THE MERKEL SPYING STORY: “I WISH YOU COULD HAVE INVENTED A MORE CONVINCING STORY; I FELT DISTINCTLY LIKE AN IDIOT REPEATING IT.”

10/28/13

If we are to believe the White House, the NSA had been spying on 35 world leaders since 2002 but the spying stopped after the White House found out about it earlier this year.  So Angela Merkel is not alone in being the subject of great interest by American spies, which should surprise no one.  But the President knew absolutely nothing about the program for over five years but put an immediate end to it as soon as he got wind of it, which should surprise everyone…if it were true.

Why do I doubt the White House on this one, and you should as well?

First, Mr. Obama and his henchmen are politicians and, as such, are rarely, if ever to be believed because a politician lies at least as easily as s/he tells the truth.   It seems as if this tendency to lie reflexively springs from an inability to make a moral distinction between deceit and honesty when the only legitimate moral standard is the advancement of one’s political career and the obvious benefits such continuation and furtherance will bring to the benighted masses.  But who knows what goes on in the febrile minds of these narcissistic fops?

Second, the reason given for the President’s not knowing about the program is that it wasn’t, as the Wall Street Journal put it (Monday, 10/28/13, page A1),  “practical to brief him on all of (the eavesdropping operations).”

Hmm…

While it might not be practical to brief the President on all the NSA’s eavesdropping operations, wouldn’t it make sense to take the time to brief him on an operation so important as that conducted against Angela Merkel, given that Germany is one of our closest allies, one of the world’s preeminent economic powers, and the de facto ruler of Europe?  One would think the NSA would have time to brief the President on such a trifling matter, right?

Third, let’s assume for a moment that the NSA really didn’t brief President Obama on its eavesdropping on Germany and 34 other countries.   Wasn’t the President sufficiently curious to wonder where all the juicy intelligence the operation garnered was coming from?   Though the President is not half as smart as his cheering section would have you believe (Nobody is.), he’s a pretty smart guy.  One would think that access to the information one hopes such an operation would be able to gather would pique his curiosity.

Interestingly, unless I have missed something, no one at the NSA or the White House has commented on whether President Bush was briefed on the eavesdropping on, inter alia, Angela Merkel and her predecessor, Gerhard Schroeder.  (Note that the operation had been going on since 2002.)   Given Mr. Bush’s having been nearly entirely free from the burden of intellectual curiosity, or even rational thought, no one would be at all surprised if, had he not been briefed, Mr. Bush displayed no curiosity whatsoever regarding the source of the intelligence he was getting on Mr. Schroeder and Mr. Merkel.   But I digress.

Two further points…

First, it is entirely possible, one supposes, that the NSA felt no need to brief the President of the United States on one of its most important, or at least one of its most high level, spying operations.  If this were true, the good news would be that the White House is not lying…but only about not being briefed on, not about its complete ignorance of, the operation.  The bad news is that the implications of a spy agency that does not feel that it ultimately reports to the President are genuinely horrifying. 

Second, on a slightly less frightening note, maybe the whole story about the NSA’s not briefing the President on a successful plot to bug the personal phone of the leader of a loyal ally and the second most consequential nation in the Western hemisphere is a load of horse excrement, as is the tale of the President’s being completely unaware of the caper.  Maybe the reason that the NSA and the White House are trying to force us to dine on such equine detritus is that, as many have suggested, the real story is that everyone spies on everyone but no one can admit it.   Maybe this is just the way “diplomacy” is conducted…trust but verify, as the Gipper put it in a related context. 

“Everyone does it” is never justification for a course of action desired by one’s teenage children.  And “everyone does it” does not seem like sufficient justification for spying on a good and faithful friend; it still offends our, or at least yours truly’s, sensibilities.  But the rules of international diplomacy do not necessarily comport closely with the ethical rules by which individuals conduct their lives.   But, as hypocrisy is the tribute immorality pays to morality, the politicians’ not being able to speak freely about what really goes on in international relations is an admission that ethics, as commonly understood, are at best an afterthought in such matters.

