 11 Senate seats.
Yes, a flourishing economy would help Democrats today, and voters invariably list the economy and jobs as their top concern in the election. But that's not all they've told pollsters.
In a CBS/New York Times survey, only 8% blame Mr. Obama for the economy and more than two-thirds see the slump as temporary. "Most voters believe the best thing the government could do to help the economy is to cut government spending," says pollster Scott Rasmussen. "At the same time, most voters believe the administration and congressional Democrats want to go in the opposite direction."
The initial glimmering of a new center-right coalition appeared less than a month after Mr. Obama took office in January 2009. The first tea parties were held in response to the budget—with its sharp increase in spending (8.4%) and 8,000 earmarks—as well as the stimulus and bailouts.
By April, independents had begun their migration from left to right. This wasn't prompted by the economy. At the time, most Americans blamed George W. Bush for the economic mess. The cause was spending, and the soaring deficit and long-term debt it was creating.
Then came the summer, dominated by growing disapproval of what Republicans dubbed ObamaCare. That trend has never reversed. Democrats were confident that their health-care reform would be a political asset. But it helped Republicans win governor's races in Virginia and New Jersey last November, and it was pivotal in January to electing Scott Brown to the Massachusetts Senate seat held for 48 years by the late Edward Kennedy.
Health care is a special thorn in the side of independents. A week ago, a George Washington University/Politico poll found that 62% of independents look unfavorably on ObamaCare. Only 6% regard it favorably. Independents, who were an indispensable part of the Democratic juggernauts in 2006 and 2008, favor Republicans by 14 percentage points.
There's a simple way to test whether Democratic policies, rather than the economy, are the dominant factor in the midterm election: Consider the alternative. After Mr. Brown was elected on Jan. 19, Mr. Obama could have abandoned his full-throttle blitz to pass health-care reform and other legislation, instead seeking compromise with Republicans. The bipartisan route, adored by independents, was open to him.
Mr. Obama could have yielded on health care and settled for a scaled-back bill that provided coverage for the uninsured and those with pre-existing conditions. He also could have proposed meaningful spending cuts or a second stimulus that included broad-based tax incentives for private investment. And he could have chosen to extend all the Bush tax cuts for another year or two.
On each of those issues, Mr. Obama would have attracted significant Republican backing—and he and his party wouldn't be in such dire straits. Democrats would still lose House and Senate seats, but not nearly as many.
And yet Democrats will explain their losses today by faulting the economy, not themselves. Their fortunes will improve once the recovery picks up, they say. And if that line of thinking isn't persuasive, they assert that there's a general anti-incumbent mood among voters this year.
Many incumbents are in trouble, but voters have a specific target: the party whose policies they so heartily dislike.
Mr. Barnes is executive editor of the Weekly Standard and a Fox News commentator.
2b)Not the Ones We've Been Waiting For
Pundits, particularly those who lean right, are schooled always to praise the wisdom of the electorate. Please.
By BRET STEPHENS
And so, today, the American people will seek an honest reckoning with Barack Obama. Good luck with that. Whatever his other virtues—not the least of which is campaigning on tautological slogans while passing himself off as Marcel Proust—this president will never be distinguished by his humility: Don't expect from him a decent admission, as George W. Bush had the decency to admit after the 2006 midterm, that his party had sustained a "thumping." Instead he will immediately decamp to places where he is still admired. That means exiting the country.
So expect no reckoning there. Nor should Americans expect one with the Democrats. If the party does a little less disastrously than anticipated, it will rally like a stock whose quarterly losses are slightly less bad than had been projected. And if it's Götterdämmerung, then we already know the narrative: secret sources of funding, plus anger, plus ignorance, plus a failure of communication. On which last score, they have a point: When your "accomplishments" consist of legislation nobody is allowed to read prior to the vote, and nobody can comprehend after it, then no wonder the swine have failed to take appreciative note of the pearls.
No, the only reckoning Americans can hope to get—and the one they most need to have—is the one they're least likely to seek. That is a reckoning with themselves.
Pundits, particularly those who lean right, are schooled always to praise the wisdom of the electorate. Please. Only three years ago, Americans became acquainted with a junior U.S. senator with an interesting personal history, notable rhetorical gifts, programmatically liberal ideas and zero legislative accomplishments. Whereupon he was hailed as a saint and elected president.
In Argentina or Venezuela such behavior may be unexceptional. But we're America, as they say: We're supposed to be into celebrity culture, not cult-of-personality politics. What happened?
Maybe Americans were sold on Mr. Obama as the man who could deliver them from the financial crisis. I don't buy it. Six months before Lehman Brothers collapsed, he delivered his instantly celebrated and soon forgotten race speech in Philadelphia. Historian Garry Wills compared it to Abraham Lincoln's Cooper Union speech. Others called it "stirring," "brave" and "flat-out brilliant." This for an address in which the candidate defended his anti-American, anti-Semitic pastor by outing his dying white grandmother as a woman prone to racist slurs.
Alternatively, perhaps Americans believed that Mr. Obama could make the United States beloved in the eyes of the world again. And maybe there's something to this: He did wow them in Berlin. But what kind of electorate surrenders itself to the good opinion of a Kreuzberg Kaffeeklatsch or a Damascene hookah bar? As president, Mr. Obama also offered an outstretched hand to Iran and gave a big speech in Cairo to the Muslim world at large. Yet Iran continues to enrich, and the parcel bombs keep getting posted in the mail. How did anyone ever expect it would be otherwise?
The answer is that as in relationships, so too in politics: Infatuation clouds judgment. You bank on the empty promises even as you refuse to take the object of your desire at his most precise word. Americans disillusioned today with the president for his health-care legislation, his refusal to extend his predecessor's tax cuts, his support for cap and trade, his ties to labor unions and groups such as Acorn, and his belief in the regulatory state, can't honestly say that they were promised otherwise during the campaign. They got almost exactly what they voted for—or at least they got an honest political stab at it. If Mr. Obama now thinks that they have no right to complain, he has a point.
Deputy editor Daniel Henninger, editorial board member Matthew Kaminski, and WSJ.com columnist John Fund analyze tomorrow's referendum on Obama-Pelosi governance.
.True, the president hasn't delivered on the promises of unity—of postracial, postpartisan, perhaps even post-American politics. These days, it's friends versus enemies, the politics of right-thinking people versus the politics of fearmongers.
That's not surprising. What is surprising are the masses of people who gave themselves over to the fantasy of unity in the first place. In a democracy, disunity is not just the reality, it's the premise. To wish for unity is to wish for an entirely different kind of politics, or perhaps something beyond politics itself, like religious transcendence.
Americans spent most of the 20th century and the first decade of the 21st fighting against that kind of wish, which goes by the name of totalitarianism and comes in fascist, communist or Islamist varieties. No, I'm not saying Mr. Obama is a closet totalitarian; on the contrary, he's nothing if not a partisan pol. But the people who donned those creepy T-shirts with Mr. Obama looking to the far distance like a latter-day Che Guevara were wholly in the mold of Eric Hoffer's true believers. In an earlier era they would have found their life's purpose as followers of Shabtai Tzvi, William Davies or Father Divine.
And so Americans go to the polls. Democracy being what it is, it holds not only our leaders to account, but our own political choices as well. Plainly Barack Obama was not the one we've been waiting for. But let's have the grace to admit we weren't the ones we'd been waiting for, either.
2c)This Is America, Stupid!
By Kyle-Anne Shiver
A nation holds its collective breath. America's pivotal election is today. We will either put the brakes on the Democrat-socialists' drive to transform us into a failing European-style social democracy or we continue to hurtle toward the cliff of no return.
Voters have waited through long, suffering months to make their voices heard at last.
Democrats have made an unprecedented mockery of representative government, ignoring the will of the people with arrogant disdain. Elitist hypocrites who campaigned on "love" for the poor party hearty on the hard-earned money of America's producers, jet to debauchery-ridden Europe to scorn our good name, and come back home only to spend our children into serfdom. The words "public servant" have almost become synonymous with "tax cheat." American companies are threatened with open thuggery by a power-mad administration of academics who wouldn't know how to actually produce a single cent if their very lives depended upon it.
The Democrats and their president line up in bowing and scraping infamy before the Islamists, throwing America under the bus of cowardly appeasement. A Democrat president still sends America's finest young people to war and ties their hands with hideous rules of engagement and withdrawal timetables, which inevitably make our bravest into cannon fodder. Democrat foreign policy has emboldened every evil actor on the world stage and made whole regions into powder kegs set to blow at the slightest provocation. Peace with genuine justice is an alien concept to the cowards in charge. These so-called peacemakers have been revealed as nothing but doormat-enablers.
And all around the land, media elites fumble the ball. These dimwitted media scalawags have twiddled their thumbs while 1776 redux has mounted a vociferous challenge to the ruling class of both parties (a class that the media themselves have for decades joined and empowered). The economy stands at the precipice of full-blown depression, the inevitable outcome of discredited Keynesian theory and a president who has bitten the small-business hand that feeds us enough to leave it bleeding and traumatized. Since our media elites are nothing more than materialist fat-cats themselves, they can see nothing in the Tea Parties but economic angst.
What a bunch of ninnies these people are. All of them. From the ivory-towered elitists in charge of the government to those in charge of the airwaves.
They forgot something.
This is America, stupid! And it's not just the economy.
It's the disrespect for the wishes of the electorate, who pay for everything.
What's the fundamental difference between American elitists today and those very well-educated, wealthy colonial elites who wrote the Declaration of Independence and the United States Constitution?
It comes down to one word: R-E-S-P-E-C-T.
Respect for God, our Creator. That's the fountain of American wisdom from which all else flows.
From respect for God, our Creator, comes respect for each individual that God has made. The foundational principle of American government is that human souls come in only one color, in one type, and at one value. In God's sight, we are all created equal. And since our very founding, good Americans of all stripes have worked to further this principle.
As if to highlight this fundamental loss of respect for our Creator as the source of citizens' unalienable rights, our big-government elitist in chief feels perfectly free to simply remove God from the American equal-rights paradigm, as he did when speaking to the Hispanic Caucus last month.
From respect for each individual flows the idea that liberty is a fundamental -- unalienable by government -- human right. Just as God has given free will to each person, in perfectly equitable manner, respecting man's ability to choose his own path, so a government made in the image of God's plan must permit the freedom to succeed or to fail, to prosper or to flounder, and to account for his own life when he faces God at the end of his earthly journey.
If the majority of American citizens want to change our Constitution, if they wish to banish the word "Creator" from our public display of the Declaration of Independence, they have legal ways in which to do this. The states can call a Constitutional Convention to take such steps democratically. Or our elected representatives can propose legal amendments to our Constitution which transform America into a socialist democracy. This is respect for the people's will.
But Democrats have decided to transform America from the top-down position of tyrants, boldly challenging the people to resist. Our founders were brilliant men who put into our Constitution the legal means to transform this country by purely democratic means. But Barack Obama is not legally empowered to make America into what he thinks it ought to be.
What we have in America today isn't just a feckless bunch of big spenders running our economy off a cliff. We have a cadre of power-mad folks who have no respect for the rule of law or the Constitution they are sworn to protect.
Respect for the will of the people is the very soul of democracy. Without it, liberty is nothing but a sham.
I've spent a great amount of time over the past year among Tea Party activists, interviewing many. I've talked to Americans from different regions of the country, old and young, rich and poor, black and white, union and non-union. To be sure, there is among Tea Partiers a mountain of economic angst and disgust for both parties' profligate ways.
But the real glue that holds all these disparate folks together -- and the reason they will not just go away after 2010 -- is bedrock respect for the U.S. Constitution.
It has not been lost on this monumental grassroots movement that lawmakers of both political parties have either ignored or defied constitutional limits on their powers for going on a century now. And for those now taking to the streets in protest, citizen revolution against growing tyranny is the primary driver of disgust.
When a United States congressman who has sworn to uphold, protect, and defend our Constitution is so smug that he can face a constituent and declare that "the federal government can do most anything it wants in this country," he has already proclaimed himself a traitor waiting for his due. When a Speaker of the people's House of Representatives mocks a reporter's question about the constitutionality of the health care bill she just railroaded through, asking "Are you serious?," she has already broken her own oath. When a president does not ask whether a power can be found within the U.S. Constitution, but rather steams ahead with nothing more than a might-makes-right, Yes-We-Can attitude, he has already trashed his own office in the sight of the people.
So as ballots are counted this week and every pundit goes into overdrive trying to pin the whole Democrat rousting on the economy, let me be perfectly clear in advance.
This is America, honey! And it's not just the economy.
It's the Constitution, stupid.
Lawmakers, judges, bureaucrats, and even presidents ignore it to their grave peril.
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3)Obama's Next Worry: A Restive Left Flank
Every president who lost re-election in the last half-century has first been weakened by a primary fight.
By JOHN FUND
Voter discontent this year isn't confined to the tea party. A new AP poll reports that 51% of Americans now think President Obama doesn't deserve re-election. More surprising, 47% of Democrats believe he should face a challenge for the party's nomination in 2012. No doubt many Democrats who hold this view are disappointed supporters of Hillary Clinton.
Prognosticators ponder whether Obama will face a primary challenge by a fellow Democrat in 2012, perhaps even by his 2008 primary rival, Hillary Clinton.
In reality, Mr. Obama doesn't have to worry too much about renomination. There are no signs that Mrs. Clinton would resign as secretary of state and challenge her boss. African-Americans, the president's strongest group of supporters, make up 30% of any Democratic primary electorate and provide him with a firewall against any opponent. And presidents from Ronald Reagan to Bill Clinton have rebounded after midterm defeats as the economy improved.
