June 5, 2010

The EU Is Beginning To Face Reality: President Obama And Secretary Geithner, Not So Much

Having a Central Bank that issues what is known as a reserve currency has its advantages. It also has its disadvantages when the federal government attached to that bank refuses to enact austerity policies that are designed to maintain fiscal stability in a national economy.

There are some fascinating events unfolding in the European Union and the United States right now regarding austerity measures (spending constraints) and Central Bank policy. In short, the EU nations, knowing full well that they cannot print money with impunity, are looking for spending discipline. U S Treasury Secretary Tim Geithner wants the EU to encourage consumer demand (re: stimulus spending).

June 6 (Bloomberg) -- European Central Bank President Jean- Claude Trichet and Treasury Secretary Timothy F. Geithner diverged on prescriptions to sustain growth, with Europe set to tighten budgets and the U.S. seeking stronger domestic demand.

The remarks underline determination within the 16-nation euro area to shrink budget deficits in the wake of a sovereign debt crisis that has led to a 750 billion-euro ($913 billion) rescue fund for the region's weakest members. The emphasis contrasts with the message delivered to the G-20 by the U.S., which wants countries with trade surpluses, including China and Germany, to stoke demand to help sustain the global recovery.

"Stronger domestic demand growth in Japan and in the European surplus countries" is needed, Geithner said at a separate press briefing in Busan. Spending in both areas is "relatively weak," he said.

Here is the gist of the debate between Treasury Secretary Geithner and EU Central Bank President Trichet: the United States can print money longer (and sustain deficits for a longer period) than the EU, but the end result is the same. The EU knows it is experiencing a currency crisis right now and may be choosing to face the music by reducing spending. The United States, on the other hand, is still in denial about this looming problem. As the Europeans take on the gut wrenching job of forcing spending cuts on their citizens because they are left with no other choices, our administration is encouraging more Keynesian non sense. Fortunately, the EU is saying "enough" to the Keynesian insanity. Why? Because they have history on their side and know in a very personal way how a currency becomes worthless and what happens as a result. Americans (with the exceptions of Southerners (and their creditors) left holding Confederate dollars 150 years ago) have no experience with the harsh reality that accompanies currency debasement. J P Morgan may have saved the country one hundred years ago but the size and scope of the problem today is several orders of magnitude greater.

This is not a complicated matter. The U S can begin adopting austerity policies now or it can continue to "tickle the dragon's tail" (print dollars they hope some country will buy) and wager that it can prevent a financial nuclear meltdown when the problem reaches critical mass. This is one time when the Americans should be following the example of the Europeans.

Karl Denninger has another take on this that is worth reading.

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June 4, 2010

Obama Warns British Petroleum Not To Pay Big Dividends: Louisiana Shareholders Hardest Hit

President Obama warned British Petroleum today that paying large dividends to its shareholders during the Deepwater Horizon spill was unacceptable:

NEW ORLEANS -- President Obama visited the Gulf Coast on Friday and chastised BP for paying billions of dollars in dividends to shareholders and on advertising to save its image while some people whose livelihoods were wrecked by the company's oil spill were reporting difficulties in getting their claims paid.

"My understanding is that BP has contracted for $50 million worth of TV advertising to manage their image during the course of this disaster," President Obama said after meeting with local and federal officials at the airport near here.

"In addition, there are reports that BP will be paying $10.5 billion - that's billion, with a B - in dividend payments this quarter," he continued. "Now I don't have a problem with BP fulfilling its legal obligations, but I want BP to be very clear they've got moral and legal obligations here in the Gulf for the damage that has been done. And what I don't want to hear is, when they're spending that kind of money on their shareholders, and spending that kind of money on TV advertising, that they're nickel-and-diming fisherman or small businesses here in the Gulf who are having a hard time."

Where was this lecturing on corporate responsibility when President Obama stuck the tax payers with the irresponsible and indefensible decisions made by General Motors and Chrysler that ultimately cost taxpayers over $60 billion dollars? President Obama had a moral and legal obligation to protect U S taxpayers from harm in the GM and Chrysler bailouts. He ignored them and transferred billions of tax payer dollars to the very unions that broke these auto companies. And now he has the chutzpah to lecture BP on its dividend policy? This statement by President Obama could not make clearer who he thinks are the owners of American industry: labor and government.

Listening to this nonsense, a person might thing car czar Steve Rattner was back in the West Wing directing PR on the BP disaster, but last I heard he was busy trying to avoid the hoosegow owing to his own legal problems.

As for the television advertising, who can blame BP for trying to rebut the "foot on the throat" message prominently advocated by the Obama administration? It is manifestly apparent by President Barack Obama's rhetoric that he is swinging wildly at every pitch in a doomed attempt to get himself and his administration back in control of the BP spill disaster message.

President Obama is setting yet another dangerous precedent by involving himself in BP's corporate finance policy and the company's relationship with its shareholders, many of whom live in oil rich Louisiana, Alabama, Florida and Texas. What better way to further damage these shareholder citizens than reduce their quarterly dividend by political fiat? The president's bullying of BP on dividend payments has a precedent. Years ago, after the second Arab oil embargo, President Jimmy Carter accused domestic oil giants of obscene profits. When the Wall Street Journal pointed out that the largest owners of these domestic oil companies were U S labor pension funds the news was met with silence by the administration and congress and the issue was later dropped. Somewhere in this process the teleprompter will notify the President that he is alienating a large and wealthy constituency with proposals like this and down the memory hole it will go.

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President Hedley Lamarr's Phoney Baloney Jobs

Great news! Non farm payrolls rose by 431,000 last month.

The not so great news: 411,000 of those jobs were census worker temp jobs.

While he was stumping in Pittsburgh on Wednesday the President had this to say:

"We expect to see strong jobs growth in Friday's report," Obama said in a speech in Pittsburgh. "This economy is getting stronger by the day."

Temporary census worker jobs are phoney baloney jobs that do nothing to promote long term growth. The economy is not getting stronger by the day and the President knows this, but that won't keep him from demagoguing about it. Once again we are reminded of the disconnect between this president and the private sector. It's embarrassing that this president actually believes he can slide this rhetoric by what he must view as an increasingly gullible electorate.

Correction:

My colleague Baron Von Ottomatic notes that the historically correct title of this post should be "President William J. Lepetomane's Phoney Baloney Jobs". I have been besieged by the local Chapter of Blazing Saddles Advanced Studies PhD's for this error. In retrospect, Lepetomane and Lamarr are both suitably odious and comical characters to use in this post. My apologies to all Blazing Saddles aficionados.

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June 3, 2010

President Bush On Water Boarding: "I'd Do It Again"

During a visit with the Economic Club of Grand Rapids, Michigan President Bush said this about the water boarding of Khalid Sheikh Mohammed:

"Yeah, we water-boarded Khalid Sheikh Mohammed," Bush said of the terrorist who master-minded the Sept. 11, 2001 attacks on New York and Washington. He said that event shaped his presidency and convinced him the nation was in a war against terror.

"I'd do it again to save lives."

