Moon of Alabama Brecht quote
May 31, 2008

Amb. Crocoker Lies on Chapter 7 and Iraq

Badger helps us to understand the complicate maneuverings in Iraq around the U.S.-Iraq Status of Force (SOFA) and Strategic Framework Agreement (SFA).

There is opposition to both of these to different degrees within the government fractions and within the opposition  groups. This has nothing to do with sectarianism but sets up the government side, which would not survive in its position without the U.S. forces, against the nationalist Shia and Sunni opposition.

As Badger translates from Al Hayat:

[O]bservers stressed that the latest version includes text relating to the establishment of 400 locations and bases [for the American forces], exemption [from Iraqi legal process] for American soldiers and citizens, and elimination of any responsibility [on the American side] for participation in the rebuilding of Iraq.

400 bases, of course not 'permanent' ones but only for a 100 years, must be about the number the U.S. currently has in Iraq. So effectively nothing would change.

Maliki may sign up such agreements when Crocker puts a gun to his head but I doubt that the Iraqi people will swallow that frog even under gunpoint, which of course they currently are anyway.

There is a nice line of disinformation coming from Ambassador Crocoker on this. Al Hayat via Badger:

"These protests [by Hakim and Hashemi respectively] have not stopped the Iraqi Foreign Ministry from announcing that the negotiations will be continued; and informed sources said Crocker has informed the Iraqi politicians that the US rejects holding a general referendum on the clauses of the agreement adding that it would be bad if Iraq were unable to exit from Clause 7" (of the UN charter, which governs the current status of US forces in the country).

"it would be bad if Iraq were unable to exit from Clause 7" - horseshit!!!

The current dubious legality of the U.S. in Iraq derives from the 2004 UN resolution 1546 (pdf). As CNN reported when that  resolution was approved:

[The resolution] also says the [Multinational] force will be able to take "all necessary measures to contribute to maintenance of security and stability" in Iraq and gives a 12-month deadline for the force to be reviewed.

Since then 1546 has been renewed, but the authority of the occupation troops WILL RUN OUT at the end of 2008. Global Policy Forum explains the resolution history:

[U]nder US/UK pressure, the Council has repeatedly renewed the mandate, in resolutions 1546, 1637 and 1723.
In late 2007, Washington and London again asked the Security Council to renew the MNF mandate, for an extension of another year. Prime Minister Nuri al-Maliki wrote to the Council to request a mandate renewal without referring the matter to parliament for ratification, as required by the Iraqi constitution. A majority of parliamentarians also had written a letter in April to Security Council members calling for a timetable for MNF withdrawal. The cabinet's actions were unilateral, unconstitutional and illegal.

Iraqi parliamentarians wrote another letter to Security Council members immediately before Council action. Further, the US House of Representatives scheduled a hearing on the matter asking "Is the Iraqi Parliament Being Ignored?" But on December 18, under heavy pressure from Washington, the Council voted unanimously to extend the mandate for a further year.

There is no chance to do this stunt again if the situation in Iraq stays relatively quiet.

The December 2007 resolution is 1790 which prolonged the occupation to the end of 2008. Here is how the Security Council's press office announced it:

Recognizing the request from Iraq, the Security Council today decided to extend the mandate of the multinational force in that country -- “for the last time”, according to its Permanent Representative -- until 31 December 2008.

Acting under Chapter VII of the United Nations Charter, the Council unanimously adopted resolution 1790 (2007), deciding further that the mandate would be reviewed at the request of the Government of Iraq or no later than 15 June 2008.

The U.S. could probably get another year, 'at the request of the Government of Iraq', if it would instigate another civil war in Iraq in the second half of 2008 and if the Iraqi security forces would not be able to handle such. Even then I doubt that China or Russia would do a lame-duck Bush such a favor.

There is a real bind here. Bush/McCain need to point to a peaceful Iraq where the Iraqi forces have everything under control to have a chance to get another republican presidency. But the same picture makes a prolongation of the UN sanctioned current status of forces impossible.

Without a UN mandate and without a SOFA agreement U.S. forces in Iraq are illegal.

So unlike what Crooker tries to imply, that "Iraq were unable to exit from Clause 7", is not the problem - at least not for Iraqis. The problem is that any UN legal authority for U.S. forces in Iraq would run out and that on January 1 2009 the U.S. forces in Iraq would be just another rogue militia.

You say such legality does not matter? Then please explain why the U.S. administration is sweating over this at all.

Posted by b on May 31, 2008 at 18:38 UTC | Permalink | Comments (8)

May 30, 2008

'Reporting' without doing such

Sorry to bore you with my addiction to cranes.

But today's crane accident in New York shows a lot of what is wrong with the media.

A construction crane collapsed Friday on New York's Upper East Side, smashing into a 23-story apartment building as it fell to the ground, killing one construction worker and seriously injuring two others.

Ok, bad stuff happens. Most people, I believe, would like to know why such bad stuff happens and if and how we can avoid to have something similar happen again.

If the media would do their job to let us know what we want and need to know they would tell us:

  • the type of the crane that broke down and its load margins,
  • what load the crane carried at the breakdown moment, from where to where,
  • real eye-witnesses accounts,
  • the company that owns the crane,
  • the company that operated that crane,
  • the name of the main contractor for the building side,
  • the opinion of the inspector who last checked this crane,
  • the voices of at least two independent experts that could evaluate the above.

Come on folks. Such basic information is easy to learn from the people on site. Run with it.

Instead we get:

  • some blah-blah quote by an uninformed mayor,
  • some weep-weep quote of someone who "left to get an egg sandwich a block away,"
  • some bang-bang quote from someone who heard a "loud sort of bangs" while he was playing "indoor tennis two blocks away when he heard the crash."

There is not even an attempt to present real information chunks within such news besides "crane crashed" "one dead" "egg sandwich are great" and "indoor tennis is super."

Sorry, but this is all crap.

How did this happen and why?

