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Broken Labor

Chicago Strike Tell Us Answer is School Choice

September 14th 2012

Chicago Teachers

It says something about today's public education reality that the two sides in the teachers' union dispute in Chicago are the union and the mayor.

Allegedly, the point of schools is to educate children. But which side in this dispute has sole interest in children and their parents? The answer, of course, is neither side.

Unions are about the economic interests of the teachers. The mayor is about his budget and the economic interests of the city. No one solely represents the interests of the kids. It's not to say that the union or the mayor has no interest in the quality of education being delivered. But this is just part of their agenda. Do union members have to worry that their jobs will be gone if children don't get the best possible education? No. Does the mayor have to worry that his job will be gone or his career over if children don't get the best possible education? No. Read more ..

The New Egypt

The Proper U.S. Response to the Cairo Attack

September 14th 2012

Cairo burning US embassy

A handful of Republicans pushed Wednesday to cut off aid to Libya and Egypt. Fortunately, most Republicans and Democrats in Congress reject the idea. In Libya, the government is largely secular and pro-American. It is also weak and unable to preserve order against the many forces — from remnants of the Gaddafi era to radical Islamic militants — that challenge its authority. Cutting off support isn’t the answer. If anything, we should be increasing assistance, especially security assistance, to help Libyans make their country safer, for themselves and us.

The bigger and more important challenge is Egypt. The attacks on the U.S. Embassy in Cairo were not carried out by or at the instigation of the elected Egyptian government. As The Post’s David Ignatius rightly points out, many of the protesters who stormed the compound Tuesday oppose the current government. But that government’s failure to protect the embassy, a core international obligation, and President Mohamed Morsi’s failure to condemn the attacks are worrisome. There is also reason to be concerned about the Morsi government’s policies more generally. The record is mixed. Read more ..

The Edge of Poverty

Poverty in the Midst of Abundance: Governance Matters

September 14th 2012

Kenya Poverty

In 1990, almost 600 million people lived on less than $5 a day in resource-rich countries. Today, it is estimated that poverty has increased to about 700 million people. Among this population, close to 300 million live in dire poverty, surviving on $2 a day or less. The majority of the poor in resource-rich countries live in Africa, where 80 percent of citizens in extractive-intensive countries live on under $5 a day, and over 50 percent live on under $2 a day.

In many countries the failure to harness natural resource wealth towards national well-being is in large measure linked to a failure of national governance. Of the hundreds of millions of citizens living on under $2 a day in resource-rich nations, 85 percent live in very poorly governed countries – countries which, according to the updated Worldwide Governance Indicators (WGI), rate very poorly in corruption control and other governance dimensions.

The WGI organize and synthesize data reflecting the views and reports of tens of thousands of stakeholders worldwide, including respondents to household and firm surveys and experts from nongovernmental organizations, public sector agencies and providers of commercial business information. The newest WGI dataset being released is based on dozens of different data sources from over 30 organizations around the world, and aggregates the data from hundreds of disaggregated questions. The indicators cover over 200 countries between the mid-1990s and the present, thus also allowing observers to monitor country trends. Read more ..

The Obama Edge

Hillary Clinton and American Sensibilities

September 14th 2012

Hillary Clinton

In an effort to protect the delicate sensibilities of Egyptian rioters who invaded the American Embassy and tore down the American flag, Secretary of State Clinton accepted at face value the claim that the rioters were just so outraged and horrified by an anti-Muslim movie that they couldn't control themselves.  While rejecting violence in a pro forma way ("There is never any justification..."), she went on to apologize for her nasty countrymen and to deplore them. "We condemn the continuing efforts by misguided individuals to hurt the religious feelings of Muslims." Later, on the State Department Twitter feed, "The U.S. deplores any intentional effort to denigrate the religious beliefs of others." And, "Our commitment to religious tolerance goes back to the very beginning of our nation."

As does our Constitutional commitment to free speech, including and especially speech that offends someone.  Americans should have two words for Secretary Clinton: "Piss Christ."  If you can't make yourself say them, try "Skokie." In 1987, American Andres Serranno produced a photograph of a plastic crucifix in a glass of his own urine.  His work was funded in part by the U.S. Government's National Endowment for the Arts. Read more ..

The New Egypt

Can Egypt Be Governed?

September 13th 2012

Mohamed Morsi Speaks at Press Conference

The Obama administration is baffled by the Egyptian government's response to the Sept. 11 attack on the American embassy in Cairo. It took President Mohamed Morsi two days to denounce the assault on the embassy, and even then he placed the blame on a hitherto unnoticed clip posted on YouTube rather than on the attackers. For two days after the flag-burning, Egyptian security was absent while demonstrators threatened the embassy. "A single security vehicle was imaged making an occasional and completely feckless foray through the gathering area, during the early morning of 13 September in Cairo. No Egyptian police or military or other security personnel were present," the Nightwatch letter observed Sept. 13. The Muslim Brotherhood called for mass protests against the Youtube clip, albeit "peaceful" ones.