THE BUDGET DEAL IN WASHINGTON: “AND NOW, THE END IS NEAR, AND SO I FACE THE FINAL CURTAIN…”

10/17/13

Now that the government shutdown/debt limit standoff has been resolved, for now, the nation can proceed on three fronts.   First, the people who do the actual work in the federal government, as opposed to the politicians who make a living primping, preening, and posing for the media, can get back to work.  Second, the U.S. Treasury is “good for it” for a little while.   Third, yours truly has some comments, and hopefully some insightful comments, on the whole imbroglio.

One of the great things about being a cynic is that it allows one to overcome one’s former partisan leanings and look at political issues from a more objective perspective.   Cynicism leads one to loathe, or at least find both amusing and deeply troubling at the same time, politicians of both parties.  Being able to find very little, if anything, good in either party, we cynics can look at issues from a nearly non-partisan, nearly non-ideological standpoint, to wit…

First, the most obvious flaw with this deal is that it is only temporary.   The government will be “reopened” until January 15 and the debt ceiling will be suspended through February 7.   With the shell game tactics that the deal allowed the Treasury secretary to continue to employ, we should be able to avert another default until early March.   Oh, joy.   This temporary fix will allow the poltroons and popinjays on the Hill and in the White House time to negotiate.   Allowing the likes of Paul Ryan and Patty Murray more time to posture and pontificate is supposed to bring us relief.  O tempora, o mores!

One does not have to be too cynical to suspect that the narcissists in Washington are prolonging this soap opera because they crave the attention; see my 10/11/13 piece, THE DEBT CEILING“CRISIS”:  “HE WANTED TAN SHOES AND PINK SHOELACES, A POLKA DOT VEST AND MAN, OH MAN!”)

 

Second, the GOP does look like something of a traveling freak show after a massive deluge, an earth jarring earthquake, and a series of tornadoes at this stage.  But it is untrue that the Republicans came out of this with no victories whatsoever.  Recall that, earlier this week, the Democrats, feeling their oats, started making demands about rolling back the scheduled sequester cuts due to be implemented in January.  They quickly fell back from that position when it looked like insistence on rolling back the sequester would nearly certainly result in default.  So the GOP did achieve a small victory, along with tightening eligibility verification procedures for those receiving subsidies under the Affordable Health Care Act, or ObamaCare.  It’s certainly not much, and the GOP is looking quite ragged at this stage, but it’s not as if the GOP achieved nothing, as the media would have you believe.

Third, one of the early, and quickly abandoned, goals of the tea partiers was the postponement, or the elimination, of the ObamaCare requirement that that individuals buy health insurance.   As the Wall Street Journal put it this morning (Thursday, 10/17/13, page A6):

They (participants at the “Conversations with Conservatives” confab at the Heritage Foundation) continued to argue that the law (the Affordable Health Care Act) is unfair, and restated their goal to shield individuals who don’t buy insurance from a penalty that kicks in next year.  (Emphasis mine)

Yours truly is no fan of ObamaCare, doesn’t like to be told to do anything, and has something of a libertarian conservative streak in him.   However, protecting the right of people not to buy insurance, which is tantamount to protecting their right to welsh on their responsibilities and force others to pick up their health care expenses, does not seem like the most conservative of ideals to me.   Is this what the tea partiers were fighting for?  The right to shirk one’s responsibilities and force others to pay one’s bills?   If this is true, where do I turn in my “conservative” card?

Fourth, the most enthusiastic “conservatives” in the tea party have to be asking themselves why they are Republicans.  That they will get nowhere with the Republican Party, as it is currently constituted, is best illustrated by an odd, or perhaps intentional, juxtaposition of articles in today’s Wall Street Journal.  On page 1 of today’s (Thursday, 10/17/13’s) paper, we saw two articles with the headlines “Congress Passes a Debt Bill” and “Business Voices Frustration with GOP.”  

