A foreign policy trial ballon from a current Financial Times article:

Members of the municipal council of Basra, Iraq’s second largest city, have been holding talks with officials from councils in two neighbouring provinces on establishing a federal region in the south, … The three provinces – Basra, Missan and Dhiqar – account for more than 80 per cent of the proved oil reserves of the country’s 18 provinces and provide a large share of the national income.
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people close to the Iraqi government say some officials driving the autonomy talks are backed by Muqtada al-Sadr, the renegade Shia cleric who launched an uprising against American troops in July.

This Fictional Times article, January 2005, puts more light on the issue:

The occupation authorities in Iraq have secretly asked two confidants, who afore had been appointed to the city council of Basra, to take over the government of the southern province. They are to form an administrative unit with those two neighbour provinces that account for most of Iraq’s oil reserves.

Only one cabinet member from the southern provinces is member of Prime Ministers Allawis cabinet, created by the Coalition Provisional Administration. “Unfortunately this now allows The South to complain about under representation in the central government.” the US ambassador to Iraq, Mr. Negroponte, explained. “We are trying to correct this sad error by lobbying the central government for more local latitude in The South.”

A Marine Corp general in Bagdhad gave some background on the military situation. “As the 15 northern provinces are now controlled by Iraqi personal, we can immediately reduce our troop numbers significantly. 50,000 men and women will stay in Iraq and will continue to build democracy. For logistical reasons I have proposed to station them exclusivly in the Autonomous Southern Provinces. This will shorten our lines of communication as supply will come through the harbour of Basra. It´s also only a short jump from our air bases in Kuwait.”

A British general added: “As the British troops are leaving, the American forces will take over our tasks. There have been less clashes here as in the Kurdish Kirkuk, the Sunni triangle and the Shia areas around Najaf, so their task here will be a lot easier. There will be fewer body bags.”

Prime Minister Allawi could not be reached for a statement as he is currently consulting with Muqtada al-Sadr in Najaf. Al Sadr, who had been said to be interested in the southern provinces, had denied such ambitions and had pointed out that no significant symbolic places of Islam are located in the south. After Sistanis death, the young cleric is expected to control the significant money flow generated by Shia pilgrimage in Najaf.

“The process we are now engaged in, will lead to a completely Autonomous South” a former senior official working at the AEI in Washington envisioned. “That new national entity has strong family and tribal relations with their brothers across the southern border. In the long term these borders may vanish and a reunited Dawlat al Kuwayt will emerge as a new prosperous and peaceful diamond in the northern Gulf.”

The Financial Times article Oil-rich Iraqi provinces push for autonomy is just the trial ballon. They are dead serious with this concept and for the neocons as for the realists it makes a whole lot of sense. If the other 15 Iraqi provinces will be a dirt poor hell on earth – who cares?

In CPI: Camouflaging Price Increase I voiced some shrill words about the official US inflation numbers. Billmon has been on this several times. Now we have the honor to be joined by Bill Gross, Managing Director for PIMCO, who oversees nearly $400 billion in fixed income assets. In his current Investment Outlook he opines on the government officials who produce the official numbers and looks at the real ones.

“Inflation under control” – (ex food and energy of course) shout the carnival barkers. “The CORE is running at just under 2%,” .. No matter that a gallon of gasoline is over 2 bucks or that a half gallon of milk will set you back $3.69; the CORE is under 2%.

.. prices of desktop and notebook computers declined by 8% a year during the past decade, The WSJ reports but because the machines’ computer power and memory have improved, their hedonically adjusted prices have dropped by 25% a year since 1997. No wonder the core is less than 2% with computers dropping by that much every year. But did your new model computer come with a 25% discount from last year’s price?
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In addition, when “substitution bias” (a BLS maneuver that follows your preference for Chicken McNuggets vs. a Quarter Pounder) is eliminated, the gap gets even worse.
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The CPI as calculated may not be a conspiracy but it’s definitely a con job foisted on an unwitting public by government officials ..
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[These statistics] might serve [Greenspan] well, but they do a disservice to those grounded in the reality of stretching a paycheck for new cars, laptop computers, and cell phones that somehow haven’t gone down as much in price as the government says they have.
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High productivity? Nonsense, in part – statistical, hedonically created nonsense. My sense is that the CPI is really 1% higher than official figures and that real GDP is 1% less.