Associated Press will leave those revelations to the 'authorities' who will have this or that unreported deal with the builder, crane manufacturer, crane owner, crane operator, etc.

We are supposed to trust these 'authorities' to launch 'serious investigations' which will issue a whitewash report three years from now which no one will ever report about.

And these 'journalists' wonder why we are disgusted with their 'reporting'?

Posted by b on May 30, 2008 at 18:55 UTC | Permalink | Comments (15)

Congrats to the People of Nepal

A genuine evolvement of a democracy without any color revolution bullshit.

All eyes on palace for Nepal king's eviction

KATHMANDU (AFP) — Nepal's government said Friday it has started an audit of palace property and sent an official letter telling King Gyanendra to leave after a historic assembly abolished the monarchy.
A constitutional assembly, dominated by former rebel Maoists, voted late Wednesday to abolish Gyanendra's 240-year-old Shah dynasty -- capping a peace process that ended a decade-long civil war.
An estimated 1,500 soldiers guard the king, but Nepal's army -- seen as a bastion of royalists -- said they will comply with the decision, which also involves turning the royal palace in Kathmandu into a museum.
Mass protests led to a landmark peace agreement in 2006 that saw the king increasingly sidelined.

Many ordinary Nepalese are delighted to see the back of the dour king as well as his would-be heir, Paras -- who is widely loathed for his reported playboy lifestyle in one of the world's poorest countries.

My congratulations to the people of Nepal.

You have a republic, if you can keep it.

Britain sent its congratulations after the assembly's first session.

Fine Britain. Now follow the example.

Posted by b on May 30, 2008 at 17:40 UTC | Permalink | Comments (12)

The Coming Naval "Dual Use" Blockade of Iran

Moon of Alabama on February 16, 2008: Iran: Next Step - Sea Blockade

Under the justification of the need to prevent smuggling and proliferation of nuclear material, the U.S., the UK and France will establish sea patrols that will interdict all ships from and to Iran and search these for "dual use" material. They will confiscate any "dual use" stuff under a similar flexible definition of "dual use" as was used against Iraq ...

Haaretz on May 21, 2008: Olmert to U.S.: Impose naval blockade on Iran

Prime Minister Ehud Olmert has proposed in discussions with the speaker of the U.S. House of Representatives, Nancy Pelosi, that a naval blockade be imposed on Iran as one of several ways to pressure Iran into stopping its uranium enrichment program.

Wall Street Journal on May 28, 2008: Punxsutawney Condi

A month-long naval blockade of Iran's imports of refined gasoline – which accounts for nearly half of its domestic consumption – could clarify for the Iranians just how unacceptable their nuclear program is to the civilized world.

What took them so long?

Anyway - I continue to believe that a complete naval blockade, or a blockade of gasoline, will not happen simply because such a naval blockade is illegal. A Canadian government site explains the law of the sea:

It has become popular for many governments and opinion leaders to call for economic sanctions, including enforced trade sanctions, against a State felt to be in violation of international public order. Such actions were recently used against Iraq and Serbia. However, a naval blockade is, prima facie, a violation of freedom of the [High Seas]. Such efforts constitute a violation of international law if not conducted with the authorization of the United Nations Security Council pursuant to Chapter VII of the Charter.

There needs to be some 'justification', like the prevention of proliferation of (non-existent) Iranian nukes, and there needs to be some coalition of the willing because the U.S. will never get a Chapter VII Security Council vote for a total naval blockade.

There is also the need to keep the spice flowing, i.e. to allow Iran further oil exports, as otherwise a rush to $200-300/barrel would kill off the last tiny bits of GDP growth in the "west".

Still the calls from Israel and the WSJ Ziocon editors do generate some echo. There are signs pointing to the implementation of the 'proliferation prevention' effort I predicted.

Two days ago Bush's national security advisor Stephen Hadley spoke at a meeting on the fifth anniversary of the Proliferation Security Initiative:

Mr. Hadley said he was particularly concerned about terrorist groups obtaining weapons of mass destruction. He raised the specter of Iran — which enriches uranium in defiance of three U.N. Security Council resolutions — funneling chemicals, germs, or radioactive material to terrorists.

"Chemicals, germs, or radioactive material" - Fertilizer, meat and hospital stuff - all 'dual use' items which will require 'inspections' and 'confiscation'.

Posted by b on May 30, 2008 at 4:51 UTC | Permalink | Comments (15)

May 29, 2008

Administration Shake-Up Imminent

WASHINGTON D.C. (RBN) -  RBN has learned of imminent changes in key government positions as launch of a "last push phase" of the Bush administration. The moves were confirmed by two senior administration officials directly involved in the current reorientation.

Secretary of State Condolezza Rice is expected to resign within weeks to pursue a new academic position at Stanford University. Her current position will be filled by Stephen J. Hadley, currently the National Security Advisor. Elliot Abrams, now the Deputy National Security Advisor for Global Democracy Strategy will be promoted to head the National Security Council.

As was rumored earlier, Christopher Hill, Assistant Secretary of State for East Asian and Pacific Affairs, will also leave the administration. His position has been offered to John R. Bolton, former Permanent US Representative to the UN and currently of counsel to the law firm Kirkland and Ellis.

As the sources explained to RBN these moves were initiated to allow a more "forceful pursuit of the President's aim to make history."

This week a Wall Street Journal editorial attacked Rice for not taking a sufficiently militaristic stand against Iran. On the same page the Iranian exile Amir Taheri remarked how she "proffered" negotiations with "Iran's mullahs."

In what amounted to a political obituary, a recent essay in the Weekly Standard by Vice-President Cheney's biographer Stephen F. Hayes accused Rice of "jettisoning of the Bush Doctrine." Hayes alleged her of circumventing the political process by allowing her Assistant Secretary Christopher Hill, to negotiate with North Korea.

