Thursday, August 23, 2012

The Chinese Economy Appears to Be Crashing

China seems to be having a very hard landing.  Also, the Chinese government seems to have resorted to simply not reporting statistics that it finds too troublesome to manipulate (h/t ZeroHedge):

The severity of China's inventory overhang has been carefully masked by the blocking or adjusting of economic data by the Chinese government — all part of an effort to prop up confidence in the economy among business managers and investors.

But the main nongovernment survey of manufacturers in China showed on Thursday that inventories of finished goods rose much faster in August than in any month since the survey began in April 2004. The previous record for rising inventories, according to the HSBC/Markit survey, had been set in June. May and July also showed increases.

"Across the manufacturing industries we look at, people were expecting more sales over the summer and it just didn't happen," said Anne Stevenson-Yang, the research director for J Capital Research, an economic analysis firm in Hong Kong. With inventories extremely high and factories now cutting production, she added, "Things are kind of crawling to a halt."


Chinese export growth, a mainstay of the economy for the last three decades, has slowed to a crawl. Imports have also practically stopped growing, particularly for raw materials like iron ore for steel making, as industrialists have lost confidence that they will be able to sell if they keep factories running. Real estate prices have slid sharply, although there have been hints that they might have bottomed out in July, and money has been leaving the country through a variety of legal and illegal channels.

Interviews with business owners and managers across a wide range of Chinese industries presented a picture of mounting stockpiles of unsold goods.

Business owners who manufacture or distribute products as varied as dehumidifiers, plastic tubing for ventilation systems, solar panels, bedsheets and steel beams for false ceilings said that sales had fallen over the last year and showed little sign of recovering.

"Sales are down 50 percent from last year, and inventory is piled high," said To Liangjian, the owner of a wholesale company distributing picture frames and cups, as he paused while playing online poker in his deserted storefront here in southeastern China.

Wu Weiqing, the manager of a faucet and sink wholesaler, said that his sales had dropped 30 percent in the last year and he has piled up extra merchandise. Yet the factory supplying him is still cranking out shiny kitchen fixtures at a fast pace.

"My supplier's inventory is huge because he cannot cut production — he doesn't want to miss out on sales when the demand comes back," he said.


"Inventory levels for us now are very, very high," said Huang Yi, the chairman of Zhongsheng Group, China's fifth-largest dealership chain. "If I hadn't done special offers in the first half of this year, my inventory would be even higher."

Manufacturers have largely refused to cut production, and are putting heavy pressure on dealers to accept delivery of cars under their franchise agreements even though many dealers are struggling to find places to park them or ways to finance their swelling inventories.


The Public Security Bureau, for example, has halted the release of data about slumping car registrations. Data on the steel sector has been repeatedly revised this year after a new methodology showed a steeper downturn than the government had acknowledged. And while rows of empty apartment buildings line highways outside major cities all over China, the government has not released information about the number of empty apartments since 2008, according to a report last Friday.

Obama's and Romney's Talking Points

From the great Michael Ramirez:

Throw the Palestinian Woman Down the Well So My Family Can Be Honored

An uncle in the West Bank beat and threw his niece down a well (while still alive) because she apparently was having "sexual relations" which could mean anything from something consensual to her being raped by family members.  Her body was found 1 year later.  Apparently, nobody from her family alerted the authorities.  Also, the report states that 3 women were killed in honor killings during this past Ramadan in Palestinian controlled areas:


Based on State Level Economic Factors, Romney Will Win by 6 Points

An analysis from the University of Colorado, which has correctly predicted every Presidential election winner since 1980, says Romney is going to win by 6 points and also win every battleground state:

A University of Colorado analysis of state-by-state factors leading to the Electoral College selection of every U.S. president since 1980 forecasts that the 2012 winner will be Mitt Romney.
The key is the economy, say political science professors Kenneth Bickers of CU-Boulder and Michael Berry of CU Denver. Their prediction model stresses economic data from the 50 states and the District of Columbia, including both state and national unemployment figures as well as changes in real per capita income, among other factors.

"Based on our forecasting model, it becomes clear that the president is in electoral trouble," said Bickers, also director of the CU in DC Internship Program.

According to their analysis, President Barack Obama will win 218 votes in the Electoral College, short of the 270 he needs. And though they chiefly focus on the Electoral College, the political scientists predict Romney will win 52.9 percent of the popular vote to Obama's 47.1 percent, when considering only the two major political parties.
Their model correctly predicted all elections since 1980, including two years when independent candidates ran strongly, 1980 and 1992. It also correctly predicted the outcome in 2000, when Al Gore received the most popular vote but George W. Bush won the election.
In 2012, "What is striking about our state-level economic indicator forecast is the expectation that Obama will lose almost all of the states currently considered as swing states, including North Carolina, Virginia, New Hampshire, Colorado, Wisconsin, Minnesota, Pennsylvania, Ohio and Florida," Bickers said.

Update:  I was able to find a copy of the paper they are going to be publishing which includes the past predictions and the current state by state forecasts:

Looks like the modeled results have been pretty good for past elections.  Let's hope it's right!

Wednesday, August 22, 2012

The CBO Estimates on the Fiscal Cliff Are Massively Underestimating Its Impact

The CBO just came out with a new report providing projections on what will happen if we go off the fiscal cliff.  On the one hand it is showing that we will go into recession next year, with GDP falling 0.3% and unemployment rising to 9.1%, but our deficit will shrink dramatically, going from over $1 trillion down to $641 billion.  Longer term, the CBO estimates that debt held by the public will be 58% of GDP in 2022 instead of 90% if we avert it.  Essentially the choice is a mild recession in 2013 and righting the fiscal ship or growing at a meager 1.7% next year and kicking the debt can down the road.  With such framing, you can easily convince yourself to just go over the cliff and deal with the short term consequences.  Unfortunately, the CBO estimates are complete fantasy with no basis in reality.

Taxes are set to go up by 3.4% of GDP next year, this is money that is going to be taken out of people's pockets and will just disappear.  It's not like the government will increase spending with that money, they will spend about the same amount regardless of whether the taxes come in or not.  That means there will be nothing to counterbalance the tax increase to cushion the blow to the economy.   So if 3.4% of GDP simply disappears, you would expect that GDP would contract by at least 1.7% next year, not the 0.3% that the CBO estimates.  But even that is underestimating how bad the recession will be next year as the tax multiplier is over 1.  Every dollar that a taxpayer spends is then often spent by the businesses and on and on.  Some believe that the tax multiplier could be 3, so if you use that figure, you would expect a negative impact totaling 10.2% of GDP, which would lead to us having a down 8.5% GDP year in 2013.  Another reason to expect a much worse than expected 2013 is that our economy is already slowing because of weakness in China and Europe.  There is a chance we would go into recession next year even without the fiscal cliff, so if you add the fiscal cliff to that and you get a severe economic contraction.  If our economy was going to have a down 1% year next year due to the global economic slowdown and then 3.4% of GDP vanishes, you suddenly have a down 4.4% year and that is with a tax multiplier of only 1!  We could be headed for economic disaster if we increase taxes by that amount when the economy is slowing at the same time.

Another issue I have with the CBO estimate is its long term projections for GDP.  They expect to have just a short 1 year recession with real GDP growing at 3.1% in 2014 and a whopping 4.8% in 2015.  They then expect no recessions at all through 2022, which is pretty remarkable considering we seem to be set to have our third recession in 12 years.  What this means is that the CBO's long term debt forecasts are completely bogus.  Our debt in 2022 is likely to be much larger than 58% of GDP as the debt will likely be larger (due to higher than expected deficit spending in recessions) and GDP is likely to be smaller (as we aren't likely to have the hypergrowth and recession-free period as the CBO forecasts suggest). 

I suspect the CBO just gave the politicians enough rope to hang the country with.

