We Are A Nation Of Laws...aah, we used to be!

Cross-posted from: RBN

The Fed Admits To Breaking The Law

Now how long will it be before something is done about it?

April 1 (Bloomberg) — After months of litigation and political scrutiny, the Federal Reserve yesterday ended a policy of secrecy over its Bear Stearns Cos. bailout.
In a 4:30 p.m. announcement in a week of congressional recess and religious holidays, the central bank released details of securities bought to aid Bear Stearns’s takeover by JPMorgan Chase & Co. Bloomberg News sued the Fed for that information.

The problem is this: The Fed is not authorized to BUY anything other than those securities that have the full faith and credit of The United States.

In addition Ben Bernanke has repeatedly claimed that these deals would not cost anyone money.  But the current value looks differently:

Assets in Maiden Lane II totaled $34.8 billion, according to the Fed, which set their current market value in its weekly balance sheet at $15.3 billion. That means Maiden Lane II assets are worth 44 cents on the dollar, or 44 percent of their face value, according to the Fed.
Maiden Lane III, which has $56 billion of assets at face value, is worth $22.1 billion, or 39 cents on the dollar, according to the Fed’s weekly balance sheet. A similar calculation for the Bear Stearns portfolio couldn’t be made because of outstanding derivatives trades.

In other words, they have lost more than half of their value.

This was and remains a blatantly unlawful activity.

The Fed has effectively usurped Article 1 Section 7 of The Constituion which reads in part:

All bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.

The Fed effectively appropriated taxpayer funds without authorization of Congress.  At the time these facilities were put in place neither TARP or any other Congressional authorization existed for them to do so, and to date no bill has been put through Congress authorizing the expenditure of taxpayer funds, either through putting them at risk or via outright expense, for this purpose.

Nor does it stop with a “mere” Constitutional violation – The Federal Reserve Act’s Sections 13 and 14 do not permit Fed asset purchases except, once again, for items carrying “full faith and credit” guarantees.  Credit-default swaps and trash mortgages most certainly do not meet these qualifications.

I know I’ve harped on this for more than two years, but here we have a raw admission of exactly what was done – and there is simply no way to construe any of it in a light that conforms with either The Constitution or black-letter statutory law.

What’s worse is that Tim Geithner, head of the NY Fed at the time, was very much involved in this – that is, he in effect personally, along with Ben Bernanke, usurped the power of the United States House.

The Fed has spent two years trying to hide this from the public and Congress.  It has fought off both Congressional demands for disclosure and multiple FOIA lawsuits, the latter of which has resulted in a series of adverse rulings (and, it appears, was ultimately going to force disclosure anyway.)

These actions are unacceptable but promising “never to do that again” is insufficient.  In a Representative Republic where the rule of law is supposed to be paramount – that is, where we do not crown Kings and relegate everyone else to the status of knaves, unlawful actions such as this demand that strong and unmistakable sanction also be applied to all wrongdoers in addition to protection against future abuse.

In this case this means that both Geithner and Bernanke must go – for starters.

Amending The Federal Reserve Act of 1913 (as Chris Dodd has proposed to prevent future lending bailouts) is not sufficient in that The Fed did not lend in this case, it purchased, and by buying what we now know were trash loans it violated the black letter of existing law.

There is only one effective remedy for an institution that has proved that it will not abide the law: it must be stripped of all authority that has been in the past and can be in the future abused.

This means that The Fed, if we are to keep it at all, must be relegated to a body that only practices and provides monetary policy – nothing more or less – and that all monetary operations must be performed openly, transparently, and within those constraints.

We cannot have a republic where an unelected body is left free to violate The Constitution with wild abandon and those acts are then allowed to stand.

One final thought: If the individuals responsible for this blatant black-letter violation of the law do not face meaningful sanction for these acts, and neither does The Fed as an institution, can you fine folks over at The Executive, Judiciary and Legislative branches of our government please explain to us ordinary Americans why we should obey any of the laws of this land when you will not enforce the laws that already exist?