Still, a primary challenge, even if waged by a less-significant contestant, is a serious matter. Every president who lost re-election in the last half century has first been weakened by a primary fight—Gerald Ford, Jimmy Carter and George H.W. Bush being cases in point. Many of the three million voters Pat Buchanan attracted in 1992 against Mr. Bush, for example, wound up voting for Ross Perot in November. This allowed Bill Clinton to win with just 43% of the popular vote.
Today, party discontent with the president is real. Last week, leading Democrats were furious when Mr. Obama declined to endorse Rhode Island's Democratic gubernatorial candidate, Frank Caprio. This was payback for Lincoln Chafee's support of Mr. Obama's candidacy in 2008—Mr. Chafee is running for governor as an independent. "The notion that the leader of the party is being disloyal to his party is I think unprecedented," Democratic strategist Paul Begala told CNN.
Key donors have told the White House that the president should decide for certain whether he's running for re-election by the end of December. Should Mr. Obama's approval ratings slip further next year, there's talk that some donors may call on him not to run, or promote an independent candidacy by New York Mayor Michael Bloomberg.
It could go further. Pennsylvania Gov. Ed Rendell, a former chairman of the Democratic National Committee, told MSNBC in July that a primary challenge to Mr. Obama "is really possible," especially if he were to go back on his pledge to begin withdrawing U.S. troops from Afghanistan next year.
A disgruntled peace candidate such as former Vermont Gov. Howard Dean, Wisconsin Sen. Russ Feingold or Ohio Congressman Dennis Kucinich could find the prospect of rallying disgruntled leftists too tempting to resist. All three men forswear any interest in challenging Mr. Obama, yet it's noteworthy that Mr. Dean is stepping up his speaking schedule around the country after the election.
Mr. Dean blames Republicans for blindly opposing the president but says Democrats have some responsibility for voter anger. "There was a misunderstanding of the kind of change people wanted," he told the AP last month. "Democrats wanted policy change. Independents and Republicans wanted to change the way business was done in Washington, and that really hasn't happened."
In the aftermath of a disappointing 2010 midterm election, some liberals may follow the path of the tea party. Tom Streeter, the co-author of "Net Effect," a book on the lessons of Mr. Dean's Internet-driven 2004 presidential campaign, says tea party supporters "share with the Deaniacs a sense of being ignored by the powers that be, and an enthusiasm and energy in the feeling that they are striking back."
Progressives are still rankled by White House Press Secretary Robert Gibbs's attack in August on "the professional left" for not supporting Mr. Obama sufficiently. David Sirota, a prominent blogger, says that liberals feel "one hundred percent" taken for granted by the White House.
Most liberals I spoke to don't support a primary challenge. Jane Hamsher, founder of Firedoglake.com, a leading liberal blog, is less categorical. She blames Mr. Obama for "appropriating the progressive message, and then not governing as one." She has always backed "a diversity of voices in the primary process as a sign of a healthy democracy."
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4)The Brown Wall
By Randy Fardal
President Kennedy made one of his greatest speeches in Berlin. Some debate whether his German intonation was perfect -- "Ich bin ein Berliner" -- but the speech's venue certainly was perfect. Kennedy wanted a side-by-side comparison of limited government versus authoritarian government, and there was no better place to do that than in the artificially divided German city. The speech also employed powerful repetition: "Let them come to Berlin!"
Today, there are those who say that America has become more like the dysfunctional, oppressed East Berlin of 1963 than its efficient, free contemporary to the West. New York Times columnist Thomas Friedman complained recently that America no longer seems to be able to get anything done. He's not sure why, but he suspects it's because Americans eat too many hamburgers.
Let him come to California. There is no physical wall in California -- not even on the Mexican border -- but there is a virtual wall. It is a wall of time that separates the state into two eras: before Jerry Brown and after Jerry Brown. Perhaps the best place to straddle that stark, trans-temporal barrier is on Yerba Buena Island, in the San Francisco Bay. It is the midpoint of the five-mile-long San Francisco-Oakland Bay Bridge and the ideological equivalent of the Berlin Wall.
To the west is the magnificent double suspension bridge that was completed in 1936, just ten years after the California legislature created the Toll Bridge Authority to span the bay. When it was completed, it was the longest high-level steel bridge in the world and cost $77M, equivalent to $1.2B today.
To the east is the other half of the Bay Bridge, also built with part of that $77M. And next to the existing eastern span is a great illustration of what's gone wrong with America. No, it's not a McDonald's; it's an uncompleted structure that someday will replace the eastern part of the Bay Bridge that failed in a 1989 earthquake.
After the quake damage was repaired, California lawmakers and bureaucrats studied and debated the situation until they eventually recommended replacing the entire east span of the bridge in late 1996. At that time, the state government agency Caltrans estimated the cost to be less than a billion dollars. A few months later, the California legislature funded the project at $1.28B.
Then the professional control freaks intervened. Busybody eco-fascists demanded that the bridge carry public transit trains, even though that would have added billions to the cost, and BART already follows that same route under the bay below. Red tape burgeoned: At least twenty "key" federal, state, and local government agencies got involved, and countless more were consulted. Senators Feinstein and Boxer meddled, along with the Clinton White House.
After the new bridge design was deemed sufficiently sensitive to the needs of the gay, lesbian, feminist, African-American, Native American, illegal alien, homeless, stoner, and all other activist groups, the project was put out for bids. Cost estimates continued to balloon, from $1.56B in 1998 to $6.3B by 2007. Today, more than two decades after the earthquake, the project still is over three years from completion. And cynics warn of another big cost jump after the 2010 elections.
The American Dream
California once was the finest example of the American dream. Siberian immigrants pursuing game and furs were the first to arrive. Later, settlers came from Spain to farm and graze the land. In 1849, prospectors flooded into northern California in search of gold. A century ago, drillers came for the oil and filmmakers came for the abundant sunshine and natural outdoor movie sets. California defense contractors helped America win World War II by building ships and airplanes better and faster than ever before. High-tech companies flourished. And, as Thomas Wolfe described in The Right Stuff, many of America's early accomplishments in the space age happened in California.
There are few things that governments can do better than private enterprises. One of them is infrastructure development -- built by private contractors and funded by taxpayers. For the first six decades of the 20th century, Republicans controlled the California legislature and developed the infrastructure needed to accommodate the state's spectacular growth. The state was renowned for its excellent roads, water supplies, schools, and universities. The growth accelerated during the 1960s, as a Democrat legislature saw infrastructure funding as a means to greater power -- just as the Republicans probably had in prior decades.
The Anti-American Dream
But the accomplishments stopped in the 1970s with the election of Governor Jerry Brown. Mr. Brown expropriated the budget money that had been allocated for infrastructure -- much of it raised by motor fuel taxes -- and diverted it to his own leftist causes. Aqueducts and freeways were canceled, including some that already were under construction. Brown also blocked private construction of power plants. His anti-American Dream was this: If you don't build it; they won't come.
But they came anyway, and now Californians waste millions of gallons of fuel in traffic jams. Forbes named California the nation's worst state for drivers. During the time since Mr. Brown canceled most of the state's freeway construction, Californians travel more than twice as many miles, but the lane mileage has increased by less than ten percent.
Despite insane spending, education quality worsens. Water rates continue to rise, yet irresponsible eco-fascists demand that taxpayers spend billions of dollars to demolish existing reservoirs. This year, chief executives voted California the worst state in the nation for doing business.
As governor in the 1970s, Mr. Brown signed legislation that gave state employee unions the collective bargaining power that now is driving the state toward bankruptcy. (Incidentally, he is running for governor again this year.) Brown was the first in a series of leftist Democrat and moderate Republican governors that raised taxes while lowering the productivity of the state's employees by more than half. America's productivity during that period in the private sector grew by 43 percent (one percent average, compounded annually), a benchmark that makes the relative performance of the state's unionized employees even more dismal.
All told, it will take post-Brown California about 25 years to debate, design, and reconstruct the east half of the Bay Bridge. In 1926, it took pre-Brown California only ten years to debate, design, and construct both halves of the bridge, along with its approaches, a toll plaza, a transit terminal, and the world's largest diameter bore through Yerba Buena Island to connect the two spans. And they completed the project six months ahead of schedule, for a quarter of the cost of today's replacement span.
Yes, the new span is supposed to have about twice the useful life of the original -- 150 years versus 80 years -- and it probably will be safer, too. Therefore, some might argue that the replacement should cost more. On the other hand, today's design tools and construction equipment are many times better than they were eighty years ago, so others could argue even more persuasively that it really should cost less.
Tear Down This Wall!
The Berlin Wall of the past century physically divided a metropolis of efficiency and freedom from one of dysfunction and oppression. Similarly, in the 1970s, Governor Brown erected an ideological barrier that transported Californians from a land of efficiency and freedom, confining them to a land of dysfunction and authoritarianism.
Similar destructive policies have spread throughout America. Somewhere, the late President Kennedy must be warning us from the free side of that ideological wall, "There are some who can't understand why America no longer can get anything done...Let them come to Yerba Buena!"
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5)Palin v. Rove and the Battle for the GOP's Future
By Lee Cary
The battle for the future of the Republican Party will fully engage tomorrow morning in the wake of today's election. The opposing forces will be initially represented by two Republicans who hold no elected office: Sarah Palin and Karl Rove.
Palin represents the Tea Party Movement (TPM). Rove is the lead consigliere for the Republican bluebloods. Will their groups eventually consolidate their disparate agendas? The answer will determine the future of the GOP.
After eviscerating Christine O'Donnell's campaign, Rove challenged the TPM in Der Spiegel, where he was quoted as saying,
If you look underneath the surface of the Tea Party movement, on the other hand, you will find that it is not sophisticated. It's not like these people have read the economist Friedrich August von Hayek. Rather, these are people who are deeply concerned about what they see happening to their country, particularly when it comes to spending, deficits, debt and health care.
His knowledge of Tea Partiers' reading habits is flawed. And his explanation of people's concerns is merely an affirmation of the obvious. He's since tried to clarify and soften his implied criticism of Tea Partiers, but once you accuse others of being unsophisticated, it's hard to step back and reframe the discussion. Actually, it's impossible.
If we were inclined to think that Rove's words were merely casual comments voiced without forethought or broader intent, we lost that notion when, in a subsequent Telegraph (U.K.) article, he was quoted as saying,
With all due candour, appearing on your own reality show on the Discovery Channel, I am not certain how that fits in the American calculus of 'that helps me see you in the Oval Office' ... "There are high standards that the American people have for it [the presidency] and they require a certain level of gravitas, and they want to look at the candidate and say 'that candidate is doing things that gives me confidence that they are up to the most demanding job in the world'.
So where does this dissing of Palin's "gravitas" come from? Ronald Reagan once hosted the television program "Death Valley Days," pushing 20 Mule Team Borax cleaner. The liberal media questioned his gravitas through both terms. Rudy Giuliani is leading a troupe of motivational speakers across the nation, promising to teach time management, leadership, and several other "skills" -- almost everything except how to stir-fry. Fred Thompson is hawking reverse mortgages to seniors. Mike Huckabee is playing average guitar on his FOX show. None of these former presidential candidates is wading hip-deep today in the Gravitas River that Rove claims does not flow through Alaska. So what's up with Karl?
This assault on Palin comes, lest we forget, from the same advisor who either did not make the case or was unable to persuade Bush 43 to stand up and fight back against the relentless criticism from Democrats and the legacy media during six of Bush's eight years as president. Why the aggression now against Palin and the TPM?
Here's a possible explanation. "Bush's Brain," and the architect of the compassionate conservative strategy of George W's 2000 presidential campaign, is feeling the ground shift under his feet. As a consequence, the gyrocompass of his once-highly regarded political judgment is broken.
On Tuesday night, he'll have his signature whiteboard out charting numbers, but the Rove magic has faded some. He appears to be suffering from a severe case of Beltway Insideritis. It strikes when those who've been comfortable with their status as powerful political influencers lose some of their...gravitas...and become mere observers of the events they wish they could influence, but can't.
If that's the case, then Karl's just one among a cadre of certified conservative pundits, in the media and among the professional camp followers of the pols, who don't understand a grassroots movement they neither initiated nor can control. To them, the Tea Party People are upstart interlopers, like an uninvited third team that suddenly takes the field during the World Series and starts warming up. Wearing street clothes. With no gloves. Tossing a square ball.
All because We The People are a powerful force, able to eclipse the intentions of the entrenched George Soroses, Peggy Noonans, Paul Krugmans, and Karl Roves who man and woman the traditional partisan barricades while the unstoppable voters surge over and around them.
Come Wednesday morning, the battle for the GOP's future will begin in earnest.
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6)IDF intelligence chief: Israel's next war will see heavy casualties
In farewell meeting at the Knesset, Gen. Amos Yadlin says next conflict will hit Israel far harder than recent wars in Lebanon and Gaza - and hints for first the time at Israeli involvement in a 2007 strike on a nuclear plant in Syria.
By Jonathan Lis
In a final meeting at the Knesset, outgoing Military Intelligence chief Amos Yadlin warned on Tuesday that Israel's next war would be fought on several fronts - causing far heavier damage and casualties than other recent conflicts.
Israel was currently enjoying a period of relative quiet, Yadlin said. But its enemies were rearming and now posed the greatest threat to the country since the 1970s. A new war would be far deadlier than Israel's last two, relatively short, conficts in Lebanon in 2006 and Gaza in 2008-9.
Speaking at the final meeting of the Knesset Foreign Affairs and Defense Committee meeting,a head of his imminent departure after for years as commander of army intelligence.
Syria, particularly, posed a greated military obstacle to Israel than at any time in the past three decades, Yadlin said, having amassed advanced Russian-built antiaircraft missiles that seriously limited the operational freedom of the Israel Air Force.
