Monday, June 28, 2004

With the economy hitting on at least 6 or 7 cylinders and Iraq out of ICU

think what Shrub's polling numbers will look like in 3 months if he's already even now...

WASHINGTON (CBS.MW) -- ...A newly released CBS News poll shows Kerry and Bush running neck-and-neck just a month after the Massachusetts senator held an eight point lead over the president.

Still, Bush's overall approval ratings are close to all-time lows. Slightly more than half of Americans -- 51 percent -- now disapprove of the way Bush is doing his job, while 42 percent approve of his performance. These ratings are almost unchanged from 52 percent and 41 percent recorded one month ago.

The nationwide poll was conducted in a telephone survey of 1,053 adults from Wednesday through Sunday, before news of the early transfer of sovereignty for Iraq, and has a margin of error of plus or minus 3 percent. Read the entire poll.

On the economy, 58 percent of Americans believe the economy is in "good" shape, compared to 52 percent in late May. Forty-one percent believe it is in "bad" shape, down from 47 percent in late May. Thirty percent of Americans believe the economy is "getting better," up from 25 percent a month earlier.


Despite the early transfer of power, Americans are still pessimistic about progress in Iraq. Forty percent think things are "going well" in Iraq, compared to 60 percent a year ago. And 57 percent believe things are "going badly" in Iraq, compared to 36 percent a year ago.

Asked whether the result of the war was worth the cost, in both dollars and human life, about one-third of Americans said it was "worth it." Sixty percent of respondents said it was "not worth it." That's roughly unchanged from last month.

About 48 percent of respondents said the United States "did the right thing" in Iraq, while 46 percent said it did not. That's roughly unchanged from April and down sharply from December."

... hell, he won't even need to purge a few voters, much less activate the Diebold Trapdoor.

SCOTUS surprises Bush on detainees

This will be considered a lamentable aberration in the near future ...

WASHINGTON (AP) - The Supreme Court dealt a setback to the Bush administration's war against terrorism Monday, ruling that both U.S. citizens and foreign nationals seized as potential terrorists can challenge their treatment in U.S. courts.

The court refused to endorse a central claim of the White House since the terrorist attacks of Sept. 11 2001: That the government has authority to seize and detain suspected terrorists or their protectors and indefinitely deny access to courts or lawyers while interrogating them.


O'Connor was joined by Chief Justice William H. Rehnquist and Justices Anthony M. Kennedy and Stephen Breyer in her view that Congress had authorized detentions such as Hamdi's in what she called very limited circumstances...Two other justices, David H. Souter and Ruth Bader Ginsburg, would have gone further and declared Hamdi's detention improper. Still, they joined O'Connor and the others to say that Hamdi, and by extension others who may be in his position, are entitled to their day in court."

...Pop QUIZ:
1. who dissented?
2. how many court seats are going to change hands in the next administration?
3. how will the court be aligned for the next 30 years if Bush gets another term?

and 4. How's that working for ya?

Econometrics point to rough sledding in our future

"The equity bubble of the late 1990s was a transforming event in many ways for the US economy. But there is one lasting implication that stands out above all - an important transition in the character of the American growth dynamic. The income-driven impetus of yesteryear has increasingly given way to asset-driven wealth effects. For consumers, businesses, policymakers, and investors, the asset economy turns many of the old macro rules inside out. In the end, it could well pose the most profound challenge of all to sustainable recovery in the United States.

The genesis of the asset economy can be traced back to the late 1980s. Prior to that period, there was little change in the role of assets as a driver of US economic activity. Over the 1952 to 1985 time span, the ratio of household sector assets to GDP fluctuated in a fairly tight range centered around 3.75. But then, as the all-powerful secular bull markets in stocks and bonds took hold, that ratio started to drift upward. In the latter half of the 1980s and the first half of the 1990s, it moved up to around 4.25. And then, courtesy of the Great Equity Bubble, it took off. Over the 1994 to 2003 period, household sector assets expanded by 84% - more than 50% faster than the growth of nominal GDP over the same interval. As a result, the ratio of US household sector assets to GDP pierced the 5.25 threshold in 1999. While the asset base was then pruned in the post-bubble carnage that was to follow, by the end of 2003, household sector assets still stood at 4.9 times US GDP, well in excess of earlier norms. "

...and 4.9% of a hugely expanded 11 trillion GDP, by the way...

