Monday, January 31, 2005
This is a great piece in Glenn Reynold's blog. It is called "Clinton's victory in Iraq". It shows what Clinton and Gore used to say about Iraq and how the Democrats are out of touch with reality today.
"I passed a television at the gym yesterday, and it was showing a familiar scene: A crowd of Arabs dancing, chanting, and waving flags for the camera.
Stereotypically, of course, those kinds of Arab crowds are celebrating something awful: A terrorist attack, the downing of a plane, whatever.
But this time, they were celebrating democracy.
And it occurred to me that the "root cause" crowd ought to be celebrating along with them.
After all, we've heard for decades that Arab terrorism resulted from Arab despotism, and that if we wanted to end terrorism we ought to quit supporting Arab despots and work for democracy.
But it was all talk until one brave man in the White House stood up for Iraqi freedom.
That man was Bill Clinton, who signed the Iraq Liberation Act back in 1998.
That Act called for "regime change," and the replacement of Saddam with a democratically elected government.
And that's what we're about to get! Nor was Clinton alone.
As Al Gore observed:
Even if we give first priority to the destruction of terrorist networks, and even if we succeed, there are still governments that could bring us great harm. And there is a clear case that one of these governments in particular represents a virulent threat in a class by itself: Iraq.
As far as I am concerned, a final reckoning with that government should be on the table. To my way of thinking, the real question is not the principle of the thing, but of making sure that this time we will finish the matter on our terms.
But finishing it on our terms means more than a change of regime in Iraq.
Gore said we need to stand up for democracy. And we have.
Only Al Gore isn't saying much now.
What's hard to understand is why so many Democrats -- including big-name Democrats like Ted Kennedy and John Kerry -- have taken such a different stance today.
Kennedy declared the war lost and the elections a failure just last week.
Kerry was churlish and negative on Meet the Press yesterday.
Mickey Kaus blames the Internet for this attitude, and there may be something to that.
Jim Geraghty thinks it's the 2008 primaries already. But I don't think either of these explanations hits the mark.
I think it's jealousy. Bush-hatred has become all-consuming among a large section of the Democratic Party, and they can't stand the thought of anything that reflects well on him, even if it's good for the country, and if it's something that was their idea originally.
The question is whether the Democratic Party -- which ought to be cheering events that vindicate Clinton's policies -- will do itself fatal damage by giving in to envy.
Such small-mindedness doesn't suggest a party that's ready to govern."
You are right Mr. Reynolds. This is not a party fit to govern. This is a collection of whiners and losers intoxicated on anti-Bushism. They are a party that can't get over '94 or anything since.
To put it bluntly, this is not FDR or Truman's party anymore.
Sunday, January 30, 2005
The Toronto Star had a story yesterday. It quoted a Canadian working as an advisor for the Iraqi elections. This is what he said:
"The big story just isn't getting out. But it is really happening.
Despite what you see on cable news, despite the bombs and the beheadings, Iraqis are putting their lives on the line for this thing called democracy.
They have a thirst for it. They want it. And they're getting it."
This Canadian fellow turned out to be prophetic.
Early Sunday morning, I turned my shortwave radio to the BBC. The news from Iraq was stunning. They had an election and close to 70% turned out to vote. The bad guys made all kinds of threats but the people voted anyway!
Then I watched the Sunday morning shows. The video from Iraq was inspiring. Lines of people, including women, turned out to vote.
The anti-Americans are going to have a tough time spinning this one. Voter turnout was high. The terrorists did not scare the voters despite 31 deaths.
Am I surprised? No.
Because the international press has not been telling the truth about Iraq. There has been a campaign to turn everything about Iraq into a massive failure.
Iraq is not a failure. Iraq is not Vietnam.
Are there challenges ahead? Yes.
But there are challenges in the US and we have a 230 year old democracy!
Congratulations to the millions who voted for Iraq. They are the real heroes of the moment!
It's now time for the world to rally around the good people of Iraq and get over Bush.
Last but not least, congratulations to Pres. Bush for sticking with the election date and having the stomach to fight this war against terrorists!
