Commentary Magazine


Posts For: March 19, 2009

Re: Did He Forget to Mention That?

Geithner just admitted that the bonus loophole came from his department. But just yesterday, President Obama said in defense of the Treasury secretary, “Understand that Tim Geithner didn’t draft these contracts with AIG.”

And then this:

Asked how he hoped to quell public anger over the bonuses, [Obama] said, “I don’t want to quell anger, what I want to do is channel anger in a constructive way.”

Well, the anger is manifest and there seems little doubt about how to channel it most constructively. Yet, Obama has staked everything on his defense of the target of the anger. It’s hard to see how this cognitive, and political, dissonance will be resolved.

Geithner just admitted that the bonus loophole came from his department. But just yesterday, President Obama said in defense of the Treasury secretary, “Understand that Tim Geithner didn’t draft these contracts with AIG.”

And then this:

Asked how he hoped to quell public anger over the bonuses, [Obama] said, “I don’t want to quell anger, what I want to do is channel anger in a constructive way.”

Well, the anger is manifest and there seems little doubt about how to channel it most constructively. Yet, Obama has staked everything on his defense of the target of the anger. It’s hard to see how this cognitive, and political, dissonance will be resolved.

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Did He Forget to Mention That?

CNN reports:

Treasury Secretary Timothy Geithner told CNN Thursday his department asked Sen. Chris Dodd to include a loophole in the stimulus bill that allowed bailed-out insurance giant American International Group to keep its bonuses.

In an interview with CNN’s Ali Velshi, Geithner said the Treasury Department was particularly concerned the government would face lawsuits if bonus contracts were breached. Dodd admitted to CNN Thursday he’d added the controversial provision after a Treasury official pushed for it. Earlier in the week, Dodd had said he had not played any role in the addition of the loophole.

Geithner told Velshi Thursday he takes full responsibility for the situation.

So for days now we’ve been playing “find the author” of the AIG bonus exemption maneuver and only now Geithner steps forward?

CNN reports:

Treasury Secretary Timothy Geithner told CNN Thursday his department asked Sen. Chris Dodd to include a loophole in the stimulus bill that allowed bailed-out insurance giant American International Group to keep its bonuses.

In an interview with CNN’s Ali Velshi, Geithner said the Treasury Department was particularly concerned the government would face lawsuits if bonus contracts were breached. Dodd admitted to CNN Thursday he’d added the controversial provision after a Treasury official pushed for it. Earlier in the week, Dodd had said he had not played any role in the addition of the loophole.

Geithner told Velshi Thursday he takes full responsibility for the situation.

So for days now we’ve been playing “find the author” of the AIG bonus exemption maneuver and only now Geithner steps forward?

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Commentary of the Day

David M. Mazel, on Peter Wehner:

If one believes that AIG, as a company, deserved taxpayer money, then does it not follow that the people who run AIG deserve a measure of compensation commensurate with their talents? In business the leaders have to pay their people to keep those people.

This passion to deny that there were bonuses, and now that the bonuses have been paid, to specifically tax them and thereby punish the recipients, boggles my mind. The reality is that if the government want AIG to succeed, AIG must have the right employees. To get and maintain these people requires the right work environment. For AIG, part of that environment is that compensation takes the form of bonuses. AIG is not alone in this, other companies use bonuses that same exact way.

To see this another way, imagine that AIG simply denied all bonuses. What would their star employees do? Would the stars not just leave? What would happen to AIG then?

David M. Mazel, on Peter Wehner:

If one believes that AIG, as a company, deserved taxpayer money, then does it not follow that the people who run AIG deserve a measure of compensation commensurate with their talents? In business the leaders have to pay their people to keep those people.

This passion to deny that there were bonuses, and now that the bonuses have been paid, to specifically tax them and thereby punish the recipients, boggles my mind. The reality is that if the government want AIG to succeed, AIG must have the right employees. To get and maintain these people requires the right work environment. For AIG, part of that environment is that compensation takes the form of bonuses. AIG is not alone in this, other companies use bonuses that same exact way.

To see this another way, imagine that AIG simply denied all bonuses. What would their star employees do? Would the stars not just leave? What would happen to AIG then?

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When Good Organizations Go Bad: The Case of the Inter-Parliamentary Union

You’ve probably never heard of the Inter-Parliamentary Union (IPU). That’s not necessarily a bad thing, because it’s a bad organization.  But it didn’t start off that way.  Its career sums up the fate of liberal internationalism, and the organizations that now-faded ideology created.

My recently-published paper from the Heritage Foundation on the IPU lacked the space to set the full historical stage.  The Inter-Parliamentary Union (IPU) was founded in 1888 by Frédéric Passy of France and William Randal Cremer of Great Britain, both of whom later received the Nobel Peace Prize for their efforts.  Passy and Cremer were liberals and members of their respective parliaments.  They were part of the much broader array of peace activists and supporters of international arbitration that flourished before World War I, and whose achievements included the Hague Peace Conferences of 1899 and 1907, which began to codify the modern laws of war.  Inspired by the rise of liberalism in the late eighteenth and early nineteenth centuries, they in turn encouraged later leaders such as President Woodrow Wilson to propose institutions such as the League of Nations, which eventually provided the impetus for the creation of the United Nations.

This pre-1914 liberalism was not free from illusions.  But there was much to admire in it.  Passy, for example, wanted to promote international peace by advancing the cause of free trade, which like most liberals of his day, he believed was essential to reducing the power of autocratic and war-prone states.  He also supported the international arbitration of disputes, but he did so in the belief that the states involved would be responsible for requesting arbitration, and would remain subject to the sovereign wills of their people.  Passy sought a world in which inter-state relations would look like they do today between Britain and the U.S., a world in which war would be unthinkable and disagreements would be settled peaceably.  Fittingly, the IPU started off as a gathering place for a small group of democracies.

How times change!  The U.S. got itself kicked out of the IPU in 2003, for persistent non-payment of dues (the IPU’s dues structure is the same as the UN’s).  The only pity is that it didn’t leave on principle.  That’s because the IPU now has no principles.  It has no standards at all for membership: North Korea, Zimbabwe, Libya, and Iran, to name only a few, are members.  It’s relentlessly biased against Israel, it betrays the beliefs of its founders by agitating against free trade, it supports a relentlessly socialist, intrusive, globalist, and illiberal economic agenda, and it’s a regular sounding board for calls to restrict free speech on the grounds that it offends Muslims.  The IPU let the bad guys in, and gave them all votes: now, just like in the UN, they run the joint.

Why does this matter to the U.S.?  Simple.  The rumor going around Capitol Hill is that the U.S. is on the verge of rejoining — or re-activating its entirely dormant membership by mailing in a check for the back dues.  There are all sorts of things that could be said about this, and I say most of them in my paper.  But I left one thing unsaid: the idea that any representative of the U.S. would sit down and discuss the definition of democracy with Zimbabwe, or women’s rights with Saudi Arabia, isn’t just a bad one.  It’s a disgusting one.

You’ve probably never heard of the Inter-Parliamentary Union (IPU). That’s not necessarily a bad thing, because it’s a bad organization.  But it didn’t start off that way.  Its career sums up the fate of liberal internationalism, and the organizations that now-faded ideology created.

My recently-published paper from the Heritage Foundation on the IPU lacked the space to set the full historical stage.  The Inter-Parliamentary Union (IPU) was founded in 1888 by Frédéric Passy of France and William Randal Cremer of Great Britain, both of whom later received the Nobel Peace Prize for their efforts.  Passy and Cremer were liberals and members of their respective parliaments.  They were part of the much broader array of peace activists and supporters of international arbitration that flourished before World War I, and whose achievements included the Hague Peace Conferences of 1899 and 1907, which began to codify the modern laws of war.  Inspired by the rise of liberalism in the late eighteenth and early nineteenth centuries, they in turn encouraged later leaders such as President Woodrow Wilson to propose institutions such as the League of Nations, which eventually provided the impetus for the creation of the United Nations.

