Paul Krugman, "The Austerity Agenda": Should My Spending Be Your Debt?

Writing from across the Atlantic, Paul Krugman in his latest New York Times op-ed, "The Austerity Agenda" (http://www.nytimes.com/2012/06/01/opinion/krugman-the-austerity-agenda.html), again argues the case for spending. Krugman observes that when questioning austerity in London, he inevitably is met with the same answer he hears in New York:

"The bad metaphor — which you’ve surely heard many times — equates the debt problems of a national economy with the debt problems of an individual family. A family that has run up too much debt, the story goes, must tighten its belt. So if Britain, as a whole, has run up too much debt — which it has, although it’s mostly private rather than public debt — shouldn’t it do the same? What’s wrong with this comparison?

The answer is that an economy is not like an indebted family. Our debt is mostly money we owe to each other; even more important, our income mostly comes from selling things to each other. Your spending is my income, and my spending is your income."

But shouldn't Krugman be asking if your spending should be my debt, and if my spending should be your debt?

When government spends, it indeed becomes our debt. And when government spends at an unsustainable level, its citizens are inevitably crushed by the repayment burden.

Moreover, when individuals or non-governmental agencies spend or gamble wildly, this does not and should not become the government's debt. However, this is exactly what has happened in the instances of the big banks, which teetered on the brink of failure just a few years ago, and in the case of Solyndra.

Instead of spending at an unsustainable level, i.e. printing money that must ultimately lose its value, might it not be a better idea to first put an end to a meaningless war in Afghanistan, which is bleeding the economies of both the US and UK white? In the case of the US, I'm confident that better use can be made of the $8 billion being burned every month in the wilds of central Asia. Peculiar how this issue is not being debated by Obama and Romney.

Maureen Dowd, "Andromeda Is Coming!": Depends Where You Live

Will the end of the earth come in 2012? Well for certain uber-liberal New York Times columnists, e.g., Paul Krugman and Gail Collins, their worlds might end if Romney is elected in 2012; however, for most of us, the sky is not about to fall over the next seven months. However, "most of us" does not include "all of us."

In her latest New York Times opinion piece, "Andromeda Is Coming!" (http://www.nytimes.com/2012/05/30/opinion/dowd-andromeda-is-coming.html), Maureen Dowd seeks to distract us with rumors concerning the impending destruction of the world as we know it sometime later this year. Dowd tells us that she consulted with David Morrison, the senior scientist at NASA’s Ames Research Center, who debunked the Mayan calendar/Armagedon/Nostradamus theories floating around cyber space.

Nice piece of fluff, Maureen.

Actually, if I'm not mistaken, I've been hearing about this for a while from my youngest son, who occasionally watches the History Channel and spends too much time surfing the Internet. Also, a friend from Moldova also asked my opinion, and I was shamefacedly forced to acknowledge my ignorance regarding this topic. Given that I live a mere half hour's drive from the real Armageddon, the ancient city of Megiddo, from whose name Armagedon derives, perhaps I should be better informed.

But whereas I don't see the world plunging into blackness anytime soon, war clouds do loom on the horizon.

Remember how Obama, who, seeking to warn Iran to curtail its nuclear development program, declared, "as president of the United States, I don't bluff" (see: http://www.theatlantic.com/international/archive/2012/03/obama-to-iran-and-israel-as-president-of-the-united-states-i-dont-bluff/253875/)? Well, the Iranians have decided that Obama is indeed bluffing. Proceeding hell-bent with their plans to construct multiple bombs by enriching uranium beyond 20% and increasing the number of centrifuges used to refine uranium at their underground Fordow facility, Iran continues to "negotiate" with the West. Meanwhile, the P5+1, headed by Catherine Ashton, the EU's first High Representative of the Union for Foreign Affairs and Security Policy and a nincompoop with no competence in international affairs (see: http://jgcaesarea.blogspot.com/2009/12/catherine-ashton-hideous-baroness-of.html), continues to extend these idle talks.

Yes, unless Obama gets tough, war in the Middle East is coming. In a Jerusalem Post article entitled "'Nuclear negotiations with Iran are not working'" (http://www.jpost.com/DiplomacyAndPolitics/Article.aspx?id=271748), written by Herb Keinon, we are told:

"The current round of negotiations between the world powers and Iran is 'not working,' a senior Israeli official said Monday, adding that after two meetings there is 'not an iota of evidence indicating the Iranians are in any way serious about curbing their nuclear program.'

. . . .

According to the official, the Iranians have succeeded in changing the world’s demands. 'In the previous rounds of talks, when Iran was only enriching uranium up to three percent, the world’s demand was for a full halt to enrichment. Now that they are enriching up to 20%, there are those in the world saying they are able to accept a certain amount of enrichment,' he said."

Who is that "senior Israeli official"? In my humble opinion, almost certainly Israeli Prime Minister Netanyahu, who has not forgotten the declaration of Iran's Supreme Leader Khamenei that "Israel is a "cancerous tumor that should be cut and will be cut" (see: http://www.telegraph.co.uk/news/worldnews/middleeast/iran/9059179/Iran-We-will-help-cut-out-the-cancer-of-Israel.html). Netanyahu will soon need to decide whether to take matters into his own hands and destroy Iran's nuclear production capabilities.

Is Netanyahu capable of doing this? You bet! Netanyahu is a student of Menachem Begin, who destroyed Iraq's Osirak nuclear reactor in 1981. Repercussions? Absolutely. Iran will seek to retaliate with ballistic missiles and demand that Hezbollah's leader in Lebanon, Nasrallah, unleash its arsenal of 50,000 rockets and missiles on Israeli cities.

Elsewhere in the Middle East, Syrian President Assad, the darling of Jimmy Carter, Nancy Pelosi and John Kerry, continues to murder thousands of his countrymen (see: http://www.jpost.com/VideoArticles/Video/Article.aspx?id=271554), and the world does . . . nothing.

Andromeda is coming? I suppose it depends where you live.

David Brooks, "The Role of Uncle Sam": Pleasuring a Ghost

Personally, I'm not concerned about displeasing the ghost of Alexander Hamilton. Rather, I believe the US has reached a series of hurdles without the leadership, or potential leadership, to take it over or around these barriers.

In his latest New York Times op-ed, "The Role of Uncle Sam" (http://www.nytimes.com/2012/05/29/opinion/brooks-the-role-of-uncle-sam.html), David Brooks observes that a bloated American federal government has abandoned its pursuit of fostering innovation in favor pandering to voters’ transient desires. Brooks concludes:

"We’re not going back to the 19th-century governing philosophy of Hamilton, Clay and Lincoln. But that tradition offers guidance. The question is not whether government is inherently good or evil, but what government does.

Does government encourage long-term innovation or leave behind long-term debt for short-term expenditure? Does government nurture an enterprising citizenry, or a secure but less energetic one?

If the U.S. doesn’t modernize its governing institutions, the nation will stagnate. The ghost of Hamilton will be displeased."

Here Brooks and I don't see eye to eye.

First, there can be no ignoring the fact that unemployment has exceeded 8 percent for a record 39 months. Americans are in pain, and many need short-term assistance to bide them over these hard times.

However, questions then arise what caused these hard times, how long are these hard times are apt to persist, and what can lift America out of the muck of stagnation.

Notwithstanding the passage of another Memorial Day, largely absent from the debate between the Obama and Romney camps is an examination of America's ongoing ground presence in Afghanistan, which was foolishly escalated by Obama and which is bleeding the American economy white for no logical reason.

In addition, although America was promised "Change" by Obama in 2008, American banks are still engaged in reckless trading activity, as evidenced by the most recent JPMorgan Chase fiasco. Quite apart from the issue of whether US taxpayers should be expected to bail out banks for their excesses, the more fundamental question arises why banks, with their bailout money, were not forced to go back to the "boring" business of lending money to creditworthy individuals and corporations, thus jumpstarting the economy. It's time to reenact Glass-Steagall.

Worse still, innovation was devastated by the elimination by the SEC of the Uptick Rule.

The Uptick Rule went into effect in 1938 in response to market abuses that threatened the health of the US economy, and prohibited short sales of securities except on an "uptick". As summarized by the SEC:

"Rule 10a-1(a)(1) provided that, subject to certain exceptions, a listed security may be sold short (A) at a price above the price at which the immediately preceding sale was effected (plus tick), or (B) at the last sale price if it is higher than the last different price (zero-plus tick). Short sales were not permitted on minus ticks or zero-minus ticks, subject to narrow exceptions."

The Uptick Rule was cancelled in 2007, thereby enabling hedge funds to short shares, i.e. sell shares they did not own, in almost unlimited, immediate quantities, and permitting them to benefit from resultant investor panic in almost any given traded company.

Example: Micro-cap company "X" has designed and patented a revolutionary widget. Recently, the achievements of "X" have made their way into the news, and its shares have risen. Farmer Joe, who attends night school and reads the financial news, decides to buy 1,000 shares of "X". However, unbeknownst to Farmer Joe, Slick Eddy at Hedge Fund "Z", who couldn't care less about the merits of company "X"'s widgets, has also noticed the rise in the share price of "X". With almost unlimited resources behind him, Eddy borrows "X" shares from various financial institutions and begins to sell vast quantities into the market, causing a precipitous decline in the market price of "X". Eddy then blocks any rally in the share price and immediately sells shares at the bid after any significant purchase. Worried by the huge downswing in the price of "X" accompanied by unusually high volume, and also concerned that at the end of each trading day "X" always goes down (Eddy always sells into the market in the last seconds of trading), Farmer Joe dumps his shares at an enormous loss ("Someone must know that something's wrong at 'X'"). Having succeeded in panicking Farmer Joe and other small investors in "X", Eddy buys back the shares at a significantly lower average price than that at which he sold them, resulting in enormous profits for Hedge Fund "Z". Eddy's bosses note his "fine" work and reward him with bonuses as the shares of "X" tumble.