According to our sources additional shake ups in the cabinet are planed, but have been delayed. So far no potential successor was found for Secretary of the Treasury Paulson. Paulson had warned of severe economic consequences of further wars in the Middle East. The nomination of Paul Wolfowitz as new Secretary of Defense is held up by "hefty resistance" on Capitol Hill, the sources say.

h/t Jim Lobe

Posted by b on May 29, 2008 at 13:43 UTC | Permalink | Comments (14)

Culture of Deception

For all of its self serving, [Scott McClellan's] book does serve one good purpose: It is a reminder that we still do not know precisely how far Mr. Bush, Mr. Cheney and the others were willing to wade into that “culture of deception” to sell Americans on the disastrous Iraq war.
I Knew It All Along, NYT Editorial, May 29, 2008

We do not know? We still do not know how far others were willing to wade into that “culture of deception”?

Hmm, really? Let's see:

The answer is the destruction of Iraq's unconventional weapons and the dismantling of its program to develop nuclear arms. That should be the lodestar of American and United Nations policy.
A Road Map for Iraq, NYT Editorial, Sep 18, 2002


The cost of letting that happen has been diminished authority for the United Nations and a growing danger that Iraq's unconventional weapons will be used in war or passed on to terrorists.
A Unified Message to Iraq, NYT Editorial, Nov 9, 2002


Iraq has to get rid of its biological and chemical arms and missiles and the means to make them, and abandon its efforts to develop nuclear weapons.
Decisive Days for Iraq, NYT Editorial, Dec 6, 2002


There is ample evidence that Iraq has produced highly toxic VX nerve gas and anthrax and has the capacity to produce a lot more. It has concealed these materials, lied about them, and more recently failed to account for them to the current inspectors.
Disarming Iraq, NYT Editorial, Feb 15, 2003


[Mr. Hussein] would also have to turn over all mobile biological and chemical weapons facilities, surrender anthrax stockpiles or demonstrate that they had been destroyed, finish eliminating illegal missiles and account for all unmanned aerial drones.
Diplomacy's Last Chance, NYT Editorial, Mar 23, 2003

Posted by b on May 29, 2008 at 6:05 UTC | Permalink | Comments (28)

May 28, 2008

Iraq Roundup

The current relative lull in Iraq is likely to end pretty soon. There are several recent events to support this assessment. All together they point to imminent danger for the U.S. troops in Iraq.

The election law for the provincial election this fall will not be agreed upon in a sufficient time frame. The elections will be moved out to next year and/or will be manipulated to allow as few choices as possible. This of course fits the Maliki government and the Kurds who in fair elections would lose power to the Sadr movement in the south and to Sunni Arabs in the north. Reidar Visser explains:

Today, the latest phase in the forced ethno-federalisation of Iraq is being played out as the Kurdish–ISCI ruling minority tries to fashion a provincial elections law that can suit its strategy of minimising popular impact on the elections results. Open lists that would give voters the opportunity of overruling party elites in their choice of candidates have been discussed in Iraq recently, but the KDP-appointed president of the “independent” electoral commission, Faraj al-Haydari, has already deemed this “impracticable”. Similarly, the idea of smaller electoral districts is being dismissed because of Kurdish concerns over Kirkuk.

The already announced, by Maliki, return of the Sunni parties to the Maliki government is not happening:

Iraq's main Sunni Arab political bloc said on Wednesday it had suspended talks to rejoin the Shiite-led government after a disagreement with Prime Minister Nouri al-Maliki over a cabinet post.

Muqtada al-Sadr called for weekly demonstrations against the U.S. demanded 'Stationing of Forces Agreement':

In a statement issued by his office, the radical cleric urged that "Iraqis across the country to hold demonstrations every week after Friday prayers until further notice or until the agreement is canceled."

He also called on all Iraqi political blocs to join force to reject the pact, demanding referendums for any agreement with Washington.

The non-sectarian resistance in Iraq, emphasized by Sadr, now gets active support from Lebanon's Hizbullah leader Nasrullah. As Badger translates form Arab media:

The instigation to resistance in Iraq on the part of the leader of Hizbullah, and with this unprecedented clarity, represents the taking of a strong position against the ruling group, in the name of Shiia Islam, and [in the name of] all who participate in this project from among the Sunni parties.

Add to that the possibility of retaliation for a U.S. attack on Iran and you have lots of likely flashpoints.

Any real fight with the Shia, over Iran or internally in Iraq, would endanger the U.S. supply line from Kuwait to Baghdad.

Last October I mused about an alternative route for U.S. supply based on a tiny hint in a Leila Fadel report. In 'You could supply us through Aqaba' I wrote:

With the British troops retreating to their air-base near Basra and eventually leaving, the U.S. supply route from Kuwait harbour to Baghdad is endangered. It is assumed that any U.S. conflict with Iran would lead to unrest in the southern Shia provinces in Iraq and disrupt that logistic 'line of communication'.
While the new Route Blue is about double as long as the red MSR Tampa, a long haul from the port of Aqaba is better than no haul at all. Especially when it carries your breakfast.

There was little confirmation for my assertions of an additional supply line when I wrote the above. The main news outlets never reported about such. Up to now that is and we only learn about the route because it involves serious corruption: Crossing Jordan: Iraq fuel deal sparks lawsuit

A little-noticed civil lawsuit in Florida is shining a light on an unusual but hugely profitable Pentagon contract to ship millions of gallons of aviation fuel to U.S. bases in Iraq through the kingdom of Jordan.
Although Jordan is not an oil-producing country, unlike other neighbors of Iraq such as Saudi Arabia or Kuwait, the Pentagon had insisted that fuel be brought in through Jordan.
The latest IOTC contract is worth $913 million over two years.

(The IOTC owner who runs the racket is, of course, a McCain supporter:

In March he hosted a $2,300-a-seat fundraiser for Sen. John McCain in Florida, according to the Palm Beach Post.

McCain's office declined to comment.

A part of that $1 overcharge per gallon goes to Republican party coffers. As usual, the Pentagon is financing the Republican party. But I digress.)

