Huntsman: Cain Scandals Hurting GOP

Republican Presidential primary candidate Jon Huntsman suggested in a recent interview that his sex scandal-ridden fellow candidate, Herman Cain, is hurting the entire Republican field and distracting voters from the real issues.

Speaking of the latest allegation against Cain involving a 13-year extramarital affair, Huntsman said it is time for the former CEO rethink his candidacy.

“Every time another accusation comes up, it diminishes our ability to stay focused on the issues that really do matter for the American people. And I think that’s a disservice to the voters,” Huntsman told The Boston Globe.

Cain has denied that he had any sexual involvement with the latest accuser. He insists he and the woman were involved in a “friendship relationship” and that he helped her financially.

“I have spoken directly to the American people and have been 100% honest with them. My plan is to continue to spread my vision on how I would renew America and keep her safe. I will not fight false claims as it is not what America needs or wants,” Cain said in a statement Monday.

Cain reportedly has decided to “reassess” his candidacy “over the next several days.” But despite some speculation he will drop out of the race, campaign manager Marc Bloc said only Cain’s wife and lack of support could make him give up, according to ABC News.

United States Of Europe

Today’s sovereign debt problems in Europe and the United States create the single biggest risk for Western economies. In order to deal with the economic challenges, the European Union is becoming an increasingly integrated and centralized structure.

I have never been a big fan of the EU and its currency, the euro. When the European Union signed the Maastricht Treaty in 1992, a core group of European countries agreed to adopt the euro as their main currency, with the object of eventually replacing individual currencies, such as the deutschemark, the French franc and the Italian lira. Seven years later, the euro was officially introduced in non-physical form. Finally, in January 2002, the euro was introduced in physical coins and notes.

At that time, I thought it impossible to bring so many different countries together and have all of them adopt a common currency. In my view, these countries were too different from each other to be merged into a single currency bloc, given huge economic and cultural differences, as well as different languages. Because I am Swiss, I am always skeptical of large and centralized political systems like the EU and even the United States. However, I have to admit that the European Union and the integration of many countries over the past 20 years worked much more smoothly than I thought it would.

I was also surprised by the convergence of European bond premiums. In the old days, it was normal that Italy had a higher risk premium than German government bonds. But over the years, that yield spread narrowed so much that credit markets viewed the credit risk of Italian bonds as being equal to the risk of German government bonds — even though Germany appeared to be in a much better position.

The European debt crisis brought this credit risk convergence to an end, and spreads started to widen again. I consider this a very healthy development, since the market has been repricing the risk of these bonds. The result is that Italy pays more for its debt, because the market perceives it to be riskier than Germany. What should the yield spread be between these two countries? This question is hard to answer, but I believe it is clear that the difference should be quite significant.

Earlier this week, Italy was issuing bonds with a 12-year lifetime at a yield of 7.30 percent, and Belgium issued 10-year bonds at a yield of 5.65 percent. Even though these yield levels look extremely high, the rates are down slightly from their peaks several days ago. For quite some time, it was not even clear whether Italy and Belgium could successfully place bonds in international markets.

In comparison, Germany can borrow from financial markets at a rate of below 3 percent for 10 years and is paying just 3.02 percent on 20-year bonds. Italy is paying more than twice the yield on its bonds than Germany. In addition, Italy’s funding costs are significantly higher. In fact, Italy’s funding costs are at levels not sustainable in the long run. The same is true for other EU member states such as Spain, Portugal and Greece.

The challenge the EU faces is that for most of its member states, the overall funding costs are now significantly above levels that can be considered sustainable. In the short run, these countries can be supported by the European central bank, the European Stability Fund or even the IMF, but this will not solve the real underlying problems in the long run. In my view, it is a not a question of “if” but “when” the EU will start issuing Eurobonds, similar to Treasury bonds in the United States. The money raised from those bonds would be used to finance individual member states through a central funding institution that acts like a Eurobank. The Eurobank would directly negotiate funding terms and conditions with individual member states that need money.

There is currently a lot of debate about this, but I don’t think the European Union has another option that would bring down borrowing costs. This also means that economically strong countries like Germany would probably pay slightly higher rates, but would still have the opportunity to issue its own bonds — if it could do so at lower yields. From a political and economic point of view, I don’t like this development, but the question today is: What other options does Europe have? In my opinion, there are none.

Again, I don’t like a setup like the EU, a centralized system in which an individual member state loses more and more of its voice. But Europeans have taken this project so far that I think the point of return is far behind them. It is absolutely critical for the EU to bring down funding costs, raise confidence among financial investors and stop the attacks on individual member states. All of these practices put the future of the EU at risk.

I think the EU is an odd concept and setup, and I doubt it will work very much longer. But now, there is no way back. That is why I think Eurobonds will be issued soon in order to calm financial markets.

Eventually, U.S. Treasury bonds and Eurobonds are going to be almost the same. Also, the underlying debt problems of the U.S. and the EU are going to be similar in size, and I am almost sure that both will print money to deal with the debt burden. The likely consequence will be that both are going to have structurally weak currencies, and investors should make sure not to hold too much exposure to these two currencies.

I don’t know which of the two currencies will be stronger in the long run (or should I say “less weak?”). Against the U.S. dollar speaks the fact that its global influence is in decline, after being the world’s dominant currency for more than 60 years. On the other hand, the euro is still a relatively young currency; and the fact that so many economically and culturally diverse countries form the EU does not make it seem the better alternative. However, I am surprised how different the United States and Europe are in their approach and willingness to deal with the current debt crisis.

