(BN) Sovereign Debt Risk Surges in Europe as Slowdown May Deepen Deficit Woes

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Sovereign Debt Risk Surges as Slowdown May Deepen Deficit Woes

Aug. 12 (Bloomberg) -- A gauge of government bond risk rose to the highest level in five weeks on concern Europe's deficit crisis will worsen as slowing economic growth exacerbates bank bailout costs.

The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments rose for a seventh day, climbing 4 basis points to 140, according to data provider CMA. The gauge is the highest since July 7 and up from a three-month low of 109.5 on Aug. 3.

Swaps on Ireland climbed to a 17-month high on speculation the $32 billion bailout bill for Anglo Irish Bank Corp. will add to the country's fiscal deficit. Greece's economy contracted for a seventh quarter and unemployment claims in the U.S. unexpectedly rose, deepening concern of a so-called double-dip recession.

"A weakening macro picture leading to increasing budget deficits for sovereigns has led to sovereign spreads widening again," BNP Paribas SA strategists in London wrote in a note to investors. "The size of 'Bad Anglo' while not finalized yet will probably add quite a bit to the Irish national debt."

Ireland's borrowing costs rose at an auction of 1 billion euros ($1.28 billion) of six and eight-month bills today. The country sold 500 million euros of securities due Feb. 14, 2011, at an average yield of 2.458 percent, compared with 1.367 percent at a July 22 auction of similar bills.

Bailout Costs

The cost of the Anglo bailout may trigger a surge in Ireland's budget deficit to 25 percent of GDP this year, before dropping to 10 percent in 2011, analysts at Dublin-based Davy Research wrote in a note today. The European Union limit for members of the euro area is 3 percent.

Default swaps on Ireland climbed 15 basis points to 286, the highest since March 2009, CMA prices show. Contracts on Anglo Irish jumped 17.5 to 551.5, Allied Irish Banks Plc increased 17.5 to 441 and Irish Life & Permanent Group Holdings Plc rose 14.5 to 337.

Germany may also have to absorb the holdings of two so- called bad banks, raising the nation's debt to 90 percent of gross domestic product, Die Zeit reported. Contracts on Germany increased 3 basis points to 47, the highest since June 29.

Swaps on Greece jumped 17.5 basis points to 809.5 as the wage-cuts and tax increases that aim to trim the European Union's second-biggest budget deficit deepened a recession. Contracts on Portugal climbed 8.5 basis points to 277, Italy rose 10 to 182 and Spain was 7 higher at 221.

U.S. Treasuries

The cost of hedging against losses on U.S. Treasuries climbed for the eighth day, with default swaps rising 1 basis point to 49.5, the highest level since February. Initial jobless claims rose by 2,000 to 484,000 in the week ended Aug. 7, the highest since mid February, Labor Department figures showed.

The cost of insuring corporate debt against default also rose with the Markit iTraxx Crossover Index of swaps linked to 50 companies with mostly high-yield credit ratings increasing 16 basis points to 520, according to JPMorgan Chase & Co., the highest in three weeks.

The Markit iTraxx Europe Index of 125 companies with investment-grade ratings climbed 4.25 basis points to 116.25, and the Markit iTraxx Financial Index of 25 banks and insurers rose 5.5 to 137.5, JPMorgan prices show.

Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A basis point on a contract protecting 10 million euros of debt from default for five years is equivalent to 1,000 euros a year.