April 2, 2010

8 Comments to "The Fed Admits To Breaking The Law"

• 
  
  gg aka " The White Rose " Says:
  

  April 2nd, 2010 at 2:57 pm

  To All, Since this is a CRIME that ramifications of resulted in the death of anyone ie. the unfortunate soul who was so affected by all this purposefully caused DEPRESSION flew and crashed his small plane into I.R.S.. [ israeli revenue service ] this CRIME should be tried as MURDER !!!!!
  

  [Reply]

  gg aka " The White Rose " Reply:
  April 2nd, 2010 at 2:58 pm
  P.S. Down with the MISHPUCKA !!!!!!!!
  

  [Reply]
• 
  
  John S. Says:
  

  April 2nd, 2010 at 3:58 pm

  After that stupid congressman from Georgia thought an island could capsize because it had too many troops on it – we are so screwed!!!
  The FED does whatever it wants to do without the consent of our prostitute suck-ups that pose as our representatives. Folks, only a small fraction of the people in this country have the capacity to understand that the FED took over the country in 1913 and put the nail in the coffin in 1933 under the treasonous FDR who signed over our country to the scum-sucking pedophile satanists. LOOK IT UP!!!
  

  [Reply]
• 
  
  Alex Jonesberg Says:
  

  April 2nd, 2010 at 6:39 pm

  Who Controls the Federal Reserve System?
  Board of Governors:
  Ben S. Bernanke(Jew) – Chairman
  Donald L. Kohn(Jew) – Vice Chairman
  Kevin M. Warsh(Jew)
  Elizabeth A. Duke(White European)
  Daniel K. Tarullo(White European)
  Federal Reserve District Banks:
  Eric S. Rosengren(Jew) – President, Federal Reserve Bank of Boston
  William C. Dudley(White European) – President, Federal Reserve Bank of New York
  Charles I. Plosser(Jew) – President, Federal Reserve Bank of Philadelphia
  Sandra Pianalto(White European) – President, Federal Reserve Bank of Cleveland
  Jeffrey M. Lacker(Jew) – President, Federal Reserve Bank of Richmond
  Dennis P. Lockhart(White European) – President, Federal Reserve Bank of Atlanta
  Charles L. Evans(White European) – President, Federal Reserve Bank of Chicago
  James B. Bullard(Jew) – President, Federal Reserve Bank of St. Louis
  Gary H. Stern(Jew) – President, Federal Reserve Bank of Minneapolis
  Thomas M. Hoenig(Jew) – President, Federal Reserve Bank of Kansas City
  Richard W. Fisher(Jew) – President, Federal Reserve Bank of Dallas
  Janet L. Yellen(Jew) – President, Federal Reserve Bank of San Francisco
  Of the five(5) members of the Federal Reserve Board of Governors, three(3) are Jews. This is a numerical representation of 60%. Of the twelve(12) Federal Reserve District Bank presidents, eight(8) are Jews. This is a numerical representation of 67%. Jews are approximately 2% of the United States population. This means that Jews are over-represented on the Federal Reserve Board of Governors by a factor of 30 times, or 3,000 percent, and over-represented among the Federal Reserve District Bank presidents by a factor of 33.5 times, or 3,350 percent. This extreme numerical over-representation of Jews among the members of the Federal Reserve Board of Governors and the Federal Reserve District Bank presidents cannot be explained away as a coincidence or as the result of mere random chance. You must ask yourself how such an incredibly small and extremely unrepresentative minority ethnic group that only represents 2% of the American population could so completely dominate the U.S. Federal Reserve System.
  