This pre-1914 liberalism was not free from illusions.  But there was much to admire in it.  Passy, for example, wanted to promote international peace by advancing the cause of free trade, which like most liberals of his day, he believed was essential to reducing the power of autocratic and war-prone states.  He also supported the international arbitration of disputes, but he did so in the belief that the states involved would be responsible for requesting arbitration, and would remain subject to the sovereign wills of their people.  Passy sought a world in which inter-state relations would look like they do today between Britain and the U.S., a world in which war would be unthinkable and disagreements would be settled peaceably.  Fittingly, the IPU started off as a gathering place for a small group of democracies.

How times change!  The U.S. got itself kicked out of the IPU in 2003, for persistent non-payment of dues (the IPU’s dues structure is the same as the UN’s).  The only pity is that it didn’t leave on principle.  That’s because the IPU now has no principles.  It has no standards at all for membership: North Korea, Zimbabwe, Libya, and Iran, to name only a few, are members.  It’s relentlessly biased against Israel, it betrays the beliefs of its founders by agitating against free trade, it supports a relentlessly socialist, intrusive, globalist, and illiberal economic agenda, and it’s a regular sounding board for calls to restrict free speech on the grounds that it offends Muslims.  The IPU let the bad guys in, and gave them all votes: now, just like in the UN, they run the joint.

Why does this matter to the U.S.?  Simple.  The rumor going around Capitol Hill is that the U.S. is on the verge of rejoining — or re-activating its entirely dormant membership by mailing in a check for the back dues.  There are all sorts of things that could be said about this, and I say most of them in my paper.  But I left one thing unsaid: the idea that any representative of the U.S. would sit down and discuss the definition of democracy with Zimbabwe, or women’s rights with Saudi Arabia, isn’t just a bad one.  It’s a disgusting one.

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Come Out, Come Out Wherever You Are, Mr. Reid

The White House and Tim Geithner aren’t smelling like roses in the AIG mess. So how are the Democratic leaders in Congress holding up? We see these companion headlines over at Politico: “Don’t blame me on AIG, Pelosi says” and “Reid Avoids AIG Blame Game.” You might think from the latter that Harry Reid is being a stand-up guy and not shifting blame to others. Well, he’s actually just plain avoiding the whole thing:

In a Thursday afternoon news conference, Reid said he wasn’t going to answer any questions about why a provision was included in the stimulus package allowing for AIG bonuses. He referred questions about the matter to Banking Committee Chairman Chris Dodd.

“We need to finish this AIG thing, but the Republicans won’t let us, and that’s too bad,” Reid said.

Republicans are pounding Reid today for what they say is his silence on the affair.

“Sen. Reid appointed himself to the conference committee that changed this bill behind closed doors and ensured that AIG executives could receive their bonuses. However, unlike his colleague Sen. Dodd, who admitted his involvement yesterday, Sen. Reid has stayed silent about his role in this process,” said National Republican Senatorial Committee spokeswoman Amber Wilkerson.

Reid today was clear on where he stood: Let’s move on already.

“I not only don’t want to talk about it, I’m not going to,” he snapped at one reporter.

This is an illustration of why real bipartisanship pays off. Yes, sometimes you get “better ideas” when everyone is working together. But the real reason, the political reason for it, is that if you shut out the other side, ram things home in secret, don’t put legislation up on the internet for a reasonable amount of time, and admit none of your members have read it, then it gets dicey when, lo and behold, there turns out to be a bunch of embarrassing junk in there.

But on a more straightforward note, Reid owes his constituents and the rest of the country some answers about what he knew and agreed to with regard to the bonuses. Chris Dodd has walked the plank, Treasury Secretary Geithner is struggling to relate his tale, and the president is going to have to get his story squared away before the next press conference. It doesn’t quite seem right that the Majority Leader gets a pass. And he may have a perfectly good explanation for his role in all this —  which I’m sure he’ll share with us. If the media can corner him.

The White House and Tim Geithner aren’t smelling like roses in the AIG mess. So how are the Democratic leaders in Congress holding up? We see these companion headlines over at Politico: “Don’t blame me on AIG, Pelosi says” and “Reid Avoids AIG Blame Game.” You might think from the latter that Harry Reid is being a stand-up guy and not shifting blame to others. Well, he’s actually just plain avoiding the whole thing:

In a Thursday afternoon news conference, Reid said he wasn’t going to answer any questions about why a provision was included in the stimulus package allowing for AIG bonuses. He referred questions about the matter to Banking Committee Chairman Chris Dodd.

“We need to finish this AIG thing, but the Republicans won’t let us, and that’s too bad,” Reid said.

Republicans are pounding Reid today for what they say is his silence on the affair.

“Sen. Reid appointed himself to the conference committee that changed this bill behind closed doors and ensured that AIG executives could receive their bonuses. However, unlike his colleague Sen. Dodd, who admitted his involvement yesterday, Sen. Reid has stayed silent about his role in this process,” said National Republican Senatorial Committee spokeswoman Amber Wilkerson.

Reid today was clear on where he stood: Let’s move on already.

“I not only don’t want to talk about it, I’m not going to,” he snapped at one reporter.

This is an illustration of why real bipartisanship pays off. Yes, sometimes you get “better ideas” when everyone is working together. But the real reason, the political reason for it, is that if you shut out the other side, ram things home in secret, don’t put legislation up on the internet for a reasonable amount of time, and admit none of your members have read it, then it gets dicey when, lo and behold, there turns out to be a bunch of embarrassing junk in there.

But on a more straightforward note, Reid owes his constituents and the rest of the country some answers about what he knew and agreed to with regard to the bonuses. Chris Dodd has walked the plank, Treasury Secretary Geithner is struggling to relate his tale, and the president is going to have to get his story squared away before the next press conference. It doesn’t quite seem right that the Majority Leader gets a pass. And he may have a perfectly good explanation for his role in all this —  which I’m sure he’ll share with us. If the media can corner him.

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The Mob on the Hill

“In all very numerous assemblies, of whatever character composed, passion never fails to wrest the scepter from reason,” James Madison wrote in Federalist #55. “Had every Athenian citizen been a Socrates, every Athenian assembly would still have been a mob.”

I was thinking of Madison’s words in the context of the Congressional reaction to the AIG bonuses. I understand the reason for being unhappy with what AIG did; I was too when I learned about them. But watching the “pitch fork populism” sweeping the land is slightly alarming. The rhetoric is ridiculously out of control. I only wish there was half as much rage aimed at terrorists who are trying to kill innocent Americans as there is for those receiving bonuses. It’s worth adding that for some Members of Congress, it appears as if terrorists deserve greater Constitutional rights than AIG employees.

What makes all this doubly galling is that Congress and the Obama Administration, which played key roles in ensuring the bonuses would be paid, are now stoking passions against the bonuses. So we can add hypocrisy to their recklessness.

Madison was, as usual, right. What we are seeing is a mob. Last time I checked, however, there was no Socrates to be found in our assembly. But it appears there are a few Meletus-like characters in our midst. All in all, it is a dispiriting and at times disgusting display by our political class. It always is when passion wrests the scepter from reason.

“In all very numerous assemblies, of whatever character composed, passion never fails to wrest the scepter from reason,” James Madison wrote in Federalist #55. “Had every Athenian citizen been a Socrates, every Athenian assembly would still have been a mob.”

I was thinking of Madison’s words in the context of the Congressional reaction to the AIG bonuses. I understand the reason for being unhappy with what AIG did; I was too when I learned about them. But watching the “pitch fork populism” sweeping the land is slightly alarming. The rhetoric is ridiculously out of control. I only wish there was half as much rage aimed at terrorists who are trying to kill innocent Americans as there is for those receiving bonuses. It’s worth adding that for some Members of Congress, it appears as if terrorists deserve greater Constitutional rights than AIG employees.

