Manque Dilettante: Team Obama

Sorry for the sophisticated Gallic headline, translation:  Obama’s got NO BALLS!

But then again, liberal men self castrate themselves.  Here’s how!

Self loathing, for the west, begins in the absence of physical exertion.  This is an attribute the English aristocracy embellished so well before the end of Empire.  It has now enveloped the west.  

Obama’s rhetoric betrays an unbecoming trait, an unwillingness to take tough stands.  Remember what George Bush said, ‘you get hammered for taking tough stands.’  

Last weeks press conference revealed a man unwilling to admit, never mind confront the challenge that is ISIS.  He said, “people like this ultimately fail”.  

That’s it?

In Obama’s world, progress is inevitable, its intrinsic that governing norms are self executing.

Did you get that?

Most working people understand an uncomfortable truth about team Obama.  The default strategy in dealing with foreign affairs is to do the absolute minimum necessary.  

We should remember that Tehran, Damascus & Beijing is watching.

Its gonna be a long August. 

 

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An Israeli Victory: Un-finished Business

Everyone knows how Clauswitz viewed war as politics by ‘other means’.  He understood that war must have political objectives.  The Israeli’s are used to being in a state of near permanent war.  The defeat of Hamas permits Jerusalem time to view its positioning synoptically among emerging geopolitical threats. 

While ISIS emerges throughout Syria, Iraq, its reach is beginning to be felt in northern Israel and Jordan.  Even with nearly 60% of Hamas’ rockets destroyed, Israel moved forward to assassinate its number 2 and 3rd in command, Mohammed Deif along with Izz ad-Din al Qassam Brigades.  Both are now gone.  Even the destruction of Gaza’s war infrastructure created nearly 100,000 homeless and blocks of destruction.  Hamas’ own people know that responsibility lays with Hamas.  It agreed to identical terms proposed by Israel on July 15.  Hamas has lost both its prestige, its weaponry and its tactical advantages. 

Here’s the bad news.  The Israeli Prime Minister’s poll numbers are down to 38%, this is dangerous in a Parliamentary system.  Team Obama seeks to constrain and humiliate Israel.  It is isolated, but for the American citizen!

Israel’s only advantage in having hurt, degraded Hamas is that it exposed team Obama to wage a diplomatic public relations campaign that HE LOST!  By exposing Obama as anti-Israeli, Netanyahu permitted Israel’s only advantage to proceed un-interrupted:  The American Citizen.  

Team Obama must now wage anti-Israeli diplomatic initiatives isolated from the American citizen.  He’s exposed now, with mounting crisis’ from Beijing to Baghdad.  

My monies on Israel backed by the American citizen. 

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Israel: New Diplomatic Minefield w/o U.S. Ally

News reports are leaking that Petro Monarchies are putting together another Gaza flotilla to embarass the Israeili’s is building.  This isn’t good news for Israel’s main political ally, the U.S. continues to send broad public messages of its distain for Israel.  All signs point to an impending diplomatic catastrophe.  

The minefield that could envelop Israel has two components, one tactical, another ideological. 

Hamas wants to open the Rafah crossing into Egypt.  This is Gaza’s connection to the Arab world.  It has been shut by Gen. Abdel Fatah al Sisi who seeks the destruction of the Muslim Brotherhood, the parent organization of Hamas.  

The pretext for the opening of Rafah is ‘development’!  Try not to laugh, its true.  Hamas is seeking humanitarian commodities like cement to solidify its control and rebuild.  The I.D.F’s chief of staff, Lt. Gen.  Benny Ganz continues to provide Gazan citizens with material support.  

Hamas was formally defeated by the Israeli’s.  Nearly 60% of Hamas’ rockets were destroyed, most of its tunnels and formal combat infantry decimated.  However, Israel may well find itself surrounded as Daesh threatens to add Lebanon, Libya, Somalia & Yemen.  Europe has already been peeled off by Iranian agitation.  Geopolitically, the Israeli neighborhood is deteriorating. 

It is my firm belief that the Israeli Navy can counter and interdict the imminent tactical advance of another flotilla.  

How should the Israeli’s go forward:  disarm the beligerents by force, prevent them from rearming and split off Arab citizens seeking a better life. 

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Federal Reserve: Out of Ammo, AGAIN.

