Moon of Alabama Brecht quote
February 28, 2005

Pop! - Goes the Bubble

New home sales tumble

New home sales tumbled 9.2 percent in January, the government reported Monday, coming in below Wall Street forecasts and raising worries about rising interest rates and the nation's housing market.

Next pop - the bond market.

Posted by b on February 28, 2005 at 11:40 AM | Permalink | Comments (21)

Iraq, Syria

One hundred dead in Hilla and counting ...

Juan Cole says:

The Syrians found Saddam Hussein's half-brother in Beirut and handed him over to the US. (If there is an Arab city where US intelligence ought to have been able to find a high Iraqi official by itself without help from Syria, it should have been Beirut).

but he does not provide a link and I fail to find a source in the international press for this. Can anyone find a detailed report on this?

WaPo says:

A half brother of Saddam Hussein who allegedly helped direct the violent insurgency in Iraq has been captured and will be turned over to the Iraqi government, a U.S. military spokesman said Sunday.
Iraqi officials told the Associated Press that Syrian officials had captured Hassan in northeastern Syria and handed him over to them. The officials said Hassan and 29 other members of Iraq's Baath Party were seized in Hasakah, about 30 miles from the Iraqi border, and turned over to Iraqi authorities.

Catched in northern Syria, turned over to Iraqi authorities, but is in American custody?

NYT writes:

Syrian officials in Damascus confirmed the transfer, and said the half-brother, Sabawi Ibrahim al-Hassan al-Tikriti, ..., was one of a group of officials from the former Iraqi government who were arrested in Syria and delivered into Iraqi custody. An Associated Press report, quoting unidentified Iraqi officials, said there were 30 men in the group.
Last month, a Bush administration official told a reporter that Syria had captured a high-level Baathist figure, whose detention was leading to the arrests of others inside Syria, and that those captured were in Syrian custody, with an understanding between Syria and the United States not to disclose what was going on.

Maybe catched months ago with US knowledge?

Confusing propaganda mix -  except for one point. 

Syria must immediately contract some profiessional public relations people. Any positive news about Syria is drowned and all negative news is exaggerated even in the most sympathetic media.

Posted by b on February 28, 2005 at 08:02 AM | Permalink | Comments (12)

Billmon: 02/27

A Bridge Too Far for Bush's Social Security elimination plans


More junkmail coming from USAnext because Eternal Vigilance is the Price of Liberty


Posted by b on February 28, 2005 at 01:56 AM | Permalink | Comments (2)

February 27, 2005

Department of Home Improvement

I think FEMA on its web site includes duct tape and plastic sheets. ... It is very appropriately listed in the list of supplies for an emergency supply kit.
Press Briefing by Secretary Ridge - February 14, 2003

A spokesman for the company that makes America's best-selling duct tape announced today that it will sponsor all future news conferences by Homeland Security Director Tom Ridge.
Duct Tape Maker Sponsors Tom Ridge News Conferences (Satire) - February 14, 2003

Assistant manager Joe Keenan reports his Denver-area Home Depot has "sold more in the last couple of days than we have in the last few months."
Say it with duct tape - February 14, 2003

"Tom Ridge served his country with great distinction, and we are honored to have him join our board, where we expect that his unique global experience and perspective will make a profound contribution to our company and our shareholders," said Bob Nardelli, chairman, president & CEO.
The Home Depot Names Secretary Tom Ridge to Board of Directors - February 24, 2005

Posted by b on February 27, 2005 at 02:01 PM | Permalink | Comments (24)

February 26, 2005

Billmon: 02/26

UPDATE  Billmon cites some folks who are: Seeing the Light on the Right  /UPDATE

... One of these days these boots are gonna walk all over you ...

In the Open (Mind) Thread someone (me!) said:

Oh, Condi into High Heals and leather. Now I understand why her hus...., ahh the President likes her.

Billmon now summarizes the press reaction to my post (really?): These Boots are Made for Walking.

... One of these days these boots are gonna walk all over you ...

Posted by b on February 26, 2005 at 07:12 PM | Permalink | Comments (8)

Newsdrop? Open Thread?

Meanwhile, there is still an interesting discussion in the R.I.P. Hunter S. Thompson thread ...

Posted by b on February 26, 2005 at 05:29 PM | Permalink | Comments (62)

How To Help (Not)

Michael Dobbs, a national reporter for the Washington Post, was swimming off Sri Lanka when the tsunami hit. After personally witnessing the disaster, he did set up a private relief effort.

His report explains what is wrong with such efforts.

  • Professional help organizations, NGOs, take too long to react. They are in competition with each other over donars money and do not coordinate. The do unbalance the local economic, social and power structures without knowing what they do.

Some fishermen are claiming replacements for boats they never had, while others have submitted duplicate claims to different donors. What's more, part of the fishing fleet is controlled by relatively rich individuals, who have succeeded in intimidating the poorer fishermen and are trying the same tactic on the donors. If you buy a fisherman a boat, the next fisherman is likely to be upset, both with you and with the first fisherman. The answer, you might think, is to buy boats for an entire community of fishermen. But then the neighboring communitywould be angry. And so on.

And how many fish will be left when everybody goes fishing with new equipment?

  • Foreign state organizations have more propaganda value for their state than real impact.

The first time I became aware of a USAID presence in Weligama was last week, when teams of laborers wearing USAID caps showed up in the town, frantically shoveling away rubble in advance of a visit by presidential tsunami envoys George H.W. Bush and Bill Clinton.

  • Private help has the same problems as professional help, only on a more personal level. When NGOs bring in new prefabricated houses for every family, the local construction company will be bankrupt.

.. a group of German divers who arrived in Weligama soon after the tsunami, intending to retrieve boat engines that had been washed into the bay. Since they were on a humanitarian mission, they offered their services free of charge. They thought they were doing everyone a favor until one day someone threw a stick of dynamite into the water after them. The explanation favored by aid workers: The Germans were stealing business from local divers who had been charging fishermen $50 for every engine they recovered from the bay.

All this well intended help does disturb the local social, economic and political structures in unforeseeable ways. Bring in food during a temporary shortage and you may take away the incentive to grow next years crop.

The solution I prefer is to give money, not goods, not outside expertise, but lots of money. Give to every family an amount relative to the family size. This leads to a big push for the local economy. If they have a need, they can and will buy the stuff and expertise that fits their needs and preferences.

.. the fact remains that most of the relief that flowed into Weligama in the weeks immediately after the tsunami was provided not by NGOs but by local businessmen ..

Posted by b on February 26, 2005 at 04:31 PM | Permalink | Comments (4)

BRIC Ascendant - Wall St Hype vs Reallity

In October 2003, Goldman Sachs published a research paper, 'Dreaming with BRICs: The Path to 2050 which predicted that by 2050, the hierarchy of the largest economies would be significantly changed, with China the largest, followed by the USA, India, Japan, Brazil and Russia. All the European members of the G-7 would be significantly outpaced.

This was updated in October 2004, in a second report, called "The BRICs and Global Markets: Crude, Cars and Capital" (sorry, could not find a link - but it is summarized below), whose title is quite explicit, and which basically confirms the 4 countries' emergence as major economic powers and the corresponding growing irrelevance of Europe, with the US more or less holding their own.

How realistic is that, seriously?

To cut to the chase, one of the consequences of this significant shift in relative wealth would be, among other, a massive reallocation of assets, as summarized in this article about the second GS report:

The share of these economies in global capital markets is currently 3.5 per cent, and depending on the extent of capital market development, they could account for anything between 10 and 17 per cent of global equity markets by 2020.

Market capitalization in the BRIC economies could increase by a factor of four times or $4 trillion (source: Goldman Sachs). While these markets will still remain dwarfed by the huge size and liquidity of Wall Street (despite such rapid growth), they will come close to approximating the size of Europe within 15 years.
Imagine if in 15 years the stock markets of the BRIC countries really approximate Europe in size.

Is there any global portfolio investor positioned adequately to handle such a seismic shift in index weightings? Europe currently accounts for approximately 15-20 per cent of most global stock indices, compared to 3-3.5 per cent for the BRIC markets.
Can global long-only investors, wedded to relative performance, profit from this inevitable directional move, or will only the hedge funds (with no index fixation) benefit?

Given all the data above as well as the conclusions of the first BRIC report, can any asset allocator really justify having only about 3 per cent of his/her equity assets in stocks of emerging market countries?


Remember that Goldman Sachs is really a huge hedging fund with an investment bank attached to it. They trade massively for their own account (i.e. they bet their own money and that of their investors), and, for some reason, they have decided that they wanted to bet on India and China and against Europe. It fits with l'air du temps (sclerotic Europe is the past, dynamic Asia is the future), it looks insightful and well researched, and they have the track record to back their bets after all...

Can I nevertheless say that I am not convinced?

Europe is doomed

A first point, made in this article (here, in French) is that Goldman Sachs is possibly close to the truth with regards to China and India (and maybe Russia and Brazil), but that it has made what appear to be voluntary mistakes to reduce the size of the European economies by taking extremely unfavorable hypotheses:

- a simple one is to take the 2000 EUR/USD rate (0.88) to convert the Euro economies in dollar terms. At the time of publication of the first report, the rate was already above 1.15 in October 2003 and above 1.20 in October 2004;

- the second one is to take reallylow growth rates for Japan (0.9%) and continental Europe (1.3 to 1.7%) - the UK, for some strange reason, is treated more kindly (2%) - and ends up being a bigger economy than Germany in 2050...

This obviously makes the European economies much smaller, relatively speaking, than the fast growing BRICs...