"The emergence of the asset economy over the past decade is traceable to two developments - the equity bubble of the late 1990s and the sharp appreciation of property in the early 2000s. Over the 1994-99 period, equity holdings rose from about 19% of total household assets to about 35%. For most of the long sweep of modern economic history, the home had been the American family's most important asset. As the equity bubble expanded, there was an extraordinary role reversal. In both 1998 and 1999, the equity share exceeded the property share of total household sector assets for the first time ever. In the post-bubble shakeout that was to follow, there was a reversion back toward earlier norms. However, while the equity share of total household sector assets fell back to 24% by the end of 2003, it was still double the average from the mid-seventies though the 1980s. Meanwhile, the tangible property share of consumer assets had risen back to about 37% at the end of 2003, near the upper end of historical experience.

It didn't take long for the American consumer to uncover the miracle of the Roaring Nineties. The "wealth effect" - the ability to monetize asset inflation and convert it into consumer purchasing power - quickly became the rage. The macro role of wealth effects is very much dependent on context. In a vigorous income generation climate, wealth effects are the "icing on the cake" - in effect, allowing households to indulge in excess spending or build saving for the future. In an income-constrained environment, the wealth effect takes on a very different role; it can plug the gap brought about by a shortfall in income generation, thereby enabling consumers to defend the lifestyles they had grown accustomed to. Both roles have come into play in recent years.

In the asset economy, there are critical distinctions between the wealth effects of equities and property. The equity wealth effect is largely a "mark-to-market" translation of the household sector's success (or failures) as investors; as such, it reflects the monetization of both realized capital gains as well as the psychological boost imparted by recent and expected appreciation. The "feel good" element of this latter effect cannot be minimized in a frothy stock market climate. It has the potential to convert the excesses of the asset bubble into the excesses of the consumer spending climate. The property wealth effect is a very different animal. The monetization of wealth from tangible assets takes two forms - realizing the gain by selling property or extracting the gain through mortgage refinancing. In recent years, the "refi" bonanza has been on the ascendancy in allowing the American consumer to capture the benefits of the property wealth effect.

Largely for those reasons, economists have found that the impacts of the property wealth effect are well in excess of the impetus provided by the equity wealth effect. Whereas econometric studies demonstrate that consumers spend about 3-4 cents of every dollar's worth of equity appreciation, the spending propensity out of property appreciation is closer to 7 cents on the dollar (see Karl Case, John Quigley, and Robert Shiller, "Comparing Wealth Effects: The Stock Market versus the Housing Market," NBER Working Paper, October 2001). This differential wealth effect is very important for the asset economy in one other way - it underscores the critical role of debt as the means by which asset appreciation can be converted into purchasing power. In property markets, equity extraction and debt go hand in hand. The property wealth effect is a far more debt-intensive phenomenon than the equity wealth effect.

This "leverage factor" shows up dramatically in the recent debt binge of the American consumer. While there has been a clear secular upturn in the household sector's appetite for debt over the past 50 years, the increases in leverage in the past seven years have dwarfed earlier trends. By the end of 2003, total household sector debt had hit 85% of GDP, up fully 15 percentage points from pre-bubble readings of 70% prevailing as recently as 1995. This development, of course, is widely depicted as the "rational" response to two developments - record low interest rates and rapid house-price appreciation.

Yet the evidence raises some serious warning signs about the potential ramifications of this debt binge. Although market interest rates had fallen to 40-year lows, debt service burdens remained near the upper end of historical experience, according to the Federal Reserve. It is also common to believe that rational consumers have locked in fixed rate debt in funding their wealth effects - in effect, securing a guaranteed insulation from any back-up in interest rates. The recent shift to adjustable-rate rate mortgages draws this assertion into serious question; the ARMs portion of the dollar value of new mortgage origination exceeded 50% in May 2004, well in excess of the 20% share prevailing in early 2003.

Stepping back from the data flow, it is important to appreciate the consequences of the asset economy. A more chilling picture emerges. Courtesy of the Great Bubble of the late 1990s, the American consumer discovered the sheer ecstasy of converting asset holdings into spending power. Households learned to spend beyond their means - as those means are defined by growth in disposable personal income. Yet when the equity bubble popped, the consumer never skipped a beat. There was a seamless transition to another asset class -property. And the joys of asset-driven consumption continued unabated. Income-based consumption had, in effect, become pass?, and American households went on an unprecedented debt binge. No one seemed to care that the personal saving rate had fallen from 5.7% in the pre-bubble days of early 1995 to 1.0% in late 2001 (and now stands at just 2.3%). In the asset economy, who needs to save out of his or her paychecks? Who needs to worry about debt? Asset markets, goes the argument, had emerged as a new and presumably permanent source of saving for the American consumer.

