"Leg Bomber" Thwarted . . . by Luck and Courage

Umar Farouk Abdulmutallab

That's the name of the alleged Delta Airlines Leg Bomber. He didn't quite get the job done for Al Kayda (sp) this time around. Here's to hoping that those that follow him are equally incompetent.

But, what is more incompetent is how this sorry excuse for a terrorist was permitted to get on a plane bound for the U.S. anyway. Let us review the facts that we know. There are other, more damning facts we don't yet know, I am sure, but here's what we know right now.

1. His father called the U.S. Embassy one month ago and informed Embassy staff that he thought his son's radical Islamic views were a danger to the U.S. and urged the U.S. to watch out for him. That's a pretty strong warning. The guy's Dad calls. Maybe that kind of warning should get more attention, perhaps?

2. His name (not exactly a household name, mind you), was subsequently added to the Terror Watchlist, maintained by U.S. Intelligence agencies.

3. He bought his plane ticket with cash (Hello? CASH!!!)

4. He did not check any bags from Lagos, Nigeria to Detroit, Michigan. Zero. Zip. Nada. Not a bag. Have you ever been on a flight from a place like Lagos to any city in the U.S? Let's just say, there's a lot of luggage, per passenger. Yet this guy pays cash and then shows up at the airport with no luggage. Gets on the plane, no problem.

No bags and paid in cash. Those two facts ALONE should have kept this guy from getting on a U.S. bound plane. Yet, he was also on a Terror Watchlist. What exactly does one do with a Terror Watchlist if one doesn't watch out for the people on said Watchlist?

Please explain to me what Janet Nepolitano meant when she said "the system worked". What system was she referring to? The inflight video system? I am hardpressed to see how one can come to the conclusion that the security apparatus of the U.S., or the coordinated global airline security procedures, distinguished themselves in this case. Question: is Janet Nepalitano the right person for Homeland Security if she thinks this is an example of a success?

The only reason we are not looking at footage of scraps of aluminum and suitcases strewn about the suburbs of Detroit is luck. Pure luck, a little incompetence a couple of courageous passengers.

Not very inspiring, is it?

Woldy

"Fat Cat Bankers"

1. Did our President actually say "I didn't get elected to help fat cat bankers. . . " on Sixty Minutes last night?

Does anyone else think this language, in referring to professionals in the finance industry, seems a bit . . . well, un-Presidential?

And a little too . . . manufactured for his audience. Afterall, he really likes to employ former fat cat bankers as advisors, tsars (he likes to hire tsars) and employees in the federal government. So, he doesn't not like fat cat bankers. He hires them all the time. And, he listens to them. This Administration has kind of gone over-board trying to help fat cat bankers and the firms they work for.

So, what's this all about, this language about not wanting to help fat cat bankers? Could it be a brazen attempt to rally his left-leaning political base because he has done so many things recently to royally piss them off? Me thinks so.

2. Lending. As long as we are on the subject, it seems a bit disingenuous (to say the least) to be publicly lambasting the . . . uh . . . fat cat bankers for not lending out the money the Federal Reserve has so cheaply made available to them. Since it has been Government policy (from various agencies involved in the soup that is financial regulation in this country) to encourage these very same financial institutions to build up their capital base. Does the President know what this means? It means that we have been telling the banks not to loan money but instead to build up capital.

So, now we are calling them out for . . . not loaning the money . . . we told them not to loan.

And, blaming them for the slow pace of job growth in the process.

Ain't politics great?

Woldy

Sorry for the hiatus . . .

1. Health Care. Here are a few things to think about the current legislation being debated by Senate Democrats. First, the bill is now up to 2100 pages. Please raise your hand if you think any of the legislators who will vote on this legislation have actually read it. And, if they have read the words on the pages, raise your hand again if you think they have any idea what the actual real-world impact of the bill will be.

Second, in poll after poll it is clear that the American People are afraid of this legislation. This is partially because . . . we have no idea what is in this proposed law . . . because Senate Democrats aren't telling us. And, they aren't telling the Senate Republicans, either. In fact, they are conducting negotiations secretly without any public disclosure of the policy specifics they are considering.

Question: is this the type of open and transparent government the Democrats, and President Obama, ran on? Oh, sorry, that was an impolite question. We are supposed to forget the campaign promises and statements now that the election is over (but, wasn't that why many of us voted for them . . . sorry, impolite again). (I am sure at this point, if there are any Obama Supporters still reading, they are readying a response that will no doubt call out the Bush Administration and a comparison to how much better this is to Bush . . . I feel better already.)

Third, it is increasingly becoming clear that whatever form this Democrat legislation (let's call a spade a spade) will take . . . it is going to raise costs, not lower them, on a per capita basis. This is from the CBO, and various policy wonks and think tanks. How does this square with what President Obama said were his priorities in this effort? Answer: not at all. Where does this leave Obama in the minds of many people next time he tells us what his priorities are? Is it so hard to figure out why politicians rate so low in poll after poll?

Fourth, Joe Lieberman is opposed to the public option, in any form, including a stealth form that pops up later, because he has been told in plain English by Congressional Democrats that the legislation is being used as a step towards the goal of nationalizing health care (see recent WSJ interview). If Obama, and Congressional Democrats want that as the end-game, why aren't they saying so? I will tell you why: because the American People don't want nationalized health care . . . and the Democrats know better what is good for us than we do.

DISCLAIMER: As if I need to do this again . . . I am not a Republican. I am part of the vast Middle who are independent minded and non-party people.

2. Monday Morning Quarterbacks. Why is everyone so smart now, a year later? Where were all these Congressional critics of our Treasury and Federal Reserve a year ago, when the bullets were flying and it was so unclear what was going to happen to our economy? I'll tell you where they were . . . scared crapless. And, relieved that someone else's butt was on the line fighting the raging fires that threatened to consume us all.

Now that the danger has passed, these hypocrits on Capitol Hill are busy parsing blame to everyone . . . but themselves. Who was it that repealed Glass-Steagall? Was that Henry Paulson, Tim Geithner and Alan Greenspan? Nope. It was Congress . . . under a Democrat President (Clinton). Oh yeah, and who pushed and pushed for federal financing of more and more home loans? Was that Chris Dodd and Barney Frank, among others? And, now those two are raising their voices loudest to call for more Congressional oversight of our financial system.

Is this Alice in Wonderland, and are we supposed to believe that up is down and down is up?

I am not sure that all the decisions that we made a year ago to bail out this or that firm were good decisions. And, I said so at the time. But, the fact is, that I really had no idea what the impact of not bailing them out would be. And, neither did the policy makers. But we had to do something and what we did apparently stopped the train from going over the cliff. So, the combination worked to save us all from ruin.

Maybe saying "thank you" would be in order. Instead of holding sham hearings, made for TV, that are designed to embarass the very people who saved us.

No wonder Congress has 26% approval ratings (seems high to me, but that besides the point).

Enough for now,

Woldy

China Doll

Just returned from China and Taiwan. I visited five cities in China; Shanghai, Haimen City, Chengdu, Huangyan City and Ningbo. And, I ended my trip in Taipei. Here are some observations:

1. Growth. The construction boom continues unabated. There are 20+ story buildings going up in every direction. Mostly apartment buildings, but also office towers and mixed use developments. In the center of cities, on the outskirts, everywhere. New roads and bridges are being built helter-skelter. It looks like a race against time to build as much as possible as quickly as possible. Before the sand falls out of the hour-glass.

2. Pollution. Except for a couple of brief moments, we did not see the sky for a week. There is a haze that hangs over the cities. China gets the vast majority of their power from coal power plants. This, plus what is likely lax pollution standards on industry and auto emissions, has created a major pollution problem in China. Taiwan was very clean compared to China.

3. Too Many Factories. The last point is relevant to this one (i.e. why too many factories are being built). Walking through a tradeshow, it is hard to believe that the World needs so many manufacturers of essentially the same product. It just seems like there is too much capacity for the amount of consumption that exists. Part of this illusion is a result of the fact that the World's production capacity is being consolidated inside China from elsewhere around the globe. But, it still seems like there are too many factories making the same thing there.

4. Financial Disaster Looming. There is a game going on between the banks in China and their borrowers. The banks are lending money to businesses and the businesses are not paying back the banks. Yet, the businesses are thriving, producing more and more products and exporting all over the World. The theory I heard in Taiwan goes that the banks, being Government owned, are trying to create jobs in an effort to employ more and more people from the rural areas. And, that this is a form of stimulus (i.e. bank loans that neither lender nor borrower think will get repaid being used to create factories and buildings).

Some economists have estimated that between 40-50% of bank loans in China are non-performing. And, that this represents a huge percentage (up to 30%) of Chinese GDP. But, if you don't recognize the losses, then there is no reckoning. Until something happens that forces you to (such as a slowing in the growth rate).

5. Taiwan Business Owners. I heard multiple stories about Taiwaneses business owners who had joint ventures in China (i.e. moved their production from Taiwan to China, but it is necessary to have a China partner) and who lost their businesses to their Chineses partner. In some cases, the Taiwanese business owners felt they lost their shares in an unfair manner.

All for now.

I've Been Spammed . . .

To WoldyWorld subscribers . . . please ignore a recent email that appears to come from WoldyWorld, courtesy of an intermediate server. This email is not from me. Sorry for the inconvenience.

Future World

Here's a glimpse at the future after 8 years of the combination of an Obama Administration and a Democratic-controlled Congress. Take it for what it is, which is one man's opinion, but you may find some of it resonates.

