The John Batchelor Show

Thursday 8 May 2014

Air Date: 
May 08, 2014

Photo, above: 

JOHN BATCHELOR SHOW

Co-hosts: Mary Kissel, Wall Street Journal editorial board. Malcolm Hoenlein, Conference of Presidents.

Hour One

Thursday   8 May   2014 / Hour 1, Block A: Josh Rauh, author, Advancing a Free Society ; Stephen Haber, Hoover: Fragile by Design, with Charles Calimiris; Tim Kane, author, The Economics of Great Powers from Ancient Rome to Modern America, & Hoover; in re: Yes, the US economic system is stabler now than it was n 2009, but situation is quite unclear. Regulators are supposed to have a crystal balloon, which they don’t. Need lots of risk on bank balance sheet, and very  low levels of capital risk – both easily observed and much seen before collapse of subprime bubble, Question: how did we generate low capital  and high risk? Employees today invest in 401Ks; others, in older corporations or state and local govts: a lot of unfunded debts for pension obligations.  Formally, for old-line co's, the feds are on e hook. For city and state govts. there's a lot of claims that the feds aren't – but that's not clear. Will the feds by city bonds to bail them out?  Endemic problems: the w=the way budgeting is done in state and local budgets, not one of which has a pension system that's balanced in reality.  In Washington, a joke: "How's the economy"  "Either in recession or heading to recession."   Who bails out the Leviathan?  Hyperinflation.  (1 of 4)

Averting the Public Pension Crisis without a National Insurance Agency. Public Sector Pensions Are a National Issuee21, Economic Policies for the 21st Century:  The Illusion of Reform and the Next Housing CrisisWashington Examiner:  The Blight of Bank Bailouts. Coming Together: Flight 370 Search Unites Global Community. Advancing a Free Society:  A Subtle Danger    FoxNews.com:  Why 2014 Will Be the Year of Immigration Reform

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Who bails out the Leviathan?  Hyperinflation.

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Thursday   8 May   2014 / Hour 1, Block B: Josh Rauh, author, Advancing a Free Society ; Stephen Haber, Hoover: Fragile by Design, with Charles Calimiris; Tim Kane, author, The Economics of Great Powers from Ancient Rome to Modern America, & Hoover; in re:      . . . We're losing our best people, having the Pentagon reduced in size but till bloated.   Gary Becker and Milton Friedman both advocated a volunteer army, Secy Gates: "Wish I’d finished [cleaning up] the institutional hardware – put people first, not last."   All these years later, Fannie Mae and Freddie Mac still here!  Strong political interests in keeping these two, now driven buy their having sustained the mortgage mkt, so supported by Nat Assn of Homebldrs, plus left I Congress – can use them to pay affordable housing initiatives. Eventually the bill comes due:  as taxes from citizenry.  Under Bush II, banks were required (by Fannie and Freddie)We're rewarding failure; companies pay much-too-low premiums   (2 of 4)

Thursday   8 May   2014 / Hour 1, Block C: Josh Rauh, author, Advancing a Free Society ; Stephen Haber, Hoover: Fragile by Design, with Charles Calimiris; Tim Kane, author, The Economics of Great Powers from Ancient Rome to Modern America, & Hoover; in re: Banking, pensions, and the Pentagon.  WaMu made loans knowing they couldn't be repaid; sold the too Fannie and Freddie, then bought 'em back – even accepted loans that included food stamps as income.  We have mortgages backed by very low levels of capital.   The political demand for this continues; may recur.  And when it blows up again, the pols who voted for it will  be safely out of office. Esp state & local pensions:  those with large unfunded debts, and the money is owed to public employees – look for a bailout. Pensions are both being promised with mad largesse, and the bookkeeping is absurd – so taxpayers wind up on the hook.  How to fix? Require correct accounting.  Reforming the Pentagon:  it’s never been audited, and never will be  because we don’t know where everything is that we dot know; they have weapons from every war we've every fought.  Men and women who tolerate this are not reformers.   On active duty: 1.4 million; but if they don’t stay in for a full 20 years they get zip [if they leave after 19.5 years of life-and-death combat, they just hit the road with zero pension].  Must have a 401K-style plan.  SH: I strongly favor transparency – if all the  facts preceding 2009 had been seen, pols couldn’t have voted for them. Deals are hammered out by pols that few can understand; one of the important roles of academics is to clarify all this. This show is important precisely to do that.  The public didn't understand that it was on the hook for trillions of dollars of mortgage loans. Instead, pols on both sides promoted he notion of a free lunch: Bush - the ownership society; Clinton -     (3 of 4)

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One of the important roles of academics is to shed light on the actual meaning of back-room deals. This show is important precisely to do that.

