"In full sunshine it might have had a cheap and cheerful carnival atmosphere, but under grey skies it hovered, a grotesque malignancy, sad and horrible, that was somewhere between tragedy and farce. And Spain seemed distant."
Paul Theroux on Costa Del Sol
Friday, January 30, 2009
Thursday, January 29, 2009
Legendary master Helio Gracie died at age of 95 years old this morning, January 01/29, at his home in the mountain region of Rio de Janeiro. In preliminary information, Master Helio had not been well for the past two days and likely passed with complications from a general infection, as we were informed by an acquaintance close to the family members. The burial of the man responsible for the creation of Gracie Jiu-Jitsu is scheduled for 5:00 PM today in the Petropolis cemetery.
A 40-Year Wish List
You won't believe what's in that stimulus bill.
Article
more in Opinion »
"Never let a serious crisis go to waste. What I mean by that is it's an opportunity to do things you couldn't do before."
So said White House Chief of Staff Rahm Emanuel in November, and Democrats in Congress are certainly taking his advice to heart. The 647-page, $825 billion House legislation is being sold as an economic "stimulus," but now that Democrats have finally released the details we understand Rahm's point much better. This is a political wonder that manages to spend money on just about every pent-up Democratic proposal of the last 40 years.
We've looked it over, and even we can't quite believe it. There's $1 billion for Amtrak, the federal railroad that hasn't turned a profit in 40 years; $2 billion for child-care subsidies; $50 million for that great engine of job creation, the National Endowment for the Arts; $400 million for global-warming research and another $2.4 billion for carbon-capture demonstration projects. There's even $650 million on top of the billions already doled out to pay for digital TV conversion coupons.
In selling the plan, President Obama has said this bill will make "dramatic investments to revive our flagging economy." Well, you be the judge. Some $30 billion, or less than 5% of the spending in the bill, is for fixing bridges or other highway projects. There's another $40 billion for broadband and electric grid development, airports and clean water projects that are arguably worthwhile priorities.
Add the roughly $20 billion for business tax cuts, and by our estimate only $90 billion out of $825 billion, or about 12 cents of every $1, is for something that can plausibly be considered a growth stimulus. And even many of these projects aren't likely to help the economy immediately. As Peter Orszag, the President's new budget director, told Congress a year ago, "even those [public works] that are 'on the shelf' generally cannot be undertaken quickly enough to provide timely stimulus to the economy."
Most of the rest of this project spending will go to such things as renewable energy funding ($8 billion) or mass transit ($6 billion) that have a low or negative return on investment. Most urban transit systems are so badly managed that their fares cover less than half of their costs. However, the people who operate these systems belong to public-employee unions that are campaign contributors to . . . guess which party?
Here's another lu-lu: Congress wants to spend $600 million more for the federal government to buy new cars. Uncle Sam already spends $3 billion a year on its fleet of 600,000 vehicles. Congress also wants to spend $7 billion for modernizing federal buildings and facilities. The Smithsonian is targeted to receive $150 million; we love the Smithsonian, too, but this is a job creator?
Another "stimulus" secret is that some $252 billion is for income-transfer payments -- that is, not investments that arguably help everyone, but cash or benefits to individuals for doing nothing at all. There's $81 billion for Medicaid, $36 billion for expanded unemployment benefits, $20 billion for food stamps, and $83 billion for the earned income credit for people who don't pay income tax. While some of that may be justified to help poorer Americans ride out the recession, they aren't job creators.
As for the promise of accountability, some $54 billion will go to federal programs that the Office of Management and Budget or the Government Accountability Office have already criticized as "ineffective" or unable to pass basic financial audits. These include the Economic Development Administration, the Small Business Administration, the 10 federal job training programs, and many more.
Oh, and don't forget education, which would get $66 billion more. That's more than the entire Education Department spent a mere 10 years ago and is on top of the doubling under President Bush. Some $6 billion of this will subsidize university building projects. If you think the intention here is to help kids learn, the House declares on page 257 that "No recipient . . . shall use such funds to provide financial assistance to students to attend private elementary or secondary schools." Horrors: Some money might go to nonunion teachers.
The larger fiscal issue here is whether this spending bonanza will become part of the annual "budget baseline" that Congress uses as the new floor when calculating how much to increase spending the following year, and into the future. Democrats insist that it will not. But it's hard -- no, impossible -- to believe that Congress will cut spending next year on any of these programs from their new, higher levels. The likelihood is that this allegedly emergency spending will become a permanent addition to federal outlays -- increasing pressure for tax increases in the bargain. Any Blue Dog Democrat who votes for this ought to turn in his "deficit hawk" credentials.
This is supposed to be a new era of bipartisanship, but this bill was written based on the wish list of every living -- or dead -- Democratic interest group. As Speaker Nancy Pelosi put it, "We won the election. We wrote the bill." So they did. Republicans should let them take all of the credit.
You won't believe what's in that stimulus bill.
Article
more in Opinion »
"Never let a serious crisis go to waste. What I mean by that is it's an opportunity to do things you couldn't do before."
So said White House Chief of Staff Rahm Emanuel in November, and Democrats in Congress are certainly taking his advice to heart. The 647-page, $825 billion House legislation is being sold as an economic "stimulus," but now that Democrats have finally released the details we understand Rahm's point much better. This is a political wonder that manages to spend money on just about every pent-up Democratic proposal of the last 40 years.
We've looked it over, and even we can't quite believe it. There's $1 billion for Amtrak, the federal railroad that hasn't turned a profit in 40 years; $2 billion for child-care subsidies; $50 million for that great engine of job creation, the National Endowment for the Arts; $400 million for global-warming research and another $2.4 billion for carbon-capture demonstration projects. There's even $650 million on top of the billions already doled out to pay for digital TV conversion coupons.
In selling the plan, President Obama has said this bill will make "dramatic investments to revive our flagging economy." Well, you be the judge. Some $30 billion, or less than 5% of the spending in the bill, is for fixing bridges or other highway projects. There's another $40 billion for broadband and electric grid development, airports and clean water projects that are arguably worthwhile priorities.
Add the roughly $20 billion for business tax cuts, and by our estimate only $90 billion out of $825 billion, or about 12 cents of every $1, is for something that can plausibly be considered a growth stimulus. And even many of these projects aren't likely to help the economy immediately. As Peter Orszag, the President's new budget director, told Congress a year ago, "even those [public works] that are 'on the shelf' generally cannot be undertaken quickly enough to provide timely stimulus to the economy."
Most of the rest of this project spending will go to such things as renewable energy funding ($8 billion) or mass transit ($6 billion) that have a low or negative return on investment. Most urban transit systems are so badly managed that their fares cover less than half of their costs. However, the people who operate these systems belong to public-employee unions that are campaign contributors to . . . guess which party?
Here's another lu-lu: Congress wants to spend $600 million more for the federal government to buy new cars. Uncle Sam already spends $3 billion a year on its fleet of 600,000 vehicles. Congress also wants to spend $7 billion for modernizing federal buildings and facilities. The Smithsonian is targeted to receive $150 million; we love the Smithsonian, too, but this is a job creator?
Another "stimulus" secret is that some $252 billion is for income-transfer payments -- that is, not investments that arguably help everyone, but cash or benefits to individuals for doing nothing at all. There's $81 billion for Medicaid, $36 billion for expanded unemployment benefits, $20 billion for food stamps, and $83 billion for the earned income credit for people who don't pay income tax. While some of that may be justified to help poorer Americans ride out the recession, they aren't job creators.
As for the promise of accountability, some $54 billion will go to federal programs that the Office of Management and Budget or the Government Accountability Office have already criticized as "ineffective" or unable to pass basic financial audits. These include the Economic Development Administration, the Small Business Administration, the 10 federal job training programs, and many more.
Oh, and don't forget education, which would get $66 billion more. That's more than the entire Education Department spent a mere 10 years ago and is on top of the doubling under President Bush. Some $6 billion of this will subsidize university building projects. If you think the intention here is to help kids learn, the House declares on page 257 that "No recipient . . . shall use such funds to provide financial assistance to students to attend private elementary or secondary schools." Horrors: Some money might go to nonunion teachers.
