Commentary Magazine


Topic: US Federal Reserve

Koch Protesters Call for Clarence Thomas’s Lynching

Ed Morrissey has an excellent roundup of the increasing incivility at the Koch protests. CONTENTIONS previously reported on the use of swastikas at the demonstration, and yesterday a video surfaced of protesters calling for Justice Clarence Thomas to be lynched.

The cameraman in the video asks attendees at the rally what should be done with Thomas after he’s impeached. Here are some of their answers:

Send him “back to the fields.” “String him up.” “Hang him.” “Torture.” One older woman wants his wife Ginny Thomas strung up as well. A younger and more creative woman wants Justice Thomas’ toes chopped off and forced-fed to him. Thomas isn’t the only one to get the necktie treatment; one protester wants Fox News executive Roger Ailes to get hung as well.

Common Cause has released a statement condemning the comments, asserting that the protesters who made them were outliers:

We condemn bigotry and hate speech in every form, even when it comes from those who fancy themselves as our friends.

Anyone who has attended a public event has encountered people whose ideas or acts misrepresented, even embarrassed, the gathering. Every sporting event has its share of “fans” whose boorish behavior on the sidelines makes a mockery of good sportsmanship; every political gathering has a crude sign-painter or epithet-spewing heckler.

Morrissey notes that “this is the exact same point that Tea Party organizers made when the media focused on the outliers (and usually provocateurs) that showed up at their rallies.”

Of course, the one difference is that the mainstream media has barely even touched this story. Can you imagine if this had been a Tea Party rally and protesters were making these same comments about President Obama?

Ed Morrissey has an excellent roundup of the increasing incivility at the Koch protests. CONTENTIONS previously reported on the use of swastikas at the demonstration, and yesterday a video surfaced of protesters calling for Justice Clarence Thomas to be lynched.

The cameraman in the video asks attendees at the rally what should be done with Thomas after he’s impeached. Here are some of their answers:

Send him “back to the fields.” “String him up.” “Hang him.” “Torture.” One older woman wants his wife Ginny Thomas strung up as well. A younger and more creative woman wants Justice Thomas’ toes chopped off and forced-fed to him. Thomas isn’t the only one to get the necktie treatment; one protester wants Fox News executive Roger Ailes to get hung as well.

Common Cause has released a statement condemning the comments, asserting that the protesters who made them were outliers:

We condemn bigotry and hate speech in every form, even when it comes from those who fancy themselves as our friends.

Anyone who has attended a public event has encountered people whose ideas or acts misrepresented, even embarrassed, the gathering. Every sporting event has its share of “fans” whose boorish behavior on the sidelines makes a mockery of good sportsmanship; every political gathering has a crude sign-painter or epithet-spewing heckler.

Morrissey notes that “this is the exact same point that Tea Party organizers made when the media focused on the outliers (and usually provocateurs) that showed up at their rallies.”

Of course, the one difference is that the mainstream media has barely even touched this story. Can you imagine if this had been a Tea Party rally and protesters were making these same comments about President Obama?

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Saying No to Pharoah

In an interview with Christiane Amanpour, Egyptian President Hosni Mubarak said he’s fed up and wants to resign, but he “cannot for fear of the country falling into chaos.”

Now, who do you suppose is responsible for that? Perhaps the same person who is responsible for eliminating democratic opposition in Egypt and who has insisted, for 30 years now, that the choice the United States faces is either supporting the dictator Mubarak or the ascension to power of the Muslim Brotherhood.

As chaos spreads in Egypt, we shouldn’t forget, even for a moment, that Hosni Mubarak created the conditions for it. That, more than anything else, is what the people of Egypt are rebelling against. They are saying “no” to pharaoh.

In an interview with Christiane Amanpour, Egyptian President Hosni Mubarak said he’s fed up and wants to resign, but he “cannot for fear of the country falling into chaos.”

Now, who do you suppose is responsible for that? Perhaps the same person who is responsible for eliminating democratic opposition in Egypt and who has insisted, for 30 years now, that the choice the United States faces is either supporting the dictator Mubarak or the ascension to power of the Muslim Brotherhood.

As chaos spreads in Egypt, we shouldn’t forget, even for a moment, that Hosni Mubarak created the conditions for it. That, more than anything else, is what the people of Egypt are rebelling against. They are saying “no” to pharaoh.

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FROM THE JANUARY ISSUE: ‘The Problem with Printing Money’

The Federal Reserve’s dramatic new intervention into the U.S. economy—a $600 billion purchase of Treasury bonds that was immediately branded with the nautical nickname of QE2—had barely gotten underway in November 2010 before the Fed itself began sending signals that it had a public-relations disaster on its hands. In a speech to European central bankers in Frankfurt only two weeks after the policy was announced, Fed chairman Ben Bernanke said he didn’t like using the term “quantitative easing”—much less “QE2” —because it didn’t precisely describe what the central bank was trying to do by running the printing presses overtime.

To read the rest of this article from COMMENTARY‘s January issue, click here.

To become a subscriber to COMMENTARY — online or print – click here.

The Federal Reserve’s dramatic new intervention into the U.S. economy—a $600 billion purchase of Treasury bonds that was immediately branded with the nautical nickname of QE2—had barely gotten underway in November 2010 before the Fed itself began sending signals that it had a public-relations disaster on its hands. In a speech to European central bankers in Frankfurt only two weeks after the policy was announced, Fed chairman Ben Bernanke said he didn’t like using the term “quantitative easing”—much less “QE2” —because it didn’t precisely describe what the central bank was trying to do by running the printing presses overtime.

To read the rest of this article from COMMENTARY‘s January issue, click here.

To become a subscriber to COMMENTARY — online or print – click here.

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The Guardian Wants Its Two-State Solution Back. Beware.

When the Guardian launched its “Palestine Papers” on Sunday, the sensational leak was accompanied by an editorial, which was sensationally titled “Pleading for a fig leaf” and just as sensationally subtitled “The secret notes suggest one requires Panglossian optimism to believe that these negotiations can one day be resurrected.”

The editorial went on to accuse the Palestinian leadership of being a bunch of collaborators — it described them as “weak” and “craven” — a mixture of poodles and quislings. It decried their humiliating readiness “to flog the family silver” in order to get “a puppet state.” It then proclaimed: “The Palestinian Authority may continue as an employer but, as of today, its legitimacy as negotiators will have all but ended on the Palestinian street.”

So, on January 23, the peace process is dead, unless you are a “Panglossian optimist.”

This was not just an isolated 0pinion piece — this was an opening salvo from the editor. Somehow, it looks like someone may have regretted going so far, because just two days later, a new editorial with a contrary headline appeared — “Despair. But we still need a deal” — with a subtitle that was also the opposite of that of the January 23 editorial: “A two-state solution remains the only show in town.” Read More

When the Guardian launched its “Palestine Papers” on Sunday, the sensational leak was accompanied by an editorial, which was sensationally titled “Pleading for a fig leaf” and just as sensationally subtitled “The secret notes suggest one requires Panglossian optimism to believe that these negotiations can one day be resurrected.”

The editorial went on to accuse the Palestinian leadership of being a bunch of collaborators — it described them as “weak” and “craven” — a mixture of poodles and quislings. It decried their humiliating readiness “to flog the family silver” in order to get “a puppet state.” It then proclaimed: “The Palestinian Authority may continue as an employer but, as of today, its legitimacy as negotiators will have all but ended on the Palestinian street.”

So, on January 23, the peace process is dead, unless you are a “Panglossian optimist.”

This was not just an isolated 0pinion piece — this was an opening salvo from the editor. Somehow, it looks like someone may have regretted going so far, because just two days later, a new editorial with a contrary headline appeared — “Despair. But we still need a deal” — with a subtitle that was also the opposite of that of the January 23 editorial: “A two-state solution remains the only show in town.”

The Guardian now says it wants the two-state solution back — two days after it inaugurated the latest effort to sabotage it and a day before the head of Hamas’s international-relations department was given a prominent platform in the paper.

Nice try, but this does not in any way match the impact of the avalanche of op-eds, news coverage, and profiles the Guardian provided and continues to provide in order to support the perception that the Palestinian leadership betrayed their people.

In other words, the Guardian believes in the two-state solution, just not the one that could be realistically negotiated, because that constitutes a betrayal of the Palestinian cause; and not one under U.S. auspices, because the Americans are not honest brokers; and not one where Israel gets its way on settlements, Jerusalem, or refugees, because that is “craven.”

In short, the Guardian is for a two-state solution where Israel, not the Palestinians, surrenders.

The Guardian has always taken the Palestinian narrative as the truth. The leaks, accompanied by an accusing finger pointed at the Palestinian negotiators, is a cry of “betrayal” of the Palestinian cause. They are more Palestinian than the Palestinians themselves.