Future growth is extrapolated from current (high) numbers

The second point to discuss is - how sustainable on the long term is the current strong growth of the BRICs?

This research paper from the National Bank of Denmark has many interesting insights and statistics on the question. The two graphs below, pulled form that paper, show the past growth of the BRICs and the current consensus for their future growth:




This does show that, indeed, most economists expect significant growth in coming years. But then again, they expected the same with regards to Japan back in the late 80s...

Oil, oil, oil

The third issue is, of course, oil and commodities. To their credit, the second Goldman Sachs report addresses the question of oil, but this is more to show how impressive the growth will be (I have not been able to access the report itself, and am commenting on this summary, so i apologize if the question is actually treated with more care by GS, but that's not how it looks from what I have been able to find)

(from the same article) China and India will emerge as the world's largest car markets over time. Within 20 years, China most probably will have overtaken the US as the world's largest car market. India will also displace the US about 10-15 years later.

Highlighting India's greater inefficiency in energy use, the data indicate that within 15 years India's contribution to global oil demand growth will overtake China's. India's share of actual global oil demand will also peak near 17-18 per cent, similar to China's.

The report makes the point that the emergence of the BRICK economies has already had an impact on global commodity markets, namely the impact of China. The huge price run-up in most industrial commodities is attributed to strong Chinese demand.

Speaking in fractions of the total economy is both impressive (the relative evolution of various countries appears starkly - some growing and some "declining") and misleading (the total is always 100%, which gives the impression of a stable market, even though we all know that even "declining countries" are still growing and so is their oil consumption). It would make more sense to talk in absolute volumes with regards to oil.

Thankfully, this is what this new article about China and India in the Financial Times (behind subscription wall) provides, and it gives a pretty grim picture:

The race by Asia's two emerging economic giants to secure fuel has begun in earnest.

With world energy supplies already tight, the question is not whether the rising demand from India and China will bring them into commercial competition with each other and with other big importers such as the US and Japan: that is already happening. The question is whether it will lead to diplomatic tension and ultimately increase the risk of military conflict in the Asia-Pacific region.

Why? Quite simple:


Chines and Indian oil demand is expected to grow from respectively 7mb/d and 4mb/d today to 13mb/d and 7mb/d in 2030, an increase, for these two countries alone, of 9mb/d which happens to be the current production of Saudi Arabia or Russia, the current 2 top producers. Get this - we need a new Saudi Arabia, or a new Russia, just to accommodate the  expected increased consumption of these two countries, without taking into account the demand growth of the rest of the world - and the requirement to renew the current production capacities as they decline.

Guess what? The Indians and Chinese are perfectly aware of this, and are engaging in a massive effort to access oil reserves - and to build up their military:

The main evidence of concern is that Beijing, nervous about the possible use of US and Indian naval power to control oil supplies from the Middle East in the event of conflict, is rapidly strengthening its own navy. "The Chinese are building up a capability to defend those sea lanes," says Gary Samore, director of studies at the London-based International Institute for Strategic Studies. "There is a naval rivalry building up in south-east Asia and the Indian Ocean."


In Mapping the Global Future, an assessment of the world's prospects in 2020, the US government's National Intelligence Council says China is expected to boost its energy consumption by 150 per cent and India by nearly 100 per cent if they maintain steady growth. "The single most important factor affecting the demand for energy will be global economic growth, particularly that of China and India," says the report, released in December.

Both countries lack domestic resources and need to ensure access to imports. "The need for energy will be a major factor in shaping their foreign and defense policies, including expanding naval power," says the intelligence report, adding that this is likely to prompt China to be more "activist" in the Middle East, Africa, Latin America and Eurasia.

And of course, meanwhile, other countries are not remaining idle:

Last year the UK for the first time became a net gas importer, as a result of which there is a lot of interest in pipeline and LNG deals in the UK and Europe," says Anna Howell, a Hong Kong-based consultant for Herbert Smith, the international law firm. "That is exactly what we're already seeing here in India and China."

Japan, the world's second largest economy, and South Korea, which recently sealed an agreement to buy $20bn of LNG from the Russian far east and Yemen, also remain highly dependent on energy imports. The continuing confrontation between China and Japan over a gas field in a disputed part of the East China sea and the fierce diplomatic battle (apparently won by Japan) over the route of a proposed Russian pipeline carrying Siberian oil show that the dangers of energy competition are real.

And, as the FT points out, this quest for energy has other nasty side effects:

The energy squeeze is not so good for human rights or environmental protection, in central Asia or countries such as Burma. Governments in oil importing countries typically care more about energy security than the politics of the exporter. Democratic India has forged close relations with Burma's military junta and all but abandoned support for the pro-democracy opposition led by Aung San Suu Kyi. Like China, India is prepared to sacrifice other goals in the search for energy security.

Altogether, the FT points out that 5 different policies can be pursued:

- boost domestic output of oil and gas (this will not be sufficient),

- ensure good relations with suppliers (that means dealing with countries like Iran, Russia, Burma, Australia, Gabon, Venezuela, who have very different priorities and very different relations with the US to take into account)

-  guard against disruptions to supply, by building up stockpiles (this is very costly and drives prices up);

-  diversify sources of supply, both geographically and in terms of fuel types (LNG, GTL, nuclear) (this requires long term planning and investment),

- improve fuel efficiency (this requires to impose real behavioral changes to the population and economic actors).

All of these have costs, either direct (new investment, new regulations, long term purchase commitments) or indirect (competition with other countries, diplomatic interference with other issues, military build up), and runaway growth could be soon severely constrained by temporary shortages of energy.

Russia and Brazil
The situation of the BRs, as opposed to the ICs, is totally different.

The only common points are that they are big countries with currently high growth. But while China and India are commodity importers, both Russia and Brazil are commodity exporters, and a chunk of their growth (especially in the case of Russia) is caused by the commodity windfall. Brazil and Russia also are massively unequal economies (see the National Bank of Denmark study above), While Brazil has managed to attract foreign investment and has a modern industrial base, Russia is burdened by an obsolete industrial apparatus, falling population and probably the most corrupt administrative apparatus of the 4.

as a percentage of GDP


So, while Chinese (and, to some extent, Indian and Brazilian) growth is based on a massive investment drive in the industrial sector, led by foreign capital outsourcing and offshoring to take advantage of the low cost base, and swallowing resources to crank out the goods the rich world buys, Brazil to some extent and most of all Russia are taking advantage of the massive need by China for commodities.

The sheer volume of the Chinese imports is having a all too visible macro economic impact - prices skyrocketing (see oil, steel, and many others), shortage of goods (thinking shipping capacity, for instance), and rushed diplomacy viz. the commodity producing countries.

These tendencies, to some extent, are created by the massive US economic imbalances: over consumption fueled by deficits and debt - and fulfilled by Chinese production, so both the USA and China have a stake in the stability of that macro-economic "deal". The problem, of course, is that this is physically unsustainable, in that China's industrialization requires the same resources as US consumption does, starting with oil, and that the two countries become competitors for these resources, in a new "grand game" of diplomacy, brinkmanship and military games.

Put in the middle of this the "transformational diplomacy" pursued by Bushco, which has pretty much an explicit intent to create chaos and (ultimately, hopefully) change in the most strategic region in the oil game, the Middle East, and you have many ingredients to think that the "BRIC boom" is more a dream than anything else.

So, back to Goldman Sachs
Investment banks have very simple sayings ("don't bet against the Fed", "the trend is your friend") which make their life easier (you don't get blamed if you're wrong but in the middle of the herd).

Chinese growth, backed now by 20 years of impressive numbers, is such a trend. Add in the more recent "trendlets" that can be identified in the other big non-Western countries (and caused for the most part by the same underlying causes in the US), and you have an irresistible story which pleases tour new clients in these countries, flatters them, and also makes you a friend of the Bush administration.

Are the trends spectacular? Sure! Do they make for good marketing? Sure! Are they realistic? Who cares! Are we going straight into a massive brick wall? No, of course not (we would not be making money then).

What's that word again? Denial?

Posted by Jérôme à Paris on February 26, 2005 at 09:56 AM | Permalink | Comments (26)

February 25, 2005

How Many People is Too Many People?

The UN has just released its latest World Population Prospects report on population estimates, which is essentially a detailed interactive data base, country by country, until 2050, with a number of very detailed sub-categories under various scenarios which I entourage you to play with.

The 2 biggest headlines are the following:

  • Population to increase by 40% (see this BBC summary)
  • India to overtake China as the largest country (see the Financial Times, which put the article on its front page this morning).

Demographic studies are often neglected in the political discourse because they talk about events and facts that seem to be so far off in the future that they are not worth bothering about. Yet, as Emmanuel Todd's remarkable "After the Empire" book shows (as did his previous, The Final Fall, which anticipated the end of the Soviet Union), long term demographic trends have a massive impact on geopolitical evolutions of various countries.

