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AUGUST 9,  2011

SHORT TAKES ON THE DRIFTING WRECKAGE – AT 10:57 P.M. ET:

WISCONSIN – At this hour we cannot say with certainty whether Democrats will succeed in recalling enough Republican state senators in today's election to take control of the Wisconsin senate.   Six seats are up for recall.  Dems must take three to have a chance at Senate control.  So far, three seats have gone Republican, one has gone Democratic, for a total of four seats settled.  Of the remainder, the Dem candidate is leading in one, and the last one is neck-and-neck.  It looks like this will go down to the wire, decided by one seat.

RICK –  Governor Rick Perry of Texas, having already announced speeches in South Carolina and New Hampshire on Saturday, has now announced that he will visit Iowa on Sunday, a day after the Ames (Iowa) straw poll.  Clearly, Perry, who will announce his presidential intentions Saturday, is trying to steal the thunder from whomever wins the straw poll, in which he is not running.  It's a great, if antagonistic, political strategy.  By this time next week the focus will be on Perry, as we see whether he can gain traction outside Texas, or if he's just a local guy with ambitions.

SKILLS – Wall Street recovered somewhat today, after yesterday's debacle, but in between President Obama went to another fundraiser and announced, “This is not rocket science in terms of how we can create more jobs in this country."  Well, given what Obama has done to NASA, he's not very good at rocket science either.  Cutbacks in NASA will make us dependent on Russian rockets for a long time, and have cost thousands of the most highly skilled jobs in the country, many of them in Rick Perry's Texas.

FINALLY – In what must be seen as another funeral oration for Barack Obama's foreign policy, the United States is now calling for President Assad of Syria to step down.  The demand, similar to the demand made of Gadaffi of Libya, will be accompanied by sanctions, but not by force.  That, of course, is the problem.  Assad watches as Gadaffi survives and remains, and he watches the United States weakening.  Does he have a great incentive to step down?  That may depend on the Arab countries and their attitude toward him.  It may also depend on European countries, some of whom have energy deals with Syria.  Let's see if, after two and a half years of Obama, we have any clout left.

August 9, 2011       Permalink 

VOTING IN WISCONSIN – BRACE YOURSELF - AT 7:51 P.M. ET:  Unknownst to the outside world,  Wisconsin votes today in special recall elections directed against Republicans in the state legislature who voted in favor of Governor Scott Walker's legislation to restrict collective bargaining.

It could be a bad night for Republicans because the recall forces are so energized, and recall elections usually bring out only the true believers.  From the Washington Examiner:

...Wisconsin voters can go to the polls in six state senate districts where the incumbent Republican is up for recall, targeted by public employee unions after supporting Republican Gov. Scott Walker’s collective bargaining legislation.

Republicans currently hold a 19-14 majority in the Wisconsin Senate, so Democrats only need to win three of the six races to take a majority. Democrats appear particularly competitive in at least four races.

And...

As one Republican strategist summarized, “The trends are all going our way, but the energy is all on their side.” If Republicans can keep the majority, they'll have to call it good day.

COMMENT:  If the Dems can flip the Senate, the national party will claim a great national victory, on a par with V-J Day in 1945.  Actually, it will mean nothing.  Wisconsin is a special case, a state with both a strong conservative and strong "progressive" tradition living side by side.  The "progressives" are the angry ones right now, and they're dragging their allies to the polls. 

I'd hate to see Scott Walker's program frustrated by losing the state senate, but it may happen.

August 9, 2011        Permalink

WE'RE SHOCKED, SHOCKED, AT SUCH ROUGHHOUSE POLITICS – AT 10:17 A.M. ET:   Apparently the president who called for a more civil atmosphere in Washington believes this applies to everyone but himself.  Of course, when you're a demigod, you make the rules.

The Politico reports that the Obama people plan an extremely rough campaign:

Barack Obama’s aides and advisers are preparing to center the president’s re-election campaign on a ferocious personal assault on Mitt Romney’s character and business background, a strategy grounded in the early stage expectation that the former Massachusetts governor is the likely GOP nominee.

