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"INTERMEX POWER" - 25 new articles

1. 2/9/10 John Stossel on O'Reilly: Free Golf Cart Thanks to "Green" Tax Credit
2. Stossel's Government Handout?
3. Van Rijn Says Japan Car Recalls Part of U.S. `Revenge': Video
4. 2/9/10 Ron Paul on Cavuto with Brian Sullivan
5. Why the Media Ignored a Scandal
6. Phony Centrists Pay the Price for ObamaCare
7. A Rand Revival
8. Breitbart’s Keynote Address
9. Equities, Euro, Commodities Rally
10. Eric Fry, reporting from Laguna Beach, California...
11. A refreshing dose of honesty
12. Clueless in Washington
13. News Hub: Volcker's Impact on Goldman Sachs
14. Hot Stocks: Industrials Surge
15. Who Rules the Tea Party
16. Republicans and the Populist Temptation
17. Cheney's Revenge
18. PM Report: Rep. Murtha Dies at Age 77
19. Toyota Recalls Dent Vaunted Image in Japan
20. ‘PIGS’ Crisis Is Opportunity for Euro to Stand Up
21. U.S. Losing AAA Is Way to Rein in Pelosi, Reid
22. Job Openings in U.S. Rose in December
23. Greece Says Call for Aid Would Send ‘Worst Signal’
24. Inventories at U.S. Wholesalers Unexpectedly Fall
25. Glenn Beck- February 8, 2010 (Part 1/4)
26. Search INTERMEX POWER

2/9/10 John Stossel on O'Reilly: Free Golf Cart Thanks to "Green" Tax Credit

Stossel's Government Handout?

Van Rijn Says Japan Car Recalls Part of U.S. `Revenge': Video

2/9/10 Ron Paul on Cavuto with Brian Sullivan

Why the Media Ignored a Scandal

Why the Media Ignored a Scandal
by Byron York

Two weeks before the 2008 Iowa caucuses, the National Enquirer published a detailed story reporting that Democratic presidential candidate John Edwards had had an affair, and that the woman involved -- campaign videographer Rielle Hunter -- was pregnant, and that Edwards had arranged for an aide to falsely claim to be the father, and that Hunter and the aide and the aide's family were being taken care of financially by a wealthy Edwards supporter.

It was, to say the least, explosive.

At the time, Edwards was a serious contender in the Democratic presidential race, so when the story was published, his aides prepared for what some believed would be an onslaught of media scrutiny.

But it didn't happen. Although Edwards could not have known it at the time, it turned out that many journalists just didn't want to report the news and didn't try very hard to uncover the facts.

The tale is told in the new book "The Politician" by former Edwards aide and confidant Andrew Young, the man who, at Edwards' insistence, claimed that he, and not the candidate, was the father of Hunter's child.

By mid-December 2007, Edwards knew the Enquirer story was coming. With Iowa fast approaching, he came up with an I'm-not-the-father cover-up scheme, believing that having Young claim paternity would deflect blame away from the candidate himself. "It's going to be a one-day story, Andrew," Edwards told Young, according to Young's account. "No offense, but the press doesn't give a s--t about you."

Going Rogue by Sarah Palin FREE

So the statement was drafted. In addition to claiming paternity, Young wrote that Edwards "knew nothing" about the relationship.

It was a preposterous lie, but Edwards went ahead, offering the one-paragraph explanation to any reporters who asked. The candidate and his top advisers, Young wrote, "expected the (media) onslaught" to begin as soon as the Enquirer posted its story online. Young sent his family out of town to spare them the firestorm.

But then ... nothing. "To our relief, no serious newspaper or TV network picked up the story because they couldn't find a source to confirm it," Young wrote. The damage was confined to a few Web sites. "We began to think that perhaps our strategy had worked," Young said.

What followed was a bizarre series of events in which Fred Baron, the wealthy Edwards supporter, paid enormous sums of money to fly Hunter and the Youngs around the country to keep them out of sight until after the Iowa caucuses, and then the New Hampshire primary, and then, when the campaign fizzled but Edwards still had hopes of making it onto the Democratic presidential ticket, until after Hunter had the baby.

Still no word of it in the press. But the Enquirer was not finished. In July 2008, the tabloid published a detailed account of Edwards' visit with Hunter and the baby at a Los Angeles hotel.

"Andrew, they caught me," a tearful Edwards is quoted as telling Young in a phone conversation. "It's all over."

Surely now, Young thought, the media would jump on the story. But it didn't happen. The New York Times, the Washington Post, the Wall Street Journal, the Los Angeles Times, the broadcast networks and the cable-news outlets -- none reported the story. This time, though, it finally bubbled up, from the blogs to talk radio to late-night television. By the second week of August, Edwards appeared on ABC News to semi-confess.

An explosive scandal had been kept out of the press for months at a time when the man at the center was an important player in national politics. Why?

Young thought it was because the Edwards camp so tightly controlled information that journalists weren't able to find sources to corroborate the Enquirer's reporting. While that may have been part of it, the fact was, many editors and reporters just didn't want to tell the story.

Maybe they admired Edwards' cancer-stricken wife, Elizabeth. Maybe they saw no good in exposing Edwards' sordid acts. Maybe they looked down on the National Enquirer. Or maybe they were just biased. "In the case of John Edwards," said Washington Post media reporter Howard Kurtz, "even though it was clearly out there -- everybody in America knew about this well before CNN and the New York Times and the Washington Post got into this game -- there was still a great reluctance."

Of course, in the end the story came out anyway -- but only after the sheer weight of Edwards' corruption made the facts impossible to ignore, even for sympathetic journalists.

Phony Centrists Pay the Price for ObamaCare

Phony Centrists Pay the Price for ObamaCare

Jennifer Rubin -

In observing the unraveling of the governing coalition and the vicious infighting breaking out in the Democratic party (”Who lost ObamaCare?” will obsess the Left for years, I suspect), James Taranto writes:

One can fault President Obama for pursuing an agenda that would be bad for the country or for his party. But one can hardly fault progressives in Congress, much less activists who don’t even hold office, for seeking to advance the ideology in which they believe–for taking their own side in an intraparty debate.

The problem is that Democratic centrists rolled over. Either they yielded their centrist principles in the face of progressive intimidation, or those principles didn’t amount to much to begin with. The most dramatic illustration of this point is the list of moderate Democrats in the Senate: Evan Bayh, Mary Landrieu, Ben Nelson, Bill Nelson, Blanche Lincoln, Jim Webb. Every one of them voted for ObamaCare. Any one of them alone could have put a stop to ObamaCare simply by casting a vote against cloture. Several of them voted “yes” in exchange for special privileges for their states, making quite clear that theirs was not a principled stand.

I think the answer to that is “those principles didn’t amount to much to begin with.” Indeed, these “centrists” didn’t merely fall off the fiscal conservative bandwagon on ObamaCare — not one of them opposed the monstrous stimulus plan. Only Evan Bayh opposed the 2009 noxious $410 billion omnibus spending plan with 8,500 earmarks. In other words, the so-called moderates never demonstrated any real moderation or inclination to restrain the Reid-Pelosi-Obama juggernaut.

And when confronted with legislation their constituents hated and that defied the fiscal conservative line on which they had ridden into office, they readily complied with their liberal leadership, in no small part because they perceived the risk of crossing the president and their Democratic colleagues to be greater than the risk of angering moderate voters. This was especially true for those who would not face the voters this year. (Only Bayh and Lincoln will.)

