Neocons and the truth: Bitter enemies to the end

In a July, 2006 article in Rolling Stone -- entitled "Iran: The Next War" -- the superb journalist James Bamford detailed the shady activities of numerous neoconservatives inside and out of the U.S. Government to plan an attack on Iran. Bamford focused on the role played by Michael Ledeen of the American Enterprise Institute and National Review, who created and began implementing an attack scheme in coordination with the Pentagon's then number-three official, Doug Feith, and Feith's deputy, Larry Franklin (subsequently convicted of felonies for passing classified information to AIPAC).

A couple weeks after Bamford's exposè was published, National Review enlisted former federal prosecutor Andrew McCarthy and talk show host Mark Levin jointly to author a defense of Ledeen and, more importantly, to savage Bamford for writing what they claimed was a pack of lies. The McCarthy/Levin article was entitled "Rolling Smear," sub-headlined "James Bamford writes a fiction about our Michael Ledeen," and accused Bamford of being "the latest in a growing crowd of hacks to smear our friend Michael Ledeen."

McCarthy and Levin specifically attacked Bamford's disclosure that Ledeen "had arranged a covert meeting in Rome with a group of Iranians [and Feith's team] to discuss their clandestine help" in attacking Iran. Said McCarthy and Levin:

Bamford, to the contrary, wants to turn the meeting into a nefarious plot by Ledeen and the neocons to push the nation into war with Iran. Yet, anyone even vaguely familiar with Michael's work knows that he has opposed military action against Iran -- notwithstanding that he was years ahead of most experts in accurately portraying Iran's role as the terror master at the center of the jihadist network.

So Bamford's claim was "embarrassing" because "anyone even vaguely familiar with Michael's work knows that he has opposed military action against Iran." Got that?

Here's Ledeen yesterday, writing in National Review's Corner (h/t sysprog):

Time to Attack Iranian Terror Camps? [Michael Ledeen]

So says John Bolton, and he's right. As you know, I have been proposing this for years. I always thought it was only a matter of time before we were compelled to take this action, which is a legitimate form of self-defense. And while we're at it, we should do the same thing to the Syrian camps as well. It isn't "sending a message," it's acting to protect our guys by fighting back in the proxy war the mullahs have been waging since 1979. Faster, please?

More amazingly, a mere two weeks before McCarthy and Levin wrote that "anyone even vaguely familiar with Michael's work knows that he has opposed military action against Iran," Ledeen himself wrote at The Corner that "I would insist that my soldiers have the right of 'hot pursuit' into Iran and Syria, and I would order my armed forces to attack the terrorist training camps in those countries."

In late 2006, I wrote about virtually identical deceit from this same group, that time with regard to Iraq. On National Review in December of 2006, Ledeen -- just as the Beltway establishment was finally turning against the war in Iraq and in the wake of a lengthy Vanity Fair article identifying the neocons who were to blame -- claimed: "I opposed the military invasion of Iraq before it took place."

In fact, Ledeen, throughout 2002 and 2003, had repeatedly and explicitly urged the invasion of Iraq in countless venues, including: The Wall St. Journal's Op-Ed Page ("If we come to Baghdad, Damascus and Tehran as liberators, we can expect overwhelming popular support"); in an interview with David Horowitz's Front Page ("Question #2: Okay, well if we are all so certain about the dire need to invade Iraq, then when do we do so? Ledeen: Yesterday."); on MSNBC's Hardball with Chris Matthews ("if President Bush is to be faulted for anything in this so far, it's that he's taken much too long to get on with it, much too long"); and in National Review (calling for "the desperately-needed and long overdue war against Saddam Hussein and the rest of the terror masters").

That war-cheerleading neoconservatives of this strain are completely unbound by the truth is not news. Obviously, the war they unleashed in Iraq is the most compelling proof of that. But sometimes when the lying is so blatant, one can't help but note it.

The same is true for the complete lack of accountability. Ledeen is a so-called "Freedom Scholar" at the revered and widely-cited American Enterprise Institute and a Contributing Editor at National Review. An intense email campaign over his Iraq comments to AEI and National Review's Editor Rich Lowry demanding a retraction or some comment from them on Ledeen's blatant falsehoods over his Iraq stance was simply ignored, as will be this episode concerning the article by McCarthy and Levin smearing Bamford due to Ledeen's alleged opposition to attacking Iran.

This isn't just a matter of documenting guilt with regard to what happened with Iraq. The Washington Post's David Ignatius today became just the latest establishment spokesman to warn (or celebrate) that "judging from recent statements by administration officials, there is also a small, but growing, chance of conflict with Iran."

The neoconservative war-lovers behind this effort have not changed, nor have their tactics. They realize, as many of them acknowledge, that they will have four more years in power if John McCain is elected. But they also realize that he may not be, and that their last hope for their long-desired attack on Iran lies in convincing the current administration to provoke one before its tenure ends. As much as one wishes it weren't true, as much as the fixation on petty election issues might obscure it, the truly depraved extremist group that brought us the invasion of Iraq still exerts substantial influence and is quite busy trying to exert it.

UPDATE: It isn't just the American neocons, but also the Israelis, who are escalating the "Attack Iran" campaign. The Jerusalem Post yesterday "reported" that "with Iran racing forward with its nuclear program, Israel now believes the Islamic Republic will master centrifuge technology and be able to begin enriching uranium on a military scale this year" (h/t quick strategy) and:

The new assessment moves up Israel's forecasts on Teheran's nuclear program by almost a full year -- from 2009 to the end of 2008. According to the new timeline, Iran could have a nuclear weapon by the middle of next year.

According to several commenters, the Israeli Ambassador to the U.S. was on Fox News this morning making the same fear-mongering claim.

The principal tactic Israel-centric neocons have repeatedly used with Bush to induce him to attack Iran has been to tell him that history will judge him based on whether he permits Iran to obtain a nuclear weapon. From The Weekly Standard's Irwin Stelzer, writing about a 2007 White House luncheon with Bush, historian Andrew Roberts, and a group of necons:

The closing note was a more serious one. Roberts said that history would judge the president on whether he had prevented the nuclearization of the Middle East. If Iran gets the bomb, Saudi Arabia, Egypt, and other countries will follow. "That is why I am so pleased to be sitting here rather than in your chair, Mr. President." There was no response, other than a serious frown and a nod.

Norman Podhoretz, when telling the President to bomb Iran, used the same tactic:

"I urged Bush to take action against the Iranian nuclear facilities and explained why I thought there was no alternative," said Podhoretz, 77, in an interview with The Sunday Times. . . .

He also told Bush: "You have the awesome responsibility to prevent another holocaust. You're the only one with the guts to do it." . . . .

"The president has said several times that he will be in the historical dock if he allows Iran to get the bomb. He believes that if we wait for threats to fully materialise, we'll have waited too long -- something I agree with 100%,' Podhoretz said.

And now, magically up pops these new reports from Israel warning that the deadline to stop Iran's nuclear bomb is the end of the year -- right before George Bush leaves office. Bush has less than eight months left to fulfill his history-mandated mission "to prevent another holocaust" by attacking Iran, or else "be in the historical dock if he allows Iran to get the bomb." They're as transparent as they are dishonest and bloodthirsty.

Greater Regulation of Financial Markets?

Gary Becker

The major deregulation movement of the past 100 years started with the Ford and Carter administrations in the 1970s, and continued through the Reagan years. This movement came to an end with the passage of the Americans with Disabilities Act of 1990 under the administration of George W. Bush. Since then some sectors, such as labor markets and product safety, have been regulated much more extensively, while others, including commercial and investment banking, have had no further declines in the extent of regulation. Despite the considerable and tangible successes of this deregulation movement, the pressure is intense to significantly increase the regulations affecting consumer safety, the introduction of new drugs, and especially financial markets.

The 1970s saw a bipartisan reduction in the regulation of airline travel, trucking, security exchanges, and commercial banking. Measures of the success of this deregulation include sharp declines in the cost of air travel and of shipping goods by truck, huge reductions in commissions on stock transactions, and higher interest rates on bank deposits. Not only has no serious attempt been made to re-regulate these activities, but also European and many other nations on all continents have copied the American deregulation of airlines and securities.

