Monday, February 13, 2012

Quick Hits - February 13, 2012

The Greek Parliament, by a vote of 199 to 74, passed the austerity measures demanded by the European Union prior to any additional financial bailout as violence escalated throughout the country.

The violence was not just limited to Athens, but also other Greek cities including the vacation islands of Corfu and Crete.  In Athens, more than 45,000 protesters closed on the Greek Parliament buildings - facing off with 4,000 riot police as tear gas and molotov cocktails were exchanged.

Over 45 buildings in Athens were gutted or severely damaged by fires set by the protesters opposing the austerity measures which will reduce minimum wage by 20%, eliminate up to 150,000 civil service jobs, and spending / pension cuts which will total nearly 3.3 billion Euros.  This is on top of the effects of the dismal Greek economy which is seeing 6% to 7% negative GDP growth and nearly 21% unemployment.

The next step is for the Finance Ministers of the European Union to meet on Wednesday to determine if the steps taken by the Greek government, and any assurances that the austerity measures will remain in place regardless of the results of the Greek national elections in April, are sufficient to warrant the second bailout of Greece inside of 21 months.  While the Finance Ministers may telegraph their intent, it could take until the beginning of March for a final decision.  Greece has a 14.5 billion Euro debt obligation due on March 20 that it cannot repay without the bailout from the EU.

What does all of this mean for Greece?  A reprieve, nothing more...
So the rest of the euro zone will probably keep confronting the same old question: whether they are prepared to keep handing over cash to Greece. The evidence of recent days is that the patience of euro-zone leaders is running out: they took a tougher line in last week’s negotiations than many had expected. The focus on Germany’s willingness to pay up risks distracting attention from other creditor states, like Finland and the Netherlands, which are equally fed up with handing out money and have fewer hang-ups than Germany about playing the part of good Europeans. And if Italy and Spain are able to make decent progress in dealing with their own public finances, the rest of the euro zone will feel more confident about limiting the fallout from a decision to turn off the Greek tap. Greece has delayed a messy default, but it will happen eventually.
In the Financial Times, a case is being made for letting Greece and Portugal to go bankrupt.  The contention is that both of these countries are so fundamentally broken that another bailout will do nothing to address their fundamental problems.  The proposed solution is to allow both nations to go bankruptcy within the European Union, and leverage the EU rescue fund to rebuild both of these nations in a manner that addresses and fixes the fundamental flaws. 

I do have to ask, though, does the European Union really recognize what the fundamental flaws are in the Greece and Portugal?  And if so, why isn't the rest of the European Union working to address these flaws now, not only in those countries, but in the EU itself.

President Barack Obama introduced his 2013 budget proposal in a campaign event in Northern Virginia earlier this morning.  In an address that was rife with the usual campaign and class warfare rhetoric, the President said...
“At a time when our economy is growing and creating jobs at a faster clip, we’ve got to do everything in our power to keep this recovery on track,” Obama said at Northern Virginia Community College. “We can settle for a country where a few people do really, really well, and everybody else struggles to get by, or we can restore an economy where everybody gets a fair shot, everybody does their fair share, everybody plays by the same set of rules, from Washington to Wall Street to Main Street.”
The President's budget, as I noted in Saturday's post, is not that different from the 2012 budget he submitted last year that the Senate rejected 0-97.  The Heritage Foundation summaries the 2013 plan here...
In summary, Obama’s vision for America according to his own budget is:

• To add about $3 trillion more in national debt to the roughly $5.5 trillion he added in his first term.

• To increase federal spending by half a trillion dollars between 2012 and 2016, from $3.8 trillion to $4.3 trillion.

• To ignore the 2012 budget deficit projected at $1.3 trillion, allow spending to grow substantially in the years immediately following, and then take sterner measures in some distant future – read, he intends to leave the pending fiscal disaster to his successor.

• To step up his economy-defeating and self-delusional ideological tax hike war.

• To hope the Congress ignores his tax policies and the economy somehow continues to strengthen on its own.

• And ultimately to live up to the moniker his predecessor President Clinton tried to of tax-and-spend liberal.
Looking forward the next decade, according to the Obama budget, we are on pace to spend $47 trillion dollars - a major increase over the original budgets presented by the President.  I also believe that the projection of adding only $3 trillion more in the national debt is highly suspect.  Let's jump back to Obama's first budget in 2009 and his promise to reduce the annual deficit by 50% by the end of his first term in office...
“This is big,” wrote White House director of new media Macon Phillips in a February 23, 2009 blog post, ”the President today promised that by the end of his first term, he will cut in half the massive federal deficit we’ve inherited. And we’ll do it in a new way: honestly and candidly.”

The 2013 budget the president submitted today does not come close to meeting this promise of being reduced to $650 billion for fiscal year 2013.
Honestly and candidly?

Does that include the accounting gimmick to announce that the budget includes $850 billion in savings resulting from the ending of the wars in Iraq and Afghanistan - and then proceeding to spend the majority of those 'savings' on a nearly $500 billion stimulus for transportation infrastructure?

