Global economic policy
The deflation dilemma
Rich countries must act to prevent prices from falling. That will cause problems for emerging economies
SHOULD you fret more about inflation or deflation? Few questions matter more for investors and policymakers, yet few seem so uncertain. Financial markets are sending mixed signals. Falling yields on Treasury bonds suggest that many investors worry about economic stagnation and deflation; the soaring price of gold points to fears of runaway inflation.
Economists also differ in their assessment of where the greater risks lie, depending largely on the country and time frame they are looking at. Judging by the discussion in a new online forum of more than 50 leading economists from around the world, which The Economist launched this week, deflation is the bigger short-term danger in big, rich economies, whereas inflation is an immediate worry in many emerging economies and, potentially, a longer-term danger in rich ones.
That seems a fair assessment. In America, the euro area and Japan, deflation is either uncomfortably close or a painful reality, despite near-zero interest rates and other efforts by central banks. In the year to April core consumer prices rose by a mere 0.9% in America, the slowest pace in four decades. In the euro area they rose by 0.7%. And in Japan, which has battled falling prices for more than a decade, they fell by 1.5%.
Nor is there much reason to expect a sudden turnaround. Broad measures of money and credit growth are stagnant or shrinking in all three places. Unemployment is high and there are large gaps between the economies’ actual output and their potential. In the euro area, especially, austerity plans will further sap domestic demand. Thankfully, there is unlikely to be a sudden price plunge, not least because ordinary people still expect consumer prices to rise modestly, and these expectations of future inflation help anchor actual prices. But the short-term balance of pressures clearly points downward.
So, too, does the balance of risks. Deflation, if it becomes entrenched, is more dangerous than most forms of inflation. When prices fall consumers put off their purchases in anticipation of even greater bargains later, condemning the economy to a vicious cycle of weak spending and sliding prices. In heavily indebted economies falling prices would increase the real burden of consumers’ and governments’ debts.
Deflation is also harder to fight than inflation. Over the past two decades central bankers have gained plenty of experience in how to conquer excessive price increases. Japan’s ongoing inability to prevent prices falling suggests the opposite task is rather less well understood. Although it is true that heavily indebted governments might be tempted to erode their debts through higher inflation, there are few signs that political support for low inflation is waning (see article).
Add all this together and the world’s big three central banks—in America, the euro zone and Japan—should worry most about falling prices. The scale of budget belt-tightening suggests these banks’ policy rates could stay way down for several years. But this will cause problems elsewhere. Near-zero interest rates in the big, rich economies send capital flooding elsewhere in search of higher yields, making it harder for the healthier countries to keep their economies stable.
Helps here, hurts there
The problem will be most acute in emerging economies. Many are already overheating, with prices rising and asset bubbles inflating. Most have inappropriately loose monetary policy. Real interest rates are negative in two-thirds of the 25 emerging economies tracked by The Economist. Their inflation expectations are less stable, so prices can quickly spiral upwards.
This suggests a need for tighter monetary policy. Central banks in Brazil, Malaysia and elsewhere have begun. But the most important emerging economy, China, pegs its currency to America’s dollar, which limits its ability to raise interest rates. And even those with more flexible exchange rates worry that higher interest rates will send their currencies soaring.
In fact, stronger currencies in emerging markets are a necessary part of the “rebalancing” of the global economy that will allow enfeebled rich economies an escape from deflationary pressure. Tighter fiscal policy in emerging economies would help dampen price pressure. Capital controls should be part of their defences, too, against sudden floods of foreign cash.
History suggests, however, that none of these policies will be a panacea. When monetary conditions in the rich world are loose, emerging economies are prone to lending binges and asset bubbles. The price of avoiding deflation in the rich world today may be a bust in the emerging world tomorrow.
Unemployment and the concept of fault
American politics
Democracy in America
Budget woes
Unemployment and the concept of fault
MIKE LILLIS reports congressman Jim McDermott will hold hearings on long-term unemployment. Says Mr McDermott:
If we can afford wars, tax cuts, and bank bailouts, then we can certainly afford to maintain programs for workers who have lost their jobs through no fault of their own.
You know the punchline: We can't afford wars, tax cuts, and bank bail-outs. But the bank bail-outs have been largely paid back, and if we were to extricate ourselves from a war or two and allow some of those tax cuts to expire, we might be able to afford programmes for workers who have lost their jobs.
That said, the construct of "through no fault of their own" is kind of interesting here. Clearly episodes of high unemployment are not caused by workers becoming abruptly unwilling to work. (If they weren't looking for work, they wouldn't be in the labour force and wouldn't be listed as "unemployed".) But why do we care whose fault it is? The question is simply how to create jobs for those workers, or what to do for them if no jobs can be created. The federal government can choose to create jobs by borrowing or taxing to fund otherwise desirable projects. Or it can cut taxes in the hope of stimulating more spending that will lead to job growth. Or it can try to retrain workers for fields in which there's more of a demand for labour. Or it can continue to pay unemployed workers to do nothing. Or it can stop paying unemployed workers, and let them scrabble around for something.
Each of these approaches has its drawbacks: the national debt is already rather high to be borrowing for new projects; cutting taxes, same problem; government worker retraining programmes have a poor record; putting people on permanent unemployment insurance saps initiative; and letting people scrabble around raises the prospect of severe poverty and homelessness. I suppose that's where the "no fault of their own" part comes in. Under normal circumstances, when unemployment is at some fairly steady rate, people who have jobs tend to blame the unemployed for their lot. But when unemployment jumps from 5% to 10%, you're talking about 7.5m hard-working salt-of-the-earth people who used to have jobs and now don't. If you want to enlist public resources to do something for those people, you have to remind the folks who do still have jobs that it could have been them. For that matter, it still could be. Have you looked in your office mailbox this morning? See anything pink? Happy Friday!
Moderates needed
California's elections
Moderates needed
A vote not just in, but also about, primaries
Have we got a proposition for youCALIFORNIANS will go to the polls on June 8th, and as usual they will receive different ballots depending on their party affiliation. The Republican ballot features the most sizzling fights. In the primaries for the gubernatorial election in November, two rich and formerly moderate Silicon Valley tycoons, Meg Whitman and Steve Poizner, have for months been trying to outflank each other on the right to appeal to the party faithful, becoming more extremist than they surely ever intended. Something similar is happening in the Republican primary for the Senate seat to be defended by Barbara Boxer, the Democratic incumbent whom the Republicans consider vulnerable.
These closed and partisan primaries, and their effect of radicalising individuals who once appeared reasonable in private conversations, seem to be the best argument in favour of another measure, one that is on all voters’ ballots. Called Proposition 14, it would amend the state constitution to make primaries open and non-partisan. Under this new system all voters, whether affiliated with a party or not, would receive the same ballot with the same list of candidates. Even the candidates themselves would no longer need to state their party affiliation. The top two vote-getters would then face each other in the general election, even if they belonged to the same party.
The theory is that Proposition 14 will help, or at least stop penalising, moderate politicians, since all candidates would have to appeal to voters across the spectrum from the start of their campaigns. In districts that are reliably Democratic, for example, the two candidates who will face each other in the general election may both be Democrats, but Republican voters could help a conservative or moderate Democrat get to the run-off and then elect him over his more liberal alternative. Voters who are independent or affiliated with the minority party might therefore be encouraged to turn out to vote more often.
