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FEBRUARY 16,  2011

WILL YOU SLEEP BETTER TONIGHT? – AT 8:45 P.M. ET:  We reported earlier on some stunning comments by a mouthpiece for the Muslim Brotherhood.   We may have to deal seriously with that organization if it gains power in Egypt and other Arab countries.  But how can we deal seriously if the bozos in charge of American "intelligence" have no idea what's going on.  It's hard to believe this, but it's being reported all over.  This story is from The Jerusalem Post:

Top US intelligence on Wednesday struggled to answer questions about the agenda of Egypt's Muslim Brotherhood, amid accusations the spy services were caught off-guard by protests in Cairo that forced Hosni Mubarak to step down as president.

US National Intelligence Director James Clapper told senators at a hearing that he was unsure about the Muslim Brotherhood's stance on Iran, the Egypt-Israel peace treaty and weapons smuggling into Gaza.

"It's hard to at this point to point to a specific agenda of the Muslim Brotherhood as a group," he said.

This is just incredible.  How much to we spend on "intelligence" gathering each year? 

CIA Director Leon Panetta told senators the Muslim Brotherhood was not "monolithic" but that the intelligence services were closely following the organization, which he said included "extremist elements."

Oh dear, oh dear.  The Nazi Party in Germany wasn't monolithic.  The Communists in the Soviet Union sometimes differed with each other.  But people with common sense knew what the thrust of both groups was. 

Why do I feel that this "deaf and dumb" routine may be designed to please the man in the White House, who never met a Muslim extremist he didn't try to "understand"?

We're in the soup. 

February 16, 2011       Permalink

SNIPPET OF THE DAY – AT 7:58 P.M. ET:

From The Hill:  The head of the CIA told senators on Wednesday that Osama bin Laden would be held at Guantánamo Bay prison if he were captured.

No need, no need.  The Berkeley, California, City Council is meeting this week to decide whether to take some prisoners from Guantanamo.  They would certainly be honored to have Sheik bin Laden.  They could put him in the People's Detention Center and Multicultural Spa, adjoining the university campus.  He could teach courses in resistance to imperialism and making home videos.

February 16, 2011      Permalink

WE'RE TALKING SCARY HERE, REALLY SCARY – AT 10:33 A.M. ET:  Youssef al-Qaradawi, the guy considered the spokesman for the Muslim Brotherhood of Egypt has a regular show on Al Jazeera, a deceptive "news" network that actually promotes radical Islam, while dressing it up a bit.

This guy is the subject of a detailed investigative report in the German magazine Der Spiegel.  It's the kind of reporting we're not getting here, and the result scares the heck out of me.  Consider this:

Qaradawi advocates establishing a "United Muslim Nations" as a contemporary form of the caliphate and the only alternative to the hegemony of the West. He hates Israel and would love to take up arms himself. In one of his sermons, he asked God "to kill the Jewish Zionists, every last one of them."

In January 2009, he said: "Throughout history, Allah has imposed upon the [Jews] people who would punish them for their corruption. The last punishment was carried out by [Adolf] Hitler."

Will this man encourage his brothers in Cairo to uphold the peace treaty with Israel, should the Muslim Brotherhood become part of a government now that Mubarak has resigned?

And yet there are those in the U.S. who are promoting the Brotherhood as "moderate," even secular.

It doesn't get any better:

The imam has also developed a reputation for himself as a moderate. Many see him as a symbol of an enlightened Islam. When speaking to the Western media, in particular, Qaradawi likes to point to Muslims' tolerance of non-Muslims and condemns the attacks of al-Qaida.

He also speaks out against the systematic castigation of wives. He calls the practice unwise, saying: "Blows are not effective with every woman, but they are helpful with some." In other cases, the sheikh insists on equal rights. For example, he says, a woman does not have to ask her husband's permission to blow herself up in an Israeli café.

Moderate, thoughtful religious leader.  Not like the others.  Geez.

...many feel that the TV imam is more dangerous than those like the Taliban who teach the Koran to the letter. Qaradawi does not demand anything impossible from his contemporaries. Instead, he stresses that his followers can be devout and modern at the same time.

