CHARLIE ROSE: All right. That segues perfectly into this. So, but I’m interested…
SIMON SCHAMA: Yes.
CHARLIE ROSE: Became passionately in love with America as much as the Americans. What did you fall in love with?
SIMON SCHAMA: Oh, you know, the division of powers. Isn’t that the dullest question — the dullest answer to the most interesting question? By which I mean the liveliness of American politics.
Another, more helpful way of looking at what is happening is to see it as a change in perception of where risk lies. Of course, there is risk in equities ”“ how could there not be with the prospect of the once-mighty General Motors filing for bankruptcy? But there is also risk in bonds, including dollar bonds issued by AAA governments. So, as you can see in the graphs, the dollar/sterling rate has come sharply back, reflecting a change in the relative perception of risk between the two countries. More significant still has been the rise in the interest rate on 10-year bonds issued by the US, the UK and eurozone governments. As you can see, the interest rate on 10-year US bonds spun down from about 4 per cent in the middle of last year, to close to 2 per cent at the turn of the year. Now it is heading back to 4 per cent again. Those are astounding swings. If you have bought at the right moment last summer, and then sold at the right moment, you could just about have doubled your money. December buyers would now be facing a large loss.
Now look ahead. What will happen over the next decade, particularly in the US? Tax revenues have collapsed, while spending has soared, as the third graph shows. The US federal government is raising only about 55 cents in taxation for every dollar it spends. The rest has to be borrowed, either from foreign countries such as China and Japan, or by artificially creating the stuff by borrowing from the US Federal Reserve system. In the latter case the debt is being “monetised”, the practice that normally happens only in wartime or in Latin America and which threatens massive inflation (the US mechanism for monetising debt is slightly different from our own “quantitative easing”, but the effect is pretty much the same).
This cannot go on, as President Barack Obama acknowledges. “We are,” as he puts it, “out of money.” So what will happen?
It is very hard to know because there are no obvious precedents.
President Obama has nominated Hispanic theologian Miguel H. Diaz as the next U.S. ambassador to the Vatican.
Diaz, a professor of theology at the College of Saint Benedict and Saint John’s University in Minnesota, was nominated as U.S. ambassador to the Holy See on Wednesday (May 27).
If the nomination is approved by the Senate, Diaz, 45, would be the ninth ambassador and the first Hispanic in the post since Washington and the Vatican established full diplomatic relations in 1984.
Diaz was Obama’s second high-profile Hispanic Catholic nominee in as many days, following the president’s choice of Judge Sonia Sotomayor for the U.S. Supreme Court. Observers said Diaz is a subtle, if perhaps unintentional, acknowledgment of the growing ranks of Hispanics in the U.S. church.
They’re back. We refer to the global investors once known as the bond vigilantes, who demanded higher Treasury bond yields from the late 1970s through the 1990s whenever inflation fears popped up, and as a result disciplined U.S. policy makers. The vigilantes vanished earlier this decade amid the credit mania, but they appear to be returning with a vengeance now that Congress and the Federal Reserve have flooded the world with dollars to beat the recession.
Treasury yields leapt again yesterday at the long end, with the 10-year note climbing above 3.7%, its highest close since November. Treasury yields had stayed low, and the dollar had remained strong, as long as investors were looking for the safest financial port amid the post-September panic. But as risk aversion subsides, and investors return to corporate bonds and other assets, investors are now calculating the risks of renewed dollar inflation.
They have cause to be worried, given Washington’s astonishing bet on fiscal and monetary reflation. The Obama Administration’s epic spending spree means the Treasury will have to float trillions of dollars in new debt in the next two or three years alone….
President Obama and Dick Cheney conspired on Thursday to propagate a myth. The myth is that we lived through an eight-year period of Bush-Cheney anti-terror policy and now we have entered a very different period called the Obama-Biden anti-terror policy. As both Obama and Cheney understand, this is a completely bogus distortion of history.
The reality is that after Sept. 11, we entered a two- or three-year period of what you might call Bush-Cheney policy. The country was blindsided. Intelligence officials knew next to nothing about the threats arrayed against them. The Bush administration tried just about everything to discover and prevent threats. The Bush people believed they were operating within the law but they did things most of us now find morally offensive and counterproductive.
The Bush-Cheney period lasted maybe three years. For Dick Cheney those might be the golden years. For Democrats, it is surely the period they want to forever hang around the necks of the Republican Party. But that period ended long ago.
