Update no.561

Update from the Heartland

No.561

10.9.12 – 16.9.12

Blog version:  http://heartlandupdate.blogspot.com/

To all,

“Corporate Cronyism Harms America – When businesses feed at the federal trough, they threaten public support for business and free markets”

by Charles G. Koch

Wall Street Journal

Published: September 9, 2012, 6:55 p.m. ET

http://online.wsj.com/article/SB10000872396390443847404577629841476562610.html?mod=djemEditorialPage_h

Aside from the vilification by the Left and in the main, Charles Koch makes excellent and valid points – government subsidies in their myriad forms distort and contaminate the marketplace.  His label for such conduct is “corporate cronyism,” which sounds rather innocuous when compared to reality.  Nonetheless, I do support his suggestion – remove government from “favoring” individuals, groups, companies or industries.  However, I think he is applying a rather broad-band, high bandwidth filter to his view of government and the marketplace.

            First, Chuck leads off his essay with an adapted quotation of President Obama that conservatives relish every opportunity to illuminate – “We didn't build this business – somebody else did.”  Frankly, I cannot pass the occasion to lambast Charlie for his myopic, political partisanship.  The President drew attention to the reality that the U.S. Government (USG) paid for, enabled or “subsidized” much of the infrastructure business utilizes for success.  For example, as this Grand Republic engaged in a bloody war within itself, President Lincoln signed into law three key laws that facilitated a dramatic increase in commerce as well as development of the West, and set the stage for post-war prosperity. 

1.     Pacific Railroad Act of 1862 [PL 37-II-120; 12 Stat. 489; 1.July.1862]

2.     Homestead Act of 1862 [PL 37-II- 075; 12 Stat. 392; 20.May.1862]

3.     Morrill Act of 1862, AKA Land Grant College Act [PL 37-II-130; 12 Stat. 503; 2.July.1862]

We can cite many more similar development laws throughout our history.  Would business have built the Transcontinental Railroad?  Probably, eventually.  Would business have built the interstate highway system?  Probably, eventually.  Would industry have built Hoover Dam, Grand Cooley Dam or all the other hydroelectric generation facilities?  Probably, eventually.  The USG has done good work that provided the means for business to be successful; thus, President Obama’s statement . . . so often taken out of context for political advantage.  Our ancestors and we have paid for the infrastructure than enables American business to grow and flourish – our tax dollars.  Let us keep things in perspective.

            Second, he cites and singles out the Community Reinvestment Act of 1977 (CRA) [PL 95-128; Title VIII; 91 Stat. 1111, 1147; 12.October.1977] [356] as one of the legislative culprits.  Indeed, it is; I agree.  However, he fails to acknowledge the greater and more contemporary legislative enabler of the Financial Services Modernization Act of 1999 (FSMA) [PL 106-102; Title I; 113 Stat. 1338, 1341; 12.November.1999] [353] that repealed the guts of the Glass-Steagall Act {Banking Act of 1933 [PL 73-066; 48 Stat. 162; 16.June.1933].  Koch makes an appropriate highlight of government meddling in the marketplace with CRA, yet his argument rings hollow when we witness the consequences of deregulation represented so well by FSMA.  Koch defines the role of business is “to provide products and services that make people's lives better – while using fewer resources – and to act lawfully and with integrity.”  Sounds rather idyllic to me.  What happens when a business acts unlawfully or without integrity, or worse as we experienced with FSMA, the law is removed?  Capitalism is a powerful force.  Money is the instrument of that power.  Unfortunately, there are bad men in this World – always have been, always will be.  Who is to police the bad men?  Further, I would like to ask Charles Koch how Credit Default Swaps, financial derivates and other similar gambling instruments “make people’s lives better”? 

            Third, Chuck’s argument and recommendation would be far more effective and useful if he had acknowledged the proper place of government in a well-ordered, productive society.  Unfortunately, he chose to ignore the beneficial aspects of laws, the need for standards and commonality in our infrastructure, and the requirement for law enforcement to reduce or eliminate the deleterious effects of bad men who choose not to act with integrity.