The role of the wealth effect took on added importance in the current economic recovery. With jobs and real wages under extraordinary pressure, there has been an unprecedented shortfall in the cyclical rebound in this key wages and salaries component of personal income. As job growth has picked up in recent months, that gap has started to close. But through April 2004, real wages and salaries had still risen less than 3% from levels prevailing at the recession trough in November 2001; that's far short of the nearly 10% gains that had occurred in the first 29 months of the preceding six cyclical recoveries. This translates into a shortfall of $280 billion in "missing" real personal income. In such an income-short recovery, there is an added urgency to draw on the wealth effects as a supplemental support to spending. In the asset economy, the idea of cutting back on discretionary consumption - a classic pattern of the American business cycle - had also become pass?.

America's policymakers have joined in celebrating the miracles of the asset economy. The Federal Reserve has taken the lead in this regard, providing the rock-bottom interest rates that have taken asset markets into uncharted territory. But the Great Enabler has now created the ultimate moral hazard: overly-indebted consumers and overly-exposed financial institutions, both of which are exceedingly vulnerable to a long overdue normalization of monetary policy. The fiscal authorities have also been seduced by the siren song of the asset economy. Income-short consumers have drawn ample support from open-ended tax cutting and the massive government budget deficits such initiatives have spawned.

That takes us to one of the greatest pitfalls of the asset economy - ever-widening twin deficits. Increasingly, asset-based saving has come to be viewed as a substitute for the income-based impetus to consumer demand. This has resulted in an unprecedented shortfall of domestic saving: America's net national saving rate - the combined saving of households, businesses, and the government sector (net of depreciation) - fell to a record low of about 2% of GDP in 2003. Lacking in domestic saving, the US has had to import surplus saving from abroad and run massive current account and trade deficits to attract that capital. The record current account deficit of about $580 billion just reported for 1Q04 — 5.1% of GDP — is a grim reminder of how serious these deficits are. Such twin deficits are part and parcel of the asset economy. That also underscores the important role that foreign investors - especially foreign central banks - have played in funding the excesses of a saving-short, asset-long US economy. The world is hooked on America's asset economy as never before.

In the asset economy, the rules of traditional macro have been rewritten. Income-based metrics that have long been used to scale deficits, debt, and saving are depicted as irrelevant. Instead, the balancing act is now evaluated relative to asset-determined wealth. I must confess to being just as suspicious of this new paradigm as I was of another such scheme back in the late 1990s. As the bursting of the equity bubble should forever remind us, there is no guarantee of permanence to asset values and the wealth effects they spawn. That's even more the case when assets are artificially inflated by unsustainably low interest rates. Saving-short, overly-indebted, and more reliant on foreign lending than ever before, the United States has pushed the limits of its asset dependency.

That takes us to the weakest link in this daisy chain - the striking juxtaposition between the imbalances of the income-based US economy and the purported soundness of the asset-based alternative. In a rush to abandon the old and embrace the new, America has pushed the concept of income-based imbalances into uncharted territory. This could not have happened, in my view, were it not for the high-octane fuel of extraordinary stimulus of monetary and fiscal policies. As those policies are now normalized, the asset economy should be subjected to its toughest test.

Friday, June 25, 2004

meanwhile, back at the boardroom, the looting continues.

Stock options are compensation, compensation is an expense. Why is this so hard to understand?

" the House Financial Services Committee voted to override the Financial Accounting Standards Board's decision to force companies to account for all stock options as a compensation expense.

The bill, which has an alarming number of co-sponsors in the House, would instead require the expensing only of options granted to a company's top five executives. Plus, according to Reuters, it would delay implementing any change for a year so that the Securities and Exchange Commission could study its potential impact.

Wow. As if the options-expensing rule, which was first proposed about a decade ago, hasn't been studied enough. As if expensing options granted to an arbitrary number of employees makes more sense than expensing all of them. Would Congress be so agreeable if, say, FASB decided that Intel didn't report any of its debt other than the money owed its top five creditors?

The dumbest thing here, though, is how so many congressmen have convinced themselves that -- with the help of a few meetings with lobbyists and a few big-pocketed constituents -- they know better how to accurately write up financials than do the professionals who have been debating accounting theory for years.

Yes. Congress has done such a good job with the public sector's finances that it can't help cleaning up the private sector's, too."

... The Coalition of the Conniving and the Clueless strikes again!

Wednesday, June 23, 2004

meanwhile, back in the boardrooms, the looting continues ...

our CEOs are pirates compared to Europe's
2004-06-23 07:28:33
"BusinessWeek, which has tracked executive pay for half a century, figures that CEOs of the country's largest corporations last year were paid about 300 times the average factory worker. In Europe, in contrast, chief executive pay tops out at 30 times the average worker. Americans might defend this disparity by declaring that U.S. companies are better run, but are these companies more than 10 times better run?"