Morsi's behavior raises questions about Egypt's governability. On the face of it, his actions seem puzzling. Washington has done everything possible to reach out to the Muslim Brotherhood. It called loudly for Hosni Mubarak's resignation when protests erupted in early 2011. It invited Brotherhood representatives to the White House last April, before Egypt's presidential elections. It backed Morsi's August 12 cold coup against the Supreme Council of the Armed Forces and the firing of Gen. Tantawi and the old guard of the Egyptian military, and embraced Tantawi's successor Gen. El-Sisi, a Brotherhood member. Read more ..

Iran's Nukes

Iran Will Get the Bomb if You Don't Stop it Mr President

September 13th 2012

Iranian missile

So now the crisis in relations between President Obama and the state of Israel has finally blown publicly open. On the very anniversary of 9/11, the day when America learned firsthand a little of what Israel has been living through for more six decades after the enemies of civilisation set out to murder as many people as possible in New York and Washington DC order to destroy the US and the west, Obama has shown his anger at Israel’s Prime Minister Netanyahu by refusing to meet him when Netanyahu comes to the US at the end of the month to beg for decisive action to prevent a second attempted genocide of the Jews.

The reason for Obama’s ire? Netanyahu made a desperate statement earlier today which sharply -- if obliquely -- called the President to account. The reason for his desperation was that, after Israel had all but said it would refrain from attacking Iran’s nuclear plants if only the President would draw a‘red line’ in negotiations by threatening force if they failed, Obama had refused on the risible grounds that, according to Hillary Clinton, negotiations were ‘ the best approach.’ Read more ..

The Race for Natural Gas

Hydraulic Fracturing: Critical for Energy Production, Jobs, and Economic Growth

September 13th 2012

Fracking gas well

While Americans continue to be disappointed by dismal jobs reports and a high unemployment rate, one of the few recent bright spots in the U.S. economy has been energy production, particularly the shale oil and shale gas revolution. In fact, the Yale Graduates Energy Study Group calculated that in 2010 alone, the consumer surplus (the consumer savings or gain from reductions in price) from shale gas production was worth over $100 billion. The technological one-two punch of horizontal drilling and hydraulic fracturing has created a remarkable energy boom and created hundreds of thousands of jobs in the U.S. The possibility of continuously low natural gas prices is turning the United States into a prime destination for chemical companies and other businesses that rely on abundant amounts of natural gas. While the energy development has been substantially positive, the process of hydraulic fracturing has come under scrutiny over concerns about contamination of drinking water, the use of chemicals, wastewater management, and the potential for causing earthquakes. Read more ..

The Edge of Terrorism

Will the Financial Markets be the Perfect Storm for Terrorists?

September 13th 2012

Frantic Wall Street denizen

Successive U.S. administrations’ failure to stop al-Qaida helped facilitate the 9/11 attacks. Targeting the World Trade Center, the symbol of U.S. financial might, bin Laden intended to destroy the U.S. financial markets and its economy. He failed. The markets survived.

However, bin Laden’s and other Islamists’ calls to destroy the U.S. economy, along with rapidly evolving technology, left the financial markets vulnerable. Over the past 11 years, the U.S. failed to prepare for another major war – one that is already under way, yet rarely recognized: financial and economic warfare.

Cyber attacks have been the focus for some time. Between October 2011 and February 2012, more than 500,000 cyber attacks on U.S. government and private industry, including 86 attacks on “critical infrastructure networks,” were detected. However, a July 2012 report by the Bi-Partisan Task Force, headed by Gen. Michael Hayden, concluded that these represented “a small fraction of ‘virtual, network type’ attacks against the U.S.” Read more ..

The New Middle East

Living in the Twilight Zone

September 13th 2012

Cairo embassy protest Sep 2012

What does it feel like to be surrounded by countries intent on wiping you off the face of the map? How do you cope with daily incitement of hate, challenges to your legitimacy, threats of boycotts, slanderous accusations and the attitude of fair weather friends? Imagine how it feels to be an Israeli tourist in a foreign land, knowing that lurking somewhere out there are groups of Islamic terrorists waiting, plotting and planning to target you and your family. What historical memories flash through your mind when you are advised that when walking through the streets of Europe you should not speak Hebrew and wear clothing identifying you as Israeli or Jewish? Do you have any idea what horrendous thoughts resurface when Holocaust survivors hear the air raid sirens sounding for a drill and what nightmares resurface when they are fitted with gas masks and anti chemical kits?

These questions and many more are in the forefront of my mind these days as we dwell in some sort of twilight zone between normality and potential chaos. As Iran races to the nuclear weapons finishing line, unhindered and undeterred by half hearted sanctions, its leaders continue to pour forth venomous poison against the Jewish State. Iran’s surrogates in Gaza, Lebanon and Syria, witnessing the USA Government’s extreme reluctance to take any meaningful action to deal with either the genocidal plans of Iran or the genocidal terror in Syria, are busy making their own threats against Israel, crystal clear. Taking their lead from a US President who would rather pontificate than act, the EU follows suit and instead concentrates its energies on trying to initiate boycotts of products from Judea, Samaria, the Golan and half of Jerusalem. The cynical hypocrisy of Russia and China elicits a collective yawn and the forthcoming UN General Assembly circus gears up for yet another bash Israel festival. Read more ..

The New Middle East

Is the Middle East Better Off Than Two Years Ago?