The impetus to tighter regulations varies from sector to sector, although there is a growing belief that many activities are insufficiently regulated. Obviously, the current turmoil in the financial sector is stimulating many proposals to regulate extensively various types of financial transactions. Yet it is not obvious that the problems in the financial sector resulted mainly because of insufficient regulation. For example, commercial banks are probably the most heavily regulated group in the financial sector, yet they are in much greater difficulties than say the hedge fund industry, which is one of the least regulated industries in the financial sector. Banks participated very extensively in originating mortgages, including subprime mortgages, and in buying mortgage-backed securities, and so they are suffering from the high foreclosure rates, and the sharp decline in the market value of these securities.

One reason why extensive regulation of commercial banks did not prevent many banks from getting into trouble is that bank examiners became optimistic along with banks about the risks associated with mortgages and other bank assets because the market priced these assets as if they carried little risk. It would run counter to human nature for regulators to take a skeptical attitude toward the riskiness of various assets when the market is indicating that these assets are not so risky, and when originating and holding these assets has been quite profitable. One can expect regulators to mainly follow rather than lead the market in assessing riskiness and other asset characteristics.

To some extent that was also true of the Fed's behavior during the past few years. I believe that Alan Greenspan is right in claiming that the main cause of the housing boom was not the Fed's actions but the worldwide low interest rates due to an abundant world supply of savings. The demand for very durable assets like housing is greatly increased by low interest rates. Still, the Fed seems to have contributed to the booming demand for housing and other assets by keeping the federal funds rate artificially low during the boom years of 2003-05.

In evaluating the need for greater financial regulation, one should also not forget that the American economy greatly outperformed the European and Japanese economies during the past 25 years. Might that not be related in part to the fact that the United States led the way with major financial innovations like investment banks, hedge funds, futures and derivative markets, and private equity funds that were only lightly regulated? An infrequent period of financial turmoil may be the price that has to be paid for more rapid growth in income and low unemployment. Rapid income and employment growth might be worth an occasional period of turmoil especially if they do not lead to prolonged slowdowns in the real part of the economy. So far the effects on GDP and employment have not been severe, although the financial distress is not yet completely over.

Nevertheless, a few important regulatory changes are probably warranted. For the first time the Fed allowed investment banks access to its federal funds window, and the Fed guaranteed $29 billion worth of mortgage-backed assets to induce J.P. Morgan to take over that investment company. Since these types of Fed actions would likely be repeated in the event of future financial turmoil, investment banks would have an incentive to take on additional risk since they can reasonably expect to be helped out by the Fed in the future. For this reason it might be desirable for the government to impose upper bounds on the permissible ratios of assets to equity held by investment banks. The ratio of assets to the equity of the five leading investment banks did increase greatly from about 23 in 2004 to the highly leveraged level of 30 in 2007.

Other regulations of financial institutions may also be merited, but elaborate new regulations of the financial sector would be counterproductive. For example, the Fed has proposed limits on how much mortgage interest rates can exceed the prime rate for low-income borrowers with poor credit ratings. This would be a foolish intervention into the details of credit contracts that have all the defects of usury laws.

The financial sector has served the economy well by managing, dividing, and pricing different types of risks in the economy. It would be a mistake if Congress and the President allow the present financial turmoil to panic them into inefficient new financial regulations.

Under Clinton's rules, Obama still wins
By: David Paul Kuhn and Avi Zenilman

Barack Obama can fully accept Hillary Rodham Clinton’s terms on Michigan and Florida and still win a majority of pledged Democratic delegates on June 1, allowing him to lay claim to the nomination under the New York senator’s own rules.

A Politico analysis of the delegate numbers after Tuesday’s primaries in North Carolina and Indiana shows Obama can concede to Clinton’s position on Michigan and Florida and still claim victory — potentially forestalling the Democratic nightmare scenario of a floor fight at the Denver convention.

The Clinton campaign rejected the premise of Politico’s analysis, dismissing it as “artificial metrics” that “might make for interesting cocktail party conversation” but would give Obama no legitimate claim on the nomination.

But the numbers could add to Obama’s growing strategic advantage. Some background: The magic number of pledged delegates — excluding Florida and Michigan, which were stripped of their delegates for holding early, unsanctioned primaries — is 1,627 to have a definitive majority.

Obama will reach that threshold on May 20, after the Kentucky and Oregon primaries, and plans to declare victory.

The Democratic National Committee sets the clinching number at 2,025 pledged delegates and superdelegates, excluding Florida and Michigan. The rationale of the Obama camp is that hitting 1,627 means the candidate is a lock for the higher DNC number also, because superdelegates are unlikely to overturn voting results.

Many neutral Democratic strategists agree. “It’s not going to happen,” said Carter Eskew, the chief strategist for Al Gore’s 2000 campaign. “I don’t think anybody in Democratic circles, not aligned with either campaign, believes any different.”

Clinton’s campaign, however, has argued that Obama needs to clear yet another figure — 2,209 pledged delegates and superdelegates, a figure that includes the two rogue states. Clinton aides have said Obama won’t meet that target on May 20.

But using Clinton’s own numbers, there now seems a clear path for Obama to claim victory.

Clinton’s push for the full inclusion of Florida and Michigan brings the total pledged delegates to 3,566. That would mean the magic number for a majority would rise to 1,784.

A conservative assessment of Obama’s chances shows he would reach 1,785 pledged delegates on June 1, when polls close in the Puerto Rican primary.

This showing by Obama is possible even under extremely generous expectations for Clinton in the weeks ahead. Should she win about 70 percent of the delegates in West Virginia next week, a showing she has only accomplished in her husband’s native state of Arkansas, she would walk away with 19 additional delegates to Obama’s nine delegates.

A week later, should Clinton win 62 percent of the delegates in Kentucky, larger than her win in her home state of New York, she would walk away with 32 additional delegates while Obama would walk away with 19.

If Clinton managed a split in Oregon — a state Obama is heavily favored to win — he would still need only 35 percent of the delegates in Puerto Rico to clinch a lead in earned delegates.

The Clinton campaign insisted that even if Obama reaches 1,785, he’s not the nominee. “Declaring mission accomplished doesn’t make it so. The Democratic Party’s rules do not differentiate between the different types of delegates. Using artificial metrics . . . won’t change the fact that it takes 2,209 delegates to win the nomination," said deputy communications director Phil Singer.

An unassailable lead in pledged delegates, however, also would give Obama wide flexibility in negotiations over how to handle Michigan and Florida.

Obama’s campaign currently refuses to tie delegate allocation in Florida and Michigan to voting results in the two states because both candidates pledged not to campaign in either state. Obama was also not on the ballot in Michigan.

Clinton’s argues that to not recognize either contest would be equivalent to disenfranchising voters. Clinton’s aides also point out that Obama chose to remove himself from the Michigan ballot.

Howard Wolfson, one of Clinton’s two strategists, said Friday during a breakfast with reporters that the campaign would be willing to offer Obama all of the “uncommitted” votes from Michigan providing both states were seated in with delegate totals reflecting their votes.

Obama’s supporters had to vote “uncommitted” when they went to the polls in the Jan. 15 Michigan contest.

Both the Michigan and Florida Democratic parties have expressed a preference for Clinton’s stance — though the position has been opposed by Obama. The DNC and state parties have broadly indicated that they would accept any deal the two campaigns agreed on.

“If there was a proposal that both campaigns and the leadership of both states agreed upon, it's likely the [DNC’s Rules and Bylaws Committee] would accept that,” said a Democratic Party veteran who has not sided with either campaign.

Obama’s campaign has not agreed to Clinton’s terms, in part for fear it would shift the paradigm of the race and offer Clinton a way to narrow the gap in pledged delegates.

But the Politico analysis shows that if Obama gets all the “uncommitted” votes in Michigan, as Clinton’s team proposes, and Obama's rogue state delegates are bona fide supporters, he will still win a majority of pledged delegates.

This also means that any decision on the status of Florida and Michigan by the eagerly anticipated RBC session May 31 could largely be moot, in terms of shaping who wins the nomination.

Jenna Bush marries Henry Hager in a private ceremony at the Bush ranch

by Mark Silva

Wedding bells will ring at the Prairie Chapel Ranch outside of Crawford, Texas, today, as a first twin, Jenna Bush, marries Henry Hager, son of a Virginia Republican.

"Please excuse me if I'm a little sleepy,'' the father of the bride, the president of the United States, has been seen joking. "A 3 am the phone rang.... The wedding planner.''