  [Reply]
• 
  
  Alex Jonesberg Says:
  

  April 2nd, 2010 at 6:39 pm

  Who Controls the Federal Reserve System?
  For the past forty(40) years, every Chairman of the Federal Reserve System has been a Jew, except for a brief period of seventeen(17) months. Here are the Chairmen of the Federal Reserve System since 1970.
  Arthur F. Burns(Jew)
  term: February 1, 1970 – January 31, 1978
  George W. Miller(White European)
  term: March 8, 1978 – August 6, 1979
  Paul A. Volcker(Jew)
  term: August 6, 1979 – August 11, 1987
  Alan C. Greenspan(Jew)
  term: August 11, 1987 – January 31, 2006
  Ben S. Bernanke(Jew)
  term: February 1, 2006 – present
  Jews are approximately 2% of the United States population. The probability that almost every Chairman of the Federal Reserve System since 1970 would be a Jew is infinitesimally small. This extreme numerical over-representation of Jews among the Chairmen of the Federal Reserve System cannot be explained away as a coincidence or as the result of mere random chance. You must ask yourself how such an incredibly small and extremely unrepresentative minority ethnic group that only represents 2% of the American population could so dominate the chairmanship of the Federal Reserve System.
  

  [Reply]
• 
  
  Sondra Says:
  

  April 3rd, 2010 at 6:10 am

  The House of Representatives had NO authority to give a charter to the private banking cartel which called itself the Federal Reserve System. Fooled us for a long time & many people still don’t know the truth that the “Fed” is a PRIVATE CARTEL & THEIR SOLE PURPOSE IS TO MAKE MONEY. Do members of congress know this? Of course they do. Why don’t they stop it? Ask them.
  The hired help in DC not only went out and begged for their jobs they knew that if hired the would be required to swear to support & defend the Constitution against all enemies foreign and domestic. To do less should require INSTANT DISMISSEL.
  

  [Reply]
• 
  
  No1nptkulr Says:
  

  April 3rd, 2010 at 1:45 pm

  With the assumption that the federal government is NOT an entity… they are hired and paid by us…. wouldn’t it be correct on all fronts to FIRE the ones that are doing wrong? There is so many things heard on the internet today about how the ‘Fed’ is doing illegal acts…. people agreeing with those ‘facts’ but no one ever shows the hard core proof. How about someone get the laws broken, who broke those laws and all of us charge them with what ever charges that will stick? Write your congressmen/women and demand they either pay attention to the constitution or they are FIRED! Many people want change and have no idea how to go about making it happen. Just my humble opinion. Just WHAT CAN be done???
  

  [Reply]
• 
  
  No1nptkulr Says:
  

  April 3rd, 2010 at 1:51 pm

  Changing “…how about someone get the laws broken” … to …
  “How about someone find out which laws were broken,”…”
  I for one will be the one screaming to put them in prison from the capital building if someone that knows what they are doing can provide solid evidence that the constitution is being unlawfully broken by anyone in congress or the white house… etc. How about it y’all? I’m willing to help.
  

  [Reply]

Hanging By A Thread...or is that, "tread"

They say this one became part of a movie scene...

The following story can be found here (To make a long story short, the bridge colapsed due to a landslide.)

And this one happened on the Crook 'O Lune Bridge

How much does Obama spend to create one job? If you said, "$286,000.00" you would be correct.