Tuesday, August 21, 2012

Could Morsi Form a Military Alliance with Iran?

In reading about what is going in Egypt, I'm really struck by how surprised most analysts (and intelligence services) were about the complete and total Muslim Brotherhood takeover of that country.  Sure they were expected to win the elections but who thought they would be able to defeat the much vaunted Egyptian military so quickly?  They've been able to do in a matter of months what took the Turkish Islamists over a decade to achieve. 

Right now it seems like most people just don't know what to think.  Everyone knows that the Muslim Brotherhood is a dangerous Islamist organization that is anti-American and anti-Israel but nobody seems to be able to fathom that Egypt, our ally for decades, could turn to the dark side.  There seems to be quite a bit of wishful thinking out there, that the Muslim Brotherhood has moderated and that US aid will keep Egypt in line given its current economic difficulties.  I think what people are missing is how bad things could very well be, how a worst case scenario could be unfolding right now (being Jewish you know that the worst case scenarios often happen). 

I'm wondering if the current roadmap isn't similar to the one used by the Nazis in Germany.  President Morsi was able to use a terrorist attack that left 16 Egyptian soldiers dead as an excuse to clean house in the military and put his own people in charge in a matter of days. This attack could very well be the modern equivalent of the Reichstag Fire in 1933.  Then, a supposedly Communist arsonist set the Reichstag, the German parliament, ablaze just 4 weeks after Hitler was sworn in as Chancellor (the Nazis had a plurality but not a majority in parliament at the time).   Hitler used the fire as an excuse to arrest Communists across Germany, including members of parliament, effectively giving Hitler a majority.  He also suspended civil liberties and all newspapers not deemed friendly to the Nazis (note the recent intimidation of "unfriendly" news outlets in Egypt, including the possible crucifixion of opponents).  Within just 30 days of the fire, Hitler was able to get the Enabling Act passed, giving him the power to rule by decree and effectively making him dictator of Germany).  With over 3/4 of parliament in Islamist hands and the military out of the way, Morsi can effectively do the same thing and rule by decree.

Morsi's next move also seems to mirror something from Nazi Germany as he remilitarizes the Sinai just as Hitler remilitarized the Rhineland in 1936.  Back then, in violation of the terms of the Treaty of Versailles, Hitler sent troops into the Rhineland, which was meant to be a buffer zone between France and Germany (and of course the allies did nothing despite the fact they still had a military advantage at that point).  Just like the move into the Rhineland, Morsi sending tanks into the Sinai is in violation of the peace treaty with Israel as the Sinai is meant to be a buffer zone between the two countries.  The situation is so serious that Israel has reportedly sent a stern message via the White House to Egypt.  Israel is right to be worried.  Over the decades, Israel has felt very comfortable along its southern border, so much so that its barely defended.  In the terrorist attack mentioned above, a single armoured vehicle was able to get 1 mile into Israel despite the fact that the Israelis knew it was coming.  They simply didn't have the firepower close by to stop it.  They had to wait for the Air Force to arrive to save the day.  If the Egyptians have major forces in the Sinai, Israel would have to revamp their entire defensive structure or else be very vulnerable to a surprise assault.

So we've already gone from the Reichstag Fire to the Rhineland, could a modern equivalent of the Molotov-Ribbentrop Pact be next?  That was the alliance signed a little more than 1 week before the start of World War II in which two archenemies signed a non-aggression pact and also secretly divided Poland between them.  Could something like that be in the offing?  It's already been announced (and trumpeted by the Iranian press) that Morsi is about to go visit Iran, the first Egyptian leader to do so since the two countries broke off diplomatic relations in 1979 (it really didn't take Morsi long to reverse 33 years of Egyptian foreign policy).  Any sort of Iranian-Egyptian alliance could be very bad news, especially if they sign any sort of mutual defense treaty related to Israel.  If they do something like that, would Israel still attack Iran when there are Egyptian armoured forces next door in the Sinai?  I realize that Iran is Shia and Egypt is Sunni, so any such treaty would be difficult.  But it would actually help Egypt in its attempt to replace Saudi Arabia as the leader of the Sunni segment of the Arab world.

Anyway, these are just some thoughts and suspicions, I don't necessarily think this is what is actually going on (I don't think anyone actually knows outside of Morsi's head and maybe some close associates).  I don't mean to be a Cassandra, but so far, the Egyptian "revolution" has surprised to the downside, its possible it will continue to do so. 

Monday, August 20, 2012

Israel Can't Trust That Obama Will Do What Needs to Be Done on Iran

There has been some chatter lately about a US offer in which they promise to attack Iran by June 2013 if Iran has not halted their nuclear program by then.  According to Debka, some components of this deal (which are yet to be agreed to) are:

1.  President Obama will formally inform the two houses of congress in writing that he plans to use military force to prevent Iran from arming itself with a nuclear weapon. He will request their endorsement. Aside from this step's powerful deterrent weight for persuading Iran's leaders to give up their pursuit of a nuclear bomb, it would also give the US president the freedom to go to war with Iran when he sees fit, without have to seek congressional endorsement.
2. To underscore his commitment, President Obama would pay a visit to Israel in the weeks leading up to election-day and deliver a speech to the Knesset solemnly pledging to use American military force against the Islamic Republic if Tehran still refuses to give up its nuclear weapon program. He will repeat that pledge before various other public forums.
3, In the coming months up until Spring 2013, the United States will upgrade Israel's military, intelligence and technological capabilities so that if President Obama (whether he is reelected or replaced by Mitt Romney) decides to back out of this commitment, Israel will by then be in command of the resources necessary for inflicting mortal damage on Iran's nuclear program with a unilateral strike.
debkafile's military sources note that an influx of these top-grade US military resources would bridge the gap between American and Israeli ticking clocks for an attack on Iran, and dispel the fear in Jerusalem that delay would give Iran time to bury its key facilities in "zones of immunity" - outside Israel's reach for serious damage with its present capabilities.

While some, like Kadima Chairman Mofaz, sound like they are willing to believe Obama's determination to keep Iran from going nuclear, any such thoughts are simply the triumph of hope over experience and also seem to indicate a certain naivete about political promises.  As we all know, political promises are only kept as long as it is expedient to do so and they are discarded when they become inconvenient.  I don't care what Obama signs or how public his testimonials are about his resolve to attack Iran, when the time comes there is absolutely nothing to actually compel him to keep his promise.  After all, what is Israel going to do to him if he doesn't keep it? Sue him?  Try to get Congress to force him to attack?  Unfortunately, as Commander-in-Chief, there is nothing anyone can do to make him launch a pre-emptive strike.  All Congress can do is decide to authorize it or not and fund it or not.  And because he is term-limited there are absolutely no repercussions from him chickening out, in fact he would probably frame it in a way that makes him sound prudent "although the drums of war are beating, I feel its better for us to focus on our own economy". 

What about all those armaments that Obama will give Israel to enable them to destroy Iranian nuclear facilities in exchange for this deal?  I think there is always a way for the US to stop an Israeli attack if it wanted to. Threats to cut of munitions supplies and other assistance in case of a regional war could put a damper on Israeli war plans.  Israel could literally run out of bullets without arms supplies from the US in event of a regional conflict.

And finally, is there any history of the US attacking nuclear facilities pre-emptively?  Nope.  The US was concerned about the Iraqi Osirak nuclear facility in the early 1980's but did nothing about them and even condemned Israel when they did something (though Dick Cheney did thank the Israeli's for doing so 10 years later during the first Gulf War).  Then what about the Syrian nuclear facility?  After a lot of back and forth being Israel and the George W. Bush administration, Israel bombed it as they couldn't wait any longer for the Bush administration to get on board.  In North Korea, there are reports that Clinton was ready to go to war to destroy their nuclear facilities but then agreed to a deal at the last moment.  A deal that North Korea clearly broke as they now have nuclear weapons.  The US also did nothing to prevent Pakistan or India from crossing the nuclear threshold.  Time after time, the US has done nothing to prevent nuclear proliferation when push came to shove.  Why would it be different this time?  Because of all the overwhelming evidence that Obama would do anything to defend the Jewish state?  Ha!

