Washed It!

As NewsBusters reported Saturday, President Obama caused a bit of an international incident this weekend when he bowed before Japanese emperor Akihito.

Not surprisingly, his adoring fans in the media have done everything in their power to cover for this peculiar demonstration by the most powerful man in the world.

With this in mind, the College Republicans at the University of Connecticut have put together a marvelous video to demonstrate how world leaders across the globe have addressed the emperor recently without bowing (video embedded below the fold, h/t Andrew Malcolm):

Now THAT’S entertainment!

WASHINGTON – President Barack Obama cited his own long struggle to quit the cigarettes he took up as a teenager as he signed the nation’s strongest-ever anti-smoking bill Monday and praised it for providing critically needed protections for future generations.

“The decades-long effort to protect our children from the harmful effects of smoking has finally emerged victorious,” Obama said during the sun-splashed Rose Garden signing ceremony.

The bill marks the latest legislative victory for Obama’s first five months. Among his other successes: a $787 economic stimulus bill, legislation to expand a state program providing children’s health insurance and a bill making it easier for workers to sue for pay discrimination.

The president has frequently spoken, in the White House and on the campaign trail, of his own struggles to quit smoking. He did so again during the ceremony, bringing it up while criticizing the tobacco industry for marketing its products to young people.

“I know — I was one of these teenagers,” Obama said. “I know how difficult it is to break this habit.”

Before dozens of invited guests, including children from the Campaign for Tobacco Free Kids, the president signed legislation giving the Food and Drug Administration unprecedented authority to regulate tobacco.

The Family Smoking Prevention and Tobacco Control Act allows the FDA to lower the amount of nicotine in tobacco products, ban candy flavorings that appeal to kids and block misleading labels such “low tar” and “light.” Tobacco companies also will be required to cover their cartons with large graphic warnings.

The law won’t let the FDA ban nicotine or tobacco outright, but the agency will be able to regulate what goes into tobacco products, make public the ingredients and prohibit marketing campaigns geared toward children.

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“It is a law that will save American lives,” Obama said.

Anti-smoking advocates looked forward to the bill after years of attempts to control an industry so fundamental to the U.S. that carved tobacco leaves adorn some parts of the Capitol.

Opponents from tobacco-growing states such as top-producing North Carolina argued that the FDA had proved through a series of food safety failures that it was not up to the job of regulation. They also said that instead of unrealistically trying to get smokers to quit or to prevent others from starting, lawmakers should ensure that people have other options, like smokeless tobacco.

As president, George W. Bush opposed the legislation and threatened a veto after it passed the House last year. The Obama administration, by contrast, issued a statement declaring strong support for the measure.

While most U.S. voters still blame the Bush Administration for the nation’s economic problems, a growing number are inclined to blame President Barack Obama.

A new Rasmussen Reports national telephone survey finds that 39% of voters now say the country’s economic problems are caused more by the policies Obama has put in place. That’s a 12-point jump from a month ago.

Fifty-four percent (54%) still say the country’s economic woes are due to the recession Obama inherited from President Bush. That figure is down eight points from 62% from early June.

By a two-to-one margin, voters also have more confidence in themselves than in the president when it comes to the economy. This marks a significant shift from just after Obama took office.

Sixty percent (60%) of voters now trust their own economic judgment more than the president’s. In early February, 49% had more trust in themselves while 39% trusted the president more.

Now only 30% trust Obama more when it comes to the economic issues facing the nation.

(Want a free daily e-mail update? If it’s in the news, it’s in our polls). Rasmussen Reports updates are also available on Twitter.

Younger voters are more likely than their elders to blame the current economic situation on the recession that began under Bush. The majority of middle income voters place more of the blame on Obama’s policies.

Eighty-two percent (82%) of Democrats see the economic problems as ones largely inherited from the previous administration, while 61% of GOP voters point the finger at the actions of the new president. Unaffiliated voters are almost evenly divided on the question.

Men are more likely than women to trust themselves rather than the president when it comes to the economy. Middle-income voters have more confidence in themselves than those who earn more and less.

The partisan split is predictable. Republicans trust themselves more than Obama by a whopping 75% to 19% margin. The findings for voters not affiliated with either major party are virtually identical. But Democrats are much more closely divided, with nearly half trusting the president more.

Obama’s ratings slipped to new lows at the end of last week in the Rasmussen Reports daily Presidential Tracking Poll, but he continues to be more popular than many of his policies.

