Learning from Dogs

Uncontrolled borders and Washington’s lack of self-control

[This article appeared in the online version of the Wall Street Journal on May 1st. Copyright exists with the WSJ and it is reproduced below without permission. However, it seems to me to be such an insightful commentary on present conditions that the decision was taken to publish it on Learning from Dogs. Ed.]

By Peggy Noonan

Peggy Noonan

We are at a remarkable moment. We have an open, 2,000-mile border to our south, and the entity with the power to enforce the law and impose safety and order will not do it. Wall Street collapsed, taking Main Street’s money with it, and the government can’t really figure out what to do about it because the government itself was deeply implicated in the crash, and both political parties are full of people whose political careers have been made possible by Wall Street contributions. Meanwhile we pass huge laws, bills so comprehensive, omnibus and transformative that no one knows what’s in them and no one—literally, no one—knows how exactly they will be executed or interpreted. Citizens search for new laws online, pore over them at night, and come away knowing no more than they did before they typed “dot-gov.”

It is not that no one’s in control. Washington is full of people who insist they’re in control and who go to great lengths to display their power. It’s that no one takes responsibility and authority. Washington daily delivers to the people two stark and utterly conflicting messages: “We control everything” and “You’re on your own.”

All this contributes to a deep and growing alienation between the people of America and the government of America in Washington.

This is not the old, conservative and long-lampooned “I don’t trust gummint” attitude of the 1950s, ’60s and ’70s. It’s something new, or rather something so much more broadly and fully evolved that it constitutes something new. The right never trusted the government, but now the middle doesn’t. I asked a campaigner for Hillary Clinton recently where her sturdy, pantsuited supporters had gone. They didn’t seem part of the Obama brigades. “Some of them are at the tea party,” she said.

None of this happened overnight. It is, most recently, the result of two wars that were supposed to be cakewalks, Katrina, the crash, and the phenomenon of a federal government that seemed less and less competent attempting to do more and more by passing bigger and bigger laws.

Add to this states on the verge of bankruptcy, the looming debt crisis of the federal government, the likelihood of ever-rising taxes. Shake it all together, and you have the makings of the big alienation. Alienation is often followed by full-blown antagonism, and antagonism by breakage.

Which brings us to Arizona and its much-criticized attempt to institute a law aimed at controlling its own border with Mexico. It is doing this because the federal

The US-Mexico border

government won’t, and because Arizonans have a crisis on their hands, areas on the border where criminal behavior flourishes, where there have been kidnappings, murders and gang violence. If the law is abusive, it will be determined quickly enough, in the courts. In keeping with recent tradition, they were reading parts of the law aloud on cable the other night, with bright and sincere people completely disagreeing on the meaning of the words they were reading. No one knows how the law will be executed or interpreted.

Every state and region has its own facts and experience. In New York, legal and illegal immigrants keep the city running: They work hard jobs with brutal hours, rip off no one on Wall Street, and do not crash the economy. They are generally considered among the good guys. I’m not sure New Yorkers can fairly judge the situation in Arizona, nor Arizonans the situation in New York.

But the larger point is that Arizona is moving forward because the government in Washington has completely abdicated its responsibility. For 10 years—at least—through two administrations, Washington deliberately did nothing to ease the crisis on the borders because politicians calculated that an air of mounting crisis would spur mounting support for what Washington thought was appropriate reform—i.e., reform that would help the Democratic and Republican parties.

Both parties resemble Gordon Brown, who is about to lose the prime ministership of Britain. On the campaign trail this week, he was famously questioned by a party voter about his stand on immigration. He gave her the verbal runaround, all boilerplate and shrugs, and later complained to an aide, on an open mic, that he’d been forced into conversation with that “bigoted woman.”

He really thought she was a bigot. Because she asked about immigration. Which is, to him, a sign of at least latent racism.

The establishments of the American political parties, and the media, are full of people who think concern about illegal immigration is a mark of racism. If you were Freud you might say, “How odd that’s where their minds so quickly go, how strange they’re so eager to point an accusing finger. Could they be projecting onto others their own, heavily defended-against inner emotions?” But let’s not do Freud, he’s too interesting. Maybe they’re just smug and sanctimonious.

The American president has the power to control America’s borders if he wants to, but George W. Bush and Barack Obama did not and do not want to, and for the same reason, and we all know what it is. The fastest-growing demographic in America is the Hispanic vote, and if either party cracks down on illegal immigration, it risks losing that vote for generations.

But while the Democrats worry about the prospects of the Democrats and the Republicans about the well-being of the Republicans, who worries about America?

