What's News Tonight: May 2010 Archives

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Daughters of Time

By John Batchelor on May 31, 2010 12:40 AM | 5 Comments

My Daughter Meets the Nukes.

Golden moments from 20th Century politics include this brief exchange between the distinguished broadcast media in 1980 (what a cadaverous, gray-haired, slow-spoken and hilariously humorless crowd they appear) and the two lacquer-haired candidates. Ronald Reagan seems somber and deeply engaged in the moment. Carter looks chipper, arrogant, folksy, slow-footed -- until we come to the part where POTUS Carter confides that his daughter Amy regards nuclear weapons as the most important issue for POTUS, and he implies that nukes are more important to his job than are jobs or 12% inflation or the crushing recessions of 1979-1983. Ooops. Reagan makes a firm statement that he will negotiate with the Soviets any time, anywhere to end nukes. Nice detail, six years away from Iceland, eight years from signing the end of the Cold War in July 1988.

My Daughter Meets BP.

This TV debate episode reminds a trusted correspondent of the POTUS Obama moment in the now-troubling and infamous BP press conference of May 27, 2010, in which POTUS Obama recounted how his daughter asked him, while he was shaving, about "the hole." State policy by child-rearing anecdote is not useful for the long-term credibility and gravity of the speaker, but it does provide witty outtakes. The Obama linkage to Carter is freshly fixed. Not a glowing event. What is also odd is how POTUS Obama has recently and repeatedly emphasized nuke disarmament just as if it was the 1980s and he was competing with Carter and Reagan. Odd. Nukes are critical re rogue and failed states such as Iran. But not for the powers. The early 1980s was the moment that POTUS made the transition from basketball tyro on Oahu to chain-smoking slacker in Los Angeles (and tourist in Pakistan). POTUS Obama is said to have written of nuke disarmament when he was at Columbia College in 1981-82-83. It can seem as if POTUS Obama is stuck in presidential time as he understands the office. The office is often understood as crisis management in between the celebrity bits. It is not going well. POTUS dependence upon Steven Chu and the Brain Trust is sentimental, inert, childlike, futile, reminding of a 1930s radio serial (read by Reagan) that calls upon geniuses to solve time travel and deep-sea diving. POTUS Obama has some loose gears. Everybody is funny. Yet it is a conclusion that POTUS Obama would have gained by spending a decade as a manager of troubled enterprises where he would have learned not to rely upon experts for anything but grief.

Carrion Men

By John Batchelor on May 30, 2010 1:16 AM | 4 Comments

New Deal Euro.

The Moody's downgrade of Spanish debt is another and logical blow to the delusion of the dreary euro. I learn from Norman Stone's sweeping and passionate new "The Atlantic and Its Enemies," re the history of the Cold War, that the Americans first dreamed up the euro in 1948 during the first waves of the George Marshall Plan. Blame it on the American tyros like John Kenneth Galbraith and the Truman-created Economic Co-Operation Administration -- another concoction of the New Dealers who lived on into the 1970s. The euro is a Cold War tool, left over from the guilt and guile of post-War victors and their lunatic water-boys -- and it is all the more impotent for its fatherless origins. Will the Germans (the ants) continue to bolster the grasshoppers (Greeks, Spanish, British, Americans)?

London Whispers.

At the moment of the Spanish downgrade, with all eyes on Lisbon and Dublin downgrades next, London wobbles with the sudden and tawdry departure of George Osborne's swanky deputy, David Laws, who is unhorsed by a love nest. The triteness of it adds flavor to the mess expected on Monday 31 when the euro resumes its decline toward par with the dollar. In sum, the Europeans are behaving as ruthlessly vainly and pettily as ever, a tribute to the fact that the 27 countries of the EU lack an identity, a constitution, a coherent point of view. The Europeans expect America to ride to the rescue a fourth time in a century, using the IMF and World Bank as surrogates.

Battle of Britain.

The ouija board says that May was an unusually sorry month, down nearly 8%, the worst May since 1940, the year of the Battle of Britain and the rise of the Churchill Legend, fighting the Blitz from the underground Cabinet room (right). The mood for June 2010 begins grim-eyed, with a sagging euro, a fresh yet mistake-ridden government in London, and troubles aplenty in Berlin. Then there are the BP shadow in the Gulf and the sudden fragility at the White House. Time for the curtain to rise at the Opera:

ANTONY:

"Blood and destruction shall be so in use

And dreadful objects so familiar

That mothers shall but smile when they behold

Their infants quarter'd with the hands of war;

All pity choked with custom of fell deeds:

And Caesar's spirit, ranging for revenge,

With Ate by his side come hot from hell,

Shall in these confines with a monarch's voice

Cry 'Havoc,' and let slip the dogs of war;

That this foul deed shall smell above the earth

With carrion men, groaning for burial."

Plan B Minus

By John Batchelor on May 29, 2010 7:37 PM | 7 Comments

Death of "Top Kill."

Reports from the Gulf indicate that BP, announcing the death of the "top kill" and the "junk shot," is no closer to a solution than it was on April 22, and that the next phase of desperate measures has minimum success with maximum palaver on a daily basis. Drip, drip, drip, with a bot cam on the spill. The relief wells remain the solution. The politics become increasingly grotesque. POTUS embraces the responsibility for the operation without anyone asking him to do so, and now he is responsible for all the failures of BP and MMS and Interior. This is folly. POTUS didn't do this. Why does he accept the grief? What advantage to this ploy? BP failed, and continues to fail. The regulators are slackers, not just at MMS but in Europe and UK and Asia.

Follow the Money.

Is there an advantage to POTUS to inserting himself into the picture? Is there money for the Democrats in announcing there will be reorganization of the regulation process? Unknown.

POTUS Doubt.

The puzzle is POTUS. There are odd reports, unconfirmed but persistent and from random sources, that speak to a brittle, impatient, disorganized, fretful, petulant, self-doubting actor who is unpredictably temperamental and despairing. Random reports, more frequently now than before. It is not BP. The BP catastrophe has been building over five weeks, and it is just now, late May, that POTUS exposes the White House to the unknowns of the engineering. It may be frustration with Washington. It may be that POTUS has run out of the energy from the election. There is little of the cheering to be heard from the distant campaign. Perhaps none of the cheering. The debt, the mortgages, the joblessness, the youth unemployment, the debts. The midterms are not about POTUS. The worldwide economy staggers with the falsehoods of the past, the Eurozone and the delusion of a united Europe without the permission of the people. Is it the scale of the crisis? Did POTUS not hear the risk of the W recovery? Even the Democratic Congress now hesitates to continue the debt heaping. POTUS is no longer at the center of the narrative. POTUS is not even Plan B. There are scenarios. LBJ? Carter? Whom does POTUS resemble with this news cycle's strangely mock-epic Biblical language in the White House's gloomy statement upon the failure of "top kill"?

"Every day that this leak continues is an assault on the people of the Gulf Coast region, their livelihoods, and the natural bounty that belongs to all of us," Obama said in a statement. "It is as enraging as it is heartbreaking, and we will not relent until this leak is contained, until the waters and shores are cleaned up, and until the people unjustly victimized by this manmade disaster are made whole."

BP (Accumulate); Democrats (Underweight)

By John Batchelor on May 28, 2010 2:11 PM | 3 Comments

Humpty-Dumpty POTUS.