"I've got a lot of on my mind, by the way,'' Bush also has been heard to say, "getting ready to walk down the aisle.''

The aisle will be behind closed doors, at the Bush family ranch -- unlike the last White House wedding in 1971, a Rose Garden affair for the Nixons.

"I wanted to have something private -- something that fits my personality a little more,'' Jenna Bush has said. Her sister, Barbara, will serve as bride's maid.

The couple met around the White House. Henry Hager, son of a Virginia Republican who has run the state party and served in the Bush administration, worked in the political shop at the White House. The couple plans to settle in Baltimore.

McCain paints Obama's portrait

WASHINGTON -- Three months ago, Sen. John McCain made a calculated decision to begin painting a not-so-pretty picture of Sen. Barack Obama.

Although Sen. Hillary Clinton was -- and still is -- battling Obama for the Democratic presidential nomination, McCain began preparing his case against the Illinois senator early on. McCain's advisers, like other observers, had concluded that Obama was the likely nominee and wanted to begin shaping Obama's image while the Democrat was still consumed with fighting Clinton.

Defining one's opponent is a key task of any campaign, and simply put, McCain has had a long head start. As early as Feb. 12--the day McCain and Obama each won primaries in Maryland, Virginia and Washington, D.C. -- McCain suggested Obama was guilty of hollow promises and a messianic self-image.

"To encourage a country with only rhetoric, rather than sound and proven ideas that trust in the strength and courage of free people, is not a promise of hope," McCain said, alluding to Obama's speaking skills and campaign theme. And in another jab he added, "I do not seek the presidency on the presumption that I am blessed with such personal greatness that history has anointed me to save my country in its hour of need."

Unlike McCain, Obama has been fighting a two-front war, trying to beat back an onslaught from Clinton while taking opening shots at McCain. Recently Obama has started focusing more squarely on the presumptive Republican nominee, attacking his positions on the war and the economy.

But because of the long, bruising Democratic campaign, McCain has gotten an early jump. Day by day, week by week, McCain has been portraying Obama as inexperienced, self-entitled and effete, a candidate coddled by a loving press corps and lacking the judgment necessary for the highest office in the land.

It's a line of attack likely to last through the fall election.

We'll make the case that Barack Obama is a wonderful new voice selling old, discredited ideas, including the most massive tax increase since Walter Mondale ran for president," said Steve Schmidt, a senior McCain adviser. "It's a combination of weakness, not being ready to be president and not being able to deliver on the things he says he will deliver on."

It's not clear how widely these criticisms have resonated, given the intense media focus up to now on the Democratic battle. The Obama campaign says that in any case they are unlikely to sway voters eager for change.

"Unlike John McCain, Barack Obama had the judgment to oppose this disastrous war from the beginning and the judgment to understand that for the sake of our security we now need to change course and bring it to a responsible conclusion," said Hari Sevugan, an Obama spokesman.

"It's clear that John McCain isn't offering anything new--his false attacks and meaningless labels are as tired as the failed Bush policies he's offering for another four years," Sevugan added.

McCain sees soft spot

But the McCain camp sees Obama's relative lack of experience and accomplishment as a major vulnerability, especially compared to a longtime senator and war hero. In a speech on his judicial philosophy last week, McCain again went after Obama for being more of a talker than a doer, as well as for what he considers his limited record of bipartisan accomplishment.

"Sen. Obama in particular likes to talk up his background as a lecturer on law, and also as someone who can work across the aisle to get things done. But when Judge Roberts was nominated, it seemed to bring out more the lecturer in Sen. Obama than it did the guy who can get things done," said McCain, accusing Obama of casting a "partisan" vote against John Roberts to be chief justice of the Supreme Court.

On Fox News Channel's "The O'Reilly Factor" on Thursday, McCain was asked what Obama's main weakness is as a candidate. "Inexperience," he replied. "I think inexperience and lack of judgment, and a record that shows that--whether it be showing a desire to sit down with the president of Iran, who has articulated his country's commitment to the extinction of the state of Israel, [or] wanting to raise people's taxes."

As Obama closes in on the Democratic nomination, the public's attention is likely to turn more to the fight between Obama and McCain. A Los Angeles Times/Bloomberg poll released Friday showed Obama leading McCain 45 percent to 40 percent, with the rest undecided. Most national polls have shown a statistical tie between the two, though polling this early often doesn't predict reliably.

Both candidates have emphasized their intention to run civil, positive campaigns. But that hasn't stopped either from taking shots.

Charles Black, McCain's senior strategist, said both McCain and Obama have presented themselves as change agents, and voters should know which candidate has the record to back it up.

"Both candidates are candidates of change, reform, and promising to work across party lines," Black said. "Guess who has a record of doing that? It's McCain and not Obama."

McCain is particularly critical of Obama for his plan to quickly withdraw troops from Iraq and his willingness to meet with the heads of rogue nations. Those positions, McCain frequently suggests, are grounded in a lack of experience, as well as poor judgment.

On "Morning Joe" on MSNBC in April, McCain, a former Navy fighter pilot, responded with derision to Obama's call for leaving a limited strike force in Iraq. "I think somebody ought to ask what in the world he's talking about, especially since he has no experience or background at all in national security affairs," McCain told host Joe Scarborough.

Message against grain?
But McCain faces hurdles in getting through to the public with that message. The Iraq War is deeply unpopular, which matches Obama's position better than McCain's. Republicans remain unpopular. Most voters believe the country is headed in the wrong direction, that economic conditions will get worse and that gas prices are likely to stay high, said Democratic pollster Anna Greenberg.

"Being the experienced person from Washington is not what voters are looking for right now," Greenberg said. "People actually want something very different. They want Washington to be different."

Some of McCain's arguments about Obama have already been tried by Clinton, who has portrayed Obama as inexperienced and unlikely to get big things done.

"Just because it didn't work so well for Hillary Clinton doesn't mean it's not going to work for John McCain," said Amy Walter, editor of the non-partisan political guide The Hotline. "What you're talking about are two different audiences."

The possible shape of a McCain-Obama contest came into stark relief last week when McCain noted that a spokesman for the Islamic militant group Hamas had said he supports Obama. The Illinois senator, who has said he would not meet with Hamas leaders, called that "a smear" and said McCain was "losing his bearings."

That, in turn, prompted the McCain campaign to issue a blistering response calling Obama's words a clumsy way of pointing to McCain's age, which is 71.

Descentralization is not Division:

RELIAL Supports Referendum in Santa Cruz, Bolivia

The referendum in Santa Cruz province, Bolivia, has a very important connotation. It is the first of a series of referendums in the country. The purpose of the referendum is to turn the administration of Bolivia, a traditionally centralized country, into a decentralized and therefore accessible and useful administration for its citizens.

The Government of Evo Morales rejects the idea of democratic decentralization. Thus, Morales is using different and dangerous tools against this initiative, generating a violent and repressive atmosphere.

Evo Morales is trying to follow the footsteps of his role model Hugo Chavez, by trying to centralize the entire state power on his own person, to accomplish his dictatorial project. For example, he annulled a resolution of the Bolivian Congress to determine a new law in favor of his own purposes. The “Movimiento Autonomista Boliviano” emerged in response of this illegal Constitution.

In countries with a solid federal tradition, such as Spain, the autonomy did not threaten the national unity but reinforced the democracy. Therefore, we support this referendum. This initiative searches for a governmental decentralization, respecting the regional autonomy characteristics, and we can find successful similar models in Europe.

To clarify confusing and false versions: the referendum respects Bolivia as a sovereign and indivisible state. This is not a division process. The Bolivarian provinces wish to decide about their autonomy, and are therefore urging the government of Evo Morales to respect their civil rights.

Thus, the members of RELIAL (Liberal Network of Latin America) invite the international community to watch and escort the referendum. The Santa Cruz citizens will express their will voting next Sunday for this legitimate referendum. And their voices must be respected.

Russia

A parade of power in Russia

Vladimir Putin watches his successor, Dmitry Medvedev, take office during a week of careful choreography

IN THE past week tanks, nuclear-bomb carriers and armoured vehicles drove up and down Tversakaya street—Moscow's main drag—and military jets whizzed past your correspondent's kitchen window, scaring children and knocking over plants. Reportedly damage caused to the roads will cost 1 billion roubles ($ ) to repair. This was in preparation for a military parade that was held on Friday May 9th on Red Square.