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Despite strong public opposition, the president has pushed hard for bailouts for General Motors and Chrysler, both now in structured bankruptcies aimed at keeping them in business. The government has taken substantial ownership stakes in both companies in exchange for federal bailout money, but 80% of U.S. voters want the government to sell its stake in GM and Chrysler as soon as possible.

Even as Obama announced earlier this month his intention to speed up the pace of stimulus spending, the plurality of Americans (45%) said the rest of the new government spending authorized in the $787-billion economic stimulus plan should be canceled.

In fact, most voters (53%) continue to believe increases in government spending hurt the economy. Fifty-one percent (51%) favor an across-the-board tax cut for all Americans to stimulate the U.S. economy.

While the president last week was aggressively campaigning for the creation of a government-run health insurance company to compete with private insurers, Americans are evenly divided now over whether that’s a good idea.

Americans are similarly divided on the urgency of moving ahead with health care reform right now given the state of the economy.

China has actually bought Treasury bonds at an accelerating pace over the last year, but the borrowing needs of the United States government have grown even faster. Prime Minister Wen Jiabao of China, right, and President Obama.

HONG KONG — Leaders in both Washington and Beijing have been fretting openly about the mutual dependence — some would say codependence — created by China’s vast holdings of United States bonds. But beyond the talk, the relationship is already changing with surprising speed.

China is growing more picky about which American debt it is willing to finance, and is changing laws to make it easier for Chinese companies to invest abroad the billions of dollars they take in each year by exporting to America. For its part, the United States is becoming relatively less dependent on Chinese financing.

China has actually bought Treasury bonds at an accelerating pace over the last year — notwithstanding Chinese officials’ complaints about American profligacy. But the borrowing needs of the United States government have grown even faster. So China represents a rapidly shrinking share of overall purchases of Treasury securities. “China’s demand for Treasuries has increased over the past year, but it hasn’t increased at anything like the pace of the Treasury’s sale of new Treasury bonds,” said Brad W. Setser, a specialist in Chinese financial flows at the Council on Foreign Relations.

Americans and investors elsewhere are buying Treasuries instead. They are saving more and have been shifting out of other investments — including equities until the past two months — and into Treasuries.

China bought less than a sixth of the Treasuries issued in the 12 months through March. Less than two years ago, by contrast, Chinese purchases of Treasuries, which included purchases in the secondary market as well as newly issued securities, briefly exceeded the entire borrowing needs of the United States.

Financial statistics released by both countries in recent days show that China paradoxically stepped up its lending to the American government over the winter even as it virtually stopped putting fresh money into dollars.

This combination is possible because China has been exchanging one dollar-denominated asset for another — selling the debt of government-sponsored enterprises like Fannie Mae and Freddie Mac in a hurry to buy Treasuries. While this has been clear for months, new data shows that China is also trading long-term Treasuries for short-term notes, highlighting Beijing’s concerns that inflation will erode the dollar’s value in the long run as America amasses record debt.

So China’s rising purchases of Treasuries do not represent the confident bet on America’s future that they might seem to be on the surface. For instance, China does not appear to be dumping euros or yen to buy Treasuries, economists said.

That said, recent Chinese and American data suggest that an astounding 82 percent of China’s $2 trillion in foreign reserves is in dollars, according to calculations by Standard Chartered.

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The development has caught the attention of the leaders of both countries.

“The long-term deficit and debt that we have accumulated is unsustainable — we can’t keep on just borrowing from China,” President Obama said last Thursday.

Wen Jiabao, prime minister of China, also has expressed concern.

“We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried,” Mr. Wen said earlier this year.

China now earns more than $50 billion a year in interest from the United States, Mr. Setser at the Council on Foreign Relations calculated.

China’s leaders were able to buy more Treasuries in recent months without buying more dollars because they have abruptly turned their back on the market for securities issued by government-sponsored enterprises.

China was the world’s biggest buyer of these securities a year ago, splashing out more than $10 billion a month.

But in the 12 months through March, it actually had net sales of $7 billion, and ramped up purchases of Treasuries instead.

China has also changed which Treasuries it buys. It has done so in ways calculated to reduce its exposure to inflation or other problems in the United States. As recently as a year ago, China actively bought long-dated bonds, seeking the extra yield they could bring compared to Treasury securities with short maturities, of which China bought virtually none.

But in each month since November, China has been buying more Treasury bills, with a maturity of a year or less, than Treasuries with longer maturities. This gives China the option of cashing out its positions in a hurry, by not rolling over its investments into new Treasury bills as they come due should inflation in the United States start rising and make Treasury securities less attractive.