Morning Bell: Welcome to the Obama Dependency Economy

Posted By Conn Carroll On April 2, 2010 @ 9:49 am In Enterprise and Free Markets

Today the Labor Department’s Bureau of Labor and Statistics released its monthly jobs report ^[1] showing that the nation’s unemployment is 9.7% for the third month in a row. While the jobs report does indicate that 162,000 net jobs were created in March, almost 50,000 of those jobs were temporary government Census jobs that do not reflect any real economic progress. In total, the U.S. economy has now lost a total of 3.8 million jobs since President Barack Obama signed his $862 billion stimulus plan. We are 8.1 million jobs short of the 138.6 million he promised the American people.
It is good to see the American economy finally recovering again. It demonstrates the resilience of the American entrepreneur in the face a punishing job killing agenda from Washington. And don’t fall for any White House claims that this belated recovery is due to the stimulus. As the Congressional Budget Office (CBO) admitted ^[2] last month, its analysis of the stimulus’ job creating record was simply “essentially repeating the same exercise” as the initial projections. In other words, the CBO numbers on the stimulus don’t take any actual new real world data into account. Working with actual data, Veronique de Rugy of George Mason University’s Mercatus Center has found ^[3]: 1) no statistical correlation between unemployment and how the $862 billion was spent; 2) that Democratic districts received one-and-a-half times as many awards as Republican ones; and 3) an average cost of $286,000 was awarded per job created. $286,000 per job created. That is simply a bad investment.
And President Obama’s future agenda is full bad investments. His recently released budget ^[4] would raise taxes on all Americans by nearly $3 trillion over the next decade; borrow 42 cents for each dollar spent in 2010; and double the publicly held national debt to more than $18 trillion. This is simply unsustainable. As Thomas Edsall writes in The Atlantic: “Net annual interest on the debt will more than triple during the next ten years, according to the CBO, shooting from $207 billion in 2010, to $723 billion in 2020, more than doubling as a share of GDP, from 1.4 percent to 3.2 percent.” The cause of these exploding deficits is spending and that spending is making the American public more and more dependent on the federal government Edsall continues: “According to the Federal Bureau of Economic Analysis (BEA), the share of total personal income in the United States that comes from government transfer programs – Social Security, Medicare, veterans’ benefits, unemployment compensation, etc. – has grown rapidly over the past six decades, from 5.9 cents of every dollar in 1950 … to 17.3 cents in 2009. In addition, according to BEA, another 9.8 cents of every dollar went, in 2009, to salaries for state, local and federal government employees, a figure that does not include costs of fringe benefits. In other words, more than a quarter of all personal income in the United States is paid for with tax dollars.”
Heritage’s own Index of Dependence on Government ^[5] shows a steep rise in American reliance on government: “The burgeoning of flagship entitlement programs and the shrinking number of taxpayers who have any financial stake in the government threaten to bankrupt the government–which has led to an increasing interest across the political spectrum in the growth of dependency-creating initiatives.” And one of the strongest dependency-creating special interests, government unions, reached a key tipping this year. As Heritage’s own James Sherk was the first to document ^[6], government union workers now out number those in the private sector. Edsall explains what this means for the American people: “The consequences of this shift are profound. A majority of the American labor movement is now directly dependent on tax dollars. In terms of political orientation, these workers can now be described as tax consumers as well as tax payers. For these workers, a tax increase may result in a slightly smaller paycheck but, more importantly, the hike means more money is available to pay for raises and new benefits.”
There is an alternative to the Obama dependency economy. We do not have to subject ourselves to chronically high unemployment and an ever-increasing government workforce. As bad as the media makes this recession seem, job losses were actually far worse in the 2001 recession ^[7]. The difference this time around is that the private sector has not created new jobs to replace the lost ones as fast as it did the last time around ^[7]. Reduced hiring is particularly acute among small businesses: they account for 36% of the net job losses in this recession compared to just 12% in 2001 ^[7].
What small businesses need to start hiring is less government intervention in the economy, not more. To promote entrepreneurship Congress could ^[7]: Freeze all proposed tax hikes and costly regula­tions until unemployment falls below 7 percent; Freeze spending and rescind unspent stimulus funds; Reform business regulations, such as repealing Section 404 of the Sarbanes–Oxley Act in order to reduce excessive auditing costs; Reform the tort system to lower costs and uncer­tainty facing businesses; Remove barriers to domestic energy production in Alaska and the Outer Continental Shelf; Repeal the job-killing Davis–Bacon Act; Pass pending free-trade agreements; and Reduce taxes on companies’ foreign earnings if they repatriate those earnings to the United States.
Quick Hits:

• Gallup’s Daily tracking finds that 20.3% of the U.S. workforce was underemployed ^[8]in March — a slight uptick from the relatively flat January and February numbers.
• Backed by the city’s private sector employers, the Los Angeles City Council defeated ^[9] Mayor Antonio Villaraigosa’s energy rate hike intended to pay for his leftist environmental agenda.
• Leftist environmental land use regulations ^[10] in Oregon’s Rogue River Valley are preventing pear farmers from expanding their fields and hiring more workers.
• The Obama administration finalized expensive new gas mileage standards ^[11] for new cars and trucks Thursday.
• Have a blessed Good Friday, Passover and Joyous Easter, from your friends and family at The Heritage Foundation