To the $38 million per month IOTC gets one has to add the millions the Sunni Awakening Councils are paid to not attack those large convois passing through their realm to the .

But money isn't everything. Even a thuggish Anbar sheik has some honor and I expect these folks  to come to some agreement with Sadr against the U.S. puppets in the Green Zone. (Lube in form of  monetary equivalents from someone (Turkey?) would certainly help the awakeniks to again change colors.)

The whole situation practically guarantees new fights. If these ensue in a united Sunni/Shia fashion, BOTH U.S. supply routes from Kuwait AND from Jordan would be in jeopardy. If the Kurds become uptidy against Turkey, as they always want to do, the limited supply line from the north will also be closed down.

If there are still sane folks in the Pentagon, they might want to think this trough before dropping bombs on Iran for sole domestic politics purpose.

Posted by b on May 28, 2008 at 18:49 UTC | Permalink | Comments (6)


You notice that your company is in deep doodoo when it lost over $38 billion in the last 12 month on U.S. mortgages, that number is likely to increase, the share price is down by half, senior people jump ship, managers get detained and questioned and you have to tell your staff to avoid travel to the U.S. because the SEC might want them for helping billionaires to hide their money.

Still, you had this bit of hope.

One of your companies vice president's successfully lobbied an 'anti-lobbyist maverick' presidential candidate. He even managed to write the guys future policies on mortgages and banking. If that guy wins and implements those policies you may again make billions instead of losing them.

But now people have found out about this scheme and your company has lost control over that too.

How good that few have noticed your other little trump-card:

"People have a feeling that it's time for change," said UBS Americas Chairman Robert Wolf, who has raised more than $200,000 for Obama.

Posted by b on May 28, 2008 at 15:42 UTC | Permalink | Comments (3)

Iran Election Ploy

There is another run of bomb-Iran news making the rounds. The IAEA released a new report (pdf) and immediately the media bashing began. The NYT had a completely misleading report  which Cyrus Safdari thankfully takes down in detail.

In August last year the IAEA and Iran made a deal on how to proceed on the then open questions. Those procedures were followed and in February the IAEA gave Iran essentially a clean bill of health. The agreement was fulfilled. But at the same time the U.S. gave the IAEA some very dubious 'evidence' derived from the 'Laptop of Death' that alleged projects of nuclear militarization. Iran has answered questions about some but not all of this 'evidence' which it says is at least in part forged.

This sequence of events does of course not prevent the Washington Post editors from lying to their readers:

LAST AUGUST, the International Atomic Energy Agency struck a deal with Iran on a "work plan" for clearing up outstanding questions about its nuclear program within three months -- in other words, before December 2007.
On Monday, some six months after the expiration of the deadline, the IAEA issued a report saying, in essence, that Iran had not acted in good faith and was engaging in delaying tactics.

The report says no such thing and the December 'deadline' never was one. But through it we learn a bit more about the alleged 'evidence'. One of the "documents shown to Iran in connection with the alleged studies" is about "High Explosives Testing":

Five page document in English describing experimentation undertaken with a complex multipoint initiation system to detonate a substantial amount of high explosive in hemispherical geometry and to monitor the development of the detonation wave in that high explosive using a considerable number of diagnostic probes.

In English?!?

And why a hemisphere? A hemisphere implosion device is needed for Plutonium bombs. Iran is not even alleged to work on anything with Plutonium. For a bomb based on Uranium much simpler ways are available to start the nuclear reaction. Why would Iran, unlike Pakistan, take the more complicate route?


21. Concerning the documents purporting to show administrative interconnections between the alleged green salt project and a project to modify the Shahab-3 missile to carry a nuclear warhead, Iran stated that, since some of the documents were not shown to it by the Agency, it could not make an assessment of them. Although the Agency had been shown the documents that led it to these conclusions, it was not in possession of the documents and was therefore unfortunately unable to make them available to Iran.

So at least part of the alleged 'evidence' has only been 'shown' to the IAEA and has not been provided to Iran at all. How is Iran to refute 'evidence' that it has never seen but that, to them, is mere hearsay? If this 'evidence' is relevant why is it not given to the IAEA to confront Iran? In another part of the report the IAEA also says that some of the 'evidence' only exists in "electronic form" which is of course prone to easy falsification.

As the IAEA notes later, the standard for verification is 'access to documents'.

23 .The Agency is continuing to assess the information and explanations provided by Iran. However, at this stage, Iran has not provided the Agency with all the information, access to documents and access to individuals necessary to support Iran’s statements.

So while Iran is not even allowed to see the 'evidence' it is supposed to deliver documents to refute it.

Adding to the manipulative reporting about the nuclear issues, there is a constant stream of attack warnings. Alex Cockburn wrote about  new plans of a U.S. undercover war against Iran three weeks ago. Yesterday Muhammad Cohen wrote in ATOL about bombs on Iran:

The George W Bush administration plans to launch an air strike against Iran within the next two months, an informed source tells Asia Times Online, echoing other reports that have surfaced in the media in the United States recently.
The source, a retired US career diplomat and former assistant secretary of state still active in the foreign affairs community, speaking anonymously, said last week that the US plans an air strike against the Iranian Revolutionary Guards Corps (IRGC). The air strike would target the headquarters of the IRGC's elite Quds force.

Now this may be the truth or it may be that the source, likely Richard Armitage, manipulates or has been manipulated.

As Col. Sam Gardiner shows, the administration communication theme before the 2004 election was 'terrorism' and it led to an incredible spike in media reports and news releases that included the term. He sees a similar communication strategy and spike coming for the 2008 election. This time the threat theme is "Iran".

An attack on Iran may come. But so far this might only be an election ploy. If an attack really comes, it is unlikely that we will be sure of it before the bombs fall. But remember:

"Over that summer of 2002," McClellan writes, "top Bush aides had outlined a strategy for carefully orchestrating the coming campaign to aggressively sell the war. . . . In the permanent campaign era, it was all about manipulating sources of public opinion to the president's advantage."