The larger fiscal issue here is whether this spending bonanza will become part of the annual "budget baseline" that Congress uses as the new floor when calculating how much to increase spending the following year, and into the future. Democrats insist that it will not. But it's hard -- no, impossible -- to believe that Congress will cut spending next year on any of these programs from their new, higher levels. The likelihood is that this allegedly emergency spending will become a permanent addition to federal outlays -- increasing pressure for tax increases in the bargain. Any Blue Dog Democrat who votes for this ought to turn in his "deficit hawk" credentials.
This is supposed to be a new era of bipartisanship, but this bill was written based on the wish list of every living -- or dead -- Democratic interest group. As Speaker Nancy Pelosi put it, "We won the election. We wrote the bill." So they did. Republicans should let them take all of the credit.
Sunday, January 25, 2009
Wednesday, January 21, 2009
The Obama presidency: Here comes socialism
By Dick Morris
Posted: 01/20/09 06:12 PM [ET]
2009-2010 will rank with 1913-14, 1933-36, 1964-65 and 1981-82 as years that will permanently change our government, politics and lives. Just as the stars were aligned for Wilson, Roosevelt, Johnson and Reagan, they are aligned for Obama. Simply put, we enter his administration as free-enterprise, market-dominated, laissez-faire America. We will shortly become like Germany, France, the United Kingdom, or Sweden — a socialist democracy in which the government dominates the economy, determines private-sector priorities and offers a vastly expanded range of services to many more people at much higher taxes.
Obama will accomplish his agenda of “reform” under the rubric of “recovery.” Using the electoral mandate bestowed on a Democratic Congress by restless voters and the economic power given his administration by terrified Americans, he will change our country fundamentally in the name of lifting the depression. His stimulus packages won’t do much to shorten the downturn — although they will make it less painful — but they will do a great deal to change our nation.
In implementing his agenda, Barack Obama will emulate the example of Franklin D. Roosevelt. (Not the liberal mythology of the New Deal, but the actuality of what it accomplished.) When FDR took office, he was enormously successful in averting a total collapse of the banking system and the economy. But his New Deal measures only succeeded in lowering the unemployment rate from 23 percent in 1933, when he took office, to 13 percent in the summer of 1937. It never went lower. And his policies of over-regulation generated such business uncertainty that they triggered a second-term recession. Unemployment in 1938 rose to 17 percent and, in 1940, on the verge of the war-driven recovery, stood at 15 percent. (These data and the real story of Hoover’s and Roosevelt’s missteps, uncolored by ideology, are available in The Forgotten Man by Amity Shlaes, copyright 2007.)
But in the name of a largely unsuccessful effort to end the Depression, Roosevelt passed crucial and permanent reforms that have dominated our lives ever since, including Social Security, the creation of the Securities and Exchange Commission, unionization under the Wagner Act, the federal minimum wage and a host of other fundamental changes.
Obama’s record will be similar, although less wise and more destructive. He will begin by passing every program for which liberals have lusted for decades, from alternative-energy sources to school renovations, infrastructure repairs and technology enhancements. These are all good programs, but they normally would be stretched out for years. But freed of any constraint on the deficit — indeed, empowered by a mandate to raise it as high as possible — Obama will do them all rather quickly.
But it is not his spending that will transform our political system, it is his tax and welfare policies. In the name of short-term stimulus, he will give every American family (who makes less than $200,000) a welfare check of $1,000 euphemistically called a refundable tax credit. And he will so sharply cut taxes on the middle class and the poor that the number of Americans who pay no federal income tax will rise from the current one-third of all households to more than half. In the process, he will create a permanent electoral majority that does not pay taxes, but counts on ever-expanding welfare checks from the government. The dependency on the dole, formerly limited in pre-Clinton days to 14 million women and children on Aid to Families with Dependent Children, will now grow to a clear majority of the American population.
Will he raise taxes? Why should he? With a congressional mandate to run the deficit up as high as need be, there is no reason to raise taxes now and risk aggravating the depression. Instead, Obama will follow the opposite of the Reagan strategy. Reagan cut taxes and increased the deficit so that liberals could not increase spending. Obama will raise spending and increase the deficit so that conservatives cannot cut taxes. And, when the economy is restored, he will raise taxes with impunity, since the only people who will have to pay them would be rich Republicans.
In the name of stabilizing the banking system, Obama will nationalize it. Using Troubled Asset Relief Program funds to write generous checks to needy financial institutions, his administration will demand preferred stock in exchange. Preferred stock gets dividends before common stockholders do. With the massive debt these companies will owe to the government, they will only be able to afford dividends for preferred stockholders — the government, not private investors. So who will buy common stock? And the government will demand that its bills be paid before any profits that might materialize are reinvested in the financial institution, so how will the value of the stocks ever grow? Devoid of private investors, these institutions will fall ever more under government control.
Obama will begin the process by limiting executive compensation. Then he will urge restructuring and lowering of home mortgages in danger of default (as the feds have already done with Citibank).
Then will come guidance on the loans to make and government instructions on the types of enterprises to favor. God grant that some Blagojevich type is not in charge of the program, using his power to line his pockets. The United States will find itself with an economic system comparable to that of Japan, where the all-powerful bureaucracy at MITI (Ministry of International Trade and Industry) manages the economy, often making mistakes like giving mainframe computers priority over the development of laptops.
But it is the healthcare system that will experience the most dramatic and traumatic of changes. The current debate between erecting a Medicare-like governmental single payer or channeling coverage through private insurance misses the essential point. Without a lot more doctors, nurses, clinics, equipment and hospital beds, health resources will be strained to the breaking point. The people and equipment that now serve 250 million Americans and largely neglect all but the emergency needs of the other 50 million will now have to serve everyone. And, as government imposes ever more Draconian price controls and income limits on doctors, the supply of practitioners and equipment will decline as the demand escalates. Price increases will be out of the question, so the government will impose healthcare rationing, denying the older and sicker among us the care they need and even barring them from paying for it themselves. (Rationing based on income and price will be seen as immoral.)
And Obama will move to change permanently the partisan balance in America. He will move quickly to legalize all those who have been in America for five years, albeit illegally, and to smooth their paths to citizenship and voting. He will weaken border controls in an attempt to hike the Latino vote as high as he can in order to make red states like Texas into blue states like California. By the time he is finished, Latinos and African-Americans will cast a combined 30 percent of the vote. If they go by top-heavy margins for the Democrats, as they did in 2008, it will assure Democratic domination (until they move up the economic ladder and become good Republicans).
And he will enact the check-off card system for determining labor union representation, repealing the secret ballot in union elections. The result will be to raise the proportion of the labor force in unions up to the high teens from the current level of about 12 percent.
Finally, he will use the expansive powers of the Federal Communications Commission to impose “local” control and ownership of radio stations and to impose the “fairness doctrine” on talk radio. The effect will be to drive talk radio to the Internet, fundamentally change its economics, and retard its growth for years hence.
But none of these changes will cure the depression. It will end when the private sector works through the high debt levels that triggered the collapse in the first place. And, then, the large stimulus package deficits will likely lead to rapid inflation, probably necessitating a second recession to cure it.
So Obama’s name will be mud by 2012 and probably by 2010 as well. And the Republican Party will make big gains and regain much of its lost power.
But it will be too late to reverse the socialism of much of the economy, the demographic change in the electorate, the rationing of healthcare by the government, the surge of unionization and the crippling of talk radio.
Morris, a former adviser to Sen. Trent Lott (R-Miss.) and President Bill Clinton, is the author of Outrage. To get all of Dick Morris’s and Eileen McGann’s columns for free by email, go to www.dickmorris.com. To order a signed copy of their new best-selling book, Fleeced, go to dickmorris.com.
By Dick Morris
Posted: 01/20/09 06:12 PM [ET]
2009-2010 will rank with 1913-14, 1933-36, 1964-65 and 1981-82 as years that will permanently change our government, politics and lives. Just as the stars were aligned for Wilson, Roosevelt, Johnson and Reagan, they are aligned for Obama. Simply put, we enter his administration as free-enterprise, market-dominated, laissez-faire America. We will shortly become like Germany, France, the United Kingdom, or Sweden — a socialist democracy in which the government dominates the economy, determines private-sector priorities and offers a vastly expanded range of services to many more people at much higher taxes.
