Saturday, May 26, 2012

Quick Hits - May 25, 2012

Alexis Tsipras, the leftist leader who is very likely to be the next Greek Prime Minister says that his country is involved in a 'Cold War' over austerity with Germany and the United Kingdom.  Using terminology similar to the invocation of 'Mutual Assured Destruction', Tsipras continued to use brinkmanship in his rhetoric where he is expecting Germany to back down on its demands that Greece honors the austerity measures agreed to on condition of its multi-billion Euro bailout - and still send the billions even as Greece fails to change the ways which brought the country to this point.
Greece is currently expected to introduce 11 billion euros of austerity measures by the end of June, but Tsipras said this was simply not possible because of the country's "destroyed economy."

"Do you actually think they would be able to implement these measures?" he said. "The problem is the austerity measures which have failed."
He has no idea what austerity is because Europe has not embraced austerity.  All he is looking for is for the status quo to continue - were wealthier European countries continue to give his country funds even though they can never pay those funds back, and they are unwilling to change the irresponsible fiscal practices which created this situation.

As the WSJ notes about 'Greece's False Austerity'....
The Greek government has been practicing a particularly aggressive form of antigrowth austerity. While the private sector shrank in 2011, Greece's government grew to 49.7% of GDP from 49.6% in 2010. To accomplish this bad outcome, Greece's government increased its value-added tax to 23%—a hidden sales tax so high that no one should be asked to pay it or support it—and created a national property tax that transfers private-sector wealth to the government and through it to foreign creditors.

Meanwhile, Greece's parliament kept full pay, full benefits, its fleet of BMWs, and a full staff. Greece maintained its sweetheart subsidies for businesses, banks, the army and those who choose not to work. Its sizeable delegations and facilities in Brussels, Vienna, Geneva and Washington are still large, as are the life-time pensions for politicians. Last week, Greek officials suspended work on the sale of government assets, one of the most pro-growth conditions in its IMF program.

The reality is that Greece's government is imposing too much austerity on others and not enough on itself. The U.S. is making the same mistake. Yet the big-government branch of economics in France and the U.S. argues that the problem in Greece is too much austerity even though there hasn't been much true austerity on the government.
With the refusal of the Greek government (and people) to actually change their direction away from the socialistic system that they've embraced for decades, they are betting that the rest of the EU will do whatever they can to avoid the pain today.  This looks to be a monumental gamble that will fail.
Germany's Bundesbank has sparked fresh worries over Greece's eurozone future, by claiming than a Greek exit from the single currency would be "manageable".

In a monthly report that has spooked investors, sending the euro tumbling as low as $1.2579 in the last few minutes, the German central bank urged European countries not to cave in over its austerity programme. That, the Bundesbank said, would "damage confidence in all euro area agreements".

The Bundesbank said:

Greece is threatening not to implement the reform and consolidation measures that were agreed in return for the large-scale aid programmes.

This jeopardises the continued provision of assistance. Greece would have to bear the consequences of such a scenario. The challenges this would create for the euro area and for Germany would be considerable but manageable given prudent crisis management.
A report issued by Bank of America Merrill Lynch provided some additional ammunition towards the Greek brinkmanship...
"Our euro area economists have highlighted the possibility of a circa 4pc decline in euro area GDP in the event of a Greek exit. Even with a moderate degree of fiscal loosening, we think that could threaten a circa 2pc decline in UK GDP," warned a report issued by the Bank of America Merrill Lynch.

The report goes on to say that while British banks have little direct risk in the event of the Greek default and exit from the Euro, the collateral damage to Britain from it's connections with EU banks will cause the challenges and deepen the double-dip recession that Britain appears to be entering.

In Spain, in addition to major banks requiring new capital infusions in order to remain viable, one of it's wealthiest areas, Catalonia, has indicated that it cannot pay its obligations as that country's economic condition worsens and borrowing costs soar. The autonomous region is seeking a major bailout from the central government. The region represents 20% of the overall Spanish economy.

