RUTHFULLY YOURS

Instead of tackling a complex new investment mission, the Fed should establish a clear portfolio wind-down process.

The Federal Reserve recently made clear it is planning to maintain its enormous balance sheet—roughly $4.5 trillion in Treasurys and mortgage-backed securities—for many years, while keeping interest rates near zero at least into 2015.

Far from being neutral or stimulative, these policies have caused huge distortions in financial markets, contributing to slow growth and falling median incomes. Given the tendency of government programs to expand and become permanent, the risk now is that the Fed’s large pool of assets and liabilities evolves into a semi-permanent government-controlled investment fund, a U.S. version of the sovereign-wealth funds created by other governments.

The concept of a sovereign-wealth fund inside the Fed sounds farfetched, but the Fed’s megaportfolio already looks like one in many respects. It is one of the world’s largest and most leveraged bond portfolios, taking massive interest-rate risks. Just to maintain the Fed’s assets as bonds mature will require the Fed to make at least $1 trillion in bond buying decisions over the next five years.

The longer the Fed holds its portfolio, the greater the danger that political forces will nudge its investments away from Treasury securities. The Fed already owns bonds created by Fannie Mae and Freddie Mac, helping them take market share in the mortgage market from the private sector. There have been many proposals in recent years to set up infrastructure banks, for example. Perhaps the Environmental Protection Agency could set up an environment fund that issues bonds for the Fed to buy as a creative way to finance the fight against global warming. Japan, China and others own large holdings of dollar-denominated bonds, and it’s easy to see a future Fed edging its portfolio into euro- and yen-denominated bonds to manipulate the value of the dollar.

Maintaining the large Fed balance sheet raises a host of other concerns too. These include conflicts of interest among the Fed’s monetary, regulatory and investment roles, and the risk of distracting the Fed from its crucial lender-of-last-resort responsibility. Major new problems are inevitable regarding investment transparency and political decisions on the appropriate levels of Fed payments to the Treasury Department and banks.

Exactly as President Obama and Senate Democrats planned, the full D.C. Circuit Court of Appeals has moved to suppress a major challenge to ObamaCare. The gambit is no less remarkable for its nakedness.

Last week the full D.C. Circuit vacated the July decision that some insurance subsidies violate the law’s plain language and agreed to rehear Halbig v. Burwell en banc. ObamaCare’s text authorizes subsidies only through exchanges “established by the State,” so a three-judge panel ruled that the Internal Revenue Service was dispensing them illegally across the 36 exchanges established by the federal government.

Such straightforward statutory interpretation fails the D.C. Circuit’s own high standards for en banc scrutiny. As Washington attorney Adam White recently explained in these pages, since the 1990s the full D.C. Circuit has chosen to rehear merely one or two—and sometimes zero—of the 500 or so cases heard every year. The court’s standard for en banc hearings has been that a panel has overturned a D.C. Circuit precedent, which Halbig does not, or if a matter of “exceptional importance” is implicated, historically meaning some constitutional principle. Reading a statute does not rise to constitutional review.

The difference now is that Harry Reid last year packed the D.C. Circuit with three of President Obama’s nominees, so liberals now outnumber conservatives by eight to five not counting senior judges. The Senate Majority Leader nuked the filibuster rule for judges, allowing them to be confirmed with 51 instead of 60 votes, precisely so the court would become the garbageman to dispose of unpleasant legal challenges to the President’s regulatory decrees. ObamaCare is Exhibit A.

At a press conference on July 22, before the White House had even moved for en banc review in Halbig, Mr. Reid proclaimed that, “It seems clear to me that that decision will be overturned. In a matter of a couple hours, the Fourth Circuit disagreed. Now they’re going to have a hearing en banc.” When asked if Halbig vindicates his filibuster play, Mr. Reid replied, “If you look at simple math, sure does.”

He’ll still write a lawless deportation rule—but not until after November.

So President Obama says he still plans to unilaterally rewrite immigration law—but not until after the election so he can spare Democrats in Congress from the wrath of voters for doing so. And he wonders why Americans are cynical about politics?