To contact the reporter on this story: Abigail Moses in London at Amoses5@bloomberg.net

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Fwd: Budget Bulletin: Trustees Report: Social Security and Medicare are Unsustainable

Budget Bulletin Your source for federal budget news and analysis Recent Updates It's Official: Medicare's Finances Shadowed by Uncertainty 2010 Social Security Trustees Report Continues to Show the Urgency of Reform U.S. Long-Term Debt Situation Is One of the World's Worst Featured Research Trustees Report: Social Security and Medicare are Unsustainable By Nicola Moore The Social Security and Medicare Trustees today released their annual reports on the fiscal condition of the programs, and the situation for these programs is still dire. Although the programs' fiscal health hasn't worsened since last year, both programs are still on an unsustainable course. Most significantly, the programs are running trillion-dollar shortfalls because they've promised more benefits than they can afford: Social Security has a $7.9 trillion shortfall (up $0.1 trillion from last year), which means the program would require $7.9 trillion in cash—today!—to afford its promises. Alternatively, closing that gap would require payroll taxes to rise immediately and permanently from 12.4 percent of earnings to 14.24 percent. For a worker earning $50,000, that's a $920 tax increase. Medicare has a $30.8 trillion shortfall. To put that into perspective, that is more than twice the size of the entire U.S. economy, which means it would be impossible to infuse enough cash into Medicare to fix the program. However, the assumptions used to arrive at this number give new meaning to the word optimistic. The good news for Social Security is that the basic position of the trust fund is unchanged: The trust fund, which is currently running deficits and will rebound by 2012, will begin to run deficits in 2015, and the whole piggy bank will be exhausted 2037. The bad news for workers, as the Trustees indicated, is that the main reason these dates are unchanged is that workers will be paying more in payroll taxes thanks to Obamacare, which has made a larger share of earnings subject to Social Security taxes. >> Click here to read Nicola Moore's full report Chart of the Week Get more charts with Heritage's Federal Revenue and Spending Book of Charts About The Heritage Foundation Founded in 1973, The Heritage Foundation is a research and educational institute - a think tank - whose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense. The Heritage Foundation | 214 Massachusetts Ave NE, Washington, DC 20002 | 202.546.4400

Fwd: Morning Bell: The Dodd-Frank Bailout is Already Here

08/12/2010 The Dodd-Frank Bailout is Already Here On July 21, when President Barack Obama signed the Dodd-Frank financial regulation bill, he promised: "There will be no more taxpayer-funded bailouts. Period." How long will this Obama promise last? Well, The New York Times reports today that  "the Obama administration on Wednesday pumped $3 billion into programs intended to stop the unemployed from losing their homes," including a program announced by the Department of Housing and Urban Development that "will draw on $1 billion authorized by the new financial overhaul law." That's right. The Dodd-Frank "no more taxpayer-funded bailouts forever" bill is not even a month old, and already President Obama is using it to turn your tax dollars into yet another bailout. And why is the Obama administration turning to Dodd-Frank bailout funds so soon after passage? Because its original mortgage bailout plan, the Home Affordable Modification Program (HAMP), has been a complete failure. Don't take our word for it. Here are the words of Special Inspector General for the Troubled Asset Relief Program Neil Barofsky: Unfortunately, HAMP continues to struggle to achieve its original stated objective, to help millions of homeowners avoid foreclosure "by reducing monthly payments to sustainable levels." Despite a seemingly ever increasing array of HAMP-related initiatives designed to encourage participation in the program, the number of homeowners being helped through permanent modifications remains anemic, with fewer than 400,000 ongoing permanent modifications…and HAMP has not put an appreciable dent in foreclosure filings. Indeed, the number of trial and permanent modifications that have been canceled substantially exceeds the number of homeowners helped through permanent modifications.

(BN) U.S. Is Bankrupt and We Don’t Even Know It: Laurence Kotlikoff

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U.S. Is Bankrupt and We Don't Even Know It: Laurence Kotlikoff

Aug. 11 (Bloomberg) -- Let's get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.

What it can and must do is radically simplify its tax, health-care, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy.

Last month, the International Monetary Fund released its annual review of U.S. economic policy. Its summary contained these bland words about U.S. fiscal policy: "Directors welcomed the authorities' commitment to fiscal stabilization, but noted that a larger than budgeted adjustment would be required to stabilize debt-to-GDP."