The Centre for Governmental Studies, a non-partisan think-tank in Los Angeles, has analysed past elections as though Proposition 14 had already been in place. It found that more than a third of the races for the state legislature or Congress could have produced run-offs between two members of the same party. Almost all of these primaries would have taken place in the liberal San Francisco Bay Area and Los Angeles and involved only Democrats. And in several cases voters from opposing parties and independents could indeed have produced more moderate winners.
Even just a few such outcomes might have a big effect on California’s notoriously dysfunctional politics. David Crane, the (Democratic) economic adviser to (Republican) governor Arnold Schwarzenegger, says that the Democrats today are owned by the unions, trial lawyers and environmentalists, and the Republicans by prison guards, tax haters and farmers. To break this stalemate, he thinks, “we need an ethical bloc” of even just a few state politicians willing to be practical. Open primaries, he reckons, could deliver that.
California’s model is the state of Washington, where politics have long been comparatively moderate. For almost 70 years until 2003, Washington had “blanket primaries” that gave all voters the same ballot but then chose the leading vote-getter from each party for the run-off. California tried to copy this system in the 1990s but its party bosses, horrified by their loss of power, took the case to the Supreme Court. It ruled that for open primaries to be constitutional they would have to be pure “top two” primaries, which would no longer act as a party nominating process. Washington took the hint and adopted top-two primaries as of the 2008 elections. Voters there seem happy with it.
California tried to do the same in 2004 with a ballot measure virtually identical to this year’s Proposition 14, but voters struck it down. They may have been swayed by their party bosses, who then as now hysterically oppose open primaries as though they spelled the death of political parties.
Since then, however, California has descended into a seemingly endless budget crisis and partisan gridlock. A deal last year for the current year’s budget only came about because three moderate Republicans, including Abel Maldonado, voted with the Democrats to pass it. His condition was that Proposition 14 would be on this month’s ballot. Mr Maldonado instantaneously became an outcast from his party. But Mr Schwarzenegger, also a moderate Republican, thanked him by making him lieutenant-governor.
California’s voters, meanwhile, seem to have changed their minds since 2004. According to a recent poll by the Public Policy Institute of California, only 16% of them approve of the partisan stooges in their state legislature. But 60% are now in favour of Proposition 14 and plan to vote Yes.
The open society and its discontents
Lexington
The open society and its discontents
In his last column, our current Lexington urges Barack Obama to defend the free flow of goods, people and ideas
A LONG time ago, the rising seas turned Tasmania into an island. A few thousand inhabitants were cut off from contact with the Australian mainland. Their technology regressed. They forgot how to make bone tools, catch fish and sew skins into clothes. It was not that they grew less intelligent. Their problem was that they no longer had many people to trade with. It took a lot of effort to learn how to carve needles out of bone. So long as there were plenty of people with whom to swap needles for food, it made sense to acquire such skills. But in a tiny, isolated society, there may have been room only for one or two needle-makers. If they both fell off cliffs, the technology died with them. When the first Europeans reached Tasmania, they found natives whose only shields against the winter chill were seal-fat smeared on their skin and wallaby pelts over their shoulders.
America, at its best, is the opposite of ancient Tasmania: a vast open society through which goods, ideas and people flow freely. “The success of human beings depends crucially, but precariously, on numbers and connections,” argues Matt Ridley, author of “The Rational Optimist: How Prosperity Evolves” and a former writer for The Economist. Trade allows specialisation. In narrower and narrower fields, people acquire deeper and deeper skills. Through trade, they share them. The fewer barriers there are to the free movement of goods and people, the more opportunities there are for ideas to meet and “have sex”, as Mr Ridley puts it.
How open does Barack Obama want America to be? The evidence so far is mixed. Last week he ordered another 1,200 national guards to the Mexican border. Was this a shrewd sop to nativists before Mr Obama pushes for a more welcoming immigration law? Or a cynical ploy to woo isolationist votes? Congressional Republicans are in such an obstructive mood that no immigration bill is likely to pass before the mid-term election. Mr Obama has often said he favours reform, but no one knows how much political capital he will invest in its pursuit.
Immigration policy is a mess. The process for getting a work visa is so arduous that many bright would-be immigrants give up. The government subsidises foreigners to acquire PhDs at American universities and then kicks them out of the country. The World Economic Forum talks of a “talent crisis”, and predicts that America will have to add 26m workers to its talent pool by 2030 to sustain the economic growth rates of the past two decades. Michael Bloomberg, the mayor of New York, describes America’s immigration policy as “national suicide”. In theory, one could lower the barriers to highly skilled workers without tackling the more controversial issue of unskilled migration. But politically, you have to do both together, says Bart Gordon, a Democratic congressman from Tennessee. Hispanic voters want a path to citizenship for their undocumented cousins. An immigration bill needs a broad coalition of supporters to pass, so it will need to offer something for everyone.
America has not raised barriers to trade much on Mr Obama’s watch, but it has not lowered them either. Trade pacts with Colombia and South Korea have been stuffed in the freezer. Average duties have barely budged, calculates Douglas Irwin of Dartmouth College, but that takes no account of trade-distorting subsidies and the “Buy American” bias in public procurement. Mr Obama says he favours open trade, but he has taken some steps backwards, such as slapping tariffs on Chinese tyres. The White House sometimes gives the impression that it sees trade policy as a way to advance environmental and social goals, rather than trade itself, frets Sallie James of the Cato Institute.
The number of temporary visitors to America (tourists, businesspeople and so on) fell sharply after September 11th 2001, recovered strongly and then briefly fell again when the recession struck. America is a wonderful place to visit, but its border bureaucracy is arguably the worst in the rich world. This is a shame: Simon Anholt, a consultant on national image, finds that foreigners who visit a country in person gain a much more positive view of it, especially if they make friends there.
Mr Obama, lift your lamp
Openness has strategic advantages, too. America’s military dominance cannot last for ever. China is catching up fast. North Korea has the bomb and Iran may soon follow suit. In future America’s global sway will depend less on the threat of force and more on soft power. Fortunately, its charms are more potent than its arms. Foreigners devour American cultural exports, from “Desperate Housewives” to the Harvard Business Review. Young people from traditional societies watch “Friends” and see the possibility of greater independence, of living without parents and uncles breathing down their necks, reckons Martha Bayles of Boston College. Foreign leaders are disproportionately educated at American universities, where they cannot help but notice that political freedom need not spell chaos. If and when China eventually embraces democracy, this will surely be part of the reason.
The financial crisis has shown that cross-border flows of money need tighter regulation. It has not undermined the case for the free movement of goods and ideas and people, but many Americans think it has. Openness is unsettling. It provokes fierce opposition. It can be reversed. Ruinous tariffs are easy to impose, as was discovered during the Depression. Foreigners can be mistreated without electoral consequence, since they cannot vote. Yet this would be a colossal mistake. These days it is not only the world’s tired, poor huddled masses who yearn to breathe free. More often, it is the energetic and upwardly mobile. A fifth of China’s graduates say they want to emigrate; few peasants do. The open society needs defenders. So it would be nice if Mr Obama spoke up more often for the ideals etched on a certain statue.