Myths die hard in America.  So it goes with the idea of the ‘Phillips Curve’ and the belief that an institution can control both labor market activity and inflation simultaneously.  Even though Reagan & Volcker killed this ideological behemoth, the institutions that teach economics, especially post-graduate monolithic institutions, continue to keep it alive.

As of this writing, the Fed. as not been able to effect labor markets.  It has damaged asset prices, which continue to spike.  Asset infation is the new price spike.  

With Jackson Hole wrapped up, I’d like to offer a few thoughts about going forward toward ‘normalization’, meaning policy briefs that permit markets to allocate/destroy.  In a word:  capitalism!  Instead, American capital markets suffer from politically allocated forms of credit masking Fed. dependency.  Will we ever return to normal?

Going forward, we need to do the following:  get rid of ‘ZIRP’ (zero interest rate policy), return the Fed’s traditional mechanism of federal funds rate BACK into its indigenous portfolio.   This means that the traditional mechanism used by the Fed is NO longer operational.  It must be brought back to life IF capitalism is to survive.  This over-night lending among banks to balance their reserves in compliance with the Fed’s capital ratio’s is a must.  Macro-prudential oversight is a myth; its called crony capitalism.  It’s what they do throughout Asian markets to build dominant market share.  Dump Q.E.  The Fed withdrew liquidity by selling T’bills to the banks; it increased it by buying T’bills.  The reality of ‘high-powered’ money was always negligible.  The Fed never really did ‘just print money’, it exchanged equal ratio’s of debt for cash.  The absence of traditional interest rate control mechanism must be restored IF the Fed is to get a handle on money creation/inflation.  

Instead, what the Fed has sought is the regulation of baseline money through payment of higher interest on excess reserves on deposit at the Fed.  In reality, this is not a viable policy.  Here the Fed seeks to persuade banks to tighten credit by bribing them with higher returns.  This could dangerously wipe out the Fed’s own capital base.  Remember, it only had $80 billion to return to Treasury, hardly enough to finance the kind of largess imaged by FOMC members. By making credit more expensive, the Fed would need to pay out to foreign owned institutions.  How do you think that’s gonna play out domestically?  And just whay does the Fed wish to destory its own earnings?  

Overnight borrowing by the Fed is called REPO.  Its utterly laughable to think the Fed could manipulate so broad a market as the r.e.p.o. market.  It would entail possessing knowledge of foreign capital markets as well as dominant foreign players like Russia, foreign commodities or sovergn funds like the House of Saud.  

The Joint Chiefs have a saying:  Mission Creep.  The Fed possesses it now in spades. 

It began when Fannie/Freddie received a dispensation from Treasury to dump their portfolio at the Fed’s door step.  We still haven’t had a market sell-off of morgaged backed securites.  We need one. 

Here’s a thought George Melloan had:  “If the Fed cannot control interest rates or the money supply or inflation, why does it think it can rule by fiat macro-prudentially?”

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Fallacy of Western Collectivism & Moral Superiority

The west’s moral crisis is similar to Islam’s.  Both need to re-discover the role of reason.  Secular fanaticism is just as real as theological fanaticism.  Remember the definition of a fanatic?  Its someone who refuses to distinguish between ends & means. 

What is the origin of this fallacy?  

Secular fanatics believe in a dualism, they believe that the basic components of reality are binary.  Since the Enlightenment, the west believed that reality was an indissoluble unity, it was for Einstein as he grabbled with the components of a unified theory.  For those with a synoptic education, science was always a justification for sound philosophy.  Nevertheless, secular fanatics always believed that reality is composed of a dualism.  We witness it everyday in major news media throughout the west as we witness that world opinion is a wellspring of great moral authority.

Did you get that?

A philosophy of pure immanence provides the foundation for moral norms.

Secular fanatics believe that this component of reality is self executing?  No need for political institutions right!!

Are sentiments alone sufficient?

Remember Dr. Martin Luther King Jr?  Remember how he spoke that the arc of the moral universe is long, but it bends toward justice!!

Is this the secret from ‘leading from behind’?

From North Korea, to the Iranian Gulag we continue to witness an evil we remain unwilling to confront.  

In THE real moral universe, political institutions are needed to execute strategy to create, if not force, the creation of Judeo-Christian norms.  For the secular fanatic, the sentiment alone suffices.

Team Obama cannot anticipate that his secular humanism of sufficient sentimentality provides a license for fanatics across the globe.  