No one. Which the American people have noticed, and which adds to the dangerous alienation—actually it’s at the heart of the alienation—of the age.

In the past four years, I have argued in this space that nothing can or should be done, no new federal law passed, until the border itself is secure. That is the predicate, the commonsense first step. Once existing laws are enforced and the border made peaceful, everyone in the country will be able to breathe easier and consider, without an air of clamor and crisis, what should be done next. What might that be? How about relax, see where we are, and absorb. Pass a small, clear law—say, one granting citizenship to all who serve two years in the armed forces—and then go have a Coke. Not everything has to be settled right away. Only controlling the border has to be settled right away.

Instead, our national establishments deliberately allow the crisis to grow and fester, ignoring public unrest and amusing themselves by damning anyone’s attempt to deal with the problem they fear to address.

Why does the federal government do this? Because so many within it are stupid and unimaginative and don’t trust the American people. Which of course the American people have noticed.

If the federal government and our political parties were imaginative, they would understand that it is actually in their interests to restore peace and order to the border. It would be a way of demonstrating that our government is still capable of functioning, that it is still to some degree connected to the people’s will, that it has the broader interests of the country in mind.

The American people fear they are losing their place and authority in the daily, unwinding drama of American history. They feel increasingly alienated from their government. And alienation, again, is often followed by deep animosity, and animosity by the breaking up of things. If our leaders were farsighted not only for themselves but for the country, they would fix the border.

Peggy Noonan is a columnist for The Wall Street Journal whose work appears weekly in the Journal’s Weekend Edition and on OpinionJournal.com.

She is the author of eight books on American politics and culture. The most recent, “Patriotic Grace,” was published in October 2008. Her first book, the bestseller “What I Saw at the Revolution: A Political Life in the Reagan Era,” was published in 1990.

She was a special assistant to the president in the White House of Ronald Reagan. Before that she was a producer at CBS News in New York. In 1978 and 1979 she was an adjunct professor of journalism at New York University.

The art of saying something and meaning something totally different.

I must confess to being a bit fed up with Greece.

In Anglo-Saxon language their attitude used to be called “taking the piss“.  Today’s “funny” (or if preferred take your pick from: tragic, surreal, ludicrous, ridiculous,bizarre, insane or indeed all of these at once) is something the Greek Prime Minister said. Admittedly he said it in February and I’ve only just picked up on it.

Here’s an extract from what was said:

‘We are a country which cannot alone deal with the speculation. So this has become a European problem, because if we do have a major problem, this could create a contagion for other countries too who are not to blame.’

Brilliant and I especially love the use of the word “speculation”.

This makes it seem as if it isn’t Greece’s fault at all; it’s all down to those nasty fat people in suits and sunglasses, the evil international financial mafia seeking to destabilize his country.

Then there is the “if” word. Now normally this is associated with a condition, but anyone who even in February thought that there was any conditionality involved in Greece’s meltdown must have been looney, or perhaps the Head of the International Monetary Fund (IMF) who said this on March 8th:

Greece will be able to deal with its own financial problems without needing a bailout, the head of the International Monetary Fund said today.

IMF managing director Dominique Strauss-Kahn said that Greece’s debt mountain is unlikely to spread to other eurozone countries with high levels of public debt.

And Mr Strauss-Kahn dismissed market speculation of potential default by other heavily indebted eurozone countries such as Portugal, Spain or Ireland as scare-mongering.

IMF Director Dominique Strauss-Kahn answers questions on a panel with Bob Geldof in Nairobi yesterday. Mr Strauss-Kahn has said he believes Greece will not need an IMF bailout .

Yes, this is the same DSK who is paid a vast salary and expenses and could be the next President of the EU.Of course he could have been lying to try to restore “confidence”. However, lying is lying, for whatever reason. Or he could have just been humungously wrong.

That’s the trouble with our leaders and financial experts these days; you never know whether they’re lying or just stupid; it’s usually one or the other and sometimes of course both.

And Papandreou’s quote continues: ” a contagion for other countries“. Indeed, Mr P. And what do we do with a “contagion” in the body? We destroy it and get rid of it …. and finally we have “other countries too who are not to blame“.

AHA! At last! Proof that my old Mum in the UK on her measly pension is not to blame. Thanks Mr P. At last some recognition fo the truth. Let’s have a bit more of that ….

As for the merits of Greece’s plea for funds, you only have to read this devastating article to feel your flabber gasting to breaking point.