Just consider the Guardian’s wise counsel on how successfully negotiate:

[T]alks succeed only when each side can put itself in the shoes of the other. To imagine that Abu Mazen could put to a referendum a deal in which Israel got its way on all the core issues – settlements, Jerusalem, the return of refugees – and to imagine that such a deal would be durable, is the ultimate failure of a negotiator’s imagination.

There. The Guardian can only put itself in the shoes of the Palestinians — but no word of Israeli and Jewish pain, when Israel’s leaders would have to relinquish Hebron, the second holiest place for Judaism; or Bethlehem, where one of four matriarchs of Israel, Rachel, is buried; or Nablus, where Jacob’s son Joseph is buried; or the entire biblical heartland, which, more than Tel Aviv and the entire coastline of Israel, is filled with longing and memories of Jewish identity.

No pain is registered, because the Guardian, in its cravenness, sees Israel as the Palestinians see it — a colonialist, European implant, based on a racist and imperialist ideology that crafted an imagined past fed by religious superstition and devoid of the authenticity of the indigenous culture.

Their leaks may be a treasure trove for the impatient historian who won’t need to wait 30 years to access classified material. It may be a golden opportunity to undermine the Palestinian Authority and poke Israel in the eye in the process. And it is no doubt great for Internet traffic. But it has no value whatsoever in terms of advancing the cause the Guardian pretends to support.

That plea for a two-state solution is just their fig leaf — a convenient cover before they charge ahead.

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Politico Swallows New White House Spin on Israel

It’s a new year and a somewhat new crew running things at the White House, what with Rahm Emanuel and David Axelrod gone, so it’s to be expected that we’re now getting a new spin about the Middle East from their successors. That’s the only way to interpret Ben Smith’s somewhat puzzling article in Politico today.

In the wake of the collapse of the administration’s last incompetent effort to get the Palestinians back to the negotiating table, there’s little question about the piece’s conclusion that the peace process is dead in the water. No one should be surprised that the president’s spin masters are attempting to absolve the president and his foreign-policy team of all blame for the Middle East failures that have marked their two years in office. But it is astonishing that Smith, who has been covering them during this period, has swallowed whole their absurd rewriting of the history of this period.

The main point of the piece seems to be that the White House is fed up with Israeli Prime Minister Benjamin Netanyahu. According to Smith, after two years of trying to “give Israeli Prime Minister Benjamin Netanyahu the benefit of the doubt as a prospective peace partner,” they’ve had it with him. Netanyahu’s “intransigence,” Smith writes, is chiefly responsible for the collapse of American diplomacy, though he — and his highly placed sources — concedes that the feckless Palestinian Authority leader Mahmoud Abbas is no better. The conclusion is that Obama is giving up on the whole thing, since the chances “of a personal alliance growing between the Israeli leader and President Barack Obama to be just about zero.”

This makes for a neat narrative designed to make Obama look good, but only rings true if you haven’t been paying the slightest attention to U.S.-Israel relations since January 2009.

Contrary to Smith, if there has been one consistent point about the administration’s attitude toward Israel during this period, it has been its hostility to Netanyahu. From the start, Obama, who prior to his election claimed to be all right with Israel but not with Netanyahu’s Likud Party, showed his dissatisfaction with the outcome of the Israeli vote in February 2009. Rather than seek a common strategy to revive a peace process that had crashed in 2008, when Abbas refused Netanyahu’s predecessor Ehud Olmert’s offer of a Palestinian state, Obama was determined to create some distance between the United States and Israel. Though the Palestinians had already conceded that most Jewish neighborhoods in Jerusalem would stay under Israeli control even as they rejected Israel’s offer of peace, Obama drew a new line in the sand. The president demanded that Israel freeze all building, even in areas — like Jerusalem — where everyone knew that Israel would not retreat even in the event of peace. Finding themselves outflanked, the Palestinians had to similarly dig in their heels, and the last two years of failed attempts to get them back to the negotiating table were the inevitable result. Read More

It’s a new year and a somewhat new crew running things at the White House, what with Rahm Emanuel and David Axelrod gone, so it’s to be expected that we’re now getting a new spin about the Middle East from their successors. That’s the only way to interpret Ben Smith’s somewhat puzzling article in Politico today.

In the wake of the collapse of the administration’s last incompetent effort to get the Palestinians back to the negotiating table, there’s little question about the piece’s conclusion that the peace process is dead in the water. No one should be surprised that the president’s spin masters are attempting to absolve the president and his foreign-policy team of all blame for the Middle East failures that have marked their two years in office. But it is astonishing that Smith, who has been covering them during this period, has swallowed whole their absurd rewriting of the history of this period.

The main point of the piece seems to be that the White House is fed up with Israeli Prime Minister Benjamin Netanyahu. According to Smith, after two years of trying to “give Israeli Prime Minister Benjamin Netanyahu the benefit of the doubt as a prospective peace partner,” they’ve had it with him. Netanyahu’s “intransigence,” Smith writes, is chiefly responsible for the collapse of American diplomacy, though he — and his highly placed sources — concedes that the feckless Palestinian Authority leader Mahmoud Abbas is no better. The conclusion is that Obama is giving up on the whole thing, since the chances “of a personal alliance growing between the Israeli leader and President Barack Obama to be just about zero.”

This makes for a neat narrative designed to make Obama look good, but only rings true if you haven’t been paying the slightest attention to U.S.-Israel relations since January 2009.

Contrary to Smith, if there has been one consistent point about the administration’s attitude toward Israel during this period, it has been its hostility to Netanyahu. From the start, Obama, who prior to his election claimed to be all right with Israel but not with Netanyahu’s Likud Party, showed his dissatisfaction with the outcome of the Israeli vote in February 2009. Rather than seek a common strategy to revive a peace process that had crashed in 2008, when Abbas refused Netanyahu’s predecessor Ehud Olmert’s offer of a Palestinian state, Obama was determined to create some distance between the United States and Israel. Though the Palestinians had already conceded that most Jewish neighborhoods in Jerusalem would stay under Israeli control even as they rejected Israel’s offer of peace, Obama drew a new line in the sand. The president demanded that Israel freeze all building, even in areas — like Jerusalem — where everyone knew that Israel would not retreat even in the event of peace. Finding themselves outflanked, the Palestinians had to similarly dig in their heels, and the last two years of failed attempts to get them back to the negotiating table were the inevitable result.

Obama’s first attempts to outmaneuver Netanyahu seemed to be based on a foolish hope that the prime minister would be forced into a coalition with the American favorite Tzipi Livni or out of office altogether. Rather than being weakened by this, Netanyahu gained strength. In the spring of 2010, Obama tried again when he deliberately picked a fight with Israel over the construction of new homes in existing Jewish neighborhoods in Jerusalem. The White House and the State Department subjected Netanyahu to an unprecedented campaign of abuse, but the result was no different than their previous efforts. Soon Obama was forced to back down and resort to a charm offensive aimed at damping down criticism from American Jews.

Rather than take responsibility for their own mistakes and the president’s relentless hostility to Netanyahu — whose grip on his parliamentary majority is stronger than ever — all we’re getting from the White House is more negative spin about Israel. But in order to believe a word of it, you’ve got to be afflicted with the sort of short-term memory loss that is the premise of Ben Smith’s article.

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Loughner’s Conspiracy-Theory Obsession

Byron York has a fascinating analysis of Jared Loughner’s obsession with the conspiracy-theory-themed Internet movie Zeitgeist, which friends say the accused shooter watched continually.

The movie is apparently made up of three parts. The first “debunks” organized religion, which is allegedly used as mind-control for the masses. The second claims that the Sept. 11 attacks were staged, in order to create an excuse to wage “constant global warfare.” And the third part alleges that greedy bankers were behind the Sept. 11 attacks:

The third and final part of the documentary is titled “Don’t Mind the Men Behind the Curtain.” Those men are central bankers and currency manipulators, the “invisible government” that controls our lives.

In the early 20th century, according to “Zeitgeist,” “ruthless banking interests” held a secret meeting to create the Federal Reserve system. The goal, beyond enriching themselves, was to debase American currency and reduce the United States to the “slavery” of ever-increasing debt. Anyone who has even sampled kooky speculations about the Fed will recognize this as very old stuff, repackaged with amateurish digital effects.

This is, indeed, repackaged old stuff. The same paranoid ramblings that have been found in anti-Semitic “New World Order” conspiracy theories for over a century.

And while you’d guess that a film like this would be popular only with the fringes of society, it actually seems to have made inroads as a political movement with some fairly mainstream progressives. The “Zeitgeist Movement,” which was created in 2007 and marketed as a progressive “sustainable living” campaign, had reportedly garnered over 300,000 registered followers as of last March. At the time, Travis Walter Donovan, the associate green editor of the Huffington Post, wrote a laudatory article about the movement that made it sound positively utopian.

According to Donovan, the Zeitgeist Movement promotes a “resource-based economy,” which means that “the world’s resources would be considered as the equal inheritance of all the world’s peoples, and would be managed as efficiently and carefully as possible through focusing on the technological potential of sustainable development.”

