Is now the perfect time for Israel to Strike Iran?

One of the issues that has been worrying folks is the prospect of a broader regional middle east war following an Israeli strike on the Iranian nuclear facilities.  I think though that given what has been going on in the surrounding countries recently, striking around now would really limit any blowback.

Think about it, following last month's coup in Egypt, the military, which has a history of cooperating with Israel has been actively destroying smuggling tunnels into Gaza and even actively battling with Hamas and other jihadists in the Sinai.  Hamas' ability to respond will therefore likely be limited as they simply won't have the supplies to mount any concerted effort.  

Hezbollah, Iran's ally/affiliate, has been involved in a costly civil war in Syria and as a guerrilla organization, doesn't have the means to fight a 2 front war.  Any major attack on Israel could result in the loss of Syria from the Iranian axis which is clearly something the Iranians don't want.  Especially since all they can hope is some symbolic revenge on Israel.

As we've seen the last few years, the middle east is anything but stable and so this current window can close quickly.  Israel might be smart to strike while they have a chance to avoid a major conflagration.  

The List of Murderous Terrorists Israel is Being Forced to Free by the Obama Administration

Just turns the stomach. The worst part is that these animals are being turned loose for absolutely nothing in return.  Officially it is a goodwill gesture to the Palestinians to get them to return to the table but it seems to me that its the Palestinians who need to provide a goodwill gesture.  They've been offered almost 100% of what they've been asking for on more than one occasion, only to turn it down.  The Palestinians will never make peace with Israel no matter how many of the "occupied territories" are ceded since they consider all of Israel to be "occupied territory".  Anyway, here is the list of coldblooded killers that are about to be set free:

The list included 17 names of prisoners who had murdered Israelis, including Abu-Musa Salam Ali Atia of Fatah, who murdered Holocaust survivor Isaac Rotenberg in a Petah Tikvah construction site in 1994.
According to Almagor, an organization of terror victims' families that has campaigned against the prisoner release, Rotenberg's family perished in the Sobibor extermination camp during World War II. Rotenberg escaped and joined the partisans fighting the Nazis in the forests of Eastern Europe. He arrived in Israel in 1947, joined the IDF and fought in Israel's Independence War on the Lebanese front.

A plasterer by trade, Rotenberg was attacked by Abu Musa and an accomplice at a construction site where all three men worked in March 1994. He sustained repeated blows to the neck with axes. His wounds induced a coma, and he died two days after the attack. He was survived by his brother and sister, who were also survivors of Sobibor, and by a wife and two children. Rotenberg was 67 when he died.

Rotenberg wasn't the oldest victim of the prisoners who made it onto the list Sunday. Fatah member Ra'ai Ibrahim Salam Ali was jailed in 1994 for the murder of 79-year-old Moris Eisenstatt. Eisenstatt was killed with ax blows to the head while he sat on a public Kfar Saba bench reading a book.
Another prisoner, Salah Ibrahim Ahmad Mugdad, also of Fatah, was imprisoned in 1993 for killing 72-year-old Sirens Hotel security guard Israel Tenenbaum by beating him in the head with a steel rod.

According to Almagor, the Poland-born Tenenbaum had immigrated to Israel in 1957, at age 36, and settled in Moshav Ein Vered. He was an agricultural worker on the moshav, but was working as a night watchman at the hotel in 1993. Tenenbaum was 72 at the time of his death. He was survived by a wife, two children and four grandchildren.

Two of the prisoners, Abu Satta Ahmad Sa'id Aladdin and Abu Sita Talab Mahmad Ayman, were imprisoned in 1994 for the murder of David Dadi and Haim Weizman. After killing Dadi and Weizman as they slept in Weizman's apartment, the attackers cut off their ears as proof of the killing.

Abdel Aal Sa'id Ouda Yusef was imprisoned in 1994 to a 22-year sentence for several grenade attacks, and for his part as an accomplice in the murder of Ian Sean Feinberg and the murder of Sami Ramadan.
Feinberg, a 30-year-old father of three, was a proponent of Palestinian economic development. He was killed by gunmen who stormed a business meeting in Gaza City which he attended in April 1993.

Also on the list was Kour Matwah Hamad Faiz of Fatah, imprisoned in 1985 after he was convicted of killing Menahem Dadon and Salomon Abukasis in 1983 and planning to murder then-prime minister Yitzhak Shamir.