Of course, there are those who will say that ultimately the stock market is "efficient", and the price of "X" will recover to an appropriate level. However, in the process we have witnessed the flow of wealth from Farmer Joe and other small investors to Hedge Fund "Z" and Slick Eddy.

Also, consider the damage to company "X", which, owing to doubt raised by the run on its shares, is suddenly unable to raise additional funds to finance production of a new line of widgets, declares bankruptcy and fires its staff.

It is widely thought that the elimination of the Uptick Rule significantly contributed to the 2008 financial crisis from which America has yet to recover. Why has the Uptick Rule not been reinstated? Obviously, there are powerful lobbyists from the financial industry opposed to its reenactment, which would kill this cash cow.

Yes, American government is bloated and needs an overhaul. Yes, government should be seeking to spur innovation. But more important, "Change" begins by ending meaningless foreign involvements and reining in the banks and hedge funds.

Paul Krugman, "Big Fiscal Phonies": Narrow-Minded Politicized Diatribe

Paul Krugman's latest New York Times op-ed, "Big Fiscal Phonies" (http://www.nytimes.com/2012/05/28/opinion/krugman-fiscal-phonies.html), leaves me confused: If Republicans are all about "reverse Robin Hood policies," and if Republican Congressman Paul Ryan's budget proposals "are mainly about cutting taxes for the rich while slashing aid to the poor and unlucky," and if there are more middle class and poor people than rich people, how do Republicans stand a snowball's chance in hell of being elected? Beats me!

More specifically, Krugman uses this highly politicized op-ed to scold New Jersey Governor Chris Christie for an ill-tempered attack upon David Rosen, New Jersey's Legislative Budget and Finance Officer, who declared that the state faces a $1.3 billion budget shortfall. Krugman tells us how Christie labeled Rosen “the Dr. Kevorkian of the numbers,” but fails to observe what was also said by the governor:

"'This year, when [the Democrats] don’t want to cut your taxes under any circumstances, they have their handmaiden walk over across the street in front of the Assembly Budget Committee today and say...’I was wrong. I was $1.6 billion wrong for this year, but trust me for next year. You’re another $660 million short for next year.’ Why would anybody with a functioning brain believe this guy?'"

Less than civil language on the part of Christie? Sure, but who will be correct at yearend? It remains to be seen.

Krugman concludes his opinion piece by launching yet another blistering attack on Republicans:

"For the modern American right doesn’t care about deficits, and never did. All that talk about debt was just an excuse for attacking Medicare, Medicaid, Social Security and food stamps. And as for Mr. Christie, well, he’s just another fiscal phony, distinguished only by his fondness for invective."

Yeah, yeah, yeah. It's all about stealing from the poor, and has nothing whatsoever to do with balancing budgets. Democrats good, Republicans bad.

But let's have a look at an ugly reality. State governments can tax the hell out of the wealthy, but guess what will happen: Those well-to-do individuals will ultimately pack their bags and leave for some other location where the tax rates are lower. Many of you who live in California have seen this happen, as your more affluent friends and neighbors have moved to Arizona. The effect on the economy? Property values and property tax revenue fall, and those of means, who have departed the state, are no longer purchasing from local business people and merchants.

Like it or not, the states must compete to attract the wealthy. Paul Krugman pretends not to understand this. Apparently, however, there are sufficient numbers of people from New Jersey's middle class who are capable of fathoming this dilemma and made Christie governor.

Thomas Friedman, "Obama Should Seize the High Ground": More Advice from He-Who-Knows-Best

Thank goodness, Thomas Friedman always has a simple remedy for all that pains us, including the economy, the Middle East, and Democratic campaign strategy!

In his latest New York Times op-ed entitled "Obama Should Seize the High Ground" (http://www.nytimes.com/2012/05/27/opinion/sunday/friedman-president-obama-should-seize-the-high-ground.html), Tom ponders how Obama "would do if he ran for re-election on all the things he’s accomplished but rarely speaks about." Among the achievements cited by Friedman:

• Obamacare
• Significantly increased mileage for vehicle fleets by 2025
• Obama's "rescue" of the economy

My goodness, why didn't Axelrod & Co., supreme masters of vapid political packaging, think of this? Maybe because the constitutionality of Obamacare is facing a serious challenge, its crushing costs were significantly misrepresented by the Obama administration, and it is extremely unpopular. In fact, according to an April 11, 2012 ABC News/Washington Post poll, Obamacare has never been more unpopular: 53% of Americans oppose the law, while only 39% support it, and two-thirds of Americans say the Supreme Court should overturn the entire law or at least the part that requires most individuals to to obtain insurance coverage (see: http://www.langerresearch.com/uploads/1136a4HealthCare.pdf).

Obama has significantly increased demands for fleet mileage? Great, but I wonder if I will be still alive in 2025 to see it, or whether the automobile industry, incapable of meeting this objective, will lobby for leniency as the deadline, more than a decade away, approaches. Personally, I would have been more pleased if Obama had approved the Keystone XL pipeline, which would have instantly provided jobs and offered relief from dependency upon Middle East oil during our lifetimes.

Obama has "rescued" the economy? I would remind Friedman of Obama's August 2011 declaration that his re-election will hinge on the state of the economy (see: http://www.cbsnews.com/2100-3445_162-20095106.html):

"'It frustrates people, understandably, when you've got an unemployment rate that is still too high, an economy that's not growing fast enough. And for me to argue, 'Look, we've actually made the right decisions, things would have been much worse has we not made those decisions,' that's not that satisfying if you don't have a job right now,' the president said. 'And I understand that, and I expect to be judged a year from now on whether or not things have continued to get better.'"

However, as recently observed by Peter Wehner of Commentary (see: http://www.commentarymagazine.com/2012/05/04/very-ugly-jobs-report-obama-economy/), unemployment has exceeded 8 percent for a record 39 months, the labor force participation rate (64.3 percent) is at its lowest level in more than 30 years, and the employment-population ratio (58.4 percent) is even lower.

Criticizing Obama for not demanding more stimulus paired with some version of the Simpson-Bowles deficit plan, Friedman concludes by observing:

"In sum, Obama’s campaign right now feels as though it were made in a test tube by political consultants. It’s not the Obama we admire. Rather than pounding the country with 'I have a plan' — a rebuilding stimulus plus Simpson-Bowles — which would be an Obama-like message of hope, leadership and unity that would put him on higher ground that Romney can’t reach because of the radical G.O.P. base, Obama is selling poll-tested wedge issues. I don’t think it’s a winner for him or America."

Well, Obama doesn't have a plan. In fact, he doesn't even have a clue, and there is a reason Axelrod is now "selling poll-tested wedge issues."

But as always, thanks for the advice, Tom. Where would we ever be without it?

Joe Nocera, "Facebook’s Brilliant Disaster": Good Investors Are Patient, but Patient for What?

I agree that to be a good investor, one must be patient; however, there must also be medium and long-term goals.

In his latest New York Times op-ed entitled "Facebook’s Brilliant Disaster" (http://www.nytimes.com/2012/05/26/opinion/nocera-facebooks-brilliant-disaster.html), Joe Nocera observes that Facebook’s stock is now more than 17 percent below its $38 offering price. Nocera concludes:

"I could easily make a bullish case for Facebook — with its 900 million users, and its wise-beyond-his-years chief executive. I could just as easily make a bearish case: Maybe Facebook will never figure out mobile. Maybe its moment will pass before it ever becomes the kind of technology juggernaut that Microsoft once was, or Google is. But being either bullish or bearish requires making a judgment that is years away from being revealed. For bullish investors, it means holding the stock patiently, waiting for the judgment to pay off. That’s what good investors do.

Instead, virtually everyone who bought Facebook on that first day was making a one-day, get-rich-quick calculation. It didn’t work out. Too bad."

Sorry, but I'm confused. Now that Facebook's coffers are flooded with cash, what is the value proposition? Will Facebook now be better able to engage in data mining and improve targeted advertising among the hundreds of millions who have created Facebook pages?

First, I must admit to my prejudice: Although I have a Facebook page, I barely visit it and have only a handful of Facebook "friends." Perhaps this also reflects the fact that in my other, "real" life, I have only a handful of close friends, whom I trust and with whom I share intimacies. I have no interest in sharing what I do - which many would find boring, e.g., growing brocolli - with the rest of the world.

Sure, two of my three children are active Facebook users, but I wonder when the next fad will come along, and whether Facebook will lose its fizzle.

I believe that Facebook caters to narcissism, which is epidemic in today's world, but I question whether Facebook will be able to continue to corner this capricious market.

I agree with Nocera: Good investors hold their shares patiently, but in today's world there is no patience. Moreover, in the case of Facebook, toward what end should investors be holding their shares patiently? Until the last teenager in Mongolia has created a Facebook page? And what then? What abiding benefit will Facebook bring to the world?

Literally, I don't buy it.

Paul Krugman, "Egos and Immorality": Hands Off Obama

In yet another highly politicized New York Times op-ed, "Egos and Immorality" (http://www.nytimes.com/2012/05/25/opinion/krugman-egos-and-immorality.html), Paul Krugman excoriates bankers, while taking care not to bruise the delicate feelings of President Obama. Krugman begins:

"In the wake of a devastating financial crisis, President Obama has enacted some modest and obviously needed regulation; he has proposed closing a few outrageous tax loopholes; and he has suggested that Mitt Romney’s history of buying and selling companies, often firing workers and gutting their pensions along the way, doesn’t make him the right man to run America’s economy."

Krugman concludes in his penultimate paragraph:

"Think about where we are right now, in the fifth year of a slump brought on by irresponsible bankers. The bankers themselves have been bailed out, but the rest of the nation continues to suffer terribly, with long-term unemployment still at levels not seen since the Great Depression, with a whole cohort of young Americans graduating into an abysmal job market."

But Krugman could have also ended by observing that we're in the fourth year of a presidency which didn't bring those irresponsible bankers to bay, and whose economic policies have proven ineffectual in reducing unemployment.

