Recently in Economy Category

The National Debt is a huge problem. Driving that point home to everyone is very important because all of us will one way or another is affected and will be affected even more as necessary attempts are made to reverse the direction in which Obama is driving this country. Thanks to PowerLine for sponsoring the contest that produced this masterpiece.


DESPITE EVERYTHING, PROGRESS IS BEING MADE

Mark Steyn so often can capture reality in a way we all can understand.

All those big numbers in the Obama budget. What do they mean?

It's not the "debt" or the "deficit," it's the spending. And the only way to reduce that is with fewer government agencies, fewer government programs, fewer government employees, lower government salaries.

The horrifying fact is that the example of federal spending is being followed in too many states and cities and towns. Raise taxes to spend more and still the spending increases.


UNSUSTAINABLE

We are incentivizing financial unsustainability.

Mark Steyn

At the National Prayer Breakfast, Barack Obama singled out for praise Navy Corpsman Christian Bouchard. Or as the president called him, "Corpseman Bouchard." Twice.

Hey, not a big deal. Throughout his life, the commander-in-chief has had little contact with the military, and less interest. And, when you give as many speeches as this guy does, there's no time to rehearse or read through: You just gotta fire up the prompter and wing it. But it's revealing that nobody around him in the so-called smartest administration of all time thought to spell it out phonetically for him when the speech got typed up and loaded into the machine. Which suggests that either his minders don't know that he doesn't know that kinda stuff, or they don't know it either. To put it in Rumsfeldian terms, they don't know what they don't know.

Which is embarrassingly true. Hence, the awful flop speeches, from the Copenhagen Olympics to the Berlin Wall anniversary video to the Martha Coakley rally. The palpable whiff given off by the White House inner circle is that they're the last people on the planet still besotted by Barack Obama, and that they're having such a cool time starring in their own reality-show remake of The West Wing they can only conceive of the public -- and, indeed, the world -- as crowd-scene extras in The Barack Obama Show: They expect you to cheer and wave flags when the floor-manager tells you to, but the notion that in return he should be able to persuade you of the merits of his policies seems entirely to have eluded them.

But, since Obama's mispronunciation is a pithier summation of the State of the Union than any of the dreary 90-minute sludge he paid his speechwriters for, let us consider it: Is America a Corpseman walking?

Well, we're getting there. National Review's Jim Geraghty sums up Obama's America thus: "Unsustainable is the new normal." Indeed. The other day, Douglas Elmendorf, director of the Congressional Budget Office, described current deficits as "unsustainable." So let's make them even more so. The president tells us, with a straight face, that his grossly irresponsible profligate wastrel of a predecessor took the federal budget on an eight-year joyride, so the only way his sober, fiscally prudent successor can get things under control is to grab the throttle and crank it up to what Mel Brooks in Spaceballs (which seems the appropriate comparison) called "Ludicrous Speed."

Obama's spending proposes to take the average Bush deficit for the years 2001-2008, and double it, all the way to 2020. To get out of the Bush hole, we need to dig a hole twice as deep for one-and-a-half times as long. And that's according to the official projections of his Economics Czar, Ms. Rose Colored-Glasses. By 2015, the actual hole may be so deep that even if you toss every Obama speech down it on double-spaced paper you still won't be able to fill it up. In the spendthrift Bush days, federal spending as a proportion of GDP average 19.6 percent. Obama proposes to crank it up to 25 percent as a permanent feature of life.

But, if they're "unsustainable," what happens when they can no longer be sustained? A failure of bond auctions? A downgraded government debt rating? Reduced GDP growth? Total societal collapse? Mad Max on the New Jersey Turnpike?

Testifying to the House Budget Committee, Director Elmendorf attempted to pull back from the wilder shores of "unsustainable": "I think most observers expect that the government will act, that the unsustainability will be resolved through action, not through witnessing some collapse down the road," he said. "If literally nothing is done, then eventually something very, very bad happens. But I think the widespread view is that you and your colleagues will take action."

Dream on, you kinky fantasist. The one thing that can be guaranteed is that a political class led by Harry Reid, Nancy Pelosi, Barney Frank, a handful of reach-across-the-aisle Republican accomodationists and an economically illiterate narcissist in the Oval Office is never going to rein in unsustainable spending in any meaningful sense. That leaves Director Elmendorf's alternative scenario. What was it again? Oh, yeah: "Some collapse down the road."

Speaking of roads, I see that, according to USA Today, when the economic downturn began, the U.S. Department of Transportation had just one employee making over $170,000. A year and a half later, it has 1,690.

Happy days are here again!

Did you get your pay raise this year? What's that, you don't work for the government? Yes, you do, one way or another. Good luck relying on Obama, Pelosi, Frank, and the other Emirs of Kleptocristan "taking action" to "resolve" that. In the last month, the cost of insuring Greece's sovereign debt against default has doubled. Spain and Portugal are headed the same way. When you binge-spend at the Greek level in a democratic state, there aren't many easy roads back. The government has introduced an austerity package to rein in spending. In response, Greek tax collectors have walked off the job.

Read that again slowly: To protest government cuts, striking tax collectors are refusing to collect taxes. In a sane world, this would be a hilarious TV comedy sketch. But most of the Western world is no longer sane. It's tough enough to persuade the town drunk to sober up, but when everyone's face down in the moonshine, maybe it's best just to head for the hills. But where to flee? America is choosing to embrace Greece's future when even the Greeks have figured out you can't make it add up. Consider the opening paragraph of Martin Crutsinger, "AP Economics Writer": "WASHINGTON -- President Barack Obama sent Congress a $3.83 trillion budget on Monday that would pour more money into the fight against high unemployment, boost taxes on the wealthy and freeze spending for a wide swath of government programs."

What language is that written in? How can a $3.83 trillion budget "freeze spending"? And where's the president getting all this money to "pour" into his "fight" against high unemployment? Would it perchance be from the same small businesses that might be hiring new workers if the president didn't need so much money to "pour" away? Heigh-ho. Maybe we can all be striking tax collectors. It seems a comfortable life . . .

If unsustainable is the new normal, it should also be the new national anthem. Take it away, Natalie Cole:

"Unsustainable
That's what you are
Unsustainable
Though near or far
Like a ton of debt you've dropped on us
How the thought of you has flopped on us
Never before
Has someone spent more . . . "

It's not the "debt" or the "deficit," it's the spending. And the only way to reduce that is with fewer government agencies, fewer government programs, fewer government employees, lower government salaries.

