The Cognitive Dissonance of His Glibness

[Crafty_Dog]

WSJ:

A Liberal Supermajority
Get ready for 'change' we haven't seen since 1965, or 1933.Article
 
If the current polls hold, Barack Obama will win the White House on November 4 and Democrats will consolidate their Congressional majorities, probably with a filibuster-proof Senate or very close to it. Without the ability to filibuster, the Senate would become like the House, able to pass whatever the majority wants.

Though we doubt most Americans realize it, this would be one of the most profound political and ideological shifts in U.S. history. Liberals would dominate the entire government in a way they haven't since 1965, or 1933. In other words, the election would mark the restoration of the activist government that fell out of public favor in the 1970s. If the U.S. really is entering a period of unchecked left-wing ascendancy, Americans at least ought to understand what they will be getting, especially with the media cheering it all on.

 The nearby table shows the major bills that passed the House this year or last before being stopped by the Senate minority. Keep in mind that the most important power of the filibuster is to shape legislation, not merely to block it. The threat of 41 committed Senators can cause the House to modify its desires even before legislation comes to a vote. Without that restraining power, all of the following have very good chances of becoming law in 2009 or 2010.

- Medicare for all. When HillaryCare cratered in 1994, the Democrats concluded they had overreached, so they carved up the old agenda into smaller incremental steps, such as Schip for children. A strongly Democratic Congress is now likely to lay the final flagstones on the path to government-run health insurance from cradle to grave.

Mr. Obama wants to build a public insurance program, modeled after Medicare and open to everyone of any income. According to the Lewin Group, the gold standard of health policy analysis, the Obama plan would shift between 32 million and 52 million from private coverage to the huge new entitlement. Like Medicare or the Canadian system, this would never be repealed.

The commitments would start slow, so as not to cause immediate alarm. But as U.S. health-care spending flowed into the default government options, taxes would have to rise or services would be rationed, or both. Single payer is the inevitable next step, as Mr. Obama has already said is his ultimate ideal.

- The business climate. "We have some harsh decisions to make," Speaker Nancy Pelosi warned recently, speaking about retribution for the financial panic. Look for a replay of the Pecora hearings of the 1930s, with Henry Waxman, John Conyers and Ed Markey sponsoring ritual hangings to further their agenda to control more of the private economy. The financial industry will get an overhaul in any case, but telecom, biotech and drug makers, among many others, can expect to be investigated and face new, more onerous rules. See the "Issues and Legislation" tab on Mr. Waxman's Web site for a not-so-brief target list.

The danger is that Democrats could cause the economic downturn to last longer than it otherwise will by enacting regulatory overkill like Sarbanes-Oxley. Something more punitive is likely as well, for instance a windfall profits tax on oil, and maybe other industries.

- Union supremacy. One program certain to be given right of way is "card check." Unions have been in decline for decades, now claiming only 7.4% of the private-sector work force, so Big Labor wants to trash the secret-ballot elections that have been in place since the 1930s. The "Employee Free Choice Act" would convert workplaces into union shops merely by gathering signatures from a majority of employees, which means organizers could strongarm those who opposed such a petition.

The bill also imposes a compulsory arbitration regime that results in an automatic two-year union "contract" after 130 days of failed negotiation. The point is to force businesses to recognize a union whether the workers support it or not. This would be the biggest pro-union shift in the balance of labor-management power since the Wagner Act of 1935.

- Taxes. Taxes will rise substantially, the only question being how high. Mr. Obama would raise the top income, dividend and capital-gains rates for "the rich," substantially increasing the cost of new investment in the U.S. More radically, he wants to lift or eliminate the cap on income subject to payroll taxes that fund Medicare and Social Security. This would convert what was meant to be a pension insurance program into an overt income redistribution program. It would also impose a probably unrepealable increase in marginal tax rates, and a permanent shift upward in the federal tax share of GDP.

- The green revolution. A tax-and-regulation scheme in the name of climate change is a top left-wing priority. Cap and trade would hand Congress trillions of dollars in new spending from the auction of carbon credits, which it would use to pick winners and losers in the energy business and across the economy. Huge chunks of GDP and millions of jobs would be at the mercy of Congress and a vast new global-warming bureaucracy. Without the GOP votes to help stage a filibuster, Senators from carbon-intensive states would have less ability to temper coastal liberals who answer to the green elites.

- Free speech and voting rights. A liberal supermajority would move quickly to impose procedural advantages that could cement Democratic rule for years to come. One early effort would be national, election-day voter registration. This is a long-time goal of Acorn and others on the "community organizer" left and would make it far easier to stack the voter rolls. The District of Columbia would also get votes in Congress -- Democratic, naturally.

Felons may also get the right to vote nationwide, while the Fairness Doctrine is likely to be reimposed either by Congress or the Obama FCC. A major goal of the supermajority left would be to shut down talk radio and other voices of political opposition.

- Special-interest potpourri. Look for the watering down of No Child Left Behind testing standards, as a favor to the National Education Association. The tort bar's ship would also come in, including limits on arbitration to settle disputes and watering down the 1995 law limiting strike suits. New causes of legal action would be sprinkled throughout most legislation. The anti-antiterror lobby would be rewarded with the end of Guantanamo and military commissions, which probably means trying terrorists in civilian courts. Google and MoveOn.org would get "net neutrality" rules, subjecting the Internet to intrusive regulation for the first time.

 

It's always possible that events -- such as a recession -- would temper some of these ambitions. Republicans also feared the worst in 1993 when Democrats ran the entire government, but it didn't turn out that way. On the other hand, Bob Dole then had 43 GOP Senators to support a filibuster, and the entire Democratic Party has since moved sharply to the left. Mr. Obama's agenda is far more liberal than Bill Clinton's was in 1992, and the Southern Democrats who killed Al Gore's BTU tax and modified liberal ambitions are long gone.

In both 1933 and 1965, liberal majorities imposed vast expansions of government that have never been repealed, and the current financial panic may give today's left another pretext to return to those heydays of welfare-state liberalism. Americans voting for "change" should know they may get far more than they ever imagined.

Please add your comments to the Opinion Journal

[ccp]

And this is exactly what the American public has to be reminded of a hundred times a day.

That if McCain doesn't get in this country and our freedoms are gone for many years if not forever.

And that is also why the MSM fears the negativity from th Republicans - because they know this is true and they want it though most Americans I doubt do.

[Crafty_Dog]

Liberals pretend that only President Bush is preventing the U.S. from adopting some global warming "solution." But occasionally their mask slips. As Barack Obama's energy adviser has now made clear, the would-be President intends to blackmail -- or rather, greenmail -- Congress into falling in line with his climate agenda.

 
APJason Grumet is currently executive director of an outfit called the National Commission on Energy Policy and one of Mr. Obama's key policy aides. In an interview last week with Bloomberg, Mr. Grumet said that come January the Environmental Protection Agency "would initiate those rulemakings" that classify carbon as a dangerous pollutant under current clean air laws. That move would impose new regulation and taxes across the entire economy, something that is usually the purview of Congress. Mr. Grumet warned that "in the absence of Congressional action" 18 months after Mr. Obama's inauguration, the EPA would move ahead with its own unilateral carbon crackdown anyway.

Well, well. For years, Democrats -- including Senator Obama -- have been howling about the "politicization" of the EPA, which has nominally been part of the Bush Administration. The complaint has been that the White House blocked EPA bureaucrats from making the so-called "endangerment finding" on carbon. Now it turns out that a President Obama would himself wield such a finding as a political bludgeon. He plans to issue an ultimatum to Congress: Either impose new taxes and limits on carbon that he finds amenable, or the EPA carbon police will be let loose to ravage the countryside.

The EPA hasn't made a secret of how it would like to centrally plan the U.S. economy under the 1970 Clean Air Act. In a blueprint released in July, the agency didn't exactly say it'd collectivize the farms -- but pretty close, down to the "grass clippings." The EPA would monitor and regulate the carbon emissions of "lawn and garden equipment" as well as everything with an engine, like cars, planes and boats. Eco-bureaucrats envision thousands of other emissions limits on all types of energy. Coal-fired power and other fossil fuels would be ruled out of existence, while all other prices would rise as the huge economic costs of the new regime were passed down the energy chain to consumers.

These costs would far exceed the burden of a straight carbon tax or cap-and-trade system enacted by Congress, because the Clean Air Act was never written to apply to carbon and other greenhouse gases. It's like trying to do brain surgery with a butter knife. Mr. Obama wants to move ahead anyway because he knows that the costs of any carbon program will be high. He knows, too, that Congress -- even with strongly Democratic majorities -- might still balk at supporting tax increases on their constituents, even if it is done in the name of global warming.

Climate-change politics don't break cleanly along partisan lines. The burden of a carbon clampdown will fall disproportionately on some states over others, especially the 25 interior states that get more than 50% of their electricity from coal. Rustbelt manufacturing states like Ohio, Michigan and Pennsylvania will get hit hard too. Once President Bush leaves office, the coastal Democrats pushing hardest for a climate change program might find their colleagues splitting off, especially after they vote for a huge tax increase on incomes.

Thus Messrs. Obama and Grumet want to invoke a political deus ex machina driven by a faulty interpretation of the Clean Air Act to force Congress's hand. Mr. Obama and Democrats can then tell Americans that Congress must act to tax and regulate carbon to save the country from even worse bureaucratic consequences. It's Mr. Obama's version of Jack Benny's old "your money or your life" routine, but without the punch line.

The strategy is most notable for what it says about the climate-change lobby and its new standard bearer. Supposedly global warming is the transcendent challenge of the age, but Mr. Obama evidently doesn't believe he'll be able to convince his own party to do something about it without a bureaucratic ultimatum. Mr. Grumet justified it this way: "The U.S. has to move quickly domestically . . . We cannot have a meaningful impact in the international discussion until we develop a meaningful domestic consensus."

Normally a democracy reaches consensus through political debate and persuasion, but apparently for Mr. Obama that option is merely a nuisance. It's another example of "change" you'll be given no choice but to believe in.

Please add your comments to the Opinion Journal

[Crafty_Dog]

“Under an Obama administration, it is not far-fetched to see the day when liberal federal judges decide that religious organizations must lose their tax exemptions should they refuse to employ homosexuals or others they regard as engaging in deviant behavior. Court challenges against those who believe homosexual behavior is sinful seem to be occurring with greater frequency... The aim of the gay rights lobby is to destroy all remnants of biblical values and societal norms. Gay rights advocates will take their agenda to federal courts as soon as sufficient numbers of liberal judges are there to give them what they want. Watch them vote in overwhelming numbers for Barack Obama. He is their future. This election is, among other things, about the future of the majority and whether we want this country to be shaped by the courts, or by ‘we the people’.” —Cal Thomas

[ccp]

Watch them vote in overwhelming numbers for Barack Obama. He is their future

And that is what Rachel Maddow is all about - her agenda.

[Crafty_Dog]

Ummm, , , who is Rachel Maddow?

[G M]

My advice: Invest in metals. Guns, ammo and canned food.

[Crafty_Dog]

I've always regarded Paul Volcker highly. 
=================

WSJ

NEW YORK -- At 81 years old, former Federal Reserve chairman Paul Volcker is getting a second chance to shape his legacy with a presidential hopeful more than 30 years his junior.

Mr. Volcker has emerged as a top economic adviser to Sen. Barack Obama during a presidential campaign dominated by a global financial crisis. Their growing bond is paying dividends for each man.

View Full Image

Associated Press
FAST FRIENDS: Sen. Barack Obama with former Fed Chairman Paul Volcker during a meeting with the senator's top economic advisers last month.
Mr. Volcker delivers gravitas and credibility to Sen. Obama, people in the Obama camp say, as well as ideas and approaches to the economic crisis. "Volcker whispering in Obama's ear will make even Republicans comfortable, because he's a hero of the right and a supporter of a strong dollar," says John Tamny, a supply-side economist and Republican.

On Tuesday, Mr. Volcker is scheduled to appear on the campaign trail with Sen. Obama for the first time. At a round-table discussion with voters in Lake Worth, Fla., he'll "give his view on the state of the economy and the credit markets, and what needs to be done to fix them," says one campaign adviser. Longtime Fed watchers are amused that Mr. Volcker, known for his muttered statements during Fed meetings in the 1980s, will be in a political role on the stump.

For Mr. Volcker, a connection with Sen. Obama could help burnish his record as Fed chairman. The cigar-chomping central banker from 1979 to 1987, he received blame for driving up interest rates and tipping the U.S. into the deepest recession since the Great Depression. But Mr. Volcker is just as well known for taming the runaway inflation of that era. His stock has risen in recent months as his gruff warnings about the risks of deregulating the financial sector have come to look prescient. His successor's reputation, meanwhile, has come under a cloud. Alan Greenspan is under criticism that the low interest rates and deregulatory ideology of his tenure contributed to today's crisis.

With nearly every day presenting a fresh financial emergency, Sen. Obama has persuaded Mr. Volcker, who travels the globe for economic meetings and occasionally disappears on fly-fishing trips, to be at the ready; Mr. Volcker now keeps a cellphone on him at all times. And though he still doesn't own a computer (his assistant prints out emails for him), he's gotten used to Sen. Obama's rapid-fire messages sent from a BlackBerry device.

The Obama-Volcker relationship continues to evolve, campaign advisers say. At the start, Sen. Obama sought advice from Mr. Volcker and other outside voices through his economic adviser, Austan Goolsbee, a 39-year-old University of Chicago professor. But starting with the demise of Bear Stearns Cos. in March and continuing today, Sen. Obama speaks directly and often with Mr. Volcker about the intricacies of the financial crisis and possible solutions. They've become "collaborators," as one aide puts it.

For example, when the U.S. Treasury put forth a plan to set up a $700 billion rescue fund to buy up toxic assets, Sen. Obama quickly backed it on the advice of Mr. Volcker. Like other prominent economists, Mr. Volcker also advocated early on for the recapitalization of banks. On this advice, Sen. Obama proposed direct equity infusions in banks in his frequent conference calls with Treasury Secretary Henry Paulson. The idea, initially rejected by Mr. Paulson, was finally proposed last week by the administration, in an effort to get banks lending again to businesses and each other.

Relying on Mr. Volcker
Sen. Obama's team of economic advisers includes two former Treasury secretaries, Robert Rubin and Lawrence Summers, and in some decisions, Mr. Volcker doesn't reign supreme. The candidate's latest proposal, for example, a $60 billion stimulus package, was initially fought by the former Fed chief on the grounds that Americans were already overspending. Moreover, he is unlikely to take a long-term role in any Obama administration.

 
Associated Press
Paul Volcker, delivering a lecture last week in Singapore, where he warned that the U.S. and Europe are facing recession from the financial crisis.
But for now, and going into the campaign's final weeks, aides say Sen. Obama is increasingly relying on Mr. Volcker. His staff now routinely reviews policy proposals and speeches with Mr. Volcker. Conference calls and face-to-face meetings of the Obama economic team are often reorganized to accommodate his schedule. When the team discusses the financial crisis, "The most important question to Obama: What does Paul Volcker think?" says Jason Furman, the campaign's economic-policy director.

The two men have developed an ease with each other, say aides, even as their styles appear to differ: Sen. Obama, who tends to use the Socratic method from his law-school training, examines all points of view and debates them. With a more formal and direct demeanor, Mr. Volcker likes to go straight to solutions.

In last week's final presidential debate, after Republican John McCain raised questions about his rival's ties, Sen. Obama said, "Let me tell you who I associate with. On economic policy, I associate with Warren Buffett and former Fed Chairman Paul Volcker...who have shaped my ideas and who will be surrounding me in the White House."

Some Democrats have speculated that, if elected, Sen. Obama could name Mr. Volcker to a post, possibly even as Treasury secretary, for a limited time. Banking and Wall Street executives are pushing the two campaigns to name a new secretary shortly after the election to reassure markets during the transition. The Obama campaign wouldn't comment on possible appointments.