The New York Times economist and columnist, Paul Krugman has repeatedly said that the challenges in Europe exist not because governments are spending well beyond their means, but that they are failing to go far enough towards spending and borrowing to stimulate their national economies.  The UK's Telegraph hammers this 'simplistic Keynesian based solution' for the Euro crisis and the UK's double dip recession in a essay deliciously titled, 'Britain Can't Afford to Fall for the Charms of the False Economic Messiah Paul Krugman'...
But haven’t we already tried borrowing to stimulate? And what did it deliver other than fiscal ruin, which in the eurozone periphery is so serious that markets have stopped lending altogether? Krugman has an answer for these questions, too. It’s not the policy that was wrong, merely that the stimulus wasn’t big and sustained enough. As for the eurozone, again, it wasn’t the policy, but the euro. Countries with their own currencies and central banks won’t run into this kind of problem. In extremis, they can always print the money.

Easy peasy, then. What’s not to like? Well, I’m sorry, but I just don’t buy it. It may or may not be possible for a vast, largely internalised economy such as the US, with its reserve currency status, to run double-digit deficits into the indefinite future without adverse consequences, but for the UK it is a much more questionable policy.

This is definitely in the 'read it all' category.

There is a disturbing pattern at work here. Krugman, one of the most vehement Keynesian advocates, basically says that the reason that the Eurozone is in trouble is that it's never been really committed to a full embracing of Keynesian economics. Note - the policy / theory isn't wrong, it's in the implementation - that the government spending stimulus wasn't big enough or sustained long enough.

Ask a Socialist / Marxist / Progressive as to why every previous implementation of that political ideology has resulted in economic crisis and failure, and they will tell you that the problem is not with Socialism, Marxism, or Progressivism, but in the implementation of it...they were never fully committed or thoroughly implemented. Some compromise or fundamental mistake always took place in the implementation...but the theory is perfect.

In the battle between advocates of the Keynesian economic model and the Austrian economic model, true Keynesians continue to push the tripe that the reason Keynesian implementations have not succeeded is not because they are fundamentally flawed and unviable in the real world (but makes a compelling theory when abstractly reviewed outside of real world effects) but because they weren't, as Krugman contends, not 'big and sustained enough'.

Look at the United States. In March 2009, the President and his economic advisers said that we needed a $800+ billion stimulus to 'jump start the economy' and prevent the unemployment level from exceeding 8%. Using the Democratic supermajority in Congress, this was rammed through creating the first ever trillion dollar annual federal deficit. GDP growth continued to stagnate. Unemployment soared into the double digits. In the next fiscal year, government spending grew even more - but there was no change. The same with the 2011 fiscal year spending - the nation barely realized a GDP growth and with the Administration cooking the books in the calculation of the unemployment numbers, we still had a real unemployment in the double digits. President Obama's embracing of Keynesian economics led to spending $5 trillion more than the government brought in in 39 months - and this has only deepened our economic and debt crisis.

The Heritage Foundation's 2012 Federal Budget in Pictures....

Still, the President, struggling in the polls (even when they are rigged in his favor with +8 or more Democrat oversampling), is appearing desperate and delusional as he tries to spin his record in office...

Stephen Moore, of the Wall Street Journal, eviscerates Obama's claim that he is not a big spender...

It's clear that this is not the effects of the ravings of a deluded Rex Nutting, but that Nutting was a willing dupe for the latest Obama reelection campaign meme to put lipstick on the pig of a record the President has - and blame George W. Bush for that pig of a record. As many elements of the mainstream media trip over themselves to assist, like Politifact anointing the President's revisionist history as correct, at least one element of the mainstream media is calling BS on this. Glenn Kessler, the 'fact checker' for the Washington Post, when he looks at this claim, gives it three (out of four) Pinocchio's. Only three? It warranted five.

6 months ago, during the bitter GOP Presidential primary battle, Democrats gleefully speculated that the GOP would be divided and unable to unify in a manner to effectively challenge the Messiah, Barack Hussein Obama, in November 2012.

Today, the GOP is unifying around the presumptive nominee, Mitt Romney and its Barack Obama and the Democrats who like they are in trouble come November.  The latest signs of an impending civil war in the Democrat party and it's base comes from the recall election of Republican Governor Scott Walker in Wisconsin...with the unions leading the recall effort starting to lash out at the President and other Washington Democrats for not doing enough to help them.
Top union officials are lashing out at Washington Democrats, claiming they haven't done enough to help them unseat Gov. Scott Walker (R) in Wisconsin's recall election.

President Obama has been silent on the race since his campaign released a statement endorsing Milwaukee Mayor Tom Barrett (D) immediately after his primary victory two weeks ago. The Obama campaign is helping Barrett with get out the vote operations, but the president has not publicly mentioned the race.