Obama will accomplish his agenda of “reform” under the rubric of “recovery.” Using the electoral mandate bestowed on a Democratic Congress by restless voters and the economic power given his administration by terrified Americans, he will change our country fundamentally in the name of lifting the depression. His stimulus packages won’t do much to shorten the downturn — although they will make it less painful — but they will do a great deal to change our nation.
In implementing his agenda, Barack Obama will emulate the example of Franklin D. Roosevelt. (Not the liberal mythology of the New Deal, but the actuality of what it accomplished.) When FDR took office, he was enormously successful in averting a total collapse of the banking system and the economy. But his New Deal measures only succeeded in lowering the unemployment rate from 23 percent in 1933, when he took office, to 13 percent in the summer of 1937. It never went lower. And his policies of over-regulation generated such business uncertainty that they triggered a second-term recession. Unemployment in 1938 rose to 17 percent and, in 1940, on the verge of the war-driven recovery, stood at 15 percent. (These data and the real story of Hoover’s and Roosevelt’s missteps, uncolored by ideology, are available in The Forgotten Man by Amity Shlaes, copyright 2007.)
But in the name of a largely unsuccessful effort to end the Depression, Roosevelt passed crucial and permanent reforms that have dominated our lives ever since, including Social Security, the creation of the Securities and Exchange Commission, unionization under the Wagner Act, the federal minimum wage and a host of other fundamental changes.
Obama’s record will be similar, although less wise and more destructive. He will begin by passing every program for which liberals have lusted for decades, from alternative-energy sources to school renovations, infrastructure repairs and technology enhancements. These are all good programs, but they normally would be stretched out for years. But freed of any constraint on the deficit — indeed, empowered by a mandate to raise it as high as possible — Obama will do them all rather quickly.
But it is not his spending that will transform our political system, it is his tax and welfare policies. In the name of short-term stimulus, he will give every American family (who makes less than $200,000) a welfare check of $1,000 euphemistically called a refundable tax credit. And he will so sharply cut taxes on the middle class and the poor that the number of Americans who pay no federal income tax will rise from the current one-third of all households to more than half. In the process, he will create a permanent electoral majority that does not pay taxes, but counts on ever-expanding welfare checks from the government. The dependency on the dole, formerly limited in pre-Clinton days to 14 million women and children on Aid to Families with Dependent Children, will now grow to a clear majority of the American population.
Will he raise taxes? Why should he? With a congressional mandate to run the deficit up as high as need be, there is no reason to raise taxes now and risk aggravating the depression. Instead, Obama will follow the opposite of the Reagan strategy. Reagan cut taxes and increased the deficit so that liberals could not increase spending. Obama will raise spending and increase the deficit so that conservatives cannot cut taxes. And, when the economy is restored, he will raise taxes with impunity, since the only people who will have to pay them would be rich Republicans.
In the name of stabilizing the banking system, Obama will nationalize it. Using Troubled Asset Relief Program funds to write generous checks to needy financial institutions, his administration will demand preferred stock in exchange. Preferred stock gets dividends before common stockholders do. With the massive debt these companies will owe to the government, they will only be able to afford dividends for preferred stockholders — the government, not private investors. So who will buy common stock? And the government will demand that its bills be paid before any profits that might materialize are reinvested in the financial institution, so how will the value of the stocks ever grow? Devoid of private investors, these institutions will fall ever more under government control.
Obama will begin the process by limiting executive compensation. Then he will urge restructuring and lowering of home mortgages in danger of default (as the feds have already done with Citibank).
Then will come guidance on the loans to make and government instructions on the types of enterprises to favor. God grant that some Blagojevich type is not in charge of the program, using his power to line his pockets. The United States will find itself with an economic system comparable to that of Japan, where the all-powerful bureaucracy at MITI (Ministry of International Trade and Industry) manages the economy, often making mistakes like giving mainframe computers priority over the development of laptops.
But it is the healthcare system that will experience the most dramatic and traumatic of changes. The current debate between erecting a Medicare-like governmental single payer or channeling coverage through private insurance misses the essential point. Without a lot more doctors, nurses, clinics, equipment and hospital beds, health resources will be strained to the breaking point. The people and equipment that now serve 250 million Americans and largely neglect all but the emergency needs of the other 50 million will now have to serve everyone. And, as government imposes ever more Draconian price controls and income limits on doctors, the supply of practitioners and equipment will decline as the demand escalates. Price increases will be out of the question, so the government will impose healthcare rationing, denying the older and sicker among us the care they need and even barring them from paying for it themselves. (Rationing based on income and price will be seen as immoral.)
And Obama will move to change permanently the partisan balance in America. He will move quickly to legalize all those who have been in America for five years, albeit illegally, and to smooth their paths to citizenship and voting. He will weaken border controls in an attempt to hike the Latino vote as high as he can in order to make red states like Texas into blue states like California. By the time he is finished, Latinos and African-Americans will cast a combined 30 percent of the vote. If they go by top-heavy margins for the Democrats, as they did in 2008, it will assure Democratic domination (until they move up the economic ladder and become good Republicans).
And he will enact the check-off card system for determining labor union representation, repealing the secret ballot in union elections. The result will be to raise the proportion of the labor force in unions up to the high teens from the current level of about 12 percent.
Finally, he will use the expansive powers of the Federal Communications Commission to impose “local” control and ownership of radio stations and to impose the “fairness doctrine” on talk radio. The effect will be to drive talk radio to the Internet, fundamentally change its economics, and retard its growth for years hence.
But none of these changes will cure the depression. It will end when the private sector works through the high debt levels that triggered the collapse in the first place. And, then, the large stimulus package deficits will likely lead to rapid inflation, probably necessitating a second recession to cure it.
So Obama’s name will be mud by 2012 and probably by 2010 as well. And the Republican Party will make big gains and regain much of its lost power.
But it will be too late to reverse the socialism of much of the economy, the demographic change in the electorate, the rationing of healthcare by the government, the surge of unionization and the crippling of talk radio.
Morris, a former adviser to Sen. Trent Lott (R-Miss.) and President Bill Clinton, is the author of Outrage. To get all of Dick Morris’s and Eileen McGann’s columns for free by email, go to www.dickmorris.com. To order a signed copy of their new best-selling book, Fleeced, go to dickmorris.com.
Taranto
"President Bush's opponents on the Angry Left often succumbed to a blind hatred for the man and ended up mocking America's ideals because they loathed the man who was speaking up for them. The Angry Right is susceptible to the same error now. An inauguration is a good opportunity to remember that those ideals belong to all of us, and that they endure regardless of party and personnel."
Tuesday, January 20, 2009
Drudge has posted the full text of Obama’s inaugural speech.
Reuters has already focused on the part that’s important to them: Obama promises new start with Muslims.
WASHINGTON (Reuters) - President Barack Obama promised a new start with the Muslim world in his inauguration address on Tuesday.
“To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect,” said Obama, who became the first black president of the United States.
Reuters is indulging in selective quoting here, because in reality, Obama’s remarks directed at the Muslim world were far more pointed (surprisingly so):
To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society’s ills on the West - know that your people will judge you on what you can build, not what you destroy. To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history; but that we will extend a hand if you are willing to unclench your fist.
Reuters has already focused on the part that’s important to them: Obama promises new start with Muslims.
WASHINGTON (Reuters) - President Barack Obama promised a new start with the Muslim world in his inauguration address on Tuesday.
“To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect,” said Obama, who became the first black president of the United States.
Reuters is indulging in selective quoting here, because in reality, Obama’s remarks directed at the Muslim world were far more pointed (surprisingly so):
To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society’s ills on the West - know that your people will judge you on what you can build, not what you destroy. To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history; but that we will extend a hand if you are willing to unclench your fist.
