The Journal Editorial Report: 9/19

" Coming up next the administration gives them back and it's handed to war on American ally shelving plans for a missile defense shield in Poland and is about Czech Republic and lessons from the Lehman's collapse one year later what have we learned now we better prepared to stop the next financial meltdown plus. President Obama risks a trade war with trying to help. His union friends are -- more favors to come in the journal. Editorial report starts right now."

" Welcome to The Journal Editorial Report I'm polish ago well it. May be risky to be an American adversary but it's more dangerous these days to be a friend. The latest allies to get slapped by the Obama administration Poland and the Czech Republic the administration announced this week that it is shelving plans to install a missile defense system in. Eastern Europe citing a change in the perceived threat posed. By a nuclear Iran plans for the missile shield had angered Russia. A country President Obama has promised to reset relations with joining the panel this week -- to -- columnist and deputy editor Dan -- Columnist Mary on -- Stacy O'Grady and deputy editor and foreign affairs columnist. Bret Stephens so Brett -- president -- this is saying look we needed to change the policy. Because the intelligence change that is a threat from Iran became more. Urgent regarding short and medium range missiles not the long range missiles that the defense system. Previous defense system at the Bush Administration had put in place had protected against so why shouldn't the policy change if the intelligence does well because."

" There is some -- NJ US in this to that claim you're not you're not buying -- not qualifying for the fun of for the following reason. Democrats people close to Obama we're putting it about even before he took office. That he intended to make precisely this kind of deal which was to -- These -- these anti ballistic missile systems in Poland and the Czech Republic which had angered the Russians. In exchange for Russian cooperation. On sanctioning. I'm sanctioning the view reunions at the at the United Nations so if this Intel is is -- this Intel would have to be over year old. For that to make any any kind of sense whatsoever. This is something they wanted to do and their fitting the Intel simply for their for their political or what that's a pretty serious charge to basically -- He's saying that they are skewing the Intel interpretation to fit the policy. With the new policy. Well it's been a longstanding."

" Position of the Democratic Party even sense Reagan you know announce what Ted Kennedy described as Star Wars. To get rid of missile defense they don't really believe -- And I think what they've done here is smacks as much of -- Obama foreign policy -- of being basically not bush -- that simply reverse something that George Bush fit. I think one of the biggest problems is it's very difficult to discern the strategic rationale behind Obama's foreign policy. It's you when you do something like this all the other players in the world groups Poland the Czech Republic Eastern Europe are trying to figure out why you are doing best and there is no. Really underlying level intellectual rationale -- terrorist --"

" I understand that if there whispering this okay nevermind the missile defense thing for a second but they're saying look Iran is a more urgent threat. We need to stop their nuclear weapons program we can only do that from an imposed sanctions of everybody agrees we can have to get the Russians on board. So if we need to pay them off with fists if we get Russian support on sanctions and we stop Iran that's a much bigger strategic wanted to."

" And Russia's foreign minister of the day after it was announced today that -- sanctions against Iran would be a mistake well because you can't sell because the Russians may be -- this on the QT -- a private deal lot of public deal that's all the opinion I think that the UV and this is a calculation. About a way to lower the tensions with."

" Those regimes around the world that the Bush Administration quote was not able to get along what we're gonna show that we can get along with these guys we're gonna bring the world together. Against really you know what we consider to be really bad actors the problem with that is that. You know it's it's sort of the first of alienating. -- here that's for sure and very upset you know that the administration is doing the same kinds of things in Latin America alienating our friends and trying to reach out to those regimes that. Quote -- the Bush Administration couldn't get along with. And sending a very dangerous signal I think to the world to."