The decision, which would make it hard for Americans in London to open bank accounts and trade shares, is being discussed by executives at Britain’s banks and brokers who say it could become too expensive to service American clients. The proposals, which were unveiled as part of the president’s first budget, are designed to clamp-down on American tax evaders abroad. However bank bosses say they are being asked to take on the task of collecting American taxes at a cost and legal liability that are inexpedient.
Andy Thompson of Association of Private Client Investment Managers and Stockbrokers (APCIMS) said: “The cost and administration of the US tax regime is causing UK investment firms to consider disinvesting in US shares on behalf of their clients. This is not right and emphasises that the administration of a tax regime on a global scale without any flexibility damages the very economy it is trying to protect.”
One executive at a top UK bank who didn’t want to be named for fear of angering the IRS said: “It’s just about manageable under the current system – and that’s because we’re big. The danger to us is suddenly being hauled over the coals by the IRS for a client that hasn’t paid proper taxes. The audit costs will soar. We’ll have to pay it but I know plenty of smaller players won’t.”
General Motors is preparing to file for bankruptcy protection as early as May 31, but a speedy restructuring of the carmaker faces headwinds from an increasingly sceptical US Congress.
Under the current plan, the US government would cancel most or all of its existing debt in the company and invest in a “new” GM that could emerge from bankruptcy in the autumn, said a person close to the matter.
GM would receive tens of billions of dollars in new government money, probably in stages, to prop up its business at a time when car sales are threatening to be lower than the 10m annual rate at which GM says it can break even.
Q: Many stories have been emerging about the pro-life response to the Notre Dame commencement ceremony. What kind of response did Notre Dame see that day from students and others who came together for the pro-life cause?
Reilly: The response to the Notre Dame scandal was immense and unprecedented.
More than 367,000 Catholics signed the Cardinal Newman Society’s petition against the honor at NotreDameScandal.com.
Bishop John D’Arcy of Fort Wayne-South Bend, the local ordinary for Notre Dame, boycotted the commencement ceremony.
Nearly 80 bishops, representing about one-third of the dioceses in the United States, spoke out against the honor, and none publicly supported it.
Mary Ann Glendon, the former U.S. ambassador to the Vatican, who was to receive Notre Dame’s prestigious Laetare Medal, declined the honor rather than share the stage with America’s pro-abortion leader.
As President Obama defends his national security strategy, he faces a daunting challenge. He must convince the country that it is in safe hands despite warnings to the contrary from the right, and at the same time persuade the skeptical left that it is enough to amend his predecessor’s approach rather than abandon it.
Arguably on the defensive over policy for the first time since taking office, Mr. Obama is gambling that his oratorical powers can reassure the public that bringing terrorism suspects to prisons on American soil will not put the public in danger.
At the same time, he must explain and win support for a nuanced set of positions that fall somewhere between George W. Bush and the American Civil Liberties Union.
It was an unusual showdown pitting present and former leaders, live on national television, with President Obama and former Vice President Dick Cheney dueling in back-to-back speeches Thursday over how to best protect the nation against terrorism.
Obama pressed his case for closing the U.S. prison at Guantanamo Bay in Cuba and for discarding interrogation techniques he described as brutal, while Cheney warned that doing so would endanger the country.
But beyond the discord over those issues, the clash represented the latest round in a larger and fast-changing fight for the public’s confidence on national security.
Americans for decades have seen the Republican Party as more trustworthy when it comes to waging war and keeping the country safe. But after sweeping the GOP into the minority in 2008, Obama is trying to forge a doctrine that would upend that view and cement his credentials — and those of his party — as a defender of the country’s security, even as he takes a more moderate course on civil liberties.
President Obama will attempt today to answer critics of his dismantling of Bush-era policies on detention and interrogation, in a speech reminding Americans that strong national security and adherence to laws and national values are not mutually exclusive.
Beyond this lofty reassurance, senior administration officials said, Obama will also repeat the case he made on his third day in office that the Bush administration’s system of dealing with “enemy combatants” — resulting in three prosecutions in seven years and challenged by U.S. courts and allies — was not sustainable.
Four months ago, Obama announced his intention to close the prison at Guantanamo Bay, Cuba; release, transfer abroad or try all its remaining inmates; and outlaw the harsh interrogation techniques he defined as torture. But the implementation of those executive orders has proved far more complicated than he expected.