Sunday, January 18, 2009
Oregon demographics
"In Clackamas County, writer MJ Cody, a white Estacada native, says people are drawn to its rural-tinged suburbia. The county doesn't have any large ethnic enclave to draw Asians, Latinos or African Americans, she says.
Another factor that makes it hard to get minorities to work and live in Clackamas County is the lack of public transportation -- something that will change when the light-rail line along Interstate 205 opens, says Nancy Drury, the county's employee services director. She expects more apartments and affordable homes to be built near light rail, which also will help diversify the population.
Twenty years ago, the county had two African American employees. Now it has 31, along with 74 Latinos and 58 other minorities out of 1,840 workers, Drury says.
When Stephen Ying immigrated to Clackamas County from Hong Kong at age 16, he and his brother doubled the Chinese American enrollment at Milwaukie's Rex Putnam High School. "I ran into a lot of discrimination," he remembers.
Thirty-five years later, Putnam High is still 80 percent white. Oregon City High, the county's largest with 2,000 students, is 85 percent white."
Another factor that makes it hard to get minorities to work and live in Clackamas County is the lack of public transportation -- something that will change when the light-rail line along Interstate 205 opens, says Nancy Drury, the county's employee services director. She expects more apartments and affordable homes to be built near light rail, which also will help diversify the population.
Twenty years ago, the county had two African American employees. Now it has 31, along with 74 Latinos and 58 other minorities out of 1,840 workers, Drury says.
When Stephen Ying immigrated to Clackamas County from Hong Kong at age 16, he and his brother doubled the Chinese American enrollment at Milwaukie's Rex Putnam High School. "I ran into a lot of discrimination," he remembers.
Thirty-five years later, Putnam High is still 80 percent white. Oregon City High, the county's largest with 2,000 students, is 85 percent white."
Thursday, January 15, 2009
Wednesday, January 14, 2009
Bush's Achievements
Ten things the president got right.
by Fred Barnes 01/19/2009, Volume 014, Issue 17
The postmortems on the presidency of George W. Bush are all wrong. The liberal line is that Bush dangerously weakened America's position in the world and rushed to the aid of the rich and powerful as income inequality worsened. That is twaddle. Conservatives--okay, not all of them--have only been a little bit kinder. They give Bush credit for the surge that saved Iraq, but not for much else.He deserves better. His presidency was far more successful than not. And there's an aspect of his decision-making that merits special recognition: his courage. Time and time again, Bush did what other presidents, even Ronald Reagan, would not have done and for which he was vilified and abused. That--defiantly doing the right thing--is what distinguished his presidency.Bush had ten great achievements (and maybe more) in his eight years in the White House, starting with his decision in 2001 to jettison the Kyoto global warming treaty so loved by Al Gore, the environmental lobby, elite opinion, and Europeans. The treaty was a disaster, with India and China exempted and economic decline the certain result. Everyone knew it. But only Bush said so and acted accordingly.He stood athwart mounting global warming hysteria and yelled, "Stop!" He slowed the movement toward a policy blunder of worldwide impact, providing time for facts to catch up with the dubious claims of alarmists. Thanks in part to Bush, the supposed consensus of scientists on global warming has now collapsed. The skeptics, who point to global cooling over thepast decade, are now heard loud and clear. And a rational approach to the theory of manmade global warming is possible.
Second, enhanced interrogation of terrorists. Along with use of secret prisons and wireless eavesdropping, this saved American lives. How many thousands of lives? We'll never know. But, as Charles Krauthammer said recently, "Those are precisely the elements which kept us safe and which have prevented a second attack."Crucial intelligence was obtained from captured al Qaeda leaders, including 9/11 mastermind Khalid Sheikh Mohammed, with the help of waterboarding. Whether this tactic--it creates a drowning sensation--is torture is a matter of debate. John McCain and many Democrats say it is. Bush and Vice President Cheney insist it isn't. In any case, it was necessary. Lincoln once made a similar point in defending his suspension of habeas corpus in direct defiance of Chief Justice Roger Taney. "Are all the laws but one to go unexecuted, and the government itself go to pieces, lest that one be violated?" Lincoln asked. Bush understood the answer in wartime had to be no.
Bush's third achievement was the rebuilding of presidential authority, badly degraded in the era of Vietnam, Watergate, and Bill Clinton. He didn't hesitate to conduct wireless surveillance of terrorists without getting a federal judge's okay. He decided on his own how to treat terrorists and where they should be imprisoned. Those were legitimate decisions for which the president, as commander in chief, should feel no need to apologize.Defending, all the way to the Supreme Court, Cheney's refusal to disclose to Congress the names of people he'd consulted on energy policy was also enormously important. Democratic congressman Henry Waxman demanded the names, but the Court upheld Cheney, 7-2. Last week, Cheney defended his refusal, waspishly noting that Waxman "doesn't call me up and tell me who he's meeting with."
Achievement number four was Bush's unswerving support for Israel. Reagan was once deemed Israel's best friend in the White House. Now Bush can claim the title. He ostracized Yasser Arafat as an impediment to peace in the Middle East. This infuriated the anti-Israel forces in Europe, the Third World, and the United Nations, and was criticized by champions of the "peace process" here at home. Bush was right.He was clever in his support. Bush announced that Ariel Sharon should withdraw the tanks he'd sent into the West Bank in 2002, then exerted zero pressure on Sharon to do so. And he backed the wall along Israel's eastern border without endorsing it as an official boundary, while knowing full well that it might eventually become exactly that. He was a loyal friend.
His fifth success was No Child Left Behind (NCLB), the education reform bill cosponsored by America's most prominent liberal Democratic senator Edward Kennedy. The teachers' unions, school boards, the education establishment, conservatives adamant about local control of schools--they all loathed the measure and still do. It requires two things they ardently oppose, mandatory testing and accountability.Kennedy later turned against NCLB, saying Bush is shortchanging the program. In truth, federal education spending is at record levels. Another complaint is that it forces teachers to "teach to the test." The tests are on math and reading. They are tests worth teaching to.
Sixth, Bush declared in his second inaugural address in 2005 that American foreign policy (at least his) would henceforth focus on promoting democracyaround the world. This put him squarely in the Reagan camp, but he was lambasted as unrealistic, impractical, and a tool of wily neoconservatives. The new policy gave Bush credibility in pressing for democracy in the former Soviet republics and Middle East and in zinging various dictators and kleptocrats. It will do the same for President Obama, if he's wise enough to hang onto it.
The seventh achievement is the Medicare prescription drug benefit, enacted in 2003. It's not only wildly popular; it has cost less than expected by triggering competition among drug companies. Conservatives have deep reservations about the program. But they shouldn't have been surprised. Bush advocated the drug benefit in the 2000 campaign. And if he hadn't acted, Democrats would have, with a much less attractive result.
Then there were John Roberts and Sam Alito. In putting them on the Supreme Court and naming Roberts chief justice, Bush achieved what had eluded Richard Nixon, Reagan, and his own father. Roberts and Alito made the Court indisputably more conservative. And the good news is Roberts, 53, and Alito, 58, should be justices for decades to come.Bush's ninth achievement has been widely ignored.
He strengthened relations with east Asian democracies (Japan, South Korea, Australia) without causing a rift with China. On top of that, he forged strong ties with India. An important factor was their common enemy, Islamic jihadists. After 9/11, Bush made the most of this, and Indian leaders were receptive. His state dinner for Indian prime minister Manmohan Singh in 2006 was a lovefest.
Finally, a no-brainer: the surge. Bush prompted nearly unanimous disapproval in January 2007 when he announced he was sending more troops to Iraq and adopting a new counterinsurgency strategy. His opponents initially included the State Department, the Pentagon, most of Congress, the media, the foreign policy establishment, indeed the whole world. This makes his decision a profile in courage. Best of all, the surge worked. Iraq is now a fragile but functioning democracy.How does Bush rank as a president? We won't know until he's judged from the perspective of two or three decades. Hindsight forced a sharp upgrading of the presidencies of Harry Truman and Dwight Eisenhower. Given his achievements, it may have the same effect for Bush.