No wonder the Germans are increasingly threatening to dump Greece, and so they should. Not the German government (all governments seem currently to lack the guts to do anything really necessary or serious).

No, this time it’s an economics professor threatening to take the EU to court if they allow this blatantly EU-illegal bailout, and public opinion is increasingly on his side.

It is a horrendous mess, but the only solution is for Greece to leave the euro. Bailing them out is a black hole. Does anyone in their right mind think the Greeks can really change their traditional practices and suddenly become honest, thrifty and hard-working?

Well, the answer is probably  “Yes”, but then cloud-cuckoo land is becoming seriously over-populated.

Which reminds me, I must get back to the British General Election Campaign ……

By Chris Snuggs

Such a shame that British electioneering couldn’t be honest.

Well, the British General Election Campaign meanders along towards the final week before we are put out of our misery on May 6th.

Sadly, the main topic of interest has been the success of Nick Clegg in the Leaders’ TV debates. The new young face on

Nick Clegg

the block has proved once and for all the huge power of television. Not one single Lib-Dem policy or personnel changed during the debate, yet the mere appearance on the telly of a new, personable kid on the block has rocketed his party up the ratings.

Well, not exactly rocket science, but sobering all the same. However, more importantly, most policy discussion seems mired in a series of scare-mongering ploys along the lines of, “Don’t vote for that lot or this terrible thing will happen.”

Yes, perhaps this is the stuff of all elections, but this one should have been a bit different since

A) it comes after a long period of power held by the Labour Party and whichever way it goes will mark a historic change and,

B) the stakes are so high as Britain hovers on the edge of joining the economically-challenged PIIGS [Portugal, Italy, Ireland, Greece, Spain, Ed.] of Europe.

We desperately need a government that can take us safely away from that particular event horizon, but to choose one rationally, we need the “truth” about what really needs to be done to reduce debt.

But sadly, we seem infected by the Greek syndrome, an ability to see the bleedin’ obvious, which is that nobody can live beyond their means for ever, much as they might like to.

So, we’re having to look for “the truth” further afield, to the Institute for Fiscal Studies (IFS), for example. According to them, the cuts in public costs will have to be as deep as any made since World War II. (Oh, and thank you to Labour and the banks for jointly getting us into this sorry mess.)

Here’s a brief quote from that BBC link:

The UK faces the deepest spending cuts since the late 1970s if the three main parties are to meet their budget commitments, new analysis suggests.

The years between 2011 and 2015 must see the largest cuts since 1976-80, according to a report from the Institute for Fiscal Studies (IFS).

Here’s Stephanie Flanders, the BBC’s Economics Editor writing in her blog:

They may disagree in public, but privately they couldn’t agree more. On the single most important issue facing the country after this election, our politicians think it’s better to keep us in the dark.

WHERE is the party explaining this clearly and unambiguously to the people? In other words, TELLING THE TRUTH?

I don’t see it. Neither of the big, old dinosaur parties are being straight with us. The Tories are proposing to spend even MORE on the NHS, (National Health Service) that sacred cow that nobody dare speak any ill of, while Labour seem to be promising to spend more on just about everything despite our £163 billion borrowing this year.

Why is this? It can – I submit – only be because they don’t think the public will understand and accept “the truth”.

If party A tells the truth and admits the cuts in public services will be deep and involve some pain and party B LIES and says it will “preserve frontline services” (the Labour line) then they (Party A) fears the public will not buy their version and opt for whoever promises them a fantasy instead, or in other words a gradual recovery without too much pain and in particular for themselves.

So, there is deep cynicism and an extreme economy with the truth from all parties who fear a voter backlash if they tell it. This is rather a sad reflection on the Labour Party’s proud boast of “education, education, education” of 1997.

Apparently, the British public is so stupid that they can’t be trusted to believe the truth when they get it. Of course, this could possibly be because they are so UNUSED to getting it and moreover because this policy of spinning smoke and mirrors worked so well in previous Labour victories.

Clear as mud!

By Chris Snuggs

A giant of US television retires from the screen

One of the fascinating aspects of my new American life is seeing how loud the volume of dissent is from the American

Bill Moyers

people about the shenanigans on Wall Street and the Too Big To Fail banks.  There is an intensity and passion that I can’t see happening on the other side of the Pond.  Maybe this is the cultural legacy of a people that just a short time ago, relatively speaking, were opening up this giant country seeking a better way of life than the ‘old countries’.

This intensity and passion is why, in the end, I believe that the solution to the huge crisis that still awaits us will start from this side of the Atlantic.  But it will get a whole lot worse before it gets better, such is the complexity and depth of the fraud that is being visited on decent, ordinary folks in this and many other fine countries.

