Monday, February 20, 2012

Quick Hits - February 20, 2012

President's Day in the US - the combination of Lincoln's Birthday (12 Feb) and Washington's Birthday (22 Feb) into a three day weekend most noted by auto and mattress sales as opposed to honoring 2 major US Presidents.

In Brussels, the European Finance Ministers are currently meeting to decide on Greece's 2nd bailout in 21 months.  There is a cautious optimism that the EU Finance Ministers will sign off on this bailout before the end of their meeting.  The Dutch Finance Minister, however, is still on record demanding that there is a permanent 'troika' [European Union, European Central Bank, and International Monetary Fund] presence in Athens to take control of Greece's revenues and public spending from the Greek government.

With the likelihood of another bailout of Greece, one has to ask if this choice will actually save Greece or destroy Greece?  Or is that decision just being postponed with another kick of the can down the road - and will that can be kicked further down the road than it was by the 2010 bailout?
The big question is whether even if Greece carries out all these measures, it can succeed in meeting the target of reducing its debt to 120% of GDP by 2020. It could well be that further funds will have to be raised - perhaps from eurozone governments. And the amount the IMF will put in is not settled.

Only when the broad package has been agreed will the private investors begin the process of taking 70% cuts on their investments, so reducing the Greek debt mountain by 100bn euros.

In all of this, there are voices who say that a new emphasis has to be placed on growth, that there is a need to free up money from the EU's regional fund and invest it in Greece. It will be interesting to see whether such ideas gather pace.

But the suspicion remains that this is a deal less about Greece and more about defending the political project of the single currency and buying time for the eurozone: to ensure that if down the road Greece defaults, the impact will be less on the banks and on other weak eurozone countries.

If there is an agreement today or early Tuesday, the markets will celebrate and EU officials will breathe a huge sigh of relief, but they will have gambled on Greece's future.
Richard Fernandez, writing on his PJ Media blog, Belmont Club, takes a far more detailed look that this is more about politics and defending a political project than fixing the fundamental problems...
Welcome to Europe in crisis, or at least to Greece. The approved word for poverty in Europe is “social exclusion”, a concept invented to describe people who had not yet been brought into the European Social Model. It “refers to processes in which individuals and entire communities of people are systematically blocked from rights, opportunities and resources (e.g. housing, employment, healthcare, civic engagement, democratic participation and due process) that are normally available to members of society and which are key to social integration.”

According to the European Statistics Office in 2010, 27.7% of people in Greece, 24.5% in Italy, 19.3% in France, 25.5% in Spain and 25.3% in Portugal were “socially excluded”. As a whole 23.4% of[r] around half a billion European citizens fell into this category.
Nearly one in four is 'socially excluded' across Europe.
Unfortunately the aspirin of fantasy can no longer palliate the hell into which Southern Europe is descending. Kanelli is getting her wish, and the last vestiges of capitalism are being driven from the country.

University of Athens economist Panagiotis Petrakis ticks off the indicators: standard of living down, by as much as 30 per cent; bank deposits that have not been spirited out of the country are dwindling; almost 70,000 businesses folded in 2010 and bankruptcy is stalking more than 53,000 of the remaining 300,000; unemployment, 25 per cent – but youth joblessness is 47 per cent and rising; a quarter of the population living in poverty; homelessness, up 25 per cent, with well-educated youngsters accounting for much of the rise. Petty crime, doubled.

On top of all that Petrakis detects a slow run on the Greek banks. “It means a slow death for the economy,” he forecasts.

Whatever else happens, Greece has provided a preview into what happens when a welfare state model can no longer be sustained. The first to fall will be the weak, as the stimulus money wears off and its toxic aspects become evident: competitiveness has been destroyed, the inability to sustain itself with stimulants, the loss of the ability to heal itself. All the signs will be there. The emigration of the working age population; capital flight; corruption, which rather than abating, intensifies; the political elites, who rather than reforming, double down.
Attempting to prop up the welfare state model does not correct the fundamental problems.  For too many, they decide to not look at the fundamental problems, because of the uncomfortable truths.
Though Europe’s economies are dying, its mind is still in the grip of patterns of thought and modes of analysis that were hatched in another era. Socialism still enjoys great prestige. It’s an open question which will die first: the socialist faith or its acolytes, for what kills the adherents in this case is the dogma.
This open question is also fully applicable here within the United States.  The acolytes for the socialist faith remain locked into their dogma regardless of our own examples of the bankruptcy that is endemic of the practice of this dogma.  Two major examples for us to learn from - California and Detroit.  Or, more specifically, that the Golden State is on the road to become Greece, by way of Detroit..