"I just want to be helpful, because I believe Sen. Obama -- in his person, in his ideas and in his ability to understand and articulate both our needs and our hopes -- brings the strong and fresh leadership we need," Mr. Volcker said in an interview in New York. Mr. Volcker wouldn't provide details of his policy suggestions or his personal relationship with Sen. Obama.

After leaving the Fed 20 years ago, Mr. Volcker stopped smoking cigars, became a professor at Princeton University and spent more time fly-fishing. His corner office overlooking Fifth Avenue is filled with photographs and statues of fish, as well as a pillow inscribed: "Work is for people who don't know how to fish."

Following a stint as chairman of a boutique investment-banking firm, Mr. Volcker largely steered clear of joining any Wall Street companies. He set up his own office in Rockefeller Center, where he consults for companies and governments. He has served on a few corporate boards, such as UAL Corp., Prudential Insurance Co. of America and Nestlé SA. He also participated on commissions including the United Nations committee to investigate corruption in its oil-for-food program, and an inquiry launched by Swiss banks to determine which accounts belonged to Holocaust victims.

The bond between Messrs. Obama and Volcker started with a dinner invitation. In June 2007, Mark Gallogly, co-founder of Centerbridge Partners, a New York private-investment firm, and an early supporter of Sen. Obama, invited a dozen financial executives to meet the senator, including Goldman Sachs Group Inc. President Gary Cohn, Merrill Lynch & Co. President Greg Fleming and Mr. Volcker.

Along with the invitation, Mr. Volcker received from Mr. Gallogly a "briefing package" containing some speeches by Sen. Obama and news articles about him. Mr. Volcker also read the two books written by the senator.

In the private dining room at a Capitol Hill restaurant, Mr. Gallogly seated Mr. Volcker directly across from Sen. Obama, who at the time was considered a long shot to win the Democratic nomination over Sen. Hillary Clinton. Returning late that night on a flight to New York, Mr. Volcker told the group he was "genuinely impressed" with the Illinois senator.

That message was eventually passed along to Sen. Obama's advisers in New York, Michael Froman, a friend from Harvard Law School and a Citigroup Inc. executive, and Jenny Yeager, a fund-raiser. Ms. Yeager told Obama headquarters in Chicago that Mr. Volcker seemed "interested" in the candidate, but in two months no one had followed up with the ex-central banker for fund raising or anything else.

When Sen. Obama's economics adviser, Mr. Goolsbee, heard about Mr. Volcker's interest, he immediately got excited. "Paul Volcker is a legend! We don't want to use his contacts for money, we want to pick his brain," he recalls saying to a campaign operative.

Starting in late summer 2007, Mr. Goolsbee had regular discussions with Mr. Volcker. He incorporated Mr. Volcker's ideas, including his early concern that the housing downturn would snowball into a larger financial crisis, into Sen. Obama's policy positions. In a September 2007 speech at Nasdaq, Sen. Obama predicted that because of oversight lapses and abusive practices that cause the public to doubt financial results, "the markets will be ravaged by a crisis in confidence."

An Early Endorsement
In early January 2008, when Sen. Clinton was pounding her rival over his lack of experience and stature, Sen. Obama phoned Mr. Volcker to ask for his endorsement. (At that time, billionaire investor Warren Buffett had refused to take sides between the Democratic contenders, saying he would support whoever got the nomination.) Mr. Volcker, a long-time Democrat who had mostly stayed out of partisan politics, agreed, and wrote out his statement in longhand.

The presidential candidate's first big economic address took place in March at Cooper Union in New York. Mr. Volcker's fingerprints were evident in the speech. The onetime central banker had long been vigilant about strong regulatory oversight; as Fed chairman he rejected big banks' attempts to repeal Depression-era laws to engage in more risky practices like investment banking. New financial institutions and instruments have since led to the repeal or relaxation of those laws, and Mr. Volcker told Sen. Obama that the U.S. regulatory structure must be strengthened and updated for the 21st century.

With Mr. Volcker sitting in the front row, Sen. Obama told the audience at Cooper Union that the current financial-regulatory framework must be "revamped." He faulted deregulation for the growing economic crisis. "Our free market was never meant to be a free license to take whatever you can get, however you can get it."

Once Sen. Obama became the expected Democratic nominee in June, and the economy became the central campaign issue, his chats with Mr. Volcker picked up. Mr. Goolsbee would get emails from Sen. Obama's traveling aide Reggie Love or his senior strategist David Axelrod with the message: "BO wants to call Volcker. What's his number again?"

Emergency Meetings
In the past two months, financial crises have come one after another, picking up speed with the federal government's July effort to bolster big mortgage insurers Fannie Mae and Freddie Mac. As the contagion from the subprime mortgages and risky mortgage credit swaps threatened to topple other institutions, Sen. Obama asked for "emergency meetings" with his economic team, about a dozen advisers including Mr. Volcker and Mr. Buffett.

At the first group meeting in Washington in late July, Sen. Obama said he wanted to hear from each adviser on the worsening economic downturn and asked Mr. Volcker to go first. "The very health of the credit markets is at stake," Mr. Volcker said, according to one attendee. He urged strong action to restore confidence, particularly in the U.S. banking system.

When Sen. Obama raised the prospect of a package of spending and tax measures to "stimulate" the economy, Mr. Volcker disapproved. "Americans are spending beyond their means," he told the group. A stimulus package would delay the belt-tightening and savings needed, he added, proposing instead better regulation and assistance to banks.

Laura Tyson, economics adviser for President Bill Clinton and a professor at University of California, Berkeley, disagreed. "Americans can't help but spend beyond their means because they've had no income growth while their costs on gas and food have skyrocketed." She suggested spending money to rebuild infrastructure and create jobs. Even as some others agreed with Ms. Tyson, Mr. Volcker didn't budge. Sen. Obama delayed putting out a new stimulus package, but stressed that he wanted to find the "right balance" of possible assistance.

When the bailout bill became a political football and the markets seized up, Sen. Obama called the second in-person meeting of his financial team on Sept. 26 in Miami. Mr. Volcker initially said he would have to call in because he was leaving for Europe that day. Sen. Obama, according to campaign aides, called him with a personal plea.

The next morning, the senator seated Mr. Volcker beside him, an arrangement that was photographed by the media entourage covering the campaign. Mr. Volcker told the group he had changed his mind about an economic-stimulus package due to the global recession, but he couldn't stay to hear the discussion about the approach because he had to catch a plane to Europe.

In the past two weeks, with the stock market's drastic volatility and weak economic indicators, Sen. Obama presented his $60 billion package, which contains tax cuts and spending to provide public-works jobs to struggling Americans.

On Monday, Fed Chairman Ben Bernanke endorsed the idea of another stimulus package, giving a boost to Democratic lawmakers who are considering one. But congressional Republicans have so far shown little interest in a second spending bill.

[Crafty_Dog]

What happens when the voter in the exact middle of the earnings spectrum receives more in benefits from Washington than he pays in taxes? Economists Allan Meltzer and Scott Richard posed this question 27 years ago. We may soon enough know the answer.

Barack Obama is offering voters strong incentives to support higher taxes and bigger government. This could be the magic income-redistribution formula Democrats have long sought.

Sen. Obama is promising $500 and $1,000 gift-wrapped packets of money in the form of refundable tax credits. These will shift the tax demographics to the tipping point where half of all voters will receive a cash windfall from Washington and an overwhelming majority will gain from tax hikes and more government spending.

In 2006, the latest year for which we have Census data, 220 million Americans were eligible to vote and 89 million -- 40% -- paid no income taxes. According to the Tax Policy Center (a joint venture of the Brookings Institution and the Urban Institute), this will jump to 49% when Mr. Obama's cash credits remove 18 million more voters from the tax rolls. What's more, there are an additional 24 million taxpayers (11% of the electorate) who will pay a minimal amount of income taxes -- less than 5% of their income and less than $1,000 annually.

In all, three out of every five voters will pay little or nothing in income taxes under Mr. Obama's plans and gain when taxes rise on the 40% that already pays 95% of income tax revenues.

The plunder that the Democrats plan to extract from the "very rich" -- the 5% that earn more than $250,000 and who already pay 60% of the federal income tax bill -- will never stretch to cover the expansive programs Mr. Obama promises.

What next? A core group of Obama enthusiasts -- those educated professionals who applaud the "fairness" of their candidate's tax plans -- will soon see their $100,000-$150,000 incomes targeted. As entitlements expand and a self-interested majority votes, the higher tax brackets will kick in at lower levels down the ladder, all the way to households with a $75,000 income.

Calculating how far society's top earners can be pushed before they stop (or cut back on) producing is difficult. But the incentives are easy to see. Voters who benefit from government programs will push for higher tax rates on higher earners -- at least until those who power the economy and create jobs and wealth stop working, stop investing, or move out of the country.

Other nations have tried the ideology of fairness in the place of incentives and found that reward without work is a recipe for decline. In the late 1970s and throughout the 1980s, Margaret Thatcher took on the unions and slashed taxes to restore growth and jobs in Great Britain. In Germany a few years ago, Social Democrat Gerhard Schroeder defied his party's dogma and loosened labor's grip on the economy to end stagnation. And more recently in France, Nicolas Sarkozy was swept to power on a platform of restoring flexibility to the economy.

The sequence is always the same. High-tax, big-spending policies force the economy to lose momentum. Then growth in government spending outstrips revenues. Fiscal and trade deficits soar. Public debt, excessive taxation and unemployment follow. The central bank tries to solve the problem by printing money. International competitiveness is lost and the currency depreciates. The system stagnates. And then a frightened electorate returns conservatives to power.

The economic tides will not stand still while Washington experiments with European-type social democracy, even though the dollar's role as the global reserve currency will buy some time. Our trademark competitive advantage will be lost, and once lost, it will be hard to regain. There are too many emerging economies focused on prosperity and not redistribution for the U.S. to easily recapture its role of global economic leader.

Tomorrow's children may come to question why their parents sold their birthright for a mess of "fairness" -- whatever that will signify when jobs are scarce and American opportunity is no longer the envy of the world.

Mr. Lerrick is a professor of economics at Carnegie Mellon University and a visiting scholar at the American Enterprise Institute.

[G M]

http://www.nypost.com/seven/10202008/postopinion/opedcolumnists/america_the_weak_134398.htm?&page=0

AMERICA THE WEAK
US RISKS TURMOIL UNDER PREZ O


Posted: 4:51 am
October 20, 2008

IF Sen. Barack Obama is elected president, our re public will survive, but our international strategy and some of our allies may not. His first year in office would conjure globe-spanning challenges as our enemies piled on to exploit his weakness.

Add in Sen. Joe Biden - with his track record of calling every major foreign-policy crisis wrong for 35 years - as vice president and de facto secretary of State, and we'd face a formula for strategic disaster.

Where would the avalanche of confrontations come from?

* Al Qaeda. Pandering to his extreme base, Obama has projected an image of being soft on terror. Toss in his promise to abandon Iraq, and you can be sure that al Qaeda will pull out all the stops to kill as many Americans as possible - in Iraq, Afghanistan and, if they can, here at home - hoping that America will throw away the victories our troops bought with their blood.

* Pakistan. As this nuclear-armed country of 170 million anti-American Muslims grows more fragile by the day, the save-the-Taliban elements in the Pakistani intelligence services and body politic will avoid taking serious action against "their" terrorists (while theatrically annoying Taliban elements they can't control). The Pakistanis think Obama would lose Afghanistan - and they believe they can reap the subsequent whirlwind.

* Iran. Got nukes? If the Iranians are as far along with their nuclear program as some reports insist, expect a mushroom cloud above an Iranian test range next year. Even without nukes, President Mahmoud Ahmadinejad would try the new administration's temper in Iraq, Afghanistan and the Persian Gulf.

* Israel. In the Middle East, Obama's election would be read as the end of staunch US support for Israel. Backed by Syria and Iran, Hezbollah would provoke another, far-bloodier war with Israel. Lebanon would disintegrate.

* Saudi Arabia. Post-9/11 attention to poisonous Saudi proselytizing forced the kingdom to be more discreet in fomenting terrorism and religious hatred abroad. Convinced that Obama will be more "tolerant" toward militant Islam, the Saudis would redouble their funding of bigotry and butchery-for-Allah - in the US, too.

* Russia. Got Ukraine? Not for long, slabiye Amerikantsi. Russia's new czar, Vladimir Putin, intends to gobble Ukraine next year, assured that NATO will be divided and the US can be derided. Aided by the treasonous Kiev politico Yulia Timoshenko - a patriot when it suited her ambition, but now a Russian collaborator - the Kremlin is set to reclaim the most important state it still regards as its property. Overall, 2009 may see the starkest repression of freedom since Stalin seized Eastern Europe.

* Georgia. Our Georgian allies should dust off their Russian dictionaries.

* Venezuela. Hugo Chavez will intensify the rape of his country's hemorrhaging democracy and, despite any drop in oil revenue, he'll do all he can to export his megalomaniacal version of gun-barrel socialism. He'll seek a hug-for-the-cameras meet with President Obama as early as possible.

* Bolivia. Chavez client President Evo Morales could order his military to seize control of his country's dissident eastern provinces, whose citizens resist his repression, extortion and semi-literate Leninism. President Obama would do nothing as yet another democracy toppled and bled.

* North Korea. North Korea will expect a much more generous deal from the West for annulling its pursuit of nuclear weapons. And it will regard an Obama administration as a green light to cheat.

* NATO. The brave young democracies of Central and Eastern Europe will be gravely discouraged, while the appeasers in Western Europe will again have the upper hand. Putin will be allowed to do what he wants.

* The Kurds. An Obama administration will abandon our only true allies between Tel Aviv and Tokyo.

* Democracy activists. Around the world, regressive regimes will intensify their suppression - and outright murder - of dissidents who risk their lives for freedom and justice. An Obama administration will say all the right things, but do nothing.

* Women's rights. If you can't vote in US elections, sister, you're screwed. Being stoned to death or buried alive is just a cultural thing.

* Journalists. American journalists who've done everything they can to elect Barack Obama can watch as regimes around the world imprison, torture and murder their foreign colleagues, confident that the US has entered an era of impotence. The crocodile tears in newsrooms will provide drought relief to the entire southeastern US.

Sen. John McCain's campaign has allowed a great man to be maligned as a mere successor to George W. Bush. The truth is that an Obama administration would be a second Carter presidency - only far worse.

Think Bush weakened America? Just wait.

Ralph Peters' latest book is "Looking for Trouble: Adventures in a Broken World."

[Crafty_Dog]

"I think at this point there needs to be a focus on an immediate increase in spending and I think this is a time when deficit fear has to take a second seat . . . I believe later on there should be tax increases. Speaking personally, I think there are a lot of very rich people out there whom we can tax at a point down the road and recover some of the money."
-- Barney Frank, October 20, 2008

The election is still two weeks away, but we are already living in the world of Obamanomics. In fact, on fiscal policy we've been living in that world at least since February when the Bush Administration conceded to the Congressional priority of Keynesian fiscal "stimulus." That didn't work very well, but no matter. Spurred on by Barack Obama, Democrats in Congress are preparing Round Two, this time in the form of $150 billion to $300 billion in new spending.

 
APIf we may borrow a phrase, this is the triumph of hope over experience. The one thing Washington hasn't failed to do in recent years is spend, yet the economy doesn't seem to have improved on the event. Brian Riedl, a budget expert at the Heritage Foundation, has calculated that in 2008 Congress enacted $332 billion of "emergency" supplemental spending bills, only half of which was for the Iraq war. Do you feel stimulated?

The nearby chart shows the arc of tax policy and economic growth across the Bush years. After the dot-com bust, President Bush compromised with Senate Democrats and delayed his marginal-rate income tax cuts in return for immediate tax rebates. The rebates goosed spending for a while but provided no increase in incentives to invest. Only after 2003, when the marginal-rate cuts took effect immediately, combined with cuts in dividend and capital gains rates, did robust growth return. The expansion was healthy until it was overtaken by the housing bust and even resisted recession into this year. Mr. Bush and Congress returned to the rebate formula in February, but a blip in second-quarter growth has now ended as the economy heads into recession. The Dow plunged again yesterday with a 514-point drop.

