Saturday, April 30, 2011

Obama -- Invisible Man

First Obama said his administration would be transparent. Everything would be in sight. Easy to read. Easy to see. However, those promises were never fulfilled. Now everything is opaque and the people around the president are proving they are local versions of Baghdad Bob, Saddam's chief cheerleader who ranted on the radio in early 2003 that Saddam's forces were destroying the US military while, in fact, Saddam's forces were brutally crushed by our military.

Obama has destroyed all the hope his supporters had. The grand plans have been reduced to minor alterations, except those that stop America from actually prospering where opportunity is loudly knocking on the door. Where is that? In the Oil & Gas Industry, which is ready to tap vast US reserves that are in easy reach. By tapping them, at least will can pay Americans to provide a larger percentage of the energy we need.

Chronicle responds after Obama Administration punishes reporter for using multimedia, then claims they didn't

Update: In a pants-on-fire moment, the White House press office today denied anyone there had issued threats to remove Carla Marinucci and possibly other Hearst reporters from the press pool covering the President in the Bay Area.

Chronicle editor Ward Bushee called the press office on its fib:

Sadly, we expected the White House to respond in this manner based on our experiences yesterday. It is not a truthful response. It follows a day of off-the-record exchanges with key people in the White House communications office who told us they would remove our reporter, then threatened retaliation to Chronicle and Hearst reporters if we reported on the ban, and then recanted to say our reporter might not be removed after all.

The Chronicle's report is accurate.

If the White House has indeed decided not to ban our reporter, we would like an on-the-record notice that she will remain the San Francisco print pool reporter.

I was on some of those calls and can confirm Ward's statement.

Messy ball now firmly in White House court.

The hip, transparent and social media-loving Obama administration is showing its analog roots. And maybe even some hypocrisy highlights.

White House officials have banished one of the best political reporters in the country from the approved pool of journalists covering presidential visits to the Bay Area for using now-standard multimedia tools to gather the news.

The Chronicle's Carla Marinucci - who, like many contemporary reporters, has a phone with video capabilities on her at all times -shot some protesters interrupting an Obama fundraiser at the St. Regis Hotel.

She was part of a "print pool" - a limited number of journalists at an event who represent their bigger hoard colleagues - which White House press officials still refer to quaintly as "pen and pad" reporting.

But that's a pretty Flintstones concept of journalism for an administration that presents itself as the Jetsons. Video is every bit a part of any journalist's tool kit these days as a functioning pen that doesn't leak through your pocket.

In fact, Carla and her reporting colleague, Joe Garofoli, founded something called "Shaky Hand Productions" - the semi-pro, sometimes vertiginous use of a Flip or phone camera by Hearst reporters to catch more impromptu or urgent moments during last year's California gubernatorial race that might otherwise be missed by TV.

The name has become its own brand; often politicians even ask if anyone from Shaky Hand will show at their event. For Carla, Joe and reporters at other Hearst newsrooms where Shaky Hand has taken hold, this was an appropriate dive into use of other media by traditional journalists catering to audiences who expect their news delivered in all modes and manners.

That's the world we live in and the President of the United States claims to be one of its biggest advocates.

Just the day before Carla's Stone Age infraction, Mr. Obama was at Facebook seated next to its founder, Mark Zuckerberg, and may as well have been wearing an "I'm With Mark" t-shirt for all the mutual admiration going back and forth.

"The main reason we wanted to do this is," Obama said of his appearance, "first of all, because more and more people, especially young people, are getting their information through different media. And historically, part of what makes for a healthy democracy, what is good politics, is when you've got citizens who are informed, who are engaged."

Informed, in other words, through social and other digital media where videos of news are posted.

The President and his staffers deftly used social media like Twitter and Facebook in his election campaign and continue to extol the virtues and value. Except, apparently, when it comes to the press.

So what's up with the White House? We can't say because neither Press Secretary Jay Carney nor anyone from his staff would speak on the record.

Other sources confirmed that Carla was vanquished, including Chronicle editor Ward Bushee, who said he was "informed that Carla was removed as a pool reporter." Which shouldn't be a secret in any case because it's a fact that affects the newsgathering of our largest regional paper (and sfgate)and how local citizens get their information.

What's worse: more than a few journalists familiar with this story are aware of some implied threats from the White House of additional and wider punishment if Carla's spanking became public. Really? That's a heavy hand usually reserved for places other than the land of the free.

But bravery is a challenge, in particular for White House correspondents, most of whom are seasoned and capable journalists. They live a little bit in a gilded cage where they have access to the most powerful man in the world but must obey the rules whether they make sense or not.

CBS News reporter, Mark Knoller, has publicly protested the limited press access to Obama fundraisers, calling the policy "inconsistent." "It's no way to do business," wrote Politico's Julie Mason, "especially [for] a candidate who prides himself on transparency."

A 2009 blog by the White House Director of New Media states that "President Obama is committed to making his administration the most open and transparent in history."

Not last week.

Mason referred to the San Francisco St. Regis protest as "a highly newsworthy event" where "reporters had to rely on written pool reports..."

Except, thanks to Carla's quick action with her camera, they didn't.

I get that all powerful people and institutions want to control their image and their message. That's part of their job, to create a mythology that allows them to continue being powerful.

But part of the press' job is to do the opposite, to strip away the cloaks and veneers. By banning her, and by not acknowledging how contemporary media works, the White House did not just put Carla in a cage but more like one of those stifling pens reserved for calves on their way to being veal.

Carla cannot do her job to the best of her ability if she can't use all the tools available to her as a journalist. The public still sees the videos posted by protesters and other St. Regis attendees, because the technology is ubiquitous. But the Obama Administration apparently wants to give the distinct advantage to citizen witnesses at the expense of professionals.

Why? Well, they won't tell us.

Some White House reporters are grumbling almost as much as the Administration about Carla's "breaking the rules." I can understand how they'd be irritated. If you didn't get the video because you understood you weren't supposed to, why should someone else get it who isn't following the longstanding civilized table manners?

The White House Press Correspondents' Association pool reporting guidelines warn about "no hoarding" of information and also say, "pool reports must be filed before any online story or blog." While uploading her video probably was the best way to file her report, Carla may have technically busted the letter of that law.

But the guidelines also say, "Print poolers can snap pictures or take video. They are not obliged to share these pictures...but can make them available if they so choose."

Then what guidelines is the White House applying here? Again, we don't know.

What the Administration should have done is to use this incident to precipitate a reasonable conversation about changing their 1950's policies into rules more suited to 2011. Dwight Eisenhower was the last President who let some new media air into the room when he lifted the ban on cameras at press conferences in 1952.

"We've come full circle here," Tom Rosenstiel, director of the Pew Foundation's Project for Excellence in Journalism told me today. "A newspaper reporter is being punished because she took pictures with a moving camera. We live in a world where there are no longer distinctions. The White House is trying to live by 20th century distinctions."

The President's practice not just with transparency but in other dealings with the press has not been tracking his words, despite the cool glamour and easy conversation that makes him seem so much more open than the last guy.

It was his administration that decided to go after New York Times reporter James Risen to get at his source in a book he wrote about the CIA. For us here in SF who went through the BALCO case and other fisticuffs with the George W. Bush Attorney General's prosecutors, this is deja vu.

Late today, there were hints that the White House might be backing off the Carla Fatwa.

Barack Obama sold himself successfully as a fresh wind for the 21st century. In important matters of communication, technology, openness and the press, it's not too late for him to demonstrate that.

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Thursday, April 28, 2011

Oil and Obama -- The Two Don't Mix

The Gas Price Freakout

Ready-made energy incoherence as a gallon climbs towards $4

Man-at-the-pump angst is harming President Obama politically almost as much as gas prices surging toward $4 are hurting the middle class economically, which explains the energy panic that Washington began in earnest this week. The 2011 debate isn't likely to be any more instructive than its 2000, 2005, 2006 or 2008 vintages, but maybe this time politicians can keep things in the general vicinity of planet earth.

They're off to a lousy start. Mr. Obama usually begins his gas price narrative, now a campaign trail staple, by explaining that there aren't easy solutions. That's true—there's not a lot the political class can do to change gas prices in the short run—but then the President goes on to mention that there happens to be one easy solution: raising taxes on the oil and gas industry. This is also his stock answer on the budget deficit, world hunger and everything else.

In a letter to Congressional leaders Tuesday, Mr. Obama called for repealing some $4 billion a year in "subsidies" in the tax code, and even Speaker John Boehner chimed in that oil companies "ought to be paying their fair share." No doubt the reporting of first-quarter profits this week will be a demagogic moment, but really? The junk economic theory is that increasing the U.S. costs of investor-owned oil producers—which together hold a mere 6% of world reserves—is supposed to lower the price of a global commodity.

Oh, and Mr. Obama wants to devote the proceeds to even more spending on "clean energy." The problem here is that some renewables (ethanol) increase the cost of driving, while the others (wind, solar) are irrelevant in transportation. We trust anyone not recharging his federally subsidized $109,000 electric sportscar at his personal windmill is blinking in amazement.

One of the main so-called subsidies that Mr. Obama wants to eliminate is for the expensing of intangible drilling costs, which has been part of the tax code since its inception. This immediate deduction—rather than amortizing the costs of development over a longer period—provides the capital and cash flow necessary in an industry where the risks are huge and returns are realized over many years, if not decades.

The rest of the items on Mr. Obama's list are tax credits offered to all manufacturers, not just oil and gas. Mr. Boehner's full comments at least revealed the right instincts—namely, proposing to eliminate such carve-outs in return for a lower corporate tax rate as in the Republican budget. The same reform should apply to clean (as well as all other) energy concerns too.

The liberal drive to tax Big Oil is rooted in an ideological commitment to higher energy prices, not consumer relief. The U.S. Energy Information Administration reports that the effective U.S. corporate tax rate for the oil majors was 26.3% in 2009, not counting royalties, excise taxes or bonus bids for leases. The effective rate typically tracks production and rises and falls with the price of oil. In 2008, it was 42.3%.

