"Inflate or Die"

WARNING: the subject matter of this post is the economy, monetary policy and the financial system. Reading this may lead to eyes glazing over, sudden fatigue and loss of wakefulness.

Many years ago I wrote that the fate of the US will be expressed in three words--INFLATE OR DIE. We are there now. Printing trillions of dollars of Federal Reserve Notes must end in inflation.-- Richard Russell, Dow Theory Letters, May 13, 2009

In a speech he gave in 2002 when he was a Governor of the Federal Reserve, Fed Chairman Ben Bernanke signalled his preference for aggressive Fed action to counter asset deflation should it occur on a sustained scale in the United States: "If we do fall into deflation," said Bernanke, "we can take comfort that the logic of the printing press...must assert itself, and sufficient injections of money will ultimately always reverse a deflation." In short, Bernanke argued that when traditional monetary actions to stimulate demand, i.e., reducing the short-term interest rates at which banks borrow money from the Fed, are exhausted, the Fed could and should "drop money from a helicopter" if necessary to increase (inflate) the number of dollars in circulation and effectively raise the dollar price of goods and services. This then-theoretical policy prescription earned Bernanke the nickname "Helicopter Ben."


In early March 2009, Bernanke's theory met reality. With the Fed funds rate practically "zero bound," the Federal Open Market Committee (FOMC) announced it was going to buy--monetize-- up to $750 billion of agency mortgage securities (i.e., securities issued by Fannie Mae and Freddie Mac) and $300 billion in long-term (30-year) Treasury bonds. The implications of this are manifold. First, the Fed doesn't have the money to buy over a trillion dollars of assets, so it has to "create" it out of thin air. This is accomplished by the Fed "borrowing" electronic credits from the Treasury which is then used to buy the assets. The issuance of these electronic credits is the digital equivalent of printing money.

Second, the debt instruments the Fed is buying are financing the "stimulus" and all of the other deficit spending of the last year and this year. In essence the Fed is soaking up the inventory of these instruments and thus keeping their prices up. This has the effect of keeping interest rates low (a bond's yield typically falls as its price rises), which in turn (theoretically) stimulates mortgage and commercial borrowing. But this comes with a price: the artificial creation of a "bubble" in bond prices, which cannot be sustained indefinitely.

Third, the monetization of agency debt and Treasuries poses a significant risk to relations with our trading partners, who get get nervous when they see what looks like the intentional debasement of our currency. An over supply of fiat dollars lessens the value of all dollars in the system. China holds more than a trillion dollars of dollar-denominated bonds in its reserves purchased with dollar surpluses from its exports to the U.S. They are rightly concerned that those reserves will lose value if our dollar is trashed, and so they are already curtailing their U.S. debt purchases. This will lead to higher interest rates forcing the Fed to come in and buy up even more debt with more printing press money, further debasing the dollar.

A devalued dollar will make our exports more attractive than those of our competitors in Europe and Asia, leading them to devalue their own currencies to save their economies. This sort of competitive devaluation leads to trade wars, which often lead to something more deadly.


It is instructive to note that although Bernanke in 2002 believed in the Fed's ability to cure deflation by injecting liquidity into the system, he believed even more in the Fed's ability to prevent deflation in the first place. Judging from the Fed's actions of late we are already past the point of prevention and now trying to effect a cure. Can it not be said that the Fed's anti-deflation policy has already failed, and that the policy prescription of printing fiat (paper) money and debt monetization is a last ditch effort to save the system?

Ah, you ask, hasn't the deflation risk been wiped away with the "green shoots" of the economic recovery we've been hearing about? And with the financial system awash with all this fiat money, shouldn't we turn our concern to inflation, maybe even super-inflation? Well, no. And yes.

The powerful stock market rally over the last two months has created the illusion of market and economic recovery. But it is well to remember that the rally was powered by the surprisingly strong first quarter bank earnings released in early April. A look behind the numbers, though, reveals two things. First, the banks benefited from a change in FASB Rule 157(e), allowing the banks to manipulate the balance sheet value of their assets. Second, the banks benefited from the low cost of borrowed funds as a result of the Fed's suppression of the Fed funds rate and the monetization policy. According to investment guru John Mauldin, this is the "equivalent of the US government reducing the cost of goods to zero for the embattled car companies and then going on to buy--courtesy of the US taxpayer--a couple of million cars that nobody really needs." In that environment anyone can show a profit.

Whenever you hear the financial mass media promoting "green shoots" and stoking a new bull market, it is wise to be cautious if not downright skeptical. If the financial pundits of CNBC say something, the opposite is likely true. The sobering fact is that the U.S. may be slipping further towards "outright deflation, just as Japan did," according to Albert Edwards of Societe Generale, the large French bank. Companies and consumers are retrenching en masse, with the former laying off workers and the latter hoarding cash and paying down debt.

In fact, some analysts calculate that the 15 largest banks have experienced reductions on their balance sheets of $3.6 trillion, with another $2 trillion more yet to be written off this year. And the problem may be worse in Europe. The IMF believes that European banks have written off less than half of total losses related to the credit crisis.

The media and many investors may be buying the "green shoots" spin, but clearly Bernanke is not. He has access to all the Fed's data and then some, and so he must know that another wave of the credit crisis approaches. Delinquencies on Alt-A and adjustable mortgages are accelerating, and prime and jumbo loans are now starting to suffer. And rumor has it that commercial real estate loans are the next shoe to drop. Another wave of losses means that more banks fail, credit gets tighter, businesses contract, layoffs accelerate and spending plummets.


That we are in deflation now may not be apparent in the prices of goods and services--yet--but is evident by the fact that the Fed is risking massive inflation in order to reflate the economy. Bernanke is frightened to death of deflation, because it is so devastating and so hard to climb out of. It is an economic death spiral of sorts. The Fed is doing everything it can to prop up the monetary system, by dropping money into it while at the same time propping up the bond market by buying medium and long-term Treasuries.

What if it doesn't work? Bernanke's theory as expressed in 2002 didn't anticipate a concurrent banking crisis, at the heart of which is a credit crisis caused by toxic assets of unknown value sitting like a cancer on the balance sheets of the banks. The data suggest that the injection of money into the financial system by the Government (through bailouts, guarantees, preferred stock purchases and mortgage purchases) is still trapped in the financial system. The banks are leaving their electronic money in the electronic vaults of the Fed because they are afraid to lend to one another. This means that all that created money has no "velocity," and doesn't have the stimulative effect intended by the Fed. Thus the country risks sinking further into the deflation trap.

And inflation? It is coming, sooner or later. The Fed's "inflate or die" policy ensures that it will do whatever it takes to get out of the deflation ditch, and eventually we'll recover. The question is, what impact will the government's deficits and the Fed's money policy have on our currency and on the rating of our bonds? According to the IMF the US has racked up almost 12 trillion dollars in debt with another 45 billion in off-balance sheet obligations, not to mention multi-trillion dollar annual deficits for years to come. Medicare and Social Security will go bust before 2017, threatening even more debt in the out years. Surely this will have consequences.

My guess, and its just a guess, is that we will end up defaulting on our debt. This will be done by cheapening the dollar through super- or hyper-inflation to the point that our creditors may as well forgive their loans to us. This may be less bad then it sounds because most other nations will be in the same boat. But the price we will pay for this is the loss of King Dollar as the world's reserve currency. Whatever else that means, it certainly means the loss of our economic sovereignty.

So what happens next is anyone's guess, but for clues keep your eye on the bond market. Thats where the real money is. Yields on 10-year Treasuries, which anchor mortgage rates, are over 3%. The Fed will try to suppress these rates with more debt purchases, but at some point they will run out of bullets. If and when that happens, rising rates will threaten the bond market.

I don't know quite what would follow a crash of the bond market. But I suspect it wouldn't be pretty.

Bulletin: Liberal Asserts Cheney Could Be Right!

Sometimes the liberal Richard Cohen of the Washingpon Post offers a point of view that surprises. In this case it is that the hated Dick Cheney may, for the first time in his 40-year career as a public servant be right: enhanced interrogation works.

In the sanest paragraph I've seen written by a certified member of the MSM on the "torture" memos, Cohen says:

Cheney says he once had the memos in his files and has since asked that they be released. He's got a point. After all, this is not merely some political catfight conducted by bloggers, although it is a bit of that, too. Inescapably, it is about life and death -- not ideology, but people hurling themselves from the burning World Trade Center. If Cheney is right, then let the debate begin: What to do about enhanced interrogation methods? Should they be banned across the board, always and forever? Can we talk about what is, and not just what ought to be?

Cohen also wonders whether these memos might shed some light on whether Nancy Pelosi is lying about her insistence that she wasn't briefed about these techniques.

In calling for release of the memos which Cheney says vindicate the Bush administration policy on interrogation post 9/11, Cohen argues: "The Obama administration ought to call Cheney's bluff, if it is that, and release the memos. If even a stopped clock is right twice a day, this could be Cheney's time."

I recalling praising Cohen in these pages on some other issue, since forgotten. Maybe even liberals are right twice a...life.

Michelle Malkin: Battered Hedge Fund Managers’ Syndrome

A hedge fund manager risks his career by calling out Obama's cheap political trick of demonizing the same financial industry heavyweights who got him elected in the first place.

Was Pelosi Briefed On "Enhanced Interrogations"?

She claimed she wasn't. But according to the CIA, she was among the first members of Congress to be briefed on the harsh interrogation tactics being used on Al-Qaeda prisoners, way back in September 2002.

Either Pelosi is a liar, or an idiot. Or both. (I vote for "both.") Nancy Pelosi is surely the most corrupt, disingenuous and craven politician in Congress today. Of course with Harry Reid, Chuck Schumer, John Kerry and Dick Durban in the Senate and Charles Rangel and Barney Frank in the House its a pretty close contest.