1. Health Insurance (This one is easy). Although the historic Health Care Act of 2009 did not add a single payer option (i.e. Government Health Care), the Health Recovery Act of 2011 did. As a result of the effect of the two bills, by 2015, most private companies had cancelled their health plans. Companies did this because their employees elected to go on the Government Option for a fraction of what they had been paying for private health insurance through their employer. As a consequence, company plans covered less and less employees every year, and at higher and higher per person/family cost.

Eventually, more and more companies succumbed to the economics and stopped offering private health insurance altogether so the Government "Option" was at long last realized to its fullest potential. By 2015, the waiting time for a knee replacement was 14 months and for heart bypass surgery it was 9 months (for those individuals that survived to see the surgical suite). For the super rich, nothing changed, except the cost of care. Many doctors opted out of Government health care altogether, electing to provide care only to those that could afford to pay for care out of their own pockets, or had private reinsurance to cover catastrophic losses (i.e. procedures costing over $50,000). Similarly, parallel hospitals emerged, some Government, some Private. Care differed dramatically in the two systems. The folks who experienced the most change were the Middle Class and, of course, people at the lower end of the income spectrum. Not only did they lose their company insurance plans, they were left with no other option but the Government "Option".

2. The U.S. Dollar. Some time in 2011, the Group of Five (China, Brazil, EU, Russia and Japan) elected to de-link world commerce from the U.S. Dollar, due to the profilgate spending of successive U.S. Administrations. The twin trade and budget deficits hovered between 2 and 3 Trillion Dollars a year for 8 years in a row. No country wanted to buy Dollar denominated debt or tie their precious commodities to the U.S. Dollar any longer. As a result, by 2014, the Dollar traded basically even with the Chinese Yuan (which was allowed to float freely by 2012). It took 5 U.S. Dollars to buy a Euro by this time. Foreigners had to be incentivized with interest rates of 25-27% to buy U.S. Treasury bills. The high interest rates prevalent in the U.S. had the effect of shutting down the remaining homebuilders. And residential real estate continued to slide, as it had every year since 2006 (which was not unprecedented as Japanese homeowners could attest to after 17 straight years of decline in the 80's and 90's).

One result of the devaluation of the Dollar was that nearly 40% of the U.S. population was now considered at, or under, the poverty line. And unemployment had not dipped below 12% since the Great Recession of 2009-2011. Things looked grim in the U.S. economy, except for the agricultural sector, which still enjoyed strong growth.

3. Mexico. As a result of the stagnating U.S. economy, millions of Mexican citizens streamed back to Mexico, having no employment prospects in the U.S. any longer. This put enormous strain on the Mexican central government, eventually leading to the election of a Chavez-like leader, promising a new direction for the country. Tensions flared on the U.S.-Mexico border, and there were frequent skirmishes in border areas. The new Mexican Government was openly hostile to U.S. interests, nationalizing many U.S. factories in the border areas, and threatening war to protect "abused" Mexican citizens still remaining in California and portions of Texas. Because U.S. Defense budgets had been cut each year since the 2010 pullout from Iraq, the U.S. military was not fully prepared to exert itself in the now lawless border region.

4. Liberty. The U.S. had long ago (2010-2012) abandoned the strategy of cultivating individual liberty and human rights around the world, choosing to become "One Nation of Many" in the world community instead. We had had our moment in the sun, as the center, and the Congress and Administration were uncomfortable playing the central role that a UniPower must play. Partially as a consequence, heinous human rights violations occurred with increased frequency around the world. There literally was no policeman to stop these crimes from happening, as the U.S. did in Kosovo in the early 90's (with NATO grudgingly following behind). By 2014, it was unclear if NATO or the UN had any role at all to play in world affairs, as the chaos of a multi-polar world reduced the role these organizations could play. France, Spain and Italy had already dropped out of NATO and a third of UN member countries no longer paid dues, although they were still ostensibly members of the UN.

MORE . . .

There is a lot more to say about how things may turn out unless we change the dynamic in Washington. This Administration and Congress are doing a whiz-bang job destroying individual incentive and laying the foundation for years of economic stagnation. It has not even been one year and the die is set.

Krauthammer on American Decline as a Policy

Decline Is a Choice
ADVANCE COPY from the October 19, 2009 issue: The New Liberalism and the end of American ascendancy.
by Charles Krauthammer
10/19/2009, Volume 015, Issue 05



The weathervanes of conventional wisdom are registering another round of angst about America in decline. New theories, old slogans: Imperial overstretch. The Asian awakening. The post-American world. Inexorable forces beyond our control bringing the inevitable humbling of the world hegemon.

On the other side of this debate are a few--notably Josef Joffe in a recent essay in Foreign Affairs--who resist the current fashion and insist that America remains the indispensable power. They note that declinist predictions are cyclical, that the rise of China (and perhaps India) are just the current version of the Japan panic of the late 1980s or of the earlier pessimism best captured by Jean-François Revel's How Democracies Perish.

The anti-declinists point out, for example, that the fear of China is overblown. It's based on the implausible assumption of indefinite, uninterrupted growth; ignores accumulating externalities like pollution (which can be ignored when growth starts from a very low baseline, but ends up making growth increasingly, chokingly difficult); and overlooks the unavoidable consequences of the one-child policy, which guarantees that China will get old before it gets rich.

And just as the rise of China is a straight-line projection of current economic trends, American decline is a straight-line projection of the fearful, pessimistic mood of a country war-weary and in the grip of a severe recession.

Among these crosscurrents, my thesis is simple: The question of whether America is in decline cannot be answered yes or no. There is no yes or no. Both answers are wrong, because the assumption that somehow there exists some predetermined inevitable trajectory, the result of uncontrollable external forces, is wrong. Nothing is inevitable. Nothing is written. For America today, decline is not a condition. Decline is a choice. Two decades into the unipolar world that came about with the fall of the Soviet Union, America is in the position of deciding whether to abdicate or retain its dominance. Decline--or continued ascendancy--is in our hands.

Not that decline is always a choice. Britain's decline after World War II was foretold, as indeed was that of Europe, which had been the dominant global force of the preceding centuries. The civilizational suicide that was the two world wars, and the consequent physical and psychological exhaustion, made continued dominance impossible and decline inevitable.

The corollary to unchosen European collapse was unchosen American ascendancy. We--whom Lincoln once called God's "almost chosen people"--did not save Europe twice in order to emerge from the ashes as the world's co-hegemon. We went in to defend ourselves and save civilization. Our dominance after World War II was not sought. Nor was the even more remarkable dominance after the Soviet collapse. We are the rarest of geopolitical phenomena: the accidental hegemon and, given our history of isolationism and lack of instinctive imperial ambition, the reluctant hegemon--and now, after a near-decade of strenuous post-9/11 exertion, more reluctant than ever.

Which leads to my second proposition: Facing the choice of whether to maintain our dominance or to gradually, deliberately, willingly, and indeed relievedly give it up, we are currently on a course towards the latter. The current liberal ascendancy in the United States--controlling the executive and both houses of Congress, dominating the media and elite culture--has set us on a course for decline. And this is true for both foreign and domestic policies. Indeed, they work synergistically to ensure that outcome.

The current foreign policy of the United States is an exercise in contraction. It begins with the demolition of the moral foundation of American dominance. In Strasbourg, President Obama was asked about American exceptionalism. His answer? "I believe in American exceptionalism, just as I suspect that the Brits believe in British exceptionalism and the Greeks believe in Greek exceptionalism." Interesting response. Because if everyone is exceptional, no one is.

Indeed, as he made his hajj from Strasbourg to Prague to Ankara to Istanbul to Cairo and finally to the U.N. General Assembly, Obama drew the picture of an America quite exceptional--exceptional in moral culpability and heavy-handedness, exceptional in guilt for its treatment of other nations and peoples. With varying degrees of directness or obliqueness, Obama indicted his own country for arrogance, for dismissiveness and derisiveness (toward Europe), for maltreatment of natives, for torture, for Hiroshima, for Guantánamo, for unilateralism, and for insufficient respect for the Muslim world.

Quite an indictment, the fundamental consequence of which is to effectively undermine any moral claim that America might have to world leadership, as well as the moral confidence that any nation needs to have in order to justify to itself and to others its position of leadership. According to the new dispensation, having forfeited the mandate of heaven--if it ever had one--a newly humbled America now seeks a more modest place among the nations, not above them.

But that leads to the question: How does this new world govern itself? How is the international system to function?

Henry Kissinger once said that the only way to achieve peace is through hegemony or balance of power. Well, hegemony is out. As Obama said in his General Assembly address, "No one nation can or should try to dominate another nation." (The "can" in that declaration is priceless.) And if hegemony is out, so is balance of power: "No balance of power among nations will hold."

The president then denounced the idea of elevating any group of nations above others--which takes care, I suppose, of the Security Council, the G-20, and the Western alliance. And just to make the point unmistakable, he denounced "alignments of nations rooted in the cleavages of a long-gone Cold War" as making "no sense in an interconnected world." What does that say about NATO? Of our alliances with Japan and South Korea? Or even of the European Union?

This is nonsense. But it is not harmless nonsense. It's nonsense with a point. It reflects a fundamental view that the only legitimate authority in the international system is that which emanates from "the community of nations" as a whole. Which means, I suppose, acting through its most universal organs such as, again I suppose, the U.N. and its various agencies. Which is why when Obama said that those who doubt "the character and cause" of his own country should see what this new America--the America of the liberal ascendancy--had done in the last nine months, he listed among these restorative and relegitimizing initiatives paying up U.N. dues, renewing actions on various wholly vacuous universalist declarations and agreements, and joining such Orwellian U.N. bodies as the Human Rights Council.