Another two prisoners to be released, Fatah members Sualha Fazah Ahmed Husseini and Sualha Bad Almajed Mahmed Mahmed, were imprisoned for a stabbing attack on a crowded Ramat Gan bus, on the 66 line, in 1990. The two, together with a third accomplice, stabbed wildly at passengers, killing 24-year-old Baruch Heizler and wounding three young women. Heizler was named after his grandfather, who was killed during the Jordanian bombardment of the Jewish neighborhoods of Jerusalem during the 1948 Independence War.

Sha'at Azat Shaban Ata was imprisoned in 1993 for helping to orchestrate the murder of 51-year-old Simcha Levi, a woman who made her living transporting Palestinian day laborers to work in Jewish settlements in the Gaza Strip. In March 1993, three of the women laborers were disguised male attackers, who beat and stabbed her to death.

Maslah Abdullah Salama Salma, a Hamas member likely to be sent to the Gaza Strip after his release, was imprisoned in 1993 for the brutal murder of Petah Tikvah convenience store owner Reuven David. Abdallah, together with an accomplice, entered David's convenience store on May 20, 1991, bound David's arms and legs and beat him to death, before locking the store and fleeing the scene. Born in Iraq in 1932, David was 59 at the time of his death, and was survived by a wife, three children and multiple grandchildren.

The remaining prisoners, in the order listed by the Prisons Service:

• Na'anish Na'if Abdal Jafer Samir, imprisoned in 1989 for the murder of Binyamin Meisner.
• Arsheed A'Hameed Yusef Yusef, imprisoned in 1993 for the murder of Nadal Rabu Ja'ab, Adnan Ajad Dib, Mufid Cana'an, Tawafiq Jaradat and Ibrahim Sa'id Ziwad.
• Al-Haaj Othman Amar Mustafa, imprisoned in 1989 for the murder of Steven Rosenfeld.
• Maklad Mahmoud Zaid Salah, imprisoned in 1993 for the murder of Yeshayahu Deutsch.
• Barbach Faiz Rajab Madhat, imprisoned in 1994 for the murder of Moshe Beker.
• Nashabat Jaabar Yusef Mahmed, imprisoned in 1990 for serving as an accessory to the murder of Amnon Pomerantz.
• Mortja Hasin Ghanam Samir, imprisoned in 1993 for the abduction, torture and murder of Samir Alsilawi, Khaled Malka, Nasser Aqila, Ali al Zaabot.
• Faraj Saleh al-Rimahi, imprisoned in 1992 for the murder of Avraham Kinstler.
• Mansour Omar Abdel Hafiz Asmat, imprisoned in 1993 as an accessory to the murder of Hayim Mizrahi.
• Asarka Mahmad Ahmad Khaled, imprisoned in 1991 for the murder of Annie Ley.
• Jandiya Yusef Radwan Nahad, imprisoned in 1989 for the murder of Zalman Shlein.
• Hamdiya Mahmoud Awed Muhammed, imprisoned in 1989 for the murder of Zalman Shlein.
• Abdel Nabi A-Wahab Gamal Jamil, imprisoned in 1992 for the murder of Shmuel Gersh.
• Ziwad Muhammed Taher Taher, imprisoned in 1993 for the murder of Avraham Cohen.
• Sabih Abed Hamed Borhan, imprisoned in 2001 for the murder of Jamil Muhammad Naim Sabih, Aisha Abdullah Haradin.

Further Proof Peace with the Palestinians Isn't Possible

Watch a convicted terrorist describe the glee that she and her fellow Palestinian busriders felt when hearing the death toll from the brutal Sbarro bombing (she led the suicide bomber to the Sbarro's):

The Sbarro's was full of women and children waiting for pizza.  Check out these details from the Wikipedia entry:

The dead included 13 Israelis, one pregnant American, and one Brazilian, all of them civilians. Additionally, 130 were injured. Chana Nachenberg remains in a persistent vegetative state a dozen years after the attack. 

Yocheved Shoshan, age 10, was killed, and her 15-year-old sister Miriam was severely injured with 60 nails lodged in her body, a hole in her right thigh, third degree burns on 40 percent of her body, and a ruptured spleen. 

... 

Mordechai and Tzira Schijveschuurder, both children of Holocaust survivors were killed along with three of their children. Two other daughters, Leah, 11, and Chaya, 8, were critically injured.^[4] The family was Dutch. During the Holocaust, Tzira's parents were in Bergen Belsen and Theresienstadt. Mordechai's parents successfully hid from the Nazis. 

... 

Chaviv Avrahami, who saw the scene of the attack after the bombing, recounted: "I heard a tremendous explosion, and I was thrown up a metre into the air. I knew immediately that it was a bomb attack, and a catastrophic one. There were people - babies - thrown through the window and covered with blood. The whole street was covered with blood and bodies: the dead and the dying." Naor Shara, a soldier who witnessed the attack, said, "The worst thing I saw, which I think will haunt me all my life, is a baby that was sitting in a stroller outside a shop and was dead. After the explosion, the baby's mother came out of the store and started screaming hysterically."

