Knowns and Unknowns of Approaching Financial Health and/or Collapse

Knowns and Economic Unknowns

 

    by Irwin M. Stelzer         at the Weeikly Standard

 

“By the end of this long weekend, we will have eaten (46 million gobblers gobbled up), travelled (44 million 50+ mile trips in cars, planes, and trains), malled (147 million crazed bargain hunters), and spent enough time watching football to have become familiar with every vulnerable bone and ligament in the human body as player after player is carted off the field after some violent collision with an opponent’s behemoth. By Christmas, consumers will likely have spent about 4 percent more than they did last year in stores (bricks) and online (clicks).

 For the first time, many retailers began their “door-buster” sales on Thursday evening rather than at 6 a.m. Friday, with Target ignoring the plea of some 400,000 petitioners to “save Thanksgiving” by remaining closed until Friday. More customers than ever, literally bloodied in past scrums, placed their orders on line. And the scramble for 40-inch flat screen TVs, $180 at Best Buy; Nikon digital cameras, $100 at Target; and HP deskjet printers, $29 at Walmart, will continue on cyber-Monday, when the web can be browsed at a leisurely pace on company rather than personal time.

There’s more, but you get the idea. Competition works for consumers, with technology making it so easy to compare prices that many retailers are offering refunds if competitors offer better deals. If you can’t be competitive “shame on you,” says Terry Lundgren, CEO of Macy’s, speaking from the floor of the chain’s New York Miracle on 34^th Street against a background of customers that included thousands of foreigners in search of the bargains denied them by restrictions on competition in their own countries.

Whether consumers will continue to spend in the new year will determine the pace at which the American economy will grow in 2013. Some economists are calling a 2 percent annual growth rate “the new normal,” while quibblers who believe they can forecast growth within a few decimal points say 1.7 percent growth is more likely. Both guesses are based on the assumption that in 2013 consumers will continue to snap up large numbers of cars, and that the housing sector will continue to recover.

Auto sales should remain buoyant. The fleet of vehicles on the road is ageing, and with the jobless rate at least stabilized so that those in work can be reasonably confident that they will not be laid off—one of the reasons President Obama did so well despite continued high unemployment—there is little reason to defer gratification any longer. Besides, most buyers are sufficiently innumerate to be able to persuade themselves that the more fuel-efficient newer vehicles will “pay for themselves” in a relatively short time. So count on relatively good auto sales.

So, too, with houses. Interest rates are at record lows—around 3.3 percent for 30-year fixed-rate mortgages—and only last week Federal Reserve Board chairman Ben Bernanke told the New York Economic Club that the Fed will continue purchasing mortgage-backed securities to the tune of $40 billion each and every month to ensure that mortgage rates don’t go up. If not forever, at least into 2015. Sales of existing homes in October were 10.9 percent above year-earlier levels, and likely to end the year at their highest level since before the financial crisis hit. Prices are up 11 percent over last year, and inventories of unsold houses are down over 22 percent, to their lowest level relative to sales in almost seven years. The number of new homes being built and sold is also rising, although not to levels seen before the housing slump, and builders, whose shares by one measure are up 90 percent this year, are more confident than they have been since May 2006.

But one cheer only, please. Almost one-in-four sales were at prices below the level of the outstanding mortgage, banks are still reluctant to extend credit, and it is a long way from here to a housing market that will provide employment for lots of construction workers. Still, the trend is up rather than down.

Unfortunately, to predict with confidence that consumers will behave in 2013 as they have in 2012 is to ignore the warning by the distinguished Danish physicist Niels Bohr, who famously said, “Prediction is very difficult, especially about the future.” Doubly difficult in a world in which there are more known unknowns—things we know we don’t know—than is usually the case. We don’t know how better off consumers will react to the large tax increases that are in store for them next year. Not only is the president likely to get the increase in marginal income tax rates he is demanding—although the starting point might be families with annual incomes in excess of $500,000 rather than his preferred $250,000—but taxes on dividends and capital gains will rise, and the 3.8 percent Obamacare tax on their investment incomes will cut in, along with a host of other taxes buried deep in the bowels of the massive Obamacare legislation.

No one expects business investment, which has fallen off a cliff of its own, to be a growth-booster in 2013. A Wall Street Journal survey of the intentions of large corporations reveals that at least half are scaling back investment plans. Corporations, sitting on some $2 trillion in cash, blame the uncertainty surrounding the fiscal cliff for their unwillingness to part with cash.  Well, that source of uncertainty will be no more in a few weeks, when a deal to avoid the cliff is likely (but not certainly, with the president determined to pursue “fairness” as well as cash, and Speaker Boehner throwing Obamacare back on the table) to be cut.