The GOP remains, for now, the party of business.  It will take the votes and contributions of the social conservatives and of the genuine fiscal conservatives, but when the chips are down it will do the bidding of the Chamber of Commerce, and will ally itself with the Democrats to do so, as the House vote on yesterday’s deal showed.   That was only the latest illustration of the true colors, for better or worse, of today’s GOP.    Look, for example, at whom the party nominated as its presidential standard-bearer in 2012; what in the world does a guy like Mitt Romney have in common with a populist social conservative who is willing to have the Treasury default on its obligations, and thus risk financial catastrophe, to make a point about a nearly completely unrelated issue? 

Either the tea partiers and their now social conservative allies have to take over the GOP and force the traditional Republicans out or the tea partiers and their social conservative allies have to form a third party.   The two groups can’t realistically co-exist…unless the tea partiers are a bunch of chumps.

As a side note, the President’s speech this morning, gloating and kicking the Republicans while they were down, didn’t help increase the level of “civility,” or “the ability to legislate” either.   Silliness and vanity are by no means exclusive to one party in Washington, despite what the media would have you believe.

Fifth, as much as those of us who genuinely favor a smaller government, and are nearly terrified by the rate at which the government is growing, would like to fantasize about it, there is no consensus, indeed very little enthusiasm among the populace for small government or even meaningful spending cuts.  Sure, everyone wants to cut spending in the abstract, but what those who profess such desire (everyone) really mean is that they’d like to cut the spending that benefits someone else.   No one wants his or her program even nicked, let alone eliminated.   Look at the outcry over the government shutdown and the serial re-opening of government agencies and functions that suddenly became “essential,” “vital,” or “indispensable.”  If we’d waited another week, every program would have been re-opened while the government remained on “lockdown.” Look at the understandable near panic at the prospect of the government’s missing that $50 billion social security payment on November 1.

 

Sadly, the American people, despite loud protests from some quarters about government’s reach and spending skyrocketing and seemingly out of control, have gotten very comfortable with big government, even creeping socialism.   They not only like their share of the bounty that flows from Washington, but one also suspects that, deep inside, they like being told what to do.  It makes life easier and enables one to get back to the business of acquiring crap one doesn’t need with money one doesn’t have to impress people one doesn’t like in a vain attempt to fill the gaping holes in one’s life.

Sixth, the world has to be shaking its head as it looks at once great America, having elected a cabal of mountebanks and charlatans to govern it, bringing itself to the brink of tarnishing, if not destroying, the credibility of the world’s bedrock credit and currency.   Chinese talk earlier this week of “de-Americanizing” the world’s financial structure has to be falling on fertile ground.

What’s the alternative, one might ask?  Right now, there may not be an alternative, though one suspects that when one looks at the German, British, and Japanese government bond markets, one has the makings of a realistic alternative, or set of alternatives (The last may not be a good candidate, given Japan’s fiscal problems; see my 9/13/13 piece ABENOMICS: HAVE THE GOVERNMENT CREATE A MESS AND THEN SPEND MONEY CLEANING IT UP for only my latest screed on Japanese fiscal mismanagement), and this is even before the Chinese bond market develops.  At any rate, one suspects that the search has intensified in recent weeks for an alternative to the U.S. treasury market, and thus to the dollar, that has somehow put itself in a position of being at the mercy of the whims of a pack of poltroons and popinjays who feel allegiance to nothing so much as their own visages in the paper, on television, and in the mirror.

Maybe I’m wrong; Treasuries have caught a big bid today, with the ten year yield down to 2.60% as I write this.  But gold and silver have also caught big bids today.  And the dollar is down virtually across the board.

As I have said ad nauseam in the past, one can’t draw conclusions from one day’s trading.  But yours truly’s enthusiasm for gold and silver, always present and always disproportionate, is only growing, as is my enthusiasm for foreign markets in general.   And yours truly is far from alone.

OBAMA’S EXCELLENT SYRIAN ADVENTURE: THE NOBEL PEACE PRIZE WINNER GETS BY WITH A LITTLE HELP FROM HIS ENEMIES?

9/2/13

President Obama has finally done the right thing regarding the ghastly situation in Syria.