U.S. gas prices last peaked in 2008, largely due to a dollar plunge and global demand, before crashing along with the economy. Now prices are rebounding, with political unrest in the Middle East and North Africa tacking on a premium beyond the market fundamentals of rising demand as the world economy grows. Then there's the Ben Bernanke premium. The most important step the government could take to stabilize if not lower oil prices is to correct the Federal Reserve's weak dollar policy, which has sent commodity prices soaring across the board.

Failing that, what matters is overall energy policy, where the Administration isn't any better. Leave aside the vast, energy-rich regions of the country that are off limits to development or even modern seismic testing, especially along the outer continental shelf. The Environmental Protection Agency's bid to regulate carbon has created new political uncertainty, while the agency has immobilized Shell's plans to drill in the Arctic Ocean by withholding the necessary permits.

Mr. Obama is also taking cover on the grassiest knoll of energy politics, suggesting last week that "illegal activity by traders and speculators" is responsible for the oil run-up. This gambit is known as shooting the price discovery messenger. Yet the President directed the Justice Department to launch a criminal investigation, and Attorney General Eric Holder said this week he had already uncovered "a couple of things that are disturbing." That must be some crack squad.

But if they're honest, they'll agree with the Commodity Futures Trading Commission, which at George W. Bush's direction launched an exhaustive investigation in 2008. The agency concluded that speculators—otherwise known as traders—were putting downward pressure on prices. The liquidity they provide helps to smooth volatility. In any event, the Federal Trade Commission already polices the gasoline markets for manipulation and anticompetitive practices, including a unit that since 2002 has monitored retail and wholesale data nationwide on a daily basis.

Rising gas prices are stealing the gains of middle-income voters, so this is an important debate to have. Too bad Mr. Obama's Washington can't seem to escape the energy incoherence — phantom speculators, easy villains — of his predecessors.

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Wednesday, April 27, 2011

Oil -- Not From Our Backyard

Should we be surprised? Obama wants oil producers to increase their production. A sensible person should be forgiven for thinnking Obama was referring to American oil producers that pay Americans for finding, pumping, refining and selling oil.

Instead, our feckless leader was imploring the Islamic oil nations that despise freedom, equality, plurality, capitalism and democracy to increase THEIR output to offset shortfalls caused by the revolts and revolutions in North Africa and the middle east that have begun to impinge on supplies. The actual decline in Libyan production and the fear that has affected the international oil market has driven oil prices to their high levels since 2008.

Rather than giving American oil companies the green light to expand domestic operations and thereby protect American consumers, Obama has offered the Islamic oil nations another opportunity to expand their influence over our economy. Inasmuch as he seems to have no credibility among muslims, his stature can only sink further as he effectively begs the Islamic nations to help the US.

Meanwhile, the chief issue affecting prices is FEAR. Not actual supply constraints. Sadly, Obama's approach ensures that Islamic oil producers will increase their capacity for generating oil-market fear. He is truly a moron.

Obama Says He Wants Oil Producers to Boost Output

Apr 26, 2011

WASHINGTON -- As the high cost of gasoline takes a toll on politics and pocket books, President Barack Obama said Tuesday he is calling on major oil producers such as Saudi Arabia to increase their oil supplies to help stabilize prices, warning starkly that lack of relief would harm the global economy.

"We are in a lot of conversations with the major oil producers like Saudi Arabia to let them know that it's not going to be good for them if our economy is hobbled because of high oil prices," Obama told a Detroit TV station.

President Obama is calling on an increase in oil production to help stabilize prices.

His remarks signaled a broad new appeal in the face of skyrocketing gasoline prices in the United States and they came as he reiterated a call for Congress to repeal oil industry tax breaks.

In interviews Tuesday with WXYZ in Detroit and in WKTR in Hampton Roads, Va., Obama said the message to major oil producers like Saudi Arabia is that an economy that buckles because of high oil prices won't grow and won't be good for them or for the U.S.

Obama acknowledged disruptions in oil production because of the war in Libya. But he said others can make up the difference and "we're pushing them to do so." Libya supplied less than 2 percent of world demand. Saudi Arabia and other OPEC countries already are covering some of that shortage by boosting production.

The president's effort to compel more overseas production echoed calls by President George W. Bush in 2008 urging Saudi Arabia to increase supplies during that year's spike in gasoline prices. The Saudis rebuffed Bush's efforts.

Obama said he has stressed the self-interest of oil producing nations, arguing that "if we're not growing, they're not going to be making money either.

"And so they need to increase supplies," he told WKTR.

Gas pump prices have climbed for 35 consecutive days. The national average rose by a penny to hit $3.87 a gallon on Tuesday, more than a dollar than a year ago. The price already has exceeded $4 a gallon in some regions of the country.

In a letter to congressional leaders Tuesday, Obama urged them to take steps to repeal oil industry tax breaks, reiterating a call he made in his 2012 budget proposal earlier this year. The White House conceded that plan would do nothing in the short term to lower gasoline prices.

The president wrote a day after House Speaker John Boehner, R-Ohio, said he was willing to "take a look at" repealing the multibillion-dollar tax subsidies enjoyed by the major oil companies. Boehner aides on Tuesday sought to clarify Boehner's stance, stressing that he was not advocating repeal of the tax breaks.

"He has said all along that he is opposed to raising taxes," Boehner spokesman Kevin Smith said. "That's his position."

Rising gas prices have become a political weight for the White House, with polls showing that as the cost rises at the pump, the president's approval ratings have slipped. Obama increasingly has sought to display action on oil, even as he acknowledges that there is no immediate way to stem costs.

"High oil and gasoline prices are weighing on the minds and pocketbooks of every American family," Obama wrote. But he also added that "there is no silver bullet to address rising gas prices in the short term."

Obama's proposal, spelled out in his past two budget plans, would eliminate a number of tax breaks for oil companies that would generate an estimated $4 billion a year in additional revenue.

The tax breaks - some in place since the 1920s - have survived multiple attempts to repeal them in the face of heavy oil industry lobbying.

The Republican response to the president's letter was dismissive.

Another Boehner spokesman, Brendan Buck, said Obama's suggestions "would simply raise taxes and increase the price at the pump." And Senate Republican leader Mitch McConnell said: "The president's latest call to raise taxes on U.S. energy is as predictable as it is counterproductive."

Obama's letter was addressed to Boehner, McConnell, House Democratic leader Nancy Pelosi, and Senate Majority Leader Harry Reid.

Blaming the subsidies on "outdated tax laws," Obama said money obtained from repealing the breaks should be spent on clean energy initiatives to reduce dependence on foreign oil.

On Monday, Boehner told ABC News that the government is low on revenues and that oil companies "ought to be paying their fair share."

"We certainly ought to take a look at it," Boehner said about repealing tax subsidies for major oil companies. "We're at a time when the federal government's short on revenues. We need to control spending but we need to have revenues to keep the government moving."

But Boehner made no commitment to repealing the subsidies. "I want to know what impact this is going to have on job creation in America," he told ABC.

Obama, in his letter, said he was "heartened" by Boehner's remarks. "Our political system has for too long avoided and ignored this important step, and I hope we can come together in a bipartisan manner to get it done."

White House spokesman Jay Carney dismissed suggestions that Obama's letter was motivated by the potential effect of rising gas prices on the president's political prospects.

"I don't think when somebody sticks the credit card in the pump or pays a cashier the cash for a tank of gas that they're thinking about an election in 2012," he said.

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Tuesday, April 26, 2011

Trump, Obama's Best Ally

Obama’s Trump Card

The damage the Donald can do

The boomlet for Donald Trump as a Republican nominee for president of the United States ought to be a wake-up call for Republican candidates and Republican party leaders alike.

Why has Trump surged ahead of other Republican candidates and potential candidates in the polls? It is not likely that his resurrection of the issue of Barack Obama’s birth certificate has aroused all this support.

The birth-certificate issue does more political damage to Obama’s critics than to the president himself, because it enables the media to paint those critics as kooks. Nor are Donald Trump’s political positions such as to create a stampede to his cause.

Radio-talk-show host Mark Levin has rebroadcast Trump’s varied and mutually contradictory statements on political issues and personalities over the years. It was a devastating revelation of Trump’s “versatility of convictions,” to use a phrase coined long ago by Thorstein Veblen.

So then what is Donald Trump’s appeal? And why should it concern Republican leaders in general?

Trump has what so many other Republicans are so painfully lacking: the ability and the willingness to articulate arguments clearly, forcefully, and in plain English. Too many Republicans talk like the actor of whom a critic once said, “he played the king like he was afraid that someone else was going to play the ace.”

What electrified so many Republicans about Sarah Palin in the 2008 election campaign was that her speeches offered such a contrast to the usual mealy-mouthed talk common among other Republican candidates, including Sen. John McCain. Whether you agreed or disagreed with her position on the issues, you didn’t have to wave your hand in front of her eyes to see if she was awake.

Donald Trump is dangerous in at least two senses. If, by some tragic miracle, he should become the Republicans’ candidate for president in 2012, that would be the closest thing to an iron-clad guarantee of a second term in the White House for Barack Obama.

That would be a huge setback for the Republicans — and, far more important — a historic catastrophe for this country.

What seems more likely is that Donald Trump as a candidate for the Republican nomination would use his superior articulation skills — not to mention brash irresponsibility — to trash all the other Republican candidates for that nomination, leaving them damaged goods in the eyes of the public, and therefore less able to gather the votes needed to prevent the reelection of Obama.

Why Republicans seem not to understand the crucial importance of putting the same time and attention into articulating their positions as the Democrats do is one of the enduring mysteries of American politics.

It was obvious that the Democrats coordinated their talking points and catch-phrases — “social justice,” “tax cuts for the rich,” etc. — even before the overheard and recorded statements of Sen. Chuck Schumer about Democrats’ plans to repeatedly use the word “extreme” to characterize Republicans.

But how many Republican catch phrases can you remember? Republican rhetoric tends to range from low key to no key.

Nor is there much evidence that Republicans have asked themselves how the left wing of the Democratic party gained such ascendancy in recent years, in a country where millions more people identify themselves as conservative than as liberals.