Here in the west, we ardently believe in a philosophy of time that unites ethics and progress.  

Theological fanatics know differently. 

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Emir Muawwyyah bin Ismail: Exiled Leader of Yazidi Speaks

Typical of our nominalist POTUS (President of the U.S.), words make reality.  Evidenced by recent U.S. bombing of jihadi positions between the northern Iraqi cities of Mosul & Erbil, indigenous Yazidis are no longer harmed by ISIS.  By removing the threat of an emerging self declared Caliph Abu Bakr al-Baghdadi, the Americans can claim victory and come home. 

But according to the Yazidi spokesman Magdi al-Yazidi, the threat has morphed into low intensity warfare.  Several major villages throughout northern Kurdistan like el-Qush & Shaikhan continue to be hit even besieged.  What team Obama fails to acknowledge is that the Yazidi’s, being non-Muslim, are subject to forced conversion or murder.

According to the Parisian exiled leader of the Yazidis, Emir Muawwyyah, his people survived the forced cultural assimilation of Hussein’s Bath Party only to need greater force protection from fellow Iraqi’s.  This was the job description of the previous Iraqi PM, having failed, the Yazidis are at the mercy of US strategic thinking. 

“To Us Spoke Zarathurstra” is the book title from Amir Taheri’s 1983 masterpiece.  Written after six months of interviews with Emir Muawwyah, Taheri reveals that the Kurdish Yazidis possess strong pacifict convictions making them subject to violence from centralist, socialist tendencies typical of Arab regimes.  

“The Yazidis always pretended to be Muslim” says Muawwyyah.  It was the only way to avoid genocide.  

The image of a non-Muslim people living in the heartland of Iraq scandalizes fanatical Muslims who seek forced conversions and ‘Ghazi’, the social standing of being a Holy Warrior.  The Yazidi’s also shun polygamy, an unthinkable moral attribute for any Ghazi. 

There are 1.8 million Yazidis in Syria, Turkey, Iran and Transcaucasia.  We should remember that Iraq remained a historic mosaic of foreigners, even under previous Caliph’s.  Six decades ago, Baghdad’s population was 20% Jewish.  Today there are only 6 Jews in Iraq.  

The self proclaimed Caliph, Abu Bakr’s dream of possessing an Iraqi state governed by forced imposition of Sharia is taking place. 

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Are American Jews Leaving the Democratic Party?

Given the openly hostile treatment the Obama administration continues to give Israel, maybe its time for devoted American Israeli’s to have their ‘Reagan Moment’.  

Remember when Reagan said, ‘I didn’t leave the Democratic Party.  The Party left me.”  

The impact the Hamas conflict had on U.S.-Israeli bilateral relations was on display recently as ‘Bibi’ worked Congressional support on military shipments to Israel, outmaneuvering team Obama.  State insists that the current ‘squeeze’ is routine.   But a ‘review’ of American policy is a warning to Netanyahu and an invitation to his political opposition that their nation is at odds with an essential ally. 

Two points to ponder:  the Israeli prime minister firmly believes that he can continue to outmaneuver team Obama by exploiting political divisions in American government.  Secondly, how tenacious can Bibi remain if Obama delivers an open, public rift between Israel & the U.S. 

It is obvious that Obama wants a liberal lapdog in Israel. Its also obvious that team Obama make a serious strategic mistake in linking Hamas as representative of Palestine.  As one Israeli paper headlined, “US livid with Israel, Hamas can’t believe its luck.”

Obama’s approval rating among American liberal progressives is down from 78% in 2008 to 55% now. 

Is this the emerging ‘Reagan Moment’ for American Israeli’s?

 

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Shinzo Abe: The Failure of Japan’s Ruling Class

The American political economy isn’t doing much better either.  At least we’ve got multiple industries devoted to intellectual patrimony that brought us the ‘Reagan Revolution’.  That much cannot be said of Japan’s ruling elite nor Shinzo Abe’s reforms.  The complete utter lack of ‘R’epublican supply/incentive side macro policy is becoming obvious.  So is deflation.

Japan’s second quarter took a dive, contracting 6.8%.  Even though most of its citizens spend heavily during the first quarter, the newly minted ‘consumption tax’ is hurting.  Hopefully the identical  keynesian gnomes at the E.U. and the U.S. are watching how this VAT tax eats growth.  In the coming years, we should watch as Japanese citizens move heavy purchases continually to the first quarter to avoid taxation.  