The big question now for policy makers and economists alike lies in whether the Chinese government’s purchases of American securities will rise or fall in the coming months.

Two big forces are at work — but they are pushing Chinese investments in opposite directions and might cancel each other out.

The first big shift is that Chinese foreign exchange reserves might start growing again, after shrinking early this year.

A senior Chinese economic policy maker, Xu Lin, expressed concern here on Monday that the reserves might grow faster if speculators started pushing more foreign exchange into China in the months ahead.

China is strongly opposed to any significant appreciation or depreciation of its currency, Mr. Xu said at a press conference. But if international investors conclude that the Chinese economy has stabilized ahead of economies elsewhere, they may start pumping more money into the Chinese economy, he said.

To keep its currency at the same level, the Chinese government buys foreign currency flowing into the country in excess of China’s needs. If overseas demand for Chinese exports recovers, then China’s trade surplus could start widening again as well. This would also tend to fatten Chinese reserves.But the countervailing trend is that the Chinese government is trying to foster channels for foreign currency to be pumped out of the country without the involvement of the central bank. The government has been buying a wider range of assets and encouraging the private sector to invest more money overseas.

“That’s part of a strategic move by the authorities to diversify,” said Wensheng Peng, the head of China research at Barclays Capital. “The reserves growth should accelerate because of inflows, but it will not be as large as what we observed in 2007 and the first half of 2008.”

The State Administration of Foreign Exchange, which is part of the central bank, issued draft regulations on Monday that would make it considerably easier for private companies to raise dollars in China to spend on overseas investments — a step that would lessen the need for the Chinese government to buy up those dollars.

This spring China has also been stepping up its purchases of commodities, which are usually bought in dollars. Iron ore has been piling up on Chinese docks, government stockpiles of crude oil and grain are being expanded and stockpiles are being started for products like gasoline, diesel and sugar.

After six years of silence, China unexpectedly disclosed last month that it had been gradually buying gold from domestic producers. The country’s reserves had climbed from 600 tons in 2003 to 1,054 tons, worth $31.8 billion at prices late Wednesday.

The disclosure, which produced a frisson of excitement in gold markets, may have been aimed at reassuring a domestic audience that the Chinese government was not putting all the nation’s savings into American dollars. But the actual investment was tiny compared with China’s foreign exchange reserves — and showed that China was accumulating gold at a much slower rate than foreign currency.

A person in periodic contact with China’s central bank, who insisted on anonymity to preserve his access, said that a Chinese central banker complained to him last year that “we have so much money and there’s so little gold, we can’t buy much without driving up the price.”

NY Times

Mises Daily by Karen De Coster | Posted on 5/22/2009

The last remnants of the American free-market system are experiencing a quick death by strangulation. Perhaps the most disturbing casualties of government intervention are General Motors and Chrysler, two disgraced automakers that have gone from private ownership to the public trough virtually overnight. The US government has effectively grabbed a financial stake in each company while attempting to control the reorganization process without any constitutional authority to commence such actions.

The takeovers, which have occurred at breakneck speed, are alarming. A defining characteristic of economic fascism is the control of private property and business through a government-business “partnership.” This public-private alliance, while permitting private business ownership, is an arrangement that allows government to control and plan private industry. What we are experiencing from the schemers in Washington, DC is a planned capitalism, or soft fascism, that is being rolled out at an unprecedented pace.

One of the more disturbing actions on the part of the Washington establishment has been the blatant disregard for property and contract rights. First, consider the case of Chrysler. The government, while coming to the aid of a dying Chrysler, lobbed offers to its lenders, the bondholders. A group of dissident bondholders spurned the government’s offer that would have given them a minuscule stake in the company while the UAW received a majority ownership position.

In response, the president denounced the bondholders, publicly proclaiming their obligation to sacrifice and referring to them as “vultures” because they insisted on maintaining their rights as senior creditors. Chrysler’s bondholders, by law, are secured creditors, and they hold a senior ranking above unsecured creditors or shareholders in a bankruptcy or reorganization. Yet they were vilified and bullied for refusing to agree to a shoddy deal. Some of the holdout bondholders finally did buckle under; they dropped their legal challenge and agreed to the government’s lowball offer, but only because they were strong-armed by Washington’s bully tactics. Thomas Lauria, the attorney representing the group, stated that his clients weren’t able to “withstand the enormous pressure and machinery of the US government.” Thus the senior creditors were plundered while ownership was redistributed to the UAW, whose members are junior creditors. This makes a mockery of US securities law.