The Vatican’s official newspaper called President Obama’s commencement speech at the University of Notre Dame on Sunday (May 17) part of his “search for common ground” with opponents of legalized abortion.
“The search for common ground: this seems to be the path chosen by the president of the United States, Barack Obama, to face the delicate question of abortion,” said an unsigned article in the Monday (May 18) edition of L’Osservatore Romano.
The paper said that Obama’s Notre Dame speech “confirmed what he expressed at the press conference marking his first 100 days in the White House,” when he said that the Freedom of Choice Act, which would remove restrictions on abortion, was “not my highest legislative priority.”
…it is quite astounding that the mainstream liberal media ”” NY Times, Washington Post, NPR, PBS, Time, Newsweek, etc. ”” has simply offered no substantive criticism of Obama’s flips on renditions, military tribunals, wiretaps, intercepts, Iraq, or ”” given their past fury over the Bush deficits ”” the Obama plan to run up more red ink in a year than Bush did in eight.
Bush was constantly criticized by mainstream conservatives for his comprehensive immigration proposals, for deficit spending, for failure to veto any bills in the first term, for No Child Left Behind, for the prescription drug benefit, for the Harriet Miers nomination, for the first pullback from Fallujah, for appointments like Scott McClellan and “Brownie,” etc.
The result, I think, will prove fatal for the media. For the last eight years, rendition (hey, they even made a hit-piece movie about the supposedly awful practice), intercepts, military tribunals, and Iraq were sort of the refrains of the liberal-media choruses. Looking back, in light of the Obama media, was such hysteria simply politics, pure and simple? Bush did it: bad; Obama did it: fine?
Still, opposition to abortion is hard and real, the signpost at the intersection of Catholicism and American public life. And those who””by inclination, or politics, or class distinction””fail to grasp this fact will all eventually find themselves in the situation that Fr. Jenkins has now created for himself. Culturally out of touch, they rail that antagonism must derive from politics or the class envy of their lesser-educated social inferiors. But it doesn’t. It derives from the sense of the faithful that abortion is important. It derives from the feeling of Catholics that, however far they themselves may have wandered, the Church ought to stand for something in public life””and that something is opposition to abortion.
“There is a political game going on here, and part of that is that you demonize the people who disagree with you, you question their integrity, you challenge their character, and you brand these people as moral poison,” Fr. Kenneth Himes, chairman of the theology department at Boston College, told the Boston Globe about the controversy at Notre Dame. As James Taranto of the Wall Street Journal noted, this was the same Fr. Himes who in 2006 wrote the faculty letter objecting to an honorary degree for Condoleezza Rice””a letter that read, “On the levels of both moral principle and practical moral judgment, Secretary Rice’s approach to international affairs is in fundamental conflict with Boston College’s commitment to the values of the Catholic and Jesuit traditions and is inconsistent with the humanistic values that inspire the university’s work.”
Some soccer moms will have to give up hulking SUVs. Carpenters will still haul materials around in pickup trucks, but they will cost more. Nearly everybody else will drive smaller cars, and more of them will run on electricity. The higher mileage and emissions standards set by the Obama administration on Tuesday, which begin to take effect in 2012 and are to be achieved by 2016, will transform the American car and truck fleet.
The new rules would bring new cars and trucks sold in the United States to an average of 35.5 miles per gallon, about 10 mpg more than today’s standards. Passenger cars will be required to get 39 mpg, light trucks 30 mpg.
That means cars and trucks on American roads will have to become smaller, lighter and more efficient.
You started out on Monday questioning why we were being so opposite of George Bush in all these questions. And on Friday I’m answering questions about why are we so much like George Bush on all these questions.
I’ll let you guys discern what period of day that all changed.
—Robert Gibbs, Barack Obama’s Press secretary, as quoted in this morning’s Globe and Mail
As I considered the controversy surrounding my visit here, I was reminded of an encounter I had during my Senate campaign, one that I describe in a book I wrote called “The Audacity of Hope.” A few days after I won the Democratic nomination, I received an e-mail from a doctor who told me that while he voted for me in the Illinois primary, he had a serious concern that might prevent him from voting for me in the general election. He described himself as a Christian who was strongly pro-life — but that was not what was preventing him potentially from voting for me.