The week ahead
The coming days
The week ahead
Barack Obama tries to hurry up “proximity talks” between Israelis and Palestinians
• A MEETING between Barack Obama and Mahmoud Abbas, president of the Palestinian Authority, on Wednesday June 9th had been intended to discuss the prospects for Israeli-Palestinian “proximity talks”, brokered by Mr Obama’s special envoy, George Mitchell. But Mr Obama’s recent meeting with Binyamin Netanyahu was rapidly cancelled after Israeli forces killed nine activists on a ship carrying humanitarian supplies bound for Gaza, controlled by Mr Abbas’s Palestinian rivals, Hamas. Yet the attack may only prove a temporary setback to a peace agreement. Mr Netanyahu has reluctantly agreed to freeze controversial settlement-building and is also negotiating indirectly with Palestinians.
• THE trial in Paris of Jérôme Kerviel, a former trader at Société Générale, gets underway on Tuesday June 9th. Mr Kerviel is accused of causing losses of €4.9billion ($6.0 billion) for the French bank—revealed in January 2008—after carrying out unauthorised trades. He intends to fight charges of breach of trust, computer abuse and forgery but could face five years in prison and a €375,000 fine if found guilty. His defence is likely to rest on his claim that his trading was carried out with the tacit complicity of his bosses.
• DUTCH voters go to the polls on Wednesday June 9th for an election where concerns about immigration and Islam have given way to growing disquiet about public finances. The election was called in February when a coalition led by the Christian Democrats (CDA) collapsed. Polls indicate an electorate fragmented between a revitalised Labour Party committed to the model of a tolerant immigrant-friendly Dutch society, the CDA and liberal VVD which have promised the biggest budget cuts, and the far-right Freedom Party, which has shaken up Dutch politics over the past year. The result may make forming a new coalition difficult.
• ANOTHER new government in the Low Countries is in prospect as Belgians also vote in a parliamentary election on Sunday June 13th. The previous government collapsed in April when a Flemish party pulled out of the coalition after the failure to resolve the question of voters' rights in and around Brussels, where French-speaking voters have more rights than Flemish counterparts. The dispute presages the customary ugly battle fights for political control between Belgium's Dutch speaking majority and francophone Walloons. The head of a Flemish party that advocates the breakup of Belgium and is leading opinion polls and should head the new government.
Time for a rent cut
Buttonwood
Time for a rent cut
Controlling the finance sector’s excess returns
WHY do people who work in finance earn more than most other people? It is a question that concerns politicians, as they debate reform of the industry. It ought also to worry those millions who, as savers and borrowers, are consumers of the industry’s products.
Something has clearly changed within the past 40 years. Banking and asset management used to be perceived as fairly dull jobs, which did not attract a significant wage premium. But after 1980, financial wages started to climb much more quickly than those of engineers, another profession that ought to have benefited from technological complexity.
Around the same time, banks became more profitable. Andrew Smithers of Smithers & Co, a firm of consultants, points out that the return on equity achieved by British banks averaged around 7% between 1921 and 1971; since then it has averaged around 20%.
Such a sustained rise suggests that the finance sector has been able to extract “rents”, a term that economists use to explain excess profits. But that suggestion only raises another question; why haven’t those rents been competed away?
Barriers to entry are a standard explanation for an uncompetitive market. In the case of banking, these barriers may exist in the form of the implicit subsidy provided by government support; this lowers the cost of finance for leading institutions. In March Andrew Haldane, executive director for financial stability at the Bank of England, argued that the effective annual subsidy for the five biggest British banks during the credit crunch was more than £50 billion ($73 billion), roughly equal to the whole industry’s annual profit in the years before the crisis.
As evidence of the industry’s lack of competition, Mr Smithers points to its increasing concentration. The proportion of bank assets held by the three biggest American banks has tripled since 1994. It is far from clear that this concentration is healthy for the rest of the economy; Mr Haldane cites research showing that economies of scale peak when banks have $5 billion-10 billion of assets.
The big banks may have benefited from other factors apart from a lower cost of capital. In market-making, for example, size gives banks an advantage since they have more knowledge of institutional investors’ order flow and can position themselves to benefit.
In addition, the growth of the financial industry has coincided with the move to floating exchange rates and market liberalisation. The result has been the creation of a whole series of instruments, mainly derivatives, designed to deal with the risks of interest-rate and currency movements. The more complex the product, the less transparent it is to customers; that makes it harder to judge the price they are being charged. The surge in trading volumes is also significant; at every stage the finance industry takes a cut in the form of a bid-offer spread, a fee or a commission. This churning is a classic rent-seeking activity.
What to do about it? At the moment, governments are wading in with all kinds of levies and regulations, which will probably have unintended consequences. Rather than tackle the big problem (for example, by breaking up the banks), they waste their time on populist measures like banning short-selling.
It would be far better if the private sector could deal with the problem. Paul Woolley, a former fund manager who set up centres for studying capital-market dysfunctionality at the London School of Economics and the University of Toulouse, has published a manifesto which he believes should be adopted by the world’s biggest public, pension and charitable investment funds. Among other things, he proposes that the funds should adopt a long-term investment approach, cap annual portfolio turnover at 30%, refuse to pay performance fees or invest in alternative assets such as hedge funds and private equity, and invest only in securities traded on a public exchange (so no structured products like the infamous collateralised debt obligations).
Some will argue with the details but the thrust of the argument is simple. If the big funds in effect own the market in aggregate, then frenetic trading activity is fruitless, even before costs. Perhaps they are chasing a chimera: they all wish to be above-average performers. Perhaps they are bamboozled by an asset-management industry that competes not on price but on the basis of (probably unrepeatable) past performance. Whatever the reason, the effect is that the returns that millions of savers hope to earn end up being paid to the finance sector as rents.
U.S.’s $13 Trillion Debt Poised to Overtake GDP
U.S.’s $13 Trillion Debt Poised to Overtake GDP: Chart of Day
By Garfield Reynolds and Wes Goodman
June 4 (Bloomberg) -- President Barack Obama is poised to increase the U.S. debt to a level that exceeds the value of the nation’s annual economic output, a step toward what Bill Gross called a “debt super cycle.”
The CHART OF THE DAY tracks U.S. gross domestic product and the government’s total debt, which rose past $13 trillion for the first time this month. The amount owed will surpass GDP in 2012, based on forecasts by the International Monetary Fund. The lower panel shows U.S. annual GDP growth as tracked by the IMF, which projects the world’s largest economy to expand at a slower pace than the 3.2 percent average during the past five decades.
“Over the long term, interest rates on government debt will likely have to rise to attract investors,” said Hiroki Shimazu, a market economist in Tokyo at Nikko Cordial Securities Inc., a unit of Japan’s third-largest publicly traded bank. “That will be a big burden on the government and the people.”
Gross, who runs the world’s largest mutual fund at Pacific Investment Management Co. in Newport Beach, California, said in his June outlook report that “the debt super cycle trend” suggests U.S. economic growth won’t be enough to support the borrowings “if real interest rates were ever to go up instead of down.”
