Thursday, November 28, 2013

Whither Iran and the Bomb?

They label conservatives who oppose this farce of a treaty with Iran, "Neanderthals".  Read these two articles, and see if you are a "Neanderthal".

Obama Gives Iran the Bomb
The president is oblivious to Iranian lies.
By Jed Babbin November 25, 2013 American Spectator

The agreement reached late Saturday night between Iran and the United States — and the rest of the United Nations’ “P5+1” gang — will enhance Iran’s ability to produce nuclear weapons whenever it decides to do so. It makes war in the Middle East nearly a certainty, rather than protecting us against it.
For Obama — and while he is president, for us — there is no responsibility so great that it cannot be sacrificed to political expediency, no duty so grave that it cannot be ignored.
America has an obligation to itself, and to allies such as Israel, to prevent Iran from obtaining nuclear arms. Four American presidents — George H.W. Bush, Bill Clinton, George W. Bush and Barack Obama — have recognized this duty by stating firmly an American policy that Iran is not to be allowed to obtain nuclear weapons. The first three of those presidents share the distinction of having done nothing to enforce that policy. The fourth has assured his place in history by surrendering the policy to Iran’s ambitions.
The details of the agreement — which we’ll get to in a minute — give Iran major relief from sanctions that were imposed by UN resolution and by American law, including some sanctions that were imposed when Iran was designated a state sponsor of terrorism in 1984. To understand how far the agreement goes, it’s important to know the context in which it was made.
The Middle East is in Obama-produced turmoil. Egypt, which replaced U.S. ally Hosni Mubarak with Mohammed Morsi’s Muslim Brotherhood and then replaced them with the military regime of General al-Sisi, is falling apart. Al-Sisi’s military, which operates and controls a majority share of the Egyptian economy, believes — according to several sources — that it can outlast Obama’s regime to better times under a new American president. But Egypt is suffering widespread food shortages and is ripe for the al-Qaida insurgency now brewing inside the nation. Al-Sisi has less time than he thinks before Egypt erupts in uncontrollable violence.
Syria is effectively partitioned into sections: one dominated by the Assad regime (and its Iranian and Russian allies), a Kurdish region (apparently dominated by the quasi-terrorist PKK group), and territory controlled by the Syrian opposition forces, comprised mainly of jihadists funded by Saudi Arabia and other Gulf States. That partitioning may be formalized next year though the fighting will not abate.
Inevitably Iraq, after the withdrawal of American troops, has become a client state of Iran, an autocracy of Sunni-Shiite violence. It won’t be long before Afghanistan falls to the Taliban.
Saudi Arabia has given up on the United States, as has Israel. The Jerusalem Post reported Wednesday that Israeli Foreign Minister Avigdor Lieberman said it was time for his country to look beyond the United States as its principal ally.
In short, the false bloom of democracy in the “Arab spring” has given way to an Iranian winter.
The agreement reached Saturday night is the subject of much glowing news coverage both here and abroad, including in the Iranian press. President Obama said on Saturday night that the agreement contains "…substantial limitations which will help prevent Iran from building a nuclear weapon. Simply put, they cut off Iran’s most likely paths to a bomb."
More accurately, Obama could have said, “If Iran likes its path to the bomb, it can keep following its path to the bomb.”
Iranian president Hassan Rouhani was equally effusive, telling reporters that, “World powers have recognized the nuclear rights of Iran. The confirmation from the great powers is of huge value.“
Unfortunately, Rouhani is closer to the truth. Oddly enough, the agreement is published in full almost nowhere. The version I saw is from the most questionable source this side of Pravda, the Iranian news agency IRNA. (The Iranian-reported version is largely confirmed by various Western news reports).
According to that version, Iran has received the biggest concession possible. For years, Iran has claimed a “right” to enrich uranium and insisted that recognition of such an imaginary right be included in any negotiated agreement. And so it is. Twice in the agreement’s preamble, Iran’s “rights” to a nuclear program are proclaimed. The first claims that the agreement ensures that Iran’s nuclear program will be for peaceful purposes, and the second says its “comprehensive solution would enable Iran to fully enjoy its right to nuclear energy for peaceful purposes…”
