Iraq post American occupation

From Michael Totten in Commentary:

Many American soldiers agree. “Everyone says things will implode after we leave,” Lieutenant Eric Kuylman told me. “They’ll blame it on politics and religion, but it’s not going to be any of that. It’s going to be about straight power. It’s going to be guys trying to one-up each other. It’s going to be key people in cities just like this who will want to seize the power gaps. It’s going to break down along tribal lines and these militias that we’ve put in place. When we pull out, there will be power vacuums. There will be pockets of people that we’ve put in power. I mean, everybody already has shaky alliances as it is. So what you’re going to see is the straight seizing of power. People are going to try to put their own tags on it, but it’s just about the seizure of power. It’s not going to be Sunni or Shia, nothing like it. It’s just going to be men who want control.”

I mostly agree with this. There will be more violence following USA withdrawal from Iraq because there will be power vacuums in a country overflowing with armed men used to settle conflicts with violence (because of their experiences of the last 5 years of course, not because they are inherently violent). But this does not mean that long term instability will follow; in my opinion, the odds that it goes the Somalia route are low, the internal stability in Vietnam after the Fall of Saigon (if you discount war against external enemies) is a more likely route. Why? Because unlike the Southern Vietnamese government, Maliki wants the US gone. It means he is fairly confident he can retain power even if they leave within a few years. It was Sadr and the Sunnis who were more uneasy about withdrawal; they are probably less confident in their abilities. As Totten writes at the end of the article:

He thinks Iraq will be okay, even so. The Iraqi Army and Iraqi Police are still shaky institutions at best, but they are much more competent than they were a few years ago. The Iraqi Army proved itself earlier this year, against nearly all expectations, when it took back areas under the control of Moqtada al Sadr’s Mahdi Army militia in Basra and Sadr City with only a limited amount of help from Americans.

Things might go as planned, but if Maliki plays his cards right he will probably be able to fill the power vacuum.

Via Andrew Sullivan

Why Obama's plan for alternative energy is more important than ever

Against this, the current economic slump could have serious long-term environmental consequences, because it may reduce investment in greener production technologies without fundamentally changing the longer-term emissions picture. With so many renewable energy projects and programs in their nascent stages, their success is easily undercut by lack of credit or financing.-Elisabeth Rosenthal, NY Times

One more reason why I am happy that Barack Obama has been elected. With the global slowdown and dropping oil prices, alternative energy will be less attractive for investors for a certain period. That is why Obama's plan to invest massively in alternative energy is more important than ever. Government funding can help the industry while times are rough so that it is able to continue to develop. This way when the economy kicks in and oil prices go back to 150$/gallon, alternative energy sources might actually present itself as some sort of alternative.

Truth and Reconciliation?

I just read Michael Isikoff in Newsweek who reports that Obama might implement a 9/11-style commission to "investigate counterterrorism policies and make public as many details as possible" but will not launch a criminal investigation. I'm largely in agreement with Kevin Drum here:

I find myself surprisingly torn by all this. My instinctive reaction is to turn over every last shred of paper in open court and mercilessly toss into jail anyone associated in any way with this stuff. But I suspect Obama is reacting more wisely than me in this matter. Not only would trials and jail sentences set off a firestorm of protest, but in the end they might not accomplish much either. That's discouraging as hell to write, but at bottom we still have a public opinion problem here: like it or not, half the country still seems to think that torturing al-Qaeda suspects was perfectly acceptable.

So in the end, perhaps we'll get half of a Truth and Reconciliation commission: we'll get the truth, but not the reconciliation, since I doubt that any of the perpetrators of this stuff are inclined to show the slightest remorse for what they did. I suppose that here in the real world this might be the most we can expect, but I don't have to like it. And I don't. -Kevin Drum

The problem is that the crimes committed under the Bush administration are broadly supported in America. Bush became unpopular because the wars dragged on (costing American life), because of his attempts to privatize Social Security and because of the disastrous management of Katrina, but not because of Guantanamo or the use of torture. There is a broad, bipartisan consensus regarding the killing of non Americans under the pretense of national security, as has been pointed by Andrew Bacevich in his latest book. An example taken from his book is Madeleine Albright's answer when she was asked to comment on a UNICEF report that claimed that up to 500 000 Iraqis children had died due to U. S. sanctions: "I think this is a very hard choice, but the price--we think the price is worth it.". There was widespread, bipartisan consensus for the sanctions despite the heavy and well known human cost and the very limited results of the sanctions. The difference between torture under Bush and sanction-linked famine under Clinton is one of process. But the end goal, supported de facto by the population, was the same: fight "them" over there so we don't have to suffer or limit our consumption over here.