Critics see Qaradawi's caution as nothing but a ruse. In the German blog "Die Achse des Guten" ("The Axis of Good"), Christoph Spielberger writes about the "Islamic principle of Taqiyya, or misrepresentation to achieve a higher goal." According to Islamic tradition, concealing one's faith is permissible, but only in the face of a massive threat.

Finally...

Now everyone wants to know who the Muslim Brothers really are. The question is as pointless as asking whether Yusuf al-Qaradawi is moderate or not. He is both himself and the opposite of himself, depending on one's perspective -- and the circumstances.

But what is acceptable in quantum physics can be extremely dangerous in the business of politics.

COMMENT:  I think we're getting the idea.  Like the fascists of the 1930s, the Brotherhood will have a fifth column operating in the United States, through the universities, part of the press, and lobbyists.  And, like the fascists of the 1930s, the Brotherwood will convince some, and lull others to sleep.

February 16, 2011       Permalink

MIDEAST PROTESTS CONTINUE – AT 9:37 A.M. ET:  CNN, whose Mideast coverage has improved somewhat now that propagandist Christiane Amanpour has gone to ABC and ruined its ratings, reports on continuing, though limited disturbances in Iran and Arab countries:

On Wednesday, thousands of people gathered for a peaceful funeral procession for a Bahraini man killed when clashes erupted during the another protester's funeral procession, the president of a human rights group said.

Demonstrators picked up the body of Fadhel Matrook, 31, from a morgue Wednesday and marched to a cemetery with no police presence on the streets, said Nabeel Rajab, president of the Bahrain Center for Human Rights.

Bahrain is headquarters to the U.S. Fifth Fleet, so we have a defense interest as well as a commercial interest in this Gulf state.

And...

Libyan police clashed with protesters chanting anti-government slogans and demanding the release of a human rights activist early Wednesday, an independent source in the country told CNN.

The about 150-200 protesters in the coastal city of Benghazi were supporting human rights activist and lawyer Fathi Terbil, who had been detained earlier, the source said.

Several people were arrested after police confronted the protesters, the source said.

Too few demonstrators to make a difference.  It's tough to get TV cameras in.  The key question in Libya, as elsewhere, is whether there's enough fire to build a protest.

Thousands of people, many of them Iranian government supporters, turned up in Tehran on Wednesday for the funeral of a man killed in anti-government protests.

The gathering near Tehran University comes amid tension following a crackdown on anti-government protests.

Government officials said 26-year-old Saneh Jaleh was shot to death Monday by members of an outlawed group called the People's Mujahedeen of Iran. The group, which is also known as the Mojahedin-e Khalq Organization, has opposed the Iranian government for decades.

Government officials have also said that Jaleh was part of the pro-government Basij militia. But some who knew Jaleh dispute that account.

Odd story.  We usually hear of anti-government protests, but they've been put down violently in Iran, and Iranian leaders yesterday called for the execution of protest leaders.  However, there is a hard core of government supporters, and they're in the streets today.

And from Yemen:

A protest by Sanaa University students Wednesday started out as a demonstration calling for an improved curriculum but transitioned into an anti-government protest, and pro-government demonstrators threw rocks, two participants said.

Despite the rock-throwing, violence did not break out and there were no reports of injuries in the protests, the participants said.

The rally began with several hundred students protesting inside the university gates. Aside for calls for a better curriculum, they demanded the removal of the university dean and called for security forces to remain off-campus. The demonstration was organized by the head of the university's student union, said Omar Al-Nihmi, a third-year media student at the university.

COMMENT:  There are disturbances, yet.  But, so far, none of the despotic governments outside Egypt seems to be in danger of falling.  Protest movements sometimes take months to build.  That happened in Iran in the late 1970s, leading to the fall of the shah, an event hailed at the time by pro-democracy forces, but which ended tragically with the rise of the Iranian mullahs. 

February 16, 2011      Permalink

SOMETHING MISSING HERE – AT 8:52 A.M. ET:  President Obama gave out the Medal of Freedom yesterday, the nation's highest civilian honor, to 15 recipients.