Now that it has been enshrined in a document that America agreed to, this phony “right” will be impossible to deny in future negotiations. Thus the principal source of danger, the Iranian capability of enriching uranium for the production of nuclear weapons, is not ended.
The agreement lasts for six months, the length of time the parties give themselves to reach a final agreement. Remember, please, the October report from the Institute for Science and International Security that projected Iran was within a month of having the ability to produce nuclear weapons.
One intended effect of this temporary agreement is to prevent any Israeli attack on Iran’s nuclear weapons facilities for at least that long. If Israel attacks Iran during those six months it will become an outlaw nation susceptible to Iranian war and indefensible by the signatories to the agreement.
In those six months, Iran gives up very little. It is permitted to retain 50 percent of its stock of uranium enriched to 20 percent, which is a sufficient enrichment level to produce rudimentary nuclear weapons. Iran promises to not enrich more uranium — for six months — to higher levels than 5 percent.
Nothing requires Iran to reduce its capacity for enriching uranium. Iran isn’t required by the agreement to disassemble the more than 19,000 centrifuges it already has. It promises to not advance further its Natanz uranium enrichment plant, or the one at Fordow, or activate its heavy-water plutonium plant at Arak in the next six months. To obtain nuclear weapons, it need not do any of those things.
In diplomatic weasel words, the agreement allows Iran to, for example, “continue its safeguarded [research and development] practices, including its current enrichment R&D practices, which are not designed for accumulation of the enriched uranium.” Whether or not they are designed for that purpose, they have that function. Also weasel worded are the inspection practices imposed which are comprised of “daily IAEA inspector access when inspectors are not present” and such. Huh? Inspections without inspectors doesn’t satisfy the Gipper’s axiom “trust but verify.”
For this, America and the rest of the “P5+1” gang give up most sanctions against Iranian oil shipments, immediately free Iranian financial assets of about $6 to $9 billion, and even allow Iran to import spare parts for aircraft.
We fell for an agreement very much like this in the last years of the Clinton administration when North Korea promised to not build nuclear weapons in return for a relaxation of strangling American sanctions. North Korea used the time the agreement allowed to build its nukes and soon tested them underground.
Iran is of the same ilk but Obama is oblivious to its lies. The report Obama relied on to begin the negotiations — that Khomenei had issued a religious fatwa prohibiting the production of nuclear weapons — was blatantly false.
We should recall the UN’s International Atomic Energy Agency report from November 2011 that recounted Iran’s long string of lies about its nuclear weapons development.
That report concluded that, among lies Iran has told the world, are:
• Since the 1980s, Iran has been conducting clandestine uranium enrichment, including the separation of plutonium;
• Iran has been acquiring "nuclear weapons development information and documentation from a clandestine nuclear supply network;"
• Iran has been working "on the development of an indigenous design of a nuclear weapon including the testing of components;" and
• The IAEA — since 2005 — has been aware that "Iran had been engaged in activities involving on a so-called green salt project, high explosives testing and the re-engineering of a missile re-entry vehicle to accommodate a new payload."
We know from other open sources that Iran has been testing triggering devices for nuclear weapons.
Only Obama could believe that a nation with that record of lies can be believed when it negotiates away any aspect of its ability to produce nuclear weapons.
As Winston Churchill wrote in The Gathering Storm, the “unwisdom” of the European powers in the 1930s enabled the rise of Hitler and the rearming of Germany, bringing about the most destructive war in human history. Israeli Prime Minister Netanyahu was correct and much too mild in saying that this new agreement was a historic mistake. Obama is guilty of “unwisdom” of the same historical scale Churchill described.
America has been deluding itself for more than 20 years, pretending that a peaceful resolution to Iran's pursuit of nuclear weapons was possible. It is not. Now, with the Obama agreement, that delusion has given way to the most dangerous reversal of policy in our nation’s history.