Blocking health care reform to survive

Passing Obamacare would be like performing exactly the opposite function of turning people into investors. Whereas the Investor Class is more conservative than the rest of America, creating the Obamacare Class would pull America to the left. Michael Cannon of the Cato Institute, who first found that wonderful Markowitz quote, puts it succinctly in a recent blog post: "Blocking Obama's health plan is key to the GOP's survival."" -James Pethokoukis

They do have a point. If universal health care is passed, it will be a game changer in American politics. We Canadians might whine loudly about our health care system, but the reality is that it is one of the most appreciated institution in the country. If enacted, it will not go away on its own; Newt Gingrich realized in 1994 just how hard it was to attempt to tear down health entitlements. If such a policy is passed, it will force the GOP leftward.

But I'll leave you on a quote from hilzoy which sums up how I felt when I first read their argument:

An honest conservative might accept this claim and say: well, I guess our ideas are unpopular, so we'll just have to make our case more persuasively.

But that's not the conclusion they draw. Pethokoukis and Cannon say: because people will like health care reform, if we do not block it, our party will lose support. So precisely because people would like it if they tried it, we need to make sure that it fails. -hilzoy

Clinton at Secretary of State

Well it appears to be semi official now, Hillary will be Obama's Secretary of State. I did not expect the rumor to be true, but it seems I was wrong. It is still strange to me that Hillary has accepted to lead Foggy Bottom when she had a safe seat in the Senate which she could use as a springboard for her 2016 (or maybe 2012) campaign. Maybe she decided that she would be too old in 2016 at 69 years old, or maybe she found the experience too harrowing this time around to want to try a second time.

But here I will make a second prediction, hopefully more accurate than the first. Obama convinced Clinton to accept the job because he told her he had big plans in foreign policy, and so he wanted someone experienced just like her to run the State department. I am thinking he mentioned either his support of the Arab Peace Initiative for the Israeli-Palestinian conflict or his policy on Kashmir. Either way, I am certain he managed to convince her by promising, or hinting at a place in history.

An attempt to understand Barack Obama

In the past year, numerous people have tried to understand Obama. Was he an extreme liberal? Was he naive or a Chicago pol? Was he an opportunist? Or maybe he was simply a human manifestation of pure ethereal change? Everyone had their opinion on who the man was and what he thought. The explanation I found most convincing was articulated by Daniel Larison, who maintained that Obama was a careful, centrist, consensus building, establishment politician who sought compromise and did not rock the boat. This explanation was concordant with his calm and attentive persona. It also explained why his positions from health care to foreign policy were extremely centrists, despite his more leftist record and the fiery rhetoric. His position to talk with Iran and Syria, while controversial, is centrist in that it is merely a logical extension of the Anbar Awakening and negotiations with North Korea. Only his initial opposition to the Iraq War could be seen as a significant break from the establishment. Overall, he had center-left positions during the campaign, clearly within the mainstream of the Democratic Party; and to the right of his primary opponents.

This vision of the man has a fairly good explanatory power, yet it is not perfect. For example, it does not explain how he ran one of the best campaign in recent history that defied conventional wisdom in so many way and managed to largely bypass established interest groups. But more importantly, it's an approximation of the man based on his actions before he became President. The incentives are different now, which should affect his future actions.

I believe his pragmatic, consensus seeking persona of the past few years was due to two main factors. First, he does seem to have the personality of someone who favors consensus building, based on all I have read about his history and his management style. The second is that he is the ultimate striver, the kind of man ambitious enough to become President of the United States at 47 years old. He knew that as the young and inexperienced candidate, he had no chances of being elected if he had positions that were not approved by the establishment. But the incentives are different now that he is in power in a political climate as favorable as can be. As President, his ambition will push him into doing things that will make him remembered as a great President.