What makes all this doubly galling is that Congress and the Obama Administration, which played key roles in ensuring the bonuses would be paid, are now stoking passions against the bonuses. So we can add hypocrisy to their recklessness.

Madison was, as usual, right. What we are seeing is a mob. Last time I checked, however, there was no Socrates to be found in our assembly. But it appears there are a few Meletus-like characters in our midst. All in all, it is a dispiriting and at times disgusting display by our political class. It always is when passion wrests the scepter from reason.

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Polling the Peace Process

Back in 2006, as Condoleezza Rice sought to overcome the “sequentiality” of the Road Map and proceed immediately to final status negotiations, Cal Thomas asked what evidence she had that if Palestinians had a state, they would not simply “complete the mission of killing the Jews and throwing them out.”  The Secretary of State responded by citing opinion polls:

Well, you can look at any opinion poll in the Palestinian territories and 70 percent of the people will say they’re perfectly ready to live side by side with Israel because they just want to live in peace.

It wasn’t true then, and a new poll released yesterday offers further reason to doubt it.

In the joint poll by the Palestinian Center for Policy and Survey Research (PCPSR) and the Truman Research Institute at Hebrew University, Palestinians were asked the following:

There is a proposal that after the establishment of an independent Palestinian state and the settlement of all issues in dispute, including the refugees and Jerusalem issues, there will be a mutual recognition of Israel as the state of the Jewish people and Palestine as the state of the Palestinian people. Do you agree or disagree to this proposal?

The percentage of Palestinians agreeing to recognize two states for two peoples — after settlement of “all issues in dispute” — is only 49.8 percent (of whom only 5.6 percent “definitely agree”).

Three months ago, PCPSR and the Truman Institute polled a specific two-state solution — patterned on the 2000 Clinton Parameters, but modified to cover 100% of the West Bank.  A total of 57% of Palestinians disagreed with the following proposal (edited here for space):

A state in Gaza and more than 97% of the West Bank, with equal land from Israel for the other 2+%; a “strong security force” and an international force to protect the state and monitor its borders (but no army); a capital in East Jerusalem; sovereignty over all Arab neighborhoods of East Jerusalem and all of the Old City, other than the Jewish Quarter and the “Wailing Wall;” an unlimited “right of return” for refugees to the new state; compensation for all refugees for their “refugeehood” and loss of property; an “end of conflict” statement; and recognition of Palestine and Israel as the homelands of their respective peoples.

The above proposal goes beyond what Israel is likely ever to endorse, since it does not (among other things) provide for defensible borders, which the U.S. has formally promised Israel multiple times.  Together with the new poll, however, it indicates that — whether framed as a comprehensive proposal effectively covering the entire West Bank or framed simply as an abstract matter (a Palestinian state and settlement of “all issues”) — the two-state solution does not command the approval of a majority of Palestinians.

Back in 2006, as Condoleezza Rice sought to overcome the “sequentiality” of the Road Map and proceed immediately to final status negotiations, Cal Thomas asked what evidence she had that if Palestinians had a state, they would not simply “complete the mission of killing the Jews and throwing them out.”  The Secretary of State responded by citing opinion polls:

Well, you can look at any opinion poll in the Palestinian territories and 70 percent of the people will say they’re perfectly ready to live side by side with Israel because they just want to live in peace.

It wasn’t true then, and a new poll released yesterday offers further reason to doubt it.

In the joint poll by the Palestinian Center for Policy and Survey Research (PCPSR) and the Truman Research Institute at Hebrew University, Palestinians were asked the following:

There is a proposal that after the establishment of an independent Palestinian state and the settlement of all issues in dispute, including the refugees and Jerusalem issues, there will be a mutual recognition of Israel as the state of the Jewish people and Palestine as the state of the Palestinian people. Do you agree or disagree to this proposal?

The percentage of Palestinians agreeing to recognize two states for two peoples — after settlement of “all issues in dispute” — is only 49.8 percent (of whom only 5.6 percent “definitely agree”).

Three months ago, PCPSR and the Truman Institute polled a specific two-state solution — patterned on the 2000 Clinton Parameters, but modified to cover 100% of the West Bank.  A total of 57% of Palestinians disagreed with the following proposal (edited here for space):

A state in Gaza and more than 97% of the West Bank, with equal land from Israel for the other 2+%; a “strong security force” and an international force to protect the state and monitor its borders (but no army); a capital in East Jerusalem; sovereignty over all Arab neighborhoods of East Jerusalem and all of the Old City, other than the Jewish Quarter and the “Wailing Wall;” an unlimited “right of return” for refugees to the new state; compensation for all refugees for their “refugeehood” and loss of property; an “end of conflict” statement; and recognition of Palestine and Israel as the homelands of their respective peoples.

The above proposal goes beyond what Israel is likely ever to endorse, since it does not (among other things) provide for defensible borders, which the U.S. has formally promised Israel multiple times.  Together with the new poll, however, it indicates that — whether framed as a comprehensive proposal effectively covering the entire West Bank or framed simply as an abstract matter (a Palestinian state and settlement of “all issues”) — the two-state solution does not command the approval of a majority of Palestinians.

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Patrick Kinna, RIP

Do you want a bit of cheer — and a bit of sadness? Go and read the Telegraph‘s obituary of Patrick Kinna. Kinna was Winston Churchill’s confidential assistant during World War II — and after it, Ernest Bevin’s.  He was in the room for the famous encounter between Churchill and Roosevelt, when Churchill leapt naked out of his bath to start pacing the room and dictating a speech.  When Winston heard a knock at the door, he ran to open it, only to find Roosevelt in his wheelchair.  Embarrassed, FDR began to retreat, but Churchill pulled himself up to full height, smiled, and said “Oh no, no, Mr President.  As you can see, I have nothing to hide from you.”

He was also in the room after a less amusing occasion: Churchill’s first meeting with Stalin in August 1942.  It was not a happy encounter: Stalin wanted a second front, and Churchill had gone to Moscow to explain that was impossible.  Stalin’s response was predictable, and Churchill returned to his room in a fury.  Entering the room, he roared “I have just had a most terrible meeting with this terrible man Stalin… evil and dreadful.”  Churchill had to be restrained by the British Ambassador, who reminded him that the room was undoubtedly bugged and that Stalin would hear everything they said.

Kinna remembered Churchill, contrary to some prejudiced sources, as basically a “very kind” man.  But when in full flow, he was irresistible, and then nothing mattered but his work.  His twin hatreds were whistling and secretaries who asked him to repeat dictation: he had too much to say to have time to say any of it twice.  But he and Kinna — who was the fastest typist in England — got on famously.  At the end of the war, Churchill recommended him for an MBE, writing that he was “a man of exceptional diligence, firmness of character and fidelity.”

But then, so was Churchill.  What a wonderful thing it would have been to have had the chance to be as close to him as Kinna was.  And what a sad thing it is that one of the last men who had that chance is gone.  Set the “greatest generation” nostalgia aside, if you will, but they were giants.

Do you want a bit of cheer — and a bit of sadness? Go and read the Telegraph‘s obituary of Patrick Kinna. Kinna was Winston Churchill’s confidential assistant during World War II — and after it, Ernest Bevin’s.  He was in the room for the famous encounter between Churchill and Roosevelt, when Churchill leapt naked out of his bath to start pacing the room and dictating a speech.  When Winston heard a knock at the door, he ran to open it, only to find Roosevelt in his wheelchair.  Embarrassed, FDR began to retreat, but Churchill pulled himself up to full height, smiled, and said “Oh no, no, Mr President.  As you can see, I have nothing to hide from you.”