Saturday, January 29, 2005
It continues to amaze me that the Iraq elections have so little support among Western liberals. So let's hear it from the horse's mouth, or more correctly from the terrorist's mouth.
In the words of Musab al-Zarqawi:
"We have declared a fierce war on this evil principle of democracy and those who follow this wrong ideology..."
"Democracy is also based on the right to choose your religion," he said, and that is "against the rule of God."
"Anyone who participates in these elections has committed apostasy against Allah."
This fellow does not sound very tolerant. In fact, he sounds like the kind of man that most liberals would not enjoy living under.
I will support these elections. I will always support elections, whether they are in South Africa, Iraq, or someday, in Cuba.
Iraq's first elections are indeed the first steps in a long journey toward self-rule. Will it work? Time will tell. I will always bet on self-rule. I will always be on the side of those who cast a ballot rather than those who blow up innocents.
Thursday, January 27, 2005
I know that many of you are furious with Ted Kennedy's recent speeches. I understand. I don't like what he is saying either.
My own view of Sen Kennedy has changed over the years. In the 1970s, I saw him as the man who ran away from an accident and left Mary Jo Kopechne to drown in Chappaquidick. In the late 1980s, Kennedy developed a more serious side and turned into a very good liberal senator. Lately, Ted Kennedy has turned into an absolute "cheap shot" artist.
Again, don't take my word for any of this. Call the 50 Dem state party headquarters and ask a simple question: Are you going to bring Ted Kennedy down to campaign with your local candidates? Officially, you will get the party line. In private, they will tell that they think that Kennedy is an electoral liability!
Why is Sen Kennedy so vocal these days? The answer is very simple. Few Democrats want to attack Bush.
Look at the numbers. Bush carried 31 states which translates into 62 of the 100 Senators. There are 16 Dems running for reelection in '06 and they remember a fellow named Tom Daschle. Why did Dashcle lose in '04? Because he got too close to Ted Kennedy.
The Democrats running for reelection understand some electoral realities:
1) The liberals will make more noise and yell more creepy obscenities.
2) The conservatives will get out the vote.
Liberals win the yelling contest. Conservatives win at the ballot box.
This is why Dems in red states avoided Gonzalez and Rice. They left that to Kennedy and Boxer. Someone has to keep the Hollywoodies, Michael Moore and the anti-war left happy and continuing to make contributions to the Dem party.
The bad news is that Kennedy is going to be very vocal in the near future.
The good news is that he will excite the Republican base and bring down more Dem incumbents in '06!
Keep Ted Kennedy talking. Please keep Ted Kennedy talking!
Wednesday, January 26, 2005
There is going to be a civil war. It will be bloody and have regional ramifications. This is not a preview of life in Iraq. This is the near future of the Democrat party.
Get ready for the mother of all civil wars!
This stuff has been brewing since 1972, the year that Pres. Nixon was reelected by snatching the South and breaking up the southern conservative/northern coalition that elected FDR, Truman, JFK and Johnson.
For years, the Democrats were the majority party. They were the party of segregationist Southerners, conservative Texans, Western ranchers and northeast liberals. They put together an impressive coalition that included middle class whites and small business owners. It included labor as well.
Nixon was a brilliant man. He saw this crack and seized on the opportunity. Nixon appealed to what he called the "silent majority". It worked beautifully in '72! It set the table for the 49 state sweep and 61% popular vote landslide against McGovern '72. Things got so bad for McGovern in '72 that he did not even carry his own state of SDakota.
Watergate bought the Dems a little time and reversed some of Nixon's gains. In '78, the Republicans made a huge comeback in the mid term elections. Carter's presidential incompetence brought about the Reagan landslide of '80 and planted the seeds of what is now the Republican majority under GWBush.
In '80, '84 and '88, most Dems in the South and West ran away from Carter, Mondale and Dukakis. They ran independent campaigns, often not even calling themselves Democrats. Their complaint: these guys in the national party are too liberal for ____ (fill in the blank with the name of a state)
The Democrats got lucky in '92 when Perot came back in the race. The first Bush was a great president but a lousy campaigner. Perot split the white middle class with Bush. Clinton was elected with 43% of the vote. It put the Dems back in the White House. It was also the beginning of the end for the Dems as a major national party.