We know that he is deeply aware of his history and we saw in the campaign that he thinks more in the long term than most politicians. Obama has been compared to Kennedy, but he has repeatedly said that his ideal is Lincoln. He also greatly respects Reagan because he left much more of a mark on the country than Clinton ever did. This is a very important aspect of Obama. He wants to be seen as a Jackson, Lincoln or FDR and not a Buchanan, Hoover or Carter. Of course, if poll numbers drop in the coming years, he might focus on policies that are popular in the short term. But right now I doubt Obama is in survival mode; he's definitely feeling the wind of change and he intends to ride it in a way that satisfy his more ambitious side.

What I think Obama will do as a President is steer very close to the "centrist consensus" on the majority of issues just like the Obama we are accustomed to, but on several issues he will attempt massive changes in policy. The major factor which will decide where he spend his political capital will be how it will affect his legacy.

I think we are starting to have a few examples of this. The first one is alternative energy. Obama supports a major investment to support the growth of this burgeoning industry. This makes perfect sense if one look at the long term trends on energy. Oil production will peak or slow, causing prices increase which will force a more widespread use of alternative energy. This is inevitable in the long term given the current trends. When this happens, history will remember Obama as the first President to get serious about alternative energy.

Second, we learned Sunday that Obama supports the Arab Peace Initiative for the Israeli Palestinian conflict. This is perhaps the most ambitious peace deal the region has ever seen; all Arab states would recognize Israel, it would withdraw to the lines of 1967 and recognize the state of Palestine with East Jerusalem as its capital. This would be the most important landmark for peace in the Middle East since the creation of the state of Israel. Needless to say it is more interesting to have your name associated with this kind of deal than, let's say, an easier to achieve Israel-Syria bilateral peace.

Third, Obama has apparently bought the argument that if Pakistan can not be safe on its eastern border, it will not manage to be stable in the west. Since stability in Afghanistan depends on the ability of Pakistan to control its western frontier, to bring peace in Afghanistan he must reach a peace deal on Kashmir. The logic is tenuous at best; there is simply no evidence that the instability in western Pakistan is due to trouble on the eastern border; western Pakistan was lawless during the Raj, it was lawless during the Indio-Pakistani wars and it was lawless during ceasefires. But the rewards are great for Obama; if he succeed he will be widely hailed as the leader who brought peace to one of the most dangerous battle zone in the world, whereas only a few historians will care about whether his argument for involving the US in this conflict was sound.

Fourth, although it is too early to tell how Barack will move on the subject, it is interesting that the Baucus health care reform blueprint goes further than Obama's campaign promises, all the way to universality of health care. Obama has not balked at this at all, in fact several serious observers believe he is happy that the legislators are going farther than he promised to, since he clung more to the center during the campaign to avoid feeding the "extreme liberal" meme. Given the current environment, Obama will definitely try to make such a plan pass. Being the President associated with universality of health care ensures a place in the textbooks.

The final example is Proposition 8. Quite a few people have asked why Obama, who was safely cruising to election days before the Nov. 4th, did not say anything to help the "No" vote on Proposition 8, or why he did not say anything about it since the result has been known. Why did he decide not to stick his neck out for this subject? I think it is because there is very little to gain in term of legacy. People who fight for gay rights have been slowly but surely winning the "war" during the past decades, and Proposition 8 will be seen as a mere bump in a long term trend favoring gay rights. Obama has no intention of spending political capital for a bump that will be seen as unimportant in the grand scheme of things. He know he will be mostly seen as pro gay anyway. This is different than alternative energy, where Obama can be seen as the first president with the "correct" vision on the topic and thus secure a place in history.

So do not be surprised too see bold actions by an Obama administration despite his carefully crafted centrist image.