Mr. Gross does not mention the home owner equivilant rent, the biggest chunk in the CPI calculation, where increasing housing costs for home owners are substituted by decreasing statistical apartment rents. This alone makes for 1% unaccounted inflation. Add that to Mr. Gross’ 1% and the official numbers and the true picture comes to light. Inflation is around 5-6% and GDP growth at maybe 1%. The official high productivity growth is and has been no growth at all.

As more international recognized money managers go public with these facts, international investors will take note. When they start to pull out their money, the real state of the US economy will be unveiled. Sell your US treasuries and bonds now and buy some value in Euroland, Australia or elsewhere.

Any ideas about the dual staged press conference, The Debate, tonight?

I am flabbergasted by a recent Program on International Policy Attitudes (PIPA) study that shows these results:

Majorities of Bush supporters favored including labor and environmental standards in trade agreements (93%), and the US being part of the Comprehensive Test Ban Treaty (68%), the International Criminal Court (75%), the treaty banning land mines (66%), and the Kyoto treaty on climate change (54%). Only 33% of Bush supporters wanted to build a new missile defense system now, while more wanted to do more research until its capabilities are proven (56%). Forty percent of Bush supporters favored increased defense spending, while 47% wanted it kept about the same (9% wanted to cut).

Suddenly I find myself agreeing with Bush supporters on several important foreign policy issues.

But why will they vote for somebody, who does not favor the positions they support? PIPA says they do not know Bush’s real position.

Majorities of Bush supporters incorrectly assumed that Bush favors including labor and environmental standards in trade agreements (84%), and the US being part of the Comprehensive Test Ban Treaty (69%), the International Criminal Court (66%), the treaty banning land mines (72%), and the Kyoto Treaty on global warming (51%). They were divided between those who knew that Bush favors building a new missile defense system now (44%) and those who incorrectly believe he wishes to do more research until its capabilities are proven (41%). However, majorities were correct that Bush favors increased defense spending (57%)

Two possibilities come to mind:

• Bush supporters do not want to know Bush’s real position.
• Bush supporters are managed to perceive his position as they do.

The U. S. Department of Defense defines Perception Management as:

Actions to convey and/or deny selected information and indicators to .. audiences to influence their emotions, motives, and objective reasoning as well as to intelligence systems and leaders at all levels to influence official estimates, ultimately resulting in .. behaviors and official actions favorable to the originator’s objectives. In various ways, perception management combines truth projection, operations security, cover and deception, and psychological operations.

Are these the results of such actions? How can they be countered?

Jim Sinclair is a serious trader in gold and commodities, and multimillionaire, with many years of international experience. Here is his view (Reg.req.) on Iraq (corrected version):

One cannot compare Iraq to the war in Vietnam. For one thing, Vietnam was never a critical player in the oil market and the war was never underpinned by any particular religious fanaticism. The world did not turn on the success or failure of the US war effort in Vietnam.

Iraq is infinitely more serious than Vietnam ever was in my view. However, the 2300 attacks discussed [in the New York Times] can be compared to the Tet Offensive in Vietnam by the North Vietnamese. If the election outcome is interpreted as a mandate for the use of force, which will likely be the case if George Bush is re-elected, the US will most certainly react exactly as it did during the Vietnam war under General Westmorland and the administration of that era.

As I have told you before, the “war against terrorism” is a contradiction in terms. War is an action and terrorism is a strategy with no particular geographical boundaries. War simply splinters terrorism into cells with no real central command. Since all combat promotes madness on all sides, failing to understand this brings one more horrific event after another.

The war to establish democracy in the Middle East will end up destroying democracy in the West. The US is in a terrible situation in Iraq exactly where the opposing forcers want it to be. A mandate for increased use of force there will be the “coup de grace” for the US Bill of Rights and the US Constitution. The names will remain but the soul will be compromised.