White House leakers are saying that Mr. Obama wants to fulfill his June pledge to issue a lawless regulation limiting deportations for millions of illegal immigrants. But he has decided to bow to incumbent Democrats who fear a political backlash that could hand Republicans Senate control in November. Mark Pryor in Arkansas, Jeanne Shaheen in New Hampshire and even Al Franken, the Minnesota hyper-liberal, have begged Mr. Obama to delay.

“And you know, the truth of the matter is—is that the politics did shift midsummer because of that problem,” Mr. Obama said on NBC’s “Meet the Press” on Sunday, referring to the rush of Central American children seeking U.S. asylum at the border. “I want to spend some time, even as we’re getting all our ducks in a row for the executive action, I also want to make sure that the public understands why we’re doing this, why it’s the right thing for the American people, why it’s the right thing for the American economy.”

He added: “And what I want to do is, when I take executive action, I want to make sure that it’s sustainable.”

According to Burkhard Freier, the director of domestic intelligence for North Rhine-Westphalia, German Salafists are increasingly inclined to use violence to achieve their aims, and many have travelled to Iraq or Syria to obtain combat training.

“The intention of these people is to provoke and intimidate and force their ideology upon others. We will not permit this.” — Wuppertal Mayor Peter Jung.

“In Germany, German law is determinative, not Sharia law.” — Christian Democratic Union (CDU) politician Volker Kauder.

Salafist ideology posits that Sharia law is superior to all secular laws because it emanates from Allah, the only legitimate lawgiver, and thus is legally binding for all of humanity. According to the Salafist worldview, democracy is an effort to elevate the will of human beings above the will of Allah.

Muslim radicals have begun enforcing Islamic Sharia law on the streets of Wuppertal, a city in North Rhine-Westphalia, the state with the largest Muslim population in Germany.

In what government officials say is a blatant challenge to the rule of law and the democratic order in Germany, groups of young bearded Islamists — some wearing orange traffic safety vests emblazoned with the words “Sharia Police” — have declared parts of downtown Wuppertal to be a “Sharia Controlled Zone.”

The self-appointed guardians of public morals have been distributing yellow leaflets that explain the Islamist code of conduct in the city’s Sharia zones. They have urged both Muslim and non-Muslim passersby to listen to Salafist sermons and to refrain from alcohol, cigarettes, drugs, gambling, listening to music, pornography or prostitution.

A seven-minute propaganda video in German, entitled “Sharia Police: Coming Soon to Your City,” shows a group of men led by a German convert to Islam, Sven Lau, roaming the streets of Wuppertal at night and pressing wayward youth to embrace radical Islam. In some instances, the men physically attempted to prevent young people from entering bars, casinos and discotheques; those who resisted were pursued and intimidated.

The University of Memphis’ Leadership Education and Development (LEAD) program graduate Fatima Noor has been appointed special assistant in the Office of the Director for U.S. Citizenship and Immigration Services in the Department of Homeland Security.

She majored in psychology with minors in Spanish and international relations. She recently completed a month-long research fellowship in psychology hosted by Carnegie-Mellon and the University of Pittsburgh; her research will be ongoing for this program. Noor was a leader in many honor societies at the U of M. She has done volunteer work with World Relief Memphis and the Tennessee Immigrant and Refugee Rights Coalition.

Where was Congress? On recess!