What's this? "Obama administration is helping Hamas"

Well here we go again with the guy in the White House interfering with the internal affairs of another country.  Since its inception, Israel has been our strongest and in reality, our only ally, in the middle east.  And along comes this hoodlum from Chicago and overnight destroys a relationship that will be easy to mend when we toss him out with the garbage as he did with the Dalai Lama.  And it's not just a singular effort by Obama that is destroying the friendship, it's all his cronies including the poor excuse for a Secretary of State, Hillary Clinton.  You recall when she visited the area while she lived in the White House how she buttered up to Yassar Arafat and kissing Soha Arafat (link to picture).  As a lead in to the following story I've added this picture as proof positive who the real freinds are of this administration... Did you ever see such a happy re-union of old pals?  He certainly didn't act this way with Netanyahu. ~ Norman E. Hooben

__________________________________

The following from: Newsmax

Obama Wants Israel's Netanyahu Out

By: Dick Morris & Eileen McGann

Why is President Barack Obama so obviously humiliating Israeli Prime Minister Benjamin Netanyahu?

Why is Secretary of State Hillary Clinton negating everything she said when she represented New York state and piling on the Jewish state?

They want Netanyahu out. Specifically, they want him to feel such pressure that he dumps his right-wing coalition partners and forms a new government with the center-left party Kadima, headed by former Prime Minister Tzipi Livni.

Livni, who thinks nothing of trading land for peace, no matter how flawed the peace might be, will then hold Netanyahu's government hostage and force it to bend to the will of Washington and sign a deal with the Palestinians that cedes them land in return for a handful of vague vapors and promises, none of which will be kept.

On March 3 Livni said, in a Knesset debate, that since Netanyahu took control "Israel has become a pariah country in the world."

She is trying to use Obama's and Clinton's rejection of Netanyahu's course to force her way into the government. And Obama and Clinton are intent on helping her do so by publicly humiliating Netanyahu.

Netanyahu insists that he'd be happy to negotiate a peace accord. But, as he told me last year, "I just don't have a peace partner with whom to negotiate."

The Palestinians are expert at playing "good cop/bad cop" with Israel. The good cop — the Palestinian Authority — wants to negotiate a peace deal and insists on signs of Israeli good faith in order to do so.

Meanwhile, the bad cop — Hamas — fires missiles at Israel from Gaza, land Israel ceded to the Palestinians in order to promote the peace process earlier in the decade.

Any peace deal with the Palestinian Authority will not be binding on Hamas, and the pattern of Gaza will likely play out again: First, Israel cedes land to the Palestinian Authority. Second, Hamas seizes the newly ceded land through elections or military action. Third, Hamas refuses to recognize the peace deal and uses the newly acquired territory as a base from which to launch further attacks against Israel.

Insanity is defined as doing the same thing over and over again and expecting a different outcome each time.

When Hillary Clinton and President Obama explode in indignation against Israel for building apartments in East Jerusalem, they deliberately miss the point: There is no reason for Israel to catalyze peace negotiations when there is no single entity that is both committed to peace and speaks for the entire Palestinian people.

Without a peace partner, negotiations are either a trip to nowhere or a slippery slope to more Gaza-like concessions that do nothing but strengthen the enemies of Israel without providing any advancement to the cause of peace.

The merits of building in East Jerusalem or the need for a moratorium on all settlement construction are quite irrelevant as long as a substantial body of Palestinian opinion wants a war with Israel and the prevailing political authority in Gaza insists on the Jewish state's eradication.

So why are Obama and Clinton so intent on raising the profile of the construction issue and publicizing it?

One suspects an effort is afoot to link Israeli resistance to the peace process with the ongoing loss of American lives in Iraq and Afghanistan, if not to the global terrorism of al-Qaida.

Gen. David Petraeus told the Senate Armed Services Committee that "Arab anger over the Palestinian question limits the strength and depth of U.S. partnerships with governments and peoples [in the region] … Enduring hostilities between Israel and some of its neighbors present distinct challenges to our ability to advance our interests in the area of responsibility." In other words, blame Israel.