The dramatic and unabashedly negative turn is the product of political reality. Obama remains personally popular, but pluralities in recent polling disapprove of his handling of his job and Americans fear the country is on the wrong track. His aides are increasingly resigned to running for re-election in a glum nation. And so the candidate who ran on “hope” in 2008 has little choice four years later but to run a slashing, personal campaign aimed at disqualifying his likeliest opponent.

That "hope" stuff, it's so yesterday.  Now fear, on the other hand...that's cool.

In a move that will make some Democrats shudder, Obama’s high command has even studied President Bush’s 2004 takedown of Sen. John F. Kerry, a senior campaign adviser told POLITICO, for clues on how a president with middling approval ratings can defeat a challenger.

“Unless things change and Obama can run on accomplishments, he will have to kill Romney,” said a prominent Democratic strategist aligned with the White House.

COMMENT:  Real nice, huh?  Read the whole article for an indication of what they plan to do to Romney if he is the nominee.  The question is whether Romney has the guts to fight back.  John McCain, whom I admire, was the gentleman of the 2008 campaign, and it certainly did him a great deal of good. 

The Obamans are rough Chicago politicians.  They like to portray themselves as elegant, educated idealists, but underneath they're gut fighters who will do anything to win.  They also know what many Republicans can't seem to fathom, that the GOP isn't particularly popular, and can't expect to ride back into the White House on dissatisfaction with Obama. 

Republicans must give as good as they get if they are to survive next year's onslaught,

August 9, 2011       Permalink

BULLETIN:  STOCKS OPEN HIGHER – AT 9:54 A.M. ET:  From Fox:

Wall Street staged a comeback on Tuesday morning following deep losses in the prior session as traders capitalized on beaten down stock prices and awaited the Federal Reserve's monetary policy statement slated for release later in the day.

As of 9:32 a.m. ET, the Dow Jones Industrial Average jumped 113 points, or 1%, to 10,922, the S&P 500 climbed 12.1 points, or 1.1%, to 1,132 and the Nasdaq Composite jumped 33.4 points, or 1.4%, points to 2,392.

COMMENT:  We caution that those are opening numbers.  It will be a long day.

August 9, 2011       Permalink

NOVEMBER, 2010, ALL OVER? – AT 9:21 A.M. ET:   Superlative political analyst Michael Barone is looking at the polling data coming in, and finds today's political map remarkably similar to the one that was drawn just before last year's elections.  From the Washington Examiner:

My Examiner colleague Conn Carroll notes that Gallup’s polling over the last six months shows Barack Obama with an approval rating over 50% in only 11 states, with 169 electoral votes (Conn has 173, but I think he’s including Maine where Obama’s job approval is right at but not above 50%). They include just three of the ten largest states, California, New York and Illinois. I find these results highly congruent with the popular vote for the House in November 2010, the subject of my July 21 article in american.com. The popular vote for the House, I argued, has become a good proxy for party and presidential standing since the mid-1990s.

What’s interesting here is that the list of states where Democrats carried the popular vote for the House in 2010 looks very much like the list of states where Obama’s Gallup job approval has been over 50% this year.

The Gallup 50%+ list includes only one state where Republicans carried the 2010 House popular vote, New Jersey, and the vote was very close there. It doesn’t include the four states where Democrats carried the popular vote but Obama’s approval stands at 50% or below: Maine, New Mexico, Oregon and Washington. But,...Obama’s Gallup approval tends to be very close to the Democratic percentage of the House popular vote last November.

Tentative conclusion: the balance of opinion remains very close to where it was in November 2010.

COMMENT:  Obviously, this can change.  But Barone's report underlines the opportunity the Republican Party has going forward to the 2012 election...if the party can pull itself together, nominate an attractive presidential candidate, and come up with a rational program that isn't self-destructive.  Those are big challenges for a party that works hard to lose elections.

The danger:  The Republican Party is becoming as ideological as the Democratic Party, and rigid ideology has never been attractive to the American voter.  We are an idealistic nation, not an ideological nation.  Reagan understood that, which is why he could pursue a conservative agenda while never appearing to be an ideological parrot or an uncompromising martinet. 

