Here's How to End the Panic
Steve Forbes
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The Bush administration must take two steps immediately to quickly halt the unending, enervating credit crisis: shore up the anemic dollar and, for the time being, suspend "marking to market" those new financial instruments, such as packages of subprime mortgages.
The weak dollar is pummeling equities, disrupting the economy, distorting global trade and giving hundreds of billions of dollars in windfall revenues--through skyrocketing commodity prices--to our adversaries such as Iran and Venezuela. Not since Jimmy Carter has the U.S. had a President so oblivious to the damage done by an increasingly feeble greenback.
The Federal Reserve can rally the markets for a day or two by finding some new mechanism through which to lend more money to banks and other financial institutions. But this is the proverbial Band-Aid for a patient who is beginning to hemorrhage.
The Administration acts as if the dollar were like the sun, its rising and falling beyond any control. Countless times experience has shown that notion to be false. The U.S. Treasury Department could buy dollars in the currency exchange markets. Our allies would gladly cooperate with such an operation; their exports are being hurt more and more. The Fed could mop up some of the excess liquidity it has created since 2004, even as it makes targeted loans to beleaguered banks and financial houses.
The other measure: The Treasury Department and the Fed should get together with the SEC, the Comptroller of the Currency and other bank regulators and announce that financial institutions for the next 12 months will no longer write down the value of exotic financial instruments (primarily packages of subprime mortgages). Instead, writedowns will occur only when there have been actual losses on those assets. If a mortgage defaults, a bank will then--and only then--recognize the loss.
It's preposterous to try to guess what these new instruments are worth in a time of panic. Such assets are being marked down to increasingly arbitrary low levels. But when a bank books such a loss, it must replenish depleted capital, even though cash flows for most financial firms are still positive. Worse, when forced by panicky regulators and lawsuit-fearing accountants to write down the value of these securities, institutions will dump assets in a market where there are temporarily few or no buyers. The result is a spiraling disaster. So let's have a time-out on markdowns until we actually have real experience in what kind of losses are actually going to occur.
These two steps would quickly end the panic. Until that happens, expect more trouble.
Iraq
The White House has announced that it will be withdrawing troops from Iraq in coming months, a consequence, it says, of the surge's success. The outgoing President, however, is making a mistake that could undermine what the new strategy has achieved--growing stability and an enormous setback to Islamic terrorism.
The withdrawals may have political appeal, but the danger is that they will put even more strain on our overstretched military in Iraq. The new strategy of cleaning out neighborhoods of insurgents and then leaving sufficient forces--ours and the increasingly better-trained Iraqis--behind to prevent the bad guys from coming back has been extraordinarily successful. But the insurgents, though badly squeezed, are still a force to be reckoned with.
Why take a chance by pulling out some of the troops? In fact, we should be increasing the size of our Army and the Marine Corps. We need more troops in Afghanistan, and we need more in Iraq to make sure the job gets done thoroughly. And who knows what new crisis in another part of the world may require U.S. forces?
One of the enduring mysteries of the Bush Administration is why after 9/11 it never truly beefed up the U.S. military, why it tried to fight the war against Islamic fanaticism on the cheap. Our troops have performed heroically, despite repeated tours of duty in Iraq and Afghanistan. Clearly many of them are paying the price of those repeated deployments in unnecessarily strained family issues. Those in the Reserves and National Guard are also paying a price in repeated absences from their civilian jobs.
The Democrats would make the Bush drawdown even more severe. Thankfully John McCain, a former career military man who currently has a son in the Marines and another attending the U.S. Naval Academy, won't make such a catastrophic mistake.
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Muslim Success Story
Kosovo, with a predominantly ethnic Albanian Muslim population, has grabbed headlines by declaring independence. Skeptics wonder if the new state can make it economically. But there's one Muslim country in the oft-tumultuous Balkans that's already doing things right: Albania. During the past two years Albania's government has enacted a number of exciting and eye-opening reforms.
