Mark Steyn on Obama’s Straw Men

Mark Steyn on Obama’s Straw Men

Rick Moran
Your must read article for today is Mark Steyn’s piece in the National Review entitled “Obama’s False Choice.”

Writing in the Chicago Tribune last week, President Obama fell back on one of his favorite rhetorical tics: “But I also know,” he wrote, “that we need not choose between a chaotic and unforgiving capitalism and an oppressive government-run economy. That is a false choice that will not serve our people or any people.”

Really? For the moment, it’s a “false choice” mainly in the sense that he’s not offering it: “a chaotic and unforgiving capitalism” is not on the menu, which leaves “an oppressive government-run economy” as pretty much the only game in town. How oppressive is yet to be determined: To be sure, the official position remains that only “the richest five percent” will have taxes increased. But you’ll be surprised at the percentage of Americans who wind up in the richest five percent. This year federal government spending will rise to 28.5 per cent of GDP, the highest level ever, with the exception of the peak of the Second World War. The 44th president is proposing to add more to the national debt than the first 43 presidents combined, doubling it in the next six years, and tripling it within the decade. But to talk about it in percentages of this and trillions of that misses the point. It’s not about bookkeeping, it’s about government annexation of the economy, and thus of life: government supervision, government regulation, government control. No matter how small your small business is — plumbing, hairdressing, maple sugaring — the state will be burdening you with more permits, more paperwork, more bureaucracy.

And don’t plan on moving. Ahead of this week’s G20 summit in London, Timothy Geithner, America’s beloved Toxic Asset, called for “global regulation.” “Our hope,” said Toxic Tim, “is that we can work with Europe on a global framework, a global infrastructure which has appropriate global oversight . . . ”

“Global oversight:” Hmm. There’s a phrase to savor.

Read Mr. Steyn’s analysis. He is at his best.

Page Printed from: http://www.americanthinker.com/blog/2009/03/mark_steyn_on_obamas_straw_men.html at March 29, 2009 – 04:45:50 PM EDT

U.N. ‘Climate Change’ Plan Would Likely Shift Trillions to Form New World Economy

U.N. ‘Climate Change’ Plan Would Likely Shift Trillions to Form New World Economy

Friday , March 27, 2009

By George Russell

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A United Nations document on “climate change” that will be distributed to a major environmental conclave next week envisions a huge reordering of the world economy, likely involving trillions of dollars in wealth transfer, millions of job losses and gains, new taxes, industrial relocations, new tariffs and subsidies, and complicated payments for greenhouse gas abatement schemes and carbon taxes — all under the supervision of the world body.

Those and other results are blandly discussed in a discretely worded United Nations “information note” on potential consequences of the measures that industrialized countries will likely have to take to implement the Copenhagen Accord, the successor to the Kyoto Treaty, after it is negotiated and signed by December 2009. The Obama administration has said it supports the treaty process if, in the words of a U.S. State Department spokesman, it can come up with an “effective framework” for dealing with global warming.

The 16-page note, obtained by FOX News, will be distributed to participants at a mammoth negotiating session that starts on March 29 in Bonn, Germany, the first of three sessions intended to hammer out the actual commitments involved in the new deal.

In the stultifying language that is normal for important U.N. conclaves, the negotiators are known as the “Ad Hoc Working Group On Further Commitments For Annex I Parties Under the Kyoto Protocol.” Yet the consequences of their negotiations, if enacted, would be nothing short of world-changing.

Getting that deal done has become the United Nations’ highest priority, and the Bonn meeting is seen as a critical step along the path to what the U.N. calls an “ambitious and effective international response to climate change,” which is intended to culminate at the later gathering in Copenhagen.

Just how ambitious the U.N.’s goals are can be seen, but only dimly, in the note obtained by FOX News, which offers in sparse detail both positive and negative consequences of the tools that industrial nations will most likely use to enforce the greenhouse gas reduction targets.

The paper makes no effort to calculate the magnitude of the costs and disruption involved, but despite the discreet presentation, makes clear that they will reverberate across the entire global economic system.

Click here for the information note.

Among the tools that are considered are the cap-and-trade system for controlling carbon emissions that has been espoused by the Obama administration; “carbon taxes” on imported fuels and energy-intensive goods and industries, including airline transportation; and lower subsidies for those same goods, as well as new or higher subsidies for goods that are considered “environmentally sound.”

Other tools are referred to only vaguely, including “energy policy reform,” which the report indicates could affect “large-scale transportation infrastructure such as roads, rail and airports.” When it comes to the results of such reform, the note says only that it could have “positive consequences for alternative transportation providers and producers of alternative fuels.”

In the same bland manner, the note informs negotiators without going into details that cap-and-trade schemes “may induce some industrial relocation” to “less regulated host countries.” Cap-and-trade functions by creating decreasing numbers of pollution-emission permits to be traded by industrial users, and thus pay more for each unit of carbon-based pollution, a market-driven system that aims to drive manufacturers toward less polluting technologies.

The note adds only that industrial relocation “would involve negative consequences for the implementing country, which loses employment and investment.” But at the same time it “would involve indeterminate consequences for the countries that would host the relocated industries.”

There are also entirely new kinds of tariffs and trade protectionist barriers such as those termed in the note as “border carbon adjustment”— which, the note says, can impose “a levy on imported goods equal to that which would have been imposed had they been produced domestically” under more strict environmental regimes.

Another form of “adjustment” would require exporters to “buy [carbon] offsets at the border equal to that which the producer would have been forced to purchase had the good been produced domestically.”

The impact of both schemes, the note says, “would be functionally equivalent to an increased tariff: decreased market share for covered foreign producers.” (There is no definition in the report of who, exactly, is “foreign.”) The note adds that “If they were implemented fairly, such schemes would leave trade and investment patterns unchanged.” Nothing is said about the consequences if such fairness was not achieved.