Such parades are held every year, but this was the first time since the cold war that Russia brandished its military hardware. The parade was supposed to celebrate victory in the second world war, but it also symbolised the return of Russia as a triumphant power in the course of eight years of Vladimir Putin's rule. This was only in part a Soviet style affair: the Lenin Mausoleum which witnessed such affairs in Soviet times was covered by a banner. It was a contemporary show.

Coming two days after the inauguration of Dmitry Medvedev as Russia's president, it was supposed to legitimise the notional transition of power from Mr Putin. As an antithesis of war, a parade also signifies predictability, order and clarity—all qualities lacking in modern Russian politics. And, short of hard facts, observers in Russia rely on the choreography of such public spectacles, the angle of the camera work, the mannerisms and facial expressions of the leaders, to interpret what is afoot.

Russian television courtiers helped to this end. They captured Mr Medvedev addressing the army while also showing Mr Putin at such an angle that the two men formed a perfect line up—a reminder of the old triptychs of Marx, Engels and Lenin. There they were: the father and the son, the founder and the follower, the great leader and his disciple. If Mr Medvedev stood slightly in front of Mr Putin at this pageant, in the real political event, the address to parliament on Thursday, Mr Putin took the centre stage and in effect gave a state-of-the-nation address.

Mr Medvedev himself told parliament that Mr Putin will play a big role in implementing his own strategy and that “no one has any doubt that our tandem, our co-operation, will only continue to strengthen.” That remains to be seen. An opinion poll suggests that, although many Russians (47%) want Mr Medvedev to have real power, only 22% think that he will get it.

Mr Medvedev and Mr Putin may stay loyal to each other, but they will struggle to contain the fierce rivalry among their apparatchiks. Mr Medvedev may remain a faithful minion for a few months, or even years, before standing aside for Mr Putin to stride back into the presidency. But the Kremlin has its own magic: there is also a chance that Mr Medvedev will try to emerge as an independent politician.

AFPBack to the future

The liberal, Westward-looking part of the Russian elite hopes for precisely that and would like to see Mr Medvedev as a beacon of a post-Putin thaw. They will try to exploit any cracks between Mr Putin and Mr Medvedev to steer the country in a more liberal direction. The new president's speeches are certainly encouraging. He talks of the supremacy of law. In his inaugural speech, he stressed the importance of civic and economic liberties for Russia's success. Unlike most of the ruling elite, he did not serve in the KGB, which may make him less prone to paranoia and conspiracy theories. On the other hand, he owes everything he has, including the presidency, to Mr Putin.

The West, encouraged by Mr Medvedev's liberal talk is hoping for a warmer relationship with Russia. But the first signals were disappointing. Hours after Mr Medvedev became president, two military attachés at the American embassy were kicked out of the country. The timing was telling. And so is a further escalation in Russia's relationship with Georgia. The Russian media has been scaremongering that Georgia is about to attack the separatist region of Abkhazia, which is supported by Russia.

Yet diplomatic expulsions aside, relations between Russia and America have been relatively peaceful of late. This week the two countries promised to co-operate in civilian nuclear technology. Mr Putin also signed a law before leaving office bringing Russia into compliance with UN resolutions on Iran's nuclear programme. And several senior politicians turned up at a leaving party for the American ambassador.

Nobody knows how the duumvirate between Mr Medvedev and Mr Putin is going to work—probably not even themselves. The bigger danger than Mr Putin being in charge is that nobody is and that Russia’s politics is determined by conflicting vested interests of different clans and individuals. A first real external crisis could expose a vacuum of power and a lack of democratic institutions. Projecting a perfectly angled image in a real life situation may be a lot harder than doing so in a parade.

Citigroup Plans to Shed About $400 Billion of Assets (Update4)

May 9 (Bloomberg) -- Citigroup Inc. Chief Executive Officer Vikram Pandit said he plans to shed about $400 billion of assets over the next three years as part of his plan to return the biggest U.S. bank to profitability.

``There will be more'' divestitures, Pandit, 51, told shareholders at a meeting today at the bank's New York headquarters. The company, which lost $5.1 billion in the first quarter, has recorded more than $40 billion of credit losses and writedowns since the subprime mortgage market collapsed last year.

``They need to pare back the parts that are broken,'' said Barry James, who manages more than $2 billion as president of James Investment Research in Xenia, Ohio, including Citigroup bonds. ``He's a cautious guy. He's not going to do anything rash.''

Pandit, who succeeded Charles O. ``Chuck'' Prince in December, has already announced plans that would reduce the bank's $2.2 trillion of assets by at least $65 billion, according to Susan Roth Katzke at Credit Suisse Group. Last week, he agreed to sell employee-benefit joint venture CitiStreet LLC. In April, the bank opted to sell the Diners Club International credit-card payment network and CitiCapital, a provider of leases and financing for industries including health care and construction.

The bank is also poised to dispose of more than $200 billion of loans and securities to shore up capital, a person with knowledge of the plan said March 24. Pandit will probably let them pay off as they come due, rather than sell them at a loss, the person said. The stakes may include $49 billion of securities the bank had to take on when it bailed out seven off- balance-sheet investment funds.

Tier 1 Capital

Under Prince, Citigroup's assets increased by $689 billion from 2005 through 2007, an amount larger than the entire balance sheet of Wells Fargo & Co., the fifth-biggest U.S. bank. Prince, 58, was forced to resign last November as the bank headed for a record fourth-quarter loss of almost $10 billion.

Selling assets that aren't trading at depressed prices would bolster Citigroup's so-called Tier 1 capital, the core measure of solvency demanded by regulators.

Under U.S. rules, banks have to set aside sufficient Tier 1 capital, which includes common stock and retained earnings, to provide a cushion that a bank would have to burn through before investors in Tier 2 capital -- mostly subordinated debt -- or depositors would suffer losses.

Weill's Legacy

``He's carting off the non-significant operations and raising money so that he can reinvest it in the business he's in, which is loaning money,'' said Robert Olstein, chief investment officer of Purchase, New York-based Olstein Capital Management, which owns Citigroup shares.

Pandit has raised $44 billion in capital, more than any financial-services company, through stock sales and private offerings to investment funds controlled by foreign governments including Abu Dhabi.

Citigroup fell 5 cents to $24.25 at 10:30 a.m. in New York Stock Exchange composite trading. The shares have plunged 54 percent on the New York Stock Exchange since the end of 2006 to the lowest in almost a decade, erasing gains made under former Chairman and CEO Sanford ``Sandy'' Weill. Weill, who built the company through a series of acquisitions over 17 years, stepped down in 2003 and tapped Prince as his successor.

Pandit told investors today that he expects to deliver return on equity, a gauge of how effectively the bank reinvests earnings, of 18 percent to 20 percent ``over time.'' The firm produced a return of 19.4 percent on average from 2001 through 2006. The measure plunged to 3 percent last year.

Morgan Stanley Team

He has already changed managers, putting former Morgan Stanley colleague John Havens in charge of trading and investment banking, moving U.S. consumer head Steve Freiberg to head a new credit-card division and recruiting former Wells Fargo & Co. executive Terri Dial to oversee consumer banking in the U.S.

The bank slashed the quarterly dividend by 41 percent in January to 32 cents a share, the first drop since the early 1990s. Oppenheimer & Co.'s Meredith Whitney has said the bank might have to cut the dividend again to bolster capital as losses escalate.

U.S. March Trade Deficit Narrowed More Than Forecast (Update2)

May 9 (Bloomberg) -- The U.S. trade deficit narrowed more than forecast in March as imports dropped by the most in more than six years, reflecting the economic slowdown.

The gap shrank to $58.2 billion, the lowest this year, from a revised $61.7 billion in February, the Commerce Department said today in Washington. The shortfall with China was the smallest in two years.

Americans bought fewer automobiles and less crude oil, furniture and communications equipment from overseas as the economy grew at the slowest pace since 2001. Exports fell for the first time in more than a year, indicating economies abroad may also be starting to cool.

``The report did not reflect well on the health of the underlying economy given that it was largely based on imports falling more than exports,'' said Russell Price, senior economist at H&R Block Financial Advisors in Detroit, who forecast a gap of $59 billion. A weaker dollar should still cause the shortfall to diminish further by fueling demand for U.S. products, he said.

Economists forecast the trade gap would narrow to $61 billion from a previously reported $62.3 billion, according to the median of 71 economists surveyed by Bloomberg News. Forecasts ranged from $59 billion to $64.9 billion.