September 12th 2012

Libyan rioters at US consulate Sep 2012 #2

Our embassies in Libya and Egypt have been ruthlessly stormed--on the 11th anniversary of 9/11, no less. Four Americans, including the U.S. Ambassador to Libya, are dead, victims of what appears to be not some spontaneous protest but a well-coordinated, pre-meditated assassination by Islamic terrorists. Ambassador Chris Stevens' body was dragged through the streets of Benghazi following the attack--although some reports suggest the men dragging him were taking him to the hospital for help and not partaking in a triumphal repeat of Mogadishu '93 or Fallujah '04. That--and the circumstances surrounding Stevens' death--remain unclear as I write this. What is certain, however, is that the Obama administration's immediate, reflexive response was not to condemn the jihadists who perpetrated these vile acts but to castigate the filmmaker who supposedly incited them and preach about limits on free speech when it comes to Islam. Read more ..

The 2012 Vote

High Stakes in Chicago

September 12th 2012

Teachers Strike
Credit: Chicago Teachers Union Local 1

Each year, the Chicago Public Schools system (CPS) spends over $13,000 per student in order to graduate 60 percent of its 400,000 students. In an attempt at reform, Mayor Rahm Emanuel has pushed to increase teacher accountability and extend the system’s school day, which at 5 hours and 45 minutes is currently the shortest of any city in the country. The Chicago Teachers Union (CTU) has responded with a tantrum and on Monday launched a strike that’s capturing election-season headlines.

The dispute has national import because its outcome will have national implications. The mayor, President Obama’s salty-tongued former chief of staff, is challenging the CTU to accept the same kinds of reforms that the president has championed, and the contretemps has highlighted the tension between teachers’ unions and Democratic reformers.

Unlike the many mayors, school boards, and superintendents who have folded at the first sign of union displeasure, Emanuel has stood tall. Even though this has meant possibly dragging the president into a nasty intraparty battle, Emanuel has sought to do right by Chicago’s students and taxpayers. Good for him. Read more ..

The Battle for Syria

Syria, Human Rights and the United Nations

September 11th 2012


As the world's leaders head to New York for their annual gathering at the United Nations General Assembly, much of the world's attention will be focused on the bloodletting in Syria and the ongoing stalemate that has prevented the world body from taking collective action. While Lakhdar Brahimi's mission on behalf of the U.N. Security Council and the Arab League to facilitate peace is admirable, he inherits a mandate that utterly failed, and conditions for peace have only gotten worse.

Despite the Assad regime's efforts to block and manipulate information about the conflict, we have reliable information that tells us he will go to the mat to outlast his opponents, both armed and unarmed. From the stream of refugees crossing borders into Turkey and Jordan, brave journalists who are risking their lives on the frontlines, everyday citizens armed with nothing more than a cellphone and a Skype connection, and U.N. monitors deployed to the field, the evidence is clear that civil war has been declared, and civilians are caught on the crossfire. The outcome of that war, it appears, will depend on which side is able to force a settlement that results in either the departure of Assad, or his retention of power for years to come. Hopes are dim, however, that the U.N. Security Council will do much given the continued intransigence of Russia and China and ambivalence of rising democracies like Brazil and India. Read more ..

Islam's War Against Christianity

The Egyptian Muslim Brotherhood And The Christian Copts

September 11th 2012

Coptic Girl

"Even the Western world realizes that Western civilization is unable to present any healthy values for the guidance of mankind."   Sayid Qutb, Islamist ideologue and Muslim Brother, "Milestones", 1960.

Without fanfare, on 8 September a delegation from the U.S. Embassy in Cairo met with mufti Abdel Rahman al-Barr, a senior member of the Muslim  Brotherhood Guidance Bureau. From an interview with the mufti they sought to ascertain the Ikhwan al-Muslimun's views on minority rights, specifically as they relate to Egypt's Coptic Christians.

According to an Ikhwan account reported in a Cairo media outlet, the U.S. delegation sought clarification of the "rights of Copts in Egypt."  Reportedly, of particular concern was the Coptic community's growing belief that Ikhwan rule would be so calamitous that there are "calls to migrate from the country to escape the Brotherhood."  In response, al-Barr discussed  (apparently in general terms) the rights of Christians and Jews, "and how the Brotherhood will determine these rights [in the aftermath of]  the 25 January  revolution." Read more ..

Remembering 9/11

Years After 9/11, U.S. Bound Cargo Remains Vulnerable to Terrorists

September 11th 2012

Twin towers burning

It's been eleven years since Islamic terrorists attacked the U.S. on Sept. 11, 2001, yet the agency created to protect the nation from another strike is still asleep at the wheel, failing to adequately screen the enormous amount of cargo that enters the country each day, according to a government report. "Cargo containers that are part of the global supply chain — the flow of goods from manufacturers to retailers — are vulnerable to threats from terrorists [including weapons of mass destruction]," state the government analysts who assembled data for a congressional report.

It may seem unbelievable to most Americans that eleven years after the worst terrorist attack in U.S. history, the vast majority of cargo containers entering the U.S. go unchecked. Incredibly, it's true and the alarming details are outlined in the GAO report published by the Government Accountability Office (GAO), the investigative arm of the U.S. Congress. Unfortunately, no one in the Obama administration has addressed the GAO recommendations. Read more ..