How else to say it:  Prime Minister Shinzo Abe’s decision on taxation will damage any emerging economic recovery.  The problem is intellectual!!  Let’s take a look.  Japan’s been here before in 1997 when it increased consumption taxes to 5% wrecking an emerging recovery.  HERE’S THE INTELLECTUAL FAILURE:  JAPAN’S FAILURE TO REVIVE ITS ECONOMY WITH FISCAL STIMULUS (read taxation) KEEPS PROVING KEYNESIAN THOUGHT WRONG, BUT NEW JUSTIFICATIONS ARE ALWAYS FOUND ABSOLVING ITS POLITICAL CLASS FROM RESPONSIBILITY.  

This is why elections matter.  This is why the very best statesman develop talents outside the confines of orthodoxy.  In other words, Abe needs to break from the suffocating, myoptic confines of Japanese Keyneisan orthodoxy. 

Translation:  he needs to grow a set of balls. 

Abe has failed to deliver on promises to deregulate, undertake major domestic reforms, specifically on federal/state subsidies.  He’s gone protectionist on Trans-Pacific Partnership.  He’s also accelerated Q.E. to highten asset/stock price/earnings ratio’s, yet still, an indigenous recovery has proved ellusive. 

The Japanese headwinds are severe, with falling consumption, depleted GDP, rising taxes, aging population, demographic decline and falling real wages.  

Its a total crisis for the Japanese economy, something conservatives in the west are familiar with. 

The debt trap that keynesian thought procured can only be smitten with pro-growth fiscal policies. The Japanese tax-spend orthodoxy must be taken straight-on.  

Ditto for the macro gnomes in the west. 

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Iraq 3: The Return of the Repressed

Regardless of the rhetoric animating the relaxed posture of team Obama, we are at war again in Iraq for the third time in 25 years.  Maybe this time, he’ll finish the job!

Least we forget, he was handed a ‘win’ on a war he characterized as ‘lost’.  

Will he execute, fight it vigorously enough to defeat the jihadists who threaten both human rights, the region and American interests?  

The sad part is this:  we can’t tell.

That’s the larger political storyline missing from the emerging chaos inside Iraq.  

Prime Minister Nouri al-Maliki is refusing to accept the political decision from Iraq’s newly elected Prime Minister, one elected from al-Maliki’s own Dawa Party, that he be replaced by Haider Al Abadi.  

How will this play out?  Its possible that the Iraqi Army will split into warring factions. The best Al Abadi can do is to guarantee immunity and protection for Maliki.  Regardless of how Iraq transitions politically, it is NOT the nations main challenge.  Defeating an emering Sunni Caliphate is.  The Islamic State in Iraq & al-Sham now controls western Iraq and regional border with Syria & Jordan.  It holds territory and the Iraqi Central Bank!!  Something Lenin could only dream of. 

Although the U.S. has bombed to stop ISIS, its advance against Kurdish territory north of Bagdad must be stopped.  Both the White House & the Pentagon have badly misjudged the strength and political ambitions of ISIS, only ‘boots on the ground’ can stop it. 

The twin oil producing cities inside Kurdish territory, Kirkuk and Erbil and now besieged.  Obama’s ‘JV Team’ is winning on the ground. A bad mischaracterization has now morphed into a regional foreign policy crisis.  American progressives can’t bring themselves to acknowledge that this JV team is a ruthless jihadi army on the move. 

Our major interest and strategic priority should be engaging and defeating ISIS so that it cannot establish a Caliphate in Bagdad.  If we fail here, we should expect the entire Iraqi state to become a mecca for global jihadi’s who will train and export terror.  

A strategy of contaiment is insufficient. 

Just as Clauswitz taught that war is politics by other means, US strategy to defeat ISIS will also make it easier to solve Iraqi political disputes.  Sunni sheiks in western Iraq don’t trust nor cooperate with an emering Shia in Baghdad.  If they anticipate a continuation of non-accommodation, Iraq will splinter into regional groups.  Just ask the Kurds.  

Can team Obama learn what C.O.I.N. teaches?  Namely that any enduring political solution must be preceeded by a definitive military defeat.