Israel needs to control its own destiny and needs to act now before its too late.  And beware of US administrations in election years bearing gifts.

Saturday, August 18, 2012

The Muslim Brotherhood May Be Crucifying Opponents in Egypt

Egypt is quickly devolving:

A Sky News Arabic correspondent in Cairo confirmed that protestors belonging to the Muslim Brotherhood crucified those opposing Egyptian President Muhammad Morsi naked on trees in front of the presidential palace while abusing others. Likewise, Muslim Brotherhood supporters locked the doors of the media production facilities of 6-October [a major media region in Cairo], where they proceeded to attack several popular journalists.


Last Wednesday, August 8, “thousands of the Muslim Brotherhood’s supporters” attacked 6-October’s media facilities, beat Khaled Salah—chief editor of the privately-owned and secular Youm 7 newspaper—prevented Yusif al-Hassani, an On TV broadcaster, from entering the building, and generally “terrorized the employees.”

 El Balad adds that the supporters of Tawfik Okasha, another vocal critic of President Morsi—the one who widely disseminated the graphic video of a Muslim apostate being slaughtered to cries of “Allahu Akbar”—gathered around the presidential palace, only to be surrounded by Brotherhood supporters, who “attacked them with sticks, knives, and Molotov cocktails, crucifying some of them on trees, leading to the deaths of two and the wounding of dozens.”

 Far from condemning these terrorists, Al Azhar, Egypt’s most authoritative Islamic institution, has just issued a fatwa calling for more violence and oppression, saying that “fighting participants in anti-Muslim Brotherhood demonstrations planned for 24 August is a religious obligation.”

So much for the Muslim Brotherhood being "largely secular" as the Obama administration has described them in the past.  My guess is that in a few years we will really regret the fall of Egypt just as we now regret the fall of the Shah of Iran.

Friday, August 17, 2012

It Seems to Be Racist To Criticize Obama or His Policies

I know that for a long time the left has resorted to simply calling many conservatives racist rather than actually discuss policy differences.  It's an easy ad hominem attack and from their point of view it's easier than actually having to defend their views calmly and logically (especially since many of their views have no logic beyond "won't somebody please think of the children!" [you can also insert poor or minorities for children]).  But it's really becoming way overused when Obama is being criticized.  Let's look at some recent examples:

  • On Thursday, August 16th, Toure a co-host of The Cycle on MSNBC said that Romney is engaging in the "niggerization" of the campaign.  Romney's crime?  Saying that Obama should "take his campaign of division and and anger and hate back to Chicago."  Apparently, if you call Obama "angry" you are using "code" to refer to Obama as an angry black man.  So if he is angry, are you supposed to say that he is "perturbed" instead?  Oh wait, that's just code for angry which is then code for angry black man.  Crap.  All joking aside, it's pretty clear that Romney is simply referring to the campaign and/or its affiliates alleging that Romney made a woman die of cancer and didn't care as well as Obama's recent "business owners think they're so smart comments".  And it's not like he said he should go back to Kenya or Indonesia or something.  Aren't you allowed to tell Obama he should go back to Chicago?  I'm pretty sure nobody would bat an eye if he told Romney to go back to Boston.
  • Just about a week before that instance, Matthew Rothschild of The Progressive has an article titled "Romney Goes Racist on Welfare".  What was Romney's crime this time?  Criticizing Obama for waiving legally unwaivable provisions in the welfare reform law.  See, according to Rothschild, Romney is only bringing up this issue " to appeal to white working class voters who can be swayed by not-so-subtle racist innuendo."  What's great is that Rotchschild doesn't provide a single quote of Romney's to prove his racism, just the general criticism of the President's welfare waiver policy is enough apparently.  Personally I think it's racist of Rothschild for using code to allude to the fact that black people are recipients of welfare and that white working class people are stupid.
  • Chris Matthews went even further on the same issue, too far many would say, as he usually does.  Apparently criticizing the welfare policy channels images of  "welfare queens and young bucks waiting in line with their food stamps to get vodka."  WTF?  I think there is an inner racist inside Chris Matthews.  Who refers to African American men as "young bucks"?  Also, who knew "young bucks" had a penchant for vodka?  He continues by saying  "and the implication here is pretty clear that the people that are getting these welfare checks without working are not white people."  
  • Even the site of Romney's announcement of Paul Ryan as his VP is also racist according to Earl Hutchinson of Care2.  I guess you aren't allowed to even hold big campaign announcements south of the Mason Dixon anymore without someone referring to your "Southern Strategy".  Hutchinson writes "the virtually lily-white audience cheered as Romney and Ryan punched the same familiar code themes: out of control spend thrift, bloated government."  It's also racist to call a government "big" and refer to that negatively though I would think the obese should probably take more obvious offense at that right?  Anyway, if Hutchinson did his homework, he would know the announcement was made in front of the USS Wisconsin, which is the state Ryan was from.  If he had done it in the actual state, and people knew his travel plans, well that would pretty much give away the identity of the surprise pick now wouldn't it.  Also Hutchinson misses the important of Norfolk, VA as a city.  It's our major naval base on the east coast and Romney has made a point of talking about the need to improve funding for our military, especially our Navy.  Sure Romney could have picked another spot but what would have been the significance of announcing Ryan in Fall River, Massachusetts in front of the USS Massachusetts?  And one more thing, how come you can an announcement at a naval base be racist but referring to an audience as "lily white" not be?  Just wondering.
  • Romney's slogan "Obama is Not Working" is also racist of course because well, you get the drift.  But what if he isn't?  What else can you say?  "Mitt Romney Can Do Better"?  But then aren't you just saying that a white man is superior to a non-white man?  I wonder if people have also attacked his uber-positive  "Believe in America" slogan as well.  Yup, they have.  That of course is racist too because it infers that Obama doesn't believe in America or something.  It's just one more code to get the racist white people to the polls.
  • And even before Romney entered the picture, it was hard to criticize Obama for anything without being branded a racist.  Apparently even calling him a "socialist" is code which is weird because when I think of socialists I think of Europeans with long greasy hair and possibly John Lennon glasses and a Trotsky goatee.  Then of course, it's also been called racist to refer to Obama by his full name Barack Hussein Obama.  How can his name be racist?  It's the name of him and his father for heaven's sake.  What if we call him Barack "Insane in the Membrane" Obama, is that okay?  Or is linking him with the pot smoking Cypress Hill group also racist?  Then of course it was also racist to question him on his racist pastor of 20 years, Reverend Wright.  I kind of think that if Romney was in a church where the pastor publicly said something about damning black people, that he would be questioned about his attendance.  Just a thought.
Anyway, as you can see, these thought police have no shame.  You can't say anything against Obama, no matter how innocuous without someone thinking you are just being racist, completely poisoning political discourse.  Post-racial my tuchus.

Thursday, August 16, 2012

Dishonorable Disclosures

Here is a 22 minute movie made by national security personnel who are sicked by this administrations constant leaking of national security secrets:

Beware of Market Complacency and Greeks Freezing Outlays

Some troubling signs from Greece just as the market has continued its low volume meltup.  I have a feeling September is going to be fuuuuuuun:

Even before the troika conducts its quarterly review on Greece's progress in hitting the targets set out in the bailout program, there are a few indications that progress hasn't been good. This week, the government imposed a spending moratorium and reports surfaced that prime minister Samaras will propose to the troika that Greece's fiscal targets be relaxed. These are obviously not encouraging signs, but they have potentially huge implications for Greece going forward that extend beyond just the next troika review. First, the Greek government has imposed a moratorium on all outlays other than salaries and pensions, according to Greek newspaper Kathimerini. This means that primary spending, the public investment programme and the settlement of arrears have been halted.