It’s a well-known pattern for many Democrats, Harry Reid included, from Red or Purple states: talk a conservative game back home, make speeches on fiscal sobriety, and roll over for liberal leadership when it comes to actual votes. Usually they get away with it when the public is not so engaged, the legislation is not so controversial, and Republicans blur the lines by defecting to vote with the bulk of Democrats. But here the public was vigilant, the legislation was noxious both in substance and in process, and Republicans held the line in their unanimous opposition to ObamaCare. So now these “centrists” are finding it hard to hide and explain why they threw in their lot with Reid-Pelosi-Obama. They may regret having “blown their cover” as faux fiscal conservatives for a bill that probably won’t pass and that is now the rallying point for an energized opposition.

A Rand Revival

A Rand Revival
By Cathy Young

Ayn Rand, the controversial Russian-born American writer, would have turned 105 years old on February 2. This anniversary takes place amidst a Rand mini-revival, sparked by the Obama Administrations push to expand government and resulting fears of socialism on the march. There has been a spike in sales of Rand's books, particularly Atlas Shrugged, the 1957 novel depicting a quasi-totalitarian future America in which the best, the brightest and the most productive go on strike in protest. Some bloggers have bandied about the idea of such a strike under Obama going Galt, after John Galt, the leader of the revolt in the novel. Rand has recently appeared on the cover of Reason, the libertarian monthly (where I am a contributing editor) and of GQ where she was the target of a profane, vitriolic rant.

Who is Ayn Rand, and what does her renewed popularity mean? A refugee from Soviet Russia who fled Communist dictatorship in the 1920s, Rand called herself a radical for capitalism rather than a conservative. Her vision, articulated in several novels and later in nonfiction essays as the philosophy of Objectivism, earned her a sometimes cult-like following in her lifetime and beyond it.

Politically, Rand wanted to provide liberal capitalism with a moral foundation, challenging the notion that communism was a noble but unrealistic ideal while the free market was a necessary evil best suited to humanity's flawed nature. Her arguments against "compassionate" redistribution, and persecution, of wealth have lost none of their power and persuasiveness. In an era when collectivism was often seen as the inevitable way of the future, she unapologetically asserted the worth of individual and each persons right to exist for himself.

However, Rand's radicalism went further, rejecting the age-old ethic of altruism and self-sacrifice. While she was hardly the first philosopher to advocate a morality of individualism and rational self-interest, she formulated it in a uniquely accessible way and a uniquely passionate one, not as a dry economic construct but as a bold vision of struggle, creative achievement and romanticism.

All this accounts for much of Rand's appeal. But that appeal is severely limited by the flaws of her world-view.

One of those flaws is Rand's unwillingness to consider the possibility that the values of the free market can coexist with other, non-individualistic and non-market-based virtues--those of family and community, for example. Instead, Rand frames even human relations in terms of trade (our concern for loved ones is based on the positive things they bring to our lives) and offered at best lukewarm support for charitable aid. When charity is mentioned in Rand's fiction, it is nearly always in a negative context. In Atlas Shrugged, a club providing shelter to needy young women is ridiculed for offering help to alcoholics, drug users, and unwed mothers-to-be.

Family fares even worse in Rand's universe. In her 1964 Playboy interview Rand flatly declared that it was "immoral" to place family ties and friendship above productive work; in her fiction, family life is depicted as a stifling swamp.

In pure form, Rand's philosophy would work very well if human beings were never helpless and dependent on others through no fault of their own. Unsurprisingly, many people become infatuated with her philosophy as teenagers only to leave it behind when concerns of family, children, and aging make that fantasy seem more and more implausible. For some, Rand becomes a conduit to more sensible small-government philosophies.

But Rand's work also has a darker, more disturbing aspect--one that, unfortunately, is all too good a fit for this moment in America's political life. That is her intellectual intolerance and her tendency to demonize her opponents. Speaking through her hero John Galt, Rand declared, There are two sides to every issue: one side is right and the other is wrong, but the middle is always evil. She lambasted free-market theorists such as Friedrich A. Hayek for their lack of purity in allowing the government a legitimate role in alleviating poverty and its effects. In her novels, supporters of various forms of collectivism--moochers and looters--are shown as acting by stealth to take over and corrupt society and culture.

Rand's detractors have often branded her a fascist. The label is unfair, but her work does have shades of a totalitarian or dictatorial mentality. To refute this charge, Rand's defenders point to her explicit statements that force is acceptable only in self-defense. Yet her fiction sometimes seems to contradict this principle.

Particularly troubling is a passage in Atlas Shrugged in which bureaucratic incompetence and arrogance lead to a deadly train wreck. Rand sarcastically notes that many people would regard the dead passengers as innocent victims of a tragedy and then, in a series of brief character sketches, endeavors to show that they were far from innocent: All had benefited from evil government programs, promoted evil political or philosophical ideas, or both. Especially chilling is Rand's casual mention of the fact that one of these evildoers, a bureaucrat's wife, is traveling with her three young children.

Rand does not advocate these people's murder (though she is sympathetic to a trainmaster who chooses not to avert the disaster, partly in revenge against the regulators). Yet she clearly suggests that they had it coming. Both in Atlas Shrugged and in Rand's nonfiction essays, political and ideological debates are treated as wars with no innocent bystanders.

Rand's achievement as a promoter of the ideas of individual liberty, reason, and the free market remains unquestionable. In the 21st century, when our public discourse is often dominated by religious conservatives on the right and collectivists on the left, such a message could have been a rallying point for what the neo-Objectivist philosopher David Kelley calls "Enlightenment-based values." Unfortunately, her extremism limits her value as a messenger, and our current intellectual climate makes it likely that many of her new admirers will adopt not her best traits but her worst: intolerance, paranoia, and dehumanization of the enemy.

Cathy Young writes a weekly column for RealClearPolitics and is also a contributing editor at Reason magazine. She blogs at http://cathyyoung.wordpress.com/. She can be reached at cyoung@realclearpolitics.com

Breitbart’s Keynote Address

Breitbart’s Keynote Address To The First National Tea Party Convention

by Andrew Marcus

Below is the entirety of Andrew Breitbart’s remarks during his Keynote address to the National Tea Party Convention in Nashville last weekend.

During Breitbart’s 33 minute long address, he threatens to upend the entire media establishment, calling them out on their hypocrisy while demanding they change their ways, or else.

The entire speech is available in this post and is broken down into four parts, but if you would like to view some of the highlights, you can click on any of the eight links below:

1. It’s You That Sucks!
2. You Better Bet Your Ass!
3. Just Add al-Qaida
4. MSM McCarthyism
5. Breitbart Challenges Soros
6. There Are More Tapes
7. The O’Keefe Arrest
8. Breitbart Issues An Ultimatum To The Media

Full Address Parts 1-4:

Part 1

Part 2

Part 3

Part 4

Equities, Euro, Commodities Rally

Feb. 9 (Bloomberg) -- Stocks rallied, with emerging-market equities recovering from the worst three-day slide in a year, and the euro and commodities gained as European officials said they were considering financial assistance for Greece. Treasuries tumbled, while Greek bonds surged.

The Standard & Poor’s 500 Index rose 1.3 percent at 4:10 p.m. in New York. The MSCI Emerging Markets Index increased 1.9 percent after falling 6.1 percent in the past three sessions. Greece’s ASE Index climbed 5 percent, rebounding from four days of losses. The euro strengthened the most in more than five months against the dollar, snapping four days of declines, and ended a three-day drop against the yen. Oil, copper and aluminum surged at least 2.2 percent to help lead gains in commodities.

Germany is considering assistance for Greece after the country’s deficit threatened the stability of financial markets, two lawmakers from Chancellor Angela Merkel’s governing coalition said. Olli Rehn, who takes over as European Union economic affairs commissioner tomorrow, said EU support for Greece will be discussed in coming days.

“The move up today is on speculation of a Greek bail-out package,” said Liam Dalton, who oversees $1.4 billion as president of Axiom Capital Management in New York. “The investment community believes that when things reach a crisis stage, governments will step in and attack the problem with policy. Investors are assuming that it will happen again.”