Krugman might also have observed the contributions of those nasty financiers to Obama's 2008 campaign.

And perhaps Krugman should also have reminded us of Obama's August 2011 declaration that his re-election will hinge on the state of the economy (see: http://www.cbsnews.com/2100-3445_162-20095106.html):

"'It frustrates people, understandably, when you've got an unemployment rate that is still too high, an economy that's not growing fast enough. And for me to argue, 'Look, we've actually made the right decisions, things would have been much worse has we not made those decisions,' that's not that satisfying if you don't have a job right now,' the president said. 'And I understand that, and I expect to be judged a year from now on whether or not things have continued to get better.'"

Well, things have not continued to get better, and now it's indeed time for "Change."

David Brooks, "The Service Patch": Heroism and Schmuckdom

In his latest New York Times op-ed, "The Service Patch" (http://www.nytimes.com/2012/05/25/opinion/brooks-the-service-patch.html), David Brooks offers the following advice to young people about to enter the job market:

"In whatever field you go into, you will face greed, frustration and failure. You may find your life challenged by depression, alcoholism, infidelity, your own stupidity and self-indulgence. So how should you structure your soul to prepare for this? Simply working at Amnesty International instead of McKinsey is not necessarily going to help you with these primal character tests.

. . . .

It’s worth noting that you can devote your life to community service and be a total schmuck. You can spend your life on Wall Street and be a hero. Understanding heroism and schmuckdom requires fewer Excel spreadsheets, more Dostoyevsky and the Book of Job."

But does it all boil down to heroism and schmuckdom? I have considered myself very fortunate to have been able to wear many different hats over the course of several decades, with jobs in agriculture, publishing, finance, the military, law and law enforcement. Today, I even enjoy taking an occasional day off to participate as an actor in commercials.

And my identity, success and failure have also been shaped by my roles as a husband and father.

Although bruised and perhaps even bearing the scars of trauma, I am no hero, but I also wish to believe that I have never descended into schmuckdom.

My satisfaction this morning as I pen this blog entry: listening, with my somewhat impaired hearing, to the birds chatter outside my window, and examining the overnight growth of my tomatoes and brocolli.

Offer advice to young people? My advice is largely limited to my children: No matter what you do, respect the feelings of others and learn to love yourself, but never to excess.

Oh, and one other piece of advice to my children: Work at Amnesty International, which condemned the US for its "unlawful" commando raid that killed Osama bin Laden (see: http://www.telegraph.co.uk/news/worldnews/al-qaeda/9286544/Amnesty-International-Osama-bin-Laden-raid-was-illegal.html)? Those who join this organization are headed for hell, not schmuckdom.

Facebook IPO: I Don't Get It and Probably Never Will

Let me begin by embarrassing myself by acknowledging that I enjoy watching "Southpark," and I vaguely remember an episode concerning a child who had no Facebook friends. Well, in terms of my number of Facebook friends, I am not too distant from that pariah child. Although I opened a Facebook Page when a business associate asked me to "befriend" him, I spend little time with it (my children check my page and accept friends for me), but I don't regard it as a vehicle for building my relationships with the outside world. In fact, I perceive Facebook as more of a vehicle for tickling one's inside world.

Friday's Facebook IPO? I don't get it, and probably never will. This is the sort of thing that today raises $16 billion overnight with a target valuation for the company of over $100 billion? What are the prospects for growth? From where will its next product/service come when this social network ultimately looses its sizzle?

Facebook shares finally closed higher yesterday at $32 per share after its shares were sold for $38 in the IPO, and a class-action suit has been filed against the company, alleging "false and misleading" language in its S-1 filings regarding revenue growth (see: http://www.washingtonpost.com/business/technology/facebook-shares-close-higher-after-three-day-slide-as-social-network-banks-face-lawsuits/2012/05/23/gJQA3bAOlU_story.html?hpid=z3).

Is there merit to this class action? I don't know and have no intention of studying the matter. An aging dinosaur with little interest in social networking, I am sorely challenged to comprehend this company's value proposition.

Thomas Friedman, "Power With Purpose": First, Let's Get the Facts Right

Would-be Middle East expert, Thomas Friedman, has written another New York Times op-ed, "Power With Purpose" (http://www.nytimes.com/2012/05/23/opinion/friedman-power-with-purpose.html), explaining what Israeli Prime Minister Netanyahu should do, with his expanded parliamentary coalition, to achieve peace. Friedman begins:

"Political power is always a double-edged sword. The more of it you amass, the more people expect you to use it to do big things, and, when you don’t, the more ineffectual you look."

This axiom would appear more applicable to Obama, particularly during his first two years as President, when the Democrats controlled the House and Senate, but instead, Friedman uses it to make demands of Netanyahu. More specifically, Friedman would have Netanyahu act in accordance with a notion termed "constructive unilateralism," which was advanced by Ami Ayalon and two colleagues in a guest April 24 opinion piece published by the Times (see: http://www.nytimes.com/2012/04/24/opinion/peace-without-partners.html). But let's start by looking at where Friedman is obfuscating the facts:

• First and foremost, Friedman nowhere mentions that Netanyahu has long since declared that he is in favor of a two-state solution (see: http://www.voanews.com/content/a-13-2009-07-05-voa12-68819962/413401.html).

• Notably, also no mention by Friedman of Israeli Prime Minister Sharon's unilateral withdrawal from Gaza in 2005, which brought a hail storm of rockets and mortar shells upon southern Israel.

• Not a word from Friedman about Israeli Prime Minister Olmert's proposal to evacuate the West Bank and share Jerusalem with the Palestinians, a generous peace offer which was refused by Palestinian President Abbas.

• Friedman tells us: "Israel’s security wall keeps Palestinian suicide bombers out." In fact, Israel's 470-mile security barrier around the West Bank is more than 90% fence, and less than 10% wall. The walls exist where there is a need to prevent sniping at Israelis. The reference to the barrier as a "wall" is usually made by those who are implacably hostile to Israel and intent upon fostering the image of apartheid.

• Regarding "constructive unilateralism," the Ayalon opinion piece also makes provision for settlers to relocate "to adjacent settlement blocs that would likely become part of Israel in any land-swap agreement." Friedman ignores this point.

About the "constructive unilateralism" proposal, Friedman writes:

"Such an initiative would radically change Israel’s image in the world, dramatically increase Palestinian incentives to negotiate and create a pathway for securing Israel as a Jewish democracy. And Bibi could initiate it tomorrow."

Would such an initiative "radically change Israel’s image in the world"? Neither Sharon's unilateral withdrawal from Gaza nor Olmert's peace proposal changed Israel's image in the world. In recent related news, the International Olympic Committee is refusing to observe a moment of silence during this summer's London games to honor the memory of the Israeli athletes who were murdered during the 1972 Olympics in Munich (see: http://www.nytimes.com/2012/05/18/sports/olympics/ioc-rejects-israeli-request-for-moment-of-silence-at-london-games.html). In short, no matter what Israel does, it will not gain the world's affection.

Constructive unilaterilism will "dramatically increase Palestinian incentives to negotiate"? Rubbish. If the Palestinians could not bring themselves to accept the Olmert peace proposal, there is no reason to believe that Ayalon's proposal, which does not go nearly as far as that of Olmert, will suddenly facilitate Palestinian acceptance of Israel as a Jewish state.

Do I oppose Ayalon's constructive unilateralism? Given that I believe in a two-state solution, I believe that it makes much sense, but as noted in the opinion piece written by Ayalon, Petruschka and Sher, "We recognize that a comprehensive peace agreement is unattainable right now."

There are no simple, overnight solutions. Moreover, even if Israel undertakes constructive unilateralism, the world will not forgo its addiction to anti-Semitism.

David Brooks, "How Change Happens": Obama No Longer Wants to Be Judged on Whether Things Have Gotten Better

As we near November, President Obama has conveniently forgotten his August 2011 declaration that his re-election will hinge on the state of the economy (see: http://www.cbsnews.com/2100-3445_162-20095106.html):

"'It frustrates people, understandably, when you've got an unemployment rate that is still too high, an economy that's not growing fast enough. And for me to argue, 'Look, we've actually made the right decisions, things would have been much worse has we not made those decisions,' that's not that satisfying if you don't have a job right now,' the president said. 'And I understand that, and I expect to be judged a year from now on whether or not things have continued to get better.'"

Well, the economy has not improved, Obama no longer wishes to be judged on his economic record, and he is now seeking to shift the blame by depicting Romney as a vulture capitalist. Moreover, in order to deflect criticism of his record, Obama is busy engaging in bald-faced lies concerning Romney's past at Bain Capital. I recommend reading Kimberley A. Strassel's Wall Street Journal article, "Vampire Capitalism? Please" (http://online.wsj.com/article/potomac_watch.html), and Alana Goodman's Commentary item, "Obama Launches New Bain Attack Ad" (http://www.commentarymagazine.com/2012/05/21/obama-launches-new-bain-attack-ad/#more-794318).

Today, in his latest New York Times op-ed entitled "How Change Happens" (http://www.nytimes.com/2012/05/22/opinion/brooks-how-change-happens.html), David Brooks scrutinizes Obama's campaign ads focusing upon Romney's Bain career, and also draws attention to Strassel's Wall Street Journal article. Claiming that private equity firms such as Bain have "forced a renaissance that revived American capitalism," Brooks writes:

"Forty years ago, corporate America was bloated, sluggish and losing ground to competitors in Japan and beyond. But then something astonishing happened. Financiers, private equity firms and bare-knuckled corporate executives initiated a series of reforms and transformations.

The process was brutal and involved streamlining and layoffs. But, at the end of it, American businesses emerged leaner, quicker and more efficient.

. . . .

Private equity firms like Bain acquire bad companies and often replace management, compel executives to own more stock in their own company and reform company operations.