But delve deeper, and you will find that the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: "The U.S. fiscal gap associated with today's federal fiscal policy is huge for plausible discount rates." It adds that "closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP."

The fiscal gap is the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years.

Double Our Taxes

To put 14 percent of gross domestic product in perspective, current federal revenue totals 14.9 percent of GDP. So the IMF is saying that closing the U.S. fiscal gap, from the revenue side, requires, roughly speaking, an immediate and permanent doubling of our personal-income, corporate and federal taxes as well as the payroll levy set down in the Federal Insurance Contribution Act.

Such a tax hike would leave the U.S. running a surplus equal to 5 percent of GDP this year, rather than a 9 percent deficit. So the IMF is really saying the U.S. needs to run a huge surplus now and for many years to come to pay for the spending that is scheduled. It's also saying the longer the country waits to make tough fiscal adjustments, the more painful they will be.

Is the IMF bonkers?

No. It has done its homework. So has the Congressional Budget Office whose Long-Term Budget Outlook, released in June, shows an even larger problem.

'Unofficial' Liabilities

Based on the CBO's data, I calculate a fiscal gap of $202 trillion, which is more than 15 times the official debt. This gargantuan discrepancy between our "official" debt and our actual net indebtedness isn't surprising. It reflects what economists call the labeling problem. Congress has been very careful over the years to label most of its liabilities "unofficial" to keep them off the books and far in the future.

For example, our Social Security FICA contributions are called taxes and our future Social Security benefits are called transfer payments. The government could equally well have labeled our contributions "loans" and called our future benefits "repayment of these loans less an old age tax," with the old age tax making up for any difference between the benefits promised and principal plus interest on the contributions.

The fiscal gap isn't affected by fiscal labeling. It's the only theoretically correct measure of our long-run fiscal condition because it considers all spending, no matter how labeled, and incorporates long-term and short-term policy.

$4 Trillion Bill

How can the fiscal gap be so enormous?

Simple. We have 78 million baby boomers who, when fully retired, will collect benefits from Social Security, Medicare, and Medicaid that, on average, exceed per-capita GDP. The annual costs of these entitlements will total about $4 trillion in today's dollars. Yes, our economy will be bigger in 20 years, but not big enough to handle this size load year after year.

This is what happens when you run a massive Ponzi scheme for six decades straight, taking ever larger resources from the young and giving them to the old while promising the young their eventual turn at passing the generational buck.

Herb Stein, chairman of the Council of Economic Advisers under U.S. President Richard Nixon, coined an oft-repeated phrase: "Something that can't go on, will stop." True enough. Uncle Sam's Ponzi scheme will stop. But it will stop too late.

And it will stop in a very nasty manner. The first possibility is massive benefit cuts visited on the baby boomers in retirement. The second is astronomical tax increases that leave the young with little incentive to work and save. And the third is the government simply printing vast quantities of money to cover its bills.

Worse Than Greece

Most likely we will see a combination of all three responses with dramatic increases in poverty, tax, interest rates and consumer prices. This is an awful, downhill road to follow, but it's the one we are on. And bond traders will kick us miles down our road once they wake up and realize the U.S. is in worse fiscal shape than Greece.

Some doctrinaire Keynesian economists would say any stimulus over the next few years won't affect our ability to deal with deficits in the long run.

This is wrong as a simple matter of arithmetic. The fiscal gap is the government's credit-card bill and each year's 14 percent of GDP is the interest on that bill. If it doesn't pay this year's interest, it will be added to the balance.

Demand-siders say forgoing this year's 14 percent fiscal tightening, and spending even more, will pay for itself, in present value, by expanding the economy and tax revenue.

My reaction? Get real, or go hang out with equally deluded supply-siders. Our country is broke and can no longer afford no- pain, all-gain "solutions."

(Laurence J. Kotlikoff is a professor of economics at Boston University and author of "Jimmy Stewart Is Dead: Ending the World's Ongoing Financial Plague with Limited Purpose Banking." The opinions expressed are his own.)

