Daily Archives: November 18, 2011
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Today’s economic statistical releases, or rather release, since there’s only one, the Index of leading indicators. Which actually looks pretty good this month, up 0.9%. There’s only one negative element for the month: vendor deliveries are showing slightly fewer delays, which pretty minor. The report indicates that the risk of a downturn or recession is receding. That’s good news.
Or, would be, if Italy, Spain, Ireland, and Portugal weren’t ready to go belly up in default, destroy the Euro, trash global banking, and plunge the world into a Second Great Depression.
But, you take the good with the bad, right?
Tunisia, cited by the “Arab Spring” crowd as the democratic and secular example to which all Arab countries should aspire has suddenly begun showing distinct Islamic tendencies:
Secular Tunisians are expressing concerns after a leader of the country’s Islamist Al-Nahda movement said Tunisia’s emerging government marks "the Sixth Righteous Caliphate."
The fifth caliphate, an Islamic imperial governing system, was abolished by Turkish secular Kemal Ataturk in 1924. In a speech posted on YouTube Sunday, Hamadi Jbeli also pledged that "we shall set forth with God’s help to conquer Jerusalem, if Allah wills… From here is conquest with the help of Allah Almighty."
Somehow this tendency to go in the Islamist religious direction has been discounted by those in the West who were sure that countries with no democratic traditions and intuitions and cultural and religious biases against both would suddenly flower into model representative democracies.
Those who had serious doubts for the reasons stated were dismissed as cynical and not able to understand the new world as it was forming, apparently driven by Twitter. Pointing out that the most ruthless best organized usually prevail in any sort of revolution and that those traits were enjoyed mostly by Islamists was waved away as overly pessimistic and indicative of a fundamental misunderstanding of the power of the technologically driven secular youth movements taking the lead in each of these countries.
And one by one those movement have foundered and Islamists, in one guise or another, have emerged to take control. Tunisia, though, where it all began, was held out as the one example of where the wished for model was working.
Yeah, not so much. 6th Caliphate? Conquer Jerusalem? Sounds like secular democracy to me, how about you?
Jbeli’s party, Al-Nahda, won 98 of 217 parliamentary seats in Tunisia’s first election. And naturally, he was hailed by the usual suspects as being a “moderate”:
The group’s electoral success won international praise as a "moderate" movement promoting a democratic form of political Islam. Headlines in mainstream media outlets like the New York Times, Los Angeles Times, and CNN called Al-Nahda moderate.
Read that quote again. Is that what is considered moderate in the Arab world? In any world?
Tunisians certainly don’t:
Leading secularist party Ettakatol suspended its participation in committees to form a governing coalition. "We do not accept this statement," said Khemais Ksila, an executive committee member of Ettakatol. "We thought we were going to build a second republic with our partner, not a sixth caliphate." Issam Chelbi of the secular PDP party called the speech "very dangerous."
"This is what we feared," Chelbi said.
Tunisian women’s groups also have been skeptical of Al-Nahda’s moderation, saying there has been an increase in verbal and physical abuse since President Zine Abidine Ben Ali resigned in the wake of a popular uprising.
This is like an Arab “Ground Hog Day” – the same story repeated in country after country where “Arab Spring” has occurred.
The party leader and ideologue is a piece of work too:
The Arab Spring "will achieve positive results on the path to the Palestinian cause and threaten the extinction of Israel," Party leader and ideologue Rashid Ghannouchi said in a May interview with the Al Arab Qatari website. "The liberation of Palestine from Israeli occupation represents the biggest challenge facing the Umma [Muslim nation] and the Umma cannot have existence in light of the Israeli occupation."
Further, in the same interview, Ghannouchi said: "I give you the good news that the Arab region will get rid of the bacillus [bacteria] of Israel. Sheikh Ahmed Yassin, the leader of Hamas, said that Israel will disappear by the year 2027. I say that this date may be too far away, and Israel may disappear before this."
Ghannouchi has also given his support to specific types of terror carried out by Hamas, including rocket attacks against Israeli civilians and "martyrdom operations."
In June 2001, Ghannouchi appeared in an al-Jazeerah panel discussion in which heblessed the mothers of Palestinian suicide bombers:
"I would like to send my blessings to the mothers of those youth, those men who succeeded in creating a new balance of power…I bless the mothers who planted in the blessed land of Palestine the amazing seeds of these youths, who taught the international system and the Israel (sic) arrogance, supported by the US, an important lesson. The Palestinian woman, mother of the Shahids (martyrs), is a martyr herself, and she has created a new model of woman."
Ghannouchi has even gone beyond rhetoric, calling for Muslims to fund and provide logistical support for Hamas. He signed the controversial "Istanbul Declaration," issued by Muslim clerics in support of Hamas after Israel’s January 2009 war in Gaza. The declaration stated that there was an "obligation of the Islamic nation to open the crossings – all crossings – in and out of Palestine permanently" to provide supplies and weapons to Hamas to "perform the jihad in the way of Allah Almighty."