  • Europe (except France and the UK), Japan and Russia will have to manage a fall in their population, which is an unprecedented event in Human history outside of times of war or plague. We all know about the problems this will create for pensions systems and health care costs, but have we thought about the consequences in terms of (i) the growing conservatism of the populations (ii) conversely, the diminished requirements for "growth", "speed", "change" that put so much pressure on our resources, (iii) the impact on immigration patterns as older people require labor-intensive care which cannot be provided by younger generations, together, (iv) in countries like Russia, the emptying of resource-rich territories (such as Siberia) which will put tremendous geopolitical pressure on border-crossing issues with heavily populated and resource-poor neighbors?;
  • China will face the same aging issue, except that it is still a (relatively) poor country. The Western world has been preparing itself for the past 20 years or more for the predictable aging of its population, and has slowly organized the required resource transfers. In China, the demographic evolution is unprecedented both in its rapidity (less than a generation) and its scale (for the time being, it is still the largest population in the world, with more than 20% of world population). Combined with the gender unbalance (more boys than girls), we have many ingredients for massive instability and upheaval as a society must suddenly learn to cope with a growing number of dependents at the same time as it is busily trying to move from an agricultural society to the industrialized age and manage it in a context of growing resource (oil, water, commodities, even land) scarcity;

  • meanwhile, the developing world, where most of the population growth is taking place, is still facing the same old boring problems like poverty, disease and lack of education. Another UN institution, The UNDPA provided its own report on population growth a few months ago, focusing on AIDS, reproductive and poverty issues (see also a summary here (pdf, 6 pages)). I am sure that others more qualified than me among you can comment on the effects of Bush/conservative policies on reproductive issues around the world...

We are going through the last - and most explosive phase - of population growth, which as we can see, is a mixture of simultaneous growth and aging which will create many tensions between generations within countries and between countries for the allocation of resources and wealth.

Posted by Jérôme à Paris on February 25, 2005 at 01:34 PM | Permalink | Comments (27)

Metal Firtina

Metal Storm is the title of a Turkish "á la Clancy" bestseller. Al Jazeera abstracts:

The novel, set in May 2007, begins when Turkish troops deployed in northern Iraq to protect the ethnic Turkish Turkmen community there, come under attack from US forces.

A huge disinformation campaign launched by Washington has people thinking that the Turks fired first, while the true aim of the United States is to seize Turkey's rich borax mines, which account for 60% of the world's boron production.

Turkey's major cities come under heavy fire, with huge loss of life, while Ankara, taken by surprise, turns to the European Union and Russia for help.

The Christian Science Monitor and the Chicago Tribune also have reviews.

The current anti-Americanism in Turkey, the scathing anti-Turkish Wall Street Journal piece by Robert L. Pollack and this sane reply are not pointing to better relations.

In Executive Order, published 1996, Tom Clancy narrated an airliner crashing into Capitol Hill. Then came 9/11. Metal Storm has a Turkish agent, acting on his own revenge initiative, detonating a nuclear bomb in a park in Washington. Just tin foil hat stuff?

I am afraid it is much more serious. If Washington allows a quasi autonomous Kurdistan, with a resourceful oil capital Kirkuk, to emerge, Turkey's eastern Kurdish parts will go up in flames (as will Kurdish parts of Iran and Syria). Ankara can not just stand by and let this happen.

Posted by b on February 25, 2005 at 07:43 AM | Permalink | Comments (70)

February 24, 2005

Billmon: 02/24

Billmon reminds us Why We Fight.

Renamed to Sex Police State. With AARP standing guard?

Protecting Our Precious Bodily Fluids from that strange love of AARP.

Ohhhh Ann, this IS a cheap shot, but it feels so gooooood - says the midget.

Posted by b on February 24, 2005 at 07:11 PM | Permalink | Comments (6)

Open (Mind) Thread

Posted by b on February 24, 2005 at 02:37 PM | Permalink | Comments (88)

Rude Americans

Some Europeans think Americans are rude. Americans always take their gloves off:

“All you need to know is that there was a ‘before 9/11’ and there was an ‘after 9/11.’ After 9/11, the gloves came off.”

said Cofer Black, ex-counter-terrorism chief at the C.I.A., about interrogation of suspects.

During the election campaign gloves came off too. "Bush Takes Off The Gloves" reports CBS and "Kerry Takes Off Gloves" says the Washington post.

Even ladies do it. In her new job as SecState "Rice Takes Off Gloves" remarks Rush Limbaugh. A lot of mano a mano happening in the States.

To take off the gloves is the rude American way, some Europeans may think. G.W. discussed this with Laura before landing in U.S. friendly Slovakia.

And they decided not to be rude, to behave more European and to keep the gloves on.


While greeting President Ivan Gasparovic and Prime Minister Mikulas Dzurinda after landing in Bratislava, G.W. shook hands with them - with black leather gloves on. His gentle gloved hands also greeted the President's and the Prime Minister's wives.

Laura Bush also refused to be rude and kept the gloves on her manos while greeting the assembled dignitaries.

Rude behavior is reserved for more business-like relations - like with "good cowboy" Chirac or with Schroeder. Dan Froomkin's First Name Watch:

Bush continues to publicly greet his fellow leaders by their first name -- and they continue not to reciprocate.

That is rude, really rude of them! But Slovakians are friends, the Bush family thinks. It's not just business with them, and Business Etiquette For Dummies does not apply. At least not for the Bushies.

For us dummies to remember:

If you're wearing gloves as part of formal attire, always remove them before shaking hands (the same goes for wearing gloves outdoors — you should take them off, unless the temperature is bitterly cold).

Shame on them, maybe it will work.

Posted by b on February 24, 2005 at 10:08 AM | Permalink | Comments (30)

Democracy in Action - Shaming Them Works

The good news - in a democracy, pointing out the inconsistencies in the behavior of your elected representatives can sometimes shame them into changing that behavior

The bad news - this is not happening in the US, of course.

As I wrote in a Kos diary last week, Le Canard Enchaine, the "anti-establishment weekly", has unearthed an embarrassing tidbit about the new French Minister of Economy and Finance, Hervé Gaymard - the fact that significant amounts had been spent to renovate and rent a huge appartment for him in the poshest part of Paris, at a time when he is trying to cut budget spending and is asking government employees for pay freezes and savings on operational expenses.

This had already triggered a first reaction from the government, forcing the Minister to give up his new appartment and new rules set for all ministers with regards to their lodgings... (see my previous diary)

Yesterday, the paper came back with more juicy stuff, i.e. the fact that he had lied about not being involved in choosing the appartment, more details on the cost of the renovations, and the various off the record comments form other ministers (Gaymard was a likely contender to be Prime Minister if there is a reshuffling in coming months, as is very possible, and his colleagues/competitors are of course happy about his misstep), and the fact that he actually owns an appartment in Paris already, which he was letting a friend use for free.

More interestingly, the charge was all the stronger because Le Monde, the establishment paper, came out later in the day with a scoop (in French) that he was actually renting his appartment (at slightly below market rates, but nevertheless for an amount which is higher than the median salary in France). Piling in, Paris-Match, a weekly which usually publishes puff-pieces on political and show biz figures, publishes an interview with Gaymard from earlier this week where he says, in an awkward attempt at a populist defense (story in French), that had he come from a wealthy family and had owned his appartment, this would not have come to pass...

Now caught lying twice in what was already a very embarrassing story, his resignation (FT, in English)  suddenly becomes a very possible outcome of this story.

The interesting angle here for dKos is that Le Canard Enchainé is, and has always been, a maverick institution and is in many ways the closest thing we have in France to the blogosphere - a snarky, irreverant and ferocious critic of all institutions, including other journalists. what the paper has is also an incredible reputation for being straight - when they publish something, they ALWAYS have reliables sources and documentation (they've been taken to court many times and they never lose) ; they are not afraid to publish corrections when they made a mistake (they call it "smack the duck"); and they are totally independent (they don't run advertising at all). Only one difference - they are not in electronic form at all...

Also, they unearth a lot of stories, but it becomes a real scandal only when other, more mainstream media, pick up the story and start talking about it. Other wise, the would-be scandals are known only to their readers and not the general public, and they can go away.

The lessons that I take from that, in the context of the Gannon story, for instance is:

  • protect your integrity at all costs - that's your only strength
  • the MSM are lazy or dumb - there are lots of fairly easy stories out there if you do your research properly
  • to make the stories "real" (it's an embarrassment only if it's on TV), you need to get the MSM interested. You need a juicy angle - and they need to have a "scoop" - so I would suggest maybe to feed them some interesting tidbits they can run with.

I know that this administration has no shame, so any similar story in the US may not have an impact on their behavior, but it will have an impact on the opinion people have of them if they can be shown to be petty, or lying, or out of touch with the average citizen.

So here's hoping!

Posted by Jérôme à Paris on February 24, 2005 at 05:48 AM | Permalink | Comments (20)

February 23, 2005

Billmon: 02/23

Coming Soon to a GOP Theatre Near You - The utter evilness of AARP

Pleasing the Court

Posted by Jérôme à Paris on February 23, 2005 at 03:19 PM | Permalink | Comments (25)

Soap or Hot Sauce?

Frank Luntz, a consultant for the Republican party, has prepared the "New American Lexicon",  "Learning from 2004 ... Winning in 2006". It includes some fascinating insights. (Kos has a download-link for the 8 MB file.)

Policy goals, like ANWR drilling, get phrased, not formed, along the most positive return  in polls. Communication - not content, words - not intent, are the keys for politicians to win elections.

The appendix lists "The 14 Words Never to Use" and their appropriate Newspeak phrasings. The question now is how to learn them. Do dirty words call for soap or hot sauce?, Karl Rove may ask.

To avoid your mouth being washed or burned, start learning Mr. Luntz' "How to talk like a Republican" lesson today.

