We believe in free markets and free people." We stands for free trade and sound money; against confiscatory taxation and the oppression of collectivists; and for individual autonomy against dictators, bullies and even the tempers of momentary majorities.
During last year's campaign, Sen. Joe Biden famously remarked that, if his ticket won, it wouldn't be long before "the world tests Barack Obama like they did John Kennedy" on foreign affairs. Last week, President Obama, brilliantly wielding the powers of his office, managed to fail that test not just once but twice, buckling in the face of Russian pressure and taking a giant wooden nickel from Iran.
With both a collapsing economy and natural gas reserves sufficient to produce 270 years of electricity, the surplus of which it exports, Iran does not need nuclear electrical generation at a cost many times that of its gas-fired plants. It does, however, have every reason, according to its own lights, to seek nuclear weapons—to deter American intervention; to insure against a resurgent Iraq; to provide some offset to nearby nuclear powers Pakistan, Russia and Israel; to move toward hegemony in the Persian Gulf and address the embarrassment of a more militarily capable Saudi Arabia; to rid the Islamic world of Western domination; to neutralize Israel's nuclear capacity while simultaneously creating the opportunity to destroy it with one shot; and, pertinent to last week's events, by nuclear intimidation to turn Europe entirely against American interests in the Middle East.
It astonishes us how quickly Afghanistan is moving from being a "war of necessity" to "too tough to do." President Obama's comments over the weekend gave the clearest signal yet that his administration is seeking an exit strategy from a conflict he described in August as "not only a war worth fighting" but "fundamental to the defense of our people." Commitment to that fundamental defense is eroding.
The president is being foiled by complex terrain, by which we mean the Congress. The Democratic leadership has indicated it would not look favorably on requests for more troops, which most analysts believe are necessary to stabilize the situation.
An Aug. 30 initial review by Gen. Stanley A. McChrystal, U.S. commander in Afghanistan, concluded that more troops are necessary to provide a "bridge capability" until Afghan forces have been adequately trained to take on the task. This increase of force is vital. "Resources will not win this war," the report states, "but under-resourcing could lose it."
Rather than follow the conclusions of the most comprehensive review of the Afghan situation to date, the White House is trying to redefine the mission. "You don't make decisions about resources," Mr. Obama warned, "before you have the strategy right."
Yet his strategy is already being implemented. Bob Schieffer of CBS News reminded the president that he rolled out a new plan on March 27. At the time, Mr. Obama called it a "comprehensive new strategy for Afghanistan [and] Pakistan" that was "the conclusion of careful policy review" that the president said he ordered "as soon as [he] took office." Mr. Obama conceded to Mr. Schieffer that he had implemented his own strategy, but that "we were gonna review that every six months."
Theater-level counterinsurgency strategies cannot be fully implemented within six months. The president himself said the new troops he ordered sent in the spring "are just now getting into place." It is unreasonable to suggest a strategy can be reviewed before it has been executed. It also frustrates those tasked with implementing the strategy when long-term objectives are at the mercy of political winds.
The president seems to be leaning toward columnist George Will's suggestion to pare down the fight to merely taking out terrorist leaders with armed drones. The "stronger, smarter and comprehensive" March 27 strategy sought to use all the elements of national power to build governing capacity in Afghanistan and to seek regional solutions with Pakistan. "A campaign against extremism will not succeed with bullets or bombs alone," the president said then. But what Mr. Obama previously called a broad-based regional solution he now derides as "mission creep."
Most alarming were the president's comments on CNN that he was "not interested in just being in Afghanistan for the sake of being in Afghanistan or saving face or, in some way ... sending a message that America is here for the duration." It's strange that he thinks anyone would argue that the United States should continue to sacrifice blood and treasure in Afghanistan "just for the sake of it." When he says we are not in for the duration, Mr. Obama comes close to stating that the United States will leave before the mission is accomplished.
Taliban leader Mullah Omar said on Saturday that "the West does not have to wage this war." It is starting to sound like Mr. Obama agrees. At the Aug. 17 national convention of the Veterans of Foreign Wars, the president said that "the insurgency in Afghanistan didn't just happen overnight, and we won't defeat it overnight. This will not be quick, nor easy. But we must never forget: This is not a war of choice. This is a war of necessity." Never forget indeed. Perhaps someone should remind the commander in chief.
Sunday, September 20, 2009
Matthews Disagrees With Guests Who Think Obama Protests Aren't About Race
By Noel Sheppard
Something truly shocking happened on Sunday's "The Chris Matthews Show": three out of four of his guests said the current anti-government sentiment sweeping the nation is not because Barack Obama is black, and that the news media are actually responsible for exacerbating the suggestion that protesters are racist.
There was even some consensus that the same kind of dissent would be happening if Hillary Clinton was president.
On the flipside, and not at all surprising, Matthews not only didn't agree, but seemed rather disappointed by this viewpoint being expressed (partial transcript below the fold):
CHRIS MATTHEWS, HOST: Rick, you've just got a big cover out this week in Time magazine about this paranoid streak in American history. We've written about it, learned about it for years. Is it part right now, part of it is this white attitude towards a black president? Is it that stark?
RICHARD STENGEL, TIME MANAGING EDITOR: You know, I start from the viewpoint that lots and lots of racists voted for Barack Obama. I don't, I can't tell you what is in people's minds and heart. I do believe that the reaction that's going on now would happen to a white president who's trying to do some of the same things that Barack Obama is doing. But I do think also that us dwelling on it, and I agree with Obama about this, is actually not good for the public discourse. It's not good for America. We basically have to move on from this kind of discussion and deal with him as he is, as President. And by the way, remember once upon a time we worried about the fact that people couldn't criticize Barack Obama because he's black. We're passed that now.
Fascinating comment by Stengel. After all, maybe it's time for the media to stop bringing race into every discussion about this president. Maybe then he'll just be President and not a black president.