Second, the Greek government has reportedly decided to propose a relaxation of its fiscal targets to Merkel and Hollande next week. Having been unable find agreement among the Greek coalition partners on EUR11.5bn in savings (a whopping 5% of Greek GDP), prime minister Antonis Samaras will request that the adjustment be made between 2012-16 instead. He is also likely to suggest that the budget deficit be slashed by 1.5 percentage points of GDP annually rather than the current 2.5 percentage points.

This will be a very hard sell for the Greek government. A relaxation of fiscal targets would require additional funding for Greece, but asking the Bundestag to approve more bailout money for the small country is an absolute non-starter.


If the troika does not grant the Greek government any concessions on its bailout programme, it is highly likely that the two junior parties—the Democratic Left and Pasok—will drop out of government. This would precipitate fresh elections, the third for this year alone.

Chinese Defector Illegally Turned Away from US Consulate, To Be Put On Trial for Treason (and probably shot)

I posted back in May about how the US Consulate turned over a Chinese defector, Wang Lijun, to Chinese State Security in what looks like to be a violation of the 1980 US Refugee Act.  Well Lijun is now going to be on trial for treason and probably executed.  The story is that Biden was the one who wanted him turned away because it would have hurt a big Obama donor's business dealings in China to have a big stink about a defector:

China's communist government is preparing to file treason charges against a former official who sought political asylum at the U.S. consulate in Chengdu but was turned away to avoid upsetting U.S.-China relations, according to U.S. officials and Chinese reports.

The former official, Wang Lijun, a Chongqing police chief and deputy mayor until his visit to the U.S. consulate Feb. 6, is expected to be charged with treason, a crime that under the communist system normally results in summary execution or life in prison.

Wang made a dramatic escape from Chongqing in February wearing a disguise, and spent the night at the U.S. consulate, as scores of Chinese security police surrounded the diplomatic outpost.

U.S. officials said Wang provided information and documents on the case of British national Neil Heywood, who was found dead in a Chongqing hotel the previous November.

The Free Beacon reported May 1 that the office of Vice President Joe Biden was behind the administration's decision to turn Wang away from the consulate, in particular Biden national security aide Antony Blinken.

Blinken, according to administration officials, overruled State and Justice Department officials who favored granting Wang political asylum and working to get him out of China.


Those in favor of asylum argued during teleconferences and phone calls between Feb. 6 and Feb. 7 that a 1980 law required the U.S. government to grant asylum to those seeking it if they are threatened.

Wang asserted during his stay at the consulate that his life and safety were threatened by Bo Xilai.

In the end, Wang was turned over to a senior official of the Ministry of State Security, the Chinese political police and intelligence service, after he left the consulate. He was taken to Beijing where he was placed in detention.

Wang's attempted defection set off a political scandal in China that continues to unfold.

It was 41 Years Ago Yesterday When the Last Vestiges of the Gold Standard Were Swept Away

"Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice."

George Washington, in letter to J. Bowen, Rhode Island, Jan. 9, 1787

"You have to choose between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the Capitalist system lasts, to vote for gold."

George Bernard Shaw

"The best way to destroy the capitalist system [is] to debauch the currency."

Vladimir Illyich Lenin

ZeroHedge has a nice piece reminding us that it was on August 15, 1971 that Nixon unilaterally destroyed the Bretton Woods System, sweeping away the last vestiges of the gold standard.  If you didn't already hate him for wage & price controls, abandoning the South Vietnamese (despite the tide turning in our favor), signed baseline budgeting into law (making it harder to actually cut spending) or Watergate, here's probably one of the best reasons to hate him.  Nothing did more to perpetuate government largesse, unlimited government spending and the demise of the dollar (which has devalued 98% vs. gold since 1970).  It has also led to a misallocation of resources as instead of the best and brightest going into businesses that actually create something, like they used to, they decide to take advantage of the easy credit and high leverage that not being on a gold standard allows and go into finance.  Finance is definitely necessary, don't get me wrong, I wouldn't have a job without it, but financial engineering is no way to really grow an economy.  The 2000's were all financial engineering based growth, how'd that work out for us?

Anyway, to conclude, here is a great piece about gold, written by Alan Greenspan before he decided that Ctrl-P is easier than sound money (again h/t ZeroHedge):

"Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit.

They have created paper reserves in the form of government bonds which -- through a complex series of steps -- the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of society lose value in terms of goods.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold [in 1933]. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."

Alan Greenspan, 1966

Wednesday, August 15, 2012

Some Comic Relief: Irish Olympic Sailing Commentary

One of the funniest things I've seen lately:

"Obama's campaign strategy is to smash America apart and then cobble together 51 percent of the pieces."

Paul Ryan has really rejuvenated Mitt Romney who gave a great smackdown of Obama's dark alley campaign tactics (h/t Powerline):

His campaign has resorted to diversions and distractions, to demagoguing and defaming others. This is an old game in politics; what's different this year is that the president is taking things to a new low.

It wasn't supposed to be this way.

In 2008, Candidate Obama said, "if you don't have any fresh ideas, then you use stale tactics to scare voters." He said, "if you don't have a record to run on, then you paint your opponent as someone people should run from." And that, he told us, is how, "You make a big election about small things."

That was Candidate Obama describing the strategy that is the now the heart of his campaign.

His campaign and his surrogates have made wild and reckless accusations that disgrace the office of the Presidency. Another outrageous charge came a few hours ago in Virginia. And the White House sinks a little bit lower.

This is what an angry and desperate Presidency looks like.

President Obama knows better, promised better and America deserves better.

Over the last four years, this President has pushed Republicans and Democrats as far apart as they can go. And now he and his allies are pushing us all even further apart by dividing us into groups. He demonizes some. He panders to others. His campaign strategy is to smash America apart and then cobble together 51 percent of the pieces.

If an American president wins that way, we all lose. …

Everywhere I go in America there are monuments that list those who have given their lives. There is no mention of their race, their party affiliation or what they did for a living. They lived and died under a single flag fighting for a single purpose. They pledged allegiance to the United States of America. So, Mr. President, take your campaign of division and anger and hate back to Chicago and let us get about rebuilding and reuniting America.

Tuesday, August 14, 2012

What Ryan Learned from Ayn Rand on Monetary Policy, the Gold Standard and the Source of Wealth

There seems to be a lot of chatter today about Paul Ryan and how he is a fan of Ayn Rand.  Of course, it's no secret as he said as much to a meeting at the Atlas Society in 2005:

It's so important that we go back to our roots to look at Ayn Rand's vision, her writings, to see what our girding, under-grounding [sic] principles are. I always go back to, you know, Francisco d'Anconia's speech (at Bill Taggart's wedding) on money when I think about monetary policy. And then I go to the 64-page John Galt speech, you know, on the radio at the end, and go back to a lot of other things that she did, to try and make sure that I can check my premises so that I know that what I'm believing and doing and advancing are square with the key principles of individualism…

Most people who have a cursory knowledge of Ayn Rand have probably heard about the ginormous John Galt speech in Atlas Shrugged, but the Fransisco d'Anconia speech is definitely a keeper in its own right.  I'll post some excerpts below but be sure to read the whole thing.  Despite the fact it was written over 50 years ago, it's very applicable today especially as we have a President who could have been a villain in Atlas Shrugged (see his "you didn't build that" speech).   It talks about the source of money and wealth (it essentially states the exact opposite idea that Obama espouses, we wouldn't have ANYTHING without entrepreneurs) and even talks about the virtue of the gold standard.  Anyway, here are some key parts of that speech with some emphasis added by me:

"When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others. It is not the moochers or the looters who give value to money. Not an ocean of tears nor all the guns in the world can transform those pieces of paper in your wallet into the bread you will need to survive tomorrow. Those pieces of paper, which should have been gold, are a token of honor – your claim upon the energy of the men who produce. Your wallet is your statement of hope that somewhere in the world around you there are men who will not default on that moral principle which is the root of money. Is this what you consider evil?