The S&P 500 erased yesterday’s 0.9 percent drop. The Dow Jones Industrial Average rallied above 10,000 after closing below that level yesterday for the first time since November on concern deteriorating European government finances will hurt economies elsewhere.

Global Rebound

The MSCI World Index of 23 developed nations’ stocks increased 0.9 percent, ending four days of losses.

Europe’s Dow Jones Stoxx 600 Index climbed 0.1 percent. The regional benchmark erased most of a 0.7 percent rally after Fitch Ratings said Greece’s medium-term outlook remains “cloudy” and the U.K. needs to pledge further measures to rein in its budget deficit. The comments from German lawmakers Michael Meister and Frank Schaeffler indicating possible assistance for Greece came after equity markets closed in Europe.

The 16-nation European currency climbed as much as 1.4 percent against the dollar, its biggest gain since Sept. 8. The euro appreciated 1.4 percent versus the yen and 0.2 percent compared with the British pound.

‘Smelling a Deal’

Greek banks led the gains in European stocks as National Bank of Greece SA, the nation’s biggest lender, surged 7 percent in Athens, while Alpha Bank AE jumped 15 percent. The 10-year Greek government bond rose, with the yield falling 37 basis points to 6.40 percent.

“The markets are smelling a deal for Greece, and for that reason we’re seeing some stabilization,” said Robin Marshall, director of fixed income in London at Smith & Williamson Investment Management, which oversees about $20 billion. “It’s hard to see there not being one, given the potential fallout and contagion effect.”

Brazil and Taiwan shares led the advance among major emerging markets, with the benchmark Bovespa and Taiex indexes climbing more than 2 percent. Developing-nation currencies strengthened, led by a 1.5 percent advance in Brazil’s real against the dollar and a 2.5 percent gain in Poland’s zloty.

The MSCI Asia Pacific Index increased 0.4 percent, gaining for the first time in four days. Nissan Motor Co. rose 2.4 percent after predicting a return to profit this fiscal year, scrapping an earlier loss estimate.

Treasuries fell for the first time in four days as investors gained confidence in riskier assets. The yield on the 10-year note rose almost eight basis points to 3.64 percent.

Default Swaps Drop

The cost to protect against defaults on U.S. corporate bonds fell. Credit-default swaps on the Markit CDX North America Investment-Grade Index Series 13, which is linked to 125 companies, fell 6.5 basis points to a mid-price of 100.5 basis points as of 12:18 p.m. in New York, according to broker Phoenix Partners Group. It would be the biggest decline since Sept. 21 when it fell 10.7 basis points, according to CMA DataVision prices. The index typically falls as consumer confidence improves and rises as it deteriorates.

Credit-default swaps on Greece fell 65.5 basis points to 360, the lowest level since Jan. 26, according to CMA DataVision prices. Optimism the country will be bailed out also sent credit-default swaps on European corporate bonds tumbling the most in three months, with the high-yield Markit iTraxx Crossover Index dropping as much as 32 basis points to 465, according to JPMorgan Chase & Co.

Commodities Rally

Copper advanced 2.5 percent to $2.987 a pound in New York, the biggest gain for a most-active contract this year. Gold for immediate delivery added 1.3 percent to $1,076.23 an ounce. Crude oil rallied 2.7 percent to $73.80 a barrel in New York trading.

Orange-juice futures surged the most in four weeks, gaining 2.6 percent to $1.3775 a pound, after the U.S. Department of Agriculture cut its forecast for Florida citrus crops following a damaging cold snap last month.

Corn rose for a second day, gaining 0.7 percent to $3.585 a bushel, after the U.S. said demand from ethanol producers will be more than expected last month, eroding domestic inventories left over from the biggest crop ever.

Eric Fry, reporting from Laguna Beach, California...

Eric Fry, reporting from Laguna Beach, California...

A moment of silence, please, for our fallen comrade, the Dow Jones Industrial Average...
Yes, it's true; the beleaguered index fell through 10,000 yesterday to finish the trading session below where it stood last November. But yesterday was not the first time the Dow ever fell below 10,000. In fact, it was the 28th time since March 29, 1999 - the Dow's very first close above 10,000.

When the Dow scaled 10,000 in March of 1999, the stock market had been rallying for several years already. Just five years earlier, the Dow had breezed through the 5,000-level. Therefore, almost no one doubted that 10,000 would be a mere stepping stone to 15,000...or 20,000...or yes, even 36,000, as James Glassman and Kevin Hassett infamously predicted in their 1999 classic: Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market.

But Dow 36,000 would have to wait awhile. Instead of continuing its vertical ascent, the Dow would spend the next eleven years tripping over itself. On twenty-eight separate occasions, the Dow would climb through 10,000...only to slip back below 10,000 sometime later. Each failed attempt produced more discouragement and fatalism than the time before. Stocks are supposed to appreciate over time, we are told - not to muddle along for years at a time. The Dow was supposed to blast through 10,000 in 1999 and never look back. It was not supposed to return to 10,000 as frequently as a "B-actor" to rehab.

What went wrong?
The short answer is: Alan Greenspan. (The long answer is also Alan Greenspan). The former Chairman of the Federal Reserve nurtured an epic financial bubble during most of his 19-year reign.

After slashing interest rates sharply during the early 1990s, Greenspan hiked them a bit in 1994, before cutting rates again between 1995 and 1998. The stock market tripled between 1990 and 1998. But here's the interesting thing: when Greenspan hiked rates in 1994, the stock market struggled...and so did Greenspan's popularity.

Greenspan did not regain his adoring followers until the back half of the 1990s, when he resumed cutting interest rates and stocks resumed their climb. But then he hiked rates slightly once again, as the stock market bubble reached its zenith in 1999. The bubble burst...and so did the aura of infallibility that had calcified around Greenspan's reputation. Suddenly, he had critics again...and he did not seem to like it very much.

He had learned his lesson: He would never be unpopular again...no matter how many bubbles he would have to inflate or reflate. As the stock market bubble began bursting in 2000, Greenspan quickly sprung into action - replacing the stock market bubble with an even more magnificent housing bubble. Between mid-2000 and mid-2003, Greenspan slashed short-term interest rates from 6.5% to 1.0%. He implemented "emergency interest rates without an emergency," as Jim Grant observed at the time.

The rest is history. The stock market rebounded, home prices rocketed and Wall Street bankers figured out how to convert junk mortgages into AAA securities. Greenspan is not to blame for everything, of course, just...almost everything.

What does this condensed and biased portrayal of history have to do with Dow 10,000? Just this: without easy credit, and the mania it spawned, Dow 10,000 would not have been possible. When the Dow first reached that magical level in 1999, the blue chip index was trading hands for about 28 times earnings - its highest valuation in 70 years.

Stocks were grossly overpriced. No doubt about it. Thus, to be an eager buyer of stocks in March 2000 was to believe that price mattered less than Alan Greenspan's magic touch. Eleven years later, we have discovered that price matters more.

But don't be discouraged. The Dow's disastrous decade does not invalidate the theory that stocks are an excellent long-term investment. Instead, the Dow's lost decade merely adds two corollaries to the theory: 1) Beware popular Fed Chairmen; 2) Price matters.

A refreshing dose of honesty

Lexington

A refreshing dose of honesty

Maria Cantwell and the politics of global warming

NOT long after the flood, when Noah was safely back on dry land, God promised: “Never again will I curse the ground because of man...And never again will I destroy all living creatures.” The implication is clear. “Man will not destroy this earth,” says John Shimkus, a Bible-reading Republican congressman from Illinois. So there is no need to worry about global warming.