Most of the time they succeed. Research from around the world clearly confirms that companies that have been acquired by private equity firms are more productive than comparable firms. "

Asking whether this transformation of the private sector can be extended to the public sector, Brooks concludes:

"In a country that desperately wants change, I have no idea why a party would not compete to be the party of change and transformation. For a candidate like Obama, who successfully ran an unconventional campaign that embodied and promised change, I have no idea why he would want to run a campaign this time that regurgitates the exact same ads and repeats the exact same arguments as so many Democratic campaigns from the ancient past."

Brooks really has "no idea" why the Democrats can no longer "compete to be the party of change and transformation"? Simple answer: Obama has failed to reform the banking and financial industry, as evidenced by JPMorgan Chase's recent multi-billion dollar trading loss, and has reneged on his 2008 campaign pledge to turn lobbyists away from the White House (see:
http://www.washingtonpost.com/politics/white-house-visitor-logs-show-lobbying-going-strong/2012/05/20/gIQA2ok4dU_story.html?hpid=z2).

There has been no change, there is not going to be any change in the foreseeable future, and given the dismal state of the economy, it is remarkable that Obama remains neck and neck with Romney in the polls (see: http://articles.latimes.com/2012/may/07/news/la-pn-poll-obama-romney-neck-and-neck-six-months-ahead-of-election-20120507).

Paul Krugman, "Dimon’s Déjà Vu Debacle": Banks Are Not Casinos!

What's going on here? Yesterday, I was forced to acknowledge that I agreed with a Thomas Friedman op-ed (see: http://jgcaesarea.blogspot.com/2012/05/thomas-friedman-do-you-want-good-news.html), and today, it appears that Paul Krugman and I see startingly eye-to-eye on bank regulation. Moreover, Krugman also today alludes to "It's a Wonderful Life," which featured prominently in my rebuttal to Maureen Dowd's May 15 New York Times op-ed, "Dancing With Derivatives" (see: http://jgcaesarea.blogspot.com/2012/05/maureen-dowd-dancing-with-derivatives.html). In my response to Dowd, I wrote:

"Although the salaries paid to JPMorgan Chase's Dimon and other heads of financial institutions are, in my opinion, obscene, their remuneration does not jeopardize America's banking system; speculative trading by commercial banks, on the other hand, has the potential to bring down the system.

. . . .

Well, I'm also a movie fan, but my thoughts are directed to 'It's a Wonderful Life' with James Stewart. Remember the plot? When cash from 'Building and Loan,' which provides home loans for the working poor, is waylaid by Henry F. Potter (Lionel Barrymore), a slumlord and majority shareholder, George Bailey (Stewart), who manages this financial institution, contemplates suicide. The townspeople, however, rush to rescue 'Building and Loan' with donations, and Bailey is made to realize by an Angel Second Class how much of a difference he has made in their lives.

Regrettably, we live in an era in which there are no George Baileys, and there are certainly no angels, second class or otherwise. Worse still, banking has lost its halo, and the focus of the industry is no longer on providing loans to worthy customers and providing a secure place where individual and corporate clients can deposit their funds, but rather on ratcheting up profits and growing the balance sheet.

. . . .

Reinstate Glass-Steagall (the Volcker Rule is not enough) and demand the reenactment of the Uptick Rule? Absolutely, but I doubt whether Obama or Romney, who have both received significant campaign funding from the employees of large financial institutions, have the gumption to turn on their benefactors."

This morning, in Krugman's latest New York Times op-ed, "Dimon’s Déjà Vu Debacle" (http://www.nytimes.com/2012/05/21/opinion/dimons-deja-vu-debacle.html), Paul also alludes to "It's a Wonderful Life" (Does he read this blog?), when critiquing JPMorgan's recent multi-billion dollar trading loss:

"Well, suppose that someone — say, Jimmy Stewart in the movie 'It’s a Wonderful Life' — runs a bank that takes in deposits and invests the money in various ways. And suppose that one of those investments is a risky bet on some complex financial instrument, with Mr. Potter, the evil plutocrat, on the other side.

If Jimmy Stewart’s bet pays off, we’re in Romneyworld: he’s made money, Mr. Potter has lost money, and that’s that. But suppose Jimmy Stewart loses his bet. If the bet was big enough, he no longer has enough assets to pay off his depositors. His bank collapses, probably in a chaotic bank run that takes down the whole town’s economy as collateral damage. Mr. Potter makes money on the deal, but so what?

The point is that it’s not O.K. for banks to take the kinds of risks that are acceptable for individuals, because when banks take on too much risk they put the whole economy in jeopardy — unless they can count on being bailed out."

Do we sound similar? Wait, there's more. Krugman concludes:

"And that’s why we need a return to much stronger financial regulation, stronger even than the Dodd-Frank regulations passed back in 2010.

Will we get that kind of regulation? Not if Mr. Romney wins, obviously; he wants to repeal Dodd-Frank, and in general has made it clear that he would do everything in his power to set us up for another financial crisis. Even if President Obama is re-elected, getting the kind of regulation we need will be an uphill struggle. But as Mr. Dimon’s debacle has just demonstrated, that struggle remains as necessary as ever."

Holy kaboly, Paul and I see alike! Banks are not casinos!

However, there is a small difference of opinion: If President Obama is re-elected, getting the kind of regulation we need" will only be "an uphill struggle"? No mention by Krugman of today's Washington Post article, "White House visitor logs provide window into lobbying industry" by T.W. Farnam(http://www.washingtonpost.com/politics/white-house-visitor-logs-show-lobbying-going-strong/2012/05/20/gIQA2ok4dU_story.html?hpid=z2), which observes that there is a steady stream of lobbyists entering the White House, notwithstanding Obama's pledge to curtail this abuse.

If re-elected, will Obama continue to cater to special interests, including the banks and financial industry? You bet!

Thomas Friedman, "Do You Want the Good News First?": Empowerment of the Individual

Writing from the West Coast, Thomas Friedman describes, in his latest New York Times op-ed "Do You Want the Good News First?" (http://www.nytimes.com/2012/05/20/opinion/sunday/friedman-do-you-want-the-good-news-first.html), his exhilaration upon encountering the innovation emerging from hi-tech firms in Seattle and Silicon Valley. Friedman declares:

"Never have individuals been more empowered, and we’re still just at the start of this trend."

I agree with Friedman. By switching on my laptop, I am instantly able to tap into a horde of information and share my ideas with persons across the world upon whom I have never set eyes.

Also, I recall a scene from my childhood: At a time when color television was in its infancy and the AT&T pavilion of the 1964 New York World's Fair highlighted the time savings of push-button phones, I remember how my grandfather expressed his regret that he would not be around to see America's technological advances in another 50 years. I am certain he would not be disappointed.

Friedman also cautions:

"What we must preserve is that magic combination of cutting-edge higher education, government-funded research and immigration of high-I.Q. risk-takers. They are, in combination, America’s golden goose, laying all these eggs in Seattle and Silicon Valley.

. . . .

This is not a call to ignore the hard budget choices we have to make. It’s a call to make sure that we give education, immigration and research their proper place in the discussion."

Again, remarkably we are in agreement. Will wonders never cease!

New York Times: "U.S. Sees Hopeful Signs" Prior to P5+1 Meeting; Mehr News: Iran "Will Not Relinquish One Iota of Its Nuclear Rights"

Iran and the P5+1 (five permanent members of the UN Security Council and Germany) will meet again in Baghdad on May 23 to discuss Iran's nuclear development program, and in its current lead online story, The New York Times observes that Obama administration officials are voicing optimism that Tehran is prepared to back down. In an article entitled "Heading Into Talks With Iran, U.S. Sees Hopeful Signs" (http://www.nytimes.com/2012/05/19/world/middleeast/officials-see-promising-signs-for-iran-nuclear-talks.html?_r=1&hp), Mark Landler of the Times writes:

"With signs that Iran is under more pressure than it has been in years to make a deal, senior Obama administration officials said the United States and five other major powers were prepared to offer a package of inducements to obtain a verifiable agreement to suspend its efforts to enrich uranium closer to weapons grade.

. . . .

The oil sanctions, which the Iranians are seeking desperately to avoid, are one of several factors that American officials believe may make Tehran more amenable to exploring a diplomatic solution. In addition, the recent decline in oil prices has magnified the pain of the existing sanctions on Iran; a new government coalition in Israel has strengthened the hand of its hawkish leader, Prime Minister Benjamin Netanyahu; and Americans believe that recent blustery statements from Iranian officials are laying the groundwork for concessions by Tehran."

Iran preparing to buckle? Wishful thinking. An article published yesterday by Iran's Mehr News Agency reports that Tehran is not prepared to compromise:

"The secretary of Iran’s Supreme National Security Council has said that the country will not back down an inch in the face of Western pressure to relinquish its rights to advance its peaceful nuclear program.

SNSC Secretary Saeed Jalili made the remarks during a speech at a conference on 'resistance economy', which was held in Tehran on Thursday.

The resistance of our nation has helped us effectively defend the rights of the Iranian people in the talks. In addition, the people are standing firm on their rights and will not relinquish an iota of them,' said Jalili, who is Iran’s chief nuclear negotiator.

. . . .

Jalili added, 'After the Istanbul talks, we heard some (negative) comments from the Westerners. I warn them to be careful when making comments so that they will not make miscalculations.'

He also said, 'Some are saying that the time for negotiations is running out. However, I tell them, 'What is running out is the policy of exerting pressure.''

Commenting on the sanctions imposed on Iran over the allegation that it is seeking to produce nuclear weapons, the Iranian official stated, 'Those who assume that they can exert pressure on the people or hinder Iran’s progress through sanctions must be aware that they are playing on our field.'"

How, most kindly, to describe the optimism of the Obama administration? "Delusional" comes to mind.

As stated by Israeli Prime Minister Netanyahu yesterday (see: http://www.jpost.com/IranianThreat/News/Article.aspx?id=270511):

"I have seen no evidence whatsoever that Iran is serous about stopping its nuclear weapons program.

. . . .

It looks as though they see these talks as another opportunity to deceive and delay, just like North Korean did for years. They may try to go from meeting to meeting with empty promises. They may agree to something in principle but not implement it. They may even agree to implement something that does not materially derail their nuclear weapons program."