Iran claims White House is lying about wording of nuke deal

Rick Moran November 27, 2013 American Thinker
Those who oppose the agreement on Iran's nuclear program may want to pause and take a breath. Apparently, there's still about 10% of the deal that needs to be worked out, and given Iran's track record, it's still very possible that the whole thing could fall through.
This certainly isn't a good sign:
Iranian officials say that the White House is misleading the public about the details of an interim nuclear agreement reached over the weekend in Geneva.
Iran and Western nations including the United States came to an agreement on the framework for an interim deal late Saturday night in Geneva. The deal has yet to be implemented
The White House released a multi-page fact sheet containing details of the draft agreement shortly after the deal was announced.
However, Iranian foreign ministry official on Tuesday rejected the White House's version of the deal as "invalid" and accused Washington of releasing a factually inaccurate primer that misleads the American public.
"What has been released by the website of the White House as a fact sheet is a one-sided interpretation of the agreed text in Geneva and some of the explanations and words in the sheet contradict the text of the Joint Plan of Action, and this fact sheet has unfortunately been translated and released in the name of the Geneva agreement by certain media, which is not true," Foreign Ministry Spokeswoman Marziyeh Afkham told the Iranian press on Tuesday.
Afkham and officials said that the White House has "modified" key details of the deal and released their own version of the agreement in the fact sheet.
Iran's right to enrich uranium, the key component in a nuclear weapon, is fully recognized under the draft released by Tehran.
"This comprehensive solution would enable Iran to fully enjoy its right to nuclear energy for peaceful purposes under the relevant articles of the NPT in conformity with its obligations therein," the agreement reads, according to a copy released to Iranian state-run media.
"This comprehensive solution would involve a mutually defined enrichment programme with practical limits and transparency measures to ensure the peaceful nature of the programme," the Iranian draft reads. "This comprehensive solution would constitute an integrated whole where nothing is agreed until everything is agreed."
Iran's objection to the deal as presented in the fact sheet raises new concerns about final stage talks meant to ensure that the deal is implemented in the next few weeks.
Negotiating with Tehran is never easy. Factions in the Iranian government can apparently derail agreements even after they're concluded, which has happened a couple of times over the years.
But the fact that the Iranians interpet the agreement as a confirmation of their right to enrich uranium and the US believes the deal says exactly the opposite means that the whole enterprise is in jeapordy. Such a fundamental disagreement on what amounts to the essence of the negotiations does not bode well for President Obama who would be hugely embarrassed if the Iranians backed out of the deal at this point. Expect Iran to push this point and the Americans to bend in order to keep the agreement on track.

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Sunday, November 24, 2013

The Pitfalls of Globalization

Although the failings of Obamacare and its website are a life and death issue for many Americans, the state of the economy is still our number one domestic problem.   Many articles about our growing and appalling disparity of wealth and incomes have been appearing lately, usually written by liberals.  I have conservative views, but facts are facts.  The average real wage has steadily declined since 1976, and the upper 20% of Americans now own more than 87% of all the wealth.  The bottom 40% own only .3 of 1% of the nation’s wealth, and these data are only a few of many devastating indicators.  The result has been a lowering of living standards and rising levels of stress and anger.  This disparity has, indeed, become our nation’s greatest domestic problem.

I’ve written several articles about this, and pointed out the several reasons for these trends.  Advances in technology, including robots and email, have eliminated millions of factory and middle management jobs.  Other factors include: an explosion in energy costs, the collapse of private-sector unions, our welfare system, and globalization.  In my opinion, the main reason for the increasing disparity and our present stagnation is globalization or so-called, “free-trade”, which has decimated manufacturing industries and jobs, and shifted them overseas.   The result has been that Americans who live on investment income become richer, while most of America becomes poorer.  What has happened is that the average American has traded a good-paying job for the opportunity to buy cheap goods at Walmart.  This has had the most devastating effects on black families living in inner cities where factories have completely disappeared.