He was also in the room after a less amusing occasion: Churchill’s first meeting with Stalin in August 1942.  It was not a happy encounter: Stalin wanted a second front, and Churchill had gone to Moscow to explain that was impossible.  Stalin’s response was predictable, and Churchill returned to his room in a fury.  Entering the room, he roared “I have just had a most terrible meeting with this terrible man Stalin… evil and dreadful.”  Churchill had to be restrained by the British Ambassador, who reminded him that the room was undoubtedly bugged and that Stalin would hear everything they said.

Kinna remembered Churchill, contrary to some prejudiced sources, as basically a “very kind” man.  But when in full flow, he was irresistible, and then nothing mattered but his work.  His twin hatreds were whistling and secretaries who asked him to repeat dictation: he had too much to say to have time to say any of it twice.  But he and Kinna — who was the fastest typist in England — got on famously.  At the end of the war, Churchill recommended him for an MBE, writing that he was “a man of exceptional diligence, firmness of character and fidelity.”

But then, so was Churchill.  What a wonderful thing it would have been to have had the chance to be as close to him as Kinna was.  And what a sad thing it is that one of the last men who had that chance is gone.  Set the “greatest generation” nostalgia aside, if you will, but they were giants.

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Losing the Touch

That keen political radar that steered candidate Barack Obama around Hillary Clinton and past John McCain seems to be on the fritz. Even his media fans think so. Greg Sargent observes:

“People are not sitting around their kitchen tables thinking about AIG,” [David]Axelrod said. “They are thinking about their own jobs.”

So are people upset about this, or aren’t they? Actually, people are thinking about the AIG disaster. Yesterday’s Gallup poll found that a big majority is very upset about it. Only 11% said they are “not particularly bothered” by it.

Again, this just seems weird politically. Why pretend that folks aren’t pissed off about this at a time when Republicans are moving aggressively to paint Obama as too passive on the issue and position themselves as the outraged and heroic defenders of the taxpapers?

It’s not “weird” — it’s panic. The entire crew is drowning in a public feeding frenzy of their own making. So they are throwing out whatever argument pops to mind. The contracts can’t be changed! Oh, we’re going to do everything we can to stop this! Oh, who cares!?

And then the president gets into the act, comparing AIG execs to suicide bombers. Is that really the right metaphor for the leader of the Free World?

You sense even their widely admired political skills are buckling under the weight of events and the scrutiny that goes with occupying the White House. It’s a good thing they don’t like big government or spending money, or we’d really have to worry about them getting in over their heads.

That keen political radar that steered candidate Barack Obama around Hillary Clinton and past John McCain seems to be on the fritz. Even his media fans think so. Greg Sargent observes:

“People are not sitting around their kitchen tables thinking about AIG,” [David]Axelrod said. “They are thinking about their own jobs.”

So are people upset about this, or aren’t they? Actually, people are thinking about the AIG disaster. Yesterday’s Gallup poll found that a big majority is very upset about it. Only 11% said they are “not particularly bothered” by it.

Again, this just seems weird politically. Why pretend that folks aren’t pissed off about this at a time when Republicans are moving aggressively to paint Obama as too passive on the issue and position themselves as the outraged and heroic defenders of the taxpapers?

It’s not “weird” — it’s panic. The entire crew is drowning in a public feeding frenzy of their own making. So they are throwing out whatever argument pops to mind. The contracts can’t be changed! Oh, we’re going to do everything we can to stop this! Oh, who cares!?

And then the president gets into the act, comparing AIG execs to suicide bombers. Is that really the right metaphor for the leader of the Free World?

You sense even their widely admired political skills are buckling under the weight of events and the scrutiny that goes with occupying the White House. It’s a good thing they don’t like big government or spending money, or we’d really have to worry about them getting in over their heads.

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Barak’s Gambit

We’re not just talking politics here, but Israeli politics, where everything flies. Therefore it’s indeed too early to conclude that Netanyahu will end up with a narrow coalition. Noah was quick to announce that Netanyahu and Labor’s Ehud Barak have reportedly struck a deal to join forces. But there is more to the story. Netanyahu has offered Barak a good bargain, and is trying to convince other Labor leaders not to stand in the way of the deal. Barak would like to accept the extended hand, but he can’t. Not without his party’s approval. Barak is in a difficult spot, and has decided to gamble his way out it.

Netanyahu’s efforts to garner either Kadima’s or Labor’s support for his coalition are challenged by inverse dynamics on each front: in Kadima he finds a party receptive to coalition negotiations but headed by a leader that wants to hear none of it; in Labor he has a receptive leader but a reluctant party base. Barak is keeping the flame of unity alive with just a handful of Labor friends, while most Labor leaders have avowed to resist all temptations and boycott the coalition altogether. Their motives seem more political than ideological: Labor’s relevance in Israeli politics is rapidly eroding and most of its leaders believe seizing control of the opposition is the only way to boost their party’s standing.

But Barak himself wants to join Netanyahu. He may believe it would be best for the country, but he may also be motivated by personal incentives: he wants to serve as Defense Minister and has realized his long-term grip on Labor’s leadership is slipping, as are his prospects of ever ascending to the Prime Ministership again. Therefore, he is willing to compromise so long as he can keep Defense, regardless of the detrimental consequences to his party.

This is a risky move. Barak is trying to implement his plan by going above (or below) the heads of most other party leaders and turning to Labor’s Central Committee, through which he stands a better chance of garnering the approval he needs. Such a maneuver will translate into a fierce row with the next generation of party leaders. If Barak fails to pull this through, his chances for survival as party leader will take a further hit; it also means that Barak is willing to risk losing some friends on his thorny path to the coalition.

Of the two alternatives available to him, Barak chose bold confrontation. Since many of his friends were already starting to whisper about the “day after Barak,” he has decided to take this risk. After all, this has always been his style: high stakes and high risks. He figures it’s worth aiming high and either winning it all (Defense) or at least losing honorably for a worthy cause (unity government), instead of dragging his feet for another couple of months before slowly falling into obscurity.

We’re not just talking politics here, but Israeli politics, where everything flies. Therefore it’s indeed too early to conclude that Netanyahu will end up with a narrow coalition. Noah was quick to announce that Netanyahu and Labor’s Ehud Barak have reportedly struck a deal to join forces. But there is more to the story. Netanyahu has offered Barak a good bargain, and is trying to convince other Labor leaders not to stand in the way of the deal. Barak would like to accept the extended hand, but he can’t. Not without his party’s approval. Barak is in a difficult spot, and has decided to gamble his way out it.

Netanyahu’s efforts to garner either Kadima’s or Labor’s support for his coalition are challenged by inverse dynamics on each front: in Kadima he finds a party receptive to coalition negotiations but headed by a leader that wants to hear none of it; in Labor he has a receptive leader but a reluctant party base. Barak is keeping the flame of unity alive with just a handful of Labor friends, while most Labor leaders have avowed to resist all temptations and boycott the coalition altogether. Their motives seem more political than ideological: Labor’s relevance in Israeli politics is rapidly eroding and most of its leaders believe seizing control of the opposition is the only way to boost their party’s standing.

But Barak himself wants to join Netanyahu. He may believe it would be best for the country, but he may also be motivated by personal incentives: he wants to serve as Defense Minister and has realized his long-term grip on Labor’s leadership is slipping, as are his prospects of ever ascending to the Prime Ministership again. Therefore, he is willing to compromise so long as he can keep Defense, regardless of the detrimental consequences to his party.

This is a risky move. Barak is trying to implement his plan by going above (or below) the heads of most other party leaders and turning to Labor’s Central Committee, through which he stands a better chance of garnering the approval he needs. Such a maneuver will translate into a fierce row with the next generation of party leaders. If Barak fails to pull this through, his chances for survival as party leader will take a further hit; it also means that Barak is willing to risk losing some friends on his thorny path to the coalition.

Of the two alternatives available to him, Barak chose bold confrontation. Since many of his friends were already starting to whisper about the “day after Barak,” he has decided to take this risk. After all, this has always been his style: high stakes and high risks. He figures it’s worth aiming high and either winning it all (Defense) or at least losing honorably for a worthy cause (unity government), instead of dragging his feet for another couple of months before slowly falling into obscurity.