And ultimately, the administration's agenda may be to explain its withdrawal of support for Israel by blaming its stubborn insistence on housing construction.

One can well see the Obama administration learning to live with an Iranian nuclear weapon, all the while blaming Israel for fomenting Iranian hostility by building housing.

Meanwhile, through American aid to Gaza, the Obama administration is helping Hamas to solidify its position in Gaza and lengthen its lease on political power — the very power it is using to torpedo the peace process.

The New American Dream ...dang! if only our dreams would come true!

Newly Found Paralleled Support For Obama's Growth Plans

How Do You Spell Hypocrisy? lets see now, K-e-n S-a-l-a-z-a-r also spelled O-b-a-m-a

So I spot this headline "Obma to Unveil Offshore Oil Drilling Plans, ..." over at FOX news and read on down where it says, "White House officials pitched the changes as ways to reduce U.S. reliance on foreign oil and create jobs ..." Duh?  Isn't that what the Republicans were saying in 2008? Then there's the mention of Ken Salazar the Secretary of the Interior...oh, you might remember him as that former senator from Colorado...check out his positon on off-shore drilling while he was sitting in that Democrat seat. 

Are any of you Liberals getting any of this hypocrisy?

Current Trends In U.S. Economy

For current chart click here http://www.x-rates.com/d/USD/EUR/hist2010.html

"...hitting a little to close to home for me." - Muslims Attack Christianity At Trinity University

OK this one is hitting a little to close to home for me. Back in the 1970's I took a few classes at Trinity University. In fact it was there I had my on stage debut when I played the part of Johann in Henrik Ibsen's play, The Pillars of Society. And right across the street from Trinity was Sunshine Cottage where my eldest daughter attended her first few years of school. Yes, I'd say that, that's enough for me to qualify for just a little bit of intamacy with Trinity. I say it's time we quit calling Islam a religion...or as they would say, "The religion of peace." ...what a joke! [See "Islam is not a religion. It is a worldwide political movement meant on domination" and Top ten reasons why Islam is NOT the religion of peace] ~ Norman E. Hooben

The following from:

Muslims Attack Christianity At Trinity University

Muslims tormenting Christians for a change. These Islamic supremacists can't stop themselves. Why are these jihadis going to Texas "Trinity" if they can't bear the thought of Christianity? They want Christianity removed from the American public square and replaced with Islam.

Texas Muslims Want Diplomas Sans Our Lord The Right Perspective

“A diploma is a very personal item, and people want to proudly display it in their offices and homes,” said Sidra Qureshi, a Muslim student and president of Trinity Diversity Connection, who is leading the charge to tweak the wording.
“By having the phrase In the year of Our Lord,’ it is directly referencing Jesus Christ, and not everyone believes in Jesus Christ.”

Agreed, and the Christians are not chopping your head (or clit) off, either. They want any reference to Christianity off their diplomas? "In the year of our lord?" I want any reference to allah, the koran or islam out of my taxi cabs and my restaurants. I want those stinky footbaths out of my airports and universities. Get the sharia out of our finance.

Attack On Christianity At Trinity University Rhymes with Right

When one attends a school with a Christian heritage, a connection to a Christian denomination, and an obviously Christian name, should one be surprised – or offended – by a reference to Jesus Christ on one’s diploma? And should "one expect that the reference be deleted from every student’s diploma because a minority of students take offense at it?
One would think that the answers to such questions would be obvious. Indeed, one would think that the need to even ask the questions is laughable. But that is not the case at San Antonio’s Trinity University.

A group of students at Trinity University is lobbying trustees to drop a reference to “Our Lord” on their diplomas, arguing it does not respect the diversity of religions on campus. “A diploma is a very personal item, and people want to proudly display it in their offices and homes,” said Sidra Qureshi, president of Trinity Diversity Connection. “By having the phrase ‘In the Year of Our Lord,' it is directly referencing Jesus Christ, and not everyone believes in Jesus Christ.”
Qureshi, who is Muslim, has led the charge to tweak the wording, winning support from student government and a campus commencement committee. Trustees are expected to consider the students' request at a May board meeting.