The disaster in the Gulf is now the exogenous event that was always possible that could take the Obama administration's plans off course for the midterms. The spill continues through all credible solutions until those relief wells can cut the flow in August. The struggles of the cap vessel, the straw siphon, the "top kill" and now the "junk shot" all add drama and news to what is a fixed problem for POTUS and the Democrats. When Big Government is the answer to healthcare and jobs, POTUS suggests, then Big Government is the answer to oil spills at 5,000 feet below. Did not work. POTUS has no way out. Spoke Dan Henninger re reform versus Reform, and we agreed that POTUS might take these days to review what is the limit of government. Cannot put the egg back together.

BP.

The hard-nosed might examine the facts of the Gulf and see the chance to grab BP stock with a 7.6% dividend. Or oil service stocks all off. Or other deepwater drillers. Big Oil prints money. There is no pol on the planet who can stop deepwater drilling. It is managing expectations that is the game. You want lights and MPG, you get oilly beachs and dead birds that can be cleaned, yes? POTUS problems and midterm risk very different tale from market wobbles in energy. Big Oil is a license to profit forever. It can buy governments, so why not markets? The sellers are suckers, but someone has to sell in order for you to buy. BP bottomed in the $40 range on sell-off. It is a permanent buy. Unless you think the dividend will be cut. The whole Gulf mess so far is $1B. BP makes that much in less than a month. Love BP faceman Tony Heyward telling a UK paper that the spill was small compared to the big ocean. Cool. Probably coast the stock a buck today. Keep talking Tony.

Mr. Coke Goes to the White House (Not)

By John Batchelor on May 27, 2010 10:35 PM | 3 Comments

At the Morgue.

Spoke to Kareem Fahim, NYT, several times to seek a good time to book him for the show and found he is most occupied chasing dead bodies in the morgue in Kingston, Jamaica, after a week of chaos and breakdown in the former British original paradise island of Jamaica. At the center of the tale is Mr. Christopher "Dudus" Coke, 41, who was deported form the US in the 1980's and now operates as the Godfather of Tivoli Gardens neighborhood, a druglord with a reputation as generous toward the meek as brutal toward the strong. The trail of Mr. Coke leads to neighborhoods in NYC where his gangsters distribute drugs from back home -- and also purchase weapons that are then shipped to Mr Coke. The trail also points to direct involvement of the PM and government of Jamaica, who treat Mr. Coke as a political boss who can deliver favors and votes.

Missing.

The presenting cause of the murder wave the last days is that there is a warrant for Mr. Coke's detention that was engineered by the US government. The usual long arm of the law. Mr. Coke promptly vanished into the fog of war. The body count keeps rising, including police officers. Who knew that Jamaica had become a narco-state ruled by romantic mass murderers? Is this in the tourist brochure? Does the Obama administration have a policy here? It would seem to involve the US, especially NYC, and I am certain that Ray Kelly can handle all the noise. But still, this would have been a big story back in the Clinton days, when Haiti occupied the Oval Office. Now, Port-au-Prince is destroyed off-stage, and Kingston is a failed city in a failed state and no comment from State or Homeland or the White House. Must be the holiday weekend. Or the trouble with BP. Perhaps when the oil slick gets to Jamaica, BP will pay for Mr. Coke's losses.

Eric Holder Stirs on the Holiday Weekend.

From Kareem Fahim update:

...73 civilians had been killed, although in 6 cases it was not clear if they were related to the raid, and three soldiers and police officers had been killed.

While those numbers provoked loud debate in Jamaica, the Obama administration expressed its support for the operation, which aims to extradite Mr. Coke to face charges in New York. "As the Jamaican government seeks to uphold the rule of law, the United States stands in support of its efforts to ensure public safety and to combat drug trafficking and other criminal activity," Attorney General Eric H. Holder Jr. said in Washington.

Ultra Deep

By John Batchelor on May 25, 2010 3:21 AM | 6 Comments

The Suspect MMS.

Spoke Kieran Suckling, BiologicalDiversity,org, a green gang that knows a deal about the special language of the Gulf fields. Keith Olberman welcomed Kieran Suckling as a guest back on May 5. We spoke May 24 re the fact that the Department of the Interior Minerals Management Services, which is the supervisory regulator for the offshore rigs, does no supervision at all, just processes permits, waivers, bypasses and so forth -- as it has done for decades. The assumption is that Big Oil can manage its own risks and technology. Learned that Ken Salazar and POTUS have both been parsing language for weeks now to avoid speaking flatly that six rigs have been given permits for new drilling in deepwater since April 20. No permits for "new" wells is the way the POTUS has been avoiding the fact -- just using existing wells to drill new boreholes. Four of the six are in "ultra deep" water, greater than 9100 feet. All MMS-approved.

Deepwater Horizon.

Also learn that MMS granted a bypass waiver for a new borehole at Deepwater Horizon on April 15, just five days before the explosion and fire. Kieran Suckling tells me that the gusher at 5,000 feet is a product of only five days of drilling. Whatever happened that led to the failure of the BOP was in a small window of April 15-20. Also, what was wrong with the previous borehole that BP had to apply for a new start? MMS approved it the same day of the application for the waiver. No inspection, no questions. SOP. I do not have a firm timeline, but I have enough to suppose that the investigation will reveal alarming details about safety, decisions, arrogance and BP policy on the drilling floor. And what is the SOP at the ultra-deep boreholes? And who is watching over the drillers now? And if the robots are at their extreme limits at 5,000 feet, how are they at 9,100 feet? And what about the BOP at the ultra-deep sites? Who inspects a piece of technology that is little changed for 90 years? The BOP are manually operated, by robots. Do the ultra-deep BOPs have remote triggers -- as the Deepwater Horizon BOP did not? I am just learning. The MMS has a lot of 'splainin' to do. So do POTUS and the Department of the Interior -- even for the poor and less-than-transparent education of the public since April 22. These look to have been man-made errors of the third kind: answering the wrong questions precisely. Unless the Obama administration has been practicing errors of the fourth kind -- answering the wrong questions precisely while knowing full well and cunningly that they are the wrong questions to answer.

Sacramento, Arizona

By John Batchelor on May 24, 2010 8:08 PM | 2 Comments

Poizner Close Then Not.

Arizona is running for the Republican nomination in California. Demi-billionaire Steve Poizner has decided to base what is left of his campaign upon the notion that the California Republicans will vote for him because he is keener on Arizona than he is on the state of California. Late news tonight is that a new poll shows Poizner closing the gap by two points for the June 8 primary. Late late news is that a new new poll shows billionaire Meg Whitman opening a 27-point gap, 54 to 27. Perhaps the Arizona portion of the vote went back to Tuscon.

Carly Leaps Over Demon Sheep

The big news from the SurveyUSA Poll is that merely well-to-do Carly Fiorina, after trailing modest Tom Campbell for many months, now leaps into a commanding 46 to 23 percent lead, with the Arizona booster Chuck Devore trailing badly with 14. Fiorina has avoided the Arizona quandary so far, and it is unlikely to be a stumble with the time left. Campbell is out of money. Campbell originally decided he could challenge Whitman, then switched to the Senate primary when he figured that his name recognition would outlast Fiorina's caginess. Didn't work. Fioria has used her cash advantage these last days to buy name recognition with bio ads and to leap over Demon Sheep himself and 'way ahead in the electability story.