 The latest plan is even worse than the spring round of $100 billion or so in tax rebate checks. At least rebates allowed taxpayers to spend their own money. Under this stimulus the government will tax or borrow $150 billion to $300 billion in order to spend the money on social and pork-barrel programs. The latest draft would direct dollars to food stamps, another expansion in unemployment insurance, home heating subsidies, more aid to states and cities, and "infrastructure" like roads, bridges and public transit. Because of Davis-Bacon wage requirements on these brick and mortar projects, a portion of the dollars would coincidentally flow to the Democrats' biggest campaign contributors: unions. Call it a political "rebate" check.

On Tuesday Senator Obama said this spending would create millions of new jobs by closing a federal "investment deficit." Over the past eight years the federal budget has exploded by more than $1.1 trillion, much of it for the very programs that Democrats want to spend more on. Let's start with infrastructure. Three years ago Congress passed a transportation bill of more than $286 billion. The transportation budget is up 22% after inflation in the past eight years. Roads and bridges can help economic growth if they increase productivity by more than the amount they cost in higher taxes or borrowing. But not if they are bridges to nowhere as so many of these projects are.

Further Reading
By Karl Rove
The Tax Argument Still Works 10/23/2008
Obama's plans are giving voters pause.
How about aid to local communities? That spending has soared by 91% after inflation in eight years. The education budget is up 57%. Welfare programs are up 30%. Only two years ago Democrats were calling the Tom DeLay Republicans spendthrift. Now they say there's an "investment deficit."

Federal budget deficits are not something we obsess about, but eventually this new spending has to be paid for, and Barney Frank's comments only underscore that big tax increases are coming. The prospect of these tax increases is now hanging over the economy like a pall, as investors and businesses wonder where and how heavily an Obama Administration and Congress would strike. The pall is likely to continue well into 2009, as millions of Americans delay their investment decisions until they know how much their after-tax returns are likely to fall.

If Mr. Obama really wants a "stimulus," he'll announce that given the condition of the economy he won't raise taxes at all. Meanwhile, all of us are getting a preview of Obamanomics in action.

Please add your comments to the Opinion Journal forum.

[Crafty_Dog]

Comments Obama's First 100 Days
by  Patrick J. Buchanan

10/28/2008

Undeniably, a powerful tide is running for the Democratic Party, with one
week left to Election Day.

Bush's approval rating is 27 percent, just above Richard Nixon's Watergate
nadir and almost down to Carter-Truman lows. After each of those presidents
reached their floors -- in 1952, 1974, 1980 -- the opposition party captured
the White House.

Moreover, 80 percent to 90 percent of Americans think the nation is on the
wrong course, and since mid-September, when McCain was still slightly ahead,
the Dow has lost 4,000 points -- $5 trillion to $6 trillion in value.

Leading now by eight points in an average of national polls, Barack Obama
has other advantages.

Not a single blue state is regarded as imperiled or even a toss-up, while
Obama leads in six crucial red states: Florida, North Carolina, Virginia,
Ohio, Missouri and Colorado. Should McCain lose one of the six, he would
have to win Pennsylvania to compensate for the lost electoral votes. But the
latest Pennsylvania polls show Barack with a double-digit lead.

Lately moving into the toss-up category are Nevada, North Dakota, Montana
and Indiana. All voted twice for George W. Bush.

Not only is Obama ahead in the state and national polls, he has more money,
is running far more ads, has a superior organization on the ground, attracts
larger crowds, and has greater enthusiasm and more media in camp. And new
voter registrations heavily favor the Democrats.

Though Congress is regarded by Americans with a disdain bordering on
disgust -- five of six Americans think it has done a poor job -- Democratic
majorities are certain to grow. Indeed, with Democrats favored by 10 points
over Republicans, Nancy Pelosi's majority could grow by 25 seats and Harry
Reid could find himself with a filibuster-proof majority of 60 senators.

Democrats already have 49, plus two independents: Socialist Bernie Sanders
and Independent Joe Lieberman. Their challengers are now ahead in New
Hampshire, Virginia, North Carolina, New Mexico, Minnesota, Oregon and
Colorado, with a chance of picking up Georgia, Alaska, Kentucky and
Mississippi.

We may be looking at a reverse of 1980, when Reagan won a 10-point victory
over Jimmy Carter, and Republicans took the Senate and, working with Boll
Weevil Democrats, effective control of the House.

With his tax cuts, defense buildup and rollback policy against the "Evil
Empire," Reagan gave us some of the best years of our lives, culminating in
America's epochal victory in the Cold War.

What does the triumvirate of Obama-Pelosi-Reid offer?

Rep. Barney Frank is calling for new tax hikes on the most successful and a
25 percent across-the-board slash in national defense. Sen. John Kerry is
talking up new and massive federal spending, a la FDR's New Deal.
Specifically, we can almost surely expect:

-- Swift amnesty for 12 million to 20 million illegal aliens and a drive to
make them citizens and register them, as in the Bill Clinton years. This
will mean that Nevada, Colorado, New Mexico and Arizona will soon move out
of reach for GOP presidential candidates, as has California.

-- Border security will go on the backburner, and America will have a
virtual open border with a Mexico of 110 million.

-- Taxes will be raised on the top 5 percent of wage-earners, who now carry
60 percent of the U.S. income tax burden, and tens of millions of checks
will be sent out to the 40 percent of wage-earners who pay no federal income
tax. Like the man said, redistribute the wealth, spread it around.

-- Social Security taxes will be raised on the most successful among us, and
capital gains taxes will be raised from 15 percent to 20 percent. The Bush
tax cuts will be repealed, and death taxes reimposed.

-- Two or three more liberal activists of the Ruth Bader Ginsberg-John Paul
Stevens stripe will be named to the Supreme Court. U.S. district and
appellate courts will be stacked with "progressives."

-- Special protections for homosexuals will be written into all civil rights
laws, and gays and lesbians in the military will be invited to come out of
the closet. "Don't ask, don't tell" will be dead.

-- The homosexual marriages that state judges have forced California,
Massachusetts and Connecticut to recognize, an Obama Congress or Obama court
will require all 50 states to recognize.

-- A "Freedom of Choice Act" nullifying all state restrictions on abortions
will be enacted. America will become the most pro-abortion nation on earth.

-- Affirmative action -- hiring and promotions based on race, sex and sexual
orientation until specified quotas are reached -- will be rigorously
enforced throughout the U.S. government and private sector.

-- Universal health insurance will be enacted, covering legal and illegal
immigrants, providing another powerful magnet for the world to come to
America, if necessary by breaching her borders.

-- A federal bailout of states and municipalities to keep state and local
governments spending up could come in December or early next year.

-- The first trillion-dollar deficit will be run in the first year of an
Obama presidency. It will be the first of many.

Welcome to Obamaland!
--------------------------------------------------------------------------------
Mr. Buchanan is a nationally syndicated columnist and author of Churchill,
Hitler, and "The Unnecessary War": How Britain Lost Its Empire and the West
Lost the World, "The Death of the West,", "The Great Betrayal," "A Republic,
Not an Empire" and "Where the Right Went Wrong."

[Crafty_Dog]

From the WT forum:

I have resigned myself to the fact that Barack Obama, wlll be our next President, and that my Taxes and Fees, will go up in a BIG way.

To compensate for these increases, I figure, that the Customer will have to see an increase in my fees to them of about 10%.
I will also have to lay off 6 of my employees.

This really bothered me as I believe we are family here and didn't know how to choose who will have to go.

So, this is what I did:

I strolled thru the parking lot and found 8 Obama bumper stickers on my employees cars.  I have decided these folks will be the first to be laid off.

I can't think of another fair way to approach this problem.

If you have a better idea, let me know.

I'm sending this letter to all the Business owners that I know.

Works for me.
__________________

[Crafty_Dog]

Geopolitical Diary: President-Elect Barack Obama
November 5, 2008 | 0509 GMT
Barack Obama was elected president of the United States on Tuesday. The popular vote gave him a solid majority, but nowhere near a landslide. His electoral majority was decisive. Most significant of the night, the Democrats now control both houses of Congress and in the Senate are close to — but not quite at — a veto-proof majority. They decisively control two branches of government. Indeed, it is likely that they will be able to appoint one or even two justices to the Supreme Court in the next four years, controlling that as well. Obama will have more control of the federal government on his first day in office than most presidents ever achieve in their entire tenure.

The crucial question will be whether it makes a difference. The shift from a Bush presidency to an Obama presidency will be a laboratory for testing one of Stratfor’s key contentions, which is that ideology and personalities are of secondary importance to the external forces that limit, shape and constrain a leader’s options. The change between the government of the United States elected in 2004 and the government that will take power in January is as dramatic a shift in personalities and ideologies as is likely in the American system. The issue will be how much room for maneuver Obama will actually have, particularly in foreign policy.

Consider: Obama has pledged to withdraw U.S. forces from Iraq, although his time frame is unclear. If he does withdraw them, he will have to deal with Iranians sooner rather than later, as they will want to move into any power vacuum left in Iraq. If the Iraqi government is unable to govern, or parts of it are under Iranian influence, obviously Iranian influence in Iraq will surge. This of course will deeply concern Saudi Arabia, which has been frightened of Iranian power since the Iranian revolution. Obama will face the choice of either leaving the Saudis to their own devices or containing the Iranians.

The strategy he has said he would follow would be to negotiate with the Iranians. He would have to reach an understanding with them that would create a neutral Iraqi government and allow the United States to withdraw, yet have a credible guarantee from Iran to respect Iraqi neutrality and keep it as a buffer zone. What can the United States offer Iran that matches the importance of Iraq to them?

That will be the point at which Obama will first show whether he can carve a new path or whether he will be trapped in the same reality the Bush administration faces. Unless he can reach an understanding with the Iranians, he cannot simply withdraw. We cannot imagine an offer to Iran that would cause Tehran to give up the goal of the domination of Iraq. But that is the laboratory experiment: Can Obama craft a solution that others can’t see? If he can, then his withdrawal plan can be executed. If he can’t, then it can only be executed at a huge potential cost prior to the next presidential election — and popularity among presidents is fleeting. Obama has won the presidency and therefore has shown himself to be a master politician. He does not want to create a disaster and lose the next election. Therefore, the question is: What will he do to fulfill the centerpiece pledge of his foreign policy?

This is not a trick question, and the least important matter is whether Stratfor’s methodology is validated or not. What is important is that Obama, having won the election, will now have to face a range of foreign policy issues that will challenge his ideology and policies, and where his personality will matter little. He will be dealing with people like Vladimir Putin, Hu Jintao and Angela Merkel, none of whom are swayed by charisma and all of whom govern countries with interests very different than those of the United States.

When policies encounter realities, harsh things happen to presidents. Most presidents are worn down by them. Some accommodate themselves. A few — a Lincoln or a Franklin Delano Roosevelt — find opportunities that no one else can quite see. The first test for Obama will be Iraq, to find an exit that isn’t disastrous but fulfills his commitments. We don’t see the path. It will be interesting to see if Obama can invent one — not only on Iraq but on a range of foreign policy issues that he’s addressed.

Tell Stratfor What You Think

[Crafty_Dog]

 Obama’s Challenge
November 5, 2008




By George Friedman

Related Special Topic Page
The 2008 U.S. Presidential Race
Barack Obama has been elected president of the United States by a large majority in the Electoral College. The Democrats have dramatically increased their control of Congress, increasing the number of seats they hold in the House of Representatives and moving close to the point where — with a few Republican defections — they can have veto-proof control of the Senate. Given the age of some Supreme Court justices, Obama might well have the opportunity to appoint at least one and possibly two new justices. He will begin as one of the most powerful presidents in a long while.

Truly extraordinary were the celebrations held around the world upon Obama’s victory. They affirm the global expectations Obama has raised — and reveal that the United States must be more important to Europeans than the latter like to admit. (We can’t imagine late-night vigils in the United States over a French election.)

Obama is an extraordinary rhetorician, and as Aristotle pointed out, rhetoric is one of the foundations of political power. Rhetoric has raised him to the presidency, along with the tremendous unpopularity of his predecessor and a financial crisis that took a tied campaign and gave Obama a lead he carefully nurtured to victory. So, as with all politicians, his victory was a matter of rhetoric and, according to Machiavelli, luck. Obama had both, but now the question is whether he has Machiavelli’s virtue in full by possessing the ability to exercise power. This last element is what governing is about, and it is what will determine if his presidency succeeds.

Embedded in his tremendous victory is a single weakness: Obama won the popular vote by a fairly narrow margin, about 52 percent of the vote. That means that almost as many people voted against him as voted for him.

Obama’s Agenda vs. Expanding His Base
U.S. President George W. Bush demonstrated that the inability to understand the uses and limits of power can crush a presidency very quickly. The enormous enthusiasm of Obama’s followers could conceal how he — like Bush — is governing a deeply, and nearly evenly, divided country. Obama’s first test will be simple: Can he maintain the devotion of his followers while increasing his political base? Or will he believe, as Bush and Cheney did, that he can govern without concern for the other half of the country because he controls the presidency and Congress, as Bush and Cheney did in 2001? Presidents are elected by electoral votes, but they govern through public support.

Obama and his supporters will say there is no danger of a repeat of Bush — who believed he could carry out his agenda and build his political base at the same time, but couldn’t. Building a political base requires modifying one’s agenda. But when you start modifying your agenda, when you become pragmatic, you start to lose your supporters. If Obama had won with 60 percent of the popular vote, this would not be as pressing a question. But he barely won by more than Bush in 2004. Now, we will find out if Obama is as skillful a president as he was a candidate.

Obama will soon face the problem of beginning to disappoint people all over the world, a problem built into his job. The first disappointments will be minor. There are thousands of people hoping for appointments, some to Cabinet positions, others to the White House, others to federal agencies. Many will get something, but few will get as much as they hoped for. Some will feel betrayed and become bitter. During the transition process, the disappointed office seeker — an institution in American politics — will start leaking on background to whatever reporters are available. This will strike a small, discordant note; creating no serious problems, but serving as a harbinger of things to come.

Later, Obama will be sworn in. He will give a memorable, perhaps historic speech at his inauguration. There will be great expectations about him in the country and around the world. He will enjoy the traditional presidential honeymoon, during which all but his bitterest enemies will give him the benefit of the doubt. The press initially will adore him, but will begin writing stories about all the positions he hasn’t filled, the mistakes he made in the vetting process and so on. And then, sometime in March or April, things will get interesting.

Iran and a U.S. Withdrawal From Iraq
Obama has promised to withdraw U.S. forces from Iraq, where he does not intend to leave any residual force. If he follows that course, he will open the door for the Iranians. Iran’s primary national security interest is containing or dominating Iraq, with which Iran fought a long war. If the United States remains in Iraq, the Iranians will be forced to accept a neutral government in Iraq. A U.S. withdrawal will pave the way for the Iranians to use Iraqi proxies to create, at a minimum, an Iraqi government more heavily influenced by Iran.

Apart from upsetting Sunni and Kurdish allies of the United States in Iraq, the Iranian ascendancy in Iraq will disturb some major American allies — particularly the Saudis, who fear Iranian power. The United States can’t afford a scenario under which Iranian power is projected into the Saudi oil fields. While that might be an unlikely scenario, it carries catastrophic consequences. The Jordanians and possibly the Turks, also American allies, will pressure Obama not simply to withdraw. And, of course, the Israelis will want the United States to remain in place to block Iranian expansion. Resisting a coalition of Saudis and Israelis will not be easy.

This will be the point where Obama’s pledge to talk to the Iranians will become crucial. If he simply withdraws from Iraq without a solid understanding with Iran, the entire American coalition in the region will come apart. Obama has pledged to build coalitions, something that will be difficult in the Middle East if he withdraws from Iraq without ironclad Iranian guarantees. He therefore will talk to the Iranians. But what can Obama offer the Iranians that would induce them to forego their primary national security interest? It is difficult to imagine a U.S.-Iranian deal that is both mutually beneficial and enforceable.