Washington (CNN) -- President Barack Obama paid tribute to "the best of who we are and who we aspire to be" in awarding America's highest civilian honor Tuesday to 15 people, including former President George H.W. Bush, poet Maya Angelou, baseball slugger Stan Musial and cellist Yo-Yo Ma...

...Other recipients of the medal included Georgia congressman and civil rights leader John Lewis; Natural Resources Defense Council co-founder John Adams; German Chancellor Angela Merkel; investor Warren Buffett; artist Jasper Johns; Holocaust survivor Gerda Weissmann Klein; humanitarian activist Tom Little, who was killed in Afghanistan; civil rights activist Sylvia Mendez; Boston Celtics NBA legend Bill Russell; nonprofit leader and former Ambassador Jean Kennedy Smith; and AFL-CIO chief John Sweeney.

Now, I don't wish to quibble.  These are all fine people, but please notice what is missing.  There isn't a single scientist or engineer on that list.  But there are political people and people being paid back for their political support. 

This is a nation that wins a disproportionate number of the Nobel prizes in science – the real Nobel prizes, as opposed to the fraudulent "peace" prize – and yet not one scientist could be found. 

I think it says something about the values of this administration.  Science is important only when it can be used, incorrectly, to support the business of climate change.

February 16, 2011      Permalink

A TALE OF TWO PAPERS – AT 8:33 A.M. ET:  From the Washington Post:

President Obama cautiously criticized the Iranian government Tuesday for carrying out a deadly crackdown on street demonstrations, as hard-line legislators in Tehran called for the execution of several prominent opposition leaders.

Obama's careful formulation - calling on the government to allow protesters to express their grievances but stopping short of calling for a change in leadership - highlighted the sharp differences between the political dynamic that his administration faces in Iran and the one that shaped the recent revolt in Egypt.

From The New York Times:

President Obama accused Iran’s leaders of hypocrisy for first encouraging the protests in Egypt, which they described as a continuation of Iran’s own revolution, and then cracking down on Iranians who used the pretext to come out on the streets....

...Mr. Obama’s words on Iran...were among the strongest he has ever voiced in encouraging a street revolt, something his administration initially shied away from doing in June 2009, after a disputed presidential election provoked an uprising that was crushed by the government....

...“What’s been different is the Iranian government’s response, which is to shoot people and beat people and arrest people,” he said.

Oh well, it must be one or the other.

February 16, 2011      Permalink

THE BRITS WERE RIGHT – AT 8:06 A.M. ET:  Recently we were treated to smiling predictions that the successful cyber attack on Iran's nuclear program had set the country back three years.  There were high-fives all around.  But Britain's great defense minister, Liam Fox, one of the few gems left in Western governments, cautioned that he didn't think so.  Dr. Fox, a physician by training, was right.  Surveillance cameras installed by international inspectors told the story.  From WaPo:

In a six-month period between late 2009 and last spring, U.N. officials watched in amazement as Iran dismantled more than 10 percent of the Natanz plant's 9,000 centrifuge machines used to enrich uranium. Then, just as remarkably, hundreds of new machines arrived at the plant to replace the ones that were lost.

The story told by the video footage is a shorthand recounting of the most significant cyberattack to date on a nuclear installation. Records of the International Atomic Energy Agency (IAEA), the U.N. nuclear watchdog, show Iran struggling to cope with a major equipment failure just at the time its main uranium enrichment plant was under attack by a computer worm known as Stuxnet, according to Europe-based diplomats familiar with the records.

But the IAEA's files also show a feverish - and apparently successful - effort by Iranian scientists to contain the damage and replace broken parts, even while constrained by international sanctions banning Iran from purchasing nuclear equipment. An IAEA report due for release this month is expected to show steady or even slightly elevated production rates at the Natanz enrichment plant over the past year.

The Stuxnet attack was brilliant.  But how effective was it, bottom line?

A draft report by Washington-based nuclear experts concludes that the net impact was relatively minor.