To contact the writer of this column: Laurence Kotlikoff at kotlikoff@bu.edu

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Fwd: Morning Bell: Summer of Bailouts

08/11/2010 Summer of Bailouts White House press secretary Robert Gibbs did not give the White House daily press briefing yesterday. The stated excuse was a bad cough. But there was no mention of any flu-like symptoms when The Hill reported yesterday that Gibbs believes the "professional left" should be "drug tested" since they will only be satisfied "when we have Canadian health care and we've eliminated the Pentagon." After an outpouring of leftist protests over the article, including a call from Rep. Keith Ellison (D-MN) that he resign, Gibbs walked back his criticism, releasing a statement explaining: "Day after day it gets frustrating. Yesterday I watched as someone called legislation to prevent teacher layoffs a bailout - but I know that's not a view held by many." Oh how wrong Gibbs is. "Bailout" is the only word that can accurately describe the $26.1 billion legislation that the House approved on a largely party line vote yesterday. Let's break down the bill's main provisions: The $16.1 Billion Medicaid Bailout - Congress has already bailed-out state Medicaid programs three times this decade, the most recent $87 billion installment coming as part of President Obama's $862 billion failed economic stimulus bill. But the states with the most wasteful Medicaid programs have already blown through that money, and now they need another hit. Every state should have known that the stimulus funding would expire on December 31, 2010. But 30 states went ahead and built their budgets on the assumption that President Obama would hook them up for 2011 as well. This $16 billion Medicaid bailout is designed to aid to those states with the worst Medicaid spending problems. For instance, New York has nearly 30 percent of its citizens enrolled and spends in excess of $18,000 per person in poverty. Texas, in comparison, with 5 million more people and 1 million more individuals in poverty than New York, has a much smaller Medicaid program. In essence those 20 states that acted prudently and budgeted for the stimulus to expire are paying for the bailouts of the 30 states that can't control their Medicaid spending problem.

Fwd: Obamacare Spreads the Wealth by Cutting Medicare

August 10, 2010 Obamacare Spreads the Wealth by Cutting Medicare Is Granny "disposable"? Some seniors may get that impression once Obamacare kicks in. As noted in a recent Wall Street Journal article, the new law cuts $200 billion from Medicare Advantage, a public-private "hybrid" of Medicare.  As a result, more than 11 million seniors will likely see their Medicare Advantage premiums rise significantly or their benefits noticeably lessened.  Either way, it will violate President Obama's promise that all who liked their current coverage would be able to keep it under Obamacare. But Obamacare giveth what it taketh away.  And the $200 billion it takes away from the seniors' program will go to finance new entitlements for younger, healthier Americans. Too bad for the oldsters.  Even before Obamacare, Medicare had racked up unfunded obligations of $38 trillion.  But rather than restructure Medicare to remedy the program's fundamental fiscal problems, Obamacare proponents opted to siphon off $200 billion and use it to start an entirely new—and equally financially unsustainable—health program for even more people. Congress would do much better by converting Medicare from a defined benefits program to a defined contribution system. Seniors would then apply their contribution to the health plan of their choice—with those opting for a richer benefit package paying the additional cost. Meanwhile, Congress should plow any "savings" it can find within Medicare (such as the $200 billion cut to Medicare Advantage) back into the program.  Cutting seniors' benefits to create costly new entitlements for younger Americans may help President Obama "spread the wealth around," but in the process it just hastens the nation's journey down the road to fiscal disaster. RECENT ENTRIES Side Effects: Obamacare Causes Some Insurers to Stop Offering Coverage for Kids VIDEO: Obamacare's Impact on Families It's Official: Medicare's Finances Shadowed by Uncertainty Share Today's Side Effects Facebook Myspace Digg Linkdin Twitter   Facebook Twitter YouTube Kindle Flickr Support our work by becoming a member with your gift of $25 or more. The Heritage Foundation 214 Massachusetts Avenue, NE Washington, DC 20002-4999 Call us at (202) 546-4400 Add newsletters@heritage.org to your address book to ensure that you receive emails from us.