Donovan concluded his article with this glowing paragraph:

The members of The Zeitgeist Movement seem to face an intimidating wall of those who decree their goals as unattainable. But with 250 international chapters forming in just one year and the membership count rapidly growing, it’s undeniable that many easily identify with the message. The evidence shows that our current system is leading us on a collision course; our present model of society cannot sustain itself. While some deny this, others ignore it, and there are those who still try to profit off of it. The Zeitgeist Movement highlights that there are individuals who believe in a sustainable future where humanity is not united by religious or political ideology, but by the scientific method, venerated as the savior that can develop a system of human equality, thriving from the cooperation and balance of technology and nature.

So, basically, it’s socialism with a couple of “green” words thrown in. And also that New World Order stuff. Sounds like a safe combination to me.

And since this subject has been so hotly politicized, I just want to add that I’m not accusing the Zeitgeist Movement, progressives, the Huffington Post, or any other group of having any sort of influence on the shooting. Despite the misguided and troubling politics of Zeitgeist, it’s clear that the movement is not one that preaches violence, so it would be unfair and erroneous to blame it for the attack.

Byron York has a fascinating analysis of Jared Loughner’s obsession with the conspiracy-theory-themed Internet movie Zeitgeist, which friends say the accused shooter watched continually.

The movie is apparently made up of three parts. The first “debunks” organized religion, which is allegedly used as mind-control for the masses. The second claims that the Sept. 11 attacks were staged, in order to create an excuse to wage “constant global warfare.” And the third part alleges that greedy bankers were behind the Sept. 11 attacks:

The third and final part of the documentary is titled “Don’t Mind the Men Behind the Curtain.” Those men are central bankers and currency manipulators, the “invisible government” that controls our lives.

In the early 20th century, according to “Zeitgeist,” “ruthless banking interests” held a secret meeting to create the Federal Reserve system. The goal, beyond enriching themselves, was to debase American currency and reduce the United States to the “slavery” of ever-increasing debt. Anyone who has even sampled kooky speculations about the Fed will recognize this as very old stuff, repackaged with amateurish digital effects.

This is, indeed, repackaged old stuff. The same paranoid ramblings that have been found in anti-Semitic “New World Order” conspiracy theories for over a century.

And while you’d guess that a film like this would be popular only with the fringes of society, it actually seems to have made inroads as a political movement with some fairly mainstream progressives. The “Zeitgeist Movement,” which was created in 2007 and marketed as a progressive “sustainable living” campaign, had reportedly garnered over 300,000 registered followers as of last March. At the time, Travis Walter Donovan, the associate green editor of the Huffington Post, wrote a laudatory article about the movement that made it sound positively utopian.

According to Donovan, the Zeitgeist Movement promotes a “resource-based economy,” which means that “the world’s resources would be considered as the equal inheritance of all the world’s peoples, and would be managed as efficiently and carefully as possible through focusing on the technological potential of sustainable development.”

Donovan concluded his article with this glowing paragraph:

The members of The Zeitgeist Movement seem to face an intimidating wall of those who decree their goals as unattainable. But with 250 international chapters forming in just one year and the membership count rapidly growing, it’s undeniable that many easily identify with the message. The evidence shows that our current system is leading us on a collision course; our present model of society cannot sustain itself. While some deny this, others ignore it, and there are those who still try to profit off of it. The Zeitgeist Movement highlights that there are individuals who believe in a sustainable future where humanity is not united by religious or political ideology, but by the scientific method, venerated as the savior that can develop a system of human equality, thriving from the cooperation and balance of technology and nature.

So, basically, it’s socialism with a couple of “green” words thrown in. And also that New World Order stuff. Sounds like a safe combination to me.

And since this subject has been so hotly politicized, I just want to add that I’m not accusing the Zeitgeist Movement, progressives, the Huffington Post, or any other group of having any sort of influence on the shooting. Despite the misguided and troubling politics of Zeitgeist, it’s clear that the movement is not one that preaches violence, so it would be unfair and erroneous to blame it for the attack.

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Stay Tuned to Tunisia

For all its reputation as the world’s most unstable region, the Middle East has actually been extremely stable in one respect — almost all of its states are ruled by dictators who tend to rule for decades. That’s why it’s very big news that a revolution has swept Tunisia, with reports that President Ben Ali has fled the country. Based on the (scant) reporting so far, it is not clear whether any political movement is behind these events. Most of the accounts describe fairly spontaneous protests and riots after a vegetable vendor set himself on fire to protest the confiscation of his cart — his sole means of support — by the authorities.

Tunisians have long been fed up with the corrupt, illegitimate rule of Ben Ali and his hated wife, an Eva Peron figure. They and their family members have grown absurdly rich even as the rest of the country has stagnated. Many other peoples across the Arab world — in Morocco, Algeria, Libya, Egypt, Syria, Saudi Arabia, and other states — are fed up too. But they have scant chance to express their displeasure except covertly, because if there is one area in which Arab rulers excel, it is in building efficient police states. Now the police state in Tunisia has crumbled.

That is either good news or bad news. It all depends on what comes next. If Tunisia makes the transition to democratic rule, that would be an epochal development that could influence neighboring states in a positive way. If another dictator comes to the fore, that would not be so good. Even worse would be if that dictator emerges from the Islamist fringe. Stay tuned. It’s still early days, but certainly the end of Ben Ali’s long-lived and heavy-handed rule is not to be mourned, even if he was a reliable American ally.

For all its reputation as the world’s most unstable region, the Middle East has actually been extremely stable in one respect — almost all of its states are ruled by dictators who tend to rule for decades. That’s why it’s very big news that a revolution has swept Tunisia, with reports that President Ben Ali has fled the country. Based on the (scant) reporting so far, it is not clear whether any political movement is behind these events. Most of the accounts describe fairly spontaneous protests and riots after a vegetable vendor set himself on fire to protest the confiscation of his cart — his sole means of support — by the authorities.

Tunisians have long been fed up with the corrupt, illegitimate rule of Ben Ali and his hated wife, an Eva Peron figure. They and their family members have grown absurdly rich even as the rest of the country has stagnated. Many other peoples across the Arab world — in Morocco, Algeria, Libya, Egypt, Syria, Saudi Arabia, and other states — are fed up too. But they have scant chance to express their displeasure except covertly, because if there is one area in which Arab rulers excel, it is in building efficient police states. Now the police state in Tunisia has crumbled.

That is either good news or bad news. It all depends on what comes next. If Tunisia makes the transition to democratic rule, that would be an epochal development that could influence neighboring states in a positive way. If another dictator comes to the fore, that would not be so good. Even worse would be if that dictator emerges from the Islamist fringe. Stay tuned. It’s still early days, but certainly the end of Ben Ali’s long-lived and heavy-handed rule is not to be mourned, even if he was a reliable American ally.

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Obama Snubs Britain Yet Again

He just can’t help himself. President Obama has apparently dissed Britain once again by declaring that “[w]e don’t have a stronger friend and stronger ally than Nicolas Sarkozy, and the French people” during a White House appearance with the French president. And the British press has taken notice:

Barack Obama has declared that France is America’s greatest ally, undermining Britain’s Special Relationship with the U.S.

The President risked offending British troops in Afghanistan by saying that French president Nicolas Sarkozy is a ‘stronger friend’ than David Cameron.

The remarks, during a White House appearance with Mr Sarkozy, will reinforce the widely-held view in British diplomatic circles that Mr Obama has less interest in the Special Relationship than any other recent American leader.

Whether or not Obama meant any offense by the statement, he obviously should have realized that his past coldness toward Britain has made the it highly sensitive to any perceived slights from the White House. The president previously declined to meet with former prime minister Gordon Brown, removed the bust of Winston Churchill from his office, and famously gave Queen Elizabeth an iPod with photos of himself on it as a gift. His latest amateur diplomatic slip-up has sparked a bit of anti-French bad-mouthing from both British lawmakers and foreign-policy experts in Washington:

Tory MP Patrick Mercer, a former commander of the Sherwood Foresters regiment, said: “I’m getting a bit fed up with the American President using terms like ‘best ally’ so loosely.

“It’s Britain that has had more than 300 servicemen killed in Afghanistan, not France.

“That to my mind is a lot more powerful than any political gesture making.”

The remarks also angered conservatives in Washington.

Nile Gardiner, director of the Margaret Thatcher Centre For Freedom at the Heritage Foundation think-tank, said: “Quite what the French have done to merit this kind of high praise from the U.S. President is difficult to fathom.

“And if the White House means what it says this represents an extraordinary sea change in foreign policy.” Dr Gardiner, a former aide to Lady Thatcher, added: “To suggest that Paris and not London is Washington’s strongest partner is simply ludicrous.

“Such a remark is not only factually wrong but insulting to Britain, not least coming just a few years after the French knifed Washington in the back over the war in Iraq.”