Frankly, it seems to me that the PC ideology has been taken way too far here. Respect for diversity is one thing – but respect for the history of the institution and the religious affiliation it still retains is also important.



What next – excising the Bible from the school seal, on the theory that not every student is a believer in that divinely inspired book? Or at least the removal of the motto – E Tribus Unum (From Three, One)? Indeed, can this sort of PC lunacy even allow for maintaining the name “Trinity”? After all, there are no doubt all sorts of non-trinitarian folks on the campus who should not find themselves daily confronted with that theological negation of their own beliefs.
So to the trustees of Trinity University, I offer this piece of advice – keep “In the Year of Our Lord”, or accept that you will have no basis upon which to maintain any aspect of your school’s Christian heritage. After all, dropping that phrase will constitute nothing less than an abject surrender to the forces of anti-Christian diversity and secularism.

Multiple Choice Quiz

The Prayer For Haiti 2010...let this be our prayer!

The Last Great Hope On Earth...at least one professor admits it

The follwing article originated January 19, 2010...one year after Inauguration Day. You didn't read it in any of the mainstream media outlets; it was most likely restricted to an Internet posting and more than likely not read by too many. The commentary is pretty much on target with the author's projections some of which mirrored my own thoughts. I have underlined those areas that should be stressful to every American. ~ Norman E. Hooben

OBAMA AND THE POST-AMERICAN WORLD

The State of the Union

By Professor Jean-Pierre Lehmann – January 2010

IMD

Chemin de Bellerive 23

PO Box 915,

CH-1001 Lausanne

Switzerland

Tel: +41 21 618 01 11

Fax: +41 21 618 07 07

info@imd.ch

http://www.imd.ch

OBAMA AND THE POST-AMERICAN WORLD The State of the Union

IMD - www.imd.ch OBAMA AND THE POST-AMERICAN WORLD Page 2/5

“I have a dream that one day this nation will rise up and live out the true meaning of its creed: "We hold these truths to be self-evident: that all men are created equal." I have a dream that one day on the red hills of Georgia the sons of former slaves and the sons of former slave owners will be able to sit down together at a table of brotherhood. I have a dream that my four children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character. I have a dream today”

As probably everyone will recognize, this is an excerpt from the famous speech delivered by Martin Luther King on August 28, 1963. I was there, it was on the eve of my 18^th birthday, and I can confirm that – apart from my marriage and the birth of my children – it was the most electrifying moment of my life that left a deep and lasting influence. In 1963, however, when segregation, discrimination and prejudices were still rife, it would have been impossible even for the wildest dreamer to imagine that in 45 years there would be a black president in the White House. Barack Obama’s election was the crescendo of the American dream!

Obama took office exactly one year ago and is preparing to give his State of the Union address next Tuesday. The State of the Union is indeed in transition. As noted in Fareed Zakaria’s book The Post-American World, the absolute and relative power of the US will decline over time, and hence it will no longer be able to dominate the planet as it did for most of the last century. Zakaria argues that the US will need to adjust to a new plurilateral world in which it will be first among increasingly equals. As the unilateralism of the Bush years ultimately forcefully demonstrated, US military power had significant limitations; this will intensify.

Though the US’ soft power is likely to remain supreme – and indeed it has been rebooted by the election of Obama – its economic and military hard power will inevitably deteriorate. So American universities will remain the magnets of the global brain drain, entrepreneurs from Hyderabad, Accra and Kiev will continue to flock to the Silicon Valley with their energy and innovative genius, and American arts and fashions will set the global trends.

On the economic front, however, the frailties of the US will be deeply exposed. The dollar will probably remain the international currency, but only because foreign holders of US treasury bonds will wish it. A Damocles sword held by Chinese, Arabs and others will remain hanging over the erstwhile almighty dollar. The crisis and especially the consequences of the crisis have caused a colossal debt which will seriously hamper the US economy for years to come. The US has been the biggest manufacturing power for a century, a position which not even the Japanese were able to usurp. Though the US can be expected to maintain its competitiveness in a reasonably broad range of high-tech sectors, this year China will overtake the US as the world’s largest manufacturer. China’s rising manufacturing competitiveness refers not only to low and medium technology products, but increasingly to high tech as well, notably in a number of leading “green technologies” where it is surpassing the US – i.e. in clean energy production.