Obama and Israel

Relying on U.S. Intelligence

September 10th 2012

Barack Obama Israel speech

Jerusalem and the resettlement of Palestinian refugees disappeared from the Democratic Party platform; language that characterized Hamas as unacceptable to the United States -- not only to Israel -- disappeared. Jerusalem is back. But the crucial part of the Democratic Party Platform for Israel is related only tangentially to Israel. It is about Iran:

(The) window for diplomacy will not remain open indefinitely and that all options -- including military force -- remain on the table. But we have an obligation to use the time and space that exists now to put increasing pressure on the Iranian regime...

The crucial questions are:
• How much time and how much space exist before the window slams on our fingers?
• What is the U.S. track record on recognizing, assessing and timing an emerging threat?
•  What is the consequence to us and to others if we miss?

The answers are not comforting. There were important intelligence misses -- Pearl Harbor, the 9-11 attack, Saddam's WMD, the outbreak of the Korean War, the third stage of North Korea's rocket capability, and the Russian atomic bomb among them. We knew about India's nuclear program, yet were surprised by the 1998 Indian nuclear weapons test, followed by a surprise Pakistani test emerging from a program we had been watching. Read more ..

The 2012 Vote

We Can and Must Spend More on Military

September 10th 2012

Stennis B

With his acceptance speech this evening, President Obama has affirmed that this is a “choice” election, not a referendum on whether things are better or worse for Americans than they were for years ago, but whether we’ll be better off four years from now.

For most voters, that’s a question about the economy, or domestic affairs more broadly.  But it’s also a profound question about what role the United States will play in the world and, in particular, whether we will retain sufficient military power to sustain what remains – by any historical standard – a remarkably peaceful, prosperous and free world. Conventional wisdom in Washington has it that we are now in an “Age of Austerity” – at least when it comes to defense budgets – as though it were a geological fact rather than a political choice.

To be sure, the federal government’s finances are a mess.  But what’s destroying the balance sheet is the growth of entitlements and other forms of “mandatory” spending, not military spending.  The facts are that the Pentagon consumes about 20 percent of federal spending and less than 5 percent of gross domestic product; mandatory spending is about 60 percent of federal spending and getting close to 15 percent of GDP.  Thanks to slow economic growth and us aging Baby Boomers, those pie-slices are getting ever bigger.  The current defense budget debate is an example of looking through the wrong end of the telescope. Read more ..

The Edge of Terrorism

A Stubborn Terror

September 10th 2012

al Qaeda Fighters

Eleven years after 9/11, al Qaeda is fighting back. Despite a focused and concerted American-led global effort—despite the blows inflicted on it by drones, SEALS, and spies—the terror group is thriving in the Arab world, thanks to the revolutions that swept across it in the last 18 months. And the group remains intent on striking inside America and Europe.

The al Qaeda core in Pakistan has suffered the most from the vigorous blows orchestrated by the Obama administration. The loss of Osama bin Laden eliminated its most charismatic leader, and the drones have killed many of his most able lieutenants. But even with all these blows, bin Laden’s successor, Ayman al-Zawahiri, is still orchestrating a global terror network and communicating with its followers. Most importantly, al Qaeda’s allies in Pakistan, the Taliban and Lashkar-e-Taiba, which attacked Mumbai in 2008, are under no pressure. They continue to enjoy the patronage of the Pakistani intelligence services. Lashkar-e-Taiba has a global network with cells in America, England, and the Persian Gulf. Just this summer, the Saudis arrested a key Lashkar operator planning a new mass-casualty attack and extradited him to India. Read more ..

The 2012 Vote

Former Actress and Michigan Governor Granholm's Masterpiece Performance

September 10th 2012

Jennifer Granholm
Jennifer Granholm at DNC.

Former Michigan Governor Jennifer Granholm never met a stage she didn’t like. But she might have finally landed on one that got the best of her.

In a wild and rambling speech Thursday night at the Democratic National Convention, Granholm winked and swayed and waved her way through a series of statements that excited an audience of loyalists but was short on facts.

We can forgive DNC organizers for introducing her as the “governor of Michigan” and even bypass the Canadian and former governor’s amnesia about her lineage when she claimed she was “from the great state of Michigan.” Those are just nuances built in to a speech to help establish some connection with the people in the cheap seats. Read more ..

The 2012 Vote

First Lady Shows the Way

September 9th 2012

Michelle Obama

After her genuine, moving and powerful speech at the Democratic National Convention, I propose that Michelle Obama is the first lady of the nation, the first mom of her loving family, a bonus military mom for every man and woman who serves our country and one strong heir to the Ronald Reagan title of Great Communicator.

During the Republican convention, I wrote on The Hill’s Pundits Blog that Ann Romney, like Michelle Obama a wonderful woman who does great good for her man and her family, hit a home run. At the Democratic convention, the first lady hit a grand slam for a nation searching for the wisest road to a better future and a party seeking the confidence of a nation that has lost faith in the politics of our times.

The first lady spoke with a sincerity and substance that was picture-perfect for America today. She painted a portrait of a loving and devoted family. She sang a song about the spirit of a nation in which the dream must remain alive for everyone, always. She composed a symphony that weaved together the high purpose of her husband the president, a real-life description of the middle-class lives so many Americans lead and the real-time agenda of a Democratic president asking voters to grant him another term to finish his work. Read more ..