POTUS Icy

By John Batchelor on May 23, 2010 12:58 PM | 17 Comments

Political Ops.

What is signifiant in POTUS Obama address to West Point this year, his second, is that POTUS knows that he no longer enjoys the confidence of the retired uniforms and that the officer cadre has taken a step back after the White House abuse of Stanley McChrystal. POTUS does not share his foreign policy genius with the uniforms, but the uniforms do read books and entrails. The speech at West Point is indistinguishable from POTUS Bush, so there is nothing to be gained by quoting POTUS's predictable language of national security and diplomacy. What is different is that POTUS does not now have a coherent national security team. SecDef Gates is said to want out pronto. Admiral Blair is retired again. General Jones is said to be a potted plant. What is left around POTUS are political actors such as Leon Panetta, Eric Holder, John Brennan, Janet Napolitano, all of whom correctly derive their perception of power (mostly network TV access) from POTUS. Even VPOTUS Biden depends upon POTUS for authority and themes; and StateSec HRC is isolated, frustrated, busy elsewhere. The White House has made its choice. POTUS is the sole director and manager of foreign policy; all the rest is show biz, misdirection, flackhood, vanity.

Afghanistan.

POTUS aims to start the withdrawal from AfPak in summer 2011 regardless of the Karzai brothers and Al Q -- and also to begin the PR handover of Pashtunistan frontier security to Pakistan and what is called the Afghan National Army in time for the Iowa caucus in January 2012. POTUS foreign policy keeps a domestic political timetable, following the savvy of most of the presidents in the 20th century (Wilson, FDR, Truman, Ike, LBJ, RMN, Carter, Reagan, Clinton, both Bushes). The election timetable requires POTUS to demonstrate diplomacy through handing off. POTUS hands off Iran to the Kremlin. POTUS hands off the Kim regime succession troubles to Beijing. POTUS hands off Eastern Europe to Berlin. All this is meant to clear out the friction before the re-election campaign season begins summer 2012. The debate continues as to whether POTUS goes to Tehran before the election, February 2012, or after the election, February 2013. Tehran becomes the Cold War adversary that empowers POTUS's diplomacy. This electioneering by foreign policy is a credible, sophisticated, passionless, icy formula of Realpolitik. (And electioneering by domestic policy is stymied by the long-term joblessness and the likely GOP obstructionism in the 112th Congress.) Can POTUS manage the tensions of dictators abroad and polling at home? Unlikely, but the dare is presidentially bloody-minded, something that rises to the level of the willful imperialism of FDR and Nixon. And the downside? The uniforms will challenge the presumption that fate can be managed with talk. The 20th century teaches that power comes out of the barrel of a gun -- and that American must never, ever be outgunned. POTUS plays for November 2012 -- 29 months from now. Grown-up stakes.

Cuomo the Unhappy Warrior

By John Batchelor on May 22, 2010 12:00 PM | 10 Comments

Cuomo the Younger Makes the Move.

"I understand we are in a difficult time, even a frightening time..." Andrew Cuomo now begins his run for the White House with a smart move to emphasize his vigor and vigilance on the watchtower of the battlespace of the economy. All politics is local politics -- about money. Cuomo is the right candidate in the right state, the son of a governor, the father of Kennedys, a veteran of his father's campaign wins and losses, a veteran of the Clinton administration's housing conduct -- in all, as experienced and well-travelled a public servant and professional pol as can be found in the nation. Cuomo's Party loss to the forgettable and Wall Street-compromised political actor in 2006 is a credit to him -- because pols are stronger for having lost and come back. Even POTUS Obama became a better actor after he lost to Bobby Rush in 2000.

White House 2016.

The plan is to secure Albany; transform the antique cronyism of New York State; romance and also distance the editorial pages of the NYT, WSJ, and the all-useful talk radio (Cuomo prospers as anathema to the burlesque talkers); and focus on a sharper and more regulated Wall Street of bankers and their co-dependents (such as state pension funds and union pension funds) and storm the Democratic convention of 2016 (in New York City) to secure the nomination for the White House. Credible, informed, sophisticated, timely, historically anchored. Cuomo does not need an economic downturn from the present in order to gain attention -- as did his legendary predecessor at Albany, FDR. You will recall that FDR's road to the White House was rocky and meandering. After spending a decade as a reformer and iconoclast from agrarian Dutchess County, despite the fact that he dwelled and prospered as a Harvard in Manhattan, FDR gained the Democratic nomination in 1920 to be VP candidate to the sad-sack Ohio Governor James M. Cox, and then spent a lost few years as a polio victim in supreme denial. The win of the governorship left open by the presidential ambitions of Al "The Happy Warrior" Smith made FDR a fresh, troubled face ("The Happy Patrician.") The Crash and mishandling of the recovery by Smoot-Hawley and Hoover made FDR the once and future heir of the Democrats in 1932. The rest is legend. Cuomo has the makings of a similar run, with the caveat that the economic collapse is at the start of his climb, followed by years of torpor and retrenching. Only a Democrat can cure the Democratic curse of municipal unions and the delusion-heaped welfare state, and the long, unauditied run of deficit-financed empire-building. Cuomo the Unhappy Warrior? POTUS Obama needs a re-election, and the GOP needs to fail in its Inquisition in Congress, and the US has to avoid the fate of the Europeans (torpor, fatalism, arrogance, pomposity, bad plumbing).

Sweet-talking Trouble

By John Batchelor on May 21, 2010 9:58 PM | 2 Comments

"During" Not "In."

Attorney General Richard Blumenthal is nominated by the Connecticut Democratic Party to be the candiadate for the open US Senate seat come the November election. Spoke Clyde Haberman, NYT, whose column "NYC," re his own Vietnam-era military service, makes careful mention that those who served in uniform in those days do not "mis-speak" of their conduct. Clyde Haberman was drafted and reported to duty in April 1968, just after the Tet catastrophe, and his unit was of the few that were sent to Europe, not to Vietnam. Clyde Haberman says that it is important to him to speak precisely of the fact that he wore the uniform 1968-1970 during the Vietnam war and not in the Vietnam war. Clyde Haberman asserts that Richard Blumenthal knows exactly how he spoke and that he spoke for effectiveness to his audiences and that it is extremely unlikely that the several recorded instances were errors of rhetoric. The NYT was careful to include a photo (below) of the New York City memorial to the 1741 dead from the city. This looks to be a fierce summertime engagement. Advantage the relentless hometown crusader of the NYT.

Washington Listens and Watches.

Spoke David Drucker re the Blumenthal flaps as well as the Rand Paul strange remarks re the Civil Rights Act of 1964. Drucker remarks that the senators are watching Connecticut closely because the assumption by the Democrats was that it was a most safe seat and that Blumenthal, the long-serving and vigorous attorney general, would easily replace the retiring Chris Dodd. Now the seat is rated toss-up. In Kentucky, Rand Paul is so far ahead of his rival that there is little reason for the candidate to campaign outside of his state. Nonetheless, the bizarrely foolish remarks by Rand Paul the last days that he opposes the 1964 Civil Rights Act have alarmed his Republican colleagues. Rand Paul declines his invitation to "Meet the Press" following the brouhaha of his remarks on MSNBC. The controversy will not fade, and neither will the Blumenthal mistakes. Pair of troubled sweet-talkers -- a matched set going into the summer campaigns.