Instead, all four are rocketing up: We are incentivizing unsustainability, and, when it comes to "some collapse down the road," you'll be surprised how short that road is.

Without question, Texas governor Rick Perry is the most successful governor in the United States. While most other states such as Illinois and California are swimming in red ink, Texas is running a surplus. People and businesses may be abandoning high tax states like California, but they're moving into Texas. Unemployment is 2% lower than the national average. Local taxes are among the lowest in the country, no income tax, no capital gains tax. In 2008 Texas created more new jobs than all of the other 49 states combined.

Perry is a conservative with a heart. When Katrina struck New Orleans, it was Perry who offered Texas as a place for the suddenly homeless. Texas took in more hurricane refugees than any other state, fed them, clothed them, educated the children and wound up giving many of them incentives to go out and find jobs.

He's running for an unprecedented (for Texas) third term in 2010. He isn't interested in going to Washington, but he keeps his eyes on what's happening there.

And when it comes to the Obama administration, Mr. Perry doesn't mince words: "To me, this is one of the great Frankenstein experimentations in American history. We've seen that movie before. It was from 1932 to 1940."

As for the health care bill, he calls it "scary"and notes that it was the seniors who figured it out first.

[T]he aspect of this [bill] that has to do with end-of-life decisions . . . are pretty cold-hearted in my opinion. You're a little too old to be spending money on, so we're just going to put you over here in the 'gonna die' category. 'Bye.' That's pretty gruesome and scary to people that are my mom and dad's age."

Another important reason Mr. Perry believes the bill is flawed is because it ignores tort reform. "To talk about health-care reform and not talk about tort reform is like whistling past the cemetery. . . . In this administration's case, it's because they're bought and sold by the trial lawyers." The governor puts his cap back on, adding, "I'll be the pope before we get tort reform with this administration."

By contrast, Perry credits a tort reform measure which he engineered for bringing a lot of new business into Texas -- and doctors.

Perry believes the Republican Party, which lost its way spending like Democrats in Washington, can find its way back with its conservative principles. And he knows a leader he likes:

The political divide, the governor insists, is between "mushy, middle of the road" Republicans and clear, devoted fiscal and social conservatives, like himself and Sarah Palin.


On that last point, he states emphatically, "I love Sarah Palin, I love her positions, I think she was a good governor. . . . I want her to be engaged in this rebuilding of the Republican Party. . . . She is substantially more the face of this country than some other people who might want to be the face of the Republican Party. To me she's the face of America. I mean she's a hard worker, she didn't come from money, she didn't come from privilege, she just worked hard. . . . I have not seen another person who invigorated the Republican base [like she did] with the possible exception of Ronald Reagan in 1976--the speech he made at the Republican Convention. People were looking around and saying, 'we nominated the wrong dude.'"

He intends to stay in Texas. He believes states are the place for innovation and experimentation, not Washington, and he wants to contInue to be part of that.

Read Fiscal Conservatism and the Soul of the GOP, this weekend's Wall Street Journal featured interview.

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Protests are springing up around the country. Stunned by a pork-laden stimulus package and a kill the economy cap-ane-trade bill, average Americans cried "too much" when the government-will-care-for-you health care bill was launched. The government will save money by running health care? That's Brooklyn Bridge talk. The government will control your life-and-death decisions because it's paying the bills: People understand that and they don't want it.

A reader of a column by the New York Daily News owner Mort Zuckerman said this:

The display of rage in crammed healthcare town hall meetings around the Country is not necessarily attributable to healthcare alone. It's much broader than that -- our fellow countymen are at wits' end trying to maintain their heads above water. Do you have any idea how hard it is to get such a huge turnout at a town hall meeting in the middle of August? The mob is turning ugly, not because they do not want anyone to "touch their Medicaid," but because the fuse has been lit by those who have taken advantage of middle class Americans and played them for fools.

Zuckerman had said this:

Ruinous tax increases are inevitable if spending cuts remain outside the President's agenda.


Everybody is dazed and confused by all this talk of additional indebtedness in the trillions of dollars. Our soaring national debt will require cataclysmic adjustments to accomplish the restoration of a balance in our fiscal position.

Obama's hatred of capitalism and free markets has led to this debt explosion. Kill the free enterprise system and the government will step in to take care of you. People aren't buying it.

Obama never had a real job so he doesn't know how wealth is created. By choking free markets and individual initiative, he will find his socialist society has no revenues. American citizens will be the losers.

Read it all.


Questions, anyone?

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Based on their own sad experience, the British are sizing up Obama a bit more quickly than many Americans:

If he is not careful, Barack Obama may end up as one of the least popular presidents in American history. His dream of re-making the world's greatest power into a large-scale version of modern-day Germany - with high taxation, dominant trade unions, overbearing government bureaucracy, stifling employment regulations, low defence spending, de-nuclearisation, a naive emphasis on soft power, and a constant desire to apologise for the past - is a nightmarish vision that fortunately is opposed by a growing majority of Americans.

Read it all.

Nile Gardiner is a Washington-based foreign affairs analyst and political commentator. He appears frequently on American and British television and radio, including Fox News Channel, CNN, BBC, Sky News, and NPR.

The Obama dream turns into nightmare

By Nile Gardiner July 24th, 2009 The Telegraph, London


Today's Rasmussen Presidential Tracking survey will have hit the poll-obsessed Obama White House like a bullet train at full speed. For the first time, Barack Obama's approval rating has fallen below 50 per cent among likely voters. 51 per cent of Americans now disapprove of the president, with 38 per cent strongly disapproving. The poll also reveals that 53 per cent oppose the president's hugely controversial congressional health care reform package, and a mere 31 per cent believe America as a country is heading in the right direction under Obama's leadership.

Senator Jim DeMint of South Carolina was absolutely right when he pointed out this week that the Obama socialized health care plan could end up being Obama's Waterloo, though arguably the initial outlook for Napoleon at the start of his own battle was slightly less grim. Even Democrats on Capitol Hill have balked at the huge costs of the $1 trillion Obama proposal, and the Senate has delayed a vote until after the August recess.

To add to Obama's woes, unemployment in America now stands at a staggering 9.5 percent and rising (the same level as the Euro area), compared to 7.2 per cent in the UK and 5.2 per cent in Japan, with the U.S. economy continuing to shed hundreds of thousands of jobs every month. According to figures cited by The New York Times, over 3.3 million jobs have been lost since January of this year. Apart from an unexpected rise in profits for prestige investment banks, there is little sign the $787 billion stimulus package is actually working (of which only $100 billion has actually been spent), and the size of America's debt has reached staggering proportions - about $11 trillion.