Obama will then be forced to make a decision. He can withdraw from Iraq and suffer the geopolitical consequences while coming under fire from the substantial political right in the United States that he needs at least in part to bring into his coalition. Or, he can retain some force in Iraq, thereby disappointing his supporters. If he is clumsy, he could wind up under attack from the right for negotiating with the Iranians and from his own supporters for not withdrawing all U.S. forces from Iraq. His skills in foreign policy and domestic politics will be tested on this core question, and he undoubtedly will disappoint many.

The Afghan Dilemma
Obama will need to address Afghanistan next. He has said that this is the real war, and that he will ask U.S. allies to join him in the effort. This means he will go to the Europeans and NATO, as he has said he will do. The Europeans are delighted with Obama’s victory because they feel Obama will consult them and stop making demands of them. But demands are precisely what he will bring the Europeans. In particular, he will want the Europeans to provide more forces for Afghanistan.

Many European countries will be inclined to provide some support, if for no other reason than to show that they are prepared to work with Obama. But European public opinion is not about to support a major deployment in Afghanistan, and the Europeans don’t have the force to deploy there anyway. In fact, as the global financial crisis begins to have a more dire impact in Europe than in the United States, many European countries are actively reducing their deployments in Afghanistan to save money. Expanding operations is the last thing on European minds.

Obama’s Afghan solution of building a coalition centered on the Europeans will thus meet a divided Europe with little inclination to send troops and with few troops to send in any event. That will force him into a confrontation with the Europeans in spring 2009, and then into a decision. The United States and its allies collectively lack the force to stabilize Afghanistan and defeat the Taliban. They certainly lack the force to make a significant move into Pakistan — something Obama has floated on several occasions that might be a good idea if force were in fact available.

He will have to make a hard decision on Afghanistan. Obama can continue the war as it is currently being fought, without hope of anything but a long holding action, but this risks defining his presidency around a hopeless war. He can choose to withdraw, in effect reinstating the Taliban, going back on his commitment and drawing heavy fire from the right. Or he can do what we have suggested is the inevitable outcome, namely, negotiate — and reach a political accord — with the Taliban. Unlike Bush, however, withdrawal or negotiation with the Taliban will increase the pressure on Obama from the right. And if this is coupled with a decision to delay withdrawal from Iraq, Obama’s own supporters will become restive. His 52 percent Election Day support could deteriorate with remarkable speed.

The Russian Question
At the same time, Obama will face the Russian question. The morning after Obama’s election, Russian President Dmitri Medvedev announced that Russia was deploying missiles in its European exclave of Kaliningrad in response to the U.S. deployment of ballistic missile defense systems in Poland. Obama opposed the Russians on their August intervention in Georgia, but he has never enunciated a clear Russia policy. We expect Ukraine will have shifted its political alignment toward Russia, and Moscow will be rapidly moving to create a sphere of influence before Obama can bring his attention — and U.S. power — to bear.

Obama will again turn to the Europeans to create a coalition to resist the Russians. But the Europeans will again be divided. The Germans can’t afford to alienate the Russians because of German energy dependence on Russia and because Germany does not want to fight another Cold War. The British and French may be more inclined to address the question, but certainly not to the point of resurrecting NATO as a major military force. The Russians will be prepared to talk, and will want to talk a great deal, all the while pursuing their own national interest of increasing their power in what they call their “near abroad.”

Obama will have many options on domestic policy given his majorities in Congress. But his Achilles’ heel, as it was for Bush and for many presidents, will be foreign policy. He has made what appear to be three guarantees. First, he will withdraw from Iraq. Second, he will focus on Afghanistan. Third, he will oppose Russian expansionism. To deliver on the first promise, he must deal with the Iranians. To deliver on the second, he must deal with the Taliban. To deliver on the third, he must deal with the Europeans.

Global Finance and the European Problem
The Europeans will pose another critical problem, as they want a second Bretton Woods agreement. Some European states appear to desire a set of international regulations for the financial system. There are three problems with this.

First, unless Obama wants to change course dramatically, the U.S. and European positions differ over the degree to which governments will regulate interbank transactions. The Europeans want much more intrusion than the Americans. They are far less averse to direct government controls than the Americans have been. Obama has the power to shift American policy, but doing that will make it harder to expand his base.

Second, the creation of an international regulatory body that has authority over American banks would create a system where U.S. financial management was subordinated to European financial management.

And third, the Europeans themselves have no common understanding of things. Obama could thus quickly be drawn into complex EU policy issues that could tie his hands in the United States. These could quickly turn into painful negotiations, in which Obama’s allure to the Europeans will evaporate.

One of the foundations of Obama’s foreign policy — and one of the reasons the Europeans have celebrated his election — was the perception that Obama is prepared to work closely with the Europeans. He is in fact prepared to do so, but his problem will be the same one Bush had: The Europeans are in no position to give the things that Obama will need from them — namely, troops, a revived NATO to confront the Russians and a global financial system that doesn’t subordinate American financial authority to an international bureaucracy.

The Hard Road Ahead
Like any politician, Obama will face the challenge of having made a set of promises that are not mutually supportive. Much of his challenge boils down to problems that he needs to solve and that he wants European help on, but the Europeans are not prepared to provide the type and amount of help he needs. This, plus the fact that a U.S. withdrawal from Iraq requires an agreement with Iran — something hard to imagine without a continued U.S. presence in Iraq — gives Obama a difficult road to move on.

As with all American presidents (who face midterm elections with astonishing speed), Obama’s foreign policy moves will be framed by his political support. Institutionally, he will be powerful. In terms of popular support, he begins knowing that almost half the country voted against him, and that he must increase his base. He must exploit the honeymoon period, when his support will expand, to bring another 5 percent or 10 percent of the public into his coalition. These people voted against him; now he needs to convince them to support him. But these are precisely the people who would regard talks with the Taliban or Iran with deep distrust. And if negotiations with the Iranians cause him to keep forces in Iraq, he will alienate his base without necessarily winning over his opponents.

And there is always the unknown. There could be a terrorist attack, the Russians could start pressuring the Baltic states, the Mexican situation could deteriorate. The unknown by definition cannot be anticipated. And many foreign leaders know it takes an administration months to settle in, something some will try to take advantage of. On top of that, there is now nearly a three-month window in which the old president is not yet out and the new president not yet in.

Obama must deal with extraordinarily difficult foreign policy issues in the context of an alliance failing not because of rough behavior among friends but because the allies’ interests have diverged. He must deal with this in the context of foreign policy positions difficult to sustain and reconcile, all against the backdrop of almost half an electorate that voted against him versus supporters who have enormous hopes vested in him. Obama knows all of this, of course, as he indicated in his victory speech.

We will now find out if Obama understands the exercise of political power as well as he understands the pursuit of that power. You really can’t know that until after the fact. There is no reason to think he can’t finesse these problems. Doing so will take cunning, trickery and the ability to make his supporters forget the promises he made while keeping their support. It will also require the ability to make some of his opponents embrace him despite the path he will have to take. In other words, he will have to be cunning and ruthless without appearing to be cunning and ruthless. That’s what successful presidents do.

In the meantime, he should enjoy the transition. It’s frequently the best part of a presidency.
 

[JDN]

I think taoist-engineer has some good points.

It's shameful that in a country as rich and prosperous as we are that people are rejected for medical care or are given sub quality care based upon ability to pay.
And a few of my relatives are doctors; even they agree the system needs fixing.  And a good friend is a physician in Canada; overall she says it works quite well.

Health care or lack thereof is one of the major causes of bankruptcy.  If you don't have a employer sponsored plan an individual plan can easily cost over $10,000
per year.  I can afford it, but many cannot.  So they go without insurance and pray they don't get sick.  is that a solution?

Everyone says "national health insurance will not work", yet what is Medicare? My father, my mother, and others I know are on Medicare.  Most if not all
seem relatively happy with the system.  And most doctors accept medicare patients.  Why can't something similar be done for all Americans?

Something needs to be done...

[G M]

JDN,

Address your disreputable lies about Michelle Malkin before you pollute any other topic.

[JDN]

I think GM we have already resolved this problem; simply SUCK IT UP, AND MOVE ON...
It was good advice - I suggest you take it.

[G M]

JDN,

I suggest you act like a man for probably the first time in your life and address your unfounded and dishonorable smear of Michelle Malkin.

[JDN]

Gee GM you are really a sore loser...  It happens...

As has been pointed out, YOU LOST (BIG TIME) SUCK IT UP, AND MOVE ON...

May I suggest you get over it... and move on...?

If you have something to say, post.  If not, don't.
Time to move on...

[G M]

I suggest you retract your dishonorable lies about Michelle Malkin. As far as losing. I didn't lose, America did. This will become evident in time.

[Crafty_Dog]

GM:

I agree with you that JDN should retract his apparently baseless accusations about MM.   That said, I trust that the point has been noted by those reading and that they will adjust how much weight to give to future accusations by JDN.  Lets move forward on this please.

Taoist Engineer:

Thank you not only for your thoughts, but the grace with which you share them.  Please forgive me for asking you to repost them in the "Politics of Health Care" thread and I will be glad to answer them there.

All:

Here's this from today's WSJ:
============
Now that Barack Obama has vanquished John McCain, he faces a much greater foe: Democrats on Capitol Hill. They've humbled the last two Democratic Presidents -- and with their enhanced majorities next year, they'll be out to do it again.

 
APMr. Obama may appreciate the threat, because yesterday he offered Clinton White House veteran Rahm Emanuel a job as his chief of staff. But even that savvy, relatively sane liberal will have difficulties grappling with the fearsome committee chairmen and liberal interest groups that did so much to sabotage Bill Clinton and Jimmy Carter. Meet the President-elect's real opposition:

David Obey. The Appropriations Chairman wants to slash defense spending as a money grab for more social programs and entitlements. Fellow spender Barney Frank recently added that a military budget cut of 25% was about right. A military crash diet wouldn't leave the funds for the surge in Afghanistan that Mr. Obama advocates, and it's a sure way to hand the national security issue back to the GOP.

Chuck Schumer. The Senate Democrat and his friends are already threatening banks if they don't lend more money instantly under the Troubled Asset Relief Program. Other political masters want to use Tarp to nationalize large swaths of U.S. industry such as the Detroit auto makers or to bail out states like New York that are in debt. If Mr. Obama doesn't want to have to pass a Tarp II, he'll have to say no.

George Miller. Some Democrats are starting to target the tax subsidies for 401(k)s and other private retirement options. Mr. Miller, who heads the House Education and Labor Committee, calls them "a big failure" and recently held a hearing to ponder alternatives, including nationalizing pensions and replacing them with special bonds administered by Social Security. The proposal has also caught the eye of Jim McDermott, who chairs the relevant Ways and Means subcommittee. Mr. Obama won big with his promise of tax cuts for the middle class, which doesn't square with attacks on middle-class nest eggs.

John Conyers. The man running House Judiciary is cheerleading the Europeans who want to indict Bush officials for war crimes. Other Democrats are thinking about hearings and other show trials. This is far from the postpartisan reconciliation that Mr. Obama preaches.

Henry Waxman. With President Bush soon to be out of office, the Californian's team of Inspector Clouseaus at House Oversight won't have any "scandals" left to pursue. The word in Washington is that Mr. Waxman is looking to unseat John Dingell as Chairman of Energy and Commerce, in order to shove aside a global warming moderate. That could pave the way for huge new energy taxes. Voters will punish Mr. Obama if they get hammered every time they fill up the gas tank or buy groceries.

Pete Stark. The Chairman of a crucial House subcommittee dealing with health care doesn't think Mr. Obama's proposal to significantly federalize the insurance market goes far enough. He wants a single-payer system like Canada's. Mr. Obama may want to strike a deal with Senate Republicans on health care, but Mr. Stark will be pulling him left at every turn.

All of these feudal lords -- and many others -- also come with their own private armies: the interest groups that compose the money and manpower of today's Democratic Party. The American Civil Liberties Union, Human Rights Watch and others on the anti-antiterror left want Mr. Obama to limit the surveillance and other tools that have prevented another terrorist attack on U.S. soil. The Natural Resources Defense Council and Environmental Defense will insist on onerous caps -- that is, taxes -- on coal and other carbon energy. Those won't help Mr. Obama carry Ohio and Indiana again in four years.

The trial bar wants an end to arbitration in disputes in return on its Senate investment, while the National Education Association will try to gut No Child Left Behind accountability standards. And organized labor will insist on a major push to pass "card check," which would end secret-ballot elections for unions. If Mr. Obama wants to mobilize the business community against him while squeezing moderate Democrats, he'll go along with that right from the start.

While many voters may think they've voted for "change" in Mr. Obama, they also handed power to the oldest forces in the Old Democratic Party. Jimmy Carter campaigned as a moderate and outsider, but Congressional liberals quickly ran his budget director, the economic centrist Bert Lance, out of town. Then they overrode Mr. Carter's veto of a pork-barrel water bill. Mr. Carter referred to the tax committees as "ravenous wolves" after they transformed his tax reform into a special-interest bouquet. Next came Reagan.

Bill Clinton also campaigned as a moderate, but in his first two years he was unable to govern as Congress pursued liberal priorities, including a big boost in taxes and spending. Recall Roberta Achtenberg as the scourge of the Boy Scouts and Joycelyn Elders calling for the legalization of drugs? Mr. Clinton chose -- or was forced -- to take up gun control and HillaryCare before welfare reform. Next came Newt Gingrich.

Maybe Mr. Obama has absorbed these lessons, but even if he has he'll have to be tough. The Great Society liberals who dominate Congress are old men in a hurry, and they'll run over the 47-year-old neophyte if he lets them.

[G M]

**The start of the great Obama-depression. Watch capital flee his "soak the rich" socialism!**

http://in.reuters.com/article/usMktRpt/idINN0531971420081105

RPT-FACTBOX-U.S. stocks on the day after presidential elections
Thu Nov 6, 2008 3:25am IST
 

 NEW YORK, Nov 5 (Reuters) - Wall Street hardly delivered a
rousing welcome to President-elect Barack Obama on Wednesday,
dropping by the largest margin on record for a day following a U.S.
presidential contest.
 The slide more than wiped out the previous day's advance, the
largest Election Day rally ever for U.S. stocks.
 The following table shows the percentage rise or decline in the
Dow Jones industrial average .DJI, Standard & Poor's 500 index
.SPX and Nasdaq composite index .IXIC on the day after a U.S
presidential election and who won the Election Day vote.
Year   Dow    S&P    Nasdaq  President elect
2008  -5.05  -5.27   -5.53   Barack Obama
2004  +1.01  +1.12   +0.98   George W. Bush
2000  -0.41  -1.58   -5.39   No decision: G.W. Bush v Al Gore*
1996  +1.59  +1.46   +1.34   William Clinton
1992  -0.91  -0.67   +0.16   William Clinton
1988  -0.43  -0.66   -0.29   George H. W. Bush
1984  -0.88  -0.73   -0.32   Ronald Reagan
1980  +1.70  +1.77   +1.49   Ronald Reagan
1976  -0.99  -1.14   -1.12   James Carter
1972  -0.11  -0.55   -0.39   Richard Nixon
1968  +0.34  +0.16    ---    Richard Nixon
1964  -0.19  -0.05    ---    Lyndon Johnson
1960  +0.77  +0.44    ---    John Kennedy
1956  -0.85  -1.03    ---    Dwight Eisenhower
1952  +0.40  +0.28    ---    Dwight Eisenhower
1948  -3.85  -4.15    ---    Harry Truman
1944  -0.27   0.00    ---    Franklin Roosevelt
1940  -2.39  -3.14    ---    Franklin Roosevelt
1936  +2.26  +1.40    ---    Franklin Roosevelt
1932  -4.51  -2.67    ---    Franklin Roosevelt
1928  +1.20  +1.77    ---    Herbert Hoover
1924  +1.17   ---     ---    Calvin Coolidge
1920  -0.57   ---     ---    Warren Harding
1916  -0.35   ---     ---    Woodrow Wilson
1912  +1.83   ---     ---    Woodrow Wilson
1908  +2.38   ---     ---    William Taft
1904  +1.30   ---     ---    Theodore Roosevelt
1900  +3.33   ---     ---    William McKinley
1896  +4.54   ---     ---    William McKinley
* George W. Bush ultimately was determined the winner of the 2000
election.
Source: Reuters EcoWin

[G M]

**It won't be long before that big glass of "Hopeandchange" flavored kool-aid starts tasting pretty bitter to the American public.**

http://www.bloomberg.com/apps/news?pid=20601087&sid=aj_ayFUP0riQ&refer=worldwide

U.S. Stocks Post Biggest Post-Election Drop on Economic Concern
By Elizabeth Stanton



Nov. 5 (Bloomberg) -- The stock market posted its biggest plunge following a presidential election as reports on jobs and service industries stoked concern the economy will worsen even as President-elect Barack Obama tries to stimulate growth.

