Fire Hydrant of Freedom

Not worth my time to double to double check, but I thought I heard him say he was gay.  Anyway, I'm with you on the rest of it.

By HOLMAN W. JENKINS, JR.
Let's face it, the "Chicago School" of economics—the one with all the Nobel Prizes, the one associated with Milton Friedman, the one known for its trust of markets and skepticism about government—has taken a drubbing in certain quarters since the subprime crisis.

Sure, the critique depends on misinterpreting what the word "efficient" means, as in the "efficient markets hypothesis." Never mind. The Chicago school ought to be roaring back today on another of its great contributions, "rational expectations," which does so much to illuminate why government policy is failing to stimulate the economy back to life.

Robert E. Lucas Jr., 74, didn't invent the idea or coin the term, but he did more than anyone to explore its ramifications for our model of the economy. Rational expectations is the idea that people look ahead and use their smarts to try to anticipate conditions in the future.

Duh, you say? When Mr. Lucas finally won the Nobel Prize in 1995, it was the economics profession that said duh. By then, nobody figured more prominently on the short list for the profession's ultimate honor. As Harvard economist Greg Mankiw later put it in the New York Times, "In academic circles, the most influential macroeconomist of the last quarter of the 20th century was Robert Lucas, of the University of Chicago."

Mr. Lucas is visiting NYU for a few days in early September to teach a mini-course, so I dash over to pick his brain. He obligingly tilts his computer screen toward me. Two things are on his mind and they're connected. One is the failure of the European and Japanese economies, after their brisk growth in the early postwar years, to catch up with the U.S. in per capita gross domestic product. The GDP gap, which once seemed destined to close, mysteriously stopped narrowing after about 1970.

The other issue on his mind is our own stumbling recovery from the 2008 recession.

For the best explanation of what happened in Europe and Japan, he points to research by fellow Nobelist Ed Prescott. In Europe, governments typically commandeer 50% of GDP. The burden to pay for all this largess falls on workers in the form of high marginal tax rates, and in particular on married women who might otherwise think of going to work as second earners in their households. "The welfare state is so expensive, it just breaks the link between work effort and what you get out of it, your living standard," says Mr. Lucas. "And it's really hurting them."

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 .Turning to the U.S., he says, "A healthy economy that falls into recession has higher than average growth for a while and gets back to the old trend line. We haven't done that. I have plenty of suspicions but little evidence. I think people are concerned about high tax rates, about trying to stick business corporations with the failure of ObamaCare, which is going to emerge, the fact that it's not going to add up. But none of this has happened yet. You can't look at evidence. The taxes haven't really been raised yet."

By now, the Krugmanites are having aneurysms. Our stunted recovery, they insist, is due to government's failure to borrow and spend enough to soak up idle capacity as households and businesses "deleverage." In a Keynesian world, when government gooses demand with a burst of deficit spending, the stick figures are supposed to get busy. Businesses are supposed to hire more and invest more. Consumers are supposed to consume more.

But what if the stick figures don't respond as the model prescribes? What if businesses react to what they see as a temporary and artificial burst in demand by working their existing workers and equipment harder—or by raising prices? What if businesses and consumers respond to a public-sector borrowing binge by becoming fearful about the financial stability of government itself? What if they run out and join the tea party—the tea party being a real-world manifestation of consumers and employers not behaving in the presence of stimulus the way the Keynesian model says they should?

Mr. Lucas and colleagues in the early 1960s were not trying to undermine the conventional prescriptions when they began to think about how the public might respond—possibly in inconvenient ways—to signals about government intentions. As he recalls it, they were just trying to make the models work. "You have somebody making a decision between the present and the future. You get a college degree and it's going to pay off in higher earnings later. You make an investment and it's going to pay off later. Ok, you can't do that without this guy taking a position on what kind of future he's going to be living in."


'If you're going to write down a mathematical model, you have to address that issue. Where are you supposed to get these expectations? If you just make them up, then you can get any result you want."

The solution, which seems obvious, is to assume that people use the information at hand to judge how tomorrow might be similar or different from today. But let's be precise, not falling into the gap between "word processor people" and "spreadsheet people," as Mr. Lucas puts it. Nothing is assumed: Data are interrogated to see how changes in tax rates and other variables actually influence decisions to work, save and invest.

Mr. Lucas is quick to credit the late John Muth, who would later become a colleague for a while at Carnegie Mellon, with inventing "rational expectations." He also cites Milton Friedman, with whom Mr. Lucas took a first-year graduate course.

"He was just an incredibly inspiring teacher. He really was a life-changing experience." Friedman, he recalls, was a skeptic of the Phillips curve—the Keynesian idea that when businesses see prices rising, they assume demand for their products is rising and hire more workers—even if the real reason for higher prices is inflation.

"Milton brought this [Phillips curve] up in class and said it's gotta be wrong. But he wasn't clear on why he thought it was wrong." In his paper for Friedman's class, Mr. Lucas remembers reaching for a very rudimentary notion of expectations to try to explain why the curve could not operate as predicted.

Growing up in the Seattle area, Mr. Lucas recalls a road trip he took as a youngster that terminated in Chicago, a city with two baseball teams! Chicago, in his mind, became "the big city," a gateway to a wider world. That, and a scholarship, is how he would end up spending most of his career at the University of Chicago.

We are sitting in an inauspicious guest office at NYU. A late summer sprinkle dampens the city. Mr. Lucas describes his parents as intelligent, reading people, neither of whom finished college—he suspects the Great Depression had something to do with it. "They got into left-wing politics in the '30s, not really to do anything about it, but to talk about. That was our background—me and my siblings—relative to our neighbors and relatives, who were all Republicans." In a community not noted for its diversity, his parents were especially committed to civil rights, his mother giving talks on the subject.

I ask about a report that he voted for Barack Obama in 2008, supposedly only the second time he had voted for a Democrat for president. "Yeah, I did. My parents are dead for a long time, but my sister says, 'You have to vote for Obama, for what it would have meant for Mom and Dad.' I felt that too. It's a huge thing. This [history of racism] has been the worst blot on this country. All of a sudden this charming, intelligent guy just blows it away. It was great."

Related Video
 Steve Moore and Mary O'Grady discuss the week's economic news.
..A complementary consideration was John McCain's inability to say anything cogent about the financial crisis then engulfing the nation. "He didn't have a clue about the economy. I just assumed the guy [Obama] could do it. I thought he was going to be more Clinton-like in his economics and politics. I was caught by surprise by how far left the guy is and how much he's hung onto it and, I would say, at considerable cost to his own standing."

Refreshing, even bracing, is Mr. Lucas's skepticism about the "deleveraging" story as the sum of all our economic woes. "If people start building a lot of high-rises in Chicago or any place and nobody is buying the units, obviously you're going to shut down the construction industry for a while. If you've overbuilt something, that's not the problem, that's the solution in a way. It's too bad but it's not a make-or-break issue, the housing bubble."

Instead, the shock came because complex mortgage-related securities minted by Wall Street and "certified as safe" by rating agencies had become "part of the effective liquidity supply of the system," he says. "All of a sudden, a whole bunch of this stuff turns out to be crap. It is the financial aspect that was instrumental in the meltdown of '08. I don't think housing alone, if it weren't for these tranches and the role they played in the liquidity system," would have been a debilitating blow to the economy.

Mr. Lucas believes Ben Bernanke acted properly to prop up the system. He doesn't even find fault with Mr. Obama's first stimulus plan. "If you think Bernanke did a great job tossing out a trillion dollars, why is it a bad idea for the executive to toss out a trillion dollars? It's not an inappropriate thing in a recession to push money out there and trying to keep spending from falling too much, and we did that."

But that was then. In the U.S. at least, the liquidity problems that manifested themselves in 2008 have long since been addressed. To repeat the exercise now with temporary tax and spending gimmicks is to produce the opposite of the desired effect in consumers and business owners, who by now are back to taking a longer view. Says

Mr. Lucas: "The president keeps focusing on transitory things. He grudgingly says, 'OK, we'll keep the Bush tax cuts on for a couple years.' That's just the wrong thing to say. What I care about is what's the tax rate going to be when my project begins to bear fruit?"


Mr. Lucas pulls up a bit when I ask him what specific advice he'd give President Obama (this is before Mr. Obama's two back-to-back speeches, one promising temporary tax cuts and the other permanent tax hikes, which mysteriously fail to levitate the economy). Unlike many of his colleagues, Mr. Lucas has not spent stints in Washington advising politicians, or on Wall Street cashing in on his Nobel laureate reputation. "No, that doesn't interest me at all," he says. "Now I've taken a salary cut. I don't go to faculty meetings. I don't teach undergraduates. I just write papers. It's great. I feel lucky about this."

Still, an answer comes. Mr. Lucas launches into a brisk dissertation on the work of colleagues—Martin Feldstein, Michael Boskin, others—whom he credits with disabusing him and fellow economists of a youthful assumption that taxes have little effect on the overall amount of capital in society. A lesson for Mr. Obama might be: If you want to stimulate growth in investment, productivity and income, cut taxes on capital.

Alas, don't look for this idea to feature in the next Obama speech on the economy, due any minute now.

Mr. Jenkins writes the Journal's Business World column.

The wave of selling that has washed over financial markets in recent weeks swamped precious metals on Friday, sending gold and silver prices plummeting and raising the stakes for key weekend meetings of global finance officials.

 Gold and silver prices have seen sharp declines lately, but Barron's economics editor Gene Epstein says the long-term value of the commodities still shines.
.In the past week, the Dow Jones Industrial Average plunged 6.4%, its worst week since October 2008. Currencies, too, have had a wild ride. The dollar this month has soared against its rivals. The euro has tumbled 6% in September, while emerging currencies like Brazil's real have been punished.

Gold futures dropped 5.8% Friday, the biggest one-day loss in five years, as investors rushed to cash out of some of their most profitable investments in the hopes of making up for losses elsewhere. The decline capped gold's worst week since 1983. Silver was even harder hit, plunging 18% for its largest single-day decline since 1987.

 Precious metals posted deep losses as investors continued to leave the market in favor of cash. Comex silver for September delivery dropped $6.4870, the worst dollar-decline since 1980. Liam Denning has details on The News Hub.
.The week highlighted a growing sense of despondency among investors concerned that policy makers have neither the will nor power to juice their economies.

The broad market declines have added pressure on finance ministers and central bankers as they gather for the International Monetary Fund's annual meeting in Washington this weekend.

"We are in a red zone," said World Trade Organization chief Pascal Lamy, one of many officials attending the meeting. "We are at risk of repeating what happened in 2008"—when market upheaval shook the global economy—"occurring again for different reasons but through the same channel, the financial system."

Friday's exodus from gold and silver underscores the unpredictable and volatile nature of financial markets in recent weeks.

 .Investors have grown increasingly skeptical of policy makers' ability to revive the global economy, and of their willingness to bring about a resolution to the European debt crisis.

The broader rout has left many investors with unexpected losses, driving some to part with some of their better performing investments, among them gold and silver.

The declines are a turnabout for gold, in particular, which has recently found strong demand in good times and bad. It has enjoyed a special status as a safe haven from financial crisis and political turmoil, as well as a hedge against inflation.