While Syria had failed to acquire Russian S-300 missiles, seen by Israel as the greatest potential threat to its aircraft, Damascus had improved its defense systems enough to push the military balance with Israel "back to the 1970s", Yadlin said.
In 1973, Israel came close to defeat by a suprise Syrian attack before eventually emerging victorious in the Yom Kippur War.
Yadlin also hinted at Israel's involvement in attacking a Syrian nuclear facility in September 2007. That strike has been widely attributed to Israel, but the government has never officially taken responsibility for the operation.
The veteran soldier, who turns 60 next year, told the committee that during his position as MI chief he had contended with two enemy nuclear programs - apparently a reference to Iran and Syria.
"I've seen three defense ministers, two chiefs of staff and two prime ministers come and go, I've been through two wars and I've contended with two nuclear programs of enemy states," Yadlin said, summing up the last years of his career.
"I headed a group of thousands of people working 24 hours a day to collect information that the enemy was not volunteering, information that had to be extracted from difficult places," he added.
Yadlin also warned of a growing threat from the Iranian nuclear program, saying Iran now had enough highly enriched uranium to build a bomb.
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7)Report: Hezbollah getting ready to take over Lebanon
Al-Sharq al-Awsat newspaper says Shiite group, together with other elements, planning to take over Lebanon as international tribunal prepares to issue ruling on Hariri assassination
By Roee Nahmias
Hezbollah is gearing up to take over Lebanon ahead of an international tribunal's ruling on the assassination of former Lebanese Prime Minister Rafik Hariri. The London-based al-Sharq al-Awsat newspaper reported Tuesday that the Islamist group has been in contact with Shiite group Amal and pro-Syrian organizations in Lebanon in order to set a plan to seize control of the country after the court's ruling.
Reason for Concern
Lebanese official accuses Hezbollah of planning coup / Roee Nahmias
A source close to Hezbollah told the paper that the plan, which is focused on Beirut and south Lebanon, "Will end Saad Hariri and the Saudis' tenure in Lebanon for good." It is estimated that the UN court will place Hezbollah responsible for the Hariri's assassination.
On Monday, the Al Akhbar daily reported that "key element in the opposition (i.e Hezbollah) is holding an electronic discourse with Lebanese elements."
According to al-Sharq al-Awsat, the parties discussed the division of areas between the various forces in a way which will allow them to seize control of their respective areas when the time comes.
It was also reported that as part of preparations, Beirut will be divided into three military zones.
'No one can predict future'
A senior Hezbollah source refused to confirm or deny the report but said, "Everyone knows that the state in the Lebanon is a reason for concern, because all of the opportunities to 'solve the situation' have thus far failed.
"It would not be useful to discuss scenarios in the media, however no one can predict what will happen in the future," he added.
The Amal movement denied the report and said it was not in a position "to make plans for conflicts."
Last week, Hezbollah Secretary-General Hassan Nasrallah called on the Lebanese people not to cooperate with IJC clerks after they visited a gynecological practice near Beirut and were attacked by 150 women who snatched one of their cases containing investigation materials.
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8)Our World: The Age of Dissimulation
By CAROLINE B. GLICK
Rather than discuss the nature and threat of Islamic supremacism, the Western media, Western political leaders and academics deny it.
Years from now, when historians seek an overarching concept to define our times, they could do worse than refer to it as the Age of Dissimulation. Today our leading minds devote their energies and cognitive powers to figuring out new ways to hide reality from themselves and the general public.
Take US President Barack Obama’s senior counterterrorism advisor for example. On Sunday, John Brennan spoke on Fox News about the latest attempted Islamic terrorist attack on American soil.
Since the Obama administration has barred US officials from referring to terrorists as terrorists and effectively barred US officials from acknowledging that Islamic terrorists are Muslims, Brennan simply referred to the Islamic terrorists in Yemen who tried to send bombs to synagogues in Chicago as “individuals.”
Today, practically, the only individuals willing to speak honestly about who Islamic supremacists are and what they want are the Islamic supremacists themselves.
For instance, in an interview last week with Reuters, the Islamic supremacist Hamas movement’s “foreign minister” Mahmoud al- Zahar told the Christian West, “You do not live like human beings. You do not [even] live like animals. You accept homosexuality. And now you criticize us?”
Al-Zahar also made the case for Islamic feminism. As he put it, “We are the ones who respect women and honor women ... not you. You use women as an animal. She has one husband and hundreds of thousands of boyfriends. You don’t know who is the father of your sons, because of the way you respect women.”
Finally, al-Zahar claimed that Westerners have no right to question Islam or criticize it. In his words, “Is it a crime to Islamize the people? I am a Muslim living here according to our tradition. Why should I live under your tradition? We understand you very well. You are poor people. Morally poor. Don’t criticize us because of what we are.”
Al-Zahar can sleep easy. The citizens of the West have rarely heard anyone in any positions of power and influence criticize Islamic supremacists “because of what they are.”
In fact, the most remarkable thing about al- Zahar’s interview was not what he said but that Reuters decided to publish what he said. By letting its readers learn what al-Zahar thinks of them, Reuters inadvertently gave Westerners a glimpse at the simple truth its editors and their counterparts throughout the Western media routinely purge from coverage of current events.
Rather than discuss the nature and threat of Islamic supremacism, the Western media along with nearly all Western political leaders and academics deny and dissimulate. Rather than address the threat, they accept the Islamic line and blame Israel for everything bad that happens in the world.
THE ONE group of people that can almost be forgiven for this crime against reality is the non-Muslims who live under Islamic rule. On Sunday, we received a grim reminder of the plight of such minorities with the Islamic terror attack on Baghdad’s largest church, the Our Lady of Salvation Catholic church.
As some one hundred worshipers celebrated evening mass, Islamic terrorists stormed the church. According to an eyewitness account, they walked straight up to the priest administering the mass and executed him. The Muslim terrorists then took the Christian worshipers hostage.
As Iraqi military forces stormed the church under US military supervision, the Islamic terrorists threw grenades at the worshipers and detonated their bomb belts. By Monday, the death toll had reached 52.
It will be interesting to see how Catholic officials in Iraq and throughout the world respond to this attack. At the Vatican’s Synod on the status of Christians in the Middle East last month, Emmanuel III Delly, the head of the Chaldean Catholic Church in Iraq proclaimed, “The population of [Iraq] …is 24 million, all Muslims, with whom we live peacefully and freely…Christians are good with their fellow Muslims and in Iraq there is mutual respect among them.”
As the noted Islamic expert Robert Spencer wrote last week in Frontpage Magazine, Emmanuel has not always been so outspoken in his praise of Muslim Iraqis. In 2008, when US forces were still in charge in Iraq, Emmanuel made a statement that more accurately reflected the plight of his co-religionists.
Then he said, “Christians are killed, chased out of their homes before the very eyes of those who are supposed to be responsible for their safety…The situation in some parts of Iraq is disastrous and tragic. Life is a Calvary: there is no peace or security… Everyone is afraid of kidnapping.”
Christian clergy in Muslim countries are so terrified of Islamic aggression that they systematically hide the truth of their oppression and often distort their own theology to win the tolerance of supremacist Islamic authorities. Spencer noted that the head of that Vatican Synod, Archbishop Cyril Salim Bustros, who presently heads the Eastern Catholic church in the US, and in the past served as archbishop of Baalbek in his native Lebanon follows a similar pattern of dissimulation.
In Bustros’s case, his prevaricating goes beyond false depictions of the plight of Christians. In his bid to win the favor of his Islamic supremacist overlords in Hizbullah, Bustros has regularly engaged in theological revisionism.
At last month’s synod, Bustros repudiated the teachings of the Catholic Church’s Second Vatican Council and embraced the discredited supersessionist theology that Vatican II denounced. Bustros claimed that God’s covenant with the Jewish people and his promise to give us the Land of Israel “were nullified by Christ.”
In his view, “There is no longer a chosen people.”
Bustros did not simply assert a theological view at odds with the doctrine of the Catholic Church. He used his replacement theology to politically delegitimize Israel. Bustros said, “The theme of the Promised Land cannot be used as a basis to justify the return of the Jews to Israel and the expatriation of the Palestinians.” Bustros is set to return to Lebanon soon to serve as the archbishop of Beirut. The fact that he used his position as the head of the Vatican’s synod on the plight of Christians in the Middle East to earn him the protection of Hizbullah when he returns is made clear when his statements at the conference are compared to a speech he made in 2006, when he was still comfortably ensconced in the US.
As Spencer notes, in a speech Bustros made at St. Thomas University in Florida in 2006, Bustros minced no words about the plight of Christians in the Middle East. Addressing the Islamic precepts on relations with non-Muslims, Bustros said, “The doctrines of Islam dictate war against unbelievers….[T]he concept of nonviolence is absent from Muslim doctrine and practice….Peace in Islam is based on the surrender of all people to Islam and to God’s power based on Islamic law. They have to defend this peace of God even by force.”
FEAR OF Islamic massacres of Christians – like the one in Baghdad on Sunday – goes a long way towards explaining anti-Jewish and pro-Islamic pronouncements by Christian clergy in the Islamic world. But what can explain the West’s embrace of lies about Islam?
Why would people who do not live under the jackboot of the likes of Hizbullah, Hamas or their sister groups in places like Iraq obsequiously parrot untruths about Islamic history and theology and deny the very existence of Islamic supremacism?
The most notable case of such behavior in recent weeks came with the UN Educational, Science and Cultural Organization’s Executive Board’s declarations about Israel and Jewish history. At its October 21 meeting, the governing board of the UN agency charged with naming and preserving world heritage sites engaged in a shocking episode of historic revisionism in the service of Islamic supremacism.
UNESCO’s board issued five declarations regarding Israel. In addition to its routine condemnations of the security fence, Israeli sovereignty in Jerusalem and Israel’s refusal to give Hamas control over its border with Israel, UNESCO’s board asserted that the Tomb of the Patriarchs in Hebron, where Abraham, Issac, Jacob, Sarah, Rebecca and Leah are all buried, is a mosque. Rachel’s Tomb, where Rachel is buried, is also a mosque, according to UNESCO’s governing body.
It is not surprising that UNESCO’s Muslim members pushed for these declarations. Islam is a supersessionist religion. It claims that all the Jewish patriarchs and matriarchs as well as all the Jewish prophets, kings and judges were Muslim. It similarly claims that Jesus, Mary and the apostles were Muslims. It is standard Islamic practice to transform Jewish and Christian holy sites in lands conquered by Islam into mosques.
It is this Islamic practice that led Yasser Arafat to shock and disgust Yitzhak Rabin in July 1995 when he proclaimed that, “Rachel was my grandmother.”
Arafat’s statement was the first time that a Muslim leader in modern times claimed Rachel’s grave is a mosque. Arafat made his preposterous claim in the course of negotiations about the disposition of Rachel’s Tomb in Bethlehem. Due to its significance to Jews, Israel demanded full security control over the tomb. Arafat based his counter-claim on standard Islamic historical revisionism.
While Rabin rejected Arafat’s baseless assertion, last month UNESCO’s executive committee, whose membership includes France, Belgium, Spain, Japan, Poland, Germany, Greece, Haiti, Italy, the US and India accepted Arafat’s wholly false rendition of the historical record. In so doing, they collaborated with an Islamic attempt to eradicate Jewish history.
Why would they do this? They are not bishops who have to worry that their communities will be annihilated if they step out of line.
No doubt, fear of Islamic terrorism fuels some of their behavior. But fear can’t be the full explanation. Most Westerners have no contact with Muslims. And Islamic terrorist attacks in the West are not a daily occurrence.
The West’s newfound obsession with Islamophobia probably also has something to do with it. Western elites are terrified of being accused of racism. This is particularly true when – as is the case with Islamophobia – the charge is leveled on behalf of people who were oppressed in the past by Westerners.
But while fear of the charge of Islamophobia does play a role in Western kowtowing to Islamic supremacists, the West’s aversion to the perception that it is oppressing those it once oppressed fails to provide an adequate explanation for its willingness to collaborate with Islamic supremacist attempts to blot out Jewish history. The West’s history of oppressing Jews is far bloodier and longer than its record of oppressing Muslims.
In the end, there is only one credible explanation for the West’s willingness to lie about the nature and goals of Islamic supremacism. There is only one credible explanation for the West’s willingness to collaborate with Islamic supremacists as they purge the historical record of the Jewish roots of Western civilization. There is only one explanation for the West’s willingness to accept the Islamic supremacist assertion that Israel is to blame for Islamic aggression against Jews and Christians alike.
But if I mention anti-Semitism, I will be attacked as a paranoid Jew.
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Obama's failures are inescapable and are his. No one else's despite his protestation He lacks the character demanded of a leader of a great nation.
Obama has gone from labeling those who don't agree as enemies, he has placed his opponents in the back of the bus, he has suggested they oppose everything he has tried to accomplish while sucking on Slurpee's but has yet to look in the mirror.
Granted, whatever the results of today's election the public have not fallen in love with Republicans, simply out of love with Obama, his Far Left crowd and their extreme legislation.(See 2, 2a, 2b and 2c below)
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A wounded president can become a feast on which the jackals within his own part could begin to feast. (See 3 below.)
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California may go with Brown and if it does this will signify it no longer much cares about its future. (See 4 below.)
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The Republican Party is not without its own schism. (See 5 below.)
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For Israelis the question is not whether there will be another war but when and what the casualty rate will be. A retiring IDF Intelligence says it will be high. (See 6below.)
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Bombs and high casualties in Baghdad and Lebanon about to fall. This is, in large part, the consequence of Obama's passive and confused Middle Eastern diplomacy. (See 7 below.)