I am still wondering, if the results Jim sees coming, are or are not the intended outcome. A Clean Break, not only for Israel like in the original plan, but also for the political system of the United States.

There is a clear and present danger of more government jobs to be outsourced to foreign nations. A new bill, H.R. 10, which can be researched here, is coming to the floor of the House of Representatives.

Section 3032 and 3033 of the proposed bill will allow the government – at its sole discretion – to transfer people it is obliged to care for to other countries.

These foreign countries will then be tasked by the US government to provide the social care and health services that the government vigorously claims it is legally beholden to provide now. This is an absurd way to save the taxpayer’s money and a huge step back from the blessings of the New Deal.

Through this bill a significant number of US government personal that, up to today, provides valuable social and health services to the inhabitants and guests of the United States, will loose their well paying jobs adding to the army of unemployed the current administration has already created.

Katherine at the Obsidian Wings has more information in her recent piece. Please join her in writing to your Representative and thereby help saving US government jobs for US workers.

Context Links:
NYT: Showdown Likely …
WaPo: Irresponsible …

by jdp

We have had several discussions at the Moon of Alabama about peak oil, what the market does concerning energy and how world stability affects oil prices. Well, instead of arguing over oil, I feel it’s better to try and figure out and apply methods to reduce our dependence on foreign oil and be environmentally friendly. While this may not wet our appetites for Bush bashing, energy conservation surely isn’t his favourite subject.

Cont. reading: The Real Test Is Your Action

by Koreyel

The REAL reason we went to war in Iraq, if you must know, is that after 9-11 we needed to kick the shit out of someone, anyone…
Contributor on a previous MoA thread

No doubt there is truth in that. In fact I’ve pointed in that direction as well. An “eye for an eye” is a primitive human theorem. It lies buried within all of us, and needs but a lure to lunge to the surface.

Cont. reading: Bush with a Bathtub in Baghdad

KARL: You better ring him up.

GEORGE: Okay Karl, I´ll call him now: 202 342-3800

VOICE: Hello?

GEORGE: Hi, this is George, is Bandarboy in?

VOICE: Sorry sir, no, he is on vacation.

GEORGE: But you will have a number for me won´t you. This is George!

VOICE: Oh I am sorry George, he left no number. I am afraid he is unreachable right now.

GEORGE: But, but when do you expect him back?

VOICE: Oh, that may take a while. I think he´ll be back in November. Early November that is.

GEORGE: Oh fuck.

Oil Charges to $50.47 Record
Morgan Stanley Says Oil Price Could Reach $61
Nothing Opec can do to bring oil down, says Purnomo
Bandarboy

Through Andy Mukherjee of Bloomberg and Dr.”Gloom” Marc Faber we got our hands on a transcript of a speech held at a meeting of the Central Economic Commission of the Chinese Communist Party. The speaker is unknown but is believed to be in a very high party position.

“Dear Comrades,

One of the next days we will publish our paper on the “Ruling Capacity of the Party”. Let me cite three passages:

We should always put national sovereignty and security in the first place and firmly safeguard state security.
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Hostile forces are still pursuing their strategic attempts to westernize and separate our country.
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We will effectively guard against and deal with various risks from the international economic field, so as to safeguard China’s political, economic, cultural and information security.

The US cronies at the IMF, the G-7 and the World Bank are putting pressure on us to loosen the peg of our Yuan to the US-Dollar. If we would do so, the US-Dollar could slowly devalue against all Asian currencies and the US economy could move back on a sustainable path. For now we do some cheap talk of planed revaluation to calm them down.

A week US Dollar is NOT in our interest.

The United States have fulfilled their long dream and occupied Iraq to achieve control over Middle Eastern commodities. They are fighting our interests in Sudan and Iran. They are engaged in various Central Asian countries at our north western border. They are even selling German made submarines, offensive weapons with cruise missiles, to the illegal government of our province Taiwan.

