False Middle East peace based on Obama delusions

“Benjamin Netanyahu, the prime minister of Israel, has redoubled his attack on Barack Obama’s plans for Middle East  peace at a face-to-face meeting with the US president at the White House.  Speaking a day after Mr. Obama shocked Israel by announcing that the US favoured an Israeli-Palestinian peace deal on the basis of the borders at the time of the 1967 Arab-Israeli war, Mr. Netanyahu labelled those lines ‘not the boundaries of peace but the boundaries of repeated wars.’  With a grim-faced Mr. Obama sitting beside him, he added: ‘Peace based on illusions will crash eventually against the rocks of Middle Eastern reality…While Israel is prepared to make generous compromises for peace it cannot go back to the 1967 lines because those lines are militarily indefensible.’ ” Daniel Dombey, and Vita Bekker, ‘Israel turns up the heat on Obama’, Financial Times, May 21, 2011

Benjamin Netanyahu knows full well that Barack Obama understands the reality to which he is referring.  Because President  Barack Obama and Secretary of State Hillary Clinton, by accident or by design, are implicitly pursuing the ultimate demise of Israel as a nation-state in the Middle East.

Benjamin Netanyahu remembers full well how U.S .presidents and U.S. Secretaries of State  talk duplicitously, with forked tongues, when they are selling erstwhile allies down the river. He remembers the earnest manner in which President Richard Nixon and Secretary of State Kissinger promised the world that the January 1973  peace treaty with North Vietnam was designed to protect the borders of the sovereign nation of South Vietnam.  Just three short years later, in July 1976, the last U.S. helicopter fled Saigon and the city was renamed Ho Chi Minh City. 

If the Palestinians successfully push for a United Nations General Assembly vote on diplomatic recognition, which way will the U.S. vote?  Will the U.S. exercise its veto power in the Security Council in dealing with such a measure?  I would not bet the White House outhouse on a negative vote or on that veto being utilized.

Let us hope that Britain’s David Cameron is a more honorable leader and international statesman than the current U.S. president. Vulnerable Israelis must pray that this is so. Otherwise, some three years after a duplicitous peace treat is forced on Israel, Tel Aviv may well  be renamed Yasser Arafat City.  If, that is to say, the entire Middle East is not by then glowing in the dark.

White House and State Department unite: pro-Arab and anti-Israel

Since the end of World War II, the U.S. State Department has been dominated by pro-Arab and anti-Israel bureaucrats.  President Harry Truman had to ride rough-shod over the Department of State in promoting the case for the creation of Israel in 1948; and the situation has remained pretty much the same ever since.

Until now. On Thursday May 19, 2011, President Obama made plain his support for Arab protesters, irrespective of their political views about the United States. From al quaeda to  Hamas, from Hezbollah to the Muslim Brotherhood, Obama is rooting for them all, as the Arab Spring moves towards a glorious Arab summer. Contempt for Israel dripped through his  sanctimonious sermon.

Thus is the fissure closed. Barack Obama and Hillary Clinton are now completely at one in their pro-Arab, anti-Jewish sentiments.  No doubt the President will expect a frosty reception when the Prime Minister of Israel meets with him the the White House today. If Netanyahu was a little less civilized, the President might well expect a well-justified bloody nose!

President Obama is very experienced in making expansive public statements that are unmarked by subsequent action. So perhaps the speech will die a natural death by attrition as the warm summer weather and the golf course attracts Obama’s undivided attention. However, although talk may be cheap, it is not costless. And every time the President opens his over-worked mouth on the Middle East he moves the world closer to Armageddon.

Israel has been a close and loyal ally of the United States. If allies are to be treated with contempt and enemies with pandering good will, a nation is in seriously bad straits. Such, unfortunately, is the situation of the United States at the present time.

Three green bottles each about to fall: which will be the fourth?

Despite massive bail-out interventions by the Euro-zone and the IMF, the first green bottle, Greece, now appears all but certain to fall, as the country moves into default on its national debt. Ireland and Portugal, the next two green bottles still standing on the bail-out wall, are wobbling badly and are also likely to follow Greece into sovereign debt default.  The Obama administration should be watching events closely across the Euro-zone and should be initiating the kind of draconian spending cuts entered into by Britain and Germany to fend off the growing prospect of a US sovereign debt default.