Both political parties are to blame, as both have succumbed to the ephemeral lure of the benefits of “free-trade”, while both seem paralyzed by references to Smoot-Hawley tariffs and its role in the Great Depression.  It clearly was a mistake not to protect our manufacturing base, and we have to start working out of this mess.  Right now, the average American cannot find a good job, and their children cannot find any job.  It is especially dismaying to hear President Obama talking about a free trade agreement with Vietnam, which will just increase the flood of cheap goods and further exacerbate the problem.

What we need to do is 1, stop any further “free-trade” agreements; 2, require our military to purchase only items 100% made in the USA; 3, subsidize and protect the startup of manufacturing businesses located in inner cities; 4, begin negotiations to abrogate current agreements such as NAFTA; 5, begin to impose limited tariff protections for existing industries that need help; 6, encourage the growth of private-industry labor unions by amending Taft-Hartley to allow “right-to-work” laws only to apply to public-sector unions; and 7, review all federal regulations relating to manufacturing with the object to eliminate those that are unreasonable or do not survive an unbiased cost-benefit analysis.

I used to view with shock and disgust the violence that occurred in cities where globalization conferences took place.  Now that I am aware of the destruction that globalization has brought, I have a little more understanding of that anger.


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Wednesday, November 20, 2013

George Zimmerman and Me

I’m sure I’m not alone in having some of the thoughts I had during George Zimmerman’s ordeal in Orlando after the tragic shooting of Trayvon Martin.  My main thought was, “If I ever have to defend myself against an African-American trying to maim or kill me, will I have to go through what Zimmerman went through?”  After all, if you are aware of the crime statistics, it’s almost a certainty that any criminal event threatening me will be carried out by an African-American youth.

Will the President of the United States publicly take the side of the African-American; will NBC and ABC doctor the 911 call to make me out to be a racist; will the actions of Jesse Jackson and Al Sharpton cause the investigative results of the local police force to be over-ruled (only to be confirmed during the trial), and all the powers of the government arraigned against me regardless of the facts?

Mr. Zimmerman is much in the news these days because he has been acting completely out-of-character with the testimony several witnesses gave at his trial.  I believe Mr. Zimmerman may have developed PTSD during his terrible ordeal similar to the malady suffered by many soldiers in a combat situation.  I feel sorry for Mr. Zimmerman and hope he can get help and have some semblance of a normal life one day.

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Sunday, November 17, 2013

Obamacare Website and Identity Theft

If things weren't bad enough, this is John McAfee's opinion of the security situation facing users of the Obamacare website.  The McAfee virus-protection programs run on millions of personal computers:

On Fox Business Network’s “Cavuto” on Wednesday, computer programmer and founder of McAfee, Inc. John McAfee said the online component of Obamacare “is a hacker’s wet dream” that will cause “the loss of income for the millions of Americans who are going to lose their identities.”

For starters, McAfee said the way it is set up makes it possible for fake websites be set up to fool people to think they’re signing up for Obamacare.

“It’s seriously bad,” McAfee said. “Somebody made a grave error, not in designing the program but in simply implementing the web aspect of it. I mean, for example, anybody can put up a web page and claim to be a broker for this system. There is no central place where I can go and say, ‘OK, here are all the legitimate brokers, the examiners for all of the states and pick and choose one.’”

“Instead, any hacker can put a website up, make it look extremely competitive, and because of the nature of the system — and this is health care, after all — they can ask you the most intimate questions, and you’re freely going to answer them,” he continued. “What’s my Social Security number? My birth date? What are my health issues?

According to McAfee, there’s not a quick fix — and as long as it set up this way, it could be a playground for computer hackers.