These gestures have not gone unnoticed abroad. The Nobel Committee effused about Obama's radical reorientation of U.S. foreign policy. Its citation awarding him the Nobel Peace Prize lauded him for having "created a new climate" in international relations in which "multilateral diplomacy has regained a central position, with emphasis on the role that the United Nations and other institutions can play."

Of course, the idea of the "international community" acting through the U.N.--a fiction and a farce respectively--to enforce norms and maintain stability is absurd. So absurd that I suspect it's really just a metaphor for a world run by a kind of multipolar arrangement not of nation-states but of groups of states acting through multilateral bodies, whether institutional (like the International Atomic Energy Agency) or ad hoc (like the P5+1 Iran negotiators).

But whatever bizarre form of multilateral or universal structures is envisioned for keeping world order, certainly hegemony--and specifically American hegemony--is to be retired.

This renunciation of primacy is not entirely new. Liberal internationalism as practiced by the center-left Clinton administrations of the 1990s--the beginning of the unipolar era--was somewhat ambivalent about American hegemony, although it did allow America to be characterized as "the indispensable nation," to use Madeleine Albright's phrase. Clintonian center-left liberal internationalism did seek to restrain American power by tying Gulliver down with a myriad of treaties and agreements and international conventions. That conscious constraining of America within international bureaucratic and normative structures was rooted in the notion that power corrupts and that external restraints would curb arrogance and overreaching and break a willful America to the role of good international citizen.

But the liberal internationalism of today is different. It is not center-left, but left-liberal. And the new left-liberal internationalism goes far beyond its earlier Clintonian incarnation in its distrust of and distaste for American dominance. For what might be called the New Liberalism, the renunciation of power is rooted not in the fear that we are essentially good but subject to the corruptions of power--the old Clintonian view--but rooted in the conviction that America is so intrinsically flawed, so inherently and congenitally sinful that it cannot be trusted with, and does not merit, the possession of overarching world power.

For the New Liberalism, it is not just that power corrupts. It is that America itself is corrupt--in the sense of being deeply flawed, and with the history to prove it. An imperfect union, the theme of Obama's famous Philadelphia race speech, has been carried to and amplified in his every major foreign-policy address, particularly those delivered on foreign soil. (Not surprisingly, since it earns greater applause over there.)

And because we remain so imperfect a nation, we are in no position to dictate our professed values to others around the world. Demonstrators are shot in the streets of Tehran seeking nothing but freedom, but our president holds his tongue because, he says openly, of our own alleged transgressions towards Iran (presumably involvement in the 1953 coup). Our shortcomings are so grave, and our offenses both domestic and international so serious, that we lack the moral ground on which to justify hegemony.

These fundamental tenets of the New Liberalism are not just theory. They have strategic consequences. If we have been illegitimately playing the role of world hegemon, then for us to regain a legitimate place in the international system we must regain our moral authority. And recovering moral space means renouncing ill-gotten or ill-conceived strategic space.

Operationally, this manifests itself in various kinds of strategic retreat, most particularly in reversing policies stained by even the hint of American unilateralism or exceptionalism. Thus, for example, there is no more "Global War on Terror." It's not just that the term has been abolished or that the secretary of homeland security refers to terrorism as "man-caused disasters." It is that the very idea of our nation and civilization being engaged in a global mortal struggle with jihadism has been retired as well.

The operational consequences of that new view are already manifest. In our reversion to pre-9/11 normalcy--the pretense of pre-9/11 normalcy--antiterrorism has reverted from war fighting to law enforcement. High-level al Qaeda prisoners, for example, will henceforth be interrogated not by the CIA but by the FBI, just as our response to the attack on the USS Cole pre-9/11--an act of war--was to send FBI agents to Yemen.

The operational consequences of voluntary contraction are already evident:

* Unilateral abrogation of our missile-defense arrangements with Poland and the Czech Republic--a retreat being felt all through Eastern Europe to Ukraine and Georgia as a signal of U.S. concession of strategic space to Russia in its old sphere of influence.

* Indecision on Afghanistan--a widely expressed ambivalence about the mission and a serious contemplation of minimalist strategies that our commanders on the ground have reported to the president have no chance of success. In short, a serious contemplation of strategic retreat in Afghanistan (only two months ago it was declared by the president to be a "war of necessity") with possibly catastrophic consequences for Pakistan.

* In Iraq, a determination to end the war according to rigid timetables, with almost no interest in garnering the fruits of a very costly and very bloody success--namely, using our Strategic Framework Agreement to turn the new Iraq into a strategic partner and anchor for U.S. influence in the most volatile area of the world. Iraq is a prize--we can debate endlessly whether it was worth the cost--of great strategic significance that the administration seems to have no intention of exploiting in its determination to execute a full and final exit.

* In Honduras, where again because of our allegedly sinful imperial history, we back a Chávista caudillo seeking illegal extension of his presidency who was removed from power by the legitimate organs of state--from the supreme court to the national congress--for grave constitutional violations.

The New Liberalism will protest that despite its rhetoric, it is not engaging in moral reparations, but seeking real strategic advantage for the United States on the assumption that the reason we have not gotten cooperation from, say, the Russians, Iranians, North Koreans, or even our European allies on various urgent agendas is American arrogance, unilateralism, and dismissiveness. And therefore, if we constrict and rebrand and diminish ourselves deliberately--try to make ourselves equal partners with obviously unequal powers abroad--we will gain the moral high ground and rally the world to our causes.

Well, being a strategic argument, the hypothesis is testable. Let's tally up the empirical evidence of what nine months of self-abasement has brought.

With all the bowing and scraping and apologizing and renouncing, we couldn't even sway the International Olympic Committee. Given the humiliation incurred there in pursuit of a trinket, it is no surprise how little our new international posture has yielded in the coin of real strategic goods. Unilateral American concessions and offers of unconditional engagement have moved neither Iran nor Russia nor North Korea to accommodate us. Nor have the Arab states--or even the powerless Palestinian Authority--offered so much as a gesture of accommodation in response to heavy and gratuitous American pressure on Israel. Nor have even our European allies responded: They have anted up essentially nothing in response to our pleas for more assistance in Afghanistan.

The very expectation that these concessions would yield results is puzzling. Thus, for example, the president is proposing radical reductions in nuclear weapons and presided over a Security Council meeting passing a resolution whose goal is universal nuclear disarmament, on the theory that unless the existing nuclear powers reduce their weaponry, they can never have the moral standing to demand that other states not go nuclear.

But whatever the merits of unilateral or even bilateral U.S.-Russian disarmament, the notion that it will lead to reciprocal gestures from the likes of Iran and North Korea is simply childish. They are seeking the bomb for reasons of power, prestige, intimidation, blackmail, and regime preservation. They don't give a whit about the level of nuclear arms among the great powers. Indeed, both Iran and North Korea launched their nuclear weapons ambitions in the 1980s and the 1990s--precisely when the United States and Russia were radically reducing their arsenals.

This deliberate choice of strategic retreats to engender good feeling is based on the naïve hope of exchanges of reciprocal goodwill with rogue states. It comes as no surprise, therefore, that the theory--as policy--has demonstrably produced no strategic advances. But that will not deter the New Liberalism because the ultimate purpose of its foreign policy is to make America less hegemonic, less arrogant, less dominant.

In a word, it is a foreign policy designed to produce American decline--to make America essentially one nation among many. And for that purpose, its domestic policies are perfectly complementary.

Domestic policy, of course, is not designed to curb our power abroad. But what it lacks in intent, it makes up in effect. Decline will be an unintended, but powerful, side effect of the New Liberalism's ambition of moving America from its traditional dynamic individualism to the more equitable but static model of European social democracy.

This is not the place to debate the intrinsic merits of the social democratic versus the Anglo-Saxon model of capitalism. There's much to be said for the decency and relative equity of social democracy. But it comes at a cost: diminished social mobility, higher unemployment, less innovation, less dynamism and creative destruction, less overall economic growth.

This affects the ability to project power. Growth provides the sinews of dominance--the ability to maintain a large military establishment capable of projecting power to all corners of the earth. The Europeans, rich and developed, have almost no such capacity. They made the choice long ago to devote their resources to a vast welfare state. Their expenditures on defense are minimal, as are their consequent military capacities. They rely on the U.S. Navy for open seas and on the U.S. Air Force for airlift. It's the U.S. Marines who go ashore, not just in battle, but for such global social services as tsunami relief. The United States can do all of this because we spend infinitely more on defense--more than the next nine countries combined.

Those are the conditions today. But they are not static or permanent. They require constant renewal. The express agenda of the New Liberalism is a vast expansion of social services--massive intervention and expenditures in energy, health care, and education--that will necessarily, as in Europe, take away from defense spending.

This shift in resources is not hypothetical. It has already begun. At a time when hundreds of billions of dollars are being lavished on stimulus and other appropriations in an endless array of domestic programs, the defense budget is practically frozen. Almost every other department is expanding, and the Defense Department is singled out for making "hard choices"--forced to look everywhere for cuts, to abandon highly advanced weapons systems, to choose between readiness and research, between today's urgencies and tomorrow's looming threats.

Take, for example, missile defense, in which the United States has a great technological edge and one perfectly designed to maintain American preeminence in a century that will be dominated by the ballistic missile. Missile defense is actually being cut. The number of interceptors in Alaska to defend against a North Korean attack has been reduced, and the airborne laser program (the most promising technology for a boost-phase antiballistic missile) has been cut back--at the same time that the federal education budget has been increased 100 percent in one year.

This preference for social goods over security needs is not just evident in budgetary allocations and priorities. It is seen, for example, in the liberal preference for environmental goods. By prohibiting the drilling of offshore and Arctic deposits, the United States is voluntarily denying itself access to vast amounts of oil that would relieve dependency on--and help curb the wealth and power of--various petro-dollar challengers, from Iran to Venezuela to Russia. Again, we can argue whether the environment versus security trade-off is warranted. But there is no denying that there is a trade-off.