"Have you ever looked for the root of production? Take a look at an electric generator and dare tell yourself that it was created by the muscular effort of unthinking brutes. Try to grow a seed of wheat without the knowledge left to you by men who had to discover it for the first time. Try to obtain your food by means of nothing but physical motions – and you'll learn that man's mind is the root of all the goods produced and of all the wealth that has ever existed on earth.

"But you say that money is made by the strong at the expense of the weak? What strength do you mean? It is not the strength of guns or muscles. Wealth is the product of man's capacity to think. Then is money made by the man who invents a motor at the expense of those who did not invent it? Is money made by the intelligent at the expense of the fools? By the able at the expense of the incompetent? By the ambitious at the expense of the lazy? Money is made – before it can be looted or mooched – made by the effort of every honest man, each to the extent of his ability. An honest man is one who knows that he can't consume more than he has produced.


Money is the barometer of a society's virtue. When you see that trading is done, not by consent, but by compulsion – when you see that in order to produce, you need to obtain permission from men who produce nothing – when you see that money is flowing to those who deal, not in goods, but in favors – when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self-sacrifice – you may know that your society is doomed. Money is so noble a medium that it does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot.

"Whenever destroyers appear among men, they start by destroying money, for money is men's protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it becomes, marked: 'Account overdrawn.'

"To the glory of mankind, there was, for the first and only time in history, a country of money – and I have no higher, more reverent tribute to pay to America, for this means: a country of reason, justice, freedom, production, achievement. For the first time, man's mind and money were set free, and there were no fortunes-by-conquest, but only fortunes-by-work, and instead of swordsmen and slaves, there appeared the real maker of wealth, the greatest worker, the highest type of human being – the self-made man – the American industrialist.

"If you ask me to name the proudest distinction of Americans, I would choose – because it contains all the others – the fact that they were the people who created the phrase 'to make money'. No other language or nation had ever used these words before; men had always thought of wealth as a static quantity – to be seized, begged, inherited, shared, looted, or obtained as a favor. Americans were the first to understand that wealth has to be created. The words 'to make money' hold the essence of human morality.


"Until and unless you discover that money is the root of all good, you ask for your own destruction. When money ceases to be the tool by which men deal with one another, then men become the tools of men. Blood, whips and guns – or dollars. Take your choice – there is no other – and your time is running out."

Ryan: Admit it, I Scare the Ever-Loving Sh*t Out of You, Don't I

A very funny but true piece out of The Onion:

When Mitt Romney selected me as his running mate, I knew the Democratic attack dogs would come out in full force. They would say I'm a right-wing ideologue. They would say my views on entitlement programs are far too radical. They would say putting me on the ticket immediately kills Mitt Romney's chances of becoming president because I'm a liability. But if we're being honest with each other—if we're able to put aside the talking points for a few minutes and say what we're all actually thinking and feeling—I believe we can acknowledge the real truth here.

I'm young, I'm handsome, I'm smart, and I'm articulate. And that scares the ever-loving shit out of you. You can pretend like you have this thing in the bag, but you know good goddamn well that this race just got real interesting, real fast.

It's okay to admit it. You're frightened to death of me. It might actually be healthy for you to face your fears now rather than later, when Mitt and I are leading by a few points in the polls and it looks like this thing might end badly for you. Face it: I'm not some catastrophe waiting to happen, like a Sarah Palin or a Dan Quayle. On the contrary, you have the exact opposite fear. I'm a solid, competent, some might say exceptional, politician.

Did you get nervous when you read that last sentence? Is it because you know in your heart of hearts that it's 100 percent true? Is it because, even if you strongly disagree with my beliefs on Medicare, Social Security, women's rights, and marriage equality, you know my talent as a speaker and my well-thought-out approach to these issues—no matter how radical and convoluted you find them—might just be enough to win over independent voters?

Do you get chills just thinking about how strong my appeal actually is?

I have another question for you: How scared are you that I can convince people I'm right? Because I'm good at it. No, I'm really good at it. You see, I know how to turn up the charm and charisma without putting people off. Then I back up what I'm saying with arguments that, when they come out of my mouth, sound completely accurate and well-reasoned. And I do it with such passion that people automatically recognize me as a man with deep convictions he will stand up for, no matter what.

The American people love that shit. They love it.


I'm your worst fucking nightmare.

Oh, and by the way, don't even try to pretend you haven't imagined me being elected president one day.

"Obama worries about student loans. None of those students are going to get any jobs under Obama"

Newt at his best on Piers Morgan:

Monday, August 13, 2012

While You Were Watching Other News, There Was a Coup in Egypt and the Muslim Brotherhood Now Controls Everything

It's just shocking how quickly Egypt has been taken over by the enemy.  The military was the only thing standing between and Muslim Brotherhood and dictatorship and it looks like they have been swept away.  Both the Defense Minister Tantawi and Army Chief of Staff Anan were "fired" by Muslim Brotherhood President Morsi in what looks like a negotiated exit to save the military men and their families from Muslim Brotherhood retribution.  As one democracy advocate told Time:

"I think the deal is [Tantawi and Anan] get a safe exit, and they hand the country to the Muslim Brotherhood," says Mamdouh Hamza, a prominent businessman and pro-democracy advocate. "Because quite honestly, if we apply the same law [to the generals] that we applied to Mubarak's family, Tantawi would be behind bars."

The new Defense Minister, Abdel-Fatah el-Sissi, is the very religious head of military intelligence who defended the use of "virginity tests" on female protesters in March 2011.

So what does this mean for Israel?  Nothing good.  The Defense Minister apparently isn't speaking to the Israelis but is speaking with Hamas, according to the Times of Israel.  Israel better start reinforcing its Southern Command or they could be in a heap of trouble quick.

And once again, Obama and his pro-Muslim Brotherhood State Department has made the situation of the United States and Israel much worse than it needed to be.  We need Obama replaced ASAP so we can start trying to reverse some of the damage he has done.  The sooner the better.

Romney Just Did What Reagan Should Have Done and Nominated a Jack Kemp for VP

I'll admit I haven't always been Paul Ryan's biggest fan as you can tell by a previous post of mine titled "Paul Ryan is Overrated and his Budget Plan Sucks" which incidentally is getting quite a bit of traffic now that he is the VP pick (I seem to have trashed the entire current GOP ticket).  And I stand by my criticisms of him.  I think many on the right are just so in love with Paul Ryan that they aren't looking at his plans critically, especially the tax reform section of his budget plan which could easily increase taxes on a lot of middle class Americans thanks to its planned elimination of deductions.  Also, in 2011 his ACU rating was only 80, thanks to a couple of pro-Union votes and votes for big spending bills.

But putting all that aside, I do think he is a great pick by Romney for VP. I'm actually quite surprised he picked Ryan as Ryan clearly overshadows him.  He's young, energetic, very well spoken and clearly a leader in the GOP.  Many, in fact, had been pressuring him to run for President himself.  Romney's pick of Ryan is clearly a testament of him putting the country first as well as his business acumen.  In the private sector, you want to hire the most talented people available as that increases your profit.  In politics, you seem to more often be looking to check boxes.