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The West goes forward in denial and with its head in the sand. That posture may bring comfort now but it will bring disaster in the future according to Caroline Glick. (See 8 below.)
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Tom Sowell asks Guess Who? I respond Guess who is coming to dinner - eventually inflation! May take a while but it will come.(See 9 below.)
Dick
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1)Keynesian Confusion
By Michael E. Lewitt
“At the present moment people are unusually expectant of a more fundamental diagnosis; more particularly eager to receive it; eager to try it out, if it should be even plausible. But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slave of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”
John Maynard Keynes (1936)
Ironically, John Maynard Keynes himself remains by far the most influential of the defunct economists from whom the madmen in authority are distilling their frenzy today. Economists occupy a world in which their theoretical musings have enormous real world consequences. Unlike their colleagues in the hard sciences, however, economists do not have the luxury of testing out their theories before inflicting them on the rest of us. The Keynesian experiment being run by governments and central banks over the past two years is a case in point.
Keynesian policies are inflicting untold damage on the U.S. and global economies today. Things did not have to be this way; Keynes did not have to be misread. His antidote for slow economic growth and high unemployment – massive doses of government spending – was appropriate in midst of the 2007-8 financial crisis, just as it was sensible during the 1930s global depression that Keynes was experiencing while he was writing The General Theory. In end of world scenarios, government spending is the last resort. But once the economy stabilizes – even at a diminished rate of growth - Keynesian medicine will cripple the patient if it is not withdrawn and replaced with a healthy fiscal regimen. Unfortunately, policymakers – in particular the current and past Chairmen of the Federal Reserve – have shown themselves to be either unwilling or incapable of making the transition from crisis management to post-crisis management of monetary policy. As a result, today’s Federal Reserve is missing the second great lesson of Keynes’ work, the “paradox of thrift.”
The most extended discussion of the paradox of thrift occurs in Chapter 23 of The General Theory, which is actually part of a series of chapters contained in Book IV entitled “Short Notes Suggested by the General Theory.” The discussion of the paradox of thrift in this chapter is primarily devoted to a historical survey of the idea and is relatively disjointed. Keynes’ clearest description of the concept comes much earlier in The General Theory when he writes the following:
“The reconciliation of the identity between saving and investment with the apparent ‘free-will’ of the individual to save what he chooses irrespective of what he or others may be investing, essentially depends on saving being, like spending, a two-sided affair. For although the amount of his own saving is unlikely to have any significant influence on his own income, the reactions of the amount of his consumption on the incomes of others makes it impossible for all individuals simultaneously to save any given sums. Every such attempt to save more by reducing consumption will so affect incomes that the attempt necessarily defeats itself. It is, of course, just as impossible for the community as a whole to save less than the amount of current investment, since the attempt to do so will necessarily raise incomes to a level at which the sums which individuals choose to save add up to a figure exactly equal to the amount of investment.”
In order for the fallacy of thrift to slow economic growth, the capital that consumers and businesses are saving would normally have to be available to recirculate in the economy through loans or investments. This recirculation is precisely what is not happening today, or at least not nearly at the rate necessary to lift growth to a level that would create significant job growth. And this is the Keynesian lesson that fiscal and monetary policymakers appear to have forgotten as they have forged their post-crisis strategy – rather than indiscriminately easing monetary conditions, it is necessary to create an environment in which savings-conscious consumers and corporations are willing to allow their funds to recirculate.
The reason that the current recovery is below par is that the economy is experiencing a massive paradox of thrift. A combination of factors has led individual economic actors – both consumers and corporations – to believe that it is in their best individual interest to save rather to spend, to repay debt rather than borrow. The result has been an increase in the personal savings rate from slightly negative to approximately 6-7 percent, and a significant improvement in corporate balance sheets (corporations are now sitting on approximately $1 trillion of cash). This has improved the financial condition of these individual economic actors, but deprived the broader economy of consumption and investment spending.
Unwise economic policy choices have led to the current situation. Consumers are saving instead of spending because the value of their homes has declined significantly, which is a result of the pro-cyclical monetary policy and lack of regulation that contributed to the housing debacle. Businesses are limiting their hiring and expansion plans due to the increasing regulatory burden being placed on them by the government, by fears of impending tax increases, and by the general anti-business tone coming out of Washington D.C. Investors are fleeing the stock market because regulators don’t have the guts to stand up to Wall Street and address dangerous practices such as the repeal of the uptick rule, naked CDS on systemically important institutions (which allows speculators to mount bear raids on companies such as BP plc), and flash and algorithmic trading. The combination of all of these policy failures has led to a massive crisis of confidence in the American model of capitalism, which has become as badly corrupted as the Japanese model that is responsible for Japan’s decades of deflation and economic paralysis. And our current politics offers little prospect for change.
This is the landscape investors are facing as we enter one of the most important weeks in American politics and markets in a long time. HCM is devoting so much time to a discussion of policy and politics because these are the forces that are driving financial markets today. The performance of individual companies is far less important than macroeconomic factors in determining investment performance. The United States is on the verge of two important events that will affect not only its own immediate future but the future of the global economy: the November 2 mid-term elections, and the November 3 meeting of the Federal Reserve’s Open Market Committee. The mid-term elections are expected to produce a significant shift in power in the U.S. Congress, with Republicans expected to regain control of the House of Representatives, move into an unassailable blocking position in the Senate, and make major gains at the state level as well. The financial markets have been treating these two early November dates as early Christmas presents, but the post-holiday hangover may be brutal. Financial markets should be careful what they wish for on November 2 and 3. Despite likely short-term market gains, they may ultimately be staring at coal in their stockings.
The Mid-Term Elections
The mid-term elections promise a big victory for the Republicans, a party whose brand was so severely devalued a mere two years ago that the media was already writing about President Obama’s second term agenda. But a Republican resurrection is hardly likely to improve economic or social conditions; the Republicans’ rigid anti-tax, anti-regulatory agenda has inflicted great damage on this country. The repudiation of Congress that will occur on November 3 should be considered bi-partisan – both parties have been abject failures. The political process has become deeply corrupted and dysfunctional. Returning the party to power that presided over 8years of budget profligacy and regulatory malpractice between 2000 and 2008 is hardly a great accomplishment; it merely promises to temper the worst anti-business and anti-growth policies of the Obama administration and its Congressional minions. Many believe that political gridlock will ensue, although we would not be surprised to see progress made on several policy fronts such as a compromise on taxes and perhaps some marginal budget cuts (not entitlement reform unfortunately). Those promoting a Republican victory argue that at least things won’t get worse for the economy if the Obama agenda is stopped in its tracks, but the economy will get worse if America’s ill-advised fiscal and tax policies remain in place.
After the election, HCM expects a dangerous outbreak of populism that will most likely take the form of protectionist economic measures primarily aimed at China. If this occurs, it will not be good for the financial markets. There are already rising pressures in Congress to take action against China, and we will have to see if these sentiments will fade after the election. Our expectation is that they will not. The demagogic danger is a real one and it is growing. With more than one in eight Americans on food stamps, new revelations about mortgage foreclosure abuses, and the appearance on the scene of politicians of the ilk of New York gubernatorial candidate Carl Paladino, Delaware Senatorial candidate Christine O’Donnell, and Ohio Congressional candidate Rich Lott, who used to spend his spare time engaging in Nazi reenactments (with his son!) and was actually endorsed by future House Speaker John Boehner, it is a small leap to protectionist legislation aimed at China and other countries that can be scapegoated for America’s own failures. The way to combat China’s currency policy is not through punitive measures but through policies that improve America’s competitive economic position, a concept that is unlikely to gain currency in today’s devalued marketplace of ideas. Instead, bad ideas are likely to gain ascendancy and provide political cover for American politicians trying to avoid making the tough choices needed to right the American economy. We may not need our politicians to be nuclear scientists, but this country isn’t going to served by electing outright idiots either.
QE2
One day after the mid-term elections, the Open Market Committee is expected to announce the details of its plan to engage in a second round of quantitative easing (QE2) pursuant to which the central bank will intervene directly in the financial markets to purchase as much as US$1 trillion of Treasury securities. The stated purpose of QE2 is to prevent inflation from dropping below the Federal Reserve’s target of 2 percent, which is somehow supposed to stimulate economic growth. This ignores the fact that record low interest rates over the past two years have failed to do precisely that. Nonetheless, all of the Fed’s jawboning about its plans has had a significant impact on the financial markets. The Dow Jones Industrial Average is up about 12% since Fed Chairman Ben Bernanke began hinting that further quantitative easing was coming two months ago. Inflation expectations have shifted sharply upward, with a recent 5-year TIPs auction resulting in a negative real yield of -0.55 percent (see Graph 1 below). On the other hand, the yield on 10-year and 30-year Treasuries has increased by about 30 and 40 basis points, respectively, since the Fed announced its intentions. Markets are heeding the history lesson that monetary policy plays a key role in shaping post-crisis economies; the problem thus far is that the markets aren’t doing what the Fed wants them to do. If the Fed does not play small ball with QE2, however, we would expect rates to drop back down in the near term. We doubt, however, that reducing already low rates is going to stimulate much of anything other than more frustration on the part of savers.
HCM has a hard time making a case that inflation is either a serious or imminent threat despite the signals coming from the market. Hedge fund star John Paulson recently told investors that he believes that inflation will rise to the double-digits by 2012, a forecast we find excessive in degree and timing although not ultimately in direction (calling for higher inflation in the future is an easy call; the tough call is deciding when inflation will hit). There is still too much excess capacity in too many areas of the economy – finance, real estate, housing – to create significant near-term inflationary pressures. The type of inflation Mr. Paulson is predicting really speaks to a different type of scenario that would involve a collapse of the U.S. dollar and with it the U.S. economy, which would be consistent with reports that Mr. Paulson holds 80 percent of his considerable personal assets in gold. HCM is a strong believer in gold and even a stronger believer in a dollar collapse and continuing U.S. economic weakness barring a 180 degree change in policy, but we don’t see it happening as quickly as Mr. Paulson.
Opinion among the Fed governors concerning the wisdom and prospects for quantitative easing is hardly uniform. For example, during an October 19 speech before the New York Association for Business Economics, Richard W. Fisher, the president of the Federal Reserve Bank of Dallas admitted that “[i]n my darkest moments, I have begun to wonder if the monetary accommodation we have already engineered might even be working in the wrong places.” St. Louis Federal Reserve Bank President James Hoenig has been a consistent dissenter from recent Fed decisions and in HCM’s opinion is the lone voice of reason in a sea of Keynesian insanity. Despite these doubts, the central bank is intent on mounting another feckless attack on the powerful deleveraging trends at work in the post-crisis world.
In a twist that must have amused the Fed’s harshest critics, it was reported that the Fed surveyed government bond dealers and investors about their expectations of the initial size of any new program of debt purchases and the time period over which it would be completed. It also asked firms how often they expected the program to be reevaluated by the Fed and to estimate its ultimate size. Coming less than a week before the Open Market Committee, this request is consistent with the tradition of the Fed cow-towing to the financial markets. Former Chairman Alan Greenspan used to rely on the wisdom of the stock market, and declared to the world that it was a “conundrum” when interest rates did not respond to Fed policy moves in accordance with his ideology. Ben Bernanke’s Fed doesn’t even wait for the markets to opine – it asks the markets in advance about their expectations, presumably so the central bank will not disappoint them and see them drop (God forbid!). That’s one way to avoid conundrums, but it is no way to manage monetary policy. The markets are counting on a $1 trillion program of quantitative easing over a reasonably short period of time; anything less could cause a sell-off in equities. The markets, as usual, are only focusing on the short-term and ignoring the long-term risks created by ill-advised monetary policies. QE2 may sustain the markets for a brief period of time, but sooner rather than later the markets are going to have to pay the piper for the mountains of debt and extended period of artificially low interest rates that this policy has promulgated.
As I have written in El Mundo and spoken about at the recent Value Investing Congress in New York, QE2 is not only unlikely to work but is certain to contribute to future financial instability. The financial system is already sitting on US$1 trillion of excess reserves. The reason that these reserves are not being used to grow the economy through capital spending or to create jobs is not that interest rates are too high. Rather, reserves are going unutilized because of a profound lack of confidence on the part of economic actors bred by anti-growth policies promoted by the Obama administration (particularly healthcare reform) and the threat of significantly higher taxes (as much as US$6 trillion over the next 10 years if current plans aren’t altered. ) QE2 will do nothing to address these factors suppressing demand for funds. QE2 is a monetary policy tool being used to address a problem that has nothing to do with monetary policy. As such, it is misguided and is unlikely to work. What it will do, however, is further swell the Federal Reserve’s balance sheet and lower the value of the dollar, neither of which will contribute to the long-term strength of the American or global economy.
But QE2 doesn’t only fail to aim at the right target (employment); it doesn’t really aim at anything at all. Instead, QE2 basically sprays money indiscriminately into the economy instead of targeting money at productive activities. Current fiscal and tax policy promotes peculation at the expense of productive growth; examples include the lax rules governing derivatives trading and leveraged buyouts, activities that add nothing to the productive capacity of the economy. Without fiscal and tax policy changes designed to promote productive growth, the excess reserves created by QE2 will end up in the hands of speculators in the financial industry. This will increase systemic leverage and exacerbate existing overcapacity in unproductive areas such as finance and real estate. QE2 without fiscal and tax policy changes is simply a continuation of the boom-and-bust regime that has dominated global financial markets for the past three decades.