On January 28th, America formally pledged to the UN that it would reduce its greenhouse-gas emissions by 17% (from what they were in 2005) by 2020. But there was a planet-sized catch. Meeting the target will depend on getting a climate bill through Congress, and that will be horribly hard. A bill to erect a cap-and-trade system to curb carbon-dioxide emissions squeaked through the House of Representatives last summer. But similar bills have stalled in the Senate, where nearly anything big needs a supermajority to pass.

Various obstacles block the way. First, Barack Obama has not yet decided what to do about health care, and he cannot wage two domestic wars at once. Second, cap-and-trade is a tough sell. An increasing number of Americans, like Mr Shimkus, doubt the science. The proportion who believe there is “solid evidence” that the earth is warming fell from 71% in 2008 to 57% last year. Among Republicans, disbelief is the norm: only 35% think there is solid evidence of warming, according to a Pew poll. The news that some climate scientists tried to muzzle dissenting voices has spread like the common cold on conservative blogs, fuelling widespread suspicion that global warming is an elaborate hoax. Many climate sceptics are furious. “My Carbon Footprint Will Fit Nicely in Your Liberal Ass,” reads a typical T-shirt. Even among Americans who believe in global warming, there is little appetite for tackling it. A hefty 85% told Gallup that the government should place a higher priority on fixing the economy, with only 12% saying the opposite.

Enter Maria Cantwell, the junior senator from Washington state. She is pushing a simpler, more voter-friendly version of cap-and-trade, called “cap-and-dividend”. Under her bill, the government would impose a ceiling on carbon emissions each year. Producers and importers of fossil fuels will have to buy permits. The permits would be auctioned, raising vast sums of money. Most of that money would be divided evenly among all Americans. The bill would raise energy prices, of course, and therefore the price of everything that requires energy to make or distribute. But a family of four would receive perhaps $1000 a year, which would more than make up for it, reckons Ms Cantwell. Cap-and-dividend would set a price on carbon, thus giving Americans a powerful incentive to burn less dirty fuel. It would also raise the rewards for investing in clean energy. And it would leave all but the richest 20% of Americans—who use the most energy—materially better off, she says.

Ms Cantwell’s bill is refreshingly simple. At a mere 40 pages, it is one-thirty-sixth as long as the monstrous House bill (known as “Waxman-Markey”, after its sponsors), which would regulate everything from televisions to “bottle-type water dispensers” and is completely incomprehensible to a layman. Instead of auctioning permits to emit, Waxman-Markey gives 85% of them away, at least at first. This is staggeringly inefficient: permits would go to those with political clout rather than those who value them most. No one is proud of this—Mr Obama wanted a 100% auction—but House Democrats decided that the only way to pass the bill was to hand out billions of dollars of goodies to groups that might otherwise oppose it. (There was plenty of pork left over for its supporters, too.)

The Senate will not pass a comprehensive climate bill any time soon. So Mr Obama is attacking the problem piece by piece, bypassing Congress. On February 3rd, he unveiled a plan to promote biofuels and a task force to study the improbable dream of “clean” coal. Last week, the Securities and Exchange Commission ordered private companies to publish estimates of the climate-related risks they face. The Environmental Protection Agency, meanwhile, is trying to regulate greenhouse gases under existing laws. But regulation is no substitute for putting a price on carbon, which would harness the power of the market to cut emissions more cheaply.

Tell it like it is

Of all the bills that would put a price on carbon, cap-and-dividend seems the most promising. (A carbon tax would be best of all, but has no chance of passing.) Ms Cantwell has a Republican co-sponsor, Susan Collins of Maine, and says she is hearing positive noises from a few other Republicans, such as Lisa Murkowski of Alaska. The most attractive thing about the bill is that it is honest. To discourage the use of dirty energy, it says, it has to be more expensive. To make up for that, here’s a thousand bucks.

This challenges the conventional wisdom in Washington, DC, that the only way to pass a global-warming bill is to disguise what’s in it. Leading Democrats try to sell cap-and-trade as a way to create jobs and wean America from its addiction to foreign oil. (It’s about “jobs, jobs, jobs and jobs,” said Nancy Pelosi, the speaker, last year.) Focus groups say this message ought to resonate. Frank Luntz, a pollster, released a study last month showing that voters are unswayed by melting ice caps but will support an energy bill that sticks it to the Saudis and creates American jobs. In real life, though, voters hear counter-arguments. Sure, cap-and-trade will create jobs, but it will destroy them, too. If the goal is to reduce dependence on foreign energy, why not mine more American coal? The only sound reason for acting to curb global warming is to curb global warming. Ms Cantwell does not put it so bluntly, but her bill speaks for itself.

Clueless in Washington

America's budget

Clueless in Washington

Neither the president nor Congress shows any sign of knowing how to tackle the deficit

IT WAS never reasonable to expect that Barack Obama’s budget proposal, delivered to Congress on February 1st, would do much to bring down America’s vast deficit in the near term. True, the economy has returned to growth. But a big part of that consists of restocking after a savage downturn that has left inventories depleted. Consumers are still struggling with the collapse in the values of their homes and other assets. And unemployment stands at a stubborn 10%: the administration forecasts see only a fractional fall in joblessness this year.

Unlike other rich countries, America lacks the “automatic stabilisers” that kick in during times of recession to help boost demand. Unemployment benefit is extremely limited. Most states are legally barred from running deficits, so when their revenues fall in times of recession they make painful cuts, firing workers and ending programmes—thus exacerbating the downturn rather than offsetting it. Only the federal government can fill the demand gap, and if it is too parsimonious and the recession returns, the deficit would get much worse.

So the eye-popping $1.56 trillion deficit for the current fiscal year previewed in this week’s budget (see article), to be followed by a further $1.27 trillion in fiscal 2011 (which begins on October 1st), ought mostly to be seen as a consequence of the downturn that Mr Obama inherited. And some of the measures proposed for this year and next make sense, particularly the tax breaks for employers taking on new hires—though in our view Mr Obama is probably adding more stimulus than is needed, especially when it comes to 2011.

What is truly worrying, though, is the medium-term outlook. Mr Obama’s budget reveals a road-map to fiscal catastrophe. At no point over the coming decade will the deficit be below 3.6% of GDP; and after 2018, it starts rising again. The cuts the president has proposed are comically insufficient: a budget freeze on non-security discretionary spending, which amounts to only about 17% of the entire $3.8 trillion budget; and a toothless deficit commission (a better version has already been killed by obstructive Republicans in Congress) whose recommendations will doubtless be ignored.

Entitled to live in debt for ever?

In the medium term there are only two ways to bring the deficit back to a sustainable level—which means no more than 3% of GDP. Either taxes will have to rise, or a serious attempt must be made to rein in the entitlements—legally mandated programmes such as Medicare, Medicaid and Social Security—that constitute the great bulk of spending. Mr Obama is proposing only a bit of the first, and none of the second. Taxes on the rich (those earning $250,000 a year or more) will go up from next January, as the Bush tax cuts expire; but Mr Obama had promised middle America that it will pay “not one single dime” more in tax, and so he is extending George Bush’s budget-busting tax cuts for the remaining 98% of Americans.

Any serious attempt to tackle entitlements now looks doomed. Health care offered a chance to do so (broader coverage could come with tougher cost controls). But a weak administration and a greedy Congress conspired to produce a baggy monster of a bill which, from a fiscal point of view, might have made things worse. No one dares touch defence, in a troubled world. The Social Security pension scheme is deemed sacrosanct by nervy politicians. It is a deeply depressing picture—and Mr Obama did nothing this week to lighten it.

News Hub: Volcker's Impact on Goldman Sachs

Hot Stocks: Industrials Surge

Who Rules the Tea Party

Who Rules the Tea Party Empire?

Sarah Palin is the honorary Queen Bee of the Tea Party convention.

JOHN FUND

The Tea Party convention held this past weekend in Nashville wasn't the biggest such gathering (600 people) or the most representative (the ticket price was more than $500) but it did give the national media a pretty good angle on the views and direction of this disparate movement.