" The the other. Point that's important I think that the Obama administration fundamentally misunderstand Russian interest vis a vis Iran. They think that at some level the -- of ukrainians -- the Russians excuse -- will go along with us. What Russia really wants is to keep the reunion crisis on an -- oil for as long as they can't. Why for one reason it drives oil prices. Which is in their interest. It keeps America. And it also keeps America engaged in a crisis and most importantly. It allows the Russians to dole out the diplomatic keepers at the UN in exchange for material concessions now was the missile the missiles of the Czech Republic. The next time it's going to be the nature of the government in Georgia or Ukraine OK Brad you're making a judgment about -- interest -- you may be right what if the administration is right in -- may have some assurances from -- the -- and -- about the fact they are going to cooperate in Iran and we get their cooperation to really come down hard on Iraq. Is this -- Q is this calculation this trade. These missile defense sites which won't be online for several years anyway. Worse. Russian support against uranium are -- girlfriend. One could argue it is I think it's the week deal you're relying on the good faith for the Russians to hold up their end of a bargain. And in return relying on this intelligence about Iranian missile capability. Which also I would suspect this week. Keep in mind that inmate big did test a long range 1500 mile missile right into I think easily within reach of Warsaw -- and I didn't exactly once and -- more than you do in Warsaw and the solid fuel rocket. Mean this this intelligence that they claim to have. Seems to me that's somewhat the somewhat questionable given between what we know of what what to read is capable to -- We also know the Iranians are cooperating very closely with the north Koreans have received North Korea steadily making advances. In terms of producing. Long range missile capabilities this particular missile ban was referring to seems to be based on and on a Chinese model so it's it's wrong to think that this is not a problem."

" Did these these defenses in Europe were also able to defend the in the east coast United States so that will no longer be the case all right thank you when we come back. Lessons from Lehman one year after the financial giant's collapse are we in. Any better prepared to stop the next big mouth. It's been one year since Lehman Brothers collapsed into bankruptcy is that the US economy into a tailspin marking the anniversary President Obama traveled the Wall Street this week to press his case. For an overhaul of the financial regulatory system."

" One year ago we saw in stark relief. How markets can spin out of control. A lack of common sense rules can lead to excess and abuse. How close we can come to the -- One year later. Is incumbent upon us to put in place those reforms to prevent this kind of crisis from ever happening again."

" back with Dan mirror and Mary O'Grady and also joining the panel assistant editorial page editor James -- all right Mary so how much progress has how much sturdier is the financial system now than a year ago and can we have what happened last year happen again any time soon."

" I think would be very hard to argue that the system is -- really. I mean there really hasn't been any any changes on I think. You probably wouldn't have any kind of a crisis anytime soon because. Were still in the process of reef relating if you well. But the problem is that if you do have a crisis. That on the fiscal side the government doesn't have any money to step and on the monetary side the Fed can't lower interest rates any firm is flooding the zone you still have a lot of Baden. Advance the financial institutions doing proprietary trading."

" I you just rating on their own account had been -- ensured deposits they make they invest their own money rather than just making it exactly and you still have the federal housing."

" Administration. I'm making very aggressive -- sub prime -- the only promised tax payers dime paid exactly what."

" We play devil's advocate for second because of -- it seems to me the finance system is sturdier in this respect the panic has subsided. Banks are have raised their capital standards some of them have had that old Adam Smith discipline imposed a saying we doctored the tape makes some of these really. Bad loans and most of the banks are making money because. Because interest rates are so -- They can borrow very very cheaply almost for nothing and then lend out at 56% so that is -- more than a year ago the system is in better shape."

" Well I think what you're saying if conditions are better for the system right be stable right but the point I'm making is that. Any kind of guard rails or defense is that you have for distortions. In the market. To get out of line have have not those sorts of things haven't changed -- but the larger structural changes another no protection. It's this way it's the same old thing only this conditions are better so we don't because right now we're not beings that were right now being careful because we just. Went through a parent -- got burned from my point is that it could happen again because we still have a system. That basically privatize as rewards. And socialize as brisk and --"

" Brings the question two when your favorite subject changed with just too big to fail she's basing Mary's basically saying what incentives haven't changed -- into anything that may be worse because what happened is we bailed out. Some of the failures city group."