Nor are these the only trade-offs. Primacy in space--a galvanizing symbol of American greatness, so deeply understood and openly championed by John Kennedy--is gradually being relinquished. In the current reconsideration of all things Bush, the idea of returning to the moon in the next decade is being jettisoned. After next September, the space shuttle will never fly again, and its replacement is being reconsidered and delayed. That will leave the United States totally incapable of returning even to near-Earth orbit, let alone to the moon. Instead, for years to come, we shall be entirely dependent on the Russians, or perhaps eventually even the Chinese.

Of symbolic but also more concrete importance is the status of the dollar. The social democratic vision necessarily involves huge increases in domestic expenditures, most immediately for expanded health care. The plans currently under consideration will cost in the range of $1 trillion. And once the budget gimmicks are discounted (such as promises of $500 billion cuts in Medicare which will never eventuate), that means hundreds of billions of dollars added to the monstrous budgetary deficits that the Congressional Budget Office projects conservatively at $7 trillion over the next decade.

The effect on the dollar is already being felt and could ultimately lead to a catastrophic collapse and/or hyperinflation. Having control of the world's reserve currency is an irreplaceable national asset. Yet with every new and growing estimate of the explosion of the national debt, there are more voices calling for replacement of the dollar as the world currency--not just adversaries like Russia and China, Iran and Venezuela, which one would expect, but just last month the head of the World Bank.

There is no free lunch. Social democracy and its attendant goods may be highly desirable, but they have their price--a price that will be exacted on the dollar, on our primacy in space, on missile defense, on energy security, and on our military capacities and future power projection.

But, of course, if one's foreign policy is to reject the very notion of international primacy in the first place, a domestic agenda that takes away the resources to maintain such primacy is perfectly complementary. Indeed, the two are synergistic. Renunciation of primacy abroad provides the added resources for more social goods at home. To put it in the language of the 1990s, the expanded domestic agenda is fed by a peace dividend--except that in the absence of peace, it is a retreat dividend.

And there's the rub. For the Europeans there really is a peace dividend, because we provide the peace. They can afford social democracy without the capacity to defend themselves because they can always depend on the United States.

So why not us as well? Because what for Europe is decadence--decline, in both comfort and relative safety--is for us mere denial. Europe can eat, drink, and be merry for America protects her. But for America it's different. If we choose the life of ease, who stands guard for us?

The temptation to abdicate has always been strong in America. Our interventionist tradition is recent. Our isolationist tradition goes far deeper. Nor is it restricted to the American left. Historically, of course, it was championed by the American right until the Vandenberg conversion. And it remains a bipartisan instinct.

When the era of maximum dominance began 20 years ago--when to general surprise a unipolar world emerged rather than a post-Cold War multipolar one--there was hesitation about accepting the mantle. And it wasn't just among liberals. In the fall of 1990, Jeane Kirkpatrick, -heroine in the struggle to defeat the Soviet Union, argued that, after a half-century of exertion fighting fascism, Nazism, and communism, "it is time to give up the dubious benefits of superpower status," time to give up the "unusual burdens" of the past and "return to 'normal' times." No more balancing power in Europe or in Asia. We should aspire instead to be "a normal country in a normal time."

That call to retreat was rejected by most of American conservatism (as Pat Buchanan has amply demonstrated by his very marginality). But it did find some resonance in mainstream liberalism. At first, however, only some resonance. As noted earlier, the liberal internationalism of the 1990s, the center-left Clintonian version, was reluctant to fully embrace American hegemony and did try to rein it in by creating external restraints. Nonetheless, in practice, it did boldly intervene in the Balkan wars (without the sanction of the Security Council, mind you) and openly accepted a kind of intermediate status as "the indispensable nation."

Not today. The ascendant New Liberalism goes much further, actively seeking to subsume America within the international community--inter pares, not even primus--and to enact a domestic social agenda to suit.

So why not? Why not choose ease and bask in the adulation of the world as we serially renounce, withdraw, and concede?

Because, while globalization has produced in some the illusion that human nature has changed, it has not. The international arena remains a Hobbesian state of nature in which countries naturally strive for power. If we voluntarily renounce much of ours, others will not follow suit. They will fill the vacuum. Inevitably, an inversion of power relations will occur.

Do we really want to live under unknown, untested, shifting multipolarity? Or even worse, under the gauzy internationalism of the New Liberalism with its magically self-enforcing norms? This is sometimes passed off as "realism." In fact, it is the worst of utopianisms, a fiction that can lead only to chaos. Indeed, in an age on the threshold of hyper-proliferation, it is a prescription for catastrophe.

Heavy are the burdens of the hegemon. After the blood and treasure expended in the post-9/11 wars, America is quite ready to ease its burden with a gentle descent into abdication and decline.

Decline is a choice. More than a choice, a temptation. How to resist it?

First, accept our role as hegemon. And reject those who deny its essential benignity. There is a reason that we are the only hegemon in modern history to have not immediately catalyzed the creation of a massive counter-hegemonic alliance--as occurred, for example, against Napoleonic France and Nazi Germany. There is a reason so many countries of the Pacific Rim and the Middle East and Eastern Europe and Latin America welcome our presence as balancer of power and guarantor of their freedom.

And that reason is simple: We are as benign a hegemon as the world has ever seen.

So, resistance to decline begins with moral self-confidence and will. But maintaining dominance is a matter not just of will but of wallet. We are not inherently in economic decline. We have the most dynamic, innovative, technologically advanced economy in the world. We enjoy the highest productivity. It is true that in the natural and often painful global division of labor wrought by globalization, less skilled endeavors like factory work migrate abroad, but America more than compensates by pioneering the newer technologies and industries of the information age.

There are, of course, major threats to the American economy. But there is nothing inevitable and inexorable about them. Take, for example, the threat to the dollar (as the world's reserve currency) that comes from our massive trade deficits. Here again, the China threat is vastly exaggerated. In fact, fully two-thirds of our trade imbalance comes from imported oil. This is not a fixed fact of life. We have a choice. We have it in our power, for example, to reverse the absurd de facto 30-year ban on new nuclear power plants. We have it in our power to release huge domestic petroleum reserves by dropping the ban on offshore and Arctic drilling. We have it in our power to institute a serious gasoline tax (refunded immediately through a payroll tax reduction) to curb consumption and induce conservation.

Nothing is written. Nothing is predetermined. We can reverse the slide, we can undo dependence if we will it.

The other looming threat to our economy--and to the dollar--comes from our fiscal deficits. They are not out of our control. There is no reason we should be structurally perpetuating the massive deficits incurred as temporary crisis measures during the financial panic of 2008. A crisis is a terrible thing to exploit when it is taken by the New Liberalism as a mandate for massive expansion of the state and of national debt--threatening the dollar, the entire economy, and consequently our superpower status abroad.

There are things to be done. Resist retreat as a matter of strategy and principle. And provide the means to continue our dominant role in the world by keeping our economic house in order. And finally, we can follow the advice of Demosthenes when asked what was to be done about the decline of Athens. His reply? "I will give what I believe is the fairest and truest answer: Don't do what you are doing now."

Charles Krauthammer is a syndicated columnist and contributing editor to THE WEEKLY STANDARD. This essay is adapted from his 2009 Wriston Lecture delivered for the Manhattan Institute for Policy Research in New York on October 5.

No way is he getting the Sham-wow job now . . .

Checking in . . .

1. It is becoming altogether too fashionable to label opposition to President Obama as racist, or being tied to race somehow. I have opined on this subject before, but it is really grating on me. The President's supporters are out there on the airwaves making statements about the opposition on the Right (which, I might add, is not where I come from . . . us Independents guard our independence with a vengeance) stoking the flames of racism, purposely trying to undercut The Great One. Even possibly trying to hurt The Sacred Voice by instigating others to violence.

This is nonsense. People are pissed. The country is in poor shape fiscally. Record Trillion Dollar deficits. There is historic unemployment (IL 10.5%, CA 12%, MI 14%). Millions of families are losing their homes to foreclosure. Our Nation is spending money like madmen. In the midst of this chaos, our President, and Congress, are proposing ANOTHER Trillion Dollar spending program. And, the pissed off public is venting on its Government - as is our right.

Obama made this Administration all about him. He said he was going to ride into town and save the day. His new approach would bridge the gaps (bring Red and Blue states together, blah, blah, blah). We need a new way forward. Gotta have hope. Obama has "uncommon wisdom" (I didn't make that term up . . . one of my friends . . . and a reader of this blog . . . has used that term). So now that the President has made it all about him, he is living with the consequences. And, one of the consequences is that people are venting on him.

Yes, there are racists in our midst and, sadly, I am afraid, there will always be. Such is the human condition that some will always want to make themselves feel better by looking down on others. But, that should not de-legitimize political discourse. We can't take a whole wedge of the population and say to them that they need to quiet down because they are riling up our crazy uncle in the attic.

Sorry, this is bugging me. On to the next thing . . .

2. President Obama Lobbying for Chicago 2016. If this isn't the political marker of all political markers being called in, I don't know what is. Daley made Obama and now, Daley needs to be paid back. With a little trip to Copenhagen. While Rome burns, Obama fiddles. He will be the first (and hopefully last) sitting U.S. President to personally lobby the Olympic Committee for a U.S. venue. Kind of humiliating for us, and for him, don't you think? Maybe he can sell Sham-wows next. Rumor has it they are looking for a new pitchman.