Grim November Tales

By John Batchelor on May 20, 2010 10:25 PM | 8 Comments

Correction.

Am told by Joe Brusuelas, of Brusuelas Analytics, that the market sell-off worldwide these last days was the smart money deciding to cash out of the longside bets on a worldwide recovery in order to prepare for the possibility of a slowdown in commodities and the attendant emerging markets and consumer-led rich economies. In sum, the big boys got caught on the wrong side of a bet and are going defensive. The plunge in oil is the metric that suggests trouble ahead. The disdained euro saw a bounce from 1.21 to 1.25 because of short-covering -- and also the anxiety caused by a rumor that central banks were going to intervene. The turmoil is widespread and violent.

Treasuries and November.

Surprising to learn that US Treasurys are now the haven of last resort. Even gold sold off, after the smart money took profits from the recent run-up. Treasurys had been the stuff to sell as the markets prepared for a climb, but now Treasurys are Mother Earth. Translating all this for political gain, the White House just watched a line crossed. The markets are correcting for the first time in the bull run since March 2009. The correction is now 10%, and it can go lower. Markets go up and down. What this also means is that employers will hesitate yet again to hire into the fall. Hiring attached to prospects for trade is what the White House needs for a bounce into the summer. Without hiring, the dreariness of the numbers will dominate the re-election narrative of the Democratic majority. There is also a small chance that the sell-off can get worse. Europe is a long way from certain of its future; and the euro looks to head to 1.10 by Election Day, making even the optimistic hesitate about the first half of 2011 and global trade. China is also out of ammo and falsehoods about its real estate driving GDP. Grim tales for the White House. It happened on May 20, the line was crossed, the market started the correction. Like November?

Incumbent Fatigue

By John Batchelor on May 19, 2010 2:06 PM | 5 Comments

No Narrative.

The joy of primary day is that it comes to nothing but spin and is quickly meaningless with the next day's maneuvers. Sestak discarded Specter, Lincoln struggles with Arkansas, Rand Paul storms Kentucky and Mitch McConnell's authority, and it comes to what? No payoff, just the possibility of payoff. Do we care if the GOP takes Kentucky, Arkansas and Pennsylvania? No. A night of incumbent fatigue is not a story we can trade on --certainly not a change in authority in Congress. Specter and Lincoln still vote all the way till Christmas. We only care if it looks like the GOP may take the Senate. That raises money and temperatures and weakens the strong horses in the Obama administration and on the Hill. Consider the Senate weakened. Shrug. The larger story for what I saw last night is that the White House lacks a narrative, the Democrats lack a narrative, and the GOP, the also-ran weakest horse in reality, gets a chance to construct a narrative.

GOP Blind.

The Republicans failed in the open seat Special of PA-12 because the Republicans lack a narrative that speaks to conservative Democratic voters. Mark Critz (right) a Party op and newbie pol staffer, with no wealth and no grit, a guy who just recently was district manager for Murtha, dispensing baubles, ran as a faux-Republican: anti-healthcare, anti-captrade, anti-abortion, pro-guns, pro-national defense. The faux beat the newbie entrepreneur Tim Burns by eight points in a district that has voted solid Murtha since Nixon. The GOP is blind and pointless. No narrative. Speaking Salena Zito, PTR, on the failure of GOP bucks from the NRCC to develop an adequate turn-out model -- and to let the SEIU create a faux-Republican to beat you -- who'll vote with Pelosi all the way to November. The Democrats do not need to beat anyone good at reading the wind; they just need to beat the sad-sack GOP elite, a whining crowd of cronies.

Election Selling Blumenthal

By John Batchelor on May 18, 2010 12:48 PM | 8 Comments

Savvy Survivors.

Primary Day in Pennsylvania, Arkansas and Kentucky, among others, points to a fierce sell-off of incumbents and a lurch toward the patter of insurgents like Rand Paul and Joe Sestak. The political professionals are savvy enough to understand they must disguise themselves as outsiders, rebels, foxes in the coop, or just generally lean amateurs seeking to do the right thing. Pols are not volunteers. They are survivors (Mini-Me-Arlens). They are recruited and courted and indulged by a sharp business class seeking advantage with Federal and State regulators and tax authorities. Self-interest times three hundred million renders a self-correcting polity is the theory. What goes wrong can go right when the numbers don't match up with the performance expectations. Just like a market crash, or in the instance of May 6, just like the Flash Crash. Systems failure is an organic way of learning that you are on the wrong road. The digital masters of Wall Street are actually a loosely connected federation of market-making exchanges that exist entirely in the ether. Numbers link with other numbers, and when they wrong combination of numbers sweeps through the system wide warning system, the machines respond with random silliness. Sotheby's bid goes from 32 to 100,000 in a flash. Hilarious. What then happens is that the smart guys turn the digital slaves off. Click. And since no one is in charge, the failures in parts become the failure in the whole. Result: flash crash. Caveat that this is not all explained yet, and I do reserve the possibility that it was the Chinese hacker genius or the Russian mob hacker genius. No fingerprints ever is a clue. However for now I will allow that it was man-made interference in a man-made system of bots.

Election Primary Day.

This all points to the same problem with pols. The man-made system of tax and spend has clearly met a wall of resistance, or perhaps it is just the nature of systems that stop working when the fiat currency is laughed at even by the chumps who work for a living. They pretend to pay us this play money and we pretend we are rich? There is also the matter of politicians being too foolish to tolerate. Representing me with this knucklehead Mark Souder of Fort Wayne, Indiana or Richard Blumenthal of Hartford, Connecticut? Why would I vote for a guy I wouldn't take a meeting with, or even sit next to in the subway? Laughable next to laughing boy Chris Dodd, late disgraced Friend of Angelo of Connecticut. Primary Day is nature's way of telling the pols that they are trite, temporary, ignorant and generally disregarded -- which is why most of us don't vote in primaries. No self-interest to endorse or reject an unknowable whiner or con man or bubble head. The flash crash of May 6 and the primary day of May 18 share much in common in expressing the fact that no one is much in charge and that you must allow for a system where cowards and their sycophants rule (Blumenthal, Specter, Souder, Mollohan) and the bold are best regarded as Hollywood fictions. Recommendations: Sell Blumenthal, buy Sestak, long Burns, short DCCC, accumulate Irony, hold on Trust.

Iron Man Replaces Robin Hood

By John Batchelor on May 17, 2010 1:34 PM | 5 Comments

They Don't Want Another Hero.

It is a surprising measure of the day that the younger fellows who make up the audience for Hollywood epics are turning away from meaty, working-class protagonists such as Robin Hood and toward digital charmers such as the Iron Man 2 contraption. It is another puzzle to solve in this dreary age of European flim-flam, Asian pretension, and American retreat. Everything about Robin Hood is useful -- his manliness, his loyalty, his passion, his gritty refusal to bend to tyranny. Nothing about Iron Man is useful -- his snarkiness, his misdirection, his gimmicks, his indifference to history (the cheerful and cozy Iron Man is post reality). What could this all mean? We don't need another human hero? We prefer faux irony?

Tehran Wins.