Citigroup Inc. tumbled 14 percent and Bank of America Corp. lost 11 percent as the Standard & Poor's 500 Index and Dow Jones Industrial Average sank more than 5 percent. Nucor Corp., the largest U.S.-based steel producer, slid 10 percent after bigger rival ArcelorMittal doubled production cuts amid slowing demand. Boeing Co., the world's second-largest commercial planemaker, lost 6.9 percent after UBS AG forecast a 3 percent drop in global air traffic next year.

``We had an election yesterday; that doesn't mean the problems go away,'' said Kevin Rendino, a Plainsboro, New Jersey- based money manager at BlackRock Inc. who oversees $10 billion. ``We still have an economic slowdown.''

The S&P 500 tumbled 52.98 points, or 5.3 percent, to 952.77, erasing yesterday's 4.1 percent rally. The Dow retreated 486.01, or 5.1 percent, to 9,139.27. The Russell 2000 Index of small U.S. companies fell 5.7 percent to 514.64. The MSCI World Index of 23 developed markets decreased 2.5 percent to 982.98.

The slide halted an 18 percent rebound from the S&P 500's five-year low on Oct. 27. The benchmark for U.S. equities has lost more than 35 percent this year, the steepest annual plunge since 1937, and Obama will have to contend with an economy pummeled by the fastest contraction in manufacturing in 26 years and the lowest consumer confidence.

Biggest Rally Erased

The market's decline came a day after the biggest presidential Election Day gain since the New York Stock Exchange first opened for trading on a voting day in 1984.

The report by ADP Employer Services showed companies cut 157,000 jobs in October, the most since November 2002 when the U.S. was emerging from a recession. The Institute for Supply Management said service industries in the U.S., which make up 90 percent of the economy, contracted by the most on record.

About 1.3 billion shares changed hands on the NYSE, 11 percent less than the three-month daily average.

Citigroup lost $2.05 to $12.63 and Bank of America plunged $2.78 to $21.75. The S&P 500 Financials Index sank 8.8 percent after extending declines late in the day following Oppenheimer & Co. analyst Meredith Whitney's prediction on CNBC that the mortgage market will contract and more than $2 trillion in available credit-card lines will be pulled from the system.

Whitney also said potential loan modifications under an Obama administration will hurt banks and diminish their appetite for risk.

$6 Trillion Lost

The S&P 500 has lost about 39 percent since it peaked at 1,565.15 on Oct. 9, 2007, as the U.S. economy contracted 0.3 percent last quarter and credit-related losses and writedowns by global financial firms approached $700 billion. More than $6 trillion was erased from U.S. equities this year by the worst financial crisis since the Great Depression.

Nucor sank $4.16 to $35.50. Luxembourg-based ArcelorMittal reported third-quarter profit that fell short of analyst estimates, said its global output will drop by more than 30 percent, and forecast fourth-quarter earnings will fall as much as 48 percent. The company's New York-registered shares slumped 22 percent to $24.88, their biggest retreat in seven years.

Boeing fell $3.67 to $49.55. Its share price, which rose 28 percent from Oct. 10 through yesterday, ``is at least six to nine months from bottoming and beginning to mover higher again,'' David E. Strauss, a New York-based analyst at UBS, wrote in a report. Aircraft deliveries may tumble 29 percent from 2009 to 2012, the analyst said.

`Continued Softening'

Textron Inc. lost $1.71, or 9.2 percent, to $16.93. The world's biggest business-jet maker through its Cessna unit reduced the number of Citation jets it plans to deliver next year, citing ``continued softening in the global economic environment.''

Stocks extended their retreat even as Nancy Pelosi, Speaker of the House of Representatives, said Democrats may seek two economic stimulus measures if President George W. Bush limits the size of a plan to be considered during the post-election ``lame- duck'' session. Obama's party captured at least 19 seats in the House and at least five in the Senate, expanding its congressional majority.

General Growth Properties Inc. tumbled almost 50 percent to $2.25 for the biggest drop in the S&P 500. The U.S. mall owner that has lost more than 90 percent of its market value on concern it won't be able to refinance debt coming due this year reported a wider third-quarter loss and suspended its quarterly dividend.

Bond Insurers

MBIA Inc. and Ambac Financial Group Inc. slumped after the bond insurers posted wider losses than analysts estimated. MBI fell 22 percent to $8.16. Ambac, dropped from the S&P 500 in June, fell 41 percent to $2.01. Slumping credit markets forced the companies to increase reserves for claims.

Pioneer Natural Resources lost 15 percent to $24.79. The oil and natural-gas producer in North America and Africa reported third-quarter earnings that missed analyst estimates and said it will cut drilling activity.

Sara Lee Corp. slid 14 percent to $10.20. The maker of frozen cakes and Jimmy Dean sausages said full-year profit will be less than it previously estimated because of falling foreign currencies and waning demand in Europe.

Marsh & McLennan Cos. fell 12 percent to $26.06. The world's second-biggest insurance broker said profit dropped 78 percent in the third quarter amid the slowing U.S. economy and price declines for commercial coverage and reinsurance.

Earnings Season

Most companies in the S&P 500 have managed to increase profits even as the economy slows. Of the 386 companies that reported third-quarter results so far, 232 posted higher earnings than in the year-earlier period. Still, profits are down 7.4 percent on average after accounting for losses at financial companies.

Medco Health Solutions Inc. climbed 9.1 percent to $41.47 for the biggest of only 13 advances in the S&P 500. A surge in use of generic and mail-order prescription drugs fueled a 38 percent increase in third-quarter profit at the largest U.S. drug benefits manager.

Molson Coors Brewing Co. gained 8.3 percent to $41.78. The third-largest U.S. beer maker reported market-share gains in Canada and the U.K. and said it expects to achieve total cost savings from its joint U.S. venture with SABMiller Plc six months early.

Chesapeake Energy Corp. climbed 8.2 percent to $24.83 on speculation it will be acquired by BP Plc.

General Motors Corp. slipped 16 cents, or 2.8 percent, to $5.56. GM, the biggest U.S. automaker, needs government aid because ``time is very short'' to stop its collapse, Roger Altman, an adviser to the automaker and Obama, said in an interview.

Recession Rallies

The S&P 500 Index may be on the cusp of a rally by Inauguration Day, based on the speed of its tumble from last year's peak and the time it took stocks to gain before recessions ended in 1975, 1982 and 1991, data compiled by Bloomberg show. This year's plunge in stocks suggests that equity investors anticipate an economic contraction as severe as the one that began under Richard Nixon that will end in July.

The S&P 500's slump since last year's high is the steepest for a comparable period since the gauge fell 43 percent in the 13 months ended in October 1974, Bloomberg data show.

1970s Recession

The economy then was mired in a recession that lasted 16 months and ended in March 1975, five months after the equity market began its rebound. During the recessions of 1982 and 1991, the S&P 500 began to climb four months and five months before the economy started to recover, respectively.

Based on the market's history of anticipating economic recoveries, the S&P 500 may embark on its next bull market in February, about a month after Obama's inauguration on Jan. 20.

Stocks gained yesterday after the 17th straight decline in a key interest rate, a sign that as much as $3 trillion of emergency funds provided by governments to resuscitate bank lending are working. The London interbank offered rate, or Libor, that banks charge each other for three month loans in dollars fell again today to the lowest level since December 2004.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.

Last Updated: November 5, 2008 20:19

[G M]

**If Barry-O was smart, he'd resign right now. He made history, now put someone who isn't a socialist novelty act in charge.**

http://biz.yahoo.com/ap/081106/wall_street.html

AP
Stocks extend decline as economic woes mount
Thursday November 6, 10:52 am ET
By Tim Paradis, AP Business Writer
Wall Street extends decline as jobless claims, retailers' sales fan recession worries

NEW YORK (AP) -- Wall Street recoiled again Thursday, sending stocks lower for a second straight day as new readings on retail sales and jobless claims fanned investors' worries that the economy is in recession.
 
New claims for unemployment benefits did dip by 4,000 to a seasonally adjusted level of 481,000, according to the Labor Department. But jobless claims above 400,000 are considered recessionary levels, and have run above that figure for 16 weeks. Also, long-term claims jumped to 3.84 million, the highest level in 25 years. The numbers arrive a day ahead of the key October jobs report, a widely watched barometer of the economy's health.

Meanwhile, retailers are releasing October sales figures that indicate consumers are pulling back their spending sharply. Wal-Mart Stores Inc. reported a better-than-expected 2.4 percent rise in October sales at stores open for at least a year, but investors are worried about other specialty retailers; Limited Brands Inc. and Gap Inc., for example, posted worse-than-expected sales drops.

In midmorning trading, the Dow Jones industrial average fell 169.17, or 1.85 percent, to 8,970.10.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 20.54, or 2.16 percent, to 932.23, and the Nasdaq composite index fell 35.82, or 2.13 percent, to 1,645.82.

Stocks appeared to draw some support following interest rate cuts by central banks in Europe. The Bank of England slashed its key interest rate by a bold 1.5 percentage points Thursday; the Swiss Central Bank cut its own key rate by a surprising half-point; and the European Central Bank lowered its key rate by a half-point.

On Wednesday, Wall Street plunged as investors considered once again how deep and protracted a U.S. recession President-elect Barack Obama will face in January when he is sworn in. After a string of huge gains in stocks, jitters returned to the market, driving the Dow down nearly 500 points. All three major indexes dropped more than 5 percent.

A late Wednesday warning by Cisco Systems Inc. added to investors' nervousness and weighed on the technology-heavy Nasdaq. The world's largest maker of computer networking gear said orders fell off sharply last month, suggesting to the market that the weak economy and tight credit markets are taking a larger-than-expected toll on many companies. Cisco fell 49 cents, or 2.8 percent, to $16.90.

And in other troubling corporate news, Japanese automaker Toyota Motor Corp. reduced its annual earnings forecast Thursday to less than a third of what it was in previous fiscal year. Toyota tumbled $12.65, or 15.7 percent, to $67.72.

The dollar traded mixed against most other major currencies, while gold prices rose.

Light, sweet crude fell $4.27 to $61.03 a barrel on the New York Mercantile Exchange.

Bank-to-bank lending rates fell for the 19th straight day, a sign that banks are becoming more willing to lend. The London Interbank Offered Rate, or Libor, for three-month dollar loans dipped to 2.39 percent from 2.51 percent.

The three-month Treasury bill, considered the ultimate safe asset, saw its yield dip further to 0.38 percent from 0.42 percent late Wednesday. In general, a lower yield means higher demand, but it is also affected by the federal funds rate.

In Asian trading, Japan's Nikkei index fell 6.53 percent, and Hong Kong's Hang Seng Index fell 7.08 percent. In afternoon trading in Europe, Britain's FTSE 100 fell 3.22 percent, Germany's DAX index fell 5.01 percent, and France's CAC-40 fell 3.73 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

[G M]

**Impeach Obama, before it's too late!**

http://www.breitbart.com/article.php?id=081106082217.v53hc2v7&show_article=1

Stocks slide, Toyota warns of 'unprecedented' crisis   

Nov 6 04:22 AM US/Eastern

Stocks Fall As Investors Ponder Obama Presidency

Asia Shares Slide, Toyota Hit

   Toyota Motor slashed its profit forecast Thursday, warning the global auto industry faces an "unprecedented" crisis as Asian stocks tumbled on fears the US is sinking deeper towards recession.
The Japanese giant became the latest automaker to reveal plunging profits due to the financial crisis, following on the heels of BMW, Nissan and Honda.

Toyota , vying with General Motors for the title of the world's top automaker, cut its annual profit forecast by more than half after a terrible year so far.

It now expects a 68 percent plunge in net profit to 550 billion yen (5.6 billion dollars) -- the first drop in nine years.

"The financial crisis is negatively impacting the real economy worldwide, and the automotive markets, especially in developed countries, are contracting rapidly," Toyota executive vice president Mitsuo Kinoshita said.

"This is an unprecedented situation."

Elsewhere in the transport sector, European aircraft manufacturer Airbus warned it expects a sharp reduction in new orders in 2009 as the global economy slows.


Amid the gloomy news, Asian stock markets fell heavily. Japan's Nikkei stock index plunged 6.53 percent even before the Toyota warning, which came after the close of trade.

The drop wiped out gains seen a day earlier on hopes that US president-elect Barack Obama will get to work on fixing the world's largest economy in the face of the worst financial crisis in decades.

"Now that the event is over, investors are sobering up and looking at the economic gloom," said Mizuho Investors Securities broker Masatoshi Sato.

Seoul ended with a loss of 7.6 percent while Sydney shed 4.3 percent. Hong Kong shares were down 6.4 percent at midday.

The sharp falls came after the Dow Jones index slid 5.05 percent on Wall Street on Wednesday as investors braced for a gloomy economic ride after the euphoria of Obama's election victory faded.

"Dismal macroeconomic data and poor corporate results reminded investors that we are only at the start of a deep recession," Dariusz Kowalczyk, chief investment strategist at CFC Seymour in Hong Kong, wrote in a note.

The euro dropped to 1.2854 dollars in Tokyo afternoon trade, down from 1.2962 late Wednesday in New York. The dollar fell to 97.70 yen from 98.33.


Investors were anticipating further cuts to interest rates on Thursday by both the Bank of England (BoE) and the European Central Bank amid fears of recessions in Europe's biggest economies.

Some economists are even forecasting the BoE would follow up last month's emergency half-point reduction to 4.50 percent with a cut of 100 basis points.

In Japan, the lower house of parliament approved a plan to inject capital into ailing banks if needed to contain the fallout from the financial crisis.

Markets were also looking ahead to crisis talks on the global financial turmoil in Washington on November 15 between leaders of the Group of 20 rich countries and major developing economies.

Leaders will likely agree on an "action plan" including near-term steps to help fix the global economy, a senior US official said Wednesday.


As efforts to contain the financial crisis continued, the International Monetary Fund approved a 16.4 billion dollar loan aimed at rescuing Ukraine .

Europe's biggest economy, Germany , approved a stimulus package costing 23 billion euros (30 billion dollars) to pump up the ailing economy.

In the US, fresh data added to the gloom over the economic outlook. A report by the Institute for Supply Management showed activity in the services sector shrank more sharply than anticipated in October.

A survey showing the US private sector shed 157,000 jobs in October added to worries ahead of official figures due Friday that are expected to show a rise in the jobless rate from a five-year high of 6.1 percent in September.

[G M]

**Russia, not cutting a break to our woefully unready president-elect.**

http://formerspook.blogspot.com/

About that Test...

While President-elect Obama basks in the glow of his electoral victory, our adversaries are apparently working on that "test" that Joe Biden talked about.

Just hours after Mr. Obama president-elect, Russia announced that it will base surface-to-surface missiles within range of our planned missile defense site in Poland.