Fwd: New Common Sense: Tea Party Populism: What Would the Founders Say?

New Common Sense Applying First Principles to the Issues of Today At Heritage What's so great about the separation of powers? Ever wonder about the rise of judicial policy-making? Around the Country Kagan joins the Court…now we will see what she really thinks. Is there a difference between legislating and administering? Charles Krauthammer thinks so. Quick Thoughts How much red tape does it take to open a lemonade stand?  Do you know who presented the first Purple Heart medal? What We're Reading: Athwart History: Half a Century of Polemics, Animadversions, and Illuminations A William F. Buckley Jr. Omnibus edited by Linda Bridges and Roger Kimball, with a preface by George F. Will   Tea Party Populism: What Would the Founders Say? With their homemade signs begging for fiscal common sense and a return to constitutional government, the Tea Party Movement has been a unique phenomenon in the American political scene and a unique brew of American populism. It is true that populism can be a destructive force, especially when passion rules reason. However, a populism that advocates limited government and constitutionalism - while still capturing the general discontent of the nation - is compatible with and beneficial to republican self-government. Such populism (tea party style) is consistent with the Founders' vision for our nation. The Founders were very aware of the dangers of a populism that elevated passion over reason. In Federalist 49, James Madison argued that it was suicidal for a nation if "the passions...not the reason, of the public would sit in judgment." Thomas Jefferson decried the characterization of the United States as a democracy, because "democracy is nothing more than mob rule, where fifty-one percent of the people rule the other forty-nine." Alexander Hamilton echoed these sentiments saying, "[T]he voice of the people has been said to be the voice of God; and, however generally this maxim has been quoted and believed, it is not true to fact. The people are turbulent and changing, they seldom judge or determine right." With this in mind, the Founders established a constitutional government with institutions to channel and check popular passion, while deriving its power from the consent of the governed. Passionate populism was not the only danger to self government. Rule by scientific expertise—such as the one Angelo Codevilla described—also threatened republican self government. The Founders, far from the progressive model of administration by experts, supported governance by those with, in the words of James Madison, the "most wisdom to discern, and most virtue to pursue, the common good of the society." Their concern was with electing the best potential leader, not with giving the person with the most expertise a legislative fiat to act however they wish. But the Tea Party Movement, despite its portrayal on MSNBC, is neither a wayward mob nor racially motivated hate group. As Matthew Spalding noted when awarding the Salvatori Prize for American Citizenship to the Tea Party Movement, "The debate between America's Founders and the modern progressive paradigm of government…has now been engaged in the public square;" the Tea Party has embraced the Founders' vision while fully rejecting the progressive paradigm. This revival of thought grounded in the permanent truths of the founding, by average citizens interested in nothing more than returning our nation to its founding principles, has animated "a deepening commitment and advocacy of the truths of the Declaration of Independence and the basic principles of the United States Constitution." This is a rational populism that conservatives should not fear, but instead wholeheartedly embrace. Keep Reading about Populism, Tea Party Style                        Forward this message to a Friend!   Quote of the Week                            Why has government been instituted at all? Because the passions of men will not conform to the dictates of reason and justice without constraint. ~ Alexander Hamilton, Federalist 15 For more quotes, visit westillholdthesetruths.org About The Heritage Foundation Founded in 1973, The Heritage Foundation is a research and educational institute -- a think tank -- whose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense. The Heritage Foundation | 214 Massachusetts Ave NE, Washington, DC 20002 | 202.546.4400