. . . .

Iran is good at playing this chess game. They know that sometimes you have to sacrifice a pawn to save the king."

Is only Bibi able to see through Tehran's charade? Or is it simply in everyone else's interest, particularly with elections drawing near in the US, to continue playing the game?

Paul Krugman, "Apocalypse Fairly Soon": Is the Euro a Failed Experiment?

In his latest New York Times op-ed entitled "Apocalypse Fairly Soon" (http://www.nytimes.com/2012/05/18/opinion/krugman-apocalypse-fairly-soon.html), Paul Krugman warns of imminent failure of the euro. Observing that Greek voters are dismayed by 22% unemployment and that Greece can’t adopt the austerity policies demanded by Germany and the European Central Bank, Krugman writes:

"Right now, Greece is experiencing what’s being called a 'bank jog' — a somewhat slow-motion bank run, as more and more depositors pull out their cash in anticipation of a possible Greek exit from the euro. Europe’s central bank is, in effect, financing this bank run by lending Greece the necessary euros; if and (probably) when the central bank decides it can lend no more, Greece will be forced to abandon the euro and issue its own currency again."

Greece will be forced to issue its own currency again? I suppose this is a euphemism for printing drachmas, which doesn't solve the underlying problems of debt and unemployment. Sure, there might be some very short-term stimulus, but Greece will be unable to borrow at reasonable rates, and this is no more than a formula for hyperinflation, continuing high rates of unemployment, and chaos.

Warning that if Greece abandons the euro, additional problems could erupt in Spain and Italy, Krugman demands that the European Central Bank cease obsessing over price stability and even "encourage several years of 3 percent or 4 percent inflation." Krugman concludes:

"Failure of the euro would amount to a huge defeat for the broader European project, the attempt to bring peace, prosperity and democracy to a continent with a terrible history. It would also have much the same effect that the failure of austerity is having in Greece, discrediting the political mainstream and empowering extremists."

Politically incorrect queries: Is there a continent, other than Antarctica, without a "terrible history"? Was it ever realistic to meld the economies of Germany with those of Greece, Spain and Portugal? Is Europe as a whole in unremitting decline, owing to a host of factors, including falling birth rates and the absorption of uneducated immigrant populations, which are contributing significantly to unemployment?

Spend to pull Europe out of its economic crisis? I don't think it will help.

2012 Country Ratings Poll: Israel Again Lambasted

The "2012 Country Ratings Poll," conducted by GlobeScan/PIPA among 24,090 people around the world (see: http://www.globescan.com/84-press-releases-2012/186-views-of-europe-slide-sharply-in-global-poll-while-views-of-china-improve.html), has again determined that Israel is among the most unpopular countries in the world:

"The most negatively rated countries were, as in previous years, Iran (55% negative), Pakistan (51% negative), and Israel and North Korea (both 50% negative)."

What a surprise! Given Israel's support of gay rights, enablement of women in politics and the workplace, democracy allowing Israeli Arabs to vociferously participate in the Israel's parliament and judiciary, threats to exterminate Israel from Iran, Hezbollah and Hamas, and the ongoing refusal of Fatah to recognize Israel's right to exist as a Jewish state, why should we expect anything different from a world which shut its doors to Jewish refugees from Nazi Germany?

The one bright spot: the US, naturally. Some 50% of Americans viewed Israel positively, against 35% who viewed Israel negatively.

Of interest, the poll also found:

"Positive views of China rose from 46 to 50 per cent on average. They jumped particularly sharply in the UK (up 19 points), as well as in Australia, Canada, and Germany (all up 18 points)."

Chinese slave labor used to manufacture iPhones? Who cares. Brutal oppression by China of dissidents? Who cares.

Some things never change, among them hatred of Jews . . . oops, the respondents to this poll meant to say Israel.

Maureen Dowd, "Dancing With Derivatives": Again Out of Her Depth

In her latest New York Times op-ed entitled "Dancing With Derivatives" (http://www.nytimes.com/2012/05/16/opinion/dowd-dancing-with-derivatives.html), Maureen Dowd demonstrates that she is out of her depth: Instead of focusing on dangerous trading activity undertaken by commercial banks, as suggested by the catchy title of her opinion piece, she focuses on grossly inflated wages paid to banking executives. Although the salaries paid to JPMorgan Chase's Dimon and other heads of financial institutions are, in my opinion, obscene, their remuneration does not jeopardize America's banking system; speculative trading by commercial banks, on the other hand, has the potential to bring down the system.

Expressing outrage at bloated executive pay deals and bonuses, Dowd writes:

"It is redolent of the classic movie 'The Solid Gold Cadillac,' with Judy Holliday as a scrappy small stockholder, challenging the board of directors about fat salaries and dubious policies."

Well, I'm also a movie fan, but my thoughts are directed to "It's a Wonderful Life" with James Stewart. Remember the plot? When cash from "Building and Loan," which provides home loans for the working poor, is waylaid by Henry F. Potter (Lionel Barrymore), a slumlord and majority shareholder, George Bailey (Stewart), who manages this financial institution, contemplates suicide. The townspeople, however, rush to rescue "Building and Loan" with donations, and Bailey is made to realize by an Angel Second Class how much of a difference he has made in their lives.

Regrettably, we live in an era in which there are no George Baileys, and there are certainly no angels, second class or otherwise. Worse still, banking has lost its halo, and the focus of the industry is no longer on providing loans to worthy customers and providing a secure place where individual and corporate clients can deposit their funds, but rather on ratcheting up profits and growing the balance sheet.

If only banks were to be ranked each year by leading financial journals by security and service, rather than by profits and total assets.

Reinstate Glass-Steagall (the Volcker Rule is not enough) and demand the reenactment of the Uptick Rule? Absolutely, but I doubt whether Obama or Romney, who have both received significant campaign funding from the employees of large financial institutions, have the gumption to turn on their benefactors (re contributions to Obama's 2008 campaign from Goldman Sachs, JPMorgan Chase, Citigroup, UBS and Morgan Stanley employees, see: http://www.opensecrets.org/pres08/contrib.php?cid=N00009638).

David Brooks, "The ESPN Man": What David Doesn't Tell Us

Today, in a New York Times op-ed entitled "The ESPN Man" (http://www.nytimes.com/2012/05/15/opinion/brooks-the-espn-man.html), David Brooks ponders the question why Obama might still win in 2012 despite his unpopularity on the issues. Brooks begins by examining the substantive hurdles facing Obama:

• the economy is rotten and going nowhere;
• Obama has governed from the left, while the country has shifted right;
• Obamacare is extremely unpopular;
• Obama has lost support from independents, Catholics, Hispanics and young people.

Notwithstanding the above, Brooks claims that Obama has remained competitive for the following reasons:

• his popularity with single women and the "unchurched;"
• "a kind of ESPN masculinity: postfeminist in his values, but also thoroughly traditional in style."

Brooks concludes:

"I’d say that Obama is a slight underdog this year: the scuffling economy will grind away at voters. But his leadership style is keeping him afloat. He has defined a version of manliness that is postboomer in policy but preboomer in manners and reticence."

"Leadership style"? Yeah, right. The Procrastinator-in-Chief has pioneered a leadership style characterized by canned blather read from teleprompters and an inability to make the hard decisions, unless his hand is forced, as happened when Joe Biden compelled Obama to take a stand on gay marriage.

Sorry, David, but "leadership" is not keeping Obama afloat.

So, if Obama's "popularity" does not rest on leadership, why is he still in the race? Read Brooks's op-ed a second time. What is missing? Answer: Brooks only mentions Romney's lack of appeal once, toward the end of his opinion piece, parenthetically, and in passing:

"This year, [Obama] has adopted a Clinton 1996 type of campaign — strong partisan attacks combined with an emphasis on small and medium-sized policies — like the Buffett Rule and student loans — intended to display his common man values. As a result, Obama has come off aggressive, but also, (unlike Romney) classless and in touch with middle-
income groups."

In fact, 2012 proffers the American electorate with two extremely unappealing candidates, and voters, with clothespins affixed to their noses, will ultimately be forced to decide which of these two men smells less fetid.

Can Romney win? Yes, if he were to challenge the banks to go back to the boring business of banking, i.e. support the reinstatement of Glass-Steagall, and if he were to demand the reenactment of the Uptick Rule.

But we all know that isn't going to happen . . .

Paul Krugman, "Why We Regulate": More to the Point, Why Didn't Obama Regulate?

Those who read this blog know that I often ask what is absent from the opinion piece of a well-known pundit writing for a leading newspaper. Today is no exception. Read Paul Krugman's latest New York Times op-ed, "Why We Regulate" (http://www.nytimes.com/2012/05/14/opinion/krugman-why-we-regulate.html), in which he chastizes JPMorgan Chase for their most recent $2 billion trading loss, and tell me what is missing.

Answer: Not a single mention of Obama.

More than three years into his presidency, the messiah who, promising change, was swept into office following a financial crisis that almost sent the West into an economic stone age, apparently has no responsibility for JPMorgan Chase's most recent devastating loss.

Of course, Krugman is quick to blame Romney:

"It’s clear, then, that we need to restore the sorts of safeguards that gave us a couple of generations without major banking panics. It’s clear, that is, to everyone except bankers and the politicians they bankroll — for now that they have been bailed out, the bankers would of course like to go back to business as usual. Did I mention that Wall Street is giving vast sums to Mitt Romney, who has promised to repeal recent financial reforms?"

Krugman does not mention that among the top contributors to Obama's 2008 campaign were employees from Goldman Sachs, JPMorgan Chase, Citigroup, UBS and Morgan Stanley (see: http://www.opensecrets.org/pres08/contrib.php?cid=N00009638).

Krugman also pointedly refuses to acknowledge that the so-called banking "reforms" enacted since Obama was inaugurated have not prevented yet another financial disaster.