And Palestinian television treats this woman like a hero.

Where's a drone when you need one.

Former Chief of Israeli Military Intelligence: We Are Running Out of Time on Iran

Looks like Iran is getting to the point where a nuclear breakout could happen quicker than western intelligence services can detect it:

In the past year, Iran has installed thousands of centrifuges, including more than 1,000 advanced ones. A report by the International Atomic Energy Agency states that Iran already has enough low-enriched uranium to produce several nuclear bombs if it chooses to further enrich the fuel. Iran has deliberately refrained from crossing what is perceived as Israel's red line: 240 kilograms (about 530 pounds) of uranium enriched to a level of 19.75 percent.

Nonetheless, Western experts like Graham T. Allison Jr. and Olli Heinonen estimate that if Iran decided to develop a bomb today, it could do so within three to five months. That is assumed to be sufficient lead time for the West to detect and respond to an Iranian decision.

But a recent report from the Institute for Science and International Security estimatesthat at the current pace of installation, Iran could reduce its breakout time to just one month by the end of this year. The report also estimates that at that pace, by mid-2014 Iran could reduce the breakout time to less than two weeks.

Any agreement must ensure that an Iranian breakout is detected quickly enough to allow for a Western response — meaning that the international community must be able to uncover any concealed facilities and activities for the production of fissile material.

A solution will also have to address the potential for a plutonium bomb. In May, Iran announced that the heavy-water reactor in Arak would become operational early next year. Some American and European officials claim that Iran could produce weapons-grade plutonium next summer. These two announcements indicate that Iran is making progress on this alternative track. So far, the West has not paid much attention to the potential for a plutonium-fueled weapon. Now it must do so.

A functioning nuclear reactor in Arak could eventually allow Iran to produce sufficient quantities of plutonium for nuclear bombs. Although Iran would need to build a reprocessing facility to separate the plutonium from the uranium in order to produce a bomb, that should not be the West's primary concern. Western negotiators should instead demand that Iran shut down the Arak reactor.

This is crucial because the West would likely seek to avoid an attack on a "hot" reactor, lest it cause widespread environmental damage. Once Arak is operational, it would effectively be immune from attack and the West would be deprived of its primary "stick" in its efforts to persuade Iran to forgo a military nuclear capability.

Of the three countries that have publicly crossed the nuclear threshold since the Nuclear Non-Proliferation Treaty entered into force in 1970, two — India and North Korea — did so via the plutonium track. In order to deny Iran this route, any agreement between the West and Iran must guarantee that Iran will not retain a breakout or "sneak out" plutonium-production capacity.

Don't Think There is an Equity Bubble? People Are Using Margin Like It's March of 2000.

When the stock market is doing well and people think the Federal Reserve "has their back" (aka the Greenspan Put and now the Bernanke Put), they tend to start borrowing more and more to try to make more money on the market.  All they think about is the upside and they really forget about downside and the risk of things going the wrong way.  Eventually, the margin debt on the street gets so high that they just can't borrow any more and the incremental additional buyers simply aren't there.  At that point, the bubble bursts and people find out that margin works both ways and the market overshoots on the downside.  It looks like we are getting to that point again with inflation-adjusted NYSE margin debt now at March 2000 highs and pretty close to the highs of 2007 (h/t Doug Short).

Federal Tax Receipts Indicate a Slowing Economy

Many people almost exclusively focus on GDP as a measure of how the economy is doing but that number has so many moving parts that it's easy to get more noise than signal.  Inventory building or a big import quarter or government spending can all have a large impact.  Another proxy to look at are federal tax receipts.  As you can see from the chart below, when the economy is doing well tax receipts also do pretty well, growing ~10% year-over-year give or take a few percentage points.  Right now our tax receipts are still growing, 6% year-over-year, but the momentum is going the wrong way.  And if you look at the data over the last 20 years, every time it has fallen to 6% growth or below we have ended up in a recession shortly thereafter.

Snowden's Email Provider is Shutting Down and The Government Won't Let Him Say Why!