Lets see how much scrutiny Pelosi's lies get in the media in the days ahead. My guess is: not much.

The Jewish Delusion (Part I).

I found it curious that after the November election so many liberal Jews rationalized their vote for Barack Obama by touting his selection of the Jewish congressman from Illinois, Rahm Emanuel, as his chief of staff. We were told that Emanuel’s pro-Israel credentials are impeccable. "Rep. Emanuel is…a good friend of Israel, coming from good Irgun stock, davening [praying] at an Orthodox synagogue, and sending his children to Jewish day schools," said a top Jewish community spokesman, William Daroff, when Emanuel’s appointment was announced. (The Irgun was the right-wing military faction headed by the late Prime Minister Menachem Begin during Israel’s War of Independence). The clear implication was that Rahm Emanuel’s elevation to Obama’s chief aide proved that Jews had no reason to fear the new president’s policies towards Israel.

It seems rather odd to justify a vote for a political candidate based on an action taken by him after the vote is taken. No voter had the slightest idea who Obama would pick as his chief aide before pulling the lever for him, and frankly could care less. But obviously some Jews felt a wee bit defensive about suggestions that Obama would be hard on Israel and soft on its enemies, and thus played the “Rahmbo” card to convince others and perhaps themselves that the chief of staff would stand athwart any attempt by Obama to sell Israel to the Arab wolves. They and we had reason for nervousness well before the election, in light of the surfacing of audio recordings of the all-time greatest hits of Jew-hatred spewed from the pulpit of Obama’s (former) pastor the Rev. Jeremiah Wright as well as revelations of Obama’s associations with radical Arabs like Rashid Khalidi, the anti-Israel professor and acolyte of the late Edward Said, the polemicist/apologist for Palestinian terror against Jews. None of this prevented liberal Jews from voting for Obama, but they must have had some qualms nonetheless. Emanuel’s rise to chief of staff no doubt settled them.

That a well-placed Jew in the White House could or would be able to change the policy of a determined president is laughable. History is replete with examples of well-positioned Jews who succumbed to the blandishments of title, honor and position and willingly did the bidding of their rulers regardless of the consequences to their co-religionists. As a result of this, Jews may be the only people on earth with mixed feelings when one of their own seeks and/or obtains high government position. (During the 2000 presidential contest even Jews who admired Joe Lieberman fretted over whether having him as the first Jewish vice president would be “good for the Jews.”)

On Sunday Mr. Emanuel, the putative guardian of Jewish interests in the Administration, weighed in on the Israel-Palestinian conflict and the Iranian nuclear threat. The occasion is the AIPAC policy conference taking place this week in Washington, where thousands of pro-Israel activists are gathered to hear speeches by U.S. and Israeli leaders, lobby Congress to support efforts to stop Iran from going nuclear, and network with their fellow activists. According to The Jerusalem Post, Emanuel said in a closed-door meeting of 300 top AIPAC donors and board members that “it will be easier” to recruit Arab nations to oppose Iranian nukes if “progress” is made on the Israel-Palestinian track, meaning that Israel ought to first make concessions to the Palestinians before Arab countries will support sanctions against Iran. This echoed Hillary Clinton, who in April “warned Israel that it risks losing Arab support for combating threats from Iran if it rejects peace negotiations with the Palestinians.”

Mr. Emanuel’s defenders in the press point out that some who attended the meeting with Emanuel said he didn’t actually “link” the two issues—i.e., Israeli concessions to Palestinians and American efforts to stop Iran-- as had been reported on Israeli TV. Perhaps he didn’t, but that’s not the point. Taken together with President Obama’s stated belief that the creation of a Palestinian state is the key to addressing Arab and Muslim grievances in the Middle East, Afghanistan, Pakistan and south Asia, Emanuel’s remarks and Clinton’s warnings can be seen as a blunt threat to Israel: concede to the Palestinian Arabs’ demands for the West Bank, the Golan and Jerusalem first, then we’ll see if we can cajole the “moderate” Arabs to support sanctions against Iran.

This is obviously a dangerous and dastardly game for several reasons. First, it flies in the face of logic and history to suggest that Israel retreat to borders that are known to be indefensible. The so-called 1967 borders, in place for 19 years following the War of Independence, were unstable and constantly probed and breached by the Arabs. Throughout the 1950s and 1960s Jordanian and Egyptian gangs from the West Bank and Gaza plotted and staged terror attacks inside Israel proper, killing dozens of Jews. Syrian troops regularly rained rockets and artillery down on Israel from their perch on the Golan Heights. Jewish access to the Jewish holy sites like the Western Wall and the Temple Mount in Jerusalem or Rachel’s Tomb in Bethlehem was denied. And this was before the so-called "occupation;" before Palestinians had been fully radicalized by the likes of Yasser Arafat; and before they had access to sophisticated weapons like Kassam or Katyusha rockets.

Only a fantasist could believe that a retreat by Israel to the old borders would lead to a better result.

Second, the Administration makes no reference to the realities of Palestinian polity. George Bush wanted a Palestinian State, to be sure, but not at the expense of Israeli security needs and certainly not without reform of Palestinian institutions. Bush’s talk of two states “living side by side in peace” always implied the establishment of democratic institutions in Palestine as a prerequisite to peace. Bush may have been naïve in his belief that the Palestinians were capable of accomplishing this, but at least he understood that it was a sine qua non of Palestinian statehood. That’s why once the radical Hamas took over in Gaza Bush more or less turned his back on the whole enterprise.

Not so Obama. There is almost no talk by him or his emissaries of Palestinian institution-building as a predicate for peace. In fact it is quite the opposite. On her first visit to the region as State secretary, Hillary Clinton pledged $900 million dollars for Gaza reconstruction virtually without conditions, assuring that the money will be controlled by the Islamist terror group in charge of Gaza, Hamas. She then travelled to Jerusalem where she took Jerusalem’s mayor to task for demolishing illegal Arab buildings. She “urged” Israel to ease up on border closings and allow humanitarian aid to Gaza, as though Israel and not the Palestinians were responsible for the human crisis inside that fetid strip.

Clinton and special envoy George Mitchell have placed almost unrelenting pressure on Israel to curry favor with the Arabs on the Iran issue by caving in to their demands for an immediate commitment to give the Palestinians a state, no matter its character. Meanwhile the Administration and Europe hints at opening a “dialogue” with the Hamas, which rules Gaza with an iron fist and threatens Prime Minister Mahmoud Abbas’ hold on the West Bank.

Third, Obama gives every indication of backing away from the bipartisan “special relationship” with Israel. According to unconfirmed reports, Israeli intelligence has warned Israeli Prime Minister Bibi Netanyahu that Obama wishes to “incrementally diminish U.S. strategic cooperation” with Israel. Even if this report is unfounded, Obama has given every indication that he favors closer relations with Syria and Iran. He has made no secret of his desire to engage Iran, and he has sent emissaries to Syria to feel them out about improved ties. In fact, Jimmy Carter proudly boasted to the Israeli daily Haaretz that he expects full ties between Syria and Washington to be established this year. Who can doubt that Syria’s price for full diplomatic relations with the U.S. is a total repudiation by Obama of the “special relationship” with Israel?

None of this is a surprise to staunch supporters of Israel who opposed Obama. They understood Obama’s world view because they understood those of the radicals he hung around with. What is surprising (and dismaying) is the continuing refusal of liberal Jews to see the danger posed to the Jewish State and therefore to worldwide Jewry by the reckless and frankly depraved anti-Israel policy being pursued by Obama, Clinton, and Mitchell (with the apparent full support of their guard-dog, Rahm Emanuel). Undoubtedly many well-intentioned Jews believe a “two-state” solution is in Israel’s ultimate best interests. But even they must have gotten the lesson from the Lebanon war of 2006 and the Gaza war of 2008-09, to wit: territory surrendered by Israel to its enemies is soon converted into staging areas for rockets and missiles fired against its citizens.

The Jews who offered Rahm Emanuel’s elevation to Chief of Staff as proof that Barack Obama is committed to Israel’s security ought to take a second look at Obama’s Israel policy. In his first media interview after his inauguration (to Arab television), Barack Obama lauded the so-called “Saudi Peace Plan,” the terms of which demand that Israel retreat to borders cynically called the “Auschwitz” borders precisely because they are indefensible. Israel is now being pressured by the U.S. into accepting this “plan,” with some changes from the original, as the basis for negotiations with the Arabs, while the ticking time bomb of Iran’s nuclear program is held over its head like a sword of Damocles. Taking advantage of an ally’s existential fears in order to extract deadly concessions to an unrepentant enemy is not only audacious, it is immoral.

American Jews need to snap out of their Obama-induced delusion and see the world as it really is. Their lives depend on it.

Richard Russell on the Markets

Richard Russell, in his mid-80s, has been writing The Dow Theory Letter for 51 years. I recently became a subscriber and am fascinated by the economic and cultural insights of this veteran of the markets and of life.

Russell is a technical rather than a fundamental analyst. And yet he has a solid grasp of the fundamentals-- of economics, debt, money and life. He is not a perma-bear...in fact he has called several bull markets accurately...but he remains bearish notwithstanding the powerful market rally since early March.

What follows are excerpts from Russell's May 5 daily remark. You may agree or disagree but you at least ought to consider the musings of this old World War II combat veteran. His kind won't be around too much longer.

(Bold highlights are added by me).

"May 5, 2009

"A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him." John Maynard Keynes, 1931.