" In particular is one of the most egregious. And and we didn't punish the very much at all. That's right at a media played dubbed mister Obama is a visit to Wall Street this week as a message that there are no more bail outs when in fact he's saying exactly the opposite his plan that is currently stalled on Capitol Hill. Would extend bailouts not just a bank split for the first time explicitly to companies that art banks. Allowing them the FDIC which has its hands full with -- banks to rescue and -- were a bailout. But he's talking about a resolution agency OK he's saying a resolution -- that isn't quite the same as a bail and I would argue that Wachovia. Wasn't rescued it was put out of business. Okay CD group was rescued all right and may be even Goldman Sachs was rescued GE capital GE capital probably was rescued by by some of these federal guarantees. So is that really fair to say everybody would get a bailout. Well in -- because it's it's it's not bankruptcy and I think the hope is that bankruptcy comes back into fashion people. Realize that the freedom to fail it's very important. We as a mutual fund money fund investors today is our first day of freedom and a year. This is the first day that we are allowed to fail and feels terrific you you're you're thrilled with that -- your money market fund and go -- can lose money and let's look over the trend continues. CIT was the -- this summer that. People's made the same of fact -- argument it's that are connected it's all over the economy it has its hands and everything. And the government wisely decided not to rescue -- hall on -- it life has gone on but the lesson of that is don't be too small. Get bigger get really big yeah but -- if -- CIT in your small we won't save you -- felt a bit but if you're big and Paterson very little evidence no evidence for them the bailouts of big guys -- the government incentives. We're really smart and the world would covenant that we taken in the details because. Any win we can tell you what it would -- airport after. So just trust those that that these are really large institutions -- to be bailed out and we'll we'll we'll -- we'll we'll we'll tell you what systemic risk -- and quickly. Pay restrictions the government this is gonna impose sweeping pay restrictions on bank executives is this gonna make any difference being sentenced."

" I think they'll make them worse it's the one point I think we haven't made is that while the government has thrown a big regulatory blanket over the system. They have not created real upside growth incentives and all this happened simultaneously with the recession. Where is strong economic growth where is the risk taking going to come from. But he still lives you so you wanna give incentives to people to make that money which are saying absolutely and they just haven't done that through the state has simply smothered the system and scapegoated the participants. Okay start when we come back. President Obama's big labor paid back he's risking -- pre war with China. To help his union friends are -- other favors in the --"

" The United States moved closer to a trade war this week is trying to threaten retaliation for president Obama's decision to slap a 35%. Tariff on tire imports united. Steelworkers union had sought the surcharge in it is perhaps just one of many pay backs coming from the administration for big labor's political support. We're back with Dan -- and Mary O'Grady and also joining the panel Washington columnist Kim Strauss all right Mary the politically in Washington the trade issue this kind of slipped under the radar of the administration dropped this tiger -- news out on late Friday. But overseas it's very big news what's reaction that."

" Yeah I think be should be administration thinks that this is just -- something little they can do for their friends in the union and that nobody's gonna notice but in fact China and meet immediately reacted by threatening. Two. Retaliate with add tariffs on non. Add chicken head and not auto parts from the US. But I think a lot of our other trading partners around the world are noticing that even -- the president keeps saying he's not a protectionist. When he does speaks more loudly he has refused to -- Put through some free trade agreements that were signed by George Bush three of them that are important. And he's also Colombia Panama South Korea all pending all pending are all very significant. You know and you think that I think is very important here is that they the administration doesn't recognize the importance of trade the United States. I mean this is not just about how other countries will retaliate but the US house to remain open if it's going to remain competitive producer. Of exports it imports in Hudson and different components that he uses. And those supply chains are totally connected throughout the globe if he starts. Breaking those supply chains he's gonna damage not only are our export business -- our ability to produce in this country."

" Well first point Genoa Obama had a press conference this week with Canadian Prime Minister Stephen Harper they're trying to work out their own trade tensions and in that press conference Stephen Harper said that he hoped the United States and Canucks. Canada could manage their relations in a way. That would be a model for other countries what mr. harper was talking about was leadership the United States is supposed to be in a leadership role on an issue like trade. And hope President Obama is running his trade policy is so we were just another -- don't country. The result of this is according to global trade alert. Association a trade analyst. The number of discriminatory trade policies around the world are -- numbering liberalizing trade policies."