Will salvation come from the Volcker Rule? I doubt it. Both Bank of America and JPMorgan Chase have indicated that the Volcker Rule will not affect their trading revenues (see: http://www.thestreet.com/story/10860335/1/bofa-ceo-says-volcker-rule-wont-be-too-tough.html?cm_ven=GOOGLEFI).

Instead of the Volcker Rule, why not reenact the Glass–Steagall Act of 1933 and take trading activity away from the banks altogether? Yeah, I know, the banks claim that this would make them "uncompetitive" with foreign banks, but I believe JPMorgan Chase's most recent loss evidences the need for strong medicine.

Moreover, reenactment of the Uptick Rule, which went into effect in 1938, would provide an immediate boost to the American economy, while admittedly harming the bottom line of predatory hedge funds engaged in sowing panic among shareholders of innovative small-cap companies (see: http://jgcaesarea.blogspot.com/2011/08/paul-krugman-hijacked-crisis-paul-heres.html).

Those of us who have worked in the financial industry are familiar with persistent concerns among bankers regarding where their institutions stand relative to other organizations in terms of balance sheet and profitability.

Wouldn't it be a pleasure if, instead, banks were to vie to be the safest financial institution for their customers, and the financial journals were to list organizations in terms of safety?

Dream on, Jeffrey.

Maureen Dowd, "Seeking Original Bliss": Heterosexuality, Homosexuality and Narcissism

In her New York Times op-ed entitled "Seeking Original Bliss" (http://www.nytimes.com/2012/05/13/opinion/sunday/dowd-seeking-original-bliss.html), Maureen Dowd quotes diary entries of a young teacher who had a romance with Obama, which will appear in a new biography of the president by David Maraniss, entitled "Barack Obama: The Story." When the assistant teacher told Obama she loved him, he replied, "Thank you," and Dowd would have us believe that Obama is a "cool customer," given to calculation, and teasingly refers to him as "President Spock."

A cool, calculating customer? Sorry, Maureen, but Obama is a dyed-in-the-wool narcissist, concerned only with his own personal gratification, and don't expect principle to get in the way of his drive to pleasure himself.

After touching upon the affair with the assistant teacher, Dowd proceeds to describe the annoyance of Obama with his vice president, who, in a move uncoordinated with the West Wing, came out in favor of gay marriage, forcing Obama to release a similar declaration, but not in accordance with the timetable set for the president's announcement. Dowd declares, "His embrace of gay marriage was not a profile in courage," and further observes:

"In the end, Obama had to rip off the Band-Aid and take a stand, because if his campaign depends on painting Romney as a bundle of ambiguous beliefs, the first black president can’t be ambiguous himself on a civil rights issue."

However, Obama has not recognized gay marriage as a civil right. In a 2004 Illinois Senate debate, Obama stated that gay marriage is not a civil right (see: http://www.therightscoop.com/obama-in-2004-on-gay-marriage-marriage-is-not-a-civil-right/), and Obama has not abandoned this position, given that he continues to believes that the states should decide this issue on their own.

Courageous? No. Calculating? Yes. All intended to win re-election.

Dowd concludes:

"As Obama is reminded of what it feels like to generate excitement, what it feels like to lift the spirits of a demoralized country by using the bully pulpit, maybe he can start occasionally blurting out something he feels strongly about."

Sorry, Maureen, but Obama feels most strongly about . . . himself.

Charles Blow, "Mean Boys;" Gail Collins, "The Anatomy of a Jokester": Beating Up on Romney

This has not been a happy week for the Obama administration.

Although America's president was feted at a Hollywood fund raiser at the home of George Clooney and was surrounded by a bevy of adoring millionaire movie stars, elsewhere, in the real world, things were not going according to plan.

In Afghanistan, local commanders are refusing to chase after insurgents (see: http://www.washingtonpost.com/world/asia_pacific/afghan-commanders-show-new-defiance-in-dealings-with-americans/2012/05/11/gIQAMdNTHU_story.html?hpid=z1), calling into question whether Afghan troops will actively engage the Taliban following an intended evacuation of US troops in 2014.

At home, JPMorgan Chase has just announced a $2 billion loss from trading activity, which highlights the fact that the Obama administration has done virtually nothing to curb abuses which threaten the financial welfare of the nation.

Still closer to home, Bill Clinton, according to a soon to be published book entitled "The Amateur," by Edward Klein, a former editor of Newsweek and The New York Times Magazine, is said to have
stated that Obama "doesn’t know how to be president" and is "incompetent" (see: http://www.nypost.com/p/news/national/bill_blockbuster_an_amateur_XJHYdaV5LT1vpr5I39IKrN). I doubt that Bill will be campaigning with Barack in the fall.

Worse yet, in a move uncoordinated with the West Wing, Vice President Biden came out in favor of gay marriage, forcing Obama to release a similar declaration, but not in accordance with the timetable set for the president's announcement (see: http://www.commentarymagazine.com/2012/05/11/end-no-drama-obama-biden-gay-marriage/#more-793548). The ombudsman of The Washington Post (see: http://www.washingtonpost.com/blogs/omblog/post/mitt-romney-bullying-story-holds-up-to-scrutiny/2012/05/11/gIQALLVnIU_blog.html?hpid=z2), believes that WAPO then took advantage of Obama's declaration to publish an article alleging bullying by Romney in high school of an unpopular classmate, who later turned out to be gay. According to WAPO's ombudsman:

"Do I think The Post took advantage of the timing? Yes.

. . . .

If I were an editor I might have sped [the article] up a little, too, to take advantage of the national discussion on gay marriage. Does that mean Post editors are timing stories with the White House? I hope not, and I doubt that is the case."

The ombudsman "hopes not"? That's very reassuring.

Meanwhile, over at "The New York Times," both Charles Blow ("Mean Boys," http://www.nytimes.com/2012/05/12/opinion/blow-mean-boys.html) and Gail Collins ("The Anatomy of a Jokester," http://www.nytimes.com/2012/05/12/opinion/collins-the-anatomy-of-a-jokester.html) have today written op-eds denouncing Romney's response to the incident, which occurred more than 40 years ago.

I'm younger than Romney, but not by much. I remember my public high school as a place where there was violence and racial intolerance, but issues involving homosexuality, prior to the evolution of gay rights, did not preoccupy teen consciousness in my town. My guess is that if Mitt Romney, a rich kid not good at sports, had attended my high school, he would have been on the receiving end of the bullying.

I'm not keen on Mitt Romney, but I would observe that back 40 years ago, high school could be a brutal place for anyone who dared not to conform. I think it's wonderful that the issue of bullying is finally receiving the attention it deserves, but frankly the alleged incident involving the vicious forced haircut is timid compared with incidents that I recall from my school days, which sent children to the hospital.

Obama? Let's indeed ignore his past use of drugs and his eating of dogs. Rather, let's focus on his much more recent associations with Jeremiah Wright, Bill Ayers and Rashid Khalidi. I would also draw special attention to Obama's ties to former White House Communications Director Anita ("Mao is one of my favorite political philosophers") Dunn; former Green Czar Van Jones; and current Special Assistant to the President Samantha Power, who advocated sending US troops to protect Palestinians from Israel.

The alleged bullying incident involving Romney more than 40 years ago as reported by The Washington Post was painful to read. Quite frankly, however, I am far more disturbed by the ongoing war in Afghanistan, America's economic malaise that shows no sign of abating, and the president's association with radical leftists, who could well shape a possible second term in office for Obama once he is freed from the constraints of facing reelection.

Paul Krugman, "Easy Useless Economics": In the Twilight Zone

In case you haven't noticed, there is an ongoing war of words between New York Times op-ed writers David Brooks and Paul Krugman. On Tuesday, in "The Structural Revolution" (http://www.nytimes.com/2012/05/08/opinion/brooks-the-structural-revolution.html), Brooks took a swipe at Krugman, and began by citing a passage from an article by Raghuram Rajan of the University of Chicago in Foreign Affairs:

“Since the growth before the crisis was distorted in fundamental ways, it is hard to imagine that governments could restore demand quickly — or that doing so would be enough to get the global economy back on track. The status quo ante is not a good place to return to because bloated finance, residential construction and government sectors need to shrink, and workers need to move to more productive work.”

Brooks went on to say:

"Many people on the left [e.g., Krugman] are having a one-sided debate about how to deal with a cyclical downturn. The main argument you hear from these cyclicalists is that the economy is operating well below capacity. To get it moving at full speed, the government should borrow and spend more. The federal government is now running deficits of about $1 trillion a year. Some of these cyclicalists believe the deficit should be about $1.4 trillion."

Brooks next claimed that these leftists are not addressing the "core issues," which are "structural," including globalization, technological change, and a decline in human capital.

Today, in a New York Times op-ed entitled "Easy Useless Economics" (http://www.nytimes.com/2012/05/11/opinion/krugman-easy-useless-economics.html), Krugman fires back at Brooks. Pointing to the Rajan article, Krugman asserts:

"Actually, government employment per capita has been more or less flat for decades, but never mind — the main point is that contrary to what such stories suggest, job losses since the crisis began haven’t mainly been in industries that arguably got too big in the bubble years. Instead, the economy has bled jobs across the board, in just about every sector and every occupation, just as it did in the 1930s.

. . . .

All of this strongly suggests that we’re suffering not from the teething pains of some kind of structural transition that must gradually run its course but rather from an overall lack of sufficient demand — the kind of lack that could and should be cured quickly with government programs designed to boost spending."

In support of his persistent spending thesis, Krugman observes how the military buildup of World War II provided fiscal stimulus on a scale commensurate with the depth of the slump induced by the Great Depression.

But as noted by FactCheck in an article published in July 2011 (http://www.factcheck.org/2011/07/fiscal-factcheck/):

"Washington's spending has recently been higher as a percentage of the nation's economic output than at any time since World War II. But by the same measure, Washington's revenues are the lowest in more than 60 years."