Posted by b on May 28, 2008 at 14:01 UTC | Permalink | Comments (8)

May 27, 2008

Kishore Mahbubani

Recently I am mulling over the thoughts of one Kishore Mahbubani.

His last book is titled The New Asian Hemisphere: The Irresistible Shift of Global Power to the East.

The blurb says:

Asians have finally understood, absorbed, and implemented Western best practices in many areas: from free-market economics to modern science and technology, from meritocracy to rule of law. They have also become innovative in their own way, creating new patterns of cooperation not seen in the West.

Will the West resist the rise of Asia? The good news is that Asia wants to replicate, not dominate, the West. For a happy outcome to emerge, the West must gracefully give up its domination of global institutions, from the IMF to the World Bank, from the G7 to the UN Security Council.

History teaches that tensions and conflicts are more likely when new powers emerge. This, too, may happen. But they can be avoided if the world accepts the key principles for a new global partnership spelled out in The New Asian Hemisphere.

I haven't yet read the book, only other material about and by him and I find his thoughts very interesting. There are reviews in the Globe and Mail and the Indian Business Standard:

A Singaporean of Indian origin, he became a career diplomat with several key assignments under his belt, not the least as ambassador to the United Nations, president on rotation of the UN Security Council, and now as a dean of a reputed school of public policy.

Mahbubani studied philosophy which makes his thoughts even more interesting.

An interview he had with the German pol-mag Der Spiegel is translated here. He had recent op-ed's in the Guardian, The sermons of cowards, and the Financial Times, Europe is a geopolitical dwarf. BBC's Hardball interviewed him and the videos are available at YouTube: 1, 2 and 3.

A main thought of his seems to be that economic development, which rapidly happens in Asia now thanks to the adoption of capitalism, is much more important than the 'western' official fetish called 'Democracy'. Something to the point that:  'Elections don't matter when you starve or get shot on the way to the voting booth.'

I can agree with that.

The 'western' political right does not want to give up its current leading positions and is looking for a fight with Asia. Wars are profitable.

The 'western' political left (well, not really left) is howling against authoritarian regimes in Asia. See Naomi Klein: First writing about Disaster Capitalism, the exploit of catastrophes by 'western' capitalism, only to immediately turn around and blame the regimes in China and Burma for their reaction to huge nature catastrophes there.

Hypocrisy abound ...

Posted by b on May 27, 2008 at 18:46 UTC | Permalink | Comments (27)

May 26, 2008

Carter and the EU's 'Equal Position'

Jimmy Carter criticizes the Europeans for not standing up against the U.S. and Israel for the people in Gaza:

Britain and other European governments should break from the US over the international embargo on Gaza, former US president Jimmy Carter told the Guardian yesterday. Carter, visiting the Welsh border town of Hay for the Guardian literary festival, described the EU's position on the Israeli-Palestinian dispute as "supine" and its failure to criticise the Israeli blockade of Gaza as "embarrassing".

Referring to the possibility of Europe breaking with the US in an interview with the Guardian, he said: "Why not? They're not our vassals. They occupy an equal position with the US."

Thanks Mr. Carter. You are right on Gaza and the 'vassal' point but I doubt the 'equal position'.

Europe has no single voice and if it had one, I am afraid, that voice would sign in tune with the U.S. just like many of the separate European voices do now.

There are several structural reasons for this, like a common U.S. and European fear about the inevitable rise of Asia and a general trend of converging "western" media opinion. (I'll expand on the first issue in another piece.)

But there is also a strange change that happened in the European media and some political parties between the five years of European protests against the War on Iraq and today's numbness in Europe against U.S. and Israeli aggressions.

I suspect a large part of this to be designed.

European politicians, often those in their early careers, are now regulary shiped to Washington and dined and wined by the usual think tanks free of charge.

Then there is the new European Council on Foreign Relations funded by George Soros, a dubious American involved in many 'regime change' operations. Why does an American finance a European Foreign Policy think tank?

In 2005 Rumsfeld lauched a huge information operation targeting 'allies':

A $300 million Pentagon psychological warfare operation includes plans for placing pro-American messages in foreign media outlets without disclosing the U.S. government as the source, one of the military officials in charge of the program says.
The program will operate throughout the world, including in allied nations and in countries where the United States is not involved in armed conflict.

$300 million - how many editors and TV producers in Europe can you buy with such an amount of money? How much 'equal position' is left after such an onslaught?

Posted by b on May 26, 2008 at 20:09 UTC | Permalink | Comments (22)

OT 08-20

Your comments are welcome.

News & views ...

Posted by b on May 26, 2008 at 16:09 UTC | Permalink | Comments (113)

Historical Fair Value

Last week I needed some money to fix a small personal credit crunch. A few $1,000 would have been fine.

So I went to my local Deutsche Bank outlet and asked for a credit. I have a long-term brokerage account with them and planed to use the stocks I hold as collateral.

But the Deutsche Bank clerk said no. He said that the stocks I hold for long-term profits were worth too little given their current market value.

"That's a stupid view," I rejoined. "I have kept these stocks for nine years by now and I plan to hold them forever, like two more years or so."

"Therefore," I explained, "you can't judge the stocks value by today's quotation. You have to look at their historical fair value, not their current price."

The clerk didn't get it. After an hour of brisk discussion I left without the money I urgently needed.

Stupit me. I gave up to early. I should have talked to the clerk's boss:

The proposals on “fair value” accounting by the Institute of International Finance, an alliance of 300-plus companies chaired by Josef Ackermann, Deutsche Bank’s chairman, would enable financial companies to cushion the blow of financial crises by valuing illiquid assets using historical, rather than market, prices.

Under the plan, which has been obtained by the Financial Times, banks that decided to keep assets on their balance sheet would also be freed from the requirement to hold them to maturity and would be able to sell them after two years.