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Thursday   8 May   2014 / Hour 1, Block D: Josh Rauh, Hoover; Stephen Haber, Hoover; Tim Kane, author, The Economics of Great Powers from Ancient Rome to Modern America,  & Hoover; in re:  . . .  The defense contractors may save us from this, as they don’t want another collapse.  Citizens must inform themselves.  Lots of people get it, but pols have no incentive to move   (4 of 4)

Hour Two

Thursday   8 May   2014 / Hour 2, Block A: Elliott Abrams, senior Fellow for Middle Eastern Studies at the Council on Foreign Relations, Washington; in re: The dire news from Homs, abandoned by the rebels in face of the bloodthirsty revolution. They’re getting not much support from the US, which has given food and bandages but no arms. Special Envoy Martin Indyk made comments highly critical of Israel; these were disavowed by the president. He's speaking tonight at he Washington Institute, tweets going out: he blames Netanyahu and Israel.  May he soon resign his position and return to Brooking Institution. He had a bad relations hip with Bibi since Clinton years.   In any case, Abbas isn’t about to sign anything; he's not a historic figure, merely filled in after Abu Ammar.    PA will say, "See, e tried but it’s the Jews and settlements, which will be picked up by Europeans.  Susan Rice in Israel: significant? No.  She'll not listen, just vaguely handhold.  No one foresaw Crimea, can’t see into the future here.   Tinkerbelle Effect [q.v.].

Thursday   8 May   2014 / Hour 2, Block B: Ambassador Ron Prosor, Israel’s Permanent Representative to the United Nations, in re: Yesterday celebrated 66th anniversary of the state of Israel; received remarkable support in the UN.  Amb Prosor has just delivered a speech covering: nonproliferation of weapons of mass destruction; treaty violations; Security Council and Assad's chem weapons; Hamas: "Will never accept the Quartet deal." Horrifying things occurring in Syria – the UN's abject failure to support Syrians is incomprehensible and ghastly.   Men,, women and children being executed daily by Assad.  Shi's, Sunni, Alawis, when wounded all seek help from Israel.  Abass's unity with Hamas will give it impunity . . . Intl community is lending legitimacy to attacks against Israel.  Hamas is overtly not following it’s treaty obligations; people who want to achieve peace find this going in a completely different direction.   Five global treaties on torture and racial discrimination: isn’t PA in breach of these? Yes. Four Geneva Conventions, Rights of the Child - teaching tiny children to shoot Israelis; discrimination against women - honor killings have doubled; covenant on civil and political rights: sending journalists to jail.  . . .  We have to remind ourselves daily that there's a bond with both sides of the aisle, and it’s strategic.  State of Israel s a model of allowing anyone to say what he wants. 

Thursday   8 May   2014 / Hour 2, Block C: Roger Cukierman; French banker, businessman and Jewish philanthropist. He serves as the President of the Conseil Représentatif des Institutions juives de France (CRIF) and Vice President of the World Jewish Congress; in re: France, French Jewry, anti-Semitism in Europe. Quenelle is a mirror-mimicry of the Nazi salute, started by a soi-disant humorist who detests Jews; he does it in front of Jewish institutions and his friends do it in front of Auschwitz – it is not neutral.  Meaning: Jews, Frnce is not yours.  There are sources of anti-Semitism in France, first the extreme right Front National, Mme LePen, who carefully doesn’t utter anti-Jewish pronouncements (although her father did) and who may have 25% of the vote. Also anti-Zionists who promote a boycott, very efficient.  Finally, from a  medium-sized proportion of French Muslims: if you go in their quartier with a small skullcap, you'll be in danger; some of them go to Mali and others to fight against the West. Estimates of the number there is up to 500 people, of whom 25 have die.  Extreme right is flourishing all over Europe, and next elections may consolidate; Golden Dawn ad LePen may join, while the LePen machine may become part of government.  Citizens point to the huge influx of North Africans who maybe unemployed and yet in large numbers receive considerable social security payments.  A photo of a young man having his picture taken in front of Birkenau. You can’t go in ht Paris subway with a skullcap without being attacked. Jews receive 41% of attacks while our population is 1%.  "Quenelle salute": is now condemned by courts and practice id s diminished to avoid being arrested.  We’re lucky to have a govt, from Hollande to _, to be on our side. We had a demonstration on 19 March where current PM made a speech saying ant-Zionism IS anti-Semitism, and that France sold not exist without the Jews. 