FactCheck proceeds to observe:

■ Federal spending ("outlays" in budget jargon) is expected to equal 24.1 percent of the nation's gross domestic product in the current fiscal year [2011], which ends Sept. 30. The figure was 25 percent in fiscal year 2009, highest since 1945.
■ On the other hand, federal revenues are expected to drop to 14.8 percent of GDP this year, lower even than the 14.9 percent attained in both 2009 and 2010. There has been only one year since World War II when revenues have been as low as in any of these years: 1950, when the figure was 14.4 percent.
■ These historically high rates of spending and low rates of taxation have combined to produce a chain of deficits that are also the highest since WWII. The deficit was 10.0 percent of GDP in fiscal 2009. It declined to 8.9 percent last year as the economy started to recover, but is projected to go up to over 9 percent this year. Each of these deficits is larger than in any year since 1945, measured as a percentage of GDP.

Immediately after World War II, American debt as a percentage of GDP crashed, yet today, even if American involvement in Afghanistan were to suddenly end, there is no relief in sight. As noted by the Congressional Budget Office (http://cbo.gov/publication/41486):

"But the budget outlook, for both the coming decade and beyond, is daunting. The retirement of the baby-boom generation portends a significant and sustained increase in the share of the population receiving benefits from Social Security, Medicare, and Medicaid. Moreover, per capita spending for health care is likely to continue rising faster than spending per person on other goods and services for many years (although the magnitude of that gap is very uncertain). Without significant changes in government policy, those factors will boost federal outlays sharply relative to GDP in coming decades under any plausible assumptions about future trends in the economy, demographics, and health care costs."

Spend wildly, as suggested by Krugman, to drag the US out of its economic morass? The reality is that the US has entered an economic twilight zone, which bears no comparison to the World War II years, and without meaningful fiscal and budgetary reform, no one knows where this will end.

New York Times Editorial, "President Obama’s Moment": Obama Still Doesn't Acknowledge Gay Marriage As a Civil Right

I am often accused of being a neocon, but I have always been pro-choice, opposed the US ground presence in Afghanistan, and supported gay marriage.

An editorial in today's New York Times entitled "President Obama’s Moment" (http://www.nytimes.com/2012/05/10/opinion/president-obamas-moment.html) states:

"It has always taken strong national leadership to expand equal rights in this country, and it has long been obvious that marriage rights are no exception. President Obama offered some of that leadership on Wednesday. 'I think same-sex couples should be able to get married,' Mr. Obama said in an interview with ABC News that the White House arranged for the purpose of giving Mr. Obama a forum to say just that.

With those 10 words, Mr. Obama finally stopped temporizing and 'evolving' his position on same-sex marriage and took the moral high ground on what may be the great civil rights struggle of our time."

But listen to Obama state explicitly in a 2004 Illinois Senate debate that gay marriage is not a civil right (see: http://www.therightscoop.com/obama-in-2004-on-gay-marriage-marriage-is-not-a-civil-right/). Has Obama now actually abandoned this position?

As further observed by the Times editorial:

"We have one major point of disagreement with Mr. Obama: his support for the concept of states deciding this issue on their own. That position effectively restricts the right to marry to the 20 states that have not adopted the kind of constitutional prohibitions North Carolina voters approved on Tuesday."

Hold on! If, as claimed by the Times, "It has always taken strong national leadership to expand equal rights in this country," how is it that a purportedly strong national leader continues to leave this issue to be decided by the states? Obviously, Obama still does not regard gay marriage as a civil right, and while taking a stand calculated to assuage his supporters, he has left himself much wriggle room.

Ah, yes, his "evolution" on the issue continues.

Thomas Friedman, "Jobs@Arabia.com": Jobs for Which Jordanians?

Now in Amman, Jordan, an itinerant Thomas Friedman gushes over a hi-tech incubator in his latest New York Times op-ed entitled "Jobs@Arabia.com" (http://www.nytimes.com/2012/05/09/opinion/friedman-jobsatarabiadotcom.html). Describing the incubator as a place "where Lawrence of Arabia meets Mark Zuckerberg," Tom writes:

"There is no tradition of venture capital in the Arab world, so Oasis500 is a pioneer. It invites any Jordanian or Arab to come with a start-up plan. Any plan that is accepted receives $15,000 in seed capital. Then the starter-uppers have to go through Oasis500 boot camp, an intense five-week course in how to build a company. The survivors are given office space at The Business Park for three to six months. For those who manage to grow after their first stage of incubation, there is more angel funding, legal advice, mentoring and networking opportunities with local business leaders."

Explaining that this business ventures amounts to another Arab Spring "alongside the drama in the streets of Cairo and Damascus,"
Friedman concludes by observing that he is "rooting for this Arab Spring as much as the other one."

Glad to know that Tom is an Arab Spring "fan."

But what isn't Tom bothering to tell us from Amman? More than 70% of Jordan's population of some six million consists of Palestinians; however, Palestinians occupy only six seats of Jordan's 120-member Parliament, and "not a single Palestinian is currently serving as a mayor of any of Jordan’s cities" (see: http://www.jpost.com/Opinion/Op-EdContributors/Article.aspx?id=257541). Discrimination against Palestinians in the job place is also common.

But why should Tom focus on the persecution of Palestinians in Jordan, when it is much more pleasant to regale us with tales about a hi-tech incubator?

David Brooks, "The Structural Revolution": The War of Words Between Brooks and Krugman Continues

The war of words between David Brooks and Paul Krugman on the op-ed page of The New York Times continues.

Yesterday, in "Those Revolting Europeans" (http://www.nytimes.com/2012/05/07/opinion/krugman-those-revolting-europeans.html), Krugman gloated over the victory of François Hollande over Nicolas Sarkozy in France's presidential election, and hailed the end of austerity in that country. However, Krugman failed to mention that Hollande's election was attributable to France's Muslims, who account for approximately 9% of France's population and among whom unemployment is estimated as high as 60%, relative to unemployment of just under 10% for all of France. Sorry, but the end of austerity is not going to make a dent in the unemployment figure for this sector of France's populace.

Today, in "The Structural Revolution" (http://www.nytimes.com/2012/05/08/opinion/brooks-the-structural-revolution.html), Brooks begins by taking a swipe at Krugman:

"Many people on the left are having a one-sided debate about how to deal with a cyclical downturn. The main argument you hear from these cyclicalists is that the economy is operating well below capacity. To get it moving at full speed, the government should borrow and spend more. The federal government is now running deficits of about $1 trillion a year. Some of these cyclicalists believe the deficit should be about $1.4 trillion.

The cyclicalists rail against what they see as American austerity-mongers who resist new borrowing. They really rail against the European ones. They see François Hollande’s victory in France as a sign that, in Europe at least, the pendulum might finally be swinging from austerity to growth."

Brooks claims that these leftists are not addressing the "core issues," which are "structural":

"The recession grew out of and exposed long-term flaws in the economy. Fixing these structural problems should be the order of the day, not papering over them with more debt.

There are several overlapping structural problems. First, there are those surrounding globalization and technological change. Hyperefficient globalized companies need fewer workers. As a result, unemployment rises, superstar salaries surge while lower-skilled wages stagnate, the middle gets hollowed out and inequality grows.

Then there are the structural issues surrounding the decline in human capital. The United States, once the world’s educational leader, is falling back in the pack. Unemployment is high, but companies still have trouble finding skilled workers."

I agree with Brooks that hyperefficient globalized companies require fewer workers. However, I do not believe that a lack of skilled laborers is keeping unemployment high.

I am privileged to work with a very small number of companies in the biotech and medical device fields, and every day I witness how a few geniuses, aided by their computers, are able to do what entire armies of R&D staffers are unable to accomplish.

We live in an era of ever greater efficiency. We also live at a time when there is a shrinking space for mediocracy in the work force, particularly among the most highly skilled laborers. Neither of these trends show signs of abating.

Higher levels of unemployment are not going to disappear overnight, if ever.

Solutions for dealing with this problem? Sure, as I've often said, reinstate the Uptick Rule (see: http://jgcaesarea.blogspot.com/2011/08/paul-krugman-hijacked-crisis-paul-heres.html). Incentives can also be provided to bring manufacturing jobs home to the US from slave labor camps in China, but Americans must be ready to pay more for their iPhones.

Israeli Defense Minister Ehud Barak on Iran: "The Moment of Truth is Approaching"

As the P5+1 continues to dilly dally in its nuclear armament negotiations with Tehran, under the misguided oversight of the EU’s High Nincompoop for Foreign Affairs and Security Policy, Catherine Ashton, Israeli Defense Minister Ehud Barak has informed the Israeli public that delay will not be tolerated much longer. In a must-read interview with Shlomo Cesana, published by Israel Hayom (http://www.israelhayom.com/site/newsletter_article.php?id=4199), Barak observes that Israel cannot accept a situation in which Iran is able to assemble an atomic weapon within 60 days:

"The moment of truth is approaching. We have to decide what to do about this if the sanctions and diplomacy fail.

. . . .

Some say let’s trust the world. No matter how hard it is and there is risk involved and it is difficult to predict the outcome, I say that in the end we can deal with Iran now or deal with a nuclear Iran that poses a far greater danger.

. . . .

If [Iran] obtains a nuclear weapon, it will be very hard to bring it down. Now they are trying to seek immunity for their nuclear program. If they achieve military nuclear capability, for arms, or a threshold in which they can assemble a bomb within 60 days, they will acquire another form of immunity – for the regime.

. . . .

We will be in a much better position to make decisions about conflict in a few years, when the Magic Wand, Arrow, and Iron Dome missile-defense systems are complete. The problem is that sometimes you can't determine the timing for decisions."

Will this wake the P5+1 from its torpor? I doubt it. French foreign policy is apt to grow vichy-vashy given the election of François Hollande with the support of France's significant Muslim minority. Moreover, Obama will soon be consumed with re-election, and a confrontation with Iran would only introduce unknown, unwanted variables come November.