Unfortunately, the new certainty will include:

• a less favorable tax regime, shorn of many special benefits now enjoyed by the oil and other industries,

Carl Cannon: The Susan Rice Issue and and the usual Racism Charges

 

The Problem With Susan Rice

By Carl M. Cannon –      at   realclearpolitics:

“This time it was President Obama who blew the dog whistle.

It happened during his Nov. 14 post-reelection press conference at the White House. Instead of merely reveling in his victory and extending a gracious hand to the vanquished Republicans, the president chose to escalate his growing rift with John McCain and Lindsey Graham over the future of Susan Rice, U.S. ambassador to the United Nations.

The backstory was the anticipated departure of Secretary of State Hillary Clinton and the White House’s floating of Rice’s name as a possible successor. If this was a trial balloon, it didn’t get far off the ground: McCain and Graham — two of the more cooperative Republicans in the Senate — expressed reservations about confirming a secretary of state who had provided the American public with misleading explanations of the Sept. 11 burning and sacking of the U.S. consulate in Libya, and the murders of four Americans there.

In Susan Rice’s telling, the killings were an unanticipated — and unpreventable — tragedy sparked by a demonstration at the Benghazi consulate, similar to one that happened earlier in the day in Cairo. Although careful to issue the caveat that all the facts weren’t in yet, in five appearances on the Sunday talk shows on Sept. 16, Rice dutifully repeated administration talking points consisting of the following assertions:

(1) The attack grew out of a spontaneous protest against a “very offensive” video spoof of the Prophet Mohammed making the rounds on YouTube.

(2) Extremist elements present on the ground in Benghazi took advantage of the situation to essentially “hijack” the demonstrations.

(3) These extremists had access to the heavy weapons necessary to destroy the U.S. compound because they were “quite common” in Libya these days.

(4) The attack was not plotted ahead of time by Islamic militants or terrorist organizations affiliated with al-Qaeda.

“This is a response to a hateful and offensive video that was widely disseminated throughout the Arab and Muslim world,” Rice told NBC’s David Gregory. “The best assessment we have today,” she added when talking to CBS’s Bob Schieffer, “is that in fact this was not a pre-planned, premeditated attack.”

But was this really the “best” assessment?

David Petraeus, who headed the CIA at the time, indicated in closed-door testimony to Congress last week that the agency realized rather quickly that the Benghazi ambush was deliberately planned by al-Qaeda-affiliated terrorists, although it’s unclear how explicitly he communicated this view at the time.

What is known is that within a day of the attack, Libya’s interim president, Mohammed el-Megarif, publicly proclaimed the attack the work of foreign operatives who had infiltrated his country and recruited Libyans to carry it out. He said it was months in the making, and suggested that no anti-video demonstration took place at all in Libya.

“The idea that this criminal and cowardly act was a spontaneous protest that just spun out of control is completely unfounded and preposterous,” Megarif said. “We firmly believe that this was a pre-calculated, pre-planned attack that was carried out specifically to attack the U.S. consulate.”

Yet it was the “unfounded and preposterous” version that the administration went public with, with Susan Rice as the point person. When questioned about this discrepancy in the waning weeks of the 2012 presidential campaign, the president and his aides went on the offensive, accusing Republicans of seeking to politicize a tragedy. As for the most troubling allegation of all — that doomed U.S. Ambassador J. Christopher Stevens had feared for his safety and requested additional security, but was turned down — the administration has simply refused comment.

When asked precisely about that by a voter during the second presidential debate, Obama ignored the question, pivoting instead into an attack on Mitt Romney. This is the tactic he used at the Nov. 14 press conference when asked about Susan Rice, too, but with a new twist. He questioned the motives of McCain and Graham, implying that there was something else about Rice they didn’t like.

After lauding her in flowery terms, Obama noted that “at the request of the White House” Rice had appeared on those Sunday talk shows to relay talking points that had been provided her.

“If Sen. McCain and Sen. Graham and others want to go after somebody, they should go after me,” he said. “But for them to go after the U.N. ambassador, who had nothing to do with Benghazi, and was simply making a presentation based on intelligence that she had received, and to besmirch her reputation is outrageous.”

There are several puzzling aspects to this reaction. For starters, Obama said the phrase “U.N. ambassador” as though it were odd anyone would criticize her over administration foreign policy. It was as if he were talking about the director of the Fish and Wildlife Service instead of one of the top architects of Obama administration foreign policy.

Also, if Rice really knew nothing about Benghazi, why was she out there talking about it? The tip-off to Republicans is that she didn’t only read from the script provided her about the violence in Libya, she also repeated the president’s campaign slogans. “The American people fully understand that this is an administration led by a president who said when he ran for office that he would take the fight to al-Qaeda,” she said. “We have decimated al-Qaeda.”