On the economic front Prime Minister Sali Berisha proudly points to Albania's now having the smallest government per capita in Europe. It has enacted a 10% flat tax on both personal incomes and business profits. This rate is lower than Albania's previously low maximum rates of 23% on individual incomes and 25% on profits. Social security levies have been lowered by 31%. Tariffs with European countries have been eliminated. Government personnel has been cut by almost 30%, and the cost of procurement is down 20%. Total revenues have surged from 22% of GDP to 27%. Not surprisingly, the IMF strongly advised Albania against slashing tax rates. "So did many of our budget people," chuckled Berisha. Such advice was profitably ignored.
To make government more efficient, the prime minister initiated a program with Estonia--a pioneer in this--to bring high tech to tax collection and government contracts.
Foreign direct investment--albeit from a low base--is growing impressively, having tripled in 2006 and nearly doubling again in 2007.
Albania boasts a plethora of minerals, including chrome, nickel and iron, and has an abundance of freshwater from the surrounding mountains. The government is promoting tourism, claiming its coasts are more beautiful than those of Bulgaria and the Riviera.
Albania is vigorously pursuing membership in NATO, figuring that would give foreign investors more confidence in investing in this once isolated and poverty-stricken country. It is also strengthening ties with the EU. The government has made a successful, vigorous attack on pervasive corruption and crime, including the trafficking in women for Europe's burgeoning prostitution market. As Prime Minister Berisha pointed out, "Corruption was almost an industry." The nation's prosecutor-general was dismissed for insufficient zeal and not tackling organized crime. Berisha's government has, impressively, been going after members of the prime minister's ruling coalition.
The government has worked to make it easier to do business in Albania, instituting a "one-stop shop" for registering a business. Education is also being emphasized, particularly by the private sector.
Since the fall of communism, Albania has been a stalwart U.S. ally, even supplying troops to help us in Iraq. Its economic and anticorruption successes are models for other Muslim nations.
Spitzeresque Pitch
The Dustice department is targeting roger clemens for criminal investigation for allegedly lying before a congressional committee in February. When will this ghastly farce end? It's no coincidence that two players who could face jail time in the steroids scandal are among the game's most disliked figures. They are not being pursued because they used steroids; prosecutors hope to nail both of these men on perjury charges.
The rule of law is being distorted like a pretzel here. Other, less unpopular players either weren't questioned or were given a pass. If Congress was serious about the use of performance-enhancing drugs, it would have questioned every player, trainer, owner and top baseball union official. Baseball Commissioner Bud Selig would have been asked--under oath--what he knew and when, as well as what rumors he had heard.
Major League Baseball didn't even get around to testing players until four years ago. The steroid controversy is riddled with hypocrisy. After the disastrous 1994--95 baseball strike Major League Baseball collectively averted its eyes from the players' growing drug use because bulked-up bodies meant more home runs. Selig made no real effort to ban powerful performance enhancers, and union leaders vigorously resisted any kind of testing.
Two years ago, to mollify critics, Selig contracted former Senator George Mitchell to conduct an investigation. Mitchell is a director of the Boston Red Sox, so it came as no surprise that his report named twice as many Yankees as Red Sox players. His list of suspected players was acknowledged to be woefully incomplete. Moreover, Mitchell refused to release the supporting documents.
Selig had already sullied his own reputation. When he initially became baseball commissioner he retained his financial interest in the Milwaukee Brewers. Allegedly to enhance the team's value he had it transferred from the American League to what he felt was the more lucrative National League. That's why the National League has 16 teams and the American League 14. Not content with that bit of self-dealing, Selig then tried to force the Minnesota Twins out of business, knowing the Twins competed with the Brewers for fans in that part of the country.
The entire steroids affair is an ethical and moral disgrace. Baseball should appoint a new commissioner and the players union a new leader. Testing for banned substances--which should include blood samples, not just urine samples--should be more frequent and truly unannounced. And investigations of past usage and prosecutions connected with them should cease.