“Here’s the problem: It’s not something software can solve,” McAfee continued. “I mean, what idiot put this system out there and did not create a central depository? There should be one website, run by the government, you go to that website and then you can click on all of the agencies. This is insane. So, I will predict that the loss of income for the millions of Americans who are going to lose their identities — I mean, you can imagine some retired lady in Utah, who has $75,000 dollars in the bank, saving her whole life, having it wiped out in one day because she signed up for Obamacare. And believe me, this is going to happen millions of times. This is a hacker’s wet dream. I mean I cannot believe that they did this.”

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Saturday, November 16, 2013

Why No Inflation? Part II

In Part I, the fact that the US Federal Reserve was keeping interest rates at almost 0, which exported our inflation to other countries, and that this could not continue forever, was discussed.  Below are two points of view on what will happen when the Fed is forced to reverse course:

By Kenn Jacobine  

"Back in June, as the official unemployment rate continued to fall, Federal Reserve Chairman Ben Bernanke indicated to the public that the Fed might begin to scale back its easy-money policies sometime before the end of this year.  As the Fed met this past week, many economists and analysts expected it to announce that the central bank would indeed begin tapering its current $85-billion-per-month bond-buying scheme known as Quantitative Easing 3.

But these are also the same pundits who have been claiming for five years that the U.S. economy is in a state of recovery. They are either disingenuous or totally clueless

I had no doubt that Bernanke would not begin tapering QE3 now. In fact, QE3 may never end.

In the first place, for five years now the Fed has injected over $2 trillion into the economy through QE 1, 2, and 3, and the real unemployment rate is still north of 
14%. More Americans are on food stamps than ever before. Middle class incomes are down and poverty is up. At this point, Bernanke’s largess is a life-support system for the economy. It will not cure the patient, just simply prolong the agony until the day of reckoning.

And the day of reckoning will come when long-term 
interest rates climb to the level where the current QE-induced housing and stock-market bubbles pop. The carnage from that, however, will be minor compared to the destruction left behind from the mother of all bubbles — Treasury Bills. The point is, in June when Bernanke simply mentioned the Fed might begin tapering, the stock market tanked 550 points and T-bill and mortgage interest rates instantly rose. Imagine the impact if the Fed really pulled the plug on the economy’s life support.  Additionally, because T-bill and mortgage interest rates have been rising that could mean Bernanke has lost control of long-term rates. The only tool he has for combating rising rates is more stimulus. Thus, instead of taper talk, analysts should be asking when the Fed will increase its amount of bond purchases per month.

Lastly, perhaps the biggest reason why the Fed may never be able to cut back on its monetary stimulus, is that to do so would accelerate the 
insolvency of Uncle Sam.  Realize that even though the current national debt is almost three times what it was in 1996, interest payments on the debt after adjusting for inflation are lower today than they were then. The difference is the rate of interest the federal government is charged. Bernanke has no choice but to keep printing. If he tapers, rates will go up, interest payments will become a bigger share of federal expenditures, and he will have to print even more to keep things going.  The hyperinflation that will result will finish off what’s left of the U.S. economy.

Many will say the above is nothing more than doom and gloom. But the above scenario is real. Bernanke has steered Fed policy down a dangerous path in 2008. Instead of allowing the market to liquidate the mal-investments from the preceding boom, he chose the politically correct path by attempting to re-inflate the bubble. Instead of letting those that were reckless and brought on the crisis lose their shirts, Bernanke launched a massive program of bailouts and bond purchases. He has printed himself (and us) into a corner and thrown away the key. To keep things from crashing he has no choice but to continue printing. Even then, the end will ultimately come and the devastation will be so much worse than 2008’s crisis."