Does French Jewry’s leader think fighting quenelle is futile? Roger Cukierman has called the gesture a Nazi salute, and said it’s neither worrisome or punishable. Confused?   | The Times of Israel  As the third-term president of French Jewry’s main body, Roger Cukierman is pretty good at spotting xenophobia.  And as a former top banker with a doctorate in economics, he’s not bad at recognizing bad investments, either.  These two skills may be key to understanding a series of conflicting statements by Cukierman this past month about the quenelle — a gesture with Nazi undertones that was invented by an anti-Semite but whose use French Jews and politicians have been powerless to stop because of the quenelle’s ambiguity.

Cukierman has called the quenelle a worrisome Nazi salute but then said it was sometimes neither worrisome nor punishable, until he finally again called it a punishable Nazi salute.  Cukierman’s uncertainty may be less about the quenelle itself and more as to whether fighting it is a winnable battle in which it is worth investing. But either way, his qualms resulted in what is being perceived as a bad case of the shivers when the chips are already very much on the table. [more]

Thursday   8 May   2014 / Hour 2, Block D: Emanuele Ottolenghi, FDD, in re:  Iran, sanctions-busting, Turkey. The rush to get a deal with Iran: eh calendar. Sense that a new opportunity was created with the election of Pres Rouhani. Also, if the negotiations continue, those in Iran who oppose a deal with the West may gain the upper hand. Problem: this cannot all be solved in six months.  US is broadcasting such eagerness to get a deal that we’ve undermined our credibility.  MK: A dip once told me, "I cannot negotiate with a govt that doesn’t trust its own people."  EO: Preposterous that with the elect of Rouhani the West is persuaded hat this is the hour of the moderates. In fact, Rouhani and his people are much more sophisticated in presenting themselves, but are just as cruel as their predecessors.  Iranian press reporting on the breakdown of the sanctions psychology and how flocks of Western business people are arriving in Iran, An Italian described as an investment advisor in Tabriz, on twinning of Tabriz and an Italian city (a bogus tale) – the name used is Giorgio Mourandi, a famous and dead artist. 

Hour Three

Thursday   8 May   2014 / Hour 3, Block A: Malcolm Hoenlein, Conference of Presidents, in re: Abbas apparently ever intended to sign anything. He's elder, a smoker, sees hat he's near the end of his time. Not accept Quartet requirements, will not accept the Zionist entity but will hang on till the PA can take over the whole land.  Susan Rice embraces Shimon Peres, says that the lead time on the agreement has to be at least a year.  Russia is a factor: looms large in he region; Euros say that Russia felt free to move in Crimea and Eastern Ukraine because no one stops Syrian massacre, et al.  Build Israeli-Egyptian pipeline Israel can send LNG to Egypt. 

Thursday   8 May   2014 / Hour 3, Block B: Simon Henderson, Baker Fellow and director of the Gulf and Energy Policy Program at The Washington Institute; in re: Pipeline so Israel can supply gas to Egypt.    Egypt has more gas than Israel but consumes huge amounts; Israel has found some and just begun to exploit it; also planning to export, esp to Egypt, which can liquefy it for shipping worldwide.  Prince Bandar bin Sultan, dean of Washington dip corps, returned to Saudi and became Secy Gen of Natl Security Council. He resigned the latter, may still be at former.  He's good at operating internationally; his relations with the US are disastrous, but he's still in the game. 

Thursday   8 May   2014 / Hour 3, Block C: Jeremy Christopher Carl, Hoover, in re: California has a very strong national voice in energy; hydrofracking: even our present Secretary of Energy favors it.   Environmentalist opposition to fracking borders on being a secular religion; have a lot of control over he media. Even scientists are hiding sheepishly and embarrassed because they no that from a scientific perspective, here are no real reasons to oppose. Drilling goes down thousands of feet, through the water table. If cementing is done correctly, has absolutely no influence on drinking water. Climate change: 53% of Cal Dems ban fracking in California.  Sad disinformation campaign.   Note: 95% of the models we've been relying on show significantly more warming than has actually occurred.  On all sides of the political spectrum is a tendency to shut out what one doesn’t want to hear. If we'd quadrupled the number of tornados in the last decade, do you think there'd be as much skepticism as there is? We prefer not to invert out entire economic system based on shaky theories.  Cal GOP tries hard; ran diverse, pragmatic candidates and lost all races.  Dems will continue to do whatever thy want. GOP hasn’t held the state legislature for a half-century; at some point, they have to take responsibility for [where we're at].