The first shock came in '94 when Clinton lost the House, Senate and drove Anne Richards into early retirement. The Republicans retained the House and Senate in '96 and have since.
From '94 to '04, the states' Dem parties have avoided the likes of Hillary Clinton and John Kerry.
No Dem running for President in '04 was invited to campaign in governors elections in Mississippi, Kentucky and Louisiana. The local Dems decided that it was too risky to bring a national party figure to campaign on their behalf. On the other side, the state Republicans could not get enough of Pres. Bush!
It got worse in '02 and '04.
In '02, consultants warned the Dem leadership that Clinton cut both ways. He generated enthusiasm in the inner city but, more importantly, boosted Republican turnout in the suburbs.
In '04, Kerry was not mentioned by Dem candidates running for the US Senate in Florida, et al. On the other hand, every new Republican senator ran with Bush.
Tom Daschle even showed pictures of him embracing Bush. One of our local candidates, incumbent Democrat Martin Frost, campaigned saying that he supported Bush more than his Republican opponent.
On election night '02 and '04, you could see the anger in the faces of Texas Democrats. You could read the message in their faces:
The Texas Dems were not alone. State Dems all over the country could not compete with Republicans singing the same tune:
I am a conservative and my opponent is a liberal.
Democrats all over the South and West, representing almost 200 of the 270 votes needed to win the White House, were screaming and wondering who sat Michael Moore next to Jimmy Carter at the convention. This picture was used over and over to portray the Dems as the party of Michael Moore!
Others were furious that someone at the Boston convention gave out T-shirts to women saying: I had an abortion. This picture went all over specially in rural areas where cultural issues matter a lot!
One of my conservative Dems friend said to me: Hey, what plays in secular Europe does not play in Texas.
It led me to say: This is not your daddy's party.
He said: It ain't!
I think that we are witnessing the end of the Democrat Party. It will split into two groups.
The Michael Moore Democrats will continue to take their flock further and further to to the left turning into an American version of Mexico's PRD or some European leftist party.
The Moore Democrats will support higher taxes and more secular socialism. They will drift further into irrelevancy and elect a few city council members in places like Berkley, CA and Madison, WI.
Their influence will be minimal and no one will take them seriously despite the fact that they will make more noise and yell more obscenities than the two parties combined! They won't win elections but they will be loud and very bitter!
The rest will emerge as a centrist group, very tolerant of pro life voters, realistic about taxes and very conservative on terrorism. They will try to get back in the game by speaking to the white middle class about education, crime and illegal immigration.
I can guarantee you this: Michael Moore will not sit next to Jimmy Carter in '08 and women won't be walking around with T-shirts boasting that they had an abortion!
Get your guns out. The shooting is about to start. These Democrats are about to cut each other to pieces!
What do we do? Enjoy the cat fight. Sit back and watch a political version of Thursday night wrestling.
Tuesday, January 25, 2005
"Never has American prestige in Europe been lower!"
Sorry anti-Bushies. The above statement was not made by John Kerry or Ted Kennedy. It does not come from a Michael Moore film or some left wing newspaper in Europe.
It appeared in a 1946 LIFE magazine article about the post war problems. Fifty-nine years ago, frustrated Europeans wondered out loud if the US liberated them or simply destroyed their cities with massive bombing.
Pres. Truman wasn't very popular either. Most of Europe thought that he was unfit for command, a lightweight with a rather blunt way of answering questions.
"Europeans. Friend and foe alike, look you accusingly in the face and tell you how bitterly they are disappointed in you as an American."
Sorry anti-Bushies. This is not a Parisian reacting to Bush's victory in the '04 election. This is another remark made in '46 when most Europeans were wondering if the US would had won the war, and as they say today, lose the peace!
It keeps coming. By the way, you can read the entire article and check the cover page by going to http://www.rushlimbaugh.com/ or read all of these stories in http://www.nationalreview.com/.:
"Grave concern was expressed today by informed officials that the United States might soon lose the fruits of victory in Germany through the failure to prepare adequately for carrying out its long-term commitments under the Potsdam Declaration."