First, it's clear the group has no leader, although Sarah Palin is certainly the honorary Queen Bee in the eyes of many attendees. Her Saturday night speech was given rapturous applause. Second, the Tea Partiers are unlikely to succumb to the temptation to form a Third Party, especially this close to the mid-term elections. They will follow Ms. Palin's suggestion that the group remain distinct from either party and work within both parties towards electing candidates closer to the movement's views.

Ms. Palin provided some examples of how she follows her own advice. Last week, she endorsed Rand Paul, son of former GOP presidential candidate Ron Paul, for an open U.S. Senate seat in Kentucky. Mr. Paul's opponent in the GOP primary is Trey Grayson, the secretary of state and a protégé of Senate GOP leader Mitch McConnell. Ms. Palin was criticized for endorsing someone holding the libertarian views that Rand Paul does, but she stood her ground: "He wants the states to have more say and [respects] the 10th amendment in our Constitution."

She then flew to Houston for an 8,000-person rally where she endorsed Governor Rick Perry, whom she knows from her days as Alaska's governor, in his contentious primary against Texas Senator Kay Bailey Hutchison. Shrewdly never mentioning Ms. Hutchison's name, Ms. Palin nevertheless made it clear whom she thought was the real conservative in the race. "What's it going to be?" Ms. Palin asked the crowd. "The way they operate in D.C. or the way y'all get things done in Texas?" Ms. Palin directly appealed to Texas pride by calling it "Alaska's little sister state," and said both places proudly cling to religion and guns, a slap at a slur Barack Obama made during the 2008 campaign.

But Ms. Palin should realize the Tea Party movement isn't likely to follow her blindly. A third candidate in the GOP primary has picked up steam after two televised debates and may throw the race into a runoff if neither Mr. Perry nor Ms. Hutchison gets more than 50% of the vote. Debra Media, a former Wharton County Republican chairwoman, is now polling 16% or more in some surveys. She emphasizes she's not a politician, not rich, and that the state needs a governor who will ensure "the average Texan is represented." Some Tea Party groups are supporting her.

The lesson: Just when politicians think they have the perfect pitch to appeal to Tea Partiers, someone comes along and moves the populist stakes on them. The people attending Tea Party events like it that way, because so far most of the politicians who are courting them keep following their lead. Together, the Tea Parties are reenergizing the wing of the Republican Party that is most skeptical of big government programs.

Republicans and the Populist Temptation

Republicans and the Populist Temptation
The reaction to Scott Brown's victory has been a lurch toward antibusiness rhetoric. The stock market doesn't like it.

By DONALD L. LUSKIN

The best stock market rally in 74 years may have ended on Jan. 19, the same day Republican Scott Brown won the Massachusetts U.S. Senate seat held by Democrats for 57 years. We don't know yet whether the alarming move down in stocks since then is simply a correction or something more serious. But the coincidence of these two history-making events raises troubling questions—especially since a Republican resurgence, on the face of it, would seem to be good for business and good for stocks.

From the beginning of this historic rally—up 73% over the 316 days since last March's market bottom—politics has been an important theme. That horrific bottom was reached after Democrats in Congress rammed through a $787 billion stimulus bill so quickly that no senator or representative could have possibly read all 1,073 pages of it. That hastily concocted porkfest should not be credited with turning stocks around. Rather, it should be blamed for the more than 18% loss that stocks suffered in the 24 days from the date of its enactment to the day of the March bottom.

The haste with which the stimulus bill was enacted made it seem certain that the cap-and-trade energy tax, unionization "card check," mortgage "cramdown," and health-insurance nationalization would become law as soon as votes could be taken. It wasn't only the antigrowth implications of these initiatives that had investors terrified in March. It was the sheer recklessness with which they were being stuffed through the legislative pipeline under the Rahm Emanuel doctrine of never letting a good crisis go to waste. The crippling uncertainty of it all was making that crisis worse.

Since then the market rally has tracked the demise, one by one, of all these initiatives, because investors could see that a political environment that had been far out of equilibrium was quickly finding its balance. Republicans stayed unified in their opposition, while in every case key Democrats lost their nerve.

Since the stimulus, precisely nothing has been accomplished by the Obama administration or the Democratic Congress. The good crisis went to waste, and stocks soared.

Seemingly, the election of Scott Brown in Massachusetts should only be a continuation of that beneficent trend back toward political balance. At a stroke, it denied the Democrats their filibuster-proof Senate majority—and opened up the real possibility of the Republicans taking control of one or both houses of Congress in November. Perhaps in 2011 a dream team, the same party configuration that proved so fruitful in the 1990s: Democratic president and GOP Congress.

So why did stocks collapse the moment the vote was tallied in Massachusetts?

It's because the immediate reaction to the Brown election—in both parties—has been a dangerous lurch toward antibusiness populism. The Obama administration's strategy has been to latch onto something that both parties can agree on: lynching Wall Street.

Just 24 hours after Mr. Brown's upset win, the White House let it be known that a radical plan to break up the largest banks, and to limit their size, was about to be announced. The next day the plan was revealed, and christened "the Volcker rule." What better way to lure Republicans onto a populist, antibank bandwagon than to associate it with the legendary Reagan-era figure?

Days later came the ordeal of Ben Bernanke's confirmation for a second term as Federal Reserve chairman. Surely there are principled reasons for denying his confirmation, as there would be for any Fed chairman (they all have a way of being far from perfect).

But it hardly seems possible that senators facing tough re-election challenges this year—such as John McCain (R., Ariz.) and Barbara Boxer (D., Calif.)—would happen to discover those principled reasons in the hours immediately following the Brown election in Massachusetts.

More likely, they seem to have interpreted the fact that Mr. Brown wore a barn jacket and drove a beat-up truck as indicating a voter preference for least-common-denominator populism. It's the low road to be sure, but desperate people do desperate things. And it might work.

A recent NBC/Wall Street Journal poll showed that Americans with college degrees, and with more than $50,000 invested, supported Mr. Bernanke's confirmation. But those with only a high-school education, and with no money invested—the classic populist audience—opposed his confirmation.

These developments have been profoundly destabilizing for stocks not because some version of the "Volcker rule" would necessarily destroy America's financial system, or because Ben Bernanke is utterly irreplaceable at the Fed. The crux of it is that it reveals a political process so dangerously narcissistic that it would use core institutions of the nation's economy as pawns in its own power struggles.

It's so dangerous because it potentially involves both parties, just when the Brown victory in Massachusetts holds out the hope of benign gridlock.

Don't think that Republicans can't be sucked in when an anti-Wall Street lynch mob gets its blood up. Recall that Sarbanes-Oxley, the devastating antigrowth response in 2002 to the Enron and Worldcom scandals, was passed with virtually unanimous support by Republicans in Congress, and signed by a Republican president. Recall that last year 85 House Republicans voted for a 90% tax on bonuses for any employee of any bank that took more than $5 billion in TARP money.

Investors got some good news last Friday. Stocks resisted following through on Thursday's sharp plunge after it was announced that the Senate Banking Committee's Democratic Chairman Chris Dodd and Republican ranking member Richard Shelby have reached an impasse on bank re-regulation. That's a nice down payment on what investors need a lot more of now: proof that the GOP won't join Democrats in a populist rush to seek revenge against Wall Street.

Mr. Luskin is chief investment officer at Trend Macrolytics LLC.

Cheney's Revenge

Cheney's Revenge
The Obama Administration is vindicating Bush antiterror policy.

Dick Cheney is not the most popular of politicians, but when he offered a harsh assessment of the Obama Administration's approach to terrorism last May, his criticism stung—so much that the President gave a speech the same day that was widely seen as a direct response. Though neither man would admit it, eight months later political and security realities are forcing Mr. Obama's antiterror policies ever-closer to the former Vice President's.