He may have looked more indecisive than the Dane himself in doing so.   Further, he may be doing so for the wrong reasons; a lot of people think the President is seeking Congressional approval of military action against Bashar Assad only as a ruse for changing his mind once again.   All this doesn’t matter.  We can’t count on people’s good motives; Francis of Assisi long ago vacated this mortal coil and there are few decent replacements.  We can only count on people’s actions.   And, regardless of his motivations, the President has finally done the right thing and gone the Constitutional route in asking Congressional approval before sending American blood and treasure on yet another foreign adventure with dubious, yet frightful, potential consequences.  In so doing, Mr. Obama has reversed the approach of every post-War president, with the possible and ironic exception of Richard Nixon, in committing American firepower, money, and troops to combat, which has been, effectively, I am the State.

This circuitous, stumbling in the dark path to righteousness has come at some cost to American credibility.   In his alternating red lines, expressions of outrage, and admonitions to caution, Mr. Obama has displayed more flip-flops than will be seen on the Jersey Shore this Labor Day weekend.   As Efraim Inbar, director of the Begin-Sadat Center for Strategic Studies at Bar-Ilan University put it, the President

“…is becoming a laughingstock in the eyes of friends and foe alike.”

While it is hard in the Middle East, or anywhere, for that matter, to distinguish friend from foe (Was it Kissinger, Metternich, or Richelieu who said “Countries don’t have permanent friends; they only have permanent interests?), Mr. Inbar has a point.  Mr. Obama could have saved himself, and this country, a lot of humiliation by saying early on, and unequivocally, that the U.S. has no interests in Syria sufficiently salient to commit American resources and kids to the conflict.   (See 8/27/13’s  SYRIA:  “WE (WILL) GET FOOLED AGAIN!” for only my latest expostulation on why getting involved in yet another Middle Eastern centuries old irresolvable sectarian conflict would be ruinous, or worse, for the United States and the world.)   But the President, as is his wont, blew that opportunity.  

More importantly, if it took an embarrassing to the point of pain Hamlet act on the international stage on the part of the President to finally get him to do what no president since Roosevelt has done, i.e., abide by the Constitution in committing American troops to conflict, that is a small price to pay.

Will the President be able to persuade the Congress to go along with this latest Bushite adventure for who knows what reason in the Middle East?   Or will he suffer the type of heaven sent humiliation that the clear-headed British Parliament sent to the starry-eyed David Cameron?

First, while things can change rapidly and political predictions are thus always perilous, the odds are not good that the Congress will give the President the nod he ostensibly seeks.   Mr. Obama must persuade not only those Congresspersons with the good sense to stay as far away from Syria as one does from a rabid dog; he also must also mollify the likes of Senators John McCain and his mini-me, Senator Lindsey Graham, who seem to have visions of mushroom clouds, and generous payment of IOUs to the “defense” industry, once again dancing in their febrile brains.   One can only hope that the Republican impulse to oppose anything that Mr. Obama proposes will override the GOP reflexive equation of militarism with patriotism and that they will thus join the Democrats, and the libertarian oriented corners of the GOP, to slap Mr. Obama’s hand and save us from another quagmire in the cradle of civilization.

Second, one does get the impression that the President is secretly hoping that Congress will not go along with the Bushite militarism that has led Mr. Obama and his team to ostensibly flak for another folly in the Middle East.   This will enable the President to avoid conflict, blame it on Congress, and breathe a heavy sigh of relief.   The nation ought to join him in that sigh should that be the outcome of this entire fiasco.

REPLACING FANNIE AND FREDDIE: “I’LL BE HERE WHEN THE MORNIN’ COMES; I’LL BE RIGHT HERE AND I AIN’T GONNA RUN…”

8/6/13

President Obama reportedly will propose today a revamped system of guaranteeing residential mortgage loans in this country.   The previous system, in which Fannie Mae and Freddie Mac, strange hybrids of private profit, public risk, and federal patronage, guaranteed mortgage loans with the implicit guarantee of the taxpayers, has obviously been a failure.  Mr. Obama proposes replacing them with private sector guarantors backstopped by a government guarantee, which sounds strangely like, well, Fannie Mae and Freddie Mac.