The dollar, which fell earlier today, remained lower after the figures. The U.S. currency was at $1.5447 per euro at 8:58 a.m. in New York, from $1.5393 late yesterday.

Inflation Adjusted

After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit shrank to $47.2 billion, the lowest since November 2003, from $50.9 billion.

Imports decreased 2.9 percent, the most since December 2001, to $206.7 billion. Purchases of crude oil dropped, even as the average price for the month jumped to a record $89.85. The quantity of petroleum bought from overseas was the lowest since February 2007.

The trade gap may not be able to keep narrowing as oil prices continue to surge. Crude oil prices jumped to over $125 a barrel today, the highest ever.

Demand for goods from China suffered the biggest slump last month, helping to narrow the trade gap with that nation to $16.1 billion, the smallest in two years. At the same time, exports to China were the second-highest ever.

Near Record

Total exports fell 1.7 percent to $148.5 billion, driven by a decline in sales of commercial aircraft, autos and petroleum products. Even with the drop, the first since February 2007, exports were still the second-highest on record.

Demand for American goods from the European Union and from South and Central America set records in March.

As the U.S. economy teeters on the brink of a recession, trading partners such as China and Brazil continue to grow at faster rates.

Brazil's economy grew 6.2 percent in the fourth quarter from a year earlier and India grew 8.4 percent. China expanded 10.6 percent in the year ended in March.

By comparison, the U.S. economy grew 2.5 percent in the first quarter compared with the same time last year. The 0.6 percent growth rate over the last two quarters was the slowest since the 2001 recession.

Emerging Markets

Growth in emerging economies is boosting demand and prices for commodities such as oil. This in turn is leading to increased sales of American-made oil-drilling rigs and construction equipment as countries seek to tap natural resources and modernize highways and factories.

Brazil is preparing to tap the biggest crude-oil discovery in the Western Hemisphere in three decades, which lies just off its Atlantic coast. Petroleo Brasileiro SA, Brazil's state oil company, is in talks with Houston-based Transocean Inc. to extend offshore drilling contracts.

A lower dollar, by making American goods cheaper to overseas buyers, is also boosting exports. The dollar was down 9 percent against a trade-weighted basket of currencies from the U.S.'s biggest trading partners in the 12 months ended in March.

Cisco Systems Inc., the world's biggest maker of networking equipment, is among the companies benefiting from gains abroad. The San Jose, California-based company posted sales growth of 10 percent in the third quarter, even as U.S. sales grew only 5 percent.

``Asia-Pacific was very strong,'' Cisco's Chief Executive Officer John Chambers said in a Bloomberg Television interview May 7. ``China and India are on fire.''

Still, record exports alone won't prevent the economy from shrinking. Harvard University economist Martin Feldstein, a member of the committee that determines when contractions begin and end, said May 6 in an interview with Bloomberg Television that the U.S. economy is ``sliding into a recession.''

An improvement in the trade gap may also come from a continued slowdown in imports as consumers, facing falling home values and rising fuel bills, restrain spending. U.S. companies are also investing less in foreign-made equipment as concern grows that consumer demand will continue to weaken.

Oil Climbs Above $126 to Record as Dollar Weakens Against Euro

May 9 (Bloomberg) -- Crude oil rose above $126 a barrel in New York to a record as the dollar weakened against the euro and yen, prompting investors to buy commodities.

Oil climbed to a record for a fifth day as the euro strengthened on signs the European Central Bank will keep rates at a six-year high to cut inflation. Dollar-based commodities like oil are often bought to counter the currency's weakness. Nigerian output fell to the lowest this decade in April because of a strike and attacks on oil installations.

``Oil is a safe haven because of the weak dollar and how badly the financial sector has been doing,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``There are also geopolitical concerns about places like Nigeria and Venezuela that are propping prices up.''

Crude oil for June delivery rose $1.63, or 1.3 percent, to $125.32 a barrel at 9:58 a.m. on the New York Mercantile Exchange. The contract surged to a record $126.20 today. Prices are up 7.7 percent this week, the biggest weekly gain in more than a year. Futures are more than double from a year ago.

Brent crude oil for June settlement climbed $2.36, or 1.9 percent, to $125.20 a barrel on London's ICE Futures Europe exchange. The contract touched a record $125.90 today.

The dollar dropped 10 percent since Sept. 18, when the Federal Reserve began cutting rates to ease financial-market strains and stave off a recession. The U.S. central bank cut rates seven times while the ECB has left rates unchanged.

Fed Policy

``Fed policy is accommodating the rise in energy prices,'' said Bill O'Grady, director of fundamental futures research at Wachovia Securities in St. Louis. ``The Fed and federal government are putting more liquidity in people's pockets, which is being spent on expensive oil.''

The U.S. government started sending $117 billion in tax rebate checks last week as part of its fiscal stimulus plan.

Goldman Sachs analyst Arjun N. Murti wrote in a report on May 6 that ``the possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months.'' Murti first wrote of a ``super spike'' in March 2005, predicting crude may trade between $50 and $105 a barrel through 2009.

``There's been a paradox, prices have surged over the last week while we've had bearish headlines,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. ``Clearly there's been a lot of fund buying on the back of Goldman's super-spike repot. They were right on the nose last time.''

The Organization of Petroleum Exporting Countries, the producer of more than 40 percent of the world's oil, may meet before September to consider increasing output in an attempt to rein in record crude-oil prices, Libya's Shokri Ghanem said.

``We would consider among other options the possibility of increasing output as a way to ensure market stability,'' Ghanem, who is the chairman of Libya's National Oil Corp., said in a telephone interview today from Tripoli.

U.S. Stocks Decline on AIG's Loss; Delta Retreats on Record Oil

May 9 (Bloomberg) -- U.S. stocks fell, sending the market to its first weekly drop in a month, as American International Group Inc.'s plan to raise $12.5 billion to cover writedowns renewed concern more losses are coming in the financial industry.

AIG, the biggest insurer, tumbled to a two-month low and posted the steepest decline in the Dow Jones Industrial Average. Delta Air Lines Inc. and Carnival Corp. led declines among companies hurt by higher fuel costs as oil climbed to a record. Mylan Inc., the largest U.S. maker of generic drugs, retreated the most since February after posting a wider loss. Tesoro Corp. led energy shares lower even as crude advanced after Goldman Sachs Group Inc. said refiners are facing ``liquidity concerns.''

The Standard & Poor's 500 Index sank 9.47, or 0.7 percent, to 1,388.21 at 10:31 a.m. in New York, giving it a 1.8 percent decline this week. The Dow slid 103.15, or 0.8 percent, to 12,763.63. The Nasdaq Composite Index lost 12.08, or 0.5 percent, to 2,439.16. More than two stocks fell for each that rose on the New York Stock Exchange.

``We're still cautious on the financials,'' said Julie Van Cleave, who oversees $4.5 billion as head of large U.S. growth stocks at Deutsche Asset Management in Milwaukee. ``People have been looking for the easy turn. It will take another couple of quarters before we're at a point where we feel more comfortable making a bigger allocation.''

The S&P 500 is down 5.7 percent this year as losses at the world's largest financial firms climb to more than $321 billion following the collapse of the subprime mortgage market. Profits have slumped 18 percent on average for the 420 companies in the index that have reported first-quarter results so far, led by an 86 percent decline at financial companies, data compiled by Bloomberg show.

Consumer Shares Outperform

While stocks fell this week, the S&P 500 is still up 9 percent since sinking to a 19-month low in March, as some investors bet the U.S. won't enter a recession. The S&P 500 Consumer Discretionary Index, a measure of companies reliant on Americans' disposable income, retreated 0.2 percent today, less than the S&P 500's drop.

AIG tumbled $2.67, or 6.1 percent, to $41.48. The insurer reported a first-quarter net loss of $7.81 billion, compared with earnings of $4.13 billion a year earlier. AIG wrote down contracts it had sold to protect investors by $9.11 billion in the quarter to comply with rules that require the company to estimate their present market value. Standard & Poor's and Fitch Ratings cut the company's credit grades after the announcement.

Delta Air Lines dropped 2.6 percent to $7.37. Crude oil rose to a record above $126 a barrel, set for the biggest weekly gain in more than a year, on speculation Nigerian export cuts may curb U.S. supplies during the peak summer driving season.