Team USA has no regional influence given how we’ve treated the Iraqi ‘problem’ under team Obama.  Since the withdrawl of troops in 2012, we’ve reduceed our capacity and institutional posture rendering us impotent. The WSJ reported that we pledged to rebuild the military airfield at Baldad but failed to do so.  We’ve delivered only one F-16, its in Arizona for Iraqi training!!  A third of Iraqi 150 M1 tanks aren’t in local service because U.S. contractors aren’t present in Iraq. 

The more we’ve neglected our regional influence, the more the Iraqi’s turned to Russia, China and IRAN.  

We’ve refused to arm the Kurds.  We’re inundated with the ideological prerequisite that Iraq discover and field political solutions first.  

The result:  an emerging ISIS on the ground with assets and an IMPOTENT US. 

None of this is lost in Tehran. 

A policy of rollback would include the following:  immediate bombing of regional ISIS outposts, arming Kurdish leadership with US forward moving air power moving south, maintaining a defensive wall around Kurdish territory, New US political commitments to gain and field a confident Iraqi military.  Then assist the Iraqi’s in retaking lost territory.  Invite regional players like Turkey and smaller Sunni neighbors to assist.  

The political and strategic myopia that procured this regional mess must be uncovered.  A blunder of US withdrawal invites defeat.

Let’s roll……

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The Ideological Drive Animating Policy Convictions Of F.O.M.C.

The Federal Open Market Committee (FOMC) is responsible for setting macroeconomic policy trends in consultation with its chairman.  Why is this significant?  Keynesian thought has overt socialist underpinnings that work at odds with market based trends.  The classic case is the resurrection of the ‘Phillips Curve’.  This doctrine was only valid when America was a manufacturing hegemon requiring centralized politics, it was an idea that was effectively killed by Volcker and Reagan.  It held that central bank policy was a consistent trade-off between inflation or employment.  With the arrival of digital based decentralized political economy, it really has no place in the policy calculations of any contemporary fed.

It is still taught at major Universities, think tanks and respected heroes of socialist, centralized policy convictions like Dr. Krugman.  It was lambasted recently by Volcker while being interviewed at Princeton.  The single most significant ideological point is that both Reagan and Volcker defeated this ideological myth before the arrival of digital, decentralized relations.

Simply put:  there never was a valid basis for the presupposition that was ‘the Phillips Curve’.    And yet, with team Obama, its back.

Why is this a problem?  The Federal Reserve has thrown trillions of dollars at the economy in an effort to boost job growth.  Its been a strategic failure.  Why does it continue to do it?  Because it want’s to remain relevant.  The Fed is a creature of Congress and it will do whatever it can to assist Congressional majorities from having to make difficult policy choices.

What has Q.E. gotten us?  An asset bubble, easy money toward monolithic financial institutions that borrow on the cheap and sky-high price/earnings ratio’s.  Yet our unemployment rate is still hovering around 17%.

The Fed got the mandate to seek high employment in 1978 under the Humphrey-Hawkins law.  This shifted the political/policy responsibility of employment off the political base of Congress toward the Fed to seek policy arrangements that would sustain stable prices consistent with targeted employment.

To achieve this, the Fed tinkers with interest rates to effect the monetary base whose impact is seen in the public’s discretionary spending.  The problem is that since 2008, THIS has not worked.

Debasing the dollar in the hope of creating jobs has failed.  If we had a more intellectually responsible Congress & Fed, we would see that to fix the U.S. economy would require fiscal reform.

When the Humphrey-Hawkins Act was passed in 1978, unemployment was 5.8%.  From 1947-1971 America averaged unemployment was 4.7%.  Currently, team Obama has never gotten below 6.4%.

What’s the significance of the above citation of 1971?

That’s when America decided to end the Bretton-Woods monetary system which enabled every foreign government on the planet to redeem their dollars for gold at a fixed rate.  When Nixon closed the ‘gold-window’ we entered the age of fiat money & the ‘great inflation’.

From 1971 to ‘Morning Again in America’ (1980) under Reagan, the U.S suffered incalcuable social, political harm, something those living under the Weimar Republic or the German ‘Gotterdammerung’ experienced.

IT ended in 1982, when Reagan & Volcker succeeded in killing the rate of excessive money growth (inflation).

Then came the 25 year boom that ended in 2008.

We can do it again.  We need leaders with balls.

(Read the world’s best account of how Reagan/Volcker succeeded in the late great WSJ senior editorialist Robert Bartley account The Seven Fat Years at Amazon for 1 CENT.)

 

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