Dan Fuss, who manages the Loomis Sayles Bond Fund, which beat 94 percent of competitors the past year, said last week that he sold all of his Treasury bonds because of prospects interest rates will rise as the U.S. borrows unprecedented amounts. Obama is borrowing record amounts to fund spending programs to help the economy recover from its longest recession since the 1930s.
“The incremental borrower of funds in the U.S. capital markets is rapidly becoming the U.S. Treasury,” Boston-based Fuss said. “Do you really want to buy the debt of the biggest issuer?”
BP Increased Oil-Capture Rate to 10,500 Barrels a Day
BP Increased Oil-Capture Rate to 10,500 Barrels a Day (Update2)
By Edward Klump
June 6 (Bloomberg) -- BP Plc said it increased the amount of oil being captured from its leaking well in the Gulf of Mexico to 10,500 barrels a day from 6,077 barrels in the previous 24-hour period ending at midnight June 4.
The well is estimated by government scientists to be gushing 12,000 to 19,000 barrels a day into the Gulf. The spill is the worst oil spill in U.S. history.
A “cap” over the well is capturing “probably the vast majority” of the leaking oil, Chief Executive Officer Tony Hayward told the Broadcasting Corp. today in a live interview in London. BP has “a further containment system to implement this week,” he said, adding that a permanent and hurricane-proof mechanism will be in place by the end of the month.
U.S. Coast Guard Admiral Thad Allen said yesterday in a news conference that four vents on the cap remained open, allowing oil to flow through the cap and into the ocean. BP will try to close the vents when pressure is stabilized, Allen said. On June 4, Allen said BP was recovering oil at the rate of about 1,000 barrels a day. BP said yesterday that it collected 6,077 barrels of crude in the 24-hour period of June 4.
“They are making adjustments to the systems and making sure they don’t increase the production rate until it’s safe to do so,” Allen said.
Improvement Expected
After the cap was put in place the night of June 3, gas reached a surface ship at about 11 p.m. local time, and oil was being piped to the ship about 10 minutes later, BP said yesterday on its website.
“Improvement in oil collection is expected over the next several days,” the London-based company said yesterday on its website.
The system can capture as much as 15,000 barrels a day, and BP will push toward that limit, Allen said.
“I’d like to see us capture 90-plus percent of this flow,” Doug Suttles, BP’s chief operating officer for exploration and production, said June 4 on CBS’s “Early Show.” “That’s possible with this design.”
The shears used to prepare the well for the cap created a cut that was more jagged than had been hoped for, so there is isn’t a perfect seal between the cap and the well, Allen said. The company won’t know how bad the leakage is until it is capturing more oil, he said.
History Lesson
“History has taught us here to be cautiously optimistic, not overly optimistic,” Dan Pickering, an analyst at investment bank Tudor Pickering Holt & Co. in Houston, said yesterday. He said capturing 90 percent of the flow would be a “huge home run.”
The spill, which has cost BP more than $1 billion, has soiled about 140 miles of shoreline in Louisiana, Alabama and Mississippi, along with some 80 miles in Florida, the Coast Guard said yesterday.
Gulf winds are moving the oil now in the water closer to the coasts of Mississippi, Alabama and Florida, Allen said. He said oil in tar balls and patties is affecting areas from western Mississippi to Pensacola, Florida.
The well began gushing oil after the Deepwater Horizon rig BP leased from Transocean Ltd. exploded on April 20 and sank two days later, resulting in the deaths of 11 workers. The leak is 40 miles (64 kilometers) off Louisiana’s coast under about 5,000 feet of water.
Obama, Hayward
President Barack Obama said communities along the Gulf Coast suffering because of the oil spill will be “made whole” with payments from BP and government aid. In his weekly address on the radio and Internet, which was taped June 4 in Grand Isle, Louisiana, Obama said livelihoods that have spanned generations are in danger of being lost.
BP’s Hayward told the BBC he hadn’t spoken directly to Obama since the Deepwater Horizon rig exploded.
“There is no need for that,” Hayward said. “I have spoken to his key lieutenants.” BP and the Obama administration are working “hand-in-hand” to resolve the spill, Hayward said.
The company has paid about half of the 35,000 claims submitted by Gulf residents and companies for income lost because of the spill, Darryl Willis, vice president of resources at BP America, said yesterday on a conference call. BP is awaiting documentation for the other claims, he said. Willis said the company’s claims spending through June may top $84 million.
‘First Call’
Hayward told investors June 4 on a conference call the spill has the “first call” on the company’s funds and financial consequences of the spill will be “severe.”
Allen said relief-well operations to stop the leak will involve pumping mud to reduce pressure and placing a cement plug. He said this effort will be the “bottom kill exercise.” Allen said the “worst case” he sees is that a discharge continues until relief wells are completed in August.
“In the long term, the threat from this well will not go away until the relief well has been drilled, pressure has been taken off and the well has been plugged,” Allen said. “In the meantime, we need to optimize our containment efforts.”
Israel Spurns Outside Gaza Raid
Israel Spurns Outside Gaza Raid Probe in Favor of Own Inquiry
By Jonathan Ferziger and Gwen Ackerman
June 7 (Bloomberg) -- Israel rejected calls for an international probe of its raid on a Gaza-bound aid ship that left nine dead, saying it was discussing how to conduct its own inquiry with the U.S.
“Israel has the ability and the right to investigate itself, not to be investigated by any international board,” Michael Oren, the Israeli ambassador to the U.S. said, speaking on “Fox News Sunday.” “I don’t think the United States would want an international inquiry into its military activities in Afghanistan, for example.”
Demands for an international investigation began after nine Turks were killed when Israeli commandos raided their boat, one of six in a flotilla attempting to breach Israel’s three-year blockade on Hamas-controlled Gaza. Israel refused to participate in the United Nations inquiry of the 2008 Gaza war, an investigation its leaders rejected as one-sided.
Foreign Minister Avigdor Lieberman said any probe of the May 31 raid, which sparked calls for the lifting of the blockade, must be conducted by Israelis though it may include international observers. Israel says the embargo is necessary to prevent weapons from reaching Gaza.
“It has to be an Israeli committee,” Lieberman said yesterday on Army Radio. “There is no problem with high level, well-known international observers serving as partners in the process.”
United Nations Secretary General Ban Ki-Moon on June 5 discussed with Turkish Prime Minister Recep Tayyip Erdogan and Israeli Prime Minister Benjamin Netanyahu “options for moving forward with the investigation,” a statement on the UN website said.
UN Probe
That proposed commission would have members from Turkey and Israel as well as others appointed by the UN and would be headed by former New Zealand Prime Minister Geoffrey Palmer, an aide to Erdogan said in a telephone interview yesterday from the western city of Bursa, speaking on the usual condition of anonymity. Palmer didn’t reply to a voicemail message left on his cellphone in New Zealand.
French President Nicolas Sarkozy held talks with Netanyahu and asked him to accept a UN inquiry, Sarkozy’s office said in an e-mailed statement yesterday.
Oren said Israel was “discussing with the Obama administration the way in which our inquiry will take place.”
Israel is refusing to agree to an international probe because similar investigations in the past have been biased, Avi Bell, a law professor at Bar-Ilan University, said. “The track record of international inquiries on Israel is that they are excessively political, the results are known in advance and Israel never gets a fair shake,” he said.