Now, once again, experts are warning that the Iranians may well be within a year or so of a nuclear weapon.  This comes at a time when the Iranian regime is beating down protesters and even threatening them with execution.

We will, of course, be smugly told that all this doesn't matter, that Iran doesn't have the means to deliver an atomic bomb by plane or missile.  Nonsense.  No such capability is needed.  A nuclear device in the hold of a cargo ship, protected by a suicide crew, can take out the port of Baltimore, New York, or San Diego. 

Problem not solved.

February 16, 2011     Permalink

FEBRUARY 15,  2011

PERSONNEL NEWS – AT 9:04 P.M. ET:  When star-studded names move around, political minds come alive.  The subject at hand is General David Petraeus.  From The New York Post:

Gen. David Petraeus, the most celebrated American soldier of his generation, is to leave his post as commander of US and NATO forces in Afghanistan, The (London) Times reported Tuesday.

The Times reported that the Pentagon aims to replace Petraeus, who was appointed less than eight months ago, by the end of the year.

Sources have confirmed that the search for a new commander in Kabul is under way. It forms part of a sweeping reorganization of top American officials in Afghanistan, which the Obama administration hopes to present as proof that its strategy does not depend on the towering reputation of one man.

Unless that man is Barack Obama.

The news that the general himself would be leaving Kabul stunned close observers of US strategy, but the Pentagon insisted Tuesday it was a natural development, given the demands of running the war and Washington's need for fresh blood in a crucial role.

Fresh blood?  He never seemed tired to me.

Lionized as the hero of Iraq and now of Afghanistan, the general will be a natural contender to become Chairman or Vice-Chairman of the Joint Chiefs of Staff -- both posts fall vacant this year.

General Petraeus has consistently ruled out running for President, but as one of the most admired US generals since Dwight D. Eisenhower he has been urged to consider an attempt for the White House since leading the successful Iraq surge in 2007.

His return to Washington this year would make possible a bid for the Republican nomination, although a former adviser told The Times: "He may find the idea flattering and even attractive, but I don't think that sort of work really speaks to him."

COMMENT:  You can be sure that this story will get Republican tongues wagging, but Petraeus, undoubtedly an outstanding officer, is not Eisenhower.  Eisenhower won a clean victory in a world war, and, in 1952, was running against Adlai Stevenson, the little-known governor of Illinois.  Petraeus's successes are murkier, and he would have to run against his current commander-in-chief, which Americans may see as an act of disloyalty.  ("If you thought he was making mistakes, you should have resigned.")

I'd imagine Petraeus will be given Mike Mullen's post.  Or, he could be made chief of staff of the Army.  It's hard to see him in politics.

UPDATE AT 11:15 P.M. ET:  The Pentagon is now denying this story, but it seems well-sourced and authoritative.  Maybe the Obamans are worried about appearing to push Petraeus out.  We'll follow it.

February 15, 2011       Permalink

WHERE OBAMA STANDS – AT 7:23 P.M. ET:  Very rarely do we see polls aligned like this.  Three major, recent polls show President Obama's approval at 48%.

Where the polls differ is on disapproval.  CBS has disapproval at 41%, Gallup at 44% and Rasmussen, the only poll of the three showing higher disapproval than approval, has the negative number at 51%.

This shows some improvement for the president over recent months.  While he's still under 50%, he's not way under.  His numbers are far from disastrous.  If they hold, it demonstrates what a tough time the GOP will have in beating him.  It is going to take a first-class candidate running a first-class campaign, and I don't think Ronald Reagan is available. 

The presumed frontrunner at the moment is Mitt Romney, whose name does not excite the country.  There is little "wanting" of Romney, who could very well be a fine president.  Trouble is, you've got to get elected first, and it's a bothersome step.

The Republican Party moves slowly.  It took Reagan three tries to get the nomination, and three almost turned out not to be the charm.  There was plenty of opposition to him in 1980 from the staid Republican establishment.  A slow-moving party will not win in 2012.

We may need a dark horse, and not Donald Trump, whose hairpiece is a better candidate than he is.