Fwd: Morning Bell: Under Obamanomics, Government Workers Win, You Lose

08/10/2010 Under Obamanomics, Government Workers Win, You Lose Today the House of Representatives is expected to approve yet another bailout for those states that have proved incapable of controlling their spending on government worker pay, benefits and pensions. The $26.1 billion price tag will be funded in part by $11 billion in tax hikes on U.S. companies that compete internationally. From his trillion dollar economic stimulus to his $3 trillion tax hike it has become clear that President Barack Obama views the private sector the same way the Huns viewed a city - as something to be sacked and plundered for the benefit of public sector workers. The effect of President Obama's policies is becoming clear. The Wall Street Journal reports that personal incomes fell across the U.S. last year except in areas with a high concentration of federal government jobs. Washington D.C. was one of just three metro areas that saw both net earnings and personal income rise. And those gains were due entirely to the growth of the federal government; private sector compensation in the Washington metropolitan area actually fell. Nationally, private wages fell six percent in 2009 while government pay rose 2.6 percent. And USA Today reports that federal employees' average compensation has grown to more than double what private sector workers earn. Responding to the new numbers, National Treasury Employees Union President Colleen Kelley told USA Today: "The data are not useful for a direct public-private pay comparison." And it is true: federal workers often are better educated and more experienced than private sector workers. But after controlling for education and experience, The Heritage Foundation's James Sherk found that federal employees get paid 22 percent more per hour on average than private-sector workers. Throw in the lavish benefits that federal government workers receive, and federal employees earn approximately 30 to 40 percent more in total compensation than comparable private-sector workers.

Fwd: Morning Bell: Blaming Bush Doesn't Create Jobs

08/09/2010 Blaming Bush Doesn't Create Jobs In January 2009 after it became clear that the leftist majority in Congress would pass President Barack Obama's $862 billion economic stimulus bill without a single vote from a Republican, Speaker Nancy Pelosi (D-CA) defended her partisan approach, telling Politico: "Yes, we wrote the bill. Yes, we won the election." Last Friday, some 19 months after the stimulus bill became law, the Labor Department issued its monthly jobs report showing the U.S. economy shed 131,000 jobs and unemployment tread water at 9.5% as 181,000 workers left the workforce entirely. These numbers are so terrible that the Federal Reserve is expected to downgrade its assessment of the U.S. economic outlook when it meets tomorrow. Desperate to shift blame away from her economic policies, Speaker Pelosi released a statement Friday blaming President George W. Bush for the economy's anemic recovery: "Today's report shows our teachers, police officers, firefighters, and nurses are still feeling the worst of the Bush recession." Notice how Speaker Pelosi is only concerned about the economy's effect on government and unionized workers: teachers, police officers, firefighters and nurses. If you happen to work for the government, Speaker Pelosi is prepared to move heaven and earth to make sure your pay isn't cut. But if you work for the private sector, Speaker Pelosi has nothing to offer you but higher taxes. That is why she is calling back the House to vote on another state government bailout. This time the price tag is $26.1 billion, funded in part by $11 billion in tax hikes on U.S. companies that compete internationally.