So Ackermann agrees with me. stocks bought at $11 a share still have their 'fair value'.

Maybe I should try again?

Posted by b on May 26, 2008 at 13:58 UTC | Permalink | Comments (8)

May 25, 2008

The End of Political Movements?

Josh Marshall puts up some thought about a long New Yorker piece by George Packer on the Fall of Conservatism.

The piece analyses the rise and fall of the conservative movement that started with the Nixon presidential campaign in 1966. Two years later:

[Nixon's] Administration adopted an undercover strategy for building a Republican majority, working to create the impression that there were two Americas: the quiet, ordinary, patriotic, religious, law-abiding Many, and the noisy, élitist, amoral, disorderly, condescending Few.

That tactic of polarization carried the Republicans on for nearly 40 years. But now it seems to work no more. Today:

Among Republicans, there is no energy, no fresh thinking, no ability to capture the concerns and feelings of millions of people.
On May 6th, Newt Gingrich posted a message, “My Plea to Republicans: It’s Time for Real Change to Avoid Real Disaster,”
Pat Buchanan was less polite, paraphrasing the social critic Eric Hoffer: “Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket.”

The conservatives have run out of aims that incite the electorate. People love tax cuts, but they also love good government service. The Republican party has no energy left to deliver either and no ideas for new themes.

Still Packer sees the presidential race between McCain and Obama as open. This because McCain does not run as much on polarization as Bush/Rove did and because of a hidden racist swell in the electorate that works against Obama.

Packer does not analyse the Democratic state of affairs. I am not sure that it is in a better than the Republican one. When I read through the Democratic sites and programs, I find no new inspiring ideas either. I also do not the see the groundswell in the electorate that would allow for new ideas to get real weight and traction (though that may be for my lack of travelling in the U.S. in recent years.)

To me the Democrats look just as corporatist as the Republicans. Both feed at the same trough. 

The view that both, Packer and Marshall, seem to subscribe to is that of a zero-sum game. One party rises when the other falls.

While Packer and Marshall see their attempts of interpretation as "taking a step back" and "the big view," their analysis is restricted to U.S. domestic policy. But it is the international big picture that is really important.

My long term theory is that today there is a lack of successful, established alternative examples in the world that look good enough to incite real demand for change in the 'West'.

The independency of the U.S. was related to the French revolution movement. FDR's programs were an answer to then established communism. The late  60's conservative movement was an answer to social democrats. All are gone. There is nothing for the conservatives to fight against and nothing for the 'progressives' to copy from.

David Frum, quoted by Packer, confirms this view:

I asked Frum if the movement still existed. “We’ll have people formed by the conservative movement making decisions for the next thirty to forty years,” he said. “But will they belong to a self-conscious and cohesive conservative movement? I don’t think so. Because their movement did its work. The core task was to stop and reverse, to some degree, the drift of democratic countries after the Second World War toward social democracy. And that was done.

(Side-thought: Think that through and consider the U.S. motives to fight 'Islamists'.)

Without any real 'enemy' to corporatism left, the right wing base has lost its enemy and falls apart.

Without any real 'enemy' to corporatism left, the left wing base has lost examples to follow and cheases to exist.

What is left are two parties in a two party system who are both without a real base movement and both supporting corporatism. They each may win this or that election and the paths they follow are slightly different.

But without some outer example that will ignite a real base movement to 'force' a real change of direction, they will both end up in a town named Fascism.

Posted by b on May 25, 2008 at 20:11 UTC | Permalink | Comments (15)

There Are Always 'Solutions'

'Ayatollah will not allow US-Iraq deal'

Iraq's most revered Shia cleric Grand Ayatollah Ali al-Sistani has strongly objected to a 'security accord' between the US and Iraq.

The Grand Ayatollah has reiterated that he would not allow Iraq to sign such a deal with "the US occupiers" as long as he was alive, a source close to Ayatollah Sistani said.

The source added the Grand Ayatollah had voiced his strong objection to the deal during a meeting with Prime Minister Nouri al-Maliki in the holy city of Najaf on Thursday.

Hillary Clinton Mentions RFK Assassination in Relation to '08 Race

In an interview with the Argus Leader, Sen. Hillary Clinton, D-N.Y., took the unusual step of invoking the assassination of Sen. Robert Kennedy, D-N.Y., when discussing the continuing Democratic nomination battle.

"My husband did not wrap up the nomination in 1992 until he won the California primary somewhere in the middle of June, right? We all remember Bobby Kennedy was assassinated in June in California. I don't understand it." Clinton said.

Posted by b on May 25, 2008 at 4:35 UTC | Permalink | Comments (19)

May 24, 2008

A New Wind Generator Feature

Picture by Tony Zech
stolen via a German crane forum

The picture shows the last big task in the installation of a new type of Enercon E-82 wind generators. This is not a bigger-is-better one. The rotor diameter is only 82 meters (270 feet), but it has a neat new feature.

Enercon generators have no gears. The turning motion of the rotor is directly transferred into electricity via a nearly frictionless annular generator. The moving part of the generator consist of perma magnets and the static part, the stator, is a ring of copper wires. When the rotation of the perma magnets induces energy into the stator, a part of that energy also heats the copper wires. This heating effect is undesired as it reduces the electricity generation capacity and can lead to isolation problems or even fires.

The new type of E-82s avoids that problem. Its stator is water-cooled in a closed loop system and in the picture above one can see the heat exchangers of the cooloing system on the front top of the machine house. You can see details by this scrolling down this page.

Normal E-82's have 2 megawatts output. This water-cooled version will generate 3 megawatts. That is quite a jump in output for adding a relative simple feature.

You will not find Enercon wind generators in the United States.

As wikipedia writes:

Enercon was prohibited from exporting their wind turbines to the US until 2010 due to infringement of U.S. Patent 5,083,039. [...] Enercon claims their intellectual property was stolen by Kenetech (US Windpower, Inc.) and patented in the US before they could do so. Kenetech made similar claims against Enercon.