But if al-Qaeda is actually able to murder American diplomats and sack U.S. consulates, the claim to have decimated the terrorist network is open to question. So Susan Rice has become a lightning rod for Republicans who think that Obama and his advisers stalled an accounting on Benghazi until after the election — and did so by stonewalling and dissembling.

Obama certainly understands this point. But instead of engaging it, he lashed out at Rice’s critics. “When they go after the U.N. ambassador, apparently because they think she’s an easy target,” Obama said, “then they’ve got a problem with me.”

In the real world, portraying the smart, tough, and strong-willed Susan Rice as an “easy” target would be humorous — except for what the president was implying: If Rice’s critics were not going after her on the merits, why were they doing so?

This was the dog whistle part, and it was both heard and heeded by Obama’s supporters in the Democratic Party and the media.

“It is a shame that anytime anything goes wrong, they pick on women and minorities,” said Rep. Marcia Fudge, an Ohio Democrat recently installed as the head of the Congressional Black Caucus. “There is a clear sexism and racism that goes with these comments being made by Sen. McCain and others.”

In USA Today, the headline over a column by DeWayne Wickham proclaimed, “McCain uses Susan Rice to re-launch war on women.”

Seizing on McCain’s contention that “this administration has either been guilty of colossal incompetence or engaged in a cover-up,” South Carolina Democratic Rep. James Clyburn maintained, “These are code words.”

“This is really down in the gutter,” MSNBC’s Ed Shultz added in a show stoking the “code words” angle. Richard Wolffe, another MSNBC commentator, called it a “witch hunt” against “people of color.” When asked point-blank if McCain was driven by racial prejudice, he replied that there “is no other way to look at it.”

There is, of course, another way to look at it: Republicans believe that Susan Rice’s excellent foreign policy qualifications were undermined by her hyper-partisanship. There was even a bit of presidential sleight of hand involved in singling out Lindsey Graham and John McCain. Those two men were joined in expressing reservations by two Republican senators whose names went unmentioned by Democrats: Kelly Ayotte of New Hampshire and Susan Collins of Maine.

The sexism angle seemed even more incongruous when the Democrats who were playing this card soon began insulting Sarah Palin, McCain’s 2008 running mate, to make their case. In an even starker inconsistency, Democrats also accused McCain of a double standard: namely his support for Condoleezza Rice as secretary of state even after her assertions about weapons of mass destruction in Iraq were proven unfounded.

But Condoleezza Rice is also an African-American woman, so this line of attack is at odds with the first one against McCain. It’s also worth remembering that left-leaning commentators did not accuse California Sen. Barbara Boxer of racism (or sexism) when she questioned Condi Rice’s veracity during Rice’s confirmation hearings. Nor did Democrats accuse Boxer of unleashing a “war on women” when the senator made the astonishing suggestion two years later that because Rice didn’t have children of her own she was insensitive to the dangers of war.

Whether current GOP reservations about Susan Rice are well-founded or not, it would seem that doubts about her possible nomination can be raised without being derided as racist and sexist. One would also think that Lindsey Graham, who voted to confirm Obama-appointed Supreme Court Justices Elena Kagan and Sonia Sotomayor, has previously demonstrated that he acts on presidential nominations in good faith.

Finally, by McCain’s conduct in the 2008 campaign, any fair-minded person would say that he has earned the benefit of the doubt. When a supporter at a Minnesota town-hall rally said he was “scared” of an Obama presidency, McCain replied, “I have to tell you, Senator Obama is a decent person and a person you don’t have to be scared of as president of the United States.”

When a woman at the town hall said she heard that Obama “is an Arab,” McCain quickly cut her off, portraying his opponent as “a decent family man and citizen.” And at a campaign rally in Ohio, McCain’s warm-up speaker, a conservative radio host, referred three times to Obama’s middle name — Hussein — and called him a “hack, Chicago-style” politician; although McCain didn’t even hear these comments, he apologized for them at the next stop. “I repudiate them,” he said.

Actually, McCain earned the right to have his arguments taken at face value many years before he entered politics. As a badly wounded prisoner of war in Hanoi for 5 ½ years, John McCain repeatedly refused offers to be released from captivity early — knowing that the North Vietnamese wanted to use him for propaganda purposes because his father was a famous naval officer.

Implying, as the president did, that any sitting senator is playing petty and prejudicial games over the post of U.S. secretary of state seems perilously close to calling that lawmaker’s patriotism into question. Essentially, that’s what Barack Obama was doing when he tooted his little dog whistle while pointing at John McCain. The man’s record says that he deserves a classier form of argument. So do the American people.”