This is Tunisia’s elected majority party. This is the party which will form the government and name the Prime Minister. This is the party which has the following stated goals:
Ghannouchi’s statements are consistent with Al-Nahda’s platform, which declares that the party "struggles to achieve the following goals … To struggle for the liberation of Palestine and consider it as a central mission and a duty required by the need to challenge the Zionist colonial attack. The platform also refers to Israel as an "alien entity planted in the heart of the homeland, which constitutes an obstacle to unity and reflects the image of the conflict between our civilization and its enemies."
In September, the organization stated that it "supports the struggle of peoples seeking liberation and justice and encourages world peace and aims to promote cooperation and collaboration and unity especially among Arab and Islamic countries and considers the Palestinian struggle for liberation to be a central cause and stands against normalization."
Peace? Democracy? Tunisia first? Secularism?
Is this the moderate, secular “Arab Spring” that the supporters imagined?
And there is more. Shikha Dalmia details it at Reason:
The Treasury Department yesterday revised its loss estimate for the Government Motors bailout from $14.33 billion to $23.6 billion, thanks to the company’s sinking stock price. GM’s Sept. 30 closing price, on which the new estimate is based, was $20.18, about $13 less than its December IPO price and $35 less than what is needed for taxpayers to break even.
The $23.6 billion represents a 25 percent loss on the feds $60 billion direct “investment” in GM. But that’s not all that taxpayers are on the hook for. As I explained previously, Uncle Sam’s special GM bankruptcy package allowed the company to write off $45 billion in previous losses going forward. This could work out to as much as $15 billion in tax savings that GM wouldn’t have had had it gone through a normal bankruptcy. Why? Because after bankruptcy, the tax liabilities of companies increase since they have no more losses to write off.
This means that the total hit to taxpayers, who still own about a quarter of the company, could add up to $38.6 billion. That’s even more that the $34 billion on the outside I had predicted in May.
You’ll remember we were vociferously against the bailout, saying the company should proceed through normal bankruptcy despite the absurd nonsense being spread about the effect of bankruptcy on jobs and the like. Had that been done, a much more stable and lean GM would have emerged. And taxpayers, meaning government, wouldn’t still own 25% of the company – in fact the government wouldn’t own any of it. Nor would unions.
The effect of government intrusion has been to worsen the company’s outlook. Again Dalmia explains the reason that the political priorities of the Obama administration will lead the company into even more troubled financial waters:
Although GM will never, ever make taxpayers whole, taxpayer losses could be mitigated if GM’s stock price rises before the Treasury sells its remaining equity, something it was supposed to do by year-end but has postponed under the circumstances. But right now at least the prospects of a serious upward move in GM’s stock don’t look too good for reasons at least partly beyond GM’s control.
GM actually has been doing quite well in North America and China with profit margins of 10 percent, among the best in the industry. How long that will last is an open question. That’s because GM’s new competitors are not Toyota and Honda that share its cost structure but Hyndai and Kia that have a far leaner one. These companies concentrate on the small car market and don’t offer a full product line so GM and Ford’s most profitable vehicles—those evil, gas-guzzling, greenhouse-gas emitting SUV’s and pickup trucks—are somewhat insulated from the downward price pressure. But the greens and Obama administration want GM to reorient its product mix away from big cars and toward money-losing hybrids and electrics, something that could well put GM back in a hole.
But that’s part of the administration’s long-term strategy for ruining GM. The company’s big weak spot right now is Europe for two reasons: One, thanks to political pressure and labor resistance, it hasn’t been able to address its bloated cost structure there. Two, Europe’s economy is imploding, weakening car sales.
That’s right, government is steering the company in which it owns 25% of the stock, to orient in a direction that is bad business, but as far as the administration is concerned, good politics.
There’s a reason central planning always fails. It’s because it ignores market demand. Central planning’s core belief is it can anticipate accurately the public’s demand and produce products it will buy. See the Chevy Volt. Then see the Chevy Tahoe.
As Dalmia points out, the market for small cars is very competitive. But the sector that GM has an advantage in is politically unpopular with the party the administration represents (note again the party ideology running the agenda and not what is good for the company or the country). So the government attempts to focus the company in a direction away from its most profitable business and toward the politically acceptable but unprofitable small car sector.
Another in a long line of lessons on how central planning always fails. This particular example also points out that when ideology is left to dictate the direction of a business instead of the market the likelihood of failure goes up exponentially.
And when the strategy fails it will not be a “market failure”. It will again be government doing its usual lousy job of picking winners and losers. We, of course, end up being the ultimate losers when it makes its picks.