Though love

Here is an excerpt of Peter Morici's address to the Senate hearing on the auto industry bailout:

If Chapter 11 is put off to the -- if Chapter 11 is put off, the industry will continue to shrink. And inevitably, when it happens, and we go through the process, fewer jobs will be saved, because fewer jobs will be there to be saved. Sooner or later, this industry has to go through the ultimate reorganization that brings its cost structure absolutely in line with its competition. It may not be fair, it may not be what we would want to see, but it is inevitable.

In my mind, Chapter 11 is viable. The assets of these companies are needed by the domestic automobile market. They make over 40 percent, near 50 percent, depending on which estimate you use, of the cars driven in America. They can't go out of business completely.

New Frum website

Adjust your bookmarks.

I want to assist in that conversation. Starting over Inauguration Weekend, I'll be launching a new website, NewMajority.com. It will be a group blog, featuring many different voices. Not all of them identify as conservatives or Republicans. But they - and people like them - are the people conservatives and Republicans need. I hope we will debate policy as well as politics. I hope above all that we can create an online community that will be exciting and appealing to younger readers, a generation often repelled by today's mainstream conservatism. -David Frum

It is a good sign to see conservatives trying to revive a healthy internal debate by escaping the suffocating environment of some journal such as National Review. Watching the conclusions conservatives reach and how they react to an Obama administration will tell us as much about the future of this country than watching the every moves of the Democrats in Washington. So pay attention.

Hat tip: Andrew Sullivan

Quote of the Day II

Yglesias on the bailout:

Everyone says that part of the conditions of doing a bailout is going to have to be some major restructuring of this and that. But normally Chapter 11 bankruptcy is precisely the means through which such restructuring is done. If unusual circumstances mean we can’t do Chapter 11 and we need extraordinary congressional intervention, then it seems to me that the extraordinary intervention should be aimed at making Chapter 11 possible. Of course key GM stakeholders on both the management and the union side would prefer to avoid that scenario. But the reason they’d prefer to avoid it is precisely that they’d prefer to avoid major restructuring.

Kristol on what went wrong

After the election, Fareed Zakaria made the claim that Americans had finally learned their lesson on foreign policy:

The electorate has seemed to sense that there is a new world out there and that the nostrums presented by McCain in his campaign are irrelevant to it. As with economics, these feelings developed after watching the ideas in action. Bush embraced a series of radical policy stances -- many of them long espoused by neoconservatives -- especially during his first term.

But the vigorous unilateralism openly advocated by the administration is recognized by most Americans to have weakened the country's influence abroad. Its excessive reliance on military force has yielded few results worth the costs.

I thought this was mostly wishful thinking. There was simply no evidence that the population at large has learned those lessons. It seemed relatively bizarre to reach this conclusion after the relatively modest win of a Democratic challenger after 8 years of a disastrous Republican administration during the worse financial crisis since the Great Depression, especially when one considers how close to consensus Obama was on foreign policy.

Looks like I'm not the only one who thought that. Here is what Bill Kristol wrote today in the NY Times:

Republicans and conservatives today face a similar challenge to that of 1976. A hawkish foreign policy, social conservatism and middle-American populism aren’t the problems. Those elements, as embodied on the Republican ticket by John McCain and Sarah Palin, produced a respectable 46 percent of the national vote — in the midst of an economic meltdown, with the Bush administration flailing and House Republicans rebelling and the Republican ticket lacking any coherent economic message.

I don’t pretend to know just what has to be done. But I suspect that free-marketers need to be less doctrinaire and less simple-mindedly utility-maximizing, and that they should depend less on abstract econometric models. I think they’ll have to take much more seriously the task of thinking through what are the right rules of the road for both the private and public sectors. They’ll have to figure out what institutional barriers and what monetary, fiscal and legal guardrails are needed for the accountability, transparency and responsibility that allow free markets to work.

And I don’t see why conservatives ought to defend a system that permits securitizing mortgages (or car loans) in a way that seems to make the lenders almost unaccountable for the risk while spreading it, toxically, everywhere else. I don’t see why a commitment to free markets requires permitting banks or bank-like institutions to leverage their assets at 30 to 1. There’s nothing conservative about letting free markets degenerate into something close to Karl Marx’s vision of an atomizing, irresponsible and self-devouring capitalism.