In short, there is little or no evidence that most Republicans see any need to fundamentally change their approach to the public. But if they think that they can rely on Obama’s declining popularity to win the 2012 election, they may be in for a rude shock. Worse yet, the whole future of this country and of Western civilization will be in jeopardy — in a world where the likes of Iran and North Korea become nuclear powers while we engage in empty talk at the U.N.

Barack Obama’s declining support in public-opinion polls makes some conservatives feel that his reelection hopes are doomed. But Donald Trump can be Barack Obama’s secret weapon in his fight to remain in the White House. The Donald can be his Trump card.


Monday, April 25, 2011

War, Obama Style

April 25, 2011 by John Stossel

Where Did All the Anti-War Protestors Go?

The anti-war movement was all over the news before President Obama was elected. But apparently they weren’t really anti-war ... they were just anti-President Bush. Two college professors just released a study of national protests between 2007 and 2009. What did they find?

… After January 2007, the attendance at antiwar rallies [measured in] roughly the tens of thousands, or thousands, through the end of 2008.

… After the election of Barack Obama as president, the order of magnitude of antiwar protests dropped [...] Organizers were hard pressed to stage a rally with participation in the thousands, or even in the hundreds. For example, we counted exactly 107 participants at a Chicago rally on October 7, 2009.

Amazing. Especially because the war in Afghanistan ramped up after Obama was elected. American fatalities shot up in 2009 and 2010.

The protesters have remained silent over Libya.

And I’m struck by the hypocrisy of the supposedly “anti-war” politicians who voted against Iraq, like Nancy Pelosi. Since Obama was elected, she has voted to continue the war in Afghanistan … and supported the attack on Libya.

Only a handful of Congressmen have remained principled on foreign intervention. One of them is Ron Paul. On my FBN show this week, I’ll talk with him about why he opposes our “aggressive foreign policy.”


The EPA, Saudi Arabia's most loyal agency

When the government is in charge of making decisions on issues of which it knows nothing, the greatest beneficiaries are always those who are the least worthy. IN this case, Obama has allowed the Islamic world to siphon vast sums, trillions of dollars, from US consumers.

If the product were diamonds, which are not found in the US, then buying them from a foreign sources is the only way. But oil? We've got lots. And we know where there are lots of untapped reservoirs. All we have to do is drill and begin drawing out the oil. But Congress and the EPA are in the way. Could our road to hell be paved with intentions that are any greater than the intention of preserving some wild habitat of no interest to anyone except a herd of elk?

Energy in America: EPA Rules Force Shell to Abandon Oil Drilling Plans

Shell Oil Company has announced it must scrap efforts to drill for oil this summer in the Arctic Ocean off the northern coast of Alaska. The decision comes following a ruling by the EPA’s Environmental Appeals Board to withhold critical air permits. The move has angered some in Congress and triggered a flurry of legislation aimed at stripping the EPA of its oil drilling oversight.

Shell has spent five years and nearly $4 billion dollars on plans to explore for oil in the Beaufort and Chukchi Seas. The leases alone cost $2.2 billion. Shell Vice President Pete Slaiby says obtaining similar air permits for a drilling operation in the Gulf of Mexico would take about 45 days. He’s especially frustrated over the appeal board’s suggestion that the Arctic drill would somehow be hazardous for the people who live in the area. “We think the issues were really not major,” Slaiby said, “and clearly not impactful for the communities we work in.”

The closest village to where Shell proposed to drill is Kaktovik, Alaska. It is one of the most remote places in the United States. According to the latest census, the population is 245 and nearly all of the residents are Alaska natives. The village, which is 1 square mile, sits right along the shores of the Beaufort Sea, 70 miles away from the proposed off-shore drill site.

The EPA’s appeals board ruled that Shell had not taken into consideration emissions from an ice-breaking vessel when calculating overall greenhouse gas emissions from the project. Environmental groups were thrilled by the ruling.

“What the modeling showed was in communities like Kaktovik, Shell’s drilling would increase air pollution levels close to air quality standards,” said Eric Grafe, Earthjustice’s lead attorney on the case. Earthjustice was joined by Center for Biological Diversity and the Alaska Wilderness League in challenging the air permits.

At stake is an estimated 27 billion barrels of oil. That’s how much the U. S. Geological Survey believes is in the U.S. portion of the Arctic Ocean. For perspective, that represents two and a half times more oil than has flowed down the Trans Alaska pipeline throughout its 30-year history. That pipeline is getting dangerously low on oil. At 660,000 barrels a day, it’s carrying only one-third its capacity.

Production on the North Slope of Alaska is declining at a rate of about 7 percent a year. If the volume gets much lower, pipeline officials say they will have to shut it down. Alaska officials are blasting the Environmental Protection Agency.

“It’s driving investment and production overseas,” said Alaska’s DNR Commissioner Dan Sullivan. “That doesn’t help the United States in any way, shape or form.”

The EPA did not return repeated calls and e-mails. The Environmental Appeals Board has four members: Edward Reich, Charles Sheehan, Kathie Stein and Anna Wolgast. All are registered Democrats and Kathie Stein was an activist attorney for the Environmental Defense Fund. Members are appointed by the EPA administrator. Alaska’s Republican senator thinks it’s time to make some changes.

“EPA has demonstrated that they’re not competent to handle the process,” said Sen. Lisa Murkowski. “So if they’re not competent to handle it, they need to get out of the way.”

Murkowski supported budget amendments that would have stripped the EPA of its oversight role in Arctic offshore drilling. The Interior Department issues air permits to oil companies working in the Gulf of Mexico.


Saturday, April 23, 2011

Obama: Spend More on Energy to Save on Energy

Obama is creating his own words and concepts to expand the range of Orwell's NewSpeak. To him, Spending More = Spending Less. Meanwhile, he said the taxpayer subsidies to the oil & gas industry amount to an annual total of $4 billion.

Four Billion? That's all? I'll take the president's word for it and gladly stand for the termination of those subsidies. Then let's get down to drilling and jump-starting the painfully slow recovery we're muddling through.

Of course if Obama truly wanted to speed the recovery and reduce our consumption of imported oil, he would remove the barriers to domestic energy exploration and exploitation. Not only would a larger domestic energy industry reduce oil imports, it would put a lot of people to work in high-paying jobs. Okay, the downside is the generally messiness of the energy industry. But that's what smart legislation is for.

We can do anything and we can do it well, which, in this case, means cleaning up. Sadly and unfortunately, Obama's approach suggests he want to force Americans into paying high prices for energy alternatives that offer much less than the conventional supplies.

Obama pumps plan to develop renewable energy

Obama says developing renewable energy sources is 1 answer to rising gasoline, oil prices

April 23, 2011

WASHINGTON -- President Barack Obama says one answer to high gasoline prices is to spend money developing renewable energy sources.

"That's the key to helping families at the pump and reducing our dependence on foreign oil" in the long term, he said Saturday in his weekly radio and Internet address.

Obama raises the issue of rising fuel prices during almost every public appearance and says that he understands the strain higher fuel costs are putting on some family budgets.

He announced Thursday during an event in Reno, Nev., that the Justice Department will begin looking for cases of fraud or manipulation in the oil markets, even though Attorney General Eric Holder suggested a variety of legal reasons may be behind the surging gas prices.

As he has before, Obama said Saturday there is no "silver bullet" that will slash gas prices immediately. But he said there are things government can do to help make a difference in the long term. They also include boosting U.S. oil production, rooting out any illegal activity by traders and speculators and ending $4 billion in annual taxpayer subsidies to oil and gas companies.

"Instead of subsidizing yesterday's energy sources, we need to invest in tomorrow's," Obama said.

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Thursday, April 21, 2011

Free Speech vs Islam in America

The muslims of Dearborn don't like it, but that's too bad. Unless the local court finds a way to twist the Bill of Rights and withhold the right of Pastor Jones to demonstrate against the anti-freedom ideology that muslims support.

Detroit Suburb Fights Pastor's Mosque Rally

Authorities in the Detroit suburb of Dearborn are trying to head off a confrontation at a rally planned Friday to protest Islamic law by Quran-burning Christian pastor Terry Jones outside the biggest U.S. mosque.

But the bid to stop the Florida pastor has stirred concerns about violating his First Amendment rights.

Pastor Terry Jones plans a rally in Dearborn against Islamic law.

The Wayne County prosecutor is asking a state court to order Mr. Jones to pay a peace bond to guarantee the event won't be violent. "The greatest danger is the likelihood of a riot ensuing, complete with the discharge of firearms, unless this bond is granted," the prosecutor said in her complaint.

The city of Dearborn, meanwhile, has asked Mr. Jones to move his rally two to three miles away to one of its two designated "free speech zones," from the planned site near the Islamic Center of America. The city—home to Ford Motor Co. and one of the largest Arab-American communities in the U.S.—cited concerns about traffic and parking near the mosque, which is near two churches hosting Good Friday services.

The city of Dearborn was in the process of denying Mr. Jones's permit, said a spokeswoman, adding if he went ahead as planned, he could face arrest.

Mr. Jones, head of Dove World Outreach Center in Gainesville, Fla., drew world attention last month when his congregation staged a "trial" of Islam's holy book that culminated in setting a copy of the Quran ablaze. News of the event incited riots in Afghanistan and an attack on a United Nations facility there that killed seven people.

Michigan's 19th District Court is expected to hear Wayne County's case Thursday afternoon. Mr. Jones said he plans to appear in court and said he would refuse to post a peace bond if so ordered, which could land him in county jail. Concerns about the public's security were unfounded, he said, repeating he had no plans to burn Qurans.

"We are going there totally in peace. We have no intentions of doing anything provocative," he said in an interview. "We will be speaking our minds, expressing our First Amendment rights."

Free-speech advocates criticized the prosecutor. "As reprehensible as his beliefs may be, this is an unconstitutional attempt to limit his unpopular speech," said Rana Elmir, a spokeswoman at the American Civil Liberties Union of Michigan.