Gold has risen six-fold in the past decade, including a 15% gain this year. In August, it reached a nominal record of $1,888.70 per troy ounce, rising on a trajectory that many had speculated could not last.

Gold settled at $1,637.50 an ounce, down 9.6% for the week. Silver, which had risen 28% this year by the end of April, settled at $30.05 per ounce, falling into negative territory for the year.

 Fears of a possible Greek default and the U.S economy dipping back into recession pushed the blue-chip index to its worst weekly decline in nearly three years. Brendan Conway has details on The News Hub.
.Some hedge funds were selling to raise cash to meet margin calls from lenders. Other investors were using proceeds of silver and gold sales to replenish other parts of their portfolios, which had fallen in value in recent sessions, said George Gero, precious metals strategist at RBC Global Futures.

In addition, it appeared that European banks were selling gold, possibly in order to raise cash and shore up their balance sheets, Mr. Gero said. This selling was then magnified by so-called momentum traders whose strategy is to piggyback on moves up or down in price.

Silver faces the added woe of being widely used in industry, and therefore vulnerable to fears that weak economies will consume less. Moreover, the Shanghai Gold Exchange said Friday that it will expand the upper and lower trading limits for its silver contract.

Exchange-traded funds that invest in, and track, the metals also have helped investors move quickly in and out of gold and silver.

"It feels like there's tremendous macro headwinds for the metals," said David Lutz, managing director at Stifel Nicolaus.

The recent downdraft for precious metals came after the Federal Reserve this week acknowledged the economy is in worse shape than it thought, a sign that inflation will be of no concern for some time. As well, economic data out of China and Europe indicated that the global economy continues to lose steam.

"What's exacerbating the situation right now is that the global economy is in bad shape," said Andreas Utermann, global chief investment officer for money manager RCM, a subsidiary of Allianz Global Investors.

On Friday, members of the Group of 20 industrialized and developing nations met to see what measures they could devise to boost confidence in financial markets. But there was little expectation that they would produce anything concrete.

 .The euro fell from nearly $1.38 to end the week at $1.35, and German, French and British stocks all fell too. Stocks in Hong Kong and Seoul fell, too, and the Shanghai Composite suffered its fourth straight week of declines. The Korean won tumbled 9.3% against the dollar, forcing the central bank to intervene.

In the U.S., the Dow's declines this week take the blue-chip index down 18% from its late-April highs. On Friday, the Dow rose 37.65 points, to 10771.48.

The fact that gold is falling along with other assets complicates life for those who bought gold because they thought it would rise or fall independently.

"There is nowhere really to hide at the moment," said Fredrik Nerbrand, global head of asset allocation at HSBC.

Will the Egyptian military be permitted to remilitarize the Sinai? Since Palestinian and Egyptian terrorists crossed into Israel from Sinai on August 18 and murdered eight Israelis this has been a central issue under discussion at senior echelons of the government and the IDF.

Under the terms of the Egypt-Israel peace treaty, Egypt is prohibited from deploying military forces in the Sinai. Israel must approve any Egyptian military mobilization in the area. Today, Egypt is asking to permanently deploy its forces in the Sinai. Such a move requires an amendment to the treaty.

Supported by the Obama administration, the Egyptians say they need to deploy forces in the Sinai in order to rein in and defeat the jihadist forces now running rampant throughout the peninsula. Aside from attacking Israel, these jihadists have openly challenged Egyptian governmental control over the territory.

So far the Israeli government has given conflicting responses to the Egyptian request. Defense Minister Ehud Barak told The Economist last week that he supports the deployment of Egyptian forces. Prime Minister Binyamin Netanyahu said Sunday that he would consider such deployment but that Israel should not rush into amending the peace treaty with Egypt.

Saturday Barak tempered his earlier statement, claiming that no decision had been made about Egyptian deployment in the Sinai.

The government's confused statements about Egyptian troop deployments indicate that at a minimum, the government is unsure of the best course of action. This uncertainty owes in large part to confusion about Egypt's intentions.

Egypt's military leaders do have an interest in preventing jihadist attacks on Egyptian installations and other interests in the Sinai. But does that interest translate into an interest in defending Israeli installations and interests? If the interests overlap, then deploying Egyptian forces may be a reasonable option. If Egypt's military leaders view these interests as mutually exclusive, then Israel has no interest in such a deployment.

Israel’s confusion over Egypt's strategic direction and interests echoes its only recently abated confusion over Turkey's strategic direction in the aftermath of the Islamist AKP Party's rise to power in 2002. Following the US's lead, despite Turkish Prime Minister Recep Tayyip Erdogan's hostile rhetoric regarding Israel, Israel continued to believe that he and his government were interested in maintaining Turkey's strategic alliance with Israel. That belief began unraveling with Erdogan's embrace of Hamas in January 2006 and his willingness to turn a blind eye to Iranian use of Turkish territory to transfer arms to Hezbollah during the war in July and August 2006.

Still, due to US support for Erdogan, Israel continued to sell Turkey arms until last year. Israel only recognized that Turkey had transformed itself from a strategic ally into a strategic enemy after Erdogan sponsored the terror flotilla to Gaza in May 2010.

As was the case with Turkey under Erdogan, Israel's confusion over Egypt's intentions has nothing to do with the military rulers' behavior. Like Erdogan, the Egyptian junta isn't sending Israel mixed signals.

Former Egyptian president Hosni Mubarak was never a strategic ally to Israel the way that Turkey was before Erdogan. However, Mubarak believed that maintaining a quiet border with Israel, combating the Muslim Brotherhood and keeping Hamas at arm's length advanced his interests. Mubarak's successors in the junta do not perceive their interests in the same way.

To the contrary, since they overthrew Mubarak in February, the generals ruling Egypt have made clear that their interest in cultivating ties with Israel's enemies - from Iran to the Muslim Brotherhood - far outweighs their interest in maintaining a cooperative relationship with Israel.

From permitting Iranian naval ships to traverse the Suez Canal for the first time in 30 years to opening the border with Hamas-ruled Gaza to its openly hostile and conspiratorial reaction to the August 18 terrorist attack on Israel from the Sinai, there can be little doubt about the trajectory of Egypt's relations with Israel.

But just as was the case with Turkey - and again, largely because of American pressure - Israel's leaders are wary of accepting that the strategic landscape of our relationship with Egypt has changed radically and that the rules that applied under Mubarak no longer apply.

After Israel withdrew from the Gaza Strip in August 2005, terrorists in Gaza and Sinai took down the border. Gaza was immediately flooded with sophisticated armaments. Then-prime minister Ariel Sharon made a deal with Mubarak to deploy Egyptian forces to the Sinai to rebuild the border and man the crossing point at Rafah. While there were problems with the agreement, given the fact that Mubarak shared Israel's interests, the move was not unjustified.

Today this is not the case. The junta wants to permanently deploy forces to the Sinai and consequently is pushing to amend the treaty. The generals' request comes against the backdrop of populist calls from across Egypt's political spectrum demanding the cancellation of the peace treaty.

If Israel agrees to renegotiate the treaty, it will lower the political cost of a subsequent Egyptian abrogation of the agreement. This is the case because Israel itself will be on record acknowledging that the treaty does not meet its current needs.

Beyond that, there is the nature of the Egyptian military itself, which was exposed during and in the aftermath of the August 18 attack. At a minimum, the Egyptian and Palestinian terrorists who attacked Israel that day did so with no interference from Egyptian forces deployed along the border.

The fact that they shot into Israel from Egyptian military positions indicates that the Egyptian forces on the ground did not simply turn a blind eye to what was happening. Rather, it is reasonable to assume that they lent a helping hand to the terror operatives.

Furthermore, the hostile response of the Egyptian military to Israel's defensive operations to end the terror attack indicates that at a minimum, the higher echelons of the military are not sympathetically disposed towards Israel's right to defend its citizens.

Both the behavior of the forces on the ground and of their commanders in Cairo indicates that if the Egyptian military is permitted to deploy its forces to the Sinai, those forces will not serve any helpful purpose for Israel.

The military’s demonstrated antagonism toward Israel, the uncertainty of Egypt's political future, the rise of the Muslim Brotherhood, and the hatred of Israel shared by all Egyptian political factions all indicate that Israel will live to regret it if it permits the Egyptian military to mobilize in the Sinai. Not only will Egyptian soldiers not prevent terrorist attacks against Israel, their presence along the border will increase the prospect of war with Egypt.

Egypt's current inaction against anti-Israel terror operatives in the Sinai has already caused the IDF to increase its force levels along the border. If Egypt is permitted to mass its forces in the Sinai, then the IDF will be forced to respond by steeply increasing the size of its force mobilized along the border. And the proximity of the two armies could easily be exploited by Egyptian populist forces to foment war.

In his interview with The Economist, Barak claimed bizarrely, "Sometimes you have to subordinate strategic considerations to tactical needs." It is hard to think of any case in human history when a nation's interests were served by winning a battle and losing a war. And the stakes with Egypt are too high for Israel's leaders to be engaging in such confused and imbecilic thinking.

The dangers emanating from post-Mubarak Egypt are enormous and are only likely to grow. Israel cannot allow its desire for things to be different to cloud its judgment. It must accept the situation for what it is and act accordingly.

Wesbury has some interesting thoughts on the Fed's twist, and the sharp downturn in gold and silver (a risk of which I have warned btw-- which has not stopped me from getting badly dinged in silver, but I digress)

http://www.ftportfolios.com/Commentary/EconomicResearch/2011/9/23/bernanke-squashes-gold-bugs

Well, she was there with a camera crew and she was on "Dancing with the Stars" last year (which I am guessing is big in the gay community) and infuriated many on the left by being voted to the next round far beyond her actual talents (i.e. Sarah Palin fans voted for her regardless of her performance).

http://www.youtube.com/watch?v=S18gsZ37QXY&feature=player_embedded

The Oath Accountability Civil Action
Join the tens of thousands of Patriots who have already signed on to the Oath Accountability Civil Action for Constitutional Integrity.

To enforce our Constitution's limits on the central government, we believe a formal legal action is necessary. This action, if successful, would require that all members of the Executive, Legislative and Judicial branches, first and foremost, abide by their oaths "to support and defend" our Constitution, under penalty of law, and comport with its enumerated limitations on the federal government. The current scope of federal activities provides abundant evidence that many members of those three co-equal branches have long since abandoned their oaths, and, at present, there is no recourse for prosecution to enforce compliance.

To that end, we urge you to join this action with Patriots across the nation in this effort to establish legal standing as citizens, particularly those in our Armed Services who defend their oaths with blood and life. If we are unsuccessful in our effort to seek remedy for the lack of any proscription against, and penalty for breach of oath, it will be because the judiciary refuses any such accountability regarding the wanton violation of our Constitution. Such rejection would in effect condemn Americans once again to the abuse previously characterized in American history as "Taxation Without Representation."

Our goal is 500,000 signatures. Please join us, and encourage other like-minded Patriots to do so. A large support base will be necessary if the federal judiciary refuses to hear this action and we are forced to take it to the national legislature for codification into federal law.