...Not when they're imploding their companies, they're not.

"What makes a “worst” CEO in the minds of so many investors and employees is not merely poor decision-making on the allocation of capital and other resources. Almost everyone can tolerate well-intentioned plans that go awry. Instead, it is the ugly way that CEOs have normalized the behavior of compensating themselves at increasingly more obscene levels -- often on the basis of self-set relative performance targets that fail to account for the absolute performance that matters most to all stakeholders: long-term corporate value as reflected in a higher stock price.

Massive payday for WellPoint execs

In Southern California, anger at CEOs has reached the boiling point over the recent discovery last week that the proposed purchase of local insurer WellPoint Health Networks by Indiana-based Anthem (ATH, news, msgs) could trigger $357 million in bonuses to WellPoint executives. Chief executive Leonard Schaeffer alone would pocket $37 million in cash, plus $45 million in pension rights. All this at a time when HMOs are increasing premiums due to the allegedly rising cost of health care.

Why did these guys believe they could get away with such a massive payday from a public company’s treasury at a time of soaring medical costs nationwide? The jackpot, buried deep in a 200-page proxy statement, was explained away by a WellPoint consultant at a hearing before state lawmakers with the comment that the pay package fell within industry norms."

...Hey! We don't need no steeenking regulations!

Tuesday, June 22, 2004

W blew 3 chances to get Zarqawi

Somehow, I'm sure this is Clinton's fault...

By Jim Miklaszewski
NBC News

Abu Musab Zarqawi, a Jordanian militant with ties to al-Qaida, is now blamed for more than 700 terrorist killings in Iraq.

But NBC News has learned that long before the war the Bush administration had several chances to wipe out his terrorist operation and perhaps kill Zarqawi himself — but never pulled the trigger.

In June 2002, U.S. officials say intelligence had revealed that Zarqawi and members of al-Qaida had set up a weapons lab at Kirma, in northern Iraq, producing deadly ricin and cyanide.

The Pentagon quickly drafted plans to attack the camp with cruise missiles and airstrikes and sent it to the White House, where, according to U.S. government sources, the plan was debated to death in the National Security Council.

“Here we had targets, we had opportunities, we had a country willing to support casualties, or risk casualties after 9/11 and we still didn’t do it,” said Michael O’Hanlon, military analyst with the Brookings Institution.

Four months later, intelligence showed Zarqawi was planning to use ricin in terrorist attacks in Europe.

The Pentagon drew up a second strike plan, and the White House again killed it. By then the administration had set its course for war with Iraq.

“People were more obsessed with developing the coalition to overthrow Saddam than to execute the president’s policy of preemption against terrorists,” according to terrorism expert and former National Security Council member Roger Cressey.

In January 2003, the threat turned real. Police in London arrested six terror suspects and discovered a ricin lab connected to the camp in Iraq.

The Pentagon drew up still another attack plan, and for the third time, the National Security Council killed it.

Military officials insist their case for attacking Zarqawi’s operation was airtight, but the administration feared destroying the terrorist camp in Iraq could undercut its case for war against Saddam.

Friday, June 18, 2004

Former diplomats & soldiers speak up

“Over nearly half a century we have worked energetically in all regions of the world, often in very difficult circumstances, to build piece by piece a structure of respect and influence for the United States that has served our county very well over the last 60 years,” Phyllis Oakley, a member of the group, told the National Press Club in Washington earlier today. Others include Gen. Merrill McPeak, former chief of staff of the U.S. Air Force; Chas Freeman, a former ambassador to Saudi Arabia; Adm. William Crowe, who as chairman of the Joint Chiefs of Staff under George H.W. Bush, was America's top military officer, and Adm. Stansfield Turner, a former director of the CIA. “Today we see that structure crumbling under an administration blinded by ideology and a callous indifference to the realities of the world around it," said Oakley. Never before have so many of us felt the need for a major change in the direction of our foreign policy.”

"You see this as a moral issue?
Yes. We do feel that it is our duty and that the fate of the United States—its status, our ultimate well-being, that of our children and grandchildren—is tied up in how the United States acts."

...If you only vote once in your entire life this should be the one.

Monday, June 14, 2004

Under God stays in the Pledge ... for now

Actually, although I strongly favor separation of church & state, unconstitutional is hard to discern here. How long has 'in God we Trust' appeared on our money? Is THAT unconstitutional too?

What if we said 'atheism shall be the official religion of the US; any official mention in text or symbol of a deity is prohibited' -- would that be unconstitutional? It's a question I think needs to be asked because that's where we're headed.

CEO Pay Explodes, Wall Street Fiddles

Stumbled on this worthy column today about bandits of the boardroom...