As the market works higher, bullish economists are falling victim to mass "brain washing." Every hint in the economy that "bad" is becoming "less bad" is leaped upon as "proof" that the worst has been seen and is past. Now bold predictions of a "rising second half of 2009" are heard. The worst crime that an analyst can commit is remaining bearish in the face of a rising market. Besides, aren't we in "a new bull market."
…

My opinion is that the economy is not fated to turn up towards the end of 2009 as widely predicted, nor will it turn up in 2010. I believe we are entering into the land of unintended consequences. We are now watching a deadly battle between deflation and over-creation of fiat money, meaning future inflation or even hyper-inflation. Making the picture even more confusing, there are increasing doubts about the viability of the US dollar and whether it can keep it reserve status.
…

Now, while everybody's fascinated by the stock market, I want to discuss a few other areas that you may not be looking at. The 30-year Treasury Bond…is very sensitive to the viability of the dollar and to inflation or deflation. The bond is in a steep decline, which means that long interest rates are moving higher (this is the last thing the Fed wants, but the Fed does not control long rates).
…

Right now, many central banks (and the IMF) are selling a portion of their gold, while other central banks (Russia, China) are buying gold. The IMF has announced that it wants to sell up to $100 billion of gold. Now why in the world would they announce their intention to sell gold unless they wanted to put pressure on gold? It doesn't matter because China is drooling to buy the whole lot, if only the IMF receives permission to place their gold on the market.

If you want to know what's happening in the world, then there's only one rule, and it's "follow the money." And in case you weren't aware of it -- gold is money.

The central banks system was invented and put in place in order to turn the power over to the world's bankers. Who controls a nation's money controls that nation. Gold is the public's defense against the bankers. Try as they might, the bankers can't control gold, which is why the bankers don't want gold in the hands of the public. Since the bankers can't keep gold out of the hands of the public, they do the next best thing -- they denounce gold and try to manipulate gold's price down.

The public has little or no knowledge of money. This ignorance extends to our Congressmen and women. Ask your Congressman or Senator where your dollars (Federal Reserve Notes) come from. The odds are that they can't tell you. Ask them how the Federal reserve was formed and when it was voted on by Congress. Ask them anything about money and the odds are that they will be clueless. Don't even bother to ask the average American the same questions because all you'll get is a blank look. Hey, even ask your local banker, and it'll be the same. Americans have no idea of money or where it comes from, which is why bankers can get away with "financial murder." In fact, ask Barack Obama about money and I guarantee you'll get a blank look. The Obama answer -- "Yeah, I know about money, you take it from the "rich" and give it to the other Americans. And if you have any money left over after taxes,"you give it to the bankers."

What could those clever Chinese be up to? While the other central banks are selling their gold, the Chinese are loading up on gold as fast as they can. Aw, what do the Chinese know. That's the big (and maybe) frightening question.…

This government will stop at nothing even including manipulation. What the Fed does not want is a swooning stock market, surging gold, or sinking bonds. I think all three are now being manipulated. Pressure from various sources continues on gold, and we know the Fed is buying bonds. When an item is manipulated, the aftermath always ends unpleasantly. I expect "unpleasantness" ahead.
...

Despite the usual manipulative efforts, the Dow closed down 16. Despite yesterday being a 90% upside day, the market failed to extend the rally. My impression is that the market is tired, and that the big money remains on the sidelines. The Dow has been up 8 out of the last 9 weeks, and the market could be ready to correct.Flash -- NYSE volume exploded to over 11 billion today -- The market is "churning," and the battle of bulls versus bears is raging.

"Change" You Can't Even See, Much Less Believe In

When Barack Obama exhorted his cabinet to cut 100 million dollars from their collective budgets, even the lovesick media snickered that it was not a very impressive cut given the size of the proposed Obama budget. Still, some did suggest that at least the proposed cuts "are a start."

Well, think again. View this short demonstration and you'll see that like so much of Obama's rhetoric the proposed cuts are much less than meets the eye.

Its a Bull Market for these Bears.

Polar bears Bill, right, and Lara seem to like each other at their first meeting at the zoo in Gelsenkirchen, Germany. Bill came from the zoo in Bruenn, Czech Republic, as a new partner for Lara.

To Obama, "Never Again" = "Forgive and Forget"

Dr. Michael Ledeen is one of those smart think tank guys that from time to time show up on talk radio or cable news as an "expert" on a given issue, like terrorism or military spending. In Ledeen's case, he is a bona fide expert on Iran and national security. As the author of The War Against the Terror Masters and The Iranian Time Bomb you would expect Ledeen knows a thing or two about the grave threat that Iran poses to stability in the Middle East (such as it is) and to Israel's existence.

Beyond that, Dr. Ledeen is a student of history, particularly modern European history, and understands the nature of evil men and regimes and their terrible toll on mankind in the previous century. Unfortunately for us, Ledeen isn't so sure that our new president acknowledges much less understands the evil designs of our enemies, and doubts he intends to do much to stop them. Even more troubling is President Obama's penchant for reserving his harshest rhetoric for those who disagree with him politically and oppose his agenda.

Ledeen's thesis is that since the media has failed to show the slightest curiosity about Obama's curriculum vitae before the November election, the American people have little information about his beliefs, political philosophy or character. Accordngly we are left to anlayze the president's words and deeds on the world stage for clues to his convictions and intentions, indeed his worldview. And what Dr Ledeen has deduced and inferred from Obama thus far troubles him.


In a recent speech at the Capitol commemorating Holocaust Remembrance Day, Obama's utterances at first seemed elegant and appropriate. According to Ledeen: "First he [drew] hope from the survivors of the Holocaust. Those who came to America had a higher birthrate than the Jews who were already living here, and those members of 'a chosen people' who created Israel. These, he [said], chose life and asserted it despite the horrors they had endured." But then Obama continues with his own version of "Never Again:"

We find cause for hope as well in Protestant and Catholic children attending school together in Northern Ireland; in Hutus and Tutsis living side-by-side, forgiving neighbors who have done the unforgivable; in a movement to save Darfur that has...people of every age and faith and background and race united in common cause with suffering brothers and sisters halfway around the world...Those numbers can be our future, our fellow citizens of the world showing us how to make the journey from oppression to survival, from witness to resistance and ultimately to reconciliation. That is what we mean when we say “never again.”

And there is the rub, according to Ledeen. "Never again" is not and has never been a cry for reconciliation and forgiveness. It was a plea to the world to "destroy the next would-be Fuhrer." It is also a self-promise by Jews never to allow themselves to be sent like sheep to the slaughter without resistance. Finally it is a hope--sadly against the evidence--that the civilized nations of the world will rise as one to destroy any despot or regime that would dare to harass, intimidate or threaten destroy the Jewish people or the people of any other nation. But "never again" is decidely not, as Obama suggests, a pretext for turning the other cheek.

Obama's oratory betrays a lame attempt to portray the world not as it really is, but rather as he imagines it to be--a world where all disputes can be negotiated and past wrongs can be addresses through truth and reconciliation commissions. This is a dangerous misunderstanding of the way the real world works.

Perhaps Obama is merely naive. Maybe Obama feels a spirit of equanimity towards all men, believing them all to be of good will and honest intentions. Yet Obama does have harsh words for his opponents, at least those that reside within our own borders. As Ledeen notes:

Significantly, Barack Obama is a lot tougher on his domestic American opponents than on tyrants who threaten our values and America itself. He tells the Republicans that they’d better stop listening to Rush Limbaugh, but he doesn’t criticize Palestinians who raise their children to hate the Jews. He bows to the Saudi monarch, but humiliates the prime minister of Great Britain. He expresses astonishment that anyone can worry about a national security threat from Hugo Chavez’ Venezuela, even as Chavez solidifies an alliance with Iran that brings plane loads of terror masters, weapons and explosives into our hemisphere from Tehran via Damascus, fuels terrorists and narcotics traffic, and offers military facilities to Russian warships and aircraft. He is seemingly unconcerned by radical Islam and a resurgent Communism in Latin America, even as his Department of Homeland Security fires a warning shot at veterans–the best of America–returning from the Middle East. He seeks warm relations with Iran and Syria–who are up to their necks in American blood–while warning Israel of dire consequences if she should attempt to preempt a threatened Iranian nuclear attack.

According to Ledeen, Obama's words are designed to "internalize conflicts that are raging in the real world." Our enemies are left to wonder what to make of a man who seems intent on accommodating them while reserving his unkindest words for those in his own country who oppose measures that would weaken America. No doubt they will feel emboldened to try harder to bring us to ruin.

The bottom line for Ledeen is this: "if the president of the United States will not act, who can stop them?"

George Friedman on Obama's First 100 Days

I found this article by George Friedman of Stratfor.com interesting, as it asserts that so far Obama hasn't strayed much from the path laid out for him by....President George Bush.

Friedman did not mention the $3.6 trillion budget proposed by Obama and the staggering deficits projected over the next decade. He also didn't suggest that O's plans for universal healthcare, cap-and-trade and takeover of the financial and auto industries are radical departures from even the free-spending G.W. Bush. Finally, Friedman fails to mention the mindset that Obama brings to his office that America is arrogant, hegemonic and a large part of the world's problem, as starkly illustrated in his decision to release the "torture" memos over the objection of his own CIA director and national security advisors.

Nevertheless, Friedman makes points that even some of us who oppose Obama might consider meritorious..

Smiling at Chavez

A lot has been written in the past weeks about President Obama's first turns on the world stage, in Europe and then Latin America. Obama has been spending a lot of time apologizing for the past policies of our nation in foreign circles, including in France, Turkey and Trinidad/Tobago. It seems that wherever Obama went, if George Bush had been for it, Obama declared he was against it, and vice versa.