Goldstone Report
Israel refused to participate in a UN panel led by former UN prosecutor and South African judge Richard Goldstone that investigated the 2008 Gaza war. Goldstone’s panel accused Israel and Hamas of war crimes and called on them to investigate the charges.
Israeli President Shimon Peres called the Goldstone inquiry a “mockery of history” and said it failed “to distinguish between the aggressor and a state exercising its right for self defense.”
Israel said its military operation in Gaza was aimed at stopping the firing of rockets into its territory. Some 330 rockets have been fired from Gaza into Israel since the end of Israel’s offensive, killing one foreign worker last March, the Israeli army said.
International Criticism
If a UN probe is established, it should have “a significant Israeli component” to ensure it is viewed as “legitimate here in Israel,” said Moshe Hirsch, a professor in the Faculty of Law’s Department of International Relations at the Hebrew University of Jerusalem.
Israel’s benchmark TA-25 stock index fell 1.9 percent yesterday in Tel Aviv.
Israel has faced international criticism over the raid. The U.S. has declined to specifically criticize Israeli actions, while backing a June 1 UN Security Council resolution that condemned the violence that led to the deaths of the aid activists and calling for an impartial inquiry.
Turkey, which along with South Africa withdrew its ambassador from Israel over the incident, says an Israeli investigation wouldn’t meet that criterion.
Criticism within Israel of the flotilla operation has focused largely on the execution of the raid and not the blockade. A survey of Israeli Jews published in the Maariv daily on June 2 showed 94.8 percent agreeing that it was necessary to stop the boats, with 62.7 percent saying it should have been handled in a different manner. Only 8.1 percent thought Netanyahu should resign. The pollsters interviewed a representative sample of 400 Israeli Jews and the results had a 4.9 percent margin of error.
Knives and Clubs
Israeli State Comptroller Micha Lindenstrauss will participate today in a parliamentary committee discussion on the government’s handling of the incident.
“There is a real need to examine ourselves and the quality of the decision-making process before and after the operation,” said Yoel Hasson, head of the state comptroller committee in parliament.
Israel says that on May 31 its soldiers were attacked with knives and clubs and seven were wounded, including by gunfire after people aboard one of the ships managed to grab Israeli firearms. Activists have said they threw the firearms into the sea and that the Israelis instigated the violence.
Turkey’s Hurriyet newspaper yesterday published photos showing what it said were bloodied Israeli commandos and activists holding what appeared to be iron bars.
More Ships
Israel has said it issued numerous warnings to the Gaza- bound flotilla asking it to change course for the port of Ashdod and unload there, before it seized the vessels.
The other five vessels, as well as a separate boat that arrived June 5, were taken over peacefully.
The Free Gaza movement, which organized the attempts to breach the blockade by sailing ships to Gaza laden with supplies, said they are planning another flotilla in two months.
“We are getting a huge amount of donations, about 2,000 euros a day,” said spokeswoman Audrey Bomse. “We will have no problem getting ships.”
U.S. Secretary of State Hillary Clinton has said the situation in Gaza is “unsustainable” and Netanyahu told top ministers yesterday Israel was considering ways to change how the blockade on Gaza is implemented.
The European Union, Russia and Turkey have called on Israel to end the blockade.
Blockade Policy
Israel has imposed restrictions on Gaza since Hamas ousted forces loyal to President Mahmoud Abbas’s Fatah group and seized full control in 2007 after winning Palestinian parliamentary elections the previous year. Hamas is considered a terrorist organization by the U.S., the European Union and Israel.
Hamas’s charter calls for the destruction of the Jewish state. Hamas leaders say they will renounce violence when Israel withdraws from territory occupied in 1967 and allows Palestinians to return to areas in Israel from which they fled in 1948.
Israel says its blockade is legal because it is in “a state of armed conflict” with Hamas. Some countries, such as Turkey, dispute the legality of the blockade.
Palestinians say the restrictions on food imports and construction materials have created a humanitarian crisis. Israel says it restricts imports because building materials and even some foods can be used to build rockets, bunkers or bombs.
“The time has come to lift the closure and find an appropriate alternative,” Israeli Welfare and Social Services Minister Isaac Herzog, a member of the Labor Party, said on Army Radio.
Japanese Stocks Decline on U.S. Jobs
Japanese Stocks Decline on U.S. Jobs, Weakening Euro, Metals
By Norie Kuboyama and Kotaro Tsunetomi
June 7 (Bloomberg) -- Japanese stocks fell, putting the Topix index on course for its biggest drop in a month, after the U.S. government reported slower-than-estimated jobs growth, the euro weakened and commodity prices declined.
Honda Motor Co., a carmaker that gets more than 80 percent of its sales abroad, sank 3.3 percent. Canon Inc., a camera maker that counts Europe as its biggest market, slid 3.9 percent. Mitsubishi Corp., Japan’s largest commodities trader, lost 3.4 percent. The June 4 election of Naoto Kan as prime minister has boosted approval of his party, surveys showed.
The Nikkei 225 Stock Average fell 2.8 percent to 9,629.26 as of 9:08 a.m. in Tokyo. The Topix lost 2.4 percent to 868.45, with only 28 companies gaining among the index’s 1,672 members.
Employers on Strike
Congress keeps giving business reasons not to hire.
It's too bad we can't do the Census every year, because maybe the U.S. economy would then show some jobs growth. That quip was one of the rueful asides we heard yesterday as Americans learned that the economy created a net total of 431,000 new jobs in May, including 411,000 temporary Census hires.
The private economy—that is, the wealth creation part, not the wealth redistribution part—gained only 41,000 jobs, down sharply from the encouraging 218,000 in April, and 158,000 in March. The unemployment rate did fall to 9.7% from 9.9%, but that was mainly because the labor force contracted by 322,000. Millions of Americans, beyond the 15 million Americans officially counted as unemployed, have given up looking for work.
Worst of all, nearly half of all unemployed workers in America today (a record 46%) have been out of work for six months or more. Normally job growth accelerates during the early stages of an economic rebound, but this dismal report suggests that the recovery remains well short of becoming a typical expansion.
There were some slivers of good news in the May jobs report. For those who have jobs, the average work week rose by 0.1 hours to 34.2 hours and earnings nudged upward by 0.3%. Manufacturers added 29,000 workers, and their hours worked jumped 5.1%, the best since 1983.
Perhaps this is what White House chief economist Christina Romer was looking at yesterday when she cited "encouraging developments" in the jobs market and "continuing signs of labor market recovery." We doubt this was the private reaction in the Oval Office, whose occupant was told by Ms. Romer and economic co-religionist Jared Bernstein that the February 2009 stimulus would kick start a recovery in growth and jobs. Whatever happened to the great neo-Keynesian "multiplier," in which $1 in government spending was supposed to produce 1.5 times that in economic output?
More
Imagine if Ms. Romer had instead promised in 2009 that Congress could spend nearly $1 trillion, and 16 months later the unemployment rate would be nearly 10% and that more than 2.5 million additional Americans would be without jobs. Would Congress have still spent the cash? Well, sure, Congress will always spend what it can get away with, but the American public would have turned against the stimulus even faster than it has.