"Re-thinking rules and regulations
Commentary: What if disclosure's not enough?

By Michael Collins,
Last Update: 1:36 PM ET April 29, 2004

WASHINGTON (CBS.MW) -- I believe in a free market, and was taught the less government interferes, the better. I've also been writing for years about the fight for more disclosure in the financial world, thinking that if the information was just out there, the market would take care of the other problems.

Perhaps it's time to think again.

Part of the problem is too many corporations, investment companies and financial services providers approach disclosure issues the same way drug companies list possible ugly side effects quickly at the end of advertisements.

But part of the blame lies with investors, us in the media, boards of directors, and investment advisors who don't pay enough attention to things that are disclosed but just don't seem right.

Take executive pay. It's one of the best-disclosed items in corporate America -- at least the basic elements. But pay packages still go up, sometimes regardless of how outrageous the compensation or how unrelated to the fate of the stock or the employees.

Data compiled by Bloomberg shows CEO pay at 70 of the largest 100 US firms rose to an average of $14.1 million last year -- which the Corporate Library notes is equivalent to 384 years of an average employee's pay of $36,764. The 2003 studies are showing executive pay isn't rising as fast as it has in the past, more compensation is tied to company performance, and some executives actually saw their packages shrink -- but are we getting our $14-million worth?

Shareholder value flies away

Another study out recently, by Professor David Yermack of the Stern School of Business at NYU, found that "CEOs' personal use of company aircraft is associated with severe and significant under-performance of their employers' stocks." Yermack found that firms that grant this perk under-perform market benchmarks by about 4 percent a year -- after controlling for other factors.

And the underperformance can't be attributed to the cost of providing the aircraft. Yermack speculates "CEOs who consume excessive perks may be less likely to work hard, less protective of the company's assets, or more likely to tolerate bloated or inefficient cost structures."

When it comes to outrageous pay and perks, and how they affect shareholder value, you can blame greedy executives, compliant boards of directors or misguided compensation consultants. But it's not a problem of disclosure. The pay and perks are right there in the filings -- and mailed to every shareholder every year. We just need to pay attention, and find a way to hold the companies and executives accountable.

In five years writing the Gadfly, I can't count the number of times I've heard aggrieved investors use a version of "If we had only known..." The answer seemed to be insisting that investors could get the information they needed, rather than counting on more policing from regulators.

But more frequently now, I'm seeing that even when investors could know, they either don't bother to find out, don't seem to care, or feel they can't do anything about the problem that is disclosed."

... you were right the last time -- individuals have no power to effect change in the boardroom. The same problem with unregulated monopolies applies in every executive boardroom -- there is no natural restraining mechanism to the natural proclivity toward gouging the maximum out the system. It only gets worse over time as each board looks at the behavior of the others and says "they're getting theirs, I'll get mine"

What Mr Collins fails to point out is that while CEO pay in overseas corporations is getting ever more disproportionately higher than the average worker's, the ratio is still far lower and climbing less rapidly than our bandits of the boardroom.

Sunday, June 13, 2004

The Grand Old Hypocritical Party stoops again

Bush Asked for Vatican's Reelection Help
Published: June 13, 2004

n his recent trip to Rome, President Bush asked a top Vatican official to push American bishops to speak out more about political issues, including same-sex marriage, according to a report in the National Catholic Reporter, an independent newspaper.

In a column posted Friday evening on the paper's Web site, John L. Allen Jr., its correspondent in Rome and the dean of Vatican journalists, wrote that Mr. Bush had made the request in a June 4 meeting with Cardinal Angelo Sodano, the Vatican secretary of state. Citing an unnamed Vatican official, Mr. Allen wrote: "Bush said, 'Not all the American bishops are with me' on the cultural issues. The implication was that he hoped the Vatican would nudge them toward more explicit activism."


Mr. Allen wrote that others in the meeting confirmed that the president had pledged aggressive efforts "on the cultural front, especially the battle against gay marriage, and asked for the Vatican's help in encouraging the U.S. bishops to be more outspoken." Cardinal Sodano did not respond, Mr. Allen reported, citing the same unnamed people.

A spokesman for the Vatican declined yesterday to disclose the contents of the meeting, which followed the president's brief meeting with the pope. Jeanie Mamo, a spokeswoman for the White House, said: "They had a good, private discussion. They discussed a number of priorities of shared concern, and the president's and the Vatican's positions on these issues are well known."

The Rev. Barry W. Lynn, executive director of Americans United for Separation of Church and State, called the report "mind-boggling."