The apology/contrition bit is tiresome and counterproductive, for sure. There is a certain arrogance in apologizing for your predecessors, especially when there is so little to apologize for. Lest you think that Obama's bashing of his predecessors was merely partisan, consider that he took a swipe at fellow Democrat John F. Kennedy when he suggested that he (Obama) should not be blamed for the failed 1961 Bay of Pigs invasion, which occurred when "I was only 3 years old" (he was actually unborn at the time). But when the Apology Tour morphs into an embrace of dictators and depots, the danger signals go off.

Obama seems obsessed with establishing "new relationships" with thug regimes like Iran, Cuba and Venezuela. At the conference of the Organization of American States in Tobago, Obama encouraged direct talks with Cuba in order to overcome "decades of mistrust," essentially putting Cuba on the same moral footing as the U.S. He had already removed restrictions on travel to the country as well as restrictions on remittances.

Obama also had a few "chance" encounters" with Venezuelan dictator Hugo Chavez, which frankly he seemed to enjoy overmuch. Debate ranges on which leader approached the other first, but there is no doubt Obama seemed charmed by the autocratic thug. Obama was photographed gripping and grinning with Chavez, and videotape shows Obama accepting from Chavez the "gift" of a a book called "The Open Veins of Latin America," a sort of bible for Latin-Left anti-capitalists and West-bashers. And Obama seemed unperturbed by the 50-minute diatribe against America and Europe by Daniel Ortega of Nicaragua, avoiding any response to it which might signal displeasure with the Sandinista killer.

All this disturbs the commentator and moral observer Rabbi Shmuley Boteach, who wonders why Obama spends so much of his obvious charm and talent in wooing the globe's worst dictators. Boteach reminds us not only of the evils of men like Chavez and Castro, but also of others courted by Obama, like the Saudis (who regularly oppress their women and kill religious apostates) and the Turks (who have never acknowledged their slaughter of 1.5 million Armenians in the 1920s). While he thinks Obama is a "nice guy" who means well, Rabbi Shmuley asks:

Suppose Obama succeeds in building friendships with Chavez, Castro, Ahmadinejad and the Taliban. What then? Does America still get to feel that it stands for something? Will we still be the beacon of liberty and freedom to the rest of the world, or will we have sold out in the name of political expediency? And do any of us seriously believe that presidential friendship is going to get a megalomaniac like Hugo Chavez to ease up on the levers of power, or are we just feeding his ego by showing him he can be a tyrant and still have a beer with the president of the United States? Will the Iranians really stop enriching uranium through diplomacy rather than economic sanctions?

It would be nice if Obama's adoring cheerleaders in the media would take the time not just to report on Obama's new tone towards our enemies and antagonists, but also to ask and analyze the questions that Shmuley Boteach poses.

Torture and Intelligence

According to George Friedman at www.stratfor.com, his invaluable website dealing with geopolitics, intelligence matters and world affairs, the issue of torture is complex and defies easy analysis along ideological or partisan lines. Please take a few minutes to read this essay.

I must admit that it challenged my own thinking on the matter.

Dershowitz: U.N. Denies Holocaust

Anne Bayefsky, the noted scholar and Senior Fellow of the Hudson Institute and a chronicler of U.N. history and the Holocaust, moderated a panel Tuesday in honor of Holocaust Remembrance Day at the same U.N. hall in Geneva that is home to the Durban II "anti-racism"conference. The panel included law professor and Jimmy Carter antagonist Alan Dershowitz, actor/activist Jon Voight, human rights icons Elie Wiesel and Natan Sharansky and author Shelby Steele.

According to writer Roger L. Simon, founder of Pajamas Media, the panel was "electric," not surprising given the brain power and eloquence of the assembled panelists and Ms. Bayefsky. PJTV will have video of the panel in the days ahead.

In the meantime PJTV has some fascinating video of a conversation moderated by Mr. Simon today in which Professors Bayefsky and Dershowitz skewer the U.N. over its hypocritical and cynical obsession with Palestinian rights and Israeli "oppression." Click here--the video gets interesting at 4 minutes in.

While I don't share Prof. Dershowitz's generally liberal politics, I am forever grateful for his unflinching advocacy on behalf of Israel and the Jewish people and his willingness to take on those who would wish to do them harm. In a world of puny and shallow figures he is a giant.

A Truly Appalling Day at the U.N.

Today marked the opening of the U.N.'s Durban Review Conference in Geneva, whose ostensible purpose is to "evaluate progress toward the goals" enunciated at the World Conference against Racism, Racial Discrimination, Xenophobia and Related Intolerance in 2001. As any sentient being knows, that was the famous U.N.-sponsored hatefest in which Israel was vilified as a racist and criminal regime, after which the U.S. delegation left the conference at the behest of then State Secretary Colin Powell. This time around the U.S. toyed with the idea of attending if it only could get the conference to tamp down its anti-Israel rhetoric. But the conference organizers couldn't produce an agenda which met even the low standards set by the Obama administration, and so the U.S. finally withdrew, along with Canada, New Zealand, Australia, Italy, Poland, Germany and the Netherlands. There is intelligent life in Europe after all.

On its best days the U.N. is an extravagant, inefficient and ineffective disgrace. But today its reputation and prestige hit its nadir. For the U.N. gave center stage at this human rights conference to one of the world's biggest human rights abusers, Mahmoud Ahmadinejad of Iran, and predictably he used the occasion to rip the Holocaust and delegitimize the Jewish State:

“Following the World War Two, they [the West? Security Council members?] resorted to military aggression to make an entire nation homeless, on the pretext of Jewish sufferings and the ambiguous and the dubious question of holocaust. [sic] They sent migrants from Europe, the United States and from other parts of the world to establish a totally racist government in the occupied Palestine…”

This was immediately followed by the dramatic departure from the assembly hall of the representatives of those Western nations who failed to boycott the conference in the first place
(France, Belgium, the Czech Republic, the UK, etc.), and who apparently have their "redlines" even when it comes to bashing Israel. It remains to be seen whether they will return to the conference tomorrow, now that the Iranians are gone.

All this caused the U.N. High Commissioner on Human Rights to issue a statement expressing shock and disgust at Ahmadinejad's speech. Said Navi Pillay:"I utterly deplore the speech of the President of Iran delivered this afternoon at the Durban Review Conference against racism...I find this totally objectionable. Much of his speech was clearly beyond the scope of the Conference. It also clearly went against the long-standing UN position adopted by the General Assembly with respect to equating Zionism with racism."

This fake outrage is all rather confusing on a few levels. First, Israel-bashing is not beyond the scope of the Durban II conference, it is its heart and soul. Second, the U.N. General Assembly practically accused Israel of perpetrating war crimes during the Gaza defensive operation a few months ago, which certainly is akin to equating Zionism with racism. Finally, it was the U.N. who invited Ahmadinejad to speak to the conference on its opening day; if they wanted contrition they should have invited Barack Obama.

The U.N. is now completely discredited as a force for good in the world. In fact it can safely be said that the institution has become a safe haven for killers, thugs and despots who get from the U.N. legitimacy and a chance to strut their stuff in front of a world that should shun them instead. If there would be no U.N. there is a good chance that these two-bit
tinhorns wouldn't be given the time of day outside of their rotten little countries and failed states.

For a blow-by-blow of the Durban II conference, visit Roger L. Simon's blog and check out the video at PJTV. Note the heroic efforts of Alan Dershowitz, Shelby Steele and Jon Voight in Geneva to call attention to the freakshow that the U.N. has become.

Obama the next Gorbachev?

Says the Associated Press's Steven Hurst concerning Obama's determination to "reset" U.S. relations with the world:

Obama's stark efforts to change the U.S. image abroad are reminiscent of the stunning realignments sought by former Soviet leader Michael Gorbachev. During his short—by Soviet standards—tenure, he scrambled incessantly to shed the ideological entanglements that were leading the communist empire toward ruin.

Before hailing Obama as the new Gorbachev, it is worth remembering that Gorby was a stunning failure as Soviet leaders go: he presided over the implosion of the very empire he sought to save without establishing a viable governing alternative. Do most Russians today celebrate the end of their nation as they knew it before 1991? It is an open question.

Lets hope that Obama's rush to shed the "ideological entanglements" that have characterized our own country's relations with the civilized world for many decades doesn't lead to such a fateful conclusion.

Israel's New Foreign Minister--more dangerous than Ahmadinejad?

Thats what the left-wing Jersualem Post commentator Larry Defner thinks.

Avigdor Lieberman is the first Israeli Foreign Minister in may years who has actually told the world elites to go screw themselves. Good for him. Too bad all he will get for his trouble is vilification by the global media, the European elites and the Obama administration as a racist.

Obama won't have to take on Netanyahu directly as long as Lieberman is around. He will happily use Lieberman as a stick with which to beat Israel over the head.

Trust me on this.

Obama's Potemkin Summit

As Barack Obama headed off to London last week the American media painted a gloomy picture for the prospects of the summit of leaders of the G-20 nations and fretted over the difficult task ahead for the charismatic but inexperienced young American president. Anarchist riots would draw thousands of violent protesters to disrupt the conference. France's President Sarkozy was threatening a summit walk-out if he didn't get his regulatory scheme endorsed. Gordon Brown of the U.K. was being blamed for the "Anglo-Saxon" policies that brought down the global financial system. And Germany's Merkel stood ready to throw a wrench in the summit machinery by eschewing the stimulus mania that has gripped the U.S. and Britain. Comparisons to the disastrous London Economic Conference of 1933 were in the air, all in an effort to lower expectations for President Obama should the summit end in rancor and division.

Lo and behold, the summit ended with a "surprise" joint communique heralding a breakthrough that defied all the pundits--at least that was the message Obama's water carriers in the media delivered. ABCNews Online called the agreement an "historic step to jump start the global economy...a turning point," although the network acknowledged there was "no guarantee" of success. United Press International's Martin Sieff called Obama a "big winner," but then worried that whatever Obama won might not be of any use.