Bill Moyers of the Bill Moyers Journal on PBS is retiring.  He’s approaching 76 and that’s a grand age to be dealing with the workload and stress of a weekly television presentation.  His last Journal was broadcast on the 23rd April, a week ago today airing two really important topics.  My only regret is that I haven’t been here sufficiently long to view many more of his Journals.

William K Black

In that last broadcast on the 23rd, Bill had two key interviews.  In this Post, I want to bring to your attention his first report, which was an interview with William K Black, now an academic but, just as importantly, a former bank regulator.  William Black really understands what is going on in banking.

The interview is both fascinating and captivating because, well to me anyway, it explains in terms that us laymen can understand, exactly what is going on and why it is so terribly important that legislation and regulations are brought into force to stop this fraud ever happening again.

This interview has not yet made it’s way onto YouTube so I can only post the link to the Bill Moyers website.

But, please, if you care about what is happening to us in whatever country you live in, click on this link and watch the interview.

And if you want to watch the earlier interview that Bill Moyers had with William Black then here it is.

By Paul Handover

The EU Bailout!

German Chancellor Angela Merkel

German Chancellor Angela Merkel has questioned whether Greece should have been allowed into the eurozone in the first place.

She said the decision “may not have been scrutinised closely enough”.

Indeed, Angela. Indeed it may not, especially as Goldman Sachs organised some “credit swaps” (now illegal) that helped Greece disguise the size of its deficit.

Perhaps something is lost in translation, but why the “may”? Why can’t people bring themselves to call a spade a spade? The “may” is totally misplaced, isn’t it? So why say it?

See also this recent piece on the BBC.

By Chris Snuggs

With thanks to one of our very regular followers, Gordon, for passing this on.

Well said, that sailor!

By Paul Handover

A fateful day for the eurozone

…. is how Gavin Hewitt recently headed up a post on his BBC Europe blog.  The headline caught my eye and then when I read the full article it seemed as yet another piece of western civilisation was sliding into chaos.  Maybe it’s my age!

Gavin Hewitt

Gavin Hewitt is the BBC’s Europe Editor and as you can see from his bio, Gavin is a very experienced reporter.  Here’s how this Eurozone article starts:

Friday [April 23rd, Ed] will be remembered as the day the euro needed rescuing. Sure it is Greece that has asked to be bailed out but it was still a day that the architects of the single currency had never envisaged. For when it came to it, there were no plans to save a euro member in trouble.

You see what I mean about grabbing one’s attention!

In fact the article is so powerful that I am going to run the risk of incurring the wrath of the BBC’s legal department by republishing it in full.

Here it is:

Read the rest of this article

The British General Election is really hotting up, with mud flying in all directions.

Mr Pott. Your proposal to keep NI (National Insurance contributions for employers and employed)  as it is rather than putting it up as we propose (as usual) will leave a black hole in the country’s finances.

Mr Kettle: a Black hole? YOU are worried about a black hole??? Ha, Ha, Ha ……

Your quiz question: Who are the real Mr Pott and Mr Kettle?

Answers soon …..

This is the concluding part four of a multipart series on the factors that drive U.S. and foreign bond prices and yields.

[Part One is here, Part Two here, Part Three here Ed.]

Bond’s in a weak or faltering economy will generate a lower return to lenders than bonds in a strong economy, absent inflation or any other material changes in the purchasing power of the currency.  Weak demand for goods and services means weak demand for financial capital which means low rates of return on financial capital.

The policies of the government can increase the borrowing costs of private industry.  Fiscal policy that increases taxes reduces the profitability of projects and undermines the ability of companies to pay coupons and repay principal.  Monetary policy that increases the money supply may lead to inflation, which also increases the cost of borrowing and reduces economic activity.

Lastly, and of the greatest concern of late, is the level of borrowing by the U.S. government.   Debt levels are at record highs, with no relief in sight. The AAA rating of U.S. debt is reportedly in jeopardy (Chicago Tribune editorial).

Moody's Corporate Logo

Both existing and new lenders worry about the ability of the U.S. government to repay. Yes, the can simply roll over existing debt by raising taxes or creating money to retire old debt and replace it with new, but the interest rate required by new lenders goes up as the ability of the private economy to sustain tax revenues falls and the risk of inflation rises (Moody’s explains U.S. bond ratings).