Majed Moughni, an organizer of a counter-demonstration to take place in one of the free-speech zones, agreed. "We think he has the right for free speech," said Mr. Moughni, a local attorney who burned Mr. Jones in effigy last fall when he threatened to burn the Quran on the anniversary of the 9/11 terrorist attacks.

Mr. Jones said his event at the Islamic Center is aimed at protesting sharia, or Islamic law. He said he expects a handful of supporters to join him.

In response, Kassem Allie, executive administrator at the Islamic Center, said the mosque will hold an interfaith gathering involving the Archdiocese of Detroit and other Christian churches Thursday afternoon. Mr. Allie is encouraging congregants to avoid the mosque Friday and join a "Stop the Hate" rally being held elsewhere.

Although Mr. Jones said the public had nothing to fear, he is concerned about his own safety. He said he has received 400 death threats, including some from Dearborn residents. He said he and an assistant accompanying him plan to be armed.

"I have a .40-caliber semiautomatic that I carry with me at all times," said Mr. Jones. "If someone would try to attack us, shoot us, we would have no problem defending ourselves."

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Tuesday, April 19, 2011

Cuba inches toward Libre

At least Fidel has admitted that his communist experiment has failed. That's a start. Pretty soon, the captives on the island prison will begin to act like the people of Egypt, Tunisia and elsewhere when they too demand freedom. Imagine a Cuba once again available to Americans. Of course the time to see it is now, before the decaying state is wiped away and replaced with something healthier, but lacking the seedy charm it has now.

Castro resigns as party head as Cuba mulls reforms

by Isabel Sanchez Isabel Sanchez – Tue Apr 19

HAVANA (AFP) – Fidel Castro confirmed his exit from the Communist Party leadership on Tuesday, ceding power to his brother Raul as delegates prepare to vote on changes that could bring term limits to key posts.

The move came after the sixth Communist Party Congress approved a flurry of measures on Monday aimed at keeping Cuba's centrally planned economy from collapse but without any broad embrace of market-oriented change.

"Raul knew that I would not accept a formal role in the party today," Fidel wrote in an article on the portal, referring to his absence from the party's new Central Committee, elected on Monday.

Castro, 84, had served as first secretary in the Central Committee of the party -- which underpins the country's Communist government -- since the party's creation in 1965.

Fidel said he had handed over the functions of the party head to Raul when he ceded power to his brother because of his own declining health in 2006, though he retained the first secretary title.

"(Raul) has always been who I described as First Secretary and Commander in Chief," Fidel wrote in the article.

"He never failed to convey to me the ideas that were planned," he added.

Castro said he supported the stepping aside of some of the older luminaries in the party, adding that "the most important thing was that I did not appear on that list.

"I have received too many honors. I never thought I would live so long."

The 1,000 delegates gathered in Havana for the four-day party congress have meanwhile approved some 300 economic proposals.

The reforms promise to inject a modicum of the free market into the island's economy ahead of a vote Tuesday expected to officially relieve Castro of his position as party head.

Reforms include the eventual trimming of a million state jobs and the decentralization of the agricultural sector.

Many of the measures have already been adopted over the past year, with the Congress now formally approving them.

Results of the voting on leadership term limits will be presented Tuesday, when Fidel would be finally officially replaced as party chief.

Raul, who turns 80 on June 3, was expected to take over as the party's new first secretary.

Raul said on Saturday that he backed term limits of 10 years for the top leadership spots, in a country he and his brother have led for more than five decades.

Fidel said he "liked the idea. I thought long and hard about the subject."

Cuba watchers were meanwhile focused on who would ascend to the party's number two position, which could signal the direction of an eventual transfer of power in the coming years.

Raul has rejected broader market-minded reforms like those adopted by China, saying they would be "in open contradiction to the essence of socialism... because they were calling for allowing the concentration of property."

Cubans have reacted to the reforms with cautious optimism, hoping that the government follows through with its pledges without harming those who depend on the public sector for employment and other basic needs.

Mikaela, the 28-year-old owner of a small beauty salon in the old city of Havana, hoped they would "give us the means to work and earn a living.

"That is all we need," she told AFP.

Herminia Diaz, 40, who left a career as an engineer and now rents out her house to earn a living, was skeptical that change would actually come.

"I like Raul's frankness in dealing with our problems, but when you think that they have been going on for 30 years, and that we've done nothing to resolve them, you just lose hope," she said.

"It leaves a bad taste in my mouth, that we've wasted all these years."

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Sunday, April 17, 2011

The Syntax of Sin Tax

Bad ideas are often compelling, mainly because they appear to offer simple solutions to difficult problems. We believe in a lot of them here in the US. A popular bad idea that has many adherents is the one about legalizing drugs so we can end the losing war against them and then, to our everlasting benefit, tax them. The people who spout this canard must be oblivious to the way our country works, otherwise they would reject it for the devastating folly that it is.

Moscow’s Drinking Problem

IN an effort to reduce both its sky-high alcoholism rate and its budget gap, Russia recently announced plans to quadruple the tax on the country’s eternal vice, vodka, over the next three years.

But while the move might be well intentioned, the long history of liquor taxation in Russia exposes a critical obstacle in the path of any anti-drinking campaign: the Kremlin’s own addiction to liquor revenues, which has derailed every previous effort to wean Russians from their tipple.

Russians consume about 18 liters of pure alcohol per person a year, more than twice the internationally recommended limit, a rate that President Dmitri A. Medvedev has called a “natural disaster.” Thanks in part to lifelong heavy drinking, the life expectancy for the average Russian man is now about 60 years, just below that of Haiti. Alcohol poisoning alone kills 40,000 Russians a year (compared with about 300 in the United States), and alcohol plays a role in more than half of all premature deaths.

Rampant alcoholism is nothing new, and Russian governments since the Middle Ages have introduced liquor taxes to reduce drinking rates.

But in almost every case, the public-health goal has been undermined by the state’s efforts to increase tax revenue. In Russia, the demand for vodka persists even when prices go up, so the state has an ever-present temptation to raise taxes and fill the treasury under the political cloak of making vodka more dear. Yet government after government has taken the following step of then promoting drinking to produce more revenue.

In 1591, for example, the English ambassador Giles Fletcher lamented that Ivan the Terrible encouraged his subjects to drink their last kopecks away in state-owned taverns where “none may call them forth whatsoever cause there be, because he hindereth the emperor’s revenue.”

Later, the ideological godfather of the Russian Revolution, Nikolai Chernyshevsky, denounced the state’s abdication of its responsibilities of “promoting national honor, the moral welfare of the nation, justice and fairness,” all of which he argued had been sacrificed to a system of hefty vodka taxes. “The only reason for its existence is monetary,” he complained. “Its sole purpose and concern is money, money, money.”

Though he was exiled to Siberia for this sort of criticism, Chernyshevsky’s argument was sustained by his revolutionary disciple, Lenin, who banned vodka during the early years of the Soviet Union.

But the siren song of liquor-tax revenue proved too tempting for Stalin, who lifted the ban to support the communist autocracy. “What is better, the yoke of foreign capitalism, or the sale of vodka?” he said. “Naturally, we will opt for vodka.”

Vodka revenues even played a role in the collapse of the Soviet state. In 1985, Mikhail S. Gorbachev restricted vodka sales to get Russian workers back to the assembly line; because vodka taxes provided a full quarter of the entire Soviet budget, the result was a substantial drop in government revenues. The Kremlin tried to patch the budget hole by printing more money, which worsened the hyperinflation that hastened the downfall of the communist state.

To his credit, Mr. Medvedev seems to grasp the pitfalls of trying to tax an entrenched culture of drinking out of existence, and he favors incremental, realistic policies like public-service messages and advertising restrictions rather than the bombastic and often hollow policy pronouncements of his predecessors.

Yet the proposed quadrupling of vodka taxes now threatens to undo this gradual progress, and return to not only the autocratic timbre of policymaking, but also the traditional harnessing of state finances to the vodka bottle. It will be hard to avoid the allure of maintaining, or even increasing, the estimated $11.2 billion in extra revenue that the proposed taxes will bring in.

Is the Kremlin poised to again stumble into this eternal liquor trap? It definitely seems so: in the fall of 2010 Russia’s finance minister, Aleksei L. Kudrin, told reporters that the best thing that his fellow citizens could do to help the country’s flaccid national economy was to smoke and drink more, thereby paying more in taxes.

“Those who drink,” Mr. Kudrin said, “are giving more to help solve social problems such as boosting demographics, developing other social services and upholding birth rates.”

Not only will the government be tempted to dial back its anti-drinking campaigns to preserve its liquor tax revenues, but the higher prices for legal alcohol — from about $3.50 for a half-liter bottle today to $14 — will, if experience holds true, drive Russians to drink dangerous and unregulated homebrews, as well as poisonous surrogates like eau de cologne, shoe polish and even jet fuel. Prime Minister Vladimir V. Putin recently based his opposition to the tax increase on precisely these past lessons.

Yet if Mr. Putin and Mr. Medvedev are to invoke the lessons of the past in dealing with Russia’s alcohol epidemic, they need to look more broadly at the dubious historical role of alcohol as a pillar of state finance. The only real solutions entail significant increases in public-health spending, rehabilitation programs, youth awareness campaigns and stricter advertising limits, as well as incremental rather than radical changes to pricing and availability.

Even then, the problem will take decades to solve. Most important, the Kremlin should take the first step to its own recovery and admit that it too has an alcohol problem, and not make the health of Russian finances dependent on the misery of its people.

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Tuesday, April 12, 2011

Mother of All Inventions

Minds on fire. That's what we need in the US. The kids who rip into math and science, who chew it up and turn it into silk. We must find them and cultivate them.

How to Fire Up U.S. Innovation

We need more hands-on tech education for American children, but we also need to keep attracting the best talent from abroad.

Whether it's the latest tablet computer, electric sports car or other cool new product, Americans get very excited about innovation—and more often than not these innovations are brought to market by engineers working in technology hubs like Silicon Valley.