Indeed, only rarely does the “information note” attempt to inform readers in dollar terms of the impact of “spillover effects” from the potential policy changes it discusses. In a brief mention of consumer subsidies for fossil fuels, the note remarks that such subsidies in advanced economies exceed $60 billion a year, while they exceed $90 billion a year in developing economies.”

But calculations of the impact of tariffs, offsets, or other subsidies is rare. In a reference to the impact of declining oil exports, the report says that Saudi Arabia has determined the loss to its economy at between $100 billion and $200 billion by 2030, but said nothing about other oil exporters.

One reason for the lack of detail, the note indicates, is that impact would vary widely depending on the nature and scope of the policies adopted (and, although the note does not mention it, on the severity of the greenhouse reduction targets).

But even when it does hazard a guess at specific impacts, the report seems curiously hazy. A “climate change levy on aviation” for example, is described as having undetermined “negative impacts on exporters of goods that rely on air transport, such as cut flowers and premium perishable produce,” as well as “tourism services.” But no mention is made in the note of the impact on the aerospace industry, an industry that had revenues in 2008 of $208 billion in the U.S. alone, or the losses the levy would impose on airlines for ordinary passenger transportation. (Global commercial airline revenues in 2008 were about $530 billion, and were already forecast to drop to an estimated $467 billion this year.)

In other cases, as when discussing the “increased costs of traditional exports” under a new environmental regime, the report confines itself to terse description. Changes in standards and labeling for exported goods, for example, “may demand costly changes to the production process.” If subsidies and tariffs affect exports, the note says, the “economic and social consequences of dampening their viability may, for some countries and sectors, be significant.”

Much depends, of course, on the extent to which harsher or more lenient greenhouse gas reduction targets demand more or less drastic policies for their achievement.

And, precisely because the Bonn meeting is a stage for negotiating those targets, the note is silent. Instead it suggests that more bureaucratic work is needed “to deepen the understanding of the full nature and scale of such impacts.”

But outside the Bonn process, other experts have been much more blunt about the draconian nature of the measures they deem necessary to make “effective” greenhouse gas reductions.

In an influential but highly controversial paper called “Key Elements of a Global Deal on Climate Change,” British economist Nicholas Lord Stern, formerly a high British Treasury official, has declared that industrial economies would need to cut their per capita carbon dioxide emissions by “at least 80% by 2050,” while the biggest economies, like the U.S.’s, would have to make cuts of 90 percent.

Stern also calls for “immediate and binding” reduction targets for developed nations of 20 percent to 40 percent by 2020.

To meet Stern’s 2050 goals, he says, among other things, “most of the world’s electricity production will need to have been decarbonized.”

Click here for Stern’s paper.

By way of comparison, according to the U.S. Department Of Energy, roughly 72 percent of U.S. electrical power generation in 2007 was derived from burning fossil fuels, with just 6 percent coming from hydro-power and less than 3 percent from non-nuclear renewable and “other” sources. And even then, those “other” non-fossil sources included wood and biomass — which, when burned, are major emitters of carbon.

Click here to see the Department of Energy report.

George Russell is executive editor of FOX News.

Obama gets list of top Muslim Americans –This Was Predictable

Obama gets list of top Muslim Americans

Denver Post Wire Report

Updated: 03/27/2009 12:58:19 AM MDT

CHICAGO — In a bid to get more Muslim Americans working in the Obama administration, a book with resumes of 45 of the nation’s most qualified — Ivy League grads, Fortune 500 executives and public servants, all carefully vetted — has been submitted to the White House.

The effort, driven by community leaders and others, including U.S. Rep. Keith Ellison, D-Minn., was bumped up two weeks because White House officials heard about the venture, said J. Saleh Williams, program coordinator for the Congressional Muslim Staffers Association, who sifted through more than 300 names.

“It was mostly under the radar,” Williams said. “We thought it would put (the president) in a precarious position. We didn’t know how closely he wanted to appear to be working with the Muslim American community.”

Obama’s False Choice

Obama’s False Choice
A “chaotic and unforgiving capitalism” is exactly what we need right now.

By Mark Steyn

Writing in the Chicago Tribune last week, President Obama fell back on one of his favorite rhetorical tics: “But I also know,” he wrote, “that we need not choose between a chaotic and unforgiving capitalism and an oppressive government-run economy. That is a false choice that will not serve our people or any people.”

Really? For the moment, it’s a “false choice” mainly in the sense that he’s not offering it: “a chaotic and unforgiving capitalism” is not on the menu, which leaves “an oppressive government-run economy” as pretty much the only game in town. How oppressive is yet to be determined: To be sure, the official position remains that only “the richest five percent” will have taxes increased. But you’ll be surprised at the percentage of Americans who wind up in the richest five percent. This year federal government spending will rise to 28.5 per cent of GDP, the highest level ever, with the exception of the peak of the Second World War. The 44th president is proposing to add more to the national debt than the first 43 presidents combined, doubling it in the next six years, and tripling it within the decade. But to talk about it in percentages of this and trillions of that misses the point. It’s not about bookkeeping, it’s about government annexation of the economy, and thus of life: government supervision, government regulation, government control. No matter how small your small business is — plumbing, hairdressing, maple sugaring — the state will be burdening you with more permits, more paperwork, more bureaucracy.

And don’t plan on moving. Ahead of this week’s G20 summit in London, Timothy Geithner, America’s beloved Toxic Asset, called for “global regulation.” “Our hope,” said Toxic Tim, “is that we can work with Europe on a global framework, a global infrastructure which has appropriate global oversight . . . ”

“Global oversight:” Hmm. There’s a phrase to savor.