Both factors are in play now: an anemic economy with little hope that this administration will undertake policies that support business, and a ballooning money supply and weak dollar that undermine the purchasing power of the returns to lenders.  The returns to U.S. debt may still be healthy relative to those one can earn in other countries, but the spread is shrinking. The private economy remains fundamentally strong, thanks to the work ethic of the American people and the profit motive of the capitalistic system, but the policies of the U.S. government are straining those resources.

By Sherry Jarrell

A very far-sighted view of European collaboration from 12 years ago!

Once again, Learning from Dogs welcomes a guest post from Per Kurowski.

Per Kurowski

——————-

I was intrigued by a recent Post on Learning from Dogs entitled Poor Old Europe.  It included two commentaries from elsewhere about the state of Europe and how the feeling of trying to force, politically, very disparate countries together was still ever so dominant.  It reminded me of an article that I wrote for my own Blog nearly 12 years ago just before the Euro came into effect.  Reading it today is interesting, to say the least.

In just a few weeks, on the 1st of January 1999, eleven European countries will forsake the right to issue their own currency and accept the circulation within their boundaries of a common currency, the Euro. Monetary policy related to the Euro will be set by a European Central Bank. One fact that struck me as curious is that in all the abundant legislation that regulates this process, there is no mention whatsoever of how to manage the withdrawal or future regret of any of the union’s members.

The absence of alternatives in this case evidently represents a burning of the bridges, but this may be necessary to achieve credibility. There is no turning back and there is no doubt that this is a truly historical moment. As participants in a globalized world in which Europe has an important role, we must naturally wish all members luck, no matter what worries we might secretly harbor.

Until 1971, all money used throughout the history of humanity was backed in one way or another by something physical to which a real value was attributed. Sometimes the backing was direct, pearls for example, while in other cases it was indirect such as the right to exchange bills for a certain quantity of gold.

This physical backing in itself did not necessarily mean it consisted of something of fixed value. The value of a pearl, for example, is in itself subjective. The promise to exchange bills for gold did not guarantee anything either, since this promise could easily be voided by fraud. Whatever the backing was, however, it did at least offer the holder of the money the illusion that it was supported by something concrete.

In 1971, the United States formally abandoned the gold standard and the direct backing, however imaginary, disappeared. Since the Dollar is a legal currency, it could always be used to repay Dollar denominated debt. Today, however, in spite of the fact that the Dollars may have lost some of their purchasing power, a holder of excess Dollars can only hope that the Government of the United States will exchange his old bills for new ones of the same tenor.

This apparently precarious situation must be the raison d’etre of the motto printed clearly on the bills which states “In God We Trust”.

Since 1971, the real value of the Dollar as an element of exchange, has lost some of its value due to inflation. Today, we would need many more Dollars to buy the same houses, cars, movie tickets and gold than we would have needed in 1971. In spite of the above, with few exceptions such as the end of the ‘70s during which inflation increased dramatically, few would dare qualify the United States’ elimination of the gold standard as a failure.

The world’s economies have managed to increase international commerce drastically and with it, sustain a healthy growth rate. Many analysts would explain this phenomenon by saying that the discipline exacted by the gold standard represented a brake on international commerce. The growth rate registered in commerce after 1971 was the result of the release of this brake. Other more critical analysts sustain the thesis that, due to the fact that we have abandoned the discipline required by the gold standard, the world has accumulated gigantic accounts payable, which we may be coming due very soon.

I personally swing back and forth between amazement of the fact that the world has accepted such a fragile system and satisfaction that it actually has done so.

The Euro has one characteristic that differentiates it from the Dollar. This characteristic makes me feel less optimistic as to its chances of success. The Dollar is backed by a solidly unified political entity, i.e. the United States of America. The Euro, on the other hand, seems to be aimed at creating unity and cohesion. It is not the result of these.

The possibility that the European countries will subordinate their political desires to the whims of a common Central Bank that may be theirs but really isn’t, is not a certainty. Exchange rates, while not perfect, are escape valves. By eliminating this valve, European countries must make their economic adjustments in real terms. This makes these adjustments much more explosive. High unemployment will not be confronted with a devaluation of the currency which reduces the real value of salaries in an indirect manner, but rather with a direct and open reduction of salaries or with an increase of emigration to areas offering better possibilities.

What worries me most is the timing. The world is facing the possibility of a global recession. This will require very flexible economic and monetary policies. The fact that the search for initial credibility for the Euro is based on trying to assure markets around the world that the new currency will be guided by a philosophy closer to that of Bonn than that of Rome, probably goes against the best interests of the world.

Published in Daily Journal, Caracas, November 19, 1998

By Per Kurowski