An innovation engine has many moving parts and all of them have to mesh properly for the engine to run smoothly. In Silicon Valley, and elsewhere in the United States, the engine requires sources of trained professionals (engineers, scientists, business people), sources of capital (venture capitalists, fluid stock markets), and new and existing companies that form a mutually reinforcing ecosystem.

Universities such as Stanford, the University of California at Berkeley and San Jose State supply a continuous flow of trained talent. Venture capital companies line Sand Hill Road in Menlo Park, adjacent to legal firms midwifing the birth of new companies. Like small villages, everyone seems to know everyone else, and individuals move from company to company, or in and out of partnerships.

It is sometimes thought that research in universities or corporate laboratories produces technology that then transfers seamlessly into products and services. But technology doesn't transfer on its own—it is the people who have the knowledge in their heads that do the transferring. One of the keys to Silicon Valley successes is the transfer of professionals into the marketplace and the ability of researchers to start new companies. Universities that allow faculty members to consult a day a week on average seed the process of business innovation, as can be readily recognized by tallying the number of companies started by Stanford or Berkeley faculty—to say nothing of the students who start new companies.

What conditions give rise to innovation and facilitate its transforming effects? Contributing factors include the freedom to pursue ideas, the freedom to fail, and the freedom of access to information in the broadest sense. Occasional business failure in the U.S. is a mark of experience, while in other cultures it may be a permanent scar. Information sharing is generally considered a powerful means towards progress, hence the strong influence that the American university system has had on the economy.

One cannot escape the observation, however, that the incidence of intelligence is uniform in all populations around the world. There are absolutely more smart people outside the U.S. than there are living here. It is in our best interest to attract talent from anywhere in the world to participate in our innovation engine. Even if visitors return to their homelands after attending an American university, we will benefit from their contributions while they were here and, in all likelihood, even after they have returned home.

Despite our well-developed college and post-college system, America simply is not producing enough of our own innovators, and the cause is twofold—a deteriorating K-12 education system and a national culture that does not emphasize the importance of education and the value of engineering and science. The American public focuses more on sports and entertainment figures and less on the scientists and engineers whose innovations make our lives easier, safer, healthier and more productive.

Since 1990, U.S. scientists and engineers have invented the lithium-ion battery that powers all manner of devices from tablet computers to electric cars, developed GPS for civilian use to keep us on the right path to our destinations, and created both remote-controlled military aircraft (drones) to keep our soldiers safe overseas and robots that keep our floors clean at home. But how many among us know the names of the creators of the lithium-ion battery at Bell Laboratories, or the founder of iRobot Corp. and inventor of the Roomba robotic vacuum cleaner now sold around the world?

By contrast, Japan, Spain, Norway, Sweden and many European countries shine a much brighter national spotlight on international science and technology breakthroughs. In northern Spain, the Prince of Asturias Awards for science and technology is a multi-day affair, as is the Japan Prize ceremony for contributions to the progress of science and technology. And of course the Nobel prizes draw international attention and renown.

So what's America to do?

Young people should understand and experience the thrill of science and discovery. We need to help them do real science, not just read about it, through collaborative tools that help mentors and students to interact through programs such as the Institute of Electrical and Electronics Engineers' Children learn best by seeing and doing, not by memorizing.

It's also important to reintroduce to the American culture a higher regard for engineers and scientists. The winners of our National Medals of Science and Technology deserve more public attention. Our successful scientists and engineers should be made more visible and their voices heard more often. Most important, however, is the need to refresh and invigorate interest in and regard for science and engineering in our youth.

School and extracurricular opportunities for young people to work with experienced scientists and engineers should be expanded. Successful examples include the FIRST robotics program established by Dean Kamen (entrepreneur and inventor of the Segway PT), Google's recently launched global Science Fair, and the 50-year partnership between NASA and the National Science Teachers Association. By elevating interest in math and science, we will foster the innovation and ingenuity that will move this nation forward into a better future.

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Cash Crops -- Growing Dividends

10 Dividend Lions Roaring Now

A quick check suggests the stock market has left the recession in the dust. With the S&P 500 doubling in just 23 months, its quickest 100% rise ever, investors are giddy about growth prospects. Perhaps even better news than the growth opportunities is the strong return to dividends. Banks are allowed to increase payouts again and powerhouse firms are ready to return their cash hoards. Can’t you hear it? Today, the dividend lion rears its head and roars.

It seems like it would be hard for the most actively traded stock to tip-toe around the strong recovery, but that’s exactly what Citigroup (C) appears to be doing. After plummeting from $55 a share in 2007 to $1 in 2009, this global financial services company has only risen to about $4.50 since. The good news is that C will soon return to those middle-double digit prices seen before the recession; the bad news is it's going to do it by using a 10 for 1 reverse stock split. After the split, a tiny, better-than-nothing $0.01 dividend will be reinstated. Management says the real dividend returns will come in 2012. Okay, so not quite a roar yet, but with the upcoming 1% payout ratio, the dividend lion at least looks to wake up in the future.

JP Morgan Chase (JPM) quickly took advantage of allowable dividend increases by bumping its quarterly mark up to $0.25 from $0.05. This actually isn’t that far off from the pre-recession $0.38 quarterly payout. Add in the 5% payout ratio and the outlook for this financial powerhouse appears to be promising. The 2.1% current yield isn’t that attractive, but then again the $8 Billion common share buyback should be factored in to the shareholder value equation. Some might not be keen on the near 50% increase in CEO Jamie Dimon’s compensation during 2010 -- but to be fair, his year-to-year base salary did not change, just his stock option incentives.

From 1984 until 2008, Wells Fargo (WFC) enjoyed a stable history of increasing dividends. Then 2009 happened and its dividend was frozen at $0.05 per share. But confidence is up and payouts are on the rise. This banking giant makes up nearly 18% of Warren Buffett’s Berkshire Hathaway (BRK.B) portfolio, and Buffett himself predicted a substantial dividend increase this year. True to form, WFC issued a special dividend of $0.07 this March in addition to its $0.05 quarterly payout. It still lags greatly from the pre-recession $0.34 a quarter, but a tiny 9% payout ratio suggest returning more value to shareholders is on the way.

AT&T (T) is not a bank, but it is a “dividend champion,” having increased its payout for 27 straight years. With a current yield of 5.6% it certainly deserves to be mentioned in any dividend conversation. It went ex-dividend on April 6, so it is a bit late to catch this quarter’s payout. Still, this telecommunications company shows a bit of everything: High yield, sustainability (51% payout ratio) and growth opportunities if its bid for T-Mobile goes through. The 5% average five-year growth rate isn’t overly impressive, but you don’t need too much appreciation on top of the high yield. The current yield has dropped as of late, but if history turns out to be the map to the future, there shouldn’t be much concern.

Excited about telecommunication companies and high yields, but don’t think the AT&T deal will go through? You could always move down the list to Frontier Communications (FTR). FTR makes waves with its 9.3% current yield. Further, it has showed consistency in the past by paying the same $0.25 quarterly dividend for 23 quarters from 2004 to 2010.

Those saying it is too good to be true might be on to something though, as FTR’s 100%-plus payout ratio proved unsustainable. A dividend cut followed last September, dropping the per-share payment to $0.75 a year. Still, because it yields about three percentage points more than AT&T and Verizon (VZ), it might be worth a look.

Sure, banks are recovering and communications are flaunting big yields, but how about those recent gas prices? And if we’re talking gas, we need to be talking about the $425 Billion market cap of mega giant Exxon Mobile (XOM).

XOM, like T, is also a “dividend champion,” having not only paid but also increased its dividend for 28 straight years. The 2% current yield doesn’t do much for income investors, but the 28% payout ratio and near 9% five-year average dividend growth rate appear promising. XOM has been very consistent with its payout increases, so look for another increase this May. Additionally, the increase announcement has not yet taken place, so investors can benefit in two ways: First from the increase in yield on cost and second on the potential upside to positive news. Or if you just want to ride the gas wave to growth, forget the dividend history and go with XOM anyway.

If we’re talking about mega giants, we might as well throw in International Business Machines (IBM). The 1.6% current yield and near 52-week high price don’t do much in the way of saying, “Hey, I’m a dividend value” -- but hold on.

IBM is a member of the “dividend contender” list, having increased its payouts for 15 straight years. In recent years, this machine-turned-service company has not been hesitant in returning value to shareholders. In the last five years, IBM has grown dividends at an average rate of 26% each year. Factor in the 23% payout ratio and dividend investors can clearly see where future payouts will be coming from. Still not satisfied? IBM has been more than consistent with its increase announcements as well. Look for a 10% increase in your yield on cost if you buy in before the expected April 26 dividend increase announcement.

Speaking of dividend increase announcements, let’s take a look at Procter & Gamble (PG). PG is a powerhouse on the “dividend champion” scene, having increased its payouts for 54 straight years.

The 3.1% current yield is reasonable, but might get even better in the next month. PG looks to mirror IBM with an expected 10% increase to yield on cost. In the last four years, increase announcements have come on either the second Tuesday or the third Monday of April. Let’s call it April 18, the third Monday of April. The 53% payout ratio appears to be in line for this consistent consumer goods company. A near 12% average five-year dividend growth rate, coupled with the expected upcoming dividend increase announcement, make PG a play that everyone can see.

Avon Products Inc. (AVP): Small, but only when compared to IBM and XOM, this $12 Billion beauty product manufacturer comes in with a current yield of 3.4%.

AVP has increased its dividend for 22 straight years and can become a “dividend champion” in just three more. This New York-based firm has a notable Fortune 500 female CEO and an apparently sustainable 66% payout ratio. Perhaps a slight concern would be the decreasing dividend growth rate, nearing a 6% average over the last five years. Still, any growth on the current yield is icing for this strong niche company.

AVP products can’t be found in Wal-Mart Stores (WMT), but pretty much everything else can. WMT has been on the “dividend champion” list for quite some time now, having increased its dividend payouts for 37 straight years.