According to Russian President Dimitry Medvedev, Moscow will deploy short-range SS-26 Iskander missiles in the Kaliningrad region to "neutralize" the planned missile defense system. He also stated that Russia plans to jam a radar located in the Czech Republic, used to detect in-bound missiles and guide the Polish-based interceptors.

With a range of at least 400 km, Iskander missiles based in Kaliningrad would be able to target the defensive site in Poland. The proposed deployment is the most serious challenge to U.S. plans to base missile defenses in eastern Europe. Washington has stated (repeatedly) that the defensive shield is designed to protect the continent from missiles launched from rogue states, such as Iran. Moscow rejects that argument, claiming that the system is actually aimed at Russia.

While Moscow has long opposed U.S. missile defenses in Europe, the timing of today's announcement is no accident. Mr. Medvedev and his political puppet master, Vladimir Putin, are quite aware of yesterday's election results in the United States. With the departure of George Bush, who championed the deployment, the Russians are mounting a challenge to his successor, who is opposed to "unproven" missile defense systems.

In some respects, the SS-26 movement to Kaliningrad is the first "shot across the bow" of the incoming administration. Moscow is waiting to see if Obama has "steel in his spine," and will stand up to a deliberate Russian provocation. So are our eastern European allies, who wonder if the new president will stand with them against the Russian bear.

***
On a related note, Iran is warning the U.S. "not to violate its airspace." Get ready for that 3 a.m phone call.

[G M]

http://hotair.com/archives/2008/11/06/russia-has-some-change-ready-for-obama/

Get ready for the changes under Obama:

America will change from being rich. America will change from being a superpower. Chug that kool-aid, Hopeandchangers!

[Crafty_Dog]

GM:

This is some important stuff.  Would you please start posting these matters on the Russia-US thread?

Thank you,
Marc

[G M]

http://www.usnews.com/blogs/capital-commerce/2008/11/6/the-obama-stock-market-correction-2.html

The Obama Stock Market Correction
November 06, 2008 05:40 PM ET | James Pethokoukis

Since Election Day, the stock market, as measured by the S&P 500, is down a smidgen over 10 percent. That's what we call a "correction."  Of course, the decline is really part of a broader bear market which has seen the S&P 500 fall some 42 percent. Hey, Obama already warned us that it's going to be "a long road and a steep climb." Maybe if we doubled/tripled/quadrupled/quintupled that big stimulus package ...  What I really wonder is what stocks would be doing if we lowered the capital gains tax rate to zero ...

**Impeach Obama in '08, before it's too late!**

[G M]

http://www.bloomberg.com/apps/news?pid=20601087&sid=a9Oq499c._cA&refer=worldwide

U.S. Stocks Tumble in Market's Worst Two-Day Slump Since 1987
By Lynn Thomasson

Nov. 6 (Bloomberg) -- U.S. stocks slid, sending the market to its biggest two-day slump since 1987, after jobless claims jumped and the shrinking economy crushed earnings at companies from Blackstone Group Inc. to News Corp.

Blackstone, the largest private-equity firm, fell 12 percent after posting the biggest quarterly loss in its 18 months as a public company. News Corp. sank 16 percent after the media company controlled by Rupert Murdoch said ad sales decreased. Chevron Corp. fell 6.4 percent as oil tumbled to a 19-month low, while an unexpected decrease in chain-store sales dragged down 25 of 27 shares in the S&P 500 Retailing Index.

``We're a long way from the end of the economic challenges,'' said Mike Morcos, who helps manage $1 billion at Old Second Wealth Management in Aurora, Illinois. ``Earnings next year are going to be significantly lower and estimates are going to continue to come down.''

The Standard & Poor's 500 Index fell 5 percent to 904.88, extending its two-day loss to 10 percent. The Dow Jones Industrial Average retreated 443.48 points, or 4.9 percent, to 8,695.79. The Russell 2000 Index of small U.S. companies declined 3.7 percent to 495.84. The MSCI World Index of 23 developed markets lost 5.9 percent to 925.09.

The two-day tumble following Election Day wiped out more than half of the market's rebound from a five-year low on Oct. 27. Both the S&P 500 and Dow average posted their biggest two-day slides since plunging more than 24 percent as rising borrowing costs helped spur the market crash of October 1987.

Europe Slides

BP Plc led a 5.6 percent retreat in Europe's benchmark index even after the Bank of England unexpectedly cut its benchmark interest rate by 1.5 percentage points to 3 percent to contain damage from a recession. Switzerland's central bank and the European Central Bank reduced their main lending rates by 50 basis points.

The S&P 500 is down 38 percent this year, poised for the steepest annual retreat since 1937. The benchmark for U.S. equities has plunged 42 percent since its record in October 2007 after the U.S. economy shrunk in two of the last four quarters.

The VIX, as the Chicago Board Options Exchange Volatility Index is known, climbed 17 percent to 63.68. The measure tracks the cost of using options as insurance against declines in the S&P 500.

``It's just been a steady, steady sell,'' said Alan Gayle, the Richmond, Virginia-based senior strategist at Ridgeworth Investments, which oversees about $70 billion. ``The pain and frustration and anxiety of these volatile moves from one day to the next has discouraged a lot of investors to move to the sidelines.''

Lost Jobs

About 481,000 workers filed initial jobless claims last week, the Labor Department said today in Washington, exceeding the 477,000 projected by economists surveyed by Bloomberg News. The number of people staying on benefit rolls was the most since February 1983.

A report tomorrow will probably show U.S. employers eliminated jobs in October for a 10th consecutive month, based on economists' estimates.

Earnings at companies in the S&P 500 that have reported third-quarter results fell 9.2 percent on average, Bloomberg data show. Analysts expect full-year profits to drop 7.7 percent, according to a compilation of analysts' estimates.

S&P 500 energy companies lost 6.1 percent as a group, as oil declined for the third time this week. Crude for December delivery retreated 6.9 percent to $60.77 a barrel, the lowest settlement since March 2007.

Exxon Mobil, the world's largest oil company, tumbled $3.73 to $69.96, while Chevron Corp. slid 6.4 percent to $70.11.

Tech Slump

Cisco Systems Inc. declined 2.6 percent to $16.94. The biggest maker of networking equipment forecast the first revenue drop in five years because of the financial crisis.

Advanced Micro Devices Inc. tumbled 11 percent to $3.17. The second-largest maker of personal-computer processors plans to cut 500 jobs, about 3 percent of the workforce, as part of its effort to return to profitability.

Technology companies in the S&P 500 lost 5.4 percent collectively. Dell Inc., Intel Corp. and Hewlett-Packard Co. fell more than 5 percent.

Amazon.com Inc. sank 9.2 percent to $47.22. The largest Internet retailer was cut to ``hold'' from ``buy'' at Citigroup Inc., which noted the shares' surge of as much as 36 percent since third-quarter results and concerns consumer spending will slow.

GM's Survival

General Motors Corp. had the steepest decline in almost a month, tumbling 14 percent to $4.80. The largest U.S. automaker is focused on winning government aid to survive through 2009, not to help a merger with Chrysler LLC, as it uses cash faster than it forecast, people familiar with the plans said. GM plans to give an update on liquidity when it reports third-quarter results tomorrow.

Tyco Electronics Ltd. fell the most in more than a year, slumping 12 percent to $16.78. Fiscal fourth-quarter profit slid 55 percent on restructuring costs and the company forecast a ``significant'' drop in sales and earnings this period.

News Corp.'s Class A shares tumbled $1.53 to $8.26. Fiscal 2009 profit will drop in the ``low to mid teens'' in percentage terms, the company said after previously forecasting a gain of 4 percent to 6 percent.

Financial stocks in the S&P 500 fell 6.7 percent as a group, led lower by Bank of America Corp. and Wells Fargo & Co. The group is down 52 percent in 2008 as the slowing economy raises concern banks will be hit by more bad loans after the subprime mortgage market's collapse led to $690 billion in credit losses worldwide.

Blackstone's Loss

Blackstone tumbled $1.05 to $7.55 after the financial crisis eroded the value of the businesses and real estate it has acquired, triggering a quarterly loss excluding items of $502.5 million. Blackstone had been expected to break even, based on the average estimate of seven analysts in a Bloomberg survey.

Wells Fargo declined 9.2 percent to $28.77 after the biggest bank on the U.S. West Coast said it plans to sell stock to fund the purchase of Wachovia Corp. The bank also said losses from the acquisition will be less than previously expected.

The bank, which disclosed the share offering yesterday in a statement, had said it would raise as much as $20 billion to fund the deal. That was before the Treasury said it was buying $25 billion of Wells Fargo's preferred shares.

Libor Declines

The slump in financials came even as the London interbank offered rate, or Libor, for three-month loans in dollars dropped 12 basis points to 2.39 percent today, the lowest level since November 2004, according to the British Bankers' Association.

Las Vegas Sands Corp., billionaire Sheldon Adelson's casino company, posted the biggest drop since becoming a publicly traded company with a 33 percent plunge to $7.85 after saying it may default on debt and face bankruptcy.

Big Lots Inc. plunged 26 percent to $17.31 for the steepest decline in the S&P 500. The largest U.S. seller of overstocked and discontinued items said third-quarter profit may be below its prediction.

October same-store sales fell 0.9 percent at U.S. chain stores, the first drop in seven months, and declined 4.2 percent excluding Wal-Mart, the International Council of Shopping Centers said. Economists surveyed by Bloomberg had projected a 0.7 percent increase.

Excluding the effect of the shifting Easter holiday, it's the first decline since at least 2000, according to research firm Retail Metrics LLC.

Grocers Gain

Whole Foods Market Inc. climbed 1.7 percent to $10.48. The largest U.S. natural-foods grocer received a $425 million equity investment from Leonard Green & Partners LP.

Kroger Co., the biggest U.S. supermarket chain, added 1.1 percent to $26.99. Safeway Inc., the third-largest, rose 2 percent to $22.03.

Analysts are lowering fourth quarter and 2009 profit forecasts for U.S. companies as third-period results miss projections at the highest rate in almost 11 years.

Companies in the S&P 500 may see fourth-quarter earnings advance 15 percent, down from 42 percent projected at the end of August, according to a Bloomberg survey of analysts. Profits in 2009 may grow 13 percent, analysts say, compared with the 24 percent predicted two months ago.

To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.

Last Updated: November 6, 2008 17:04 EST

[G M]

http://news.aol.com/political-machine/2008/10/24/obama-dems-seek-to-end-401-k-plans/

Obama, Dems Seek to End 401(k) Plans
By Mark Impomeni
Oct 24th 2008 9:00AM
Filed Under:eDemocrats, Barack Obama, 2008 President

Sen. Barack Obama's Democratic allies in Congress are looking into a radical new plan that would fundamentally change the way Americans save for retirement. House Democrats recently heard testimony on the idea and, under a potential Obama administration, would likely move to put it in place. Democrats want to seize the money that workers currently invest in their 401(k) plans and replace the popular retirement savings accounts with a one-size-fits-all government sponsored retirement account. Under the scheme, Americans would be forced to transfer all of their hard earned retirement savings from their 401(k) to the government.

The government would contribute $600 a year to fund each account and would pay a rate of return of around three percent in interest. The government would also mandate that each worker contribute 5% of their yearly salary to the accounts. Under current law, workers with 401(k) plans contribute to their retirement accounts and earn interest tax free. The Democrats' plan would end those tax breaks, amounting to as much as a 15% tax hike on each American worker.

Rep. Jim McDermott (D-WA) said recently that Democrats had better ideas for the $80 billion that Americans contribute to their 401(k) plans each year. "We have to start thinking about whether or not we want to continue to invest that $80 billion for a policy that's not doing what we say it should." Sen. Obama would likely sign on to the plan as president.

Obama, McDermott, and Congressional Democrats miss the point that under current law, Americans have control over their retirement savings, where and how it is invested, and when and how much they contribute. The idea to nationalize retirement savings is another example of Democrats' socialist proclivities. They want control of Americans' retirement to reside in Washington DC, not on Main St., all in the name of "retirement security."

[G M]

http://apnews.myway.com/article/20081107/D949OQU00.html

States consider billions in cuts as deficits widen


Nov 6, 7:32 PM (ET)

By JULIET WILLIAMS
 
SACRAMENTO, Calif. (AP) - The nation's economic meltdown is taking state budgets down with it - especially in California, where Gov. Arnold Schwarzenegger said Thursday he wants to close a $11.2 billion gap in part by raising sales taxes on everything from cars to Disneyland tickets.
Several other states are confronting billion-dollar deficits. Some, including Massachusetts, North Carolina and Wisconsin, have ordered broad and deep cuts in spending, while others have only begun to consider how to compensate for their revenue wells drying up.
Schwarzenegger wants $4.5 billion in cuts; one of his proposals would force state employees to take a day off each month without pay and give up two holidays. But he says cuts alone aren't enough to deal with a steep drop in revenue, and he proposes $4.7 billion in tax hikes, including a three-year, 1.5-percentage-point increase in the sales tax.
"We have a dramatic situation here and it takes dramatic solutions ... and immediate action," Schwarzenegger said as he called the Legislature back into session to deal with the shortfall. "We must stop the bleeding."
California's bleak new projections come just six weeks after Schwarzenegger signed this year's budget, which made $7.1 billion in cuts to services to help close a $15.2 billion deficit.
"I'm not a believer in taxes, I'm not a believer of increasing fees. It's just under these circumstances it's necessary to do," Schwarzenegger said.
California relies heavily on capital gains taxes, which have plunged along with the stock market. Sales taxes also have plummeted as consumers have cut off nonessential spending. And California is among the states hardest hit by falling housing prices.
The state controller issued a statement saying California runs "the very real risk" of a severe cash shortage by the end of the year and may have to resort to borrowing so it can balance its books. Its deficit is now 11 percent of general fund spending and could double by next fiscal year if not addressed immediately, the controller said.
The shortfall in Arizona is even worse, on a percentage basis, than California's. Gov. Janet Napolitano on Thursday said the state's deficit had grown to an estimated $1.2 billion, or 12 percent of general fund spending, forcing lawmakers into a likely special session by the end of the year.
The deficit in Washington state is projected at $3.2 billion, but could grow by the time officials get an update later this month.
Nevada Gov. Jim Gibbons and the Legislature have cut spending by $1.2 billion because of declining tax revenue, but Gibbons warned lawmakers they might have to cut another 14 percent when they go into session in February.
Wisconsin's governor has ordered state agencies to trim 10 percent to cover a $3 billion hole over two years, while North Carolina's governor has ordered several departments to make do with 5 percent less. Massachusetts Gov. Deval Patrick announced last month that the state would eliminate up to 1,000 jobs and make more than $1 billion in cuts and spending controls to bridge a growing budget gap.
New York Gov. David Paterson last week asked Congress for as much as $8.6 billion from an economic stimulus measure Democrats are considering. He already has called a special session for later this month to tackle a $1.5 billion deficit for the fiscal year that ends in April and warned that New York's deficit could hit $47 billion by 2012.
California's crisis has brought a change in rhetoric from Schwarzenegger. Since taking office in 2003, he has blamed "autopilot spending" by the Legislature whenever California has confronted fiscal woes, but on Thursday he said, "It is now a revenue problem rather than a spending problem."
His proposed sales-tax increase would apply to items as varied as cars and amusement park and sporting game tickets. For the first time, the sales tax also would be applied to services such as vehicle, appliance and furniture repairs, veterinarian services and even greens fees for playing golf. Taxes on alcohol also would increase.
The sales tax plan met immediate opposition from some in the business community. Peter Welch, president of the California New Car Dealers Association, said raising vehicle prices by hundreds of dollars is the last thing his faltering industry needs.
"The fact of the matter is we are in an historic car recession (that's) bordering on a depression," he said. "We actually think we need an economic stimulus package to get people to come in and buy cars. This is just the opposite."
Other revenue could come from raising the registration fee for vehicles by $12 and taxing companies that extract oil from California, which Schwarzenegger said would generate $528 million this year.
The governor also wants to accelerate hundreds of millions of dollars in public works spending to spark job creation. At the same, the newly unemployed would struggle more under his plan. He wants to tighten eligibility for unemployment benefits because the state's unemployment insurance fund is on the brink of insolvency.
---
Associated Press Writers Judy Lin and Steve Lawrence contributed to this report.