My quick interpretation is that the Obama administration wants nothing to do with confrontation in the nasty old storm-the-castle mode of the Plantagenets vs the French Devils (see Robin Hood opening act). POTUS chooses the camouflage of diplomacy via Lula of Brazil and Erdogan of Turkey (below) concocting a silly and sly deal with Tehran re some part of its enriching uranium. All cheery. POTUS can kick the can down the road past November elections. Tehran can boast and prance and finagle. The best twist so far is that the Obama team is said to be worried about the empty promises. This is too naive to be concocted, and in any event POTUS does not think ironically. Tehran is the Iron Man to the Obama King John. Game over. Robin Hood's theatrical heroism is futile and unloved. Tehran wins, Obama administration wins, Iron Man wins, Robin is retired.

North Korean Torpedo.

The Iron Man of the Kim regime is equally the winner, as the South Korean Lee confers with POTUS over the March 26 sinking of the South Korean warship by a North Korean torpedo. Nothing will come of this but noise in English. Hu of China signed on to this mischief. POTUS regards Hu as a rich uncle with difficult pals. Again, Robin is asked to leave the building. North Korea is the Bank of America of rogues, too sinister to fail.

Merry Men.

Spoke John Bolton, AEI, re his column on William Hague's visit to Mrs. Clinton over Afghanistan. There is fresh energy in Europe. Hague channels Pitt the Younger of the 18th century, the man who presided over the end of the American Revolution and into the Bonaparte wars. Hague has wit. He aims to treat foreign policy as critical to the mission statement of nations. POTUS treats foreign policy as a distraction with no risk, just talk; community organizing on continental scale. There will be trash talk. King John is all POTUS can manage or afford. The Democrats prefer an oligarchy of poseurs and do-gooders. To Sherwood, lads, work to be done.

London Seeks Berlin

By John Batchelor on May 16, 2010 11:39 PM | 7 Comments

Euro Swoons.

Spoke Joe Brusuelas, Brusuelas Analytics, and John Tamny, RealClearMarkets.com, re the swift decline in the euro and sterling against the US dollar -- which eerily seemed to be happening in real time as we spoke. The euro moved right through 1.23 and the pound right through 1.44, while the Canadian loonie strengthened against the dollar, demonstrating that while the US looks like a sanctuary from the euro dreamers, it is not as firm a currency as the asset-based loonie to the North. The euro crisis is now said to be a sovereign debt crisis -- to be distinguished from the credit crisis of 2008. Which countries must default and who wil pay for it? We debated if the Fed is paying for a bank bailout in Europe. There is a bank run, and the way to halt a bank run is to pour cash into the system and not fret about leverage and risk-management. The Asian markets all plunged in conjunction with the euro and pound.

Euro Plan B.

Am told that the preparations are in place for an alternative universe of Northern Europeans - London, Berlin, Scandanavia - that will jettison the PIIGS and move to a fiscal house with sharp discipline. London aims to be part of this enterprise if and when it corrects its own budget ruination. London now begs Berlin not to be left out of the rescue vessel. The new PM Cameron has no room to maneuver. Cameron must force state job cuts, give-backs, severe reduction in welfare benefits and health costs, the sort of emergency diet that kills off the patient. Cameron must hurry and take on his enemies pronto, or see the UK treated as roughly as Greece.

Jobless Banks.

The impact on the US will be a reduction in earnings per share on the exporters and a corresponding reluctance to grow and hire. The mood will darken. What we will witness in Europe will appear to be a recession without much of a safety net. The European purchase of power will decline, and this will cut into the profit margins in Asia, especially Japan. Canon is off now because 30% of its sales are in the EU. Oil declines because of the expectation of less demand in the EU, even given the driving season. And this all assumes that the PIIGS will accept their fate as beggars and marooned dopes. And what of the French and German banks with exposure to the sovereign debt? Bank runs. John Tamny mentions that some American banks now believe they rehired too quickly before the euro crash.

Drachma.

The wit of the weekend was that the Europeans fathers (and Margaret Thatcher) chose the euro because they figured they were getting the Deutschemark. Instead they got the drachma. The French banks who shoveled money into Greece must now consider the next years of being paid off in olive oil and whining.

Chris Christie Star Turn

By John Batchelor on May 15, 2010 12:02 AM | 19 Comments

Gov Christie calls S-L columnist thin-skinned for inquiring about his 'confrontational tone'

Welfare State Nightmares.

The quietly spectacular story in Trenton is that the burly and handsome Chris Christie has taken charge not only of the message but also of the stage with his "blunt, honest, direct" talk and his unapologetic haste to change a failed state. New Jersey has the same mound of debt and obligations to state unions as California and other welfare state nightmares. And on a per capita basis, New Jersey is likely worse than California, which is a stunning comparison. Chris Christie arrived with a wit and a mission to eliminate the deficit and balance the state revenues with the state obligations. This means reducing the workforce, backing down the school districts, and soon enough reducing the tax load on the citizens. The Democrats long in command of Trenton do not celebrate Chris Christie, and they are busy at the task of driving down his approval rating and mocking him as rude. See above for how to be a governor in the 21st century. "To govern not to get re-elected."

The GOP in Search of Talent.

What we are watching in Trenton is the creation of a phenomenon, a Republican governor who is unafraid of the Democrats in Washington and the Statehouse and the electorate. The GOP is interviewing Pawlenty, Romney, Palin, Daniels. What is missing in this pleasant chorus line is a muscleman who can declare, "Win or lose, here I am ..." and mean it. Is it possible that a Jersey guy can get on the Met stage and outsing POTUS? Sure. Watching Christie. The more difficult the Dems and the media make it for him, the more he has to gain. Boom Chris Christie? Early yet, but let us look closely right up until fall 2011.

Suicide China

By John Batchelor on May 14, 2010 12:56 AM | 11 Comments

Murder of Children.

Spoke Gordon Chang, Forbes.com, re the China school attacks since spring -- 5 or 6, depending upon counting -- and the non-response of the mandarins of Beijing. The most recent horror in Shanxi Province turns on a longstanding property dispute between the killer (now dead at his own hand) and the local Party boss. The Party boss sold the public land for the school, so the school was willy-nilly relocated on land rented from the perpetrator, Mr. Wu. The dispute raged, and Wu's madness exploded when he attacked and killed seven children and two adults. Gordon Chang observes, "This couldn't have happened in a country with law and courts. It is a product of China's one-party dictatorship."

iPad Suicides.

Also spoke Gordon Chang re the unusual number of suicides and attempted suicides at a vast manufacturing complex in Shenzhen. Young people leaping from dormitory windows in response to group pressure, unhappiness, isolation from family, ignorance. The complex is the vast Foxcann, on the Mainland across from Hong Kong, where they build the iPad and many Mac products, including the iPhone. Foxcann has moved in a hotline, and it is calling in monks to exorcise evils spirits and comfort the dead. The Chinese people are thrifty, vigorous, ambitious, relentlessly cheerful, self-assured, magical. The Chinese government has not any of these qualities: in addition, Beijing is rotten with kleptocrats and dullards in power.

Gold Fear

By John Batchelor on May 13, 2010 3:03 AM | 3 Comments

Gold Bugs.

Gold being at an all-time high within hours of the European bailout promises and kisses does not require a deep psychology to solve. Fear. Spoke Joe Brusuelas, of Brusuelas Analystics, who points again to the creeping upward LIBOR OIS, which is the money banks charge each other for overnight loans. The higher it goes, the more doubt and fear in the market. The gold price says that Europe as well as Asia is a risky place to keep your money -- and that even the dollar, a refuge for euros and yen, is not a solution, just a transition. The Gold Bugs are always with us, and when they are right, they are very right. John Tamny asserts that the price of gold is an expression of the disregard of the dollar.