We have a glimpse of where this leads. It's called Detroit.

Detroit is where "all the major economic planks of the statist or 'progressive' platform have been enacted," writes Jarrett Skorup of the Mackinac Center. "A 'living wage' ordinance, far above the federal minimum wage, for all public employees and private contractors. A school system that spends significantly more per pupil than the national average. A powerful school employee union that militantly defends the exceptional pay, benefits and job security it has won for its members. Other government employee unions that do the same for their members. A tax system that aggressively redistributes income from businesses and the wealthy to the poor and to government bureaucracies."
Sound like California? What has all this done for Detroit, "dubbed the most liberal city in America"? Detroit in 1950 was America's wealthiest city on a per capita income basis. Today it's the second-poorest major city.

"[I]t is striking that the decline in per capita income is exactly what classical economists predict would occur when wage controls are imposed and taxes are increased," Skorup writes.

Despite progressivism's poisoned fruits on display, what does California do? Recent headlines trumpeted proposed tax increases of billions, additional "rights" for state government workers and clamoring for more tax subsidies for education and health care and, let us not forget, Gov. Jerry Brown's desire to squander billions on a high-speed train no serious analyst says can operate profitably, if it can even be built for its estimated $98.5 billion.
The November 2012 election is going to be a referendum on the direction of the US.  Will the American voters decide to embrace the welfare / entitlement / Euro-style socialistic state as represented by the Obama Administration and its hard left progressivism or will the US embrace the conservative approach based far more on traditional values of smaller government, lower taxes, pro-business growth, and individual rights.

The President and his supporters, including many major elements of the 'mainstream media' are doing to want to direct the conversation away from the record of the Obama Administration's performance to focus on arguments that ignore the record.
GOP says HHS mandate is about liberty, not contraception. Dems say it’s about contraception, not liberty. Media accept and amplify Democratic framing.” So the Weekly Standard’s Stephen Hayes adroitly tweeted noon time Sunday in an accurate observation demonstrated by Meet the Press where host David Gregory opened the roundtable: “I want to start with...a big theme in this race so far. And Politico, I thought, captured the headline here with this theme, ‘2012: The year of birth control moms?’”
The entire kerfuffle being led from HHS, from the progressive women on Capital Hill, from the White House, and from the editors and executive producers of the major newspapers and television networks who share the progressive dogma on focusing on the 'perils' of social conservativism as opposed to the record of the Administration - or the unprecedented expansion of Federal powers.
Isn’t religious freedom for women too? So why did Representative Carolyn Maloney (D–NY) and Delegate Eleanor Holmes Norton (D–DC) walk out of a committee hearing on the subject, claiming it was disregarding women?

On Thursday, House Oversight and Government Reform chairman Darrell Issa (R–CA) held a hearing on a topic that has deeply concerned many Americans in recent weeks: Obamacare’s trampling of religious liberty. But some committee members seemed more interested in engaging in political theater than complying with required committee hearing process so that a serious constitutional issue could get some due consideration.

Disregarding committee rules, Maloney and Norton called at the outset of the hearing for the immediate seating of a female law student alongside the clergy on the first panel. As Issa explained, the proposed witness (who came prepared with testimony about a friend’s serious health problem) did not have the relevant credentials or appropriate contribution requested for the hearing’s focus on religious liberty. Nor was her name submitted for the panel in keeping with the committee’s requirement for advance notice, according to Issa: “I cannot, and will not, arbitrarily take a majority or minority witness if they do not have the appropriate credentials…and if we cannot vet them in a timely fashion.”

The opening challenges (“Where are the women?”) and later press interviews by Maloney and Norton obscured the fact that women indeed testified at the hearing.

Maloney told MSNBC that there were “so few women there—practically zero.” With two female witnesses among 10 total, however, that can hardly be excused as a rounding error. (See testimony of Allison Dabbs Garrett, senior vice president for academic affairs at Oklahoma Christian University, and Laura Champion, M.D., medical director and physician at Calvin College.)