Forced reluctantly into fiscal austerity by those who are bailing it out, Greece appears to have fallen into a debt trap, in which budget cuts are actually worsening its debt crisis. This is what happens when spend-thrift behavior takes a nation beyond any realistic recovery prospect and when creditors therefore  demand increasingly high rates of interest in return for holding government bonds.  The yield on Greek bonds is currently as high as 25 percent:

“‘Greece has reached the point where, under realistic scenarios, debt dynamics are unsustainable.  The countdown to restructuring has started in our view,’  said Piero Ghezzi an analyst at Barclays Capital. Under its own efforts, and with help from the EU and IMF, Barclays estimates that Greece could achieve only about half the deficit cuts needed to become solvent again, he said.  ‘Fiscal consolidation will need to be helped by an effective debt reduction’ to get Greece out of this debt trap, Mr. Ghezzi said.”  Patrice Hill, ‘Europe debt crisis forces nations to make tough calls.’ The Washington Times, May 19, 2011

Global financial markets have been bracing for the possibility of a Greek default for weeks.  A survey by Bloomberg news determined that 85 per cent of investors world-wide expect Greece, Portugal and Ireland to default.  Such a sequence of defaults would threaten the solvency of many European banks that stand to take big losses on their holdings of government bonds issued by these three countries.

So, to put this into US perspective, let me outline the current debt situation of the United States relative to the three green bottles under review. In 2010, the general  government gross debt as a percentage of GDP ratios are:

Greece                  142.0 percent

Ireland                    96.2 percent

United States         91.5 percent  

Portugal                 83.3 percent

Q.E.D.

US dollar may be stripped of international dominance by 2025

According to a World Bank report released on May 17, 2011, the US dollar is expected to lose its sole dominance in the global economy by 2025. By that year, the euro and the remnimbi will be established on an equal footing in a new ‘multi-currency’ monetary system.

The World Bank considers that this momentous change will be driven by the increasing market strength of emerging market economies – Brazil, China, India, Indonesia, Russia and South Korea – accounting for more than 50 percent of global economic growth in the next 14 years. These economies, in aggregate, are expected to grow at an annual rate of 4.7 percent between 2011 and 2025, more than double the rate of 2.3 percent per annum predicted for the advanced economies.

The implications of this adjustment in relative economic balance and consequential shift in the international reserve currency system are immense. Investment flows will move significantly in favor of countries that drive global economic growth. Multi-national corporations will regroup and relocate to reflect such dominance. The lagging ‘advanced’ nations will reflect rust-belt characteristics as they suffer from the economic sclerosis of excessive indebtedness and institutional decline.

In my assessment, three factors may protect the United States from the adverse consequences of such an evolution. First, and most important, is the political will to address the US federal debt crisis swiftly and efficiently. If federal spending can be brought down to 18.5 percent of gross domestic product and federal revenues also held to that rate, the US economy will have a fighting chance of emulating the economic growth rate of the emerging nations. Unfortunately, unless President Obama undergoes a political -economic transformation of immense proportions, the secular equivalent of Saul on the road to Damascus,  the issue will not be addressed until the problem is insoluble.

Second, unless the euro-zone demonstrates a ruthless willingness to eject non-conforming members – the PIIGS – it will remain a non-optimal monetary union. A non-optimal monetary union cursed with the absence of centralized political authority, cannot promote a major international reserve currency .

Third, unless the People’s Republic of China renounces autocracy in favor of some form of limited democracy the remnimbi will never become more than a regional reserve currency. Asset holders rightly cannot trust an autocracy to honor its commitments. For any autocrat is just one bullet away from a radical coup d’etat.

DSK moral debacle a stroke of good fortune for France and Germany

Excellent police-work by the NYPD and good sense and resolution by New York City’s District Attorney  may have saved France from yet another retrenchment into French-style socialism and stagflation and Germany from round after wretched round of fiscal bail-outs of profligate members of the Euro-zone. 

When Dominique Gaston Andre Strauss-Kahn was unceremoniously hauled out of the first class cabin of an Air France aircraft preparing for take off, in a Roman Polanski bid to evade rape charges by sheltering behind French extradiction laws, and when he was later charged with several serious felony counts that may keep him in a United States penitentiary for the rest of his life, the upcoming Presidential Elections in France took a turn very much for the better.