            Lastly, there is a long list of laws (and obvious targets for budget cuts) that fit precisely the cronyism Charlie is referring to in his essay.  I have railed against earmarks which are just another form of “cronyism.”  It is up to We, the People; we must wean ourselves of the public teat.  Thus, I shall end my little diatribe and say thank you Charles Koch for saying what had to be said, and I shall disregard the implied parochial political partisanship to achieve the greater objective.

Saeed al-Shihri, a Saudi national, al-Qa’ida no. 2 leader in Yemen, and former, six-year Guantanamo detainee, was killed by a missile after leaving a house in the southern province of Hadramawt.  The shooter was presumably a U.S.-operated, unmanned drone aircraft.  Al-Shihri met his end of days in an automobile along with six other people.

Circa 21:30 [B] LCL, Tuesday, 11.September.2012, a well-armed assault broke through the gates and stormed the U.S. Consulate in Benghazi, Libya, in what became a five-hour siege.  The details are still being collected and assembled, however, we do know four Americans were killed.

·      John Christopher “Chris” Stevens, 52 – United States Ambassador to Libya

·      Sean Patrick Smith, 34 – U.S. Foreign Service Information Management Officer

·      Tyrone S. “Rone” Woods, 41 – former SEAL (probably a DSS agent or contractor)

·      Glen A. “Bud” Doherty, 42 – former SEAL (probably a DSS agent or contractor)

The bodies of the four Americans returned and repatriated at Andrews Air Force Base by the President and Secretary of State.  They will be transferred to Dover Air Force Base for thorough autopsy in support of the investigation.

            May God rest their immortal souls.

            The president of Libya’s National Assembly, Mohammed Magarief, apologized for the attack, describing it as “cowardly” and offering condolences, according to the Associated Press.

            The United States deployed a Fleet Antiterrorism Security Team (FAST), whose mission is to respond on short notice to terrorism threats and to reinforce security at U.S. embassies.  The FAST secured the embassy in Tripoli and I suspect in Benghazi to enable the investigation; another team may have been deployed to Sana’a, Yemen, as well as perhaps other embassy sites in the region.

            The Benghazi attack sequence is not yet known or has not been made public, however it does appear Stevens and at least one of the others were attempting to escape from the Consulate compound when their vehicle was struck by a Rocket Propelled Grenade (RPG), designed as an anti-tank weapon and commonly used to project high explosives, to strike the vehicle – not the type of weapon you carry to a spontaneous street protest.  There are some indications Stevens and Smith may have perished in the fire at the main building or in the not-so-safe, safe room, thus the importance of the detailed autopsy.  The attack appears to have been well-planned and executed, more akin to a military assault rather than a spontaneous mob reaction to some obscure, mindless, amateur video.  From everything I have seen in the public domain so far, I think the Benghazi Consulate attack was going to happen, probably on the day it took place.  The video trailer instigator and Cairo protest were convenient happenstance distractions.  There are conflicting assessments and attributions, ranging from an unplanned, armed mob that went too far, to a well executed and planned assault attributed to members of a Libyan Salafi Islamist extremist group known as Ansar al-Sharia that has some connection with al-Qa’ida in Islamic Maghreb (AQIM) – the al-Qa’ida affiliate in North Africa. 

            Ambassador Stevens, who just happened to be visiting the consulate that day, is the first American ambassador killed on duty in more than three decades.  According to the U.S. State Department, five prior American ambassadors had been assassinated by terrorists.  They were:

·      Adolph “Spike” Dubs – Afghanistan, 14.February.1979

·      Francis Edward Meloy, Jr. – Lebanon, 16.June.1976

·      Rodger Paul Davies – Cyprus, 19.August.1974

·      Cleo Allen Noel, Jr. – Sudan, 2.March.1973

·      John Gordon Mein – Guatemala, 28.August.1968

Two other U.S. ambassadors died in airplane crashes:

·      Arnold Lewis Raphel – Pakistan, 17.August.1988

·      Laurence Adolph Steinhardt – Canada, 28.March.1950

Read more here: http://www.miamiherald.com/2012/09/12/2998294/us-ambassadors-killed-in-the-line.html#storylink=cpy

The last handful of decades has not been easy for U.S. ambassadors.  They hold rank equivalent to a four-star general, and I do not recall very many full generals being killed in combat.