The affair is also emblematic of prosecutorial excesses, of too quickly seeking to appease an anxious, angry crowd's cry for blood when things are going wrong or people feel the world is spinning out of control. From Eliot Spitzer's grossly abusing his public powers (behavior sadly imitated by numerous other state and local officials), to the Justice Department's trying to make it impossible for accused executives to get proper defense counseling, to Congress' grandstanding with demagogic hearings to inflame and win favor with the public, the rule of law and that essential sense of proportion are being shredded.
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State Dept: Two contractors fired for accessing Obama’s passport records
Mar 20, 2008 9:08 PM by Allahpundit
97 Comments » | 1 Trackbacks
“Imprudent curiosity.”
Geraldine Ferraro: Wright a “racist bigot”
Mar 20, 2008 4:00 PM by Ed Morrissey
131 Comments » | 4 Trackbacks
Not going quietly.
Obama: My grandmother who fears black men is a “typical white person”
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Nuance.
Green shock: CFLs more dangerous than first thought
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219 Comments » | 1 Trackbacks
Seeing the light on CFLs.
Update: Audio added">Bin Laden issues new message … that doesn’t mention fifth anniversary of Iraq invasion? Update: Audio added
Mar 19, 2008 7:15 PM by Allahpundit
Update: Audio added">79 Comments » | 8 Trackbacks
What war?
ABC: Obama contradicts a year of denial
Mar 19, 2008 2:03 PM by Ed Morrissey
137 Comments » | 4 Trackbacks
Why didn’t change begin at home?
NYT: “Mr. Obama’s eloquent speech should end the debate over his ties to Mr. Wright”
Mar 18, 2008 9:35 PM by Allahpundit
242 Comments » | 8 Trackbacks
“It is hard to imagine how he could have handled it better.”
Video: Gingrich lowers the boom on Obama
Mar 18, 2008 8:40 PM by Allahpundit
141 Comments » | 6 Trackbacks
“Intellectually fundamentally dishonest.”
The Blog
Strib trolls for misery among the troops
Mar 20, 2008 9:40 PM by Ed Morrissey
31 Comments » | 0 Trackbacks
Where’s Geraldine when we need her?
Update: “How pathetic”">Awesome: Wright was an invited guest of the Clintons at the White House; Update: “How pathetic”
Mar 20, 2008 8:28 PM by Allahpundit
Update: “How pathetic”">49 Comments » | 1 Trackbacks
Racist!
The Sand Sailors
Mar 20, 2008 7:42 PM by Ed Morrissey
12 Comments » | 0 Trackbacks
The Navy lends a hand in the battles in Iraq.
New York governors can apparently make it anywhere!
Mar 20, 2008 7:00 PM by Ed Morrissey
36 Comments » | 0 Trackbacks
It’s up to you, New York.
Saudi Mideast expert: If Pope wants churches in the Kingdom, he only has to do one thing
Mar 20, 2008 6:30 PM by Allahpundit
96 Comments » | 0 Trackbacks
Compromise.
McCain spanks Soren Dayton to remain above the Wright Stuff
Mar 20, 2008 6:00 PM by Ed Morrissey
48 Comments » | 1 Trackbacks
The wheels of the bus go round and round … over Soren.
Update: “Iraq is the perfect base”">New Osama tape even more boring and predictable than the last; Update: “Iraq is the perfect base”
Mar 20, 2008 5:33 PM by Allahpundit
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Boilerplate.
Canada counterterrorism center plans found in garbage
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38 Comments » | 0 Trackbacks
Worst-laid plans.
and it’s live">Video: The patient’s been impaled by an RPG, doctor — oh, and it’s live
Mar 20, 2008 4:30 PM by Allahpundit
and it’s live">46 Comments » | 1 Trackbacks
“If this thing goes off, I just want you all to know it’s been great working with you.”
Poll: 35% having doubts about Obama over Wright
Mar 20, 2008 3:28 PM by Allahpundit
42 Comments » | 1 Trackbacks
Plus: “Sore loser” Democrats to defect to McCain?