Government Washington
Privatization / Private Accounts Personalization / Personal Account
Tax Reform Tax Simplification
Inheritance / Estate Tax The Death Tax
A Global Economy / Globalization / Capitalism Free Market Economy
Outsourcing Taxation, Regulation, Litigation, Innovation, Education
Undocumented Workers Illegal Aliens
Foreign Trade International Trade
Drilling for oil Exploring for energy
Tort Reform Lawsuit Abuse Reform
Trial Lawyer Personal Injury Lawyer
Corporate Transparency Corporate Accountability
School Choice Parental Choice / Equal Opportunity in Education
Healthcare "Choice" "The Right to Choose"

Posted by b on February 23, 2005 at 08:00 AM | Permalink | Comments (34)

February 22, 2005

Billmon: 02/22

The Man Who Wasn't There (B. Eberle)

AARP vs. America

Wafer Thin Mints

Posted by Jérôme à Paris on February 22, 2005 at 01:18 PM | Permalink | Comments (12)

"They Talk About Planes and Bananas"

I was going to write a longer post on the topic of Bush's visit to Brussels, but I'll just bring in this quote from this morning's FT:

Sporadic applause for Bush's European overture

Still, the Bush administration's scepticism about Europe's capabilities runs deep. At a recent meeting with one European diplomat, Mr Bush was dismissive of the EU. “I just go there and they talk about planes [sic] and bananas,” he said, according to one person present. Until now, trade disputes over subjects such as aircraft and agricultural projects and the occasional competition decision have been the meat and drink of the US-EU relationship.

Meanwhile, I understand that the headlines of the NYT and the LAT are only about Bush scolding Russia for its lack of democracy, so get used to it: Europe is nice and irrelevant, or a pain and irrelevant...

---(Jérôme à Paris wrote the above, Bernhard follows up)---

Sorry, my dear co-writer Jérôme is getting this wrong. We seem to have some generational differences here.

In remarks to the citizens of Mainz, Germany, President Bush actually set forth four laudable proposals:

  • To promote free elections and political pluralism through multilateral negotiation processes;
  • To concede favorable trade conditions in exchange for more "openess" of restrictive societies;
  • International cooperation and exchange of experts and expertise on vital common environmental interests;
  • A significant, multilateral reduction in general armament levels and troop concentrations.

The speech was welcomed and seen as a significant step to a more peaceful, cooperating world - and yes, I applaude it.

In case anybody is having doubts of President Bush's words, here are excerpts from the transcript:

I set forth four proposals to heal Europe's tragic division, to help Europe become whole and free.

First, I propose we strengthen and broaden the Helsinki process to promote free elections and political pluralism ..

.. this, then, is my second proposal: Bring glasnost to East Berlin.
.. the United States is prepared to drop the "no exceptions'' standard that has guided our approach to controlling the export of technology to the Soviet Union, lifting a sanction enacted in response to their invasion of Afghanistan.

.. we have all learned a terrible lesson: Environmental destruction respects no borders.
So, my third proposal is to work together on these environmental problems, with the United States and Western Europe extending a hand to the East.

My fourth proposal, actually a set of proposals, concerns a less militarized Europe, the most heavily armed continent in the world.

A Europe Whole and Free
President George Bush, Rheingoldhalle, Mainz, Federal Republic of Germany, May 31, 1989.

Some generational differences ...

Posted by Jérôme à Paris on February 22, 2005 at 06:04 AM | Permalink | Comments (25)

Billmon: Hidden Agendas

Advertisement like everybody's doing it ..

Posted by b on February 22, 2005 at 01:40 AM | Permalink | Comments (3)

February 21, 2005

Open Thread 05-20

News, views, visions ...

Posted by b on February 21, 2005 at 11:56 AM | Permalink | Comments (38)

R.I.P. Hunter S. Thompson

You will know more about him than I do.

UPDATE: Billmon sure does and yes it´s Frisco, a place I love.

For the dumb ones like me, Fran pointed to an SFGate article:

But maybe he isn´t dead at all. Giblet says (hat tip Kate):

Giblets saw the Good Doctor with his own two eyes just a few hours ago, heading north in the White Whale. He said he was headed up to heaven to shoot God. "The great bastard's in season and it's long overdue," the Godfather of Gonzo said as he dusted off his elephant gun. "I have full reason to believe they will award me both the head and the tail. Expect me back by the apocalypse."

Posted by b on February 21, 2005 at 10:25 AM | Permalink | Comments (116)

Let Iran Have the Nuclear Bomb

Seriously, why shouldn't they?

- Proliferation?
- Putting nuclear weapons in the hands of terrorists?
- Regional instability?
- A threat to the US or to the West?
- A bad precedent for other countries?

Debunking the above - and more arguments - below.

  • Proliferation

That ship has sailed - and not from Iran.

The worst proliferators have been Pakistan and Russia. Their clients have been mostly other states, in the (wider) Middle East. Having a Middle Eastern State with an acknowledged nuclear arsenal would probably dry up a good chunk of the "demand" for clandestine nuclear know-how and materials, as a lot of that demand is linked to the perceived inequality with Israel.

Would the Saudis also want the nuclear weapon to balance the Iranians? That's a trickier question, to which I do not have a ready reply. But if you have Iran publicly a nuclear power, the same reasoning below could also presumably apply to the Saudis. I go into this in below, but I note this weakness in my argument here.

  • Putting nuclear weapons in the hands of terrorists?

Being a nuclear power is a very specific responsibility, and those that are have for the most part behaved accordingly.

They have not being very good at limiting proliferation (that includes France and the US, along side Pakistan, Russia and China), but the transferees have each time been other countries (Israel, North Korea, Lybia, Iran) to which that same reasoning applies.

States understand the value of having nuclear weapons, and they apply the concept of proportionate response:

- do not use WMDs against a country which has no WMD;

- do not use WMDs first, unless to defend the country against an attack threatening vital interests;

- expect massive retaliation (including by WMD) by any country with WMDs which is attacked by WMDs that can be traced back to you (and nuclear weapons CAN be traced)

Iran is a State and will behave as a nuclear State if they are acknowledged as such. They will actually be forced to behave more responsibly if they enter the delicate balance between nuclear States. Support to terrorist attacks against Israel will be less necessary and more risky - because the rules above apply to Israel as well, and the first one would stop protecting Iran if they had nukes.

  • Regional instability?

Israeli nuclear weapons are a major source of tension in the region. Restoring the balance and forcing both sides to acknowledge that balance (and thus each others existence and rights) would probably be a lot more stable. Having nuclear weapons forces you to have a doctrine with respect of their use, and that includes very centralized control. We may not like the regime in Iran, but it is there and it is functioning, and they would certainly be able to manage their nuclear weapons and come out with the appropriate rules for use (these may be public, or privately communicated to other nuclear powers, or somewhat ambiguous, but the other nuclear powers understand that game well enough).

Acknowledging the nuclear option would force Iranians to provide a position viz. Israel, the other nuclear power in the region. This can only lead to an acknowledgment of the existence of Israel and its ability to defend itself (with nukes).

As written above, small scale terrorist attacks against an also-acknowledged nuclear opponent will probably be a lot harder to justify. It will force both sides to talk to each other - simply to avoid accidental launches or provocations from non-State actors. Diplomacy can only be a good thing in that context.

  • A threat to the US or to the West?

Iran is not a threat to the West today - except in so far as they can close off the Straits of Hormuz to oil tanker traffic, which is there irrespective of nuclear weapons and is actually a lot more effective as a WMD than a few nukes would be.

Nuclear powers work by the above rules. Any nuke attack on the West which can be traced to Iran will lead to massive retaliation.

Being an recognized nuclear power - and thus an unavoidable regional power treated as such by the West would probably do wonders to Iran's view of the world and their current belligerence would be much less necessary.

Having to discuss nuclear issues with the US, like with Israel, would lead to more diplomacy and dialog, and probably fewer misunderstandings.

  • A bad precedent for other countries?

Well, as I wrote above about Saudi Arabia, I am probably on shakier ground here. On the other hand, the Pakistan and India episodes have shown that they did not encourage any countries beyond those that were already contemplating nuclear weapons. Iran has been on that list for a while.

I doubt that the Iranian precedent would change much to the North Korean situation.

The Arab world (even though Iran is not Arab) would probably see some justice being done in someone in the region having nukes as a balancing tool viz. Israel, and would have one major argument against Israel taken from them.

The rest of the world (especially those under the explicit or implicit US umbrella) would probably be happy to see any kind of balance work in that region, and not much change for their own local worries. States are rational entities. They have a lot to lose and will thus control their nukes well, and so would Iran.

Or is this all wishful thinking? Have at it!

Posted by Jérôme à Paris on February 21, 2005 at 10:21 AM | Permalink | Comments (28)

Billmon: The Out of Towners

.. within sight of the Statue of Liberty

Posted by b on February 21, 2005 at 01:48 AM | Permalink | Comments (24)

February 20, 2005

Iraq Anybody?

The voting is over and the backroom deals for the Prime Minister seat are waiting for the needed absolution by Washington. Nearly 100 people were killed in the last three days through suicide attacks.

"The concerted effort to disrupt the elections was an abject failure. Not one polling place was shut down or overrun," ...  "The fact that you have these suicide bombers now, wreaking such hatred and violence while people pray, is to me, an indication of their failure,"

says who?

Iraq expert Senator Hillary Clinton says so, after having been flown into the Green Zone.

The US military stood back a bit during the elections. Now the war is restarted. As Reuters reports:

RAMADI, Iraq (Reuters) - U.S. and Iraqi troops launched a large-scale operation around the rebellious city of Ramadi on Sunday, as part of a nationwide effort to restore order in the wake of last month's election.

Troops from the 1st Marine expeditionary force, supported by Iraqi soldiers, set up a ring of checkpoints around the city, 70 miles west of Baghdad, and imposed an 8 p.m. to 6 a.m. curfew under Operation River Blitz.