The multiplier is an illusion because that Keynesian $1 has to come from somewhere in the private economy, either in higher taxes or borrowing. Its net economic impact was probably negative because so much of the stimulus was handed out in transfer payments (jobless benefits, Medicaid expansions, welfare) that did nothing to change incentives to invest or take risks. Meanwhile, that $862 billion was taken out of the more productive private economy.
Almost everything Congress has done in recent months has made private businesses less inclined to hire new workers. ObamaCare imposes new taxes and mandates on private employers. Even with record unemployment, Congress raised the minimum wage to $7.25, pricing more workers out of jobs. The teen unemployment rate rose to 26.4% in May, and for those between the ages of 25 and 34 it rose to 10.5%. These should be some of the first to be hired in an expansion because they are relatively cheap and have the potential for large productivity gains as they add skills.
The "jobs" bill that the House passed last week expands jobless insurance to 99 weeks, while raising taxes by $80 billion on small employers and U.S-based corporations. On January 1, Congress is set to let taxes rise on capital gains, dividends and small businesses. None of these are incentives to hire more Americans.
Ms. Romer said yesterday that to "ensure a more rapid, widespread recovery," the White House supports "tax incentives for clean energy," and "extensions of unemployment insurance and other key income support programs, a fund to encourage small business lending, and fiscal relief for state and local governments." Hello? This is the failed 2009 stimulus in miniature.
It's always a mistake to read too much into one month's jobs data, and we still think the recovery will lumber on. But if Ms. Romer wants this to be more than a jobless recovery, she and her boss should drop their government-creates-wealth illusions and start asking why so many private employers remain on strike.
Saturday, June 5, 2010
The Bible mandates free market capitalism.
The essence of democratic socialism is this re-written version of God's commandment: "Thou shalt not steal, except by majority vote."
"Economic democracy" is the system whereby two wolves and a sheep vote on what to have for dinner.
Christian socialists and defenders of economic planning by state bureaucrats deeply resent this interpretation of their ethical position. They resent it because it's accurate.
When Christianity adheres to the judicial specifics of the Bible, it produces free market capitalism.
On the other hand, when Christianity rejects the judicial specifics of the Bible, it produces socialism or some politically run hybrid "middle way" between capitalism and socialism, where politicians and bureaucrats make the big decisions about how people's wealth will be allocated. Economic growth then slows or is reversed. Always.
Free market capitalism produces long-term economic growth. Socialism and middle-way economic interventionism by the state produce poverty and bureaucracy. If your goal is to keep poor people poor, generation after generation, you should promote socialism. But be sure to call it economic democracy in order to fool the voters.
The Bible is an anti-socialist document. Socialist propagandists for over four centuries have claimed that the Bible teaches socialism, but we have yet to see a single Bible commentary written by a socialist. If the Bible teaches socialism, where is the expository evidence?
When I say that the Bible mandates a moral and legal social order that inevitably produces free market capitalism, I have the evidence to back up my position. My critics -- critics of capitalism -- do not.
The next time you hear someone say that the Bible teaches anything but free market capitalism, ask him or her which Bible commentary demonstrates this. You will get a blank stare followed by a lot of verbal tap-dancing about "the ultimate ethic of the Bible" or "the upholding of the poor in the Bible." You will be given a lot of blah, blah, blah. Blah, blah, blah is not a valid substitute for biblical exposition.
Fact: There has never been an expository Bible commentary that shows that the Bible teaches anything other than free market capitalism.
Beginning in April, 1973, I began writing a verse-by-verse commentary on the economics of the Bible. The first essay, on Genesis 1:26-28, appeared in the May, 1973 issue of the Chalcedon Report.
An economic commentary on the Bible had never been attempted before. I discuss only those passages that relate to economics.
No one before me had ever attempted to write a Bible commentary on a specific academic discipline. I hope mine becomes a model for others.
I have continued working on this project ever since. I limited my writing to one essay per month from 1973 to 1976. Beginning in the summer of 1977, I began working 10 hours per week, 50 weeks per year on this project.
I have needed every minute.
So far, I have written commentaries on every book except Esther and the Song of Solomon. I found nothing in Esther. I do not expect to find much in the Song of Solomon. Some are still in manuscript form: the epistles, the prophets, Psalms, the historical books, and Ecclesiastes. They will be typeset by the middle of 2010 if things go well. As for indexing, I make no promises about anything that is not yet on-line.
In addition, I have written over half a dozen books that are in effect extended appendixes to one or more of these commentaries. These are posted on-line for free: www.GaryNorth.com/freebooks.
Dominion and Common Grace (1987)
Is the World Running Down? (1988)
Political Polytheism (1989)
Millennialism and Social Theory (1990)
Victim's Rights (1990)
The Judeo-Christian Tradition (1990)
The Coase Theorem (1991)
The books covering Genesis through Leviticus (the short version) are still in print. So are the seven support volumes. Order them here: 800-628-9460. (Note: I have never taken royalties on any of these books. They were written and printed as part of my ministry, the Institute for Christian Economics.) You can download them here, read parts or all of each of them, and then decide if you want the book on your shelf.
Leviticus (the long version), Deuteronomy, and the New Testament commentaries are only available in PDF files. Eventually, I may make them available through the new print on demand (POD) technology: one book at a time. Until then, you must download each file, save it to your hard disk drive (recommended: File> Save As...), name it, and print it out.
For an introduction to each of my economic commentaries, click on the links to the following descriptive articles.
First, however, is my brief, easy-to-read introduction to biblical economics, Inherit the EarthIsraeli commando who shot six passengers in aid convoy in line for medal
Israeli commando who shot six passengers in aid convoy in line for medal
Six of the nine passengers killed in an Israeli raid on an aid convoy bound for Gaza were shot by a single Israeli commando, who is being considered for a medal of valour for saving his injured comrades as passengers attacked them with clubs, knives and even guns they had taken from downed Navy Seals.
Fresh details of the controversial raid, which has led to accusations of “piracy” and “state terrorism” being levelled against Israel, and which wrecked its strategic partnership with Turkey, emerged yesterday. There were reports that passengers who attacked the Israeli boarding party had been dragging three captured commandos into the hold of the ship when the shooting broke out.
And a British passenger who witnessed the deadly pre-dawn encounter in international waters said that some of the more peaceful activists on board had tried to protect captured Israeli soldiers being set upon by a hardcore of passengers, most of them believed to be Turks linked to an Islamic charity accused by Israel of having links to extremists.
The Israeli commando who killed six of the passengers of Mavi Marmara, the Turkish ferry owned by the IHH charity, said that he had been the last of 15 soldiers to rappel down the rope from an overhead helicopter on to the decks of the ship, which he described as “a battlefield”.
Identified for security reasons only as Staff Sergeant S, he said that contrary to initial Israeli Army reports, the shooting had started within minutes as he and his comrades were set upon by a “mob of mercenaries”.
As he landed on the ship’s top deck, he said he saw three of his superior officers who had landed ahead of him lying wounded, one with a bullet wound to the stomach, another shot in the knee and the third beaten unconscious.