--Fred Barnes, for the Editors
Ten things the president got right.
by Fred Barnes 01/19/2009, Volume 014, Issue 17
The postmortems on the presidency of George W. Bush are all wrong. The liberal line is that Bush dangerously weakened America's position in the world and rushed to the aid of the rich and powerful as income inequality worsened. That is twaddle. Conservatives--okay, not all of them--have only been a little bit kinder. They give Bush credit for the surge that saved Iraq, but not for much else.He deserves better. His presidency was far more successful than not. And there's an aspect of his decision-making that merits special recognition: his courage. Time and time again, Bush did what other presidents, even Ronald Reagan, would not have done and for which he was vilified and abused. That--defiantly doing the right thing--is what distinguished his presidency.Bush had ten great achievements (and maybe more) in his eight years in the White House, starting with his decision in 2001 to jettison the Kyoto global warming treaty so loved by Al Gore, the environmental lobby, elite opinion, and Europeans. The treaty was a disaster, with India and China exempted and economic decline the certain result. Everyone knew it. But only Bush said so and acted accordingly.He stood athwart mounting global warming hysteria and yelled, "Stop!" He slowed the movement toward a policy blunder of worldwide impact, providing time for facts to catch up with the dubious claims of alarmists. Thanks in part to Bush, the supposed consensus of scientists on global warming has now collapsed. The skeptics, who point to global cooling over thepast decade, are now heard loud and clear. And a rational approach to the theory of manmade global warming is possible.
Second, enhanced interrogation of terrorists. Along with use of secret prisons and wireless eavesdropping, this saved American lives. How many thousands of lives? We'll never know. But, as Charles Krauthammer said recently, "Those are precisely the elements which kept us safe and which have prevented a second attack."Crucial intelligence was obtained from captured al Qaeda leaders, including 9/11 mastermind Khalid Sheikh Mohammed, with the help of waterboarding. Whether this tactic--it creates a drowning sensation--is torture is a matter of debate. John McCain and many Democrats say it is. Bush and Vice President Cheney insist it isn't. In any case, it was necessary. Lincoln once made a similar point in defending his suspension of habeas corpus in direct defiance of Chief Justice Roger Taney. "Are all the laws but one to go unexecuted, and the government itself go to pieces, lest that one be violated?" Lincoln asked. Bush understood the answer in wartime had to be no.
Bush's third achievement was the rebuilding of presidential authority, badly degraded in the era of Vietnam, Watergate, and Bill Clinton. He didn't hesitate to conduct wireless surveillance of terrorists without getting a federal judge's okay. He decided on his own how to treat terrorists and where they should be imprisoned. Those were legitimate decisions for which the president, as commander in chief, should feel no need to apologize.Defending, all the way to the Supreme Court, Cheney's refusal to disclose to Congress the names of people he'd consulted on energy policy was also enormously important. Democratic congressman Henry Waxman demanded the names, but the Court upheld Cheney, 7-2. Last week, Cheney defended his refusal, waspishly noting that Waxman "doesn't call me up and tell me who he's meeting with."
Achievement number four was Bush's unswerving support for Israel. Reagan was once deemed Israel's best friend in the White House. Now Bush can claim the title. He ostracized Yasser Arafat as an impediment to peace in the Middle East. This infuriated the anti-Israel forces in Europe, the Third World, and the United Nations, and was criticized by champions of the "peace process" here at home. Bush was right.He was clever in his support. Bush announced that Ariel Sharon should withdraw the tanks he'd sent into the West Bank in 2002, then exerted zero pressure on Sharon to do so. And he backed the wall along Israel's eastern border without endorsing it as an official boundary, while knowing full well that it might eventually become exactly that. He was a loyal friend.
His fifth success was No Child Left Behind (NCLB), the education reform bill cosponsored by America's most prominent liberal Democratic senator Edward Kennedy. The teachers' unions, school boards, the education establishment, conservatives adamant about local control of schools--they all loathed the measure and still do. It requires two things they ardently oppose, mandatory testing and accountability.Kennedy later turned against NCLB, saying Bush is shortchanging the program. In truth, federal education spending is at record levels. Another complaint is that it forces teachers to "teach to the test." The tests are on math and reading. They are tests worth teaching to.
Sixth, Bush declared in his second inaugural address in 2005 that American foreign policy (at least his) would henceforth focus on promoting democracyaround the world. This put him squarely in the Reagan camp, but he was lambasted as unrealistic, impractical, and a tool of wily neoconservatives. The new policy gave Bush credibility in pressing for democracy in the former Soviet republics and Middle East and in zinging various dictators and kleptocrats. It will do the same for President Obama, if he's wise enough to hang onto it.
The seventh achievement is the Medicare prescription drug benefit, enacted in 2003. It's not only wildly popular; it has cost less than expected by triggering competition among drug companies. Conservatives have deep reservations about the program. But they shouldn't have been surprised. Bush advocated the drug benefit in the 2000 campaign. And if he hadn't acted, Democrats would have, with a much less attractive result.
Then there were John Roberts and Sam Alito. In putting them on the Supreme Court and naming Roberts chief justice, Bush achieved what had eluded Richard Nixon, Reagan, and his own father. Roberts and Alito made the Court indisputably more conservative. And the good news is Roberts, 53, and Alito, 58, should be justices for decades to come.Bush's ninth achievement has been widely ignored.
He strengthened relations with east Asian democracies (Japan, South Korea, Australia) without causing a rift with China. On top of that, he forged strong ties with India. An important factor was their common enemy, Islamic jihadists. After 9/11, Bush made the most of this, and Indian leaders were receptive. His state dinner for Indian prime minister Manmohan Singh in 2006 was a lovefest.
Finally, a no-brainer: the surge. Bush prompted nearly unanimous disapproval in January 2007 when he announced he was sending more troops to Iraq and adopting a new counterinsurgency strategy. His opponents initially included the State Department, the Pentagon, most of Congress, the media, the foreign policy establishment, indeed the whole world. This makes his decision a profile in courage. Best of all, the surge worked. Iraq is now a fragile but functioning democracy.How does Bush rank as a president? We won't know until he's judged from the perspective of two or three decades. Hindsight forced a sharp upgrading of the presidencies of Harry Truman and Dwight Eisenhower. Given his achievements, it may have the same effect for Bush.
--Fred Barnes, for the Editors
Pentagon: 61 ex-Guantanamo inmates return to terrorism
Tue Jan 13, 2009 3:32pm EST
By David Morgan
WASHINGTON (Reuters) - The Pentagon said on Tuesday that 61 former detainees from its military prison camp at Guantanamo Bay, Cuba, appear to have returned to terrorism since their release from custody.
Pentagon spokesman Geoff Morrell said 18 former detainees are confirmed as "returning to the fight" and 43 are suspected of having done in a report issued late in December by the Defense Intelligence Agency.
Morrell declined to provide details such as the identity of the former detainees, why and where they were released or what actions they have taken since leaving U.S. custody.
"This is acts of terrorism. It could be Iraq, Afghanistan, it could be acts of terrorism around the world," he told reporters.
Morrell said the latest figures, current through December 24, showed an 11 percent recidivism rate, up from 7 percent in a March 2008 report that counted 37 former detainees as suspected or confirmed active militants.
Rights advocates said the lack of details should call the Pentagon's assertions into question.
"Until enough information is provided to allow the press and the public to verify these claims, they need to be viewed with a healthy degree of skepticism," said Jennifer Daskal, a Washington-based lawyer for Human Rights Watch.
Rights advocates contend that many Guantanamo detainees have never taken up arms against the United States and say the Defense Department in the past has described former detainees as rejoining "the fight" because they spoke out against the U.S. government.
"The Defense Department sees that the Guantanamo detention operation has failed and they are trying to launch another fear mongering campaign to justify the indefinite detention of detainees there," said Jamil Dakwar, human rights director at the American Civil Liberties Union.
President-elect Barack Obama, who takes office next Tuesday, is expected to issue an executive order to close the Guantanamo Bay prison. Defense Secretary Robert Gates also favors shuttering Guantanamo.
But the prison is unlikely to shut until after U.S. officials settle a myriad of legal and logistic issues, including a solution on where to house its occupants.