But Matthews wasn't buying it, and continued to pan the water looking for the dirt he was craving:
MATTHEWS: Let's take a look at this sign, I want Kathleen to go to this, "I Want My Country Back." That was last weekend in Nashville. Would that have happened with another Democratic president? I want my country back?
KATHLEEN PARKER, WASHINGTON POST: I think so, Chris, and I so agree with what Rick said. I mean, of course there is a racial element any time you have this conversation there's going to be a certain percentage. But, by the way, in January 75 percent of voters approved of Barack Obama, and they didn't, that percentage didn't suddenly become racists. So, there's something else at work, and when they say, "I want my country back," they're talking about this great anxiety that's widespread about the rapid growth of government, the growing debt and deficits, you know, this healthcare program that's so huge and incomprehensible to most. So, when they want their country back, they're not saying, "We want white America back." I don't think, I think that's a stretch. They're saying, "We want to remain a constitutionally sound country." And they're in doubt about that.
0 for 2. Care to make it a hat-trick, Chris?
MATTHEWS: This existential question is about should he be president, that this rage we're seeing and these rallies, you think it would be there with Hillary if she were president?
DAVID BROOKS, NEW YORK TIMES: Yeah, I do. I mean, what Rush and Glenn Beck are doing, that's just race-baiting. 100 percent, that's race-baiting. But if you take a longer view what we're seeing now is what we've seen before in American history with Father Coughlin, William Jennings Bryan, with Andrew Jackson, Huey Long. It's a populist uprising of mostly rural people who think the moral backbone of this country comes from people who work with their hands, who are extremely suspicious when you get government power fusing with banking power which is a lot of what they've seen over the past few weeks. And so there, there, they would be upset if Washington merged with Wall Street the auto industry, the energy sector, the health care industry, and if a bunch of what they saw as overeducated people were leading the country. They'd be upset whether it was Hillary, whether it was John Kerry or whether it was Barack Obama whether it was anybody.
0 for 3. Finally, Matthews got the answer he was looking for:
HELENE COOPER, NEW YORK TIMES: I disagree with you guys, I think race plays as huge part of what we're seeing. I'm looking at, you know, the, the, what you just described about the rural, the rural south and rural people who were afraid, I mean you didn't see that when George Bush was in power and he's the ultimate elitist.
Not surprisingly, Matthews was pleased: "By the way, by the way, Helene, I'm with you."
For the record, the Matthews Meter was evenly split on this, so he's not alone.
—Noel Sheppard is the Associate Editor of NewsBusters.
The real reason for the rage: Americans aren't racist - they're just furious at Obama and Washington
As the former leader of the free world, Jimmy Carter deserves our respect. As a political analyst - attributing racism to the anger at President Obama - he is irresponsibly inaccurate.
Obama's popularity hasn't tumbled because he's black. It's tumbled because he has come to represent Washington instead of those who sent him there.
I know this because of a 6,400-person interview survey I conducted for my new book "What Americans Really Want ... Really." I sat down to write this book, conduct the poll and insisted that the second "really" be included in the title because I was fed up with opinion elites who ascribe opinions to Americans that simply do not exist.
The latest flareup over supposed racism is only the most recent example. America certainly isn't perfect, but as a society, we are intolerant of intolerance, and we'll immediately demonize anyone, anywhere who tries to play the race card. Just ask Bill Clinton.
The real reason why 72% of the people I interviewed say that they're "mad as hell and they're not going to take it anymore" has nothing to do with racism. No, their rage is about a lack of accountability, a lack of respect, and a lack of progress in the nation's capital.
Let's start with the absence of accountability, because that ranks No. 1 in the hearts and guts of the average American. Washington spends billions to bail out big business and then can't explain where the money went. Washington spends $800 billion on a stimulus package filled with earmarks and pork projects. And now Washington is trying to create a trillion dollar health care experiment when over 85% of Americans are satisfied with their health care just as it is.
This could be forgiven, perhaps, if those elected officials from Washington exhibited even an ounce of respect for the voters who pay their salaries. But the combination of a political class that ignores those with whom they disagree and a business class that ignores the very real suffering of the working class (if they are, in fact, working) while pocketing million-dollar bonuses has convinced the public that no one cares.
It's not racial hatred you're hearing. It's political and economic outrage.
There's a reason why, according to the book survey, only 33% of Americans think their kids will have a better quality of life than they have. The country is demanding economic progress, yet all it sees is political paralysis and a government mired in sloth, avarice and bureaucratic meddling.
But Carter did unintentionally raise a point that deserves a full and candid discussion. When will it be possible in America to criticize Barack Obama and not be accused of racism? We cannot pat ourselves on the back for electing an African-American leader so enthusiastically and then simultaneously vilify his detractors by blaming their opposition to his policies on racial bias.
The public has not just reached its boiling point with Washington; they've long since passed it, and you see it spilling over the edge of the American dreamscape. It represents a frustration among some and a resentment among others at promises from the White House that is heavy on captivating rhetoric and light on explanation and details.
Whichever side of the health care debate you support, you have to marvel at the spontaneous participation of a population that has largely been indifferent and disaffected, if not dormant. It's nice to know that people still care about their country, their government and their freedom.
Our political leaders in Washington are still that - leaders. Ever more in the era of TMZ and Twitter, we the people seek in our elected representatives role models of conduct and of rhetoric. But more than that, we should jealously protect our American right to disagree, to criticize, and even to condemn.
At least for me, that's what democracy is all about. President Carter says he hears too many white southerners condemning Obama because of his race. Maybe he should get his hearing checked.
WASHINGTON — President Obama sent a secret letter to Russia’s president last month suggesting that he would back off deploying a new missile defense system in Eastern Europe if Moscow would help stop Iran from developing long-range weapons, American officials said Monday.