KSM was the person who, according to President Barack Obama, captured the imagination of the world when he sawed off Wall Street Journal reporter Daniel Pearl's head with a knife and broadcast the grisly murder to the world. Listening to President Bush it's refreshing to hear a president speak directly and unequivocally about the murderous Islamists that want to kill Americans. Jennifer Rubin said this about Bush's comments and how they compare to our current president:

Emotional. Direct. Morally unambiguous. Deeply loyal to allies. A true friend of Israel. A clear-eyed understanding of the enemy we face. Yes, Obama is the un-Bush, and the U.S., the West, and Israel are the worse for it.

While I took issue with his failure to rein in spending and Republican Congressmen who spent money like Democrats, I sure miss the Bush/Cheney team now. Those fiscally irresponsible Republicans in Congress were just pikers compared to the Obama/Pelosi/ Reid crew we have in charge now. In the far more serious arena of national security and the war on terror the contrast is even greater. Ed Morrissey makes the point that if President Bush had made this comment just a year ago the elite media would have been in high dudgeon, demanding that the former president beg forgiveness for such honesty. They're strangely quiet today because not only has the nation experienced several terrorist attacks (some successful) but also because of the stark reality of the present Executive who is unprepared and unwilling to confront an enemy the Bush administration openly called out (to say nothing of this administration's utter disloyalty to Israel).

Yeah, I miss George Bush.

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June 2, 2010

Strung Out In Pittsburgh

After seventeen months of huge majorities in both Houses of Congress and a fawning press the President went to Pittsburgh today for his much needed fix and launched an attack on...George Bush and Republicans.

PITTSBURGH--President Barack Obama, his presidency bogged down in the Gulf oil spill, lashed out at Republicans Wednesday, linking their deregulatory philosophy to misdeeds by bankers, insurers and oil companies.

Congressional Republicans, he said, have a "sincere and fundamental belief" that government has "little or no role to play in helping this nation meet our collective challenges.

"If you're a Wall Street banker or insurance company or oil company, you pretty much get to play by your own rules, regardless of the consequences to everyone else," Mr. Obama said.
Republicans, he said, "gutted regulations and put industry insiders in charge of industry oversight."

For the umpteenth time let's break this down: the bankers and financiers that Obama attacks as instruments of Republican influence gave more than two to one to Obama and the Democrats in the 2006 and 2008 election cycle. The insurers have given more to Democrats in the 2010 election cycle. President Obama is the biggest recipient of British Petroleum largesse during the last decade. So how do we square these facts with the President's statements in Pittsburgh today? The answer is that the President's demagoguery and the facts can't be reconciled any more than oil can mix with water. These statements, all blatantly false, are the inevitable result of an Executive being consumed by events. Simply put, he's in Denial and completely out of touch.

President Obama predictably hit the road today to do the only thing he knows how to do: campaign. What he is campaigning for is not quite clear given the notable absence of several Democratic politicians who chose to avoid the event in Pittsburgh today. This President does not require Republican cooperation to accomplish any of its legislative goals yet he continues to run against them as the members of his own party avoid him. Has anyone seen Joe Sestak?

Clearly an intervention is in order.

November can't get here soon enough.

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June 1, 2010

Obama's Bay Of Rigs: The President's Chickens Come Home To Roost

As the Deepwater Horizon blow out continues unabated for a month and one half, the disaster has become what Rush Limbaugh is calling Obama's Bay of Rigs. This may be one of those times when a spoof better describes what the public is coming to view as this president's Waterloo. Oversold and under delivered from the moment he came on the national scene, Barack Obama is now being rolled over by an extraordinary confluence of events.

At the center of these events now is the oil spill in the Gulf, a situation over which he has minimal tactical control and 100% political control. But there's nothing he can do to fix the problem that BP and a world of petroleum engineers haven't already thought of. So what does he do next? Send in the prosecutors. Although this may be seen as effective by some (those focused solely on payback), it is no comfort to most who will see it as a cynical political response to a problem that begs for some "roll up your sleeves" leadership.

The problem waiting just one step back from the oil spill was manifested yesterday in the thinly disguised political theatre produced by Hamas and Turkey when a barricade storming flotilla of Hamas thugs and their requisite coterie of human shields upstaged a planned "reconciliation" meeting between Israeli PM Benjamin Netanyahu and President Obama. The attempt by the Obama administration to reset the Israeli dialogue with the US came after President Obama botched the last meeting and humiliated the Israeli Prime Minister in a way that shocked even Congress. Our enemies obviously saw this imminent rapprochement as the time to stage an incident (their timing was perfect and the poorly executed response by the IDF only helped their cause). But the genesis of this entire fiasco can be found in the Apology Tour conducted across the globe by our president last year, where a message of self doubt, weakness and appeasement was delivered to a worldwide audience by a man still consumed by the fumes of his own celebrity. It was, as predicted, viewed by our enemies as a sign of weakness and yesterday's provocation was the inevitable result.

Election results of the past year show clearly that there is a growing sense of unease percolating in the electorate. Personal income rose over $50 billion in April yet consumer spending was nonexistent. That is the calculus of fear. As has been remarked on this blog before, there is the growing realization that not only is there no one at the helm, there isn't the least perception that anyone is in charge. The oil spill in the Gulf only enlarges this perception of an impotent President; the barricade run by our enemies yesterday against Israel, however, just shows that our enemies are not going to let a good opportunity pass when they see one.

Note: Link to generic ballot fixed

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May 30, 2010

Massive Response To BP Oil Spill Dwarfed By Obama CYA Operation

Charles Krauthammer asks rhetorically: Whose blowout is it, anyway?

Here's my question: Why are we drilling in 5,000 feet of water in the first place?

Many reasons, but this one goes unmentioned: Environmental chic has driven us out there. As production from the shallower Gulf of Mexico wells declines, we go deep (1,000 feet and more) and ultra deep (5,000 feet and more), in part because environmentalists have succeeded in rendering the Pacific and nearly all the Atlantic coast off-limits to oil production. (President Obama's tentative, selective opening of some Atlantic and offshore Alaska sites is now dead.) And of course, in the safest of all places, on land, we've had a 30-year ban on drilling in the Arctic National Wildlife Refuge.

Krauthammer is zeroing in on what will be the main topic, front and center, when this disaster has ended (which may be August according this report). Why do politicians in Washington subject their constituents to greater hazard in the name of environmental activism? That may become a campaign slogan come August. (Sara Palin is already pushing it.) Democrats are slowly waking up to this reality, which is why Massachusetts uber Liberal Congressman Ed Markey was out on CBS today accusing BP of underestimating the initial reports of how much oil has polluted the Gulf.

(CBS) Rep. Bob (sic) Markey, D-Mass., said today that BP knew the initial estimates of oil gushing into the Gulf of Mexico from the site of the Deepwater Horizon drilling rig were larger than what they were publicly stating was the flow.

In his appearance on CBS' "Face The Nation" Sunday, Markey said that once video of the oil leak became public, independent scientists confirmed that the flow was much higher than the initial estimates made public by the company.