As one of my Russian colleagues likes to say, we are becoming more and more like the Soviet Union every day.  Here is the letter from the owner and operator of Lavabit, the email provider that Snowden used:

My Fellow Users,

I have been forced to make a difficult decision: to become complicit in crimes against the American people or walk away from nearly ten years of hard work by shutting down Lavabit. After significant soul searching, I have decided to suspend operations. I wish that I could legally share with you the events that led to my decision. I cannot. I feel you deserve to know what's going on--the first amendment is supposed to guarantee me the freedom to speak out in situations like this. Unfortunately, Congress has passed laws that say otherwise. As things currently stand, I cannot share my experiences over the last six weeks, even though I have twice made the appropriate requests.

What's going to happen now? We've already started preparing the paperwork needed to continue to fight for the Constitution in the Fourth Circuit Court of Appeals. A favorable decision would allow me resurrect Lavabit as an American company.

This experience has taught me one very important lesson: without congressional action or a strong judicial precedent, I would _strongly_ recommend against anyone trusting their private data to a company with physical ties to the United States.

Sincerely,

Ladar Levison
Owner and Operator, Lavabit LLC

Defending the constitution is expensive! Help us by donating to the Lavabit Legal Defense Fund here.

Craig Shirley and Newt Gingrich Give the GOP Surrender Caucus a History Lesson

Things used to be pretty dark for the GOP, standing up for principles helped save it:

By January 1977, only 11% of citizens younger than 30 identified with the Republican Party. The party had been on fumes for years, ever since the Great Depression and only challenged the Democrats for national authority when they screwed up, as in 1946 and 1968, or when Republicans nominated an overwhelmingly popular figure, such as Dwight D. Eisenhower, in 1952.

And with the election of Carter, a smart, moderate Democrat from the South, the prospect for Democratic rule for another generation seemed bright. The party of Andrew Jackson had smothering control of the House, a filibuster-proof majority in the Senate and in the South, there were states such as Mississippi that had almost no elected Republican officeholders.
The only state in the country that had GOP control of the legislature and the governor's mansion was Kansas. The other 49 states had partial or complete Democratic control.

The old ways of accommodating the establishment by the GOP of the 1930s, '40s, '50s and '60s would no longer work. Something else had to be tried. To conservatives such as Reagan, accommodation was tantamount to capitulation and they asked themselves, "If we surrender on everything, what is the purpose of having a Republican Party?"

For several years, the U.S. government had been making plans to yield control and ownership of the Panama Canal to Omar Torrijos, the dictator of the Panama. All of the establishment was going along with it, from Lyndon Johnson to Nixon to Ford, Henry Kissinger and by 1977, Carter. Nearly all the editorialists supported the "giveaway" of the canal at the height of the Cold War.

Control of the canal was vital to American military interests, especially with Soviet control of Cuba and designs on Central America.

Into this void stepped former California Gov. Ronald Reagan, who launched a national campaign to oppose the giveaway. He gave speeches, stumped across the country and testified before Congress. A "New Right" rose up and organized a "Panama Canal Truth Squad" led by Richard Viguerie, Phyllis Schlafly and Paul Weyrich, among others. Petitions were circulated at the grassroots and delivered to Capitol Hill.

In speech after speech, Reagan thundered, "We built it! We paid for it! It is ours! And we are going to keep it!" Polling had shown American support for the two Panama Canal treaties, but by 1978, the American people had switched and agreed with Reagan and the conservatives -- and not Carter.
In the end, the treaties to declare the canal a neutral zone and eventually surrender it to Panama passed by the barest of margins, only by one and two votes more than the two thirds required in the Senate.

The war had been lost but the battle was worth it. Principles had been established and arguments made. It led to Republican victories in the off year elections of 1978 and launched Reagan's third campaign for the White House.

Years later, Carter himself acknowledged the potency of the canal issue in the election of 1980, which not only saw the rise of Reagan, but the loss of scores more Democrats who had voted for the treaties.

First Paul Krugman and Now Thomas Friedman Gets Something Completely Wrong in His Column

In yesterday's column titled "Daring to Fail", Thomas Friedman lauds Kerry's efforts to bring the Palestinians and Israelis together.  In making a point that Israel really needs to make peace he writes this:

Let’s start with a small item in Britain’s Independent newspaper on July 24, which began: “He once sang, ‘You Gotta Get Outta This Place,’ but now Eric Burdon is not even turning up at all having deciding to withdraw from a planned concert in Israel. ... The Animals frontman, whose hits include ‘House of the Rising Sun,’ and ‘San Franciscan Nights,’ had been due to perform alongside local Israeli bands in Binyamina. ... However, in a statement, Mr. Burdon’s management, said: ‘We’ve been receiving mounting pressure, including numerous threatening e-mails, daily. ...’ Burdon was just the latest of a rising number of artists and intellectuals who have started boycotting Israel over the occupation issue.”