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Reich Is Right

Robert Reich explains why AIG may not be just Tim Geithner’s undoing, but the president’s:

AIG is rapidly becoming a nightmarish metaphor for the Obama Administration’s problems administering the bailout of Wall Street. One central problem is the lack of transparency. According to some news reports, Treasury Secretary Tim Geithner knew weeks ago that AIG was planning to issue the bonuses to executives in its notorious credit default swap unit, and felt it was contractually bound to do so. But even if Geithner discovered all this just last week, he faces an awkward question about why he didn’t know sooner. . .

The President cannot afford to lose the public’s confidence that his administration is a careful steward of the public’s money. The public was willing to go along with a large stimulus package. But it won’t go along with a second stimulus, and certainly not another TARP. And until the public feels confident that its money isn’t being thrown down a rat hole, it may balk at other ambitious undertakings such as health care or education or the environment.

So to review: this mess has undermined whatever faith Congress and most Americans still had in Geithner’s competency and credibility. The fact that the president vouched for Geithner magnifies the growing doubts about Obama’s own competency and judgment. The president’s defense of Geithner, in conjunction with Obama’s relative cluelessness regarding what was going on with the bonuses, undermines support for  significant new administration initiatives  that require a large degree of executive acumen.

And that may already be occurring. This poll tells us: “Fifty-five percent of the people questioned in a CNN/Opinion Research Corporation survey released Wednesday say that since he’s taken over in the White House, Obama has tried to handle more issues than he should have.”

The funny thing about credibility and competence: once the president loses the former and demonstrates a lack of the latter, it’s hard to regain the public’ trust. If nothing else, George W. Bush taught us that.

Robert Reich explains why AIG may not be just Tim Geithner’s undoing, but the president’s:

AIG is rapidly becoming a nightmarish metaphor for the Obama Administration’s problems administering the bailout of Wall Street. One central problem is the lack of transparency. According to some news reports, Treasury Secretary Tim Geithner knew weeks ago that AIG was planning to issue the bonuses to executives in its notorious credit default swap unit, and felt it was contractually bound to do so. But even if Geithner discovered all this just last week, he faces an awkward question about why he didn’t know sooner. . .

The President cannot afford to lose the public’s confidence that his administration is a careful steward of the public’s money. The public was willing to go along with a large stimulus package. But it won’t go along with a second stimulus, and certainly not another TARP. And until the public feels confident that its money isn’t being thrown down a rat hole, it may balk at other ambitious undertakings such as health care or education or the environment.

So to review: this mess has undermined whatever faith Congress and most Americans still had in Geithner’s competency and credibility. The fact that the president vouched for Geithner magnifies the growing doubts about Obama’s own competency and judgment. The president’s defense of Geithner, in conjunction with Obama’s relative cluelessness regarding what was going on with the bonuses, undermines support for  significant new administration initiatives  that require a large degree of executive acumen.

And that may already be occurring. This poll tells us: “Fifty-five percent of the people questioned in a CNN/Opinion Research Corporation survey released Wednesday say that since he’s taken over in the White House, Obama has tried to handle more issues than he should have.”

The funny thing about credibility and competence: once the president loses the former and demonstrates a lack of the latter, it’s hard to regain the public’ trust. If nothing else, George W. Bush taught us that.

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It’s Very Nice . . .

Frank Sinatra once cut a fantastic concept album about the joys of travel called Come Fly With Me. In the song “It’s Nice to Go Trav’ling,” Sinatra lists the assorted pleasures of vacation spots outside the U.S.: “It’s very nice to go trav’ling/ To Paris London and Rome.” In listening to the song, I find it impossible to absorb the following line casually: “It’s very nice to just wander/The camel route to Iraq.

To hear Sinatra sing about Iraq as an exotic vacation spot for Americans is a wistful reminder that history and pop culture have long been knotted up together, and that it’s impossible to see the contours of the future just a few decades ahead (The album came out in 1958, one year after a 21-year-old Saddam Hussein joined the Ba’ath Party).

In any event, Saddam Hussein is dead and so, too, is his favorite singer (true story) Frank Sinatra. But the line from the song gets a new shade of significance with this news:

The first official Western tour group to enter Iraq since the US-led invasion six years ago is visiting historic and religious sites in the country, the tourism ministry said on Thursday.

“This visit is a positive sign for the return of touristic activity to Iraq,” ministry spokesman Abdul Zahra al-Telagani said of the five Britons, two Americans and a Canadian on a trip organised by a British operator.

This also gives new meaning to the next line in the song: “It’s oh so nice to just wander/ But it’s so much nicer, yes it’s oh so nice, to wander back.” Coalition troops have turned Saddam’s threatening wasteland into a free and viable country with a legitimate stake in a globalized future. When our men and women “wander” back, they better know we appreciated it.

Frank Sinatra once cut a fantastic concept album about the joys of travel called Come Fly With Me. In the song “It’s Nice to Go Trav’ling,” Sinatra lists the assorted pleasures of vacation spots outside the U.S.: “It’s very nice to go trav’ling/ To Paris London and Rome.” In listening to the song, I find it impossible to absorb the following line casually: “It’s very nice to just wander/The camel route to Iraq.

To hear Sinatra sing about Iraq as an exotic vacation spot for Americans is a wistful reminder that history and pop culture have long been knotted up together, and that it’s impossible to see the contours of the future just a few decades ahead (The album came out in 1958, one year after a 21-year-old Saddam Hussein joined the Ba’ath Party).

In any event, Saddam Hussein is dead and so, too, is his favorite singer (true story) Frank Sinatra. But the line from the song gets a new shade of significance with this news:

The first official Western tour group to enter Iraq since the US-led invasion six years ago is visiting historic and religious sites in the country, the tourism ministry said on Thursday.

“This visit is a positive sign for the return of touristic activity to Iraq,” ministry spokesman Abdul Zahra al-Telagani said of the five Britons, two Americans and a Canadian on a trip organised by a British operator.

This also gives new meaning to the next line in the song: “It’s oh so nice to just wander/ But it’s so much nicer, yes it’s oh so nice, to wander back.” Coalition troops have turned Saddam’s threatening wasteland into a free and viable country with a legitimate stake in a globalized future. When our men and women “wander” back, they better know we appreciated it.

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So Much For That

The Wall Street Journal editors take the president to task for jumping on the bandwagon to excoriate AIG, invoking the tax code as a weapon to get back the bonuses, and generally scaring the living daylights out of any institution foolish enough to accept TARP money. They conclude:

Reviving a financial system is a long process that requires a combination of capital support, workout ability and discipline for mistakes. The public has to believe the end result will be a better, sturdier system in return for taxpayer support, while at the same time being assured that gamblers aren’t saved from their own mistakes.

If this balance is beyond the ability of Mr. Obama’s current economic team, he needs a better team. The worst mistake he can make is to deflect attention away from government’s mistakes by joining the attack on the very bankers he needs to lead an economic recovery. That’s how a deep recession becomes a Depression.

All of this raises the question: what became of that first class temperament? That was Obama’s selling point for many voters and prominent pundits. He was uncommonly calm and thoughtful, not given to getting rattled or angry. He’d be a cool character under stress. So much for that theory.

What happened is clear: his inept Treasury Secretary bungled the simple task of overseeing AIG. Once the bonuses saw the light of day the president wigged out and went into campaign mode. That’s the routine where you vilify the other side, assert your own moral superiority, and propose a series of programmatic “solutions” (“More regulation!” “Tax it all!”) that don’t get at the real issue (i.e. the government shouldn’t be managing complex companies). There is, in all of this, little trace of the qualities his supporters divined through scraps of information and plenty of wishful thinking. As Michael Goodwin writes:

The bonuses are disgusting, but there was a Keystone Kops element to the White House reaction. Its yes-we-can, no-we-can’t act on canceling the payoffs was clumsy, especially when the President said he wanted the bonuses stopped. It made for good sound bites before an aide called the whole thing off, saying it was too late, legal contracts, yada, yada.