August 9, 2011       Permalink

LONDON IS BURNING – AT 8:32 A.M. ET:  One of the characteristics of an economic crisis, and we've remarked on it before, is that it diverts eyes from foreign news.

Something terrible has been happening in London, in response to a police shooting that remains something of a mystery.  There have been what must be called race riots, and they are spreading beyond London:

LONDON — Prime Minister David Cameron pledged on Tuesday to flood the streets of London with 10,000 extra police officers and said Parliament would be recalled in emergency session after rioting and looting spread across and beyond London for a third night in what the police called the worst unrest in memory.

Mr. Cameron spoke after cutting short a vacation in Tuscany to return home as violence convulsed at least eight new districts in the metropolitan area and broke out for the first time in Britain’s second-largest city, Birmingham, and elsewhere.

Coming after a cascade of crises, the measures announced by Mr. Cameron seemed to represent a bid to restore some appearance official authority after nights of chaos and near-anarchy with rioters taunting or outmaneuvering the police, raiding stores and torching buildings.

One commentator noted that the police in England have become so sensitive to issues of race – the result of left-wing "multicultural" propaganda, that they have been nearly paralyzed in response to the rioting.  That may change.  Public response appears to be ahead of the response of the police.

The violence has left many Londoners stunned at the spectacle of hooded and masked marauders rampaging with seeming impunity despite hundreds of arrests that have filled police cells to overflowing. In a cautious response on the streets, some citizens took to cleaning up the debris on Tuesday, cheering police patrol vehicles passing by.

Standing outside his office and residence at 10 Downing Street, Mr. Cameron said lawmakers would be called back from their summer recess for one day on Thursday to enable Parliament to assess the situation. All police leave had been canceled, he said, and the number of officers on the streets would be increased to 16,000 on Wednesday night from 6,000 on Tuesday.

That's nice.  It took three days to figure this out while vacation schedules were maintained.  If this were New York City, with its great police commissioner, Ray Kelly, the affected areas would be flooded with battle-trained cops within hours, even minutes. 

“Last night was the worst the Metropolitan Police Service has seen in current memory for unacceptable levels of widespread looting, fires and disorder,” Scotland Yard said in a statement tallying a further 200 arrests overnight, bringing the total from three nights of unrest to over 450.

The well-trained parrots in some parts of the British press, and the BBC, are already saying that the "root cause" of the trouble is budget cuts in "social programs."  The leftist line never changes.  It is part of a religion posing as a political philosophy. 

Do not be overly shocked if some of this violence comes here.  There are plenty of people out there who dream of a return to the 1960s, which they see as a time of revolutionary gain.

One thing about the Brits, though, and it goes for the French as well – they can be very tough when called upon.  Let's see what Cameron and Scotland Yard can do in the next few days.

August 9, 2011       Permalink

MARKETS UNSTABLE, CALMING PILLS REQUIRED – AT 8:24 A.M. ET:  From the Washington Post:

TOKYO — A frenzied sell-off caused Asian stocks to nosedive early Tuesday, and though most major indexes recovered slightly toward the close of trading, the latest day of losses extended fears of a global economic downturn.

Japan’s Nikkei 225 index fell more than 4 percent within the opening hour and dropped 1.68 percent for the day, closing at 8,944.48 — its first finish below the 9,000 mark since mid-March. South Korea’s Kospi index sustained massive losses in the opening hours, at one point plunging more than 9 percent and bringing a brief halt to trading. But the index clawed back and finished with losses of 3.64 percent for the day.

European markets fluctuated in morning trading, falling sharply at first but then largely recovering. By midday, the major indexes were all within one or two percentage points of where they had opened Tuesday morning--with London’s FTSE and Germany’s DAX slightly in the red, but France’s CAC 40 and the Stoxx Europe 600 edging into positive territory.

U.S. stock futures were also volatile, but edged up significantly within two hours of the opening bell.

The latest Asian market chaos heightened the urgency facing the U.S., which on Tuesday will hold a Federal Reserve meeting to discuss possible new monetary easing measures. In the meantime, Asia is offering proof that no part of the world is cut off from the problems gripping the U.S. and Europe, particularly as foreign investors pull their money from Asia’s stocks and flee to safe havens, like Treasuries and gold.