            The instigation for the Cairo protest that sparked off the wider regional assaults on the facilities of the United States and apparently provided cover for the terrorist attack in Benghazi was an amateurish 14-minute video clip released on YouTube and touted as a trailer for a two-hour movie, titled: Innocence of Muslims.  Apparently, the vid clip was translated into Arabic and re-titled: Mohammed Nabi al-Muslimin [Mohammed, Prophet of the Muslims], according to Egyptian media sources.  No one can find any evidence on an actual movie or legitimate purpose.  Men identified as involved or associated with the vid clip are:

Þ   Steve Klein – a California real estate developer and self-professed anti-Islamist

Þ   Terry Jones [454] – the notorious Florida pastor (although I am quite reticent to use the honorable term with him)

Þ   Morris Sadek – the leader of the Washington-based National American Coptic Assembly

Þ   Sam Bassiel, or Bacile, or Bassel, or Basile, or Basil – the apparent producer of the vid clip, who the Press has identified as Nakoula Bassely Nakoula, an Egyptian Coptic Christian of felonious background, and he has used more than a dozen aliases identified so far

Every American is entitled to freedom of speech, including Nakoula, to speak their mind as they see fit.  Yet, the First Amendment’s freedom of speech does not entitle anyone from utterances intended to incite violence – shouting fire in a crowded theater.  This vid clip has all the markings of a statement purposefully intended to incite Muslims.

            Rabble-rousing Egyptian tele-Islamist Sheikh Khalid Abdullah, 47, gets the credit for igniting the flames of religious passion within Egypt.  The vid clip had been on the Internet since July.  Abdullah broadcast the vid clip last week and called for the creators to be executed – not prosecuted but executed.  Within hours of the broadcast, hardline Salafi Islamists in Cairo were demonstrating in Tahrir Square and outside the U.S. embassy.  Undoubtedly, megalomaniacal Islamic clerics rapidly fanned the flames and encouraged public demonstrations with a focus on the United States.  Other European countries also suffered attacks across the region, including Germany and Great Britain in Khartoum and Switzerland in Tehran.  These attacks were no longer about that silly vid clip.  To be fair, more rational, moderate clerics tried to diffuse the situation in Cairo, specifically respected spiritual leader Abdullahi Sheikh Osman.  There is sanity amid the insanity.

            First, I must say that I do not believe the armed assault of the U.S. Consulate in Benghazi was in any way associated with the protests in Cairo, Sana’a, or other countries in the region.  Second, I absolutely do not believe President Obama was sympathizing with the protesters, or making excuses for America, as some political talking heads have claimed . . . to suggest such nonsense is irresponsible.  Third, I doubt the vast majority of the Islamic protesters have ever seen the vid clip in question.  I believe they were stirred up by fundamentalist clerics for their megalomaniacal purposes.  Once the mob was ignited, it took on a course of its own.  Fourth, how are people who have grown up in an autocratic, dictatorial or theocratic country expected to understand freedom of speech, when every public action is ruthlessly controlled by the government?  It should be no surprise many Muslims have difficulty separating the foolish work of a few people intent upon inflaming religious passions from the direct action of the United States of America.  Lastly and sadly, it appears to be a common trait among various religions, defend the “honor” of the religion and God with violence, as some comprehensible demonstration of devotion.  Intellectually, if our faith is so weak that we cannot sustain our beliefs in the face of opposition, then is our faith really that strong in the first place.  Resorting to fear, intimidation, and violence to defend the faith may have been acceptable (I will not say appropriate) 700 years ago, but such conduct is intolerable in an enlightened World.  As I have said more than a few times, Islam originated 600 years after Christianity, and Islam has not matured to the level of tolerance, diversity and coexistence necessary in modern, free society.  Education beyond the religious parochial madrasah is essential.

Japan announced they will phase out nuclear powered, electricity generation by 2040 – a major policy shift and the first formal decision to retreat from nuclear energy since the Tohoku Earthquake disaster at Fukushima [482, 11.March.2011].  Japan will join Germany as the second major economy to reject nuclear power, electricity generation. Business groups opposed the plan, while the U.S., UK and France questioned the wisdom of the decision.  Japan’s timeline is almost two decades slower than Germany’s schedule to achieve the same objective.

News from the economic front:

-- The People’s Republic of China (PRC) reported imports fell 2.6% in August from the same month a year ago while exports increased less than expected by only 2.7% from a year earlier – another sign of soft economic indicators.