The current focus of international investors is clearly on the European situation. There is a great deal of urgency to address the debt problems. As a result, a number of governments have been toppled in order to force reforms. The EU now needs to decide whether it wants to become a true political union with a centralized government, in which the influence of individual member nations is reduced further.

The current situation is similar to the United States’ situation between 1777 and 1787 when the 13 former British colonies formed a union (“Articles of Confederation and Perpetual Union”). The various problems with this decentralized setup led to the adoption of the U.S. Constitution, which made all member States part of a single republic with a strong central government. However, even if Europe were to decide to form a closer union, doing so would not guarantee success.

The United States’ situation today looks more stable only at first glance; the truth is that the situation is not much different from the one in Europe. What worries me with the United States’ situation is that not even the Congressional supercommittee has been able to devise a plan to reduce debt, and everything seems to be stuck in a political deadlock. How much longer will international financial markets tolerate this situation? I doubt it will be for very long.

To Be Perfectly Frank

Since he let us in on his future plans, Representative Barney Frank has touched off a firestorm of discussion over his legacy of 40 years living off the largesse of the taxpayers of Massachusetts and the United States. As you might expect, much of the discussion has centered on the factor Frank spent the most time promoting: his sexual preference. (Barney liked girls, but not in that way.) I would be remiss in my duties if I sent Barney packing without so much as a nod to the fact that he is openly gay. In fact, Frank is the first-ever member of the U.S. House of Representatives to live openly as a homosexual. Even a casual glance at the fawning political epilogues being offered to Frank among today’s corporate media reveals that Frank’s sexuality is the most prominent — if not sole — reason he will be remembered.

While he made his sexual identity a sword that he used to help gays ascend to a position of political and social equality, his use of the same as a shield against any criticism may well have slowed the process. Call it a backlash, but I would suggest that Frank, much like some of the so-called black leaders, allowed his most-cherished issue to become his sole defining position. For better or worse, Frank countered criticism with unfair charges of bigotry — even when said criticism was deserved. Frank was never a Congressman; he was a gay Congressman. Something tells me that had Frank gone to cooking school, he would have become a gay chef, as opposed to just a chef. Since I am merely an average guy, I can’t necessarily identify with the difficulties Frank faced early in his career; nor can I necessarily identify with the concept of being a member of a once-disenfranchised minority of any sort. However, I wonder how Frank feels now, knowing that his entire career can be boiled down to the fact that he is gay? It strikes me that, according to Frank’s stated goal, his announcing himself as “gay” would be akin to me announcing myself as “tall.”

For those who dismiss my musings as being somehow driven by the bigotry liberals blindly assign to all conservatives, consider who’s doing the talking. The Washington Post called Frank a “hero… for his role in promoting gay rights, having been the most prominent openly gay member of Congress.” The Associated Press labeled him a “a gay pioneer in Congress” before it noted his home state. And the rusting hulk that used to be The New York Times noted Frank “… has been among the nation’s most prominent gay elected officials.”

The media’s effort to lionize Frank — while tossing out only fleeting (if any) mentions of his considerable missteps, failures and scandals — is entirely transparent. The reason has nothing to do with his sexuality and everything to do with his liberalism. Much like the abominable Ted Kennedy, who left behind a legacy of almost shockingly unrepentant corruption and offense (as well as some extraordinarily bad driving), Frank is one of the more redoubtable travelers from the far left of the American political atlas. As such, he earned a free pass from consequences. From his involvement with a prostitution ring to his well-documented complicity in the housing crisis, Frank skated away from scandals that would sink a conservative’s career.

From my perspective, Frank’s private life means nothing more to me than he wants it to. My objections to Frank are entirely political — a fact I expect would disappoint him, given the enormous effort he has put into trying to make me despise him on moral grounds. Frank has supported the Democrats’ efforts to let millions of illegal aliens dance across our borders, stood steadfast with the far left in attempting to abrogate the 2nd Amendment and pushed for government speed bumps on the information superhighway in the form of so-called “Net Neutrality.” He remains a committed supporter of the unholy profanity that is partial-birth abortion. And there is that dalliance with Fannie Mae when he took center stage in the organization’s failure and subsequent bailout for a sizable fee.

Much as it would pain him to hear it, Frank disgusts me, but only in the same way Representative Nancy Pelosi and President Barack Obama disgust me — no more, no less. I will remember him as unforgivably liberal. Sorry, Barney.

High winds cause chaos at LA airport

LOS ANGELES, Dec. 1 (UPI) — High winds knocked out power in some terminals Wednesday night at Los Angeles International Airport and scattered debris over runways, aviation officials said.

The weather delayed many travelers, with 20 flights diverted to other airports and others circling the airport waiting for the wind to die down, the Los Angeles Times reported. Ian Gregor, a spokesman for the Federal Aviation Administration, said gusts were 40 knots or more, creating dangerous crosswinds as pilots attempted to land.

Two runways were closed because of debris.

“We are trying to shoehorn a four-runway operation on to two runways, and add into that mix periodic strong crosswinds that prevent aircraft from taking off or landing, and you have a pretty interesting evening,” Gregor said.

In some of the darkened terminals travelers used cellphones as emergency flashlights.

The wind also put an AM news radio station, KNX, off the air for a time. Traffic lights in parts of the city were out.

Forecasters said Southern California would experience high winds through Friday, with gusts as high as 80 mph possible.