And it’s not hard to see why Obama’s statement provoked such a response. As the Daily Mail notes, the UK has lost nearly seven times as many troops as France in the global war on terror. I’d say that the president should choose his words more carefully next time, but in light of his numerous diplomatic flaps with Britain, I’m not sure if he has it in him.

He just can’t help himself. President Obama has apparently dissed Britain once again by declaring that “[w]e don’t have a stronger friend and stronger ally than Nicolas Sarkozy, and the French people” during a White House appearance with the French president. And the British press has taken notice:

Barack Obama has declared that France is America’s greatest ally, undermining Britain’s Special Relationship with the U.S.

The President risked offending British troops in Afghanistan by saying that French president Nicolas Sarkozy is a ‘stronger friend’ than David Cameron.

The remarks, during a White House appearance with Mr Sarkozy, will reinforce the widely-held view in British diplomatic circles that Mr Obama has less interest in the Special Relationship than any other recent American leader.

Whether or not Obama meant any offense by the statement, he obviously should have realized that his past coldness toward Britain has made the it highly sensitive to any perceived slights from the White House. The president previously declined to meet with former prime minister Gordon Brown, removed the bust of Winston Churchill from his office, and famously gave Queen Elizabeth an iPod with photos of himself on it as a gift. His latest amateur diplomatic slip-up has sparked a bit of anti-French bad-mouthing from both British lawmakers and foreign-policy experts in Washington:

Tory MP Patrick Mercer, a former commander of the Sherwood Foresters regiment, said: “I’m getting a bit fed up with the American President using terms like ‘best ally’ so loosely.

“It’s Britain that has had more than 300 servicemen killed in Afghanistan, not France.

“That to my mind is a lot more powerful than any political gesture making.”

The remarks also angered conservatives in Washington.

Nile Gardiner, director of the Margaret Thatcher Centre For Freedom at the Heritage Foundation think-tank, said: “Quite what the French have done to merit this kind of high praise from the U.S. President is difficult to fathom.

“And if the White House means what it says this represents an extraordinary sea change in foreign policy.” Dr Gardiner, a former aide to Lady Thatcher, added: “To suggest that Paris and not London is Washington’s strongest partner is simply ludicrous.

“Such a remark is not only factually wrong but insulting to Britain, not least coming just a few years after the French knifed Washington in the back over the war in Iraq.”

And it’s not hard to see why Obama’s statement provoked such a response. As the Daily Mail notes, the UK has lost nearly seven times as many troops as France in the global war on terror. I’d say that the president should choose his words more carefully next time, but in light of his numerous diplomatic flaps with Britain, I’m not sure if he has it in him.

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Morning Commentary

Concern is growing over China’s advancing military capabilities. As Secretary of Defense Robert Gates met with civilian leaders in Beijing today, Chinese bloggers and news agencies produced photos that appear to show the country’s new stealth fighter taking its first test flight: “That message undercuts the symbolism of Mr. Gates’ visit, which is designed to smooth military relations ahead of a state visit to the U.S. next week by Chinese President Hu Jintao.”

The insta-politicization of the Arizona shooting — by both Twitter activists and serious political leaders — is just another example of why Americans are becoming increasingly fed up with both the Republican and Democratic parties, writes Reason’s Nick Gillespie: “How do you take one of the most shocking and revolting murder sprees in memory and make it even more disturbing? By immediately pouncing on its supposed root causes for the most transparently partisan of gains.”

Foreign Policy’s Josh Rogin outlines the possible replacements for the top positions on Obama’s foreign-policy team in 2011. The most likely candidates to replace Defense Secretary Robert Gates — who is expected to step down after early next spring — are John Hamre, president of the Center for Strategic and International Studies; Michele Flourney, Gates’s current undersecretary for policy; and CIA chief Leon Panetta.

The IDF is fighting back at criticism over its use of tear gas at an anti-Israel protest in Bil’in, by launching a YouTube campaign showing demonstrators throwing rocks and attempting to tear down fences at the same rally.

A former ambassador to Lebanon responds to the New York Times’s shameful fluff story about a radical Lebanese, Hezbollah-praising newspaper: “Sadly, Al Akhbar is less maverick and far less heroic than your article suggests. Al Akhbar will no more criticize Hezbollah’s secretary general, Hassan Nasrallah, than Syria’s state-run Tishreen newspaper would question the president of Syria, Bashar al-Assad.”

Bilawal Bhutto Zardari, the chair of the Pakistan ruling party and son of the late Benazir Bhutto, has vowed to keep fighting the country’s blasphemy laws after the assassination of Salman Taseer: “‘To the Christian and other minority communities in Pakistan, we will defend you,’ he said at a memorial ceremony in London for Salman Taseer, the governor of Punjab province who was killed by his own security guard last week. ‘Those who wish to harm you for a crime you did not commit will have to go through me first.’”

Concern is growing over China’s advancing military capabilities. As Secretary of Defense Robert Gates met with civilian leaders in Beijing today, Chinese bloggers and news agencies produced photos that appear to show the country’s new stealth fighter taking its first test flight: “That message undercuts the symbolism of Mr. Gates’ visit, which is designed to smooth military relations ahead of a state visit to the U.S. next week by Chinese President Hu Jintao.”

The insta-politicization of the Arizona shooting — by both Twitter activists and serious political leaders — is just another example of why Americans are becoming increasingly fed up with both the Republican and Democratic parties, writes Reason’s Nick Gillespie: “How do you take one of the most shocking and revolting murder sprees in memory and make it even more disturbing? By immediately pouncing on its supposed root causes for the most transparently partisan of gains.”

Foreign Policy’s Josh Rogin outlines the possible replacements for the top positions on Obama’s foreign-policy team in 2011. The most likely candidates to replace Defense Secretary Robert Gates — who is expected to step down after early next spring — are John Hamre, president of the Center for Strategic and International Studies; Michele Flourney, Gates’s current undersecretary for policy; and CIA chief Leon Panetta.

The IDF is fighting back at criticism over its use of tear gas at an anti-Israel protest in Bil’in, by launching a YouTube campaign showing demonstrators throwing rocks and attempting to tear down fences at the same rally.

A former ambassador to Lebanon responds to the New York Times’s shameful fluff story about a radical Lebanese, Hezbollah-praising newspaper: “Sadly, Al Akhbar is less maverick and far less heroic than your article suggests. Al Akhbar will no more criticize Hezbollah’s secretary general, Hassan Nasrallah, than Syria’s state-run Tishreen newspaper would question the president of Syria, Bashar al-Assad.”

Bilawal Bhutto Zardari, the chair of the Pakistan ruling party and son of the late Benazir Bhutto, has vowed to keep fighting the country’s blasphemy laws after the assassination of Salman Taseer: “‘To the Christian and other minority communities in Pakistan, we will defend you,’ he said at a memorial ceremony in London for Salman Taseer, the governor of Punjab province who was killed by his own security guard last week. ‘Those who wish to harm you for a crime you did not commit will have to go through me first.’”

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Morning Commentary

Why Ron Paul’s new role as the head of the subcommittee that oversees the Federal Reserve is disconcerting (even to libertarians): “[W]hen you look at his speeches, he doesn’t understand anything about monetary policy. He might actually understand it less than the average member of Congress. My personal opinion is that he wastes all of his time on the House Financial Services Committee ranting crazily.”

Surprise: Michael Steele to run for a second term as Republican National Committee chair. “I come to my bosses with a record that only you can judge, based upon directions you made clear to me from the very beginning. Yes, I have stumbled along the way, but have always accounted to you for such shortcomings. No excuses. No lies. No hidden agenda. Going forward, I ask for your support and your vote for a second term,” Steele announced in an e-mail last night.

Richard Holbrooke: April 24, 1941–December 13, 2010. The New Republic has an excellent tribute to the legendary diplomat as well as a compilation of articles written about (and by) him.

European papers are reporting that the Stockholm bomber was radicalized in Britain, raising concerns about whether British universities have done enough to combat home-grown terrorism: “His parents were even a little worried that he was having too much fun. But then he went to England to study in 2001 and everything changed,” a friend of Stockholm terrorist Taimur Abdulwahab al-Abdaly told the Telegraph. “When he came back he had grown a beard and he was very serious. He talked about Afghanistan and religion and did not want to hang out with his friends.”

Is WikiLeaks a force for good? Reason magazine spoke to four experts who gave their uncensored views on the controversial website.

Why Ron Paul’s new role as the head of the subcommittee that oversees the Federal Reserve is disconcerting (even to libertarians): “[W]hen you look at his speeches, he doesn’t understand anything about monetary policy. He might actually understand it less than the average member of Congress. My personal opinion is that he wastes all of his time on the House Financial Services Committee ranting crazily.”

Surprise: Michael Steele to run for a second term as Republican National Committee chair. “I come to my bosses with a record that only you can judge, based upon directions you made clear to me from the very beginning. Yes, I have stumbled along the way, but have always accounted to you for such shortcomings. No excuses. No lies. No hidden agenda. Going forward, I ask for your support and your vote for a second term,” Steele announced in an e-mail last night.