“We can’t,” he continued, “allow institutions to cherry pick among competing regulators and ship risk to where it faces the lowest standards and weakest constraints . . . ”

Just as a matter of interest, why not? If you don’t want to be subject to the punitive “oversight” of economically illiterate, demagogic legislators-for-life like Barney Frank, why shouldn’t you be “allowed” to move your business to some jurisdiction with a lighter regulatory touch?

Borders give you choices. Your town has a crummy grade school? Move ten miles north and there’s a better one. Sick of Massachusetts taxes? Move to New Hampshire, as thousands do. To modify the abortionists’ bumper sticker: “I’m Pro-Choice And I Vote With My Feet.” That’s part of the self-correcting dynamism of capitalism: For example, Bono, the global do-gooder who was last in Washington to play at the Obama inauguration, recently moved much of his business from Ireland to the Netherlands, in order to pay less tax. And good for him. To be sure, he’s always calling on governments to give more money to Africa and whatnot, but it’s heartening to know that, when it comes to his wallet as opposed to yours, Bono — like Secretary Geithner — has no desire to toss any more of his money into the great sucking maw of the government treasury than the absolute minimum he can get away with. I’m with Bono and Tim: They can spend their money more effectively than hack bureaucrats can. We should do as they do, not as they say.

If you listen to the principal spokesmen for U.S. economic policy — Obama and Geithner — they grow daily ever more explicitly hostile to the private sector and ever more comfortable with the language of micro-managed government-approved capitalism — which, of course, isn’t capitalism at all. They’ll have an easier time getting away with it in a world of “global oversight” where there’s nowhere to move to. Unfortunately, even then it won’t work. Think about it: It takes extraordinary skill to create and manage a billion-dollar company; there are very few human beings on the planet who can do it. Now look at Obama and Geithner, the two men currently “managing” more money than any individuals in human history: not billions, but trillions.

Notwithstanding the Treasury secretary’s protestations that the Yes/No prompt buttons of Turbo Tax were too complex for a simple soul such as himself, it’s no reflection on the hapless Geithner that he’s unable to fix the planet. When the Bolsheviks chose to introduce Russians to the blessings of a “command economy” 90 years ago, they were dealing with a relatively simple agricultural society largely contained within national borders. Obama and Geithner are trying to do it with a sophisticated global economy in which North American consumers, European bankers, Asian suppliers, Saudi investors, and Chinese debt-holders are more tangled than an octopuses’ orgy. Even with “global oversight” — with the Toxic Tims of Germany, Argentina, and India all agreeing on how to fix the game — it can’t be done.

Barack Obama, even when he’s not yukking it up on 60 Minutes, barely disguises his indifference to economic matters. He is not an economist, a political philosopher, a geopolitical strategist. He is the president as social engineer, the Community-Organizer-in-Chief. His plan to reduce tax deductions for charitable giving, for example, is not intended primarily to raise revenue, but to advance government as the distributor of largesse and diminish alternative sources of societal organization, such as civic groups. Likewise, his big plans for socialized health care, a green economy, universal college education: They’re about extending the reach of the state.

Unfortunately, all of it costs money he doesn’t have. So he has to borrow it, in your name. Where does the world’s hyperpower go to borrow more dough than anyone’s ever borrowed in human history? More to the point, given that, partly at the behest of Obama and Geithner, almost every other western government is ramping up national debt to cover massive bank bailouts and other phony-baloney “stimuli,” is there enough money out there to buy up the debt that’s already been run up? Last week, at the official British Treasury auction, investors failed to buy the full complement of so-called “gilt-edged” 40-year bonds. Two such auctions have already failed in Germany. The U.S. Treasury, facing similar investor reluctance to snap up $34 billion of five-year notes, was forced to increase the interest it will pay on them. The Chinese and the Saudis have long taken the view that it’s to their advantage to own as much of the western world as they can snaffle up, but it’s unclear whether even they have pockets deep enough for what America and the many Bailoutistans of Europe are proposing to spend.

In their first two months, Obama and Geithner have done nothing but vaporize your wealth, and your children’s future. What began as an economic crisis is now principally a political usurpation. And, to return to the president’s “false choice,” that “chaotic and unforgiving capitalism” is exactly what we need right now. It’s the quickest, cheapest, fairest, most-efficient route to economic stabilization and renewal. A regimented and eternally forgiving global command economy with no moral hazard will destroy us all.
 
Mark Steyn, a National Review columnist, is author of America Alone. © 2009 Mark Steyn


National Review Online – http://article.nationalreview.com/?q=YjBlNjQyNzYzNzk2YjBhNjg4NDM2Y2I5MjJkMDYzNjQ=

Rahm Emanuel’s profitable stint at mortgage giant

Rahm Emanuel’s profitable stint at mortgage giant

Short Freddie Mac stay made him at least $320,000

Chief of Staff

The White House Chief of Staff Rahm Emanuel listens as President Barack Obama delivers remarks to open the White House Forum on Health Reform in the East Room of the White House. (Tribune photo by Zbigniew Bzdak / March 5, 2009)

 

Before its portfolio of bad loans helped trigger the current housing crisis, mortgage giant Freddie Mac was the focus of a major accounting scandal that led to a management shake-up, huge fines and scalding condemnation of passive directors by a top federal regulator.

One of those allegedly asleep-at-the-switch board members was Chicago’s Rahm Emanuel—now chief of staff to President Barack Obama—who made at least $320,000 for a 14-month stint at Freddie Mac that required little effort.

As gatekeeper to Obama, Emanuel now plays a critical role in addressing the nation’s mortgage woes and fulfilling the administration’s pledge to impose responsibility on the financial world.

Emanuel’s Freddie Mac involvement has been a prominent point on his political résumé, and his healthy payday from the firm has been no secret either. What is less known, however, is how little he apparently did for his money and how he benefited from the kind of cozy ties between Washington and Wall Street that have fueled the nation’s current economic mess.