So how do I reconcile my earlier criticism of Ryan with my stance that he is a great pick?  Here are some reasons:

  • My earlier criticisms sprouted from everyone gushing over his budget plan, so I thought I'd point out some very specific imperfections within the plan and within Ryan's record.  But we don't live in a perfect world and nobody who Romney was going to pick was going to be 100% conservative/libertarian.  He was never going to pick a Jim DeMint or a Rand Paul to be his VP but Ryan was one of the better choices.  If Romney had picked someone like Rob Portman, I'd be shaking my head today.  Portman is essentially a Bush Republican who doesn't stand for much.  Ryan, on the other hand, definitely stands for a lot.  He stands for the America that we used to have, an America that can come back under the right leadership.
  • If you look at Ryan's lifetime ACU rating of 91.69, he compares quite favorably to people we think of as stalwart conservatives.  Newt had a lifetime rating of 90, Dick Cheney had a 91 and Jack Kemp had an 89.  That's pretty good company, I'd say and as he has been in Congress for 14 years, you can't say there aren't enough datapoints to reach a conclusion.
  • Looking at the big picture, picking Ryan is the same as if Reagan had picked Jack Kemp in 1980, who was also a relatively youthful and charismatic House reformer who was the darling of conservatives.  Back then though Reagan felt he need to balance the ticket with someone from the establishment with a long record and chose George H.W. Bush.  This one pick gave control of the GOP to the Bush family for 20 years following Reagan's departure from office as being the VP automatically gives you an advantage when running for President (especially if that Presidency is successful).  This pick has the potential to give the GOP to the reformers for years to come.  People who won't shirk from tackling Medicare despite the fact that its considered a "third rail" in politics.  These are the people we need to have in power in order to keep America from sliding further towards bankruptcy.  Not thinking to the future is definitely one of the problems I had with W.  I'm a huge Dick Cheney fan but it was pretty clear due to his health that he wouldn't be President.  Not having someone waiting in the wings for two terms meant that we had to settle for a John McCain in 2008.
I also just want to add one more thing, I'm relatively impressed with how Romney has been campaigning for President.  I expected that once his challengers dropped out that he would immediately tack towards the left (I really thought he'd be the etch-a-sketch candidate), which is something even Reagan did in 1980.  But he hasn't really, he is campaigning as a conservative and doubled down on that by picking Paul Ryan as his VP.  While he isn't a bomb thrower like Newt, the main substance of his speeches are probably no different than what a Newt would say if he were in the same position.  He is offering a real choice for voters and driving Democrats nuts.  What else could I want?

Italy and Spain are Collapsing

According to this in the FT, it sounds like the situation in Spain and Italy is pretty dire:

The Spanish and Italian commercial property markets have all but collapsed with the number of transactions in both countries falling more than 90 per cent in the three months to July as investors worry about the future of the eurozone.

Only three property transactions were registered in Spain during the second quarter, down from 58 deals in the previous quarter. In Italy the slide was even more pronounced, with just two buildings being traded during the period, down from 56, according to data from Real Capital Analytics.


The total value of transactions for offices, shops and industrial property in Spain was €67m for the second quarter, down 74 per cent from €260m in the first quarter. The inactivity meant Spanish property transactions were below those of neighbouring Portugal for the first time.


"There is no reality in how to price anything there at the moment. You have eight years of unsold supply sitting in the banks, so how do you put value on anything else?" the person added.

Obama Has Bankers Afraid of Retribution if they Challenge a Regulation

Jamie Dimon, former Obama supporter and CEO of JP Morgan made an interesting statement at the end of his New York Magazine interview:

"Everyone is afraid of retaliation and retribution. We recently had an event with a hundred small bankers here, and 85 percent of them said they can't challenge the regulation because of the potential retribution. That's a terrible thing. Okay? This is not the Soviet Union. This is the United States of America. That's what I remember. Guess what," he says, almost shouting now. "It's a free. Fucking. Country."

Sunday, August 12, 2012

Friday, August 10, 2012

Fmr. Federal Prosecutor: Michelle Bachmann is Right about the Mulsim Brotherhood

Andrew McCarthy, a 25-year DOJ veteran and the guy who prosecuted the World Trade Center bombing case, recently gave a speech in which he enumerated how Islamists are a threat to this country and how Michele Bachmann was correct in raising questions about Muslim Brotherhood influence. You can watch the whole thing below, it's an hour long with another 40 minutes of Q&A and it's well worth the time:

You can also read the speech here. Here are some key excerpts (again, please read or watch the whole thing, McCarthy clearly knows what he is talking about):

 I don’t understand why more people in Washington, from both parties, have not rallied to the support of Congresswoman Bachmann and Congressmen Gohmert, Franks, Westmoreland and Rooney. At a time when government policy is being radically harmonized with the agenda of the Muslim Brotherhood — meaning, policy has shifted in the direction of avowed enemies of the United States — what ought to shock people is that there is any controversy over a commonsense request. The five House members are simply asking that the inspectors general in pertinent government agencies conduct internal inquiries and report back to Congress about potential Islamist influences at those agencies.

Now, let me be clear about what I said and what I didn’t say. I said Islamist influences, I did not say Muslims.


When we talk about the influence of Islamists, we are referring to Muslims who are beholden to Islamic supremacism. Islamic supremacism is an ideology, not a religion. It is a totalitarian social system that would govern every aspect of life down to the granular level — economic, financial, social, political, military, familial, dietary, issues of crime-and-punishment, even matters of hygiene.

That is the sharia system. As interpreted by many of Islam’s most influential thinkers — including organizations like the Muslim Brotherhood and academics like the faculty of ancient al-Azhar University in Cairo — classical sharia rejects basic principles of American constitutional democracy.

In fact, it rejects first and foremost our foundational premise that people are free to determine their own destiny and their own laws — regardless of what sharia holds. Classical sharia rejects freedom of conscience, freedom of speech, economic liberty, equality between men and women, equality between Muslims and non-Muslims, and Western notions of personal liberty and privacy.  

It is the goal of all Islamists to impose sharia. That is why there is no such thing as a “moderate Islamist.” If you want to replace the American Constitution with sharia, and Western civilization with the Islam of the Middle East, you are not a moderate — however grateful we may be that you’re not looking to blow up a bridge in order to impose your desires.


The movement’s intellectual leader is the Muslim Brotherhood. The Brotherhood is not a “largely secular” umbrella organization. It is not “moderate.” It is the vanguard of a ground-up, revolutionary, ideological mass movement. It is sophisticated, patient, and determined. It has spent almost 90 years building its reserves and biding its time.

And now that the Brotherhood is in the midst of a gradual triumph in Egypt and much of the Middle East, leading Brothers have become bolder in their public pronouncements.

For example, in October 2010, on the cusp of the revolt, the Brotherhood’s “supreme guide” in Egypt, a man named Mohammed Badi, gave a speech in which he expressly called for violent jihad against the United States.

Specifically, Badi urged his fellow Muslims to remember “Allah’s commandment to wage jihad for his sake with [their] money and lives, so that Allah’s word will reign supreme.”

Applying this injunction, Badi proclaimed that jihad “is the only solution” against what he called “the Zio-American arrogance and tyranny.” Not negotiation — jihad. Badi also took delight in noting that the United States had been badly wounded by jihadists in Iraq and Afghanistan. From that, he predicted that  America “is now experiencing the beginning of its end, and is heading towards its demise.”

So, contrary to what increasingly seems to be popular belief here in Washington, Islamist influences are not benign. They are not something to yawn over. They are something we need to defend against.

We are talking about a very determined movement that pulls no punches in braying that it means to destroy our country. The most important sharia authority in the world, Sheikh Yusuf Qaradawi — the Muslim Brotherhood’s chief jurist — proclaims that Islam will “conquer America” and “conquer Europe.” And by the way, you’ll want to remember Sheikh Qaradawi’s name — we’ll be coming back to him shortly.


Having now spent a good deal of time weighing the competing claims, I am compelled to say that, when it comes to Ms. Abedin’s background, the five House members have actually understated the case.

Their letter to the State Department’s inspector general stated that Ms. Abedin “has three family members — her late father, her mother and her brother — connected to Muslim Brotherhood operatives and/or organizations.” It turns out, however, that Huma Abedin herself is directly connected to Abdullah Omar Naseef, a major Muslim Brotherhood figure involved in the financing of al-Qaeda.