"It is just unprecedented for a president to ask for help from the Vatican to get re-elected, and that is exactly what this is," Mr. Lynn said. Linda Pieczynski, a spokeswoman for Call to Action, a liberal Catholic group, said, "For a president to try to get the leader of any religious organization to manipulate his fellow clergymen to support a political candidate crosses the line in this country."

But some with experience in Roman Catholic politics said they were hardly shocked. "Any head of state who goes to the Vatican will attempt to present a case," said Msgr. Lorenzo Albacete, a professor of theology at St. Joseph's Seminary in New York. Monsignor Albacete, who has served as a translator for Catholic officials in meetings with heads of state, said: "If it is done in a very rude way, then the Vatican will remember and you won't get invited again. But if it is done in a diplomatic way, that is why they go to the Vatican anyway. It is not an act of devotion. It is a political thing."

Mr. Bush's campaign is betting heavily on churchgoers in his re-election effort, and how Catholic voters apply their faith to politics is emerging as a focal point of the race. There are an estimated 63 million Catholics in the United States. Bush campaign pollsters have said that in the last election, people who attended church regularly voted disproportionately for Mr. Bush, though Catholics were much more evenly split than Protestants were.

Once a reliably Democratic constituency, Catholics have become divided, with traditionalist Catholics making common cause with conservative evangelical Protestants on social issues like opposition to same-sex marriage and abortion. But Mr. Bush is also a born-again Methodist who is likely to face a Roman Catholic opponent, Senator John Kerry, Democrat of Massachusetts. And the pope and other Catholic officials have repeatedly criticized the Bush administration over the war in Iraq.

In the last six months, a handful of Catholic bishops in the United States have already weighed in on the presidential race by threatening to withhold communion from Catholic politicians who disagree with the church's stance on abortion, a group that includes Senator Kerry.

Other bishops, however, have said that threatening to withhold communion goes too far, and the pope has warned of "the formation of factions within the church" in the United States. The bishops are expected to take up the matter at a closed-door conference this week in Colorado.

Pope John Paul II praised Mr. Bush last week for "the promotion of moral values" but reminded the president of the pope's "unequivocal position" on Iraq."

... One can only imagine the vitriol that Savage & Limbug would be spewing if it were Kerry that asked the Vatican to pressure American bishops to support his campaign.

Friday, June 11, 2004

McCain is the voice in the deficit wilderness

the Progressive Policy Institute, in conjunction with eight other Washington think tanks ranging from the right to the center to the left, convened a forum entitled Restoring Fiscal Sanity -- While We Still Can. The forum showed that even at a time of deep partisan divisions, all serious thinkers, regardless of party or ideology, agree that the federal government has gone fiscally insane, and needs radical therapy to recover.

...McCain promised the audience the he would offend "each and every one of you in some way." Citing the general loss of bipartisan spirit in Congress, McCain said: "[T]here is one thing that unites Republicans and Democrats: Fiscal irresponsibility has become the great unifier of late, and for that we should all be ashamed."

But McCain reserved his strongest words for his own GOP. "The party that was long known to be the guardian of the treasury is now its routine raider," he said. "I'm a Barry Goldwater Republican. I revere Ronald Reagan and his party of limited government. Sadly, that party is no longer."

McCain also excoriated the misguided priorities of the GOP-controlled federal government during the war on terrorism. "I don't remember ever in the history of warfare when we cut taxes," he observed. "Throughout our history, wartime has been a time of sacrifice.... Name one thing that Congress has told the special interests and their fat-cat lobbyists to do without since this war began?"

... How's that working for ya, John?

Tuesday, June 08, 2004

Fail to plan, plan to fail

"Thousands of soldiers nearing discharge learned last week that the Army was extending their tours of duty to keep them with their units in Iraq or Afghanistan. That's another clear sign, if Americans still needed one, that Defense Secretary Donald Rumsfeld and the Pentagon disastrously underestimated the number of troops and the amount of time it would take to secure these two countries. The men and women of America's volunteer Army are being required to bridge the gap.

The Bush administration now talks about maintaining large numbers of American ground troops in Iraq through at least the end of next year. Most of that burden will fall on the Army, with limited help from the National Guard and the Marines. That is more than the Army, at its present strength, can handle without paying a heavy price in future combat readiness and re-enlistment rates.

The Army can comfortably station no more than about one-third of its 33 combat brigades in front-line zones. Today, some 18 of those 33 brigades are on front-line duty — roughly 14 in Iraq, 2 in Afghanistan and 2 elsewhere, including, at least for now, Korea. To field those nearly 7 extra brigades, discharges are being delayed, troops sent back to combat faster, and training exercises skipped.