About 255 men are still held at the U.S.-run naval base in Cuba, a symbol of aggressive interrogation methods that exposed the United States to allegations of torture.
Pentagon officials say that about 110 detainees should never be released because of the potential danger they pose to U.S. interests.
Washington has cleared 50 of the detainees for release but cannot return them to their home countries because of the risk they would be tortured or persecuted there.
The Pentagon said it considers a former detainee's return to terrorism "confirmed" when evidence shows direct involvement in terrorist activities. U.S. officials see a "suspected" terrorism links when intelligence shows a plausible link with terrorist activities.
"Propaganda does not qualify as a terrorist activity," the Pentagon said in a statement.
(Additional reporting by Andrew Gray, editing by David Alexander and David Wiessler)
Tue Jan 13, 2009 3:32pm EST
By David Morgan
WASHINGTON (Reuters) - The Pentagon said on Tuesday that 61 former detainees from its military prison camp at Guantanamo Bay, Cuba, appear to have returned to terrorism since their release from custody.
Pentagon spokesman Geoff Morrell said 18 former detainees are confirmed as "returning to the fight" and 43 are suspected of having done in a report issued late in December by the Defense Intelligence Agency.
Morrell declined to provide details such as the identity of the former detainees, why and where they were released or what actions they have taken since leaving U.S. custody.
"This is acts of terrorism. It could be Iraq, Afghanistan, it could be acts of terrorism around the world," he told reporters.
Morrell said the latest figures, current through December 24, showed an 11 percent recidivism rate, up from 7 percent in a March 2008 report that counted 37 former detainees as suspected or confirmed active militants.
Rights advocates said the lack of details should call the Pentagon's assertions into question.
"Until enough information is provided to allow the press and the public to verify these claims, they need to be viewed with a healthy degree of skepticism," said Jennifer Daskal, a Washington-based lawyer for Human Rights Watch.
Rights advocates contend that many Guantanamo detainees have never taken up arms against the United States and say the Defense Department in the past has described former detainees as rejoining "the fight" because they spoke out against the U.S. government.
"The Defense Department sees that the Guantanamo detention operation has failed and they are trying to launch another fear mongering campaign to justify the indefinite detention of detainees there," said Jamil Dakwar, human rights director at the American Civil Liberties Union.
President-elect Barack Obama, who takes office next Tuesday, is expected to issue an executive order to close the Guantanamo Bay prison. Defense Secretary Robert Gates also favors shuttering Guantanamo.
But the prison is unlikely to shut until after U.S. officials settle a myriad of legal and logistic issues, including a solution on where to house its occupants.
About 255 men are still held at the U.S.-run naval base in Cuba, a symbol of aggressive interrogation methods that exposed the United States to allegations of torture.
Pentagon officials say that about 110 detainees should never be released because of the potential danger they pose to U.S. interests.
Washington has cleared 50 of the detainees for release but cannot return them to their home countries because of the risk they would be tortured or persecuted there.
The Pentagon said it considers a former detainee's return to terrorism "confirmed" when evidence shows direct involvement in terrorist activities. U.S. officials see a "suspected" terrorism links when intelligence shows a plausible link with terrorist activities.
"Propaganda does not qualify as a terrorist activity," the Pentagon said in a statement.
(Additional reporting by Andrew Gray, editing by David Alexander and David Wiessler)
Tuesday, January 13, 2009
WSJ
"This Week With George Stephanopoulos."
Stephanopoulos: Vice President Cheney has been giving a series of exit interviews, and he told Mark Knoller of CBS that the Bush counterterrorism policies have definitely made the United States safer. And he added this piece of advice for you.
Cheney: Before you start to implement your campaign rhetoric, you need to sit down and find out precisely what it is we did and how we did it. Because it is going to be vital to keeping the nation safe and secure in the years ahead, and it would be a tragedy if they threw over those policies simply because they've campaigned against them.
Stephanopoulos: Are you going to take it?
Obama: I think that was pretty good advice, which is I should know what's going on before we make judgments and that we shouldn't be making judgments on the basis of incomplete information or campaign rhetoric. So, I've got no quibble with that particular quote. I think if Vice President Cheney were here he and I would have some significant disagreements on some things that we know happened.Pressed for specifics, Obama says only that he thinks waterboarding--which reportedly has been used only a few times, and not recently--is "torture."
As blogger Tom Maguire notes, Stephanopoulos asked Obama "a seemingly easy question"--whether the Army Field Manual will set the limits for all interrogation of terrorists--"but chose to sidestep it." Then the host tried again:
Stephanapoulos: So no more special CIA program?
Obama: I'm not going to lay out a particular program because again, I thought that Dick Cheney's advice was good, which is let's make sure we know everything that's being done.
It is certainly to Obama's credit that he has decided to "know what's going on" rather than "making judgments on the basis of incomplete information or campaign rhetoric." In an ideal world, he would have abjured the irresponsible campaign rhetoric to begin with. But in imperfect reality, running a dishonest campaign isn't as bad as instituting reckless policies.
Stephanopoulos: Vice President Cheney has been giving a series of exit interviews, and he told Mark Knoller of CBS that the Bush counterterrorism policies have definitely made the United States safer. And he added this piece of advice for you.
Cheney: Before you start to implement your campaign rhetoric, you need to sit down and find out precisely what it is we did and how we did it. Because it is going to be vital to keeping the nation safe and secure in the years ahead, and it would be a tragedy if they threw over those policies simply because they've campaigned against them.
Stephanopoulos: Are you going to take it?
Obama: I think that was pretty good advice, which is I should know what's going on before we make judgments and that we shouldn't be making judgments on the basis of incomplete information or campaign rhetoric. So, I've got no quibble with that particular quote. I think if Vice President Cheney were here he and I would have some significant disagreements on some things that we know happened.Pressed for specifics, Obama says only that he thinks waterboarding--which reportedly has been used only a few times, and not recently--is "torture."
As blogger Tom Maguire notes, Stephanopoulos asked Obama "a seemingly easy question"--whether the Army Field Manual will set the limits for all interrogation of terrorists--"but chose to sidestep it." Then the host tried again:
Stephanapoulos: So no more special CIA program?
Obama: I'm not going to lay out a particular program because again, I thought that Dick Cheney's advice was good, which is let's make sure we know everything that's being done.
It is certainly to Obama's credit that he has decided to "know what's going on" rather than "making judgments on the basis of incomplete information or campaign rhetoric." In an ideal world, he would have abjured the irresponsible campaign rhetoric to begin with. But in imperfect reality, running a dishonest campaign isn't as bad as instituting reckless policies.
Monday, January 12, 2009
Friday, January 09, 2009
"Hulk Hogan was a terrible wrestler, and he still is."
Congress Proves That Hulk Hogan Sucked
By Pareene, 3:50 PM on Fri Jan 9 2009, 4,083 views
So this is what congress has been up to lately! They just finished a two-year investigation into steroid use in professional wrestling. The most important finding?
The Incredible Hulk Hogan was not actually incredible!
This is the work of Henry Waxman and his government oversight committee. Here is WWE executive VP Stephanie McMahon:
Q: How does talent get to become main-event talent?
A: Basically, hard work and perseverance and overwhelming the audience. . . . When someone walks out on that stage, they either connect with the people or they don't. If you walk out on stage and nobody cares and you don't have any presence, you are never going to be a main-event guy. But if you walk out and you make the people notice you, you can be a main-event guy. You really don't even have to be a good wrestler. Hulk Hogan was a terrible wrestler, and he still is.
Q: For the record, I am sure he would disagree with that.
A: I am sure he would disagree with that. I forget this is all public. But, you know, he was. He was a terrible wrestler. But what an incredible psychologist and what an incredible charismatic person. There is no denying Hulk Hogan is one of the biggest stars in the history of our business and will always be perceived as such. But he was not a great wrestler, not a great technician.
Ouch. But in his defense he was a kick-ass Mr. Nanny and Suburban Commando.
By Pareene, 3:50 PM on Fri Jan 9 2009, 4,083 views
So this is what congress has been up to lately! They just finished a two-year investigation into steroid use in professional wrestling. The most important finding?