Dmitry Astakhov/RIA Novosti, via Associated Press
The letter was hand-delivered to President Dmitri A. Medvedev, above, three weeks ago.
The letter to President Dmitri A. Medvedev was hand-delivered in Moscow by top administration officials three weeks ago. It said the United States would not need to proceed with the interceptor system, which has been vehemently opposed by Russia since it was proposed by the Bush administration, if Iran halted any efforts to build nuclear warheads and ballistic missiles.
The officials who described the contents of the message requested anonymity because it has not been made public. While they said it did not offer a direct quid pro quo, the letter was intended to give Moscow an incentive to join the United States in a common front against Iran. Russia’s military, diplomatic and commercial ties to Tehran give it some influence there, but it has often resisted Washington’s hard line against Iran.
“It’s almost saying to them, put up or shut up,” said a senior administration official. “It’s not that the Russians get to say, ‘We’ll try and therefore you have to suspend.’ It says the threat has to go away.”
On Tuesday, a press secretary for Dmitri A. Medvedev told the Interfax news agency that the letter did not contain any “specific proposals or mutually binding initiatives.”
Natalya Timakova said the letter was a reply to one sent by Mr. Medvedev shortly after Mr. Obama was elected.
“Medvedev appreciated the promptness of the reply and the positive spirit of the message,” Ms. Timakova said. “Obama’s letter contains various proposals and assessments of the current situation. But the message did not contain any specific proposals or mutually binding initiatives.”
She said Mr. Medvedev perceives the development of Russian-American relations as “exceptionally positive,” and hopes details can be fleshed out at a meeting on Friday in Geneva between Foreign Minister Sergei V. Lavrov and Secretary of State Hillary Rodham Clinton.
Mr. Obama and Mr. Medvedev will meet for the first time on April 2 in London, officials said Monday.
Mr. Obama’s letter, sent in response to one he received from Mr. Medvedev shortly after Mr. Obama’s inauguration, is part of an effort to “press the reset button” on Russian-American relations, as Vice President Joseph R. Biden Jr. put it last month, officials in Washington said. Among other things, the letter discussed talks to extend a strategic arms treaty expiring this year and cooperation in opening supply routes to Afghanistan.
The plan to build a high-tech radar facility in the Czech Republic and deploy 10 interceptor missiles in Poland — a part of the world that Russia once considered its sphere of influence — was a top priority for President George W. Bush to deter Iran in case it developed a nuclear warhead to fit atop its long-range missiles. Mr. Bush never accepted a Moscow proposal to install part of the missile defense system on its territory and jointly operate it so it could not be used against Russia.
Now the Obama administration appears to be reconsidering that idea, although it is not clear if it would want to put part of the system on Russian soil where it could be flipped on or off by Russians. Mr. Obama has been lukewarm on missile defense, saying he supports it only if it can be proved technically effective and affordable.
Mr. Bush also emphasized the linkage between the Iranian threat and missile defense, but Mr. Obama’s overture reformulates it in a way intended to appeal to the Russians, who long ago soured on the Bush administration. Officials have been hinting at the possibility of an agreement in recent weeks, and Mr. Obama’s proposal was reported on Monday by a Moscow newspaper, Kommersant.
“If through strong diplomacy with Russia and our other partners we can reduce or eliminate that threat, it obviously shapes the way at which we look at missile defense,” Under Secretary of State William J. Burns said about the Iranian threat in an interview with the Russian news agency Interfax while in Moscow last month delivering Mr. Obama’s letter.
Attending a NATO meeting in Krakow, Poland, on Feb. 20, Defense Secretary Robert M. Gates said, “I told the Russians a year ago that if there were no Iranian missile program, there would be no need for the missile sites.” Mr. Obama’s inauguration, he added, offered the chance for a fresh start. “My hope is that now, with the new administration, the prospects for that kind of cooperation might have improved,” he said.
The idea has distressed Poland and the Czech Republic, where leaders invested political capital in signing missile defense cooperation treaties with the United States despite domestic opposition. If the United States were to slow or halt deployment of the systems, Warsaw and Prague might insist on other incentives.
For example, the deal with Poland included a side agreement that an American Patriot air defense battery would be moved from Germany to Poland, where it would be operated by a crew of about 100 American service members. The administration might have to proceed with that to reassure Warsaw.
Missile defense has flavored Mr. Obama’s relationship with Russia from the day after his election, when Mr. Medvedev threatened to point missiles at Europe if the system proceeded. Mr. Medvedev later backed off that threat and it seems that Moscow is taking seriously the idea floated in Mr. Obama’s letter. Kommersant, the Moscow newspaper, on Monday called it a “sensational proposal.”
Mr. Medvedev said Sunday that he believed the Obama administration would be open to cooperation on missile defense.
“We have already received such signals from our American colleagues,” he said in an interview posted on the Kremlin Web site. “I expect that these signals will turn into concrete proposals. I hope to discuss this issue of great importance for Europe during my first meeting with President Barack Obama.”
David E. Sanger and Thom Shanker contributed reporting from Washington, and Michael Schwirtz and Ellen Barry from Moscow.
Anti-Americanism: Alive and Well in the Age of Obama
Islamic countries distrust the United States under the leadership of President Obama about as much as they did under President George W. Bush. What's going on?
Throughout the Bush presidency, opinion polling from the Pew Research Center trumpeted America’s “abysmal” approval ratings across the globe. The problem, pollsters suggested with numbing regularity, was that a “cowboy president” had inflamed the Muslim world—and America’s European allies—with his “unilateral” war on terrorism. The remedy, of course, was a new administration with a fresh approach: a president committed to multilateralism, smart diplomacy, and American soft power. Right on cue, a Pew report hailed Barack Obama’s election for inspiring “global confidence” in U.S. leadership and rescuing America’s reputation from eternal perdition.