Simply expanding the Army to the point where it could easily handle current demands would be neither practical nor wise. It would require having more than 50 combat brigades, as the Army did at the end of the cold war. Such a buildup would take at least two years to complete and would cost tens of billions a year at a time of record and unsustainable deficits. Reinstating the draft, which almost no military professional favors, would not shorten this timetable or substantially reduce the cost."

... they knew the job was dangerous when they took it, Fred.

Saturday, June 05, 2004

Pundits for Ahnold thought he'd actually balance the books by cutting waste

Are they still smoking whatever they were puffing last fall? ...

From Oct '03 Cavuto on Business: Can Arnold Save the Golden State?

Neil Cavuto: He wanted it, now he's got it. Arnold Schwarzenegger (search) said he'd take on California's problems. Now he'll get his chance. So what should he do first to fix the world's 5th largest economy? Jack Welch, you came into General Electric years ago. A huge company with money problems, similar to what Schwarzenegger is walking into. What should Arnold do?

Jack Welch: He needs to capitalize on the success he had with the election. I hope there are good young stars on his team. I like the diversity on his team. He has to lay out his issues, but he better not go near taxes.

Neil Cavuto: He seems to have put himself in a box by saying he can do this buy cutting through waste and fraud without hiking taxes. Can he?

Meredith Whitney: California mirrors a lot of what happened in corporate America, where the idea was why hire one guy when you can hire one guy and five guys to watch that one guy. Arnold needs to cut costs. The state is spending money like it still has revenues coming in during the height of the bull market back 1999 and 2000.

Neil Cavuto: The governor doesn't have a great deal of power in that state, right Jim?

Jim Rogers: That's right. The democrats control the state congress and they are waiting for him so they can hack him out at the knees. Jack is right. He has to come in strong with his vision, but he has to have more than just vision. If they go back to what they had expended in 1998 or 1999, there would be no problems. The Democrats, under Gray Davis, shot spending through the roof.

Gregg Hymowitz: Arnold's charisma is only going to get him so far. Any budget or tax bills need to be passed by 2/3 of the legislature. As Jim said before the legislature is controlled by the Democrats. He's already said he's not going to cut education and education is 50 percent of the budget. Ultimately, the guy is going to have to raise taxes. And by the way Jack, in 1967 Governor Reagan raised taxes. In 1991, Governor Wilson raised taxes. And in 2003 or 2004 Governor Schwarzenegger will raise taxes.

Jack Welch: That's your answer for everything Gregg.

Jim Rogers: Gregg, you said Arnold said he won't cut back education. I don't want Arnold to cut back on education but if he cuts back the education bureaucracy, we don't need all these bureaucrats.

Gregg Hymowitz: You can't cut that much. The most aggressive analysts say the most you may be able to cut would be about $5 million. You're facing a $10 billion budget deficit. That's as large as the aggregate deficits of the other 49 states.

Neil Cavuto: Let's say that Arnold does do what Jack wants him to do. What do investors buy in that environment?

Meredith Whitney: I think a pure play is California Municipal bonds. I don't own them though.

Jim Rogers: I would also buy California bonds. It's the only thing you can buy. Just because California is getting better doesn't mean you should buy stocks. I would buy municipal bonds, but I wouldn't have them for very long. I would sell them into a rally.

Gregg Hymowitz: In order for California to improve, Silicon Valley will have to improve. And if that happens, I own and like Microsoft (MSFT). Although, I think Microsoft will rally before California improves. Also, I didn't hear Jack comment when I mentioned two very well known Republicans who raised taxes in California. One of which is, I'm sure one of Jack's idols, President Reagan.

Jim Rogers: Gregg, raising taxes has never made an economy get better.

Gregg Hymowitz: Balancing budgets makes economies better. I don't see how you don't agree with that. "

... well, one of 'em nailed it. Amen, Gregg. Sadly, I doubt the gullible fools that swallowed that line even remember what they ate.

Thursday, June 03, 2004

Take a break

This is killer. Did it get a Cleo?

Wednesday, June 02, 2004

Enron screwed us, Ashcroft covered it up

Ashcroft had these recordings for THREE YEARS and what has Big John done? Nada, of course. Why doesn't he just hang a "BOHICA, California" sign on the Hoover Bldg?

"According to the Snohomish County Public Utility District, which obtained audiotapes of trader conversations from the Justice Department and transcribed them, traders openly discussed creating congestion on transmission lines, taking generating units offline to pump up electricity prices and overall manipulation of the California power market.

For example, in one transcript a trader asks about "all the money you guys stole from those poor grandmothers of California."

To which the Enron trader responds, "Yeah, Grandma Millie, man. But she's the one who couldn't figure out how to (expletive) vote on the butterfly ballot."