So what was Obama's big win? According to Sieff, he "agreed to Sarkozy and Merkel's demands to put pressure on nations that have long prospered as tax havens to reveal at last full details of the fortunes hidden away in their vaults and accounting records." That's like calling a guy who caves in to his ex-wife's demands for a rich alimony settlement a "big winner." In the event, this tax haven sop is vague and toothless and thankfully won't lead anywhere.

Obama's other "win," according to U.S. press accounts, is the agreement to create a global financial super regulator, the Financial Stability Board, a body that would consist of central bankers from the G20 countries, the IMF and the EU and the U.S. The FSB would extend “regulation and oversight to all systemically important financial institutions, instruments, and markets…[including] systemically important hedge funds” and in theory gives Europe a means of stifling our economic freedom. Dick Morris refers to this as no less than a surrender of U.S. financial sovereignty, but I'm not so sure. For one thing, we long ago surrendered national control over our economic fate when we agreed to export the bulk of our debt to China and other creditors and have made things worse of late by trashing our own currency. For another, Britain has rejected the latest regulatory regime proposed by Europe and without the U.K. on board we won't play ball.

The only agreement of substance to have emerged from the G20 was a trillion dollar bailout of the bankrupt central European countries through the IMF. That is a lot of money compared to the debt owed Western Europe by central Europe, but by the new American standard of government spending it is a pittance. This summit "accomplishment" was probably hashed out weeks in advance by the central bankers and finance ministers and can hardly be termed a breakthrough.

Thanks to the slavish and unquestioning U.S. media Obama and his friends in Europe have pulled off a Potemkin summit, that is, one which from a distance appears to have real weight and substance but which on close examination is but a facade built on a foundation of hype and invented tensions with the flimsy materials of communiques, sound bites, pretty pictures and an adoring media. It seems to have worked its magic in the short term--the announcement that Obama and company saved the global financial system lifted the markets immediately and significantly.

The fact is that the one thing the summit did not do is to address the underlying causes of the global financial crisis. Not a single toxic asset was bought or sold or removed from the balance sheets of the West's banks. No grand plan was discussed or announced to deal with the risks of global asset deflation, a looming inflationary recession, protectionism or currency stabilization. The grandees of the G20 pretended to fight the next war while the current battle rages on.

As for Obama, he may have done no real harm in Europe, but we did learn a few things about him. First, by agreeing, even vaguely, to a global regulatory scheme he showed he is unwilling to stand up for American values of economic liberty and sovereignty. Second, his vaunted oratorical skills won him few if any concessions, in particular from Germany. The United States wanted Germany to agree to massive spending to stimulate its own domestic demand and thus curb its exports, and Germany wouldn't budge. Finally, Obama's attempts to gain European troop commitments to Afghanistan failed, with Europe agreeing to deploy a meager 5000 non-combat troops temporarily.

At first blush, it seems that Obama was at the center of the action at the G20, negotiating complex agreements and bringing the other leaders to his side. Look a little closer and it appears that the opposite is true. Obama's charms persuaded no one. He gave up a lot and got little in return.

George Bush's problem was being perceived as a unilateralist cowboy. Obama will do everything he can to prove to the world he is no George Bush. If Barack Obama isn't careful he'll quickly become something far more dangerous--a laughingstock.

Barack Obama, the rabbit in North Korea's headlights, is Jimmy Carter II

by Gerald Warner, UK Telegraph Blog

"Obama calls for action on North Korea" reported today's headlines - which is much like a chief constable demanding something should be done about crime. If the President of the United States cannot bring the Pyongyang regime to heel, who does he expect to perform this task? It appears that, along with the bust of Churchill, Harry S Truman's maxim "The buck stops here" has also been banished from the Oval Office.

What was the point of America deploying two missile-killing destroyers, the USS McCain and the USS Chafee, in Japanese waters, only to spectate as Kim Jong-il's Taepodong-2 missile took off? US military sources have made much of the fact that the missile failed to launch a satellite into space or to achieve its stage three flight. That is like being complacent because Iran has not yet quite completed its nuclear armaments programme. It is the unimpeded process of pursuing nuclear weaponry that is threatening. No wonder West Coast Americans feel insecure.

Overnight, posturing and sabre-rattling, formerly the province of Kim, has become the role of America and its allies. Such chest-thumping followed by inaction is deadly dangerous. Do the names Sudetenland and Czechoslovakia not ring any bells? Ironically, Barack Obama was in Prague - the ultimate monument to appeasement - when he heard the news of the North Korean launch. Incredibly, he went on to deliver another turgid oration on the need to scrap nuclear weapons. That must have given them a good laugh in Pyongyang.

It did not take Obama long to emerge from his chrysalis as a fully-fledged Jimmy Carter II. What makes his supine appeasement worse is that the United States, under both Democrat and Republican administrations, has previous when it comes to being suckered by North Korea. Two administrations, Clinton in October 1994 and Bush in February 2007, made identical deals with Kim to freeze the Yongbyon plutonium plant in return for supplies of fuel oil - Uncle Sam bought the Brooklyn Bridge twice from the wide boys in Pyongyang.

Obama should have ordered the shooting down of the North Korean missile, launched in defiance of a 2006 UN resolution. Such ruthless action is the only thing Reds understand. Weakness and moderation excite their contempt and ambition. Instead, Obama is whining that something must be done. Indeed; and the person who should be doing it is you, Mr President. That is what you are paid your 400,000 bucks a year to do.

Obama's PR team is trying to depict him as firm because he still intends to implement the European missile defence shield. Yes; but how long before Vladimir Putin sells him another pup to join the one in the White House? The word has gone round the hard-faced power freaks of the geopolitical demi-monde that here is a US president who makes taking candy from a baby look challenging. Jimmy Carter is back. Be very afraid.

Europe does have its charms

Some things just transcend national borders after all!

Israel: Time for an " I Told You So."

In a January post about Barack Obama's interview with Al-Arabiya television, I noted Obama's reference to the "Saudi peace plan," which calls for a so-called "two-state solution" to the Israeli-Palestinian conflict, but which really is a Trojan horse for the delegitimization of Israel. As I said then, "the plan insists on 'return of the Palestinian refugees,' a poison pill that would require Israel to absorb millions of descendants of those who fled Israel during the War of Independence." I noted that no reasonable Israeli government would negotiate on the basis of the Saudi plan.

Now comes word that Obama not only literally bowed before the Saudi King Abdullah in Europe this week (which is the subject of hoots and hollers from the conservative punditry), but bowed also to the Arabist view of Israeli illegitimacy embraced by Europe and the American Left. According to the Jerusalem Post, "Obama reiterated his support for the Saudi initiative" in his meeting with the Saudi monarch. Strangely the Post article made no reference to the aspects of the Saudi plan which would spell destruction for Israel.

At the same time the Post reports that European leaders have already called new Prime Minister Benjamin Netanyahu to pressure him into negotiating with the Palestinians for a Palestinian state without regard to the facts on the ground (those facts clearly showing the unwillingness and unreadiness of the Palestinians to govern themselves). Caroline Glick meanwhile warns of the coming offensive by the civilized nations of the world to deligitimize Israel.

More on all of this later. Now I must sign off for Shabbat. Shabbat Shalom.

Where are the Clowns?

If this 4-1/2 minute video doesn't make you tear up thinking of all we have lost (and are in the process of losing still) I don't know what will.

I hope my kids will some day discover that there was a time in America when funny men and women could make us laugh at ourselves, our politicians and even our culture without anyone seriously taking offense. Perhaps they will learn that if a society must curtail its speech for fear of offending anyone, it will ultimately offend everyone.

Enjoy this piece of nostalgia, and note Orson Welles' prophetic lament at the end. Unfortunately the clowns in the video are amateurs compared to the ones running our government (and soon our lives.)

Mob Rule Coming to a Continent Near You?

“The time has come to address the entire robber banker culture. Investment banks have been run not for the benefit of society, customers, or even shareholders, but exclusively for the advantage of the bankers themselves…This is why we must stand outside their homes throwing rocks through the windows until they do.”

So says newspaper editorial Max Hastings in the U.K.'s Daily Mail. And he is not alone. College professors, union bosses and politicans in the U.K are stoking the fires of anarchy and mob rule, just in time for the G-20 summit in London next week. Some 2,000 protestors are set to descend on the meeting, causing trouble and hanging capitalist bankers in effigy.

Could it happen here? Consider: when AIG acting chairman Ed Liddy appeared before Congress last week he testified that many of his employees have received death threats in the wake of the AIG bonus "scandal" ginned up by our politicans. Barney Frank shrugged off his testimony, New York's attorney general Andrew Cuomo is suing to have the names of the bonus-receiving executives outed and a Republican U.S. Senator gently suggested that the executives might consider suicide. And then the U.S House of Representatives, including 85 shameless Republicans, voted to impose a 90% tax on the bonuses retroactively.

Never mind that the bonuses were specifically accounted for in the "stimulus" bill insisted upon by the President and passed by our dear members of Congress, none of whom read the final bill. Never mind that Connecticut Democrat Senator Dodd lied about his role in inserting the bonus waivers in the legislation (I am sure even liberal Connecticut voters would agree that Dodd is a walking advertisement for term limits, not that he is the only one). The politicians needed to divert attention away from their own reckless incompetence and who better to vilify than the very capitalists who they have showered with a gazillion dollars of bailouts, guarantees and the like.