[JDN]

GM; I live in CA.  It truly is a problem and what the article says is true.  For me it's simple; I spend less or I try to make more.
I believe in a balanced budget, plus a little surplus (savings).  But for the State it is more difficult I suppose. 
Good article, but do you have a comment?

[G M]

We're just starting to see the start of the great Obama-depression. "Soak the rich" socialism is going to kill off our already damaged economy. Capital is fleeing, and as the dems try to grasp all the money they can for their "New Deal II", it'll drag us to the bottom.

Meanwhile, the world's hotspots will burst into flame.

[Crafty_Dog]

If I have my datum correct, spending has increased over 40% under Gov P-whipped.

My wife just mentioned this to me a little while ago, and this article is the first I have read on it.  Something like this (imposing sales tax on my teaching income) could be the straw that breaks the camel's back and drives us out of CA.

[JDN]

I understand; other than my "day job" I do a lot of photography.  Recently, if I do a photo shoot, and if I obey the law you are charged sales tax for the prints (fair) AND sales tax for my shooting time.
It used to be services were not taxed.

That being said, GM's article pointed out and you know there is a problem in CA.  I doubt if simply lowering taxes will solve the problem. Nor will raising taxes please very many people.
And cutting services is difficult; but something needs to be done or even CA (great weather; I bet you stay here   ) is going to have problem.  My point; it is not easy to please all the people
and grow as a state.  CA is lucky, it has fabulous weather, beaches, mountains, etc. to attract people, but still...

Any comments as to the solution?

[G M]

The plan that would work on the state and national level:

1. Cut taxes. Just as California's taxes and over-regulation has been chasing business to other states, the dems plan to do on a massive level nationally. Just look at California as the dem's test track. Like what you see? Just wait.

2. Cut government spending. No deficits. This means all the wonderful, touchy-feely programs the dems love to burn other people's money on have to go. Just do the core gov't services that are actually mandated by law. Roads, bridges, fire, law enforcement, EMS. Liberals want free health care for the poor? Create non-profits and fund them out of your own pockets. You''l get more bang for your buck anyway.

3. Return to a culture of self-reliance. Like or not, we are broke. "New Deal II" will only make it worse, and won't work anyway. We are responsible for ourselves, and gov't can't and won't be there as the "good mommy" the dems love to imagine. Very bleak times await us. Grird up and brace for impact.

[JDN]

I understand and basically agree, I like the idea of no deficits.  I live within my means and avoid debt. 

But, fire, law enforcement, prison guards, county and state employees, teachers, etc.
all want a big raise. And some of them make big bucks.  AND some of them have powerful unions. 
Fair?  I don't know, but the money has to come from someplace.

And people (voters) like their services.  Even "touchy-feely" although I agree many are a joke and definitely not necessary.

My point, it's not that easy.  And lowering taxes "may" retain business, but CA is lucky, it has a lot else to offer.  Other states do not.
The rust belt might die.

It's easy to lower taxes.  Everyone is in favor of that!  But no deficit, well that is another story....

[Crafty_Dog]

I too think GM has it right.

Gov. P-whipped has done the opposite what he promised to do to get elected.  No spending cuts- instead MASSIVE increases.  If he simply had frozen spending we would be fine right now.  Instead Gov. Global Warming has been galvanting around sucking up and selling out to his wife's friends and family.

Tom McClintock was very good and very knowledgeable on these issues when he was in the State Legislature.  He just ran for US Congress.  Does anyone know if he won?

Changing subjects, BO does not have to be a Clusterfcuk , , ,
-------------

If Barack Obama ran for president by calling for a heavier hand of government, he also won by running one of the most entrepreneurial campaigns in history.

Will he now grasp the lesson his campaign offers as he crafts policies aimed at reigniting the national economy? Amid a recession, two wars, and a global financial crisis, will he come to see that unleashing the entrepreneur is the best way to raise the revenue he needs for his lofty priorities?

Like every entrepreneur, Mr. Obama's rise was improbable. An unusually-named, African-American first-term senator defeated two of the most powerful incumbent political brands, the Clintons and John McCain. Like many upstarts, he won by changing the rules of the game.

Mr. Obama, following FDR's mastery of radio and JFK's success on TV, is the first candidate to fully exploit the Web. The community organizer seemed to realize that new social networking and video technologies were perfect for politics. It didn't hurt that Facebook co-founder Chris Hughes worked for the campaign. "What ultimately transformed the presidential race," Joshua Green of The Atlantic wrote in June, "was not the money that poured in from Silicon Valley but the technology and the ethos."

The results of Mr. Obama's decentralized Web effort were staggering: 8,000 Web-based affinity groups, 50,000 local events, 1.5 million Web volunteers, and 3.1 million donors who contributed almost $700 million. Republicans, Charlie Cook reported on Nov. 3, believe their large but impersonal centralized databases could not match the tacit knowledge, individual initiative and agility of Mr. Obama's diffuse social networks.

Such creativity could bubble up because Mr. Obama was stable at the top. Not just anyone could recruit an army of volunteers and let them run free, establishing their own networks, offices and events. Because Mr. McCain lurched from one message and tactic to the next with dramatic frequency, his supporters froze. They spent more time defending or deciphering his shifting policies and tactics than they did organizing and persuading. Mr. Obama's even temper and relentlessly consistent message, on the other hand, encouraged supporters to take risks without the worry of being blindsided.

The key question now is how will Mr. Obama govern? Will he stick with the policies he ran on or adopt the approach that he won with?

The only way a president can maximize economic growth is to unleash diffuse networks of entrepreneurs. As economist Bob Litan of the Kauffman Foundation says, "Government can't compel growth." But Mr. Obama's plans -- "card check" legislation to allow workers to unionize a workplace without a secret ballot election; curbing free trade; a government-led "green economy"; and higher tax rates on capital and entrepreneurs -- do not reflect his campaign's deep trust in individuals.

A thought experiment, Mr. President-elect: What if as your campaign raised more and more money it was taxed away and given to Mr. McCain to level the field? Or think of this: What if you were not allowed to opt out of the public financing scheme that left Mr. McCain with a paltry $84 million, about a quarter of your autumn total?

Opting out of monopolistic, closed or centralized systems is often the path to innovation. Sometimes we opt out through the relaxation of regulations. More often, technology allows us to leap, obliterate or ignore the obstacles altogether.

So on education, why doesn't Mr. Obama take Charles Murray's advice? Instead of spending ever more billions to send ever more students to get often-meaningless, four-year college degrees, we should disaggregate the higher education market using the Web and skill-specific short courses and accreditation exams.

Clayton Christensen of Harvard Business School makes a similar argument for K-12 education, where we mindlessly follow a century-old way of doing business. Get rid of this manufacturing era, "value chain" model -- where we take inputs (students), add value (sometimes), and spit them out the other end -- in favor of a "user network" model where unique students with distinct learning styles plug in to smart software and tutoring tools that deliver a customized education.

On health care, let's face facts. We are not going to "solve" the entitlements crisis by gouging American producers to pay for the current Medicare/Medicaid abomination. Much better to transcend the issue with medical innovations and an entrepreneurial, consumer-driven market where more physicians go into medical technology, more nurses replace doctors, more technologies replace doctor visits, and, with properly-aligned incentives and real prices, more citizens take better care of their own health and thus their pocket books. The only way to escape current predictions of scarcity is the unforeseen abundance that entrepreneurship can bring.

Finally, Mr. President-elect, here's a secret: Insist on a strong and stable dollar. It worked wonders for presidents Reagan and Clinton. A weak dollar killed Messrs. Nixon, Ford, Carter and Bush 43. In the same way that Mr. Obama's millions of entrepreneurial volunteers took comfort in their leader's calm, steady, disciplined approach, entrepreneurs need the predictability and discipline of a stable currency to unleash their unpredictable innovations.

Mr. Obama should throw away his tax-regulate-and-centralize white papers. Instead, he should follow his campaign playbook and trust the networked masses. The best way to harness their power is to undo the reins.

Mr. Swanson is a senior fellow and director of the Center for Global Innovation at The Progress & Freedom Foundation.

[DougMacG]

I agree with the sentiment that we are screwed if and when Democrats take over all branches of government.  Still I respectfully request a clearer title for this thread a) in the recognition that the forum already lacks quantity and quality of opposing views and b) in wishing for the discussion to be something I can share with a teenage daughter as prepares for citizenship.

[Crafty_Dog]

Editor’s Note: The following is an internal Stratfor document produced to provide high-level guidance to our analysts. This document is not a forecast, but rather a series of guidelines for understanding and evaluating events, as well as suggestions on areas for focus.

1. The U.S. presidential transition begins: Between the crises in Iraq, negotiations with Iran, the war in Afghanistan, the slow-motion disintegration of Pakistan and Russia’s resurgence, U.S. President-elect Barack Obama is going to have his plate full on Jan. 20, 2009. In reality, it is full now. The Russians in particular are pulling out all the stops to impose a reality on the incoming American president. This means that unless Obama plans on letting the Russians ride roughshod over their near abroad, he not only needs to come up with a counterpolicy quickly, he needs to work with the outgoing administration to implement that policy well before Inauguration Day. That will require Obama and his team getting up to speed on not just Central Europe and the former Soviet Union, but also on Iraq and Pakistan — locations he needs to have at least partially locked down if he is to have a free hand to deal with Moscow. Our sources tell us that the Obama team was requesting recommendations from the Bush team less than 24 hours after the election results were made official. This is going to be the fastest transition in history — and it needs to be. Obama’s presidency will, for all practical purposes, commence next week. So watch, record and — above all else — probe accordingly.

Related Special Topic Page
Intelligence Guidance
2. The global financial summit: Obama’s first act as “president” will be to attend (so far in an unofficial role) the global financial summit Nov. 15 in Washington, where the Europeans will attempt to force a European-style financial management program on the American system. Obama may be more willing to hear the Europeans out on the topic than the Bush administration, but he is not going to give away the farm — certainly not so long as Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are advising both Bush and Obama. (This goes doubly so for Bernanke, since the Fed chairman does not serve at the president’s pleasure; he will survive the transition’s head-chopping regardless.) We need to investigate to find out specifically what the Europeans are going to ask for at the summit — and what they plan to bring to the table in exchange.

3. Russia’s summits: On the day before the financial meeting, the Russians will be holding simultaneous summits with the European Union and the Commonwealth of Independent States. The summits will feature the Russians offering a series of carrots and brandishing a (larger) number of sticks. Before Obama can decisively take the reins, the Russians have a window in which to force their preferred world on their neighborhood. They will not spare the horses. Or the neighbors.

[G M]

**The dems will do for America, what they've done for California**

http://www.city-journal.org/2008/eon1023lm.html

Lawrence J. McQuillan
Californians Voting with Their Feet

The state government’s stifling economic policies are worsening the downturn and driving citizens elsewhere.
23 October 2008
With the implosion of its storied investment banks and the future of Wall Street in doubt, New York will suffer the effects of the financial crisis more acutely than many states. But the crisis reaches epicenters outside of Manhattan as well. Chief among them is the world’s eighth-largest economy: California.

Several key economic indicators point to grim news for the Golden State in the aftermath of the Wall Street meltdown. The state’s unemployment rate has jumped to 7.7 percent, its highest rate in 12 years and the third-worst in the United States. In Riverside County, 40 percent of homes sold in the past year are in foreclosure. Unfortunately, California’s government doesn’t seem interested in solving the state’s economic problems.

California continues to be burdened with high taxes, punitive regulations, huge wealth-transfer programs, out-of-control spending, and lawsuit abuse. And there’s no end in sight to the state’s fiscal madness. The “balanced budget” signed only a few weeks ago by Governor Arnold Schwarzenegger already runs a deficit of as much as $5.5 billion. Last week, to cover state expenditures for the rest of the fiscal year, the state sold $5 billion in short-term notes. Schwarzenegger bought $100,000 worth himself.

Analysts already project that next fiscal year’s budget will be billions in the red. State spending has increased at a faster rate under Schwarzenegger than under his predecessor, Gray Davis. Every year, California puts taxpayers on the hook for yet more spending without any reform of the government’s boneheaded economic policies. It’s not surprising, then, that California ranks fourth-to-last in the Pacific Research Institute’s 2008 U.S. Economic Freedom Index, published in association with Forbes. The Index measures how friendly or unfriendly each state’s government policies are toward free enterprise and consumer choice. Its rankings derive from a comprehensive evaluation of fiscal, judicial, and regulatory indicators such as tax rates, state spending, occupational licensing, environmental rules, income redistribution, tort reform, and prevailing-wage laws.

When he arrived in Sacramento, Schwarzenegger promised to end government overreach. He pledged to “blow up” boxes in the state’s organizational chart, “tear up the credit card” for state legislators, and curtail taxes. Thus far, though, any “Schwarzenegger effect” on state governance has been difficult to discern. Since 2004—Schwarzenegger’s first full year in office—California’s economic-freedom ranking in the PRI index improved only two places, from an abysmal 49 to 47. And $5 billion of new debt will do nothing to bolster the Governator’s self-proclaimed reputation as a fiscal hawk.

By contrast, Nevada, California’s neighbor to the east, boasts a much more favorable economic environment. Nevada ranked sixth among the states in economic freedom, an improvement from 2004, when it placed twelfth. But the model of economic freedom among the states is slightly further east—South Dakota. The Mount Rushmore State imposes no corporate-income tax, no personal-income tax, no personal-property tax, no business-inventory tax, and no inheritance tax. States in the Great Plains and Rocky Mountains tend to be the most economically free. States in the Northeast tend to be the least free. (New York has ranked dead last since 1999.)

Americans vote with their feet, and strong economic freedom draws workers and businesses. According to United Van Lines, South Dakota ranked seventh in inbound migration in 2007. That’s one way of saying that lots of people are moving there. Nevada ranked second. By contrast, California tallied more outbound shipments than inbound. People are fleeing California partly because of economic aggravation. For every one-place improvement in a state’s Index ranking of economic freedom, its net migration per 1,000 people typically increases by one person. This means that for Michigan, the top-ranked outbound state, a one-spot improvement in economic freedom would result in a net increase of about 10,000 people moving into the state—resulting in much-needed new consumers, workers, entrepreneurs, and investors.

Economic freedom—or the lack thereof—affects states in multiple ways. Migration alters the political map through congressional apportionment. Current projections suggest that California’s mass exodus will deprive it of a seat in the U.S. House of Representatives after the 2010 census. Economic freedom also impacts pocketbooks. In 2005, per-capita income in the 15 most economically free states grew 31 percent faster than in the 15 states with the lowest levels of economic freedom. Policies friendly to economic freedom help states shore up their finances, too. The 15 freest states saw their general-fund tax revenues grow at a rate more than 6 percent higher than the 15 states with the least economic freedom. California lawmakers should keep these figures in mind as they grapple with the state’s yawning budget deficit.

In short, economic freedom is not an academic exercise or a zero-sum game. It benefits workers, businesses, and governments alike. When one state expands economic freedom, it puts pressure on its neighbors also to improve, or risk competing at a disadvantage for people and capital. With luck, Nevada’s example will spur California to embrace serious reforms. Otherwise, a stagnant economy brought on by the financial crisis will plague the Golden State far longer than necessary.

Lawrence J. McQuillan is director of business and economic studies at the Pacific Research Institute and coauthor of the 2008 U.S. Economic Freedom Index.

[Crafty_Dog]

IF BO backs off our missile defense in Poland he is going to have "pussy" tattooed on his forehead.
==============

Geopolitical Diary: Obama's Visit to the White House
November 10, 2008
U.S. President George W. Bush has invited President-elect Barack Obama to the White House. Such visits are normal protocol, and wives are part of the visit. Many times such visits come later in the transition, provide for a photo opportunity that assures the country that the transition is amicable and leave policy issues out of it. It will be interesting to see if this meeting has more substance, because there are certain issues that are not only pressing, but on which Obama and Bush might need to coordinate — even if they have different policies.