“Okay, smart-a___, what is your strategy?”
In a [rather large] nutshell; here are the tactics which when pulled together make up a grand strategy:
Domestic
Make an “America is back!” speech from the Oval Office in the White House modeled on Harry Truman’s “Doctrine” speech of 1947. http://www.americanrhetoric.com/speeches/harrystrumantrumandoctrine.html Its principal theme would be recognition that the U.S. and its allies are launched in an extended war — and still from being won — against the Islamic jihadists.
Immediately ask Congress for emergency lifting of all Sequestration applying to the Department of Defense, the CIA and other security agencies for five years. Halt and reverse with continuing extension and recruitment the personnel cutbacks now decimating the American armed forces.
Reverse energy policies to provide the U.S. economy and our allies with a noninflationay stimulus of cheaper fuel, simultaneously directly providing hundreds of thousands of new jobs, by:
Administratively, opening up all federal lands [including offshore Virginia, etc.] to fracking,
Administratively, waiving all EPA regs on fracking for five years.
Administratively, fast-track applications for the dozen or so outstanding applications for liquefied natural gas export facilities, putting on hold any Environmental Protection Agency regulations concerning them for a five-year period.
Ask Congress to lift all oil and gas export restrictions, including a waiver on EPA fossil fuel export regs for five years. [These exports would begin to supply allies in Europe and Asia and simultaneously help mend the balance of payments hemorrhage against the dollar.]
Immediately okay the XL Keystone Pipeline and other Canadian applications for pipelines into the U.S. directed at Houston refineries and their export facilities.
Cooperate with Detroit and foreign-owned auto companies to organize and subsidize a national network of filling stations for an expanded production and use of LNG-fueled vehicles.

http://historynewsnetwork.org/article/156748

This is the 75th anniverary of the non-aggression pact between the Hitler and Stalin, the latter becoming (after Hitler attacked Stalin on June 22, 1941) the member of the “Big Three” known as “Uncle Joe.” In the commemorative essays discussing the twin dictators’ earlier alliance of August 23, 1939, which would be followed by Hitler and Stalin’s conquest of Poland the following month, the pact’s secret protocol that divided the nations of central and Eastern Europe between them is also mentioned. I have yet to see, however, any discussion of how that secret protocol became known to the public.

That disturbing story of near-suppression takes us past the war to the trials of the Nazi high command in Nuremberg — widely hailed the model of international justice. But what a morally rotten exercise it was, as war criminals (Soviets) sat in judgment of war criminals (Nazis) while war crimes (British and US) were occurring all around (Operation Keelhaul, the little known British-US-enabled “repatriation” from the West of millions of Soviet-claimed persons to death/the Gulag, was in full swing).

There, in a Nuremberg prison yard, a German defense lawyer by chance overheard top Nazis (von RIbbentrop and Goering) discussing the contents of the still-secret protocol, which offered evidence of Stalin’s guilt in committing “conspiracy to wage aggressive war,” one of the key charges against the German high command. With Stalin trying to blot out his alliance with Hitler from the record — with full support of his British and American allies — how did the secret protocol ever come to the world’s attention?

Here is what happened at Nuremberg, as discussed in Chapter 2 of American Betrayal, pp. 54-58.

Not long after the recent Gaza war finally subsided, a familiar
contentious issue reemerged. Following an investigation lasting
several years Israel’s Civil Administration declared nearly one
thousand acres south of Jerusalem, within the cluster of communities
known as Gush Etzion, to be state land. This meant that new homes
could be built for Jews. Or, in the reflexive common parlance: Israel
was planning another “illegal settlement” on “Palestinian” land.

To the contrary. The Etzion bloc, located between Jerusalem and
Hebron, currently comprises 18 communities with nearly 40,000
residents. Its modern origins are traceable to 1927, when Yemenite
immigrants and ultra-Orthodox Jews established “Migdal Eder,” named
after the biblical site (mentioned in Genesis 35:21) where Jacob
pitched his tent after burying Rachel. Destroyed during the violent
Arab riots of 1929, when the ancient Jewish community in nearby Hebron
was also decimated, it was rebuilt between 1943 and 1947, only to be
demolished yet again by marauding Arabs on the eve of Israel’s
independence. More than 200 Jewish residents, who fought valiantly to
the bitter end, were massacred. By Knesset decree, the day Gush Etzion
fell became – and remains – the day of remembrance for Israeli
soldiers killed in military action.

To fully appreciate the meaning of interfaith dialogues with so-called “moderate” Muslims and friends, consider the apt Sears Optical commercial. “Mama,” Kitty’s myopic owner, fails to see without her glasses. She opens the door to let Kitty in to “snuggle with mama” but instead, a raccoon―known to carry rabies―runs in and jumps in with ‘mama’ on her cozy bed.