February 15, 2011      Permalink 

HUH?  WHY NOT SEND BOZO THE CLOWN? – AT 10:32 A.M. ET:   John Kerry is traveling.  From ABC News:

Sen. John Kerry has left for a trip to Pakistan today, according to his spokesperson on the Senate Foreign Relations Committee, to calm frayed diplomatic relations between the U.S. and Pakistan.

Wait a second.  This dude is a senator.  Don't we have ambassadors and special envoys to handle these affairs?  Who sent him?

Spokesman Frederick Jones said the trip comes at a time when the relationship is strained by the detention of a U.S. government official, Raymond Davis, suspected of killing two Pakistani men in self-defense during an alleged robbery attempt late last month in Lahore. Another Pakistani man was then accidentally killed by a rescue vehicle rushing Davis' aid.

The U.S. was scheduled to host a trilateral meeting in Washington with Afghanistan and Pakistan at the end of February, but the meeting was canceled after Pakistan resisted U.S. demands to release Davis immediately. Pakistan is charging Davis with murder, but U.S. officials argue that Davis was in Pakistan under a diplomatic visa and has diplomatic immunity from prosecution in a host country. The senator is traveling on behalf of the Obama administration.

“Senate Foreign Relations Chairman John Kerry left tonight for Pakistan where he will meet with senior Pakistan government officials to reaffirm support for the strategic relationship between the two countries,” Jones said.

COMMENT:  What makes this intriguing is some informed speculation that Kerry is being prepped to become secretary of state should Hillary Clinton leave...or be pushed.  Stories are being floated that Obama is suddenly displeased with Clinton.  This is pure speculation, but the active political mind might reason that it would be better for Obama to throw Hillary under that bus parked outside the White House, than have her resign and then run against him in 2012 primaries, claiming that she was "disappointed" in him.  If she's essentially fired, any campaign on her part would look like revenge or sour grapes.  But I stress, that is speculation.  It's juicy though, isn't it?

February 15, 2011       Permalink

SNIPPET OF THE DAY – AT 10:13 A.M. ET: 

From the L.A. Times's Top of the Ticket blog:   Just a quick statistical confirmation that Republicans are more romantically involved than either those love dud Democrats or those indecisive independents.  The Clarus Poll finds that Republicans are far more excited about their love lives (44%) than members of the other party (32%) and members of no party (31%). With Republicans even being 8% more excited than the national excitement average.  And the new survey found that Southerners are expecially happy with their love lives, more so than, predictably, those fuddy-duddy northeastern Democrats.

I've always believed that the party that succeeds is the one that has more fun.  Given the statistics above, we're heading for a landslide.

February 15, 2011      Permalink

WILL WE GET IT? – AT 9:14 A.M. ET:  The trendies are already out in force, assuring us that Egypt's Muslim Brotherhood is just a moderate organization of men in business suits.  Why, all those rotten ideas they had about democracy, women's rights, and other religions?  Oh, just relics of the past.  Ancient history, as Jimmah Carter said, when trying to explain away Hamas's horrible charter. 

That's like saying, in 1940, that Hitler's "Mein Kampf" was ancient history.  Guess he didn't mean it.

Bret Stephens, of The Wall Street Journal, writes a superb piece setting the record straight.  Stephens is the former editor of The Jerusalem Post.  His opening paragraph is a gem:

It's what the good people on West 40th Street like to call a "Times Classic." On Feb. 16, 1979, the New York Times ran a lengthy op-ed by Richard Falk, a professor of international law at Princeton, under the headline "Trusting Khomeini."

"The depiction of [Khomeini] as fanatical, reactionary and the bearer of crude prejudices seems certainly and happily false," wrote Mr. Falk. "What is also encouraging is that his entourage of close advisers is uniformly composed of moderate, progressive individuals."

After carrying on in this vein for a few paragraphs, the professor concluded: "Having created a new model of popular revolution based, for the most part, on nonviolent tactics, Iran may yet provide us with a desperately needed model of humane governance for a third-world country."

Whoops.