Uhhh, I hate to break it to you but Eric Burdon never cancelled the show and did play in Israel.  Here is what he said, "it was not my decision to cancel the show, it was my manager's, who as a result of lots of threatening emails she received, was genuinely afraid for my life," he said.  "I'm not afraid to perform here and very happy to be back in Israel."  And here is a picture from the show:

Thomas Friedman really had two things wrong.  First, and importantly, the show went on (almost an entire week before he published his column!).  Secondly, even the original story had nothing to do with Eric Burdon or his manager's feelings about the disputed territories.  It was about people threatening his life if he performed there.  There's a pretty big difference. 

Seriously these overpaid New York Times columnists (Paul Krugman got basic math wrong the other day) need better fact-checkers.

Obama's Nonsensical Housing Reform Plan

After reading Obama's remarks, I honestly had to wonder whether people actually thought about the plan he was going to propose or they just had him say things that sound good in front of a friendly audience?  Seriously.  And of course he couldn't resist a remark about " an endless parade of distractions and political posturing and phony scandals".  Why scandals are phony?  Did the NSA not collect data on innocent Americans?  Did the IRS not target groups that were seen as opposed to the administration?  Did an Ambassador not die?  I'd really like to know.  Anyway, on to his plan:

1.  "Congress should pass a good, bipartisan idea to allow every homeowner the chance to save thousands of dollars a year by refinancing their mortgage at today's rates."  This definitely sounds good but why exactly does it need Congressional action?  The reasons people typically can't refinance are because they are underwater in their home and no bank will give them a new loan at the home valuation that they need to get rid of the first mortgage and because they don't meet current credit/lending standards.  Congress "fixing" this only creates more problems.  First, the current owner of the mortgage is going to take a loss.  So banks are going to lose capital and investors in mortgage backed securities will see the valuations of those securities go down.  Considering the Federal Reserve is having to prop up that market right now, I don't think it could use any more bad news like having the government cram losses into them.  Also, if the reason for the lack of ability to refinance is bad credit, is a new loan going to fix anything?  Plus, if you force banks to give new loans to people with bad credit aren't you just creating another class of subprime loans that will one day blow up in our faces?

2.  "We're cutting red tape for responsible families who want to get a mortgage but keep getting rejected by the banks.  We need to give well-qualified Americans who lost their jobs during the crisis a fair chance to get a loan if they've worked hard to repair their credit."  How do you judge if someone has "worked hard to repair their credit"?  If it's improved from 400 to 500?  Even irresponsible people have periods where they haven't done anything completely idiotic or simply have periods of good luck.  But we're talking about 30 year mortgages here.  If people have had financial disasters in the past they probably are more likely to have more in the future (works the same as heart attacks) and any bank giving them additional funds are liable to take a loss.  So once again, this would create another subprime lending mess.

3.  "And step three is something that you don't always hear about when it comes to the housing market, and that is fixing our broken immigration system.  It would actually help our housing market. "  So printing dollars isn't working well enough now we need to get more people too?  Anyway, he might have a point if he was talking about fixing the immigration system so educated, skilled people could come here easier.  But he's not.  The vast majority of people who are going to be assisted by the current immigration proposals probably don't have good enough credit to buy a home.

4.   "Let's put construction back -- construction workers back to work repairing rundown homes, tearing down vacant properties so that the value of homes in those surrounding areas start picking up."  Just what we need, more government funded construction jobs.  Because that worked oh so well with his $900 billion stimulus (remember that?).   Anyway, what we need are industrial jobs in sustainable industries, not jobs that go away once the project is done.

5.  "Instead, let's invest in affordable rental housing.  Let's bring together cities and states to address local barriers that drive up rents for working families. "  Does that mean he wants rent control which might keep rents low but also leads to a restriction of supply?  Or does he want to overrule local zoning boards and force them to put up low-income housing whether they want to or not?

6.  "Right now there's a bipartisan group of senators working to end Fannie and Freddie as we know them.  And I support these kinds of reform efforts...   I believe that our housing system should operate where there's a limited government role and private lending should be the backbone of the housing market.  And that includes, by the way, community-based lenders who view their borrowers not as a number, but as a neighbor."  I actually like this section a lot.  Honestly.  I'm wondering if he put it in there so he can take credit for it or something when it happens because it actually flies in the face of other sections of his plan.  First, because Fannie and Freddie were able to borrow money with the full backing of the US government, they helped reduce mortgage rates.  Hence, getting rid of them will most likely increase mortgage rates somewhat making housing less affordable.  Also, community based lenders are not the folks who will be too willing to give loans to people "working really hard to improve their credit".  Community banks tend to hold on to the mortgages they lend and not sell them off for someone else to worry about hence they are much more conservative than the fly-by-night brokers that originated 2/3 of the subprime loans in 2006.  Taken together, this part of the plan will likely reduce affordability and access, which seems to be the exact opposite of the spirit of the speech.  I guess I'm happier though with Obama being right for the wrong reasons than being just plain wrong like he is usually.