Sadr admits failure in Iraq
Mar 20, 2008 2:50 PM by Ed Morrissey
44 Comments » | 1 Trackbacks
Not with a bang but a whimper.
prosecuted in Ohio for crossing over to affect Democratic primary?">Republicans to be prosecuted in Ohio for crossing over to affect Democratic primary?
Mar 20, 2008 1:41 PM by Allahpundit
prosecuted in Ohio for crossing over to affect Democratic primary?">113 Comments » | 2 Trackbacks
What?
The Ed Morrissey Show: John Lott, Minnesota Health Care
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Will the Court strike the DC gun ban?
Shock: Geno’s wins discrimination case, allowed to keep “speak English” sign
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Assimilationmania?
Barack Obama’s path to The Speech: Not especially courageous
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66 Comments » | 1 Trackbacks
Self-preservation: The New Politics?
Kerry: Obama’s race will help bridge the divide with the Middle East
Mar 20, 2008 11:49 AM by Allahpundit
88 Comments » | 0 Trackbacks
“It will give us an ability to talk to those countries…”
The Wright Stuff: Obama sinking in critical state polls
Mar 20, 2008 11:20 AM by Ed Morrissey
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Down 14 in Ohio against McCain, from 3 up three weeks ago.
McCain not retreating on AQI/Iran ties
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Crisis management
By Clarence Page
If political campaigns were political movies, Barack Obama's Big Speech deserves a big Oscar.
The Big Speech is a key characteristic of political movies, from "Mr. Smith Goes to Washington" to "West Wing," Slate's David Edelstein once wrote: "The candidate either bravely affirms principles over politics and is transfigured, or cravenly yields to expediency and is damned."
Mr. Obama's Big Speech about race in Philadelphia went further than that. He bravely fought to save his presidential campaign by affirming principles over expediency as an argument for improving politics. His campaign was in crisis, thanks to the polarizing rhetoric of Mr. Obama's spiritual mentor and former pastor, the Rev. Jeremiah Wright of Chicago's Trinity United Church of Christ.
Sound bites of Mr. Wright characterizing the United States as fundamentally racist and the government as corrupt and murderous were replayed endlessly on talk shows and the Internet. Obama supporters, as well as reporters and other voters, demanded answers. With the future of his campaign on the line, Mr. Obama decided to address the biggest crisis of his campaign in the same way that he launched himself onto the national political stage at the 2004 National Democratic Convention, with a Big Speech.
In the end, I think even Jimmy Stewart's Mr. Smith would have been impressed.
As a public statement about race, culture, class in America, and, quite poignantly, in the heart of its speaker, Mr. Obama's Big Speech offered a rare outpouring of brilliance, sophistication and personal frankness.
He put the Mr. Wright's hurtful comments in the context of Mr. Wright's generation and their experiences. He put himself in the context of a young community organizer, raised in a white world, who was still learning the ways of the black American community in Chicago's South Side that he was trying to organize.
"Did I ever hear him make remarks that could be considered controversial while I sat in church? Yes. Did I strongly disagree with many of his political views? Absolutely — just as I'm sure many of you have heard remarks from your pastors, priests or rabbis with which you strongly disagreed."
And yet, "I can no more disown him than I can disown the black community. I can no more disown him than I can my white grandmother — a woman who helped raise me, a woman who sacrificed again and again for me, a woman who loves me as much as she loves anything in this world, but a woman who once confessed her fear of black men who passed by her on the street, and who on more than one occasion has uttered racial or ethnic stereotypes that made me cringe."
With that, Mr. Obama moved to what I think has excited so many Americans since his Big Speech in 2004. He understands America's divide over race and class because he has struggled with it. Yet he seems to be effortlessly unburdened by it. Maybe that's what fooled Geraldine Ferraro. He made handling racism look almost easy. White America could deal with him guilt-free.