Born in April 1949 to a family of mixed Sephardic and Ashkenazic Jewish origin, DSK was educated primarily in Paris, obtaining a degree in public law as well as a Ph.D. and an aggregation in economics at the Universite Paris X (Nanterre) in 1977.  He retains the title of full professor of economics at Sciences Po, though , since 2007, he has been on an extended leave of absence.

As a student, DSK was an activist member of the Union of Communist Students, displaying his true anti-capitalist ideology from an early age. In the 1970s, he joined CERES – Center on Socialist Education Studies and Research – led by Jean-Pierre Chevenement, who would run as a far-left presidential candidate in 2002. After the election of Francois Mitterrand – also a one-time communist – to the presidency in 1981, DSK  became actively involved in the Socialist Party, which was led by future Prime Minister, Lionel Jospin.  DSK also founded Socialisme et Judaisme.

In 1987, DSK was elected deputy for the first time in the Haute-Savoie department.  In 1991, he was nominated by Mitterrand to be junior minister for industry and foreign trade in Edith Cresson’s left-leaning government, a position that he held until the fall of the government in 1993.  In June 1995, DSK was elected Mayor of Sarcelles and married his third wife,  a rich heiress, Anne Sinclair.  In 1997, Prime Minister Lionel Jospin appointed DSK Minister for Economics, Finance and Industry, making him one of the most influential members of his Plural Left government.  DSK was a major proponent of reducing the  French working week to 35 hours. No wonder he is (was?) such a strong supporter of bailing out the lazy Greeks at the present time!

Following Jacques Chirac’s success in the 2002 presidential election and the Union for a Popular Movement majority in Parliament, DSK was re-elected deputy and rejoined the Socialist Party leadership. He was primarily responsible for drawing up the Socialist program for the 2007 presidential election. He was defeated by Segolene Royal in the primaries, and she lost to Nicolas Sarkozy in the presidential election.

Anxious to rid himself of a troublesome socialist, President Sarkozy successfully supported DSK for the managing directorship of the IMF.  DSK was elected to that position in September 2007. Despite two investigations of  his allegedly predatory sexual behavior within that office, DSK has remained in post throughout the post-2008 financial crisis. He has demonstrated exemplary socialist principles in the IMF’s bailout approach to fiscal prodigality. The PIIGS will be prostrate with grief at his impending departure as a disgrace to the institution that was resolved on bailing them out.

But Gauls and Germans should be dancing in the streets. A major threat to Euro-prosperity has been summarily removed by U.S. justice. Who among those peoples really would revel in a return of Mitterrand-style socialism?  And that was a likely outcome of the French presidential election prior to Saturday May 14, 2011.

And the French should not doubt the predictable arrogance and high-handedness of DSK had he ever penetrated the Elysee Palace. If they require confirmation, just let them reflect on the depraved nature of any rich, socialist Jew who would ruthlessly ravish a poor, devout Muslim maid some thirty years his junior, chasing her buck-naked across his $3,000 a night palatial suite, in a determined attempt to rape and sodomize her for his selfish gratification.

Now, instead of waving flags stating  ‘Yes we Kahn’, the French Republic will be replete with flags joyously pronouncing “No we Kahn’t’. And that will be good for politics and economics right across Euro-land.

U.S. federal debt default better than a bum deal

” ‘A financial crisis is surely going to happen as big or bigger than the one we had in 2008 if we continue to behave the way we’re behaving,’ says Stanley Druckenmiller, the legendary investor and onetime fund manager for George Soros.  Is this another warning from Wall Street that Congress must immediately raise the federal debt limit to prevent the end of civilization?  No – Mr. Druckenmiller has heard enough of such ‘clamor and hyperbole.’  The grave danger he sees is that politicians might give the government authority to borrow beyond the current limit of $14.3 trillion without any conditions to control spending.” James Freeman, ‘What If the U.S. Treasury Defaults?’, The Wall Street Journal, May 14, 2011

Mr. Druckenmiller outlines two options. First, suppose that one owns a 10-year Treasury.  In return, one receives an income stream over that period. As a result of default that income stream will be delayed for some period of time, until market pressures force the government to clean house.  In return for that delay, one receives significant cuts in entitlements and the government gets its house in order.  In consequence, one’s income stream almost 10 years out is much more assured. 

 Second, suppose that one owns the same 10-year Treasury. However, in this scenario, the debt limit is quickly raised to avoid any disruption of payments.  One receives one’s income on time.  But the government continues to pile up trillions of dollars of debt, and a Greek situation emerges say six years down the road.  One’s income stream is rendered worthless.