The US’ growing economic vulnerability is compounded by the erosion of its military power. And the military costs in turn exacerbate the economic situation – the Iraq invasion has been estimated so far to have cost close to $600 billion, for which there have been no positive returns. The fiasco of the Iraq invasion has also obviously seriously dented US prestige in the world. The US is and can be expected to remain by very far the biggest military power; US defense expenditure is still six to seven times greater than China’s.

While Iraq may remain a quagmire, it is Afghanistan that is likely to end up being a graveyard. Iraq may be chaotic and fraught by the tensions between its three communities – Sunnis, Shiites and Kurds – but at least it does have the semblance of some kind of state, it has infrastructure, a middle class and some highly educated people. Afghanistan has no semblance of a state, it has no infrastructure and the female literacy rate is 12%. Afghanistan possesses some of the world’s worst human development indicators. On the other hand, Afghanistan possesses a proud history of warfare and it proved indomitable in the face of British aggression in the 19th century and Soviet aggression in the 20th.

One of Obama’s most difficult decisions during his first year in office was ordering

additional troops to be sent to Afghanistan, despite resistance from many in his own party. But can the US win in Afghanistan? Before even trying to answer that question, one would need to ask the preliminary question: what is the meaning of “win”? When the US invaded Afghanistan in October 2001, instead of consolidating its position and seeking to “accomplish its mission”, it rapidly diverted energy and attention away from Afghanistan to Iraq. It has never been able to recover the ground it lost. Thus even if “winning” today means no more than getting rid of the Taliban – and even though in 2002 then Vice President Dick Cheney proclaimed that “the Taliban is out of business, permanently” – this is not something the US is likely to accomplish.

Quite apart from the fact that eventually it may be easier for the US to extricate itself from Iraq than Afghanistan, there is the added complication that whereas there is quite a broad consensus of opinion in the US (and of course internationally) that the invasion of Iraq was a mistake, this is not the view in respect to Afghanistan. Obama himself has publicly adopted the fairly widely held view that unlike Iraq, which was a war of choice, Afghanistan is a war of necessity.

That Barack Obama should be presiding over the decline of the US is no fault of his own. Indeed, as noted above, his election has rebooted American soft power and if he succeeds in implementing a multilateral policy, in contrast to Bush’s unilateralism, he could considerably assuage the effects of decline. The Copenhagen Climate Change Conference also demonstrated how elusive multilateral policy may be. The overall trend of decline is unlikely to be reversed.

What happens in the US has obviously immense consequences for the rest of the

world. For the last six and more decades, we (non-Americans) have been able to bask under the protective security parasol of the US and feed off the seemingly ever expanding American consumer market. This is a situation we are unlikely ever to see again. We will need to adjust to weaker American economic and military hard power. In fact the irony is that eventually it is perhaps non-Americans rather than Americans who may be most discomforted by a post-American world! Having achieved one American dream with the election of Obama, it will now be necessary to envisage a new dream.

Jean-Pierre Lehmann is Professor of International Political Economy at IMD and the Founding Director of The Evian Group. He teaches on the Orchestrating Winning Performance (OWP), Leading the Global Enterprise (LGE) and Mastering Technology Enterprise (MTE) programs. He also teaches on the International Seminar for Top Executives.

Note from Norm:

As the above theme would indicate, Professor Lehmann projects America’s decline as the once center piece of the modern world… Would you agree with that assessment? For what it’s worth, here’s what the good professor said about Europe just six months earlier:

Prof. Jean-Pierre Lehmann, professor at IMD Lausanne and founding director of Evian Group, stressed that Europe has lost its leading position and is no longer the center of universe; moreover, it is in decline in geographical, economic as well as demographic sense. In his opinion, it should become more externally open and internally unified, speak with one voice and see what it can contribute to the world. Source: IEDC