Richard Holbrooke: April 24, 1941–December 13, 2010. The New Republic has an excellent tribute to the legendary diplomat as well as a compilation of articles written about (and by) him.

European papers are reporting that the Stockholm bomber was radicalized in Britain, raising concerns about whether British universities have done enough to combat home-grown terrorism: “His parents were even a little worried that he was having too much fun. But then he went to England to study in 2001 and everything changed,” a friend of Stockholm terrorist Taimur Abdulwahab al-Abdaly told the Telegraph. “When he came back he had grown a beard and he was very serious. He talked about Afghanistan and religion and did not want to hang out with his friends.”

Is WikiLeaks a force for good? Reason magazine spoke to four experts who gave their uncensored views on the controversial website.

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Time for the Fed to Back Off

Fed chairman Ben Bernanke was interviewed by CBS News’s 60 Minutes. Over at e21 (with which I am affiliated), David Malpass does a careful fisking of Bernanke on the issue of the second round of quantitative easing (QE2) — a rather esoteric monetary issue but one that has significant economic ramifications.

In Malpass’s words, “Having the Fed buy bonds in the absence of a crisis is unprecedented and raises many risks — it manipulates markets, creates a bigger overhang when the Fed tries to unload the bonds, risks capital losses at the Fed if interest rates rise, and puts taxpayers and the dollar at risk by shortening the maturity of the outstanding national debt.”

My concern is that given the dismal jobs report on Friday, in which we learned that unemployment increased to 9.8 percent and private-sector job creation was anemic, the Fed will be tempted to get more, not less, aggressive. It shouldn’t, for reasons laid out by Mr. Malpass.

Fed chairman Ben Bernanke was interviewed by CBS News’s 60 Minutes. Over at e21 (with which I am affiliated), David Malpass does a careful fisking of Bernanke on the issue of the second round of quantitative easing (QE2) — a rather esoteric monetary issue but one that has significant economic ramifications.

In Malpass’s words, “Having the Fed buy bonds in the absence of a crisis is unprecedented and raises many risks — it manipulates markets, creates a bigger overhang when the Fed tries to unload the bonds, risks capital losses at the Fed if interest rates rise, and puts taxpayers and the dollar at risk by shortening the maturity of the outstanding national debt.”

My concern is that given the dismal jobs report on Friday, in which we learned that unemployment increased to 9.8 percent and private-sector job creation was anemic, the Fed will be tempted to get more, not less, aggressive. It shouldn’t, for reasons laid out by Mr. Malpass.

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Another Good Entitlement-Reform Plan

James Capretta explains why the entitlement-reform proposal put forth by Rep. Paul Ryan and former Fed vice-chairman Alice Rivlin is so important:

In Medicare, the Ryan-Rivlin proposal would be transformative. It picks up on a key feature of Rep. Ryan’s “Roadmap” budget plan, which is that new enrollees in Medicare after 2020 would receive their entitlement in the form of a fixed contribution from the federal government rather than today’s defined benefit program structure. …

For Medicaid, Ryan and Rivlin propose moving toward a fixed block grant payment from the federal government to the states. The block grant payments would be indexed to grow with the size of the Medicaid population as well as per capita GDP growth plus one percentage point. …

Beyond Medicare and Medicaid, the plan would also impose limits on noneconomic and punitive damages in medical liability cases as well as repeal the ill-advised long-term care program (called the “CLASS Act”) that was created in the recently passed health care law.

The Congressional Budget Office (CBO) has already issued a preliminary assessment of the budgetary implications of Ryan-Rivlin, and the results are impressive. Over the next decade, Ryan-Rivlin would cut federal deficit spending by $280 billion, and by 2030, federal spending on the major health entitlement programs would be about 1.75 percent of GDP below a reasonable baseline projection.

But Capretta is right that the importance of the plan is more political — the emergence of a responsible Democratic voice willing to work with the GOP’s guru on entitlements (Ryan) in a productive way. This will diffuse to a degree the alarmist rhetoric coming from the Dem side of the aisle. Moreover, it recognizes that we need to pursue “an across-the-board move toward more fixed federal financial support for coverage.”

In conversations I have had over the past week, Republicans on the Hill seem to recognize that there are important elements in both the debt commission plan and the Ryan-Rivlin plan. Neither is perfect, but parts of both represent some key concessions by the Democrats involved in formulating each. A flatter tax code, a lower corporate tax rate, and market-based entitlement reforms? Some would sign on the dotted line, warts and all. The Democrats? Well, by launching an assault on the debt commission, they risk appearing unserious about deficit control and real fiscal reform.

At the very least, the Ryan-Rivlin and debt commission plans will jump-start a key debate. If Republicans want to prove they are sober and mature lawmakers, they will start crafting proposals that extract the best from both plans.

James Capretta explains why the entitlement-reform proposal put forth by Rep. Paul Ryan and former Fed vice-chairman Alice Rivlin is so important:

In Medicare, the Ryan-Rivlin proposal would be transformative. It picks up on a key feature of Rep. Ryan’s “Roadmap” budget plan, which is that new enrollees in Medicare after 2020 would receive their entitlement in the form of a fixed contribution from the federal government rather than today’s defined benefit program structure. …

For Medicaid, Ryan and Rivlin propose moving toward a fixed block grant payment from the federal government to the states. The block grant payments would be indexed to grow with the size of the Medicaid population as well as per capita GDP growth plus one percentage point. …

Beyond Medicare and Medicaid, the plan would also impose limits on noneconomic and punitive damages in medical liability cases as well as repeal the ill-advised long-term care program (called the “CLASS Act”) that was created in the recently passed health care law.

The Congressional Budget Office (CBO) has already issued a preliminary assessment of the budgetary implications of Ryan-Rivlin, and the results are impressive. Over the next decade, Ryan-Rivlin would cut federal deficit spending by $280 billion, and by 2030, federal spending on the major health entitlement programs would be about 1.75 percent of GDP below a reasonable baseline projection.

But Capretta is right that the importance of the plan is more political — the emergence of a responsible Democratic voice willing to work with the GOP’s guru on entitlements (Ryan) in a productive way. This will diffuse to a degree the alarmist rhetoric coming from the Dem side of the aisle. Moreover, it recognizes that we need to pursue “an across-the-board move toward more fixed federal financial support for coverage.”

In conversations I have had over the past week, Republicans on the Hill seem to recognize that there are important elements in both the debt commission plan and the Ryan-Rivlin plan. Neither is perfect, but parts of both represent some key concessions by the Democrats involved in formulating each. A flatter tax code, a lower corporate tax rate, and market-based entitlement reforms? Some would sign on the dotted line, warts and all. The Democrats? Well, by launching an assault on the debt commission, they risk appearing unserious about deficit control and real fiscal reform.

At the very least, the Ryan-Rivlin and debt commission plans will jump-start a key debate. If Republicans want to prove they are sober and mature lawmakers, they will start crafting proposals that extract the best from both plans.

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Desperate — About Everything

The most common adjective used to describe the administration these days is “desperate.” It is desperate to get a New START deal, and get it now. It is “desperate” to restart the non-direct, non-peace talks. It has made common cause with the Fed’s “desperate” bond-buying scheme.

The increasingly frantic policy gambits can be attributed to the attempt to convince the voters that Obama is not a failed president. If only he can get a deal on — fill in the blank — then he’ll cut the losing streak and regain his political mojo. The theory is as, well, desperate as are the individual schemes. The president’s difficulties stem from his jobs-killing agenda, his misunderstanding of the Middle East and most other foreign policy conflicts,  and his inability to relate to voters. Should he manage to force through a largely irrelevant New START treaty or eke out another 90 days of Middle East talks, would this restore his luster? Hardly. And in the meantime, most especially in his enthusiasm for the Fed’s decision to rev up the printing press, Obama reveals his own political weakness, economic illiteracy, and foreign policy fabulism. In short, none of it is helping.

The most common adjective used to describe the administration these days is “desperate.” It is desperate to get a New START deal, and get it now. It is “desperate” to restart the non-direct, non-peace talks. It has made common cause with the Fed’s “desperate” bond-buying scheme.

The increasingly frantic policy gambits can be attributed to the attempt to convince the voters that Obama is not a failed president. If only he can get a deal on — fill in the blank — then he’ll cut the losing streak and regain his political mojo. The theory is as, well, desperate as are the individual schemes. The president’s difficulties stem from his jobs-killing agenda, his misunderstanding of the Middle East and most other foreign policy conflicts,  and his inability to relate to voters. Should he manage to force through a largely irrelevant New START treaty or eke out another 90 days of Middle East talks, would this restore his luster? Hardly. And in the meantime, most especially in his enthusiasm for the Fed’s decision to rev up the printing press, Obama reveals his own political weakness, economic illiteracy, and foreign policy fabulism. In short, none of it is helping.