In fact, the President's changes in antiterror policy have never been as dramatic as he or his critics have advertised. His supporters on the left have repeatedly howled when the Justice Department quietly went to court and offered the same legal arguments the Bush Administration made, among them that the President has the power to detain enemy combatants indefinitely without charge. He has also ramped up drone strikes against al Qaeda and Taliban operatives in Pakistan.

However, the Administration has tried to break from its predecessors on several big antiterror issues, and it is on those that it is suffering the humiliation of having to walk back from its own righteous declarations. This is Dick Cheney's revenge.
***
Begin with Mr. Obama's executive order, two days after his inauguration, to shut the detention facility at Guantanamo Bay within one year. The President issued this command before undertaking a study to determine how or even whether his goal was feasible. In his May speech, Mr. Obama declared, "The record is clear: Rather than keep us safer, the prison at Guantanamo has weakened American national security."

Mr. Obama's deadline has come and gone, and Guantanamo remains open. In part this is the result of political opposition from Americans—including many Congressional Democrats—who understandably do not want terrorists in their backyards. Another problem is that European allies, while pressing for Guantanamo's closure, have been reluctant to accept more than a handful of detainees who are deemed suitable for release. The upshot is that Congress may never appropriate the money to close Gitmo, and Mr. Obama never mentioned the prison in his State of the Union address.

The Administration similarly has been backing away from its intention, announced in November, to try 9/11 mastermind Khalid Sheikh Mohammed and four other enemy combatants in civilian court a few blocks from Ground Zero. New York Mayor Michael Bloomberg, who at first endorsed the trials, has since reversed himself and urged the Administration to "do the right thing" and move the trials somewhere else, preferably to a military base.

The same day, New York's Senator Chuck Schumer asked officials to find another venue. Within hours, Mr. Obama ordered the Justice Department to do just that, and Mr. Schumer has since said any trial shouldn't be held anywhere in New York state. Meanwhile, bipartisan support is growing in Congress to block money from being spent on any civilian trial for KSM, anywhere.

The Administration seems to have thought no more deeply about the potential legal pitfalls of civilian trials than about the security and logistical problems. Mr. Obama himself responded to criticism by suggesting that what he had in mind was a series of show trials, in which the verdict and punishment were foreordained.

When NBC's Chuck Todd asked him in November to respond to those who took offense at granting KSM the full constitutional protections due a civilian defendant, the President replied: "I don't think it will be offensive at all when he's convicted and when the death penalty is applied to him." Mr. Obama later claimed he meant "if," not "when," but he undercut his own pretense of showcasing the fairness of American justice.

There is a real possibility, too, that convictions would be overturned on technicalities. KSM and other prospective defendants were subjected to interrogation techniques that, while justifiable in irregular war, would be forbidden in an ordinary criminal investigation. When Senator Herb Kohl, a Wisconsin Democrat, asked Attorney General Eric Holder what the Administration would do if a conviction were thrown out, Mr. Holder said: "Failure is not an option." A judge may not feel the same way, and the Administration is derelict if it is as unprepared for the contingency as Mr. Holder indicated.

In the event of an acquittal or an overturned conviction, it would be entirely legitimate under the laws of war to continue holding KSM and the others as enemy combatants. But this would defeat the moral rationale of a trial and require the Administration to explain why it was continuing to detain men whose guilt it had failed to establish in court.

A third policy under increasing criticism is the Administration's approach to interrogation. In August, Mr. Holder announced that he had appointed a special prosecutor to investigate—or rather re-investigate—allegations of abuse by CIA interrogators. At the same time, Mr. Obama declared that responsibility for interrogating detainees would shift from the CIA to a new, FBI-led High Value Detainee Interrogation Group, which would employ only tactics that are "noncoercive" or approved by the Army Field manual.

Then came the attempted Christmas bombing and the revelation that the new interrogation group is not fully operational and won't be for months. Not that it would have had a chance to question Umar Farouk Abdulmutallab. On Mr. Holder's order, investigators immediately classified him as a criminal defendant. After interrogating him for just 50 minutes, they advised him of his right to remain silent, which he promptly exercised.

Fifty minutes was plenty of time, White House Press Secretary Robert Gibbs assured "Fox News Sunday" viewers last month: "Abdulmutallab was interrogated, and valuable intelligence was gotten as a result of that interrogation." Mr. Holder told Senate Minority Leader Mitch McConnell in a letter last week that Abdulmutallab "more recently . . . has provided additional intelligence to the FBI"—which is encouraging if true, but makes Mr. Gibbs's earlier assurance look empty.

Meanwhile, one of Scott Brown's most potent campaign themes in Massachusetts was his line that "Some people believe our Constitution exists to grant rights to terrorists who want to harm us. I disagree." Mr. Brown even endorsed waterboarding.
***

As long as George W. Bush and Dick Cheney were responsible for keeping Americans safe, Democrats could pander to the U.S. and European left's anti-antiterror views at little political cost. But now that they are responsible, American voters are able to see what the left really has in mind, and they are saying loud and clear that they prefer the Cheney method.

Mr. Holder has nonetheless begun a campaign to defend his decisions on Abdulmutallab and KSM, telling the New Yorker last week that "I don't apologize for what I've done" and that trying KSM in a civilian court will be "the defining event of my time as Attorney General."

Given that he still can't find a venue and that even Democrats are having second thoughts about the spectacle, Mr. Holder may well be right that the trial will define his tenure. Before this debate is over, he may have to explain why he's decided that the best place to try KSM really is a military tribunal—in Guantanamo.

PM Report: Rep. Murtha Dies at Age 77

Toyota Recalls Dent Vaunted Image in Japan

‘PIGS’ Crisis Is Opportunity for Euro to Stand Up

‘PIGS’ Crisis Is Opportunity for Euro to Stand Up: Matthew Lynn

Feb. 9 (Bloomberg) -- “You never want a serious crisis to go to waste,” Rahm Emanuel, U.S. President Barack Obama’s chief of staff, said during the 2008 credit crunch. “It’s an opportunity to do things that you could not do before.”

Somebody should phone the White House, and ask if Emanuel could be flown to Frankfurt for a few weeks.

The euro area and the European Central Bank are now dealing with what markets are calling the “PIGS” crisis: Portugal, Ireland, Greece and Spain. Sometimes Italy is added to the list, but its finances seem to be in slightly better shape.

The bond markets have picked on Greece, punishing the country for running up a budget deficit equal to 12.7 percent of gross domestic product. Now the focus is on other indebted countries in the euro area. Equity and currency markets are jittery as central bankers seek a lasting solution.

It’s a crisis, no doubt. But the ECB should, perhaps, see it as an opportunity.

There has been confusion about fiscal responsibility since the euro was created a decade ago. This is the chance to set the record straight. Get this crisis right, and the euro could establish itself as the dominant world currency. Get it wrong, and by 2030 the only place you’ll be able to get euro notes will be as souvenirs on EBay Inc.

The nub of the PIGS problem is very simple: For years, they have been able to incur debts in a currency that was far stronger, and had much lower borrowing costs, than the old national ones the euro replaced. Now the bill is falling due. Either they implement tough austerity measures, subjecting their economies to savage recessions. Or else they can quit the euro and introduce a new currency. Either way, the outlook is grim.

There is, however a three-step program, that would manage the crisis and strengthen the euro in the long term.

Here’s what the ECB, with the backing of the euro-area governments, needs to do:

Step 1: Stand firm and refuse to offer a bailout.

The bond markets have been assuming that lending to the PIGS was much the same as lending to the U.S. or Japan. In the end, the central bank would always rescue them by printing more money. That was a big mistake.