The Incredible Hulk Hogan was not actually incredible!
This is the work of Henry Waxman and his government oversight committee. Here is WWE executive VP Stephanie McMahon:
Q: How does talent get to become main-event talent?
A: Basically, hard work and perseverance and overwhelming the audience. . . . When someone walks out on that stage, they either connect with the people or they don't. If you walk out on stage and nobody cares and you don't have any presence, you are never going to be a main-event guy. But if you walk out and you make the people notice you, you can be a main-event guy. You really don't even have to be a good wrestler. Hulk Hogan was a terrible wrestler, and he still is.
Q: For the record, I am sure he would disagree with that.
A: I am sure he would disagree with that. I forget this is all public. But, you know, he was. He was a terrible wrestler. But what an incredible psychologist and what an incredible charismatic person. There is no denying Hulk Hogan is one of the biggest stars in the history of our business and will always be perceived as such. But he was not a great wrestler, not a great technician.
Ouch. But in his defense he was a kick-ass Mr. Nanny and Suburban Commando.
Thursday, January 08, 2009
Pimco's Bill Gross
Andrew Mellon vs. Bailout Nation
2008 was the year when the United States led the charge of bailout nations, lending and literally guaranteeing trillions of dollars of private liabilities in an effort to avoid the advent of another Great Depression. Nothing, with the possible exception of George Bush’s IQ was the subject of greater debate. To begin with, the rescue plan itself was controversial even amongst its implementers: Congress voted against it, then a week later voted for it; Treasury Secretary Paulson designated it “TARP” (short for “Troubled Asset Relief Program”), then a month later did a 180°, refusing to buy subprime mortgages and asserting his right to change his mind because the facts themselves had changed. But the broader question reached beyond politics and into the realm of the dismal science itself. Was it necessary and productive to mutate 21st century American-style capitalism into a thinly disguised knock-off of the New Deal?
Better, some thought, to have followed the advice of early 1930s Treasury Secretary Andrew Mellon: “Liquidate labor, liquidate stocks, liquidate the farmers – purge the rottenness from the system.” The Mellons of the world argued that bailouts were akin to pouring gasoline on a fire, adding trillions of dollars of new debt to a domestic and global economy that had broken down because of, because of, well, because of – too much debt. Wall Street, the Fed, and Newport Beach took the other side. Those steeped in economic history felt that the Great Depression and more recently the “lost decade” in Japan had both experienced a “liquidity trap,” a monetary black hole where lenders, savers, and ultimately consumers were frightened into stuffing their money into a mattress rather than circulating it in classic capitalistic fashion. Sensing a freezing of credit markets following the default of Lehman Brothers, policymakers decided it was better to become a bailout nation than a sunken ship.
The debate, of course, can never be resolved. You can’t prove a negative nor recreate history to show what might have been. What we do know, however, is that even with U.S. and indeed global bailouts, almost every major economy entered recessionary territory in 2008 and that the “D” word, while unmentionable in official policy circles, was nevertheless on the tip of their tongues and at the forefront of their contingency plans. As we closed the year, “quantitative easing” was the publically acknowledged future policy of the Federal Reserve, which in short meant “buy assets, support Wall Street, and in the process, hope that some of it might trickle down to labor and the farmers.” Ben Bernanke is no Andrew Mellon. There may be rottenness in the system, but our Chairman surely doesn’t believe in starving a cold, or pneumonia for that matter. The Fed’s willing accomplice was the United States Treasury and the FDIC, extending not only $350 billion of TARP money but literally guaranteeing three quarters of the liabilities of U.S. banks. For those who fear nationalization of our financial system, the destination seemed just over the horizon.
Still, while such a transformation is, to put it mildly, undesirable, the policies are necessary. As outlined in these pages, the U.S. and many of its G-7 counterparts over the past 25 years have become more and more dependent on asset appreciation. Under the policy-endorsed cover of technology and somewhat faux increases in financial productivity, we became a nation that specialized in the making of paper instead of things, and it fell to Wall Street to invent ever more clever ways to securitize assets, and the job of Main Street to “equitize” or, in reality, to borrow more and more money off of them. What was not well recognized was that these policies were hollowing, self-destructive, and ultimately destined to be exposed for what they always were: Ponzi schemes, whose ultimate payoffs were dependent on the inclusion of more and more players and the production of more and more paper. Bernie Madoff? As with every financial and economic crisis, he will probably go down as this generation’s fall guy – the Samuel Insull, the Jeffrey Skilling, of 2008.
But Madoff’s scheme has a host of culpable look-alikes and one has only to begin with the mortgage market to understand the similarities. Option ARMs or Pick-A-Pay home loans allowed homeowners to make monthly payments that were so small they did not even cover their interest charges. Two million mortgagees either chose or were sold this Ponzi/Madoff form of skullduggery, believing that home prices never go down and that shoppers never drop. One can add to this the trillions in home equity/second mortgage loans that extracted “savings” in order to promote current instead of future consumption, and one begins to realize that Bernie Madoff and our cartoon’s Wimpy had company all these years.
What about the shabby performance of the rating agencies? Were they not equally at fault for perpetrating a giant charade that was bound to end in tears? Of course: Aaa subprimes structured like a house of straw; Aaa monoline insurers built like a house of sticks; Aaa credits like AIG, FNMA, and FHLMC where only a huff and a puff could expose them for what they were – levered structures dependent upon asset price appreciation for their survival. Ponzi finance.
I will go on. Municipalities with begging bowls now extended for over a trillion of Federal taxpayer dollars, based their budgets and their own handouts on the perpetual rise in home prices, the inevitable upward slope of sales taxes, and the never-ending increase in employment and personal income taxes. To add injury to insult, they conveniently “balanced” their books with a host of accounting tricks that Bernie Madoff could never have come up with in his wildest imagination. Now, with cash flow insufficient to meet current outflows, they are proving my point that we have met Mr. Ponzi and he is us – all of us: auto companies that siphoned sales dollars to make labor peace instead of research and design expenditures; hedge funds that preposterously billed investors for 2% and 20% of nothing; a President and politicians who thought they could fight a phony war for free and distract the nation’s attention from $40 trillion of future social security and health care liabilities. Ponzi, Ponzi, Ponzi.
Still, future policymakers must confront the reality that is, not the one that should have been. And investors must do likewise, casting aside personal philosophies for a clear-headed view of the future horizon. PIMCO’s view is simple: shake hands with the government; make them your partner by acknowledging that their checkbook represents the largest and most potent source of buying power in 2009 and beyond. Anticipate, then buy what they buy, only do it first: agency-backed mortgages, bank preferred stocks, and senior bank debt; Aaa asset-backed securities such as credit card, student loan, and auto receivables. These have been well-advertised PIMCO strategies over the past 6 months but there are others in clear sight. An Obama administration will quickly be confronted by the need to provide those hundreds of billions of dollars to states and large municipalities. Their requests total nearly a trillion dollars and to think California or NYC would be allowed to fail is, well – unthinkable. Municipal bonds then, selling at historically high ratios relative to U.S. Treasuries, offer attractive price appreciation potential, or at the very least a defensiveness with high carry that a 2½% 10-year Treasury cannot.
Here’s another thought. While TIPS or inflation-protected securities cannot logically be a recipient of Uncle Sam’s checkbook over the next 12 months, they can benefit if and when the government’s efforts to reflate begin to take hold. 2½% real yields cannot possibly be maintained unless deflation as opposed to inflation becomes the odds-on favorite. What bond investors know as “breakeven inflation rates” are currently signaling a future where the U.S. CPI averages -1% for the next 10 years. Possible, but not likely. As an additional strategy, global bond investors should recognize the value in high-quality investment-grade corporate bonds in many markets. Yields of 6%+ for intermediate maturities are still common and readily available.