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Shut Up, the Fed Defenders Explained

Doug Holtz-Eakin defends himself and his fellow signatories on their letter to the Fed taking exception with the $600B bond-buying spree. He covers a number of bases, but the first is the most interesting:

Conservatives are politicizing the Fed.  I consider this the most ironic complaint of all. The letter makes a substantive critique of quantitative easing. It does not say “Republicans would run the Fed better” or “monetary policy decisions should be voted on by the Congress” or anything else that might be genuinely politicizing the Fed.

Instead, the issue became “political” the moment that the QE II defenders asserted that it was a political attack. It is disappointing that when presented with a serious critique by academics, think tank analysts, and market participants the immediate response is “it must be a conservative attack on the Fed.” Note that implicitly this also carries the message: “I’d never consider that conservatives have ideas or that I might learn something from them.”  So sad.

And, seriously, if you don’t want the Fed to be politicized, stop having the President and the Secretary of the Treasury defending it around the globe. Administrations should say nothing about the Fed when they disagree — or when they agree.

Not only is this dead-on; it’s also a familiar storyline. If we object to the Ground Zero mosque, it’s Islamophobia. If we object to New START, it’s just partisanship. If we attend health-care town-hall meetings or Tea Parties, we are fanning violence and hate. You see the theme.

There are a couple of reasons why liberals behave in this fashion, starting with intellectual laziness. The ad hominem attacks require no argumentation or analysis. But there is also, I think, a good deal of projection going on. The left assumes that the right is willing to imperil America in order to bring down the president, as the left did under George W. Bush. (The fact that the right has backed the increasingly unpopular war in Afghanistan is one example of cognitive dissonance for which the left has no explanation.)

Here’s the thing: when Obama proposes an extension of all the Bush tax cuts, puts the threat of military force against Iran back on the table in a credible manner, slashes entitlement programs, or declares a moratorium on new business regulations, we’ll have his back. But if he — or the Fed — persists in doing things inimical to a secure and prosperous country, we’re going to let him have it. It’s sort of like a democracy.

Doug Holtz-Eakin defends himself and his fellow signatories on their letter to the Fed taking exception with the $600B bond-buying spree. He covers a number of bases, but the first is the most interesting:

Conservatives are politicizing the Fed.  I consider this the most ironic complaint of all. The letter makes a substantive critique of quantitative easing. It does not say “Republicans would run the Fed better” or “monetary policy decisions should be voted on by the Congress” or anything else that might be genuinely politicizing the Fed.

Instead, the issue became “political” the moment that the QE II defenders asserted that it was a political attack. It is disappointing that when presented with a serious critique by academics, think tank analysts, and market participants the immediate response is “it must be a conservative attack on the Fed.” Note that implicitly this also carries the message: “I’d never consider that conservatives have ideas or that I might learn something from them.”  So sad.

And, seriously, if you don’t want the Fed to be politicized, stop having the President and the Secretary of the Treasury defending it around the globe. Administrations should say nothing about the Fed when they disagree — or when they agree.

Not only is this dead-on; it’s also a familiar storyline. If we object to the Ground Zero mosque, it’s Islamophobia. If we object to New START, it’s just partisanship. If we attend health-care town-hall meetings or Tea Parties, we are fanning violence and hate. You see the theme.

There are a couple of reasons why liberals behave in this fashion, starting with intellectual laziness. The ad hominem attacks require no argumentation or analysis. But there is also, I think, a good deal of projection going on. The left assumes that the right is willing to imperil America in order to bring down the president, as the left did under George W. Bush. (The fact that the right has backed the increasingly unpopular war in Afghanistan is one example of cognitive dissonance for which the left has no explanation.)

Here’s the thing: when Obama proposes an extension of all the Bush tax cuts, puts the threat of military force against Iran back on the table in a credible manner, slashes entitlement programs, or declares a moratorium on new business regulations, we’ll have his back. But if he — or the Fed — persists in doing things inimical to a secure and prosperous country, we’re going to let him have it. It’s sort of like a democracy.

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The Fed Writes What May Be Obama’s Obituary

Yesterday came the news that the Federal Reserve expects unemployment to hover around 9 percent throughout 2011 and possibly decline to 8 percent by the end of 2012. It’s worth noting that we don’t have much reason to trust that the Federal Reserve knows anything about anything these days. The prognosticative skills of its officials and reports have proved scandalously poor over the past few years, just as its policies have suggested exactly the kind of inconstancy, desperation, and politicization that the Federal Reserve system was designed to avoid.

So with those caveats, which are substantial, we can still be assured of one thing: if unemployment is that high in 2012, Barack Obama will not win a second term. Democrats can intone the words “Sarah Palin” all they want as a desperate hope for salvation from Republican rule. But the simple fact of the matter is that if we enter into a fourth year of unemployment at levels unseen except for periods of a few months since the 1930s — after spending somewhere north of $1 trillion to try to bring the number down and with the Fed printing as much as $2 trillion to pump up growth — any Republican, and I mean any Republican, who can get the nomination will win.

Indeed, if unemployment is higher than the Fed now is expecting at the beginning of 2012, I think it’s entirely possible that Obama would not run for a second term. Continued parlous economic news through 2011 will surely create the condition for a serious primary challenger, as I talk about in my lead article in COMMENTARY’s December issue, as will continued trouble in Afghanistan.

One reason for the depth of the difficulty here is the degree to which the United States remains a consumer-driven economy. If a tenth of the country has little or no disposable income, that limits the possibilities for economic growth and a roaring recovery. Even worse, the psychic effect of years of bad economic news depresses consumer spending in every sector.

And the uncertainty created by the current political-economic climate, in which no one knows what will happen to tax rates and what will happen to health-care plans and what will happen to housing, contributes to the worries of small businesses (traditionally the engines of job growth, especially at the tail end of a downturn) about taking on new workers.

It’s a dangerous loop. So now, having to invest hope in the Fed’s newest round of quantitative easing working in his favor, Obama must simultaneously pray that the Fed is wrong about all that other stuff. Even if it is, he’s going to have a tough road ahead.

Yesterday came the news that the Federal Reserve expects unemployment to hover around 9 percent throughout 2011 and possibly decline to 8 percent by the end of 2012. It’s worth noting that we don’t have much reason to trust that the Federal Reserve knows anything about anything these days. The prognosticative skills of its officials and reports have proved scandalously poor over the past few years, just as its policies have suggested exactly the kind of inconstancy, desperation, and politicization that the Federal Reserve system was designed to avoid.

So with those caveats, which are substantial, we can still be assured of one thing: if unemployment is that high in 2012, Barack Obama will not win a second term. Democrats can intone the words “Sarah Palin” all they want as a desperate hope for salvation from Republican rule. But the simple fact of the matter is that if we enter into a fourth year of unemployment at levels unseen except for periods of a few months since the 1930s — after spending somewhere north of $1 trillion to try to bring the number down and with the Fed printing as much as $2 trillion to pump up growth — any Republican, and I mean any Republican, who can get the nomination will win.

Indeed, if unemployment is higher than the Fed now is expecting at the beginning of 2012, I think it’s entirely possible that Obama would not run for a second term. Continued parlous economic news through 2011 will surely create the condition for a serious primary challenger, as I talk about in my lead article in COMMENTARY’s December issue, as will continued trouble in Afghanistan.

One reason for the depth of the difficulty here is the degree to which the United States remains a consumer-driven economy. If a tenth of the country has little or no disposable income, that limits the possibilities for economic growth and a roaring recovery. Even worse, the psychic effect of years of bad economic news depresses consumer spending in every sector.

And the uncertainty created by the current political-economic climate, in which no one knows what will happen to tax rates and what will happen to health-care plans and what will happen to housing, contributes to the worries of small businesses (traditionally the engines of job growth, especially at the tail end of a downturn) about taking on new workers.

It’s a dangerous loop. So now, having to invest hope in the Fed’s newest round of quantitative easing working in his favor, Obama must simultaneously pray that the Fed is wrong about all that other stuff. Even if it is, he’s going to have a tough road ahead.

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Flotsam and Jetsam

A good question. “Foreign Minister Avigdor Lieberman on Tuesday slammed the world’s response to North Korea’s attack on its southern neighbor, saying the international community was showing weakness in the face of aggression. … ‘How will the world be able to stop Iran if it can’t stop North Korea,’ Lieberman said.”

A good example of the power of the Tea Party. “In one of the biggest election surprises of the year, Ann Marie Buerkle is officially the winner in New York’s 25th congressional district. Ms. Buerkle was ahead by some 800 votes on Election Day, and after several thousand absentee ballots were finally counted her lead held up. Ms. Buerkle is a nurse and mother of six who had never sought political office. She knocked off Dan Maffei, a life long politician and a protégé of scandal-plagued Charlie Rangel.”

A good bit of advice. “The incoming class of House Republicans is being urged to re-read the Constitution, carefully deal with the press and become very familiar with congressional ethics rules.”

A “good grief” report: “Fed lowers economic expectations for 2011.” They could be lower?