Taking charge, he formed his men in a perimeter around the wounded, pulled his 9mm Glock pistol and opened fire on passengers he accused of shooting at the boarding party with guns taken off the first soldiers, who had been overwhelmed as they landed one by one.
“When I hit the deck, I was immediately attacked by people with bats, metal pipes and axes,” the sergeant recalled. “These were without a doubt terrorists. I could see the murderous rage in their eyes and that they were coming to kill us.”
He said he saw one of the passengers holding a seized pistol to another Israeli commando’s head.
His accusation that his assailants were mercenaries was based on the large amounts of cash found on a number of the detained and killed passengers, although other officials have suggested the money was destined to be given to Hamas in Gaza if the convoy succeeded in breaking the Israeli naval blockade.
New footage released by Israel, and apparently filmed by activists before the boarding had started before dawn on Monday, showed an Israeli assault craft full of helmeted commandos pull alongside the Mavi Marmara, where men waving metal pipes and a chain leant overboard to ward them off.
Others were emptying fire hoses at the Israeli boat below, while a stun grenade was dropped into the vessel, exploding among the soldiers.
Some Israeli officials have accused the Turks who attacked them of links to terrorist groups, although it was unclear why, in that case, the soldiers of Flotilla 13, the elite Navy Seals unit involved in the operation, were briefed only to expect peaceful resistance.
The question also remained as to why the passengers, if they were indeed terrorists, did not use deadlier weapons against the approaching naval launches and helicopters hovering overhead.
Alexandra Lort-Phillips, 37, an activist from Hackney, was on the Mavi Marmara when it was stormed and described seeing an Israeli soldier taken down into the stairwell below the deck where the soldiers landed.
“I went down the stairwell and there was a massive crowd of people and lots of shouting,” she said, after being deported to Istanbul.
“They had got a soldier who had boarded the ship from the roof. There was a sense of ‘My god, we’ve got an Israeli soldier’. I don’t think we really knew what we were going to do.”
“I saw a gun being taken. His gunbelt was removed and someone, I don’t know who, ran past me with the weapon and disappeared. They could have shot him but didn’t.” She said around 25 people were gathered around the soldier, who was held by his legs and stripped to his underwear as he was restrained.
“The women who were there were shouting ‘Don’t hurt him’.” Ms Lort-Phillips denied he was beaten, but said: “There were obviously some guys there who were extremely agitated by the situation. It is like you’d expect when there’s a fight between men.” As Israel desperately tried to limit the damage caused by the bloodbath on the high seas, the organisers of the aid flotilla said another boat was due to challenge the blockade and make for Gaza at the weekend.
The Rachel Corrie, an Irish-flagged ship, is named after a young American peace activist who was crushed to death by an Israeli bulldozer in 2003 while trying to prevent the army from demolishing a Palestinian home in Gaza. Organisers said it was steaming straight for Gaza with Mairead Maguire, winner of an Irish Nobel Peace Prize, on board.
Israel was too easy on flotilla
Israel was too easy on flotilla
Weakness invites aggression. Any sign of weakness emboldens an aggressor.~ Jeff Kuhner, radio host
I will stand with the Muslims should the political winds shift in an ugly direction.
~ Barack Obama, from his second biography– "Audacity of Hope" (2007)
 That tiny red dot in the center of the map is Israel, which the Bible says God loves with an everlasting love. The green areas are the Muslim states sworn by the Quran to Israel's complete annihilation. |
While the Muslim feigns to favor a nuclear free Middle East, Muslim nations have pledged their lives for a Jewish-free Middle East.
The international catastrophe of a Gaza-bound flotilla of six boats from Turkey was co-sponsored by the Humanitarian Relief Foundation (IHH), a Turkish Hamas front group that wants to overthrow the government of Turkey and establish Shariah law, and the Muslim Brotherhood, the Egyptian-based grandfather of all modern Muslim terrorist groups.
The Israel Defense Forces boarded the largest vessel after repeatedly warning the ships that they would not be allowed to breach Israel's naval blockade because Israel suspected that the ships were carrying weapons to terrorist groups like Hamas, the PLO and Hezbollah – weapons used to kill Jewish civilians.
Obviously, self-defense was justified when IDF soldiers first boarded the largest Turkish boat and were savagely beaten by "peace activists" with poles, kicked, shot and even thrown to a lower deck – a 30 foot fall!
In unison came the parade of Horribles: the United Nations, the Muslim states, liberal Democrats and virtually every nation in the world to condemn Israel for its "massacre," according to Turkish Prime Minister Recep Tayyip Erdogan, and "inhumane Zionist regime action," according to Iranian President Mahmoud Ahmadinejad.
After several days of failing to act decisively to defend our hapless ally Israel against the savage aggression of Muslim terrorists disguised as "humanitarians," President Obama stayed true to his international policy found in his second biography: "I will stand with the Muslims should the political winds shift in an ugly direction," calling Israel's attack on the Turkish flotilla "tragic."
Why is it "tragic" for any nation to zealously defend its borders? I can clearly see the deadly serpent of liberalism slithering throughout this international crisis. Historically speaking, since the 1930s the political left has essentially transformed the Western world into singular socialist states. Now, with the rebirth of militant Islamic terrorism concurrent with the rebirth of Israel in May 1948, this Liberal-Fascist Axis and Liberal-Muslim Axis I wrote about in previous articles is now self-evident and approaching its full supremacy.
The Muslim states and the Arab League of Nations are very shrewd and have been very successful in the propaganda war against Israel and in cultivating positive press for their anti-Semitic madness, turning the entire world against the Jewish state.
In an earlier article, I posited that liberalism is political madness because, despite its laudable beginnings during the Age of Enlightenment, liberalism has since devolved into a totalitarian religious cult masquerading as a political philosophy. The corollary of liberalism is Islam, which in my opinion is a totalitarian religious cult masquerading as a hegemonic political philosophy. Because of their fascist tendencies, liberalism and Islam are two sides of the same coin.
Dr. Lyle H. Rossiter Jr., a noted psychiatrist, in his best-selling 2008 book, "The Liberal Mind: The Psychological Causes of Political Madness," wrote: "The roots of liberalism – and its associated madness – can be clearly identified by understanding how children develop from infancy to adulthood and how distorted development produces the irrational beliefs of the liberal mind."
Do you understand why I call this diabolical duo, "The Liberal-Muslim Axis"? Why have almost 200 countries of the United Nations arisen to condemn Israel within 48 hours of the Israeli-Turkey confrontation in Gaza, yet refuse to condemn North Korea for wantonly killing 46 South Korean sailors in a torpedo attack in March and allows Iran to possess enough uranium to build two nuclear bombs?
Why do I call liberalism Israel's mortal enemy? Because Israel is more concerned with pleasing the world than protecting its own citizens. Instead of sinking all six Turkish ships when they refused to obey Israel's blockade, the IDF entered the ships with paintballs and a "no gunfire" order. They were only allowed to protect themselves when soldiers had their guns taken away by the Muslim terrorists and used against the IDF.