So incompetence is disguised by ginned up anger. Instead of that fine “temperament,” there is a total absence of executive skill here — in selecting Geithner, allowing him to flounder (and then ludicrously praising him), dribbling out details to explain how this occurred, throwing out contradictory positions on the administration’s ability to stop the bonuses, and finally encouraging Congress to go after AIG and its executives through the tax code. It’s almost like he’s never managed a large enterprise or handled a full-blown crisis. You’d think he had never been subjected to critical media. Oh, wait.

Perhaps experience matters more than we thought and “temperament” only gets you so far. As Mary Katherine Ham observes, the president — having made a perfect hash out of AIG and provided fodder for those who contend he’s in over his head –now goes on a campaign swing. Yes, “Too bad we need a president.”

The Wall Street Journal editors take the president to task for jumping on the bandwagon to excoriate AIG, invoking the tax code as a weapon to get back the bonuses, and generally scaring the living daylights out of any institution foolish enough to accept TARP money. They conclude:

Reviving a financial system is a long process that requires a combination of capital support, workout ability and discipline for mistakes. The public has to believe the end result will be a better, sturdier system in return for taxpayer support, while at the same time being assured that gamblers aren’t saved from their own mistakes.

If this balance is beyond the ability of Mr. Obama’s current economic team, he needs a better team. The worst mistake he can make is to deflect attention away from government’s mistakes by joining the attack on the very bankers he needs to lead an economic recovery. That’s how a deep recession becomes a Depression.

All of this raises the question: what became of that first class temperament? That was Obama’s selling point for many voters and prominent pundits. He was uncommonly calm and thoughtful, not given to getting rattled or angry. He’d be a cool character under stress. So much for that theory.

What happened is clear: his inept Treasury Secretary bungled the simple task of overseeing AIG. Once the bonuses saw the light of day the president wigged out and went into campaign mode. That’s the routine where you vilify the other side, assert your own moral superiority, and propose a series of programmatic “solutions” (“More regulation!” “Tax it all!”) that don’t get at the real issue (i.e. the government shouldn’t be managing complex companies). There is, in all of this, little trace of the qualities his supporters divined through scraps of information and plenty of wishful thinking. As Michael Goodwin writes:

The bonuses are disgusting, but there was a Keystone Kops element to the White House reaction. Its yes-we-can, no-we-can’t act on canceling the payoffs was clumsy, especially when the President said he wanted the bonuses stopped. It made for good sound bites before an aide called the whole thing off, saying it was too late, legal contracts, yada, yada.

So incompetence is disguised by ginned up anger. Instead of that fine “temperament,” there is a total absence of executive skill here — in selecting Geithner, allowing him to flounder (and then ludicrously praising him), dribbling out details to explain how this occurred, throwing out contradictory positions on the administration’s ability to stop the bonuses, and finally encouraging Congress to go after AIG and its executives through the tax code. It’s almost like he’s never managed a large enterprise or handled a full-blown crisis. You’d think he had never been subjected to critical media. Oh, wait.

Perhaps experience matters more than we thought and “temperament” only gets you so far. As Mary Katherine Ham observes, the president — having made a perfect hash out of AIG and provided fodder for those who contend he’s in over his head –now goes on a campaign swing. Yes, “Too bad we need a president.”

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Sanity Prevails

In what could be a truly hopeful sign of change, the Obama administration has reversed two policies — one proposed, one enacted — that have garnered considerable criticism of late.

First up, it has reversed the regulation forbidding the military from reselling used ammunition casings for reloading. The policy — selling them purely for scrap, and actually mangling them beyond re-use before reselling — was a transparent ploy to make ammunition scarcer and more expensive; the rule guaranteed an 80% drop in revenues from the resale to the government, not even counting the costs in mutilating the casings.

Next, the administration has announced that under no circumstances will it try to pass the costs of medical care for wounded veterans onto their private insurance. The initial proposal — to allow the VA to bill veterans’ private insurance companies for care for  service-related injuries and disabilities — would have shifted almost a billion dollars from the federal government to the insurers. This would have burned our veterans, whose “pre-existing conditions” could have caused them considerable hardship with their own insurance companies.

This is the kind of Change many of us have been Hoping for — signs that sanity will actually prevail, and the Obama administration will forgo some of its more radical (and stupid) ideas and reconcile with reality.

Here’s hoping it’s not an aberration, and that the Obama administration will start doing the right thing from the outset, and not after being pummeled by public outcries.

In what could be a truly hopeful sign of change, the Obama administration has reversed two policies — one proposed, one enacted — that have garnered considerable criticism of late.

First up, it has reversed the regulation forbidding the military from reselling used ammunition casings for reloading. The policy — selling them purely for scrap, and actually mangling them beyond re-use before reselling — was a transparent ploy to make ammunition scarcer and more expensive; the rule guaranteed an 80% drop in revenues from the resale to the government, not even counting the costs in mutilating the casings.

Next, the administration has announced that under no circumstances will it try to pass the costs of medical care for wounded veterans onto their private insurance. The initial proposal — to allow the VA to bill veterans’ private insurance companies for care for  service-related injuries and disabilities — would have shifted almost a billion dollars from the federal government to the insurers. This would have burned our veterans, whose “pre-existing conditions” could have caused them considerable hardship with their own insurance companies.

This is the kind of Change many of us have been Hoping for — signs that sanity will actually prevail, and the Obama administration will forgo some of its more radical (and stupid) ideas and reconcile with reality.

Here’s hoping it’s not an aberration, and that the Obama administration will start doing the right thing from the outset, and not after being pummeled by public outcries.

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Some Career Guidance Counseling Perhaps

Gail Collins is kidding (sort of), but few would quibble with this:

I am extremely angry at Tim Geithner for being such a baby that he couldn’t scare a bunch of American International Group quants into forgoing their bonuses. We need a Treasury secretary so terrifying that if you were stuck in an elevator alone with him, you would just automatically hand over your wallet and credit cards.

[. . . ]

Geithner claims nobody warned him that this bonus scandal was coming down the pike. Is it because he doesn’t have any assistants? It appears there’s nobody in the world of finance who wants to accept a top-level Treasury job if it means letting the White House accountants go over their tax returns. Geithner is walking around listening to the hallways echo, like the only kid at boarding school who didn’t get invited home for Christmas.

Really, Congress is in a tizzy, the president is in hot water, and the entire financial system is hung up because Tim Geithner didn’t have the nerve (or common sense) to say to AIG’s CEO, “Of course you have contracts, but so does the UAW. Now go back and work this out.” Or better yet, “Sure you might have contracts but all of your ‘stars’ were in breach for non-performance so tell them not to expect anything for a few years.”

And did Geithner really not know about the bonuses until last week or was it like those unpaid taxes — something that slipped through the cracks? (He did after all help craft the original AIG bailout while working at the Fed. And either he or “someone” in the Treasury cajoled the Senate to “fix” the bonus-nixing language in the stimulus bill.) As one observer noted, not since Alberto Gonzales has a cabinet official invited such overt contempt for his candor and competency.

Part of the problem is — let’s be frank — he doesn’t have the presence or the sense of stagecraft that the job requires. You don’t go before the financial mavens with your bank “plan” and say: “To be determined later.” You don’t go months without assistants. (And if vetting-gone-wild is the issue preventing  badly needed hiring, you should be raising a big fuss with the president.) You don’t go before Congress with a sweaty brow looking like a grad student searching the mental index cards for the right bit of data.

Everyone keeps saying how bright he is. But if he were really bright — not just filled with data or possessing technical acumen — he would realize he’s in the wrong job, find his own replacement, and see if he can get his old gig back at the New York Fed. Really, we’d all be fine with that. And the markets would throw one heck of a going away party.