Which of those two pieces of paper would one prefer to hold?  The answer to that question is a no-brainer!  It is the piece of paper number one!

Debt talks target the Federal Employment Retirement System

It is now widely acknowledged that most United States  federal government employees  are over-paid and over-protected by comparison with relevant private sector employees. They receive higher than average salaries, and higher than average pension benefits, skill for skill,  while enjoying significantly greater job security.  Given the magnitude of the federal debt crisis, it is abundantly clear that these relative privileges will have to be scaled back.  The real issue is when and how, while avoiding the kind of street riots that Greece currently enjoys.

The Obama administration has moved cautiously into this political minefield. President Obama has imposed a federal salary freeze across the board for a two year period. Given the low rate of price inflation this will erode real salary differentials only to a minimal extent.  It is unrealistic to expect a Democratic President to wield the surgeon’s knife by imposing nominal salary cuts on a population that hugely supported his 2008 presidential campaign.

So, it is predictable that bipartisan debt reduction talks now focus on the Federal Employment Retirement System (FERS). This system represents exceptionally low-hanging fruit for debt reducers, because federal workers currently enjoy one of the most generous retirement plans in the country.

Created in 1986, FERS features a thrift savings program similar to a 401(k) retirement account and a traditional defined-benefit pension. Overall the system provides benefits that are slightly more generous than those available to most other middle-income families.  But federal employees contribute strikingly little, just $1 out of every $15 paid into the plan.  Third Way, a centrist Democratic think tank, calculates that federal taxpayers are far more generous to their employees than are private sector companies, contributing 12.7 percent of payroll to retirement accounts, versus 5.3 percent in the private sector.

House Republicans have picked up on Third Way’s proposal to require workers to contribute 6 percent of salary to FERS, equalizing payments with those of the federal government.  Because federal workers currently contribute only 0.8 percent, the change would amount to more than a 5 percent pay cut. The budget savings that would be made by such an adjustment, over a ten-year period, would amount to $120 billion. Of course, this is a minute contribution to federal debt reduction, but every $100 billion helps in a tough economic environment.

Inevitably, public choice issues raise their ugly heads whenever federal employees are under scrutiny. Federal employees are well-organised and they are geographically concentrated. So we should expect self-seeking politicians in constituencies where federal employees reside – whether Democrat or Republican – to baulk at the picking of such fruit even from the lowest branches of the tree. Representative Chris Van Hollen (D-Md) is one such. As one of only six lawmakers at the table in the Biden budget deficit reduction talks, one would have expected Van Hollen to be sympathetic to the pension cuts. But Van Hollen is no statesman. He is a vocal opponent of the Third Way proposal.  Similarly, as a fiscally responsible Republican, one might have expected Representative Frank Wolf (R.Va) to support this modest proposal.  Not so:  ‘I regret that the …proposal seeks to make government service an unattractive career choice by changing retirement plans’ croaks out this spineless Congressman, who thrives on the votes of federal employees located in the Greater Washington suburbs.

We should expect political firecrackers over this proposal. We should also expect some expert foot-shuffling on the part of President Barack Obama. Yet this is truly the lowest of all available low-hanging fruit. Who will be out there when the ladders have to be hauled out for the richer fruits in the higher branches?

Realism invades illusion: the crisis in social security and medicare

On Friday 13, 2011 (surely an auspicious day) the Trustees for Social Security and Medicare in the United States, reported that the Trust Fund for each of those programs will run dry earlier than expected.  In the absence of reform, Social Security has sufficient resources to pay 100 percent of promised benefits through 2036.  Thereafter, it will only be able to pay 77 percent of promised benefits. Again, in the absence of reform, Medicare’s hospital insurance program – known as Medicare Part A – will be able to pay full benefits through 2024. By 2025, the Hospital Trust Fund will be able to pay only 90 percent of hospital costs.  By 2045, that share will drop to 75 percent.

Unfortunately, these Trust Fund reports are mendacious. They pre-suppose that the Trust Funds actually exist. The truth is that they are as fraudulent as Bernie Madoff’s pyramid scheme. Let me explain. Since 1983, the Social Security Trust Fund has ‘accumulated’ a $2.6 trillion of surplus revenue that is credited to its account.  Unfortunately, that surplus has been blown by successive governments as they spent in excess of their own incomes.  It has been replaced by worthless, non-marketable United States Treasury bonds.  Now that the program has started to redeem those bonds, the Treasury must either borrow more money to redeem them, raise taxes, or cut spending.  The Trust Fund, in a phrase, is a busted flush.