Blow-Off.

Gold retreated modestly on the third day after the EU bail-out, but no one thinks it has topped. The blow-off is for the fools in China, where they have entered a secular bear market. Long way to the bottom. Can't catch a falling knife. The theme for the remaining year is fixed: the euro goes to par; the yuan fades and fades; the PIIGS default and reorganize; the US switches control on Capitol Hill and reigns in the pretentiousness on Pennsylvania Avenue. Gold is delightfully positioned to enjoy all possible scenarios from Asia to Europe to Lord God Almighty Dollar Ben Bernanke and the printing press at the Fed (with $2.3 Trillion on the books). If I'd told you, back in 1999, that it would be $1233/oz in 2010, you would have regarded me a Gold Bug kook. If I tell you $2000/oz today, you may sneer as well. Shrug. China's bear market will make gold the only refuge this side of the grave.

Back-Slapping Slapped Back

By John Batchelor on May 12, 2010 12:54 AM | 3 Comments

Specter Exit.

The Keystone State has already moved on, and this peculiarly aimless TV spot for Specter that includes POTUS "saying a few things about Arlen Specter" has the look of a birthday helium balloon the morning after, deflated, bobbing along the ground, unloved. Joe Sestak is pulling away from the turncoat Specter, who is unloved and uncelebrated. Salena Zito asserts that Specter will not pull well west of Philadelphia's counties in the May 18 primary, but I observe he won't do well west of City Line. Pat Toomey, who will represent the GOP, is aware that Sestak is coming hard, and has already gone on air with a profile ad for him and his beautiful young family, including a newborn boy -- just born this last weekend. Nice timing, Pat. Joe Sestak has the energy of 31 years in the USN, leaving a three-star admiral. The Keystone State will be a jousting contest between the parties, and there will not be an obvious wave advantage for Toomey.

Specter and the White House.

Axelrod misread his own Pennsylvania Democrats, who rejected POTUS as a candidate and look to reject POTUS's choice of Specter. Am told that the Specter supprt is a product of the promises made to Specter when he switched parties to provide the 60th vote for cloture. Short-term gain, long-term loss, as the Sestak win against the White House means that the White House intimidates no one in either party -- except the needful Boxer and the sagging Giannoulias. POTUS has lost control of the primaries, and how will he fare in the general? Specter's defeat is useful to close the book on the 20th century version of get-along, back-slapping Republicans. Specter's defeat may also teach the White House that Chicago Rules (Obama and Biden bring an arsenal of pork) don't work in Pennsylvania? Nah.

Trouble Trichet

By John Batchelor on May 11, 2010 12:50 AM | 10 Comments

The Trouble with Greece.

Speaking Joe Brusuelas, John Tamny, Aaron Task re the euro kerfluffle and the major Greek risk. Steve Moore, WSJ, tells me that the Europeans do not have a Greek problem, or a currency problem, or even a credit problem. The Euros have a spending problem. The patch of the leaking boat - which rallied the oversold and rewarded the worrisome (above) -- will not solve the underlying failure that the EU spends more than it can afford and can no longer raise taxes and mandate public servant largesse. In sum, the welfare state has run aground on bad leadership and sloth. The trading opportunity is obvious. For some weeks the turmoil will offer rumor, doubt, fantasy and threat from Berlin, Paris, Athens, Brussels and now London. The American market is not protected from European mischief and French dunderheadedness. The rejection of Merkel in Rhineland-Westphalia is not idle. Also, the Europeans now push themselves into slow growth in order to pay down the debt, and this means un-hiring and drift, not conditions that will invite American growth. What goes around is around. The fate of Iceland, Greece, the UK and California -- and soon enough the USA, absent proportional discipline at the Federal trough.

The Trouble with the USA.

Housing overhang continues as the curse of the bubble of '04-'08. Spoke Connor Dougherty, WSJ, re the limited prospects of growing out of the mess. Two million construction jobs are gone, not coming back. Consumers feel poor because their houses have crashed in value, and a larger percentage are underwater. Small businesses cannot borrow effectively because of the decline in the value of their commercial real estate holdings, which then weakens their collateral at the bank. Also, municipal and state governments are in sharp decline because property taxes are in sharp decline. Dougherty also mentions that people without good job prospects are stuck in poor job locations because they cannot sell their underwater houses.

The Trouble with the UK.

Gordon Brown, David Cameron, Nick Clegg and a population living in denial as big as California. Spoke Brusuelas again, re what does Ben Bernanke watch to worry about the Europeans. The answer is the LIBOR OIS, which opens at 6 AM Eastern Time. The LIBOR rate has backed off the spike up, but it is not quiet; and it points to the fact that the smart money does not believe the European package. Am told that Larry Summers and Tim Geithner told the EU finance ministers and Trichet of the ECB to overstate and overwhelm and overpromise with the bailout package. Now the best-case scenario is in the market, and the facts will come slowly over weeks that the Europeans cannot and will not deliver on the promises and sacrifices.

Bond Vigilantes' Smoke Break

By John Batchelor on May 10, 2010 2:01 AM | 3 Comments

Risky Behavior.

Spoke Joe Brusuelas, Brusuelas Analystics; Joe Bel Bruno, WSJ; John Tamny, RealClearMarkets, re the "audacious" intervention fo the Eurozone 27 countries to push a bailout package of €750 billion into the conversation about the survival of the euro and the EU. Brusuelas tells me that Jean-Claude Trichet's ECB is buying euros and Greek debt, and that other central banks such as the Fed, the BOJ, are coordinating the swaps in a worldwide collaboration to hold off the bond vigilantes another week. This is similar to what was done during the 2008-2009 crisis to keep dollars circulating to European banks. The Greek bonds are now out of the market, taken onto the ECB balance sheet though they are likely worthless. Brusuelas argues that this is risky behavior by the ECB. Joe Bel Bruno notes that the US market is vastly oversold and will rally for starters to compensate for the EU/ECB intevention. The bond vigilantes will wait at the smoke shop. John Tamny notes that the EU package includes €250 billion from the IMF, which means as much as €100 billion of US taxpayer guarentees - all offered by POTUS - likely in conversations with Angela Merkel over these last days. I asked John Tamny if the politicians have learned anything useful since the TARP bailout of the bankers in October and November 2008, and he answers, "No." Will the bailout work? The question is the risk. The bond vigilantes never truly sleep, and the Greeks will soon be joined by the UK in that pool of water called dire straits.

Watching Deutschland.

Meanwhile, Angela Merkel, much in the negotiation to rescue the euro, loses a local election that may lead to her losing her coalition advantage in the Bundesrat. Merkel plays rough, fast and sharp. The German people look to be rejecting her internationalism, her willingness to lead with German taxpayers. The German government coalition is now as fragile as the UK coalition hopes to be. What can go wrong with the EU fix? Berlin and London for starts. Merkel was in Moscow briefly to watch the V-E parade. Odd behavior -- celebrating the 65th anniversary of smashing the Berlin that Europe now depends upon.

Unlucky

By John Batchelor on May 9, 2010 1:09 AM | 6 Comments

Failure.