Ms. Abedin worked for a number of years at the Institute for Muslim Minority Affairs as assistant editor of its journal. The Institute was founded by Naseef, who remained active in it for decades, overlapping for at least seven years with Ms. Abedin.

Naseef was also secretary general of the Muslim World League in Saudi Arabia, perhaps the most significant Muslim Brotherhood organization in the world. Under the auspices of the Muslim World League, he founded the Rabita Trust, which is formally designated as a foreign terrorist organization under American law due to its support of al-Qaeda.
That is to say: Before you even start probing the extensive, alarming Brotherhood ties of her family members, Huma Abedin could easily have been disqualified from any significant government position requiring a high security clearance based on her own personal and longstanding connection to Naseef.

Islamists not only tell us that they intend to destroy us. They tell us, straight out, how they intend to do it: Not only by the intimidating, constant potential of violence, but by “sabotage” — their word, not mine. The will, they say, “destroy” us “from within.” They intend to insinuate themselves into our major institutions, including into the policy-making bodies of our government. They intend to compromise us from the inside, as well as from the outside.

A little more background: At the Institute of Muslim Minority Affairs, Ms. Abedin was assistant editor of the Journal of Muslim Minority Affairs. The journal was the Institute’s main product. It promotes the fundamentalist version of sharia championed by the Muslim Brotherhood, by Abdullah Omar Naseef, and by Sheikh Yusuf Qaradawi. Ms. Abedin was assistant editor from 1996 through 2008 — from the time she began working as an intern in the Clinton White House, until the time shortly before she took her current position as Secretary Clinton’s deputy chief of staff.


It is Congress’s responsibility to scrutinize executive branch policy, especially when the policy choices endanger the nation. Let’s consider just some of those policy choices in the last three-and-a-half years. Since 2009, the Obama administration has abandoned the federal government’s prior policy against dealing directly and formally with the Muslim Brotherhood. The State Department has not only been supportive of this dramatic shift; it has embraced a number of Muslim Brotherhood positions that undermine both American constitutional rights and our alliance with Israel. To name just a few manifestations of this policy sea change:
  • The State Department has an emissary in Egypt who trains operatives of the Brotherhood and other Islamist organizations in democracy procedures. We’re helping them get elected.
  • The State Department announced that the Obama administration would be “satisfied” with the election of a Muslim Brotherhood–dominated government in Egypt.
  • The State Department has collaborated with the Organization of Islamic Cooperation, a bloc of governments heavily influenced by the Brotherhood, in seeking to restrict American free-speech rights in deference to sharia prohibitions against examination and negative criticism of Islam.
  • The State Department has excluded Israel, the world’s leading target of terrorism, from its “Global Counterterrorism Forum,” a group that brings the United States together with several Islamist governments, prominently including its co-chair, Turkey. By the way, the Erdogan regime in Turkey now finances the terrorist organization Hamas, which is the Muslim Brotherhood’s Palestinian branch. At the forum’s kickoff, Secretary Clinton decried various terrorist attacks and terrorist groups; but she did not mention Hamas or attacks against Israel. Transparently, this was in deference to the Islamist governments the administration has chosen to partner with — to the exclusion of Israel. Those government’s adhere to the Muslim Brotherhood’s position that Hamas is not a terrorist organization and that attacks against Israel are not terrorism.
  • The State Department and the Obama administration waived congressional restrictions in order to transfer about $1.5 billion dollars in aid to Egypt after the Muslim Brotherhood’s victory in the parliamentary elections.
  • The State Department and the Obama administration waived congressional restrictions in order to transfer millions of dollars in aid to the Palestinian territories notwithstanding that Gaza is ruled by the Hamas, which is a designated terrorist organization under American law — meaning that to provide it with material support is a serious federal crime.
  • The State Department and the administration recently hosted a contingent from Egypt’s newly elected parliament that included not only Muslim Brotherhood members but a member of the Islamic Group (Gama’at al Islamia). The Islamic Group is the jihadist organization headed by the Blind Sheikh (Omar Abdel Rahman), who is serving a life sentence for his leading role in a terrorist campaign against the United States in the early Nineties. Like Hamas, the Islamic Group is a designated as a terrorist organization to which it is illegal to provide material support.
  • On a just-completed trip to Egypt, Secretary Clinton pressured the ruling military junta to hand over power to the newly elected parliament, which is dominated by the Muslim Brotherhood, and to the newly elected president, Mohamed Morsi, who is a top Brotherhood official. Secretary Clinton later met with Morsi, who has also been extended the honor of an invitation to visit the White House in September.
All this, despite the Muslim Brotherhood’s extensive record of hostility toward the United States, and despite the fact that Morsi, in his first public statement after being elected president, announced that one of his top priorities is to pressure the United States for the release of the Blind Sheikh.

The Dollar Has Been Devalued by 98% Since We Went Off the Gold Standard 40 Years Ago

Here is a scary chart of the value of the dollar in terms of gold with 1970=100. As you can see, since we officially went off the gold standard (Nixon unilaterally took us off in 1971) the value of the dollar has plummeted by 98%. What's even more amazing is that by the end of 1979, the dollar had already depreciated by 95% versus gold. Looks like if you allow a government to print at will, it will:

Coincidentally, this money printing allowed almost unlimited deficit spending, in fact, as this graph shows (with the red line being the official real GDP growth rate and the blue line being real gdp with the annual increase in gross federal debt subtracted) around the time we went off gold was when we really stopped being able to grow without deficits.

Thursday, August 9, 2012

Obama is in Trouble and Needs a Hail Mary to Win this Election

I realize it's only August and a lot can happen but at this point it looks like Romney's race to lose.  I realize the polls are very close and Obama tends to have a slight lead in most of them, though its not statistically significant.  But I think people are putting way too much stock in these polls.  Here are the key reasons why I think the current polls will turn out to be wrong:
  • The party affiliations in many of them are assuming a big Democratic wave year like 2008 or even bigger (which is highly doubtful since we don't have a sitting two term Republican President who everyone was sick of nor do we have an incompetent GOP candidate).  In the Public Policy Polling poll of North Carolina, they are showing 12% more Democrats than Republicans today compared to 11% more Democrats than Republicans in 2008 exit polls.  Given this heavily Democratic weighting you would assume that Obama would be killing Romney in the poll.  Nope, he is only leading by 3%, within its margin of error, which I take as a sign that North Carolina will not be close at all and will go for Romney.  Now take a look at some of the CBS/NY Times/ Quinnipiac polls which show that Obama leads in Florida and Ohio.  In Florida, they show a 9% advantage for Democrats, despite the fact that in 2008 it was only 3% and in 2010 it was 0%.  No wonder they are showing Obama winning by 6%.  Ohio is a similar story, they show an 8% advantage for Democrats in line with 2008 though 2010 the party affiliation ran even.  Again, it shows Obama winning by 6%.  Many of these polls aren't worth the excel spreadsheets they were manufactured on.
  • The Wisconsin exit polls were a great reminder how wrong polls can be.  Remember that they showed Walker tied with his opponent while in actuality he won by 7 whole points.  These polls were conducted the exact same day as the election and interviewed people as they were leaving the voting booth.  This means that you wouldn't get any skew due to people saying that they are likely voters when instead they are playing their PS3 on election day and yet it was still off by a whole 7 points!  If such polls can be wrong, what is the point of relying on a poll done months ahead of time?
  • Look at history.  In 1980, the polls were showing a very close race between Reagan and Carter right up until the last minute.  Reagan won it by 10% with 489 electoral votes!
That said, even if the polls are a correct snapshot of what is happening right now, it seems likely that the momentum will swing towards Romney as the race gets closer for two main reasons:
  • Romney has so far been heavily outspent by Obama and his cronies who have been going through money like a homeless person who just found a wad in his unwashed pants.  By my calculations Obama has spent a whopping 56.3% more than Romney through the end of July ($483 million vs. $309 million).  When you consider much of Romney's expenses came in his heated battle to defeat Republican primary opponents while Obama could just focus on bashing Republicans, the spending is even more in Obama's favor.  And despite all of this spending the race is still close.  Going forward thought the advantage seems to be Romney's.  The last couple of months he has raised about $207m while Obama has raised $146 million.  If this rate is maintained and given that Romney has more cash on hand right now ($186m versus something around $144m for Obama) Romney is likely to outspend Obama by about 36.6% heading into the final stretch when it really counts ($496m versus $363m for Obama). 
  • Romney is probably going to get more of a boost coming out of the convention than Obama will.  Since Romney's VP is probably going to be a high quality Republican, like a Paul Ryan, and all Obama is likely to do is parade around the gaffe prone Joe Biden, it just seems likely that Romney is going to have a better August than Obama will, setting the tone for the final months when the undecideds make their decisions.
  • The economy isn't getting any better and given the way things are now, it is signaling an Obama loss.  You can look at the charts here and here to see that based on various indicators and historical vote-shares, Obama is simply not going to pull this one out.  It's the economy, stupid!
I think Obama and his team are seeing what I am seeing and are started getting worried.  How else do you explain the ad where a steel worker blames Romney for his wife's death?  Even people like Wolf Blitzer and Mark Halperin were embarrassed by it.  Why else would they release such a desperate ad?  I realize it was sent out by a SuperPAC but its headed by an Obama insider and also the Obama campaign hasn't exactly distanced itself from it.