Richard Falk is a hard-left apparatchik who has spent his career fronting for some of the worst causes in the world.  His latest venture is as a hired gun for the UN Human Rights Council, one of the most corrupt bodies in the UN.  Falk was hired to "investigate" Israel.  I don't have to tell you the result.

It's easy to be taken in by the Brotherhood: Eight decades as a disciplined, underground organization, outwardly involved in charitable social work, have made them experts at tailoring messages to separate audiences.

And...

Hassan al-Banna (1906-1949), the Brotherhood's founder, was an admirer of the fascist movements of his day, and he had similar ambitions for his own movement.

"Andalusia, Sicily, the Balkans, south Italy and the Roman sea islands were all Islamic lands that have to be restored to the homeland of Islam," he wrote in a message dedicated to Muslim youth. "As Signor Mussolini believed that it was within his right to revive the Roman Empire . . . similarly it is our right to restore to the Islamic empire its glory."

Ancient history, ancient history, didn't mean it, misunderstood.

Today the Brotherhood has adopted a political strategy in keeping with Banna's dictum that the movement must not over-reach on its way toward "[subjugating] every unjust ruler to its command": "Each of these stages," he cautioned his followers, "involves certain steps, branches and means." Thus the Brotherhood has gone out of its way in recent weeks to appear in the most benign light, making an ally of former IAEA chief Mohamed ElBaradei and forswearing any immediate political ambitions.

Or, as Lenin said, two steps forward, one step back.  It's amazing how totalitarians arrive at the same strategy.

Nor should there be any doubt about what the Brotherhood is aiming against. "Resistance is the only solution against the Zio-American arrogance and tyranny," Muhammad Badie, the Brotherhood's supreme guide, sermonized in October. "The improvement and change that the [Muslim] nation seeks can only be attained . . . by raising a jihadi generation that pursues death just as the enemies pursue life."

Oh so moderate.  But who are we to question another's culture?

In 2005, candidates for the Brotherhood took 20% of the parliamentary vote. Gamal al-Banna, Hassan's youngest brother, once told me they command as much as 40% support. Neither figure is a majority. But unless Egypt's secular forces can coalesce into serious political parties, the people for whom Islam is the solution won't find the fetters of democracy to be much of a problem.

And now, from another source, we have this:

CAIRO (AP) - Egypt's long banned Muslim Brotherhood said Tuesday it intends to form a political party once democracy is established, as the country's new military rulers launched a panel of experts to amend the country's constitution enough to allow democratic elections later this year...

...The Brotherhood's charter calls for creation of an Islamic state in Egypt, and Mubarak's regime depicted the Brotherhood as aiming to take over the country, launching fierce crackdowns on the group. Some Egyptians remain deeply suspicious of the secretive organization, fearing it will exploit the current turmoil to vault to power.

Not to worry, brothers.  The Richard Falks of the world, and the useful idiots of the American media, will be glad to help out.

February 15, 2011      Permalink

IRAN – NO SECOND DAY – AT 8:41 A.M. ET:  The question, of course, is whether the demonstrations that rocked Iran yesterday would continue into today.  Sadly, they apparently have not, at least not yet. 

The difference between Iran and Egypt is that the Egyptian army would not fire on demonstrators.  In the mullahs' Iran, the guns and clubs came out immediately:

Tehran, Iran (CNN) -- Iranian lawmakers denounced Monday's protests in Tehran and called for the execution of two opposition leaders for inciting the demonstrations, Iran's state-run Press TV reported Tuesday.

Members of the Iranian parliament issued fiery chants against opposition leaders and former presidential candidates Mehdi Karrubi and Mir Hossein Moussavi

Press TV aired video Tuesday of lawmakers chanting "Moussavi, Karroubi ... execute them."

Lawmakers also named former President Mohammad Khatami in some of the death chants.

Iranian leaders have praised Egypt's revolution, but Monday when protesters in Iran took to the streets the government cracked down hard. 

And...

Patrolling security forces battled protesters with batons and tear gas for much of the day.

The large crowd was largely cleared from the city's streets by nightfall and the main squares near Tehran University remained free of police, security forces or protesters

Dozens of demonstrators were detained during Monday's protests while internet videos showed others had been chased and beaten.

