Sunday, December 12, 2010

Sweden's reward for pandering to Muslims

Suspected suicide bomb in central Stockholm injures two and panics shoppers

A suspected terrorist blew himself up in an apparent suicide bomb attack in central Stockholm which left two injured and caused panic among Christmas shoppers. Two explosions rocked the busy shopping street of Drottninggatan among the afternoon crowds.

A Swedish news agency said it had received messages about 10 minutes before the blasts in Arabic and Swedish, warning of unspecified “action”. The email warning, 10 minutes before the bombs, protested about the country’s presence in Afghanistan, where it has a force of 500 soldiers, mainly in the north of the country.

“Our acts will speak for themselves,” the agency quoted the message as saying. “Now your children, your daughters and your sisters will die as our brothers, our sisters and our children are dying.” The email had sound files in Swedish and Arabic.

The agency said the warning, which was also sent to Sweden’s Security Police (SAPO), also referred to caricatures of the Prophet Mohammed by the Swedish artist Lars Vilks.

Petra Sjolander, a police spokesman, said the first explosion was in a car containing gas canisters. The dead man was found at the site of the second blast about 300 yards away.

According to reports, the man was carrying pipe bombs, as well as a backpack full of nails. He shouted Arabic slogans before setting off the explosion.

Police were last night investigating whether other, unexploded bombs were on the scene.

Police spokesman Ulf Johansson said: “We need more investigation and of course we need more witnesses. The car exploded with a series of minor explosions and there was also some kind of explosion close up to where we found the dead man.”



Iceland offers lessons for Ireland -- and the USA too?

Iceland has finally emerged from deep recession after allowing its currency to plunge and washing its hands of private bank debt, prompting an intense the debate over whether Ireland might suffer less damage if adopted the same strategy.

The Nordic economy grew at 1.2pc in the third quarter and looks poised to rebound next year. It ends a gruelling slump caused largely by the "New Viking" antics of Landsbanki, Glitnir and Kaupthing, the trio of lenders that brought down Iceland's financial system in September 2008.

The economies of the two "over-banked" countries have both contracted by around 11pc of GDP, but Iceland has achieved it with inflation that devalues debt, while Ireland has done it under an EMU deflation regime that raises the burden of debt.

This has led to vastly different debt dynamics as they enter Year III of the drama. Iceland's budget deficit will be 6.3pc this year, and soon in surplus: Ireland's will be 12pc (32pc with bank bail-outs) and not much better next year.

The pain has been distributed very differently. Irish unemployment has reached 14.1pc, and is still rising. Iceland's peaked at 9.7pc and has since fallen to 7.3pc.

The International Monetary Fund said Iceland has turned the corner, praising Reykjavik for safeguarding its "valued Nordic social welfare model".

"In the event, the recession has proved shallower than expected, and Iceland’s growth decline of about minus 7pc in 2009 compares favorably against other countries hard hit by the crisis," said Mark Flanigan, the IMF's mission chief for the country.

Total debt will peak at 115pc, before dropping to 80pc by 2015 in what the IMF called "robust debt dynamics". Meanwhile. Ireland's debt will continue rising for another three years to 120pc of GDP. The contrast will be very stark by the middle of the decade. Iceland may have a lower sovereign debt than Germany by then.

Iceland's president, Olafur Grimsson, irritated EU officials last month when he said his country was recovering faster because it had refused to bail out creditors – mostly foreigners.

"The difference is that in Iceland we allowed the banks to fail. These were private banks and we didn't pump money into them in order to keep them going; the state should not shoulder the responsibility," he said.

The comments came just as the EU authorities were ruling out investor "haircuts" in Ireland, making this a condition for the country's €85bn (£72bn) loan package.

Dublin has imposed 80pc haircuts on the junior debt of Anglo Irish Bank but has not extended this to senior debt, viewed as sacrosanct.

The Irish press reported that EU officials "hit the roof" when Irish negotiators talked of broader burden-sharing. The European Central Bank is afraid that any such move would cause instant contagion through the debt markets of southern Europe.