What bothered the doctor was an entry that my campaign staff had posted on my website — an entry that said I would fight “right-wing ideologues who want to take away a woman’s right to choose.” The doctor said he had assumed I was a reasonable person, he supported my policy initiatives to help the poor and to lift up our educational system, but that if I truly believed that every pro-life individual was simply an ideologue who wanted to inflict suffering on women, then I was not very reasonable. He wrote, “I do not ask at this point that you oppose abortion, only that you speak about this issue in fair-minded words.” Fair-minded words.
After I read the doctor’s letter, I wrote back to him and I thanked him. And I didn’t change my underlying position, but I did tell my staff to change the words on my website. And I said a prayer that night that I might extend the same presumption of good faith to others that the doctor had extended to me. Because when we do that — when we open up our hearts and our minds to those who may not think precisely like we do or believe precisely what we believe — that’s when we discover at least the possibility of common ground.
That’s when we begin to say, “Maybe we won’t agree on abortion, but we can still agree that this heart-wrenching decision for any woman is not made casually, it has both moral and spiritual dimensions.
Father THOMAS REESE (Senior Fellow, Woodstock Theological Center, Georgetown University): I don’t think it’s a scandal. Universities should be places where we have discussion, debate, where people of different views come together to argue, and when the bishops get involved in trying to censure people, ban speakers ”” I think it’s not helpful.
Archbishop BURKE: This is a Catholic institution which is bound by ”” its title is Catholic, its identity is Catholic ”” to uphold the moral law, and that’s the source of the scandal.
Social and cultural factors doubtless play a big role in all this. Schools alone are not to blame. But the evidence is clear that what happens in the classroom matters, and that underperforming schools are contributing hugely to the problem.
Fixing them is itself a multi-faceted challenge. In some cases, money is the issue. Local financing of schools means that students in rich areas are lavished with resources, whereas schools in poor areas are often starved. On the other hand, money is not the whole story. High-tax jurisdictions, such as Washington DC, have among the highest rates of spending per pupil in the country, and among the worst test scores.
The keys ”“ and here comes the political challenge ”“ are accountability and competition. However you do it, through school vouchers if you want to be radical, or the faster expansion of self-governing charter schools if you do not, the crucial thing is to give parents alternatives to failing schools. This means firing the worst teachers and shutting the worst schools. Teachers’ unions have a death grip on the system and are having none of it. In many parts of the country, sacking a teacher, however incompetent, is next to impossible. Will Mr Obama dare to face down this powerful Democratic party constituency?
The president and his party in Congress face the terrifying prospect of being able to fulfill their campaign promises. They will have no excuse if there is no health-care reform or energy reform, or if there are and they are disasters.
The biggest shock, though, will probably be to the voters. For years they have called for “change,” generally unspecified, while enjoying the status quo more than they cared to admit. (They want health-care reform provided that they can keep their own doctor. They want congressional term limits, but they like their own member enough to reelect him again and again.) They have demanded alchemy from their representatives — expand our benefits and cut our taxes and balance the budget while you’re at it — and then staged hissy fits when the politicians didn’t produce.
Now, when the voters demand change, they may well get it. We’ll see how they like it.
President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.
“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”
Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”
Dealers across the United States reacted with a mixture of anger and sadness on Thursday to word that bankrupt automaker Chrysler LLC plans to eliminate franchise agreements with them as part of its restructuring efforts.
But most, even those surprised by the news, entertained little hope they could stop Chrysler from following through on the proposed closures, the latest chapter in the decline of a company that was — for a brief period in the 1990s — the most profitable car manufacturer in the world.
As a result, the dealers said they were already taking the sad but necessary preliminary steps to close or consolidate businesses that, in many cases, had carried their family names as well as those of the automaker for generations.
Now, imagine a world in which China could borrow and lend internationally in its own currency. The renminbi, rather than the dollar, could eventually become a means of payment in trade and a unit of account in pricing imports and exports, as well as a store of value for wealth by international investors. Americans would pay the price. We would have to shell out more for imported goods, and interest rates on both private and public debt would rise. The higher private cost of borrowing could lead to weaker consumption and investment, and slower growth.
This decline of the dollar might take more than a decade, but it could happen even sooner if we do not get our financial house in order. The United States must rein in spending and borrowing, and pursue growth that is not based on asset and credit bubbles. For the last two decades America has been spending more than its income, increasing its foreign liabilities and amassing debts that have become unsustainable. A system where the dollar was the major global currency allowed us to prolong reckless borrowing.