Carnival, Mylan

Carnival, the largest cruise-line company, slumped 1.6 percent to $39.81.

Fuel expenses for the U.S. major airlines now represent about 40 percent of total costs for the industry, according to a research report by Merrill Lynch & Co. distributed yesterday.

Tesoro Corp., the largest refiner in the U.S. West, slid 6.4 percent to $21.74. Valero Energy Corp., the biggest U.S. refiner, slumped 2.3 percent to $45.21 after Goldman cut second-quarter profit estimates.

Mylan fell 8.3 percent to $11.43, the second-biggest drop in the S&P 500. The largest U.S. maker of generic medicines reported a wider first-quarter loss on costs tied to the $6.9 billion purchase of Merck KGaA's generics division in October.

McDonald's, Burger King

McDonald's Corp. fell 45 cents to $59.32. Goldman Sachs Group Inc. removed the world's largest restaurant company from its ``conviction buy list'' and added Burger King Holdings Inc. McDonald's had risen 16 percent since being added to the list June 12, and additional gains may be ``muted'' in the coming months, Goldman analysts led by Steven T. Kron wrote in a report. Burger King may benefit from price increases and extended summer hours, Goldman said.

Burger King fell 37 cents to $27.80.

Citigroup Inc., the biggest U.S. bank by assets, slipped 7 cents to $24.23 on plans to ``wind down'' about $400 billion of assets as part of a program to return to profitability. The bank announced the wind-down today in a presentation posted on the company's Web site. The New York-based company, which lost $5.1 billion in the first quarter, has recorded more than $40 billion of credit losses and writedowns since the subprime mortgage market collapsed last year.

Priceline.com

Priceline.com Inc. surged $15.63, or 13 percent, to $139.41. The Internet travel agency featuring William Shatner as its spokesman said annual profit, excluding some items, may be as much as $5.65 a share. That topped the average analyst estimate of $5.09 a share. First-quarter revenue gained 34 percent as international sales more than doubled, the company said.

Stocks failed to pare losses after the government said the U.S. trade deficit narrowed more than forecast in March as imports dropped by the most in more than six years, reflecting the economic slowdown. The gap shrank to $58.2 billion, the lowest this year, from a revised $61.7 billion in February, the Commerce Department said.

Presidential Pariah

By Victor Davis Hanson

We are in one of the longest presidential campaigns in modern memory -- and haven't even started focusing on the general election.

It's been enough to drive most of us mad, but if there's one person in particular suffering the most, it may be President Bush.

It's been noted here before that we have not had an election since 1952 in which an incumbent president or vice president was not running in at least partial defense of an existing administration's record.

That means Bush is not just a lame duck but an easy target for all three current candidates -- none of whom have any investment in the president's legacy.

Consider that the last president in a similar position was Harry Truman. He left office with an approval rating in the 20s, and it took years before historians revised the standard negative and mostly unfair view of him.

When there is no incumbent in a long race, almost everything of the last four years becomes fair and uncontested game. In 2004, Bush defended his record for months on the stump; now it has become almost second nature for all three candidates to denounce it daily.

John McCain has distanced himself from Bush as much as he can, even as his Democratic opponents dub him John McBush -- when they are not outdoing each other in their denunciation of the president.

Last week, I asked a fierce Bush critic what he thought were the current unemployment rate, the mortgage default rate, the latest economic growth figures, interest rates and the status of the stock market.

He blurted out the common campaign pessimism: "Recession! Worst since the Depression!"

Then he scoffed when I suggested that the answer was really a 5 percent joblessness rate in April that was lower than the March figure; 95 to 96 percent of mortgages not entering foreclosure in this year's first quarter; .6 percent growth during the quarter (weak, but not recession level); historically low interest rates; and sky-high stock market prices.

There are serious problems -- high fuel costs, rising food prices, staggering foreign debt, unfunded entitlements and annual deficits. Yet a president or vice president running for office (and covered incessantly by the media) would at least make the argument that there is a lot of good news, and that the bad that offsets it could be shared by a lot of culpable parties, from the Congress to the way we, the public, have been doing business for the last 20 years.

Bush, like Truman, will have to leave his final assessment for posterity. But for a variety of historic reasons as well as his own self-interest, Bush should at least take his now-unpopular case to the people, with more press conferences, public addresses, stump speeches and one-on-one interviews.

Bush's own legacy will be affected by who succeeds him. Ronald Reagan received great press after leaving office in part because a Republican followed him for four years -- quite the opposite from the senior George Bush who was thrown out of office in 1992 and blamed for assorted sins the next eight years. Likewise, compare the image of Lyndon Johnson, Gerald Ford, Jimmy Carter and Bill Clinton when a president from the opposite party followed each into office.

Second, public perceptions, such as ongoing consumer confidence or support for the war, can dramatically affect policy success or failure. Defending past decisions can sometimes improve their outcomes.

Third, it would elevate the arguments of all three candidates if someone could remind them that energy and food problems, foreign policy crises and economic woes usually involve bad and worse choices.

The American people are more interested in exactly how they are going to improve things, rather than hearing each hour how our collective problems are simply the fault of one man. Searing "Bush did it" into the public conscious won't resolve our energy, economic or foreign policy challenges.

The truth is that America is providing unprecedented amounts of money to address the AIDS epidemic in Africa. Tax cuts brought in greater, not less total revenue. International trade agreements created more, not fewer, jobs. Security measures at home, and losses suffered by terrorists abroad, in part explain the absence of a second 9/11.

And drilling in ANWR and off the coasts and building more nuclear power plants, refineries, and clean coal plants -- if the Congress would only approve -- could provide a short-term mitigation of energy prices until we reach a new generation of clean-burning and renewable fuels.

George Bush could learn from "Give 'em Hell, Harry." A disliked Truman never went silent into the night, but defended his record until the very end -- and was ultimately rewarded for it.

It's Obama, Warts and All

By KARL ROVE

Sens. Hillary Clinton and Barack Obama each took a state Tuesday. But the result was a damaging loss for the woman who was once the overwhelming front-runner for the Democratic nomination. Here are some observations on the race:

- Mr. Obama is now the prohibitive favorite. Tuesday night, he took at least 94 delegates to Mrs. Clinton's 75 and leads the former First Lady by 176 delegates in the AP tabulation. He has 1,840 of the 2,025 delegates needed to win. Mr. Obama needs only 185 – or 38% – of the 486 outstanding delegates (217 to be elected in the six remaining contests, and 269 superdelegates yet to endorse a candidate). Mrs. Clinton needs 341, or 70% of those left to be awarded.

AP

Barack Obama arrives at a primary election night rally in North Carolina, May 6, 2008.

Mr. Obama understands this. On Tuesday night, he added a big dollop of general election themes and pre-emptive defenses against coming attacks to his stump speech.

- Mrs. Clinton may battle until June and possibly until the convention in August. There's nothing Mr. Obama can or should do about it. After a long, bitter struggle, losing candidates often look for reasons to feel aggrieved. There is no reason to give her one. No pressure from Mr. Obama or party Chairman Howard Dean is better than pushing her out of the race.

- The Democrats' refusal to seat the Florida and Michigan delegations at their convention is an unresolved problem. If they insist on not seating these delegations, Democrats risk alienating voters in states with 44 of the 270 electoral votes needed to win the White House. And here Mr. Obama is at greater risk than Mrs. Clinton, especially in Florida. He trails John McCain badly in Sunshine State polls today, while Mrs. Clinton leads Mr. McCain there.

- The length of the Democratic contest has been – in some ways – a plus for the party. The AP estimates that more than 3.5 million new voters registered during the competitive primary season. And the hundreds of millions of dollars spent energizing Democratic turnout will leave organization and energy in place for November. Mr. Obama is a better candidate for having been battle tested. And Mr. McCain has to fight hard for attention. He's mentioned in less than 20% of the coverage in recent months, while Mr. Obama and Mrs. Clinton are talked about in 60% to 70% of the coverage.

- The length of the Democratic contest has been – in some ways – a minus. It has revealed weaknesses in Mr. Obama and Mrs. Clinton. Mrs. Clinton came across as calculating, contrived, stiff and self-concerned. Mr. Obama is increasingly seen not as the Second Coming, but as a typical liberal Chicago pol with a thin record, little experience, an array of troubling relationships and, to top it off, elitist sensibilities. Nominating him will now test the thesis that only a Democrat running as a moderate can win the White House.