We continue actively to buy large amounts of US securities, especially treasuries, to keep the Yuan value bound to the US Dollar. We now have accumulated some US$ 500 billion in such instruments. There are three major positive effects to this:

• We enable the US Federal Reserve to keep the interest rates low in spite of the huge US deficits and we thereby induce the US consumer to buy more of our goods and services.
• We make the US manufacturing and service industries uncompetitive and force them to move to Asia, teaching our workers the skills we will need in the future.
• We make imports to our country expansive and induce our people to save and to invest their money into our industrial build-up.

There are also negative effects, like some increased inflation here. But for now we are able to control these by central administrative means.

There is no chance that this scheme will work into eternity. But there is a good chance that we, the Party, can determine the point in time where a break will occur. Until then we will use the accumulated dollars to build significant strategic reserves of all commodities and increase the abilities of the People’s Liberation Army and especially the People’s Liberation Army’s naval forces.

At some point, for some reason, the US, in their quest of world domination, will threaten us – either directly through military means or indirectly through the oil lever. That will be the right moment do de-peg the Yuan, devalue the US Dollar and throw the treasuries we own onto the international markets.

US treasury rates will then increase immediately to double digit values, the US economy will falter first into recession and then into a Weimar like hyperinflationary depression.

Then we will pick up what is left over from the US empire paying the cheap price of some paper losses in our US security portfolio.

Comrades, lets work to keep the US dollar strong, very strong, for the glory of the Party and the wellbeing of the people of China.”

All is said with few words at the WhiskeyBar.

… the Bush administration launches a new pre-election antiterrorism campaign this week that will include the likely arrests of hundreds of aliens from Middle Eastern and other countries known to be havens for terrorists. Homeland Security has targeted for possible detention as many as 2,000 foreigners who are believed to be in violation of their visas and about whom there is “soft intelligence” suggesting possible terror connections.

Newsweek: Homeland Security’s Info: Miles from Nowhere – last graph

RING, RING, RING

TOM: Ridge here

KARL: Hi Tom, this is Karl – how are you – hey we have a problem here and I need your help.

Cont. reading: Tom is Happy to Help

Your links, discussions and opinions to pieces and events you deem of interest

… a film recommendation by anna missed

The recent documentary film Where Are We? is now on DVD. Co-directed by Oscar recipients Jeffery Friedman and Rob Epstein, the film, on the surface is a sort of “road” movie, where the pair set out on an eighteen day tour of the South and the Southwest interviewing the common people they meet without any apparent judgment.

Under the surface, as the film unfolds, there is a curious blurring of boundaries on what is normal, what is bizarre, and what collectively might be thought of as a culture gone stark raving mad, incapable of meaningful reflection, or direction. The common character of all the people interviewed, as even their own words belie their own condition, is one of being adrift in a sea of banality, anchored only by religion or patriotism.

If Fahrenheit 9-11 documented the method and consequences of unrestrained American power, this film, in its own little way documents the amorphous cultural sediments that enable that power.

This is a beautiful, ethereal, and terrifying look at America that recalls the “normal” torment evidenced in the photographs of Diane Arbus.

This part of Bush’s speech at the United Nation General Assembly needs to be thought about:

In this young century, our world needs a new definition of security. Our security is not merely found in spheres of influence, or some balance of power. The security of our world is found in the advancing rights of mankind.

Paul Krugman says “He doesn’t really believe that.” because Bush doesn´t live up to the claim when he supports Russias Putin. Other see reason to be concerned.

In a letter to the NYT Editor Benjamin Solomon explains:

In the context of recent history, many will interpret this to mean the United States’ leading a group of countries to bring a version of freedom to the designated country in accord with American interests and aims.

Such a policy would also signify a marked change in the United Nations Charter and the prospect of unending war.

For the American body politic, such a policy declares that the conceptual position with which the administration now defends the Iraq war will be permanently central to America’s role in the world.

Most people in this world will not agree to have their “rights of mankind” “advanced” to the fundamentalistic faith based George Warmonger Bush version. Those who do not have the gift of basic rights today for sure would like to have it. But what price are they willing to pay?