So far the hospitals in Ramadi were not reported to be bombed.  But that may change anytime as the Fallujah tested concept is transfered to the bigger city of Ramadi.

"I think you can look at the country as a whole and see that there are many parts of Iraq that are functioning quite well", Clinton said.

Posted by b on February 20, 2005 at 09:48 AM | Permalink | Comments (33)

US Diplomacy - the Good, the Bad and the Ugly

What kind of diplomacy can we expect for the second Bush administration? As Bush prepares for his 4-day visit to Europe, currently more interested in the first referendum on the EU constitution taking place in Spain, and both sides (Europeans and Americans) are at least making conciliatory noises towards each other, what are the prospects for diplomacy to actually work?

("Just vote 'Yes' to the American Constitution and let's not discuss it anymore" from this weekend's Le Monde.)

A French diplomat has described the current administration as a mixture of realists, with whom you can negotiate), nationalists (hard-headed USA firsters who hate anything that stand in the way of US power, but who are at least rational and are willing to trade if you have something of interest to them), and the neo-cons, who are driven by ideology and are beyond the reach of reason. This diplomat (quoted by Le Canard Enchaine, a French weekly which is not online, but you can see the front page here) only identified Rumsfeld and Cheney in the second category, and was quite clear that Europeans did not know yet who was ascendant at this point.

It's actually an interesting dynamic which is going on between the 3 groups, which you can ally in different ways.

The Good (or realists) are led by Zoellick (the new no.2 in the State Deptartment) and by the State Dept. in general. They are diplomats and traditionally favor diplomacy. They are not hostile to multilateral institutions per se and value working with allies under existing alliances and arrangements. With Zoellick, the former trade negotiator, at the helm, they are also likely to take into consideration economic and commercial ties with other countries.

The Bad (or nationalists) are also a fairly traditional species - the "might is right", USA come first, great power approach to international relations. The US should focus on its interests; as the strongest player around, it should try to maintain this dominance and it has a say in anything that goes around the planet. Other countries have divergent interests and cannot be expected to be permanent allies (or only at an excessive cost to the US) and relations with them should be on an ad hoc, case by case basis - this is the philosophy underlying the "coalition of the willing" concept, and the "Old Europe" vs "New Europe" digs (divide and rule to avoid the emergence of a strong Europe).

The Ugly (or neocons) are driven by an ideological mindset which I will not try to go into too much detail. In the most positive description I can make, one could say that they are idealists, with a vision that the US should intervene in the world to bring democracy and freedom to those that do not have them yet, if necessary by force. The status quo in the Middle East was a failure, not to be tolerated anymore, and anything that would replace the current corrupt and failed regimes would be a progress, especially if the US had a hand in shaping the outcome.

With respect to Europe, I'll put their respective positions succinctly:

- the realists are broadly favorable to the European Union: the Europeans share broadly the same democratic values and are well known partners in most international forums,  it's easier to discuss with Brussels than with 24 different governments, the bothersome French are kept in check by others within the EU framework, and if they get their shit together, the Europeans can actually help the Americans in various hotspots around the globe. On the trade negotiations, the two sides are broadly evenly matched and can impose their will against the rest of the world; with the emergence of new assertive trading powers like Brazil and China, the EU and the US might end up being on the same side more often than not. Altogether, it's complex, frustrating, at times nasty, but it is a relationship that works and should be kept that way.

- the nationalists are at the same time more dismissive and wary of the Europeans. They tell them that they don't matter anymore, with US strategic interests mostly being in the Pacific, Asia and the Middle East. They mock them for being unable to act together militarily - but at the same time try to prevent any effort in that direction to succeed. They like the Atlantic institutions so long as the Europeans fall in line when required, and as this is not happening so easily anymore, they tend to discard them more and more in favor of ad hoc coalitions. They play European powers against each other, with a special treatment for France, as the more troublesome of all - but they also respect France for fighting tooth and nail for its interests and its ability and willingness to act forcefully in some occasions - and the 2 countries do work together when it is convenient.

- the neocons have mixed feelings for Europe - they berate them for their hypocrisy, inefficient "realpolitik" and tolerance for the (evil and corrupt) status quo; they dismiss them for their weakness and wimpiness, but they do see the European Union as an interesting concept to promote peace and democracy, as long as it is under and behind the US shield and sword. It is also a convenient source of funds and "nation building bureaucrats" once they have done the dirty job of toppling the nasty regimes they are targeting.

The Bad and the Ugly share a simple understanding of international relations that there are no rules, that only power and strength get results, and they are therefore both keen to have a strong military and to use it, both to get specific results and as a demonstration to others;

The Good and the Bad are not driven by ideology so much and are mostly reality-based. They are usually able to take facts on the ground into account and are thus amenable to discussion and compromise. They both fear the unpredictable consequences and economic cost of the chaos promoted by the neo-cons. Europeans are familiar with both, and while they obviously would rather deal with the "Good", they understand the "Bad" and can manage them (playing to their strengths when available to impose changes in behavior or submitting to the US otherwise);

Interestingly enough, the Good and the Ugly can probably be separated from the Bad on the topic of democracy and freedom; The realists certainly don't give a damn about democracy in the rest of the world - what is important is whether the regime is friendly or not, not how that result is obtained.

The question, of course, is - who will get the upper hand? Where do we put Bush? and Rice?

Bush appears, from his discourse, to be closest to the neo-cons, with his idealistic speeches and references to "freedom" and "liberty" is every sentence. In his behavior and background (privileged frat-boy), he seems to be more of the "nationalist" - aprés moi le déluge mentality to take a very narrow view of his/the US's interests; The strength and persistence of Cheney and Rumsfeld, and the isolation and inability of Colin Powell to influence policy much shows that the policies are closer to the nationalistic version, with (big) bones thrown to the neo-cons to play with.

The nomination of Condoleeza Rice at the State Dept is not likely to change things much. Her utility is her loyalty to Bush. When the conflicts between the preferred attitude of the State Dept ("realism") and the preferences of her boss will clash, one of the following will happen:

- she will "go native", defend diplomacy - and she will be marginalized;
- she will stop the "ms nice guy" role she is currently playing, and the hardball policy of the nationalists will become the sole face of US to the world.

Either way, the policies are not likely to change, even if there is a effort currently to at least avoid saying any more provocative or combative things to Europeans (and they have nothing to lose to adopt the same tone).

The important thing to note about current US policy is that it is driven most of all by its belief that the only players are States. This is an administration that does not believe in multinational institutions, and which does not seem to care about non-State groups/threats like terrorist networks, international money laundering and drug alliances, and collective attempts at global solutions like Kyoto, the ICC and so forth. They care about Iran, North Korea, China, Poland, not about the UN, APEC, European Union, NATO or al-Qaida.

Iran is going to be the big test of all this - I will write about it later.

So - expect a lot of smiles and soothing noises in the coming days, but no substantive changes.

Posted by Jérôme à Paris on February 20, 2005 at 08:22 AM | Permalink | Comments (24)

Billmon: 02/19

Bitter Enders: No Russians at the gates of Berlin.

Nobody Expects the Spanish Inquisition: Heresy by thought, heresy by word, ...

Posted by b on February 20, 2005 at 03:56 AM | Permalink | Comments (2)

February 19, 2005

Billmon: The Creation of Gannon

This is incredible artful, but probably fake.

Posted by b on February 19, 2005 at 04:09 AM | Permalink | Comments (32)

Billmon: Young Pioneers

Children in worship of Big Brother

Posted by b on February 19, 2005 at 04:07 AM | Permalink | Comments (23)

February 18, 2005

Billmon: 02/18

Whither Canada?

The Fatta the Land

Life Imitates Art Imitating Life

Posted by Jérôme à Paris on February 18, 2005 at 04:27 PM | Permalink | Comments (31)

Week-end Open Thread

My last one is 2 years old tomorrow, so it's party time!
Have fun this week-end, BYOB.

Posted by Jérôme à Paris on February 18, 2005 at 03:24 PM | Permalink | Comments (36)

Big Oil: $85 Billion Profits - To What Use?

Total has provided its 2004 accounts and we now know the profit of the 5 largest oil companies:

ExxonMobil $25.3 billion
Shell $18.5 billion
BP $16.2 billion
ChevronTexaco $13.3 billion
Total $11.2 billion

More interesting is what these companies have done with these "obscene" amounts of money.

Here's a second list:

ExxonMobil $15.5 billion 100% $ 9.9 billion
Shell $13.4 billion   50% $13.7 billion
BP $16.2 billion   78%* $13.7 billion
ChevronTexaco   n/a   n/a   n/a
Total $10.7 billion 120% $ 4.5 billion

*(106% with TNK-Russia)

The first column is the amounts that were invested by these companies in the exploration and production of oil.
The second column is their "replacement rate", i.e. the ratio of newly discovered reserves to production.
The third column is the amount of share buy-backs in 2004.

This means that oil majors are not willing - or not able - to invest their available funds into the development of future reserves and would rather return the cash to their shareholders rather than invest in their business - to the point that they are actually threatening their own long term viability, by not renewing their reserves!

The reasons they are not investing are the following:

  • Reserves are more and more located in countries which are totally closed to foreign investment, like Saudi Arabia, Kuwait or Iran.

  • Those reserves that could be available do not meet the stringent profitability requirements of the investors, and only the best opportunities are pursued. Obviously, the long term assumption for the price of oil is the most fundamental parameter to determine such profitability and the oil majors, although they have increased that level in recent years, are still very conservative (most of them require their investments to be fully profitable at $20/b, as opposed to $15-16/b a few years back).