The Stock of the Fed is Dropping Quickly
The once Teflon reputation of the Federal Reserve has taken a beating since the financial crisis, but its management of the post-crisis environment has lifted criticism of the central bank to a new and perhaps unprecedented level. Previously, the most strident attacks came from the likes of Congressman Ron Paul and other libertarians; today they are coming from respected market figures such as Morgan Stanley economist Stephen Roach, PIMCO’s Bill Gross, and Jeremy Grantham.
Readers of this publication are well aware that HCM has long admired the work of Morgan Stanley’s Stephen Roach. Mr. Roach is one of the more intellectually honest and outspoken central bank critics on the scene today. On October 12, he addressed the World Knowledge Forum in Seoul, South Korea and delivered one of the harshest public critiques of the Federal Reserve that has been made in many years. The primary thesis of the speech was that policy makers have failed to learn from the policy errors made by Japan. He writes that “it is now debatable as to whether there was ever a clear understanding of the true Lessons of Japan and what they might imply for macro policy management in the modern world.” This is important because “[i]n the aftermath of the Crisis of 2009-09 - and the Great Recession it spawned – a legacy of post-crisis debt and deleveraging is now increasingly global in scope.” The correct lesson of what has happened to Japan over the past two decades is not that Japanese authorities moved with insufficient speed and aggression to deal with credit and asset bubbles. The correct lesson is that such bubbles must be identified earlier and avoided in the first place.
Mr. Roach rightly criticized the Federal Reserve for failing to spot obvious bubbles in advance (the Internet Bubble, Housing Bubble, and Corporate Bond Bubble are three obvious examples). But even worse, he said, is that the Federal Reserve Chairman was leading the intellectual charge supporting the case that these were not bubbles.
“One of the most disturbing features about each of these episodes is that the Chairman of the Federal Reserve – steeped in his ideological convictions that markets always know best – led the charge in denying that they were bubbles. He argued that the NASDAQ bubble was well supported by the productivity renaissance of the New Economy. Housing bubbles could only be local – never national. And the unprecedented tightening of credit spreads was an outgrowth of stunning advances in financial innovation.”
As someone who was fortunate enough to warn in this publication (and elsewhere) of each of these bubbles in advance, HCM welcomes Mr. Roach’s willingness to speak out about the failure of so-called leading economists to miss such obvious imbalances. These imbalances are what cause the types of market crashes that wipe out years of investment performance in the blink of an eye, or create the opportunity to profit from selling short. Moreover, these bubbles are not that difficult to identify if one is willing to look at the facts with an objective eye and not be corrupted by the madness of crowds. As I wrote in The Death of Capital:
“there are clear indicia of when asset prices are rising at unsustainable levels….Any significant departure from long-term valuation trends should capture the concern and attention of central bankers and trigger a response. But the types of deviations from the norm that occurred in the decade preceding the crisis of 2008 were far more than mere departures from long-term trends; they were obvious bubbles that required no special economic knowledge to identify. Stock prices traded at a multiple of 351x earnings on the NASDAQ Stock Exchange at their peak on March 10, 2000; the average price/earnings multiple at previous market peaks had been no higher than 20 before that. The risk premium (known as spread) on Credit Suisse’s High Yield Index reached 271 basis points over Treasuries on May 31, 2007, a record level that exceeded the historical average of 570 to 580 basis points by over 50 percent.”
Unfortunately, we are again heading into dangerous territory as a result of the Federal Reserve’s ill-advised zero interest rate policy, which is being exacerbated by an irrational fear of disinflation that is leading to its truly hare-brained scheme to engage in QE2. You can be sure we will do our best (as we have in the past) to sound the warning when markets get out of hand again. It is only a matter of when, not if, this occurs.
Mr. Roach also criticizes the Federal Reserve for failing to take into account the fact that financial bubbles have a devastating effect on the real economy. “A key lesson from Japan,” he said, “is for the authorities to be especially mindful of the lethal interplay between asset and credit bubbles and related distortions in the real economy. That lesson was totally lost on the Federal Reserve over the past decade.” In the post-crisis environment, monetary policy is being guided by deflation fears fed by Japan’s experience that lead to policies that are likely to exacerbate those very same deflationary risks. Mr. Roach warns: “[t]hat could very well be the single greatest flaw of a narrow and mechanistic inflation-targeting policy rule – a framework that does not allow for the unintended consequences of low nominal interest rates in spurring a steady string of asset and credit bubbles that could well compound deflationary risks over time.” In other words, the Fed’s narrow mandate (or its narrow interpretation of its mandate) is leading it to adopt policies that are exacerbating the very risks it is seeking to mitigate.
Mr. Roach’s solution is to add to the central bank’s mandate a requirement to maintain “financial stability.” Such a requirement would provide monetary authorities “with the political cover to attack asset and credit bubbles before they had dangerously destabilizing impacts on markets and wealth- and credit-dependent economies.” He believes such a change is necessary because we have had “a Federal Reserve that was swayed more by ideology than discipline, and debased by politically-motivated fiscal authorities who have become fixated on short-term stimulus while ignoring longer-term considerations. In this environment, we can no longer count on the promises of policy makers to act in accordance with the lessons they have learned from Japan or from the Great Crisis of 2008-09.” HCM would slightly modify Mr. Roach’s last statement. Policymakers have simply failed to learn the right lessons from the 2008-09 crisis. As we argued above, rather than learning from Keynes that a debt crisis should be solved with more debt, the authorities should have better understood how the paradox of thrift would operate in a post-crisis environment and developed policies to deal with that phenomenon.
Bill Gross was also harshly critical of Federal Reserve policy in his most recent Investment Outlook. In so many words, he accused the U.S. government of running a massive Ponzi scheme, although he softened this comment by noting that public debt always has Ponzilike characteristics. But the Ponzi scheme currently being run by the U.S. government is unprecedented in size and scope. Mr. Gross argued that:
“with growth in doubt, it seems that the Fed has taken Charles Ponzi one step further. Instead of simply paying for maturing debt with receipts from financial sector creditors – banks, insurance companies, surplus reserve nations and investment managers, to name the most significant – the Fed has joined the party itself. Rather than orchestrating the game from on high, it has jumped into the pond with the other swimmers. One and one-half trillion in checks were written in 2009, and trillions more lie ahead. The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullible, they will just write the checks themselves. I ask you: Has there ever been a Ponzi scheme so brazen?”
PIMCO is a huge holder of Treasury and other types of securities that are likely to benefit in the short run from QE2, but Mr. Gross correctly frets about the inevitable inflationary consequences of this policy. Inflation, of course, could decimate PIMCO’s long bond positions when it begins to rear its ugly head (although we assume he is hedged), so Mr. Gross is not only making a principled argument but also to some degree talking his book (which is his right).
Jeremy Grantham, in a Quarterly Letter entitled “Night of the Living Fed,” makes the compelling argument that debt doesn’t correlate with long-term growth rates. Debt, he writes, “is the paper world. It is, in an important sense, not the real world.” He continues:
“In the real world, growth depends on real factors: the quality and quantity of education, worth ethic, population profile, the quality and quantity of existing plant and equipment, business organization, the quality of public leadership (especially from the Fed in the U.S.), and the quality (not quantity) of existing regulations and the degree of enforcement. If you really want to worry about growth, you should be concerned about sliding education standards and an aging population. All of the real power of debt is negative: it can gum up the works in a liquidity/solvency crisis and freeze the economy for quite a while.”
Mr. Grantham has long been a critic of Alan Greenspan, Ben Bernanke and the Federal Reserve, but he could hardly contain himself in his last quarterly letter. He provides a great deal of fodder for the growing intellectual case against the pro-cyclical path that monetary policy has taken under its two most recent Chairmen.
Market Recommendations
We still expect the stock and bond markets to maintain their strength through the end of the year, particularly in the aftermath of a Republican victory in the mid-term elections and the announcement of QE2. Our short-term oriented readers should act accordingly. The corporate credit markets are paying absolutely no attention to company quality; anything with a decent coupon is trading up. The risk trade is clearly on.
Readers with a long-term focus should continue to accumulate gold and limit their investments in the credit area to bank loans (through mutual funds), BB/BBB corporate bonds, and stocks that have lower-than-market p/e ratios and pay dividends. We would avoid Treasuries at all costs. Lending to our government at 2.6 percent for 10 years is a great way to become a millionaire - if you’re already a billionaire. Sooner or later, everything being earned on the upside of this liquidity-induced rally will be given back in spades – the only question is when.
-------------------------------------------------------------------------------------2)Why Obama Is No Roosevelt
Roosevelt: 'Your government has unmistakable confidence in your ability to hear the worst without flinching and losing heart.' Obama: We don't 'always think clearly when we're scared.
By DOROTHY RABINOWITZ
Whatever the outcome of today's election, this much is clear: It will be a long time before Americans ever again decide that the leadership of the nation should go to a legislator of negligible experience—with a voting record, as state and U.S. senator, consisting largely of "present," and an election platform based on glowing promises of transcendence. A platform vowing, unforgettably, to restore us—a country lost to arrogance and crimes against humanity—to a place of respect in the world.
We would win back our allies who, so far as we knew, hadn't been lost anywhere. Though once Mr. Obama was elected and began dissing them with returned Churchill busts and airy claims of ignorance about the existence of any special relationship between the United States and Great Britain, the British, at least, have been feeling less like pals of old.
In the nearly 24 months since Mr. Obama's election, popular enthusiasm for him has gone the way of his famous speeches—lyrical, inspired and unburdened by the weight of concrete thought.
About the ingratitude of Democratic voters the president brooded in a September Rolling Stone interview. "If people now want to take their ball and go home," he declared, "that tells me folks weren't serious in the first place." His vice president, Joe Biden, had a few days earlier contributed his own distinctive effort to seduce Democrats back to the fold by telling them to "stop whining."
The results of this charm campaign remain to be seen. What's clear now is that we've heard quite enough about the "angry electorate"—a peculiarly reductive view of citizens who've managed to read all the signs and detect an administration they were not prepared to live with.
Nothing wakened their instincts more than the administration's insistence on its health-care bill—its whiff of totalitarian will, its secretiveness, its display of cold assurance that the new president's social agenda trumped everything.
But it was about far more than health-care reform, or joblessness, or the great ideological divide between the president and the rest of the country. It was about an accumulation of facts quietly taken in that told Americans that the man they had sent to the White House had neither the character or the capacity to lead the country.
Their president was the toast of Europe, masterful before the adoring crowds—but one who had remarkably soon proved unable to inspire, in citizens at home, any belief that he was a leader they could trust. Or one who trusted them or their instincts. His Democratic voters were unhappy? They, and their limited capacities, were to blame.
These are conspicuous breaks in the armor of civility and charm that candidate Obama once showed—and those breaks are multiplying.
At a Democratic fund-raiser a few weeks ago, the president noted, in explanation for the Democrats' lack of enthusiasm, that facts and science and argument aren't winning the day because "we're hard-wired not to always think clearly when we're scared." The suggestion was clear: The Democrats' growing resistance to his policies was a product of the public's lack of intellectual capacity and their fears.
Decades ago another president directly addressed Americans in a time of far greater peril. "Your government has unmistakable confidence in your ability to hear the worst without flinching and losing heart," Franklin Roosevelt told his national audience. The occasion was a fireside chat delivered Feb. 23, 1942. No radio address then or since has ever imparted a presidential message so remarkable in its detail, complexity and faith in its audience.
It was delivered just a few months after Pearl Harbor, a time when the Allied cause looked bleakest. It would be known to history as "The Map Speech." The president had asked Americans to have a map at hand, "to follow with me the references I shall make to the world- encircling battle lines of this war." He took them through those lines, the status of battles around the globe, the enemy's objectives, centers of raw material and far more. By the time they had finished poring over their maps with him they had had a considerable education.
It is impossible to imagine what might have been the effect if the current president, who is regularly compared to FDR—always a source of amazement—had tried anything like a detailed address explaining, say, the new health-care bill. Though this would have required knowledge of what was actually in the bill (a likely problem) and a readiness to share that news (an even greater one).
Despite the ongoing work of legions grinding out endless new and improved proofs that FDR was a despoiler of democracy and our economic system, it is worth remembering the reason virtually all serious historians rank him among the top three of our greatest presidents.
Franklin Roosevelt led the nation through 12 years begun in incomparable national misery virtually to the end of the war. When he died, an anguished country mourned as it had not done since the death of Lincoln. Americans trusted him. The story is told of a man found weeping when Roosevelt's funeral train went past, who was asked if he had known the president. "I didn't know him," he replied. "But he knew me."
The times are now vastly different—no one expects a candidate with the powers of an FDR these days. But the requirements of leadership don't change. Despite charm and intellect, Americans have never been able to see in Mr. Obama a president who spoke to them and for them. He has been their lecturer-in-chief, a planner of programs for his vision of a new and progressive society.
Plenty of suggestions, none of them feasible, are in the air now about how he can reposition himself for 2012, and move to the center. Mr. Obama is who he is: a man of deep-dyed ideological inclinations, with a persona to match. And that isn't going away.
The Democrats may not take a complete battering in the current contest, but there is no doubt of the problems ahead. This election has everything to do with the man in the White House about whom Americans have lost their illusions. Illusions matter. Their loss is irrecoverable.
Ms. Rabinowitz is a member of the Journal's editorial board.
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2a)Democrats Can't Blame the Economy
Imagine if President Obama had moved right after Scott Brown's election. The party would be in better shape today.
By FRED BARNES
A funny thing happened on the way to the midterm election. The economy was in bad shape, with high unemployment, slow growth and a lingering housing crisis. Yet it wasn't the paramount issue in the campaign.
The run-up to today's election has been policy-driven: Democrats are likely to lose their strong majorities because of the policies of President Obama and his congressional allies on spending, the deficit, the national debt and health care.