As recent Gallup surveys have shown, the United States remains a largely conservative nation, and Obama's brand of high spending, high taxing neo-socialism is increasingly rejected by the American public. While much of Europe, including Britain, is moving rightwards, America is the only major country in the Western world whose leadership is dramatically moving to the left. Although he ran for the presidency largely as a centrist, Obama's government is without doubt the most left-wing administration in American history.

Even with liberals dominating the Executive Branch and both Houses of Congress, as well as about 80 per cent of America's print and television media, the Obama team has so far spectacularly failed to win over the American people to a radical big government agenda that seeks to significantly enhance the power of the state over the individual.

If he is not careful, Barack Obama may end up as one of the least popular presidents in American history. His dream of re-making the world's greatest power into a large-scale version of modern-day Germany - with high taxation, dominant trade unions, overbearing government bureaucracy, stifling employment regulations, low defence spending, de-nuclearisation, a naive emphasis on soft power, and a constant desire to apologise for the past - is a nightmarish vision that fortunately is opposed by a growing majority of Americans. The spirit of individual liberty and free enterprise remains the most powerful force in the United States today, and any government that goes against it is bound to fail in imposing its agenda.

Obama has exploded federal spending to expand government control of the economy and make millions more dependent on government handouts, but promised he wouldn't raise taxes on anyone making less than $250,000. Remaking the U.S. into the European model will doom America to mediocrity, as it is doing Europe, because of its unsustainable welcome progams that even incredibly high taxes can't support.

Europeans, notorious for tax evasion, cannot escape the so-called VAT tax, which imposes a tax on the value added at every step in the process of producing goods or services. To the delight of politicians, it's an indirect or hidden tax, but a very big money maker.

Here's a tax that will hit everyone (even those who pay no income tax) and it is being quietly discussed inside the Obama administration as the fuel it needs. (What's another broken promise, particularly if it can be hidden and disguised?) The money isn't wanted to reduce the huge Obama deficits, but to keep government growing even more. What's another broken promise?

Lawrence Summers, the witty economist now advising the Obama leadership, foresaw the possibility of the VAT tax being embraced even by the left wing in the U.S.:

Liberals oppose a VAT because it is regressive and conservatives oppose it because it is a money machine, but a VAT might come when liberals realize it is a money machine and conservatives realize it is regressive.

George Will looks ahead to where investors will want to put their money:

Will a person or institution looking for a place to invest $1 billion seek opportunities in the United States, where policy decisions are deliberately increasing taxes, debt, regulations and the cost of energy, and soon will increase the cost of borrowing and hiring? Or will the investor look at, say, India. It is the least urbanized major country -- 70 percent of Indians live in rural areas, 50 percent on farms -- so the modernizing and productivity-enhancing movement from the countryside to the city is in its infancy. This nation of 1.2 billion people has a savings rate of 25 percent to 30 percent, and fewer than 20 million credit cards. Which nation, India or the United States, is apt to have the higher economic growth over the next decade?

Democrats control all the levers of national power and there is nothing to stop their "tax and spend" rampage.

Economic destruction lies ahead. The incompetence and bureaucratic bungling of government will hold more and more sway over the operations of the economic sector. At the moment, there is no escape in sight.

If Obama wants to destroy the American economy, he's doing a great job.

Higher Taxes, Anyone?
George Will
Sunday, July 12, 2009

WASHINGTON -- Economic policy, which became startling when Washington began buying automobile companies, has become surreal now that disappointment with the results of the second stimulus is stirring talk about the need for a ... second stimulus. Elsewhere, it requires centuries to bleach mankind's memory; in Washington, 17 months suffice: In February 2008, President George W. Bush and Speaker Nancy Pelosi, who normally were at daggers drawn, agreed that a $168 billion stimulus -- this was Stimulus I -- would be the "booster shot" the economy needed. Unemployment then was 4.8 percent.

In January, the administration, shiny as a new dime and bursting with brains, said that unless another stimulus -- Stimulus II wound up involving $787 billion -- was passed immediately, unemployment, which then was 7.6 percent, would reach 9 percent by 2010. But halfway through 2009, the rate is 9.5. For the first time since the now 16-nation Eurozone was established in 1999, the unemployment rate in America is as high as it is in that region, which Americans once considered a cautionary lesson in the wages of sin, understood as excessive taxation and regulation.

"Everyone guessed wrong" about the economy's weakness, says the vice president, explaining why Stimulus II has not yielded anticipated benefits. Joe Biden is beguiling when unfiltered by calculation, as he often is and as he was when he spoke about guessing ("Meet the Press," June 14) and how everyone "misread" the economy ("This Week," July 5). To be fair, economics is a science of single instances, which means it is hardly a science. And it is least like one when we most crave certainty from it -- when there is a huge and unprecedented event and educated guessing is the best anyone can do.

But before embarking on Stimulus III, note that only about 10 percent of Stimulus II has yet been injected into the economy in 2009. This is not the administration's fault, the administration's defenders say, because government is cumbersome, sluggish and inefficient. But this sunburst of insight comes as the administration toils to enlarge governmental control of health care, energy, finance, education, etc. The administration guesses that these government projects will do better than the Postal Service (its second-quarter loss, $1.9 billion, was 68 percent of its losses for all of 2008) and the government's railroad (Amtrak has had 38 money-losing years and this year's losses are on pace to set a record).

Let's guess: Will a person or institution looking for a place to invest $1 billion seek opportunities in the United States, where policy decisions are deliberately increasing taxes, debt, regulations and the cost of energy, and soon will increase the cost of borrowing and hiring? Or will the investor look at, say, India. It is the least urbanized major country -- 70 percent of Indians live in rural areas, 50 percent on farms -- so the modernizing and productivity-enhancing movement from the countryside to the city is in its infancy. This nation of 1.2 billion people has a savings rate of 25 percent to 30 percent, and fewer than 20 million credit cards. Which nation, India or the United States, is apt to have the higher economic growth over the next decade?

Yet while government diminishes America's comparative advantages, liberals are clamoring for ... higher taxes. Partly because of changes endorsed by presidents from Ronald Reagan to Barack Obama, approximately 60 percent of taxpayers now pay either no income tax (43 percent) or less than 5 percent of their income. Because one cannot raise significant money by that tax without nicking the middle class, or without bringing millions of people back onto the income tax rolls, attention is turning to a value-added tax.