Interestingly, this low price superstore plays as a rich man’s favorite with Buffett and Bill Gates holding substantial stakes. Earlier in the year, the 2.3% yield might have spooked income investors, but a recent increase has lead to a much more acceptable 2.8% current yield. The low 33% payout ratio says "how do you do" to future sustainability, but more impressive is the recent dividend growth rates. In the last five years, payouts have increased by an average of over 15%. If we see that over the next five years, your yield on cost would double.

Dividends are coming back across the board; to be sure, this is just a sampling.

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Friday, April 08, 2011

Clorox -- A Clean Company

Clorox has a plan for the growth of its business as well as a plan for the growth of its dividend. The combination should interest investors who want a stock offering both stock-price growth and rising income. There's an added bonus. This company looks like a company Warren Buffett would coonsider owning. However, from Buffett's perspective, the biggest shortcoming of Clorox is its level of debt. But the company has the power to reduce debt and increase equity.

Clorox Dividend Stock Analysis

by: Dividend Growth Investor April 08, 2011

The Clorox Company (CLX) manufactures, markets, and sells consumer products in the United States and around the world. The company operates through four segments: Cleaning, Lifestyle, Household, and International. The company is a dividend aristocrat. It has increased distributions every year for the last 33 years. The most recent dividend increase was in January, when the Board of Directors approved a 6.40% increase to 25 cents/share. The major competitors of Clorox include Procter & Gamble (PG), Colgate-Palmolive (CL) and Church & Dwight (CHD).

Over the past decade this dividend stock has delivered an annualized total return of 8.60%.

The company has delivered an impressive increase in EPS of 13.50% per year since 2001. Analysts expect Clorox to earn $3.95 per share in 2011, and $4.43 per share in 2012. This would be a nice increase from the $4.24/share the company earned in 2010. Meanwhile, the company has decreased the number of shares outstanding by 6.70% per year over the past decade through share buybacks, which have improved earnings per share growth.

In 2007 the company introduced its Centennial Strategy, which aims for double-digit annual growth in economic profit. A key driver of the strategy is to accelerate sales by growing existing brands, expanding into adjacent product categories, entering new sales channels and increasing penetration within existing countries. The company also anticipates using its strong cash flow to pursue growth opportunities and increase shareholder returns.

The company intends to deliver further growth through an ongoing focus on consumer megatrends. In addition, the company is targeting 2% sales growth through product innovation. The company projects sales growth of 3-5 percent, excluding acquisitions and expansion into new geographies through 2013. Last but not least, Clorox will target margin expansion and maximizing cash flow through a continued robust cost-saving program while sticking with recently made price increases.

Since 2003, the return on assets has largely remained above 11%. Return on assets is the best measure because stockholders equity was negative after a transaction in 2004in which Clorox exchanged its ownership in a subsidiary for approximately 29% of the company’s outstanding shares.

The annual dividend payment has increased by 10.10% per year since 2001, which is lower than the growth in EPS.

A 10% growth in distributions translates into the dividend payment doubling every 7 years. If we look at historical data, going as far back as 1983, we see that Clorox has indeed managed to double its dividend every seven years on average.

Moreover, during the past decade the dividend payout has remained below 50% of net income. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.

Currently Clorox is trading at 16.80 times earnings, yields 3.20% and has a sustainable dividend payout.

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Thursday, April 07, 2011

Exercise Your Right to Free Speech -- Burn a Quran

General Petraeus and President Obama, to name just two, should repeat 100 times: The Right of Freedom of Speech means Americans -- Americans -- have the right to burn a Quran without fear of government opposition.

Or so many of us thought. Have both the President and the General forgotten one of our most important rights? Seems they value the "feelings" of illiterate muslims over the Rights of Americans. Their comments are horrifyingly naive and horrifyingly good news for our enemies.

Petraeus Misfires on Quran Burning

Mobs murder more than 20 innocents in the name of God—and the commander of Afghan forces rebukes a publicity-hungry pastor in Florida


It must have come as a disappointment to the mullahs of Mazar-e-Sharif—who sent the faithful out on Friday with instructions to avenge the recent insult to the Quran—and to the mobs who consequently went forth to slaughter 12 people at U.N. headquarters, nine more in Kandahar the next day, and two more the next, that their bloody enterprise had counted for so little in the eyes of Western military leaders.

So it would appear at least from the response by Gen. David Petraeus, who delivered an impassioned rebuke of a publicity-hungry Florida pastor who had presided over the mock trial and burning of a Quran on March 20. This act was, the general declared in a video statement over the weekend, "hateful, extremely disrespectful, and enormously intolerant." It had endangered American troops. He wanted, he announced, to condemn it in the strongest possible terms.

No one listening could doubt it. The general would go on to say more, but nowhere in any of that condemnation was it possible to find a mention of the merciless savagery that had taken place in the name of devotion to God and the Quran. Mark Sedwill, the NATO senior civilian representative who joined Gen. Petraeus in the statement, did manage to find a moment to murmur in passing that, of course, condolences were due to "everyone who has been hurt in the demonstrations."

It's hard to conceive of a pronouncement richer in evasions of brutal reality than this one, with its references to people "hurt'' in "demonstrations." The participants in these "demonstrations"—a nice touch, that, suggestive of marchers, perhaps carrying placards—had in fact hunted down and killed, by shooting, stabbing and beating to death a total of 22 people by the end of the third day's expression of religious devotion.

In an interview Sunday in this newspaper, Gen. Petraeus reflected further on the problems caused by burning the Quran and how mobs could be influenced by those who might have an interest in hijacking passions—"in this case, perhaps, understandable passions."

To this the only sane response is no. They are not understandable, these passions that so invariably find voice in mass murder, the butchery of imagined enemies like the people hunted down in the U.N. office Friday, and of everyone else the mobs encountered who might fit the bill. We will not prevail over terrorism and the related bloodlust of this fundamentalist fanaticism as long as our leading representatives, the military included, are inclined to pronounce its motivations as "understandable."

It should be said that President Obama, to his credit, went on to declare, after denouncing the Quran burning, that to kill innocent people in response is "outrageous and an offense to human decency and dignity." It should be said, too, that it's a bleak commentary on the prevailing political atmosphere that the president's public recognition of the horrors committed by those rampaging soldiers of Islam should seem noteworthy.

Still, it was. And it came as a relief, after so much handwringing, all of it focused on the Florida pastor and the likelihood that he may have endangered American troops. (The same was said about the danger to American troops when Newsweek published a false report, in 2005, that American interrogators had flushed a Quran down the toilet—an event which set off days of rioting and bloodshed in Afghanistan and elsewhere.)

By making no mention of the perpetrators of the current massacres—while managing to suggest they were understandably driven to their action—Gen. Petraeus doubtless believed he was taking the appropriate politic path. It's a path that's unquestionably familiar—called appeasement—and one whose usual outcome is also familiar.

Displays of cringing deference to the forces loosed on the streets of Afghanistan over the weekend will not strengthen the American mission. They will stiffen the spines of the jihadists. Such displays count as victories, reassuring indicators that the threat of terrorism—mob terrorism, in this case—continues to work its wonders as a weapon of war. The sort that could send the commanding general of U.S forces in Afghanistan and a NATO official into swoons of apology while denouncing the pastor's act. For a moment there during their joint statement it seemed altogether possible that one or another of them might begin rending his garments.

That none of these emotional proclamations included any judgment, moral or otherwise, about the criminality of the zealots who had just taken so many lives, speaks volumes to those at war with us—all of it encouraging to them. Something to consider adding to the list of things that might endanger the lives of American troops.

Ms. Rabinowitz is a member of the Journal's editorial board.

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Monday, April 04, 2011

Fever over Global Warming is Cooling

How Scientific Is Climate Science?

What is arguably the most important reason to doubt global warming can be explained in plain English

For years, some researchers have argued that the evidence for global warming is not nearly as strong as has been officially claimed. The details of the arguments are often technical. As a result, policy makers and other people outside the debate have relied on the pronouncements of a group of climate scientists. I think that is unnecessary. I believe that what is arguably the most important reason to doubt global warming can be explained in terms that most people can understand.

Consider the graph of global temperatures in Figure 1, which uses data from NASA. At first, it might seem obvious that the graph shows an increase in temperatures. In fact the story is more involved.

Imagine tossing a coin ten times. If the coin came up Heads each time, we would have very significant evidence that the coin was not a fair coin. Suppose instead that the coin was tossed only three times. If the coin came up Heads each time, we would not have significant evidence that the coin was unfair: Getting Heads three times can reasonably occur just by chance.

In Figures 2 and 3, each graph has three segments, one segment for each toss of a coin. If the coin came up Heads, then the segment slopes upward; if it came up Tails, then it slopes downward. In Figure 2, the graph on the far left illustrates tossing Heads, Tails, Heads; the middle graph illustrates Tails, Heads, Tails; and the last graph illustrates Heads, Tails, Tails. Figure 3 illustrates Heads, Heads, Heads.

Three Heads is not significant evidence for anything other than random chance occurring. A statistician would say that although the graph shows an increase, the increase is "not significant."

Suppose now that instead of tossing coins, we roll ordinary six-sided dice. We will roll each die three times. If a die comes up 1, we will draw a line segment downward; if it comes up 6, the segment is drawn upward; and if it comes up 2, 3, 4 or 5, the segment is drawn straight across. Figure 4 gives some examples of possible outcomes.

Now consider Figure 5, which corresponds to rolling 6 three times. This outcome will occur by chance just once out of 216 times, and so offers significant evidence that the die is not rolling randomly. That is, the increase shown in Figure 5 is significant.

Note that Figure 3 and Figure 5 look identical. In Figure 3, the increase is not significant; yet in Figure 5, the increase is significant. These examples illustrate that we cannot determine whether a line shows a significant increase just by looking at it. Rather, we must know something about the process that generated the line. But in practice, the process might be very complicated, which can make the determination difficult.

Consider again the graph of global temperatures in Figure 1. We cannot tell if global temperatures are significantly increasing just by looking at the graph. Moreover, the process that generates global temperatures—Earth's climate system—is extremely complicated. Hence determining whether there is a significant increase is likely to be difficult.