A good reminder that our awful policy toward North Korea is a bipartisan undertaking. Charles Krauthammer on the revelations of an advanced nuclear plan in North Korea: “The farce began 16 years ago when the Clinton administration concluded what was called the framework agreement in which the deal was they would freeze and then dismantle their plutonium program in return for all kinds of goodies, including two nuclear reactors that we would construct, and a lot of, a lot of economic support.”

A good reason not to send your kid to NYU. “A New York University arts professor might not have eyes on the back of his head, but he’s coming pretty close. Wafaa Bilal, a visual artist widely recognized for his interactive and performance pieces, had a small digital camera implanted in the back of his head — all in the name of art.”

Not a good thing for Mitt Romney’s outreach to the Tea Party crowd. President “Read My Lips,” George H.W. Bush, endorsed him for president.

A good question. “Foreign Minister Avigdor Lieberman on Tuesday slammed the world’s response to North Korea’s attack on its southern neighbor, saying the international community was showing weakness in the face of aggression. … ‘How will the world be able to stop Iran if it can’t stop North Korea,’ Lieberman said.”

A good example of the power of the Tea Party. “In one of the biggest election surprises of the year, Ann Marie Buerkle is officially the winner in New York’s 25th congressional district. Ms. Buerkle was ahead by some 800 votes on Election Day, and after several thousand absentee ballots were finally counted her lead held up. Ms. Buerkle is a nurse and mother of six who had never sought political office. She knocked off Dan Maffei, a life long politician and a protégé of scandal-plagued Charlie Rangel.”

A good bit of advice. “The incoming class of House Republicans is being urged to re-read the Constitution, carefully deal with the press and become very familiar with congressional ethics rules.”

A “good grief” report: “Fed lowers economic expectations for 2011.” They could be lower?

A good reminder that our awful policy toward North Korea is a bipartisan undertaking. Charles Krauthammer on the revelations of an advanced nuclear plan in North Korea: “The farce began 16 years ago when the Clinton administration concluded what was called the framework agreement in which the deal was they would freeze and then dismantle their plutonium program in return for all kinds of goodies, including two nuclear reactors that we would construct, and a lot of, a lot of economic support.”

A good reason not to send your kid to NYU. “A New York University arts professor might not have eyes on the back of his head, but he’s coming pretty close. Wafaa Bilal, a visual artist widely recognized for his interactive and performance pieces, had a small digital camera implanted in the back of his head — all in the name of art.”

Not a good thing for Mitt Romney’s outreach to the Tea Party crowd. President “Read My Lips,” George H.W. Bush, endorsed him for president.

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Paul Ryan Articulates Conservative Philosophy

Representative Paul Ryan appeared on PBS’s Charlie Rose program earlier this week. The interview demonstrates Ryan’s mastery of budget and economic issues; he also speaks fluently and convincingly on taxes, health care, spending cuts, housing policy, Social Security, the Fed’s policy on quantitative easing, the German vs. the Japanese model, and the inner workings of Congress. He also shows an impressive ability to articulate the philosophical precepts underlying conservatism. But see for yourself.

Representative Paul Ryan appeared on PBS’s Charlie Rose program earlier this week. The interview demonstrates Ryan’s mastery of budget and economic issues; he also speaks fluently and convincingly on taxes, health care, spending cuts, housing policy, Social Security, the Fed’s policy on quantitative easing, the German vs. the Japanese model, and the inner workings of Congress. He also shows an impressive ability to articulate the philosophical precepts underlying conservatism. But see for yourself.

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What’s the Palin Rationale?

Back in September, Sarah Palin had this to say about a presidential run:

A reason to run is if nobody else were to step up with the solutions that are needed to get the economy back on the right track and to be so committed to our national security that they are going to do all that they can, including fighting those on the extreme left who seem to want to dismantle some of our national security tools that we have in place.

Now, in an upcoming New York Times Magazine piece, she let’s on that she is engaged in internal discussions about a run, and there really aren’t many policy differences among potential GOP candidates:

Palin went on to say that there weren’t meaningful differences in policy among the field of G.O.P. hopefuls “but that in fact there’s more to the presidency than that” and that her decision would involve evaluating whether she could bring unique qualities to the table. “Yes, the organization would have to change,” Palin said during an hourlong phone conversation.

“I’d have to bring in more people — more people who are trustworthy … I know that a hurdle I would have to cross, that some other potential candidates wouldn’t have to cross right out of the chute, is proving my record. That’s the most frustrating thing for me — the warped and perverted description of my record and what I’ve accomplished over the last two decades. It’s been much more perplexing to me than where the lamestream media has wanted to go about my personal life.”

This raises a few questions. First is a variation on the Roger Mudd to Ted Kennedy question: if the policy differences aren’t great, what is the rationale for her candidacy, which she acknowledges has hurdles that other candidates don’t have? There may be some good reasons for her to run anyway, but she will have to justify it. Second, why hasn’t she she brought on “more trustworthy” people already? Frankly, her pronouncements on foreign policy have been rock-solid and, to a large extent, ahead of the pack of Obama’s conservative critics, but where’s the same level of seriousness on domestic policy? And where’s the strategy to reach out to skeptics rather than simply forge an alliance with the base? Third, if she keeps using phrases like “lamestream media,” that suggests she is still in victim mode and feed-the-base mode, rather than expanding her reach and elevating her stature. To the faithful, that’s a phrase that warms the heart, but to others, it is an eye-roller. Finally, if she is fed up with obsession over her personal life, why is she doing a show about her life in Alaska that is all about her family, nature outings, etc.?

All of this points to the promise and the peril of her candidacy. She can command attention, she has a degree of self-awareness about the challenges, and yet she has trouble leaving her comfort zone. Fundamentally, the questions for her and for her party remain: can she bring something to the race that other candidates can’t, and do her assets outweigh her liabilities? Stay tuned.

Back in September, Sarah Palin had this to say about a presidential run:

A reason to run is if nobody else were to step up with the solutions that are needed to get the economy back on the right track and to be so committed to our national security that they are going to do all that they can, including fighting those on the extreme left who seem to want to dismantle some of our national security tools that we have in place.

Now, in an upcoming New York Times Magazine piece, she let’s on that she is engaged in internal discussions about a run, and there really aren’t many policy differences among potential GOP candidates:

Palin went on to say that there weren’t meaningful differences in policy among the field of G.O.P. hopefuls “but that in fact there’s more to the presidency than that” and that her decision would involve evaluating whether she could bring unique qualities to the table. “Yes, the organization would have to change,” Palin said during an hourlong phone conversation.

“I’d have to bring in more people — more people who are trustworthy … I know that a hurdle I would have to cross, that some other potential candidates wouldn’t have to cross right out of the chute, is proving my record. That’s the most frustrating thing for me — the warped and perverted description of my record and what I’ve accomplished over the last two decades. It’s been much more perplexing to me than where the lamestream media has wanted to go about my personal life.”

This raises a few questions. First is a variation on the Roger Mudd to Ted Kennedy question: if the policy differences aren’t great, what is the rationale for her candidacy, which she acknowledges has hurdles that other candidates don’t have? There may be some good reasons for her to run anyway, but she will have to justify it. Second, why hasn’t she she brought on “more trustworthy” people already? Frankly, her pronouncements on foreign policy have been rock-solid and, to a large extent, ahead of the pack of Obama’s conservative critics, but where’s the same level of seriousness on domestic policy? And where’s the strategy to reach out to skeptics rather than simply forge an alliance with the base? Third, if she keeps using phrases like “lamestream media,” that suggests she is still in victim mode and feed-the-base mode, rather than expanding her reach and elevating her stature. To the faithful, that’s a phrase that warms the heart, but to others, it is an eye-roller. Finally, if she is fed up with obsession over her personal life, why is she doing a show about her life in Alaska that is all about her family, nature outings, etc.?

All of this points to the promise and the peril of her candidacy. She can command attention, she has a degree of self-awareness about the challenges, and yet she has trouble leaving her comfort zone. Fundamentally, the questions for her and for her party remain: can she bring something to the race that other candidates can’t, and do her assets outweigh her liabilities? Stay tuned.

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Flotsam and Jetsam

Get the feeling that Michael Steele has no friends these days? “Republican National Committee political director Gentry Collins resigned from his post Tuesday morning with a stinging indictment of Chairman Michael Steele’s two-year tenure at the committee. In a four-page letter to Steele and the RNC’s executive committee obtained by POLITICO, Collins lays out inside details, previously only whispered, about the disorganization that plagues the party. He asserts that the RNC’s financial shortcomings limited GOP gains this year and reveals that the committee is deeply in debt entering the 2012 presidential election cycle.”

Get ready for a really, really tough punishment for Charles Rangel. “A House panel on Tuesday found Representative Charles B. Rangel guilty of 11 counts of ethical violations, ruling that his failure to pay taxes, improper solicitation of fund-raising donations and failure to accurately report his personal income had brought dishonor on the House. … While the committee has the power to recommend expulsion, that is highly unlikely. Ethics experts and committee members have said that Mr. Rangel, 80, is more likely to face a letter of reprimand or a formal censure.” OK, maybe just a hand slap.