According to the European Parliament: "Kenetech seeking evidence for legal action against Enercon for breach of patent rights on the grounds that Enercon had obtained commercial secrets illegally. According to an NSA employee, detailed information concerning Enercon was passed on to Kenetech via ECHELON."

It is a longer story going back to the early 1990s. It is alleged, though not proven, that the CIA 'aquired' the technical information which was patented in the U.S. by Kenetech. Later the NSA was involved to 'prove' that Enercon was in breach of that Kenetech patent.

The NSA listened in to Enercon communication and 'aquired' codes needed to enter and shut down Enercon wind generators. Some folks on Kenetech's payroll used these codes and then climbed up into the machine house of one Enercon generator in Germany. There they took plenty of pictures. These pictures were used against Enercon in the U.S. patent case by Kenetech.

Who needs enemies when one has such allies?

Posted by b on May 24, 2008 at 17:50 UTC | Permalink | Comments (8)

May 23, 2008

High Energy Prices Are Good - Fast Rising Prices Are Deadly

March driving down for 1st time since 1979: government

In a sign that Americans are curbing their driving in the face of record-high gasoline prices, data released on Friday showed highway miles driven in March fell 4.3 percent from a year earlier, the first March decline since the last major oil shock in the late 1970s.

Assuming that the data is correct, I find this is good news.

It is often argued that oil consumption is inelastic, i.e. does not change much when the price changes. While this may be right for the short term, a planed trip will not be postponed because of a few cent higher gas prices, the  long term is different.

Record-high oil prices above $135 a barrel are pushing average pump prices closer to the crucial $4 a gallon level. Pump prices in seven U.S. states, including California, Illinois and New York, already average above $4 a gallon.

Why is $4 a gallon "crucial"? The price here is $9 per gallon. It was $8 the last time I filled up, which is some two month ago. The tank is still half full.

Crude oil prices -- which comprise more than 70 percent of the cost of gasoline -- have jumped about 30 percent since the start of 2008, driven by worries about tight stocks of refined products in the near term and mounting global demand over the longer term.

Not a word about speculation. The 30% increase this year can NOT be explained by demand or supply constrains. This jump is the consequence of negative real interest rates the Fed is inducing to prop up Wall Street banks and of unlimited financial speculation in the commodity markets:

Wall Street banks, hedge funds and other investors have been boosting spending on commodities such as oil for several years. Global investment in commodities rose by more than a fifth in the first quarter to $400 billion, Citigroup Inc. said April 7.

In the last year, non-commercial market participants have raised bets on rising prices, known as long positions, by 37 percent to 263,378 contracts, the Commodity Futures Trading Commission said May 16.

Last weeks jump in crude-oil prices to $135/barrel was a classic 'short squeeze' that had absolutely nothing to do with real oil:

The rush to buy back contracts may be linked to the record number of short positions that had been built up in recent weeks by small-sized speculators, which the CFTC refers to as "non- reportable'' traders because their holdings are small. Those investors held 123,194 futures contracts betting oil futures would fall in the week ended May 6, an all-time high, and 47 percent more than the number of bets they'd placed on rising prices.

There are several things wrong with future markets.

It is a good idea if a farmer wants to 'fix' the price for the wheat he plants today and wants to sell next year. It is fine that a mill wants to 'fix' the price and amount of wheat it plans to buy next year. If the farmer and the mill can agree on next years price today, both will have more security in doing their business.

Commodity future contracts and their exchanges were invented to handle the above situation. Initially they were restricted to real market participants who were buying and selling the physical products.

But today everybody can speculate with such contracts and settle them in money instead of taking delivery of, or deliver the actual physical product. There is absolutely no reason to allow such non-physical market participants.

Additionally these speculations are highly leveraged:

When you enter into a futures or option contract through an individual account, you are required to make a payment referred to as a "margin payment" or "performance bond." This payment is small relative to the value of your market position, providing you with the ability to "leverage" your funds. Because trading commodity futures and option contracts is leveraged, small changes in price, which occur frequently, can result in large gains or losses in a short period of time.

This speculation by 'non-commercial market participants', and a good chunk of the high oil prices,  could easily be reigned in if the U.S. Commodity Futures Trading Commission (CFTC) would increase the mandatory margin requirement.

The commission is chartered by Congress and there is no reason why Congress could not legislate such. Indeed two weeks ago Democrats in the Senate started to push for this, but the proposed bill mixes up too many controversial issues. Higher margin requirements are a no-brainer and could be enact alone. 

High and rising energy prices are good as they change long term behavior and will lead to less consumption. Fast rising energy prices are bad because they do not leave enough time to adopt. One can not build a new light railway or cultivate a new fruit within a few month.

The gravest problem, literally, is the fast increase in food prices which is directly connected to energy via fertilizer prices and the crime of Ethanol production. Many people will die because of these increases.

Currently energy prices are rising much too fast. This is a result of cheap money and leveraged financial speculation.

But cheap money is a conscious policy of the U.S. Federal Reserve to bail out the banks and the leveraged use of this money in speculation is conscious policy of the CFTC and the U.S. Congress.

The deadly consequences of such policies were foreseeable.

Posted by b on May 23, 2008 at 17:55 UTC | Permalink | Comments (13)

Norquist's Wonderland

A while ago the news agency KCNA recalled the abolishment of all taxes in North Korea:

The historic law "on completely abolishing the tax system" was promulgated at the third session of the fifth Supreme People's Assembly of the DPRK on March 21, Juche 63 (1974). The law took effect from April 1 that year.

This meant the realization of the centuries-old desire of the people to be free from tax burden.

U.S. anti-tax jihadis like Grover Norquist's Americans for Tax Reform argue:

The government's power to control one's life derives from its power to tax. We believe that power should be minimized.

With zero taxation, North Koreans have obviously achieved that aim.