COMMENT:  I wouldn't be shocked to see some gains in the U.S. stock market today, as bargain hunters move in, although panic and fear could move the market in the other direction.

But there is a worldwide economic problem, probably the greatest since the Great Depression, and President Hope 'n Change in the White House continues to give political speeches and go to fundraisers.

August 9, 2011      Permalink

AUGUST 8,  2011

SHORT TAKES ON THE DRIFTING WRECKAGE – AT 9:20 P.M. ET:

SPOIL SPORT? – Governor Rick Perry of Texas will announce his presidential plans on Saturday, with speeches in the two presidential primary states of New Hampshire and South Carolina.  Obviously, he's running.  You don't go to New Hampshire and South Carolina to announce that you're training for the senior Olympics.  Saturday is the day of the famous Ames (Iowa) straw poll, and one can ask whether Perry is trying to steal the thunder from other candidates who, unlike him, will be participating in that poll.  This coincidence of timing will not make Perry loved in certain circles.

THE GREAT STRATEGIST SPEAKS – Congressman Barney Frank of Massachusetts has pronounced that the cause of this nation's credit downgrade is the American military and its operations.  Frank will undoubtedly get plenty of support for this profound theory from the tofu-worshipping crowd in his congressional district.  Frank says he's now on a mission to reduce the military budget and, of course, bring the boys home.  He is a perfect example of the fact that the nutty left and the nutty right are both joining in a new isolationism.  Tried that before.  Didn't work.  Ask the gents who were at Pearl Harbor that December morning.

THE GREAT ARTIST ALSO SPEAKS – Michael Moore, who I think makes leftist-oriented movies like "Fahrenheit 911," has announced a solution to the downgrade situation.  He wants President Obama to have the managers of Standard & Poors arrested.  Among other charges, Moore claims that Standard & Poors is connected with the Bush ((!!) family.  There are many criticisms of S&P, some of them probably quite valid, but we generally, in democracies, investigate before we incarcerate.  But who said Moore ever believed in democracy?

COURAGEOUS MAYOR – Philadelphia, like other big cities, has been victimized by a series of flash mob attacks, in which gangs of African-American "youths" attack others and run through stores stealing what they wish.  (We note that they represent a very small percentage of black kids.)  Finally, Philadelphia's black mayor, Michael Nutter, has had the courage not only to impose tighter curfews in parts of the city, but has confronted the issue of race in these attacks.  No excuses, no invoking "root causes."  He has called the flash mobbers "a tiny minority of ignorant, reckless fools."  He has bluntly said that they are hurting their race.  And he has announced that parents will be held responsible if their kids violate curfews.  Solid stuff, and much needed.  Other mayors might take note.

August 8, 2011       Permalink

BULLETIN – DOW DROPS 634 POINTS – AT 4:23 P.M. ET:  The Dow Jones Industrial Average dropped about 634 points today (minor adjustments in the number might be made later), the first American market reaction to the downgrade.

We now await the opening of Asian markets, which occurs at 8 p.m. ET. 

The president spoke today, and basically called for an end to partisanship in Washington.  As usual, he had nothing of substance to say.

S&P has started to downgrade other financial products that are linked to the U.S. Government, such as loan guarantees to foreign nations.  This, too, will have a ripple effect.

The fool Barney Frank is blaming the American military for the downgrade.  The left already has its big eyes on the military budget, not understanding that, national security needs aside, the military budget is one of the great economic engines in this country.

Some concern has been raised that several states could be downgraded next.

August 8, 2011       Permalink

STOCKS DROP SHARPLY – AT 10:25 A.M. ET:  The stock market has opened sharply lower, following S&P's downgrade of America's credit.  From Bloomberg:

U.S. stocks retreated, following the biggest weekly drop in the Standard & Poor’s 500 Index since 2008, amid concern that a downgrade of the nation’s credit rating by S&P may worsen an economic slowdown.