And another, less-alarming view:

   Wall St Journal

On May 22, Mr. Bernanke broached the possibility that the Fed might begin tapering QE3. Although carefully hedged by suggesting that the Fed would wait to taper until the unemployment rate fell to 6.5%, his comments unsettled world financial markets. Over the next four days, long-term interest rates rose sharply, and foreign and domestic stock markets fell.
Subsequently, a chastened Fed chairman, and several presidents of Federal Reserve district banks—including William Dudley of the Federal Reserve Bank of New York—suggested that tapering would be deferred. On Sept. 18, the Federal Open Market Committee chose not to taper. After these disclaimers, the bond market partially recovered. However, long-term interest rates (now near 2.5% on 10-year Treasurys) remain higher than before the tapering speech—with volatility also substantially higher.
Yet there is no doubt that the U.S. needs to break out of its near-zero interest-rate trap in order to avoid perpetual stagnation, where real returns on new investments are also driven toward zero. But is there an efficient way out of the trap that the Fed has set for itself? I believe there is.
The Fed can start by raising short-term interest rates, currently near zero, while leaving QE3 on hold. Because the overnight policy rate is unambiguously under the Fed's control, the Fed should announce a schedule of slowly phasing in higher short-term rates that would end after two years, when rates reach some modest upper bound of, say, 2%.
The current constraint on the supply of loan finance, which arises when nominal rates are near zero, would then be relaxed. Commercial banks with huge excess reserves would start lending them out for a modest return. With short rates even moderately greater than zero, the near-moribund interbank market would spring back to life as a needed backstop for commercial banks' extending their credit lines to nonfinancial enterprises large and small. Money-market mutual funds would no longer fear "breaking the buck"—seeing their net asset value drop below $1 per share—when they accept short-term deposits.
After a year or so, when the new program achieves credibility, but before reaching the 2% end point, the Fed could return to the problem of tapering QE3. We now know that merely stopping the central bank's bond-buying program—as initially suggested in Mr. Bernanke's May 22 tapering speech—with future short-term interest rates being uncertain, leaves bondholders with no idea of what the equilibrium long-term bond rate will be. (I assume that simply leaving short rates at zero is not credible, if only because it does so much damage to the financial system.)
Ideally, however, if the new program of phasing in higher short rates capped at 2% becomes credible, this would anchor long-term interest-rate expectations. When QE3 is phased out altogether so that the government no longer tries to influence long rates directly, an efficient free market would then set long rates at the average of expected future short rates—plus a liquidity premium. The liquidity premium could vary a bit with the ebb and flow of nonmonetary forces, but the mean long-term interest rate would be effectively pinned down once the market knew what the central bank plans to do. It would be a good demonstration of the importance of transparency in a free market.
The major objection to this kind of policy change is that the "recovery" from the subprime mortgage crisis and economic slump of 2008 is so weak that the economy can't withstand any increase in interest rates. This general concern with economic weakness is what pushed the Federal Reserve into its near-zero interest-rate trap to begin with—followed by the Bank of England, the European Central Bank and the Bank of Japan.  All four central banks have fallen into similar traps and their economies remain sluggish.
What is at fault here is conventional macroeconomic theory. First, although reducing high interest rates to more moderate levels is stimulating for aggregate demand, going from moderate rates to near-zero rates has proved far less effective. Second, fine-tuning monetary policy to target a nonmonetary variable, such as the level of unemployment, has become an ill-advised fetish. What Milton Friedman taught us in his famous 1967 address to the American Economic Association, "The Role of Monetary Policy," is that central banks cannot (and should not) persistently target a nonmonetary objective—such as the level of unemployment, which is determined by too many other factors.
The most straightforward approach now is for the leading central banks—the Federal Reserve (perhaps with Ms. Yellen at the helm), the Bank of England, the Bank of Japan and the European Central Bank—to admit that they were wrong in driving interest rates too low in the pursuit of a nonmonetary objective such as the unemployment level.
They could then begin slowly increasing short-term interest rates in a coordinated way to some common, modest target level, such as the 2% suggested here. Coordination is crucial to minimize disruptions in exchange rates. Then our economic gang of four should, in a measured and transparent manner, phase out quantitative easing so that long-term interest rates once again can be determined by markets.
Mr. McKinnon, a professor at Stanford University and a senior fellow at the Stanford Institute for Policy Research, is the author of "The Unloved Dollar Standard: From Bretton Woods to the Rise of China (Oxford University Press, 2013)


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