Conversations that involve Forney, Belden and Richter appear throughout the transcripts.

In one of those transcripts, a trader says to Richter, "So, uh, somebody's figured out how to set congestion?"

Richter: "Well, we ... we can set it if we want. I mean, it's not a hard game to do ..."

In another, an Enron trader identified as David discusses shutting down a steamer from a generating unit to increase prices.

"I was wondering, um, the demand out there is er ... there's not much, ah, demand for power at all and we're running kind of fat. Um, if you took down the steamer, how long would it take to get it back up?

"Oh, it's not something you want to just be turning on and off every hour. Let's put it that way," another trader says.

"If we shut it down, could you bring it back up in three — three or four hours, something like that?" David asks.

"Oh, yeah," the other trader says.

"Well, why don't you just go ahead and shut her down, then, if that's OK," David says.

Eric Christensen, a lawyer for the utility district, said it is seeking to convince a FERC administrative law judge that Enron should be ordered to surrender as much as $2 billion in unjust profits.

Tuesday, June 01, 2004

Educated Shia Condemn Sadrists

From free Iraqi press ...

"Radical movement’s attacks on senior clergy seen as contradicting calls for unity.

By Hussein Ali in Baghdad (ICR No. 64, 25-May-04)

While charismatic preacher Muqtada al-Sadr might be a hero to a good number of young and poor Shia for his defiance of the Coalition, many of their older and middle-class co-religionists condemn his movement for causing divisions within their community.

In particular, middle-class Shia object to the movement's newspaper al-Hawza, whose closure helped trigger an April uprising across Iraq.

Ever since Coalition troops shut down the title in late March, curious Iraqis have snapped up back issues of what was formerly a fairly limited-circulation weekly.

Reading through them, they claim to have discovered attacks on senior scholars, which they say contradict Sadr’s public calls for Shia unity.

"When we started reading the back issues, we found many strange things written between the lines," said surgeon Ahmed Nasser, 45. "I found that it seeks disunity among Shia…There is a big contrast between what is published in the paper, and what [the Sadrists] declare on TV."

Kadhim Haider, 39, a teacher at al-Khowarnek secondary school, keeps a clipping of an article which suggests that many senior clergy are foreigners who do not take an interest in the lives of ordinary Iraqis.

"The basements of Najaf, cool in the summer and warm in winter, house scholars who are Persian, Afghani, and Pakistani, along with Iraqis who prefer not to appear in front of the public," the article says.

Several of Iraq's senior scholars - including Iranian-born Grand Ayatollah Sayydi Ali al-Husseini al-Sistani – are foreigners.

For some Shia, such criticism of senior clergy justifies the US crackdown on the Sadr militants and their newspaper.

"The Shia benefit from the closure of the paper as it writes against our Marjeeya[ religious leadership],” said Ali Jaffar, 35, an engineer.

"Muqtada's followers claim that they are [loyal] to the marjaeya in Najaf, but they write the opposite in their newspaper."

Although hostility to al-Hawza is most marked among professional Shia, some working class members of the faith also support the closure of the title.

"If the paper was still issued, it might cause a civil war among the Shia themselves," said a day labourer. "It is great to have the paper closed. We thank the occupying forces."


Police adviser: Snafu in Najaf - Police adviser: Snafu in Najaf - May 31, 2004: "BAGHDAD, Iraq (CNN) -- An American adviser said the U.S. Army 'dropped the ball' by providing inadequate accommodations for Iraqi police officers who were to begin joint patrols with coalition troops in Najaf on Sunday.
About 100 police officers arrived in Najaf on Saturday to help calm the Shiite Muslim holy city, which has been besieged by fighting between U.S. forces and a militia loyal to radical cleric Muqtada al-Sadr.
But when coalition troops arrived the next day to begin the joint patrols, the Iraqis were gone.
The Iraqis left their posts because they felt they received second-class treatment when they arrived from Baghdad, the American adviser said Monday.
The U.S. adviser said no sleeping arrangements had been made for the Iraqis, they had no personal gear for their duties or changes of clothes, and they were given military rations for meals that included pork. Muslims are forbidden to eat pork.
'They were not even given a mattress to sleep on,' the adviser said. 'The U.S. Army really dropped the ball here.'

... we're getting to the "never miss an opportunity to miss an opportunity" point

They told his mother yesterday

on Memorial Day. Single mom Karen Ballard's only child, Ken, taken out by small arms fire. His tank company was on extended tour operating in Kufa. 77 days to go.

The brass hats and Guys in Ties continue to screw up their jobs and get our kids killed. It's time to declare victory and set the pullout date.