This hagiographic storyline, however, is evaporating like a morning mist. A newer Pew survey suggests that most Islamic countries distrust the United States under the leadership of President Obama about as much as they did under President George W. Bush. Yes, majorities of the Muslim populations interviewed still believe that America plays a mostly destructive role in the world. Most view the United States as “an enemy” and “a military threat” to their own country. Most disapprove of the American-led effort to combat terrorism. Large numbers, in fact, voice strong support for terrorism and Osama bin Laden. Western Europeans, though expressing positive personal views of Obama, show little enthusiasm for key U.S. foreign policy objectives. In other words, anti-Americanism is alive and well in the age of Obama.
The most alarming poll finding, in view of Pakistan’s nuclear capability, is that more Pakistanis express positive views of Osama bin Laden than they do of President Obama.
The Pew poll, completed just after Obama’s Cairo speech to the Muslim world, drew on 27,000 interviews in 25 countries, including five Muslim-majority states. The desultory findings from Muslim respondents—reported by Pew researchers with a mix of confusion and rationalization—received scant attention from the mainstream media. No wonder: If the survey results represent attitudes in the Middle East and beyond, then the most cherished liberal assumptions about radical Islam and U.S. foreign policy are exposed as desperate falsehoods.
Perhaps the most fearsome example is Pakistan, where only about 16 percent of respondents express a positive view of the United States—a drop of three percentage points from when Bush was president. Thanks in part to terrorist attacks that have killed scores of ordinary Pakistanis, disapproval of terrorism and the Taliban has risen sharply in recent months. Nevertheless, most Pakistanis (64 percent) view the United States as an enemy. The most alarming finding, in view of Pakistan’s nuclear capability, is that more people express positive views of Osama bin Laden than they do of Obama. Let that soak in. Nearly one in five respondents (18 percent) trust bin Laden to “do the right thing” in world affairs, compared to 13 percent for Obama. Given Al Qaeda’s record of slaughtering Muslims as effortlessly as they do Western infidels, the Pakistani psyche seems headed for moral collapse.
Many people in Muslim-majority states believe the United States is playing a largely negative role in the world, according to a survey.
The situation in other Muslim lands looks nearly as grim. Echoing the Pew findings, a recent World Public Opinion survey suggests that many people in Muslim-majority states believe the United States is playing a largely negative role in the world (72 percent in Turkey say the United States is playing a mainly negative role, 69 percent in Pakistan, 67 percent in Egypt, 53 percent in Iraq, and 39 percent in Indonesia.) In Egypt, where America-bashing is virtually the only permissible form of public protest, high levels of anti-Americanism persist. Palestinians, by a more than two-to-one margin (51 percent to 23 percent), have more confidence in the leader of Al Qaeda than in President Obama. Obama gets higher approval ratings in Turkey—about 33 percent—but most respondents oppose his Afghanistan policy and express highly unfavorable attitudes toward the United States. Indeed, at least 86 percent of Turks say America abuses its power to get Turkey to do what it wants, and 76 percent see the United States as having a “hypocritical” agenda. This comes despite continuing U.S. support for Turkey’s admission to the European Union, assistance against terror attacks of the Kurdistan Workers Party, and an Obama trip in which he reassured Turks that America “is not, and never will be, at war with Islam.” A recent report by the Washington Institute for Near East Policy has begun to grasp the essential reality: “Combined with historical data, these new polls show that anti-Americanism might be becoming an internalized component of Turkish society, and that anti-Americanism in Turkey does not relate to specific U.S. administrations.”
That verdict could be applied to nearly every country in the Arab League. Yet pollsters, determined to locate the causes of anti-Americanism in U.S. foreign policy, have designed surveys to exonerate their presumptions. America’s imperial ambitions, rapacious oil companies, the Jewish lobby, apocalyptic evangelicals—all have been blamed for turning the United States into an object of fear and loathing in the Muslim world. Dalia Mogahed, executive director of the Center for Muslim Studies at the Gallup Organization and an advisor to the Obama White House, insists that Islam has nothing to do with terrorist rage against the United States: “The real difference between those who condone terrorist acts and all others is politics, not piety.” Never mind the observable fact that Muslim leaders openly brandish the Koran to justify every manner of inhuman atrocity.
Opinion polls do not mean a hill of beans in cultures rendered incoherent by despotism, denial, rage, and irrational religion.
The Pew Research Center for People and the Press, directed by Andrew Kohut, has led the research effort to prop up these pernicious myths: The trick is to employ polling methods oblivious to the cultural pathologies raging in Arab and Muslim societies. What does “public opinion” mean under Islamic regimes that outlaw political parties, control the media, underwrite hate speech in sermons and school textbooks, persecute religious minorities, and torture political dissidents? Pew researchers remain unburdened by these complicated realities.
Others are not. Not long ago, a group of moderate European Arabs launched a campaign to prevent Al Jazeera television from being broadcast in Europe. Why? Because they accuse the channel of “fostering extremism” among European Arab youth and “supporting terrorism.” In 2006, when global anti-Americanism was at its zenith, surveys found a majority of Indonesians, Jordanians, Turks, and Egyptians still did not believe that Arabs were responsible for the September 11 terrorist attacks. (Pew researchers euphemistically called this finding the result of “fundamentally different views of world events.”)
If the survey results represent attitudes in the Middle East and beyond, then the most cherished liberal assumptions about radical Islam and U.S. foreign policy are exposed as desperate falsehoods.
The Pew Research Center, advised by no less a partisan than former Secretary of State Madeleine Albright, continues to make the now incomprehensible claim that “the unilateralist U.S. foreign policy” of George Bush was the engine of anti-Americanism the world over. In a summary report of its work over the last eight years, Pew researchers concluded: “In the view of much of the world, the United States has played the role of bully in the school yard, throwing its weight around with little regard for others’ interests.” Of Pew’s 25 surveys conducted since 2001, America’s image problem was designated “the central, unmistakable finding.”