  • They have not enough incentive to invest in a major way in other forms of energy. They are dabbling in renewable energy (Shell is a big player in wind, BP in solar) but it's small change for them.

Item one is obviously beyond the control of the oil companies, but possibly not of the US government. The Iraqi campaign can certainly be seen as an attempt to ultimately open that country to foreign (and first of all American) investors. As I've argued elsewhere, this is far from succeeding, at least as far as Iraq is concerned.

Item two is linked to how our own economies are structured; with the current domination of short term requirements for financial profitability, this is unlikely to change, but we should all note - and publicise - the fact that the stock market is beginning to lose its role as the place where companies find funds to invest and is turning into a place where (rich) investors get remunerated by extracting ever increasing cash "savings" from companies.

Item three is a matter of public policy. Put in incentives to develop other forms of energy, and the energy companies will respond by investing (as the example of the wind sector shows). Penalise the use of oil, simply to reflect its real externalities (pollution, carbon emissions) without even making the energy companies bear that directly, and they will adapt again.

My point is - the status quo is broken: Big Oil is earning record profits which it is unable to use itself; there is no clear energy policy for the medium term while bigger and bigger threats are looming (China's growing consumption, global warming, reserve depletion, the geopolitics of oil reserves getting steadily worse). There is plenty of cash available to do something and it is not done.

Our kids will hate us when they see how we did not care for their needs when we could, and cared only about a few extra percentage points of profit to burn in SUVs and McMansions.

Posted by Jérôme à Paris on February 18, 2005 at 09:30 AM | Permalink | Comments (20)

February 17, 2005

Billmon: Intelligence Test

About Negroponte

Posted by Jérôme à Paris on February 17, 2005 at 03:41 PM | Permalink | Comments (37)



Posted by b on February 17, 2005 at 07:04 AM | Permalink | Comments (14)

The US - a "finance-based economy" on "crack"

In last week's Economist, this amazing statistic:

America, in particular, relies too much on financial firms as a source of profit growth. Since 1982, the profits of financial firms in America have risen from 4% of overall profits to more than 40%. (Neither Europe nor Japan has experienced the same phenomenon.) As a whole, the finance industry makes up nearly one-quarter of America's overall stockmarket capitalisation, up from a bit over 5% in the 1970s. Bill Gross, a bond-market veteran, adds these numbers to soaring consumer debts to arrive at what he calls the "finance-based economy"--a perilous venture sustained by the Fed's super-low interest rates.

Parallel to that, the Financial Times talks about the "crack cocaine of global finance"... (more below)

The FT first explains the case why not to worry, which is probably the version you are most familiar with if you follow business news at all:

The case for downplaying the...worries is, first, that the global economy is stable and growing. Much has been done to enhance the robustness of the financial system in the US...since the LTCM debacle. Banks have diversified their credit exposure...[and] have been reporting high profits for an extended period. They thus have an impressive looking cushion of capital as a defence against loss-inflicting shocks.

However, the FT is not convinced:

...banking is a cyclical business, in which the seeds of future trouble are sown precisely at times like this.


Timothy Geithner, president and chief executive of the Federal Reserve Bank of New York, in a recent speech :"Most financial crises involve a shock whose origins lie in the realm of macroeconomic policy error, often magnified by the toxic combination of poorly designed financial deregulation and an overly generous financial safety net. Probably the most important contribution policymakers can make is to avoid monetary policy mistakes and external imbalances that increase the risk of large macroeconomic shock"

Measure the US...against that template and warning lights immediately flash.

The FT then notes

  • the huge fiscal and current account deficits
  • the very low interest rates that "do strange things to a highly deregulated financial system" and "fuel an increase in risk appetite and leverage"
  • most of the assets of US financial institutions are not subject to the regulations that apply to banks
  • a growing concentration of financial assets and liabilities
  • houselhold debt at a peak, both in absolute amounts (close to 10,000 billion $ - yes, that's billion) and in relative terms (120% of disposable income, as compared to 60% in the 70s and 80s)
  • the phenomenal growth of unregulated hedge funds, which banks are desperate to finance (the "crack cocaine of global finance" quip above refers to prime brokerage for hedge funds, i.e. the services that banks provide to these funds to buy and sell shares - and finance the transactions)
  • finally, the amazing concetnration of derivatives, with 5 (five) banks holding more than 95% of all outstanding (84,000 billion $ at the end of september 2004) - with JP Morgan Chase aholding half of that. The FT notes that credit derivatives have never been tested in times of acute market stress and that "there is a risk that any attempt[by the 5 banks] to reduce their exposure in the face of shock could magnify rather than diminish the shock".

The FT concludes: "Far too little is known about the risks that are being run".

As the Economist notes in the article linked to above, one of the reason for high profits is that companies have a tendency to overstate their profits by having, once in a while, a "horrible year" with whopping losses which allows to show good results in subsequent years:

...firms consistently overstate reported profitability. They tend to punctuate periods of oddly rapid growth with occasionally awful years of massive write-offs: admissions, in other words, that past profits were overstated. In 1989-2004, says Goldman Sachs, write-offs among the firms included in the S&P 500 index tended to fluctuate between 5% and 15% of total reported earnings per share (EPS) each year. But there were two notable exceptions: in 1991-93, write-offs rose to 30% or more of reported EPS, setting the conditions for lots of weirdly quick profit growth later in that decade. In 2002, write-offs soared to an astonishing 140% of EPS.


  • the one bright spot in the US economy is the record profits of its corporations;
  • these are subject to accounting tricks, even today;
  • additionally, an amazingly high portion of these profits come from financial firms, who seem to be making these by taking advantage of very low interest rates to take growing risks, especially in lending to hedging funds and buying untested derivatives.

With interest rates on their way up, big macroeconomic imbalances in the US economy (record debt, record deficit, record current account deficit) and the probability of outside shocks (oil, dollar, terrorism, tension with Iran, Middle East, etc...) quite high, the probability that a serious crisis could be triggered - and amplified by the financial system - is worringly high. Add in a financial sector in denial (we have big profits, why worry?), an administration oblivious to the situation and most likely unable to react, and you have a lot of ingredients for a "perfect storm".

Posted by Jérôme à Paris on February 17, 2005 at 06:34 AM | Permalink | Comments (29)

Billmon 02/17

A Separate Reality

A Boy and His Dog

Posted by Jérôme à Paris on February 17, 2005 at 02:09 AM | Permalink | Comments (5)

February 16, 2005

Syria Attacked

Whoever killed Rafik Hariri, the Syrian government most probably did not. The killing of Hariri is seen as an invitation to slam Syria and drive it out of Lebanon. This was obvious to forsee and there is no reason to believe the Syrian government would be stupit enough to invite what will come down now.

So who else could be interested?

  • The folks who have lots of experience in blowing up cars in foreign countries?
  • Rumsfelds under-cover special operation forces?
  • Some Lebanese-mafia business organization?

I do not know. But sticking this on Syria is obviously wrong and U.S. officials seem to agree.

As the New York times wrote yesterday under the crude headline
U.S. Seems Sure of the Hand of Syria, Hinting at Penalties

The Bush administration, condemning the assassination of the former prime minister, Rafik Hariri, in Lebanon, suggested Monday that Syria was to blame..
Mr. McClellan and other administration spokesmen said they had no concrete evidence of Syria's involvement in the killing of Mr. Hariri,..

NYT cites "No evidence" but headlines "seems sure"?

"We're going to turn up the heat on Syria, that's for sure," said a senior State Department official. ".. Even though there's no evidence to link it to Syria, Syria has, by negligence or design, allowed Lebanon to become destabilized."

Syria is guilty, the State Department says, because they allowed Lebanon to "become destabilized"? Hey, why didn´t they just put in more troops and stabilized that country?

In the same manner the Washington Post editorial writers just do not care who did it.

WHO ENGINEERED the assassination of former Lebanese prime minister Rafiq Hariri on Monday may never be known. But these facts are clear enough: Mr. Hariri, a self-made billionaire who orchestrated Lebanon's reconstruction in the 1990s after years of civil war, had emerged as a leading opponent of Syria's continued domination of his country.
The despicable murder of Mr. Hariri benefits no one outside the rogue regime in Damascus -- and the world should respond accordingly.

Would Israel NOT benefit when Syrian troops leave Lebanon and the heat on Damascus is turned higher?

Would U.S. plans for Middle East manipulation NOT benefit from a destabilization in Syria regime?

And how about some business connections?

Hariri was a thug who bribed his way to a top position to rob the country for his personal wealth and grandstanding. In 2001 an anti-Syrian US pressure group wrote a dossier on  Rafiq Hariri:

Hariri approached this daunting task [as prime minister] in much the same manner as he conducted his private business affairs. Several key business associates of the prime minister were given high-ranking positions in the new government. Fouad Siniora, the chief financial officer for Hariri's business empire, was appointed finance minister. One of his company's lawyers, Bahij Tabbara, became justice minister. Riad Salameh, who had handled Hariri's account at Merrill Lynch, was appointed head of the Central Bank. The new governor of Mount Lebanon, Suhail Yamut, had previously been in charge of the prime minister's business interests in Brazil. Farid Makari, the vice president of Saudi Oger, later joined Hariri's cabinet as information minister.