This brings us to the statistical concept of a time series, which is any series of measurements taken at regular time intervals. Examples include prices on the New York Stock Exchange at the close of each business day, the maximum daily temperature in London, the total wheat harvest in Canada each year and the average global temperature each year.

In the analysis of time series, a basic question is how to determine whether a given series is significantly increasing (or decreasing). The mathematics of time-series analysis gives us some tools to do this, requiring us first to state what we believe we know about the series in question. For example, we might state that we believe the series goes up one step whenever a certain coin comes up Heads, and that the series in question comprises three upward steps, as in Figure 3. Next, we must complete some computations based on what we have stated. For example, we compute that the probability of a coin coming up Heads three times in a row is ½ × ½ × ½ = 1/8, or a 12.5% probability of occurring randomly. From that, we conclude that the three upward steps in the coin-toss time series can be reasonably attributed to chance, and thus that the increase shown in Figure 3 is not significant.

Likewise, in order to determine if the global temperature series is increasing significantly, we must first state what we know about what causes those temperature movements. Because our understanding of the dynamics of global temperature is incomplete, we must make some assumptions. As long as the assumptions are reasonable, we can at least be confident that the conclusions drawn from our time-series analysis are reasonable.

This is standard practice, but is it always adhered to in the work of climate scientists? The latest report from the U.N.'s Intergovernmental Panel on Climate Change (IPCC) was published in 2007. Chapter 3 of Working Group I considers the global temperature series illustrated in Figure 1. The chapter's principal conclusion is that the increase in global temperatures is extremely significant.

To draw that conclusion, the IPCC makes an assumption about the global temperature series, known as the "AR1" assumption, for the statistical concept of "first-order autoregression." That assumption implies, among other things, that only the current value in a time series has a direct effect on the next value. For the global temperature series, it means that this year's temperature affects next year's, but that the temperature in previous years does not. Intuitively, that seems unrealistic.

There are standard checks to (partially) test whether a given time series conforms to a given statistical assumption; if it does not, then any conclusions based on that assumption must be considered unfounded. For example, if the significance of the increase in Figure 5 were computed assuming that the probability of a line segment sloping upward were one in two instead of one in six, then that would lead to an incorrect conclusion. The need for such checks is taught in all introductory courses in time series. The IPCC chapter, however, does not report doing any such checks.

That is a startling omission, one with consequences for how the IPCC's recommendations should be interpreted. A fairly elementary alternative assumption that some researchers and I have tested fits the actual temperature data better than the IPCC's AR1 assumption—so much better that we can conclude that the IPCC's assumption has no support. Under the alternative assumption, the data do not show a significant increase in global temperatures. We don't know whether the alternative assumption itself is reasonable—other assumptions might be even better—but the improved fit does tell us that until more research is done on the best assumptions to apply to global average temperature series, the IPCC's conclusions about the significance of the temperature changes are unfounded.

None of this is opinion. This is factual and indisputable. It applies to any warming—whether attributable to humans or to nature. This assumption problem is not unique to the IPCC, either. The U.S. Climate Change Science Program, which advises Congress, published its report on temperature increases in 2006, and relied on the same insupportable assumption.

This is not the only instance of serious incompetence in climate science.

Over many millennia, the most important cycles in Earth's climate have been those of the ice ages, which are caused by natural variations in Earth's orbit around the sun. These variations alter the intensity of summertime sunlight. The relevant data are presented in Figure 6: One line represents the amount of ice globally and the other line represents the intensity of summertime sunlight in the Northern Hemisphere, where the effects are greatest. But notice that the similarity between the two lines is very weak.

To understand what's going on, we have to consider the changes in the amount of ice globally. For example, if the amount of ice at different times were 17, 15, 14, 19, . . . , then we must subtract adjacent amounts to obtain the changes: 2, 1, -5, . . . . One line in Figure 7 shows these changes, while the other, as before, shows the intensity of summertime sunlight. Now we see that the similarity between the two lines is strong: one excellent piece of evidence that ice ages are indeed caused by orbital variations.

Serbian astrophysicist Milutin Milankovitch first proposed a connection between ice ages and orbital variations in 1920, though data on the amount of ice present in past millennia didn't become available until 1976. But not until 2006 did scientists first study the changes in the amount of ice. That is, it took 30 years for scientists to think to do the subtraction needed to draw the second line in Figure 7. During these three decades, scientists analyzing Milankovitch's proposed link based their studies on graphs like Figure 6, and they considered a variety of assumptions to try and explain the weak similarity of the two lines.

We have already seen that the authors of the IPCC report have made one fundamental mistake in how they analyze their data, drawing conclusions based on an insupportable basic assumption. But they commit another error as well—the same one, in fact, that hindered the scientists working to verify Milankovitch's hypothesis. Nowhere in the IPCC report is any testing done on the changes in global temperatures; only the temperatures themselves are considered. The alternative assumption I tested does make use of the changes in global temperatures and obtains a better fit with the data.

To be sure, there have been other studies that consider other alternative starting points and thereby reach different conclusions about the temperature data. The IPCC report nods toward such work, but without really acknowledging how crucially the soundness of its conclusions rests upon its choice of assumptions. Making the right choice, the one that best corresponds to physical reality, requires further, difficult research, and accepting conclusions based on shaky premises risks foreclosing upon such work. That would be gross negligence for a field claiming to be scientific to commit.

Mr. Keenan previously did mathematical research and financial trading on Wall Street and in the City of London; since 1995, he has been studying independently. He supports environmentalism and energy security. Technical details of this essay can be found at


Obama, the president who loves Islamic Madmen

Looks like Muammar is keeping his job after all. Way to go, Barack. Way to go. Shred the country but leave the crackpot leader in place. Way to go.

Libya says ready for change, Gaddafi must stay
04 Apr 2011

* Govt offers "any changes" but says Gaddafi must stay

* Denies attacks on civilians

(Adds details, quotes)

TRIPOLI, April 4 (Reuters) - Libya is ready to hold elections and reform its political system but only its own people can decide whether leader Muammar Gaddafi can stay at the helm, a government spokesman said on Monday.

"We could have any political system, any changes: constitution, election, anything, but the leader has to lead this forward. This is our belief," said Mussa Ibrahim, when asked about the content of negotiations with the West.

"Who are you to decide what Libyans should do? Why don't they (Western powers) say: we need the Libyan people to decide whether the Libyan leader should stay or go, to decide whether to have a different political system or not.

"No one can come to Libya and say: you have to lose your leader or your system or your regime. Who are you to stay that?"

He said no conditions could be imposed on Libya from abroad, even though the country was ready to discuss proposals aimed at bringing more democracy, transparency, press freedom and anti-corruption laws.

"Don't decide our future from abroad, give us a proposal for change from within," he said.

"The leader has no official position to step down from. ... He has a symbolic significance for the Libyan people. How Libya is governed is a different matter. What kind of political system is implemented in the country is a different matter. This is a question we can talk about."

He accused some Western leaders of trying to topple Gaddafi out of personal interest or for economic gain.

"We know there are some politicians in power in the West who just have a personal problem with the leader," he said. "Others have economic interests which they think would be served better if the government collapsed."

He denied allegations that government forces were involved in any attacks against civilians, adding that Libya regretted Italy's decision to back the rebels.

"We are not attacking any civilians, I assure you. We never in this crisis attacked any civilians. ... I will not stand and speak for a government that kills civilians. Who do you think we are, monsters?"

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Freedom of Speech is one of our Constitutional Rights unless...

Why in the world would President Obama, General Petraeus and several elected officials expect Americans to sacrifice one of our most important principles, one of our most important rights, to appease the people of the Islamic world? Those are the people who want to strip us of our Right of Free Speech, among many other rights that offend them.

Are they not the last people on the planet we should appease? If our own leaders are asking Americans to forego their Right to Free Speech, have they not themselves become enemies of America?

Asking Americans to relinquish the Right of Free Speech is asking Americans to submit to an authority that demands to stand above our Constitution. For Americans, that is IMPOSSIBLE.

Beginning in the 1960s, American protesters opposed to the Vietnam War burned American flags. Flag-burning created plenty of controversy -- but led to no deaths. Instead, burning the US flag led to a Supreme Court case. The justices decided the Constitution permitted the burning of the US flag.

Burning the US flag sometimes occurs in other nations, most notably Islamic nations. However, no American has ever believed that anti-American speech in other countries should be met with murder or violence here at home. Or anywhere else. As 1,400 years of Islamic history proves, muslims will NEVER accept Freedom of Speech, Freedom of Religion or any other freedoms and rights granted to Americans by our Constitution and Bill of Rights.

"Free Speech Is A Great Idea, But ..."

03 Apr 2011

Harry Reid's comment that "we'll look into" the despicable Christianism of Terry Jones unnerved me. Butters unnerved me some more:

Sen. Lindsey Graham said Congress might need to explore the need to limit some forms of freedom of speech, in light of Tennessee pastor Terry Jones’ Quran burning, and how such actions result in enabling U.S. enemies.

"I wish we could find a way to hold people accountable. Free speech is a great idea, but we're in a war," Graham told CBS' Bob Schieffer on “Face the Nation” Sunday.

And there you have a classic example of how warfare abroad can curtail liberties at home. Koran burning is obviously a disgusting act of disrespect and incivility. But that very kind of act is what the First Amendment is designed to protect. And we should also remember that this war has no end, and that therefore the liberties taken away by wartime are permanently taken away.

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Sunday, April 03, 2011

What's Wrong with Islam? -- A Lot says Bernard Lewis

As if we didn't know that Iran and other Islamic nations are run by religious fanatics who want to start a nuclear war. But the recent revolutions may save the world from the Pyrrhic Loss that would define the kind of war the Islamic fanatics want.

'The Tyrannies Are Doomed' The West's leading scholar of the Middle East, Bernard Lewis, sees cause for optimism in the limited-government traditions of Arab and Muslim culture. But he says the U.S. should not push for quick, Western-style elections...