-- PRC Premier Wen Jiabao promised Beijing will do more to boost the stalling Chinese economy in the coming months as he delivered a spirited defense of his economic legacy and his decade in power.  Wen acknowledged the downturn in China that has gathered pace in recent months.  Yet, he insisted his government still had the ability and to stimulate the economy, albeit at lower levels than the past annual average 10.7% growth.

-- Moody’s Investors Service warned the U.S. government could lose its top Aaa credit rating, if policy makers fail to agree on measures to reduce the country’s debt to GDP ratio next year.  The warning reflects the continued pessimism regarding the U.S. debt situation.

-- The Internal Revenue Service granted a US$104M award to tax whistleblower and former UBS banker Bradley Birkenfeld for providing the agency with inside information with respect to UBS's alleged encouragement of secret offshore accounts by U.S. taxpayers.  The award is believed to be the largest reward ever given to an individual whistleblower in the U.S.

-- The judges of Germany's Federal Constitutional Court highest court rejected attempts to delay the country's ratification of the European Stability Mechanism (ESM) and the so-called fiscal pact – a major question mark over two crucial elements of the euro zone's €500B rescue fund to tackle its debt crisis and paved the way for the creation of a permanent bailout mechanism that will be able to provide large-scale financial assistance to heavily indebted euro-zone economies.  The court added stipulations that must be observed for the ESM to stay within the limits of compatibility with the German Grundgesetz [Basic Law], e.g., the ceiling of €190B in German financial guarantees imposed when parliament approved the rescue fund could only be increased with the ascent of lawmakers. There must be no unlimited liability for Germany, the ESM’s biggest backer, the justices decided.  I have very mixed feelings regarding the burdens being placed on Germany by southern countries taking on massive debt without the ascent of Germany.  What is happening in Europe verges upon taxation without representation, and we know how that went.  Europe is precariously close to fracture.

-- The U.S. Federal Reserve Open Market Committee decided Quantitative Easing stage 3 (so called QE3) that will expand their holdings of mortgage-backed securities, and potentially undertake other new policies, until unemployment drops sufficiently or inflation rises too fast.  The Fed said that it will add US$23B of mortgage bonds to its portfolio by the end of September, and then announce its plans for October as part of a new process that aims to prioritize the Fed’s economic objectives.  The Fed also said it expects to hold short-term interest rates near zero until at least mid-2015.

Comments and contributions from Update no.560:

Comment to the Blog:

“I read that entire American Dream article (Jon Meacham, Time Magazine). It’s very long. I missed the doom and gloom you mentioned. As far as I could see, he said it’s up to “We the People” that you both go on about to decide whether the American Dream continues. That dream is, in any case, poorly defined except by marketers who see their product as part of it. Let us remember meanwhile that the whole thing is a concept, not a concrete fact. I did not understand the part of your discussion beginning with, ‘The American Dream does not entitle anyone . . .’ It’s supposed to be a dream rather than a reality, right?

“I will note here as elsewhere that the prosperity of the US in the 1950s and 1960s was as much a product of World War II as anything else. The USA had the only major economy left intact after that war. We had a great time but we didn’t bother to maintain our lead as other countries caught up to us.

“You define the Box pretty clearly, but I think it’s not as restrictive today as you picture it. In my childhood it was, but a great many people have loosened the shackles at least as far as sexuality. The Tea Party and their radical Christian allies make a great deal of noise, but here in Central Ohio as opposed to in the media most of my friends know at least one gay person or couple as friends, mixed-race couples are not notable, and many of us have other causes on our minds. This might look very different to me if I lived in a different place.

“Your use of middle names, in this case the mainstream Presidential candidates’ middle names, still interrupts the flow of my reading.

“I will be a bit more direct and encourage your readers who wish to vote without holding their noses to vote for either the Green Party or the Libertarian Party candidates, according to their own beliefs. If they have independents with whom they agree, that’s even better.

“In my case, I will vote from the comfort of my home. For anything beyond that, I have run completely out of energy. Living in a “swing” state has meant resisting the temptation to trash the TV when the hundredth political ad of a given day comes on.”