A VAT is levied at every stage of production. Like the cap-and-trade regime being constructed, a VAT is a liberal politician's delight: It taxes everything, but opaquely.

Before he became an economic adviser in the Obama White House, where wit can be dangerous, Larry Summers said: Liberals oppose a VAT because it is regressive and conservatives oppose it because it is a money machine, but a VAT might come when liberals realize it is a money machine and conservatives realize it is regressive.

At the June 29 White House briefing, press secretary Robert Gibbs was asked, with reference to health care legislation, if the president's pledge not to raise taxes on couples making less than $250,000 is "still active." Gibbs answered: "We are going to let the process work its way through." What is your guess?

Canadian David Warren philosophizes in the Ottawa Sun and often sees the United States America more clearly than many who live and write within our borders.

He is pessimistic about the revolution that is unfolding under Obama's direction and foresees the emerging of a new America that can't be stopped with full Democratic control of Congress and the White House.

In the middle of this economic mess, the U.S. politicians are debating not one, but two new programs of unprecedented size, without the slightest understanding of the economic consequences. One is a vast new "health care" plan, to be sold almost entirely on emotion, with President Obama's snake-oil skills. The only thing clear about it, is the intention of the people behind it: to effectively nationalize the U.S. medical system, by making every part of it report to government bureaucracies. This is what we did in Canada in the 1960s, and we've spent the decades since trying to persuade ourselves that waiting rooms are natural.

The other is the "cap and trade" legislation. At a time when it has become all but obvious that the "global warming" scare was an imposture, the U.S. government is going to war against carbon fuels, through a program that can only kill jobs, both directly and through outsourcing of American economic activity to places with lower environmental standards; while igniting protectionist trade wars over the latter.

Can it be stopped?

I don't think they can. For not only has the Democrat party - committed in the main to the "second American revolution" I began to sketch above - control of the White House and both Houses. The Republican party is pulling itself apart. Only half of it is willing to fight: the other half thinks the only way back to power is to accommodate this revolution.

He sees no solution, only disaster ahead.

July 5, 2009

The New America

By David Warren

The Dow has been tanking again, and new figures show the U.S. economy shedding jobs at an accelerating rate. One might criticize the U.S. government for the first trillion or two of "stimulus" spending, by observing that it hasn't worked. But that would be too easy.

Yes, it was crazy, in the middle of a crisis created by debt, to see how far they could run up debt. It was crazy to shore up nearly worthless assets, in the face of irresistible market forces. At a time when the entire investment system desperately needs to be de-leveraged, it was crazy to oil the gears.

Continue reading...

"OBAMA IS ALREADY OVER." DON'T WE WISH.

Powerline notes how depressed Roger Simon is this Independence Day:

I don't think I've ever seen my country so divided and depressed on the Fourth of July in my lifetime....The current situation is grim.


Obama is already over. In six short months the now-spattered bumper stickers with "Hope and Change" seem like pathetic remnants from the days of "23 Skidoo," the echoes of "Yes, we can" more nauseating than ever in their cliché-ridden evasiveness. Although they may pretend otherwise, even Obama's choir in the mainstream media seems to know he's finished, their defenses of his wildly over-priced medical and cap-and-trade schemes perfunctory at best.

MOTORING IN 2012

Congressional Motors is hard at work on the 2012 edition.


The mainstream media's total abdication of its responsibility to report fairly and accurately the Obama administration's plan to sacrifice the American capitalist economy to the false god of manmade climate change is shocking.

The House of Representatives disgraced itself rushing a bill off to the Senate that had not even been assembled into a single thousand-page plus document -- let alone not having been read by anyone -- so Members could go party for Fourth of July.

At least Michael Ramirez is paying attention.

CapeTradetoon070209big.gif

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Skepticism about the religion of global warming is growing. Australia has put a hold on its cap & trade effort, as has New Zealand. The Wall Street Journal followed up on an important report that appeared online. See our most recent prior report on the myth.

IT WILL HAVE TO BE PAID BACK

Who's going to pay for this?

You, your children, your grandchildren and great-grandchildren.

The Obama administration is engaged in a historic borrowing from future generations to pay for an unprecedented expansion of the federal bureaucracy and government control over many aspects of American life. It will burden the American economy for decades. There is only one way to pay for all these unfunded deficits -- higher taxes on everyone, which will be a drag on economic growth, reduce the nation's prosperity and jeopardize the nation's security and standing as the most powerful and successful nation in the history of the world.

Who voted for this? Did they know?

PROMISES, PROMISES

The Obama administration made projections about the unemployment that would result if the stimulus bill did not pass. Well, it passed and look what happened. Unemployment is higher than than their worst case. (Chart courtesy of Power Line)


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OBAMA: STAND DOWN, AMERICA

Let's see: Now the U.S. cozies up to the Muslims, strong-arms Israel, shrugs at North Korean nuclear and missile threats and let's Iran pursue its genocidal dream.

Well, we certainly got change with the new president. He's issued an open invitation to every nutcase regime in the world to gear up to take a shot at America -- and all the other big guys America used to defend. There's nothing to fear.

Mark Steyn says it best:

We are building a world in which the wealthiest nations on the planet, from Norway to New Zealand, are all but defenseless, while bankrupt dysfunctional squats go nuclear. Even with inevitable and generous submissions to nuclear blackmail, how long do you think that arrangement will last? In the formulation of Janet Napolitano, we are on the brink of "man-caused disaster."

The god king is orchestrating the shriveling of American power and the impoverishment of future generations to please his European and Muslim friends; no longer need they envy America.

North Korea provokes with impunity

A rogue nuclear test staged on the day to honor American war dead is greeted with only half-hearted diplomatese from Washington.

Mark Steyn
Syndicated columnist
Orange County Register
May 29, 2009

What does a nuclear madman have to do to get America's attention? On Memorial Day, the North Koreans detonated "an underground atomic device many times more powerful than the bombs that destroyed Hiroshima and Nagasaki," as my old colleagues at The Irish Times put it. You'd think that'd rate something higher than "World News In Brief," see foot of page 37. But instead Washington was consumed by the Supreme Court nomination of Sonia Sotomayor, who apparently has a "compelling personal story."
Doesn't Kim Jong-il have a compelling personal story? Like Sonia, he grew up in a poor neighborhood (North Korea), yet he's managed to become a nuclear power, shattering the glass ceiling to take his seat at the old nuclear boys' club. Isn't that an inspiring narrative? Once upon a time you had to be a great power, one of the Big Five permanent members of the U.N. Security Council, to sit at the nuclear table: America, Britain, France, Russia, China, the old sons of power and privilege. But now the mentally unstable scion of an impoverished no-account backwater with a GDP lower than Zimbabwe has joined their ranks: Celebrate diversity!