    


The Foundation
"The natural cure for an ill-administration, in a popular or representative constitution, is a change of men." --Alexander Hamilton


Government & Politics
Chicago-Style Government
The Era of Obama was supposed to be a time of Hope and Change, transparent and accountable government, and bipartisan song-singing -- indeed, as Obama himself put it, "the moment when the rise of the oceans began to slow and our planet began to heal." Reality has been wholly different. A recession that, according to the National Bureau of Economic Research, ended in June 2009 but has given way to crippling economic stagnation, with no end in sight. Promised transparency quickly gave way to unaccountable czars and closed-door dealings, and bipartisanship was cast aside for the Democrat partisan ramrodding of hard-left legislation through the chambers of Congress. We don't pretend to speak for the planet, but nothing much seems healed.

Amid that bleak picture, there are (at least) three administration scandals that continue to simmer, despite the fact that the Leftmedia and Obama Re-Election Outlets (but we repeat ourselves) have given them scant attention. First is the story of Solyndra's bankruptcy following a $535 million federal loan guarantee from the Obama Department of Energy (part of the 2009 "stimulus"). The hastily issued loan to the California-based solar cell producer was greater than the amount given to 35 states to complete their respective lists of "shovel-ready" infrastructure jobs. When even that wasn't enough, Solyndra sought another $469 million. "Green energy" sure does seem to require an awful lot of green.

Solyndra went bankrupt when its unworkable business model collapsed. Yet, consistent with leftist cronyism, certain creditors who happened to be Democrat donors were placed in front of the taxpayers in the line of recovery -- much as unions were placed in the front of the line for the GM and Chrysler bailouts. Lost in the cover-up are the 1,100 workers abruptly laid off in August who will have a tough time finding jobs, as California is already reeling from high unemployment and is hardly a climate conducive to economic recovery.

Former employees are beginning to tell all, too. "After we got the loan guarantee, they were just spending money left and right," said former Solyndra engineer Lindsey Eastburn. "Because we were doing well, nobody cared. Because of that infusion of money, it made people sloppy." No wonder Solyndra CEO Brian Harrison and CFO W.G. Stover Jr. have announced that they will invoke their Fifth Amendment right against self-incrimination when they testify before Congress today.

Second is the administration's widening venture socialism scandal involving wireless network company LightSquared, which is financed by billionaire Democrat donor Philip Falcone. Military, civilian and government experts are objecting to LightSquared's potential to interfere with the military's GPS network. Air Force Commander Gen. William Shelton blew the whistle last week, claiming that the White House pressured him to modify testimony before Congress to make it more favorable toward LightSquared. He didn't.

LightSquared executives insist that their proposed system's wavelength won't interfere with the adjacent wavelengths used by the military's GPS on the available broadcast spectrum. Despite industry-wide protests, however, LightSquared received fast-track approval for an FCC waiver granting them the right to construct a 4G wireless network for far less capital than the billions the government would extract from its competitors. To address the industry's concerns about GPS interference, LightSquared proposed that everyone else pay to retrofit their GPS devices instead of revising its network to avoid broadband spillover.

Prior to its current incarnation, LightSquared was known as Skyterra, and its ownership included major Obama backers going back to 2004. Obama sold his Skyterra stock in 2005. Along with so much in the president's background, the Leftmedia seem content to characterize such connections as coincidental.

Finally, and most serious, is the continuing cover-up of Project Gunrunner and Operation Fast and Furious. As our readers well know, this project of the Bureau of Alcohol, Tobacco, Firearms and Explosives has resulted in more than 2,000 American weapons illegally crossing into Mexico, not only under the nose of the ATF, but with its consent, fueling the raging drug war south of the border. Reports this week indicate that a third gun linked to Fast and Furious was recovered at the scene of Border Patrol agent Brian Terry's murder in December. Furthermore, according to Darrell Issa, Chairman of the House Oversight Committee investigating this scandal, Fast and Furious guns were used in at least 200 murders in Mexico -- and that's a conservative estimate. The administration is in full rear-covering mode, and the Leftmedia have, predictably, remained virtually silent.

Is it too much to ask that the media start doing their jobs? It's high time the Chicago thugs in the White House are held accountable for their actions.

What can be done about the thugs in Washington?
Obama's Novel Debt Plan: Raise Taxes
On Monday, Barack Obama put forward his plan for the congressional debt-reduction super committee to consider. Not surprisingly, it's heavy on tax increases and light on actual debt reduction. To read the full story, don't miss Mark Alexander's essay, Taking Down Socialist 'Tax Fairness' Rhetoric.


News From the Swamp: Spending and Jobs
Late Thursday night, the House barely passed a short-term continuing resolution to authorize spending for FY2012. The vote was 219-203. Earlier in the week, Republican leaders were dealt a defeat by conservative members of their own caucus when a similar CR failed with 48 Tea Party conservatives opposed. Those 48 wanted to stick with the House's April spending deal, while the leadership was putting forward the August bipartisan agreement. Some two dozen Republicans were brought back into the fold with an amendment that included $100 million in cuts to the Innovative Technology Loan Guarantee Program, the Department of Energy program responsible for the Solyndra debacle.

In the Senate, Barack Obama's much touted jobs bill is lacking the support it needs to pass -- among Democrats. Reports are that Democrats Mark Begich (AK), Jim Webb (VA), Mary Landrieu (LA) and Barbara Mikulski (MD) outright oppose the bill, with some others not entirely decided yet. Administration officials met with several Democrats on the Hill this week to try to persuade them, but even if all Democrats are on board, the president's bill is in trouble.

Quote of the Week
"We're home alone. There's no adult in charge." --Larry Summers, former director of Obama's White House National Economic Council, as quoted in Confidence Men, Ron Suskind's newly released book about the Obama economic team

From the 'Non Compos Mentis' File
A number of federal agencies and departments are proudly making an effort to cut costs in these trying economic times by taking stock of their stationery and office equipment and buying in bulk. The plan adopted by the Departments of Commerce, Defense, Homeland Security, Justice and Treasury is expected to save $600 million over four years. Wow. We hate to criticize cost savings, but this amount won't even register on the chart compared to the government's multi-trillion-dollar debt. Sure, buying in bulk makes sense, but the trouble with government is that it took them so long to figure out basic business economics. Perhaps the whole thing is merely an offset for the new Washington Post report that, "In the past five years, the Office of Personnel Management has made more than $601 million in benefits payments to deceased federal annuitants."

New & Notable Legislation
The Senate Appropriations Committee has added a measure to the 2012 appropriations package that would provide for taxpayer-funded abortions in the District of Columbia. The House version maintains the abortion ban that has been in place since April, so now all eyes are on what deal may be hammered out. The National Right to Life Committee estimates that removing the Dornan Amendment, which prevents congressionally appropriated funds for abortion, would mean an additional 1,000 abortions a year in DC alone paid by taxpayers. The ban was originally in place from 1996-2009, but Barack Obama lifted it when he took office. Republicans reinstated it earlier this year after winning the House, but once again it's up for debate.


 

Hope 'n' Change: Finding Out What's in It
Add CLASS (Community Living Assistance Services and Support) to the growing list of Obama administration scandals. CLASS was ostensibly designed to be the long-term care component of ObamaCare. Its real purpose was to allow the administration to claim that the health care reform package was "deficit neutral." CLASS would collect premiums upwards of $75 billion during a 10-year period beginning in 2012, but those premiums would not go back to the citizens who paid them. Instead, they would be funneled into other parts of ObamaCare that are short on cash. When the bill for CLASS comes due in 2021, taxpayers will take a big hit to keep the "deficit neutral" ObamaCare afloat -- unless, of course, 2012 provides opportunity for repeal.

CLASS recently folded up shop, but a public airing of several internal emails regarding the program reveals that the White House knew all along that it was unsustainable, and that they had no way to fix it. A congressional investigation led by Sen. John Thune (R-SD) notes that, within the Department of Health and Human Services, "the program was repeatedly referred to as 'a recipe for disaster' with 'terminal problems.'" The only viable solution to fix CLASS would be for Congress to repeal it immediately. It doesn't work, it never worked, and it never will work.

From the Left: Staying in Touch With the Little Guy
Remember the flap about Nancy Reagan's red dress? Well, in hard-times America, the current First Lady showed up at a DNC fundraiser (the one for millionaires at $35,000 a plate) wearing jewelry including a Lotus cuff priced at $15,000 with 2.9 carats of diamonds, her Gothic cuff at $15,350 with 2.17 carats in diamonds, and the Quatrefoil bracelet at $11,800 with 1.73 carats in diamonds. Total value -- $42,150.

Let them eat cake. No coverage in the Leftmedia for our modern-day Marie Antoinette.


National Security
Palestinian Statehood Takes Center Stage
The muddled mess that is the Middle East continued to churn this week, threatening to splatter the rest of the world, via the United Nations, with its toxic ooze. Palestinian leader Mahmoud Abbas is pushing the UN Security Council to grant Palestinian statehood during the current General Assembly meeting. On Wednesday, however, Barack Obama tried to head off Abbas by giving yet another of his platitudinous speeches and declaring the painfully obvious: "Peace will not come through statements and resolutions at the United Nations. If it were that easy, it would have been accomplished by now." Interestingly, it was this same Obama who, at last year's UN meeting, breezily said that he wanted a sovereign Palestinian state established by this year's UN meeting. So in the span of one year, a completely inept Obama managed to stab both the Israelis and the Palestinians in the back.

The Palestinians won't get their state just yet, as the U.S., even under Obama, cannot allow it. (That doesn't mean he doesn't support the idea.) However, reports are that the Security Council needs only two more votes for statehood from countries such as Bosnia (the Muslim country we created in the Clinton years), Gabon and Nigeria, which would force the U.S. to veto it. Sen. Orrin Hatch (R-UT) has introduced legislation to defund the UN if it votes to recognize a Palestinian state.

Ultimately, what the Palestinians want out of a UN vote isn't so much a state as much as another weapon in their arsenal to ultimately destroy Israel. "We are going to complain that as Palestinians we have been under occupation for 63 years," Abbas said this week. In other words, that "occupation," began with the creation of Israel in 1948, and it won't end until Israel is destroyed. So goes the Middle East "peace process."

What do you make of the Palestinians' efforts?
It Would Be a Comedy of Errors If It Weren't So Serious
This week, the Obama administration proved yet again that Hope 'n' Change is no substitute for wisdom and experience. After dragging out discussions for almost two full years on whether to provide new F-16 fighter-bombers to Taiwan, the White House decided instead to upgrade Taiwan's existing F-16s without providing new aircraft. In typical fashion, Obama managed to anger both Taiwan and China. Our largest foreign creditor is angry over any U.S. upgrades to Taiwan's military, while Taiwan is rightly angry that the United States caved in to communist pressure and stiffed a democratic ally. China was going to complain no matter what -- why not get our money's worth and provide new F-16s to a friendly democracy?

Meanwhile, in another transparently cynical move to placate the president's leftist base, Attorney General Eric Holder announced that the administration remains committed to closing the Guantanamo Bay detention facility. The January 2010 deadline for doing so flew by without fanfare, so now they promise to close it by Election Day 2012. Holder at least had the courtesy to provide the obvious motivation -- the election. Obama's base has been increasingly disenchanted with his performance lately, and he obviously wants some highly visible leftist dream to come true just in time for the election. Congress will have a great deal to say about Guantanamo's final disposition, but for the White House even to float this idea -- and so explicitly tie it to the next election -- is dangerously amateurish.

