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"As democracy is perfected, the office of  president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron."
- H.L. Mencken

 “ I'm confident democracy will prevail in Iraq.” -US President George Bush

"A little patience, and we shall see the reign of witches pass over, their spells dissolve, and the people, recovering their true sight, restore their government to it's true principles. It is true that in the mean time we are suffering deeply in spirit, and incurring the horrors of a war & long oppressions of enormous public debt. ... If the game runs sometimes against us at home we must have patience till luck turns, & then we shall have an opportunity of winning back the principles we have lost, for this is a game where principles are the stake. Better luck, therefore, to us all; and health, happiness, & friendly salutations to yourself."
-T. Jefferson

Nous sommes desoles que notre president soit un idiot. Nous n'avons pas vote pour lui.

Only 47% of Americans now think that a stable, democratic Iraq is a likely outcome. This percentage is down from 55% in April. That is, American confidence in the Bush misadventure in Iraq has fallen below the half-way point. How fifty percent of the American people can possibly still think Bush is doing a good job in Iraq is a great mystery. The AP-Ipsos poll found:

' Those most likely to have lost faith in the chances of a stable, democratic Iraq are those with college degrees, Southerners, homeowners, city-dwellers, Catholics, independents and Democrats.’  Juan Cole

Comment: This leaves Mid Western trailer park denizens, tongue-talkers and the differently-abled: Loyal Republicans all!

The Voice of the White House

This month in the Monkey Palace there has been much discussion of the article in the New York Times by Paul Krugman:http://www.nytimes.com/2005/01/04/opinion/04krugman.html in which he says: "There are only two things that could endanger Social Security's ability to pay benefits before the trust fund runs out. One would be a fiscal crisis that led the U.S. to default on all its debts. The other would be legislation specifically repudiating the general fund's debts to retirees."

The second statement seems to have put a bright idea in Our Dear Leader's small brain. He is apparently drooling at the mouth, at the prospect of how many  kickbacks (board postions, speaking fees, advisory retainers, hot IPO tips) he can expect from Wall Street firms after he retires in 2008, if he "privatizes" Social Security. There is one small problem to overcome: Social Security is not bankrupt.

The Trust Funds, (four of them), fully invested in obligations of the U.S. Treasury, as of December 2004

stand at $1,686,985,126,000: http://www.ssa.gov/cgi-bin/investheld.cgi Krugman is referring to Article 4 of the Fourteenth Amendment to the U.S. Constitution, which begins as follows:

"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."

 The buzz down the hall is that if confirmed as Attorney General, Judge Alberto R. Gonzales intends to write an opinion for George Bush, which would let his boss propose legislation to allow the Treasury to default on its obligations to retirees, and also let his boss off the hook, if, as a result, the central banks of the world dump their dollars.

The rumor is that Gonzales intends to focus on the phrase "authorized by law," and to argue that the Constitution does not bar the President from sending legislation to Congress, proposing a default on the $1,686,954,876 of the Trust Fund which is invested in "Special Issue" T-Bills, IOU's written by the Treasury specifically for the Trust Funds. These Special Issue IOU's were issued by the Treasury over the years, to cover the use of working Americans' FICA paycheck deductions to give tax breaks to plutocrat friends of the President.

 Not only that, but the Treasury might even be able to recognize this repudiation of its liabilities as income, thereby wiping out all Bush's deficits, and allowing him to claim record budget surpluses in his second term, trumping Clinton's record. (Who gives a damn that the cost is the retirement funds of a hundred million Americans?)

 The danger is that if the Central Banks of Russia, China, Japan, and other nations, should see the U.S. Government repudiate their obligations to their own old folks, in order to manufacture a Social  Security "crisis" merely in order that George Bush can have a sweet retirement, they might ask themselves, what is to prevent the U.S. Treasury doing the same to them? If they believe their T-bills are worthless pieces of paper, the stampede out of dollars and into other currencies will cause a Richter 10.0 earthquake in the financial markets. If that happens, Alberto R. Gonzales takes the fall, (with suitable compensation, no doubt,) and Bush continues to smell sweet like a rose.

 You have to give Team Bush credit. The hallmarks of  great criminal minds are that there is no trace of morality or conscience, that they think in terms of sums that stagger the imagination, and that the getaway plan is as important as the crime itself. Up to now, the shenanigans have been in the billions or hundreds of billions. Now they're thinking in terms of trillions.

Data may add to dollar's doldrums 

The New York Times
 January 16, 2005
http://www.nytimes.com/2005/01/16/business/yourmoney/16mark.html

The report last Wednesday that the monthly trade deficit reached $60.3 billion in November surprised forecasters and sent the dollar reeling against other major currencies.

The dollar rebounded at the end of the week, but new data due on Tuesday -- for flows of foreign funds into American stocks and bonds for November -- could undermine it again.

The dollar has weakened in the face of a rising trade deficit because money from abroad must flow into the United States to cover that gap, as well as to cover the broader current account deficit, which also includes services. If that flow slows, the dollar may face more downward pressure.

The most recent data on fund inflows, for October, showed that foreigners bought a net $48.1 billion of stocks and bonds. For the 12 months through October, the net inflow was $853.5 billion, far more than the current account deficit, which is expected to top $600 billion in 2004.

Despite that margin, a slowdown in foreign investment in November is likely to disturb currency traders because they will extrapolate any slowdown into the future. And the $48.1 billion for October was already the smallest monthly net inflow since October 2003 and well below the $67.9 billion monthly average since then.

The problem is bigger than it appears because the numbers published by the Treasury Department in its monthly news release overstate current net inflows. On its Web site, the Treasury advises that these published numbers should be adjusted for stock swaps in mergers between American and foreign companies and for principal payments made on asset-backed securities.

When those adjustments are made, the net inflow for October slips 7.2 percent, to $44.6 billion, and the net inflow over the 12 months through October drops 6.6 percent, to $796.9 billion.