Let’s be clear: Liberals are fighting to force religious employers to provide health insurance coverage for “no-cost” abortion-inducing drugs and contraception even if it conflicts with their beliefs. Violation of religious liberty is the central problem—and it’s just the latest in the list of Americans’ grievances against Obamacare.
However, the US still appears to be a center-right country as opposed to center-left or left leaning country.  Could this be a major miscalculation by the left to assume that social conservativism is a losing issue for the majority of US voters?
“Social issues were nonexistent in the period 1932 to 1964,” he observes. “The Republican Party won two presidential elections out of nine, and they had the Congress for all of four years in that entire period. . . . When social issues came into the mix—I would date it from the 1968 election . . . the Republican Party won seven out of 11 presidential elections.”

The Democrats who won, including even Barack Obama in 2008, did not play up social liberalism in their campaigns. In 1992 Bill Clinton was a death-penalty advocate who promised to “end welfare as we know it” and make abortion “safe, legal and rare.” Social issues have come to the fore on the GOP side in two of the past six presidential elections—in 1988 (prison furloughs, the Pledge of Allegiance, the ACLU) and 2004 (same-sex marriage). “Those are the only two elections since Reagan where the Republican Party has won a popular majority,” Mr. Bell says. “It isn’t coincidental.”
Ultimately, despite the efforts at misdirection, what is going to drive this election for the majority of Middle America is going to be what is affecting them right now - the unemployment rates, concerns over the national debt, gasoline prices, the expansion of the Federal government's powers, and their frustration over the direction of the country.

All of which have contributed to....

Gasoline prices continue to increase - and today's developments reflect more upwards pressure being placed on domestic prices..

Saudi Arabia has announced that they are cutting their oil output - spiking prices to $105 per barrel, which is a 9 month high.

The local Los Angeles CBS affiliate is reporting that one independent station in LA's Miracle Mile district is selling gas at $4.93 per gallon of unleaded regular - with the overall average price in the LA market now $4.06 per gallon.  This is a record high for this time of year - and an increase of over 20 cents in just 6 days.

This does not bode well for the President as this chart - which links the price of gasoline to Presidential job approval ratings reflects...

In Syria, reports are that the Assad regime is sending military reinforcements to Homs for a renewed offensive against that opposition controlled city.  The increasingly violent efforts of Assad to retain power are directly leading to more resistance to his regime elsewhere in Syria.
Assad has no intention of ceding power. That's the bottom line, and he's undertaking actions that constitute war crimes and crimes against humanity in order to remain in power. He's more than willing to murder thousands upon thousands of Syrians to show those surviving that he's going to continue to remain in power.

Even as more and more of Syria resists Assad's loyalists and seeks to engage in a new political order, Assad will resist to the end. He's following a path we've seen previously with Libya's Mumar Khadafi. Assad may well think that his forces are still capable of crushing the rebellion and prevent an all out civil war, but we're already seeing a civil war as rebel forces are operating from territories within the country where the loyalists are unable or unwilling to enter.

The diplomatic efforts to prevent further bloodshed aren't going to succeed as long as Assad continues to think that he can crush the rebellion. War crimes and crimes against the humanity aren't going to be an impediment to his actions. Artillery barrages against cities like Hama or Homs will continue to inflict civilian casualties.

On This Day in History

1942 - Lt. Edward 'Butch' O'Hare becomes the first American ace of WW2.  Flying from the aircraft carrier USS Lexington, O'Hare shoots down 5 Japanese bombers attempting to attack the Lexington in just 4 minutes of combat - earning the Medal of Honor.

1962 - John Glenn becomes the first American to orbit the Earth in space - completing 3 orbits before concerns over mechanical issues ended the flight early.

50 years ago...  Seven years and five months later, 2 Americans, Neil Armstrong, and Buzz Aldrin, walked on the Moon - the first from Earth to do so.  Today - we are dependent on the Russians for putting Americans into space as we lack our own capability with the end of the Space Shuttle program.  There is something very wrong with this.

2003 - A fire at a rock concert in a West Warwick, Rhode Island nightclub kills 100 and seriously injures almost 200.  The fire was caused by the band's pyrotechnics which ignited soundproofing foam on the structure's ceiling.

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