But beneath his happy face, his Ivy League education and his come-together rhetoric, Mr. Obama also has lived on the fault lines of America's divide painfully within his own family. The Rev. Wright helped him to learn how most black Americans lived, but life also seems to have given Mr. Obama enough emotional distance to know where Mr. Wright went wrong.
"The profound mistake of Rev. Wright's sermons is not that he spoke about racism in our society," Mr. Obama said. "It's that he spoke as if our society was static; as if no progress has been made; as if this country — a country that has made it possible for one of his own members to run for the highest office in the land and build a coalition of white and black, Latino and Asian, rich and poor, young and old — is still irrevocably bound to a tragic past."
But, as the Illinois senator also pointed out, the good news is that "America can change. That is true genius of this nation. What we have already achieved gives us hope — the audacity to hope — for what we can and must achieve tomorrow." With that, amid deserved applause, he moved smoothly from what divides Americans to the common concerns of jobs, schools, health care and housing that should unite us.
Will Americans come together under his leadership? The final act of this Obama drama depends on how we follow his Big Speech with our actions.
Europe.view
Not mad, not bad, just sad
The Macedonia name-game
IF YOU have an unexploded bomb on your doorstep, do not hit it with a hammer, especially if you hear it ticking. That would seem uncontroversial, except when the unexploded bomb is Macedonia and the hammer is wielded by Greece.Neither side is blameless in the two countries’ tedious wrangle about who can be called what. Ultranationalists of both flavours make absurd claims about the geographical and ethnic characteristics of “historical” Macedonia. If the Olympic games featured an event that measured stubborness and prejudice, the partisans from the Wikipedia talk page dealing with the name wrangle could form a world-class joint team.
Greece’s fears of irridentism from the north are not wholly groundless. But they are out of date and minor compared to the real threat: instability, or worse. The best way to prevent the “Former Yugoslav Republic of Macedonia” from posing any kind of security threat to its southern neighbour, or stirring up trouble among the slavophone population in the northern Greek province also called Macedonia, is to bring it into the European Union and NATO.
A Macedonian by any other name...That prospect has also scotched the notion of a Greater Albania, which would have included Kosovo and a large chunk of Macedonia. If borders look set to matter less, that idea will stay dormant.
Membership in the Atlantic alliance has proved a highly effective means of calming old rows (not least between Greece and Turkey). It is hard to argue that Greece will be more secure if it vetoes Macedonia’s NATO membership at the alliance’s summit in Bucharest between April 2nd and 4th, especially if Albania and Croatia gain membership.
America is promoting compromises (Independent Republic of Macedonia, New Republic of Macedonia, Democratic Republic of Macedonia and Constitutional Republic of Macedonia). Greece rejects these, and wants a different qualifier (Upper, Northern, Vardar or Skopje). Macedonia says it will accept an extra label, but not a geographical one.
Macedonia’s impatient-sounding stance and displays of petulance in the past have not always helped its own case, especially in Greek eyes. But a resentful and isolated neighbour will be worse for Greece, not better.
More troublingly, it may blow up. Macedonia’s precarious internal stability is teetering. The coalition government has lost its majority since its Albanian coalition partner pulled out last week; it wants immediate recognition of Kosovo, greater use of the Albanian flag and language, plus pensions for veterans of the insurgency in 2001. Only some prompt and effective international mediation saved that conflict from turning into civil war.
For now, Macedonia has been something of a success story, pushing ahead with fast tax-reform and promoting e-government. That has benefited Greek companies too, who find politics does little or nothing to dent the attractions of northwards trade and investment. Macedonia is already a handy NATO ally, with soldiers in Afghanistan (who, unlike those from some existing members of the alliance, are actually allowed to fight).
A great deal more needs to be done. Infrastructure is dismal, education inadequate, corruption still a problem. But the well-trodden path to membership in the European Union and NATO is the best route for improvement. It if works, it will benefit Greece too.