Fwd: WikiLeaks or Not, Afghanistan is a War the U.S. Must Win

heritage.org | Heritage research | Blog |                          August 9, 2010 Issue in Depth: Afghanistan Two weeks ago thousands of classified documents relating to the war in Afghanistan were released on the website WikiLeaks. Regardless of the intentions and motivations of the website's founder, Julian Assange, our commitment to this vital part of the world must be unwavering. The fact remains that the United States is fighting in Afghanistan to keep it from reverting to a safe haven for terrorists like those who struck on September 11. Efforts by the U.S. and its allies and partners in Afghanistan to facilitate and defend stable democratic governance are essential to reducing the terrorist threats to U.S. national security. With a new commander in place, a fresh set of counterinsurgency guidelines, as well as tens of thousands of more American troops entering the country, there is little reason to get caught up in "wikisteria." Please see our most recent research on the war in Afghanistan in this week's National Security Update. Latest Research: The Heritage Foundation: Afghanistan: Standing Shoulder to Shoulder with the United States The truth is that operations in Afghanistan—operations for which the Afghans themselves are paying a heavy price along with NATO and other Coalition forces—are a direct consequence of the terrorist attacks of 9/11. To withdraw prematurely would risk both creation of a security vacuum with the return of civil war and the destabilization of Pakistan, which could have unthinkable regional, and even nuclear, consequences. The Heritage Foundation: The Cameron-Obama White House Meeting: The U.S. and U.K. Must Reject a Timetable for the War in Afghanistan On July 20, British Prime Minister David Cameron will meet with President Barack Obama at the White House in what will be Cameron's first visit to Washington as Prime Minister. Cameron and Obama have met on at least two previous occasions, most recently at the G-20 summit in Canada. However, this visit marks the most important meeting of the two leaders to date and comes amid heavy strain on the Anglo–American Special Relationship. The Heritage Foundation: Capture of Taliban Leader Hints Pakistan Reevaluating Afghan Strategy The recent capture of the number two Afghan Taliban leader, Abdul Ghani Bahadur, in Pakistan is a blow to the Afghan Taliban and its ability to coordinate the insurgency in southern Afghanistan. Following months of quiet U.S. pressure on Pakistani officials to crack down on Taliban leaders in their country, Islamabad has come through by helping to capture Bahadur, who was critical in directing and organizing Taliban foot soldiers in Afghanistan. The Heritage Foundation: Expand NORAD to Improve Security in North America To enable NORAD to better fulfill its mission, the United States and Canada should invite Mexico to join NORAD. Mexican participation would greatly enhance NORAD's aerial and maritime surveillance capabilities in North America and help to build a common strategic vision across North America. More Blogs: The Foundry: Wikisteria: Don't Take the Anti-War Bait The aim of releasing thousands of classified documents on the Afghanistan war on the WikiLeaks Web site was apparently to undermine American public support for the war. The founder of WikiLeaks, Julian Assange, said he wanted the world to see the "true nature of the war" and equated the WikiLeaks Afghanistan archive with the release of the secret files of the East German police following the fall of the Berlin Wall. The Foundry: Senate Hearing Cautions Administration on Timelines and Taliban Reconciliation "Can we improve the Afghanistan Government? Maybe. Can we do it by July 2011? No." This statement came from Dr. David Kilcullen, an expert in counterinsurgency and former advisor to General Petraeus, during rigorous questioning at a Senate Foreign Relations Committee (SFRC) hearing last week. The Heritage Foundation: Petraeus Hearing: Obama Needs a Victory Plan, Not an Exit Plan Gen. David Petraeus, testifying before the Senate Armed Services Committee today, demonstrated why he is a superb choice to replace Gen. Stanley McChrystal as commander of U.S. and NATO forces in Afghanistan. Petraeus gave a crisp, smooth, and tactful performance that exhibited the diplomatic skills that will serve him in good stead at his new job.   More Events: August 23 - 27, 2010 Location: Washington, DC The Heritage Foundation: Homeland Security 2020 To carry out an attack on American soil, a terrorist only has to be right once. Thus, America's homeland security apparatus must keep up with the evolving nature of the terrorist threat. While homeland security has come a long way since 9/11, the question remains as to how DHS, state and local governments, and the private sector can ensure that the future homeland security enterprise can take on tomorrow's threats. Join us the during the week of August 23rd as Heritage analysts host a week long discussion dedicated to devising the right security policy agenda for the next decade. August 24 -25, 2010 Location: Washington, DC National Defense University: The Economic Element of National Power: Economic Security is National Security This symposium seeks to illuminate and promote informed discussion on the ways in which government and commercial sector leaders must work together to reform and revitalize our national economy to support enhanced national security. Featured speakers include government officials and a wide range of private sector experts. Copyright All Rights Reserved © 2009, The Heritage Foundation The Heritage Foundation | 214 Massachusetts Ave NE, Washington, DC 20002 | 202.546.4400