Evidently, some compelling personal stories are more compelling than others. In The Washington Post, Stephen Stromberg argued that Kim's decision to drop the Big One on a three-day weekend was evidence of his appalling news judgment. Other blasé observers shrug that it's now an American holiday tradition. It began when Pyongyang staged the first of its holiday provocations on Fourth of July 2006, and, amidst all the other fireworks displays, America barely noticed. No doubt there'll be another Hiroshima on Labor Day or Thanksgiving. Geez, doesn't the hick in the presidential palace get it? There's no point launching nukes when everyone's barbecuing chicken or watching football.

Well, you never know: Maybe we're the ones being parochial. If you're American, it's natural to assume that the North Korean problem is about North Korea, just like the Iraq war is about Iraq. But they're not. If you're starving to death in Pyongyang, North Korea is about North Korea. For everyone else, North Korea and Iraq, and Afghanistan and Iran, are about America: American will, American purpose, American credibility. The rest of the world doesn't observe Memorial Day. But it understands the crude symbolism of a rogue nuclear test staged on the day to honor American war dead and greeted with only half-hearted pro forma diplomatese from Washington. Pyongyang's actions were "a matter of ..." Drumroll, please! "...grave concern," declared the president. Furthermore, if North Korea carries on like this, it will - wait for it - "not find international acceptance."

As the comedian Andy Borowitz put it, "President Obama said that the United States was prepared to respond to the threat with 'the strongest possible adjectives.' Later in the day, Defense Secretary Robert Gates called the North Korean nuclear test 'supercilious and jejune.'"

The president's general line on the geopolitical big picture is: I don't need this in my life right now. He's a domestic transformationalist, working overtime - via the banks, the automobile industry, health care, etc. - to advance statism's death grip on American dynamism. His principal interest in the rest of the world is that he doesn't want anyone nuking America before he's finished turning it into a socialist basket case. This isn't simply a matter of priorities.

A United States government currently borrowing 50 cents for every dollar it spends cannot afford its global role, and thus the Obama cuts to missile defense and other programs have a kind of logic: You can't be Scandinavia writ large with a U.S.-sized military.

Out there in the chancelleries and presidential palaces, they're beginning to get the message. The regime in Pyongyang is not merely trying to "provoke" America but is demonstrating to potential clients that you can do so with impunity. A black-market economy reliant on exports of heroin, sex slaves and knock-off Viagra is attempting to supersize its business model and turn itself into a nuclear Wal-Mart.

Among the distinguished guests present for North Korea's October 2006 test were representatives of the Iranian government. President George W. Bush was much mocked for yoking the two nations together in his now all but forgotten "axis of evil" speech, but the Swiss newspaper Neue Zuercher Zeitung reported a few weeks ago that the North Korean-built (and Israeli-bombed) plutonium production facility in Syria was paid for by Tehran. How many other Iranian clients are getting nuclear subsidies? It would be interesting to learn who was on the observation deck for the Memorial Day Hiroshima re-enactment, but North Korea is one of the most closed societies on the face of the Earth, certainly when compared with the more closely scrutinized corners of the Middle East. In other words, it's the perfect partner for any state that wants to pursue certain projects under the Western radar screen.

It is remarkable in just five years how the world has adjusted to the inevitability of a nuclear North Korea and a nuclear Iran. Nudge it on another half-decade: Whose nuclear ambitions will be unstoppable by 2015? Syria's? Sudan's? Selected fiefdoms in Somalia?

Barack Obama came to power pledging to talk to America's enemies anywhere, anytime. Alas for America's speak-softly-and-carry-a-big-teleprompter diplomacy, there are no takers for his photo-ops. In the ever more pitiful straw-clutching of the State Department, America is said to be banking on a post-Kim era. He's apparently had a bad stroke and might be dead within a decade or three. So what? It's a safe bet that whoever emerges from a power struggle between the family, the party and the military is committed to nuclearization as the principal rationale of the state.

Likewise in Iran's imminent election, both "extremists" and "moderates" are pro-nuke. You want an Iranian moderate? Here's Hashemi Rafsanjani, the moderate guy who lost to that crazy Ahmadinejad last time round: He called Israel "the most hideous occurrence in history," which the Muslim world "will vomit out from its midst" with "a single atomic bomb." Nuking the Zionist Entity is as bipartisan as motherhood and apple pie.
More to the point, the feeble bleatings from the State Department that there may be internal change down the road emphasize the central feature of the present scene: the absence of meaningful American power.

While America laughed at North Korea, Iran used it as a stalking horse, a useful guide as to the parameters of belligerence and quiescence a nuclearizing rogue state could operate within. In what Caroline Glick of The Jerusalem Post calls "the post-American world," other nations will follow that model.

We are building a world in which the wealthiest nations on the planet, from Norway to New Zealand, are all but defenseless, while bankrupt dysfunctional squats go nuclear. Even with inevitable and generous submissions to nuclear blackmail, how long do you think that arrangement will last? In the formulation of Janet Napolitano, we are on the brink of "man-caused disaster."


You always can count on Charles Krauthammer to deliver the correct perspective on what is happening. All the demagogUery issuing out of Washington from the president down through the Democratic ranks of Congress is a world embarrassment and a threat to world financial recovery.

Bonfire of the Trivialities

Charles Krauthammer for the Washington Post
Friday, March 20, 2009

WASHINGTON -- A $14 trillion economy hangs by a thread composed of (a) a comically cynical, pitchfork-wielding Congress, (b) a hopelessly understaffed, stumbling Obama administration, and (c) $165 million.

That's $165 million in bonus money handed out to AIG debt manipulators who may be the only ones who know how to defuse the bomb they themselves built. Now, in the scheme of things, $165 million is a rounding error. It amounts to less than 1/18,500 of the $3.1 trillion federal budget. It's less than one-tenth of 1 percent of the bailout money given to AIG alone. If Bill Gates were to pay these AIG bonuses every year for the next 100 years, he'd still be left with more than half his personal fortune.

For this we are going to poison the well for any further financial rescues, face the prospect of letting AIG go under (which would make the Lehman Brothers collapse look trivial) and risk a run on the entire world financial system?