Explain politely that nobody ever said that was how the euro would work. If you lend money to Greece or Portugal, you have to take a good look at that economy and reach a decision on whether the bond can be repaid, much as you would when deciding whether to buy a bond from Volkswagen AG or BP Plc. Corporations rarely get bailed out by central banks, and they can’t devalue their currencies either. Within the euro area, the bond market needs to start functioning much more like the corporate-debt market, with each borrower assessed on its own merits.

Step 2: Organize an orderly default.

It’s not going to be possible for the PIGS to meet their obligations. The debt burden is simply too great, well above the euro-area limit of 3 percent of GDP: Portugal’s 2009 budget deficit was 9.3 percent; Ireland’s was 11.7 percent; and Spain’s was 11.4 percent.

If governments slash spending too much, they will drag their economies down too far and too fast. Tax revenue will collapse, making it even harder to repay the debts. They will just get sucked into a vicious circle.

There is a lot of pain to go round, and there is no reason why the bondholders shouldn’t share some of it. Companies default on their bonds all the time. So do countries. The PIGS, under the guidance of the ECB, should simply declare a debt restructuring: They can announce a temporary suspension of interest payments, and offer bondholders 50 percent of their money back. It is precisely what would happen if a company was struggling to pay back its debts. There’s no reason a euro-area country shouldn’t do the same thing. So long as it is done in a controlled way, the situation is manageable.

Step 3: Create a mini-IMF.

In much of the world, the International Monetary Fund is called in when a country gets into a financial mess. It organizes a bailout, and effectively takes control of the nation’s economic policies while a rescue package is put in place. The ECB needs to do something similar. If Greece or Portugal defaults on its bonds, it will be hard to raise funds.

In that situation, the ECB should provide bridge loans to get countries through the crisis, in exchange for imposing emergency economic reforms. That will include cuts to state spending and taxes, and rolling back regulations so that economies can grow again. As the IMF has proved, it is often a lot easier for an outside body to impose tough changes than it is for locally elected politicians.

Countries can claw their way back from a fiscal meltdown. The Irish have made a great start, cutting public spending dramatically, while holding corporate taxes down. In effect, they are swapping short-term pain for long-term gain, which is always a lot better than doing it the other way around.

When the euro was introduced in 1999, it wasn’t clear whether member states would have to bail each other out and whether economic policies would be imposed from the center.

Those questions should now be answered decisively.

The euro can’t survive if members can accumulate huge debts and get other countries to pick up the bill. And, when necessary, there needs to be tough economic medicine imposed by the ECB. The PIGS crisis is a chance to address those two points. The common currency will emerge stronger as a result.

U.S. Losing AAA Is Way to Rein in Pelosi, Reid

U.S. Losing AAA Is Way to Rein in Pelosi, Reid: David Reilly

Feb. 9 (Bloomberg) -- When it comes to America’s AAA debt rating, we have to ask whether we would be better off without it.

That notion is pure heresy, and Treasury Secretary Timothy Geithner was quick this weekend to try and dispel any thought that the U.S. would ever be in for a downgrade.

“That will never happen to this country,” Geithner said during an interview with ABC News. The remark came after Moody’s Investors Service last week said the pristine U.S. rating will come under pressure unless something is done about mounting deficits.

Geithner shouldn’t have fought Moody’s report. He should have embraced it. What better way to impress upon Congress that the U.S. is very much in crisis and needs to face up to its problems.

That reality has yet to set in on Capitol Hill. Two weeks ago, for example, the Senate shot down a proposal to create a deficit-reduction commission. The measure failed because the Left worries such a committee will cut spending, while the Right is afraid it will call for tax hikes.

So no spending cuts or tax hikes, which is what we need -- just deficits as far as the eye can see. Let’s break out the fiddles already and watch Rome burn.

This is why concerns over the so-called PIGS -- Portugal, Ireland, Greece and Spain -- or those on the geographic and economic periphery of the European Union are really a sideshow. The real danger to markets lies with the DOLTS, or Dangerously Over-Leveraged Triple-A Superpowers.

That club currently consists of the U.S.

Let’s Pretend

So far, membership has allowed the U.S. and its elected representatives to pretend urgent action isn’t needed. After all, DOLTS have the world’s reserve currency and nukes.

This supposedly means we can spend our way out of debt because creditors like China will forever lend us money. Failing that, we can just print more dollars.

Yet even these benefits can’t change the fact that the U.S. is on an unsustainable course with deficits rising, the national debt soaring, and Social Security and Medicare preparing to go bust. At 10 percent of gross domestic product, the $1.6 trillion budget deficit for 2010 forecast by the Obama administration ranks as the highest such ratio since World War II.

The administration predicts that this ratio will fall to about 4 percent by 2015. For that to happen, though, the economic recovery mustn’t sputter.

U.S. Weakening

Debt, meanwhile, is set to climb to 77 percent of gross domestic product by 2019, according to Moody’s, while “debt affordability would be weakened by higher interest costs in the next several years.” That compares with government expectations at the end of 2008 of a future debt-to-GDP ratio of about 40 percent by the end of this decade.

No wonder investors like Marc Faber, who publishes the Gloom, Boom and Doom report, say the U.S. would carry a below- investment grade, or junk, rating if the country were a company.

And starting in 2020, things will get even worse. “It is worth noting that after 2019 is when the most serious pressures resulting from Social Security, Medicare, and Medicaid will develop, so that failure to rein in the deficits would make it even more difficult to deal with such pressures,” Moody’s said in a credit opinion last week.

State and local governments are also in crisis, and, like their federal counterparts, are unwilling to face the harsh reality confronting them.

California Dwarfs Greece

The mire facing California, for example, makes Greece’s woes look somewhat manageable. California, staring at a $20 billion budget gap over the next 17 months, accounts for about 13 percent of the U.S. economy. Greece accounts for just 3 percent of the economy of countries that use the euro.

Things are so bad in Nevada, meanwhile, that the state could lay off every worker paid from its general fund and it would still be $300 million in the red, according to state Assembly Speaker Barbara Buckley.

Given all this, Geithner should be using Moody’s AAA talk as a cudgel to beat some reality into congressional heads. So far, though, President Barack Obama has preferred to kowtow to House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, rather than lead them.

From the earliest days of his administration, Obama has tried to appease both, or stood by as they hijacked and then wrecked his initiatives. This started with Obama’s acquiescence to a pork-laden stimulus bill and continued as the president gave Congress control over initiatives like the health-care overhaul and financial reform.

Getting Worse

The result is that the government has accomplished little in the face of the greatest financial crisis since the Great Depression. And things may easily get worse.

An emboldened and divided Congress, meanwhile, shows no sense of recognizing the true extent of the meltdown. Unless there is a sense of immediate danger, there’s little chance it will do anything differently.

So while the threat of a downgrade might be unsettling, allowing the country to continue along its present course is far worse.

Job Openings in U.S. Rose in December

Feb. 9 (Bloomberg) -- Job openings in the U.S. rose in December for the first time in three months, signaling employers are gaining confidence in the economic recovery.

Openings increased by 63,000 to 2.5 million, the Labor Department said today in Washington. Job vacancies climbed for state and local governments, the report showed.

The figures indicate that the world’s largest economy, which expanded in the second half of 2009, may soon add jobs after payrolls unexpectedly dropped last month. Still, the labor market will take time to overcome the loss of 8.4 million jobs lost since the recession began in December 2007.

“Today’s report is indicative of an improving labor market,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “Most segments of the economy are already seeing positives in terms of job growth.”

The rate of job openings in December climbed to 1.9 percent from 1.8 percent, according to today’s report. The separations rate, which includes dismissals and those who quit their jobs, fell to 3.2 percent from 3.3 percent the prior month.

Payrolls fell by 20,000 last month after a 150,000 decline in December, according to Labor Department figures released on Feb. 5. The unemployment rate unexpectedly dropped to 9.7 percent from 10 percent.