The primary has created a deep fissure in Democratic ranks: blue collar, less affluent, less educated voters versus the white wine crowd of academics and upscale professionals (along with blacks and young people). Mr. Obama runs behind Mrs. Clinton's numbers when matched against Mr. McCain in key industrial battleground states. Less than half of Mrs. Clinton's backers in Indiana and North Carolina say they would support Mr. Obama if he were the nominee. In the most recent Fox News poll, two-and-a-half times as many Democrats break for Mr. McCain (15%) as Republicans defect to Mrs. Clinton (6%) and nearly twice as many Democrats support Mr. McCain (22%) as Republicans back Mr. Obama (13%). These "McCainocrat" defections could hurt badly.

State and local Democrats are realizing the toxicity of their probable national ticket. Democrats running in special congressional races recently in Louisiana and Mississippi positioned themselves as pro-life, pro-gun social conservatives and disavowed Mr. Obama. The Louisiana Democrat won his race on Saturday and said he "has not endorsed any national politician." The Mississippi Democrat is facing a runoff on May 13 and specifically denied that Mr. Obama had endorsed his campaign. Not exactly profiles in unity.

- As much as Mr. Obama's cheerleaders in the media hate it, Rev. Jeremiah Wright remains a large general-election challenge for Mr. Obama. Not only did Mr. Obama admit on "Fox News Sunday" that Mr. Wright was a legitimate issue, voters agree. Mr. Obama's favorable ratings have dropped since Mr. Wright emerged as an issue. More than half of Mrs. Clinton's supporters say it is a meaningful reflection on Mr. Obama's character and judgment.

- This will be a very difficult year for Republicans. The economy's shaky state, an unpopular war, and the natural desire for partisan change after eight years of one party in the White House have helped tilt the balance to the Democrats.

Mr. Obama is significantly weaker today than he was three months ago, but Democrats have the upper hand in November. They're beatable. But it's nonsense to think this year is going to be a replay of George H.W. Bush versus Michael Dukakis or Richard Nixon versus George McGovern.

- Mr. McCain is very competitive. He is the best candidate Republicans could have picked in this environment. With the GOP brand low, his appeal to moderates and independents becomes even more crucial.

My analysis of individual state polls shows that today Mr. McCain would win 241 Electoral College votes to Mr. Obama's 217, with 80 votes in toss-up states where neither candidate has more than a 3% lead. Ironically, Mrs. Clinton now leads Mr. McCain with 251 electoral votes to his 203 with 84 in toss-up states. This is the first time she's led Mr. McCain since I began tracking state-by-state results in early March.

Mr. McCain is realistic enough to know he will fall behind Mr. Obama once the Democratic nomination is settled. He's steeled himself and his team for that moment. And he's comforted by a belief that there will be plenty of time to recapture the lead. Mr. McCain saw Gerald Ford come from 30 points down to lose narrowly to Jimmy Carter in 1976, and watched George H.W. Bush overcome a 17-point deficit in the summer to hammer Michael Dukakis in the fall of 1988.

- The battlegrounds will look familiar. It will be the industrial heartland from Pennsylvania to Wisconsin, minus Indiana (Republican) and Illinois (Democrat); the western edge of the Midwest from Minnesota south to Missouri; Colorado, New Mexico and Nevada in the Rocky Mountains; Florida; and New Hampshire.

Mr. Obama will argue he puts Virginia and North Carolina into play (doubtful), and may make an attempt at winning one or two of Nebraska's electoral votes (it awards its electoral votes by congressional district). Mr. McCain will say he can put New Jersey and Delaware and part of Maine (it splits its vote like Nebraska) in play. But it's doubtful he'll win in Oregon or Washington State, although he believes he can.

- Almost everything we think we know right now will be revised and even overturned during the next six months. This has been a race in which conventional wisdom has often been proven wrong. The improbable or thought-to-be impossible has happened with regularity. It has created a boom market for punditry and opinion offering, and one of the grandest possible spectacles for political junkies in decades. Hold on to your hat. It's going to be one heck of a ride through Nov. 4.

Mr. Rove is the former senior adviser and deputy chief of staff to President George W. Bush.

Gunmen Kill Chief of Mexico’s Police

MEXICO CITY — Gunmen assassinated the acting chief of Mexico’s federal police early Thursday morning in the most brazen attack so far in the year-and-a-half-old struggle between the government and organized crime gangs.

Omar Torres/Agence France-Presse — Getty Images

Edgar Millan Gomez, the acting chief of Mexico's federal police, in January.

Mexican police have been under constant attack since President Felipe Calderón took office in December 2007 and launched an offensive against drug cartels who had corrupted the municipal police forces and local officials in several towns along the border and on both coasts.

Since then, Mr. Calderón has sent thousands of federal agents and troops into those areas to establish law and order, provoking a powerful backlash from drug cartels, who have killed some 200 officers, among them at least 30 federal agents.

The police chief, Edgar Millán Gómez, was ambushed by several men wearing rubber gloves and carrying weapons as he entered his apartment building in the Guerrero neighborhood of Mexico City with two bodyguards at 2:30 a.m. He was hit nine times in the chest and one hand. He died a few hours later at Metropolitan Hospital.

Commander Millán was the highest ranking official to be killed since President Calderón’s campaign against drug dealers began. Intelligence officials said it is highly likely he was murdered in retribution for the arrest on Jan. 21 of Alfredo Beltrán Leyva, one of the leaders of a cartel based in Sinaloa state.

“It was in response to his role in the arrest,” said one intelligence officer, speaking on the condition of anonymity because he was not authorized to release classified information. “It’s the worst casualty we have suffered so far.”

Commander Millán, 41, had served for the last year as the federal police official in charge of the anti-drug operations throughout the country. A month ago, he was promoted to become the acting chief of the entire force.

His death was the tenth assassination of a federal police official in the last two months. Last week, gunmen also shot and killed the head of the organized crime division in the public security ministry, Roberto Velasco Bravo.

One of Mr. Millán’s bodyguards, though wounded, managed to wrestle an attacker to the ground and arrest him. The man, Alejandro Ramírez Báez, 34, was wearing rubber gloves and carried a pistol with a silencer, the police said. Shells from an assault rifle were also found at the scene. The police said Mr. Ramírez has a criminal record, having been convicted twice for stealing cars. Still, it remained unclear who, if anyone, had hired him as an assassin, they said.

Mr. Millán, 41, started his carreer in Mexico’s intelligence service and then switched to the newly formed Federal Agency of Investigation in 2001, where he rose quickly to become the chief of the kidnapping division. He dismantled several notorious kidnapping rings and managed the successful release of Rubén Omar Romano, a well-known professional soccer coach.

Since 2006, he had overseen regional deployments of federal officers, even as a number of federal police forces were consolidated and given more authority. Last month, he took over the reins of the reorganized federal police as acting chief, when the previous chief was promoted, officials said.

“Early this morning, Mexico lost one of its bravest men, a police professional at the service of the nation,” the public security secretary, Genaro García Luna, said in a statement.

Russia's new president

Enter, pursued by a new bear

The West should hang tough with President Dmitry Medvedev

IT HAS been a busy week in Moscow. First Dmitry Medvedev was inaugurated president. A day later his predecessor, Vladimir Putin, became his new prime minister. Then on May 9th Moscow planned to mark the annual Victory Day celebrations with the first parade of tanks and nuclear missiles through Red Square since the end of the cold war. What should the watching West make of all this?

One of these three events seems to offer more hope than the other two. Mr Medvedev is the first Russian leader since the tsars to have come from neither the security services nor the old Communist Party. And judging by what he says, including in his inaugural speech, he has some liberal instincts and an understanding of why the rule of law matters. Yet he also arrives in office weighed down by two troubling burdens.

The first is Mr Putin. Moscow has been rife with speculation about who will really be in charge ever since Mr Putin chose his long-time protégé and lawyer as his successor. For now, the answer appears to be either that nobody knows, or that it will still be Mr Putin. In the run-up to the inauguration, Mr Medvedev has been far less visible than Mr Putin. Even at this week's ceremony, Mr Putin seemed the dominant figure. This is by no means a real transfer of power (see article).