And there is such a thing as law. The way to break a contract legally is Chapter 11. Short of that, a contract is a contract. The AIG bonuses were agreed to before the government takeover and are perfectly legal. Is the rule now that when public anger is kindled, Congress summarily cancels contracts?

Even worse are the clever schemes now being cooked up in Congress to retrieve the money by means of some retroactive confiscatory tax. The common law is pretty clear about the impermissibility of ex post facto legislation and bills of attainder. They also happen to be specifically prohibited by the Constitution. We're going to overturn that for $165 million?

Nor has the president behaved much better. He too has been out there trying to lead the mob. But it's a losing game. His own congressional Democrats will out-demagogue him and heap the blame on the hapless Timothy Geithner.

Geithner has been particularly maladroit in handling this issue. But the reason he didn't give the bonuses much attention is because he's got far better things to do -- namely, work out a rescue plan for a dysfunctional credit system that is holding back any chance of recovery

It is time for the president to state the obvious: This recession is not caused by excessive executive compensation in government-controlled companies. The economy has been sinking because of a lack of credit, stemming from a general lack of confidence, stemming from the lack of a plan to detoxify the major lending institutions, mainly the banks, which, to paraphrase Willie Sutton, is where the money used to be.

Obama has been strangely passive about this single greatest threat to the country. In his address to Congress and his budget, he's been far more interested in his grand program for reshaping the American social contract in health care, energy and education.

Obama delegates to Geithner plans for a bailout -- and Geithner (thus far) delivers nothing. Obama delegates to Nancy Pelosi and her congressional grandees the writing of all things fiscal -- and gets a $787 billion stimulus package that is a wish list of liberal social spending, followed by a $410 billion omnibus spending bill festooned with pork and political paybacks.

That bill, we now discover, contains, among other depth charges, a Teamster-supported provision inserted by Sen. Byron Dorgan that terminates a Bush-era demonstration project to allow some Mexican trucks onto American highways, as required under NAFTA.

If you thought the AIG hysteria was a display of populist cynicism directed at a relative triviality, consider this: There are more than 6.5 million trucks in the United States. The program Congress terminated allowed 97 Mexican trucks to roam among them. Ninety-seven! Shutting them out not only undermines NAFTA. It caused Mexico to retaliate with tariffs on 90 goods affecting $2.4 billion in U.S. trade coming out of 40 states.

The very last thing we need now is American protectionism. It is guaranteed to start a world trade war. A deeply wounded world economy needs two things to recover: (1) vigorous U.S. government action to loosen credit by detoxifying the zombie banks and insolvent insurers, and (2) avoidance of a trade war.

Free trade is the one area where the world indisputably turns to Washington for leadership. What does it see? Grandstanding, parochialism, petty payoffs to truckers and a rush to mindless populism. Over what? Over 97 Mexican trucks -- and bonus money that comes to what the Yankees are paying for CC Sabathia's left arm.

In the years that investment bankers fought to persuade Congress of the dangers of re-linking their risk-taking businesses to commercial banks insured by the federal government, Congress loved the idea of "one-stop shopping" and of having banks big enough and versatile enough to compete with the biggest and best on the world staqe.

Finally, after a 19-year battle through the Reagan, Bush 1 and Clinton years commerical banks and Congress got their wish in 1999.

Today's world financial meltdown is the result. Goldman Sachs and Morgan Stanley had been right.

Britain's former Chancellor of the Exchequer Nigel Lawson says "Bring Back Glass-Steagall."


Capitalism needs a revived Glass-Steagall

By Nigel Lawson in the Financial Times March 16, 2009

That capitalism has been shown, in practice, to be endemically flawed should come as no surprise. That is the nature of mankind. What is more important is that history, notably the history of the world after the second world war, has demonstrated beyond dispute that every other system of economic organisation is far worse. So capitalism both deserves to survive, and will survive, just as it did after the even greater economic disaster of the 1930s.

But there is another lesson of the 1930s. It is that although capitalism survives it is capable of retreating behind a protectionist shell, at great cost to global prosperity. This is a real danger today. The "Buy American" provisions in President Barack Obama's fiscal boost are an ominous sign. The impulse to resort to protection when economic hardship suddenly strikes is, of course, always present. But there is today a dangerous new factor which magnifies the threat. The leaders of some of America's largest corporations have already joined up with organised labour (the AFL-CIO) to urge Congress to impose tariffs against imports from countries (such as China, for example) which are understandably unwilling to bear the heavy costs of an obligation to curb their carbon dioxide emissions. There is considerable support in Europe, notably within the European Commission and in France, for a similar approach.

It is essential, both in the US and in Europe, that this is resolutely rejected. The first and most important requirement for the future of capitalism is the preservation of globalisation, and the massive benefits it confers on mankind, in particular in the developing world. There are, inevitably, costs of globalisation; but they are hugely outweighed by the benefits. So resistance to protection, whatever arguments may be used in its favour, must be rigorously maintained. Nor is this an exclusively economic argument. It is a moral imperative, as well. Moreover, a trade war with China could well have unpredictable, and potentially highly damaging, political consequences.
But will capitalism need to change in the future? Again, the lesson of history is that the answer is "not really". The economic cycle is endemic and inescapable, and everyone (with the exception of prime minister Gordon Brown) has always known this. What the current crisis does underline, however, is that a cyclical downturn associated with a collapse of the banking system is by an order of magnitude worse than a normal cyclical downturn.

So there does need to be a change to the banking system. In a nutshell, we need to return, in all major financial centres, to the separation of commercial banking from investment banking that was enforced in the US under the 1933 Glass-Steagall Act, until it was repealed by President Bill Clinton in the 1990s. This is all the more important since we now live in an age in which the acquisition of wealth appears to count for more than reputation.

Achieving this will not be easy or popular in banking circles, but it can be done. We have time to get it right: this is not firefighting, but fireproofing.

The overriding reason why this separation is essential is straightforward. It is only a commercial banking crisis that poses a systemic risk and can lead to the sort of mess we face today. It is folly to allow core banks to be in a position where they can be brought down by exciting but highly risky investment banking activities. But the idea that this can be prevented by judicious regulation of investment banking activities is a chimaera. In the real world, that is not possible: either the investment bankers will outsmart the regulators, or the regulators will respond with damaging overkill.

Thus investment banks should be left to their own creative devices, and subject essentially only to the discipline of the marketplace. This leaves a much more limited, and practicable, but still absolutely essential, role for bank supervision and regulation: namely, to ensure that the core commercial banking system is thoroughly sound and adequately capitalised at all times.