Berkshire Cuts

Some companies are still trimming payrolls. Warren Buffett’s Berkshire Hathaway Inc. cut about 3,000 jobs since December after customers scaled back orders for building-related materials.

“If you look at our carpet business, our brick business, our insulation business, all of those businesses have had significant reductions in employment,” Buffett said in an interview in Omaha, Nebraska, on Jan. 20. “The day the orders come in, we hire back. But there’s no reason to hire people if they don’t have anything to do.”

Other businesses plan to resume hiring. Oracle Corp., completing the acquisition of Sun Microsystems Inc. last month, will hire 2,000 salespeople, President Charles Phillips said on Jan. 27. He said the hiring of new employees, who will sell Sun’s products directly to Oracle’s biggest customers, will start immediately.

Job growth remains a challenge for the Obama administration almost a year after implementation of the $787 billion stimulus package. More than 4 million jobs have been lost since President Obama took office in January 2009.

Greece Says Call for Aid Would Send ‘Worst Signal’

Feb. 9 (Bloomberg) -- Greek Finance Minister George Papaconstantinou said he can’t call for outside aid as his government struggles to cut the European Union’s largest budget deficit.

“The worst possible signal which we could send out is one calling for outside help,” he said in an interview with Bloomberg Television in Athens yesterday. “We will tackle the deficit,” he said, adding that tax revenues in January exceeded forecasts “by some percentage points.”

Papaconstantinou has so far failed to convince investors that Greece can push the deficit below the EU’s ceiling of 3 percent of gross domestic product. With European leaders meeting on Feb. 11 to discuss the economic outlook, Greek two-year bond yields have surged to the highest in almost a decade and concerns about budget sustainability are spreading to Spain and Portugal.

“The current state of the markets suggests Greece may need conditional support from the key European institutions and governments,” said Janet Henry, chief European economist at HSBC Holdings Plc, in an e-mailed note.

ECB ‘Confident’

The premium investors demand to hold Greek 10-year government bonds over comparable German debt fell 7 basis points to 354 basis points today, down from an 11-year high of 396 basis points on Jan. 28. The benchmark ASE stock index gained almost 3 percent today, after declining 12 percent in the previous four sessions.

European finance officials are for now sticking to their line that Greece, which has a deficit of 12.7 percent of GDP, won’t need outside help. European Central Bank President Jean- Claude Trichet said on Feb. 4 that he’s “confident” measures announced by Greece will work and EU Monetary Affairs Commissioner Joaquin Almunia says there’s no “plan B” for Greece.

Papaconstantinou said he wasn’t aware of any EU plan to aid Greece.

“We have no knowledge or have been involved in any discussion of the type,” he said. “We have said time and again that Greece will be implementing the stability and growth program to the letter.”

Trichet Returns

Greece’s budget woes threaten to overshadow a summit of European Union leaders that compelled Trichet to shorten his trip to a Reserve Bank of Australia symposium in Sydney by one day. The EU meeting was called to lay the groundwork for a 10- year economic program to strengthen the region’s competitiveness.

The EU should openly pledge to aid Greece as a way of calming financial markets, and there is “clearly no risk of default,” said Nobel laureate Joseph E. Stiglitz in an interview in London today.

“It is very import for Europe to come forward with an act of solidarity,” he said. “That is one of the flaws of the euro, that you created a monetary system without the underpinning of the fiscal basis that you need.”

Papaconstantinou said yesterday that Greece’s budget plan will get the “green light” from European finance ministers when they meet on Feb. 15-16. He may this week unveil an overhaul of Greece’s tax system that imposes the top 40 percent levy on Greeks earning less than the current threshold of 75,000 euros per year.

Pension Changes

Today the government confirmed that it will raise the average retirement age by two years to 63 years, as part of an effort to prevent pension spending from straining finances. Papaconstantinou also said that the government measures were already working and spending was less than forecast in January.

“Expenditure is clearly under control,” Papaconstantinou Said. “It is below the target for the month. That means the deficit reduction for January is well within what we have promised.”

Investors are turning a deaf ear to EU officials as Greece’s fiscal woes focus their attention on gaping budget deficits across the euro region’s southern fringe. Credit- default swaps on Spain and Portugal rose to a record yesterday.

“Greece, Portugal and Spain have the most challenging fundamentals but Italy and Belgium could also start to raise some concerns,” said HSBC’s Henry.

Italian Finance Ministry Undersecretary Luigi Casero told Sky TG24 yesterday his government must “maintain a policy of fiscal rigor” to avoid “difficulties.”

Trichet’s efforts to shore up confidence in the euro region as a whole are also being ignored. While the ECB president said on Feb. 4 the bloc’s combined budget deficit may be lower than those of the U.S. and Japan this year, the euro fell the next day, extending its slide since the start of December to almost 10 percent.

Inventories at U.S. Wholesalers Unexpectedly Fall

Feb. 9 (Bloomberg) -- Inventories at U.S. wholesalers unexpectedly fell in December following the biggest increase in more than five years, indicating distributors had trouble keeping up with demand.

The 0.8 percent decrease in stockpiles followed a revised 1.6 percent gain in November that was the largest since July 2004, figures from the Commerce Department showed today in Washington. Sales climbed 0.8 percent.

A record inventory drawdown last year has opened the door for manufacturers to pick up production and other companies to increase orders to meet demand. Efforts to prevent stockpiles from falling further in the fourth-quarter provided its biggest boost to economic growth in 20 years and may keep supporting the economy in coming quarters.

“The sales numbers are strong,” said David Sloan, a senior economist at 4Cast Inc., a New York forecasting firm. “If sales continue to rise, inventories are poised to be rebuilt.”

Economists forecast inventories would rise 0.5 percent after a previously estimated 1.5 percent increase in November, according to the median of 31 projections in a Bloomberg News survey. Estimates ranged from a drop of 0.8 percent to a 1 percent gain.

Job openings rose in December to 2.5 million from 2.43 million a month earlier, the first gain in three months, a report from the Labor Department also showed today. Manufacturers and retailers were among industries with the biggest increase in employment opportunities.

Shares Rise

Stocks maintained earlier gains after the reports on speculation that Greece will get European help with its budget deficit. The Standard & Poor’s 500 Index climbed 0.9 percent to 1,066.7 at 10:49 a.m. in New York. Treasury securities fell.

At the current sales pace, it would take 1.12 months for wholesaler to deplete the amount of goods on hand, the lowest level since a record-low 1.11 reading in June 2008.

Efforts to rebuild depleted inventories contributed 3.4 percent points to gross domestic product in the fourth quarter, the most in two decades.

Private reports suggest stockpile rebuilding has continued to help boost production. The Institute for Supply Management’s factory index rose to 58.4 in January, the highest since August 2004, and the survey’s gauges of production and new orders rose.

Machinery, Autos

Inventories of durable goods, or those meant to last at least three years, decreased 1.1 percent in December, and sales increased 3 percent.

Distributors of machinery, automobiles and metals led the drop in stockpiles as sales increased.

Wholesalers make up about 30 percent of all business stockpiles. Factory inventories, which account for about 38 percent of the total, fell 0.1 percent in December, the Commerce Department said Feb. 4. Retail stockpiles make up the rest and will be included in the Feb. 11 business inventories report.

Rockwell Automation Inc.’s profit fell in the fiscal first quarter less than anticipated and the company raised its 2010 forecast. Demand was strongest in the U.S., led by sales of software and orders from recovering industries including automakers, Chief Executive Officer Keith Nosbusch said in an interview Jan. 27.

Companies “de-stocked to the point where any need had to be filled immediately, one to one, as opposed to before where they were able to take it out of their inventory supply chain,” Nosbusch said.

Glenn Beck- February 8, 2010 (Part 1/4)