When the New York Times published the resignation letter of AIG VP Jake deSantis, I thought for sure that average, hardworking Americans would applaud his ethic of hard work and duty to the company he served for many years. I felt that surely no one would begrudge him the right to the bonus that he was promised and deserved (especially since he took only a $1.00 salary).
Yet I saw nothing but scorn for Mr. deSantis in the press, including a column by Margaret Carlson pooh-pooing his plight. Is this what America has come to? Heaping scorn on a private citizen who was just doing his job, and then got stiffed on his way out the door?

So again, I ask: could the rule of the mob that threatens to storm the G20 summit happen here? I don't know. But Michelle Malkin thinks it can. It already has.

My Purim Video

For the Jewish holiday of Purim I produced a 10-minute video for our synagogue's Purim party.

For those of you who don't know the "players," it may not be as much fun to watch as it is for those who do. But I hope you will watch and enjoy anyway.

GSEs: Government Sheltered Enterprises

If we had anything resembling a fair and independent media then the Dems wouldn't control Congress today. If instead of slavishly hyping failure on the part of the Bush administration to regulate the financial services industry the press simply presented the facts and allowed them to speak for themselves, Americans might have learned the truth about the role that Barney Frank, Chuck Schumer, Maxine Waters, Chris Dodd and company played in the recent housing market bust and related credit freeze. These Democrats did everything they could to keep the wraps on the corruption and accounting shenanigans at the GSEs (Fannie Mae, Freddie Mac), notwithstanding increasing pressure from the White House, Treasury and the Fed and even the GSE regulator (who is accountable to Congress) to reign in the massive bureaucracies.


This doesn't come as a shock to those of us who pay attention to these kinds of things. Many have seen this video of Maxine Waters, Barney Frank and others excoriating the inspector general of the agency overseeing the GSE's when he tried to raise the warning flag about problems at Freddie and Fannie in 2004. The money quote from Maxine: "Everything [with the GSE's] has worked just fine...what we need to do today is to focus on the regulator...so as not to impede [the agency's] affordable housing mission."


But shouldn't this have been Page One material? Doesn't a congresswoman's attempt to intimidate a government regulator warrrant serious attention? It took internet blogger sleuths to find this stuff and feed it to YouTube and talk radio because the media elites shunned it. A journalism industry worth more than spit would have not only brought this shameless shilling and intimidation by Democrat bigs to light but would have asked the obvious question: why?

Well, there apparently was one "mainstream" media outlet that made a run at the story. In September Fox News Special Report ran this segment exposing the GSE protection racket. (Why it took months for this to hit my inbox is beyond me.) It has been viewed an incredible $3.4 million times since it was posted by ProudtobeCanadian.ca, a conservative group of...proud Canadians (who knew?). Think things today might be different if the story had been pushed by CNN, The New York Times and the rest of the elite media?


That this is not a scandal of huge proportions is itself a scandal of huge proportions, and future historians will have plenty to chew on in analyzing why a free and independent press would engage in a cover-up that rivals the cover-up they were covering up.

Magnificent Monday on Wall Street. Can it Last?

I read several news accounts describing the Treasury's new plan to rescue the financial sector by ridding banks of their "legacy assets." (While that sounds like priceless stuff you'd like to hand down to your kids and grandkids, the term its just a fancy name for the toxic real estate-related assets that have clogged credit markets for the past year or more.) The Public-Private Investment Program (I'll be the first to call it "Pub Pip") will apparently finance up to a trillion dollars of asset purchases by private investors and the taxpayers using $100 billion of already-authorized bank rescue money plus FDIC guarantees, Federal Reserve financing and what not.

(To tell you the truth I'm kind of tired of seeing the word "trillion" show up in every other paragraph of every financial news story of late. It just doesn't sound like a hell of a lot of money anymore. Pretty soon my wife'll come home one afternoon and tell me she just bought a dress on sale: "but hon, it only cost a trillion!" It would be nice if the next time I saw the term "trillion" it was printed on my 401K statement or the appraisal of my home's value. Of course the way the Fed is inflating money these days a trillion may not quite get me through next month.)

I read tax cheat Treasury man Tim Geithner's opinion piece in the Wall Street Journal today announcing Pub Pip. I'm pretty smart but I couldn't make heads or tails out of it, honestly. (I'm having a contest--if any one of my readers can tell me in 10 paragraphs or less how the plan works I'll buy him or her a free subscription to "This Week at American General," AIG's employee newsletter). But I guess the really smart guys on Wall Street liked it, because they sent the Dow soaring almost 500 points today. That didn't do me a whole lot of good since much of my net worth is now in cash.

But I'm happy for my friends and clients who saw their investments rise by 8% in one day, and I hope the rally continues. But I caution against what the now-discredited former Fed Chairman Greenspan called "irrational exuberance." The market rose almost entirely on sentiment and a sigh of relief that Mr. Geithner actually had a plan, not just a promise of a plan. (For a sobering reaction to the Treasury's new plan, click here).


The problem is that bear markets don't usually end with a bang. And bull markets don't usually start with one either. Bulls are built on a solid foundation of a strong financial system, a stable currency and a positive outlook for the political, regulatory and global environment. Bulls like a predictable tax system that at the very least does not punish risk-taking. Bull markets like government spending to be in the 20% of GDP range or less, not the 23% or 24% range it is fast getting to. And bulls sure don't like the idea of $9 trillion (oops, I said it again) in projected deficits over the next decade, 3 times the deficits racked up under the evil President Bush.

Bulls probably are not happy when the Russians and the Chinese threaten to introduce a new reserve currency because of America's rush to cheapen its own. Bulls look askance at protectionist policies like those that crept into the omnibus spending bill keeping Mexican trucks off our highways. Bulls shy away from economies in which entire sectors are under threat of government domination (financials; energy; health care) and those that are not face increased labor costs, taxes and regulation.


Bulls worry that the "quantitative easing" announced by the Fed last week (printing money to buy up government debt) will not work, and even if it does will result in massive inflation, thus throwing all deficit projections out the window. Bulls wonder whether any of this will inspire confidence in our trading partners and debt holders.


And finally, a bull would have to ponder whether our government's headlong rush to appease Iran, Hamas, Syria and other despotic regimes at the expense of our allies, particularly Israel, might lead to a bad end--bad for children, markets and other living things. It may be hard to predict what and when could go wrong, but its not hard to predict with confidence that if we sell out our friends to please our enemies, something unpleasant this way comes.


So have your fun with the market rally. I hope it endures long and profitably for those with the stomach for these sorts of things. I will probably wince with every uptick since I will not be benefiting from them. But until some of the systemic risk of the financial system is worked out, and until I am no longer frightened by the government's regulatory, energy, spending and tax policy, I will stand on the sidelines cheering.


I suspect I will know when its safe to come back on the field when my recurring nightmares featuring Barney Frank dressed as Nancy Pelosi finally cease.

The Gold-en Years?

You are no doubt hearing a lot about gold lately. The internet pop-ups for gold dealers are ubiquitous (everywhere), and it seems every other commercial on talk radio urges us to buy gold bullion, gold ETFs or gold coins.

If you are a contrarian, you might conclude that with all the hype about gold it is exactly the wrong time to buy. The again, after hearing that the Fed is about to monetize our debt by asking the Treasury to print up to a thousand billion dollars, not to mention the next trillion dollar bank bailout plan announced just today, on top of the $5 to 7 trillion of bailouts, guarantees and the like since last fall, one might feel justified in hearing a massive inflationary timebomb ticking away. Inflationary pressures are bullish for precious metals.

Is this the right time to buy gold? I have no idea, but in case you are interested you ought to watch this 4 minute interview with Ambrose-Evan Pritchard, international business editor of the U.K. Telegraph and a man who closely follows the gold market.

For a note of caution on gold in the short-term check out this from the Wall Street Journal on Friday. For a more bullish take, see this article from Bloomberg.com.

Making Money. Literally.

I read an email by one of blogger Hugh Hewitt's readers, whose nom de plume is Banker Guy, who implied that Ben Bernanke is the one adult in government who has a clue. Banker Guy likens Treasury man Geithner to a hapless team quarterback who is stuck for a gameplan. When the quarterback asks for the next play, Coach Obama is unavailable by virtue of being interviewed by Jay Leno. "Then," says BG, "all of a sudden, a walk-on player runs onto the field, grabs the ball, and starts running through the opposition toward the goal line … its Ben Bernanke!"

Banker Guy is particularly taken with Wednesday's stunning announcement that the Fed will expand its balance sheet another $1.2 trillion through the purchase of $300 billion in long-dated Treasuries, $750 billion in mortgage-backed securities (Fan/Fred), and another $100 billion in
U.S. agency debt. Called "monetizing the debt" or "quantitative easing," the debt buy-back program essentially requires the Treasury to print money. Lots and lots of it. BG says this has spurred "some real optimism in the markets."

With all deference to Banker Guy, I am wondering why, if the Fed's debt monetization policy is
such a brilliant play, the Dow is down now over 200 points since it was announced. And if Bernanke is providing such "sound leadership," why did the Dow drop 122 points today in a slide that began just as the Fed chairman was speaking to community bankers at noon? I think Bernanke's policy is rightfully seen as a monetary "Hail Mary" pass, only riskier.

Perhaps investors have had time to think about the implications of the debt purchase program. Having run out the clock on its ability to manipulate rates at the short end, the Fed is trying to bring down mortgage rates by buying back billions of medium-term Treasuries,
agency debt, etc. To my knowledge this is without precedent.

The Fed's stated purpose is to free up private credit markets, something that trillions of dollars in bailouts, guarantees and credit facilities established since last summer have not accomplished (apparently). But the real story seems to be that the Fed is not convinced that recovery is imminent notwithstanding the bits and pieces of positive news that sparked the bear
market rally of the past weeks. Rather the policymakers appear to be still concerned, perhaps even panicked, that we are danger of falling into a deflationary spiral.