Paul Krugman, "Those Revolting Europeans": C'est Ennuyeux

In his New York Times op-ed, "Those Revolting Europeans" (http://www.nytimes.com/2012/05/07/opinion/krugman-those-revolting-europeans.html), Paul Krugman hails the victory of François Hollande over Nicolas Sarkozy in France's presidential election. Krugman predictably writes:

"What is true is that Mr. Hollande’s victory means the end of 'Merkozy,' the Franco-German axis that has enforced the austerity regime of the past two years. This would be a 'dangerous' development if that strategy were working, or even had a reasonable chance of working. But it isn’t and doesn’t; it’s time to move on. Europe’s voters, it turns out, are wiser than the Continent’s best and brightest."

But what if spending also can't cure France's economic malaise, i.e. unemployment of some 10%, which is at a 12-year high?

Krugman doesn't mention that unemployment among Muslims in France, who account for approximately 9% of France's population, is estimated as high as 60%. Exactly what type of spending will reduce the number of unemployed French Muslims, who face job discrimination and are thought to comprise some 60% of those incarcerated in French prisons?

It's never as simple as Krugman would have us believe.

Thomas Friedman, "Lead, Follow or Get Out of the Way": What Is Tom Smoking?

Continuing his mindless meandering across what he terms "the post-Awakening Arab world," Thomas Friedman has penned from Dubai yet another feeble-minded New York Times op-ed entitled "Lead, Follow or Get Out of the Way" (http://www.nytimes.com/2012/05/06/opinion/sunday/friedman-lead-follow-or-get-out-of-the-way.html). In his latest opinion piece, Friedman decries the lack of leadership in the Muslim Middle East:

"Who will tell the people that while Islam is a great and glorious faith it is not 'the answer' for Arab development today? Math is the answer.

. . . .

Who will tell the people that, yes, the way capitalism came to the Arab world in the last 20 years was in its most crony and corrupt mutation, but that the right answer now is not to go back to Arab socialism, but better capitalism: better market-based economics, emphasizing expanded exports, but properly governed by the real rule of law and targeted safety nets.

. . . .

Who will tell the people that Arab societies have no time anymore to be consumed by these sectarian divisions, which just drive everyone into their own ghettos or out of the region altogether?"

Math is the answer? Oh really? Go find the leader who will tell this to Egypt's Muslims, of whom some 95% believe it is "good" that Islam plays a large role in politics, and of whom some 84% believe that those abandoning Islam should be executed (see: http://www.pewglobal.org/2010/12/02/muslims-around-the-world-divided-on-hamas-and-hezbollah/). In fact, there is a strong likelihood that anyone daring to say that math, and not Islam, is the answer will soon find himself or herself dangling from a noose.

Better market-based economics emphasizing exports are going to save the Muslim Middle East? And just what might those exports be in today's hi-tech world? There is already an unbridgeable scientific gap that widens by the day, which has left such countries as Egypt, with its 34% rate of illiteracy, in the dust.

Eliminate sectarian divides? Indeed, it's high time that the Middle East's 30 million Kurds, the largest ethnic group in the world without their own state, be granted independence from Turkey, Syria, Iran and Iraq. Peculiar how Friedman never seems to get around to mentioning the Kurds, who have suffered such horrific persecution at the hands of their Turkish, Arab and Persian overlords, but that would cause him to become persona non grata in many of the countries he is now visiting.

Seek leadership in the Muslim Middle East at a time when Egyptian presidential candidate Amr Moussa is telling his electorate that the Camp David Peace Accords with Israel are "dead and buried" (see: http://www.presstv.ir/detail/238970.html)? Sorry, but leadership in the Arab world died with the assassination of Anwar Sadat and the death of Jordan's King Hussein, who was the target of more than a dozen assassination attempts.

As for Friedman, he might want to check what he has been smoking of late from his Shisha (شيشة).

Gail Collins, "Obama’s Wonderful Town": Obama Not Responsible

In her latest New York Times op-ed entitled "Obama’s Wonderful Town" (http://www.nytimes.com/2012/05/05/opinion/collins-obamas-wonderful-town.html), Gail Collins wastes ink and paper on an excerpt from a biography of Obama, which includes interviews with former girlfriends. Yet another reference by Collins to the Romney "Seamus" story? Of course:

"Also eating dog meat when you are a child in Indonesia is not the same thing as driving to Canada with the family Irish setter strapped to the roof of the car when you are 36."

Or in other words, Obama bears no responsibility for eating dogs at age 10, but there can be no forgiving Romney for placing Seamus in a wind-protected crate atop his vehicle some 30 years ago. And in fact, the Washington Post (http://www.washingtonpost.com/politics/obama-campaign-puts-bo-on-the-trail/2012/04/30/gIQAgZrYsT_story.html) informs us that Obama is now prominently featuring Bo, his Portuguese water dog, in official campaign advertisements:

"President Obama has unleashed a particularly unusual fundraiser for his 2012 campaign.

One Internet ad starts with a two-toned blue background, like dozens of other pro-Obama spots. Then the furry star pops into the frame, tongue out and ready to frolic. 'Join Pet Lovers for Obama,' the ad implores.

The unlikely pitchman is Bo, the White House family pet, who may well be the first 'first dog' to emerge as a central player in a presidential reelection campaign."

Personally, I think it sad that Obama has so little else to run on, and is now relying on his pet for re-election.

But back to Collins: Even if Obama has no responsibility for eating dogs as a child in Indonesia, there was also that other government report released on Friday, showing that employers added fewer-than-expected jobs in April. As observed by Peter Wehner in Commentary (http://www.commentarymagazine.com/2012/05/04/very-ugly-jobs-report-obama-economy/#more-792893):

"It’s not simply that unemployment has been above 8 percent for a record 39 months, which is bad enough. While news stories report that 115,000 new jobs were added in April, the true picture is much worse. More than 340,000 Americans dropped out of the labor force last month. The total employment level for April fell 169,000.

. . . .

The labor force participation rate (64.3 percent) reached its lowest level in more than 30 years, while the employment-population ratio (58.4 percent) is lower still."

Obama ingesting dog meat in Indonesia as a child? Who cares? However, there can be no avoiding discussion of Obama's responsibility for the worrisome state of the US economy.

Paul Krugman, "Plutocracy, Paralysis, Perplexity": Damned Republicans!

Read Paul Krugman's anti-Republican diatribe "Plutocracy, Paralysis, Perplexity" (http://www.nytimes.com/2012/05/04/opinion/krugman-plutocracy-paralysis-perplexity.html). Now read it a second time. What critical elements are missing?

Krugman writes:

"Did the rise of the 1 percent (or, better yet, the 0.01 percent) cause the Lesser Depression we’re now living through? It probably contributed. But the more important point is that inequality is a major reason the economy is still so depressed and unemployment so high. For we have responded to crisis with a mix of paralysis and confusion — both of which have a lot to do with the distorting effects of great wealth on our society."

Okay, so here we have a rehash of Occupy Wall Street (Do you remember them?) economics: the 1 percent have cowed the 99 percent into docile submission. Moreover, Krugman goes on to say, "the takeover of half our political spectrum by the 0.01 percent [no longer the 1 percent] is, I’d argue, also responsible for the degradation of our economic discourse, which has made any sensible discussion of what we should be doing impossible." Thus, a hyper-partisan Republican Party is responsible for America's economic morass. What could be more simple?

But now back to my original homework assignment: What is missing from the Krugman equation?

Obama's name does not appear even once in Krugman's op-ed. Although elected president more than three years ago, and notwithstanding the fact that during the first two years of his tenure he controlled both the Senate and the House, he has no responsibility for US economic stagnation?

The Senate, still controlled by the Democrats, has been unable to pass a budget for three years.

Moreover, would Krugman claim that Obama was not elected with the support of Hollywood millionaires? With donations from Goldman Sachs? With the backing of billionaire mogul George Soros?

Who are the 12 wealthiest persons in Congress? The answer is provided in a table of estimated net worth prepared by USA Today (http://www.usatoday.com/news/washington/story/2011-11-15/congress-wealthy-1/51216626/1):

Rep. Congressman Darell Issa, $448,125,017
Rep. Congressman Michael McCaul, $380,411,527
Dem. Senator John Kerry, $231,722,794
Dem. Senator Mark Warner, $192,730,605
Dem. Senator Herb Kohl, $173,538,010
Dem. Congressman Jared Polis, $143,218,562
Rep. Congressman Vernon Buchanan, $136,152,641
Dem. Congresswoman Nancy Pelosi, $101,123,032
Dem. Senator Jay Rockefeller, $99,057,011
Dem. Senator Frank Lautenberg, $85,572,116
Dem. Senator Richard Blumenthal, $73,151,590
Dem. Senator Dianne Feinstein, $69,046,622

Among the wealthiest in Congress, Democrats obviously predominate, but as observed by the article in USA Today, there is a fairly even distribution of extremely affluent Democrats and Republicans: "In the House, 23 Republicans and 10 Democrats are in the 1%, while in the Senate Democrats edge out Republican one percenters 13-11." In short, there is little truth to the claim that wealth is to be found only among Republican politicians, although it could well be said that politics has become a rich woman and rich man's game.

And then there's this other "little" problem with Krugman's argument: If the Republican Party had indeed become the politican vehicle of the 1 percent or the 0.01 percent, in order to retain any semblance of power, Republicans would still require the votes of a multitude of less wealthy Americans. Presuming that Krugman remembers that the US is still a democracy, it stands to reason that Krugman must believe that those middle class Americans who vote for Republicans such as Chris Christie, Paul Ryan, Marco Rubio and Bobby Jindal are imbeciles.

I believe in the adage variously attributed to Abraham Lincoln (another damned Republican), Mark Twain and P.T. Barnum:

"You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time."

Unlike Krugman, I also believe in the common sense and rationality of the American electorate, and Krugman's effort to saddle Congress, and specifically Republicans, with Obama's failure to remedy the US economy is pure hogwash.

More to the point, by engaging in highly politicized legerdemain, Krugman is even treating his readership as half-wits.