"An exhaustive compilation of opinions of Germans in all walks of life on their reaction to the United States occupation of their country was released this afternoon from the confidential status under which it was submitted to officials of the United States Forces in the European Theatre recently.
Bitter resentment and deep disappointment was voiced over the Americans' first six months of occupation, though there was some praise for the improvements in transportation, health conditions, book publishing and entertainment."
"United States Seventh Army headquarters announced today that plans had been completed for initial German elections in January at Gemuende. A statement said that a vast majority of Germans remained passive in attitude toward politics and displayed no disposition to take over civic responsibilities."
Once again, these are not '04 Democrats talking about Iraq or the upcoming election. This is the NYTimes from its coverage of the occupation of Europe. (http://www.nytimes.com/)
Some things don't change. Occupations are tough and the NYTimes is the newspaper of "doom"! Do you want a daily dose of pessimism? Just read the NYTimes!
Thankfully, Pres. Roosevelt did not have weekly polls, a partisan opposition and a media determined to do anything, including running a story based on forgeries, to elect the other guy.
FDR, and subsequently Truman, had a different reality. Those of us who love freedom are thankful of that!
The Republicans of the early 1940s decided that beating Hitler and Japan were more important objectives than denying FDR another term. They saw evil and decided to fight it with all of their energies even if it meant that FDR, their political opponent, would get the credit.
Why can't the Democrats of '04 be more like the Republicans of '44?
Monday, January 24, 2005
In a perfect world, there would be no hunger, every child would have a responsible father and terrorists would not blow up election workers in Iraq.
Unfortunately, the world is not perfect. Neither is US history or anybody else's!
I have incredible admiration for the good people of Iraq. Despite threats, they are planning to show up next Sunday. Now that's courage!
The negative brigade is out in force saying that some regions won't participate because of violence. This is true. But it is not enough to disqualify this election or deny many their right to vote!
Between 1860 and 1872, the US had 4 elections and a Civil War in the middle. In '60, Linconl came into town secretly for fear of a kidnapping or assassination. In '64, half of the nation had a President named Jefferson Davis. In '68 and '72, US troops occupied southern states. Many Americans, and certain regions, did not participate in those elections.
Over in Iraq, the people will prove the negative brigades wrong. They will show up to vote. They will deliver the knockout punch to the thugs who are doing everything possible to deter an election.
The Iraqi people will show up. It does not mean that Iraq will turn into a perfect democracy. Violence will go on. Innocents will be killed by barbarians bent on stopping an election.
But the people will show up! That's a major victory in itself.
Karl Vick of The Washington Post reports that:
"An overwhelming majority of Iraqis continue to say they intend to vote on Jan. 30 even as insurgents press attacks aimed at rendering the elections a failure, according to a new public opinion survey. Western specialists involved with election preparations said they were struck by the determination and resilience of ordinary Iraqis as they anticipate their country's first free election in half a century.
I agree with this. The real story of Iraq has gone unnoticed. The good news from Iraq has gone unreported in the international media.
Yet, this is no longer about the war. It is about a vote in Iraq. As Jeff Jacoby wrote in THE BOSTON GLOBE:
"The war to topple Saddam may have been wise or foolish, but for the Iraqi people, there is no turning back. They have, to take a phrase from Ronald Reagan, a rendezvous with destiny. As they head to the polls next Sunday, the prayers of all free people -- and all who yearn to be free -- go with them."
One of my favorite liberals is Thomas Friedman of THE NEW YORK TIMES. He sees the big picture. He is not angry at Iraq because of the 2000 elections. He sees the threat as well as the opportunities in Iraq. He writes:
What's sad is that right when we have reached crunch time in Iraq, the West is totally divided. All that the Europeans care about is being able to say to George Bush, "We told you so." What happens the morning after "We told you so" ? Well, the Europeans don't have a Plan B either."
Iraqis will turn out in large numbers. They will have an election. More from Friedman:
"This is a war between Iraqi voters and insurgents - ballots versus bullets.And the people who understand that best are the fascist insurgents.
That is why they are not focusing their attacks on U.S. troops, but on Iraqi election workers, candidates, local officials and police.