Even if it succeeds, the massive debt purchases will weaken the dollar, increase tensions with our trading partners, and perhaps ultimately lead to a catastrophic bursting of
the bubble in Treasuries. Why would the Fed embark on a policy which is designed to create massive asset inflation when the risk of success is bad and the risk of failure could be catastrophic?

According to Larry Kudlow, the four killers of prosperity are high taxes, high inflation, protectionism (currency devaluation) and increased regulation. It seems to me that Bernanke's prescription will result in all four.

I hope that Banker Guy is right, and I am wrong.

America and Israel: Rupert Murdoch Gets It

Media titan Rupert Murdoch was awarded the National Human Relations Award by the American Jewish Committee on March 4th. In his acceptance speech he laid out a cogent and forceful case for a continuing special relationship between the U.S. and Israel. This quote struck me as the heart and soul of his remarks:

IN THE WEST, we are used to thinking that Israel cannot survive without the help of Europe and the United States...[m]aybe we should start
wondering whether we in Europe and the United States can survive if we allow the terrorists to succeed in Israel.

Murdoch nails the dilemma Israel finds itself in vis-a-vis Hamas: while its conventional military forces can flatten Gaza, Israel is constrained by the fact that it is accountable to its citizens for every life lost, including Palestinian lives. By contrast Hamas is accountable to no one, and the death of "innocent" Palestinians by Israeli fire is nothing more than grist for its propaganda mill.

Murdoch notes that Israel is further handicapped by the global media, which is decidedly tilted towards the terrorist entity. The media willingly serves as agents for Hamas in spreading lies about Israel in the form of edited (or in some cases fabricated) images and soundbites. The narrative is always the same--Israel the brutal occupier and oppressor rains death and destruction on the victims of Gaza.

When Hamas lobs missiles at Israeli towns the media shrugs. Yet Israel's measured response is cause for a war crimes tribunal.

Good for Mr. Murdoch. Kudos to the American Jewish Committee for recognizing him.

Read the speech here.

Thomas Paine: "A Nation of Cowards"

The American patriot Thomas Paine has resurfaced, and he's talking common sense about everything from control of our borders to bank bailouts.

You ought to hear what he has to say about Congress. (Sample: "The biggest traitors among you hold elected office.")

Finally, Paine sets forth a "We the People" stimulus package we can all agree with.

Get your teabags ready.

Mark Steyn: "The Brokest Generation"

A fabulous piece by Mark Steyn in this weekend's OC Register on what we are doing to our kids. An excerpt:

This is the biggest generational transfer of wealth in the history of the world.
If you're an 18-year-old middle-class hopeychanger, look at the way your parents
and grandparents live: It's not going to be like that for you. You're going to
have a smaller house, and a smaller car – if not a basement flat and a bus
ticket. You didn't get us into this catastrophe. But you're going to be stuck
with the tab, just like the Germans got stuck with paying reparations for the
catastrophe of the First World War. True, the Germans were actually in the war,
whereas in the current crisis you guys were just goofing around at school,
dozing through Diversity Studies and hoping to ace Anger Management class. But
tough. That's the way it goes.

If our kids do end up as the "brokest generation," I dare say they'll not be thinking too well of us a few decades hence.

"Trickle-Down Poverty"

1980s Reagonomics was ridiculed by the Left and the media (but I repeat myself) as "trickle down" economics. Ronald Reagan's theory, formally known as "supply side economics," held that marginal tax rate reductions on the wealthy would increase their productivity and income, incentivize them to grow their businesses and add jobs and so benefit the less wealthy and working poor. As we know, the critics were wrong in everything except their nomenclature--wealth, income and jobs did "trickle down" from the wealthy to everyone else and ignited an economic and stock market boom that lasted for decades.

Read what investment manager Thomas E. Nugent has to say about President Obama's complete reversal of the policies that Reagan championed and implemented. We'll know soon enough whether Obama's policies lead to economic prosperity like Reagan's did.

Hillary, Haman and the Jews

This week Jews celebrated the holiday of Purim, which, according to some, is a day even holier than Yom Kippur. (In fact, Yom Kippur, usually translated as "day of atonement," literally means "day like Purim"). According to the Jewish Sages, the biblically mandated holy day of Yom Kippur presages the day a millennium later on which the Jews would be saved from a high Persian official named Haman by a G-d whose "face" had up to that point been hidden. Purim's message to the Jews today, as it has been to the Jewish people since their exile from the First Temple over over 2400 years ago, is that G-d is in control of events great and small. The designs and plans of the most mighty of men to oppress or destroy the Jews can instantly "turnabout" and suddenly the Jews marked for destruction are redeemed and their would-be destroyers are destroyed.

It is impossible to predict the future course of events. But there are disturbing signs of late of a trend that if not halted or reversed could lead to a dark and difficult period for the Jews. Perhaps at no time since Hitler and the Nazis snuffed out the lights of European Jewry have events warranted a comparison to those days in ancient Persia which seemed so bleak and yet ultimately led to triumph for the Jews.

To wit:

1. Anti-Jewish attacks are on the increase in Europe and the U.S. I referred in an earlier post to incidents in Amsterdam, London, France, Scandinavia and even Miami and Chicago in which Jews or their institutions were physically attacked or threatened. Anti-Jewish incidents in the U.K. in particular have created a sense of panic and gloom in religious Jewish communities. Says CNN.com, "the Community Security Trust, a non-governmental organization which monitors anti-Semitism in Britain, recorded more than 200 incidents in the month of January alone, the highest monthly total it has seen since it began keeping records in 1984."

2. These incidents are either ignored or justified by much of the world media. They are tossed off as an understandable display of raw anger at the brutal policies of Israel's government, or the anti-Jewish nature of the attacks are pooh-pooed. In the face of the horrific attacks in Mumbai in which a Chabad rabbi and his wife were targeted for killing, The New York Times and others went to great lengths to suggest that the Jews were more or less hapless bystanders who got caught in the crossfire, not intended victims.


3. The elite governmental and quasi-governmental world bodies are invested in an unprecedented level of hatred towards Israel. This manifests itself in a variety of ways. The United Nations General Assembly cast a troubling vote roundly castigated Israel during Operation Cast Lead (Israel's military campaign to halt rocket attacks from Gaza against its citizens) for using "disproportionate" force, while failing to condemn the deliberate targeting of civilians by the rulers of Gaza. The European Union engages in similar diatribes against Israel, such as the one this week accusing Israel of illegally annexing East Jerusalem (which, it should be recalled, was conquered by Israel in a defensive war 42 years ago). The U.N. Human Rights Council is run by totalitarian countries with a single-minded obsession with condemning Israel. And "Durban II," the U.N. -sponsored second conference on "racism" scheduled for this spring in Geneva has a hate-filled agenda of Israel-bashing destined to outdo its 2001 orgy of anti-Jewish hate in South Africa.

4. Iran marches relentlessly toward nuclear capabilities while the world pretends to wring its collective hands. The IAEA, the hapless and ineffective U.N. nuclear watchdog agency, released a report the other day complaining that Iran is blocking access to its nuclear facilities and refuses to respond to questions about its nuclear intentions. In an appearance that surely has Teheran quaking, U.S. ambassador to the U.N. Susan Rice (no great supporter of Israel herself) asked a Security Council subcommittee "to vigorously support the IAEA in its continuing investigations of these critical matters." At the same time, a U.S. diplomat downplays Teheran's ability to go nuclear "any time soon." That's comforting, since Iran makes no secret of its desire and intention to blow Israel--a U.N. member state--to smithereens (with nary a tut-tut of protest from that great world body).

5. President Obama signalled his desire to change the long-standing pro-Israel bias of American Middle East policy by the timing and substance of his remarks to al-Arabiya television early in his thus-far unimpressive presidency. In choosing the quasi-Saudi-controlled channel as the situs of his first media presidential interview Obama sent an unmistakable message to Jews--prepare for an overhaul of U.S. foreign policy centered on appeasing Israel's enemies. The substance of the interview hammered home the point: Obama practically endorsed the shelved Saudi peace plan of a few years back which effectively calls for a "one-state" solution to the Israel-Palestinian conflict. It goes without saying that the "one state" the Saudis have in mind would not long remain a Jewish state, or for that matter a state with Jews.



6. While the U.S. has declared its intention not to attend the anti-Israel "Durban II" conference, it left the door open to re-engage the conference organizers if the draft agenda is changed suitably. The U.S. has also announced it will join the U.N. Human Rights Council as an observer or perhaps run for a membership slot. Either way it is prepared to lend an air of legitimacy of the Council, which is a wholly owned subsidiary of the Organization of Islamic States and exists for the sole purpose of de-legitimizing Israel.

6. Obama's diplomatic and foreign-policy appointments thus far are troubling to say the least from a pro-Israel perspective . One of them, Chas Freeman, who was nominated as National Intelligence Council chief, withdrew his nomination under enormous pressure from AIPAC and other members of the so-called "Jewish Lobby" over concerns that published statements of his evince a bias against Israel. (Ironically, in blaming the "dark forces" of the "Lobby" for his withdrawal Freeman vindicated those opposed to his nomination). But he is just the tip of the iceberg. Consider:

• Samantha Powers, the professor, intellectual and human rights activist who withdrew as an advisor to Obama's campaign last spring after calling Hillary Clinton a "monster." Powers has reemerged as a foreign policy advisor to the administration. She is known as a Palestinian sympathizer who believes the American Jewish community is too influential.