Those policies aroused an anti-Democratic alliance of Republicans, independents and tea partiers that emerged in the spring of 2009, spurred by alarm over spending, bailouts and escalating debt. By fall 2009, opposition to Mr. Obama's health-care plan solidified what appears to be a majority coalition.
Yes, the economy is always a factor in elections. But a wretched economy doesn't automatically doom Washington's ruling party to disaster in a midterm election. Since World War II, the average midterm loss by the president's party is 24 House and four Senate seats. In 1982, despite a deep recession and joblessness above 10%, Republicans lost only 26 House seats and none in the Senate. The difference between 1982 and today is that President Reagan's policies—cutting spending and taxes, firing striking air-traffic controllers—were popular.
And, by the way, a prosperous economy doesn't guarantee midterm success. In 1994, Republicans capitalized on President Clinton's liberal policies to win a rout despite a generally strong economy. In 1974, the Watergate scandal led to a Democratic landslide. In 1946, when Republicans ran on the slogan "Had Enough?"—referring to the regulations and taxes of wartime and the New Deal—they won 54 House and 11 Senate seats.
Yes, a flourishing economy would help Democrats today, and voters invariably list the economy and jobs as their top concern in the election. But that's not all they've told pollsters.
In a CBS/New York Times survey, only 8% blame Mr. Obama for the economy and more than two-thirds see the slump as temporary. "Most voters believe the best thing the government could do to help the economy is to cut government spending," says pollster Scott Rasmussen. "At the same time, most voters believe the administration and congressional Democrats want to go in the opposite direction."
The initial glimmering of a new center-right coalition appeared less than a month after Mr. Obama took office in January 2009. The first tea parties were held in response to the budget—with its sharp increase in spending (8.4%) and 8,000 earmarks—as well as the stimulus and bailouts.
By April, independents had begun their migration from left to right. This wasn't prompted by the economy. At the time, most Americans blamed George W. Bush for the economic mess. The cause was spending, and the soaring deficit and long-term debt it was creating.
Then came the summer, dominated by growing disapproval of what Republicans dubbed ObamaCare. That trend has never reversed. Democrats were confident that their health-care reform would be a political asset. But it helped Republicans win governor's races in Virginia and New Jersey last November, and it was pivotal in January to electing Scott Brown to the Massachusetts Senate seat held for 48 years by the late Edward Kennedy.
Health care is a special thorn in the side of independents. A week ago, a George Washington University/Politico poll found that 62% of independents look unfavorably on ObamaCare. Only 6% regard it favorably. Independents, who were an indispensable part of the Democratic juggernauts in 2006 and 2008, favor Republicans by 14 percentage points.
There's a simple way to test whether Democratic policies, rather than the economy, are the dominant factor in the midterm election: Consider the alternative. After Mr. Brown was elected on Jan. 19, Mr. Obama could have abandoned his full-throttle blitz to pass health-care reform and other legislation, instead seeking compromise with Republicans. The bipartisan route, adored by independents, was open to him.
Mr. Obama could have yielded on health care and settled for a scaled-back bill that provided coverage for the uninsured and those with pre-existing conditions. He also could have proposed meaningful spending cuts or a second stimulus that included broad-based tax incentives for private investment. And he could have chosen to extend all the Bush tax cuts for another year or two.
On each of those issues, Mr. Obama would have attracted significant Republican backing—and he and his party wouldn't be in such dire straits. Democrats would still lose House and Senate seats, but not nearly as many.
And yet Democrats will explain their losses today by faulting the economy, not themselves. Their fortunes will improve once the recovery picks up, they say. And if that line of thinking isn't persuasive, they assert that there's a general anti-incumbent mood among voters this year.
Many incumbents are in trouble, but voters have a specific target: the party whose policies they so heartily dislike.
Mr. Barnes is executive editor of the Weekly Standard and a Fox News commentator.
2b)Not the Ones We've Been Waiting For
Pundits, particularly those who lean right, are schooled always to praise the wisdom of the electorate. Please.
By BRET STEPHENS
And so, today, the American people will seek an honest reckoning with Barack Obama. Good luck with that. Whatever his other virtues—not the least of which is campaigning on tautological slogans while passing himself off as Marcel Proust—this president will never be distinguished by his humility: Don't expect from him a decent admission, as George W. Bush had the decency to admit after the 2006 midterm, that his party had sustained a "thumping." Instead he will immediately decamp to places where he is still admired. That means exiting the country.
So expect no reckoning there. Nor should Americans expect one with the Democrats. If the party does a little less disastrously than anticipated, it will rally like a stock whose quarterly losses are slightly less bad than had been projected. And if it's Götterdämmerung, then we already know the narrative: secret sources of funding, plus anger, plus ignorance, plus a failure of communication. On which last score, they have a point: When your "accomplishments" consist of legislation nobody is allowed to read prior to the vote, and nobody can comprehend after it, then no wonder the swine have failed to take appreciative note of the pearls.
No, the only reckoning Americans can hope to get—and the one they most need to have—is the one they're least likely to seek. That is a reckoning with themselves.
Pundits, particularly those who lean right, are schooled always to praise the wisdom of the electorate. Please. Only three years ago, Americans became acquainted with a junior U.S. senator with an interesting personal history, notable rhetorical gifts, programmatically liberal ideas and zero legislative accomplishments. Whereupon he was hailed as a saint and elected president.
In Argentina or Venezuela such behavior may be unexceptional. But we're America, as they say: We're supposed to be into celebrity culture, not cult-of-personality politics. What happened?
Maybe Americans were sold on Mr. Obama as the man who could deliver them from the financial crisis. I don't buy it. Six months before Lehman Brothers collapsed, he delivered his instantly celebrated and soon forgotten race speech in Philadelphia. Historian Garry Wills compared it to Abraham Lincoln's Cooper Union speech. Others called it "stirring," "brave" and "flat-out brilliant." This for an address in which the candidate defended his anti-American, anti-Semitic pastor by outing his dying white grandmother as a woman prone to racist slurs.
Alternatively, perhaps Americans believed that Mr. Obama could make the United States beloved in the eyes of the world again. And maybe there's something to this: He did wow them in Berlin. But what kind of electorate surrenders itself to the good opinion of a Kreuzberg Kaffeeklatsch or a Damascene hookah bar? As president, Mr. Obama also offered an outstretched hand to Iran and gave a big speech in Cairo to the Muslim world at large. Yet Iran continues to enrich, and the parcel bombs keep getting posted in the mail. How did anyone ever expect it would be otherwise?
The answer is that as in relationships, so too in politics: Infatuation clouds judgment. You bank on the empty promises even as you refuse to take the object of your desire at his most precise word. Americans disillusioned today with the president for his health-care legislation, his refusal to extend his predecessor's tax cuts, his support for cap and trade, his ties to labor unions and groups such as Acorn, and his belief in the regulatory state, can't honestly say that they were promised otherwise during the campaign. They got almost exactly what they voted for—or at least they got an honest political stab at it. If Mr. Obama now thinks that they have no right to complain, he has a point.
Deputy editor Daniel Henninger, editorial board member Matthew Kaminski, and WSJ.com columnist John Fund analyze tomorrow's referendum on Obama-Pelosi governance.
.True, the president hasn't delivered on the promises of unity—of postracial, postpartisan, perhaps even post-American politics. These days, it's friends versus enemies, the politics of right-thinking people versus the politics of fearmongers.
That's not surprising. What is surprising are the masses of people who gave themselves over to the fantasy of unity in the first place. In a democracy, disunity is not just the reality, it's the premise. To wish for unity is to wish for an entirely different kind of politics, or perhaps something beyond politics itself, like religious transcendence.
Americans spent most of the 20th century and the first decade of the 21st fighting against that kind of wish, which goes by the name of totalitarianism and comes in fascist, communist or Islamist varieties. No, I'm not saying Mr. Obama is a closet totalitarian; on the contrary, he's nothing if not a partisan pol. But the people who donned those creepy T-shirts with Mr. Obama looking to the far distance like a latter-day Che Guevara were wholly in the mold of Eric Hoffer's true believers. In an earlier era they would have found their life's purpose as followers of Shabtai Tzvi, William Davies or Father Divine.
And so Americans go to the polls. Democracy being what it is, it holds not only our leaders to account, but our own political choices as well. Plainly Barack Obama was not the one we've been waiting for. But let's have the grace to admit we weren't the ones we'd been waiting for, either.
2c)This Is America, Stupid!
By Kyle-Anne Shiver
A nation holds its collective breath. America's pivotal election is today. We will either put the brakes on the Democrat-socialists' drive to transform us into a failing European-style social democracy or we continue to hurtle toward the cliff of no return.
Voters have waited through long, suffering months to make their voices heard at last.
Democrats have made an unprecedented mockery of representative government, ignoring the will of the people with arrogant disdain. Elitist hypocrites who campaigned on "love" for the poor party hearty on the hard-earned money of America's producers, jet to debauchery-ridden Europe to scorn our good name, and come back home only to spend our children into serfdom. The words "public servant" have almost become synonymous with "tax cheat." American companies are threatened with open thuggery by a power-mad administration of academics who wouldn't know how to actually produce a single cent if their very lives depended upon it.
The Democrats and their president line up in bowing and scraping infamy before the Islamists, throwing America under the bus of cowardly appeasement. A Democrat president still sends America's finest young people to war and ties their hands with hideous rules of engagement and withdrawal timetables, which inevitably make our bravest into cannon fodder. Democrat foreign policy has emboldened every evil actor on the world stage and made whole regions into powder kegs set to blow at the slightest provocation. Peace with genuine justice is an alien concept to the cowards in charge. These so-called peacemakers have been revealed as nothing but doormat-enablers.
And all around the land, media elites fumble the ball. These dimwitted media scalawags have twiddled their thumbs while 1776 redux has mounted a vociferous challenge to the ruling class of both parties (a class that the media themselves have for decades joined and empowered). The economy stands at the precipice of full-blown depression, the inevitable outcome of discredited Keynesian theory and a president who has bitten the small-business hand that feeds us enough to leave it bleeding and traumatized. Since our media elites are nothing more than materialist fat-cats themselves, they can see nothing in the Tea Parties but economic angst.
What a bunch of ninnies these people are. All of them. From the ivory-towered elitists in charge of the government to those in charge of the airwaves.
They forgot something.
This is America, stupid! And it's not just the economy.
It's the disrespect for the wishes of the electorate, who pay for everything.
What's the fundamental difference between American elitists today and those very well-educated, wealthy colonial elites who wrote the Declaration of Independence and the United States Constitution?
It comes down to one word: R-E-S-P-E-C-T.
Respect for God, our Creator. That's the fountain of American wisdom from which all else flows.
From respect for God, our Creator, comes respect for each individual that God has made. The foundational principle of American government is that human souls come in only one color, in one type, and at one value. In God's sight, we are all created equal. And since our very founding, good Americans of all stripes have worked to further this principle.
As if to highlight this fundamental loss of respect for our Creator as the source of citizens' unalienable rights, our big-government elitist in chief feels perfectly free to simply remove God from the American equal-rights paradigm, as he did when speaking to the Hispanic Caucus last month.
From respect for each individual flows the idea that liberty is a fundamental -- unalienable by government -- human right. Just as God has given free will to each person, in perfectly equitable manner, respecting man's ability to choose his own path, so a government made in the image of God's plan must permit the freedom to succeed or to fail, to prosper or to flounder, and to account for his own life when he faces God at the end of his earthly journey.
If the majority of American citizens want to change our Constitution, if they wish to banish the word "Creator" from our public display of the Declaration of Independence, they have legal ways in which to do this. The states can call a Constitutional Convention to take such steps democratically. Or our elected representatives can propose legal amendments to our Constitution which transform America into a socialist democracy. This is respect for the people's will.
But Democrats have decided to transform America from the top-down position of tyrants, boldly challenging the people to resist. Our founders were brilliant men who put into our Constitution the legal means to transform this country by purely democratic means. But Barack Obama is not legally empowered to make America into what he thinks it ought to be.
What we have in America today isn't just a feckless bunch of big spenders running our economy off a cliff. We have a cadre of power-mad folks who have no respect for the rule of law or the Constitution they are sworn to protect.
Respect for the will of the people is the very soul of democracy. Without it, liberty is nothing but a sham.
I've spent a great amount of time over the past year among Tea Party activists, interviewing many. I've talked to Americans from different regions of the country, old and young, rich and poor, black and white, union and non-union. To be sure, there is among Tea Partiers a mountain of economic angst and disgust for both parties' profligate ways.
But the real glue that holds all these disparate folks together -- and the reason they will not just go away after 2010 -- is bedrock respect for the U.S. Constitution.
It has not been lost on this monumental grassroots movement that lawmakers of both political parties have either ignored or defied constitutional limits on their powers for going on a century now. And for those now taking to the streets in protest, citizen revolution against growing tyranny is the primary driver of disgust.
When a United States congressman who has sworn to uphold, protect, and defend our Constitution is so smug that he can face a constituent and declare that "the federal government can do most anything it wants in this country," he has already proclaimed himself a traitor waiting for his due. When a Speaker of the people's House of Representatives mocks a reporter's question about the constitutionality of the health care bill she just railroaded through, asking "Are you serious?," she has already broken her own oath. When a president does not ask whether a power can be found within the U.S. Constitution, but rather steams ahead with nothing more than a might-makes-right, Yes-We-Can attitude, he has already trashed his own office in the sight of the people.
So as ballots are counted this week and every pundit goes into overdrive trying to pin the whole Democrat rousting on the economy, let me be perfectly clear in advance.
This is America, honey! And it's not just the economy.
It's the Constitution, stupid.
Lawmakers, judges, bureaucrats, and even presidents ignore it to their grave peril.