The 2012 Vote

The Fading Poster of Professor Obama

September 9th 2012

Obama Crowd

President Obama spoke in three college towns last week: Ames, Iowa, Fort Collins, Colorado, and Charlottesville, Virginia,. In his nomination acceptance speech, Congressman Paul Ryan described the recent college graduate, unemployed, living at home, looking at the faded poster of then Senator Obama from the 2008 election on his wall. I don't know who is more foolish: college students coming to hear President Obama and applauding him when their siblings who are college graduates are sitting at home doing nothing, or President Obama trying to sell his record to college students. The President made much the same pitch of about 30 minutes at all three stops. Notably, he took no questions. We can only imagine what bright, objective, student editors might have asked him. Read more ..

The Clinton Edge

Hillary Clinton Would Leave Void if She Opts Out of 2016

September 8th 2012

Hilary Clinton

Hillary Clinton has not missed a Democratic convention since 1968 and her conspicuous absence this year left some Democrats wondering who would fill her shoes if she skips a presidential run in 2016.

If Clinton retires from public service, Democrats say Secretary of Health and Human Services Kathleen Sebelius, Secretary of Homeland Security Janet Napolitano and Sens. Kirsten Gillibrand (D-N.Y.) and Amy Klobuchar (D-Minn.) are considered potential successors.

Democratic National Committee Chairwoman Debbie Wasserman Schultz, a Democratic congresswoman from Florida, and Kamala Harris, California’s attorney general, who addressed the convention, also receive mentions. But there is no obvious front-runner to become the first female Democratic nominee for president in the foreseeable future.

“It’s hard to predict right now. There are women who are outstanding members of the Senate, outstanding members of the House. Clearly Elizabeth Warren if she’s elected to the Senate is someone who will have nationwide notoriety,” said former Rep. Martin Frost (D-Texas), a one-time member of the House Democratic leadership.

University of Virginia political scientist Larry Sabato describes the Democratic Party as the “mommy party” and the GOP as the “daddy party." More women than men have identified themselves as Democrats since at least 1983, according to the Center for the American Women and Politics at Rutgers University. In 2008, 56 percent of female voters backed Barack Obama for the presidency.

Some Democrats are impatient for a woman to occupy the Oval Office. “I would like to see a woman president, absolutely, and as soon as possible,” said Rep. Rosa DeLauro (D-Conn.). Aside from Nancy Pelosi’s (D-Calif.) four-year reign as House Speaker, Clinton has been the most prominent female leader of the Democratic Party for the past 20 years. Read more ..

The Battle for Syria

Only Bombing Assad's Forces will Stop the Slaughter Now

September 8th 2012

Syrian Missiles

President Bashar al-Assad continues to exploit the international community's propensity to turn a blind eye to the escalation in Syria, which now results in the murder of hundreds of innocent civilians each week. Thus in order to avoid a Syrian civil war, Western resolve to use its leverage beyond the weak condemnations, publicised summits, and ineffectual initiatives of the past months is likely to be tested.

Indeed, examination indicates that six arguments propounded by opponents of Western military intervention do not hold much water, and instead suggests that Western inaction is likely to hasten the very scenario that opponents of military intervention seek to avoid.

First, Syria need not become "another Iraq". Those who resist intervention warn that military intervention might end in the West becoming mired in another Muslim country, on the heels of the unsuccessful Afghan and Iraqi experiences. This argument belittles the West's successful experience in Kosovo 20 years ago and in Libya in 2011, where intensive airpower removed Gaddafi, stopped the bloodbath, and enabled democratic elections.


The US and Latin America

The Importance of the War of Ideas in Latin America

September 8th 2012

obama and chavez

As anti-American feelings are being cultivated in large parts of Latin America, not much attention is being paid to the potential consequences that this may eventually have. Propaganda is easy to dismiss as nonsense. But propaganda can unfortunately work. It is sometimes easy for those who are better informed to disregard propaganda as being the work of fanatics whose discourse is so ridiculous that nobody in his right mind would take it seriously. Yet the effects of propaganda are manifold. Often information that distorts reality can have harmful repercussions. This is because when something is repeated so many times, there is always the risk that such lies might perpetuate themselves. Since many governments in the region are left-wing regardless of whether they are extreme or moderate, anti-American prejudice is omnipresent. Many on the left believe in the theory of dependency, a notion that views economic development among advanced countries as being made possible by the exploitation of raw materials in the Third World. As the theory goes it is a zero-sum game where Third World countries, including those in Latin America, have always been the losers. Read more ..

The New Egypt

Egypt's Provocative and Dangerous Remilitarizationof the Sinai

September 7th 2012

Egyptian Tank in Sinai

Egypt has sent tanks into Sinai in gross violation of the peace treaty. And so far, the world is letting Cairo get away with it.

When Egyptian President Mohammed Morsi was first elected, Israel worried that he might seek to revise the Israeli-Egyptian peace agreement. After all, senior members of his Muslim Brotherhood party had threatened repeatedly to "review" it during the parliamentary and the presidential campaigns. Yet this idea always had a serious drawback from Morsi's perspective: It would require negotiating with Israel, a state the Muslim Brotherhood doesn't recognize and whose very name it refuses to utter. But it now seems Morsi has found a way around this problem: Instead of renegotiating the treaty, he simply moved troops into Sinai in gross violation of its central provision, demilitarization. It's exactly the tactic Hitler used to remilitarize the Rhineland in 1936: Move in the troops, and dare the world to do anything about it. And so far, it seems to be working just as well. Read more ..