" Discriminatory policies are rising in the world the United States should be pushing back against that Kim politically did the president just feel look I am I did. Big labor help me so much in the election -- really this was the first big decision they're really watching it health care -- some labor supports the public option that probably is not going to pass. The congress therefore he had to do this on trade no matter what the risks that Marion Dan makes a clear. My."

" Even if he. He didn't have to do anything what what you are seeing yet they did help him get elected among seem senseless president came office is a series of that this is really just the latest you've had. Executive orders giving union special access to federal work you've had special considerations for them. In the health care legislation to make sure that their plans don't get tax you've had. Discussions with a look at the auto bailouts and which the unions were placed ahead of the creditors in those cases so. This and and a series we've also buy America provisions in you know the stimulus bill. And so this is just the latest it didn't is going to be a long string of war and and the concern is married and gamble pointed out is it. What -- is most focused on is trade and so with these questions of deals you've now had US steel come up and ask for for more punitive levies on on Chinese. A steel pipe imports so we're gonna have a lot more of this and what it."

" What about the argument Mary though that look this idea of unilateral free trade. Is is naive in this world I mean if you really want to get the other countries to open up like China. And play fair you've got a whack a once in awhile and that means you have to impose tariffs you get their attention they might. You know rattled LeSabre a little bit about retaliation but in the end. He'll get them to open up so in the sense a little protectionism. Equals more free trade."

" That's like -- a lot of people there's a real problem with that and if you're looking actually at the evidence of what happens with trade. Countries that are open regardless of the access that other countries and market access and other countries give. Countries that are open are more competitive they have higher standards of living. And they're able to produce and export even when they don't have special trade agreements so the idea that by closing up and we saw all through. The twentieth century Latin America completely closed off lost all its competitiveness. Its standard of living dropped and it didn't start to make gains backward and back to where was in the 1920s until it started opening."

" and and Dan's point about leadership is crucial here because the United States is the world's leading economy if it doesn't if it starts to abandon that trade leadership everybody else could say that every country. For itself. And then you don't know where we're going to be going all right we have to take one more break when we come back our hits and misses of the week. Time now for our hits and misses of the week -- for --"

" While some good news this last week has been like the soundtrack to queen's another one bites the dust. Terrorists have been killed it topped out -- to terrorism because in Somalia. In Pakistan and India Indonesia some of these people. Who planned hotel bombings. One in in in one case they someone I know quite well was it was a very it was a very nearly killed. We point to the problems -- facing in Afghanistan we should remember that calculus problems. Are even graver than ours and for those who have suffered from what they perpetrated. Businesses such justice to celebrate."

" All right Kim. We'll somebody this may be -- apparently someone have to give -- miss -- Serena Williams and Kanye West. Maybe some people were amused to watch tennis star go all John McEnroe at the US open and yell at the line judge -- to watch the rapper stormed the MTV stage and tell us when she didn't deserve to win. But there is such a thing as is good sportsmanship and losing. With grace and and one -- uplifting part this week was listening to the chorus of boos from the audience and both of these places to realize they were witnessing to people who got. The rules didn't apply to them anymore and they do you are right that thanks Kim James."

" Paul -- thanks to readers back Brian Edwards promising on our opinions -- com website would like to give a hit to the real community organizers these are people not living on government grants or shakedowns of job creating businesses but. People who run the boy and girl scout troops. Neighborhood watch kiwanis club and do not get paid for -- volunteers."

" All right and then also this week acorn. What's defund dead yet by that community acorn community organizer group by the house of representatives on the housing front by the Senate so we'll see if that cannot. That can continue that's very good sorry James thanks. And remember if you have your own hit or miss police -- said JER at foxnews.com. That's it. For this week's edition of The Journal Editorial Report thanks to my panel. And to all of you for watching I'm apology go we hope to see you right here. Next week."