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3)Obama's Next Worry: A Restive Left Flank
Every president who lost re-election in the last half-century has first been weakened by a primary fight.
By JOHN FUND
Voter discontent this year isn't confined to the tea party. A new AP poll reports that 51% of Americans now think President Obama doesn't deserve re-election. More surprising, 47% of Democrats believe he should face a challenge for the party's nomination in 2012. No doubt many Democrats who hold this view are disappointed supporters of Hillary Clinton.
Prognosticators ponder whether Obama will face a primary challenge by a fellow Democrat in 2012, perhaps even by his 2008 primary rival, Hillary Clinton.
In reality, Mr. Obama doesn't have to worry too much about renomination. There are no signs that Mrs. Clinton would resign as secretary of state and challenge her boss. African-Americans, the president's strongest group of supporters, make up 30% of any Democratic primary electorate and provide him with a firewall against any opponent. And presidents from Ronald Reagan to Bill Clinton have rebounded after midterm defeats as the economy improved.
Still, a primary challenge, even if waged by a less-significant contestant, is a serious matter. Every president who lost re-election in the last half century has first been weakened by a primary fight—Gerald Ford, Jimmy Carter and George H.W. Bush being cases in point. Many of the three million voters Pat Buchanan attracted in 1992 against Mr. Bush, for example, wound up voting for Ross Perot in November. This allowed Bill Clinton to win with just 43% of the popular vote.
Today, party discontent with the president is real. Last week, leading Democrats were furious when Mr. Obama declined to endorse Rhode Island's Democratic gubernatorial candidate, Frank Caprio. This was payback for Lincoln Chafee's support of Mr. Obama's candidacy in 2008—Mr. Chafee is running for governor as an independent. "The notion that the leader of the party is being disloyal to his party is I think unprecedented," Democratic strategist Paul Begala told CNN.
Key donors have told the White House that the president should decide for certain whether he's running for re-election by the end of December. Should Mr. Obama's approval ratings slip further next year, there's talk that some donors may call on him not to run, or promote an independent candidacy by New York Mayor Michael Bloomberg.
It could go further. Pennsylvania Gov. Ed Rendell, a former chairman of the Democratic National Committee, told MSNBC in July that a primary challenge to Mr. Obama "is really possible," especially if he were to go back on his pledge to begin withdrawing U.S. troops from Afghanistan next year.
A disgruntled peace candidate such as former Vermont Gov. Howard Dean, Wisconsin Sen. Russ Feingold or Ohio Congressman Dennis Kucinich could find the prospect of rallying disgruntled leftists too tempting to resist. All three men forswear any interest in challenging Mr. Obama, yet it's noteworthy that Mr. Dean is stepping up his speaking schedule around the country after the election.
Mr. Dean blames Republicans for blindly opposing the president but says Democrats have some responsibility for voter anger. "There was a misunderstanding of the kind of change people wanted," he told the AP last month. "Democrats wanted policy change. Independents and Republicans wanted to change the way business was done in Washington, and that really hasn't happened."
In the aftermath of a disappointing 2010 midterm election, some liberals may follow the path of the tea party. Tom Streeter, the co-author of "Net Effect," a book on the lessons of Mr. Dean's Internet-driven 2004 presidential campaign, says tea party supporters "share with the Deaniacs a sense of being ignored by the powers that be, and an enthusiasm and energy in the feeling that they are striking back."
Progressives are still rankled by White House Press Secretary Robert Gibbs's attack in August on "the professional left" for not supporting Mr. Obama sufficiently. David Sirota, a prominent blogger, says that liberals feel "one hundred percent" taken for granted by the White House.
Most liberals I spoke to don't support a primary challenge. Jane Hamsher, founder of Firedoglake.com, a leading liberal blog, is less categorical. She blames Mr. Obama for "appropriating the progressive message, and then not governing as one." She has always backed "a diversity of voices in the primary process as a sign of a healthy democracy."
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4)The Brown Wall
By Randy Fardal
President Kennedy made one of his greatest speeches in Berlin. Some debate whether his German intonation was perfect -- "Ich bin ein Berliner" -- but the speech's venue certainly was perfect. Kennedy wanted a side-by-side comparison of limited government versus authoritarian government, and there was no better place to do that than in the artificially divided German city. The speech also employed powerful repetition: "Let them come to Berlin!"
Today, there are those who say that America has become more like the dysfunctional, oppressed East Berlin of 1963 than its efficient, free contemporary to the West. New York Times columnist Thomas Friedman complained recently that America no longer seems to be able to get anything done. He's not sure why, but he suspects it's because Americans eat too many hamburgers.
Let him come to California. There is no physical wall in California -- not even on the Mexican border -- but there is a virtual wall. It is a wall of time that separates the state into two eras: before Jerry Brown and after Jerry Brown. Perhaps the best place to straddle that stark, trans-temporal barrier is on Yerba Buena Island, in the San Francisco Bay. It is the midpoint of the five-mile-long San Francisco-Oakland Bay Bridge and the ideological equivalent of the Berlin Wall.
To the west is the magnificent double suspension bridge that was completed in 1936, just ten years after the California legislature created the Toll Bridge Authority to span the bay. When it was completed, it was the longest high-level steel bridge in the world and cost $77M, equivalent to $1.2B today.
To the east is the other half of the Bay Bridge, also built with part of that $77M. And next to the existing eastern span is a great illustration of what's gone wrong with America. No, it's not a McDonald's; it's an uncompleted structure that someday will replace the eastern part of the Bay Bridge that failed in a 1989 earthquake.
After the quake damage was repaired, California lawmakers and bureaucrats studied and debated the situation until they eventually recommended replacing the entire east span of the bridge in late 1996. At that time, the state government agency Caltrans estimated the cost to be less than a billion dollars. A few months later, the California legislature funded the project at $1.28B.
Then the professional control freaks intervened. Busybody eco-fascists demanded that the bridge carry public transit trains, even though that would have added billions to the cost, and BART already follows that same route under the bay below. Red tape burgeoned: At least twenty "key" federal, state, and local government agencies got involved, and countless more were consulted. Senators Feinstein and Boxer meddled, along with the Clinton White House.
After the new bridge design was deemed sufficiently sensitive to the needs of the gay, lesbian, feminist, African-American, Native American, illegal alien, homeless, stoner, and all other activist groups, the project was put out for bids. Cost estimates continued to balloon, from $1.56B in 1998 to $6.3B by 2007. Today, more than two decades after the earthquake, the project still is over three years from completion. And cynics warn of another big cost jump after the 2010 elections.
The American Dream
California once was the finest example of the American dream. Siberian immigrants pursuing game and furs were the first to arrive. Later, settlers came from Spain to farm and graze the land. In 1849, prospectors flooded into northern California in search of gold. A century ago, drillers came for the oil and filmmakers came for the abundant sunshine and natural outdoor movie sets. California defense contractors helped America win World War II by building ships and airplanes better and faster than ever before. High-tech companies flourished. And, as Thomas Wolfe described in The Right Stuff, many of America's early accomplishments in the space age happened in California.
There are few things that governments can do better than private enterprises. One of them is infrastructure development -- built by private contractors and funded by taxpayers. For the first six decades of the 20th century, Republicans controlled the California legislature and developed the infrastructure needed to accommodate the state's spectacular growth. The state was renowned for its excellent roads, water supplies, schools, and universities. The growth accelerated during the 1960s, as a Democrat legislature saw infrastructure funding as a means to greater power -- just as the Republicans probably had in prior decades.
The Anti-American Dream
But the accomplishments stopped in the 1970s with the election of Governor Jerry Brown. Mr. Brown expropriated the budget money that had been allocated for infrastructure -- much of it raised by motor fuel taxes -- and diverted it to his own leftist causes. Aqueducts and freeways were canceled, including some that already were under construction. Brown also blocked private construction of power plants. His anti-American Dream was this: If you don't build it; they won't come.
But they came anyway, and now Californians waste millions of gallons of fuel in traffic jams. Forbes named California the nation's worst state for drivers. During the time since Mr. Brown canceled most of the state's freeway construction, Californians travel more than twice as many miles, but the lane mileage has increased by less than ten percent.
Despite insane spending, education quality worsens. Water rates continue to rise, yet irresponsible eco-fascists demand that taxpayers spend billions of dollars to demolish existing reservoirs. This year, chief executives voted California the worst state in the nation for doing business.
As governor in the 1970s, Mr. Brown signed legislation that gave state employee unions the collective bargaining power that now is driving the state toward bankruptcy. (Incidentally, he is running for governor again this year.) Brown was the first in a series of leftist Democrat and moderate Republican governors that raised taxes while lowering the productivity of the state's employees by more than half. America's productivity during that period in the private sector grew by 43 percent (one percent average, compounded annually), a benchmark that makes the relative performance of the state's unionized employees even more dismal.
All told, it will take post-Brown California about 25 years to debate, design, and reconstruct the east half of the Bay Bridge. In 1926, it took pre-Brown California only ten years to debate, design, and construct both halves of the bridge, along with its approaches, a toll plaza, a transit terminal, and the world's largest diameter bore through Yerba Buena Island to connect the two spans. And they completed the project six months ahead of schedule, for a quarter of the cost of today's replacement span.
Yes, the new span is supposed to have about twice the useful life of the original -- 150 years versus 80 years -- and it probably will be safer, too. Therefore, some might argue that the replacement should cost more. On the other hand, today's design tools and construction equipment are many times better than they were eighty years ago, so others could argue even more persuasively that it really should cost less.
Tear Down This Wall!
The Berlin Wall of the past century physically divided a metropolis of efficiency and freedom from one of dysfunction and oppression. Similarly, in the 1970s, Governor Brown erected an ideological barrier that transported Californians from a land of efficiency and freedom, confining them to a land of dysfunction and authoritarianism.
Similar destructive policies have spread throughout America. Somewhere, the late President Kennedy must be warning us from the free side of that ideological wall, "There are some who can't understand why America no longer can get anything done...Let them come to Yerba Buena!"
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5)Palin v. Rove and the Battle for the GOP's Future
By Lee Cary
The battle for the future of the Republican Party will fully engage tomorrow morning in the wake of today's election. The opposing forces will be initially represented by two Republicans who hold no elected office: Sarah Palin and Karl Rove.
Palin represents the Tea Party Movement (TPM). Rove is the lead consigliere for the Republican bluebloods. Will their groups eventually consolidate their disparate agendas? The answer will determine the future of the GOP.
After eviscerating Christine O'Donnell's campaign, Rove challenged the TPM in Der Spiegel, where he was quoted as saying,
If you look underneath the surface of the Tea Party movement, on the other hand, you will find that it is not sophisticated. It's not like these people have read the economist Friedrich August von Hayek. Rather, these are people who are deeply concerned about what they see happening to their country, particularly when it comes to spending, deficits, debt and health care.
His knowledge of Tea Partiers' reading habits is flawed. And his explanation of people's concerns is merely an affirmation of the obvious. He's since tried to clarify and soften his implied criticism of Tea Partiers, but once you accuse others of being unsophisticated, it's hard to step back and reframe the discussion. Actually, it's impossible.
If we were inclined to think that Rove's words were merely casual comments voiced without forethought or broader intent, we lost that notion when, in a subsequent Telegraph (U.K.) article, he was quoted as saying,
With all due candour, appearing on your own reality show on the Discovery Channel, I am not certain how that fits in the American calculus of 'that helps me see you in the Oval Office' ... "There are high standards that the American people have for it [the presidency] and they require a certain level of gravitas, and they want to look at the candidate and say 'that candidate is doing things that gives me confidence that they are up to the most demanding job in the world'.
So where does this dissing of Palin's "gravitas" come from? Ronald Reagan once hosted the television program "Death Valley Days," pushing 20 Mule Team Borax cleaner. The liberal media questioned his gravitas through both terms. Rudy Giuliani is leading a troupe of motivational speakers across the nation, promising to teach time management, leadership, and several other "skills" -- almost everything except how to stir-fry. Fred Thompson is hawking reverse mortgages to seniors. Mike Huckabee is playing average guitar on his FOX show. None of these former presidential candidates is wading hip-deep today in the Gravitas River that Rove claims does not flow through Alaska. So what's up with Karl?
This assault on Palin comes, lest we forget, from the same advisor who either did not make the case or was unable to persuade Bush 43 to stand up and fight back against the relentless criticism from Democrats and the legacy media during six of Bush's eight years as president. Why the aggression now against Palin and the TPM?
Here's a possible explanation. "Bush's Brain," and the architect of the compassionate conservative strategy of George W's 2000 presidential campaign, is feeling the ground shift under his feet. As a consequence, the gyrocompass of his once-highly regarded political judgment is broken.
On Tuesday night, he'll have his signature whiteboard out charting numbers, but the Rove magic has faded some. He appears to be suffering from a severe case of Beltway Insideritis. It strikes when those who've been comfortable with their status as powerful political influencers lose some of their...gravitas...and become mere observers of the events they wish they could influence, but can't.
If that's the case, then Karl's just one among a cadre of certified conservative pundits, in the media and among the professional camp followers of the pols, who don't understand a grassroots movement they neither initiated nor can control. To them, the Tea Party People are upstart interlopers, like an uninvited third team that suddenly takes the field during the World Series and starts warming up. Wearing street clothes. With no gloves. Tossing a square ball.
All because We The People are a powerful force, able to eclipse the intentions of the entrenched George Soroses, Peggy Noonans, Paul Krugmans, and Karl Roves who man and woman the traditional partisan barricades while the unstoppable voters surge over and around them.
Come Wednesday morning, the battle for the GOP's future will begin in earnest.