One person was shot and killed during the protests, according to Iran's semiofficial Fars news agency. Several others were injured and listed in serious condition as a result of the shooting, which the Iranian government blamed on "agitators and seditionists."

COMMENT:  It's not uncommon for revolutionary movements to be beaten back one day, only to emerge again later, possibly months later.  But whether this will happen in the face of a regime that doesn't hesitate to murder its own citizens is problematical.  So far, we have seen no evidence that the Iranian military, led by the Revolutionary Guards, the Iranian version of the Nazi SS, is turning on the government or even leaning toward neutrality.

A good friend of mine likes to quote Douglas MacArthur, who commonted on those who smugly tell us that the pen is mightier than the sword.  MacArthur replied, "Whoever said the pen is mightier than the sword obviously never encountered automatic weapons."

We also have the trendies who romanticize Gandhi's nonviolent resistance in India.  It worked because Gandhi was facing the British, representatives of a modern, civilized society.  If he'd faced the Nazis or the Soviets, we never would have heard of Gandhi because he would have lasted an hour. 

We wish the Iranian people well.  We wish Barack Obama had supported them in 2009, when they had a chance to win.  But I cannot claim great optimism in light of what they are facing.

And I wonder how the apologists for the regime, some of whom are active in the United States, will act now.

February 15, 2011      Permalink

ARE WE BEING CARTERIZED?  – AT 8:18 A.M. ET:  A number of commentators have noted the similarities between Barack Obama and Jimmah Carter – the weakness, the cynicism, the contempt for the American people.

One of the most troubling things to mark the Carter administration was stagflation, a rapid inflation of the economy combined with a lack of growth.  It was one of the things that led Carter out of office in the 1980 election. 

Are we about to repeat?  There are troubling signs.  CNBC reports that clothing prices are about to rise ten percent or more:

The era of falling clothing prices is ending. Clothing prices have dropped for a decade as tame inflation and cheap overseas labor helped hold down costs...

...Clothing prices are expected to rise about 10 percent in coming months, with the biggest increases coming in the second half of the year, said Burt Flickinger III president of Strategic Resource Group...

..."All of our brands, every single brand, will take some price increases," said Eric Wiseman, chairman and CEO of VF Corp., whose brands include The North Face, Nautica, Wrangler and Lee.

The key question:  Will consumers, used to lower prices, pay the higher ones?

Retailers are trying to figure out whether consumer demand that gave them strong holiday sales will last. The fear is higher prices will nip that budding demand.

Stores that cater to low- and middle-income shoppers will have the hardest time passing along price increases.

"We have been so used to deflation for years and years," said David Bassuk, managing director in the retail practice of AlixPartners. "Customers are going to be surprised."

Janice Mignanelli of Washington Township, N.J., doesn't want any surprises.

"I'm not going to spend any more than $50 for a pair of jeans," said Mignanelli, a stay-at-home mom shopping at The Garden State Plaza in Paramus, N.J., last week.

"I'll just have to cut back on the extras."

And...

Mary Hutchens, owner of Full of Beans, a 25-year-old children's clothing store in Chevy Chase, Md., worries that price increases could be a death blow.

She said she has to discount heavily to stay in business and isn't sure she'll be able to pass along the costs.

"Everybody has changed their habits since the recession," she said. "I'm just trying to hold on."

COMMENT:  I suspect that habits learned during the recession will last, and that, sadly, some brands will go out of business.  People just aren't ready to pay high prices again.  Stores will have to run more sales, making the same farce of "list" prices that  already exists in electronics. 

We're in for a turbulent ride.  This economy is not out of the woods yet.

Who will survive best?  I suggest that consumers and retailers in states that are well run will have it best.  If you're in Illinois, and your taxes have just been raised 50%, that money has to come from somewhere, and that somewhere often is the clothing budget.  One less dress, one less pair of jeans, one less business shirt.  I think we may see retail chains opening more shops in places like Indiana, where sane government has kept the state healthy.

February 15, 2011     Permalink