3. Why Chicago is so Luke-Warm on the Olympics. Honestly, I have no opinion about whether the Olympics will be good or bad for Chicago, but I do have an opinion about who will end up paying for them. And the answer is sitting right here in front of this PC . . . Illinois Taxpayers. I've seen enough of Illinois and Chicago politics to know that. And, at the end of the day, that's why there is so little support for the Olympics (47% in recent poll).

We know in our guts that this is going to cost us. Big time.

Plus, there is the sense that more important things are going on in Chicago. Like the horrifying beating death of a Chicago high school student this week. Or the number of kids killed in Chicago this year. Or the high unemployment. Or, or, or . . . we've got more pressing matters to worry about than whether some real estate developers are going to get the chance to line their pockets . . . at our expense.

And, sadly . . . we know it will come to pass. And we will pay.

4. Remember Who Your Friends Are. This Administration is striving to love and be loved, by everyone. Maybe President Obama spent too much time watching "Everyone Loves Raymond" and thinks that everyone should love Barack. The reality is that not everyone is going to love Barack, or the U.S.A. Some people actively hate us, and others pursue their own self interest, sometimes at our expense. That's not going to change. Let's not forget who our friends are in the process of trying to be loved by everyone.

Okay, I'll connect the dots on this subject. We are trying to win over the Russians (a dying country if there ever was one) by tossing overboard the Poles and the Czechs (see Missile Defense issue). We are trying to win over the hearts and minds of the Arab Street (whatever that is) by pressuring the Israelis to give concessions to leaders who don't have the legitimacy or power to deliver a peace deal. We are trying to bring Hugo Chavez in from the cold by dialing back on our relations with our close allies in Columbia. All these efforts will yield no lasting benefits for this country. We are being played like a fiddle. And, in the process, our friends are being taught a lesson; don't get too close to the U.S.A. because the next Administration may take a different path, and you'll get burned.

Not good for us, in the long run. Barack may enjoy being welcomed the World over, but at the end of the day, he is hurting our country's credibility on the World Stage.

Woldy

A few rantings . . .

1. Jimmy Carter has a way with words, doesn't he? The ONLY reason anyone pays attention to what that cranky old guy says any longer is that he used to occupy an office suite at 1600 Pennsylvania Avenue. No other reason. He has not added anything meaningful in the public arena in many years.

As far as what he said this last week, clearly, there are racists still in this country. That is indisputable. I suppose it is safe to assume that most racists are offended by having an African-American President. But to come out and suggest, as Carter did last week, that opposition to Obama is tied to racism is less than honest, at best, and manipulative of headlines at worst. This kind of "analysis" is clearly intended to quiet down the opposition. Who wants to be called a racist? Not too many people.

Jimmy, go build some houses for folks. Do something useful. For a change.

2. Missile Defense. Right or wrong with the decision, what we did this week will undercut our credibility with Central European countries (and possibly others) for a long, long time. The Czech and Polish leadership went out on a limb in an effort to help the U.S. with its missile defense plans. Now it looks like they walked the plank instead. We left them hanging and they won't forget it.

And, for what? To placcate the Russians? Seems to me that without something tangible (i.e. specific promises and actionable items in return for this move), we just pissed off our friends to try to curry favor with our enemy.

3. Stop Spending. Please Stop Spending. Is anyone in Washington listening? We are saying this pretty unambiguously and consistently. The American Public does not like spendthrifts and the current Administration (and, let's be fair, the last Administration) are turning us all into spendthrifts.

We are in a hole. The quickest way out of the hole is to stop digging and start climbing. Seems that the Wrecking Crew in charge of our Government right now is intent on digging.

4. Arrogance. If you want to view arrogance up close and personal, then check out Henry Waxman's actions these last couple of weeks. He is throttling any chance of correcting a clearly flawed law (yes, I am referring to the CPSIA) that is inflicting real, and lasting damage on corporations in a wide array of industries.

This type of "leadership" will end up costing the Democrats . . . big time.

Another Bad Decision

Want to start a trade war? Bend to political pressure from unions and put a 35% duty on some small item and see what the other side does.

That's exactly what our President decided to do in a little-noticed move late last week when he put the duty on Chinese made tires in response to pressure from unions in this country.

Surprise, surprise. China is now studying two categories of American products for possible dumping duties.

This is how trade wars start. And, they don't end well.

Bad move, President Obama.

Please Read This

http://online.wsj.com/article/SB10001424052970203706604574370712943409146.html?mod=googlenews_wsj

Joe Wilson is an A-hole . . . but he may be right

Okay, Rep Wilson is a jerk. Let's agree on that. In the U.K., parliamentarians can stand up and call out the Prime Minister during questions. They can call the P.M. all kinds of names, including a "liar". But we don't have that tradition here. Usually, the President is treated with deference by the Congress and they politely listen to what the President has to say and show some respect for the Office. Agree or disagree, we are all Americans and the President is the President of all of us. So, ding Rep Wilson for being a jerk. It will be interesting to see if he gets re-elected.

But, that's where it should stop. Let's move on. There are far more important things to do than to focus on this guy from South Carolina who blurted out something stupid (are we talking about their Governor or one of their Congressmen . . . sorry, I lost my train of thought).

Regarding the speech the other night and its implications, I have an observation.

Much has been written about the way that President Obama was walking a thin line in that speech between the liberal wing of his Party and the conservative wing of his Party (along with Independents who are concerned about mundane things like deficit spending and leaving our children with a gi-normous bill to pay for our profligate spending). It seems to me as I read this commentary, and listened to, and re-read portions of the speech, that President Obama said things that mean different things to different audiences. Maybe this is an old politicians trick, and maybe he is just damn good at this, but he said things in such a way that a wide range of the political spectrum can project their beliefs onto what he said and nod their head and say "yeah, that's more like it".

For instance, the President said that if you like your current coverage, you can keep the coverage you have today, but the legislation is just going to enhance its value by eliminating waste and inefficiency. Sounds great and who can argue with that? Only thing is, nobody who thinks about these issues seriously believes that this is anything other than fantasy or political posturing.

This was, in my view, an effort to stifle the dissent from the disgruntled masses who have currently health insurance and largely like what they have, which is a very large majority of us, by the way. By telling us what we want to hear, he's hoping that we now will go silently along with his proposals.

It is an interesting political game he is playing. I think he feels he needs something (anything at this point) to pass so he can claim victory and go home. It is not so much about fixing what's wrong, as it is about making incremental change and hoping he comes out looking good in the end.

The game is afoot.

I Can't Believe We are Doing This

Despite the fact that I have been blogging on this subject for months (most recently July 12, if you need a refresher) . . . I still can not believe that our country is about to host a witch hunt to punish the very individuals who sacrificed so much to keep us safe. The men and women who put it on the line for us, to fight people who live in the gutters of the World, on our behalf.

We are going to look back from a safe distance at the decision-making of policymakers during the duress of post-9/11 and at the actions of those who worked several layers down under the guidance of written legal opinions and executive orders. This is totally un-American.

I simply can not believe that it has come to this.

What a huge mistake we are making right now. Where are we going to be next time we need some tough action to save American lives? Who is going to stand up next time if this is how we treat our warriors?

What are we doing?

Is it true?

That President Obama called the head of the Congressional Budget Office to the White House for a meeting after the CBO came out with its study that none of the current health care legislation being considered will actually reduce what we spend on health care, as claimed by the President?

If this is true, this seems awfully close to the line of inappropriate meddling by the Executive in the business of the Legislative. The CBO was created to cut through the politics of the budgetary process so that somewhere, somehow, Congress could get honest numbers on what they are spending.

Do you think the President was just being social or calling the CBO to the carpet for coming out with numbers that contradicted his?

The Crusader . . .

When you think you are on a (capital C) Crusade to save America . . . the potential exists for you to miss signals that maybe, possibly, you may not be correct in your assumptions. If you feel you are "right" and doing the "right" thing, then damn the opposition and plow ahead because you are on a Crusade to save the People. To right the wrongs. To cure the ills. To create an idealic future for us all. Peace, love and understanding will prevail if you succeed.

And, those that stand in the way of your goals are obstructionists, tied to the status quo. They are evil-doers with immoral motivations. If they aren't for you, they are against you and therefore, against all that is right and just in your Crusade to create a better World. The opposition wants the Old World to continue, where injustice and cruelty rule the day. They are evil insurance companies (motivated by . . . YIPES . . . Profit.) They are caustic Republican Right-Wingers stirring up the emotions of the mob with untruths and lies. They are cynical political operatives trying to hurt the Crusader so he doesn't succeed in creating a better World.

When you are on a Crusade, it is easy to tell the good guys from the bad guys.

When you are on a Crusade, the World is a very simple place to figure out. Those who are with you are The Light and those that are opposing you are the Dark Forces who must be defeated.

Does any of this sound familiar to you? It should ring a bell of sorts.

This is an unhealthy environment to lead the Country. If you de-legitimize the opposition, you miss hearing what they have to say. And, what they have to say may actually help you because the opposition is not created out of thin air. It exists because of real concerns of real citizens. And, you are the leader of all the citizens, not just the ones who voted for you. Which means, you need to listen to them all, and hear them out. And, not pretend that what they have to say is somehow tainted by the fact that they are anti-Crusaders.

Unless . . . your Crusade is more important and you know what is "right" for the People and how to make the World better. Then, damn the opposition. Full steam ahead!!!

Tin Ears and Arrogance

An interesting phenomena is happening now across the country. Congressmen are going home on recess and having town hall meetings, where they are soliciting comments from their constituents on the health care legislation now before Congress. These town hall meetings usually have a nice, civil tone in which the adoring public (usually mostly made up of campaign contributors and supporters of the politicians) praises the Congresspeople for their wonderful deeds, and asks for things for the local community.