The Company for the Development and Reconstruction of Beirut's Central District (commonly known by its French acronym Solidère), in which Hariri is the primary shareholder, expropriated most property in the central business district of Beirut, compensating each owner with shares in the company (which, in some cases, were worth as little as 15% of the property's value). That Hariri and his business associates profited immensely from this project was an open secret.
By 1998, however, the Lebanese economy was on the verge of catastrophe and the Syrians began to see Hariri as a liability. As a result of Hariri's freewheeling public spending and rampant government corruption, Lebanon's national debt had soared from $2.5 billion to $18.3 billion, the largest per capita public debt of any emerging market (debt servicing accounted for 40% of the government budget). Economic growth slowed from 8% in 1994 to under 2% in 1998.

Hariri simply robbed the country. Also of interest may be this tidbit:

Hariri is reported to have channeled an estimated 3.2 billion francs to the political campaigns of French President Jacques Chirac and his allies

Many interested parties and many possibilities are involved.

My instinct says Rumsfeld's storm troopers. But whoever it was, I do doubt that the results of this will be a better life for the Lebanese and the Syrian people.

For context:
Joshua M. Landis' Syria Comment
Soj's paxblog
Helena Cobban's Just World News

Posted by b on February 16, 2005 at 04:33 PM | Permalink | Comments (25)

Billmon 02/16

Gimme That Old Time Religion

With Friends Like These...

Posted by Jérôme à Paris on February 16, 2005 at 03:11 PM | Permalink | Comments (20)

"Why We Fight"

The movie "Why We Fight" did run on the German/French public channel ARTE yesterday. It was saddening and fun to watch.

"Why We Fight" starts with Eisenhower's 1961 Military-Industrial Complex Speech:

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the militaryindustrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

A movie review continues:

Deploying the general's farewell address as his strategic ground zero, Eugene Jarecki launches a full-frontal autopsy of how the will of a people has become an accessory to the Pentagon. Surveying the scorched landscape of a half-century's military misadventures and misguided missions, Jarecki asks how--and tells why--a nation ostensibly of, by, and for the people has become the savings-and-loan of a system whose survival depends on a state of constant war.

The very best scene comes directly after an in-depth descriptions of Halliburton/KBR and the enriching career of Dick Cheney.

In an interview Senator John McCain (sympathetic closeup shot in his office) is all so concerned and saddened by the democracy endangering connections between the military industry and the politicians network. At one point an aid for McCain interrupts his lamentations for an urgent phone call.

McCain asks the aid: "Who is it?" - aid whispers: "The Vice President" - McCain: "Who?" - aid louder: "The Vice President" - McCain: "Oh, ahh, oh, excuse me." He smirks, caught with the hand in the cookie jar, into the camera and gets up to take the call. The interview ends there, the movie continues.

Reviews: Reuters, Film Threat, Baltimore Sun

Posted by b on February 16, 2005 at 12:58 PM | Permalink | Comments (6)

Yet Another Open One

News, views, visions ...

Posted by b on February 16, 2005 at 07:23 AM | Permalink | Comments (73)

February 15, 2005

Billmon: Pieces of the Puzzle

There are still pieces missing in the current puzzle. Maybe they mixed with the older one? Billmon thinks so.

Posted by b on February 15, 2005 at 05:13 PM | Permalink | Comments (49)

Budget Priorities


In restraining spending in the 2006 Budget, the Administration was guided by three major criteria:

First: Does the program meet the Nation’s priorities? ..

Second: Does the program meet the President’s principles for appropriate use of taxpayer resources? ..

Third: Does the program produce the intended results? ..
Overview of the President's 2006 budget (PDF)


Education Programs Proposed for Elimination

Alcohol Abuse Reduction, Arts in Education, B.J. Stupak Olympic Scholarships, Byrd Honors Scholarships, Civic Education, Close Up Fellowships, Community Technology Centers, Comprehensive School Reform, Demonstration Projects for Students with Disabilities, Educational Technology State Grants, Elementary and Secondary School Counseling, Even Start, Excellence in Economic Education, Exchanges with Historic Whaling and Trading Partners, Federal Perkins Loans Cancellations, Foreign Language Assistance, Foundations for Learning, Gaining Early Awareness and Readiness for Undergraduate Programs, Interest Subsidy Grants, Javits Gifted and Talented Education, Leveraging Educational Assistance Partnerships, Literacy Programs for Prisoners, Mental Health Integration in Schools, Migrant and Seasonal Farmworkers, National Writing Project, Occupational and Employment Information, Parental Information and Resource Centers, Projects With Industry, Ready to Teach, Recreational Programs, Regional Educational Laboratories, Safe and Drug-Free Schools and Communities State Grants, School Dropout Prevention, School Leadership, Smaller Learning Communities, Star Schools, State Grants for Incarcerated Youth Offenders, Supported Employment State Grants, Teacher Quality Enhancement, Tech-Prep Demonstration, Tech-Prep Education State Grants, Thurgood Marshall Legal Educational Opportunity Program, TRIO Talent Search, TRIO Upward Bound, Underground Railroad Program, Vocational Education National Programs, Vocational Education State Grants, Women's Educational Equity

Total 2005 budget of these 48 programs: $4,264.4 million; 2006: $0.00.
Fiscal Year 2006 Budget Summary - U.S. Department of Education -
Promoting educational excellence for all Americans.


Missile Defense – The Administration is requesting $8.8 billion for missile defense in FY’06, down roughly $1 billion from the current $9.9 billion. Approximately $800 million of the proposed reductions are from the Kinetic Energy Interceptor (KEI) program. Though the request is below current levels, missile defense continues to receive more funding than any other weapons program in the annual Pentagon budget. This total does not include $757 million for the SBIRS-High [missile detection] satellite program.
Highlights of the FY'06 Budget Request


Missile Defense

The nation's fledgling missile defense system suffered its third straight test failure when an interceptor rocket failed to launch Sunday night from its base on an island, leaving the target rocket to splash into the Pacific Ocean, the Pentagon said yesterday.
Rocket fizzles; failure is 3rd for missile defense

Again, the target, perhaps representing a North Korean ICBM hurtling toward a U.S. city, performed flawlessly.
Life Imitates Art: Another Missile Defense Test Failure - ArmsControlWonk (funny);  Technical background - Interceptor databus physically too slow for task

Posted by b on February 15, 2005 at 07:58 AM | Permalink | Comments (5)

February 14, 2005

Billmon: Down the Memory Hole

Same pictures on CNN for "Iranian" and "North Korean" nuclear facilities.

Should Fran get a hat tip?

Posted by Jérôme à Paris on February 14, 2005 at 02:34 PM | Permalink | Comments (4)

Juvenile Traders

The international demise of the US financial industry
A financial lecture on moral behaviour told in four <blockquote>'s:

Citigroup eurozone bonds ploy leads to panic and clampdown on trading
Reuters(?), August 10, 2004

Trading in the eurozone government bonds market has been restricted after an unprecedented wave of selling orders by Citigroup caused panic last week.

MTS, which provides the market's busiest electronic-trading platform, took the highly unusual step of limiting liquidity after the US bank sold a total of €11bn (£7bn) in eurozone paper on August 3, in a rapid-fire barrage of transactions stretching across about 200 debt instruments.

About half and hour later, Citigroup bought back €4bn of the paper at cheaper prices - potentially securing large profits for itself.

Citigroup memo details bond profit strategy - FT
Reuters, Jan.31, 2005

An internal Citigroup memorandum detailed how the U.S. financial services company could "very profitably" manipulate the eurozone government bond market two weeks before it made several controversial trades, Britain's Financial Times newspaper said on Tuesday.

The Financial Times said it had obtained a document dated July 20 that said Citigroup wanted to shake up the eurozone market, where transparency and competition have shrunk trading margins.

The newspaper quoted the memo as saying Citigroup wanted to "turn the European Government bond market into one that more closely resembles" the less transparent U.S. Treasury bond market.

"Over time, this may help to kill off some of the smaller dealers," the FT quoted the memo as saying.

Joint Statement Issued Today by Tom Maheras, CEO, Global Capital Markets and William Mills, CEO, Europe, Middle East, & Africa, Citigroup Corporate and Investment Banking Group
Citigroup, Feb. 02, 2005

As we have stated previously, we regret having executed the trade because we failed to consider its potential impact on our clients and other stakeholders, including European regulators and treasuries, and because it did not meet our standards.

As one example, unfortunately, the traders involved made inappropriate, unrealistic, and in certain instances juvenile remarks about the trading strategy before it was executed. We regret these comments, which do not represent the views of the supervisors who approved the trade, nor of management.
Based upon the reports we have received and our own internal review, we continue to believe that this trade did not violate any applicable rules or regulations. Contrary to what has been reported in the press, our traders did not intend to sell more than the cash position of approximately €8 billion that they held.

However, they underestimated the number of bids they would hit on the MTS platform at the price parameters set for the sale, and as a result, sold €12 billion.

Sure, these boys just oversold because there was so much demand, you know. That's why these juveniles just had to buy back €4 billion after prices had droped through their sellout, making tens of millions in profits. Go away, nothing to be seen here ...

But wait, here is the lesson:

Citigroup Loses European Government Business Amid Bond Probes
Bloomberg, Feb. 14, 2005

Citigroup Inc.'s share of European government debt sales for the 12 nations that use the euro is the lowest in more than five years after the world's biggest bank roiled markets with a barrage of August bond trades.
The New York-based firm's European government bond sales dropped 98 percent in the past six months from $5.5 billion in the same period a year earlier, according to data compiled by Bloomberg.
``I would expect there would be some impact, although not quantifiable, from reputational issues'' related to Citigroup's August government bond trades, Chief Financial Officer Sallie Krawcheck, 40, said on a conference call with investors on Feb. 11. Earnings in the European region ``were not as strong as we would have hoped,'' she said. ``Some part of it may have been from folks not doing as much business with us.''