The abolishment of all taxes in North Korea followed the introduction of Chuch'e, which in 1972 replaced Marxism-Leninism as the official state ideology.

The three principals of Chuch'e are "independence in politics" (chaju), "self-sustenance in the economy" (charip) and "self-defense in national defense" (chawi).

Such politics certainly echo with the non-interventionists and protectionist 'America First' agenda of the late 1930s and its contemporary resurrection by Pat Buchanan.

In 2003 North Korea introduced "People's Life Bonds." These are not a tax, but a lottery:

These instruments have a 10-year maturity, with principal repaid in annual installments beginning in year five (there does not appear to be any provision for interest payments and no money for such payments has been budgeted). For the first two years of the program, there would be semi-annual drawings (annually thereafter) with winners to receive their principal plus prizes. No information has been provided on the expected odds or prize values other than that the drawings are to be based on an "open and objective" principle.

"Open and objective" - followers of objectivism will applaude that idea. Indeed the idea for such bonds comes from Ayn Rand's state financing concepts laid out in The Virtue of Selfishness. Kim Jong-il seems to agree with Rand's claim:

A government lottery, for instance, [..] is one good method of voluntary taxation.

Fice years behind North Korea, Arnold Schwarzenegger last week proposed lottery bonds to finance the state of California.

As North Korea already resembles the anti-tax, isolationist and objectionist paradise Norquist, Buchanan, Greenspan and Schwarzenegger strive to achieve, we wonder when they will finally make their ideological aliyah and settle in Pyongyang.

Posted by b on May 23, 2008 at 13:55 UTC | Permalink | Comments (4)

May 22, 2008

The Next Scam - Derivatives

Professor Roubini asks: How will financial institutions make money now that the securitization food chain is broken?

The most severe financial crisis in decades has not only damaged the balance sheet of financial institutions. It has also severely affected their P&L, i.e. the process of generating revenues and profits.

In the old “originate & hold” model (before securitization) financial institutions made money from the investment income of holding the credit risk of loans and mortgages. But in the brave new world of securitization where you “originate & distribute” the credit risk rather than hold it on balance sheet an increasing fraction of the income of financial institutions was coming from the fees and commissions involved in this securitization process. This food chain of fees on top of fees is now broken: securitization of mortgages, that was running at the annual rate of $1,000 billion in January of 2007, was down 95% to an annual rate of $50 billion by January of 2008. So the process of generating fees and commissions is broken.

In the mortgage boom everybody lived off fees: the real estate agents, the mortgage brokers, the appraisers, the smaller mortgage aggregators, the loan servicers, the investment banks that bought the mortgages and converted them into Collateral Debt Obligations, the monoline insurers that 'guaranteed' the quality of these papers, the rating agencies, the retail banks that sold the resulting AAA junkbonds to some dumb investor.

Similar chains existed for commercial real estate mortgages and leveraged buyout loans. The bigger the loans the more money was made by everyone involved, while the risk was moved away to the investor.

Now that market is dead and these people have to find a new gig. The big investment banks need a new revenue stream.

So Roubini asks if there is one.

My answer is "Yes." I believe the investment banks have already found a new scam:

Derivatives, including those based on debt, currencies, commodities, stocks and interest rates, expanded 44 percent from the previous year to $596 trillion, the Basel, Switzerland-based [Bank for International Settlements] said in a report today. The amount of credit-default swaps protecting investors against losses on bonds and loans more than doubled to cover a notional $58 trillion of debt.
Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. Derivatives are financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in interest rates or the weather.

The data on the BIS report are based on contracts traded outside of exchanges in the over-the-counter market.

The investment banks who sold junk debt to investors are now selling 'protection' to the same investors against interest rate change and default of such debt. To eliminate risk for themselves they also buy 'protection' from other banks and investors. In between they generate hefty amounts of fees which again depend on the size of the transaction. This has led to the creation of another bubble. $596 trillion of derivatives is a multiple of the value of underlying real assets. It is essentially hot air but dealing it makes money.

Here's as story on the results of a fee generating derivatives scam.

Like homeowners who took out mortgages they couldn't afford and didn't understand, Jefferson County officials rejected fixed-rate debt and borrowed instead at rates that varied with the market.

The county paid banks $120 million in fees -- six times the prevailing rate -- for $5.8 billion in interest-rate swaps. That was supposed to protect the county from rising rates for their bonds. Lending rates went the wrong way, putting the county $277 million deeper into debt.
The swaps are contracts in which the county and the banks agreed to exchange periodic payments based on the size of the outstanding debt and changes in prevailing lending rates. Swaps are derivatives, which are unregulated financial contracts tied to the underlying value of a security, commodity or index.

The county bought 'protection' against interest rate changes and it turned out that the fine print read somewhat different than what the salesperson had said. With $596 billion total in derivative deals how many more of such cases are out there?

The derivative market is next big thing to blow up. If one of the big players fails, all others will be seriously affected. The Fed bailed out Bear-Stearns and has committed over half of its assets to avoid general liquidity problems. But a failing pyramid of some $600 trillion in derivatives dwarfs any central bank's capability.

That shoe still has to drop. When it does we will be in the second, bigger phase of the credit crisis. The outcome is not foreseeable but it is unlikely to be positive.

Posted by b on May 22, 2008 at 15:39 UTC | Permalink | Comments (12)

May 21, 2008

After Bush - Appeasement

May 15, 2008 - President Bush Addresses Members of the Knesset

Some seem to believe that we should negotiate with the terrorists and radicals, as if some ingenious argument will persuade them they have been wrong all along. We have heard this foolish delusion before. ... We have an obligation to call this what it is -- the false comfort of appeasement, which has been repeatedly discredited by history.

Bush left the Middle East and suddenly 'some' is 'everyone'.

It seems like people in the Middle East all thought "Enough with this lunacy!"


Did something happen behind the scene? Some secret appeasement between Iran and the U.S.?

Posted by b on May 21, 2008 at 16:37 UTC | Permalink | Comments (42)