The Economy on Edge

Let Banks Trade Securities

September 7th 2012

I Bailed Out a Bank

Sandy Weill's switch in time—calling for the reinstatement of the Glass- Steagall Act—again raises the question whether eliminating the trading activities of banking organizations would make banks safer and more likely to write good old-fashioned loans.

This is the view of the lawmakers who backed the Volcker Rule in the Dodd-Frank Act barring banks from trading securities for their own accounts. Will the Volcker Rule or reinstatement of Glass-Steagall reduce the risks of banking organizations or induce them to make more loans? The answer to both these questions is no.

The idea that banking organizations can be profitable solely or principally as lenders, or that this would be good for them or the U.S. economy, is based on a vision of the economy and the capital markets that no longer exists. As former Senator Phil Gramm once said, if you want your grandfather's banks, you'll have to restore your grandfather's economy. Read more ..

The 2012 Vote

Democrats Making Hard Sell to Latino Voters

September 7th 2012


Conventions are all about sending a message.

The 2012 Democratic convention’s chairman is Los Angeles Mayor Antonio Villaraigosa. Its keynote speaker – and breakout star – is San Antonio Mayor Julian Castro. Latino, black and white speakers have mentioned that President Obama appointed the first Hispanic justice to the United States Supreme Court, Sonia Sotomayor. The two Latinos in the Obama cabinet have addressed the convention, Labor Secretary Hilda Solis and Interior Secretary Ken Salazar.

And Rep. Luiz Gutierrez (D-Ill.), who pushed the president to stop deporting young Hispanics who came here as children, also had a prime spot on the convention stage. As the Democrats leave Charlotte, this convention’s message is clear – President Obama wants and needs to energize Latino turnout to win this fall. An August poll taken by NBC News, The Wall Street Journal and Telemundo found Latinos prefer President Obama over Mitt Romney by 35 points, 63 to 28 percent. But 14 percent of Hispanic voters remain undecided, according to a new Zogby poll. Read more ..

Obama and Israel

The End of U.S.-Israel Strategic Cooperation?

September 6th 2012

Obama and Israel

"I don't want to be complicit if they (Israelis) choose to do it (attack Iran's nuclear program)," said Joint Chiefs Chairman Martin Dempsey.

News flash, General Dempsey: You are complicit in the way that counts; you are trapped: the Iranian leadership does not care what we say -- or what we do -- about our military relations with Israel. The Iranian leadership needs the U.S. as its adversary and will not allow you deniability. If there is a strike on Iran, they will need for it to have been the U.S. – will need, General Dempsey, for it to have been you.

It is unlikely, General, that you spoke on your own hook as you are still wearing your stars. The last General who spoke to journalists out of turn and out of the country was Stanley McChrystal – and he lasted only as long as it took to arrive in the Oval Office. Your Commander in Chief appears to have used you to hammer another nail in the coffin of a relationship that had, until he got here, been remarkably productive for more than 30 years. Read more ..

The Economy on Edge

Don’t Repeal Dodd-Frank, but Don’t Crush the Banks Either

September 6th 2012

Financial reform now protest

In the clamor of election rhetoric it is hard to make clear-headed judgments about what should be done to promote stronger economic growth and more jobs. One piece of the recovery puzzle is to make sure the financial sector can do its job. Political slogans calling for the repeal of the Dodd-Frank financial reform make no sense.

First, that is not going to happen when a few senators can block either new legislation or the repeal of existing legislation. Second, after the massive financial crisis, reforms to restrain excessive risk-taking were essential and Dodd-Frank made a good start on those reforms. At the same time, efforts to blame the entire crisis and the continuing slow economy on Wall Street are equally foolish. And the way the Dodd-Frank rules are being implemented threatens to hold back new lending. Some on the left, and even a few on the right, are calling for the break up of the big banks, under the illusion this huge disruption would help us get through the economic slump. Read more ..

Obama and Israel

Conventions Produce Unconventional Insights Into Parties’ Changing Views on Israel and Islam

September 6th 2012

Obama and flags

National party conventions produce balloons, hot air and many  conventional wisdoms, but this year, the conventions highlighted the changing way Republicans and Democrats treat Jews, Israel, Muslims and Islamic extremism.

Republicans stressed support for Israel and Jerusalem as its capital, but the Democrats removed platform language backing Jerusalem as the capital, and a Democratic leader spurred a fight with Israel’s US ambassador when she claimed that the ambassador said he viewed Republicans as dangerous to Israel.

“I categorically deny that I ever characterized Republican policies as harmful to Israel,” declared Ambassador Michael Oren, responding to claims from Rep. Debbie Wasserman-Schultz, the Democratic National Committee (DNC) Chairwoman.

“Bipartisan support is a paramount national interest for Israel, and we have great friends on both sides of the aisle,” Dr. Oren said, but the tone at both conventions seemed to suggest that the traditional stance of both parties has changed.