Though just 49, Emanuel is a veteran Democratic strategist and fundraiser who served three terms in the U.S. House after helping elect Mayor Richard Daley and former President Bill Clinton. The Freddie Mac money was a small piece of the $16 million he made in a three-year interlude as an investment banker a decade ago.

In business as in politics, Emanuel has cultivated an aggressive, take-charge reputation that made him rich and propelled his rise to the front of the national stage. But buried deep in corporate and government documents on the Freddie Mac scandal is a little-known and very different story involving Emanuel.

He was named to the Freddie Mac board in February 2000 by Clinton, whom Emanuel had served as White House political director and vocal defender during the Whitewater and Monica Lewinsky scandals.

The board met no more than six times a year. Unlike most fellow directors, Emanuel was not assigned to any of the board’s working committees, according to company proxy statements. Immediately upon joining the board, Emanuel and other new directors qualified for $380,000 in stock and options plus a $20,000 annual fee, records indicate.

On Emanuel’s watch, the board was told by executives of a plan to use accounting tricks to mislead shareholders about outsize profits the government-chartered firm was then reaping from risky investments. The goal was to push earnings onto the books in future years, ensuring that Freddie Mac would appear profitable on paper for years to come and helping maximize annual bonuses for company brass.

The accounting scandal wasn’t the only one that brewed during Emanuel’s tenure.

During his brief time on the board, the company hatched a plan to enhance its political muscle. That scheme, also reviewed by the board, led to a record $3.8 million fine from the Federal Election Commission for illegally using corporate resources to host fundraisers for politicians. Emanuel was the beneficiary of one of those parties after he left the board and ran in 2002 for a seat in Congress from the North Side of Chicago.

The board was throttled for its acquiescence to the accounting manipulation in a 2003 report by Armando Falcon Jr., head of a federal oversight agency for Freddie Mac. The scandal forced Freddie Mac to restate $5 billion in earnings and pay $585 million in fines and legal settlements. It also foreshadowed even harder times at the firm.

Many of those same risky investment practices tied to the accounting scandal eventually brought the firm to the brink of insolvency and led to its seizure last year by the Bush administration, which pledged to inject up to $100 billion in new capital to keep the firm afloat. The Obama administration has doubled that commitment.

Freddie Mac reported recently that it lost $50 billion in 2008. It so far has tapped $14 billion of the government’s guarantee and said it soon will need an additional $30 billion to keep operating.

Like its larger government-chartered cousin Fannie Mae, Freddie Mac was created by Congress to promote home ownership, though both are private corporations with shares traded on the New York Stock Exchange. The two firms hold stakes in half the nation’s residential mortgages.

Because of Freddie Mac’s federal charter, the board in Emanuel’s day was a hybrid of directors elected by shareholders and those appointed by the president.

In his final year in office, Clinton tapped three close pals: Emanuel, Washington lobbyist and golfing partner James Free, and Harold Ickes, a former White House aide instrumental in securing the election of Hillary Clinton to the U.S. Senate. Free’s appointment was good for four months, and Ickes’ only three months.

Falcon, director of the Office of Federal Housing Enterprise Oversight, found that presidential appointees played no “meaningful role” in overseeing the company and recommended that their positions be eliminated.

John Coffee, a law professor and expert on corporate governance at Columbia University, said the financial crisis at Freddie Mac was years in the making and fueled by chronically weak oversight by the firm’s directors. The presence of presidential appointees on the board didn’t help, he added.

“You know there was a patronage system and these people were only going to serve a short time,” Coffee said. “That’s why [they] get the stock upfront.”

Conservative Senator Says Obama’s Plan to Expand AmeriCorps Is Unwarranted Federal Intrusion

Conservative Senator Says Obama’s Plan to Expand AmeriCorps Is Unwarranted Federal Intrusion
Thursday, March 26, 2009
By Ryan Byrnes


First lady Michelle Obama, center, rear,shakes hands with students of the YouthBuild AmeriCorps community service program who gathered on the National Mall in Washington, Tuesday, March 17, 2009. (AP photo/Scott Applewhite)

(CNSNews.com) – The U.S. Senate is poised to approve a dramatic expansion of the AmeriCorps national community service program. Conservatives who oppose the measure say it is an attempt to greatly expand government’s role in providing community services by replacing charitable volunteers with paid government workers.

Senators voted 74-14 Monday to take up the Serve America Act, legislation that would more than triple the size of the AmeriCorps program over the next eight years, expanding its current 75,000 positions to 250,000.

Last week, a similar bill that would add 175,000 participants to the program passed in the House by a vote of 321-105.

President Barack Obama said at the time that expanding AmeriCorps is “timely.”

“At this moment of economic crisis, when so many people are in need of help and so much needs to be done, this could not be more urgent,” Obama said. “It is up to every one of us to do his or her small part to make the world a better place.”

But conservatives such as Sen. Jim DeMint (R-S.C) call the expansion nothing more than “the federal government reaching further into the world of civil society” — an arena they say is best left to the local level and to organizations such as the Boy Scouts, Girl Scouts, United Way and Knights of Columbus.

“Government charity is anathema to what our Founders intended and what our Constitution stands for,” DeMint said on the Senate floor Tuesday afternoon.

“Civil society works because it’s everything that government is not – it’s small, it’s personal, it’s responsive, it’s accountable,” he said. “Civil society must be protected from anything that makes it more like government.”

AmeriCorps, which combined the Volunteers in Service to America (VISTA) program and the National Civil Community Corps into one program, was launched in 1993 when President Bill Clinton signed the National and Community Service Trust Act into law.

More than 500,000 have participated in the program since its inception, completing public service projects ranging from building houses to teaching inner-city youth.

But DeMint said the proposed expansion of AmeriCorps would make its parent, the Corporation for National and Community Service, the 14th-largest company in the world, in terms of number of employees.