It is worth adding that it is the capital adequacy regime, and not primarily interest rate policy, which needs to be responsive to asset-price bubbles.

What else (other than the maintenance of what passes for world peace) is needed to ensure that capitalism survives (as it will) and prospers (as it should)?

There is a danger in many parts of the world, and certainly in the UK, to imagine that since this is a global problem it requires a global solution, so the overriding need is for a global agreement. This may sound statesmanlike, but it is in fact a dangerous delusion. The overriding need is for the authorities in each country to put their own house in order.
The threat from terrorism is an instructive parallel. Terrorism is indeed a global problem, and international co-operation is clearly desirable. But that in no way diminishes the overriding duty of national governments to do what is necessary to protect their own people.

The same applies to financial regulation. As the Basel II bank capital rules clearly showed, international agreement is slow in arriving and, when it does arrive, it is likely to prove inadequate. As far as the UK is concerned, Mr Brown's decision, as chancellor, to scrap the strengthened system of bank supervision I put in place in 1987 and replace it with a system that has proved largely dysfunctional was not very clever. Without waiting for global agreement, however desirable that may be, we need to, and can, do a great deal better.

The writer was the UK's chancellor of the exchequer from 1983 to 1989.

GOVERNMENT KNOWS BETTER. SURE.


What catastrophe are we heading towards as the government intrudes more and more into the private sector? Peter Wallison describes clearly how the dumb hand of the government, not the competitve forces of the market, will pick tomorrow's winners.

OPINION MARCH 17, 2009, 7:17 A.M. ET Wall Street Journal

Congress Is the Real Systemic Risk

By PETER J. WALLISON

After their experience with Fannie Mae and Freddie Mac, you'd think that Congress would no longer be interested in creating companies seen by the market as backed by the government. Yet that is exactly what the relevant congressional committees -- the Senate Banking Committee and the House Financial Services Committee -- are now considering.

In the wake of the financial crisis, the idea rapidly gaining strength in Washington is to create a systemic risk regulator. The principal sponsor of the plan is Barney Frank, the chair of the House Financial Services Committee. A recent report by the Group of Thirty (a private sector organization of financial regulation specialists), written by a subcommittee headed by Paul Volcker, also endorsed the idea, as has the U.S. Chamber of Commerce and the Securities Industry Financial Markets Association.

If implemented, this would give the government the authority to designate and supervise "systemically significant" companies. Presumably, systemically significant companies would be those that are so large, or involved in financial activities of such importance, that their failure would create systemic risk.

There are several serious problems with this plan, beginning with the fact that no one can define a systemic risk or its causes. The Congressional Oversight Panel, which was established to advise Congress on the use of the TARP funds, concluded -- with two Republicans dissenting -- that the current crisis is an example of a systemic risk evolving into a true systemic event. After all, virtually all the world's major financial institutions are seriously weakened, and many have either failed or been rescued. If this is not an example of a systemic risk, what is?

The current financial crisis is certainly systemic. But what caused it? The failure of Lehman Brothers occurred long after the market for mortgage-backed securities (MBS) had shut down, and six months after Bear Stearns had to be rescued because of its losses. In other words, the crisis did not arise from the failure of a particular systemically significant institution. The world's major financial institutions had already been weakened by the realization that losses on trillions of dollars in MBS were going to be much greater than anyone had imagined, and before the major asset write-downs had begun. So if this was a systemic event, it was not caused by the failure of one or more major institutions. In fact, it was the other way around: The weakness or failure of financial institutions was the result of an external event (losses on trillions of dollars of subprime mortgages embedded in MBS).

If this is true, what is the value of regulating systemically significant financial institutions? Financial failures, it seems, can be the result, rather than the cause, of systemic events like the one we are now experiencing. Even if we assume that regulating systemically significant companies will somehow prevent them from failing -- a doubtful proposition, given that the heavily regulated banks have been the most severely affected by the current crisis -- we will not have prevented the collapse of a major oil-supplying country, an earthquake or a pandemic from causing a similar problem in the future. All we will have done is given some government agency more power and imposed more costs on financial institutions and consumers.

But increased government power and higher costs are not the worst elements of the proposal to designate and supervise systemically significant companies. The worst result is that we will create an unlimited number of financial institutions that, like Fannie Mae and Freddie Mac, will be seen in the financial markets as backed by the government. This will be especially true if, as Mr. Frank has recommended, the Federal Reserve is given supervisory authority over these institutions. The Fed already has the power -- without a vote of Congress -- to provide financing under "exigent circumstances" to any company, and will no doubt be able to do so for the institutions it supervises.

A company that is designated as systemically significant will inevitably come to be viewed as having government backing. After all, the designation occurs because some government agency believes that the failure of a particular institution will have a highly adverse effect on the rest of the financial system. Accordingly, designation as a systemically significant company will in effect be a government declaration that that company is too big to fail. The market will understand -- as it did with Fannie and Freddie -- that loans to such a company will involve less risk than loans to its competitors. Counterparties and customers will believe that transactions with the company will generally be more secure than transactions with other firms that aren't similarly protected from failure.

As a consequence, the effect on competition will be profound. Financial institutions that are not large enough to be designated as systemically significant will gradually lose out in the marketplace to the larger companies that are perceived to have government backing, just as Fannie and Freddie were able to drive banks and others from the secondary market for prime middle-class mortgages. A small group of government-backed financial institutions will thus come to dominate all sectors of finance in the U.S. And when that happens they shall be called by a special name: winners.

Mr. Wallison is a fellow at the American Enterprise Institute.

OBAMA'S "POWER GRAB"

Even the British are wising up to the Obama agenda:

Well, I grew up with the Left and what this looks like to me is a power grab: a seizing of the moment by the forces which always believed in state domination. The Left sees an opening here, first for telling a critical lie about the historical origins of this crisis, which was propelled as much by the Left-liberal determination to spread prosperity through easy credit to the poor, as by the greed of bankers. And then, out of the wreckage, to restructure the economy along the lines that it always wanted, complete with central controls over the pay levels in private financial institutions.

We are being led to believe that public debate should be all about economic mechanics when it should really be about political principle: just how many freedoms do we want to lose while governments pretend that they are the solution?

Britain's Labor Party has the same instincts as sees the same "opportunity" to grab more power for government as Obama and the Democrats.

Read what Janet Daley has to say.

WHAT IS THE STOCK MARKET TELLING US?

You won't find a better short recapitulation of the damage the socialist ideologue Obama has wrought in the nation's economy since he emerged as the likely president.

Is It Any Wonder The Market Continues To Sink?