For many years, few Jews felt comfortable with the GOP, but this year, the Republicans opened with a prayer by an Orthodox rabbi and closed with a prayer by a Catholic cardinal, symbolizing the “Judaeo-Christian ethic” that has been declaimed repeatedly by the GOP.

Meanwhile, the Muslim profile at the Democratic National Convention (DNC) has been raised in many ways, The Council on American-Islamic Relations (CAIR) reported that this year’s DNC was hosting  a record number of American Muslim delegates representing some 20 states. Read more ..

Obama and Israel

General Dempsey's Remarks Should Not Come as a Surprise

September 5th 2012

General Martin Dempsey

With his most recent comments in London last week, Gen. Martin Dempsey, Chairman of the U.S. Joint Chiefs of Staff, put a greater distance between the United States and Israel over a potential attack against Iran. "I don't want to be complicit if they [Israel] choose to do it," Dempsey said, thereby clearly indicating that the differences between the Obama administration and the Netanyahu government surpass the previously declared red lines.

If the strategic goal remains prevention and not containment of Iran's nuclear weapons program, then Gen. Dempsey's remarks hampered this objective. They notified the world that the United States and Israel are not united on this front. Read more ..

The 2012 Vote

Obama Hobbled by Record, Slumping Democratic Brand

September 5th 2012

Obama Pentagon

"One question, Mr President," read the words on the front cover of this week's Economist, behind a silhouette of the back of Barack Obama's head, "just what would you do with another four years?"

It's a good question, and one that's still open as Barack Obama prepares to deliver his acceptance speech at the Democratic National Convention in rainstorm-plagued Charlotte, N.C., on Thursday night.

Other presidents seeking re-election have usually provided a more or less convincing answer. George W. Bush said he would try to reform Social Security and advance energy independence.

Bill Clinton said he would provide "a bridge to the 21st century," which turned out to include significant tax cuts and a lunge toward Medicare reform. Bush failed to deliver on Social Security and Clinton failed to deliver on Medicare, but both tried to pivot from a first-term to a second-term agenda. The first George Bush, in contrast, didn't seem to pivot. He gave the impression he'd just keep going on. That wasn't good enough for voters. Read more ..

South Africa on Edge

Desmond Tutu and Tony Blair--Another Outburst

September 5th 2012

Click to select Image
Archbishop Desmond Tutu

Archbishop Desmond Tutu has pulled out of a speaking engagement in Johannesburg because he refuses to speak alongside Tony Blair.

Explaining his decision, Tutu says Blair and George W Bush should face trial at the International Criminal Court in The Hague over the Iraq war. Blair can consider Tutu’s snub a badge of honour.

After all, Tutu has some very colourful views about international affairs. He has made sinister and inaccurate insinuations about a “Jewish lobby” in America. He has frequently compared Israel to apartheid South Africa, and argued that Zionism has “very many parallels with racism”. Tutu has also urged the Jewish people to “pray for” the Nazis, and is a subscriber to the obscene ‘they of all people’ argument. So I doubt Blair, who has brilliantly responded to Tutu’s outburst, will lose much sleep over this. Indeed, one wonders what is really going on here. Tutu agreed to speak with Blair, accepted the fee, and signed-off promotional posters featuring him with the former PM. Read more ..

America on Edge

Are Entitlements Corrupting Us?

September 4th 2012

Bundles of Cash

The American republic has endured for well over two centuries, but over the past 50 years, the apparatus of American governance has undergone a radical transformation. In some basic respects—its scale, its preoccupations, even many of its purposes—the U.S. government today would be scarcely recognizable to Franklin D. Roosevelt, much less to Abraham Lincoln or Thomas Jefferson.

What is monumentally new about the American state today is the vast empire of entitlement payments that it protects, manages and finances. Within living memory, the federal government has become an entitlements machine. As a day-to-day operation, it devotes more attention and resources to the public transfer of money, goods and services to individual citizens than to any other objective, spending more than for all other ends combined.

The growth of entitlement payments over the past half-century has been breathtaking. In 1960, U.S. government transfers to individuals totaled about $24 billion in current dollars, according to the Bureau of Economic Analysis. By 2010 that total was almost 100 times as large. Even after adjusting for inflation and population growth, entitlement transfers to individuals have grown 727 percentover the past half-century, rising at an average rate of about 4 percent a year. Read more ..

The Economy on Edge

The Underfunding of Corporate Pension Plans

September 4th 2012

Elderly couple

The current low level of interest rates poses a big challenge to pension plans with benefits guaranteed by their corporate sponsors. These pension plans have a difficult time earning a decent return from high-quality bonds with relatively low risk.

In response, Congress has recently revised the rules for calculating the obligations of corporate pension plans. But these revised rules allow corporate pension plans to assume that they will earn unrealistically high returns. As a result, many corporate sponsors will not contribute enough to meet their likely benefit obligations to retirees. The key to calculating a pension plan's obligations is the "discount rate." Actuaries estimate a plan's long-term benefit obligations by studying its benefit schedule and projecting the life span of its workforce. Then they reduce this amount by the discount rate -- the returns that the plan can reliably earn on its investments from the present to the times at which it must pay out benefits to retirees. Read more ..