The Democrat, who is chairman of the House Subcommittee on Energy and Environment, said that the amount of oil flowing is tied to any fee that may be imposed on the oil company resulting from the spill.

"BP has a stake in their own liability here," Market said. "That means that the fine which can be imposed upon them is dependent upon how many barrels per day is going out into the Gulf. If it's 1,000 barrels per day, it's a relatively low fine, but if it's 10,000, 15,000, 20,000 barrels per day, it could wind up billions of dollars in fines that BP executives have to pay to the federal government."

Allow me to decode what Congressman Markey is saying: "If we had known the spill was this bad in the beginning President Obama would not have been playing golf during the emergency".

The Democrats are furiously trying to reset and rearrange facts to better portray their President's stunningly poor performance to date because they know there will be political hell to pay when the BP well is capped and the cleanup bill (not just the financial bill but also the ever more important one for political damage) arrives. Markey can and will demagogue about civil and criminal liability on the part of BP, but make no mistake, his real goal is to protect President Obama. Look for more Markey type performances in the future as the Obama administration tries to mitigate the damage of their feeble response to this disaster.

Note: Markey link just added.

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May 29, 2010

Palin Derangement Syndrome Update: Iowahawk Eviscerates Joe McGinnis

Iowahawk has a piece up that just eviscerates Joe McGinnis and the boatload of journalists (including the likes of Tina Fey) that suffer from Palin Derangement Syndrome . As Kim noted earlier this week, Joe McGinnis, who is finishing a book on Palin, recently rented the house next door to the Palin family in Wasilla, Alaska.

Assuming a persona of the Palin that occupies the inside of McGinnis' head (as opposed to the real Sara Palin), Iowahawk covers the entire spectrum of PDS symptoms with withering sarcasm. Here's a sample:

Knockity knock!

Oh hi there! I was out shooting caribou on the Arctic Cat and saw your synapse lights on, and so I said to myself, "now, gosh darn it, Sarah, you've been living inside this nice person's cerebral cortex for, what is it, almost two years now? By golly, it's about time you dropped in at their frontal lobe with a plate of your famous homemade Alaska welcome wagon cookies and introduced yourself." So anyhoo, I sure hope you like 'em. Don't want to give out a family recipe, but the secret ingredient is baby seal. I clubbed 'em fresh this morning!

Oh my goodness... you look kind of confused. I get that a lot! You were probably thinking, "hey, I only wanted to move next door to Sarah Palin -- now what in the goshdarned heck is she doing inside my brain?" Well ya see, the deal is I'm not Sarah, but boy I gotta tell ya, we sure do get mistaken all the time! No, I'm just a plain ol' homunculus Sarah Palin that your own id created to sublimate your deep-seated psychosexual neuroses. Or so those egghead books say, anyway. But if you ask me that sure sounds like a lot of elite Anti-America liberal professor gobbledegook! By the way, your id says hi.

Gosh darn it, where the heck are my manners? Here I am, gabbing away, like some plainspoken chatty old chatterbox, while you've probably got things to do. I imagine you've got an important op-ed or comedy skit to write about that other Sarah Palin, the one from corporeal reality. And why she's irrelevant and ridiculous and such. Oh no, don't worry, I won't take it personal. After all I'm not her, remember? Though I bet it can probably get confusing trying to keep straight which one of us is which, and who really said what. Tell you what -- why don't you just take the cookies as my gift, and I'll drop by later when it's more convenient. Or, if you like, I'll just be on my way and let you live in peace. You tell me. After all, I'm really only a figment of your imagination. Just stop thinking about me, and poof -- I'll mush the ol' dogsled straight back to your subconscious forever.

...Now where were we? Oh yes, Tina Fey. Now, just the other day Tina... umm... is everything all right? I mean, you have the strangest look in your subthalamus. Oh...! Oh, this. The bikini. Funniest thing. Turns out once I'm inside a liberal's head, It's like poof! Off with the clothes. I tell ya, it's gotten to the point that I really don't even notice it anymore. No, don't be embarrassed or ashamed, most of your friends don't even give me the bikini.

Whoa! Did you feel that? I think I felt a little earthquake! Oh -- I see. It was just you, banging your head against the stair banister trying to get me out of it. Trust me, you might as well give up on that, because it's not gonna work. Just ask Tina Fey. Say, what's this on your coffee table - a scrapbook? Goodness sakes, I love scrapbooking! It's so much fun isn't it? And such a wholesome pastime to keep American families connected. Do you mind if I take a look at yours?

Now that's different... I gotta say I don't think I've ever seen this many pictures of me in one place. And all of them with the eyes cut out! Now, maybe I never went to a fancypants college like you did, but I can tell that is very artsy and avant garde. I wonder what it means? No, no -- don't give me any hints! Is it some kind of latent pathological response to the struggle between your libidinal and destrudinal impulses?


Go over to Iowahawk and read the whole thing. Good satire is impossibly hard to write and this may be the best takedown of a liberal icon in years.

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May 27, 2010

Worst Press Conference Since " I Am Not A Crook"

As Shawn mentioned below, the Obama press conference today was literally unbelievable. The "checkers moment" ("daddy, did you plug the hole"?) he tried to insert in the presser came after an hour of unctuous lecturing and evasion. This may have been the most disastrous presidential press news conference since Nixon's famous "I am not a crook" moment.

It's hard to imagine a Republican president getting away with the weasel words offered today by Barack Obama. The President couldn't determine if MMS head Elizabeth Birnbaum was fired or she resigned. Even the Obama bread carriers at CBS were skeptical:


Elizabeth Birnbaum's departure was first reported as a "firing." Later, a "resignation." When asked for clarity, President Obama told the press corps today he had no idea.

"Did she resign," asked CBS White House Correspondent Chip Reid. "Was she fired? Was she forced out? And if so, why?"

"I found out about her resignation today," the president answered, "so I don't know the circumstances in which this occurred."

An incredulous press corps followed up.

"How is it that you didn't know about Ms. Birnbaum's resignation/firing before?" asked another reporter.

Mr. Obama: "Well, you're assuming it was a firing. If it was a resignation, then she would have submitted a letter to Mr. Salazar this morning at a time when I had a whole bunch of other stuff going on... Come on, I don't know. I'm telling you I found out about it this morning. So I don't yet know the circumstances, and Ken Salazar has been in testimony on the Hill."

After unequivocally stating that he owned and controlled every aspect of the BP oil spill catastrophe, this President doesn't know if his own Minerals and Management Service Director, which had oversight authority of the BP, was fired or resigned? He found out about it just this morning? What we need to know, actually, is who owns Interior Secretary Ken Salazar: the President or Congress?

Then came this whopper from Fox News about the Sestak job kick back/bribe allegation that simply won't go away:

President Obama said Thursday that the White House is preparing to issue a formal explanation regarding the allegation that it offered Rep. Joe Sestak a job to drop out of the Democratic primary race against Sen. Arlen Specter.

The president, addressing the matter in public for the first time since the Pennsylvania congressman leveled the claim in February, said the statement should answer questions about the claim and insisted "nothing improper" happened.