Now I'm not saying that Romney is guaranteed a victory, I think there are still a couple of things that Obama can do to win, though he will probably only do these if he is desperate:

1.  Replace Biden with Hillary.  This would do two things. First, it would take the wind out of the sales of Romney's pick.  What do you think the media would rather cover, another white guy or a white guy being dumped for Hillary Clinton?  Instead of talking about the Ryan plan or whatever you are going to see tons of interviews of Biden ("how do you feel being brushed aside?" "Did you know beforehand?"), women ("how does it feel to have a woman as a potential VP?") and even Bill Clinton ("so will you be the second Gentleman?" to which he will respond "we all know I'm no gentleman").  Second, it will reinvigorate one of Obama's core constituencies, women and make sure they come to the ballot box.
2.  Help Israel attack Iran.  Again this would do a couple of things.  First, one of the arguments against Obama is that he doesn't stand by our allies and he hates Israel.  Providing such strong evidence against both those arguments right before the election will go a long way to getting more Jews and Independents to vote for him.  Heck, militarily defending Israel alone probably gets him Florida.  Second, Americans tend to rally to the flag when there is a conflict, at least initially.  Its only if the conflict is long and drawn out that Americans sour.  If Carter was able to get a 20 point boost in the polls from the Iranians taking Americans hostage, Obama should get at least that.  Of course there is always a chance that it becomes a larger regional war and makes oil prices completely skyrocket (especially if Iran goes after the Saudi oil fields) but there probably won't be enough time between the attack (likely in October, if it happens at all) and election day to erode the bump Obama will receive.  Sure Obama's instincts are probably to keep Israel from going forward but I think his desire to win will trump those.

Hizbullah MP: Iranian Nukes Meant to Finish Off the "Zionist Enterprise"

Here is a reminder of what all the hullabaloo about Iran is about. It is about the survival of the State of Israel. Anyone telling you differently is either an idiot or doesn't like Israel of Jews particularly much in the first place:

Tuesday, August 7, 2012

Attack on Iran Coming in October?

That seems to be the word for now, though if that is the word, my guess is that it could come in September.  Anyway, the war drums seem to be getting louder.  First, Michael Oren, the brilliant Israeli Ambassador to the United States wrote today that "Time is Short for Iran Diplomacy":

Nearly two decades ago, Israel started alerting the world about Iran's nuclear program. But the world ignored our warnings, wasting 10 years until the secret nuclear enrichment plant at Natanz was exposed in 2002. Then eight more invaluable years were lost before much of the international community imposed serious sanctions on Iran.

Throughout that time, the ayatollahs systematically lied about their nuclear operations, installing more than 10,000 centrifuges, a significant number of them in a once-secret underground facility at Qom. Iran has blocked International Atomic Energy Agency (IAEA) inspectors from visiting its nuclear sites, refused to answer questions about the military aspects of its program, and rejected all confidence-building measures. Iran has tested long-range missiles capable of reaching any city in the Middle East and, in the future, beyond.


In their first round of talks with Iranian officials, late in 2009, the P5+1 demanded the suspension of all enrichment activities in Iran and the transfer of its stockpiles, then enriched to 3.5%, abroad. Iran rejected those conditions and escalated its enrichment process to 20%, which can be enhanced to weapons-grade in a matter of weeks.

Iran now has amassed roughly 225 pounds of 20% uranium and 11,000 pounds of 3.5%, sufficient for almost five nuclear bombs. Rather than stand by its initial demands, however, the P5+1 is now seeking merely the cessation of Iran's 20% enrichment, the removal of its 20% stockpile, and the closure of the facility at Qom. Arguably, this would be the first stage in the phasing out of Iran's nuclear program. But Iran has rejected even this preliminary gesture.

Iran will continue to drag out the negotiations while installing more centrifuges. These, according to the IAEA, are spinning even faster. The sanctions, which have dealt a blow to Iran's economy, have not affected the nuclear program. Meanwhile, more of Iran's expanding stockpile will be hidden in fortified bunkers beyond Israel's reach.


Time is dwindling and, with each passing day, the lives of eight million Israelis grow increasingly imperiled. The window that opened 20 years ago is now almost shut.

And now there are reports of preparations for an October attack.  Personally I think it would be fitting if Israel attacks on Yom Kippur, which starts the evening of September 25th.  Make the Iranians learn the real meaning of the Day of Atonement.  Though it would probably be too suspicious to have any Israeli military activity on a day where the country usually shuts down completely:

U.S. intelligence analysts watching for indicators of Israeli military action recently reported that there are signs the Jewish state plans an attack against Iran in October.


One veteran Israeli journalist, Channel 2's Ehud Yaari was quoted July 28 as saying he was told the most likely date for an Israeli military strike is October.

"I will give you an impression, and this is just an impression, but it is a strong impression, after conversations with the people one needs to talk with about this matter," Yaari said.

"My impression is that the Americans are convinced that there is very high chance that Israel will decide to attack in Iran before the elections in the U.S."

"The date that they are talking about — they say that the prime minister will have to make a decision around October," he said. "They are getting ready for a possibility like that in the sense that they have to decide what they will do if there is one response or another by Iran, in the follow-up stage."

"But when you talk to them, they talk about [an Israeli strike] almost as a given—as a clear, unassailable fact."

The sensationalist Israeli newsletter DEBKAfile reported July 29 that its sources in Washington report "October is often mentioned these days in the White House, the Pentagon and top military command as the month to watch."

The report said Persian Gulf states would prefer a U.S. attack rather than an Israeli strike. The July 29 report said senior Saudi officials recently told western officials that they have been assured by the United States that the Israelis will be the first to attack and that U.S. forces would later join in. The Saudis also were told that the Obama administration has been pressing the Israelis to hold off from conducting an attack but that Washington cannot be certain that Israel will wait.

The Untied States currently has two aircraft carrier strike groups in the region.

I think the timing does make general sense.  Ramadan ends on August 18 and we know Israel wouldn't want to be accused of violating some else's holy days.  Then we have Rosh Hashanah and Yom Kippur coming in September and it might be hard to disguise activity on those days given usually there isn't much militarily.  So that leaves the very end of September and October as November might be too late due to the rains that usually come to the area around then (negatively impacting visibility and armor mobility, if it comes to that).