And honestly I simply question the need to do much, if anything, to encourage greater home ownership.  The home ownership rate is 65.4% today while pre-bubble it was closer to 64%.  There is simply no evidence that Congress needs to enact any major legislation other than to get rid of Fannie and Freddie.

This Chart Should Keep You From Worrying About Carbon Dioxide and Temperatures

Looking at historical carbon dioxide (purple line) and temperature (blue line) levels, recent fluctuations are nothing more than a blip (see article here):

The Pro-NSA Camp is Getting Unhinged

Last night's piece by Jonathan Tobin in Commentary, "Snowden, Amash and the Isolationist Peril", is a great example of how the pro-surveillance forces in the GOP are getting desperate.  The tide within the GOP is shifting and they clearly don't like it.  They've decided to flush logic down the drain in favor of emotion and insults.  The main points of the piece were:

1.  Those that want to restore our civil liberties are part of the "September 10th Caucus", as in they want to turn the clock back to before 9/11, inviting another mass casualty attack

2.  If you value civil liberties you are an isolationist

3.  The worldwide travel warning and closure of our embassies justifies the NSA spying

The first point really goes hand in hand with Chris Christie's comments against libertarianism and Rand Paul.  If you aren't for NSA spying on you, your wife and your children, you are in effect betraying the widows and orphans of 9/11.  Please.  I saw 9/11 transpire from my office window.  I didn't need to watch CNN, I was seeing it myself and that image and feeling is burnt into my soul.  I have no problem with the national security apparatus going after terrorists.  I WANT them to go after terrorists.  What I don't want is for them to go after AMERICANS without any probable cause.   I don't want them molesting some 3 year old girl with spina bifida in a wheelchair on the way to Disney World for no legitimate reason.  How in the heck does that add to our security or prevent another 9/11?  The Israelis have much more security than the US but they don't violate little children like that mostly because they are out to actually stop terrorists, not make sure that the ethnic composition of their security checks is appropriate.  What is also laughable about referring to a "September 10th caucus" is that Jim Sensenbrenner voted for the Amash amendment to stop NSA spying on Americans and he was the author of the Patriot Act.  He rightly believes that the government is abusing the power it was given and is not weak on national security at all.

It's also laughable to claim that the government simply didn't have the means to stop 9/11 on September 10th.  That is completely untrue.  The CIA knew that two al-Qaeda operatives (who eventually made it on to jets used in the 9/11 attacks) were living in California and purposely hid the information from the FBI (despite being legally bound to notify them).  If the FBI had this information, they would have had probable cause, been able to get warrants and stop the attacks before they began.  I don't think that we really need to let the government turn on the microphones in our phones remotely and start recording whenever they want.  Oh all these programs are strictly monitored to ensure they aren't abused?  I have two problems.  I really have no faith in secret government courts to limit government power.  And also, if oversight is so strict how come they still don't know for certain what exactly Snowden took?  Just because the NSA has all of our data doesn't mean they are efficiently policing themselves.

The second argument that is being used is that people who don' like the NSA spying are isolationists.  That is actually confusing two different issues, national security and interventionism.  You can be someone who wants the NSA to spy the crap out of American citizens and yet not want to send a dime to Pakistan.  Also, you might want to maximize civil liberties at home and want the US to intervene in the name of freedom and democracy across the globe.  Or you can be a bunch of things in between.  Not wanting your kids phones tapped by the NSA does not mean you don't want to give foreign aid to Israel or that you want to withdraw from NATO or something.  This is just a ludicrous straw man created by some very nervous people.

The third point, that the worldwide travel warning justifies the NSA snooping is about as valid as the other two arguments.  Yes an intercepted communication led to the alert, but it was a communication from al-Qaeda chief al-Zawahiri to the chief of the Yemen affiliate ordering an attack.  Last I checked neither of them were in the US and even if they were, there probably wouldn't be too much difficulty in getting a warrant as probably cause is pretty sufficient to snoop on both men.  All this proves is that the NSA does some good things, but it doesn't have anything to do with the fact that innocent Americans are being snooped on.

People like Tobin and Christie need to get their acts together if they don't want to continue to make fools of themselves. 