"There will be an official response shortly on the Sestak matter," Obama said, when asked about the issue by Fox News at the president's press conference. "I mean shortly -- I don't mean weeks or months. ... I can assure the public that nothing improper took place."

This form of "I'll get back to you on that" answer is truly outrageous. Even the genuflecting hard core liberals in the White House Press Corps had trouble swallowing that command. Is there anything that this president believes he can't make happen with his ability to turn a phrase and make his listeners disabuse themselves of doubt? As Allah noted, via Breitbart:

"White House cover-up of Sestak job offer not quite finished yet."

What makes me think this inexperienced young President, a recipient of the odd combination of a nation's goodwill and racial guilt, has suddenly found himself wagering greatly on the outcome of one press conference? (That was Charles Krauthammer's point tonight on Fox News) Barak Obama did not have to hold this presser today but he did, perhaps because of a confluence of events that were bearing down on him: the Sestak matter, the BP disaster, his falling poll numbers, the looming 2010 midterms and maybe James Carville's unhinged and unguarded critique of the president this weekend. So why did he do it? And perform so poorly?

This president is not just losing the ideological battle spectacularly. He is being consumed by a tidal wave of events that only an experienced executive can effectively manage. In short, he's in over his head and we will suffer the consequences.

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May 24, 2010

Jesse Jackson Jr. Hits The Jackpot, Gets To Shakedown Republicans And Democrats

Just when you thought Illinois politics couldn't get any crazier. Politico informs us that Representative Jesse Jackson Jr. has found some sudden respect for Republican Senatorial nominee Mark Kirk in the Illinois race to fill the ObamaSeat that is being vacated by that noted statesman Roland Burris.

Now, Rep. Jesse Jackson Jr., who did not endorse anyone in the Democratic primary, is flirting with the idea of backing Republican nominee Mark Kirk in the general election. "I like Alexi Giannoulias, but I have great respect for Mark Kirk and his service to the people of Illinois," Jackson told POLITICO.

Jackson and Kirk work together on the House Appropriations Committee, on which both are senior members of the subcommittee that provides foreign aid.

It's exceedingly rare for a lawmaker of one party to endorse a colleague of the other party -- particularly within the same state -- meaning Jackson lending his name to Kirk would be a bit of a shock to the political system and a blow to Giannoulias's campaign.

If Jackson does go for Kirk -- or even remains neutral, which seems more likely -- Giannoulias will lose out on the veteran Democratic congressman's political operation on Chicago's South Side.

Readers will remember that Jackson was at the center of a controversy surrounding then Governor Rod Blagojevich (now a target of the U S Attorney Patrick Fitzgerald) and accusations that the ObamaSeat was being auctioned by the embattled governor. Jackson was rumored to have offered some serious change for the Senate seat and Blago is throwing subpoenas around like candy to prove that point.

"If I can bring [Obama's] chief of staff, Rahm Emanuel, in to testify ... if I can bring Valerie Jarrett, a top staffer to President Obama in to testify, if I can bring Congressman Jackson, Sen. Durbin, Sen. Reid, Sen. [Robert] Menendez (D-N.J.) and a whole series of other people -- in fact, every single person I talked to about the Senate seat, then I can clear my name ... and fairness and justice will prevail," Blagojevich said at the time. Blagojevich was hoping to get testimony to fight impeachment proceedings in the Illinois Legislature. He was unsuccessful in his effort to present a defense with those witnesses and ultimately removed from office. Jackson met with Blagojevich to discuss the Senate seat on Dec 8, 2008, the day before the governor was arrested.

Now that Congressman Jackson may have put enough distance between himself and the stench of the Blago investigation one would think he wouldn't go there again, but this is Illinois and he is the son of the Rainbow Coalition / PUSH shakedown machine. Congressman Jackson's ostensible respect for the Republican candidate Mark Kirk makes perfect sense in the calculus of Chicago politics. If his new pal Kirk wins the election Jackson can run against him in the next election. If the Democratic nominee Giannoulias wins the general election Jackson will be frozen out of the seat for decades. But it gets better. Jackson's new found respect for his Republican colleague offers the best opportunity imaginable: a whole summer and fall election season to shakedown both parties for his endorsement. Does it get any better than this?

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May 22, 2010

The European Riots Can Happen Here: The SEIU Is Already Sponsoring Them

It turns out that restructuring the European lifestyle may be much more difficult than many EU members expected.

ARIS -- Across Western Europe, the "lifestyle superpower," the assumptions and gains of a lifetime are suddenly in doubt. The deficit crisis that threatens the euro has also undermined the sustainability of the European standard of social welfare, built by left-leaning governments since the end of World War II.

Europeans have boasted about their social model, with its generous vacations and early retirements, its national health care systems and extensive welfare benefits, contrasting it with the comparative harshness of American capitalism.

Europeans have benefited from low military spending, protected by NATO and the American nuclear umbrella. They have also translated higher taxes into a cradle-to-grave safety net. "The Europe that protects" is a slogan of the European Union.

But all over Europe governments with big budgets, falling tax revenues and aging populations are experiencing rising deficits, with more bad news ahead.


Restructurings (a term that is a euphemism for changing bad habits into good habits) are always difficult. Sometimes governments take it upon themselves to change owing to internal political pressures; other times it requires something far different, like a war, to bring about change. The lifestyle polemic currently at center stage in the EU crisis looks awfully familiar and there is a readily identifiable suspect right here in the United States that deserves some serious scrutiny.

Public employees now earn on average more than private sector employees in the U S. Their wages are higher, their insurance benefits are superior, their retirement plans are gold plated and they have an uncanny ability to avoid layoffs and unemployment. Mort Zuckerman made the point again in the Wall Street Journal Friday that approximately $250 billion of the $780 billion Stimulus legislation passed in 2009 went to preserve public employee payrolls, benefits and retirement plans. And you ask why there is no economic rebound evident from the stimulus? The riots in Greece, and the anxiety Germans have about bailing out the Greeks, is a perfect picture of what awaits the U S in the next several years as private sector employees (and unemployed) continue to experience in a very personal way the divide between them (the tax payers) and the SEIU protected public employees (the benficiaries of the tax payers).

Democratic policy, especially among its most liberal sponsors, has unapologetically promoted various forms of class warfare for over fifty years. This month's debacle in Europe is a preview of the real class warfare that will occur here. U S political trends and the recent increased violence of the Left shows indications of an evolving conflict, from civil disobedience to what might be called a "hot war" between the private sector and the political class. When even the New York Times begins to take note of the crumbling of big government socialism in Europe then everyone should pay attention. The gig is up. It's only a matter of time before there is actual conflict in the streets here.

But wait, there already is. Please go to the link and watch the videos and view the pics. The SEIU sent four busloads of Washington D C protestors to a Bank of America attorney's home last week, where they stormed his property and had the homeowner's teenage son hiding in a bathroom until they left. Fortune Magazine's Nina Easton lived next door and documented the attack. As one blog commenter noted, there are thousands of towns and cities in flyover country where this sort of assault would not have ended well for the SEIU thugs. The union's leadership knew that, however (they had a District of Columbia police escort) and terrorized a citizen's home safe in the knowledge that no violence would be visited upon them.