Gail Collins is kidding (sort of), but few would quibble with this:

I am extremely angry at Tim Geithner for being such a baby that he couldn’t scare a bunch of American International Group quants into forgoing their bonuses. We need a Treasury secretary so terrifying that if you were stuck in an elevator alone with him, you would just automatically hand over your wallet and credit cards.

[. . . ]

Geithner claims nobody warned him that this bonus scandal was coming down the pike. Is it because he doesn’t have any assistants? It appears there’s nobody in the world of finance who wants to accept a top-level Treasury job if it means letting the White House accountants go over their tax returns. Geithner is walking around listening to the hallways echo, like the only kid at boarding school who didn’t get invited home for Christmas.

Really, Congress is in a tizzy, the president is in hot water, and the entire financial system is hung up because Tim Geithner didn’t have the nerve (or common sense) to say to AIG’s CEO, “Of course you have contracts, but so does the UAW. Now go back and work this out.” Or better yet, “Sure you might have contracts but all of your ‘stars’ were in breach for non-performance so tell them not to expect anything for a few years.”

And did Geithner really not know about the bonuses until last week or was it like those unpaid taxes — something that slipped through the cracks? (He did after all help craft the original AIG bailout while working at the Fed. And either he or “someone” in the Treasury cajoled the Senate to “fix” the bonus-nixing language in the stimulus bill.) As one observer noted, not since Alberto Gonzales has a cabinet official invited such overt contempt for his candor and competency.

Part of the problem is — let’s be frank — he doesn’t have the presence or the sense of stagecraft that the job requires. You don’t go before the financial mavens with your bank “plan” and say: “To be determined later.” You don’t go months without assistants. (And if vetting-gone-wild is the issue preventing  badly needed hiring, you should be raising a big fuss with the president.) You don’t go before Congress with a sweaty brow looking like a grad student searching the mental index cards for the right bit of data.

Everyone keeps saying how bright he is. But if he were really bright — not just filled with data or possessing technical acumen — he would realize he’s in the wrong job, find his own replacement, and see if he can get his old gig back at the New York Fed. Really, we’d all be fine with that. And the markets would throw one heck of a going away party.

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Surging in Afghanistan

The Obama administration still hasn’t made public the conclusions of its review of Afghanistan policy. Indeed the president hasn’t signed off on the policy yet. But from the leaks appearing in the MSM it looks like the administration is headed in the right direction.

According to the Washington Post:

A civilian “surge” of hundreds of additional U.S. officials in Afghanistan would accompany the already approved increase in U.S. troop levels there under a new Afghanistan-Pakistan strategy being completed at the White House, according to administration officials.

According to the New York Times:

A plan awaiting final approval by the president would set a goal of about 400,000 troops and national police officers, more than twice the forces’ current size, and more than three times the size that American officials believed would be adequate for Afghanistan in 2002, when the Taliban and Al Qaeda appeared to have been routed.

Assuming these policies are actually implemented, the Obama administration will avoid the danger of a “minimalist approach” that John McCain and Joe Lieberman rightly warn against in this Washington Post op-ed. It appears that instead of downsizing our forces and concentrating on killing terrorist leaders — a strategy with scant chances of success — the administration will instead implement a full-blown counterinsurgency strategy of the kind that has recently worked so spectacularly in Iraq. We can only hope that the president ratifies this decision for it would immeasurably increase our odds of success on this vital battlefield.

The Obama administration still hasn’t made public the conclusions of its review of Afghanistan policy. Indeed the president hasn’t signed off on the policy yet. But from the leaks appearing in the MSM it looks like the administration is headed in the right direction.

According to the Washington Post:

A civilian “surge” of hundreds of additional U.S. officials in Afghanistan would accompany the already approved increase in U.S. troop levels there under a new Afghanistan-Pakistan strategy being completed at the White House, according to administration officials.

According to the New York Times:

A plan awaiting final approval by the president would set a goal of about 400,000 troops and national police officers, more than twice the forces’ current size, and more than three times the size that American officials believed would be adequate for Afghanistan in 2002, when the Taliban and Al Qaeda appeared to have been routed.

Assuming these policies are actually implemented, the Obama administration will avoid the danger of a “minimalist approach” that John McCain and Joe Lieberman rightly warn against in this Washington Post op-ed. It appears that instead of downsizing our forces and concentrating on killing terrorist leaders — a strategy with scant chances of success — the administration will instead implement a full-blown counterinsurgency strategy of the kind that has recently worked so spectacularly in Iraq. We can only hope that the president ratifies this decision for it would immeasurably increase our odds of success on this vital battlefield.

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They Know Better?

Douglas Holtz-Eakin wasn’t very good at constructing an economic blueprint for John McCain’s campaign, but he’s a pretty good analyst. He writes:

The AIG debacle teaches us two things: First, it does not make sense to try to save any single financial institution. Failed enterprises should fail — and go away… The second lesson is that no matter how bad you think market capitalism is, the federal government has proved it is worse.

It is this latter point that may prove troublesome for the Obama administration. The president’s New Deal II agenda depends on two premises — the sky is falling and only the government can protect us. The first argument is being downplayed as Obama figured out that talking down the markets might not be the best strategy. But the second is called seriously into question by the gang that can’t shoot straight.

Obama’s mantra about collecting the “best and the brightest” for his cabinet was not just puffery. It was a message: we’re smarter than those fools who messed up the economy. We have the answers and can devise exquisitely refined solutions, with thousands of interconnected parts, to do what the “broken” free market system cannot. But how credible is that?

The AIG mess revolves around a very simple issue: could the government have stopped the bonuses prospectively? This was such a vexing matter that it has now engulfed the entire administration and all of Congress, and served as fodder in an election two weeks away. But how much more complicated is cap-and-trade regulation and taxation for the entire economy? The AIG bonus issue is child’s play compared to devising a universal health care system that is simultaneously going to expand coverage, improve care, reduce cost, protect privacy, and digitize all our medical information. We’re just supposed to have faith in the Employee Free Choice Act’s phalanx of government arbitrators who will set wages, benefits, and working conditions in every newly organized factory and workplace in America.

The lesson from AIG is that the entire premise of the Obama administration — we know better — is fundamentally flawed. The Obama team can’t effectively manage a single troubled company without getting itself and the whole country tied up in knots. The notion that we should invest the federal government with authority to control vast swatches of the economy can now be seen for what it is: madness. We should consider ourselves lucky that the public is getting a glimpse of its government in action on a (relatively speaking) low-dollar item of limited consequences.

Douglas Holtz-Eakin wasn’t very good at constructing an economic blueprint for John McCain’s campaign, but he’s a pretty good analyst. He writes:

The AIG debacle teaches us two things: First, it does not make sense to try to save any single financial institution. Failed enterprises should fail — and go away… The second lesson is that no matter how bad you think market capitalism is, the federal government has proved it is worse.

It is this latter point that may prove troublesome for the Obama administration. The president’s New Deal II agenda depends on two premises — the sky is falling and only the government can protect us. The first argument is being downplayed as Obama figured out that talking down the markets might not be the best strategy. But the second is called seriously into question by the gang that can’t shoot straight.

Obama’s mantra about collecting the “best and the brightest” for his cabinet was not just puffery. It was a message: we’re smarter than those fools who messed up the economy. We have the answers and can devise exquisitely refined solutions, with thousands of interconnected parts, to do what the “broken” free market system cannot. But how credible is that?

The AIG mess revolves around a very simple issue: could the government have stopped the bonuses prospectively? This was such a vexing matter that it has now engulfed the entire administration and all of Congress, and served as fodder in an election two weeks away. But how much more complicated is cap-and-trade regulation and taxation for the entire economy? The AIG bonus issue is child’s play compared to devising a universal health care system that is simultaneously going to expand coverage, improve care, reduce cost, protect privacy, and digitize all our medical information. We’re just supposed to have faith in the Employee Free Choice Act’s phalanx of government arbitrators who will set wages, benefits, and working conditions in every newly organized factory and workplace in America.