The first is obviously the G-20 meeting to be held in Washington on Nov. 15. Labeled as Bretton Woods II by some European leaders, the meeting is intended to discuss the future of the international financial system. Some Europeans want to create a robust international regulatory regime — or as might be put by cynics, a means whereby the Europeans have increased control over the American financial system. The first meeting will not be the last. A process is going to be put in place at this meeting. Bush’s inclination is to resist the more extreme European demands. It is not clear what Obama’s policy is. Obama will not be at the meeting, under the principle that the U.S. has only one president at a time — and to hold open his options. But his presence will be felt. These talks will set up the process under which Obama will negotiate. Bush and Obama might want to discuss this.

Second, there is Iran. Prior to the election, the administration was leaking the idea that Bush would establish low-level diplomatic relations with Iran after the election and before the winner — now known to be Obama — takes office. The theory was that such relations were essential and that Bush wanted to take the onus of establishing relations away from his successor, freeing him to deal directly with the Iranians. The Iranians formally congratulated Obama on his victory — the first such congratulations since the Iranian revolution. Obama, at his press conference, reacted coolly to the congratulations, reiterating demands that Iran stop nuclear development and not support terrorist groups. Obama is again keeping his options open. However, if the leaks from the administration genuinely signaled a desire by Bush to open diplomatic relations to free Obama to negotiate while Bush takes the heat, then Obama will have to let Bush know that he wants this — or at least go on record with Bush that he doesn’t.

Finally, there is the question of a coordinated stance on Russia. The Russians have just announced that they intend to deploy Iskander short-range ballistic missiles in Kaliningrad as a counter to a U.S. ballistic missile defense (BMD) installation slated for Polish soil. Obama’s advisers have also insisted that their camp has made no firm commitments on this installation either way, repudiating claims by Polish President Lech Kaczynski that the new American president-elect had assured him of firm support during a phone conversation on Nov. 8. On Nov. 7, news leaked that investigators from the Organization for Security and Cooperation in Europe have discovered the obvious, which is that Georgian troops started the war with Russia by attacking South Ossetia first. The deployment of missiles, the caution on BMD deployment in Poland and support for the Russian version of what happened in Georgia all combine to create new issues and opportunities in U.S.-Russian relations. It remains Bush’s responsibility to deal with this, but clearly, knowing where Obama wants to go on this would be useful to the transition.

The Russia question can hold, but the other two issues are pressing. It would be extremely useful to the international markets to know what the American position at the G-20 is going to be and whether it will remain the same after Jan. 20, 2009. The markets have all the uncertainty they need and could use a joint position. The Iranian recognition issue is critical. We suspect that Bush is prepared to move on this but needs an indication that this is the direction Obama wants to go. It is pointless and possibly harmful to open diplomatic relations if Obama is heading in a different direction.

All transition periods have important questions, but normally there is little need for coordination. Things will wait and if policies change, they change. In the case of the G-20 and Iran, that is not quite the way it is. True, the world will not end if Bush zigs and Obama zags, but in these two matters it would be enormously helpful if a seamless position could be devised. Russia is somewhat less pressing, but Obama already seems to have taken a position, and therefore the issue is in play.

The question is whether Obama is ready to define even preliminary positions on either the G-20 or Iran. Election rhetoric is very different from policy formation, and no president-elect, a week after his election, is quite ready to implement policy. But the G-20 is days away, and the situation in Iran is fluid. It will be interesting to see if the Nov. 10 meeting between Bush and Obama is tea and a tour, or a serious working session. Obviously, aides can work out a detailed coordination, but the principals have to seal the deal. We will find out on Monday what kind of transition we have, and what might happen in the interim.

[Body-by-Guinness]

Moved to "First Amendment" per our esteemed Global Moderator's request.

http://dogbrothers.com/phpBB2/index.php?topic=1285.msg22913#new

[Crafty_Dog]

Woof BBG:

Nice post!

May I be a tad anal and ask you to post it on the Free Speech (or is it The First Amendment?) thread?

TIA,
Marc

[G M]

**Iran, Russia and others can't withstand a prolonged drop in the global price of oil, so they will be forced to act soon.**

http://formerspook.blogspot.com/

Wednesday, November 12, 2008

The Gathering Storm


An Iranian Sajjil missile is launched from a test site west of Tehran (Associated Press photo via Fox News)


Barack Obama's first international "test" moved a bit closer to reality today, with Iran's test of a new, solid-fuel missile that can strike targets in Israel--and southeastern Europe--more accurately (and with less warning) than other missiles in Tehran's inventory.

Iranian Defense Minister Mostafa Mohammed Najjar identified the missile as the Sajjil, which was launched from a test complex western of Tehran. The two-stage system has a reported range of 1,200 miles, allowing it to reach targets as far away as Greece and Israel. Iranian officials claim that the Sajjil is Iran's first medium-range missile to use solid fuel technology, similar to that found in more advanced systems produced by Russia, China and the West.

While the test launch was a major step for Iran's missile program, it also represented another failure. U.S. defense officials report that th Sajjil suffered an engine failure in the early stages of its flight and traveled only 180 miles, less than 20% of its advertised range. Similar failures have also occurred in past launches of extended range versions of the Shahab-3, Tehran's first medium-range ballistic missile.

Unlike the Sajjil, the Shahab-3 uses liquid fuel to power its engines. While liquid-fuel engines represent proven technology, they also pose operational problems. The missile must be fueled before launch, raising the potential for accidents--or detection by intelligence, surveillance and reconnaissance (ISR) systems. It can take up to an hour to fuel an older Iranian SCUD or Shahab-3 and in some cases, the missile must be elevated to firing position before the propellant and oxidizer can be loaded.

By comparison, solid fuel is stable and can be stored in the missile for extended periods of time. That decreases the "signature" associated with operations--you don't need oxidizer and propellant trucks following your launcher vehicle around the countryside. With a smaller signature, it becomes more difficult to spot (and interdict) missile operations.

That problem is further compounded by the rapid response time of solid fuel missile systems. With liquid fuel missiles, there is often a lag between the receipt of launch orders and the actual event, increasing the vulnerability of the weapon--and its crew--to enemy interdiction efforts. The problem is particularly acute in Iran's ballistic missile force; many of its Shahab-3 launchers cannot raise a fully-fueled missile, meaning that the airframe must be elevated prior to fueling operations.

Those difficulties are largely eliminated by the use of solid-fuel missiles. With the propellant (and warhead) already on-board, a solid-fuel system can respond much more rapidly to operational tasking. Using standard "shoot-and-scoot" tactics, a Sajjil crew could fire their missile and move to an alternate site for re-loading and new tasking. That makes the job of "Scud hunting" (or, in this case, MRBM hunting) that much more difficult.

Additionally, Iran has taken steps to help conceal its missile and rocket forces, improving their prospects for survivability. In the spring of 2005, for example, western intelligence analysts were surprised to find pre-surveyed launch sites for SCUDs and battlefield rockets near the Persian Gulf coastline. The sites had been used in a late-winter exercise involving Iranian missile units, but the deployment locations weren't discovered until well after the training ended. That discovery underscores the difficulty associated with finding ballistic missiles and rockets in the field.

Tehran has also developed a concealed launch site which could support a surprise attack against Israel, U.S. targets in the Gulf region, or locations in southeastern Europe. When Iran's missile base at Bakhtaran was built several years ago, analysts noted a rather unusual feature in one of the underground bunkers. Iranian engineers left a rather wide opening in the top of the bunker, which was burrowed beneath a hill.

More detailed analysis revealed the opening was actually a launch shaft for Shahab-3 missiles, which are based at the facility. The underground cavern was large enough to allow a missile to be elevated to launch position and fired through the shaft. Using the subterranean complex, Iranian crews could prepare and fire the missile with little chance of detection. It was an ideal facility for staging a "bolt from the blue" strike against one of Iran's enemies.

Development of the Sajjil will make that scenario even more likely. A solid-fuel system is a much safer option for an underground launch, since the missile uses a more stable propellant. Couple that with improved reaction times, and you have an ideal weapon for the Bakhtaran complex. Clearly, Iran's new missile has significant technical hurdles to overcome, but those challenges are not insurmountable.

And, of course, Tehran is continuing its quest to develop a nuclear warhead, capable of delivery by medium and long-range missiles. That represents the ultimate weapon for for a first-strike system, like the one tested today in the Iranian desert.

***

ADDENDUM: So, how does the missile launch figure into the "challenge" for Mr. Obama? Consider this possibility: Iran would benefit from a crisis that sends oil prices spiraling. Tehran typically stages major military exercise in the late winter/early spring that includes ballistic missile units. The next Sajjil test could well occur during that time frame, part of an Iranian effort to provoke the U.S. and test the mettle of the new commander-in-chief. This won't be the last time that Mr. Obama (and his advisers) have to deal with Tehran's new missile.

Today's event also underscores the importance of the recent deployment of a U.S. X-band radar to Israel. Capable of detecting missile launches at long range, the radar will give Israeli officials an additional 60-70 seconds of warning time, critical in any "surprise attack" scenario.

[G M]

http://hotair.com/archives/2008/11/13/a-nifty-demonstration-of-democratic-fiscal-management/

A nifty demonstration of Democratic fiscal management
posted at 9:55 am on November 13, 2008 by Ed Morrissey   


Those of us on Barack Obama mailing lists have wondered why the masters of fundraising haven’t stopped pushing for more donations.  After all, Obama won … last week.  Recounts won’t affect the substantial victory; this isn’t 2000.  Yet we keep getting e-mails, supposedly from people like Michelle Obama, Joe Biden, and especially David Plouffe, telling us that Obama and the DNC desperately need more of our money — and Andrew Malcolm does the math.  He reprints the missive from Plouffe:

Here’s what he said:

“We’ll get to work transforming this country. But first, we need to take care of the DNC.”

Did we hear that right? Now that Obama’s the president-elect, the top priority is the Democratic National Committee?

To drive home the point elsewhere in the same e-mail Plouffe adds: “Before we do anything else, we need to pay for this winning strategy.”

Don’t worry, you still get the Victory T-shirt for this $30. But it sounds like pretty much everything else is on hold. This change stuff is looking to be an expensive process, even before it gets started.

The DNC raised $100 million dollars on top of the $600+ million raised by Obama.  The latter was a record-breaking number, and the DNC’s wasn’t too bad, either.  Instead of simply spending what they raised, though, Howard Dean took out massive loans that left the Democrats in the red by $15 million.

In government, we call that deficit spending, something Democrats decried during the 2006 elections.  And who gets to pay for all the overspending and fiscal mismanagement?  The contributors who already coughed up record amounts of money for Hope and Change, that’s who.  And the new administration will hold the Hope and Change hostage until it gets all of the loose change possible first, Plouffe tells us.

In a way, this is truth in advertising.  The Democrats have given us a clear example of how they will govern for at least the next two years.  In fact, we may all wind up wearing shirts that say, “The government took all of my wealth, and all they shared was this lousy T-shirt.”

[JDN]

I think many political parties and candidates on BOTH sides of the aisle have at one time or another taken out loans and overspent on their campaign.
What's new about the DNC asking for more donations to pay off their debt? 
This isn't a partisan practice.

Actually, the DNC is looking for voluntary donations.  They are trying to solve their deficit problem.  That's more than Bush ever did with our deficit.
 

[Crafty_Dog]

Well, tis a rare event but, apart from the tedious boilerplate about Bush, I'm in agreement with JDN on this one.

However, the following presages exactly the sort of weakness that I fear from a President BO:

JOHN R. BOLTONArticle
 
Presidential transitions provide the opportunity to predict how an incoming administration will govern. While the Obama transition is proceeding largely behind the scenes, commentators have been hard at work examining the emerging evidence to reach sweeping conclusions about the administration's likely direction.

While it is much too early to reach any firm conclusions, a few substantive events have taken place. Consider, for example, the established tradition of a president-elect's series of calls to world leaders, to introduce himself and receive their congratulations. One of Barack Obama's first such conversations took place last Friday with Polish President Lech Kaczynski.

From the press reports and statements regarding their brief exchange it seems Messrs. Obama and Kaczynski drew radically different conclusions on a critical issue -- missile defense. Mr. Kaczynski raised the subject, given the recent U.S.-Polish agreement to base missile defense assets in Poland. In the words of the Polish press statement about the call, Mr. Kaczynski heard Mr. Obama say "that the missile defense project would continue."

The Obama transition promptly issued a rebuttal: "President-elect Obama made no commitment on it. His position is as it was throughout the campaign -- that he supports deploying a missile defense system when the technology is proved to be workable."

This was a remarkable statement. Mr. Obama contradicted a head of state, clinging to a campaign position that could most kindly be described as weak and ambiguous. The statement also reflected a naiveté in the structuring of such transition conversations -- and future dealings with truly unfriendly foreign leaders -- that could have been avoided.

Importantly, the Obama-Kaczynski telephone call must be seen in the context of Russian President Dmitri Medvedev's speech just two days before, where he threatened to base Russian missiles in the Kaliningrad enclave, targeting our proposed missile defense deployments in Poland. Mr. Medvedev's words were more than just a direct challenge to President-elect Obama on missile defense. They were also a direct challenge to the Polish government, which reached an agreement with the Bush administration just days after the Russian invasion of Georgia. The Poles were out on a limb, and Mr. Medvedev was testing the strength of that limb and the strength of the incoming U.S. president. Both now look disturbingly weak.

To be sure, one could argue that the Poles should not so quickly have issued an unequivocal statement without checking with Mr. Obama's handlers. But so too the Obama team should have understood that foreign leaders, both friends and adversaries, are in a state of high tension, hoping to get the president-elect to give his stamp of approval for their agendas before the inertia of the permanent government gets in the way.

Mr. Kaczynski's gambit may have been the first, but it won't be the last, and those hundreds of Obama foreign-affairs advisers should have known it was coming. The Iranian and North Korean nuclear weapons programs, Arab-Israeli affairs and a host of other critical problems are thundering toward Mr. Obama as Jan. 20 approaches.

Freeing America from the 1972 Anti-Ballistic Missile Treaty's antiquated constraints is rightly regarded as one of President Bush's most significant achievements. In 2001, we believed that the Russian strategic threat had eased. But the emerging threats from rogue states possessing a few nuclear-capable ballistic missiles required that we develop adequate defenses -- especially because many emerging nuclear-weapons states do not accept the same calculus of deterrence that maintained the Cold War's uneasy nuclear standoff. The demise of the ABM Treaty allows America to defend itself from these threats.

For a new Obama administration to retreat from this achievement, as many in the arms-control "community" have advocated, would be a significant step backward. His campaign position about deployment after the technology is "proved" is an excuse never to deploy missile defenses -- because nothing in the military field is ever conclusively proven for all time. Rebuffing Mr. Kaczynski is also precisely the wrong response to Mr. Medvedev's provocation. It will surely be read as weakness, and not only in Moscow. In fact, Moscow announced yesterday there would be no more missile-defense negotiations before Jan. 20.

How should Israel and the Arab world now contemplate the prospects for rapid U.S. withdrawal from Iraq and the prospects for turmoil there and enhanced Iranian influence in the Middle East? Will North Korea -- whoever is in charge -- now kick back and wait for Jan. 20? The list of questions is far longer than the list of Mr. Obama's answers.

To repeat, it is much too early to draw larger conclusions from this one episode. On the existing postelection evidence, we cannot tell whether Mr. Obama will govern on the left or the center-left, or whether he is simply passive and risk-averse. But on balance, his conversation with Mr. Kaczynski points toward a weakening of the U.S. defense posture, indifference to allies under duress, and the need to satisfy his natural constituency within the Democratic Party. Let us now await the next pieces of evidence.

Mr. Bolton, a senior fellow at the American Enterprise Institute, is the author of "Surrender Is Not an Option: Defending America at the United Nations"