The South Carolina senator also said the federal government’s recent behavior casts doubt on whether it would be able to effectively manage such a large institution.

“Despite the good intentions of this bill, we are creating a huge new government entity that will be unmanageable and violates some of the core principles of our civil society,” DeMint said. “This bill is everything wrong with how Congress sees the world.”

The expansion would be costly. The Senate bill, which is co-sponsored by Sens. Edward Kennedy (D-Mass.) and Orrin Hatch (R-Utah), is projected to cost $5.7 billion over the next five years. The House version would cost an estimated $6 billion during the same period.

Last month’s stimulus plan (the Reinvestment and Recovery Act) devoted $201 million in funding for the Corporation for National Community Service to support expansion of AmeriCorps programs.

AmeriCorps participants currently receive up to $4,725 at the completion of year-long service to help cover the costs of college or pay back student loans, according to the AmeriCorps Web site.

Both the Senate and House bills would increase the maximum award to $5,350 – the same amount as a Pell Grant scholarship for college students.

Most AmeriCorps participants, the majority of whom are between the ages of 18 and 26, also receive an average living stipend of $11,800 during their service period.

AmeriCorps has had its share of financial struggles. Earlier this decade, the program was accused of not knowing how many volunteers it had enlisted in its program and, consequently, how much funding was available to help pay members the stipend they had been promised.

In June of 2003, AmeriCorps said it would only be able to fund half of its volunteers.

During a Committee on Appropriations hearing in the spring of 2003, Sen. Barbara Mikulski (D-Md.) chastised the group’s leaders and referred to AmeriCorps as the “Enron of non-profits.”

Mikulski, however, said this week that AmeriCorps has improved, and she supports the current plan to expand the program.

Matthew Spalding, director of the Center of American Studies at The Heritage Foundation, a conservative think-tank, said that while many of the group’s past problems have since been corrected, the idea of tripling the size of any bureaucratic organization is a recipe for further financial troubles.

“We need to separate voluntary service – which we strongly support – and service that is sponsored and instituted by the government,” Spalding told CNSNews.com. “That’s something very different and something that, in our opinion, we need to oppose.”

Senate Majority Leader Harry Reid (D-Nev.), meanwhile, has threatened to call the Senate in for a weekend session if a final vote on the measure doesn’t take place by Friday.

Geithner to Propose Vast Expansion Of U.S. Oversight of Financial System

Geithner to Propose Vast Expansion Of U.S. Oversight of Financial System

By Binyamin Appelbaum and David Cho
Washington Post Staff Writers
Thursday, March 26, 2009; A01

Treasury Secretary Timothy F. Geithner plans to propose today a sweeping expansion of federal authority over the financial system, breaking from an era in which the government stood back from financial markets and allowed participants to decide how much risk to take in the pursuit of profit.

The Obama administration’s plan, described by several sources, would extend federal regulation for the first time to all trading in financial derivatives and to companies including large hedge funds and major insurers such as American International Group. The administration also will seek to impose uniform standards on all large financial firms, including banks, an unprecedented step that would place significant limits on the scope and risk of their activities.

Most of these initiatives would require legislation.

Geithner plans to make the case for the regulatory reform agenda in testimony before Congress this morning, and he is expected to introduce proposals to regulate the largest financial firms. In coming months, the administration plans to detail its strategy in three other areas: protecting consumers, eliminating flaws in existing regulations and enhancing international coordination.

The testimony will not call for any existing federal agencies to be eliminated or combined, according to the sources, who spoke on condition of anonymity. The plan focuses on setting standards first, leaving for later any reshaping of the government’s administrative structure.

The nation’s financial regulations are largely an accumulation of responses to financial crises. Federal bank regulation was a product of the Civil War. The Federal Reserve was created early in the 20th century to mitigate a long series of monetary crises. The Great Depression delivered deposit insurance and a federally sponsored mortgage market. In the midst of a modern economic upheaval, the Obama administration is pitching the most significant regulatory expansion since that time.

An administration official said the goal is to set new rules of the road to restore faith in the financial system. In essence, the plan is a rebuke of raw capitalism and a reassertion that regulation is critical to the healthy function of financial markets and the steady flow of money to borrowers.

The government also plans to push companies to pay employees based on their long-term performance, curtailing big paydays for short-term victories. Long-simmering anger about Wall Street pay practices erupted last week when the Obama administration disclosed that AIG had paid $165 million in bonuses to employees of its most troubled division, despite losing so much money that the government stepped in with more than $170 billion in emergency aid.

The administration’s signature proposal is to vest a single federal agency with the power to police risk across the entire financial system. The agency would regulate the largest financial firms, including hedge funds and insurers not currently subject to federal regulation. It also would monitor financial markets for emergent dangers.

Geithner plans to call for legislation that would define which financial firms are sufficiently large and important to be subjected to this increased regulation. Those firms would be required to hold relatively more capital in their reserves against losses than smaller firms, to demonstrate that they have access to adequate funding to support their operations, and to maintain constantly updated assessments of their exposure to financial risk.

The designated agency would not replace existing regulators but would be granted the power to compel firms to comply with its directives. Geithner’s testimony will not identify which agency should hold those powers, but sources familiar with the matter said that the Federal Reserve, widely viewed as the most obvious choice, is the administration’s favored candidate.

Geithner and other officials have said in recent weeks that such powers could have kept in check the excesses of AIG and other large financial companies.

“The framework will significantly raise the prudential requirements, once we get through the crisis, that our largest and most interconnected financial firms must meet in order to ensure they do not pose risks to the system,” Geithner said yesterday in a speech before the Council on Foreign Relations in New York.

Hand in glove with this expanded oversight, the administration also is seeking the authority to seize these large firms if they totter toward failure.

Under current law, the government can seize only banks.