The actual unmistakable finding, confirmed by the resiliency of anti-Americanism in the era of Obama, is that opinion polls do not mean a hill of beans in cultures rendered incoherent by despotism, denial, rage, and irrational religion. Instead, such surveys merely allow partisans to use foreign narrators to voice their private grievances. These researchers surely realize that countless Arab and Muslim leaders are devoted to disseminating a perversely distorted image of the United States. Yet they carry on, blithely unconcerned that the abnormalities of Islamist societies—where the suicide bomber is a sanctified symbol of martyrdom—might represent an assault on the moral norms of the democratic West.
A more honest approach to polling could help us better understand America’s influence in the world. It might suggest how the ideals of equality, freedom, government by consent, religious liberty—the core doctrines of the American creed—pose a threat to despots and religious demagogues. That would require researchers, however, to suspend their agendas and begin asking tough, open-ended questions to more diverse audiences.
Obama Scolds Bankers, Appeals to Moral Compass: Caroline Baum
Commentary by Caroline Baum
Sept. 16 (Bloomberg) -- It says a lot about the shift in the center of gravity from Wall Street to Pennsylvania Avenue when the main focus of the trading day is what the president of the United States says.
This week it’s financial regulation; financial stocks rose Monday when President Barack Obama took his case for overhauling financial regulation to Wall Street. At times he sounded more like a parent scolding a disobedient child than a president proposing a new regulatory framework.
“We will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis,” Obama said in a speech at Federal Hall in New York City. (“You will not stay out until 2 a.m. again.”)
Obama’s regulatory revamp would create a new consumer protection agency to -- what else? -- protect the consumer from himself, as well as from predatory lenders; a “resolution authority” to seize and wind down insolvent non-banks; and an oversight council to share information across markets and plug regulatory gaps “that don’t fit neatly into the organizational chart.”
He said that. Honest. By the time regulators figure out their reporting channels, bankers will have identified and wiggled their way through new loopholes.
“Regulation is static. Markets are dynamic,” said Allan Meltzer, professor of political economy at Carnegie Mellon University in Pittsburgh.
Trees, Not Forest
The president didn’t anoint the Federal Reserve as the new systemic risk regulator, which suggests to Meltzer a move away from the Treasury position, and for good reason.
“The Senate Banking Committee doesn’t want to give the Fed more power,” Meltzer said. “I’ve never seen such unanimity, and I’ve been testifying before the committee since 1962.”
Obama blamed the patchwork system of financial regulation for the current crisis. So many agencies and regulators were responsible for oversight of individual financial firms that no one was minding the store or, as he put it, “protecting the whole system.”
Obama said his reforms are designed to promote “transparency and accountability,” buzzwords of his administration.
Don’t hold your breath. When it comes to the “particulars of a given industry or instrument, they are only transparent ex- post,” said Bob Barbera, chief economist at ITG/Hoenig, a New York brokerage. “You are overstating your skill set if you think you will see through the potential pitfalls.”
Bankers Outfox Regulators
It is fantasy to believe a new, bigger, better regulator will ferret out problems before they grow to system-sinking size. Those being regulated are always one-step ahead of the regulator, finding new cracks or loopholes in the regulatory fabric to exploit. When the Basel II accord imposed higher risk- based capital requirements on international banks, banks moved assets off the balance sheet.
What’s more, regulators tend to identify with those they regulate, a phenomenon known as “regulatory capture,” making it highly unlikely that a new regulator would succeed where previous ones have failed.
The single biggest problem with Obama’s speech on financial regulation was the failure to dent the doctrine of too big to fail. Obama warned “those on Wall Street” against taking “risks without regard for consequences,” expecting the American taxpayer to foot the bill. But his words rang hollow.
Learn by Example
You can wag a finger at bankers and brokers and try to appeal to their moral sense, reminding them of the debt they owe to the American people for bailing them out.
But you can’t, with words alone, alter the perception -- now more entrenched than ever -- that the government won’t allow large institutions to fail.
How do you convince bankers they will pay for their risk- taking when they’ve watched the government prop up banks, investment banks, insurance companies, auto companies and housing finance agencies?
They learn by example. The system of privatized profits and socialized losses has suited them fine until now. It is accepted wisdom that allowing Lehman Brothers Holdings Inc. to fail a year ago was a huge mistake, one that shut down, and almost brought down, the financial system.
Failure as Success
One solution, according to Meltzer, is to insist that bigger must be made better. Regulators could “make sure capital requirements rise more in proportion to asset size,” he said.
Another option is to excise proprietary trading from the banking and brokerage business, according to John Cochrane and Luigi Zingales, professors at the University of Chicago Booth School of Business, as outlined in a Sept. 15 Wall Street Journal op-ed.
In other words, institutions deemed “systemically important,” shouldn’t engage in systemically destabilizing activities.
Then there’s a third unpalatable option. When it comes to the doctrine of too big to fail, nothing succeeds like failure.
Monday, September 14, 2009
Obama Defends China Tariffs as Trade War Talk Grows (Update1)
By Mark Drajem
Sept. 14 (Bloomberg) -- President Barack Obama said his decision to impose tariffs on Chinese tires wasn’t intended to be “provocative,” as China’s response sparked concern about the risk of a trade war.
China called the move an “abuse,” and filed a complaint with the World Trade Organization today. China also said it will probe whether U.S. chicken and auto products are being dumped at below-market prices or receive unfair government subsidies.
“This administration is committed to pursuing expanded trade and new trade agreements,” Obama said in a speech at Federal Hall in New York City today. “But no trading system will work if we fail to enforce our trade agreements.”
Obama said Sept. 11 that he will impose duties of 35 percent on $1.8 billion of automobile tires from China, acting on a petition by the United Steelworkers union.