Citigroup's profit from corporate banking in Europe, the Middle East and Africa fell to $84 million in the fourth quarter of 2004 from $118 million in the same period a year earlier and from $123 million in the third quarter of 2004.

Other stories: Parmalat Sues Citigroup for $10 Billion and Japan closes Citigroup branches

Unlike the US, some countries do fight back on white crime fraud. Can the US financial industry survive internationaly under such rules?

Posted by b on February 14, 2005 at 01:03 PM | Permalink | Comments (21)

Billmon: 02/14

It's the Counting


A Very Different Situation

Posted by b on February 14, 2005 at 02:10 AM | Permalink | Comments (22)

February 13, 2005

Billmon: Conspiracy Theories

Not where you would think...

Posted by Jérôme à Paris on February 13, 2005 at 05:15 PM | Permalink | Comments (29)

European Truck of the Year


This night, the heavy-duty (10 ton) version of the Ariane 5 rocket was successfully launched from Kourou in French Guyana.

Posted by Jérôme à Paris on February 13, 2005 at 05:44 AM | Permalink | Comments (14)

Useless Statistical Almanach n°4

Is there such thing as useless or worthless information?

I'd like to bring your attention to 2 examples from the games world again:

Game 1 (a classic, and an easy one)

You are given the choice between 3 cards, which are face down, one of which is red and the other two black. You are asked to find the red one.

After you have made your choice (but not looked at it yet), the dealer reminds you that out the two remaining cards, at least one is black, and he shows one of the two cards, which is indeed black.

Should you change your choice of card if given the opportunity? How much more would you be willing to bet if you had that possibility?

Game 1 "The Grass is Greener", from Brad De Long (but don't go peek there yet!)

You are given the choice between two envelopes and told that there is money in both envelopes, with one amount being double the other amount.

If you choose one envelope, you can always think the following: the other envelope has a 50% probability of having double the money, and a 50% of having half, so it's "expected value" is 0.5*2 + 0.5*0.5, i.e. 1.25 the expected value of this envelope. Trouble is, the same reasoning applies with the other envelope?
Do you have too much information or too little? What would you think if the person givng you the envelopes had pointed out that above reasoning AFTER you had chosen one envelope?

Posted by Jérôme à Paris on February 13, 2005 at 04:55 AM | Permalink | Comments (5)

Billmon: 02/13

  • Lincoln's Passion: The pretense of loving liberty ...
  • Nothing to Fear But Fear Itself: You will all be bankrupt ...

Posted by b on February 13, 2005 at 03:46 AM | Permalink | Comments (11)

February 12, 2005

Billmon: Law of the Land

This deserves your comments. The current direction of policy in the US compared to that of the Nazi regime does not fit (yet). But the convergence is obvious - at least from outside the US.

Just look at another new Billmon post: Onward Christian Soldiers which does align to the Gott mit Uns belt buckle my father, as million others, was wearing during WWII.

Posted by b on February 12, 2005 at 05:29 PM | Permalink | Comments (40)

Iraq is Not about Oil, it is about Tolerating No Dissent

There are many theories (most recently this Kos diary) bringing up a tidbit of information about Iraqi oil that purports to explain that the war was all about oil.

Of course, it was about oil, but maybe not in the way you think about it. The issue (which has domestic relevance as well) is - do you have an administration that does not tolerate opposition and is willing to use all means to crush it?

Oil is the most important item on which decisions must be taken in Iraq, but how these decisions are taken are more important than the actual decisions.

Let's play a game: what's the common point between these 2 groups of countries?

+ Saudi Arabia, Pakistan, Uzbekistan, Egypt, Kuwait, Emirates, Sudan, Yemen, Kazakhstan
+ Italy, Georgia, Ukraine, Poland, Japan, UK, Norway, Israel, Nigeria
+ Burma, Cuba, Zimbabwe, North Korea, Angola
+ Venezuela, Russia, Iran, France, Spain, Canada.

Now look again (same countries, different groups):

+ Saudi Arabia, Kuwait, Qatar, Sudan, Angola, Kazakhstan, Emirates
+ Russia, Venezuela, Iran, UK, Norway, Nigeria, Canada.
+ Burma, Cuba, Zimbabwe, North Korea, Pakistan, Uzbekistan, Egypt, Yemen
+ Italy, Georgia, Ukraine, Poland, Japan, France, Spain, Israel.

Can you tell how I put these together? And what it has to do with Iraqi oil?

Group 1 countries are currently seen as allies by the US administration in the fight against terrorism;
Group 2 countries are enemies or at least unhelpful partners (Not all countries have been put into that list, only those relevant to the point I'm coming to)

Group A are oil exporters
Group B are not

Now, you have noticed that in each group, the first line includes dictatorial regimes while the second line includes democracies (some flawed, obviously, but nevertheless democracies). So, as you can see, democracy has little to do with either (i) being a friend of the US or (ii) having oil or not.

Now here's a trickier one:

a) Saudi Arabia, Kuwait, Russia, Emirates
b) UK, Norway, Venezuela, Iran, Angola, Nigeria, Sudan, Canada, Kazakhstan.


i) Norway, UK, Kuwait, Angola, Sudan, Canada, Emirates, Nigeria
ii) Russia, Iran, Venezuela, Saudi Arabia.

These are all oil-producing countries and significant exporters
a) are those that do NOT, for the most part, give access to their oil reserves to foreign oil majors
b) are those that DO
i) are those that do not use their oil exports as a political weapon
ii) are those that DO.

And another one:

aa) France, Germany, Canada, Mexico,
bb) Cuba, Iran, Russia, Venezuela


11) Canada, Mexico, Spain, Russia, Germany
22) Cuba, Iran, France, Venezuela

aa) and bb) list opponents to the war in Iraq, separated in "allies" and others
11) list those that are treated as friends by the US despite this opposition, and 22) those that are not. These last four tend to be those that are the most outspoken (or frank) and explicit in their opposition to US policies.

The point that I am trying to make is that US policy is not about oil, it's not about democracy, it's about a general intolerance to dissent and opposition. It's about "we know better, and if you don't agree we'll make you pay for your insolence".

It's all about hubris, and oil has little to do about it.

Saddam Hussein was hated by Americans, because, like Castro and Chavez, he was (at least after 1990 and his "betrayal") an outspoken opponent of the US, unwilling to bow to US demands, always trying to use his oil as a political weapon (by limiting his production to jack up prices or by threatening to price it in euros) and, unlike Chavez and Castro, he had provided a not entirely unarguable case under international law that he should be removed, so he was (note - I am not saying that I agree with the war, but I am saying that it was at least legitimate to put pressure on him like the first UN resolution did - he was stubborn enough that even France and others could have come to agree that war was the only way to make him comply).

Castro and Chavez have been the target of various attempts to destabilise them, which, as can be expected, only strenghten their internal legitimacy, despite their otherwise quite flawed policies.

Iran is the same - outspoken against the US, willing to use its oil in its international posture, and thus especially targeted by the administration.

France, not an oil producer, not a dictature (yet), quite outspoken in its opposition to the US (both for good and bad reasons), has also been subject of a campaign of hate of unusual intensity in right wing circles and media in the past two years. France has the "luck" of (i) being part of the EU which is quite able to fight the US where it matters (money and trade) (ii) having the same high opinion of itself as the US and thus not really caring about its opinion in the US beyond pragmatic interests.

Russia and Saudi Arabia are special cases, because they are not very friendly to the US, and they can do pretty much what they want in many respects - including in their oil diplomacy - because they are pretty careful not to be in outspoken opposition to the US. The play real-politik games which sometimes put them in opposition to the US, but these are understood as a defense of their national interest and are not part of a pattern of explicit opposition to the US, so they can be understood and tolerated in the general scheme of things (they are fought in such instances by the US, of course, but not seen as enemies, only temporary opponents).

Today's Iraq is a big unknown for the time being. Still being fully controlled by the US, it has no independnet policy of its own. It's clear that what Bushco want is an "independent" but friendly country, not an independent and independent-minded country with policies that go against US interests.

Oil, of course, is an important issue, and the way Iraq will open up its reserves is an important decision, but the important thing is more about who decides than the actual decision. Opening up your oil reserves is not a bad thing per se - it can be profitable to you if you negotiate good terms with the oil companies (such as PSAs - see this post I wrote in the diary I mentioned above).

The US has shown that it will deal with countries who export oil to the US or don't, who open their oil sector to them or not, and who are democracies or not, so I really thing this is not the issue. (The US of course has a preference for democratic, friendly countries that give them access, but it can live with the other options. What they do NOT like is public opposition, especially when it is backed by oil and thus is heard).

The question is - will the opening up of Iraq oil reserves be a sovereign decision, and will the US tolerate decisions by Iraqis that do not follow their preferences.

Oil in Iraq will not be developed as long as there is unsecurity and instability, and the big oil companies will NOT invest as long as they do not have adequate long term contracts with a legitimate, sovereign, government. The US can give juicy short term contracts to oil contractors in Irak, but this a budgetary issue (who gets to spend Iraq's money), a sovereignty issue and how US money for Iraq is spent (a domestic US budgetary oversight issue) and has little to do with Iraq's massive reserves.

So that question has domestic repercussions in the US - do you have an administration that tolerates no dissent, no opposition, and seems willing to act forcefully against those that oppose or criticise it - or try to "check and balance it"?

Posted by Jérôme à Paris on February 12, 2005 at 08:46 AM | Permalink | Comments (36)