One way to grasp the magnitude of Social Security’s long-term shortfall – the reach of the fiscal Ponzi Scheme if you will – is to consider how much the 12.4 percent payroll tax paid by those who work on the first $106,800 of their wages would need to increase immediately in order to ensure that the program can pay full benefits over the next 75 years.  The Trustees themselves estimate that the immediate reset must be at 14.62 percent.. That will surely whack a lot of people in their all-but empty pocket-books!

In exactly the same manner, the Hospital Trust Fund of Medicare is an empty box.  All those surpluses have been blown yet again by governments who can never balance their budgets. In order to eliminate the program’s long-term shortfall, the 1.45 percent Medicare payroll tax rate on all of a worker’s wages must increase immediately by just under 1 percentage point. Once again, this is the price of the government’s Ponzi Scheme; the price, if you care to think about it in such terms, of progressive politics in the United States.

Oh, yes! While I remember, let me remind you that, in addition to Part A, the main Medicare benefit, there are two supplementary programs: Part B for doctor bills and Part D for drug coverage.  For these, there is no fictitious Trust Fund.  They are funded in principle, solely by general tax revenues and patient-paid premiums.  Of course, government has no principles. So for the most part they are funded by government borrowing; most probably they are funded to a significant extent by the People’s Republic of China. I doubt that we should rely too heavily on that bail-out source as the Middle Kingdom itself begins to sow its wild oats.

The GOP should choose with care for November 2012

The November 2012 presidential election will be a decisive event in the future political economy of the United States. Given the disproportionate power of the president in the political market-place, and given the tipping point in political economy that will be resolved, one way or another, by 2016, this presidential election is no less important than that of 1860.  Will the United States conform to the will of its Founders as a constitutional republic endowed with a limited government of strictly enumerated powers?  Or will it shred the rest of its already ragged constitutional parchment, and pursue the progressive route to an unconstrained Leviathan?

By his first term’s record, we know full well that Barack Obama will lead a progressive assault on limited government, given a second term opportunity. During the first two years of his first term, aided by a progressive Congress, the President has bribed  significant electoral constituencies to support him in his re-election bid.  With approximately 50 per cent of all eligible voters already feeding at the federal trough, it will take great statesmanship for any G.O.P. candidate to win the Electoral College. Yet win that College  the G.O.P must, if the constitutional republic is to be preserved and protected through the debt crisis storm that hovers on the horizon.

A statesman, in my definition, is a person well-educated in the history of his nation, a polished communicator, well-versed in the art of politics, willing to place the interests of the nation above his own personal advancement and endowed with the executive ability to lead a polarized nation. Among the Founders of a small nation, George Washington, James Madison and Thomas Jefferson  epitomized these qualities, each with his own personal balance.

From a current  population of 300 million souls, not a single statesman of such quality has yet emerged to  show any interest in running on behalf of  the G.O.P. in the  2012 presidential elections.  Perhaps the United States is now incapable of growing such giants, I do not know. Surely they do not bestride the political spectrum as they clearly did during the last quarter of the eighteenth century.

What we see instead among the leading G.O.P. contestants are deeply flawed individuals. Newton Gingrich is a serial adulterer, who demonstrated a serious failure of leadership as Speaker of the House of Representatives, and significant improprieties in the conduct of his personal finances.  An opportunistic self-seeker, Gingrich almost certainly would follow the progressive path marked out by George W. Bush, were he to win election. 

 Mitt Romney is a smooth-talking nonentity who enjoyed a progressive governorship in Massachusetts. He has learned nothing from the health-care debacle that he imposed upon that state, a debacle that paved the way for Obamacare. He appears to have no grasp of history, no sense of the political economic crisis that confronts the nation.

Sarah Palin is a beautiful woman who would turn many a male eye in a presidential election. She is well-meaning and hard-working, and does understand the nature of the Founding to a degree that the others do not. But she perfomed poorly as Governor of Alaska and abandoned the tiller when the storm-clouds began to form.  She lacks the gravitas  both intellectual and political, to lead a great nation, and the political finesse to carry the baton of the constitutional republic on its next crucially important lap.