Get government to downsize? Puleeze. David Malpass explains what’s so bad about the Fed’s $600B bond-purchase scheme. “By buying longer term assets, whose value will decline when interest rates rise, the Fed is engineering a fundamental change in the nature of U.S. monetary policy. This has undercut global confidence in the Fed, as reflected in high gold prices, dollar weakness, and large-scale investments abroad by U.S. companies and wealthy individuals. … Both fiscal stimulus and Fed asset purchases raise the same giant red flag. As the government expands its role in the economy, business confidence and hiring decline in the knowledge that there’s no free lunch.”

The Obama team simply doesn’t get it: once again, Secretary of Defense Robert Gates throws cold water on the use of military force for preventing Iran from going nuclear. They sure have gone out of their way to give the mullahs assurance that they can defy us without risking a military strike.

Bibi says he needs to get the U.S. bribes promises in writing. “Prime Minister Binyamin Netanyahu said Tuesday that Israeli approval of a 90-day settlement freeze was contingent upon a written US pledge regarding a package of incentives that insured his country’s security and national interests, diplomatic sources told The Jerusalem Post.” Now, there’s a “rock-solid” relationship for you.

House Dems get their anger out. “Disgruntled Democrats finally had a chance to confront Speaker Nancy Pelosi face-to-face for the first time during a raucous closed-door caucus meeting Tuesday, as defeated Rep. Allen Boyd called her ‘the face of our defeat.’ ‘We need new leadership,’ Boyd, a Florida Democrat, told his colleagues, according to sources in the room. … Pelosi, her top elected lieutenants and her aides have been scrambling to defuse discontent following the election. They are actively working to prevent a delay in the leadership vote and to deny support to a slate of proposals by moderate ‘Blue Dog’ Democrats that would weaken her hand in the minority by making top appointive positions subject to caucus election.”

Investors get jittery: “Global stock markets’ steady march higher was interrupted by concerns about growth in China, debt in Europe and the Federal Reserve’s $600 billion plan to stimulate the U.S. economy. Tuesday’s world-wide selling was touched off by a 4% stock drop in Shanghai. It spread to Europe, where markets fell more than 2%, and then to the U.S., pushing the Dow Jones Industrial Average down 1.6%, its worst point and percentage decline since August 11.”

Get the feeling that Michael Steele has no friends these days? “Republican National Committee political director Gentry Collins resigned from his post Tuesday morning with a stinging indictment of Chairman Michael Steele’s two-year tenure at the committee. In a four-page letter to Steele and the RNC’s executive committee obtained by POLITICO, Collins lays out inside details, previously only whispered, about the disorganization that plagues the party. He asserts that the RNC’s financial shortcomings limited GOP gains this year and reveals that the committee is deeply in debt entering the 2012 presidential election cycle.”

Get ready for a really, really tough punishment for Charles Rangel. “A House panel on Tuesday found Representative Charles B. Rangel guilty of 11 counts of ethical violations, ruling that his failure to pay taxes, improper solicitation of fund-raising donations and failure to accurately report his personal income had brought dishonor on the House. … While the committee has the power to recommend expulsion, that is highly unlikely. Ethics experts and committee members have said that Mr. Rangel, 80, is more likely to face a letter of reprimand or a formal censure.” OK, maybe just a hand slap.

Get government to downsize? Puleeze. David Malpass explains what’s so bad about the Fed’s $600B bond-purchase scheme. “By buying longer term assets, whose value will decline when interest rates rise, the Fed is engineering a fundamental change in the nature of U.S. monetary policy. This has undercut global confidence in the Fed, as reflected in high gold prices, dollar weakness, and large-scale investments abroad by U.S. companies and wealthy individuals. … Both fiscal stimulus and Fed asset purchases raise the same giant red flag. As the government expands its role in the economy, business confidence and hiring decline in the knowledge that there’s no free lunch.”

The Obama team simply doesn’t get it: once again, Secretary of Defense Robert Gates throws cold water on the use of military force for preventing Iran from going nuclear. They sure have gone out of their way to give the mullahs assurance that they can defy us without risking a military strike.

Bibi says he needs to get the U.S. bribes promises in writing. “Prime Minister Binyamin Netanyahu said Tuesday that Israeli approval of a 90-day settlement freeze was contingent upon a written US pledge regarding a package of incentives that insured his country’s security and national interests, diplomatic sources told The Jerusalem Post.” Now, there’s a “rock-solid” relationship for you.

House Dems get their anger out. “Disgruntled Democrats finally had a chance to confront Speaker Nancy Pelosi face-to-face for the first time during a raucous closed-door caucus meeting Tuesday, as defeated Rep. Allen Boyd called her ‘the face of our defeat.’ ‘We need new leadership,’ Boyd, a Florida Democrat, told his colleagues, according to sources in the room. … Pelosi, her top elected lieutenants and her aides have been scrambling to defuse discontent following the election. They are actively working to prevent a delay in the leadership vote and to deny support to a slate of proposals by moderate ‘Blue Dog’ Democrats that would weaken her hand in the minority by making top appointive positions subject to caucus election.”

Investors get jittery: “Global stock markets’ steady march higher was interrupted by concerns about growth in China, debt in Europe and the Federal Reserve’s $600 billion plan to stimulate the U.S. economy. Tuesday’s world-wide selling was touched off by a 4% stock drop in Shanghai. It spread to Europe, where markets fell more than 2%, and then to the U.S., pushing the Dow Jones Industrial Average down 1.6%, its worst point and percentage decline since August 11.”

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But What If the Markets Won’t Go Along?

Those darn markets have minds of their own. The Fed’s scheme to print cash and buy $600 billion in bonds aims to drive up the price of bonds and drive down yields (interest rates). Fewer bonds, higher prices, and lower yields. But the markets have rebelled, and investors have dumped bonds, thereby driving bond prices down and yields up — the exact opposite of what the Fed intended. Oops. This report explains:

Bucking the Federal Reserve’s efforts to push interest rates lower, investors are selling off U.S. government debt, driving rates in many cases to their highest levels in more than three months.

The Fed’s $600 billion program to buy Treasury bonds began late last week and is kicking into high gear this week, with the central bank buying up tens of billions of dollars of debt. …

The trend is a potential problem for the economy and the Fed. Rates had fallen sharply for months in anticipation of a Fed buying program, and in a short time much of that effect has been lost, spelling an unwelcome rise in borrowing costs throughout the economy.

That could throw a wrench in what the Fed is trying to accomplish: to use low rates to encourage more borrowing and risk-taking by consumers, businesses and investors, thereby reviving growth.

This may be a blip, or it may be a sign that investors are now wary of holding USD-denominated assets. After all, if the Fed is going to devalue the currency, why not get into other assets that will hold their value?

What this does show is that the Fed is playing with fire, trying a gambit with many unintended consequences. (“Still, the recent move in rates has been jarring, raising some market worries that the Fed’s program might be ineffective or backfiring. That could damage the Fed’s credibility and raise borrowing costs broadly.”) When the new Congress convenes, oversight hearings should explore whether Helicopter Ben’s plan has the potential to deliver more harm rather help — both to the economy and the Fed’s reputation.

Those darn markets have minds of their own. The Fed’s scheme to print cash and buy $600 billion in bonds aims to drive up the price of bonds and drive down yields (interest rates). Fewer bonds, higher prices, and lower yields. But the markets have rebelled, and investors have dumped bonds, thereby driving bond prices down and yields up — the exact opposite of what the Fed intended. Oops. This report explains:

Bucking the Federal Reserve’s efforts to push interest rates lower, investors are selling off U.S. government debt, driving rates in many cases to their highest levels in more than three months.

The Fed’s $600 billion program to buy Treasury bonds began late last week and is kicking into high gear this week, with the central bank buying up tens of billions of dollars of debt. …

The trend is a potential problem for the economy and the Fed. Rates had fallen sharply for months in anticipation of a Fed buying program, and in a short time much of that effect has been lost, spelling an unwelcome rise in borrowing costs throughout the economy.

That could throw a wrench in what the Fed is trying to accomplish: to use low rates to encourage more borrowing and risk-taking by consumers, businesses and investors, thereby reviving growth.

This may be a blip, or it may be a sign that investors are now wary of holding USD-denominated assets. After all, if the Fed is going to devalue the currency, why not get into other assets that will hold their value?

What this does show is that the Fed is playing with fire, trying a gambit with many unintended consequences. (“Still, the recent move in rates has been jarring, raising some market worries that the Fed’s program might be ineffective or backfiring. That could damage the Fed’s credibility and raise borrowing costs broadly.”) When the new Congress convenes, oversight hearings should explore whether Helicopter Ben’s plan has the potential to deliver more harm rather help — both to the economy and the Fed’s reputation.

Read Less




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