These more recent meetings, however, have been filled with discontent (to say the least), rancor, disrespect for the politicians and fear. People are afraid of the change that is being talked about in Washington. They have read about it and they don't like what they are reading. And, they are letting their elected officials know they are unhappy by telling them to their face, and laughing at them while they try to sell their plans (because everyone knows they are lying about the financial impact of the legislation, and they know they will pay for these lies). And, it turns out that America's elected officials don't like getting lip from their constituents. They much prefer the praise they have been receiving at these meetings.

The reaction of (mostly) Democratic political leaders has been the dangerous part, not the public's reaction to the legislation. The politicians are quick to write off the reaction they are getting as being orchestrated somehow by the Republican "Right". This is a big mistake and illustrates how far these politicians have drifted from the electorate. And, they proceed with their legislation at their own peril.

The problem for the Dem Leadership stems from the fact that they operate in their Washington cocoon, which is so very well insulated from the viewpoints of actual citizens (see for yourself how hard it is as an actual, concerned citizen, to get an audience with an elected official - they won't see you unless your name is affixed to a five digit check to their campaign). So, when they come face to face with real people (who, nominally, are their bosses), and when those people tell them things they don't want to hear, they think to themselves "there must be an explanation for this that absolves me of any responsibility". And, then they trot out the Boogie Man Right-Wing Conspiracy.

Time for politicians to pay attention to their constituents and listen to what they have to say.

Obamacare . . . is bad economics

Here are a couple reasons why I feel this way . . .

1. The plan requires $1 Trillion in new spending. One Trillion dollars of new spending . . . at a time when our budget deficit is expected to be close to $2 Trillion this year and $1.5 Trillion next year and $1 Trillion in 2011. All told, we are projected to rack up 10 Trillion dollars in new debt in the next eight years. That's a lot of beakers, my friends.

Is it just me or does it seem that maybe now might not be the absolute best time to be proposing new Trillion dollar social programs. We are not exactly flush. By the way, we all know that if politicians say something will cost $1 Trillion, it will really cost (at least) twice that. And, as with all entitlement programs ever enacted . . . it will be permanent and it will be very difficult to modify.

2. Tax Plan. The Democrats in the House have a plan to address part of this dilemma. They plan to tax upper income Americans at rates of over 5% on income over a certain threshhold. To pay for half of the Trillion dollar plan. The other half is going to come from "efficiency gains" (whatever the heck that means).

By the way, this plan to pay for health insurance by taxing the top 1% of taxpayers with a surtax is in direct response to polling figures that show that Americans want health insurance reform . . . as long as someone else is paying for it. So, the Democrats took care of that little problem by foisting the bill onto the tiny sliver of America at the top of the income scale. That's leadership for you . . . or at least that's one version of leadership (the kind that doesn't lead, but follows.)

Some people call this plan “progressive”. Somehow, the thinking goes, it is “progressive” to transfer wealth from one group of people (wealthy individuals) to another group of people (less wealthy Americans). Rather than everyone pays their own way and the American people will together use tax receipts to fund various social programs . . . the approach we are flirting with is . . . everyone who can afford it pays their own way . . . and then this tiny minority of taxpayers pays for everyone who can’t. The inherent problem with this approach, besides the obvious one of fairness (why don’t these top tier taxpayers get to keep what they earn? Did they do something wrong, or is our system designed to reward those that produce more economic benefit?) is that this type of thinking pits this tiny minority in the top bracket against everyone else. Not just those that will receive the transfer of wealth, but those in the middle who don’t have to pay for it because the top tier of taxpayers is footing the bill. Why not eat more ice cream if someone else is getting the calories and the fat?

In my view, this is bad public policy. It becomes someone else’s problem to pay for all these decisions in Washingon and that someone is a very small minority of citizenry. Which means that more and more will be piled on to them (because it is politically expedient to do so). That means more surcharges (why not, they can afford it . . . they make so much money.)

And, then, the golden goose stops laying eggs. That’s what has happened in California where 144,000 taxpayers in a state of 38 Million people, pay more than 55% of state income taxes. The home state of Nancy Pelosi and Henry Waxman is very progressive. Then those taxpayers experience economic set-backs and guess what? There is a huge hole in the budget because California was taxing the top brackets so heavily that virtually no one else had to share in the burden. It works until it doesn’t. And when it stops working . . . it stops in a big way.

3. Late last week, the Congressional Budget Office (bipartisan organization funded by Congress to get better (i.e. nonpolitical) numbers on budgets and economic conditions) came out with the conclusion that none (as in not one) of the various health insurance plans being discussed in the House, Senate or White House . . . will actually reduce expenses, contrary to the “party line” coming out of the Obama White House on this issue. As if we needed to be told this.

But the point is an important one. These new spending programs will not be short term pain for long term gain, as we are being sold . . . I mean . . . told. We don’t have to spend now to save later. We have to spend now to . . . spend more later. That is what the CBO has said about these cockamamie plans.

Anyone surprised by this? Didn’t think so.

Wrong on Goldman

A number of you have made observations about the Goldman stock sales that are more likely better explanations of those sales than my posting so . . . I was wrong (I think). Or at least I am willing to entertain that the explanation was more nuanced than I originally proposed. Here are the comments (from those of you who still have not figured out how to post a comment . . . )

Commenter #1
I think you missed on this one. The Goldman insiders sold for a variety of reasons, including margin calls, funding obligations, diversification…maybe even a little fear. However, the decisions of individuals does not alter the strength of the institution. Whether or not Goldman is fairly priced in this new world, their market presence in undeniable and their collective intelligence remains impressive. Ask yourself this question: IF you want to be invested in the financial sector, with whom would you RATHER be invested in than GS?

Commenter #2
I'm no Goldman apologist, but I think you are fuzzing private economic
behavior with the ability of Goldman, as an institution, to make
profits.

I think that individual selling (and $700 million is a rounding error,
in my mind) was attributable to a perfect storm of (i) margin calls,
(ii) too many individual illiquid investments, (iii) inability to pull
capital out of hedge funds and other investments which froze
redemptions, (iv) other short term obligations coming due (the house
in Aspen with a bullet payment due) and (v) smaller bonuses not being
able to finance current cash needs.

I sold at $120 on the way down, and am kicking myself. Of course, I
was feeling pretty smart when GS went to $75.....

Commenter #3
I think it means an amazing number of execs were doubling down with margin accounts that got called. Then they had to sell at the bottom....

Goldman Stock Sales Astounding

Executives at Goldman Sachs apparently sold nearly $700 Million of Goldman stock between September 2008 and April 2009 with the selling peaking between December '08 and February '09 . . . when Goldman traded near record lows.

This is the group of people who want to help us manage our money. They sold their own company's stock, with all the information that they have working at the company . . . at exactly the wrong time. They panicked and sold when they should have been buying by the bushel-full. GS has rebounded quite nicely from late January low of $59 to today's $149. Yet, executives at GS bailed on hundreds of millions worth of their own stock.

Does something strike you as odd about that?

To me, it spells trouble for the retail investor thinking of buying GS.

Woldy

The Victors Write History

Please recall what a certain blogginator wrote on this subject earlier this year on April 23 . . . it is worth reading again. Attorney General Holder is currently contemplating appointing a special prosecutor to investigate decisions relating to interrogation methods made during the Bush Administration, and those individuals who made the decisions.

This is a huge mistake on several levels.

First, the obvious . . . punishing policymakers for making policy during national crises will encourage lack of risk-taking and lowest common denominator decision making. Do we want our leaders afraid to make decisions when we most need them? When the stakes are the highest, don't we want our leaders decisive, and thinking about how to protect our citizens. That is the central, and most important, function of our Federal Government. Above all else, it is to provide us with national defense; to protect us. Appointing this prosecutor will not advance the cause of keeping us safe.

Second reason this appointment, when it occurs (sidebet for lunch with anyone who doubts that it will happen), is a huge mistake is that the underlying motivations behind the appointment are political (and driven by the agenda of fringe political forces) and will doom the rest of the Obama Administration, as long as it lasts, to partisan politics as usual. I thought we were moving away from the politics of destruction, as our President liked to call the prevailing infighting when he was running for President. Appointing a special prosecutor for this looks more and more like the same old story.

Is this what we need? Is this the reason we elected Barack Obama? Didn't he run on a different platform? Rising above this nonsense to "right the ship"?

And if there are any doe-eyed innocents who think the President is not a party to the decision of whether, or not, to appoint . . . think again. This decision will stain the Obama Presidency.

Third reason this appointment is a mistake . . . never underestimate the opposition. If you think you know everything the Bush Administration knows . . . you are deluding yourself. Open this can of worms and it will stink to high heaven. There will be revelations of all sorts of things that the AG and the President did not want to come out. The Law of Unintended Consequences will rule in this case. This will hurt the Democrats chances, and it will injure our country. Airing our dirty laundry in public will not improve our image overseas. It will only serve to provide more fodder for USA-haters who don't give a damn what our well-meaning President is trying to communicate to them. They hate us and want to hurt us.

President Obama's instincts are telling him one thing. His politics are telling him something different. Hopefully he listens to his instincts and urges his AG not to appoint.

Woldy

And Now for Something Completely Different

Yesterday's Michael Jackson-a-palooza was the final effort by those around him to manipulate and use the tragic figure that was MJ for personal financial gain. None of the "celebrity" figures that appeared in that show did it because they were such great friends with Michael Jackson. They did it to get in on the show, man. Good friends don't grieve for the public, in front of 20,000 spectators, and millions of TV-viewers. Good friends don't hoist the poor guy's (golden?) casket up for everyone to gawk at.