There is legitimate concern as to the ultimate destination and outcome of our “bailout nation.” Realistically, quantitative easing, a two-trillion-dollar expansion of the Fed’s balance sheet, and the near certainty of future budget deficits approaching 6-7% of GDP should alert bond investors to once again become vigilant as was the case in the 1980s and 90s. Vigilantes we should be, but that is a battle to be fought in the Treasury market where low yields offer little reward and increasing risk. For now, our Ponzi-style economy and its policy remedies encourage bond investors to mimic Uncle Sam and its global compatriots. Buy what they buy, but get there first. Andrew Mellon would surely have disapproved. Liquidation was his game. Wimpy? Well, he’s gonna have to start paying for those burgers on Monday, even in a bailout nation.
William H. Gross
Managing Director
2008 was the year when the United States led the charge of bailout nations, lending and literally guaranteeing trillions of dollars of private liabilities in an effort to avoid the advent of another Great Depression. Nothing, with the possible exception of George Bush’s IQ was the subject of greater debate. To begin with, the rescue plan itself was controversial even amongst its implementers: Congress voted against it, then a week later voted for it; Treasury Secretary Paulson designated it “TARP” (short for “Troubled Asset Relief Program”), then a month later did a 180°, refusing to buy subprime mortgages and asserting his right to change his mind because the facts themselves had changed. But the broader question reached beyond politics and into the realm of the dismal science itself. Was it necessary and productive to mutate 21st century American-style capitalism into a thinly disguised knock-off of the New Deal?
Better, some thought, to have followed the advice of early 1930s Treasury Secretary Andrew Mellon: “Liquidate labor, liquidate stocks, liquidate the farmers – purge the rottenness from the system.” The Mellons of the world argued that bailouts were akin to pouring gasoline on a fire, adding trillions of dollars of new debt to a domestic and global economy that had broken down because of, because of, well, because of – too much debt. Wall Street, the Fed, and Newport Beach took the other side. Those steeped in economic history felt that the Great Depression and more recently the “lost decade” in Japan had both experienced a “liquidity trap,” a monetary black hole where lenders, savers, and ultimately consumers were frightened into stuffing their money into a mattress rather than circulating it in classic capitalistic fashion. Sensing a freezing of credit markets following the default of Lehman Brothers, policymakers decided it was better to become a bailout nation than a sunken ship.
The debate, of course, can never be resolved. You can’t prove a negative nor recreate history to show what might have been. What we do know, however, is that even with U.S. and indeed global bailouts, almost every major economy entered recessionary territory in 2008 and that the “D” word, while unmentionable in official policy circles, was nevertheless on the tip of their tongues and at the forefront of their contingency plans. As we closed the year, “quantitative easing” was the publically acknowledged future policy of the Federal Reserve, which in short meant “buy assets, support Wall Street, and in the process, hope that some of it might trickle down to labor and the farmers.” Ben Bernanke is no Andrew Mellon. There may be rottenness in the system, but our Chairman surely doesn’t believe in starving a cold, or pneumonia for that matter. The Fed’s willing accomplice was the United States Treasury and the FDIC, extending not only $350 billion of TARP money but literally guaranteeing three quarters of the liabilities of U.S. banks. For those who fear nationalization of our financial system, the destination seemed just over the horizon.
Still, while such a transformation is, to put it mildly, undesirable, the policies are necessary. As outlined in these pages, the U.S. and many of its G-7 counterparts over the past 25 years have become more and more dependent on asset appreciation. Under the policy-endorsed cover of technology and somewhat faux increases in financial productivity, we became a nation that specialized in the making of paper instead of things, and it fell to Wall Street to invent ever more clever ways to securitize assets, and the job of Main Street to “equitize” or, in reality, to borrow more and more money off of them. What was not well recognized was that these policies were hollowing, self-destructive, and ultimately destined to be exposed for what they always were: Ponzi schemes, whose ultimate payoffs were dependent on the inclusion of more and more players and the production of more and more paper. Bernie Madoff? As with every financial and economic crisis, he will probably go down as this generation’s fall guy – the Samuel Insull, the Jeffrey Skilling, of 2008.
But Madoff’s scheme has a host of culpable look-alikes and one has only to begin with the mortgage market to understand the similarities. Option ARMs or Pick-A-Pay home loans allowed homeowners to make monthly payments that were so small they did not even cover their interest charges. Two million mortgagees either chose or were sold this Ponzi/Madoff form of skullduggery, believing that home prices never go down and that shoppers never drop. One can add to this the trillions in home equity/second mortgage loans that extracted “savings” in order to promote current instead of future consumption, and one begins to realize that Bernie Madoff and our cartoon’s Wimpy had company all these years.
What about the shabby performance of the rating agencies? Were they not equally at fault for perpetrating a giant charade that was bound to end in tears? Of course: Aaa subprimes structured like a house of straw; Aaa monoline insurers built like a house of sticks; Aaa credits like AIG, FNMA, and FHLMC where only a huff and a puff could expose them for what they were – levered structures dependent upon asset price appreciation for their survival. Ponzi finance.
I will go on. Municipalities with begging bowls now extended for over a trillion of Federal taxpayer dollars, based their budgets and their own handouts on the perpetual rise in home prices, the inevitable upward slope of sales taxes, and the never-ending increase in employment and personal income taxes. To add injury to insult, they conveniently “balanced” their books with a host of accounting tricks that Bernie Madoff could never have come up with in his wildest imagination. Now, with cash flow insufficient to meet current outflows, they are proving my point that we have met Mr. Ponzi and he is us – all of us: auto companies that siphoned sales dollars to make labor peace instead of research and design expenditures; hedge funds that preposterously billed investors for 2% and 20% of nothing; a President and politicians who thought they could fight a phony war for free and distract the nation’s attention from $40 trillion of future social security and health care liabilities. Ponzi, Ponzi, Ponzi.
Still, future policymakers must confront the reality that is, not the one that should have been. And investors must do likewise, casting aside personal philosophies for a clear-headed view of the future horizon. PIMCO’s view is simple: shake hands with the government; make them your partner by acknowledging that their checkbook represents the largest and most potent source of buying power in 2009 and beyond. Anticipate, then buy what they buy, only do it first: agency-backed mortgages, bank preferred stocks, and senior bank debt; Aaa asset-backed securities such as credit card, student loan, and auto receivables. These have been well-advertised PIMCO strategies over the past 6 months but there are others in clear sight. An Obama administration will quickly be confronted by the need to provide those hundreds of billions of dollars to states and large municipalities. Their requests total nearly a trillion dollars and to think California or NYC would be allowed to fail is, well – unthinkable. Municipal bonds then, selling at historically high ratios relative to U.S. Treasuries, offer attractive price appreciation potential, or at the very least a defensiveness with high carry that a 2½% 10-year Treasury cannot.
Here’s another thought. While TIPS or inflation-protected securities cannot logically be a recipient of Uncle Sam’s checkbook over the next 12 months, they can benefit if and when the government’s efforts to reflate begin to take hold. 2½% real yields cannot possibly be maintained unless deflation as opposed to inflation becomes the odds-on favorite. What bond investors know as “breakeven inflation rates” are currently signaling a future where the U.S. CPI averages -1% for the next 10 years. Possible, but not likely. As an additional strategy, global bond investors should recognize the value in high-quality investment-grade corporate bonds in many markets. Yields of 6%+ for intermediate maturities are still common and readily available.
There is legitimate concern as to the ultimate destination and outcome of our “bailout nation.” Realistically, quantitative easing, a two-trillion-dollar expansion of the Fed’s balance sheet, and the near certainty of future budget deficits approaching 6-7% of GDP should alert bond investors to once again become vigilant as was the case in the 1980s and 90s. Vigilantes we should be, but that is a battle to be fought in the Treasury market where low yields offer little reward and increasing risk. For now, our Ponzi-style economy and its policy remedies encourage bond investors to mimic Uncle Sam and its global compatriots. Buy what they buy, but get there first. Andrew Mellon would surely have disapproved. Liquidation was his game. Wimpy? Well, he’s gonna have to start paying for those burgers on Monday, even in a bailout nation.
William H. Gross
Managing Director
Tuesday, January 06, 2009
http://nightsinrodanthe.warnerbros.com/
This was playing on my flight from Portland to Chicago. So cheesy!
This was playing on my flight from Portland to Chicago. So cheesy!
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