Peggy Noonan Eviscerates Chris Christie

When she's on point, she's on point:

To call growing concerns about the size, depth, history, ways and operations of our now-huge national-security operation "esoteric" or merely abstract is, simply, absurd. Our federal government is involved in massive data collection that apparently includes a database of almost every phone call made in the U.S. The adequacy of oversight for this system is at best unclear. The courts involved are shadowed in secrecy and controversy. Is it really wrong or foolhardy or unacceptably thoughtful to wonder if the surveillance apparatus is excessive, or will be abused, or will erode, or perhaps in time end, any expectation of communications privacy held by honest citizens?

It is not. These are right and appropriate concerns, very American ones.

Consider just two stories from the past few days. The Wall Street Journal's Jennifer Valentino-Devries and Danny Yadron had a stunning piece Friday that touches on the technological aspect of what our government can now do. The FBI is able to remotely activate microphone on phones running Android software. They can now record conversations in this way. They can do the same with microphones in laptops. They can get to you in a lot of ways! Does this make you nervous? If not, why not?

Reuters has a piece just today reporting that data gathered by the National Security Agency has been shared with the Drug Enforcement Administration. The agency that is supposed to be in charge of counterterrorism is sharing data with an agency working in the area of domestic criminal investigations.

Luckily Lois Lerner is on leave, so the IRS isn't involved yet.

The concerns of normal Americans about the new world we're entering—the world where Big Brother seems inexorably to be coming to life and we are all, at least potentially Winston Smith—is not only legitimate, it is wise and historically grounded.

...

So Christie is wrong that concerns and reservations about surveillance are the province of intellectuals and theorists—they're not. He's wrong that their concerns are merely abstract—they're concrete. Americans don't want to be listened in to, and they don't want their emails read by strangers, especially the government. His stand isn't even politically shrewd—it needlessly offends sincere skeptics and isn't the position of the majority of his party, I suppose with the exception of big ticket donors in Aspen.

And Christie's argument wasn't even…an argument. It was a manipulation. If you don't see it his way you don't know what 9/11 was—you weren't there, you don't know how people suffered. If you don't see it his way you don't care about the feelings of the widows and orphans.

It seems to me telling that he either doesn't have a logical argument or doesn't think he has to make it.

...

It is up to the people in the country, to citizens, to control and limit government surveillance, to the extent they can and in accord with true national-security needs.

That is what a conservative, with all his inherent skepticism toward groups of humans wielding largely unaccountable governmental power, would want to do. What is surprising here is that Christie is so quick and sloppy with his denunciation of conservatives who are acting like conservatives. It is odd because he, too, is a conservative.

His remarks were bad in another way, and it is connected to the word manipulation.

His comments on surveillance were an appeal only to emotion, not to logic and argument and fact, but emotion. This is increasingly the way politics is done in America now. It's how they do politics at the White House, where the president usually doesn't bother to make a case and instead just tries to set a mood. But it's not how Christie normally approaches public questions. In speeches and appearances in the past he's addressed the logic of the issue at hand, whether it's spending or the implications of pension promises, or union contracts, or tax rates. That's part of why he's been so popular—he's blunt and logical, has an argument to make and makes it clearly.

Maybe he's using emotion and special pleading here because he was speaking on a national issue, not a state one, and felt insecure. If this is the best he can do he should feel insecure.

The Federal Reserve Just Lost $192 billion

The Fed is learning the downside of having an enormous balance sheet of US Treasuries:

The yield on 10-year U.S. Treasuries (^TNX) has surged 66% over the past three months. And bond investors, especially those with jumbo-sized positions, are getting hammered. How much money has the Federal Reserve lost?

At the end of July, the Federal Reserve held $1.98 trillion in U.S. Treasuries. (See chart below) That figure represents just over half of the Fed's $3.6 trillion balance sheet. 

Scott Minerd, the Global Chief Investment Officer at Guggenheim Partners notes: 

"Our estimate shows that the spike in bond yields since the first quarter of this year has caused a mark-to-market loss of $192 billion on the Fed's holding assets, equivalent to approximately all of the unrealized gains that the Fed had accumulated since it began to implement quantitative easing in late 2008. Although in keeping with their own accounting principles the Fed does not record mark-to-market losses, a continued increase in bond yields would incur actual losses should the central bank decide to sell assets."

...

Granted, the Bernanke & Co. does not value its massive bond portfolio on a mark-to-market basis. But the surge in interest rates has already erased almost $200 billion in the Federal Reserve's capital. But that's not all.