Department of Military Correctness: Orientation Genie Out of the Closet
At the stroke of midnight Tuesday, the Pentagon laid out the welcome mat for homosexual members of the military and for those in civilian life to join. After an 18-year "Don't Ask, Don't Tell" interregnum during which homosexuals were allowed in the military as long as they stayed "in the closet," the long-standing ban on their serving openly in the United States military formally came to a close. Obviously this came as a relief to service members such as "J.D. Smith," who in real life is Air Force First Lieutenant Josh Seefried. He adopted the pseudonym last year when he founded OutServe, a heretofore underground network of homosexual service members that has grown to 4,300 members. It's estimated that there are around 65,000 such members of the military, a presumption likely drilled into the 2.3 million active-duty and reserve members around the world who sat through an hour-long sensitivity course on accepting homosexuals within their ranks earlier this year.

Critics saw the change as an attempt to "reshape social attitudes" and warned that the number of military personnel may drop further than the 14,346 members discharged over the years by running afoul of the old DADT rules. Those who had been so discharged will be eligible to rejoin but won't have any specific preference over others who want to re-enter the service, the Pentagon announced.

It isn't clear whether benefits given to the spouses and families of married service members will eventually be extended to same-sex partners. A proposal to allow Navy chaplains to conduct "marriage" ceremonies in states where civil unions are allowed was scrapped after lawmakers objected.

  
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Business & Economy
Income Redistribution: Bonuses for GM Workers, the Shaft for Taxpayers
Last week General Motors and its UAW workforce reached a tentative four-year labor agreement, which is likely to be ratified overwhelmingly by the rank and file. As usual, the devil is in the details. Despite the fact that the automaker is still on the hook for billions of dollars to the federal government, which remains the owner of about one-quarter of GM's stock, the agreement includes a provision that UAW workers will receive a $5,000 "signing bonus" in lieu of a cost-of-living increase this year and maintain their health care and pensions. Newly hired workers will get a significant raise from their current $14 per hour to perhaps $17 per hour over the life of the contract. All workers will have "improved" profit sharing. In addition, the automaker will reopen the former Saturn assembly line in Spring Hill, Tennessee, which was idled in 2009.

Undoubtedly union leaders are thrilled about these concessions from the company, but they also knew whom to thank. As UAW Bob King noted, "None of this would have been possible without the efforts of President Obama, who invested federal funds to help turn the company around, protect the auto supplier base, and keep good-paying jobs in America." Unfortunately, those efforts have cost taxpayers roughly $15 billion that is yet to be repaid.

Have you driven a Ford lately?

Regulatory Commissars: Don't Create Jobs
With all the talk of saving and creating jobs, we find it disturbing that someone has been punished for doing just that. Peter Schiff, president and CEO of EuroPacific Capital, committed the unpardonable offense of hiring more brokers than regulations allow. "In my own business, securities regulations have prohibited me from hiring brokers for more than three years," Schiff testified before Congress. "I was even fined $15,000 expressly for hiring too many brokers in 2008. In the process I incurred more than $500,000 in legal bills to mitigate a more severe regulatory outcome as a result of hiring too many workers. I have also been prohibited from opening up additional offices. I had a major expansion plan that would have resulted in my creating hundreds of additional jobs. Regulations have forced me to put those jobs on hold."

Furthermore, says Schiff, "[T]he added cost of security regulations [has] forced me to create an offshore brokerage firm to handle foreign accounts that are now too expensive to handle from the United States. Revenue and jobs that would have been created in the U.S. are now being created abroad instead." As National Review's Andrew McCarthy quipped, "He's in finance. I guess he should have tried solar panels."

In related news, the EPA's overzealous regulators will soon cost another 500 workers their jobs. Texas energy company Luminant will be forced to stop generating energy at two of its power plants and shutter three lignite mines, thanks to requirements within the EPA's recently mandated Cross-State Air Pollution Rule in 2012. In a statement, the company said that while it is "launching a significant investment program to reduce emissions across our facilities" it couldn't otherwise comply with the "unrealistic deadline" without eliminating the 500 jobs. Also, it has taken the step of suing the EPA to overturn the edicts.

  
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Culture & Policy
Around the Nation: Ground Zero Mosque 'Opens'
In August 2010, we noted the controversy over the building of an Islamic cultural center (a.k.a. mosque) two blocks from Ground Zero. It was sometimes called The Cordoba Initiative, which was a thinly veiled religious reference to the long-ago Muslim conquest of the Christian city of Cordoba, Spain. Most commonly, however, the project is known by the more palatable -- and secular -- Park51.

On Wednesday, the project launched its first public exhibit featuring the work of New York City photographer Danny Goldfield. For the past seven years, Goldfield has been working on a collection of photographs of children from every country in the world who are living in New York City. The exhibit is a sorry attempt to soften the blow of the timing of the mosque's opening. Who could be opposed to children? Not only is it less than two weeks since the 10-year anniversary of the 9/11 attacks, but it also comes during a week of tense meetings between Barack Obama and Israeli and Palestinian leaders.

Last year, in the midst of the heated debate, Obama felt it was his duty to impart his wisdom on the subject. What he said, of course, completely missed the point. Everyone knows that Park51 is legally viable, but that knowledge does little to assuage the hurt and rage of the thousands of people directly affected by 9/11, let alone the millions of Americans who were forever changed by that day. Against their protests, construction continued, but apparently the message didn't go completely ignored, considering the whitewash that is taking place now. "Looking forward to welcoming you to the NY Children's opening," Park51 tweeted, "We have a surprise guest to cut the ribbon. Make sure you're there!"

On Sept. 27, PBS will air the documentary "The Man Behind the Mosque" profiling developer Sharif El-Gamel. Last January, Park51 booted Feisal Abdul Rauf, the imam best known for his statements that America brought the terrorists attacks upon itself. Despite the feel-good PR, this mosque is nothing more than a thumb in the eye from the very extremists who want to punish the "Great Satan."

Village Academic Curriculum: No Such Thing as a Free Lunch
Reading, writing, 'rithmetic and recipes? Since the launch of the federal school lunch program in 1946, the government has required schools to provide low-cost or free lunches to qualifying students. Now, under the new child nutrition law signed by Barack Obama late last year, the feds are mandating that schools make these meals more nutritious. In other words, not only are Washington bureaucrats subsidizing school lunches, they're also packing them. And that's not all. For the first time, the government is now inserting itself into the pricing process, and, as happens when Washington steps in, costs are going up. As The New York Times notes, under the law "school districts are required to start bringing their prices in line with what it costs to prepare the meals, eventually charging an average of $2.46 for the lunches they serve." Although the law says that price increases should be capped at 10 cents per year, some school districts have raised prices by as much as a quarter.

Districts across the country are preparing for backlash against the price hikes, but it's Washington bureaucrats who really should be taken to task for assuming "food service" is found anywhere in the Constitution. They say it's bad having two cooks in the kitchen. It's downright scary, though, when one of them is Barack Obama.

In related news, the administration will soon detail plans to revamp No Child Left Behind through waivers, not through Congress. Specifically, the White House wants to waive the requirement that students be proficient in math and reading by 2014 or risk sanctions.

  
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Faith and Family: City Orders Halt to Home Bible Study
The city of San Juan Capistrano, California, was founded as a mission in the late 1700s. Now, more than 200 years later, a couple in that city is facing fines for holding weekly Bible studies in their home. CBS Los Angeles reports, "Homeowners Chuck and Stephanie Fromm ... were fined $300 earlier this month for holding what city officials called 'a regular gathering of more than three people.'" They could face another $500 fine for every additional gathering. According to Section 9-3.301 of the city code, "religious, fraternal, or service organizations (non-profit)" cannot meet in residential areas without obtaining a conditional use permit. We question, however, whether the city would have enforced this ordinance against a similarly sized "fraternal" gathering.

The Fromms appealed the fine to the city but were denied, and now the Pacific Justice Institute (PJI) is taking the ruling to the California Superior Court. PJI President Brad Dacus noted, "An informal gathering in a home cannot be treated with suspicion by the government, or worse than any other gathering of friends, just because it is religious. We cannot allow this to happen in America, and we will fight as long and as hard as it takes to restore this group's religious freedom." If the court has any understanding of our nation's foundation of religious liberty, it will agree.

Share your thoughts on this banned Bible study
Catholic Archbishop Writes in Support of Marriage
Catholic Archbishop Timothy Dolan of New York sent a letter to Barack Obama this week to seek an end to the administration's campaign against traditional marriage and religious liberty. Dolan specifically sited the Obama Justice Department, which claims that supporters of the Defense of Marriage Act, signed by Bill Clinton, are motivated by "prejudice and bias." Such language presents a threat to religious liberty. "The institution of marriage is built on this truth," Dolan wrote, "no other relationships provide for the common good what marriage between husband and wife provides. The law should reflect this reality." Dolan further warned, "The Administration's failure to change course on this matter will ... precipitate a national conflict between Church and State of enormous proportions and to the detriment of both institutions." When has "conflict ... to the detriment" of anything stopped Obama before?

And Last...
Rep. Charlie Rangel (D-NY) was censured by the House (333-79) just nine months ago for several ethics violations, including tax evasion. Yet Thursday, Rangel hosted a ceremony to unveil his official portrait in the Longworth House Office Building. The list of speakers at the ceremony included Speaker John Boehner (R-OH), Minority Leader Nancy Pelosi (D-CA) and Minority Whip Steny Hoyer (D-MD), as well as New York Democrat senators Kirsten Gillibrand and Chuck Schumer. After getting an "OK" from the FEC, Rangel paid for the $65,000 portrait using campaign cash.

Truly, this is beyond words. These people really do live in a parallel universe -- one in which, as Pelosi once put it, they "drain the swamp" apparently by hanging portraits of swamp creatures. What next? Obama wins the Nobel Peace Prize? Oh, wait...

Semper Vigilo, Fortis, Paratus et Fidelis!
Nate Jackson for The Patriot Post Editorial Team

Any comments on the debates last night?

"There is no part of the administration of government that requires extensive information and a thorough knowledge of the principles of political economy, so much as the business of taxation. The man who understands those principles best will be least likely to resort to oppressive expedients, or sacrifice any particular class of citizens to the procurement of revenue." --Alexander Hamilton, Federalist No. 35, 1788

By REBIYA KADEER
As the U.S. and its allies were reflecting on the 10th anniversary of the 9/11 atrocities, China's Communist regime manipulated the occasion to present itself as a victim of Islamic extremism. Beijing also accused the U.S. of practicing double standards by not giving unqualified support to its military offensive against what it calls "Muslim separatism" in northwest China. It insisted this campaign is an integral component of the war on terror.

These complaints are entirely driven by the regime's domestic agenda. The West should not be fooled by China's attempt to make its nationalities policy more palatable. For decades, China has brutally crushed even the mildest aspirations for self-rule among the non-Han Chinese peoples in its midst.

Beijing's actions in Tibet are the best-known example of this policy, yet it is no different in northwest China, the ancient homeland of the Uighur people. In 2009, the state's response to mass demonstrations for democracy and human rights was to beat and shoot at protesters, and to randomly arrest male Uighurs on a mass scale.