It may well be that America will bang heads together in the run-up to the NATO summit. But outside attention is a scarce commodity and needed elsewhere too—not least for the vital but chancy business of producing a convincing NATO offer for Georgia and Ukraine.
Greece’s politicians would be doing themselves and everyone else a favour if they would settle the “name issue”—or at least say publicly that they will not veto their northern neighbour from joining an organisation that will make everyone safer and freer.
Taiwan
The China card
Events in Tibet are bad news for the nationalists in Taiwan's presidential elections
THE last thing China wants in the presidential election in Taiwan on March 22nd is another victory for the independence-minded Democratic Progressive Party (DPP). It still looks unlikely. But the military crackdown in Tibet and a warning from Wen Jiabao, the prime minister of China, that independence for either Tibet or Taiwan would be intolerable has helped the DPP candidate, Frank Hsieh. He has narrowed a double-digit deficit in unpublished opinion polls and pulled to within five percentage points of Ma Ying-jeou, the candidate of the opposition Nationalists, the Kuomintang or KMT.
Mr Ma tried to shore up his flagging support by taking a tough stance against China’s action. He threatened to boycott the Beijing Olympics should the bloodshed continue. Even that may have backfired, however. Rather against the odds, Taiwan’s baseball team this month qualified for the games—a triumph relished by the island’s many baseball fans.
Sabre-rattling by Beijing might be counterproductive in another way, too, improving the chances that two referendums to be held along with the presidential election, both of which China hopes will be roundly defeated, might actually be approved. One asks whether Taiwan should apply to rejoin the United Nations using the name “Taiwan”; the other asks if it should apply using “the Republic of China” (its formal nomenclature), “Taiwan” or something else. Parts of the KMT had been calling for a boycott of the referendums, which require a 50% turnout for the result to be valid.
After a landslide victory in January’s parliamentary election, the KMT’s bid to regain the presidency—which it held for five decades until 2000—enjoyed massive momentum. After eight years of lacklustre DPP rule, voters seemed ready for a change. But the KMT’s ambitions for closer ties with China, including even a peace treaty and a “Great China” common market, now look less like votewinners.
The KMT may have been hurt by overconfidence. Three weeks before election day, some senior party officials went so far as to claim that the DPP had no chance.
The DPP, however, has been aggressively ramming away at KMT policies and behaviour. It managed to portray a provocative visit by four KMT legislators to Mr Hsieh’s campaign headquarters on March 12th as evidence of an attempt at “one-party dominance”. This linked it to the authoritarianism that marked the KMT’s rule. Mr Hsieh has also taken every opportunity to label the “Great China” market a “One China” market, insisting the policy is tantamount to surrender to the communists.
He has spread fears that under the plan, Chinese workers and products would flood Taiwan, even though Mr Ma has repeatedly insisted that this would not be allowed to happen. The DPP has also attacked Mr Ma’s planned peace treaty, claiming it would lead Taiwan to a destiny no different from that of Tibet, which signed an agreement with China in 1951 promising it great autonomy.
In self-defence, Mr Ma has reiterated his “three noes” policy towards China—“no independence, no unification, and no military conflict”. He has emphasised his identity as a Taiwanese (despite his mainland-Chinese heritage) who would defend the island’s interests, by using local songs to accompany his television commercials.
In the previous presidential election in 2004, the DPP won by a mere 0.22%. Political analysts expect the KMT to win by a bigger margin of 2-4%, or some 250,000 to 500,000 votes. But if the DPP fares well in its stronghold in the south and wins a slight edge in central Taiwan it might just scrape home.
In the past two elections, China has tried and failed to intimidate Taiwanese voters. In 1996 it fired missiles in an attempt to scare voters away from the KMT’s independence-minded Lee Teng-hui—who this week endorsed the DPP’s Mr Hsieh. Again, in 2000, China gave warning of the danger of voting for pro-independence candidates. This year, it seemed to have learned its lesson and has been conspicuously silent. But events in Tibet have spoken louder than words.
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