We have reached a point in this country when cooler political heads need to take charge before the natural instincts of citizen self protection kick in. This country has been at this precipice before and almost always found a peaceful solution. But that requires real leadership and courage which is sorely lacking in Washington DC today.

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May 21, 2010

The Rand Paul Panic

Perusing the news today, it appears that there is still a serious systemic problem unfolding in the EU that could make the 2008 financial panic look like a picnic. The FDIC informs us that there are more than 700 banks on the FDIC's problem list (compared with around 250 two years ago). Over at the Department of Homeland Security Assistant Secretary of Homeland Security for U.S. Immigration and Customs Enforcement John Morton expressed reluctance to assist the State of Arizona in enforcing a recently passed State law that, in short, was a mirror of almost never enforced Federal law.

But the zeitgeist that consumes the minds of journalists and bloggers after Tuesday's elections centers on a heretofore unknown Kentucky politician named Rand Paul. Over at Memeorandum you would think he is Elvis found again given the twenty or so articles about him. And that's just today. Yesterday he owned the entire front page of the site because he shared some opinions about the 1964 Civil Rights Act that were nowhere to be found in the Emily Post guide to Politically Correct thought in Washington DC. Today he blundered into the Obama administration's demogoguing of the BP oil spill by making this monstrously unacceptable comment: "Accidents happen".

Tomorrow the news will be all about Rand Paul's decision to not go on the Meet The Press.

Rand Paul clearly has a lot of people on edge. The liberal media, the mental midgets in charge of Congress today and some suspects on the Right don't simply dislike Rand Paul but consider him the personification of the devil (his father, Ron Paul) himself. Funny thing, Rand Paul's political curriculum vitae is just slightly less extensive than Barrack Obama's was in 2006. Obama won some State Senate races and thereafter accomplished little other than voting "Present" during controversial legislation while Paul was practicing eye surgery and helping with his father's presidential aspirations.

As to their political philosophies Paul is much more unguarded. He's a libertarian. He questions conventional political wisdom. He embraces the Tea Parties. He's also considered a raving nutcase (in the minds of his some of his conservative critics) who desires to destroy Federalism and the tenets of Edmund Burke's Conservatism that have been carefully constructed since 1950's by the disciples of William Buckley. And that's just what his Republican critics have to say about him. Liberals simply believe he is a racist, illiterate and ignorant, Bircher loving, Confederate reprobate hoodlum that hangs around the Truthers his father refused to repudiate.

No other meme could get him the wall to wall attention he's received since Tuesday.

So how does a political weirdo like this hang 23 points on Trey Grayson, who was Mitch McConnell's handpicked replacement for the vacancy left by the retiring (only at McConnell's "Luca Brasi" type suggestion) Jim Bunning?

I'll tell you how (and Republicans should take note of this): Trey Grayson was unelectable. That he lost by 23 points to an outlier should demonstrate to anyone that Grayson was incapable of beating the ultimate Democratic nominee, Kentucky Attorney General Jack Conway. But there is a back story here. Trey Grayson succumbed to some "mavericky" behavior several years ago when he openly attacked then Republican Governor Ernie Fletcher when the Governor was under a withering attack from Democratic Attorney General Greg Stumbo, who was accusing Fletcher of government hiring improprieties. (Most Kentuckians found that charge laughable since government jobs here are the very currency of Kentucky politics) But those charges were later dropped. However, the conservative Republican base never forgot Grayson's betrayal. A number of Republican heavyweights in the Kentucky Republican party, including former Republican gubernatorial candidate Larry Forgy, warned McConnell and Grayson at the time that they would pay a price for their crippling attack on Fletcher, the first Republican Governor elected in decades. The rest, as they say, is history. Trey Grayson, the ostensible McConnell heir apparent was found to be unelectable at a most unfortunate time when incumbents and insiders came to be viewed as the problem. Mitch McConnell, the Republican Senate Minority Leader and renowned Republican fundraiser, is now forewarned and hopefully somewhat wiser.

Rand Paul, like him or not, has demonstrated that the "old school" Republicans (especially the "mavericky" types in the Republican Party that occasionally suck up to the approval of Liberals) may find they have lost their base. That this has happened in McConnell's own state is a harbinger of things to come.

On the other hand, liberal Democrats are so alarmed by the Paul victory that they have singled him out for a very particular kind of treatment: front page, above the fold for as long as it takes. They have a long road ahead of them though. The first poll out after the Tuesday primary shows Paul leading Democrat Jack Conway by 25 points.

Hope and Change. You betcha.

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Rating: 4.4/5 (21 votes cast)


May 18, 2010

The Final Insult To Daniel Pearl

Via our commenter kathie comes this remark by President Obama about the execution and beheading of Wall Street Journal reporter Daniel Pearl.


"Obviously, the loss of Daniel Pearl was one of those moments that captured the world's imagination because it reminded us of how valuable a free press is."

What? Pearl's murder didn't capture my imagination. It enraged me. What a fool our President is. Pearl had his head cut off by none other than Khalid Sheikh Mohammed because Pearl's father was a Jew. The bastards that cut his head off video taped it all and used it as propaganda by releasing it to the public. And our President described it as a moment "that captured the world's imagination because it reminded us of how valuable a free press is".

This president is not only clueless but his demagoguery is is long removed from reality. Perhaps that is why he wants to give KSM a trial in the United States criminal courts....to capture the world's imagination.

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Rating: 4.8/5 (41 votes cast)


Kentucky Has Spoken

Clarice at Tom Maguire's blog may have saved some lives tonight with the following advice:

Whatever...Let's follow Rush's advice--Don't drink every time an announcer says, "This is not a referendum on Obama," because you'll die of alcohol poisoning if you do.

E J Dionne was spinning a variety of theories around that point this morning. The results of tonight's elections in Kentucky are simply part of the anti Obama chorus that began singing after the Democratic disasters in Virginia, New Jersey and Massachusetts. It's all about Obama because, if for no other reason, voters have been subjected to a campaign of All Obama All The Time during 2009 and 2010. The ubiquitous finger pointing, lecturing judge / professor of everyone from the Cambridge Police Department to British Petroleum is being exposed by voters in election after election as a boorish mountebank. After the pomp and circumstance of the 2008 campaign voters began to understand something we began discussing at Wizbang after Nancy Pelosi and Harry Reid so easily rolled the President elect with the Stimulus Bill: there is no there "there" with Barack Obama. He's the Chauncey Gardiner President, only now with an attitude.

When a political outlier like Rand Paul crushes an opponent (Trey Grayson) personally endorsed by Senate Minority Leader Mitch McConnell by over twenty points in Kentucky there is a lot more than anti incumbency at work. Politico is reporting that Paul tapped into voter anger but demures from identifying the specific object of that anger: Barack Hussein Obama. Voters in Kentucky are reaffirming what motivated voters in New Jersey, Virginia and Massachusetts. They have seen the real Barack Obama, as opposed to the Potemkin Obama presented to them in 2008, and rejected him. Barack Obama may become the singularly most unpopular President since Andrew Johnson. After tonight's carnage, expect Democratic Congressional incumbents to flee from his presence.