Since then, a palpable tension has prevailed. In recent weeks, following the reported killing in July of more than 20 Uighurs by security forces in the city of Hotan, China has deployed an additional 200,000 security personnel as well as its special anti-terror force, in order to deter fresh protests in a region that is home to 10 million Uighurs.

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CloseAFP/Getty Images
 
An elderly Chinese Muslim Uighur man prays at his hat shop in Kashgar, China.
.China's leaders have enthusiastically offered a justification for the repression of Uighurs that is not available to them in the case of Tibet. For while most Tibetans are Buddhists, Uighurs are overwhelmingly Muslim. So the Beijing regime presents its campaign against the Uighur people's peaceful struggle for self-rule as part of the global battle against Islamists.

The hypocrisy on display here is astonishing. China, after all, has consistently supported radical, anti-Western currents in the Middle East. It is a stalwart ally of Iran's murderous regime and has opposed international measures to curb Syria's rulers. In Libya, China supplied Gadhafi's dictatorship with weapons until the last possible minute.

Even before 9/11, Beijing was effectively encouraging al Qaeda, using its position on the United Nations Security Council to oppose sanctions against Afghanistan's Taliban after the attack on the USS Cole in 2000.

Within days of 9/11, China's official Xinhua news agency was lauding the attacks as a "humbling blow" against America, a theme that continued this anniversary year, even as Beijing's propagandists complained about Washington's "blind eye" toward the conflict in the Uighur region. Clearly, China does not object to rooting out terrorist groups as long as it is allowed to define who the terrorists are.

Meanwhile, China has skillfully taken advantage of the West's ignorance of Uighur history and culture to insert itself into the antiterror camp.

As practiced by the vast majority of Uighurs, the religion of Islam has nothing in common with the radical Wahhabi and Salafi strains that have caused such terrible strife in the Middle East and South Asia. Just as we reject communism, we reject clerical rule. We aspire to a democratic state in which religion is a matter of individual conscience.

Indeed, if China had honored its 1955 commitment to the autonomy of the Uighur people, there would probably be no conflict. Our demands—to fly our own flag, to reap a fair dividend from the oil, coal and other natural resources flowing through our region, to end the mass transfer of Chinese settlers into our territory—are hardly unique. Some leading European democracies have reached similar arrangements with their constituent nationalities, such as Spain's Catalans.

Rather than negotiate with us, China's rulers prefer to label the Uighurs as terrorists, with myself as their leader. I am often asked why such a powerful state apparently regards me—a slight, elderly woman who has spent many years in Beijing's jails—as an existential threat. I always reply that China should fear not me, but the consequences of resisting the legitimate demands I articulate. For as the Soviet Union and then Yugoslavia demonstrated, states that refuse any compromise with their minorities can easily implode.

As the U.N. General Assembly's 66th session proceeded this week, I participated in the We Have a Dream Global Human Rights Summit (www.ngosummit.org) just down the street, which brought together human rights defenders from all over the world. Our final declaration was a rallying cry based upon the U.N.'s own Universal Declaration of Human Rights. It included the demand that China and other authoritarian states be removed from the U.N.'s key human rights bodies.

In confronting China's cynical and hypocritical identification of our legitimate struggle with terrorism, we will counter that the true issue is the trampling of basic human rights under the excuse of national sovereignty.

Ms. Kadeer is president of the World Uighur Congress and the author of "Dragon Fighter: One Woman's Epic Struggle for Peace with China" (Kales Press, 2009).

By FOUAD AJAMI
'U.N. 194" is the slogan of the campaign to grant the Palestinians a seat at the United Nations, to recognize their authority as the 194th nation in that world body. This is the Palestinians' second chance, for there was the session of the General Assembly in 1947 that addressed the question of Palestine, and the struggle between Arabs and Jews over that contested land.

A vote took place on the partition resolution that November and provided for two states to live side by side. It was a close affair. It required a two-thirds majority, and the final tally was 33 states in favor, 13 opposed, 10 abstentions, and one recorded absence. Israel would become the 58th member state. The Palestinians refused the 59th seat.

Arab diplomacy had sought the defeat of the resolution, and the Palestinians had waited for deliverance at the hands of their would-be Arab backers. The threat of war offered the Palestinians a false promise; there was no felt need for compromise. The influential secretary-general of the Arab League, the Egyptian Azzam Pasha (by an exquisite twist of fate a maternal grandfather of al Qaeda's leader Ayman al-Zawahiri), was to tell a talented, young Zionist diplomat, Abba Eban, that the Arab world was not in a compromising mood. "The Arab world regards the Jews as invaders. It is going to fight you," he said. "War is absolutely inevitable."

For the Zionists, the vote was tantamount to a basic title to independence. But the Jewish community in Palestine had won the race for independence where it truly mattered—on the ground. Still, theirs was a fragile enterprise.

Britain, the Mandatory Power in Palestine since the end of World War I, had wearied of the Zionists, of the Arabs, and of the whole sordid burden of adjudicating their competing claims. The British Empire was broke and looking for a way to reduce its burdens. In August 1947, it had given up India, the Jewel of the Crown, and stood aside as a wave of cataclysmic violence between Hindus and Muslims provided a shameful end to a long imperial dominion. It was no use shedding blood and treasure in Palestine, and Pax Britannia was eager to pass the problem onto the U.N.

Nor were matters clinched for partition, and for the cause of a Jewish state, in the American councils of power. President Harry Truman was indecisive. He drew sustenance from the Bible and the cause of Jewish statehood tugged at him, but he was under immense pressure from a national security bureaucracy that had no sympathy for the Zionist project. An accidental president who had come to the presidency after the death of FDR, he lacked the self-confidence a crisis of this kind called for.

His secretary of state, Gen. George Marshall, was dubious of the idea of partition, fearful that a war would break out over Palestine that would require the intervention of American troops. Truman stood in awe of Marshall, regarded him as one of the "great commanders of history." Secretary of Defense James Forrestal was more antagonistic still. There were oil interests in the Arab world, and a big strategic position in the region to protect.

The voting at the U.N. was messy. In the end, all American doubts were swept aside, and the United States opted for partition, lobbied for it, and was joined by the Soviet Union. Britain abstained. The tire magnate Harvey Firestone secured Liberia's vote for partition. The Philippines hesitated but cast a favorable vote. India had hinted that it was in sympathy with partition but in the end chose not to run afoul of the sensibilities of its own Muslim population. Rumor had it that the delegate from Costa Rica sold his country's vote for $75,000.

"The partition line shall be nothing but a line of fire and blood," Azzam Pasha warned. And history would vindicate him. Six months later, with Britain quitting Palestine without even a ceremonial handover of responsibility, war would break out.

Related Video
 Matt Kaminski on President Obama's U.N. speech, Palestine's statehood gambit, and attitudes toward the U.S. in Muslim countries.
..But the scenarios of doom for the new Jewish state were not to be fulfilled. Israel held its own. And the Palestinians who had bet on the Arab cavalry riding to the rescue were to know defeat and dispossession. Their cause was subsumed under a wider Arab claim, mandatory Palestine was to be divided—there was the new Jewish state, Jordanian sovereignty over the West Bank and east Jerusalem, Egyptian control over Gaza. The victory of Israel two decades later in the Six Day War reunited the land and, ironically, gave the Palestinians a chance to release themselves from pan-Arab captivity.

"We need to have full membership at the U.N. We need a state, a seat at the United Nations," Palestinian President Mahmoud Abbas declared last week in Ramallah as he launched this bid, in defiance of American wishes. Thus state-building would be bypassed, and the Palestinians, in a familiar pattern of their history, would place their faith in deliverance through the indulgence of others.

But were the Palestinians to look at their history, they would come to recognize that the one break that came their way happened in 1993, through direct negotiations with Israel. The peace of Oslo that secured them their national authority, that brought Yasser Arafat from his Tunisian exile to Gaza, was a gift of direct diplomacy. Arafat was looking for redemption; he had bet on Saddam Hussein in the Gulf War of 1990-91 and lost the financial support of the Arab oil states. Israel, for its part, had just elected a war hero, a stoical, determined man, Yitzhak Rabin, as its leader, and he had campaigned on the promise of getting "Gaza out of Tel Aviv."

True, the ceremony of reconciliation on Sept. 13, 1993, had taken place on the South Lawn of the White House, Bill Clinton nudging Arafat and Rabin together for that reluctant handshake. But the Americans were giving away the bride long after the couple had eloped.

A generation after that handshake, the lesson of that accord remains unaltered. There can be no avoiding the toil and the exertions of direct negotiations. The deliberations at the U.N. are only theater, just another illusion.

Mr. Ajami is a senior fellow at Stanford University's Hoover Institution and co-chair of the Working Group on Islamism and the International Order.

By JAMES TARANTO
In his Labor Day speech in Detroit, Barack Obama issued a ringing endorsement of government employee unions:

Having a voice on the job and a chance to organize and a chance to negotiate for a fair day's pay after a hard day's work, that is the right of every man and woman in America--not just the CEO in the corner office, but also the janitor who cleans that office after the CEO goes home. Everybody has got the same right.
And that's true for public employees as well. Look, the recession had a terrible effect on state and local budgets--we all understand that. Unions have recognized that; they've already made tough concessions.
From the president's hometown comes an example of what he is actually supporting. The Chicago Tribune reports that an investigation it conducted with WGN-TV found "23 retired union officials from Chicago stand to collect about $56 million from two ailing city pension funds."

That's an average of $2.4 million each, and some will rake in even more. Dennis Gannon, a former president of the Chicago Federation of Labor, stands to collect some $5 million. In line for $4 million apiece are Liberato "Al" Naimoli, president of the Cement Workers Union Local 76, and James McNally, vice president of the International Union of Operating Engineers Local 150.

"Since the 1950s," the Trib explains, "city workers who take leaves of absence to work full time for unions have been able to remain in city pension funds if they choose. The time they spend at their union jobs counts toward their city pensions."

 
Ill. Attorney General Office
 
Dennis Gannon, pensioner
.Union jobs, however, are far more lucrative than city jobs. Gannon's city salary was $56,000 a year; his union salary, $200,000. But he retired from his city job in 2004--at age 50, and 13 years after beginning a leave of absence. Between then and 2010, when he retired from the union, he collected both the $200,000 union salary and a $150,000 city pension.

How did the city end up paying him a pension nearly three times his salary? That's where things get interesting. Few labor leaders took city pensions, the Tribune reports, "until the law was changed in 1991 to base those workers' city pensions on their union salaries instead of their old city paychecks, dramatically boosting the amount they could receive"--a provision that "became law with no public debate among state legislators and, more importantly, no cost analysis."

And no accountability: "No one from either the state Legislature or city government will take credit for the law, which passed in 1991, and the process of drafting pension legislation in Springfield is so shrouded in secrecy that there's no way of knowing exactly whom to hold responsible."

And no possibility of reversal: "The state constitution says pension benefits cannot be diminished once they are earned."

"Gannon told the Tribune that he was only following the law in filing for a city pension," the paper reports. The scandal isn't that what they're doing is illegal but that it is legal.