This is pretty incredible coming from one of the most influential conservative around. Among social conservatism, populism, hawkish foreign policy and supply-sided economic theory he chose to drop the last one from the conservative ideology. Unlike what Zakaria said, Kristol argues that the foreign policy was not the problem; and from a purely electoral point of view, I agree with Kristol. I think that by moving toward the Democrats on this issue will be much more beneficial for the Republicans than changing fairly popular hawkish foreign policy views.

How Republicans respond to this will be worth watching.

Quote of the day

Horace Greeley, for those who don't or remember know their history, was the stridently abolitionist editor of the New York Tribune who in August 1862 wrote an open letter to Abraham Lincoln to tell him that anti-slavery voters like himself, whose votes gave Lincoln the 1860 election, were deeply disappointed he hadn't acted more decisively to free the slaves.

To this Lincoln famously responded:

If I could save the Union without freeing any slave I would do it, and if I could save it by freeing all the slaves I would do it; and if I could save it by freeing some and leaving others alone I would also do that. If I could save the Union without freeing any slave I would do it, and if I could save it by freeing all slaves I would do it; and if I could save it by freeing some and leaving others alone I would also do that. What I do about slavery, and the colored race, I do because I believe it helps to save the Union; and what I forbear, I forbear because I don't believe it would help to save the Union. I shall do less whenever I shall believe what I am doing hurts the cause, and I shall do more whenever I shall believe doing more will help the cause. I shall try to correct errors when shown to be error; and I shall adopt new views so fast as they shall appear to be true views.

It was the answer of a super pragmatist. He had one goal, keeping the "united" in United States, and would take whatever approach achieved it.

Lincoln is clearly Obama's presidential hero, the commander-in-chief he most aspires to emulate. He has told us more than once he's reading Lincoln now and draws comfort and inspiration from him.

(...)

So Obama, as Lincoln did with Greeley, is sending a message. He will be pragmatic. He will do whatever it takes to get the job done. -Frank James, The Swamp

Very true. It also tells us that Obama does not see himself as a mere placeholder. He intends to attempt dramatic changes. From early posturing, it seems to be heading that way, with the Baucus Health plan and talks of attempting to solve Kashmir and the Israeli-Palestinian conflict... It will be interesting to watch.

Sarko back offs on Missile Defense

Arthur Goldhammer reports that Sarkozy has backed off on his previous statement that the US should abandon its Missile Defense project in Eastern Europe. Last Friday I called Sarkozy's move shrewd. So what now? Why did he back off?

Arthur (link above) thinks that Sarkozy weaken his hands by backing off and make Russians more suspicious; and he wonders whether his new position means that he learned in Washington this weekend that Obama had no intention of removing his support for the project.

I do think it might be possible that Obama's representative to the G20 meeting, Madeleine Albright who is well known for her Russophobia, might have scared Sarkozy into believing that Obama would not back off. But after thinking about the issue, I think I stick with my original assessment. I don't think Sarkozy weakened his hand by backing off. He signaled to Russia that he was opposed to the plan and to Washington that he would support them if they decided to not go ahead with the project and his retraction shows that he would not object if they went ahead either. By retracting his previous statement, he takes a back seat and does not involve France further; he saw that loudly opposing USA foreign policy did not get Chirac very far in terms of results. The ambivalence of his position is its strength, everyone can read into it what they want but no one can be seriously angry with his position.

I still think the new US administration will eventually back off the Missile Defense plan in Obama's first term, but maybe the Russophobes will win. We'll see.

Big 3 again: Bankruptcy or bailout?

On Friday I mentioned that I was for allowing GM (and the Big 3 if necessary) to go bankrupt, provided it goes through a Chapter 11 bankruptcy (company still operating while restructuring) and not Chapter 7 (full liquidation). Several experts seems to think that GM would have to go Chapter 7 because of the impossibility of securing credit, but I did not understand why it was not possible for the government to secure its credit somehow to ensure it goes Chapter 11.