The insurgents have one credo: "Iraqis must not vote - there must be no authentic expression of the people's will for a modern, decent Iraq. Because, if there is, the world will see that this is not a war between Muslims and infidel occupiers, but between Muslims with bad ideas and Muslims with progressive ideas."
The terrorists get it. They know what the battle in Iraq is all about. The Iraqi people get it, too. This is why they will show up.
Peter Brookes puts it best:
"Sorry, oracles of doom: You're about to be disappointed. "
Friday, January 21, 2005
There is a story in the Boston Globe today that Sen. Hillary Clinton has started to insert the word God in her speeches. She is even claiming to be a person that "prays" a lot.
I think that this is wonderful. I am glad that Hillary Clinton prays and has faith in God.
My question is this: Will they call her a religious fanatic? Will the liberals say that Sen. Clinton can not separate church from state? Will the liberals say that she is too close to God to govern?
This is what the liberals say about Pres. Bush!
This is from The Boston Globe:
"In a speech at a fund-raising dinner for a Boston-based organization that promotes faith-based solutions to social problems, Clinton said there has been a "false division" between faith-based approaches to social problems and respect for the separation of church of state.
"There is no contradiction between support for faith-based initiatives and upholding our constitutional principles," said Clinton, a New York Democrat who often is mentioned as a possible presidential candidate in 2008.
Addressing a crowd of more than 500, including many religious leaders, at Boston's Fairmont Copley Plaza, Clinton invoked God more than half a dozen times, at one point declaring, "I've always been a praying person."
She said there must be room for religious people to "live out their faith in the public square."
I won't question Hillary Clinton's motives. I will give her the benefit of the doubt. I won't question any liberal's recent public conversion to religion. I won't be cynical and say that it is based on electoral results.
I do have one genuine request:
Can the liberals stop calling us the American Taliban?
I find that very offensive!
Thursday, January 20, 2005
We live in a free country. People actually have the right to make fools of themselves.
During the early stages of the Bush parade, there were several signs that said: I WANT MY COUNTRY BACK.
They looked like mass produced signs. There were several mass produced placards, like the one with W's face and the word LIAR.
As I said, we live in a free country. Unlike Saddam or Castro, the US gives you the opportunity to mass produce such signs and display them at Bush's parade.
My question is this: Who does he want the country back from? The voters? How did Bush become President?
As I recall, we had an election. Bush won a majority of the popular vote and the electoral college. He increased Republican totals across the country.
What does this protester want? Who is supposed to give him his country back? It is sad that the US left has been reduced to silly placards and yelling 4-letter words at police officers.
So my advice to this fellow is this: Win the next election and you will get your country back. It's very simple.
In our system, we have elections. One side wins and they get to watch victory parades. The other side loses and moves on. Then there is the Michael Moore wing of the Democrat Party and they make fools of themselves!
The election is over. It's time to govern!
In Jan '69, LBJ was packing up to return to Texas. Nixon was getting ready to move into the White House. Someone asked Pres. Johnson: Why did the Democrats lose the '68 election? LBJ said: They did not get enough votes!
Last week, Joe Biden got back from Europe. He told the Europeans: get over it. Bush won, get over it!
We are now in the 11th week of the "Why Kerry lost" episodes. The Democrats have promoted every theory, from some silly Ohio conspiracies to the values voters.
No one has said the obvious: Bush won. He carried 51% of the popular vote and won the Electoral College, 286-252.
Bush won, get over it!
Elementary, very elementary. Get over it!
Ted Kennedy's recent speech (more like a rant) just shows that the Democrats don't get it. First, what political consultant advised the Democrats to put Ted Kennedy's face on the party? The Democrats need an urine sample from that consultant. Ted Kennedy is the last person in the world who should be speaking for the party. Does this party want to win? Another liberal voice from Massachusetts?
The US map will continue to be red all over until the Democrats nominate a person who understands the party's electoral dilemma. They already have all the liberals. What they lack is support from middle-class white families in fast-growing suburbs.
So come on Democrats. Get ready to govern. Let's hear some constructive alternatives to Bush's ideas.