The bailout and ensuing appropriation of General Motors is no less tragic. The current restructuring plan calls for the US Treasury Department to have controlling interest in General Motors, which amounts to absolute nationalization. In GM’s headquarters in Detroit there is a cluster of bureaucrats from the government’s task force telling GM how to run its business. The task force, assembled by the White House, has the power to exercise significant control over product decisions. According to a GM news release, the Treasury Department will have the power to elect all of GM’s directors and control the vote on matters brought before the stockholders. Additionally, the bondholders who have funded the company are being offered a paltry piece of the equity of the reorganized company — another major blow against the sanctity of contract.

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Furthermore, the White House fired General Motors Chairman and CEO Rick Wagoner. When the executive branch intervenes in a private business and ousts management, bailout or not, it is a staggering violation of the American ideal of free enterprise. This sets a precedent for unlimited government trampling over the private sector. On March 30th, Obama said, “Let me be clear. The United States government has no interest in running GM. We have no intention of running GM.” If that’s the case — and we know it’s not — then why scoop up majority ownership?

The revolving door between Wall Street and the bowels of Washington are getting a workout. It’s the guys from Wall Street who run the government and the guys from government who run Wall Street. Only the guys from Wall Street – especially Goldman Sachs – who have taken over the Treasury Department are now taking over control of the domestic auto industry. You know what happened when they tried to run their own company, Goldman Sachs. How in the heck did I miss the part in the Constitution where powers were granted to the Treasury Department and its hired hacks?

Another notable abomination is the use of taxpayer dollars, on the part of the political establishment, to grant preferential treatment to one group of constituents — the unions — at the expense of each company’s creditors, the bondholders. Not only is this an illicit use of the executive office for political pandering, it’s a deliberate redistribution of wealth. It’s also a handsome payoff to the loyal unions, who have long been big supporters of the Democratic Party.

The GM and Chrysler takeovers are orchestrated political restructurings aimed at serving the larger interests of the US government. The apparatchiks on the Potomac have the authority to coordinate production in a manner that compliments their political and social agenda. The White House has not been shy about its ambitions for green policy and the future of American-made automobiles. This coup paves the way for big government to get its tentacles into an industry that will allow the feds to ram their socialist-totalitarian, green agenda down all of our throats.

Moreover, the Obama regime already announced that it is buying 17,600 green vehicles (hybrid sedans) from Detroit’s Big Three by June 1, using $285 million from the $787 billion stimulus bill. Representative Sander Levin, a Democrat from Michigan, stated, “The federal government’s purchase of thousands of hybrids and other fuel-efficient vehicles from the Big Three shows that our domestic auto industry will weather this current crisis and build the cars of the future.” But certainly, it shows nothing. If the car companies were capable of building the cars of the future that consumers want to buy, no bailout would have been needed, and the government would not have to place an enormous, personal order for automobiles in order to keep the assembly lines moving and inventory lots turning over. The only thing the mega-purchase “shows” is Detroit’s inability to sell its automobiles at bloated prices in the free market, thereby leaving the government to spend taxpayers’ money on goods they refused to buy on their own.

In fact, giving the kiss of life to two dead horses, GM and Chrysler, illustrates the futility at work here, considering that both companies have just announced there will be a considerable number of dealership closings all over the country. Chrysler plans to close about 800 dealerships while GM will trim back 2,600 dealers by 2010. The fact that GM is cutting back its dealerships to the tune of 42 percent speaks volumes about its bloated, bubble-fueled predicament. The government has been pouring billions into each company’s bailout bin in order to keep these inefficient, surplus dealerships around so that they could continue on their path of chasing invisible customers and not selling cars. The misallocation of resources has been staggering. Half-baked investment decisions, like these, are what we can expect from a politically anointed task force that will centrally plan the manufacture of automobiles.

$19 $15

As the Chrysler resuscitation continues and GM morphs into Government Motors, we can expect that the government will prepare to churn out its environmentally correct greenmobiles that the market has rejected over and over again. Freedom, choice, and capitalism will pay a dear price because a group of government bureaucrats, on the receiving end of political favors, will run a major sector of the US economy and foist a prescribed lifestyle upon American consumers.

The funeral bell is ringing a reminder of capitalism’s mortality. And I won’t dare touch on what happens when government-run automobile manufacturers perform like the post office or the DMV.