The “risk is that it just spirals” into a trade war, David Spooner, a former Commerce Department official and a lawyer at Squire, Sanders & Dempsey LLP in Washington, said in an interview today. Spooner represented China’s rubber industry in the case.
White House spokesman Robert Gibbs told reporters today that “a dispute like this” won’t cause the U.S. relationship with China to “get off track.”
Obama said in his speech that imposing the tariffs wasn’t meant to be “provocative or to promote self-defeating protectionism.”
‘Political Pressure’
The case brought by the steelworkers union was the largest so-called safeguard petition filed to protect U.S. producers from increasing imports from China. Union leaders and Democratic lawmakers said the decision demonstrates Obama’s commitment to protecting U.S. workers and jobs.
Retailers that rely on imports are “disappointed in the president’s decision to bow to political pressure,” Stephanie Lester, vice president of the Retail Industry Leaders Association, which represents companies such as Wal-Mart Stores Inc. and Target Corp., said in a statement.
The retailers hope administration officials “will be more judicious in their responses to any future safeguard petitions,” she said.
Obama’s decision on tires may encourage U.S. producers of apparel, steel or other goods to file similar safeguard complaints against imports from China, and spur China to retaliate against U.S. companies trying to do business there, said Robert Kapp, a Port Townsend, Washington-based business consultant specializing in China.
‘Biting Their Nails’
“There are 10 to 50 companies on the U.S. side biting their nails to the bone, hoping they are not caught up in this,” Kapp said.
As long as China continues to subsidize its manufacturers and channel government funds into export-oriented businesses, trade friction with the U.S. will remain, said Jeremie Waterman, senior director for China at the U.S. Chamber of Commerce.
The safeguard complaints “are symptoms of broader problems in the U.S.-China relationship,” he said in an interview today. Obama’s decision “is not likely to save a single job, but it’s a legal and legitimate action.”
The U.S. and China will try to make sure the frictions that erupted over tires don’t disrupt a commercial relationship that totaled $409 billion last year, Kapp said. China, the second- largest U.S. trading partner after Canada, is also the largest holder of U.S. debt with $776 billion.
“The Chinese will be angry,” said Elliot Feldman, a partner with Baker Hostetler LLP in Washington, who writes a blog on China trade. “But there is a limit to their anger.”
Feldman predicted China won’t prevail in its complaint over the tire tariffs because Chinese officials accepted such “safeguard cases” when it joined the WTO.
‘U.S. Confident’
“The U.S. is confident that our action is fully WTO- consistent,” Carol Guthrie, a spokeswoman for the U.S. Trade Representative’s office, said in an interview today. The safeguards were part of “the deal China agreed to.”
In safeguard cases, companies need to show only that imports are surging and not that the products benefit from subsidies or are being dumped at a discount.
Some of the largest U.S. tire companies didn’t join in the union’s petition for relief from Chinese tire imports. Goodyear Tire & Rubber Co., the largest U.S. tiremaker, stayed neutral. Cooper Tire & Rubber Co., the second-largest U.S. tiremaker, opposed the relief. The company has a plant in China.
Goodyear gained 51 cents, or 3 percent, to $17.78 at 4 p.m. in New York Stock Exchange composite trading. Cooper rose $1.03, or 7 percent, to $15.89.
Tightening Supplies
“We see positive implications for U.S. pricing,” Deutsche Bank Group said in a report today. “Tightening supplies of Chinese tires could exacerbate this phenomenon in the U.S.”
The USA Poultry & Egg Export Council said China’s move to investigate whether the U.S. sold poultry there for below-market prices was prompted partly by bad U.S. trade policies, including the tariffs on tires.
“Our own government is creating these problems more so than the Chinese,” James Sumner, president of the group representing producers of 90 percent of U.S. chicken and egg exports, said in an interview today. “We are upset with the way this has been handled by the administration.”
What a difference a month makes! When my last controversial column posted on Salon in the second week of August, most Democrats seemed frozen in suspended animation, not daring to criticize the Obama administration's bungling of healthcare reform lest it give aid and comfort to the GOP. Well, that ice dam sure broke with a roar. Dissident Democrats found their voices, and by late August even the liberal lemmings of the mainstream media, from CBS to CNN, had drastically altered their tone of reportage, from priggish disdain of the town hall insurgency to frank admission of serious problems in the healthcare bills as well as of Obama's declining national support.
But this tonic dose of truth-telling may be too little too late. As an Obama supporter and contributor, I am outraged at the slowness with which the standing army of Democratic consultants and commentators publicly expressed discontent with the administration's strategic missteps this year. I suspect there had been private grumbling all along, but the media warhorses failed to speak out when they should have -- from week one after the inauguration, when Obama went flat as a rug in letting Congress pass that obscenely bloated stimulus package. Had more Democrats protested, the administration would have felt less arrogantly emboldened to jam through a cap-and-trade bill whose costs have made it virtually impossible for an alarmed public to accept the gargantuan expenses of national healthcare reform. (Who is naive enough to believe that Obama's plan would be deficit-neutral? Or that major cuts could be achieved without drastic rationing?)
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By foolishly trying to reduce all objections to healthcare reform to the malevolence of obstructionist Republicans, Democrats have managed to destroy the national coalition that elected Obama and that is unlikely to be repaired. If Obama fails to win reelection, let the blame be first laid at the door of Speaker of the House Nancy Pelosi, who at a pivotal point threw gasoline on the flames by comparing angry American citizens to Nazis. It is theoretically possible that Obama could turn the situation around with a strong speech on healthcare to Congress this week, but after a summer of grisly hemorrhaging, too much damage has been done. At this point, Democrats' main hope for the 2012 presidential election is that Republicans nominate another hopelessly feeble candidate. Given the GOP's facility for shooting itself in the foot, that may well happen.