Related Video
 Bill McGurn on retired Chicago union leaders' lavish pensions.
..This particular provision is unique to Obama's home state, the Tribune reports: "Pension experts from around the country say they've never heard of such a perk for union leaders." But unions have any number of perfectly legal ways to rip off the taxpayers. As we noted in July, the Wisconsin teachers union runs its own insurance company, the WEA Trust. Until Gov. Scott Walker's reforms took effect earlier this year, the union negotiated "collective bargaining" agreements obliging local school districts to pay above-market premiums for its health benefits.

And as The Daily's Jillian Melchior reported last month, state pension funds frequently make risky investments, knowing that if they don't pan out, taxpayers will have to make up the losses. What's more, the boards that manage these funds are stacked with union representatives and political appointees: "Because public unions are an influential constituency, they're inclined toward union priorities."

That is the system President Obama defended on Labor Day. And his support for it is not merely rhetorical. Both the 2009 stimulus and the recently proposed Stimulus Jr. include vast payments to states and localities--in effect, a federal taxpayer bailout for governments that have been so profligate with their own taxpayers' dollars. Some of that money, of course, gets kicked back as campaign contributions and independent expenditures to support the campaigns of Obama and other Democrats. It's all legal, but that doesn't mean it isn't a scam.

For future reference, that sort of piece would better belong in Politics, or The American Creed threads.

By LAURA LANDRO
With more medical information than ever before at their fingertips, patients increasingly feel empowered to make their own decisions about care—or overpowered by all that data.

In "Your Medical Mind," oncologist Jerome Groopman, and his wife, endocrinologist Pamela Hartzband, offer a road map for navigating the medical maze and the mountains of information that Google searches produce. In an era when the magisterial physician who dictates care is obsolete, the book may be a welcome guide for those who are daunted by the choices they face, ranging from taking a cholesterol-lowering drug to making end-of-life decisions for a loved one.

Dr. Groopman is the author of four other books that have helped demystify medicine for a lay audience, including "How Doctors Think." "Your Medical Mind" analyzes how patients think as they weigh the pros and cons of different options, especially when they are presented with conflicting evidence and advice. "The unsettling reality," the authors note, "is that much of medicine still exists in a gray zone, where there is no black or white answer about when to treat or how to treat."

The books draws heavily on the approach known as shared medical decision-making, which has been promoted by researchers at Dartmouth College and others. This approach holds that doctor and patient together should review information about the risks and benefits of any given treatment and then customize care according to the patient's values and preferences.

To illustrate, the authors use anecdotes from real patients like Dave Simon, an avid tennis player diagnosed with atrial fibrillation, an abnormal heart rhythm. He must choose whether to take a blood-thinning medication that may prevent stroke from a clot but that can also cause internal bleeding. He is afraid to take the medication but is more terrified of having a stroke. Complicating matters: There is a new blood thinner on the market with a smaller risk of bleeding—but slightly more risk of heart attack. Mr. Simon, with his doctor, reviews the data on the risks, but he also thinks hard about his own mind-set: He's a doubter when it comes to new treatments. He goes with the more established medication.

The authors categorize patients like Mr. Simon by their biases: Are they believers in the benefits of medical intervention or has experience or upbringing made them skeptics? Are they apt to go for the maximum amount of care or the minimal amount that's still likely to get the job done? Do they embrace technology or are they inclined to natural solutions?

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Close.Your Medical Mind
By Jerome Groopman and Pamela Hartzband
(The Penguin Press, 308 pages, $27.95)
.Drs. Groopman and Hartzband have had their own experiences as patients, including Dr. Groopman's disastrous and well-chronicled experience with back surgery, which changed him from a maximalist to a more risk-averse patient. Dr. Hartzband says that she is a minimalist, avoiding medicines and supplements unless absolutely necessary. Both say that they are mindful in their practices not to impose their preferences on patients.

A dilemma often arises, though: where to draw the line between a patient's preference and the strongest medical evidence. The authors acknowledge that patient autonomy is taken too far when a doctor neglects his role as guide and puts the burden of choice entirely on the patient's shoulders. The closest that "Your Medical Mind" comes to a solution is noting that when patients want to know what their doctors think, the answer should be offered only "after information is presented in a neutral way."

One approach the authors examine is a formula for rational decision-making often used in economics: Measure the probability of an outcome and place a numerical value on the outcome itself. In medicine, that would mean finding out the probability of a particular outcome from a proposed medical treatment and then placing a numerical value on the state of health that such an outcome would bring about. Simple multiplication (the probability-percentage times the numerical value) will yield a number that can be compared with the numbers derived from other treatments. The highest number indicates the most rational or "best" choice.

The best choice, of course, may differ from patient to patient. For example, the treatments for Graves' disease, which results from an overactive thyroid gland, include radioactive iodine, surgery and medication, but there are differences in potential negative outcomes and side effects. The authors tell us about Lily Chan, a 27-year-old social worker who has the disease. She fears radioactive iodine and worries that it may increase the risk of cancer, so she chooses surgery. Anna Gonzales, a 42-year-old journalist with three kids, has no fear of radioactive iodine and isn't bothered that the treatment will also require her to take a thyroid-hormone pill every day for the rest of her life—a prospect that 36-year-old Patrick Baptiste, another Graves' patient, can't bear to contemplate.

Naturally, it can be hard to imagine a disease's progress or the effects of possible treatments, and weighing all the options can be exhausting. "Having many options," the authors observe, "can be more distressing than having fewer options and can impede our ability to make a sound decision, or any decision." Even when a choice doesn't turn out as we had hoped, though, "we often underestimate the reservoir of our resilience."

Prostate cancer patients, for example, face choices that include watchful waiting, radiation and surgery. Concerning the two medical interventions, the specialists advising their patients may well focus on the bad side effects of the other's approach (incontinence, impotence). One prostate-cancer patient that Drs. Groopman and Hartzband discuss, Matt Conlin, speaks to 20 doctors about his disease, and he quizzes other patients about their experiences—even if he is embarrassed by asking about their sex lives or bladder issues. He decides to go ahead with robotic surgery, a newer approach, and does suffer some bad side effects. But he is rid of his cancer, and he resolves that it is time to move forward without regret—a choice that may be the best outcome for any medical decision.

Ms. Landro writes The Informed Patient column for the Journal.

Please be sure to see the first post of the morning as well:
==============

By ALAN REYNOLDS
The president's "Plan for Economic Growth and Deficit Reduction" mainly hinges on persuading Congress to trade $447 billion in temporary payroll tax cuts and spending increases—the "jobs plan"—for permanent income-tax increases of $150 billion a year. Mr. Obama also calls on the 12-member congressional super committee to undertake "comprehensive tax reform," which he defines in peculiar fashion as trading lower deductions for higher rates.

According to the Sept. 19 White House fact sheet, "The President calls on [the super committee] to undertake comprehensive tax reform, and lays out five principles for it to follow: 1) lower tax rates; 2) cut wasteful loopholes and tax breaks; 3) reduce the deficit by $1.5 trillion; 4) boost job creation and growth; and 5) comport with the "Buffett Rule" that people making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay."

But the administration's tax plan violates these principles. It raises rather than lowers tax rates, shrinks tax deductions to pay for more spending, makes no believable contribution to economic growth, has nothing specific to say about the Buffett Rule, and allocates a third of the proposed $1.5 trillion tax increase over the next decade to such miscellany as the temporary payroll tax break, more subsidies for state and local government jobs, and prolonged unemployment benefits.

Enlarge Image

CloseCorbis
 .Nearly all of Mr. Obama's new tax increases are identical to those in his failed budgets of 2011 and 2012. But the repackaging of stale ideas is partly concealed by intermingling the phasing-out of deductions and exemptions with allowing the Bush tax rates to expire, thus increasing the top two tax rates to 36% and 39.6% from 33% and 35%. This intermingling gives the false impression that $866 billion in projected additional revenue comes from raising the top tax rates alone.

The Treasury Department's more candid explanation of these same proposals in the 2011 budget estimated that raising the top two tax rates would bring in only an extra $36.4 billion a year from 2011 to 2020, which adds up to little more than $400 billion from 2012 to 2021. The administration's 2011 proposal to raise the tax rate on capital gains and dividends to 20% from 15% on upper incomes was estimated to raise an even punier $10.5 billion a year. But the 3.8% surtax in ObamaCare already raised those tax rates to 18.8% to finance health-insurance subsidies, leaving no meaningful revenue from that source.

In other words, most of that large, $866 billion 10-year tax hike comes from phasing out personal exemptions and deductions. These are not "tax breaks that small businesses and middle-class families don't get," as the president claimed on Monday in his Rose Garden remarks. The phase-outs apply to the same exemptions and deductions enjoyed by those earning less than $250,000, including deductions for mortgage interest, charitable contributions, and state income taxes.

Mr. Obama's second biggest tax increase, supposedly worth $410 billion over 10 years according to the fact sheet, comes from further reducing "the value of itemized deductions and other tax preferences to 28% for those with high income." The phasing out itemized deductions for upper-income taxpayers would shrink those deductions by as much as 80%, so this additional cap would limit any remaining deductions to 28 cents on the dollar. The combination would be severe. Ask any charity.

As for corporate taxes, Mr. Obama said in the Rose Garden that "We can lower the corporate rate if we get rid of all these special deals." But his plan does not include a lower corporate rate. Instead it earmarks the revenue from eliminating any loopholes and "special deals" to pay for the $447 billion jobs bill.

This brings us to the president's puzzling remarks about "the Buffett Plan," which has no clear connection to anything in his own plan. Mr. Obama has said that anyone who thinks "somebody who's making $50 million a year in the financial markets [i.e., Warren Buffett] should be paying 15 percent on their taxes, when a teacher making $50,000 a year is paying more than that" should "have to defend that unfairness. . . . They ought to have to answer for it."

Related Video
 Editorial board member Steve Moore on why some Democrats are opposing Obama's deficit plan.
..Warren Buffett's large capital gains (mostly unrealized) and token $100,000 salary are by no means typical. IRS statistics show those earning more than $1 million paid 28.9% in federal income taxes in 2009, compared with 24.6% for those earning from $200,000 to $500,000 and 11.6% for those earning from $50,000 to $75,000.

However, if Mr. Obama is seriously suggesting that marginal tax rates should be the same for the working teacher's salary as for the retired teacher's capital gain, then he may be flirting with a rerun of George McGovern's 1972 presidential campaign theme that, "Money made by money should be taxed at the same rate as money made by men."

Unlike Mr. McGovern, though, Mr. Obama has not yet proposed a capital gains or dividend tax higher than 20%. If the rhetorical Buffett Rule has any meaning at all, it appears to be nothing more than a presidential hint to the congressional super committee that he would like them to propose (as he has not) that incomes above $1 million face a 28% tax on capital gains and dividends.

The trouble is that such a Buffett Rule would quite certainly reduce rather than enlarge federal revenue. That's because we know from experience that a 28% tax on selling stock or property greatly reduces the amount offered for sale. Wealthy people then sit on more unrealized capital gains rather than subjecting themselves to a stiff tax penalty on selling those assets. The 28% tax on long-term capital gains brought in only $36.9 billion a year from 1987 to 1997, according to the Treasury Department, while the 15% tax brought in $96.8 billion a year from 2004 to 2007.