Comparisons between the Irish and Icelandic banks must be handled with care. Iceland is tiny. It could walk away from liabilities equal to 900pc of GDP without causing a global systemic crisis.

Ireland is 12 times bigger. The balance sheets of Irish banks are $1.3 trillion (£822bn). The interlocking ties with German, Dutch, Belgian, and British banks create a nexus of vulnerability. Bondholder defaults would risk contagion to Spain and Portugal, where the banks rely heavily on foreign capital markets.

Of course, banks are only half the story. Nobel economist Paul Krugman said Iceland has been able to eke out recovery sooner because it never joined the euro. "Iceland devalued its currency massively and imposed capital controls. And a strange thing has happened: although it experienced the worst financial crisis (anywhere) in history, its punishment has been substantially less than that of other nations," he said, referring to Baltic states pegged to the euro.

Two years later, the krona is down 30pc, aluminium smelters are firing on all chimneys to meet export demand and local produce has displaced imports, including such exotica as vegetables and tomatoes grown in greenhouses.

Lars Christensen from Danske Bank said Iceland had come through "relatively unscathed" given the devastation of its banks but warned that it is still too soon give the all clear. "Iceland is a frozen crisis, and I am still worried what will happen when they lift capital controls," he said.

There is a better model for Ireland than Iceland, according to Mr Christensen. "People should be looking at Kazakhstan, which didn't bail out any creditors and let the three biggest banks fail, yet avoided a recession by letting the currency plunge and using monetary stimulus," he said.

Whether Ireland can learn anything from the Kazakh solution is a neuralgic issue. Ireland cannot resort to exchange and monetary stimulus without leaving the euro, which would be traumatic for all kinds of reasons, and illegal according to the ECB.

Ireland's EMU membership is not an economic policy. It is part of Ireland's larger strategy to escape Britain's shadow and build a different kind of country.

With a highly open economy, it has attracted investment from US and European companies precisely because it is fully committed to the EU Project.

Yet the underlying tale of Ireland and Iceland, and the tale of the 1930s, is that a devaluation shock may cause a violent crisis – that looks and feels terrible while it happens – but the slow-burn of policy austerity and debt deflation does more damage in the end.



Why do the liberals rage about Obama's tax-cut agreement?

by Jeff Jacoby

LIBERALS AND DEMOCRATS have been melting down, blowing up, and freaking out over President Obama's agreement with Republican leaders to extend Bush-era tax rates for another two years. "An absolute disaster," fumes Vermont Senator Bernie Sanders in an interview on MSNBC. "Anger of House Dems boils over," Politico reports. "An Odious Tax Deal," editorializes The New York Times. "Moral corruptness," seethes Senator Mary Landrieu of Louisiana.

"No amount of lipstick," roars a headline at Democratic Underground, "can make this pig of a deal acceptable."

Why is the left so furious?

I realize, of course, that liberals were against the Bush tax cuts from the start. I know that Obama vowed time and again to let those tax cuts expire for households earning more than $250,000 a year. He made that pledge as a candidate for president, and he was still making it on the campaign trail this fall. "We are ready . . . to give tax cuts to every American making $250,000 or less," the president said in Cleveland on Sept. 8. "For any income over this amount, the tax rates would just go back to what they were under President Clinton."

But Obama swore to end plenty of other Bush policies that nevertheless remain intact. Why aren't Democrats in a blind rage over the tens of thousands of US troops still deployed in Iraq? Or his extension of the Patriot Act? Or the ongoing rendition of terror suspects to third countries for interrogation?

Roll Call reported last week that liberal activists angry about Obama's compromise on tax cuts "crashed two phone lines at the White House" and are planning to do the same to the Senate. Why have they never overloaded the White House switchboard with calls protesting the continued use of the presidential signing statements for which Bush was so sharply criticized? Or warrantless wiretapping? Or the fact that Guantanamo still hasn't been shut down?

Of all the ways in which "George W. Obama" (as a Village Voice headline dubbed him in January) has disappointed his ideological supporters, why is it the prospect of not raising taxes on the wealthy that drives them into such a frenzy?