By INVESTOR'S BUSINESS DAILY | Monday, February 23, 2009 -- Editorial

Last Oct. 13, in trying to explain why the market had sold off 30% in six weeks, we acknowledged that the freeze-up of the financial system was a big concern. But we cited three other factors as well:

• The imminent election of "the most anti-capitalist politician ever nominated by a major party."


• The possibility of "a filibuster-proof Congress led by politicians who are almost as liberal."

• A "media establishment dedicated to the implementation of a liberal agenda, and the smothering of dissent wherever it arises."

No wonder, we said then, that panic had set in.

Today, as the market continues to sell off and we plumb 12-year lows, we wish we had a different explanation. But it still looks, as we said four months ago, "like the U.S., which built the mightiest, most prosperous economy the world has ever known, is about to turn its back on the free-enterprise system that made it all possible."

How else would you explain all that's happened in a few short weeks? How else would you expect the stock market, where millions cast daily votes and which is still the best indicator of what the future holds, to act when:

• Newsweek, a prominent national newsweekly, blares from its cover "We Are All Socialists Now," without a hint of recognition that socialism in its various forms has been repudiated by history -- as communism's collapse in the USSR, Eastern Europe and China attest.

Even so, a $787 billion "stimulus," along with a $700 billion bank bailout, $75 billion to refinance bad mortgages, $50 billion for the automakers, and as much as $2 trillion in loans from the Fed and the Treasury are hardly confidence-builders for our free-enterprise system.

• Talk of "nationalizing" U.S.' troubled major banks comes not just from tarnished Democratic Sen. Chris Dodd, chairman of the Senate Finance Committee, but also from Republicans like Sen. Lindsey Graham of South Carolina and former Fed chief Alan Greenspan.

To be sure, bank shares have plunged along with home prices, and many have inadequate capital. But is nationalization really the only solution for an industry whose main product -- loans to consumers and businesses -- has expanded by over 5% annually so far this year?

• A stimulus bill laden with huge amounts of spending on pork and special interests is the best our Congress can come up with to get the economy back on track. Economists broadly agree that the legislation has little stimulative power, and in fact will be a drag on economic growth for years to come.

The failure to include any meaningful tax cuts for either individuals or small businesses, the true stimulators of job growth, while throwing hundreds of billions of dollars at profligate state governments and programs -- such as $4.2 billion for "neighborhood stabilization activities" and $740 million to help viewers switch from analog to digital TV-- has investors shaking their heads.

• A $75 billion bailout for 9 million Americans who face foreclosure, regardless of how they got into financial trouble, is the government's answer to the housing crunch. Many Americans who have scrupulously kept up with payments are steaming at the thought of subsidizing those who've been profligate or irresponsible.

With recent data showing that as much as 55% of those who get foreclosure aid end up defaulting anyway, a signal has been sent that America has gone from being "Land of the Free" to "Bailout Nation."

• Energy solutions ranging from the expansion of offshore drilling and the development of Alaska's bountiful arctic oil reserves to developing shale oil in America's Big Sky country, tar-sands crude in Canada and coal that provides half the nation's electric power, are taken off the table.

The market knows full well what drives the economy and that restraining energy supply will make us all poorer and investing less profitable. Taking domestic energy sources off the table makes us more reliant on sources from hostile and unstable regimes, breeding uncertainty in a capital system in which participants seek stability.

• Lawmakers who seem more interested in pleasing special interests than voters back home now control Congress. Some of the leading voices in crafting the massive bank bailout and stimulus packages -- including Sen. Chris Dodd, Rep. Barney Frank and House Speaker Nancy Pelosi -- were the very ones who helped get us in this mess.

They did so by loosening Fannie Mae and Freddie Mac's lending rules and pushing commercial banks to make bad loans. Both Dodd and Frank were recipients of hefty donations from Fannie, Freddie and other financial firms they were charged with regulating.

• Trade protectionism passes as policy, even amid the administration's lip service to free trade. Congress' vast stimulus bill and its "Buy American" provisions limit spending to U.S.-made products and will drive up costs, limit choices and alienate key allies.

Already, it has triggered rumblings of retaliation in a 1930s-style trade war from trading partners, just as the Smoot-Hawley tariffs prolonged the Great Depression. Several European partners have begun raising barriers. Meanwhile, three signed free-trade pacts with Colombia, Panama and Korea languish with no chance of passage. Free trade offers one way out of our problems, yet it's been sidetracked.

• A 1,000-plus page stimulus bill is bulled through Congress with no GOP input and not a single member of Congress reading it before passage. It borders on censorship.
GOP protests of the bill's spending and the speed it was passed at were dismissed by Obama and other Democrats as seeking to "do nothing" or "breaking the spirit of bipartisanship." But voters are angry.

Along with thousands of angry phone calls to Congress, new Facebook groups have emerged, and street protests have sprung up in Denver, Seattle and Mesa, Ariz., against the "porkulus." CNBC Chicago reporter Rick Santelli's on-air denunciation of federal bailouts for mortgage deadbeats attracted a record 1.5 million Internet hits.

• Business leaders are demonized. Yes, there are bad eggs out there like the Madoffs and Stanfords. But most CEOs are hugely talented, driven, highly intelligent people who make our corporations the most productive in the world and add trillions of dollars of value to our economy.

They don't deserve to be dragged before Congress, as they have been dozens of times in the past two years, for a ritual heaping of verbal abuse from the very people most responsible for our ills -- our tragically inept, Democrat-led Congress.

• Words like "catastrophe," "crisis" and "depression" are coming from the mouth of the newly elected president, rather than words of hope and optimism. Instead of talking up America's capabilities and prospects, he talks them down -- the exact opposite of our most successful recent president, Ronald Reagan, who came in vowing to restore that "shining city on a hill."

Even ex-President Clinton admonished Obama to return to his previous optimism, saying he would "just like him to end by saying that he is hopeful and completely convinced we're gonna come through this."

• The missile defense system that brought the Soviet Union to its knees, and which offers so much hope for future security, is being discussed as a "bargaining chip" with Russia. This, at the same time the regime in Iran is close to having a nuclear weapon and North Korea is readying an intermediate-range missile that can reach the U.S.

This sends a message of weakness abroad and contributes to a feeling of vulnerability at home. A strong economy begins and ends with a strong defense.

All this in barely a month's time. And to think that more of the same is on the way seems to be sinking in. Investors are watching closely and not caring for what they see. Sooner or later, the market will rally -- but not without good reason to do so.

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