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Rating: 4.7/5 (15 votes cast)


May 17, 2010

Tuesday's Primaries Begin The Banquet Of Consequences

The primary elections in Kentucky, Arkansas, Pennsylvania and Oregon will be fascinating to watch. A few thoughts on the races I find most interesting:

Pennsylvania Democratic Senate Primary: Sestak versus Specter is a classic for many reasons. Sestak is attacking from the Left with the support of the Party's far left wing. Specter is selling seniority in the Senate. This race has a schadenfreude element to it because shunned Republicans, many of whom went way out on a limb to support Specter six years ago were burned when the liberal Republican switched parties last year and did a "Jeffords". I think Specter deserves retirement and dinner with the real victims of the Unicorn (if you don't get it, look it up). I know, that's a little harsh, but for this RINO that has caused such damage to the conservative movement and then sold them out at the height of Obamania some reality would do him some good.

Prediction:
Sestak by 2 points.

PA-12, the Murtha Seat: I respect John Murtha because he was a Marine. From time to time he was a valuable ally of our military in Congress. After he left the Corps he lost his way. Enough said. In PA-12 Republican businessman Tim Burns faces former Murtha aide Democrat Mark Critz. This is a very tight race in a district controlled by Democrats for forever. It's a referendum on Obama, Pelosi, Reid and earmarks. It's a referendum on the insidious influence of defense contractors that lined the pockets of Murtha's former staff members and friends. It's a referendum on untraceable phantom donors.

Prediction: Burns by less than half a point.

Kentucky Republican Senate Primary: Trey Grayson versus Rand Paul. This is easily the most interesting race of the day because it pits an establishment Republican with a mountain of money and political power against a relative unknown that has as his greatest political asset a famous father. Trey Grayson is the Kentucky Secretary of State and is backed by Mitch McConnell. That in itself would be a ticket to success in Kentucky politics because Senator Mitch McConnell wields enormous political power nationwide given his control over vast Republican financial resources.

Rand Paul is a Bowling Green, Kentucky ophthalmologist with no significant political experience.

The differences in their campaign came into focus when Grayson failed to grasp the power of the Tea Party movement last year, perhaps because he is perceived as an establishment blue blood Republican, a species remarkably similar to a RINO. His opponent Rand Paul immediately embraced the nascent movement and has benefitted from their momentum for months. So in Kentucky the candidate endorsed by Rudi Giuliani, Dick Cheney and Mitch McConnell finds himself trailing today by eighteen points to a candidate endorsed by Sarah Palin and South Carolina Senator Jim DeMint. Here is one of two possible reasons as to how Grayson lost his chances to win in spite of the considerable advantages he enjoyed early in the campaign:

The Grayson strategy was to tie Paul to the "truther" movement that holds that Sept. 11 was an act of mass murder perpetrated by the Bush administration.

Pundits expected Paul's insurgent candidacy to fizzle.

Kentucky is a state of 4.3 million people that boasts more than 400,000 veterans and 36,000 active-duty military members on two big bases: the elite 101st Airborne Division at Fort Campbell and the army's tank training center at Fort Knox. [Ed. Note: it is no longer an armor training base]

But Paul hit back hard. His response ad used images from the Sept. 11 attacks and said "fighting back was the right thing to do." He then spoke directly to Grayson, saying "your shameful TV ad is a lie, and it dishonors you."

His message on the stump was that he wanted America have the most powerful military in the world as a deterrent to our enemies, not to be a policeman or a community organizer to failed nations.

It's the same message that worked for candidate George W. Bush in 2000 and a common thread of conservative foreign policy until Bush embraced an interventionist approach after 9/11.
Grayson's slimy ad and Paul's rejoinder helped Paul get the endorsement of Sarah Palin and the man he seeks to replace, retiring Sen. Jim Bunning.

For the political and news junkies (myself included) there is another aspect of Grayson's background that hurt the candidate: he is fickle and untrustworthy from a political standpoint and prominent Republicans in Kentucky were quick to pick up on this. Kentucky Democratic Governor Steve Beshear's predecessor, Republican Governor Ernie Fletcher ( a former Congressman from the district now represented by Democrat Ben Chandler), was ambushed by Democrat Attorney General Greg Stumbo on a political patronage scandal investigation. During the investigation then Republican Secretary of State Trey Grayson, perhaps sensing Fletcher's weakness, opportunistically attacked the Republican governor in a widely publicized political forum known as Fancy Farm. This act of betrayal may have delivered, four years after the fact, more votes to Rand Paul than any policy position the latter has espoused. But it is a reminder, just as with fair weather RINO's like Pennsylvanian Arlen Specter, that voters are paying closer attention in these days of Obamania.

Prediction:
Paul by ten points.

The biggest question after tomorrow's elections will be when and if the elite media will dispense with the theme of anti-incumbency and drill in on the anti-Obama/Pelosi/Reid sentiment that is driving voter turn out.

Tuesday is Election Day for many of you. Please vote.

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Rating: 4.8/5 (19 votes cast)


May 15, 2010

The European Union Crack Up And What It Says About U S Priorities

It is becoming ever clearer that the macroeconomic experiment know as the European Union is coming apart.

May 15 (Bloomberg) -- The euro fell to its lowest level since the collapse of Lehman Brothers Holdings Inc. on concern that the 16-nation currency may be headed for disintegration.

The shared currency fell for a fourth week versus the dollar and a third week versus the yen, the longest losing streaks since February, as German Chancellor Angela Merkel said that Europe is in a "very, very serious situation" despite a rescue package for the region's most indebted nations. European Central Bank Governing Council member Axel Weber speaks on financial-market regulation next week in Berlin.

Via Joe Weisenthal some of the most high profile bond fund managers in the world have dumped their holdings in Greek and Portuguese debt this week.

The euro has tumbled to its lowest level in 18 months and might be entering a period of sustained weakness, analysts believe, on fears of years of weak economic growth as austerity measures across the continent bite.

Deterioration in sentiment towards the euro has raised concerns that its appeal as a reserve currency, a major support for it in recent years, is diminishing.

"We think it is too risky to buy Greece and Portugal," said the head of one of the largest US asset managers.

When there is default risk, you scale your exposure differently. There is no value. But even if there was value, our investors still don't want us to invest."

What will happen in Europe if the EU falls apart and the weaker economies are decoupled from the stronger (or less weak) economies? If Portugal, Spain and Greece default on their debt what will happen? I suppose the best answer to that question is another question: what will be the response of the parties that hold their debt. It's beginning to look a lot like the European Central Bank will be left holding the bag, so who takes the hit in that scenario? Probably Germany, France and the UK, who have the biggest stakes at risk in this looming catastrophe. Will those countries, in a worst case scenario, allow their already struggling economies to be severely harmed by the failure of the weaker EU members? Or will France, Germany and the UK force budget cuts and austerity measures on the weaker sisters? And equally important, will the weaker sisters accept these mandated cutbacks? Those riots in Greece we saw this week indicate that at a minimum a few won't accept EU budget mandates.