The rest of the field, announced and close to announcing, is quite frankly no where near presidential timbre.  Those such who preen themselves on the edge of the battlefield  would do their nation and their political party a great favor by recognizing their irredeemable inadequacies and withdrawing from the race.

 Among those with serious political experience, there is but one candidate of true merit. Unfortunately, Jeb Bush carries his younger brother’s surname, and that may be sufficient to disqualify him from political consideration. But Jeb Bush showed how to govern well the great State of Florida. Unlike his younger brother, he does understand the nature of the Founding and the crisis of political economy that now grips this vulnerable nation.

In my judgment, Jeb Bush has some, though not all, the requisite characteristics of statesmanship that this country so desperately needs. In the interest of his nation, he should throw his hat into the ring.

Unlearned lessons from the real estate boom and bust

Rational individuals usually learn from their past errors and adjust future behavior accordingly. Politicians often will not display equivalent learning, not always because they are irrational, but because political incentives take them in perverse directions. The United States real estate market tells us a great deal about these divergent responses.

Over the period 2001 to 2007, the United States experienced two real estate bubbles, one in commercial real estate and the other in housing.  The housing bubble created a mortgage debt of $11 trillion.  The commercial real estate bubble created a mortgage debt of  $2.4 trillion. Both bubbles were characterized by running up leverage and asset prices to an unsustainable 90 per cent increase, with housing peaking in the second quarter of 2006 and commercial real estate in the fourth quarter of 2007. Both bubbles were the creatures of government ineptitude and government depravity:

The causes of the housing bubble – subprime mortgages, adjustable rate mortgages, government-managed loans, etc. – are well known. The role of traditional lending by the heavily regulated banking system in the commercial real-estate bubble has received less attention, yet its toll in subsequent bank failures is apparent.  The inevitable bust brought a national price drop of 32% from the peak for housing, and an even steeper 42% drop from the peak for commercial real estate.  These erased trillions of dollars of illusory bubble  ‘wealth’.  The combined drop in market values was greater than $8 trillion – that’s more than the GDP of China last year.” Alex J. Pollock, ‘On Housing: There Will Be More Lean Years Ahead’, The Wall Street Journal, May 12, 2011

An important question is why house prices fell proportionally less than commercial real estate prices after they had both inflated to the same degree.  In large part, government is responsible. Large government programs and subsidies, accompanied by arm-twisting the mortgage lenders to relieve debt and to extend credit, have slowed down the rate of progress to fundamental house price equibrium. Essentially, there is still another 10% drop  from peak prices necessary to clear the price- inflated house- market. With many households in pending foreclosure and many others struggling with underwater debt, politicians are fighting, for political reasons, to hold back the ebbing tide.  Such is not the case with respect to commercial real estate, where market forces move for the most part beneath the political radar.

As Alex Pollock (above) cleverly explains, the Federal Reserve has played and continues to play malevolent games in the real estate market-place.  The first such game – the Greenspan gamble – came into play in 2001 following the collapse of the tech-stock bubble.  Confronted by an ensuing industrial recession and deflationary pressures from past irrational exuberance, Greenspan figured that a housing boom would counter-balance the effects of the industrial recession. As Greenspan mumbled to a gullible Congress and a believing public in 2002, the negative wealth effect of the stock market losses would be offset by the positive wealth effect of rising house prices.

Well we found out in September 2008 just where that gamble took us! To my knowledge Alan Greespan so far has not committed  sepuku; nor is he serving out his final years in a federal penitentiary.

So it is not at all surprising, in this penalty-free environment, that we now have the Bernanke gamble, designed to offset the negative wealth effect of huge losses in real estate by fostering high prices for debt and equity securities through massive monetary expansion. Essentially, the Federal Reserve has made itself the largest Saving and Loan in the world. Once the true motive behind this gamble becomes apparent – in the form of high and rising inflation designed to release debt-holders from the burdens that they voluntarily assumed – the holders of debt securities will know who was played for a sucker, and the holders of equity securities had better have lengthy time- horizons.

Oh yes! Do not think for one minute that Ben Bernanke will commit sepuku , or that will he rot in jail!  So what will be the nature of the next, say 2015, Federal Reserve gamble, and who will be next in line  to be suckered out by believing the nostrums of a corrupt government bureaucrat?