(1) Just-released quadrennial report on climate change from the Administration; (2) Hydraulic fracturing and natural gas exports in the context of Russia/Ukraine; (3) The likely failure of California's cap and trade system.

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"Reality is that which, when you stop believing in it, doesn't go away."

–Philip K Dick

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Thursday   8 May   2014 / Hour 3, Block D: David Davenport, Hoover, in re:   Religion in the public square.  First Amendment refers not to brief practice of religion but to actual coercion.  In the Greece, New York, town hall, persons can come and go, so there's no coercion, and everyone acknowledges that the practice is ceremonial.  First Amendment doesn’t protect us from being uncomfortable, only from proselytizing. 

[David Davenport is a research fellow and director of Washington, DC, Programs at the Hoover Institution. He specializes in international law and treaties, constitutional federalism, and American politics and law.]

Hour Four

Thursday   8 May   2014 / Hour 4, Block A: Carson Bruno, Hoover, in re: California into six states?  In the North: Jefferson – rural, small population; West California, incl LA (huge in size and population); North California;  Silicon Valley (the current state's economic driver); Central Valley; Southern California – the Inland Empire; ___ . Proposition probably won’t get on the ballot; were it to, wouldn’t pass; were it to, Congress probably would refuse. 

Thursday   8 May   2014 / Hour 4, Block B: Carson Bruno, Hoover, in re: Looking at these divisions, labor no longer dominates; aerospace has been dying off due to end of First Cold War plus restrictive regulations.  Silicon Valley drives the economy.  Instead, need a diversified economy. Currently:  60% of California's tax revenues come from personal income tax.  . . .

Whoa! It’s not Sacramento that's trying t jack up taxes and indulge in enormous expenditures - high-speed rail(that doesn’t work), and the like.  About 30% of the state's Dems are in LA County, but only 20% of primary voters. All but two of the (Sacramento leadership?) come from the Bay Area – where the money is, the political initiative is (from San Jose to San Francisco).

Thursday   8 May   2014 / Hour 4, Block C: Jonathan Rodden, Hoover  senior Fellow, in re: Polarization between the parties and big data on it. . . .    Has not always been thus, but now a strong correlation between density of population and Democratic voting; rural, lightly-populated areas are predominantly Republican.

US is unique among former British colonies in having a presidential, not parliamentary, system.  Proportional representation systems usu have lots of parties.  Most presidential systems have multiple parties, so presidents never presided over majorities, had fragmentary legislatures.  In US, cannot put together a legislative coalition in order to win legislative votes. Now, we have a strong two-party system but divided govt. Since 1950, two-thirds of presidencies have dealt w divided govt.

Nick Bloom, Scott Baker, and John Taylor have been working one this. Uncertainty abt future policy causes investors to pull back, creating a drag on the economy.  True in other countries.   Usu long-term investments are pulled back before an election if the parties are in strong disagreement. You can get a deal done only at the last minute when the game of chicken is about to crash – on the eve of govt shutdown, which leads to large partisan fears, which only increases the partisanship.  At present, even the most moderate members of an opposition party have incentives to behave more like a British back-bencher and vote No. 

Inside state legislatures:  there are reforms that could loosen this: a Constitutional reform (a la Woodrow Wilson) – unlikely; gerrymandering; compulsory voting, which isn’t welcome in the US or, if feasible, probably only at the state level. Presumption is that compulsory voting would give the upper hand to moderates – thus, the notion of base mobilization would be destroyed [and donations probably reduced; it’s all about money].  A transition to compulsory voting is likely only at the hands of whoever is not in power.   (1 of 2)  

Thursday   8 May   2014 / Hour 4, Block D: Jonathan Rodden, Hoover  senior Fellow, in re: Dysfunctional govt:   Purple districts contain deep red and deep blue.  It’s not the case that . . .  "Americans are moving into homogeneous communities" – not really at the district-level presidential vote shares.  When we look inside the districts beyond the aggregate vote shares and look at precinct levels, often find them extremely polarized.  Election is a turn-out battle between red and blue voters.  People who want to work together can't necessarily be found in purple districts, as far-left and far-right may live next door to each other. 

Our university students have dvpd new techniques, found ideologically-polarized persons in close quarters. Where are the moderates? In the kind of middle ring of suburbs.   Note that gerrymandering does not encourage moderation. geography, esp in some settings such as Bloomington, Indiana: liberal center surrounded by agricultural GOP population. One thing poli-sci has been saying: regular Americans are less polarized than these fights suggest, despite reports.   (2 of 2)