Any student of history knows that wars have been started in Europe over lesser financial panics than what we are witnessing today in the EU. There is a sense of uneasiness that is permeating all international financial markets now because seasoned investors and students of history know that one country, the United States, has a long history of lending to Europe to avert financial crises and war. This is where Junius Morgan and his son, J. Pierpont Morgan, made their international reputations. But that was before the existence of the Federal Reserve Bank of the United States. One theory that deserves consideration is that some international investors clearly anticipate a crisis of monumental proportions but are concerned that the lender of last resort (the United States) may be somewhat preoccupied (to put it politely) and unprepared to address an international financial panic. American voters, for example, may be more distressed about the prospects of having to bail out the eighth largest economy in world - California - and less concerned about old Europe.

The anxiety over the EU crack up may be more the result of concern that the lender of last resort, the United States, is getting ready to let one of its own states go belly up first. This is why the Tea Party movement, which first highlighted this particular element of the Washington spending binge last year, is the object of such criticism from the media organs that cover international finance. It's all about which interested party gets a place at the Federal Reserve and the U S Treasury table. Will it be Greece and Portugal or the victims of their demise - France, Germany and Britain? Or will it be California? Or will voters in the U S put their foot down and say enough to the absurd concept of bailing out a debtor with more debt, regardless of nationality or if they are evn members of the union?

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Rating: 5/5 (8 votes cast)


May 14, 2010

Rahm Emanuel Is Doing Some Serious CYA After ObamaCare Passage: Does He Hear Clinton Footsteps?

Liberal blogger Greg Sargent has an interesting piece out today about Jonathan Alter's new book "The Promise". I haven't read the book but Sargent offers some interesting teasers from Alter's analysis of the war going on inside the White House about the debate and wisdom of trying to pass what we know today as ObamaCare.

Rahm Emanuel spent nearly a week in the summer of 2009 aggressively trying to talk Obama out of moving forward with an ambitious version of health care reform, and by his own admission "begged" him not to do it, a book out next week reports.

"I begged him not to do this," Rahm admits to Alter. But according to the book, Obama overrode Rahm's advice, privately taking a bit of shot at Clinton by telling advisers that he hadn't been sent to the White House to do "school uniforms."

According to the book, when the health care wars were heating up in August of 2009, and centrist Dems were dragging their feet, Rahm mounted an aggressive push to get Obama to shelve ambitious reform.

"For the better part of a week in August Rahm made the case aggressively," the book says.
But the book paints Obama as resolute about moving forward, contradicting impressions at the time that Obama hadn't exercised enough leadership on the issue. "I feel lucky," he told advisers at the time, according to the book. "I think we can get it done."

At a subsequent meeting in the Oval Office on September 1st, the book reports, Robert Gibbs cracked a joke about bad poll numbers on health care.

"This is about whether we're going to get big things done," Obama said. "I wasn't sent here to do school uniforms."

Rahm then asked Obama if he still felt lucky
.
"My name is Barack Hussein Obama and I'm sitting here," Obama answered. "So yeah, I'm feeling pretty lucky
."

In light of the recent news that ObamaCare will be much more expensive than what anyone estimated during the heated moments of the Stupak Deception and the Nelson Payoff some politicians and DC insiders are in full CYA mode (like Henry Waxman). Of course the cost of ObamaCare, if it can't be repealed or defunded, will cost way more than even the CBO's new $110 billion dollar estimated increase (which brings the total to _______ (fill in the blank). But as Sargent mentions, there are several interesting subplots to the story including the angle of Rahm Emanuel as a prophet not respected in his own land. The subsequent political fallout from the passage of ObamaCare, and the imminent losses of Democrats at the polls in November, certainly has engendered a lot of posturing by Democratic insiders. There have been several stories recently in the political press that portray Emanuel as the level headed, reasonable and cautious consigliere that warned his boss not to drive his Party off the cliff with an undertaking as controversial as ObamaCare.

But the gratuitous comment attributed to Obama in Sargent's article about the Clintons (and school uniforms) is some real raw meat. President Obama, while remaining generically popular in national polls, is getting crushed in the battleground states of the 2010 midterms. I've never dismissed the possibility of a Clinton challenge to Obama in 2012 for several reasons. First, if Hillary would have simply executed a nominally effective caucus state strategy in 2008 Obama would have lost. Second, there is the still in place Clinton campaign apparatus that could be mobilized immediately. And third there is the Ego of the Clintons and their drive for power. Granted, all politicians that strive for higher office must necessarily possess large egos, but the Clintons took that requisite to a new level in the 1990's.

The smooth, confident (and, as Vice President Biden says), "clean and articulate" President Obama will be looked at and perceived much differently if there is a Republican Majority in the House (and possibly the Senate) in January 2011. Something tells me Rahm Emanuel has figured this out while President Obama is still admiring the view from the Oval office.

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May 13, 2010

The Washington Post's Sudden Concern For Bipartisanship

The opinion editors at the Washington Post are concerned about the level of polarization in our national politics. This concern seems to pop up every time establishment pols inside the beltway get tossed out by voters. I can't blame the Post for this position because business as usual is a good thing for their newspaper and a booming District means increased advertising revenues even for a print newspaper. But this a bit overboard:

THE INCREASING polarization of the nation's politics is fueling a blood sport in this election year: the ideological purification of both parties. Conservatives in Utah denied Republican Sen. Robert Bennett renomination last week. Liberals have targeted Arkansas Democrat Sen. Blanche Lincoln in a May 18 primary. Activists in other states and congressional districts hope to punish politicians they view as insufficiently devoted to party creed.

But there are dangers, too. The world is complicated, and an electorate so diverse in geography, race, class and beliefs can't be shoehorned into two fixed templates. There is no particular reason why all advocates of fiscal restraint should also oppose abortion rights, or why supporters of a progressive tax code should necessarily favor restrictions on gun ownership. The more litmus tests are imposed, the greater the number of voters who will find themselves politically homeless.

For many party cleansers, working across party lines constitutes treason. We agree that elected officials ought to be guided by principles that they are willing to fight for. But we also see a difference between fidelity to principle and dogmatism. If Republicans cannot accept that Democrats may make some reasonable arguments, and vice versa, then nothing will get done: no energy policy, for example. Mr. Bennett worked with Democratic Sen. Ron Wyden of Oregon to develop a bipartisan health bill that responded to each party's noble aspirations: Republican commitment to economic competition and individual choice in the service of Democratic commitment to universal, affordable care. But that bipartisan effort became a leading charge in the activists' indictment of Mr. Bennett.

The Post doesn't get it, but this isn't the first time. They didn't get it in 1994, 2000, 2006 and 2008. As for the polarization I can only ask: Who said "We Won"? It wasn't George Bush in 2000. And don't fall for the Post's concern about Bennett ( if there were a chance that seat could become a Democratic pick up they would already have forgotten how to spell Bennett's name). That's a fig leaf for their real concern about the Democrats' potential loss of the Senate.