Speaking of Social Security, what alternatives are the Democrats proposing? This is a program created in 1935 and the bulk of the benefits will be paid after 2015? Drop the class warfare game. Are Democrats comfortable with doing nothing? Are they going to raise the payroll tax or cut benefits?
Let's govern. Give me ideas not just stupid class warfare.
As for the war on terror, don't give me partisan cheap shots on Iraq. John Kerry looked at the same info that Pres. Bush did. He walked out of the meeting and gave a stern speech about Saddam, WMDs and the threat it posed. Every Democrat, from Ted Kennedy to Nancy Pelosi, applauded Pres. Clinton's position on WMDs.
Let's get real, Democrats.
Let me close with Michael Goodwin of The NYDaily News:
"Boxer and Kennedy are living in the past, back when it was okay for limousine liberals to tell the rest of us how to live. And maybe they're going a little nuts with frustration because white-bread Bush was reelected and he's the one nominating the first Hispanic attorney general and the first black female secretary of state.
Whatever's bugging them, Kennedy and Boxer need to get a grip. They're embarrassing themselves and defining their party as a bunch of sour-grapes, out-of-touch losers. All the talk about Dems moving back to the political center and working with Bush is being demolished every time these two open their potty mouths.
Of course, there is another, even more scary possibility:
Maybe Kennedy and Boxer actually speak for the majority of their party.
In that case, Dems are in more trouble than they can ever imagine."
Friday, January 14, 2005
The CBS scandal brings to an end the age of the liberal crusader journalist. No more crusades, just cover the story and don't forget to check the accuracy of the documents.
The liberal crusader journalist of the last 30 years, LCJ for short, was a Democrat party partisan, even though he or she always denied it. They promoted the liberal agenda, from their anti-business stories to mocking Reagan.
The success of talk radio, FOX NEWS, and more recently the bloggers, is a reaction to the liberal bias.
The LCJ saw a Vietnam in every war and a Watergate in every politician. He or she believed that they had a duty to bring down governments, particularly Republican administrations.
From Nixon to Bush 43, the media was hostile to conservatives. In '92, a poll of journalists showed that they voted for Clinton in huge numbers. On the other hand, the popular vote was only 43% for Clinton.
Mary Mapes, the lady producer fired by CBS, was your typical liberal crusader protecting all of us against evil Bush. She was so determined to protect us that she fell for a worthless story peddled in Texas.
Mapes won't get to write her bestseller book entitled "All the President's memos". She won't get to see liberal icon Brad Pitts play the courageous journalist in the movie of her book. She won't have the pleasure of having Barbra Streisand do the theme song for the film soundtrack.
Sorry Mary. You won't get to see John Kerry assume the presidency next week either. As THE OAKLAND TRIBUNE reports:
"Mary Mapes, the longtime Texas-based producer who basically did what little reporting was done, clearly considered the story an important opportunity to help defeat Bush at the polls and contacted the campaign of Sen. John Kerry."
Sorry Mary. You should read what Howard Fineman of Newsweek is writing about you and the rest of the LCJ's in an article titled "The party is over":
"The crusades of Vietnam and Watergate seemed like a good idea at the time, even a noble one, not only to the press but perhaps to a majority of Americans. The problem was that, once the AMMP declared its existence by taking sides, there was no going back. A party was born.
Were Dan Rather and Mary Mapes after the truth or victory when they broadcast their egregiously sloppy story about Bush's National Guard Service?
The moment it made air it began to fall apart, and eventually was shredded by factions within the AMMP itself, conservative national outlets and by the new opposition party that is emerging: The Blogger Nation."
Sorry LCJ's. The crusade is over.
Saturday, January 08, 2005
The anti-Bushies, a.k.a. "the glass is always half empty crowd" got some bad news on Friday. The US economy is doing quite well. Bush was indeed right during the campaign. Kerry was blowing hot air.
The Washington Times reported on Friday:
"The economy created 157,000 jobs last month, a solid gain that capped the best year for job creation since 1999, the Labor Department reported yesterday."