Today, Paul Krugman linked to a piece by Jonathan Cohn which said bankruptcy would be disastrous because of the aforementioned reason without exploring the possibility that the government could ensure that it goes Chapter 11; and said the bailout was the only solution and that the Big 3 had definitely learned from their mistakes anyway. It just seemed that my point was too stupid to even mention, as I did not read anyone consider that it could be a viable alternative.

But Felix Salmon came to my rescue:

At heart, this argument is simple. There's no available DIP financing for an orderly Chapter 11 bankruptcy, and Chapter 7 liquidation would be disastrous, therefore we need a bailout which avoids any kind of bankruptcy at all. But I don't see why a government bailout must, ipso facto, avoid any kind of bankruptcy.

He makes some good argument on the timing problem:

So there would need to be serious negotiations between all of GM's stakeholders and the government -- negotiations which, I'll concede, would be all but impossible during this uncomfortable interregnum between the election and the inauguration. Even if GM can somehow muddle through until January, it can hardly expect such negotiations to be concluded in a matter of weeks.

But this is hardly an insurmountable difficulty, it is just slightly more tricky than a bailout where legislators simply give free money in the hope that the company will use it wisely and that it learned its lesson this time. But it is also the best hope of successful reorganizing for American automakers.

Obama to try to solve Israeli-Palestinian conflict?

Kashmir is not enough, it looks like Obama also wants to solve the Israeli-Palestinian conflict. Furthermore, I've heard through the cracks that he intends to transform Darfur into a Japan clone during his second term. This is coming from very well placed sources.

Alright, back to the Middle East. An article published today in the Sunday Times hints that Obama is thinking about solving the Israeli-Palestinian issue. Apparently, Barrack Obama intends to pursue the Arab Peace Initiative, originally proposed by Saudi Arabia in 2002. To say that the plan is ambitious is an understatement. If implemented by all parties, Israel would retire to its pre 1967 borders (including Golan Heights), recognize a Palestinian state with East Jerusalem as its capital and in return they would get full recognition from Arab states. According to the Times, the Right of Return would be subject to Israeli veto; it is only cited in the plan. So the plan is basically a full normalization of the state of Israel and the creation of a Palestinian State.

The Peace Deal is definitely interesting, if only because it came from the Arab states and show that they are finally committed to solve the problem. One of the reason why they want to solve it is that they almost all have internal problems with fundamentalists; and they would all sleep better at night if the Israeli-Palestinian conflict was solved, in the belief that it would slow down fundamentalist recruitment. But before we start being optimist, there are a lot of questions left unanswered:

1. Who will win the Israeli elections of February 10th 2009? Livni, the leader of the ruling Kadima Party, has supported the plan. But on the other hand, Netanyahu of the Likud Party is totally opposed to the plan. Several polls show Likud with a small lead, but it is very close. If Likud wins, forget about the plan.
   
2. Will the plan still be acceptable to Arab states and all leading Palestinian factions once it is clear that the Right of Return will be "vetoed" by Israel? This is a huge sticking point.
   
3. Is the plan acceptable to both Fatah and Hamas? The article does not mention Hamas at all, but they must be aware that they are in charge of Gaza and no comprehensive peace deal will lead to anything if Hamas is not on board. According to wikipedia, Hamas has supported the plan after it was released; but that was a long time ago when the intra-Palestinian situation was different. What about now? Also, Fatah might not want to sign a Peace Deal which would leave them a country that they think would vote them out for Hamas. It seems Fatah has become almost parasitically dependent on Western propping
   
4. Is Barrack Obama experienced enough to pass it? I can't say I'm impressed by what he said according to the Times; that Israel would be "crazy" if they refused such a plan which "give them peace with the Muslim world". Telling choice of words but not very diplomatic; and if he wants to do this thing he will need all the diplomacy he can get. I tend to agree that this is as good as a deal that Israel will get, but I could see plenty of scenarios where I would not regard it in Israel's self-interest to sign (for example if some Arab countries backed off or if Fatah or Hamas disengage from the negotiations).
5. Will there be fundamentalists on either sides that will do whatever it takes to make it fail? If so will they succeed?

Anyway, it will be another subject I'll follow closely.