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6)IDF intelligence chief: Israel's next war will see heavy casualties
In farewell meeting at the Knesset, Gen. Amos Yadlin says next conflict will hit Israel far harder than recent wars in Lebanon and Gaza - and hints for first the time at Israeli involvement in a 2007 strike on a nuclear plant in Syria.
By Jonathan Lis
In a final meeting at the Knesset, outgoing Military Intelligence chief Amos Yadlin warned on Tuesday that Israel's next war would be fought on several fronts - causing far heavier damage and casualties than other recent conflicts.
Israel was currently enjoying a period of relative quiet, Yadlin said. But its enemies were rearming and now posed the greatest threat to the country since the 1970s. A new war would be far deadlier than Israel's last two, relatively short, conficts in Lebanon in 2006 and Gaza in 2008-9.
Speaking at the final meeting of the Knesset Foreign Affairs and Defense Committee meeting,a head of his imminent departure after for years as commander of army intelligence.
Syria, particularly, posed a greated military obstacle to Israel than at any time in the past three decades, Yadlin said, having amassed advanced Russian-built antiaircraft missiles that seriously limited the operational freedom of the Israel Air Force.
While Syria had failed to acquire Russian S-300 missiles, seen by Israel as the greatest potential threat to its aircraft, Damascus had improved its defense systems enough to push the military balance with Israel "back to the 1970s", Yadlin said.
In 1973, Israel came close to defeat by a suprise Syrian attack before eventually emerging victorious in the Yom Kippur War.
Yadlin also hinted at Israel's involvement in attacking a Syrian nuclear facility in September 2007. That strike has been widely attributed to Israel, but the government has never officially taken responsibility for the operation.
The veteran soldier, who turns 60 next year, told the committee that during his position as MI chief he had contended with two enemy nuclear programs - apparently a reference to Iran and Syria.
"I've seen three defense ministers, two chiefs of staff and two prime ministers come and go, I've been through two wars and I've contended with two nuclear programs of enemy states," Yadlin said, summing up the last years of his career.
"I headed a group of thousands of people working 24 hours a day to collect information that the enemy was not volunteering, information that had to be extracted from difficult places," he added.
Yadlin also warned of a growing threat from the Iranian nuclear program, saying Iran now had enough highly enriched uranium to build a bomb.
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7)Report: Hezbollah getting ready to take over Lebanon
Al-Sharq al-Awsat newspaper says Shiite group, together with other elements, planning to take over Lebanon as international tribunal prepares to issue ruling on Hariri assassination
By Roee Nahmias
Hezbollah is gearing up to take over Lebanon ahead of an international tribunal's ruling on the assassination of former Lebanese Prime Minister Rafik Hariri. The London-based al-Sharq al-Awsat newspaper reported Tuesday that the Islamist group has been in contact with Shiite group Amal and pro-Syrian organizations in Lebanon in order to set a plan to seize control of the country after the court's ruling.
Reason for Concern
Lebanese official accuses Hezbollah of planning coup / Roee Nahmias
A source close to Hezbollah told the paper that the plan, which is focused on Beirut and south Lebanon, "Will end Saad Hariri and the Saudis' tenure in Lebanon for good." It is estimated that the UN court will place Hezbollah responsible for the Hariri's assassination.
On Monday, the Al Akhbar daily reported that "key element in the opposition (i.e Hezbollah) is holding an electronic discourse with Lebanese elements."
According to al-Sharq al-Awsat, the parties discussed the division of areas between the various forces in a way which will allow them to seize control of their respective areas when the time comes.
It was also reported that as part of preparations, Beirut will be divided into three military zones.
'No one can predict future'
A senior Hezbollah source refused to confirm or deny the report but said, "Everyone knows that the state in the Lebanon is a reason for concern, because all of the opportunities to 'solve the situation' have thus far failed.
"It would not be useful to discuss scenarios in the media, however no one can predict what will happen in the future," he added.
The Amal movement denied the report and said it was not in a position "to make plans for conflicts."
Last week, Hezbollah Secretary-General Hassan Nasrallah called on the Lebanese people not to cooperate with IJC clerks after they visited a gynecological practice near Beirut and were attacked by 150 women who snatched one of their cases containing investigation materials.
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8)Our World: The Age of Dissimulation
By CAROLINE B. GLICK
Rather than discuss the nature and threat of Islamic supremacism, the Western media, Western political leaders and academics deny it.
Years from now, when historians seek an overarching concept to define our times, they could do worse than refer to it as the Age of Dissimulation. Today our leading minds devote their energies and cognitive powers to figuring out new ways to hide reality from themselves and the general public.
Take US President Barack Obama’s senior counterterrorism advisor for example. On Sunday, John Brennan spoke on Fox News about the latest attempted Islamic terrorist attack on American soil.
Since the Obama administration has barred US officials from referring to terrorists as terrorists and effectively barred US officials from acknowledging that Islamic terrorists are Muslims, Brennan simply referred to the Islamic terrorists in Yemen who tried to send bombs to synagogues in Chicago as “individuals.”
Today, practically, the only individuals willing to speak honestly about who Islamic supremacists are and what they want are the Islamic supremacists themselves.
For instance, in an interview last week with Reuters, the Islamic supremacist Hamas movement’s “foreign minister” Mahmoud al- Zahar told the Christian West, “You do not live like human beings. You do not [even] live like animals. You accept homosexuality. And now you criticize us?”
Al-Zahar also made the case for Islamic feminism. As he put it, “We are the ones who respect women and honor women ... not you. You use women as an animal. She has one husband and hundreds of thousands of boyfriends. You don’t know who is the father of your sons, because of the way you respect women.”
Finally, al-Zahar claimed that Westerners have no right to question Islam or criticize it. In his words, “Is it a crime to Islamize the people? I am a Muslim living here according to our tradition. Why should I live under your tradition? We understand you very well. You are poor people. Morally poor. Don’t criticize us because of what we are.”
Al-Zahar can sleep easy. The citizens of the West have rarely heard anyone in any positions of power and influence criticize Islamic supremacists “because of what they are.”
In fact, the most remarkable thing about al- Zahar’s interview was not what he said but that Reuters decided to publish what he said. By letting its readers learn what al-Zahar thinks of them, Reuters inadvertently gave Westerners a glimpse at the simple truth its editors and their counterparts throughout the Western media routinely purge from coverage of current events.
Rather than discuss the nature and threat of Islamic supremacism, the Western media along with nearly all Western political leaders and academics deny and dissimulate. Rather than address the threat, they accept the Islamic line and blame Israel for everything bad that happens in the world.
THE ONE group of people that can almost be forgiven for this crime against reality is the non-Muslims who live under Islamic rule. On Sunday, we received a grim reminder of the plight of such minorities with the Islamic terror attack on Baghdad’s largest church, the Our Lady of Salvation Catholic church.
As some one hundred worshipers celebrated evening mass, Islamic terrorists stormed the church. According to an eyewitness account, they walked straight up to the priest administering the mass and executed him. The Muslim terrorists then took the Christian worshipers hostage.
As Iraqi military forces stormed the church under US military supervision, the Islamic terrorists threw grenades at the worshipers and detonated their bomb belts. By Monday, the death toll had reached 52.
It will be interesting to see how Catholic officials in Iraq and throughout the world respond to this attack. At the Vatican’s Synod on the status of Christians in the Middle East last month, Emmanuel III Delly, the head of the Chaldean Catholic Church in Iraq proclaimed, “The population of [Iraq] …is 24 million, all Muslims, with whom we live peacefully and freely…Christians are good with their fellow Muslims and in Iraq there is mutual respect among them.”
As the noted Islamic expert Robert Spencer wrote last week in Frontpage Magazine, Emmanuel has not always been so outspoken in his praise of Muslim Iraqis. In 2008, when US forces were still in charge in Iraq, Emmanuel made a statement that more accurately reflected the plight of his co-religionists.
Then he said, “Christians are killed, chased out of their homes before the very eyes of those who are supposed to be responsible for their safety…The situation in some parts of Iraq is disastrous and tragic. Life is a Calvary: there is no peace or security… Everyone is afraid of kidnapping.”
Christian clergy in Muslim countries are so terrified of Islamic aggression that they systematically hide the truth of their oppression and often distort their own theology to win the tolerance of supremacist Islamic authorities. Spencer noted that the head of that Vatican Synod, Archbishop Cyril Salim Bustros, who presently heads the Eastern Catholic church in the US, and in the past served as archbishop of Baalbek in his native Lebanon follows a similar pattern of dissimulation.
In Bustros’s case, his prevaricating goes beyond false depictions of the plight of Christians. In his bid to win the favor of his Islamic supremacist overlords in Hizbullah, Bustros has regularly engaged in theological revisionism.
At last month’s synod, Bustros repudiated the teachings of the Catholic Church’s Second Vatican Council and embraced the discredited supersessionist theology that Vatican II denounced. Bustros claimed that God’s covenant with the Jewish people and his promise to give us the Land of Israel “were nullified by Christ.”
In his view, “There is no longer a chosen people.”
Bustros did not simply assert a theological view at odds with the doctrine of the Catholic Church. He used his replacement theology to politically delegitimize Israel. Bustros said, “The theme of the Promised Land cannot be used as a basis to justify the return of the Jews to Israel and the expatriation of the Palestinians.” Bustros is set to return to Lebanon soon to serve as the archbishop of Beirut. The fact that he used his position as the head of the Vatican’s synod on the plight of Christians in the Middle East to earn him the protection of Hizbullah when he returns is made clear when his statements at the conference are compared to a speech he made in 2006, when he was still comfortably ensconced in the US.
As Spencer notes, in a speech Bustros made at St. Thomas University in Florida in 2006, Bustros minced no words about the plight of Christians in the Middle East. Addressing the Islamic precepts on relations with non-Muslims, Bustros said, “The doctrines of Islam dictate war against unbelievers….[T]he concept of nonviolence is absent from Muslim doctrine and practice….Peace in Islam is based on the surrender of all people to Islam and to God’s power based on Islamic law. They have to defend this peace of God even by force.”
FEAR OF Islamic massacres of Christians – like the one in Baghdad on Sunday – goes a long way towards explaining anti-Jewish and pro-Islamic pronouncements by Christian clergy in the Islamic world. But what can explain the West’s embrace of lies about Islam?
Why would people who do not live under the jackboot of the likes of Hizbullah, Hamas or their sister groups in places like Iraq obsequiously parrot untruths about Islamic history and theology and deny the very existence of Islamic supremacism?
The most notable case of such behavior in recent weeks came with the UN Educational, Science and Cultural Organization’s Executive Board’s declarations about Israel and Jewish history. At its October 21 meeting, the governing board of the UN agency charged with naming and preserving world heritage sites engaged in a shocking episode of historic revisionism in the service of Islamic supremacism.
UNESCO’s board issued five declarations regarding Israel. In addition to its routine condemnations of the security fence, Israeli sovereignty in Jerusalem and Israel’s refusal to give Hamas control over its border with Israel, UNESCO’s board asserted that the Tomb of the Patriarchs in Hebron, where Abraham, Issac, Jacob, Sarah, Rebecca and Leah are all buried, is a mosque. Rachel’s Tomb, where Rachel is buried, is also a mosque, according to UNESCO’s governing body.
It is not surprising that UNESCO’s Muslim members pushed for these declarations. Islam is a supersessionist religion. It claims that all the Jewish patriarchs and matriarchs as well as all the Jewish prophets, kings and judges were Muslim. It similarly claims that Jesus, Mary and the apostles were Muslims. It is standard Islamic practice to transform Jewish and Christian holy sites in lands conquered by Islam into mosques.
It is this Islamic practice that led Yasser Arafat to shock and disgust Yitzhak Rabin in July 1995 when he proclaimed that, “Rachel was my grandmother.”
Arafat’s statement was the first time that a Muslim leader in modern times claimed Rachel’s grave is a mosque. Arafat made his preposterous claim in the course of negotiations about the disposition of Rachel’s Tomb in Bethlehem. Due to its significance to Jews, Israel demanded full security control over the tomb. Arafat based his counter-claim on standard Islamic historical revisionism.
While Rabin rejected Arafat’s baseless assertion, last month UNESCO’s executive committee, whose membership includes France, Belgium, Spain, Japan, Poland, Germany, Greece, Haiti, Italy, the US and India accepted Arafat’s wholly false rendition of the historical record. In so doing, they collaborated with an Islamic attempt to eradicate Jewish history.
Why would they do this? They are not bishops who have to worry that their communities will be annihilated if they step out of line.
No doubt, fear of Islamic terrorism fuels some of their behavior. But fear can’t be the full explanation. Most Westerners have no contact with Muslims. And Islamic terrorist attacks in the West are not a daily occurrence.
The West’s newfound obsession with Islamophobia probably also has something to do with it. Western elites are terrified of being accused of racism. This is particularly true when – as is the case with Islamophobia – the charge is leveled on behalf of people who were oppressed in the past by Westerners.
But while fear of the charge of Islamophobia does play a role in Western kowtowing to Islamic supremacists, the West’s aversion to the perception that it is oppressing those it once oppressed fails to provide an adequate explanation for its willingness to collaborate with Islamic supremacist attempts to blot out Jewish history. The West’s history of oppressing Jews is far bloodier and longer than its record of oppressing Muslims.
In the end, there is only one credible explanation for the West’s willingness to lie about the nature and goals of Islamic supremacism. There is only one credible explanation for the West’s willingness to collaborate with Islamic supremacists as they purge the historical record of the Jewish roots of Western civilization. There is only one explanation for the West’s willingness to accept the Islamic supremacist assertion that Israel is to blame for Islamic aggression against Jews and Christians alike.
But if I mention anti-Semitism, I will be attacked as a paranoid Jew.
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