Putting aside the seemingly empty threat of a Buffett Plan tax on capital gains, the president's new-old plan to raise income taxes on families and small businesses earning more than $250,000—to pay for temporary tax gimmicks and extra spending—is just stale wine in a new bottle.

Any plan that would impose permanently higher tax rates on income to pay for temporarily lower tax rates on payrolls is no stimulus or jobs plan under any sort of economics. Neither is a tax-financed extension of unemployment benefits. It's a tax-and-spend plan, and a bad one.

Mr. Reynolds, a senior fellow with the Cato Institute, is the author of "Income and Wealth" (Greenwood, Press 2006).

second post of morning:

We are not passive observers of this universe, but rather partners in its creation. We are the ones who assign each thing its meaning, who bring definition and resolution to an otherwise ambiguous world.

In fact, we are legal witnesses who determine a matter of life or death: For each thing we hold, each event that enters our life, our word declares whether it breathes with G‑dly life or simply idles itself into oblivion.

Vice President of Intelligence Fred Burton examines the emerging threat against journalists covering Mexican cartel violence along the border and the challenges of corroborating source information.


Editor’s Note: Transcripts are generated using speech-recognition technology. Therefore, STRATFOR cannot guarantee their complete accuracy.

Related Links
Mexico Security Memo: Zetas Communications Network Dismantled
As a forecasting company, we try to look at emerging threats. Intelligence surfaced this week over concerns for border violence against journalists that cover cartel violence from Mexico. In this week’s Above the Tearline, we’re going to examine the challenges of making sense of this kind of emerging threat, as well as how we go about attempting to corroborate or refute the information.

Being a journalist or an investigative reporter in Mexico is an extremely dangerous job. Organizations like Reporters Without Borders reports that there’s been 80 journalists killed in Mexico since 2000, and recently we had two female journalists found naked, bound and killed in Mexico City. The intelligence we received this week is from a very reliable source of STRATFOR that expressed very specific concern for this emerging threat against journalists inside the United States, especially those in close proximity to the border.

When STRATFOR receives a report like this from a reliable contact, we take great strides to attempt to corroborate or refute the data point, meaning we go about contacting our other sources in state and local and federal law enforcement, as well as foreign police, in this case, Mexico, in an effort to see what they may know about this concern and to seek out their assessment as to whether or not this could be a viable threat. One of the things that we did to connect the dots is, we have had over the years anecdotal information from various media contacts and investigative journalists of the exact same fear. We’ve had reports of journalists being relocated out of concerns surrounding this exact issue, and in essence protective security measures being taken by various media outlets to protect themselves from this kind of issue.

One of the other things we do in an effort to corroborate or refute a source report is, we’ll gather together the tactical team that puts together the Mexico Security Memo and discuss in great detail whether or not we think this is a viable threat and will unpack that threat to see if it makes sense or if it’s something that just is totally off the wall.

The Above the Tearline aspect with this video is the fear that the cartels have the capability to suppress the open source as to what’s taking place in Mexico or along the border and in essence shape the perception of what the cartels are doing. We have already seen this happen inside of Mexico. There has been a reduction of investigative journalists, we’ve had numerous killed and intimidated and if this threat is now coming across the border, this is an issue that most of us have to look at very closely and think about the ramifications of the spillover effect and the ability of the cartels to shape the news inside the United States.

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Bono's ONE foundation under fire for giving little over 1% of funds to charity


Read more: http://www.dailymail.co.uk/news/article-1314543/Bonos-ONE-foundation-giving-tiny-percentage-funds-charity.html#ixzz1YdQ2b1Aw

Bono's anti-poverty foundation ONE is under pressure to explain its finances after it was revealed that only a small percentage of money it raises reaches the needy.
The non-profit organisation set up by the U2 frontman received almost £9.6million in donations in 2008 but handed out only £118,000 to good causes (1.2 per cent).

The figures published by the New York Post also show that £5.1million went towards paying salaries

While the organisation's gameplan has never been direct handouts on the ground, many who admire the Irish rock legend may be surprised by the figures.

Bono was playing Brussels last night with U2 as the world's leaders - so many of whom he speaks to directly - were meeting at the UN assembly in New York to assess the progress, or lack of, in reaching the Millennium goals they set.

The Post revealed it had received a number of gifts from ONE in the run-up to the event, such as leather notebooks, bags of coffee and water bottles.
In the UK, the organisation has laid on a series of high-profile, celebrity-supported events since it launched in 2002 to fight poverty in Africa and Aids worldwide.
In 2009, the group campaigned to have enshrined in British law a commitment to development assistance abroad.

ONE spokesman Oliver Buston has now defended the way the organisation is run, insisting the money is used for promoting its campaign and raising awareness rather than being given straight to those who need help.
He said: 'We don't provide programmes on the ground. We're an advocacy and campaigning organisation.'
Another spokesman in New York today dismissed the notion of lavish salaries being paid to its 120 members of staff and said the organisation was highly efficient in its raising of awareness.

ONE said it took no money from the public and that most of its funding came from the Bill & Melinda Gates Foundation.
================
Scott Grannis comments:

Having worked with a number of large charitable organizations, I can say that the vast majority spend no more than 5% of their assets per year (because by law they need to do that to remain a charitable organization). This story is not surprising to me. Both Bono and Gates spend most of their time lobbying for governments to spend money on the causes that they think are worthy. I would wager that a large percentage of the money that the gates foundation is obligated to spend every year (5%) is money that is given to another charity, and that charity in turn spends only 5% of its money. Charitable organizations are for the most part loathe to actually spend their money on charitable causes, preferring instead to accumulate assets that are invested for handsome returns. Why? Because those who are running the charity make a salary that is proportionate to the size of the assets they are managing.

"No pecuniary consideration is more urgent, than the regular redemption and discharge of the public debt: on none can delay be more injurious, or an economy of time more valuable." --George Washington, Message to the House of Representatives, 1793


"There is not a more important and fundamental principle in legislation, than that the ways and means ought always to face the public engagements; that our appropriations should ever go hand in hand with our promises. To say that the United States should be answerable for twenty-five millions of dollars without knowing whether the ways and means can be provided, and without knowing whether those who are to succeed us will think with us on the subject, would be rash and unjustifiable." --James Madison, Speech in Congress, 1790


"The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." --Thomas Jefferson, letter to John Taylor, 1816

Cutting Through the Lone-Wolf Hype
September 22, 2011


By Scott Stewart

Lone wolf. The mere mention of the phrase invokes a sense of fear and dread. It conjures up images of an unknown, malicious plotter working alone and silently to perpetrate an unpredictable, undetectable and unstoppable act of terror. This one phrase combines the persistent fear of terrorism in modern society with the primal fear of the unknown.

The phrase has been used a lot lately. Anyone who has been paying attention to the American press over the past few weeks has been bombarded with a steady stream of statements regarding lone-wolf militants. While many of these statements, such as those from President Barack Obama, Vice President Joseph Biden and Department of Homeland Security Director Janet Napolitano, were made in the days leading up to the 10th anniversary of the 9/11 attacks, they did not stop when the threats surrounding the anniversary proved to be unfounded and the date passed without incident. Indeed, on Sept. 14, the Director of the National Counterterrorism Center, Matthew Olsen, told CNN that one of the things that concerned him most was “finding that next lone-wolf terrorist before he strikes.”

Now, the focus on lone operatives and small independent cells is well founded. We have seen the jihadist threat devolve from one based primarily on the hierarchical al Qaeda core organization to a  threat emanating from a broader array of grassroots actors operating alone or in small groups. Indeed, at present, there is a far greater likelihood of a successful jihadist attack being conducted in the West by a lone-wolf attacker or small cell inspired by al Qaeda than by a member of the al Qaeda core or one of the franchise groups. But the lone-wolf threat can be generated by a broad array of ideologies, not just jihadism. A recent reminder of this was the July 22 attack in Oslo, Norway, conducted by lone wolf Anders Breivik.

The lone-wolf threat is nothing new, but it has received a great deal of press coverage in recent months, and with that press coverage has come a certain degree of hype based on the threat’s mystique. However, when one looks closely at the history of solitary terrorists, it becomes apparent that there is a significant gap between lone-wolf theory and lone-wolf practice. An examination of this gap is very helpful in placing the lone-wolf threat in the proper context.


The Shift Toward Leaderless Resistance

While the threat of lone wolves conducting terrorist attacks is real, the first step in putting the threat into context is understanding how long it has existed. To say it is nothing new really means that it is an inherent part of human conflict, a way for a weaker entity — even a solitary one — to inflict pain upon and destabilize a much larger entity. Modern lone-wolf terrorism is widely considered to have emerged in the 1800s, when fanatical individuals bent on effecting political change demonstrated that a solitary actor could impact history. Leon Czolgosz, the anarchist who assassinated U.S. President William McKinley in 1901, was one such lone wolf.

The 1970s brought lone wolf terrorists like Joseph Paul Franklin and Ted Kaczynski, both of whom were able to operate for years without being identified and apprehended. Based on the success of these lone wolves and following the 1988 Fort Smith Sedition Trial, in which the U.S. government’s penetration of white hate groups was clearly revealed, some of the leaders of these penetrated groups began to advocate “leaderless resistance” as a way to avoid government pressure. They did not invent the concept, which is really quite old, but they readily embraced it and used their status in the white supremacist movement to advocate it.

In 1989, William Pierce, the leader of a neo-Nazi group called the National Alliance and one of the Fort Smith defendants, published a fictional book under the pseudonym Andrew Macdonald titled “Hunter,” which dealt with the exploits of a fictional lone wolf named Oscar Yeager. Pierce dedicated the book to Joseph Paul Franklin and he clearly intended it to serve as an inspiration and model for lone-wolf operatives. Pierce’s earlier book, “The Turner Diaries,” was based on a militant operational theory involving a clandestine organization, and “Hunter” represented a distinct break from that approach.

In 1990, Richard Kelly Hoskins, an influential “Christian Identity” ideologue, published a book titled “Vigilantes of Christendom” in which he introduced the concept of the “Phineas Priest.” According to Hoskins, a Phineas Priest is a lone-wolf militant chosen by God and set apart to be God’s “agent of vengeance” upon the earth. Phineas Priests also believe their attacks will serve to ignite a wider “racial holy war” that will ultimately lead to the salvation of the white race.

In 1992, another of the Fort Smith defendants, former Ku Klux Klan Leader Louis Beam, published an essay in his magazine “The Seditionist” that provided a detailed roadmap for moving the white hate movement toward the leaderless resistance model. This roadmap called for lone wolves and small “phantom” cells to engage in violent action to protect themselves from detection.

In the white-supremacist realm, the shift toward leaderless resistance — taken because of the government’s success in penetrating and disrupting group operations — was an admission of failure on the part of leaders like Pierce, Hoskins and Beam. It is important to note that in the two decades that have passed since the leaderless-resistance model rose to prominence in the white-supremacist movement there have been only a handful of successful lone-wolf attacks. The army of lone wolves envisioned by the proponents of leaderless resistance never materialized.

But the leaderless resistance model was advocated not only by the far right. Influenced by their anarchist roots, left-wing extremists also moved in that direction, and movements such as the Earth Liberation Front and the Animal Liberation Front actually adopted operational models that were very similar to the leaderless-resistance doctrine prescribed by Beam.