Representative Paul Ryan, Chairman of the House Budget Committee, has released his own observations and points from the President's budget...
Key facts from the President’s budget:

Spends Too Much:
$47 trillion of government spending over the next decade
Proposes a net increase over current spending projections

Taxes Too Much: 
$1.9 trillion in new taxes
Raises taxes, not to pay down the debt, but to fuel more government

Borrows Too Much:
Four straight years of trillion-dollar-plus deficits; no plan to reduce the debt
Gross debt at the end of FY22: $25.9 trillion

Budget Gimmicks & Broken Promises
Overstates new deficit reduction by taking credit for savings already

Exploits discredited budget gimmick by “not spending” nearly $1 trillion
that was never going to be spent
Anyway someone looks at this budget, with the continued trillion dollar plus deficits, with the continued increases in spending, the calls for huge tax increases on the wealthy and corporations, the President remains locked into his ideology and the efforts to expand the power, scope, and reach of the federal government.  He's also locking us onto the same unsustainable path that Greece, Italy, France, Portugal, Ireland, and other European Union nations are locked onto.

Forbes Magazine notes the cynical nature and tactic of the President's repeated refrain towards 'Economic Fairness'...
President Obama claims to be on a moral crusade for “fairness.” In one campaign speech after another, he suggests that his soak-the-rich class warfare will stop “millionaires and billionaires” from grabbing more than their fair share of wealth. But the most likely outcome is that he will end up grabbing more than his fair share of power, and everybody else will be poorer.

It would be hard to name a single case where class warfare appeals to envy and resentment are associated with faster growth rates, more private sector jobs and higher living standards for ordinary people. Moreover, not even hard-core communists seem to have believed in the morality of class warfare. It was always a cynical strategy to provide political cover for a power grab.

Of course, it isn't all about class warfare...racial politics also comes into play as noted by actor Samuel L. Jackson who let us know this weekend that the only reason he voted for Barack Obama was because he is black.

Recent polls are showing that President Obama's approval ratings are on the upswing, particularly after the announcement that the unemployment rate dropped to 8.3% in the January 2012 numbers...assisted considerably by an additional 1.2 million people being dropped out of the calculation as 'actively looking for work'.  I believe that these are also being boosted by the fight for the GOP nomination and the efforts of the mainstream media to boost Obama's numbers.  I am still standing by my analysis from last November that shows the President in some serious challenges in the key battleground states - including Pennsylvania.
During a drive between the Mon Valley towns of McKeesport and Elizabeth, a man named Ray was overheard calling into a local radio station to talk about the subject of the hour: November’s presidential election.

The first thing he said is that he is a Democrat who voted for Barack Obama in 2008. Pressed by the talk-show host, he said he would not vote for Obama this time.

The rest of Ray’s answer was not unique or remarkable: Yes, he is a union member. Yes, he wanted Obama to succeed. And, yes, he is very disappointed after giving the president more than enough chances to prove he can lead. 
Ray said he had finally given up.

It is a story heard over and over across the country, one that began not long after Obama took office in 2009 and followed a series of heavy-handed moves such as appointing policy “czars” to avoid Senate confirmation fights and a lack of transparency with the press and the public (a list too long to elaborate) despite vows to the contrary.

Stimulus signs that dotted highways after a trillion-dollar federal spending spree became signs to mock when the economy failed to improve — and guys like Ray began to detach. . . . While Obama campaigners salivate over the primary battle among Republicans Mitt Romney, Rick Santorum, Newt Gingrich and Ron Paul, they fail to realize that the GOP’s family feud will heal more easily than did Democrats’ in 2008.
The President, his campaign, his sycophants in the mainstream media can all tout the problems they 'inherited' from the previous Administration, the 'obstructionism' of Congress (in particular the Democrat majority controlled Senate), the 'recovery' (<2% 2011 GDP growth), and the job 'gains' - while downplaying the higher food, gas, and electricity costs that every American is experiencing.  But the perception of middle America is matching the reality of middle America - that the economy is not improving fast enough or broad enough...and the policies of this Administration are not the solutions we need.  Middle America is not seeing the Administration as working for them.

Tensions in the Middle East are ratcheting higher after nearly simultaneous attacks were made on Israeli diplomatic personnel in India and Georgia.  In both attacks, bombs were placed on vehicles driven by Israeli diplomatic personnel.  In Tblisi, Georgia, the device was discovered and disarmed before it could go off.  In New Delhi,  the bomb planted on a vehicle with Israeli diplomatic license plates did explode, seriously injuring the wife of an Israeli embassy staff member and at least three other people in the car.

Israel has accused Iran and the terror organization Hezbollah for conducting these attacks on their diplomatic personnel.

On This Day in History

1633 - Galileo arrives in Rome to face the Roman Inquisition on charges of heresy for advocating the Copernican theory - that the Earth revolves around the Sun.

1689 - William and Mary are proclaimed the joint sovereigns of Great Britain

1945 - The first of a series of firebombing air raids began against the German city of Dresden.  The resulting firestorm would gut the city and kill as many as 135,000 people - more destructive than the atomic bombings of Hiroshima and Nagasaki

1984 - Konstantin Chernenko is named the General Secretary of the Soviet Communist Party, four days after the death of Yuri Andropov.  Chernenko was the last of the Soviet 'hard-liners' to rule the USSR.  After his death in 1985, Mikhail Gorbachev was named to replace him.

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