The engineering miracle of the 98-ton containment cap has failed in the Gulf, and the spill continues unabated. BP is fiercely pursuing a solution, but the best hope now is the two relief wells under way. Best estimate is 60 days, and perhaps as long as 90. This translates into continuing nightmare political scenarios. The White House manages the crisis by repeating that BP must pay. Spoke to the NYT about the maneuvers of the Congress to raise the cap of $75 million that is mandated by law. Senator Robert Menendez seeks to raise the cap to $N billion retroactively -- sometimes known as a bill of attainder. There are too many twists to guess, except that POTUS has not managed any crisis at all so far, just ridden them out. This is presidential of him; however the ride may be in the bumpy part now. The euro is dire. The British lack a leader. The Democrats are shrinking like a wicked witch. And the NY markets are about as reliable as jello. If the jobs number would improve, POTUS could clutch a talking point. However, there is only the drip, drip of the tentative hiring --which encourages the long-term unemployed to start looking, and this will inccrease the jobless percentage in the summer months. Is POTUS unlucky?

Euro Hurricane

The major unknown of the moment remains the EU. The Gulf leak, BP relief wells and the inadequate containment cap are at least capable of correction. There is no known fix for the Democratic weakness. Spoke to Greg Giroux, CQ, to learn that even the 14-term Alan Mollohan, WV-1, who was re-elected by 99.9 in 2008, is now in a losing position to a challenge from his own party, a young state senator named Oliverio, who is hammering Mollohan as unethical. This puts a deeply blue CD into play, adding a likely swing seat to the GOP target zone. What threatens POTUS the most? A complete collapse of the House? No. The polls? Yes. POTUS still rattles on with a professorial wave of the hand about healthcare (he was never a professor; he was a lecturer by grace of the snobs at Chicago; and his professorial airs are aspirational). By the August recess, we will know if POTUS can hold 40% approval. The new question is hurricane season, which begins June 1, and BP works now to get those relief wells in place before a blow.

Never Waste a Good Crisis

By John Batchelor on May 8, 2010 12:50 AM | 6 Comments

Hang Them All.

The sensationally-named hung Parliament that follows the confused and haste-makes-waste British General Elections delivers a teaching moment for Europe. Can Reuters and the Beeb handle two crises at once? Greece Burns While London Fiddles? It is hard for a grown man not to break down laughing at the spectacle of the three British pols, Brown, Cameron and Clegg, with their solid pastel silk ties and bespoke suits, striding here and there through doorways as if something is going to happen. The best advice is Rahm Emanuel's now-immortal bons mots at the start of the Obama administration: "Never waste a good crisis." David Cameron must draw out the decisionmaking as he dances around the puny Lib Dems and their 55 seats; while Nick Clegg must act the high-minded truth-seeker as he ponders a Cabinet post and the price of power.

The Trouble with Greece.

Nothing about the market close in NYSE suggests that the turmoil that started in Europe over these last weeks will end soon. Spoke Ben West, Stratfor.com, to learn that Greece has a firm tradition of murderous anarchy bands, led by a shadowy group of sophisticated rebels called Revolutionary Struggle. The bank attack on May 5 was not an organized effort. Revolutionary Struggle delivered a VBIED at the Athens Stock Exchange in the fall of 2009. It has been depleted by April raids, but it is hydra-headed. Also, the two political parties in Greece, the center-left Pan-Hellenic Socialist Movement now in power, the New Democracy Party that it replaced after the failures of leadership during the forest fires of 2007 and 2009, are now both disregarded and ignored by an alienated, willful, petulant populace of youth and tax-cheats. Add the Greek model of spontaneous self-destruction to the EU model of pompous dithering while the credit markets choke and suffocate, what we have is a crisis that cannot stop itself. They call it a virus. Sure. Fevers in Lisbon and Madrid and Dublin. Soon in Rome and London. The center is not holding. EU keeps using the word "crisis" as an explanation. All panics come down to bank runs. There is a bank run in Europe. Jimmy Rogers joins Marc Faber and other voices in Asia to say that it is time to lighten up on exposure. Others are betting and re-betting against the euro. Pick your brand of poison:

•Euro Falls Most Since Financial Crisis on Greece Debt Contagion Concerns

•EU to Set Up Emergency Fund to Defend Euro, Halt Spread of Greek Crisis

• Jim Rogers, Marc Faber Advise Paring Investments Amid U.S. Equities

Slump

•Bank Risk Soars to Record, Default Swaps Overtake Lehman Crisis

"The Markit iTraxx Financial Index of credit-default swaps on 25 banks and insurers soared as much as 40 basis points to 223, according to JPMorgan Chase & Co. The index closed at 212 basis points March 9, 2009. Swaps on Greece, Portugal, Spain and Italy rose to or near all-time high levels."

Greece Bots

By John Batchelor on May 7, 2010 12:25 AM | 15 Comments

Turmoil Turmoil.

Spoke Evan Newmark, WSJ, and John Tamny, RealClearMarkets, re the "flash crash" of the NYSE approximately 2-3 PM Thursday 6 May. No explanation is yet adequate. Circuit-breakers may have failed. A "bad print" of prices may have triggered or may have been a reaction to a trigger. Rumors abound. Mr. Market was having a very bad, awful day already when the bottom fell out in a knife-like plunge. More investigation necessary. Evan Newmark says, "There goes their claim of an orderly market." John Tamny comments that the Europeans have created conditions that are unstable and therefore whatever happens will be chaotic. I am reminded that turmoil brings turmoil.

The Trouble with Greece.

Spoke Marko Papic, Stratfor.com, who says that the solution to the euro gyrations is Berlin. All eyes on the Germans. When and if the Germans decide to pay for the Greek debts, then the crisis will ease. The ECB does not help nerves when it boasts that it is not considering the "nuclear option" of buying the bonds of sinking countries. When in doubt of debt markets and equity markets, the wise man puts his money back in his billfold. The UK election results of no-decision (Cameron, Brown and Clegg all disappointed) also pushed the pound sterling to new lows of 145 with lower to tumble. And the US reports jobless claims in hours. May Day has triggered a festive month of unpredictable events.

Jobless Immigration

By John Batchelor on May 6, 2010 1:46 AM | 13 Comments

Punks and Iconoclasts.

The jobless recovery overwhelms all the atmospherics re the Obama administration defensiveness over the Gulf or Shahzad or the healthcare confusion. David Wessel reports (above) the staggering number of 20% unemployment for men between 25 and 54 years old. POTUS cannot talk around this obstacle. The midterms are a measure of the disdain for Washington. All incumbents are at risk if they belong to what is perceived to be the ruling class. The general election in the UK, already under way, may well demonstrate that the anti-incumbent temperament is global. Brown out. Cameron in. Clegg celebrated. The GOP is lucky to have a midterm cycle that favors punks and iconoclasts.

Immigration.

John Burns, NYT, tells me from London that the city to watch in the general election is Luton, fifty miles north of London. Filled with Poles who work on EU passes, and Pakistanis (see mosque below) who are present legally and illegally, it is a reliable Labour district that may bolt to the Tories. Why? Because Cameron promises to cap immigration from the EU. This appeals to the Pakistanis, who have been losing their jobs to the Poles. The UK has moved to a consensus that immigration destabilizes the island. This is a position very close to the Arizona state law about Mexicans and Central Americans. Puzzle if POTUS and the pols who have blasted Arizona are watching the UK results. If Cameron takes Luton North, which was plus 8.5% Labour in the last general, then the immigration card has worked. Put the immigration card together with the above statistic of 20% joblessness among young males int he US, and you have the making of a volatile election issue for the next cycles.