More recently, and for similar reasons, the jihadists have also come to adopt the leaderless-resistance theory. Perhaps the first to promote the concept in the jihadist realm was jihadist military theoretician Abu Musab al-Suri. Upon seeing the success the United States and its allies were having against the al Qaeda core and its wider network following 9/11, al-Suri began to promote the concept of individual jihad — leaderless resistance. As if to prove his own point about the dangers of belonging to a group, al-Suri was reportedly captured in November 2005 in Pakistan.

Al-Suri’s concept of leaderless resistance was embraced by al Qaeda in the Arabian Peninsula (AQAP), the al Qaeda franchise group in Yemen, in 2009. AQAP called for this type of strategy in both its Arabic-language media and its English language magazine, “Inspire,” which published long excerpts of al-Suri’s material on individual jihad. In 2010, the al Qaeda core also embraced the idea, with U.S.-born spokesman Adam Gadahn echoing AQAP’s calls for Muslims to adopt the leaderless resistance model.

However, in the jihadist realm, as in the white-supremacist realm before it, the shift to leaderless resistance was an admission of weakness rather than a sign of strength. Jihadists recognized that they have been extremely limited in their ability to successfully attack the West, and while jihadist groups welcomed recruits in the past, they are now telling them it is too dangerous because of the steps taken by the United States and its allies to combat the transnational terrorist threat.


Busting the Mystique

Having established that when a group promotes leaderless resistance as an operational model it is a sign of failure rather than strength, let’s take a look at how the theory translates into practice.

On its face, as described by strategists such as Beam and al-Suri, the leaderless-resistance theory is tactically sound. By operating as lone wolves or small, insulated cells, operatives can increase their operational security and make it more difficult for law enforcement and intelligence agencies to identify them. As seen by examples such as Fort Hood shooter Nidal Hassan and Roshonara Choudhry, who stabbed British lawmaker Stephen Timms with a kitchen knife in May 2010, such attacks can create a significant impact with very little cost.

Lone wolves and small cells do indeed present unique challenges, but history has shown that it is very difficult to put the lone-wolf theory into practice. For every Eric Rudolph, Nidal Hasan and Anders Breivik there are scores of half-baked lone-wolf wannabes who either botch their operations or are uncovered before they can launch an attack.

It is a rare individual who possesses the requisite combination of will, discipline, adaptability, resourcefulness and technical skill to make the leap from theory to practice and become a successful lone wolf. Immaturity, impatience and incompetence are frequently the bane of failed lone-wolf operators, who also frequently lack a realistic assessment of their capabilities and tend to attempt attacks that are far too complex. When they try to do something spectacular they frequently achieve little or nothing. By definition and operational necessity, lone-wolf operatives do not have the luxury of attending training camps where they can be taught effective terrorist tradecraft. Nasir al-Wahayshi has recognized this and has urged jihadist lone wolves to focus on simple, easily accomplished attacks that can be conducted with readily available items and that do not require advanced tradecraft to succeed.

It must also be recognized that attacks, even those conducted by lone wolves, do not simply materialize out of a vacuum. Lone wolf attacks must follow the same planning process as an attack conducted by a small cell or hierarchical group. This means that lone wolves are also vulnerable to detection during their planning and preparation for an attack — even more so, since a lone wolf must conduct each step of the process alone and therefore must expose himself to detection on multiple occasions rather than delegate risky tasks such as surveillance to someone else in order to reduce the risk of detection. A lone wolf must conduct all the preoperational surveillance, acquire all the weapons, assemble and test all the components of the improvised explosive device (if one is to be used) and then deploy everything required for the attack before launching it.

Certainly, there is far more effort in a truck bomb attack than a simple attack with a knife, and the planning process is shorter for the latter, but the lone wolf still must follow and complete all the steps. While this operational model offers security advantages regarding communications and makes it impossible for the authorities to plant an informant in a group, it also increases operational security risks by exposing the lone operator at multiple points of the planning process.

Operating alone also takes more time, does not allow the lone attacker to leverage the skills of others and requires that the lone attacker provide all the necessary resources for the attack. When we consider all the traits required for someone to bridge the gap between lone-wolf theory and practice, from will and discipline to self-sufficiency and tactical ability, there simply are not many people who have both the ability and the intent to conduct such attacks. This is why we have not seen more lone-wolf attacks despite the fact that the theory does offer some tactical advantages and has been around for so long.

The limits of working alone also mean that, for the most part, lone-wolf attacks tend to be smaller and less damaging than attacks conducted by independent cells or hierarchical organizations. Breivik’s attack in Norway and Hasan’s attack at Fort Hood are rare exceptions and not the rule.

When we set aside the mystique of the lone wolf and look at the reality of the phenomenon, we can see that the threat is often far less daunting in fact than in theory. One of the most vocal proponents of the theory in the white supremacist movement in the late 1990s was a young California neo-Nazi named Alex Curtis. After Curtis was arrested in 2000 and convicted of harassing Jewish figures in Southern California, it was said that when he made the jump from “keyboard commando” to conducting operations in the physical world he proved to be more of a “stray mutt” than a lone wolf.

Lone wolves — or stray mutts — do pose a threat, but that threat must be neither overstated nor ignored. Lone attackers are not mythical creatures that come out of nowhere to inflict harm. They follow a process and are vulnerable to detection at certain times during that process. Cutting through the hype is an important step in dispelling the mystique and addressing the problems posed by such individuals in a realistic and practical way.

Fed Actively Twists But Holds Off on QE3
Today the Federal Reserve announced major changes to
the composition of its balance sheet as well as major
changes to its description of the economy.
From now through the middle of next year, the Fed will
sell $400 billion of Treasury securities with maturities of
three years or less and purchase $400 billion in Treasury
securities with maturities of six years to thirty years. This
is an “active” form of “twisting” the maturities in its
balance sheet in an attempt to bring down long-term
interest rates. It is more aggressive than the “passive”
alternative in which the Fed would roll some of its
maturing short-term Treasury securities into longer-term
Treasury debt. It is unclear at this point whether the Fed
will employ the passive approach in addition to the active
twist of $400 billion.
The Fed also announced that it will cease shifting its
portfolio of mortgage backed securities (MBS) and the
debt of Fannie Mae and Freddie Mac (GSE debt) into
Treasury securities. Since mid-2010, the Fed has reduced
its holdings of these residential mortgage-based assets by
about $300 billion, to $1 trillion from $1.3 trillion, buying
Treasury securities with the principal as MBS and GSE
debt matured. Now the Fed will use the principal to buy
MBS. The Fed did not provide a date for that process to
end. In other words, going forward and for the foreseeable
future the Fed will maintain a stable amount of Treasury
securities and a stable amount of mortgage-based assets.
All of these measures come on top of the decision at the
Fed’s last meeting in early August to commit to
maintaining the current federal funds rate at nearly zero
percent through at least mid-2013.
Notice, however, that neither the active twist nor a passive
twist, nor maintaining the size of its mortgage-related
assets will alter the overall size of the Fed’s balance sheet.
In other words, the Fed did not announce a third round of
quantitative easing. The Fed also did not reduce or
eliminate the interest rate it pays banks on their excess
reserves, another policy move it surely discussed at the
meeting over the last two days.
The changes to the language of the Fed’s statement were
also significant. The Fed noted a modest increase in
household spending but suggested the recovery should be
stronger given the easing of supply-chain disruptions
related to Japan’s disasters. More importantly, the Fed
said downside risks to the economic outlook were
“significant,” including recent problems in “global
financial markets,” an obvious reference to the European
sovereign debt problems. Remarkably, even with
consumer prices up 0.5% in July, 0.4% in August and
3.8% in the past year, the Fed said that “inflation appears
to have moderated since earlier in the year,” the exact
same language it used at the prior meeting. Message to
markets: the Fed does not care about inflation right now.
Three members of the Federal Open Market Committee
(Fisher, Kocherlakota and Plosser), all reserve bank
presidents, not members of the Washington DC-based
Board of Governors, voted against today’s decision to shift
the composition of the Fed’s Treasury assets to longerdated
maturities and maintain the size of the Fed’s
This report was prepared by First Trust Advisors L. P., and reflects the current opinion of the authors. It is based upon sources and data believed to be accurate and reliable.
Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
mortgage-related assets. These same three members
dissented last month against the decision to commit to
maintaining near zero short-term rates through at least
mid-2013.
We believe the changes announced today are unlikely to
have the beneficial effects on the economy that the Fed
majority thinks. The Fed is clearly trying to reduce
mortgage rates as well as other long-term interest rates.
But the policy measures taken today will, if they have a
financial impact, flatten the slope of the yield curve,
reducing bank earnings.
Moreover, the shift in the composition of the Fed’s
portfolio of Treasury securities means that, on net
(Treasury issuance minus Fed purchases), the federal
government is issuing less long-term debt and more shortterm
debt. This is poor management of the federal debt.
Given historically low interest rates, the federal
government should be issuing more long-term debt and
less short-term debt, not the other way around.
Ultimately, we believe today’s policy moves were more
about appearing to do something than getting actual
results.
Brian S. Wesbury, Chief Economist

Existing home sales rose 7.7% in August To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 9/21/2011


Existing home sales rose 7.7% in August to an annual rate of 5.03 million units, easily beating the consensus expected pace of 4.75 million units. Existing home sales are up 18.6% versus a year ago.

Sales in August were up in all major regions of the country. Almost all of the increase in overall sales was due to single-family homes. Sales of condos/coops rose slightly.
 
The median price of an existing home fell to $168,300 in August (not seasonally adjusted), and is down 5.1% versus a year ago. Average prices are down 4.0% versus last year.
 
The months’ supply of existing homes (how long it would take to sell the entire inventory at the current sales rate) fell to 8.5 from 9.5 in July.  The drop in the months’ supply was due to both the faster pace of sales as well as a smaller inventory of homes for sale.
 
Implications:  Sales of existing homes rebounded sharply in August, coming in well above consensus expectations, and beating the forecast of all 74 economic groups that made predictions. What makes the 7.7% gain to a 5.03 million annual pace even more impressive is that it came in the face of financial volatility in August as well as a hurricane that hit the eastern seaboard late in the month. It would not have been surprising if these factors temporarily depressed sales, which are counted at closing. Lenders could have balked, asking for a larger down-payment or re-inspection to make sure the storm did not damage the home; buyers could have balked out of (in our view, unwarranted) concern about a double-dip recession. Despite these potential pitfalls, the strength in sales was widespread, increasing in all major regions of the country and for both single-family homes and condos/coops. While a large portion of sales came from distressed properties (such as foreclosures and short sales), this is necessary for inventories to continue to be worked off and for the housing market to ultimately recover. The inventory of existing homes is down 13.1% in the past year and homes available for sale this August were at the lowest level for any August since 2005. Despite today’s good news, strict lending standards continue to making access to credit difficult, so we don’t expect robust sales gains every month.  In other recent news, the growth of chain store sales continues to show we are not in recession. Last week’s same-store sales were up 3.4% versus a year ago according to the International Council of Shopping Centers and up 4.1% according to Redbook Research.

Bush made Pakistan the North Star of our Afpakia strategy.  How's that working out for us?

http://www.theblaze.com/stories/onstar-announces-tracking-continues-even-after-cancellation/