I didn't watch the spectacle, but you couldn't avoid the press coverage so I did see a few clips. It was disgusting.

And the hypocracy of it all was equally appalling. Most of the people appearing on that stage would not be caught (on film) in the presence of Michael Jackson for the last 10-15 years. Jesse Jackson wrapping himself around the Jackson Family like a gigantic leech. As if. Wherever there are hot lights, Jesse will not be far. Al Sharpton saying there was nothing strange about Michael Jackson. It was the rest of us who didn't understand. Didn't understand what, Al? Why a 40 year old Michael Jackson paid a family $20 million to settle child molestation charges out of court? Why an adult Michael Jackson had sleepover parties with pre-pubescent boys? But, Michael Jackson was a poor tortured soul. So, all this should go away. He was a genius. So, forget the rest of it. We just don't understand . . . according to the good Reverend Al.

There are many things that are great about our country. Yesterday's show was not one of them.

Woldy

I Have a Job for Bernie!

Now that it is settled that Bernie Madoff has a very long time to contemplate his navel . . . that is to say, the rest of his life . . . it is time to take another look at this guy.

Bernie is an uniquely skilled guy. Let's use him for the greater good of society by focusing his creative energies on . . . the federal deficit. Perhaps there is a way that he can convince people who have a lot of money (i.e. China, Singapore Japan, South Korea, Saudi Arabia, Goldman Sachs Partners, etc...) to "invest" in an unique investment fund which pays a nice dividend. The fund is not redeemable for, let's say 30 years. Also, since this is for greater good, why not make the dividend federal tax-free. The proceeds of the investment fund will be used to pay down first, interest on our national debt and second, debt principal itself. We keep getting more and more investors, or keep opening new funds (which Bernie could market, since he is a master marketer). We can keep this thing going for a long, long time.

Wait a minute!!!

I think I just described Treasury Bills . . .

I'm not saying that T-Bills are a ponzi scheme, but . . . they sort of are, aren't they?

Woldy

This Guy Needs to Leave . . . Now!

Below are some quotes about Gov. Sanford and his dalliances (there was apparently more than one woman) . . . the parentheticals are my edits. . .


During an emotional interview at his Statehouse office with The Associated Press on Tuesday, Sanford said Chapur is his soul mate but he's trying to fall back in love with his wife. (TIP . . . you better hope Mrs. Sanford doesn't read that one.)

He says that during the other encounters (he said he met other women, but never had "sexual relations" with them . . . gosh, that sounds familiar . . . now, where have I heard that before????) he "let his guard down" with some physical contact but "didn't cross the sex line." He wouldn't go into detail. (I doubt that Bill Clinton will offer up any advice to this guy, who voted to impeach him.)

Au Contraire, Mon Ami . . . it is not I who is cynical

It is our beloved President who is the cynical one. If he were not so cynical, he would have come out on Iran the same way he did on Honduras, which is to say, with conviction. Many world leaders did that, including the somewhat more timid Europeans. But, we lagged behind, cautiously waiting to see which way the tear gas blew.

And yet, when the coup occurs in the Banana Republic of Honduras, there is an immediate reaction, as if the world will forget our non-reaction to the Iranian Government shooting its own citizens for peacefully demonstrating.

THAT is cynicism. I am just observing the pattern.

Another Comment from Follower

U r soooo cynical

Comment from Follower

One other small difference. In Iran, there was at least the illusion of a vote, and responsible governance suggested that just maybe, we need to give the grand puba enough time to figure out the right response on its own. Military cou’s on the other hand are cut and dried. Of course, the fact the we are talking about Honduras does make it much easier.

Righteous indignation . . . about Honduras?

Our President has decided to step up his global leadership by taking a new tact on issues of democracy by lambasting the Honduran military for "illegally" ousting the democratically elected President of Honduras. President Obama must have felt the stinging rebuke he took from around the World about his lack of leadership on Iran (yeah, yeah, we know it was strategic non-leadership, but it was non-leadership, nonetheless) and he decided not to make the same mistake again! He came out forcefully and with no hesitancy about Honduras.

Of course . . . the stakes are much lower in Honduras than they are in the volatile Middle East. And, Honduras has no nuclear program and no ballistic missile capabilities. And, only 7 million inhabitants (as compared to Iran's 65 million). And, Honduras has no oil and no ability to block the Straits of Hormuz, of course.

So, it was a slightly (i.e. much) easier call, politically, to come out against the Honduran military, although it might not be the right call from what is being written about the guy they ousted. Apparently, the Honduran military acted at the request of the Honduras Supreme Court because the ex-President didn't like doing things like following laws and listening to court decisions. But, we quibble here about details. This is about big D Democracy and our President knows something about Big D Democracy . . . when it comes to small Central American states.

Woldy

Blue State, Red State, Keep it in Your Pants, Mate!

Can it possibly be true that Republicans have more lust than Democrats, or that Democrats are just better at not getting caught? Yes, we know about Bill Clinton, Gary Hart and John Edwards, but come on . . . it seems that more Republicans than Democrats are cheating on their wives these days.

Governor Sanford is the second elected Republican official this month to admit an affair. In the last couple of years, we have had the "wide stance" Senator and the "Congressional Intern" Congressman, both Republicans. Maybe this is just a statistical cluster and there really is no difference, in this respect, between powerful Democrats and Republicans . . . but let's assume for a moment that there is a difference.

What explains this? Anyone have any theories?

Woldy

Slip Sliding Away . . . Slip Sliding Awayayay.

The great poll numbers for St. Barack are starting to erode.

This is not surprising and totally predictable (and predicted by certain commentators). First, his very high approval rates were non-sustainable. As soon as he started to act, they were destined to go down (because there are winners and losers on every issue). Second, despite the fervor with which his ardent fans (and they are more fans than anything else) view him, it is factual that Barack Obama was elected by Independent voters who thirsted for change. Indepenent voters are really not all that attached to Obama personally (unlike his fans). What they wanted, what they voted for, isn't turning out to be exactly what President Obama is delivering. And, this is showing up in the polling numbers.

Independent voters are becoming increasingly concerned at both; 1) the pace at which the President is spending money (or planning to spend it . .. ala health care) and 2) what he is doing with our economy (i.e. inserting Government into more and more aspects of "private" industry).

By the way, if you think St. Barack isn't focused on polling numbers . . . think again. His fans don't really like to acknowledge it, but he is a politician first and foremost.

Reminder: I voted for him . . . but, I am also an Independent who is increasingly uncomfortable with what I see him doing.

Woldy

I Agree

Not suprisingly, I agree with the curmudgenly commentator about the Chrysler bankruptcy.

The actions of the Administration, inserting itself into the reorganization (what is a Car Czar anyway?) of these two large corporations, deciding who wins and who loses, sets a dangerous precedent for the future and may, in the end, do more harm that good.

Yes, it may very well be true that, as my friend JL pointed out, many of the secured creditors were hedge funds who bought their positions speculatively at less than face value. However, this fact (?) should not distract from the central, and more important, issue. To me, it is irrelevant who the secured creditors were. What happened to them matters more. The Obama Administration re-wrote private contracts between parties and re-prioritized creditors according to the priorities of the Obama Administration. Whether, or not, they did this for political reasons is up for debate. But, one can definitely be left with the impression that they did. And, that, my friends, is a very dangerous precedent indeed. That kind of behavior passes muster in Chicago, but should we allow that kind of you-scratch-my-back-I'll-scratch-yours politics to prevail at the national level?

Do we live in Putin's Russia or the (late) great U. S. of A? Can one man re-arrange the chess pieces on the board at his whim, or is he - even he - still subject to the rule of law?

Speaking of the rule of law . . . Ken Feinberg is now going to be the Czar of compensation for executives at TARP recipient companies. So, we now have a Government official deciding how much 175 people who work in the private sector can get paid . . . until, that is, the companies pay back the TARP funds they borrowed (which is why they are lining up to return the money).

I just find it so ironic that China and Russia are moving towards free markets and The U.S.A. is moving towards central planning. What's next? The Obama 5 Year Economic Plan?

Please, fellow commentators, do not respond to me with missives about how Bush did this, or Bush did that, and how terrible Bush was. Bush isn't President any longer. Obama is. And, Obama needs to stand on his own two feet, and be held accountable for what HE IS DOING. Reflections on how Obama's actions relate to what Bush did are not dispositive on whether the actions of Obama are something to endorse or reject.

Woldy

Comment from Follower

How about your thoughts on the abuse of the section 363 bankruptcy process to screw over the secured creditors to favor other unsecured creditors including the labor unions? Beyond the "takings" involved and the fact that the D's are now shoveling $ to their supporters in a backdoor fashion, how about the fact that borrowers hereafter will pay more to banks since they will have to price this added risk into their loan pricing? That's got to get you going a little??

This is the real import of the Fiat transaction. Same thing is going to happen in the GM bankruptcy case too.

Fiat and Chrysler: Shotgun Wedding

Anyone interested in an over-under bet on how many years before Fiat/Chrysler ends up in Chapter 11?

Mr. Obama Goes to Cairo

Our President is a very earnest guy and I believe that he truly does want to do good things in the World. But I found his speech today to be quite troubling.

Obama spoke eloquently today about the 60 year plight of the Palestinians. And, he left the clear impression that it was the State of Israel that was the sole cause of the plight of the Palestinians. Little history lesson: there never was a country called Palestine. Ever. And, when two Arab states, Jordan and Egypt, controlled the West Bank and Gaza for 19 years between 1948 and 1967, they did not create a state called Palestine then either (they occupied the land). Israel is but one party among many that are responsible for the plight of the Palestinians.