The Post is ignoring the 800 pound gorilla again. The Stimulus Legislation, which was a monumental failure at job creation and, well, stimulus in general, was a partisan issue crammed down Republican throats. ObamaCare, the largest piece of legislation in decades, was crammed down Republican throats. The Chrysler and GM bailouts, which were multibillion dollar sops to the Democrat's largest financial backers (unions), were crammed down Republican throats. Closing Gitmo the same. Granting terrorists access to U S criminal courts the same. Somewhere in that process an electorate began to revolt and, as I've said before, the banquet of consequences began. When the WaPo writers use language in their article like "party cleansers", "blood sport", and "ideological purification" it becomes obvious to any reader whose ox is getting gored. The WaPo cares as much about compromise and bi partisanship as their principal owner, Warren Buffet, cares for financial losses. The WaPo knows that a majority of its ox herd will be gored in November so now they plead for fairness, bi partisanship and objectivity. Where were you guys in 2008 and 2009 when the Obama/Pelosi/Reid juggernaut was rolling over conservatives with no regard for compromise?

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Rating: 5/5 (22 votes cast)


May 12, 2010

The Failure Of The Federal Confidence Game

The world's largest entity in terms of gross revenue had a bad month in April. The IRS collected only $245 billion dollars in April 2010 compared with collections of $266 billion in April 2009. This was only part of the reason the U S government ran up an $82 billion dollar deficit in April of this year because the government spent $327 billion dollars in that month versus $287 billion in April of last year. For 43 of the past 56 years there has been a budget surplus in April owing to the fact that tax collections occur then.

Of course, none of this is news to voters in Virginia, New Jersey, Massachusetts, and Utah and, as of last night, West Virginia. In all of these states the "surprise" losers were either irreparably tainted by an Obama/Pelosi/Reid connection or ossified incumbents that finally felt the wrath of an electorate that has had enough of giving at the office, giving at home, giving at the store ad infinitum, ad nauseum and giving everywhere else the government has extended its insatiable desire for taxes. Add to that anger a state immigration law in Arizona that a majority of Americans broadly support but is wildly unpopular in the establishment media, academia and other elitist strongholds and you get one of those rare moments in U S history when events converge to create a wave.

We are witnessing a worldwide repudiation of big government and Keynesian economics. In the Unites States the evidence of this is found in the results of the several state elections I mentioned above, most if not all of which were plebiscites on national policy issues. However, this skepticism is becoming an international issue. In Europe the response is much starker, verging on panic. Last weekend, before the big Euro Bailout, European bank stocks and sovereign credits (government issued loans and bonds) were almost falling off the cliff. Monday morning brought news of the bailout and things looked rosy....for about a day. Today brought news of abject panic buying of gold in Europe.

AUSTRIAN MINT SAYS SOLD 243,500 OZ GOLD IN COINS AND BARS IN LAST 2 WEEKS, MORE THAN IN ENTIRE Q1

AUSTRIAN MINT SAYS GOLD ORDERS COMING ENTIRELY FROM EUROPE IN LAST FEW WEEKS, SIGNS OF "PANIC BUYS"

The Europeans that yearn for gold do so for a reason: they don't buy the Euro bail out propaganda at all. And unlike most Americans, who buy gold as a hedge against inflation and currency devaluation, these Europeans are buying gold in anticipation of having to actually use it as a currency. (Imagine that, thinking of using gold as a currency.) Our modern economists must think that is so quaint but I will give the Europeans credit for one thing: when things get really bad over there their historical memory kicks in. That's why they are hoarding gold. And rioting.

The reason why there is such a loud repudiation of the Obama/Pelosi/Reid agenda is that many fly over country citizens know that what is known as the European contagion can happen here also. As I have mentioned before, in the midst of these financial crises of the past three years there is an enormous confidence game going on. When that confidence is lost (as appears to be happening in Europe) the result is not something that can be contained by a press conference or a new stimulus plan.

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May 10, 2010

Samuelson: Death Spiral Of The Welfare State

Is the failure of the great Keynesian experiment in public spending and government intervention in national economies about to get some traction in the popular media? In other words, are the alphabet media dupes at ABCNBCCBSCNNWPTIMENWMSNBC finally figuring out what people that used to read and watch them began to intuitively understand years ago? An article by Robert J. Samuelson in the Washington Post today suggests that there may be hope. Unfortunately, it required a crisis in Europe, and specifically, riots in Greece, to summon his plain English explanation of what plagues not just the US economy but European economies also. Some in the poular media are coming to understand what Margaret Thatcher warned us of decades ago: socialism works well until it runs out of other people's money to spend.

The European Union is putting that opinion to the test now with their trillion dollar version of TARP.

Markets rallied around the world in response to the extraordinary show of solidarity in defending the euro, which topped even the U.S. government's support for its collapsing financial system in 2008. A broad index of European blue chips closed up more than 10 percent and Wall Street was up more than 3 percent in afternoon trading.

But analysts pointed out that the package did nothing to reduce overall debt -- it just spread it onto more shoulders.

There will also be a risk that, by in effect shielding Greece, Portugal, Spain and other over-indebted countries from the harsh verdict of the open market, the measures will make it harder for political leaders to overcome public resistance to the deep budget cuts needed to get spending and borrowing under control. Strikes in Greece led to a riot last week that left three people dead.

And therein is the problem. The EU marched in with a large band aide today when the patient required an amputation. I might say that response is both uniquely Keynesian and European but that would not be true. The United States has done the same thing by refusing to address the root problems of excessive government spending. As Samuelson notes:

What we're seeing in Greece is the death spiral of the welfare state. This isn't Greece's problem alone, and that's why its crisis has rattled global stock markets and threatens economic recovery. Virtually every advanced nation, including the United States, faces the same prospect. Aging populations have been promised huge health and retirement benefits, which countries haven't fully covered with taxes. The reckoning has arrived in Greece, but it awaits most wealthy societies.

Americans dislike the term "welfare state" and substitute the bland word "entitlements." Vocabulary doesn't alter the reality. Countries cannot overspend and over borrow forever. By delaying hard decisions about spending and taxes, governments maneuver themselves into a cul-de-sac. To be sure, Greece's plight is usually described as a European crisis -- especially for the euro, the common money used by 16 countries -- and this is true. But only to a point.

Euro coins and notes were introduced in 2002. The currency clearly hasn't lived up to its promises. It was supposed to lubricate faster economic growth by eliminating the cost and confusion of constantly converting between national currencies. More important, it would promote political unity. With a common currency, people would feel "European."

Their identities as Germans, Italians and Spaniards would gradually blend into a continental identity. None of this has happened. Economic growth in the countries using the currency averaged 2.1 percent annually from 1992 to 2001 and 1.7 percent from 2002 to 2008. Multiple currencies were never a big obstacle to growth; high taxes, pervasive regulations and generous subsidies were. As for political unity, the euro is now dividing Europeans. The Greeks are rioting
.

The European "financial contagion" is spreading. Look for quarantines between states in the U S soon.

Note: Frequent commenter Brett made this connection earlier.


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