If interest rates continue to head higher, the value of the Fed's liquid assets that it could sell would decline and further undermine its capital cushion. And if the velocity of rate increases intensifies, the Fed, with only $62 billion in capital, could see its entire capital base completely wiped out.

This could have a serious domino effect. It could paralyze the Fed's ability to defend the dollar's purchasing power, causing Treasury prices (NYSEARCA:TLT) to fall further and thereby push interest rates even higher. Just imagine the unimaginable; a weakened and impotent Fed.

Paul Krugman Has Lost the Ability to Do Basic Math

In his latest biased Republican-bashing piece, Krugman included this nugget:

Then House leaders announced plans to hold a vote cutting spending on food stamps in half — a demand that is likely to sink the already struggling effort to agree with the Senate on a farm bill.

Oh those horrible Republicans, out to starve the poor!  Not so fast.  Republicans want to cut food stamps by $40 billion over 10 years or in other words by about $4 billion a year. According to the CBO, the Food Stamp program will cost the taxpayer about $82.5 billion in 2013, so we are talking about a 4.8% cut, a far cry from 50%.  Damn decimal places. 

A Funny Yet Serious Anti-Obama Video from Supporters of the Egyptian Coup

The video is silly and the subtitles are funny in their aranglish sort of way but supporters of the Egyptian coup do seem to be seriously pissed off at Obama.  Even the Egyptian Army chief has criticized him recently:

Waiter/Bartending Jobs are Skyrocketing while Manufacturing Jobs are Diving

Here is a pretty scary chart comparing the employment trends for the food service industry (the blue line), all full time employment (the red line) and manufacturing jobs (the green line).  It's shocking that there are 30%+ fewer manufacturing jobs now than in 1990 despite a 30% larger working age population.  We have the same number of people employed in manufacturing today as we did in May 1941!:

How bad is the jobs market? We currently have the same number of full time jobs as in April of 2005 but 20 million more people aged 16 and over

We're really getting close to having a lost decade.  We have the same number of full time jobs today as we did back in April of 2005, over 7 years ago, while in the interim our working age population has grown by 20 million!  That's millions of people who know have to work part time and essentially say good bye to any hopes of a career or savings.  Check out this chart of full time jobs:

Now compare that with a chart of part time jobs:

As you can see, part time jobs have hit an all time high while full time jobs have been languishing.  That is really a bad sign.  And as you can see from the chart below, historically they grew at pretty similar rates, it's only recently that we have seen such a massive bifurcation:

How can we expect our economy to grow when the only jobs people can get are part-time and usually don't involve actually manufacturing anything other than maybe a hamburger and fries?  We can't survive long term as just being a service economy, we've seen what happens with that.  We need real, full time jobs so people can have actual careers and actual futures.  We need to continue the de-unionization process, loosen the environmental statutes so companies can actually open manufacturing plants in this country again and reform our corporate tax system to get corporations to repatriate the billions upon billions of dollars they have parked overseas.

Putting our GDP Growth in Perspective. In the last 12 months, GDP grew $473 billion. Our debt grew $882 billion!

People have this misconception that our GDP is the economy.  No, it's a proxy for the economy that measures how much we spend every year.  If someone without any sort of job or means of support rings up $100,000 in credit card bills, that is counted as $100,000 in added GDP despite the fact that no sane person would consider that $100,000 expenditure to be a good thing and a sign we are doing well or getting wealthier.  With that in mind, let's take a look at the latest GDP figures and compare it to the latest debt figures.  Over the last 4 quarters, nominal GDP has grown by $473 billion, which even by itself isn't really very much.  When you take inflation into account our GDP has only grown by 1.4% in the last year, which the rate of growth we were at in early 2008, right before the economy crumbled.  What is even worse is the fact that during the same period debt grew from $15.9 Trillion to $16.7 Trillion, a whopping $882 billion difference in just 1 year.  In other words, the only reason GDP is positive is because we are using our credit card, not because the economy is actually doing well at all.  Our expansionist fiscal and monetary policies have not helped us recover at all, they just rang up our debts.

There were 66% More Homicides in Chicago in 2012 Than KIA's in Afghanistan

I heard a politician mention that more Americans are killed in Chicago than Afghanistan and I automatically thought it had to be wrong, that they were exaggerating.  Shockingly, they were completely correct.  Last year there were 516 homicides in Chicago but only 310 US servicemen killed in action in Afghanistan.  Even at the peak of violence in Afghanistan in 2010, we still lost less people (499) than we lost in Chicago last year. That is pretty shocking considering we are facing armed guerrillas in Afghanistan that are actively trying to kill Americans.  Looks like the urban policies of the Democrats are more lethal than RPG's and IED's.