Unlike during the last ideologic world struggle, the Cold War, this doctrine leaves the US without an ideologic coalition. Has any other country a vision of advancing rights of mankind that is compatible with Bush’? I hope not, but the power of the United States may be big enough to intermediatly press others into this framework.

In a recent comment barfly Fran points to one, two remarkable articles and opines with regard to the US election:

“the rising of the Banana Republic”

With a respectful nod towards South American entities I strongly disagree.

If there are comparisons to the US election system these are to be found in places where the US is supporting the implementation of democracy. There, like in the US, every effort is made to make the elections outcome as effortless as possible.

Take a look at Afghanistan, where a distinguished ambassador is continuously consulting with all presidential candidates. In an effort to make it easy to vote, he is tediously working to shorten the ballot list, even if this involves incuring significant expenditures.

After the hourlong meeting last month, the ethnic Hazara warlord said in an interview Tuesday, he wasn’t satisfied with the rewards offered for quitting.

New meetings are said to be scheduled. To guarantee a high voter outcome, some 10.5 million of 9.5 million estimated eligible Afghan voters are registered by now. Efforts continue to additionally register expatriates like Mr. Rahman.

“We are a bit confused about the candidates,” said Saifur Rahman, 52, a Jalozai[, Pakistan,] resident. “Nobody knows what their plans are for our country.”

But he insists he’ll vote. “I’m an Afghan, and this is my right. I will use that right.”

Another good example for a decent election process may be found in Iraq. The voters there will have to cast the ballot on party lists of candidates. To disburden the electorate and to reduce the costs of ballot printing, the major parties are agreeing to form one “consensus list“. The voter’s arduous decision process will significantly lighten as there will be one simple circle on the ballot that may be marked. This entitles the Iraqi voter to exactly the same extensive variety of policy choices the US voter is demanding and given.

The democratic legitimation of the next President of the US of A, Prime Minister of Iraq and President of Afghanistan will be on comparable levels. To liken these with Banana Republic standards is an insult.

Two female Iraqi scientist are in custody. They are said to have worked for Saddam’s weapon programs. A group that has killed two US hostages during the last days, and still has one British hostage, has demanded all female prisoners to be freed. It is not known whether they referred to these women. Today there were a couple of announcements on the scientists future.

• Noori Abdul-Rahim Ibrahim, a spokesman for the Justice Ministry, said [Rihab Rashid Taha] will be released soon and on bail (NYT)

Cont. reading: Sovereign and Just Screw Up

From a recent StratFor piece:

Bush’s view is that every alliance must be evaluated in terms of its utility for the United States and that the United States must pursue its foreign interests, even if an existing alliance resists it. Kerry appears to be arguing that since alliances should be seen as permanent institutional frameworks, accepting limitations on American freedom of action is a small price to pay for retaining critical international institutions.
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The real debate has always been between two schools of internationalism. … One school looks at the United Nations as a hindrance to the pursuit of national interest. The other looks at the United Nations as being at the heart of the national interest.
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Bush represents the former view; Kerry represents the latter view.

The difference between these views has a relation to the assumed time horizon. It takes time to build coaltions and functioning international institutions. It takes time to build trust. Long term partners who trust each other will go along, even when there are some accute disagreements and no short term benefits. When this trust is broken, like it currently is in some cases, the wound is usually deep and takes a long time to heal.

Bush´s view is relying on short term allies, pressured into duty by short term relative benefits. Allies exchangable at hoc when needed. Kerry´s view relies on long term allies, were pressure is applied by the threat of changes in long term real benefits. Most non-US countries traditionally have a long term view.

This short term / long term divergence can be seen in other issues too. The small saving rate in the US vs. other countries. Houses build for decades from plywood vs. build from stone to last centuries.

Stratfor continues:

One of the things hurting Kerry is that his view has, in general, been a minority view in the United States.

Was this the minority view after the second world war? Has this dichotomy change in recent years? Has the US time horizon shortened?