Bank of America Corp. (BAC) and Citigroup Inc. (C) slumped at least 5.4 percent, pacing losses in financial shares. Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) declined more than 2.7 percent as oil futures tumbled to trade at an eight-month low.

The S&P 500 retreated 2.1 percent to 1,174.66 at 9:34 a.m. in New York, after losing 7.2 percent last week. The Dow Jones Industrial Average fell 197.92 points, or 1.7 percent, to 11,246.69.

“It’s panic selling,” Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, said in a telephone interview. His firm manages $275 billion. “There are no fundamental reasons for the selloff. We’re not going into a recession. We had a terrific earnings season. Now is not the time to panic. This is where you start to put cash back to work.”

COMMENT:  Volatility is expected throughout the day.  The Wall Street economy is not the real, Main Street economy.  As Felix Rohatyn, a true statesman of the financial sector, once said, it's something of a casino.  We'll see who comes away with more chips.

It is now three days since the downgrade, and President Obama has yet to comment on it.  His leadership, or lack of it, has got to be a factor in the economic decisions that people and corporations make.  There's not much glow left, or much love.

August 8, 2011      Permalink

IMPORTANT MEDICAL NEWS – AT 9:38 A.M. ET:  We report, as medical observers, the meltdown of one Albert Gore, former vice president of the United States and former husband of one Tipper, at a meeting on August 4th in the Democratic Party's capital city of Aspen. 

Mr. Gore, who has our sympathies and good wishes for a speedy recovery, spoke as follows:

Speaking Aug. 4 at the Aspen Institute, Gore claimed global warming critics have used the same tactics allegedly used by the tobacco industry to prevent needed anti-smoking regulations for four decades, according to The Colorado Independent, a liberal website.

"The model of media manipulation used then, Gore said, 'was transported whole cloth into the climate debate. And some of the exact same people — I can go down a list of their names — are involved in this. And so what do they do? They pay pseudo-scientists to pretend to be scientists to put out the message: This climate thing, it’s nonsense. Man-made CO2 doesn’t trap heat. It may be volcanoes. *@##!@%*!  It may be sun spots. *%!@%*&!#!  It’s not getting warmer. #!**%#@!'  Gore exclaimed," the Independent reported.

“'When you go and talk to any audience about climate, you hear them washing back at you the same #!@% over and over and over again,' he continued. 'There’s no longer a shared reality on an issue like climate even though the very existence of our civilization is threatened. People have no idea! … It’s no longer acceptable in mixed company, meaning bipartisan company, to use the %@#!*&n word climate. It is not acceptable. They have polluted it to the point where we cannot possibly come to an agreement on it.'"

Mr. Gore is receiving get-well cards at any of his residences.  He will also be teaching master classes in good taste and fine vocabulary to local underprivileged youths.

A full text of his remarks, for mature adults, is available.

August 8, 2011       Permalink

IOWA WEEK – AT 9:18 A.M. ET:  Call this Iowa week in American politics.  We have a primary system, and each event in a primary takes on great significance because it can narrow the presidential field.  Narrowing may well occur this week.  From The Politico:

The most important week of the 2012 presidential race so far begins now.

Whatever happens in Thursday’s debate and Saturday’s straw poll in Ames, the Republican field is likely to be narrowed. No candidate will come out of Ames the same as he or she went in. Some may not come out at all. And one will emerge as the top challenger to Mitt Romney, whose decision not to compete in the straw poll turned the voting largely into a contest between Tim Pawlenty and Michele Bachmann.

The week will also be key for Rick Perry, the Texas governor who’s been weighing a run, but won’t be on the Ames ballot. The less strength everyone else in the field shows, the wider the opening for him to get in.

For all its detractors who claim the straw poll has little predictive value, it has shaped every Republican presidential race for years. Even those who skipped competing — Romney, Newt Gingrich and Jon Huntsman — won’t be able to ignore the results. And those votes won’t be cast until after the debate — Huntsman’s first — two days before Ames.

It’s a week that will prove or disprove the conventional wisdom: Ron Paul’s struggling to be taken seriously, Rick Santorum’s hoping for attention, Herman Cain’s fading fast, Gingrich is sliding toward irrelevance and Michigan Rep. Thaddeus McCotter’s run remains mostly confusing.