'What Went Wrong?" That was the explosive title of a December 2001 book by historian Bernard Lewis about the decline of the Muslim world. Already at the printer when 9/11 struck, the book rocketed the professor to widespread public attention, and its central question gripped Americans for a decade.

Now, all of a sudden, there's a new question on American minds: What Might Go Right?

To find out, I made a pilgrimage to the professor's bungalow in Princeton, N.J., where he's lived since 1974 when he joined Princeton's faculty from London's School of Oriental and African Studies.

Two months shy of his 95th birthday, Mr. Lewis has been writing history books since before World War II. By 1950, he was already a leading scholar of the Arab world, and after 9/11, the vice president and the Pentagon's top brass summoned him to Washington for his wisdom.

"I think that the tyrannies are doomed," Mr. Lewis says as we sit by the windows in his library, teeming with thousands of books in the dozen or so languages he's mastered. "The real question is what will come instead."

For Americans who have watched protesters in Tunisia, Egypt, Iran, Libya, Bahrain and now Syria stand up against their regimes, it has been difficult not to be intoxicated by this revolutionary moment. Mr. Lewis is "delighted" by the popular movements and believes that the U.S. should do all it can to bolster them. But he cautions strongly against insisting on Western-style elections in Muslim lands.

"We have a much better chance of establishing—I hesitate to use the word democracy—but some sort of open, tolerant society, if it's done within their systems, according to their traditions. Why should we expect them to adopt a Western system? And why should we expect it to work?" he asks.

Mr. Lewis brings up Germany circa 1918. "After World War I, the victorious Allies tried to impose the parliamentary system on Germany, where they had a rather different political tradition. And the result was that Hitler came to power. Hitler came to power by the manipulation of free and fair elections," recounts Mr. Lewis, who fought the Nazis in the British Army. For a more recent example, consider the 2006 electorial triumph of Hamas in Gaza.

Elections, he argues, should be the culmination—not the beginning—of a gradual political process. Thus "to lay the stress all the time on elections, parliamentary Western-style elections, is a dangerous delusion."

Not because Muslims' cultural DNA is predisposed against it—quite the contrary. "The whole Islamic tradition is very clearly against autocratic and irresponsible rule," says Mr. Lewis. "There is a very strong tradition—both historical and legal, both practical and theoretical—of limited, controlled government."

But Western-style elections have had mixed success even in the West. "Even in France, where they claim to have invented freedom, they're on their fifth republic and who knows how many more there will be before they get settled down," Mr. Lewis laughs. "I don't think we can assume that the Anglo-American system of democracy is a sort of world rule, a world ideal," he says. Instead, Muslims should be "allowed—and indeed helped and encouraged—to develop their own ways of doing things."

In other words: To figure out how to build freer, better societies, Muslims need not look across the ocean. They need only look back into their own history.

Mr. Lewis points me to a letter written by France's ambassador in Istanbul shortly before the French revolution. The French government was frustrated by how long the ambassador was taking to move ahead with some negotiations. So he pushed back: "Here, it is not like it is in France, where the king is sole master and does as he pleases. Here, the sultan has to consult."

In Middle Eastern history "consultation is the magic word. It occurs again and again in classical Islamic texts. It goes back to the time of the Prophet himself," says Mr. Lewis.

What it meant practically was that political leaders had to cut deals with various others—the leaders of the merchant guild, the craft guild, the scribes, the land owners and the like. Each guild chose its own leaders from within. "The rulers," says Mr. Lewis, "even the great Ottoman sultans, had to consult with these different groups in order to get things done."

It's not that Ottoman-era societies were models of Madisonian political wisdom. But power was shared such that rulers at the top were checked, so the Arab and Muslim communities of the vast Ottoman Empire came to include certain practices and expectations of limited government.

Americans often think of limited government in terms of "freedom," but Mr. Lewis says that word doesn't have a precise equivalent in Arabic. "Liberty, freedom, it means not being a slave. . . . Freedom was a legal term and a social term—it was not a political term. And it was not used as a metaphor for political status," he says. The closest Arabic word to our concept of liberty is "justice," or 'adl. "In the Muslim tradition, justice is the standard" of good government. (Yet judging from the crowds gathered at Syria's central Umayyad mosque last week chanting "Freedom, freedom!," the word, if not our precise meaning, has certainly caught on.)

The traditional consultation process was a main casualty of modernization, which helps explain modernization's dubious reputation in parts of the Arab and Muslim world. "Modernization . . . enormously increased the power of the state," Mr. Lewis says. "And it tended to undermine, or even destroy, those various intermediate powers which had previously limited the power of the state." This was enabled by the cunning of the Mubaraks and the Assads, paired with "modern communication, modern weapons and the modern apparatus of surveillance and repression." The result: These autocrats amassed "greater power than even the mightiest of the sultans ever had."

So can today's Middle East recover this tradition and adapt it appropriately? He reminds me that he is a historian: Predictions are not his forte. But the reluctant sage offers some thoughts.

First, Tunisia has real potential for democracy, largely because of the role of women there. "Tunisia, as far as I know, is the only Muslim country that has compulsory education for girls from the beginning right through. And in which women are to be found in all the professions," says Mr. Lewis.

"My own feeling is that the greatest defect of Islam and the main reason they fell behind the West is the treatment of women," he says. He makes the powerful point that repressive homes pave the way for repressive governments. "Think of a child that grows up in a Muslim household where the mother has no rights, where she is downtrodden and subservient. That's preparation for a life of despotism and subservience. It prepares the way for an authoritarian society," he says.

Egypt is a more complicated case, Mr. Lewis says. Already the young, liberal protesters who led the revolution in Tahrir Square are being pushed aside by the military-Muslim Brotherhood complex. Hasty elections, which could come as soon as September, might sweep the Muslim Brotherhood into power. That would be "a very dangerous situation," he warns. "We should have no illusions about the Muslim Brotherhood, who they are and what they want."

And yet Western commentators seem determined to harbor such illusions. Take their treatment of Sheikh Yusuf Qaradawi. The highly popular, charismatic cleric has said that Hitler "managed to put [the Jews] in their place" and that the Holocaust "was divine punishment for them."

Yet following a sermon Sheikh Qaradawi delivered to more than a million in Cairo following Mubarak's ouster, New York Times reporter David D. Kirkpatrick wrote that the cleric "struck themes of democracy and pluralism, long hallmarks of his writing and preaching." Mr. Kirkpatrick added: "Scholars who have studied his work say Sheik Qaradawi has long argued that Islamic law supports the idea of a pluralistic, multiparty, civil democracy."

Professor Lewis has been here before. As the Iranian revolution was beginning in the late 1970s, the name of Ayatollah Ruhollah Khomeini was starting to appear in the Western press. "I was at Princeton and I must confess I never heard of Khomeini. Who had? So I did what one normally does in this world of mine: I went to the university library and looked up Khomeini and, sure enough, it was there."

'It" was a short book called "Islamic Government"—now known as Khomeini's Mein Kampf—available in Persian and Arabic. Mr. Lewis checked out both copies and began reading. "It became perfectly clear who he was and what his aims were. And that all of this talk at the time about [him] being a step forward and a move toward greater freedom was absolute nonsense," recalls Mr. Lewis.

"I tried to bring this to the attention of people here. The New York Times wouldn't touch it. They said 'We don't think this would interest our readers.' But we got the Washington Post to publish an article quoting this. And they were immediately summoned by the CIA," he says. "Eventually the message got through—thanks to Khomeini."

Now, thanks to Tehran's enduring Khomeinism, the regime is unpopular and under threat. "There is strong opposition to the regime—two oppositions—the opposition within the regime and the opposition against the regime. And I think that sooner or later the regime in Iran will be overthrown and something more open, more democratic, will emerge," Mr. Lewis says. "Most Iranian patriots are against the regime. They feel it is defaming and dishonoring their country. And they're right of course."

Iranians' disdain for the ruling mullahs is the reason Mr. Lewis thinks the U.S. shouldn't take military action there. "It would give the regime a gift that they don't at present enjoy—namely Iranian patriotism," he warns.

By his lights, the correct policy is to elevate the democratic Green movement, and to distinguish the regime from the people. "When President Obama assumed office, he sent a message of greeting to the regime. That is polite and courteous," Mr. Lewis deadpans, "but it would have been much better to send a message to the people of Iran."

Let's hope the Green movement is effective. Because—and this may be hard to square with his policy prescription—Mr. Lewis doesn't think that Iran can be contained if it does go nuclear.

"During the Cold War, both the Soviet Union and the United States had nuclear weapons but both knew that the other was very unlikely to use them. Because of what was known at the time as MAD—mutually assured destruction. MAD meant that each side knew that if it used a nuclear weapon the other would retaliate and both sides would be devastated. And that's why the whole time during the Cold War, even at the worst times, there was not much danger of anyone using a nuclear weapon," says Mr. Lewis.

But the mullahs "are religious fanatics with an apocalyptic mindset. In Islam, as in Christianity and Judaism, there is an end-of-times scenario—and they think it's beginning or has already begun." So "mutually assured destruction is not a deterrent—it's an inducement."

Another key variable in the regional dynamic is Turkey, Mr. Lewis's particular expertise. He was the first Westerner granted access to the Ottoman archives in Istanbul in 1950. Recent developments there alarm him. "In Turkey, the movement is getting more and more toward re-Islamization. The government has that as its intention—and it has been taking over, very skillfully, one part after another of Turkish society. The economy, the business community, the academic community, the media. And now they're taking over the judiciary, which in the past has been the stronghold of the republican regime." Ten years from now, Mr. Lewis thinks, Turkey and Iran could switch places.

So even as he watches young Middle Eastern activists rise up against the tyrannies that have oppressed them, he keeps a wary eye on the spread of Islamic fundamentalism. It is particularly challenging because it has "no political center, no ethnic identity. . . . It's both Arab and Persian and Turkish and everything else. It is religiously defined. And it can command support among people of every nationality once they are convinced. That marks the important difference," he says.

"I think the struggle will continue until they either obtain their objective or renounce it," Mr. Lewis says. "At the moment, both seem equally improbable."

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