The Republicans are not quite clear on what they would replace Fannie and Freddie with but are paying their usual lip service to the private sector.   But a purely private mortgage loan guarantee system is a pipe dream.  Why?  Because there is no substantial market for the types of loans that have supported real estate in this country for just about as long as most people can remember—long term (usually 30 year), fixed rate loans with no call protection for the lender—without federal guarantees.  As long as we insist that borrowers are entitled to loans that feature almost incredibly juicy terms to them and just as incredibly lousy terms to the lenders, the government has to play a big role in the mortgage lending.

The obvious answer, it seems, to avoiding a repeat of the Fannie/Freddie debacle is to move away from the 30 year fixed rate loan model on which the real estate market has been built.   Remove the guarantees and let lenders make loans that make sense from an investment perspective, loans that they would be willing to hold on their books rather than sell to a government backed entity.   Variable rates would clearly be a big part of such a mix, but the cleverness and innovation of the free markets would make all sorts of loans, probably including equity participation loans, available to consumers.  But the 30 year fixed rate loan, ridiculously skewed in favor of the borrower, would probably become a museum piece.

Such a logical transition will probably never take place, even though it works in most other advanced economies.   The real estate industry would scream bloody murder.   Homeowners, largely at the inducement of the real estate industry, would complain that the value of their homes, previously inflated by government guarantees, would be hurt.  Potential home buyers would whine that their entitlement…the 30 year fixed rate loan…had been taken away from them.   And so Fannie and Freddie, or, more likely, something very much like them with a different name, will be around more or less forever.

Long ago, we decided, for whatever reason, that we would heavily subsidize homeownership, and thus investment in residential real estate, in this country.   The largest components of that subsidy are the deductibility of mortgage loan interest and the 30 year fixed rate loan made possible through the intercession of the government.  Neither makes much sense, but neither will be going anywhere soon.  As usual, politics trumps finance, economics, and common sense…and we live with the consequences.

ADDRESSING THE PROBLEMS OF MEDICARE: MR. RYAN STAYS IN WASHINGTON

3/13/13

As regular readers know, I am no fan of Representative and former Vice-Presidential Paul Ryan.   (See my 1/2/13 post, PAUL RYAN:   MORE PAP AND PABULUM FROM THE MASTER OF HYPOCRISY, which is only my latest diatribe on the man who represents all that is wrong with American politics.)  My problems with Mr. Ryan have little to do with policy and everything to do with his background and his presumption that, as a lifelong public payroller, he has some sort of wisdom to impart to those of us who pay the bills for the lifelong ego trip he calls a career.   This, of course, makes him no different from just about any other politician in this age of politics as a “profession;” however, it is Mr. Ryan’s hypocrisy, his endless, vocal, and stentorian paeans to the private sector bellowed while he is comfortably ensconced at the public trough, that make him more grating than the rest of the barnacles on the ship of state that inhabit Washington, D.C.

Mr. Ryan’s latest budget, which purports to balance in ten years while providing so few specifics as to be laughable, is only the latest in his insults to the intellect of the American people, a collective intellect that is, after years of endless exposure to the vapidity of prime time television, rapidly reaching the point at which it is incapable of being insulted by anyone lacking the utter lack of shame and introspection that characterizes Mr. Ryan.   The budget, unlike most other things emanating from the Janus-faced GOP, does show a glimmer of common sense in tackling brobdingnagian expenditures on foreign adventures and proboscis insertion that the bi-partisan War Party insists on calling “defense.”   So never let it be said that I have never said anything nice about Mr. Ryan.  Further, he is, I understand from those few people I know who know Mr. Ryan, a nice guy, a wonderful family man, and a good Catholic. So there…more nice things to say about Mr. Ryan.  But I digress.

The major problem with Mr. Ryan’s budget lies at the intersection of his utter lack of experience with anything remotely resembling the real world and his desire to tackle the major problem facing our budget, health care spending and, specifically, Medicare spending.   As much as I don’t like to give President Obama many kudos, either, he was nearly right when he said something like (I can’t quote directly because I don’t have the quote in front of me.)

We don’t have a budget problem; we have a health care problem.