When asked about national Democrats' support in the recall election, another union official scoffed.
"Labor has always been there for the national Democratic Party. The national Democratic Party should be there for labor in this instance. They're not," he said.

The official said that what happened in the recall election would likely bleed over into the presidential election.

"I think they would want their voters energized and motivated for November. To me, it's just short-sighted," the official said.
Even Politico, becoming one of the loudest pro-Obama voices, is noting that the Obama campaign is sputtering - not firing on all cylinders...
So nothing inspires more angst than when that same Obama stumbles, as he has leaving the gate in 2012.

That’s the unmistakable reality for Democrats since Obama officially launched his re-election campaign three weeks ago. Obama, not Mitt Romney, is the one with the muddled message — and the one who often comes across as baldly political. Obama, not Romney, is the one facing blowback from his own party on the central issue of the campaign so far – Romney’s history with Bain Capital. And most remarkably, Obama, not Romney, is the one falling behind in fundraising.

We're seeing far more mistakes being made by the Obama campaign team this year than they did in 2007-8. We're also seeing far more weakness with one of the more important aspects of the Obama base. Not so much with the rabid progressives of the environmental movement or the union leadership (but this could change as a result of Wisconsin), but with the blue collar, rank and file, Democrats...many who would have been Reagan democrats in 1980. The Carteresque economic conditions and the President's continued insistence to treble down on the same economic policies while expecting different results will continue to not play well with the non-ideologues and independents.

Maryland is offering us another lesson in the effects of progressive taxation policies....
Last week the legislature in Annapolis enacted another huge tax increase, this time hitting anyone earning more than $100,000 ($150,000 for couples). This isn't a tax on the 1%. It's a tax on the top 14%.
Readers may recall that when Mr. O'Malley first raised taxes, in 2007, he said he could balance the budget on the backs of the rich. That didn't work out so well. The number of millionaires fell sharply in the state, whether because of the recession or because they sought tax shelters or simply fled to lower-tax states. Revenues came in far below projections, and the deficit forecast ballooned. (See "Millionaires Go Missing," May 26, 2009.)

So Mr. O'Malley is now going where the real money is—the middle class. The highest state-local combined income tax rate will rise to 8.95% from 8.7% and 7.95% when Mr. O'Malley became Governor, giving Maryland one of the highest rates in the nation. About 300,000 Maryland filers reported six-figure incomes last year.

The alternative would be to reduce state spending to match current revenues, especially in a state where spending has grown to $35 billion from $28 billion since 2007. But most Democrats and their union allies denounced an alternative plan to avoid the tax hike and allow spending to grow by $700 million, or 2%, as a "doomsday budget." The tax bill ties the new revenues to a pay raise for public-employee unions. Mr. O'Malley says government services are "severely undercapitalized," as if Maryland households aren't.

The progressive tax ratchet—the racket—is to pretend government can squeeze more money from the rich than is possible, then spend the imaginary windfall, then when deficits persist claim there's no choice but to raise taxes on the upper middle class and eventually on everyone who has income to tax. This is why Californians making as little as $48,000 pay a tax rate of 9.3%.

Reports are coming out that the President and his team have been providing unprecedented access, including access to classified information, to a Hollywood team that is hard at work developing for an October release a movie celebrating the President's 'gutsy call' to launch the Seal mission which killed Osama Bin Laden. The 'in-kind' campaign donation is intended to highlight the President's foreign policy success.

This does not appear the first time that the President or his team have released classified information in order to gain politically. In part of their football spike of the Bin Laden raid, they released information that a Pakistani doctor in Abbottabad provided critical assistance identifying the compound that Bin Laden occupied. The Pakistani tribal government in the region expressed their thanks to the Doctor by arresting him and charging him with treason. In a show trial, they found him guilty of assisting the US and sentenced him to 33 years in prison.
A Senate committee outraged over Pakistan imprisoning a doctor who led the U.S. to Usama bin Laden engaged Thursday in some dollar diplomacy by voting to cut aid to the country by $33 million.

The amount equals $1 million for every year of Dr. Shakil Afridi’s 33-year-long sentence for high treason.

The doctor ran a vaccination program for the CIA to collect DNA and verify bin Laden's presence at the compound in Abbottabad where U.S. commandos found and killed the Al Qaeda leader in May 2011.