The administration yesterday detailed its proposed process, under which the Federal Reserve Board, along with any agency overseeing the troubled company, would recommend the need for a takeover. The Treasury secretary, in consultation with the president, then would authorize the action. The firm would be placed under the control of the Federal Deposit Insurance Corp. The government also would have the power to take intermediate steps to stabilize a firm, such as taking an ownership stake or providing loans.

“Destabilizing dangers can come from financial institutions besides banks, but our current regulatory system provides few ways to deal with these risks,” Geithner said yesterday. “Our plan will give the government the tools to limit the risk-taking at firms that could set off cascading damage.”

The administration compared the proposed process with the existing system under which banking regulators can take over failed banks and place them under FDIC control.

One important difference is that the decision to seize a bank is made by agencies that have considerable autonomy and are intentionally shielded from the political process. Some legislators have raised concerns about providing such powers to the Treasury secretary, a member of the president’s Cabinet.

The cost of bank failures is carried by the industry, which pays assessments to the FDIC. The Treasury said it has not yet determined how to pay for takeovers under the proposed system. Possibilities include dunning taxpayers or collecting fees from all institutions the government considers possible candidates for seizure.

FDIC chairman Sheila C. Bair issued a statement that expressed support for an expansion of her agency’s responsibilities.

“Due to the FDIC’s extensive experience with resolving failed institutions and the cyclical nature of resolution work, it would make sense on many levels for the FDIC to be given this authority working in close cooperation with the Treasury and the Federal Reserve Board of Governors,” Bair said.

The administration also wants to expand oversight of a broad category of unregulated investment firms including hedge funds, private-equity funds and venture capital funds, by requiring larger companies to register with the Securities and Exchange Commission. Firms also would have to provide financial information to help determine whether they are large enough to warrant additional regulation.

Hedge funds were designed to offer high-risk investment strategies to wealthy investors, but their role quickly grew from one on the fringe of the system to a place near the center. Some government officials have sought increased regulation of the industry since the 1998 collapse of Long-Term Capital Management threatened the stability of the financial system.

Geithner also plans to call for the SEC to impose tougher standards on money-market mutual funds, investment accounts that appeal to investors by aping the features of checking accounts while offering higher interest rates. He will not make specific suggestions.

SEC chairman Mary Schapiro plans to testify today that the SEC supports both proposals.

The administration’s broad determination to regulate the totality of the financial markets also includes a plan to regulate the vast trade in derivatives, complex financial instruments that take their value from the performance of some other asset. Derivatives have become a basic tool of the financial markets, but trading in many variants is not regulated. Credit-default swaps, a major category of unregulated derivatives, played a major role in the collapse of AIG.

Geithner plans to call for the entire industry to be placed under strict regulation, including supervision of dealers in derivatives, mandatory use of central clearinghouses to process trades and uniform trading rules to ensure an orderly marketplace.

The Fed already is moving to improve the plumbing of the financial system, including of the derivatives trade. The administration wants to expand and formalize these efforts.

Senior government officials view these highly technical arrangements as critical to the restoration of a healthy financial system.

Staff writer Zachary A. Goldfarb contributed to this report.

Love That Hate!

Love That Hate!

By Paul Kengor

“We must teach our children to hate,” Vladimir Lenin instructed his education commissars. The Bolshevik godfather declared that hatred was not only “the basis of communism” but “the basis of every socialist and Communist movement.”

Class envy has been a defining staple of the left for centuries, from the frenzied mobs leaping around the French guillotines to the Soviets to, well, the new masses circling AIG executives today. The difference is merely the degree of response — a question of socially acceptable force or violence.

 

Historically, this behavior is both foreign and antithetical to the American experience. Unfortunately, modern Americans don’t understand their founding and the nation’s core principles — our educational system doesn’t teach those things. Thus, they are now voting, and behaving, in kind. And we are now witnessing our own homegrown socialist movement in action, inspired by hate.

 

Some Americans, whipped into poisonous hatred by their elected representatives, have literally called for death for AIG executives, and one U.S. senator openly requested that these businesspeople commit suicide.

 

Liberals in Congress, from Senator Chuck Schumer to Senator Chris Dodd, plus a wild gaggle of unleashed central planners in the House, have conducted a show trial of AIG executives, with the larger purpose of placing American free enterprise in the dock.

 

The interrogation by this anointed body made me think of the old Soviet “Extraordinary Commission,” the operation of which was explained by its awful head, the Latvian M. Y. Latsis:

 

In your investigations don’t look for documents and pieces of evidence about what the defendant has done, whether in deed or in speaking or acting against Soviet authority. The first question you should ask him is what class he comes from, what are his roots, his education, his training, and his occupation. These questions define the fate of the accused.

 

Latsis characterized his commission as a tribunal acting on the home front against the capitalist class.
Liberals — if they’d ever heard of Latsis, which they probably haven’t in their universities — might ridicule the extremism of my analogy. After all, they aren’t talking about “eliminating the bourgeoisie as a class,” as did Latsis. Fair enough. But, again, it’s a matter of degree. Certainly, the acceptable demonization of an identified, despised class, for the purpose of working the masses into a rush of rage for political exploitation, is not terribly different.

 

As members of Congress target the likes of AIG chief executive Edward Liddy, mobs target the homes of AIG employees in Connecticut.

 

Of course, our sophisticated members of Congress separate themselves from the fray by choosing a non-violent but, ironically, somewhat Bolshevik-like response: they confiscate AIG pay (“bonuses”) at a flat, full tax rate of 90%.

 

Will this financial penalty satiate the mob’s bloodlust? No. That’s the problem when deadly sin — envy — becomes government demagoguery and policy. The torch-carriers spill into the streets to take “social justice” into their own hands.

 

A case in point is a remarkable New York Times article, titled, “Scorn Trails AIG Executives, Even in Their Driveways.”