Even though Mr. Ryan would never admit it for fear of introducing even a jot or tittle of risk to his comfortable lifetime sinecure dispensing what he thinks is his wisdom to those of us who have never had the good fortune to spend our days suckling at the public mammary gland, he agrees with the President on this point; if we don’t solve our health care spending problem, we will never solve our budgetary problems.   And if we can some how control our health care spending, we will all but eliminate our budgetary problems.

So the problem with our budget is Medicare and, to a lesser extent, Medicaid.  Mr. Ryan, to his credit, tries to attack the problem of Medicare by applying free market principles, which almost always work, to the Sisyphean difficulties Medicare presents.  But Medicare’s problems are not amenable to free market solutions.   Why?

Medicare is a huge, expensive government program simply because it is impossible to insure the elderly population profitably and the elderly population is growing rapidly.  It is impossible to insure the elderly profitably because older people, on average, spend a lot more on health care than just about any of them could possibly afford to pay by themselves.  Health insurance is essentially cost and risk spreading and the elderly, as a group, incur more health care expenditures than they could pay even if those costs are spread across their peer group.  That is why in a world in which insurance companies seek to operate profitably, being old is a pre-existing condition.   No profit seeking health insurer would sell health insurance to elderly people at anything remotely resembling affordable premiums, and charging market premiums would so shrink the insured pool that realistic cost and risk spreading would be impossible.

This inability to insure elderly people profitably, and thus the inability of elderly people, and especially elderly retired people, to obtain health insurance is what spawned Medicare.   Medicare was simply a concession to reality.   Whether it’s been run well or not is subject to debate, but there is no one who is reasonable who would argue that some kind of government program to provide health insurance to the elderly was and is necessary.  Why?   Because the cost of insuring the elderly, which could never be carried by the elderly, has to be shared with the non-elderly, if you will.   If you can spread the risks and costs beyond the elderly population, then you can insure senior citizens.   That is what Medicare, or any health insurance plan for the elderly, is designed to do.   That is why, incidentally, there will be such resistance from the not yet elderly to tinkering with the problem…they have spent years on the paying end of the cost spreading system and understandably don’t want to be denied their turn on the receiving end.

To his credit, Mr. Ryan realizes that a subsidy is necessary to insure the elderly; thus his “premium support” plan that replaces a government program that transfers costs beyond the elderly with a  (don’t call it a ) voucher for the individual to buy his or her own insurance from a private purveyor.  Mr. Ryan expects the usually nearly miraculous powers of the free market to work to drive down costs by effectively and efficiently providing health insurance to seniors.   Mr. Ryan assures us that insurance companies who participate in the program will not be able to turn down potential customers due to pre-existing conditions.  He assumes that insurance companies will be lining up to provide health insurance to those they currently would deem uninsurable, i.e., any senior citizen.  

But why would insurers volunteer to decimate their bottom lines insuring the currently uninsurable and/or to pay claims that vastly exceed the premiums they collect?  Could insurance companies make money insuring the elderly at anything like the premium support level Mr. Ryan proposes without, or even with, cherry picking those least likely to bust their bottom lines?   It seems like they wouldn’t and couldn’t.…unless the government were to provide some kind of subsidy to the insurance companies or some kind of cap on the liabilities the insurers face, a feature inherent in current MediGap policies.   And if government provides subsidies to insurance companies, either directly or through capping their liabilities, how would the new system be much different, at least in cost, from the current system?   And how would our budget problems thus be solved?  (I first addressed this problem in a 4/6/11 post on The Insightful Pontificator entitled “I WISH YOU HEALTH, AND MORE THAN WEALTH, I WISH YOU LOVE…”)

It simply isn’t possible to insure the elderly population without either losing lots of money or requiring a massive subsidy from the not yet elderly.  The free market has very few limits, but this is one of them.  That is why virtually every country has a program to provide subsidized health insurance, or health care, to the elderly.  Ours is called Medicare.   It may not be the greatest program in the world and if we don’t get it under control, it will bankrupt our country as my generation becomes entitled to its subsidies.  Mr. Ryan’s program tries to address this issue, but ignores the inherent uninsurability of the elderly by the private sector.   This isn’t surprising, however, given that Mr. Ryan has spent his life on some sort of government health insurance program.