Have we learned nothing from British Prime Minister Neville Chamberlain placating Hitler in 1938? His gutless appeasement to Hitler's naked aggression regarding the annexation of the Sudetenland in Czechoslovakia and the Anschluss of Austria only precipitated the catastrophe of World War II. On a lesser scale, Israel should never have appeased the Palestinians by relinquishing Gaza in 2005 where the terrorist group Hamas quickly seized absolute power through fraudulent elections. Israel's reward? Hamas has bombed Israel with over 10,000 rocket attacks.
In the new movie "Robin Hood," the French king was fighting on the shores of England and, despite superior forces, was in a losing effort. He said: "This doesn't look like a country fighting against itself; we'll have to return at a later time." The king got back into his ships and returned to France. That kind of fighting spirit is what Israel needs to demonstrate to the world.
By embracing liberalism, a fascist totalitarian cult rooted in perversity and political madness, Israel has essentially been at war with herself since her rebirth in May 1948, thus making it easier for her enemies to demoralize and defeat her. However, there is a better way for the Jewish people to prosper. God said to Israel through the prophet Ezekiel:
… And when I passed by thee [Israel], and saw thee polluted in thine own blood [entangled in sin], I said onto thee when thou wast in thy blood, LIVE; yea, I said unto thee when thou wast in thy blood, LIVE!
Israel, return to the God of your forefathers; forsake liberalism, socialism and trying to please your enemies … and LIVE!
White House linked to flotilla organizers
White House linked to flotilla organizers
Israel official ties president's adviser to controversial 'Free Gaza Movement'
By Jerome R. Corsi
 John Brennan |
A top adviser to President Obama is the contact person within the White House for communications with the Free Gaza Movement over plans to challenge Israel's blockade of the terrorist Hamas-controlled Gaza Strip, according to a reputable source close to the Netanyahu government.
The source, a career official whose reliability was established through his tips for the book, "Why Israel Can't Wait," identified John O. Brennan, deputy national security adviser for homeland security and counterterrorism, as the contact.
The allegation raises the bizarre possibility that the Free Gaza Movement's flotilla action in the Mediterranean was being coordinated with the White House, something that would align with a shift in U.S. policy toward Israel being debated within the Obama administration.
Mike Hammer, a National Security Council spokesman, told WND flatly the report "is not true."
His response was followed quickly by another denial, when WND asked if Hammer also rejected the claim Brennan was a key force within the White House pushing for a change in U.S. policy toward Israel in demanding an end to the blockade, as the WND source reported.
"John Brennan is quite busy in his job as the president's counterterrorism and homeland security adviser, relentlessly working to keep the country safe," Hammer said in a e-mail to WND. "The administration has others who are responsible for our Middle East policy. So, again, not true."
However, Brennan's activities in his "counterterrorism" work have involved him in situations with domestic groups known to have ties to Middle East terrorism.
WND previously has reported that Brennan participated in a meeting with Muslim law students, facilitated by the Islamic Society of North America, a group that was named an unindicted co-conspirator in a case where the founders of the Holy Land Foundation of Texas were given life sentences "for funneling $12 million" to Hamas, the group currently in political control of Gaza.
WND further reported that at a meeting with Muslim law students at New York University, Brennan declared himself a "citizen of the world" who believed the United States government should never engage in "profiling" in pursuit of national security.
The New York Times reported this week that the Obama administration's policy toward Israel was changing in a re-evaluation that now considers Israel's blockade of Gaza to be untenable. But Israel's Prime Minister Netanyahu insisted in a special press conference in his office Thursday that "Israel will not apologize for defending itself," which strongly suggested Israel fully intends to continue its blockade.
Brennan tilts toward Islam
In a speech delivered Aug. 9, 2009, to the Center for Strategic and International Studies, and archived on the White House website, Brennan commented that using "a legitimate term, 'jihad,' meaning to purify oneself or to wage a holy struggle for a moral goal" to describe terrorists "risks reinforcing the idea that the United States is somehow at war with Islam itself."
In reporting on Brennan’s speech to the CSIS, WND noted his specific advice regarding the Middle East, namely, that U.S. foreign policy should encourage greater assimilation of the Hezbollah terrorist organization into the Lebanese government.
WND noted that in a July 2008 article in The Annals, a publication of the American Academy of Political and Social Sciences, Brennan argued it "would not be foolhardy, however, for the United States to tolerate, and even to encourage, greater assimilation of Hezbollah into Lebanon's political system, a process that is subject to Iranian influence."
Continued Brennan: "Hezbollah is already represented in the Lebanese parliament and its members have previously served in the Lebanese cabinet, reflections of Hezbollah's interest in shaping Lebanon's political future from within government institutions. This involvement is a far cry from Hezbollah's genesis as solely a terrorist organization dedicated to murder, kidnapping and violence."
At the August 2009 press conference for the CSIS, Brennan declared, "Hezbollah started out as purely a terrorist organization back in the early '80s and has evolved significantly over time. And now it has members of parliament, in the cabinet; there are lawyers, doctors, others who are part of the Hezbollah organization."
Middle Eastern terrorist groups like Hamas and Hezbollah frequently maintain civilian units of doctors and lawyers so as to emphasize their outreach with local politicians and increase their political acceptance in the international arena.
Conceivably, the Istanbul-based Foundation for Human Rights and Freedoms and Humanitarian Relief, better known by the Turkish acronym IHH, would fit Brennan's definition of the charitable side of organizations such as Hezbollah, despite IHH's ties to al-Qaida that have been documented by experts such as former investigating judge Jean-Louis Bruguiere, who led the French judiciary's counter-terrorism unit for nearly two decades before retiring in 2007.
The IHH, in fact, is not included on the U.S. State Department's current list of 45 groups designated as foreign terrorist organizations. Both Hezbollah and Hamas are listed.
In his speech to the New York University law school students posted on YouTube by the White House, Brennan included a lengthy statement in Arabic that he did not translate for his English-speaking audience.
Noting that he spent time spent as an undergraduate with the American University in Cairo during the 1970s, Brennan proceeded to use only the Arabic name "Al Quds" when referring to Jerusalem, commenting that during his 25 years in government he spent considerable time in the Middle East, as a political officer with the State Department and as a CIA station chief in Saudi Arabia.
"In Saudi Arabia, I saw how our Saudi partners fulfilled their duty as custodians of the two holy mosques in Mecca and Medina," he said. "I marveled at the majesty of the hajj and the devotion of those who fulfilled their duty as Muslims of making that pilgrimage."
Obama's Chicago radical pals at center of Free Gaza Movement
WND previously reported that Weather Underground terrorists William Ayers and Bernardine Dohrn, as well as Jodie Evans, the leader of the radical activist organization Code Pink, were top supporters of the Free Gaza Movement, a coalition of leftist U.S. activists and pro-Palestinian groups that organized the six-ship flotilla that attempted to run the Israeli blockade of Gaza.
Obama began his political career in Chicago at a 1995 fundraiser held in the Chicago apartment of Ayers and Dohrn, held to introduce Obama as the candidate hand-picked to run for the Illinois Senate seat held by admitted communist Alice Palmer when she decided to step aside to run that year for the U.S. House of Representatives.
In January, WND reported that Ayers, Dohrn and Evans were involved in provoking chaos on the streets of Egypt in an attempt to enter Hamas-controlled Gaza with the Free Gaza Movement to join in solidarity with Gaza's population and leadership.
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