 

Though frightening, the piece is not surprising. It begins with AIG executive James Haas trying to make his way into his home in Fairfield, Connecticut — a “bay-windowed house,” as the Times described it. “I feel horrible,” said Haas, “this has been a complete invasion of privacy.”

 

But Haas’s tormentors do not respect things private. They seek to expropriate the private.

 

“You have to understand,” pleaded Haas, fighting back tears, “there are kids involved, there have been death threats.”

 

Haas explained how he had offered political penance — to pay reparation: “I didn’t have anything to do with those credit problems. I told Mr. Liddy I would rescind my retention contract…. Leave my neighbors alone.”

 

The neighbors, however, are fit to be tied. They want a body. The Times quoted a loving New England resident who for 24 years lived down the block. Driving by, dripping with rage, surely after watching the morning news shows, she practically spit as she fulminated against AIG bonuses – which are a microscopic sliver compared to the trillions of dollars in debt Obama and the Democrats have racked up in only eight weeks.

 

“It makes me absolutely sick,” scowled the neighbor, in reference to AIG, not the federal government. “It’s despicable. It’s disgusting what these people have done. They should be forced to give every cent back.”

 

AIG workers are being demonized, noted the Times; they are hiring bodyguards. And it isn’t only AIG. Merrill Lynch is dealing with similar assaults.

 

And that’s just the start. It’s only a matter of public exposure until another group of private-sector “reptiles” — Lenin’s word — is identified for the proletariat. Congress and the White House will be happy to call out the next group of kulaks.

 

Alas, among the eager comrades joining this effort — and, predictably, not investigated by the liberal media camped outside AIG homes — are the ringleaders behind the packs of protestors across the country, including those carted around in “bus tours” of AIG executives’ homes.

 

These alleged unprompted uprisings of “the people” are, of course, hardly spontaneous. They are organized, particularly by the odious Service Employees International Union.

 

Personally, I knew where to follow the footsteps. I went to the website of People’s Weekly World, an organ of Communist Party USA. There, among the articles praising Obama’s “mandate for change,” praising the “Employee Free Choice Act,” and so forth, was an article titled, “Angry about AIG? Here’s how you can do something about it.”

 

The CPUSA article emphasized that “President Obama calls AIG’s behavior an ‘outrage.’” “But what can [you] do about it?” asked the communists. Well, “if you’re angry,” you can join the “March 19 Day of Action Against Corporate Excess.” CPUSA then linked to a “complete list of cities and events.”

 

“Don’t see your city on there yet?” carefully guided the article. “Sign up to organize your own Take Back the Economy rally — all the materials you need are available through the site.” Indeed, they were: PDF’s of fliers and all kinds of things.

 

Following the links, one ends up at the sponsors for the Day of Action. Topping the list, naturally, is ACORN, the training ground for the current President of the United States and leader of the free world. Joining Obama’s alma mater is SEIU, MoveOn.org, the National Lawyers Guild, the Mass Nurses Association, and other usual suspects.

 

Dependably, the useful idiots of the Religious Left were there: Interfaith Worker Justice, United for Peace and Justice, Catholics United, American Friends Service Committee, Brockton Interfaith, Catholic Scholars for Social Justice, Mass Interfaith Committee for Worker Justice, New England Jewish Labor Committee, and other fellow travelers.

 

But most significant, the greatest dupes of all — the liberal media — are relied upon as the ultimate sucker: The ringleaders count on the press to report the tiniest protest; they understand that the mainstream media is educator-in-chief to most Americans. From there, the likes of James Haas’s Connecticut neighbor learn how to feel about the Haas family’s bay windows.

 

That’s the process. Thus, the mob.

 

Well, the mob wants someone’s head on a platter — now. Time to eat the rich. Perhaps our dear leader, President Obama, can go to Connecticut to play the role of healer, addressing the faithful, calming their fears, a political sermon on the mount. Blessed would be the peacemaker.

 

But not yet — for now, this hate is just too excellent, too perfect for advancing the agenda of the leftist ideologues and envy-mongers running the republic.

 

Who’s to blame? The American people are to blame. I’m tired of the populist nonsense from talk-radio on how Americans “deserve better than this.” They do? Why? They voted for this. Obama is being Obama. Pelosi is being Pelosi. Schumer is being Schumer. The American people cast the ballots.

 

You reap what you sow. Enjoy the hate, America. You elected it.

 

Paul Kengor is author of The Crusader: Ronald Reagan and the Fall of Communism (HarperPerennial, 2007) and professor of political science at Grove City College. His latest book is The Judge: William P. Clark, Ronald Reagan’s Top Hand (Ignatius Press, 2007).

Page Printed from: http://www.americanthinker.com/2009/03/love_that_hate.html at March 26, 2009 – 09:55:40 AM EDT

Obama’s Foreign Failures

Obama’s Foreign Failures

By Ralph Peters
New York Post | 3/26/2009

AMERICA’S enemies smell blood and it’s type “O.”

All new administrations stumble a bit as they seek their footing. But President Obama’s foreign-policy botches have set new records for instant incompetence.

Contrary to left-wing myths, I wasn’t a fan of the Bush administration. (I called for Donald Rumsfeld to get the boot in mid-2001.) But fair’s fair. Despite his many faults, Bush sought to do good. Obama just wants to look good.

Vice President Dick Cheney was arrogant. Vice President Joe Biden is arrogant and stupid. Take your pick.

Don’t worry about the new administration’s ideology. Worry about its terrifying naivete.

Consider a sampling of the goofs O and his crew have made in just two months:

China: Secretary of State Hillary Clinton (you know that gal married to the Saudi hireling) crawled to Beijing to tell the party bosses that human rights don’t matter. Our “relationship” is more important than freedom and human dignity.