Borken Healthcare

The Illusory Promise of Free-market Health care Miracles

September 4th 2012


While listening to the promises to repeal ObamaCare during the Republican National Convention, I was reminded of what those of us in the health insurance industry said when our friends in Congress were able to block passage of President Clinton’s health care reform legislation 18 years ago.

Like the politicians in Tampa, we insisted then that a big government program not only wasn’t needed, but would be harmful — that what the government really needed to do was get out of the way and let the free market work. Insurance company spokesmen like me assured the public that our then-novel managed care plans, coupled with the invisible hand of the market, would do the trick. Leave it to us, we said, and we’ll get medical costs under control and enroll every American in a good HMO.


The Economy on Edge

Bernanke’s No-Win Position in Jackson Hole

September 3rd 2012

Bernanke headache

Virtually all spectators to Bernanke's Jackson Hole speech will probably be disappointed, as Bernanke sits in a no-win position. Faced with sluggish economic growth, a strong desire exists for the chairman to announce a third round of quantitative easing at Jackson Hole, which is unlikely given the Fed's recent comments and fresh, positive financial data. Yet, the short-term rally is clearly not enough to cause the Fed to reverse its unprecedented accommodative stance.

The Fed Open Market Committee gave an uncharacteristically candid glimpse of its thought process following its August meeting, indicating that, given the continued tepid expansion of the U.S. economy, "additional monetary accommodation would likely be warranted fairly soon." This hint at more QE has proven that words can do a lot, as markets rallied through August, but not everyone likes this prospect.

Brazil on Edge

Brazil’s Chaotic Transportation Systems at Stake

September 3rd 2012

Broken Road

On July 27, a violent truck drivers’ strike occurred in the Brazilian state of Rio Grande do Sul, which eventually encompassed Brazil’s entire trucking industry. Among other issues, they were protesting the National Agency of Terrestrial Transports’ (ANTT) new highway safety regulations. On the same day, the agency issued measures concerning a significant 2.87 percent price increase in highway tolls. Both controversial decisions reflect not only a strained road infrastructure, but also an urgent need for profound structural improvement in the country’s highway system. The lack of coherence in the region’s trucking industry derives from deep-rooted inadequacies and a lack of government investment. Since 1980, Brazil has witnessed a steady decrease in its public transportation investment, now at only 0.7 percent of its 2010 GDP. The dearth of appropriate planning and a complex regulatory environment have only amplified this problem. Read more ..

Israel on Edge

The Futility of Relying on the International Community

September 3rd 2012

Western/Wailing Wall

Over 120 countries – equating to two thirds of total United Nations membership – convened in Teheran to partake in the 16th Summit of the Non-Aligned Movement (NAM) hosted by the Iranian Islamic Republic.

The Iranians boasted that 3 Kings, 27 presidents, 8 Prime Ministers and 50 Foreign Ministers attended. Egypt’s President Mohamed Morsy was present, breaching Egypt’s long standing estrangement from Iran which he now describes as “a strategic ally”, even though he condemned Assad’s regime in Syria. India, the world’s most populous democracy, participated with a delegation of 250 headed by Prime Minister Manmohan Singh, stating shamelessly that its objective was to increase trade and commerce with Iran. Despite appeals from the United States and others, UN Secretary-General, Ban Ki-moon, also attended. He did so only days after his condemnation of Iran for defying repeated Security Council resolutions demanding that it end its uranium enrichment program and repeatedly contravening the UN Charter by calling for the destruction of Israel. Read more ..

The 2012 Vote

Correcting Reality

September 1st 2012

Paul Ryan

In 2004, Arnold Schwarzenegger — then a popular figure in the Republican party — gave an exciting, upbeat, and surprisingly funny speech at the GOP convention. He covered a lot of territory: how he came to America, how he became a Republican after listening to Richard Nixon, and other highlights of his life story.

Afterwards, then–CBS News anchor Dan Rather reported that Schwarzenegger “slapped John Kerry around like a hockey puck.” The only problem: Schwarzenegger never mentioned John Kerry, not even once. I bring it up because it’s hardly news that much of the press likes to report the convention as they want it to be rather than as it is. Read more ..

The Battle for Syria

Al Qaeda in Syria: Jihadists Use Chaos in Arab Awakening

September 1st 2012

Ayman Al-Zawahiri (al Q #2)

The Syrian civil war has dramatically demonstrated both al Qaeda’s ability to exploit failing states to its advantage and the continued relevance of the al Qaeda core leadership 11 years after 9/11. The jihadist movement has found new life in the Arab awakening and is striking back from adversity, once again.

This February Ayman al-Zawahiri, the Egyptian who succeeded Osama bin Laden as the emir of al Qaeda, addressed the “lions of Syria” in an audio message from his hideout in Pakistan. He urged the Sunni Arab opponents of Bashar al-Assad to rely on al Qaeda for help and not to trust “the failed states of the Arab League, the West, or Turkey.”

Zawahiri urged jihadists from across the Islamic world to go to Syria to fight Assad’s Alawite minority, which he called “corruption.” In the six months since Zawahiri’s message, hundreds of jihadists have gone to Syria to fight. What began as peaceful protests have turned to suicide bombings and multiple simultaneous attacks — the violent fingerprints of al Qaeda since 1998. Read more ..

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