But I think we can see a pattern emerging from Obama; from Kashmir to health care to the Middle East, it can be summed up in 2 words: THINK BIG.

Endgame

The Iraqi Cabinet has approved the Security Pact with the US. The importance of this Pact is that it has set a timetable for withdrawal; the Coalition will have to start moving in the summer of 2009 and be out of the country by 2011. The final approval by the parliament is probably going to be a mere formality.

However this is by no mean a time for wild optimism for Iraqis. The next few years will be vital to ensure stability of the country. Now that everyone knows when Americans will be gone, the fight for power in post-USA Iraq will begin (or continue). Let's hope it will be a fight in the parliament or in debates and not fighting in the streets. I am slightly skeptical that this will happen without any violence, but we will see. Maliki appears stronger than ever, and if he continues his shrewd management, it would not be impossible for him to impose his power even without US backing.

As Kevin Drum mentions, this also has powerful implications on the domestic scene here in America. BO will not have to fight to secure American withdrawal from Iraq; he will be able to claim with a straight face that he is merely following the previous administration's policies while spending his political capital on other issues. At the same time it reminds everyone of Barack's good judgment regarding Iraq.

Big 3 troubles: consumers' fault?

Here are a few arguments from Blake Hounshell at FP Passport, explaining why consumers are to blame for the current plight of the Big 3 automakers:

• The industry was in trouble before, but it's the drying up of consumer demand due to the financial crisis that is threatening to destroy it at present. Even the innovative Toyota is feeling the pain right now.
• Who bought all those "gas-guzzling S.U.V.s and trucks" Friedman is ranting about? Martians?
• I must have missed the groundswell of grassroots activism in favor of the higher taxes that would have put a floor under the price of gasoline and made for a stable environment that could make technologies like plug-in hybrids viable even when market prices for crude oil collapse.

I think Blake is missing the point here by saying that it was basically the consumer's role to ensure that the Big 3 innovate or simply realize that gas prices would increase in the long term. That responsibility falls solely on those companies. It was (and still is, despite recent fall in price) obvious that world demand for oil increases faster than the output and, especially given limited reserves, the long term trend for oil price would be up. The Big 3 totally failed to see this reality.

While gas-guzzlers might have been profitable in the short term, it was the role of the directors of the companies to realize that to be competitive in the long term they would have to invest in fuel-efficient cars, not only because of government regulations but because of long term economic trends. It is in no way the fault of consumers that they bought them for a short period, while oil prices and the economy was good; the fault lie on the total lack of vision of the upper management of those companies.

Foreign automakers managed to foresee this trend and reacted accordingly, so this was by no mean an impossible thing. Also, while you claim that Toyota is feeling the pain, which is true, there are no signs that they are close to collapse; so the current crisis can not fully explain the desperate situation at the Big 3.

Foreign companies invested in the right places while American automakers closed its eye on reality. End of the story.

"Yes America is like Jessica Simpson, sometimes it's so stupid it embarasses you, but on the other hand..."

Money quotes:

Go away!

Stop following me around with your car in parking lots in the hope of getting my parking spot. I don't even have a car, I'm just wandering around because Obama won and I'm on acid

Via Ataturk

Quote of the day

There was a revolution; it just had little to do with the tenets of conservatism. The true nature of the revolution becomes apparent only in retrospect. Reagan unveiled it in remarks that he made on March 23, 1983. History remembers this as the occasion when the president announced his Strategic Defense Initiative. Embedded in Reagan’s remarks were two radical propositions: the minimum requirements of U.S. security required a status akin to invulnerability and modern technology was bringing this utopian goal within reach. Star Wars introduced into mainstream politics the proposition that Americans could be safe only if the United States enjoyed permanent global military supremacy. Here was Reagan’s preferred response to the crisis that Carter had identified. Here, too, can be found the strategic underpinnings of George W. Bush’s global war on terror. -Andrew J. Bachevich at TAC

One of the greatest public intellectual of the decade. Go read his book now.