The stakes are highest for Pawlenty and Bachmann, as the former Minnesota governor pits two years of organizational build-up against the enthusiasm that has made the congresswoman the Iowa frontrunner as both try to prove their viability.

COMMENT:  Thursday's debate will be televised by Fox.  I encourage you to watch it.  Watch to see if Michele Bachmann continues the winning streak she established by her remarkable performance in the first debate of the campaign many weeks ago.  Watch to see if Tim Pawlenty can get a pulse.  Watch to see if Ron Paul will reveal himself to be the bag of nuts that he really is.

Rick Perry has been mentioned.  I'll be discussing him in upcoming days.  He is expected to jump into the race later this month, and there is great excitement in some circles.  I've been studying Perry and find, very frankly, that he's currently a local politician with narrow appeal – the Rudy Giuliani of Texas – who will have only months to prove himself on a national stage, not only to GOP primary voters, but to the independents needed to win a presidential election.  More on that later.

August 8, 2011      Permalink

SOME COMMON SENSE ON THE DOWNGRADE – AT 8:54 A.M. ET:  The big story of the day is about to begin...the American stock market's reaction to the downgrading of American credit by Standard & Poors. 

Over the weekend we saw, via the mouths of John Kerry and others, the Democrats' awkward attempt to blame the downgrade on the Tea Party.  True, the Tea Party doesn't rank very high in opinion polls, but the attempt fizzled rather quickly.  Barack Obama is president, not the Tea Party, and Americans are actually aware of that.

At the same time, the administration was attacking Standard & Poors for issuing the downgrade itself.  But The Wall Street Journal, while skeptical of ratings agencies like S&P, argues for some common sense in dealing with this humiliation:

is there anything that S&P said on Friday that everyone else doesn't already know? S&P essentially declared that on present trend the U.S. debt burden is unsustainable, and that the American political system seems unable to reverse that trend.

This is not news.

In that context, the Obama Administration's attempt to discredit S&P only makes the U.S. look worse—like the Europeans who also want to blame the raters for noticing the obvious. Treasury officials and chief White House economic adviser Gene Sperling denounced S&P for relying on a Congressional Budget Office scenario that overestimated the U.S. discretionary spending baseline by $300 billion through 2015 and $2 trillion through 2021.

But even adjusting for that $2 trillion would only reduce U.S. publicly held debt to 85% or so of GDP—still dangerously high. And that assumes that recently agreed upon spending caps are sustained over a decade, something which rarely happens.

We think the larger problem with S&P, Moody's and Fitch is that they make no distinction over how a nation balances its books—whether through tax increases or spending reductions. Like the International Monetary Fund, the raters care only about balance.

This takes too little account of the need for faster economic growth, which is the only real path out of a debt crisis. Britain's government has earned rater approval for its fiscal consolidation, but its increases in VAT and income tax rates are hurting its tepid recovery. Letting the credit raters dictate tax increases is the road to an austerity trap.

The real reason for White House fury at S&P is that it realizes how symbolically damaging this downgrade is to President Obama's economic record. Democrats can rail all they want about the tea party, but Republicans have controlled the House for a mere seven months. The entire GOP emphasis in those seven months—backed by the tea party—has been on reversing the historic spending damage of Mr. Obama's first two years.

COMMENT:  You'll probably see more economic analysis in the next week than you've seen in a lifetime.  Everyone is out there with a theory, but the Journal is fundamentally correct.  We will get out of this only by growth in the economy, growth that has so far eluded the Obamans.  Achieving that growth may mean putting aside some perfectly good social goals for a time in favor of economic growth which, in turn, will make social goals more attainable.

I am not an economist, and don't pretend to be one, but it does seem to me that the manufacturing sector – expanding and enriching it – may well hold the key to growth, and that working on ways to make this country more competitive again in manufacturing can produce quick dividends.  But ideology too often rules this administration, and its middle-level administrators have little regard for a sector that too many of them loathe.

August 8, 2011     Permalink