After all, it isn't as though Obama's deal with the GOP singles out the rich for a windfall. It is simply an agreement not to single them out for a loss. And it isn't as though the affluent don't already shoulder an income-tax burden disproportionately higher than their share of the national income. In 2008, the top 1 percent of tax filers accounted for 20 percent of all income earned that year, yet they paid 38.0 percent of all federal individual income taxes. The top 5 percent -- anyone making $160,000 and up -- earned 35 percent of the nation's personal income, but paid 59 percent of the taxes. Federal income tax rates are progressive to a fault. So why are "progressives" spitting nails at the thought of leaving those rates where they are?

In an interview on Tuesday, NBC's Andrea Mitchell demanded to know how Senator Judd Gregg, a New Hampshire Republican, could "justify going along with a larger tax cut, for those who really don't need it." Gregg replied: "Well, my view is: It's their money."

That would be my view, too -- and the view of most Americans, who are not conditioned to equate wealth with dispossession, and have not been raised to resent the rich. It's their money. Congress doesn't have to "justify" letting them keep it; it has to justify taking more of it away. The premise of Mitchell's question -- that government has the strongest claim on money the affluent "really don't need" -- strikes most non-liberals as not just wrong, but pernicious.

But to the left, the opposite is true. "We have so many people who can't see a fat man standing beside a thin one," Ronald Reagan, a recovered liberal, said in a famous speech, "without coming to the conclusion the fat man got that way by taking advantage of the thin one." As long as there are have-nots, therefore -- and there will always be have-nots -- it is pernicious for government not to confiscate more wealth from the haves.

This envy and resentment, which liberals think of as sensitivity and compassion, are at the very core of the liberal conception of good government. That is why "tax cuts for the rich" gets them so emotional and angry -- and it only deepens their outrage that most Americans don't think the way they do. Hence the Democrats' apoplexy. And hence their unbridled fury at Obama for agreeing to a compromise that a majority of voters seem to like.



Welfare has its limits

Tis the season to be jolly, but you can forget about that in political circles. The current angst about the economy and taxes is so intense that even Santa's reindeers are spooked. Speaking the other day on a cable news program, liberal Congressman Jim McDermott put it this way: "This is Christmastime. We talk about Good Samaritans, the poor, the little baby Jesus in the cradle and all this stuff. And then we say to the unemployed we won't give you a check to feed your family. That's simply wrong."

As I wrote in this space a couple of weeks ago, the liberal agenda in America is expanding and now includes demands for guaranteed jobs at good wages for all who want to work. Unemployment benefits were extended again this year, and if the Obama tax compromise is passed, $150 billion more will be added to the deficit. Adding it all up, the total debt of the United States will soon exceed $14 trillion.

By invoking the baby Jesus, McDermott puts an important question in play: What does a moral society owe to the have-nots? How much public money should go to those in financial trouble?

Many liberals believe there should not be any limits. Just this week, California Gov. Arnold Schwarzenegger declared a state of emergency because his state is bankrupt. The liberal legislature in Sacramento has spent so much money on entitlements for the poor and state union workers that it owes an astounding $158 billion.

If the wild spending continues on the federal level, the entire country will be adversely affected. Right now, the financial future of most Americans hinges on the dollar retaining its dominant position in the world. But if our currency collapses under unpaid debts, so will personal assets.

There comes a time when compassion can cause disaster. If you open your home to scores of homeless folks, you will not have a home for long. There is a capacity problem for every noble intent.

America remains the land of opportunity, but you have to work for it. The unemployment rate for college graduates is 5 percent. For high-school dropouts, it is 16 percent. Personal responsibility is usually the driving force behind success. But there are millions of Americans who are not responsible, and the cold truth is that the rest of us cannot afford to support them.

Every fair-minded person should support government safety nets for people who need assistance through no fault of their own. But guys like McDermott don't make distinctions like that. For them, the baby Jesus wants us to "provide" no matter what the circumstance. But being a Christian, I know that while Jesus promoted charity at the highest level, he was not self-destructive.

The Lord helps those who help themselves. Does he not?



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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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