Mr Medvedev's second burden is his inheritance. Mr Putin became acting president, on the last day of 1999, at an auspicious time for Russia. The economy was booming after the 1998 devaluation, oil prices were climbing and ordinary Russians (and the outside world) seemed relieved to have stability and order in place of the chaos that marked the final years of Boris Yeltsin's presidency. In contrast, Mr Medvedev comes in when the economic outlook is gloomier and inflation is soaring. The oil price seems unlikely to keep going up and there are ominous signs that Russia is having serious problems sustaining its oil output (see article). Moreover, Russia's relations with the West have hit new lows—which may explain Moscow's drum-beating Victory Day parade.

Do bears shoot in the woods?

Despite this, many in the West are itching to extend an olive branch to the new president. The Kremlin's power is immense, so even if Mr Medvedev starts in Mr Putin's shadow, he may in time emerge from it. It is always tempting to try a soft approach on a new Russian president, just as it was with Mr Putin. But this time, Western political leaders should be far more cautious. There is no sign that Russia is moving in a more liberal and democratic direction at home, or that it is going to be more accommodating to the West abroad. It seems far more likely that it will continue to play the divide-and-rule game started by Mr Putin, who deftly exploited differences among European Union leaders, in particular.

The best approach to Mr Medvedev will be to heed what he does, not what he says. For example, if he gave parole to Mikhail Khodorkovsky, an oligarch imprisoned without even a pretence at a fair trial, dropped Russia's belligerent posture towards Georgia, began to open up state-run television to alternative voices, and initiated a crackdown on corruption, then it would be right to respond in a friendly fashion. But hard evidence is needed before taking such a step. Above all, Western leaders must be united. Medved means bear in Russian—and the worst way to respond to a bear is to display overt weakness or to scarper in different directions.

CAPITALISMO BUENO Y MALO

REFLEXIONES LIBERTARIAS
CAPITALISMO BUENO Y MALO
Ricardo Valenzuela

Santa Fe, N.M. - MARSOUND, LLC anuncia el siguiente episodio de su serie; “tendamos puentes no murallas.” En interesante entrevista con Emilio Goicoechea, embajador mexicano en Canadá, discute el desarrollo económico, inmigración, el crecimiento de Norteamérica y será dada a conocer vía Internet esta semana para luego pasar a la interesante cita que hemos tenido con mi gran amigo y mejor economista, Roberto Salinas León.

Otras entrevistas incluyen a personal asignado a la presidencia de los E.E.U.U. en las administraciones de Clinton, Reagan y Bush, expertos mundiales en migración, gobernadores de estados fronterizos, representantes de México en las negociaciones de NAFTA, el vicecónsul de México en Arizona, economistas de prestigio mundial y líderes políticos de ambos países.

Eugenio Elorduy, gobernador de Baja California, afirma con entusiasmo: "Necesitamos educar al mundo en cuanto a las oportunidades que ofrece la frontera. MARSOUND ha iniciado este proceso de una manera única y de gran alcance. Creo que éste podría ser el milagro económico de los próximos 10 años!"

La semana pasada, en la conferencia de promoción para la competitividad efectuada en Hermosillo, Carlos Slim, ya el hombre mas rico del mundo, sorprendía elaborando aun más el concepto al afirmar se debería de trabajar sobre un Plan Maestro para el desarrollo integral de toda la zona fronteriza, la que el describe con un potencial infinito. El PIB de los estados de zona fronteriza de los EU sumado con los de México, convertirían a la región en la segunda economía del mundo, cerraba Slim su charla.

En discusiones privadas Slim, realmente entusiasmado, continuaba cincelando una interesante visión en la cual, estas entidades tuvieran una especial autonomía que los pudiera llevar a convertir la región en una primera avanzada para una zona libre estilo Hong Kong, Qatar, Dubai en los cuales, sus sistemas impositivos, entre otras cosas, se han convertido en el motor de su impresionante desarrollo.

Es interesante escuchar al hombre que representa el mal capitalismo mexicano en toda su expresión y, más impactante, al gran enemigo de la competencia, en una reunión de competitividad el abogar por algo similar a una zona libre fronteriza que la caracterice por todo lo contrario. Es decir, una zona en la cual prive los mercados y el buen capitalismo que tan bien define Carlos Alberto Montaner cuando escribe comentando el nuevo libro: “Capitalismo Bueno y Capitalismo Malo.”

“No es serio firmar compromisos solemnes, como la Carta Democrática, y luego ignorar olímpicamente lo que está sucediendo en Venezuela, Bolivia o Ecuador donde las instituciones republicanas, frágil sustento del Estado de derecho, están siendo sistemáticamente demolidas desde el poder.

¿Cómo pudiera el señor Insulza ganarse honradamente el pan al frente de una OEA modesta, pero razonablemente útil?

Podría convocar a los presidentes de América Latina para debatir el gran tema moral, político y económico que sacude a toda la región desde el Río Grande a la Patagonia: ¿por qué los latinoamericanos constituyen el segmento más pobre y atrasado de Occidente? ¿Por qué la mitad de la población latinoamericana vive en la miseria? ¿Por qué el capitalismo latinoamericano ha dado tan pobres resultados si se contrasta, por ejemplo, con el éxito de los países escandinavos o con Canadá y Estados Unidos, las otras dos expresiones europeas del otro lado del Atlántico?”

Pero a Carlos Alberto le llegaba de inmediato respuesta de uno de los nuevos idiotas latinoamericanos, en carta que le dirige el Presidente de Ecuador para llamarlo “apóstata.”

Pero todas esas preguntas ya fueron respondidas en un excelente libro, Good Capitalism/Bad Capitalism, escrito por los economistas William J. Baumol, Robert E. Litan y Carl J. Schramm. El título agrega algo más para explicar de qué se trata: "la economía del crecimiento y la prosperidad". Y la tesis es sencilla de entender: el hecho de que existan propiedad privada y mercado no necesariamente genera desarrollo. En Haití y en Holanda hay mercado y propiedad privada, pero en un país la gente se muere de hambre y en el otro las preocupaciones son la obesidad y la longevidad excesiva.

De acuerdo a los autores hay cuatro capitalismos: 1) El guiado por el Estado donde los funcionarios escogen a ganadores o a los desdichados perdedores; 2) El capitalismo oligárquico, donde un pequeño grupo de gentes adineradas pone el Estado a su servicio y convierte la actividad económica en un coto cerrado para su beneficio; 3) El capitalismo de las grandes empresas, donde el poder de los gigantes económicos hace girar la organización de la sociedad en provecho de sus ubicuos intereses.

Por último- 4) El capitalismo democrático, donde el Estado no asigna privilegios y se limita a crear las condiciones para el surgimiento de empresas que deben sustentarse en mercados abiertos y competitivos, gobernados por la agónica búsqueda de innovaciones, calidad y mejores precios con los que conquistar a los consumidores.

Éste último es el "buen capitalismo" de que habla el libro, y aunque no existe en estado puro en ninguna parte, es evidente la relación entre este modelo de producción y el buen desempeño económico. De diversas maneras y grados, esto es lo que sucede en las veinte naciones más prósperas y desarrolladas del planeta. Los autores no prometen que el capitalismo empresarial traerá un mundo más justo y equitativo, e incluso defienden las virtudes de los desequilibrios como parte del impulso destructor que regenera constantemente al mercado, pero sí advierten que en las naciones que lo practican se observan menores desigualdades.

En realidad, Good Capitalism/Bad Capitalism no dice nada radicalmente nuevo, pero aporta algo muy importante al debate: una manera muy ordenada de presentar los argumentos, y lo hace sin recurrir a la jerga complicada de la economía. Es un libro para profanos. Por ejemplo, con tres o cuatro excepciones, especial para los presidentes latinoamericanos. Ojalá Insulza se anime a leerles el texto despacito y en voz alta. Se beneficiarían. Nunca es tarde para aprender un par de cosas.

Michael Orshan, ex Secretario de Ciencia y Tecnología de Nuevo México y cofundador de MARSAUND afirma: “Las políticas de inmigración reflejan la manera que las poblaciones deciden sobre cómo estructuran sus países. Los Estados Unidos están experimentando ese proceso y es lo que refleja en la frontera.”

Deseamos explicar la magnitud de cómo esas decisiones afectarán nuestro futuro en una zona ideal para establecer ese buen capitalismo, pues podemos y debemos hacer historia desterrando el fatal capitalismo mexicano basado en esteroides estatales, para establecer esa zona de libertad y prosperidad para todos.

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