The best year since 1999? This is amazing. 1999 was the peak of the high tech boom. The current economic recovery has not peaked yet. Are we looking at 4% unemployment in 2005-06? It looks like may be! It looks like the US economy is going to fool the naysayers one more time!
I love what Larry Kudlow said:
"Americaâ€™s cowboy capitalism, to borrow Europeâ€™s derisive term, is hatching yet another economic boom."
Kudlow goes on:
"Additionally, at 5 percent or lower unemployment, the 4 percent growth rate of the economy will spur a flood of new individual tax collections at lower tax rates. Hence, another economic surprise of 2005 will be a pronounced decline in the federal budget deficit."
The anti-Bushies will find something wrong with yesterday's news. Indeed, we do not live in a perfect economy. We never have!
Yes, we have a deficit. It is coming down. Why? Because the US economy is growing. As Fred Barnes points out:
"Neither frugality nor tax hikes will eliminate the deficit. It fell $103 billion from the projected level in 2004 largely because of an aroused economy. Growth was the key in the Clinton years as well--to the surprise of Clinton's own economic team. The best recipe today for deficit reduction is an economy stimulated by permanent tax cuts and tort reform".
The bottom line is this: Our economy is doing great and the Europeans are hatching another cycle of 2% growth.
Don't forget to read my post on the "overvalued" euro. Remember. I warned you about the euro!
Saturday, January 01, 2005
Over the years, I have learned something about currencies: a currency is a piece of paper, signed by a politician and backed by a nation's economy.
My resolution for 2005 is simple: Don't fall in love with the euro.
Why? Because the euro is a piece of paper, signed by EU politicians, and backed by a region with zero economic vitality.
My first experience with the value of a currency came in Mexico in the early 80s.
Like many others, I woke up in February '82 to learn that the peso had been adjusted against the US dollar. It went from 27 to 38 overnight.
Why? Because Mexico could not sustain the peso after the energy prices collapsed in the summer of '81. It was compounded by capital flight, which was a reaction to Pres. Lopez-Portillo vowing to defend the peso like a "perro".
By mid '82, it was 75 and it soared to 145 after Lopez- Portillo decided to expropriate the private banks.
Mexico had currency adjustments throughout the 1980s and into the 1990s. In '94, Banco de Mexico decided to change the peso. The government deleted the 000's and told everyone that the new peso was now worth 3-1 rather than 3,000 to 1.
Today, the Mexican peso is traded at 11-1. But it is really 11,000 to 1, a sad reminder that a currency is a piece of paper, signed by a politician and backed by a nation's economy.
Like a new dance or hot song, the euro is in vogue today. According to the experts, the euro is now stronger than the dollar.
Is it stronger or is it overvalued? I think that it is overvalued.
Why? Because the US is a vibrant economy and Europe is a sick patient connected to a life support system.
Let's compare the economies of the US and the Euro-countries.
As I write this, the US economy has 4% annual growth, 5.4% unemployment and we are coming strongly out of a recession caused by the dot.com burst of 2000 and the 9-11 attack. By any historical standard, the US recovery has been outstanding!
David Sands puts it in perspective in The Washington Times:
With 6 percent of the world's population and 6 percent of its land mass, the United States generates a third of the gross domestic product (GDP), attracts a third of the foreign direct investment and spends more on research and development than the next seven countries combined.
Read this from UPI:
Unemployment in the United States appears set to fall next year by nearly 10 percent, the Christian Science Monitor reported Tuesday.
And job creation looks robust, too.
Employers are expected to create as many as 225,000 new jobs each month in 2005 to more than absorb the 125,000 who enter the job market every month, economists predicted.
An informal survey of economists indicates that unemployment could fall from its current 5.4 percent to as low as 5 percent, a nearly 10 percentage point decline.
"It may be the best year since 2000 in terms of the general job market," predicts Mark Zandi of Economy.com. "There will rising labor force participation and fewer underemployed."
Reasons for the optimism includes an unusually high number of businesses that are flush with cash, the expiration of the government's accelerated depreciation benefit on capital investments and the slowdown in downsizing.
"Each year downsizing is dropping off about 20 percent," says John Challenger whose firm in Chicago, Challenger, Gray & Christmas, keeps track of announced layoffs.