This column has been calling for heads to roll at the White House from the get-go. Thankfully, they do seem to be falling faster -- as witness the middle-of-the-night bum's rush given to "green jobs" czar Van Jones last week -- but there's a long way to go. An example of the provincial amateurism of current White House operations was the way the president's innocuous back-to-school pep talk got sandbagged by imbecilic support materials soliciting students to write fantasy letters to "help" the president (a coercive directive quickly withdrawn under pressure). Even worse, the entire project was stupidly scheduled to conflict with the busy opening days of class this week, when harried teachers already have their hands full. Comically, some major school districts, including New York City, were not even open yet. And this is the gang who wants to revamp national healthcare?
Why did it take so long for Democrats to realize that this year's tea party and town hall uprisings were a genuine barometer of widespread public discontent and not simply a staged scenario by kooks and conspirators? First of all, too many political analysts still think that network and cable TV chat shows are the central forums of national debate. But the truly transformative political energy is coming from talk radio and the Web -- both of which Democrat-sponsored proposals have threatened to stifle, in defiance of freedom of speech guarantees in the Bill of Rights. I rarely watch TV anymore except for cooking shows, history and science documentaries, old movies and football. Hence I was blissfully free from the retching overkill that followed the deaths of Michael Jackson and Ted Kennedy -- I never saw a single minute of any of it. It was on talk radio, which I have resumed monitoring around the clock because of the healthcare fiasco, that I heard the passionate voices of callers coming directly from the town hall meetings. Hence I was alerted to the depth and intensity of national sentiment long before others who were simply watching staged, manipulated TV shows.
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Why has the Democratic Party become so arrogantly detached from ordinary Americans? Though they claim to speak for the poor and dispossessed, Democrats have increasingly become the party of an upper-middle-class professional elite, top-heavy with journalists, academics and lawyers (one reason for the hypocritical absence of tort reform in the healthcare bills). Weirdly, given their worship of highly individualistic, secularized self-actualization, such professionals are as a whole amazingly credulous these days about big-government solutions to every social problem. They see no danger in expanding government authority and intrusive, wasteful bureaucracy. This is, I submit, a stunning turn away from the anti-authority and anti-establishment principles of authentic 1960s leftism.
How has "liberty" become the inspirational code word of conservatives rather than liberals? (A prominent example is radio host Mark Levin's book "Liberty and Tyranny: A Conservative Manifesto," which was No. 1 on the New York Times bestseller list for nearly three months without receiving major reviews, including in the Times.) I always thought that the Democratic Party is the freedom party -- but I must be living in the nostalgic past. Remember Bob Dylan's 1964 song "Chimes of Freedom," made famous by the Byrds? And here's Richie Havens electrifying the audience at Woodstock with "Freedom! Freedom!" Even Linda Ronstadt, in the 1967 song "A Different Drum," with the Stone Ponys, provided a soaring motto for that decade: "All I'm saying is I'm not ready/ For any person, place or thing/ To try and pull the reins in on me."
Throughout this fractious summer, I was dismayed not just at the self-defeating silence of Democrats at the gaping holes or evasions in the healthcare bills but also at the fogginess or insipidity of articles and Op-Eds about the controversy emanating from liberal mainstream media and Web sources. By a proportion of something like 10-to-1, negative articles by conservatives were vastly more detailed, specific and practical about the proposals than were supportive articles by Democrats, which often made gestures rather than arguments and brimmed with emotion and sneers. There was a glaring inability in most Democratic commentary to think ahead and forecast what would or could be the actual snarled consequences -- in terms of delays, denial of services, errors, miscommunications and gross invasions of privacy -- of a massive single-payer overhaul of the healthcare system in a nation as large and populous as ours. It was as if Democrats live in a utopian dream world, divorced from the daily demands and realities of organization and management.
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But dreaming in the 1960s and '70s had a spiritual dimension that is long gone in our crassly materialistic and status-driven time. Here's a gorgeous example: Bob Welch's song "Hypnotized." which appears on Fleetwood Mac's 1973 album "Mystery to Me." (The contemplative young man in this recent video is not Welch.) It's a peyote dream inspired by Carlos Castaneda's fictionalized books: "They say there's a place down in Mexico/ Where a man can fly over mountains and hills/ And he don't need an airplane or some kind of engine/ And he never will." This exhilarating shamanistic vision (wonderfully enhanced by Christine McVie's hymnlike backing vocal) captures the truth-seeking pilgrimages of my generation but also demonstrates the dangerous veering away from mundane social responsibilities. If the left is an incoherent shambles in the U.S., it's partly because the visionaries lost their bearings on drugs, and only the myopic apparatchiks and feather-preening bourgeois liberals are left. (I addressed the drugs cataclysm in "Cults and Cosmic Consciousness: Religious Vision in the American 1960s" in the Winter 2003 issue of Arion.)
Having said all that about the failures of my own party, I am not about to let Republicans off the hook. What a backbiting mess the GOP is! It lacks even one credible voice of traditional moral values on the national stage and is addicted to sonorous pieties of pharisaical emptiness. Republican politicians sermonize about the sanctity of marriage while racking up divorces and sexual escapades by the truckload. They assail government overreach and yet support interference in women's control of their own bodies. Advanced whack-a-mole is clearly needed for that yammering smarty-pants Newt Gingrich, who is always so very, very pleased with himself but has yet to produce a single enduring thought. The still inexplicably revered George W. Bush ballooned our national deficits like a drunken sailor and clumsily exacerbated the illegal immigration debate. And bizarrely, the hallucinatory Dick Cheney, a fake-testosterone addict who spooked Bush into a pointless war, continues to be lauded as presidential material.