On the Big 3 bailout

I do not have anything insanely clever to say about the proposed bailout for the Big 3 car companies. David Brooks in the New York Times sums up my views pretty well. I do not see why, aside from electoral considerations, those companies should be bailed out instead of going through bankruptcy. The idea of an "automobile czar" who could oversee the use of bailout money and force the companies to embrace "green" technology is totally ridiculous give the history of those companies. The corporate structure and culture of the Big 3 needs to be completely reshaped and that won't happen if they can get bailout from the government; it will be just a very costly life support for a brain dead patient. The money from the bailout should go to a program to ease the pain of transition for the employees.

Looking at the situation from Obama's perspective, I understand that he is wary of letting the Big 3 die after getting the Electoral Votes from the whole Midwest region and I could see how he'd want to keep them on life support with government funds until his second term. What I'd be curious to know is if Obama actually believes his talk about bailout and "auto czar" or if its just playacting for a Midwest audience.

Update: Before allowing bankruptcy, the government should ensure that they will be able to go through restructuring (Chapter 11) instead of total liquidation (Chapter 7). This might be a problem because a company has to be able to function while going through bankruptcy to go through Chapter 11, and experts think they would not be able to secure loans necessary to buy the parts that would be needed to continue operation. Total liquidation would be disastrous of course, but what about allowing them to go through bankruptcy while the government makes sure they get enough funds to continue operation so that they can go through Chapter 11 reorganization. The goal here is to provide the incentives necessary for the Big 3 to restructure themselves to ensure long term viability, while not completely destroying the economy of a whole region.

This just in: Hillary accepts job at Secretary of State

Just kidding!

The rumor of the day appears to be that Hillary Clinton has been offered the Secretary of State job at a private meeting with Obama in Chicago. Marc Ambinder can not confirm or infirm the sources. Andrew Sullivan likes it, Kevin Drum is skeptical.

I try to not comment too much on the speculation regarding Obama's future cabinet because it is basically like trying to understand a play in a foreign language while watching from the back of the theater. You can see who's there, you can see their movement, sometimes you can make out a word or two but you really can't tell what the hell is going on.

But my gut feeling is that it is horse crap. I don't see why she would leave her safe Senate seat for a job she will have for only a few years at best, and which will lower her chances to run again for President since she will have to focus on her job instead of politics for the years to come. She wouldn't be able to profit from a major Obama mistake, which she basically needs if she wants to have a chance in 2012 and she would lose her power base for a run in 2016. I don't see how she could spin positively going from a tough, independent legislator to a team player, following orders from a man whom she had called "naive and inexperienced" only a few months before.

From Obama's perspective, choosing Hillary would indeed show he was serious about his "Team of Rivals" talk and it would fit with a "Keep your friend close but your enemies closer" kind of logic, but I don't see what he has to gain. He's overwhelmingly popular, won the vast majority of Democrats and he has the best chance of any Democrat in a generation to pass important legislation. I don't see the logic in how by having Hillary in his Cabinet he will prevent her from attacking him. He wasn't afraid to face her when the odds were overwhelmingly in her favors, I don't see what he has to fear for 2012; barring a major mistake on his part during his term, in which case he'd be vulnerable from many other people, not just Hillary. If she does decide to run a primary challenge to the bitter end again in 2012, the 2008 elections has shown us that this only made Obama stronger by preparing him for the general election and didn't hurt him at all with Democrats (with 89% of the Democratic vote for him). There is also the Bill problem. Hillary doesn't seem to be able to control him, and Obama has not shown himself to be the type of boss that likes controversy caused by his employee (or their family) causing drama which makes him look bad. Such a job for Hillary would give plenty of opportunity to Bill to talk too much since an Obama administration will more than likely change a thing or two compared to how Clinton used to run thing and Bill will feel compelled to comment on this.

Finally, everyone who is in serious contention for top jobs has been very quiet as of late and the leaks have been relatively few and far between. Now all of a sudden it's leaking from everywhere? That looks intentional to me. If I had to guess why they met, I'd guess it might be to ask him not to take Richardson or Kerry as SecState, since she still hold grudges against them for supporting Obama early over her. Maybe...

Or maybe they just met like two old warriors to remember, over a coffee, the good old times when they called each other names.