Going back even further, when the British Mandate proposed to split the land between the Jews and the Arabs in 1917, they divided the land into two states, separated by the Jordan River. What is now Jordan was supposed to be the Arab state and everything West of the Jordan (including what is now called the West Bank and Gaza) was to be the Jewish state. That plan languished, the Kingdom of Jordan was created, as a gift to a tribal leader who assisted the British in another conflict. And, Palestine remained a British protectorate until 1948 when the UN split what was left of the land.

The Jews said "thank you very much" and the Arabs said "no" and invaded. The rest is history (and needs more space than I have here). Flash forward to Oslo and 1993 when a peace process was started and the dynamics set in motion to result in a Palestinian state. Unfortunately, violence stopped that process and more bloodshed resulted.

Then along comes Bill Clinton and Camp David when the bluff was finally called publicly once and for all. The Palestinians were offered a solution that included having their own state, 98% of the pre-1967 land and partial control of Jerusalem. That offer was rejected by Yasir Afafat, who then plunged into the Second Intifada, which cost thousands more lives and has resulted in a decade of on-again, off-again war. The lost decade also included a unilateral pullout of Israel from Gaza, which was another test for Palestinian leadership. Now they had a chance to prove to the World that they could handle the responsibilities of governance. Instead, thousands of rockets have been fired at Israel from Gaza and the land has been turned into a wasteland. And, this, too, is all Israel's fault. No matter how irresponsible and crooked the Palestinian leadership is . . . it is Israel that is at fault.

Meanwhile, the Palestinians continued to suffer, as do the Israelis. The Palestinians want their own state. The Israelis want to live life. Israel does not want to govern the Palestinians. But, they don't want to have rockets fired at them more than they don't want to rule over the Palestinians. Until the Palestinians solve that little problem, they will not have a state of their own. No matter what our well-meaning (and naive) President would like to think.

There is one other problem with his approach to this conflict, which is that he is setting himself, and by extension us, up to fail. He likes to lecture about how diplomacy works (he's been President for what, five months?) Well, if he consults some of those diplomats he employs in Foggy Bottom, he will find out that in most successful diplomatic deals there is usually a lot of talk behind the scenes and frameworks agreed upon privately well in advance of any public proclamations about what this party or that party needs to do. This is not the approach President Obama is taking on this. He is laying out markers and drawing lines in the sand before talking is seriously undertaken.

And, the shame of it all is that the Israelis have shown a willingness to give up almost anything to get peace (the terms offered at Camp David are unthinkable today, a mere 9 years later). They really don't need to be pushed that hard. The only problem is there has never been, and still isn't, a party on the other side of the table who is equally willing, and able, to give it all away . . . in order to prevent yet another generation of Palestinians from growing up in refugee camps. Yet, sadly, at the end of the day, no matter what befalls the Palestinians . . . we all know who's fault it will be.

Woldy

Government Ownership of GM is a Bad Idea

President Obama says that the U.S. Government will be a passive investor in GM, not taking any Board seats and not interfering with the running of the company by the "car guys". Once again displaying stunning naivete, the President seems to think that by saying these words, he will somehow address the nagging concern that many Americans have over owning a piece of GM (for crying out loud, we don't even want to buy their cars, let alone own the company). As if the words, delivered by him, will convince us that the U.S. Government has the capacity to be passive owners.

Only thing is . . . didn't the President just fire the CEO of GM a month or so ago? Would that be considered the actions of a "passive" investor. Then again there is the little problem of the fact that the Government regulates the product that GM produces in significant ways (safety, fuel efficiency, to name but two important ones). How does the need to regulate GM get prioritized against the needs of the shareholders?

Oh, and by the way, what happened to the pensions, and promises of lifetime health insurance, for the over 400,000 retired GM workers? No one wants to talk about those multi-billion dollar debts. Let me guess . . . those would now be taxpayer obligations instead of obligations that get wiped out during a bankruptcy proceeding?

I am also guessing that, since we don't actually live in the Kingdom of Obama (despite the desire of some to believe we do), there is another branch of Government that has something to say about how GM is managed. That other branch has GM dealers, some GM plants (though a lot fewer now), and a lot of GM captive businesses in their districts. Does anybody reasonably expect this other branch of Government to play along as passive investors?

This is a train-wreck. The proper use of bankruptcy should have been allowed. The code was designed to help companies like GM to restructure and survive, albeit in a smaller or different form than before. What we have done instead is substitute taxpayer money for the pain that would have accompanied a "real" bankruptcy. Once again, the poor schmuck taxpayers are picking up the tab.

Feel better?

North Korea: I Have a Plan!

We have spent more than a decade trying to convince the North Koreans to give up their nuclear program, giving them billions in food aid and humanitarian assistance and engaging in multi-party talks, direct negotiations, pretty much any way they wanted to talk, we tried. We even gave them fuel oil to help get them through the cold winters.

What have we gotten in return?

Not a damn thing. They continued their clandestine program after promising to stop, even kicking out international inspectors. They threaten their neighbors, which include three of our largest trading partners (Japan, South Korea and China). They help other rogue states with their nuclear programs, further endangering the World (several N. Korean technicians were rumored to have been killed during Israel's strike on Syria's nuclear plant last year).

They are cheats, liars and scoundrels. So . . . why do we keep thinking that if only we could give them what they want, they will stop all this nonsense? Clinton did it. Bush did it. Now it looks like Obama will follow the failed policies of the last three administrations. This Chamberlain-esque foreign policy is not working. John Bolton was right. The soft approach doesn't work with these people. We need to harden our approach to North Korea.

The long term problem is that if they are allowed to continue to test ballistic missiles and develop more powerful nukes, eventually, they will pose a direct threat to the U.S. At which point, it will be too late to do anything meaningful about it without risking a nuclear missile being shot at our West Coast. We can not deter someone who has nothing to lose. Deterrence worked with the Soviets because they thought about their country, and survival, in conventional terms.

So, here's my plan: coordinated Chinese/American/Japanese naval and air blockade, coupled with economic blockade, until such time that they either start a war, in which case China and the U.S. will finish it quickly, or they give in and give up power (we may need to agree to let the leaders live in exile . . . Guantanamo Beach Resort, perhaps?) so that the North can be incorporated into the South and the dynamic on the Korean penninsula totally changes. War is the most likely outcome of a blockade, let's not kid ourselves. But better now than after they perfect a ballistic missile capable of reaching LA.

If China won't join, let's negotiate at least a standstill with them. China doesn't want American troops on their border. We may need to temporarily have U.S. troops in North Korean territory, but just until the hostilities end. After that, we won't move them any further North than Seoul and eventually (on a set timetable) out of the country altogether as the main justification for having them there would be gone (this could be the card China wants to see played).

There is no other path forward. We can not trust the North Koreans. They continue to lie, cheat and steal. We can choose to continue to play the delay game, but this works in their favor, not ours. As we wait patiently for change, they continue to export nuclear and missile technology and thumb their noses at the UN and USA. If we keep this up, eventually, they will develop a three stage missile that can reach the West Coast. Or, they will sell a nuke to a nonstate actor, which would challenge the deterrence scheme that has assured no wartime use of nuclear arms since 1945.

The time to act is now. Wouldn't it be ironic if President Obama did what Bush was unwilling to do with respect to North Korea?

Woldy

Political Update

1. Ed Liddy is Quitting.

Big surprise after the reception he received on Capitol Hill a few weeks ago. Those Congressmen, strutting, posing and wagging their fingers for the cameras, treated this accomplished businessman as if he created the problems at AIG. To the contrary. Ed Liddy graciously accepted the position of CEO of AIG at the request of the Treasury Department well after the bailouts started. Not only that, but this principled man said he would take the job, but on the condition that he be paid $1 per year to do it. And, by all accounts, he was doing a fabulous job winding down the costly positions and selling assets.

Remember, we taxpayers own 85% of AIG. And, we want the best people to help us run this company or we'll never get paid back the $180 BILLION we have extended to them (or any part of it). So, will someone please help explain how we are going to attract talented business leaders to come to this company when they saw Ed Liddy (at $1 a year) get that kind of treatment?

What planet are these people in Washington living on?

2. Trial Lawyers LOVE Obama.

They absolutely adore him. Trial lawyers will be building their next set of mansions, paying college tuition and buying new Rolls Royces for years to come because of our young President's decisions in his first few months in office. Let's take this week's news that, by executive order, President Obama directed the Federal Government to undo possibly the most constructive thing the Bush Administration did. Which was, to try to coordinate product liability issues at the Federal level, rather than force companies to attempt to follow 50 different sets of state rules.

The Bush Administration, for all its faults, did understand business needs better than Obama has so far shown. And, why is it important to understand business needs when it is the "little guy" who really needs protecting? Because in this case, you need to look a little deeper to see who really benefits from this sweeping change of the law. It ain't the little guy. It is the trial lawyers who have been stymied by this, and other regulatory changes over the past 10 years. The trial lawyers stand to benefit immensely because it is now OPEN SEASON on companies who make products for the U.S. economy. Instead of one set of rules, now there are 51 (50 states plus one federal). And, these rules are in constant motion. This has a debilitating impact on companies' ability to plan. And, if you can't plan your business, you don't spend money expanding it. Because your return on investment is cloudy, at best. So, you don't buy machinery or hire people. It really isn't any more complicated than that.

Why does all this matter? It only matters if you think that growing the economy and creating jobs is important. If you don't, then it doesn't matter. And, I don't buy for a second that this is a tradeoff between a system that wasn't working before (prove it) and now we will have regulatory nirvana by having 51 sets of rules. There was no identifiable problem, except from the viewpoint of trial lawyers, who really did not like the cap on their compensation.

Woldy