“All of us are outraged at the imprisonment and sentence of some 33 years, virtually a death sentence to the doctor," said Arizona Sen. John McCain, the ranking Republican on the Senate Armed Services Committee. “It frankly outraged all of us.”

The Administration's response? Crickets chirping..

The scandal around Elizabeth Warren, a Democrat candidate for Senate in Massachusetts, who has falsely claimed to be a Native American, continues to grow despite her efforts to move on from it.

More lies are being uncovered in the story of Warren who started listing herself as a Native American as her career brought her into Ivy League institutions....including that she listed herself as Native American at least three years earlier at Harvard - just as she was being considered for tenure...
Breitbart News has uncovered exclusive new evidence that in the spring of 1993, three years before Harvard Law School first publicly stated she was “a woman of color,” Elizabeth Warren likely made that claim while teaching at Harvard, and at approximately the same time the faculty was considering her for a tenured position. Warren, now running for the Democratic nomination for U.S. Senate in Massachusetts, told Politico as recently as May 15 that she had “no idea” why a Harvard Law School spokesman called her a “woman of color” in a 1996 Harvard Crimson article and a 1997 Fordham Law Review article. However, a 1993 issue of the Harvard Women’s Law Journal suggests that she knew very well indeed.

Warren has now taken to stonewalling - as evidenced in this with a local TV reporter...

The clip here shows two minutes of back and forth but, according to this report, there was more:

Finally, Warren said, “I am proud of my family and I am proud of my heritage.”

Hiller followed up: “Does it include an Indian background?”

Warren replied, “Yes.”

“How do you know that?” Hiller asked.

Warren responded, “Because my mother told me so. This is how I live. My mother, my grandmother, my family. This is my family. Scott Brown has launched attacks on my family. I am not backing off from my family.”

Better than a document, better even than DNA: Family lore. Give her credit for staying on message here, though. The strategists and spin doctors have now programmed her to respond to all ancestry inquiries with repeated and relentless invocations of the “middle class,” which is as important to her campaign narrative as “jobs” is to Romney’s. Unless something new and more damning bubbles up in this vein that she has to explain away, I doubt she’ll respond on the merits again.

Even the Boston Globe, which up to now has steadfastly defended Warren, calling the attacks 'orchestrated' by the Boston Herald, is now turning on her and her unsubstantiated claim... 
Both of these stories establish a turning point for Warren, and maybe a fatal one -- especially with her powerhouse local paper, the Boston Globe. Once the media digs their teeth into something like this, out of sheer pride and the universal disgust we all share in the face of being deceived, the media can be reluctant to let go, even if it goes against their own partisan interests.

The media also knows that Warren could be fatally hurt by this scandal and that the sooner she comes clean, the better her chances are against Scott Brown. So their motives here aren't entirely pure.

The thin corrupt line between Democrats and electoral defeat is almost always the mainstream media. Republicans can with the media against them and usually have to, but without the corrupt media on their side, Democrats lose elections at something close to a 100% rate. The media knows this, Democrats know this, and this is why New Media has to work so damn hard to push legitimate stories into the MSM's narrative.
One final note - do read Patterico's blog post for today - and then check out Michelle Malkin's site as well as Hot Air and Ace of Spades...

Free speech needs to be defended.

This Day in History

1660 - The English Restoration - the exiled King Charles II, lands at Dover to assume the throne and end 11 years of military rule over Britain.

1787 - The Constitutional Convention, with George Washington presiding, begins in Philadelphia to develop a replacement for the Articles of Confederation which united America's 13 states.

1861 - President Abraham Lincoln suspends the writ of habeas corpus during the Civil War - insisting that he needed to suspend the rules in order to put down the rebellion in the South.

1977 - Star Wars Episode IV: A New Hope opens...

1979 - American Airlines Flight 191, a DC-10 flying from Chicago's O'Hare Airport to Los Angeles crashes shortly after takeoff after losing it's left engine and pylon, killing all 277 people onboard in addition to 2 others on the ground.  An American Airlines maintenance crew was found to have failed to follow proper procedures for the removal / replacement of the engine and pylon during repair and maintenance work.  The loss of the engine and pylon combined with the wing damage inflicted caused the aircraft to crash.  This crash remains the worst in the US, and one of the 10 worst in aviation history in terms of lives lost.

1983 - Star Wars Episode VI: Return of the Jedi opens....and sets a new opening day box office sales record.

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