• George Mitchell, Obama's emissary to the Middle-East, is in the mainstream of elite opinion on the matter of Israel,which is itself problematic. According to columnist Caroline Glick of The Jerusalem Post, Mitchell's "first order of business... is to pressure the outgoing government to destroy the so-called outpost communities in Judea and Samaria and expel the hundreds of Israeli families who live in them." In the most optimistic scenario Mitchell will promote and implement the same failed policies that he recommended to President Clinton in 2000, the basic elements of which are (1) to publicly state that both sides are equally to blame for the Palestinian terror war against Israel; and (2) pressure Israel into making concrete and irrevocable concessions in exchange for Palestinian promises of "100 % effort" to fight terror. More likely, reflecting the decided shift in American policy away from Israel, Mitchell will go further and attempt to pressure Israel to quickly agree to give away the Golan, Judea, Samaria and Jerusalem.
• Robert Malley, who is not now a formal advisor to Obama but who is known to influence his thinking, is a revisionist activist who is an apologist for Yassir Arafat who has co-authored article after article with former Arafat crony Hussein Agha blaming Israel for Palestinian terrorism. His think-tank is funded in part by George Soros and his work is used by Israeli Leftists to oppose Israel's Palestinian policies.


• Most troubling of all is Hillary Clinton, the newly minted Secretary of State, who is a dedicated and professional liar (unlike her husband who is merely a pathological one). This is evidenced not only by her presidential campaign statements claiming falsely to have been shot at in the Balkans but also her cynical courtship of the Jewish vote during her first Senate campaign in which she repudiated her warm embrace of Suha Arafat earlier in the 1990s. She is deeply dangerous since she will surely use her current position to advance her interests. And if her interests are served by implementing Obama's appeasement agenda, then so be it.

Hillary's moves so far are cause for concern. Her first action item on her first Middle East trip as secretary was to attend a donor's conference in Sharm-al-sheik in which the U.S. pledged almost a trillion dollars for reconstruction in Gaza following Operation Cast Lead, untethered to any conditions concerning halting Palestinian rocket attacks against Israel. Since all money to Gaza flows through the dirty and bloody fingers of Hamas, this is essentially a giveaway to a terrorist entity we don't officially "recognize."

Hillary then proceeded to Jerusalem, where she appeared all smiles with Ehud Olmert, the disgraced soon-to-be former Israeli prime minister. Hillary reportedly admonished Israel for not doing more to help rebuild and re-arm Hamas even while Hamas continues to lob missiles into southern Israel at its pre-Cast Lead pace. She also criticized the mayor of Jerusalem for demolishing illegally built structures in East Jerusalem as "unhelpful," even though the city's order applies to Jewish and Arab owned structures alike.

Hillary intentionally declared a two-state solution (which many observers find untenable given among other things the rivalry between Hamas and Fatah) as "inescapable" presumably for the purpose of limiting the negotiating room of incoming Prime Minister Benjamin Netanyahu. Some ally.

Finally Hillary made a big show of sending two U.S. envoys to Syria to feel out that brutal dictatorship for signs that it is ready to engage with Israel. It remains to be seen whether Syria, or for that matter any of the thug Arab regimes that surround Israel, will come in for the same criticism and harsh rhetoric that seems to be reserved only for our allies these days.

It is possible that these dark omens for Israel and the Jews are merely fleeting ones. However the observable phenomenon point to increased pressure on Israel to give up its claim to Jewish lands and thus to participate in its own de-legitimization. Sadly, its greatest friend and ally seems to be its greatest threat. It all adds urgency to the warning of journalist Claudia Rosett that "the world is tacitly coming to accept not only persecution of the Jews, but the possibility of a second genocide."

I'm not suggesting that Obama and Hillary are modern day stand-ins for the evil plotters of the Purim story. But clearly there are actors on the world stage who are gunning for Israel and the Jews, including some who are at or very close to the center of power in Washington. The events of Purim give us confidence that ultimately those who have evil designs on the Jews and Israel will be instruments of a great "turnabout" in which they are destroyed and the future of the Jews is finally secure.

The Coming Money Bubble: A Visual Aid

By now you know I am a huge fan of Glenn Beck--radio talk show host, author and now host of a new show on FoxNews at 5:oo pm. Glenn explains how the huge increase in money supply spells big trouble for the country in the not too distant future. (about 5 mins.)

It's Doesn't Have to be all Gloom and Doom

The editorialists at The Wall Street Journal put the current economic crisis in perspective. The basis for recovery lies in several factors that if allowed to play themselves out will bring the markets and the economy back:

The price of oil and other commodities have fallen by two-thirds since their 2008 summer peak, which has the effect of a major tax cut. The world is awash in liquidity, thanks to monetary ease by the Federal Reserve and other central banks. Monetary policy operates with a lag, but last year's easing will eventually stir economic activity.

Housing prices have fallen 27% from their...peak, or some two-thirds of the way back to their historical trend. While still high, credit spreads are far from their peaks during the panic, and corporate borrowers are again able to tap the credit markets. As equities were signaling with their late 2008 rally and January top, growth should under normal circumstances begin to appear in the second half of this year.

In the midst of the fog of fear and anxiety, it is heartening to see that the seeds of an eventual recovery are being sown now. But in any newly planted garden too much rain and not enough sunlight will retard or even prevent growth; Obama's policies are clearly having the same effect on the economy:

Every new President has a finite stock of capital -- financial and political -- to deploy, and amid recession Mr. Obama has more than most. But one negative revelation has been the way he has chosen to spend his scarce resources on income transfers rather than growth promotion. Most of his "stimulus" spending was devoted to social programs, rather than public works, and nearly all of the tax cuts were devoted to income maintenance rather than to improving incentives to work or invest.

Obama's team is trying to rescue banks while he is assailing bankers. His tax proposals punish the very venture capitalists and entrepreneurs whose investments will be necessary to help falling real estate and financial assets find a bottom. Users of fossil fuels will be taxed in order to incentivize them to switch to as yet unavailable alternative energy sources. Manufacturers will have to buy permits from the government to use energy resulting in higher utility costs to you, me and the "working folks" who Obama claims to represent. Private capital is being edged aside in favor of government "investments" in banks, auto companies and other private firms.

The Journal notes that on January 1st the Dow was at 9000, almost 35% higher than it is today. This decline is almost entirely attributable to Obama's policies, which are scaring away both small and institutional investors. The markets crave certainty, but the only certainty out there is that taxes and regulation will increase, energy costs will climb, and wealth will be transferred from investors and producers to shirkers and bureaucrats, with a little taken off the top for the politicans and their favored executives and donors.

How all this ends up helping the people in the middle that Democrats always talk about is not clear to me.

Rick Santelli Sets the Record Straight

Remember Rick Santelli, the CNBC personality with the "rant heard round the world" against the proposed mortgage bailout of President Obama from the Chicago Board of Trade? After a hit piece in Playboy accused Santelli of timing his "rant" to aid the "tea party" protest movement in coordination with right-wing online groups, Santelli hit back. In a CNBC.com column, Santelli said:

Just for the record I have NOT been in favor of any of the bailouts not in the Bush administration nor the Obama administration. Not for the banks, the insurance companies, or the homeowners that purchased homes they can no longer afford. I have consistently questioned the notion that hard working Americans that have played by the rules should be on the hook for others ill fated financial behavior. This is very easily proven....the record is in the video archives of CNBC for any media outlet interested in representing the facts. Furthermore, the "rant heard around the world" (as it has been named by the media) on February 19th was spontaneous....not scripted....and any person, organization, or media outlet that claims otherwise IS INACCURATE.

Why does the Leftist media feel so threatened by Santelli that they must set out to destroy his credibility and impugn his motives? Perhaps its because they can't sustain a debate on the merits of Santelli's impassioned argument. This is textbook methodology on the Left: instead of challenging ideas, they destroy the individual with the ideas. The idea is to intimidate the opposition and his ilk into silence. This is toxic for the body politic.

Thank G-d that some people can't be intimidated. Rush Limbaugh is one of them. Rick Santelli, it would seem, is another.

AIG Bailout: That Worked Out Well.

See if this makes sense:

1. In September, AIG Inc. borrowed $85 billion from the U.S. government which got in exchange a high-interest rate and an 80% interest in the company.

2. In October, in order to address growing problems at AIG, Uncle Sam loans another $40 billion.

3. In November, the U.S. invests another $40 billion in capital, for a total package of $150 billion. CEO Edward Liddy (appointed by the government) said that AIG was "on the road to recovery

4. Today AIG announced a $62 billion 4th quarter loss, the largest in U.S. corporate history.

5. Today the government announced it will increase its stake in AIG by $30 billion, while relaxing the terms of repayment to the taxpayers of AIG debt.

6. The government said that the cost of doing nothing "would be extremely high" while admitting it doesn't know the real risk to taxpayers of doing "something." This is the same argument it made $80 billion ago.

7. The total amount of TARP money available to AIG is $70 billion, 10% of the total TARP program. The likelihood of more AIG bailouts is high, according to economists.

8. AIG is subject to the restrictive compensation limits imposed by the "stimulus" package passed last month, which may actually harm its ability to retain its hghest performing employees, according to the company.

9. Citigroup has received $50 billion and Bank of America $45 billion in Treasury money. In addition the government has guaranteed hundreds of billions of potential bank losses.

10. The government is now in the insurance business, the banking business, the auto business, the health care business, the energy business and likely to be in the radio talk show business.

11. Don't you feel better now?

We Surround Them--The Unveiling

Talk Radio and Fox News host Glenn Beck talks sense. His 9 Principles and 12 Values empower ordinary G-d fearing Americans to look inside themselves and to their families and their communities for strength in these perilous times.

Glenn's We Surround Them Project, like the American Tea Party movement, is a grass roots effort to show America who really runs our country--we do. I hope you will join me and millions of Americans March 13th for the unveiling of Glenn's project on the Fox News Channel at 5:00pm eastern.

Until we have true political leaders who speak for us, we need to speak for ourselves.