Son of Al Qaeda

By John Batchelor on May 4, 2010 5:58 PM | 5 Comments

Son of an Air Force General.

Colleague Simon Constable reporting with Evan Perez, WSJ, re the detention and now arrest and charging of American citizen Faisal Shahzad, 30, of Bridgeport, Connecticut. The facts so far support a general theory that the Sunday 2 May claim of sponsorship of the attack by Qari Hussain Mehsud of the Pakistan Taliban was credible -- and that linking the attack to the notorious Pakistan Taliban led by Haikeemullah Mehsud is correct. Spoke Bill Roggio and Arif Rafiq of Pakistan Policy Blog re the facts revealed that Shahzad (or Shazad) is the son of a retired Pakistan Air Force general and that he travelled to North Waziristan training camps in the period of late 2009 until his return to the US in February 2010. Shahzad looks to have been recruited and prepared for a lone wolf operation against American targets. The claims of the Mehsud clan are consistent with the nature of this attack. Bill Roggio explains the chronology and significance carefully in his LongWarJounal.com.

Mehsud Threat.

See the robust and not uncomical video below (emailed by the Taliban to Bill Roggio on Sunday May 2, before the revelation of the detention of Shahzad) in order to comprehend the boldness and ignorance of the Mehsud posse. The Mehsud are closely linked to Al Qaeda, and this is the network that provides the so-called hospitality for Bin Laden and his gang when they are in Waziristan. The grievance is based on the Predator strikes that have increased dramatically under the Obama administration. Mehsud includes his fantasies of explosions in American cities. I do not see an explosion at the spot that marks Manhattan. In fact the special effect gets clownish. But the threat in big banner headlines, similar to what might be used by horror films in the 1950s, does make it clear that the mainland is the target.

Nuke Speak

By John Batchelor on May 3, 2010 1:43 PM | 5 Comments

Truffles for Tehran.

The delusional dictator Ahmadinejad at the UN is a comic opening act that is impossible to top, so the US chair Susan Rice left the room. The game is to pretend that the Obama administration is unhappy with Tehran even while it sends kisses and chocolates to all manner of cretinous ops who pass messages along with only one small bite out of the truffles. The new script at the NSC is to press for a de-nuclear Middle East. In sum, pretend that the US is working with Egypt to make the Middle East a safer place. Knowing that Israel will not surrender its nukes, POTUS can pretend that the problem with the region is not Tehran but the nuke arms race, and that all stakeholders must be at the table. This is appeasement squared.

Israel.

No one is fooled by the Obama team shenanigans. No one is fooled by the Tehran bloody-mindedness. John Bolton writes that the Obama administration calculation is that Tehran can be managed as a nuke power in the same fashion as the US managed the Soviets. What is wrong with this assumption is that the Soviets, after Stalin, became a rational actor with predictable motives and reactions, with much to risk in a confrontation, while Tehran remains a delusional super-weakling with an uncertain and unpredictable regime of men who promote suicide and sadism. The Obama team seeks a retreat from its opposition to nukes in the hands of gangsters and their spiritual co-dependents. Review the 20th century. No good comes of handing off security to the camp of sycophants and liars such as the UN and its NPT regimen.

Of Interest

By John Batchelor on May 2, 2010 10:10 PM | 2 Comments

Manhunt.

Spoke Simon Constable, Thaddeus McCotter, Larry Johnson, John Fund, John Avlon, Steve Schippert, Fred Burton, Stratfor, Ed Hayes, Aaron Klein, re the Nissan VBIED and gained a foggy picture of a success for the bomber team. The vehicle was correctly prepared. Is it part of the attack that it was likely followed onto the island by surveillence cameras? The bomb did not ignite. Fred Burton says that it is difficult to build an IED from store-bought parts, and that he and the FBI used to practice constructing such bombs on the FBI firing range. The manhunt dominates the reporting, the nation participating in a thrilling assembly of clues, hints, images, events. NYPD releases a brief video of a man pulling off an overblouse in the Schubert Alley down the street from where the VBIED was parked, and the NYPD says this man is a "person of interest." My information is that the VBIED was similar to the attacks in London and Glasgow in 2007 by domestic UK citizens who had been radicalized by the internet links to the jihadists. The motive with the Times Square VBIED may be to radicalize the American Moslem population. The more exercised and paranoid the Moslems in America become, the less likely there will be snitching on larger operations than one VBIED at the Lion King. Even the pursuit of the bombers stirs the pot. The cameras are just starting to produce the cold trail of the Nissan VBIED (below Times Square Saturday May 1). The possibility that the VBIED was aimed at the Viacom (Comedy Central and South Park) headquarters cannot be ruled out.

"Is this the end of Johnny Rico?"

By John Batchelor on May 1, 2010 2:13 PM | 23 Comments

Goldman Agony.

Blankfein is too late and too weakened to repair the vast damage done to GS, the Street, and the art of gentlemanly piracy in the 21st century by Federal government interference in the market. Let the investment banks fail in '08, let the Too Big to Fail go away, and there is stability in the reorganization. Today we live with zombies who . The revelation of the criminal investigation into GS and the Big Short rocks the stock price and puts the game into a fast forward mode. I described it as moving the opera from Mozart to Beethoven. You know the ending will not be happy ever after. Blankfein performed credibly with Charlie Rose. No matter. The Obama team knows that destroying GS will poll well. The SEC case is a sidebar to Justice. Eric Holder's Khalid Sheik Mohammed Justice will go for the contest in the main arena, US vs GS, death match. When James Cagney, in the Great Depression "Public Enemy," asked, "Is this the end of Johnny Rico?" he was already dying. Blankfein gets the final speech before the curtain. "Is this the end of Goldman Sachs?"

POTUS Flyover.

POTUS changes his plans travel to the Gulf on Sunday, and this is the first indication that the NSC is trying to catch up to the story. Deepwater Horizon changes the narrative. POTUS and the Democrats were preparing to fight the mid-terms by recruiting the B Team of youth, tribe and gender, rallying the base with trash-talk of the wicked GOP Arizona Party of No Brains. Deepwater Horizon brings the story back to POTUS. What did Napolitano know, and when did she know it that the Coast Guard is mandated, since Valdez, to take charge of oil spill accidents pronto. BP pays but doesn't lead. Homeland (Coast Guard) waited for nine days before it moved, and now it calls on the US Navy. The new narrative is not about partisan gamesmanship, not about GS, not even about POTUS ambitions for a central planned economy. It is about governance. POTUS was just ambushed by events, and it is not yet clear that he has the skills to catch up. The script for the Arizona inquisition is no longer top of the page. The script for the bankers inquisition is no longer top of the page. The graphics of the Gulf, the scale of the engineering challenge, the subplot of the Obama administration decision to permit off-shore exploration, the sudden geopolitical challenge of an oil spill that will damage the whole Gulf and all the shorelines. What does POTUS do? Trash talk Big Oil. Launch a BP inquisition? The CYA at the White House starts with the usual John Brennan blocking:

John Brennan, the assistant to the president for Homeland Security, said, "the president has been fully engaged since the beginning," and has pushed to make sure there is an "integrated effort" between the state, local and federal governments as well as BP itself. "We need to move aggressively to mitigate the environmental damage to the coast and coastal waters," Brennan said.

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