Tuesday, September 04, 2012

U.S. Ready To Give Money To Islamists


This only underlies the impotence and confusion of the Obama foreign policy.  From The Wall Street Journal:

CAIRO—American diplomats are closing in on an agreement to dole out $1 billion in debt relief to Egypt, part of a gilded-charm offensive that Washington hopes will help shore up the country's economy and prevent its new Islamist leadership from drifting beyond America's foreign-policy orbit.
A team of senior State Department economic officials have spent the past week in Egypt's capital completing the terms of an aid package that President Barack Obama first announced last year after Egypt's pro-democracy uprising rattled the country's once-promising economic future.
The money has since sat in policy limbo as Egyptian and American diplomats disagreed over how the Egyptian government would allocate the funding and American politicians hesitated over the prospect of rewarding Egypt's newly elected Islamist leadership.
As the recipient of $1.3 billion in annual U.S. military aid, Egypt has historically ranked among America's top security partners in the Arab world. Its peace treaty with Israel has helped buttress regional security for more than 30 years.
From The New York Times there is a strong indication that American diplomats may not be up on the latest news:
Developments in Iran and Sinai Deepen Israel’s Worries About Egypt 
Published: August 22, 2012
JERUSALEM — With Egypt’s new Islamist president headed to Iran next week and its military deploying tanks in the Sinai Peninsula — possibly outside the parameters of his nation’s 33-year-old treaty with Israel — officials here are increasingly worried about what has long been their most critical regional relationship.

When Egypt’s longtime leader, Hosni Mubarak, was toppled last year, Israel worried about the loss of a dependable strongman who had helped preserve a reliable if chilly peace. Concern grew with this spring’s election of a president from the Muslim Brotherhood and deteriorating security in the Sinai Peninsula, which bridges the two nations. The concerns have grown as Egyptians from across the political spectrum have in recent weeks demanded a review of the treaty, and in particular, its restrictions on Egypt’s military presence in Sinai. Israel’s Defense Ministry and military have each sent several messages of concern to Cairo in recent days about Sinai, and received no response, a senior government official said Wednesday. That breakdown in communication, two weeks after a deadly terrorist attack along the border between the nations, comes alongside President Mohamed Morsi’s announcement that he will defy the West and break with Egyptian precedent to attend a summit meeting of nonaligned nations in Tehran, complicating Israeli and American efforts to define Iran as a pariah state because of its nuclear program.
If it quacks like a duck and walks like a duck.... 

2012 IS HERE


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“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
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Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)