My response to the Blog:

Calvin,

            Re: doom & gloom.  The tone of his essay was, gee, wasn’t it great, and now it is virtually gone.  We have heard the argument many times over.  Folks seem to conveniently forget the stifling injustice of segregation, the violent social convulsions of the 60’s, and the dramatic immorality of Watergate, the inhumanity of Vietnam, the constant threat of nuclear Armageddon, among so many others.  We survived those; we’ll survive this.  The American Dream is not dead; it is just changing.  I gave Meacham credit for his good points.

            Re: entitlement.  Here is where the debate gushes up.  We create expectations with the notional American Dream that leads many folks to think of poverty in monetary terms, or welfare without constraints, or everyone should have a house in the suburbs on a tree-covered street, or folks rush into traffic to retrieve dollars thrown from a robber’s vehicle.  We have been through this debate; I suspect this will open it again.

            Re: The Box.  I am heartened Central Ohio is progressing.  South Central Kansas is not.  That aside . . . are all Ohioans able to exercise their freedom of choice and seek their Happiness without interference from external sources, and enjoy all the rights & privileges of citizenship?  I suspect not.  Ohioans who choose to live in The Box probably cannot recognize all the rumblings, but I am fairly certain those who wish to live outside The Box would not agree that they enjoy the same rights & privileges.

            Re: full names.  I shall endeavor to keep it to a minimum, but I do think it is important to be precise. 

            Re: voting.  Thank you for your encouragement.

            Re: swing state.  Kansas is definitely not a swing state, yet we still get a flood of these noxious political advertisements.

. . . round two:

“I’ll go ahead and admit that I’ve never had a coherent picture of the American Dream. Maybe that’s why I can think outside the Box with relative ease. People as poor as I were not offered that Dream, and I think it’s a good thing.

“As far as ‘entitlements,’ I’ll save that discussion until someone comes up with definitions and numbers. At present, that entitlement argument is a game played by people of all political stripes who envy others over things that mostly are imaginary.

“I’m glad if Central Ohio is more socially advanced than some other place, although I would not wish others to be behind. We are not perfect here or anything like it, but what I said is true and represents substantial progress. We still have the Box but it’s not as limiting as it once was. I am keenly aware that much work remains.

“The political season goes on and on. I have finally had all I want of passively listening to the major parties.”

 . . . my response to round two:

            Re: American Dream.  I could only paint a quick pencil sketch of the façade.  My sketch is hardly a definition, and further, I doubt an actual definition exists; yet, it is a term popularly used.  I suspect every American has felt the “Dream” and specifically The Box.  In our culture, success and often happiness are defined in monetary terms, by the possessions you own and often flaunt, or the title, influence or power you wield.  Bigger is better, and such.  Personally, I think that notion is what drives some folks to the euphoria and oblivion of psychotropic substances, or encourages them to criminal conduct . . . more, more, more.

            Re: entitlements.  I can do neither.

            Re: Ohio.  I am heartened that Ohio is more progressive.  Then, does a homosexual male enjoy the same freedom, rights and privileges as his heterosexual neighbor?  Are Ohioans able to indulge in private conduct without fear of law enforcement or legal retribution?  How have the confines of The Box been permeated?

            Re: silly season.  I share your pain, brother . . . and regrettably, we have another six weeks of it.

. . . round three:

“The American Dream remains nebulous to me, but I have encountered the attitude that material wealth is the only goal of life. I find that sad or annoying depending on the circumstances.

“I'm beginning to feel attacked about Central Ohio. Yes a homosexual man or woman enjoys the same rights as his or her neighbors in terms of property ownership, privacy, employment rights (at least in the City of Columbus), and most other legal issues. Ohio is not yet near permitting gay marriage, and I'm sure there are other ways in which we are imperfect. All the same, if we move away from a simplistic either/or outlook, we're doing pretty well here.”

 . . . my response to round three:

Uncle Calvin,

            Re: American Dream.  Material wealth = success, life goal . . . sad & annoying, indeed . . . very.

            Re: Central Ohio.  My apologies if I made you feel under attack.  My point was all citizens do not enjoy equal rights under the law, even in Central Ohio.  Nonetheless, I’m glad you feel y’all are doing pretty well.

My very best wishes to all.  Take care of yourselves and each other.

Cheers,

Cap                        :-)