Read this one from THE WALL STREET JOURNAL, a newspaper that knows a thing or two about economics:
According to the November forecast of the Organization for Economic Cooperation and Development, gross domestic product in the U.S. is expected to increase by 4.4% in 2004.
Elsewhere, the OECD predicts growth of 4% for Japan, 2.7% for the U.K., 2.1% for France and 1.2% for Germany.
For the 12-country euro zone, the figure is 1.8%.
Don't stop. The WSJ article gets better:
Overall, the U.S. economy has added 2.3 million jobs since the third quarter of 2003, bringing the unemployment rate down to 5.4% from 6% in October 2003.
In Germany, the unemployment rate is 10%; in France it's 9.5%.
For the 27 countries of the OECD, the average unemployment rate is 6.8%. Only Britain and Japan, among the major economies, have unemployment rates lower than the U.S.
OK, say the critics, but what has given the U.S. numbers a boost is that some people have so despaired of finding work that they've just dropped out of the job market. Yes, the rate of workforce participation in the U.S. declined slightly in the Bush years, from 76.8% in 2001 to 75.8% in 2003.
But that still beats rates in Japan (72.3%) Germany (71.3%), France (68.2%) and Italy (61.6%).
Where is Europe? Have you tried to look for a job in Europe recently?
Again, the WSJ states:
Even more revealing are the figures for long-term (12 months-plus) unemployment.... Here again, the U.S. looks good. Put simply, about 90% of Americans who lose their job can expect to find another within a year.
Lose your job in Europe, and you face far more daunting odds.
I like what Larry Kudlow said about the US economy:
If you haven't noticed, Japan's economy is slumping again. Europe's economy never recovered in the first place.
Russell A. Berman, economist, writes this:
...the euro economies: growth in 2004 may only reach 1.8 percent and is predicted to climb at most to 1.9 percent in 2005.
This is what Reuters is reporting today:
....the National Association of Purchasing Management-Chicago's business barometer registering a healthy 61.2 from 65.2 in November. Economists had forecast the index at 63.0. A reading above 50 indicates expansion, and December represented a 20th straight month of growth.
What economy do you have more faith in?
I am betting on the US. We have problems but our economy is more flexible, less regulated and more efficient than theirs.
On the other hand, Europe has a massive welfare state and high taxes.
What political system is most stable? I am betting on the US. I think that Europe is going to have some serious adjustment problems over the next 20 years with rising Muslim populations becoming a factor in politics.
What about China?
I know that China is growing and it represents a challenge to all of us. But I am betting on the US again. Why? Because we are a pluralistic democracy and China is not. China is headed for big social upheaval because of its fast and uncontrollable growth. So let the Chinese continue to grow without concern for the environment, workers' rights and social justice. China is going to explode sooner or later!
So let me make a New Years Resolution.
Don't fall in love with your Euros.
By mid-2005, Euro politicians will face a hard reality: the euro is shutting down factories and unemployment is in double digits!
How long can European countries support a currency that shuts down their factories and sends American tourists to another part of the world?
Europe depends on having a share of the US$ 15 trillion market and the American tourist who travels to Paris and Rome. They don't have much of either right now.
So get ready for a euro adjustment vis a vis the dollar. Get ready for the comeback of the dollar.
Richard W. Rahn is a senior fellow of the Discovery Institute and an adjunct scholar of the Cato Institute. This is what he wrote:
At the same time, foreign companies and individuals want dollars to invest in the United States because U.S. rates of return have generally been higher than many other places in the world, such as Japan and Europe, over the last couple of decades, and the United States is viewed as a "safe haven."
You may have read the U.S. budget deficit has caused the big shift in exchange rates. However, the U.S. budget deficit is rapidly falling and is likely to be lower (as a percent of GDP) than that of Italy, France or Germany in the next year or so.
The U.S. economy is growing more rapidly than the major European economies, and the fiscal outlook for the costly European welfare states with their stagnant or declining populations is far bleaker than that for the U.S.
Over the long run, the dollar seems a much safer bet than the euro.
So don't fall in love with your euros. It may prove to be a very expensive love affair!