Now that the dollar’s position is no longer so secure, we need to shift our priorities. This will entail investing in our crumbling infrastructure, alternative and renewable resources and productive human capital ”” rather than in unnecessary housing and toxic financial innovation. This will be the only way to slow down the decline of the dollar, and sustain our influence in global affairs.
The barrage of tax increases proposed in President Barack Obama’s budget could, if enacted by Congress, kill any chance of an early and sustained recovery.
Historians and economists who’ve studied the 1930s conclude that the tax increases passed during that decade derailed the recovery and slowed the decline in unemployment. That was true of the 1935 tax on corporate earnings and of the 1937 introduction of the payroll tax. Japan did the same destructive thing by raising its value-added tax rate in 1997.
President Obama’s decision to deliver a speech here next month has given significant encouragement to a once powerful ally that has grown increasingly frustrated over its waning regional influence and its inability to explain to its citizens why it remains committed to a Middle East peace process that has failed to produce a better life for Palestinians.
After eight years in which Egypt felt unappreciated and bullied by the Bush administration, Egyptian officials were gleeful about Cairo’s selection last week for the president’s address to the Muslim world. They said that it proved Egypt remained the capital of the Arab world and that it eased concerns that Washington might undermine its Arab allies in exchange for a grand deal with their rivals in Iran.
“The aptest choice was Cairo,” the Egyptian foreign minister, Ahmed Abul Gheit, told the state-owned daily newspaper Rose Al-Yousef. “It is the capital of moderation in Islam and the capital of cultural sway in the Arab and Muslim worlds.”
But the higher deficit figures and additional proposed taxes, along with details of corporate tax breaks the Obama administration wants to ax, led to sharp criticism of the White House from some Republican lawmakers and business groups. It was a taste of the battle to come on Capitol Hill, where lawmakers and lobbyists have prevented some of the proposed changes in the past.
“The administration’s displayed an insatiable appetite for spending and they need to get money wherever they can. So they use the tax code the way Willie Sutton used a gun,” said Martin A. Regalia, vice president for economic and tax policy at the U.S. Chamber of Commerce, referring to the famous bank robber.
So you might expect the mood in the Middle East to be awful, bordering on desperate. Although it is sombre, those who know the region feel that there is all to play for. There are two reasons for this.
The first is the complex personality of Mr Netanyahu. I have met him several times and had informal conversations with him. He is usually reticent on strategy but a master at tactics. I have no doubt that he deeply dislikes the concept of a Palestinian state but that is not the same as saying that he could never endorse one….
That brings me to the second and, perhaps, decisive reason why the situation is more fluid than might first be apparent. Unlike George W. Bush, Barack Obama is engaging himself in the Israel-Palestine issue from the very outset of his presidency. He is doing so with more goodwill from the Arab world than any recent president.
The White House on Monday projected 2009 and 2010 federal budget deficits far higher than it forecast just two and a half months ago, even as it continued to defy most experts and predict that the economy is headed for a strong comeback starting late this year.
Economists scoffed at the latest administration predictions.
“If they keep playing this game, they’re going to have real credibility problems,” predicted Brian Bethune, the chief U.S. financial economist at IHS Global Insight, an economic research firm.
To understand what the controversy surrounding Obama’s invitation is about, it is important to understand what it is not about.
Most important, the issue is not, as some commentators have suggested, whether Notre Dame should welcome, engage, debate and explore a wide range of viewpoints. Of course it should. It was, after all, a central message of the Catholic Church’s Second Vatican Council that “nothing genuinely human fails to raise an echo” in Christians’ hearts, and the same can be said for the work of a Catholic university. Such a university has nothing to fear from ”” indeed, it has the best possible reasons to welcome ”” inquiry, investigation, argument and testing. And so, no one could reasonably oppose inviting the president to Notre Dame for discussion and dialogue on immigration, education, health care ”” or even abortion.
The question on the table is not whether Notre Dame should hear from the president but whether Notre Dame should honor the president. A Catholic university can and should engage all comers, but in order to be true to itself ”” to have integrity ”” it should hesitate before honoring those who use their talents or power to bring about grave injustice. The university is, and must remain, a bustling marketplace of ideas; at the same time, it also has a voice of its own. We say a lot about who we are and what we stand for through what we love and what we choose to honor. The controversy at Notre Dame is not about what should be said at Catholic universities, but about what should be said by a Catholic university.