Beijing’s response? A staged military confrontation with an unarmed US Navy vessel; continued screw-America currency cheating; a renewed crackdown on dissidents and, yesterday, a call for a new global currency to replace the dollar.

Thanks, Hill. You’re a sweetheart.

Pakistan: With viral corruption throughout and Islamist fanatics sweeping half of its territory, Pakistan’s coming apart. Its Dem-adored prez tries to ban opposition parties and gut the judiciary. It has nukes and seethes with hatred of America. And Islamabad controls our primary supply route into Afghanistan, using it as an extortion tool.

Obama’s response? Billions in new aid for Pak pols to pocket. We’d be better off handing the money to AIG to pay out more bonuses.

Afghanistan: Obama’s Vietnam. Am I the only American who remembers that candidate Obama had a plan to capture Osama bin Laden and fix our previous “mistakes” in Afghanistan? President Obama doesn’t have a clue.

Iran: Obama tried to reach out, to talk. After all, talking got him to the White House. But America-bashing is what keeps Iran’s leaders in office, it’s their political essence. After 30 years of fierce hostility, hasn’t anyone figured out that the senior mullahs need us as an enemy? Without the Great Satan America to blame, they’d have some real explaining to do to their homies. So O got the left-hand finger.

He wanted to chat with the Taliban, too. They told him he could stick it where the sun don’t shine.

North Korea: Obama wanted a fresh start. North Korea’s response? Threats of war with South Korea and the kidnapping of two American journalists. And the renewed pursuit of weapons of mass destruction, along with rocket tests.

Cuba: Obama would like to liberalize our relationship. The Castro boys told him to kiss off. They need an enemy, too. (Dear Mr. President: It’s not always about us or how evil America is.)

Venezuela: Guess who else needs an enemy?

Mexico: The good news: Obama knows where it is on a map and recognizes that Mexico’s government faces a narco-insurgency that threatens our country, too. His first action? Cave to the Teamsters, violate a lawful treaty on cross-border trucking, reignite fading anti-Americanism and undercut President Felipe Calderon.

Poland: Obama’s stance on our bravest ally on the European continent? The Russians are more important than you are. He’s sending the same message to Ukraine and Georgia.

Russia: Bolshie Biden, the commuting commissar, knows he’s the man who can turn Russia into our best pal. After “Friend of Bill” Strobe Talbott tried and failed disastrously. And after poor W saw into Putin’s soul, only to get his butt handed to him. “Uncle Joe” Biden has nothing to learn from past failures, though: He’s got a re-set button.

Moscow’s response to the Obama administration’s bid for a new start? It threatens NATO members it once occupied and continues to back Iran’s nuclear program. Plus, it bribes Kyrgystan to kick us off the critical-to-Afghanistan Manas airbase (then offers to help replace that supply lifeline, giving Russia a choke-hold on our troops).

Next, the Kremlin threatens massive re-armament and demands the abandonment of the dollar as the international reserve currency.

Obama’s response? Push that re-set button again. And again.

At what point does naivete become cowardice?

As for our allies, Obama apparently needs them less than Bush did. O treated Britain’s prime minister like the deputy Paraguayan veterinary inspector, and he blindsided the leaders of the Czech Republic, Poland, Mexico and Canada on issues ranging from missile defense to trade. But he’d like them to take the Gitmo terrorists off our hands, please.

The one bright spot thus far has been Iraq, where Obama quickly tossed aside his campaign promises. The O-man doesn’t want to be on the blame-line for snatching defeat from the jaws of victory in Baghdad. And his MoveOn.org supporters can throw all the tantrums they want. (Breaking news, folks: O’s a professional pol, not the messiah . . . )

Apart from Iraq a success Sen. Obama did all he could to prevent his foreign policy’s an instant wasteland. By comparison, the Carter administration is starting to look like a model of manly strength, courage and patriotism.



Ralph Peters is a New York Post Opinion columnist and the author of “Looking For Trouble: Adventures in a Broken World.”

‘I’m having a very good crisis,’ says Soros as hedge fund managers make billions off recession

‘I’m having a very good crisis,’ says Soros as hedge fund managers make billions off recession

By Mail Foreign Service
Last updated at 5:13 PM on 25th March 2009

soros

George Soros said the current economic crisis has been the culmination of his life’s work

A hedge fund manager who predicted the global credit crunch has said the financial crisis has been ‘stimulating’ and the culmination of his life’s work.

George Soros, who predicted the global financial crisis twice before, was one of the few people to anticipate and prepare for the current economic collapse.

Mr Soros said his prediction meant he was better able to brace his Quantum investment fund against the gloabal storm.

But other investors failed to take notice of his prediction and his decision to come out of retirement in 2007 to manage the fund made him $US2.9 billion.

And while the financial crisis continued to deepen across the globe, the 78-year-old still managed to make $1.1 billion last year.

‘It is, in a way, the culminating point of my life’s work,’ he told national newspaper The Australian.

Soros is one of 25, top hedge fund managers from across Wall Street who have defied the credit crunch crisis to reap a total of $11.6billion (£7.9bn) last year.

The managers made their profit by trading above the pain in the markets, according to Institutional Investor’s Alpha Magazine.

Former maths professor James H. Simons, who has made billions in  hedge fund Renaissance Technologies, earned $2.5 billion running computer-driven trading strategies. 

And John A. Paulson, who made his fortune by betting against the housing market, came in second earning $2 billion.

paulson
simons

 

Big hitters: John Paulson and James H Simons were part of a group of 25 hedge fund managers who make a total of $11.6bn

The managers made the profit in a year when losses were recorded at two of every three hedge funds and when hedge funds lost an average of 18 percent, according to the New York Times.

Two of the three managers who tied for ninth place, at $250 million, are based in Britain and include David Harding of Winton Capital and Alan Howard of Brevan Howard Asset Management.

Another Brevan Howard employee Christopher Rokos also made the list.

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