Consider this an analogy for a distressing drama in progress at Chautauqua Institution, a strikingly beautiful summer retreat in Chautauqua, N.Y. While enveloped by pastoral landscape, Lake Chautauqua, beautiful houses and gardens, and enriched by music, visual arts, ballet, opera, symphony, chamber music and much more, Chautauqua is opening its doors to another sort of rabid beast.

After toying with the idea for many years, Chautauqua’s religion department this summer announced plans to add a Cordoba House to the Institution’s “Abrahamic family,” to be led by the infamous Imam Feisal Abdul Rauf, a move it describes as “highly supported by Chautauqua Faith leaders.”

What’s the rush? Why now, when bands of Islamic brigands roam much of the Middle East and Africa, and Muslim Brotherhood sympathizers worldwide endanger Western civilization? Why at this moment, as Islamic jihadists slaughter Christians throughout the entireMiddleEast as well as elsewhere. After all, Chautauqua Institution was founded by Protestant Christians.

Rather than outrage over endemic tyrannical Islamic abuses of Christians, associate religion department director Maureen Rovegno expresses what an objective individual could at best describe as naiveté:

“The only way that this fear [of Islam] can be alleviated, or neutralized, is to get to know each other in a personal way.” As the Psalm goes: ‘How good is it, and how pleasant, when people dwell together in unity’.”

Thus, only this summer, Chautauqua featured five influential Muslim Brotherhood functionaries and apologists as guest speakers: Former Islamic Circle of North America president Imam Abdul Malik Mujahid, Imam Rauf, DaliaMogahed, KarenArmstrong and John Esposito, a Georgetown University professor and head of its Prince Alwaeed bin Talal Center for Muslim Christian Understanding, eponymous for the Saudi royal who in 2005 donated $20 million to the center.

Esposito has long espoused views consistent with Brotherhood doctrine and during the 1990′s was known to claim that Islamic fundamentalism, in fact, was democratic and posed no threat to the U.S. Esposito has also served with global Muslim Brotherhood leader Yusef Qaradawi―since 1999 banned for his terror support from entry to the U.S.―at both the Institue of Islamic Political Thought and the Circle of Tradition and Progress as well as the United Association For Studies and Research (USAR), part of the Hamas’ U.S. Muslim Brotherhood support infrastructure.

The EU is on life-support, and the doctors are clueless

Europe’s heart has stopped. It has ground to a halt, with zero growth in the second quarter. In Italy it is worse: the economy effectively has not grown since it joined the euro. The cure is obvious, but the Eurocrats only care about themselves

The problem with being ruled by the unelected is not just that they do not necessarily rule in the interests of the people they serve, but that they have no incentive to find out what those interests are.

Another opportunity to do something about the appalling economic condition of Europe was missed at the recent meeting of the European Central Bank (ECB). Mario Draghi, ECB president, announced a

couple of ineffective measures to be introduced at an unspecified date and said that individual countries had to introduce reforms.

Yes, yes, yes. He’s right: many countries, in particular in southern Europe, need to change; to open up their markets, tackle vested interests. We hear repeatedly of individual horror stories such as that headache pills are twenty times the price in Italy as in England, because the Pharmacy lobby prevents them being sold in supermarkets and operates an illegal minimum pricing rule.

But if someone’s heart has stopped, yes, he needs to lose weight; yes he needs to give up smoking; yes he needs to take more exercise, but what he needs right now is a shot of adrenalin.

Eurostat, the EU statistics office, has now confirmed that Europe’s heart has stopped. It has ground to a halt, with zero growth in the second quarter. In Italy it is worse: the economy effectively has not grown since it joined the euro.

The figure of one in eight unemployed masks the fact that in parts of the south there are towns and villages with hardly anyone in work except for needless hand-out jobs from the local government. More than half of young working age people can find nothing to do.

Inflation in Italy is -1.6 percent. Negative. Who will buy a new washing machine or car if they think it is going to cost less next year? And the deflation makes it harder to reduce debt: in real terms the debtor country – and Italy owes €2 trillion – has to pay back more. Real interest rates are high. With the debt increasing in real terms Renzi must make more cuts to keep within his eurozone imposed 3 percent ceiling.