The lesson from AIG is that the entire premise of the Obama administration — we know better — is fundamentally flawed. The Obama team can’t effectively manage a single troubled company without getting itself and the whole country tied up in knots. The notion that we should invest the federal government with authority to control vast swatches of the economy can now be seen for what it is: madness. We should consider ourselves lucky that the public is getting a glimpse of its government in action on a (relatively speaking) low-dollar item of limited consequences.

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Monetary Policy Rebooted

The Federal Reserve announced a momentous shift in policy yesterday. Its import was easy to miss because, as always with the Fed, it was written in a jargon only superficially resembling English. But its intention is to take actions that will deeply shift the policy landscape, probably to a much greater extent than Congress’s various stimulus plans.

The Fed announced an American version of what has been called “quantitative easing,” or QE. The Japanese have done this before, and the British got into it a few weeks ago. You can think of it, with no loss of accuracy, as inflation.

QE is what monetary authorities resort to when policy interest rates go to zero, which is where they are now. If you can’t reduce the price of money any further, you simply increase the amount of money. The Fed will be monetizing (purchasing) about $750 billion in mortgage-backed securities and about $300 billion in straight Treasury debt.

They’ve purchased mortgage paper before (last December), but the Treasury debt purchases are new. And the bond market’s reaction to the news was electric, as interest rates fell sharply, particularly for the 10-year note. Inflation-sensitive commodities like oil, gold and copper also shot up 5% or more in price, and are holding those gains this morning. The news is also a mild positive for the stock market, which can benefit from inflation.

What is Fed Chairman Ben Bernanke really trying to do? He wants to unfreeze the “credit crunch” that is making it too expensive or even impossible for U.S. consumers and businesses to borrow money, which was the trigger for the current recession. The Fed directly controls only the shortest-term interest rates. But consumer purchases (including mortgages) and business investments are sensitive to longer-term interest rates. QE is the Fed’s way of trying to reduce real interest rates in the 2 to 10-year range of the spectrum.

This is also the biggest experiment in monetary policy in history. Milton Friedman is known for having explained the genesis of the Great Depression in monetary terms. Bernanke, a close student of the early Depression, is determined to prevent the wicked asset deflation of 1930-32 that ruined so many lives. At what cost? Well, the Fed’s balance sheet just grew by $1.15 trillion: it’s now 50% bigger than it was a day ago. That’s a scary amount of inflation.

What no one really knows yet is the exact linkage between the formation of new money, and the formation of new credit. Bernanke and his Fed are gambling that a giant pulse of monetary inflation will reignite private lending. We can only hope they’ve pointed their fire hose at the right problem.

For every lender, there’s a borrower. The Fed will succeed if the problem in credit markets is the reluctance of lenders to write new loans. But if the problem turns out to be a lack of demand for credit, then all we’ll get out of this is stagflation.

The Federal Reserve announced a momentous shift in policy yesterday. Its import was easy to miss because, as always with the Fed, it was written in a jargon only superficially resembling English. But its intention is to take actions that will deeply shift the policy landscape, probably to a much greater extent than Congress’s various stimulus plans.

The Fed announced an American version of what has been called “quantitative easing,” or QE. The Japanese have done this before, and the British got into it a few weeks ago. You can think of it, with no loss of accuracy, as inflation.

QE is what monetary authorities resort to when policy interest rates go to zero, which is where they are now. If you can’t reduce the price of money any further, you simply increase the amount of money. The Fed will be monetizing (purchasing) about $750 billion in mortgage-backed securities and about $300 billion in straight Treasury debt.

They’ve purchased mortgage paper before (last December), but the Treasury debt purchases are new. And the bond market’s reaction to the news was electric, as interest rates fell sharply, particularly for the 10-year note. Inflation-sensitive commodities like oil, gold and copper also shot up 5% or more in price, and are holding those gains this morning. The news is also a mild positive for the stock market, which can benefit from inflation.

What is Fed Chairman Ben Bernanke really trying to do? He wants to unfreeze the “credit crunch” that is making it too expensive or even impossible for U.S. consumers and businesses to borrow money, which was the trigger for the current recession. The Fed directly controls only the shortest-term interest rates. But consumer purchases (including mortgages) and business investments are sensitive to longer-term interest rates. QE is the Fed’s way of trying to reduce real interest rates in the 2 to 10-year range of the spectrum.

This is also the biggest experiment in monetary policy in history. Milton Friedman is known for having explained the genesis of the Great Depression in monetary terms. Bernanke, a close student of the early Depression, is determined to prevent the wicked asset deflation of 1930-32 that ruined so many lives. At what cost? Well, the Fed’s balance sheet just grew by $1.15 trillion: it’s now 50% bigger than it was a day ago. That’s a scary amount of inflation.

What no one really knows yet is the exact linkage between the formation of new money, and the formation of new credit. Bernanke and his Fed are gambling that a giant pulse of monetary inflation will reignite private lending. We can only hope they’ve pointed their fire hose at the right problem.

For every lender, there’s a borrower. The Fed will succeed if the problem in credit markets is the reluctance of lenders to write new loans. But if the problem turns out to be a lack of demand for credit, then all we’ll get out of this is stagflation.

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The Old Realism

Michael Young, the opinion editor of the Beirut Daily Star, has a terrific commentary on Chas Freeman in today’s National, Abu Dhabi’s English-language newspaper. Something tells me pieces like this won’t make it into Walter Pincus’ next trend story on Arab public opinion:

It has become increasingly difficult for leaders of Western democracies to avoid mentioning human rights and democracy in rationalising their overseas behaviour. Political realism will not die. States won’t suddenly become moral Leviathans. However, the stripped down realism of a Mr Freeman, without an ounce of human sympathy or humour, is a thing of the past – as he himself, and much to our relief, has become.

Michael Young, the opinion editor of the Beirut Daily Star, has a terrific commentary on Chas Freeman in today’s National, Abu Dhabi’s English-language newspaper. Something tells me pieces like this won’t make it into Walter Pincus’ next trend story on Arab public opinion:

It has become increasingly difficult for leaders of Western democracies to avoid mentioning human rights and democracy in rationalising their overseas behaviour. Political realism will not die. States won’t suddenly become moral Leviathans. However, the stripped down realism of a Mr Freeman, without an ounce of human sympathy or humour, is a thing of the past – as he himself, and much to our relief, has become.

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It Was That Kind of a Day

Yesterday Democrat Paul  Kanjorski blasted Tim Geithner and the excuse mongering at the White House:

I’m sick and tired of hearing the administration and the secretary of the Treasury say, “I just found out about it.” That’s not true, and if he did just find out about it on Thursday or Wednesday then he better get to this mail department and to his telephone people because we communicated with the Treasury at least six or seven times.

Apparently, he doesn’t realize we are in the best of hands and that not since Alexander Hamilton has the Treasury Secretary had it so tough. But, then again, the good congressman from Pennsylvania voted for the stimulus bill with the Chris Dodd bonus protection provision in there. Without reading it of course, because who had time?

Yesterday Democrat Paul  Kanjorski blasted Tim Geithner and the excuse mongering at the White House:

I’m sick and tired of hearing the administration and the secretary of the Treasury say, “I just found out about it.” That’s not true, and if he did just find out about it on Thursday or Wednesday then he better get to this mail department and to his telephone people because we communicated with the Treasury at least six or seven times.

Apparently, he doesn’t realize we are in the best of hands and that not since Alexander Hamilton has the Treasury Secretary had it so tough. But, then again, the good congressman from Pennsylvania voted for the stimulus bill with the Chris Dodd bonus protection provision in there. Without reading it of course, because who had time?

Read Less




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