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Which brings us to Afghanistan: Let's get the hell out! While I vociferously opposed the incursion into Iraq, I was always strongly in favor of bombing the mountains of Afghanistan to smithereens in our search for Osama bin Laden and al-Qaida training camps. But committing our land forces to a long, open-ended mission to reshape the political future of that country has been a fool's errand from the start. Every invader has been frustrated and eventually defeated by that maze-like mountain terrain, from Alexander the Great to the Soviet Union. In a larger sense, outsiders will never be able to fix the fate of the roiling peoples of the Near East and Greater Middle East, who have been disputing territorial borderlines and slaughtering each other for 5,000 years. There is too much lingering ethnic and sectarian acrimony for a tranquil solution to be possible for generations to come. The presence of Western military forces merely inflames and prolongs the process and creates new militias of patriotic young radicals who hate us and want to take the war into our own cities. The technological West is too infatuated with easy fixes. But tribally based peoples think in terms of centuries and millennia. They know how to wait us out. Our presence in Afghanistan is not worth the price of any more American lives or treasure.
In response to persistent queries, I must repeat: No, I do not have a Facebook page, nor am I a "friend" on anyone else's Facebook. Nor do I Twitter. This Salon column is my sole Web presence. Whatever doppelgänger Camille Paglias are tripping the light fantastic out there (as in the haunted bus-station episode of "The Twilight Zone"), they aren't me!
Camille Paglia's column appears on the second Wednesday of each month. Every third column is devoted to reader letters. Please send questions for her next letters column to this mailbox. Your name and town will be published unless you request anonymity.
Tuesday, September 8, 2009
Obama Gridlocked Is the Market’s New Best Friend: Amity Shlaes
Commentary by Amity Shlaes
Sept. 8 (Bloomberg) -- Right wingers are in an uproar over President Barack Obama’s plan to address school children this week.
Some find such a display of sanctimony by a federal official toward school kids inappropriate.
Yet this use of the bully pulpit is probably good for a different crowd: bulls. Market bulls, that is.
Preaching like a social worker takes time away from other things the president might be doing, including finding enough votes to make his health-care overhaul truly radical. Over the weekend the story of the school speech actually overshadowed the speech the president is planning this week on health care.
Everyone knows that government in action can terrify markets. What matters most is the quality of the initiatives. There are those that change the world. And there is “feel good” activity that substitutes for significant change.
This latter kind is almost the equivalent of inactivity. A Washington abuzz over a pep talk for sulky sophomores is a Washington that might leave the rest of the economy alone to grow. The stock market recognizes this, and acts accordingly.
It all might provide an explanation for the past year. Last September both the White House and commentators argued that a financial bailout would save us. That such a bailout would help the market recover went without saying. The bailout package passed in early October, auguring involvement of the federal government in business of an unanticipated scale. Instead of rallying the Dow plunged below 10,000, and then below 9,000.
By October and early November, it was clear that Democrats would sweep into office, and that they were ready for action.
Worst Week
The week that the incoming team seemed most ferocious was the week of Nov. 17. Two things happened then. The first was that the president-elect’s new chief of staff, Rahm Emanuel, drove home his famous line, “you never want a serious crisis to go to waste.” Meanwhile news reports said that the president- elect and Senator John McCain, the defeated Republican challenger, had agreed to work together, a signal that Obama might have no opposition.
The combination represented the potential for more change by government than many adults could remember. Not good. The day it took in the Emanuel statement -- Nov. 19 -- the Dow Jones Industrial Average dropped more than 400 points.
Over the spring, though, it became clear that the Republicans weren’t going to support the Obama administration to the extent imagined in the fall. Even an all-Democratic Washington was confronting legislative limits. The market staged its rally.
Summer Rebound
This summer brought evidence that the president’s signature legislation on health care might not come as fast as anticipated, or might exclude the radical part, the public- insurance option. By July, the White House found it lacked the votes to pass the most dramatic version of health-care reform.
Senate Majority Leader Harry Reid then announced that the lawmakers wouldn’t be able to get a bill through before the August recess. The Dow jumped the 9,000 hurdle. Markets knew that lawmakers would be back at their desks come September, but they also believed now that Washington was capable of less than Emanuel had suggested.
The distinctions between different kinds of activity were first outlined by an economist at the University of Chicago, Frank H. Knight.
Knight drew a line between risk and uncertainty. Risk that can be quantified through theory or empirical work was one thing, he wrote: “insofar as the probability can be evaluated numerically by either method it can be eliminated and disregarded.”
Different Risks
Risks that can’t be measured are of a different type altogether. It is the unquantifiable uncertainty that interested Knight, who saw in it the possibility of profits for the bold few. But most of the rest of us just bury our heads in the sand.
Over time, theorists right, left and center have built on Knight’s work or come up with their own versions.
Former Treasury Secretary Robert Rubin, who is now chairman of the institution where I work, the Council on Foreign Relations, has long emphasized the value of forcing problems into frameworks of probability. In other words, shoving as much risk as possible into the easier, quantifiable category.
Rubin’s efforts and those of others in the Clinton administration reduced uncertainties and pleased markets: thus the 1990s rally. Former House Speaker Newt Gingrich’s decision to shut the government rather than agree to administration spending plans produced a gridlock that likewise precluded Emanuelesque action.
Possible Explanations
You can argue that government activism stoked the recent rally and that the so-called cash for clunkers consumer spree generated the summer’s rises.
Knightian Uncertainty, as it is known, is at least as plausible an explanation. Those trying to figure out how markets will move this fall might find cracking a copy of Frank Knight worthwhile.
I’ve written before about the Congressional Effect Fund, which buys and sells stocks on the premise that markets will rise when Congress is out of session -- that is, truly inactive.
But you get the drift: big new legislation -- bad. Government gridlock -- good. Speeches to school children -- outstanding.
Something truly shocking happened on Sunday's "The Chris Matthews Show": three out of four of his guests said the current anti-government sentiment sweeping the nation is not because Barack Obama is black, and that the news media are actually responsible for exacerbating the suggestion that protesters are racist.
