Moon of Alabama Brecht quote
July 22, 2008

Zimbabwe - Has Zanu-PF outwitted the IMF?

by Debs is dead
lifted from a comment

The announcement current Zimbabwe government headed by long serving president Robert Mugabe, which has met with both factions of the opposition Movement for Democratic Change including the faction led by Amerikan Enterprise Institute sock puppet Morgan Tsvangirai, appears to have wrong footed the media led hysterics who have been building to a crescendo screaming lies since Tsvangirai wimped out of the second round of elections.

The media running coverage of this meeting, brokered by South African President Mbeki, has been really unsure of what line to take.

An obvious sign of being unprepared is having no pre-prepped lines to use to denigrate the current Zimbabwe government with. This was the usual methodology; to pick on some side issue that plays to whitey's fear of Africans in control, then make it an issue by having a chorus of unanimous distortions throughout the western media. No one ever questions the veracity of a statement made by nearly every fishwrap on the news stand.

At the moment, favorite in the past-deadline English media is to discuss the meeting as if it hasn't yet occurred. This to give time for a consternation soaked huddle, called to get the 'sound bites' to be 'read off the same page'.

The big talking point of the Associated Press story carried in this (NZ time) morning's NZ Herald is unlikely to have traction as they say.  It goes: 

Mugabe, who has ruled Zimbabwe for all 28 years since independence and just last month declared election victory, appeared nervous at the ceremony. Head bent and looking beaten as he stood between two jubilant opposition leaders, Mugabe never once looked at Tsvangirai during the hour-long ceremony. Afterwards, he shook hands with everyone except his rival.

This piece of slanted ad hominem gossip won't have legs if a picture is really worth a thousand words. The par sits directly under a photo of Mugabe and Tsvangirai shaking hands at the meeting. The same image was in a vid run on BBC World. The BBC are completely dependent on others for footage since Zanu-PF tired of their one sided tirades against the president on the beeb. In the Herald story this obvious disconnect is explained thus:

"Asked about it at a news conference later, he posed for journalists, giving Tsvangirai a limp handshake."

  That complexity is just too hard to work.  Lies spread by western media rely on a superficial analysis by the consumer. 

Making peeps understand that shaking hands at a press conference but not in private is dangerous stuff, even if it could be nuanced correctly, in itself unlikely.

Readers forced to go beyond simple imagery may delve too far, as in: "Do you mean all the pix n vid of pols we are shown, are posed?"

But I am betting that the mention of two competing factions within the Movement for Democratic Change will be edited out of most stories and as for the Prime Minister of Kenya Raila Odinga, his comment in the Independent"

"Robert Mugabe is an embarrassment to the African continent," Odinga told BBC television. "He lost an election and refused to move on."

is not only beyond the bounds of normal hypocrisy it is dangerous ground.

Readers may remember, as Zanu_PF does, that Odinga, at the time a populist advocate of opposition to the neo-con attacks on the economic well being of the people of Kenya, won an election yet was forced to negotiate with the defeated government who wouldn't concede that defeat. This anti-democratic intransigence was backed by, maybe even instigated by, USuk, UN seppo suck asses and the greed heads

So Odinga settled for the role of Prime Minister, a largely powerless figure-head position whilst IMF and amerikan enterprise institute darling Mwai Kibaki kept his gig as president of Kenya.

Readers may get lost following the neo-con logic which goes like this. 

"When a humanist wins government in Africa we pay the thugs we had originally put in control, to beat the humanist supporters senseless. We call this tribalism. Then when the violence gets out of hand we force the newly elected government to accept well paid powerless positions.

This scam not only sabotages any prospect of change, it destroys the credibility of the anti-neo-cons and cripples the momentum for a change.

But when an anti neo-con is in power and wins an election, we instigate the same violence ("they are all tribalists in Africa" is a widely accepted meme), but refuse to accept the result of negotiations put together by any broker who isn't an IMF sock puppet. Even if that broker is the democratically elected leader of the nation in question's long time friend and neighbor.

For those of us who have looked at Kenya from all sides, this latest outburst confirms that Raila Odinga is competing with Mwai Kibaki for the position of most agreeable western lap-dog. A sad day for Kenyans indeed, yet what else can one expect, for decades this has been the stuff which elections are made of in the so called ' great democracies of the West'.

Incidentally the execrable Gordon Brown is prevailing upon the EU to bludgeon the Zimbabwean people with another round of economic sanctions, will this rapprochement between the political powers in Zimbabwe prevent that? I'm betting not if Gordon can help it. After all this has never been about the people of Zimbabwe, it has been about England's re-colonization of a former food source.

Zanu-PF will ensure as much as they can, that Zimbabwe isn't forced to relive the horrors of the 1990's when it's national institutions were put up for sale to the highest foreign bidder. That is inaccurate actually the national assets given away to carpet baggers with IMF connections.

Even the World Bank admitted in their warm and fuzzily titled paper

Structural Adjustment and Zimbabwe's Poor:

Zimbabwe's Economic and Structural Adjustment Program (ESAP) supported by the World Bank dismantled many of the controls confining the country's economy. . .
. . . 1/ the program did not reduce poverty and unemployment as its architects had hoped. Critical fiscal reforms made slow and uncertain progress, keeping budget deficits high. This created uncertainty and shortages of capital for private producers, which delayed investment in new capacity and job creation. By focusing on the formal urban sector, the program restricted its ability to reach the majority of Zimbabweans, who work predominantly in the informal sector and in rural areas.

The part of this paper that really gets my goat comes next:

Two basic lessons are that: (1) macroeconomic stabilization--particularly fiscal adjustment--is a prerequisite for sustainable growth in employment, output, and incomes, and (2) sound macroeconomic policies need to be accompanied by actions specifically designed to assist and protect people who do not directly benefit from formal sector growth.

Zimbabweans are starving and these World Bank technocrats are dispassionate to the point of sociopathy when they discuss the problems they have caused as if it were the result of a laboratory experiment, which of course it was.

New Zealand had gone through exactly the same 'reforms' a few years before Zimbabwe's mid '90s attempt, the voters there finally managed to rid themselves of the technocrats responsible out of the Tweedledee and Tweedledum parties.

Those appalling failures of humanity immediately picked up gigs with the IMF and World Bank so they could continue their 'experiments'.

NZ's once enviable community has been on a downward spiral of gaping income gaps and an ever growing 'underclass' (neo con talk for unwhite) ever since the experiments. The people of Zimbabwe have paid a high price for their successful rejection of neo-con subjugation but if they can trade free of sanctions, then they should recover quickly because unlike NZ, Zimbabwe hasn't sold the farm.

The vast bulk of Zimbabwe's resources still remain under Zimbabwean ownership.
So let us hope Zanu-PF have successfully pulled off their staunch rejection of the 'new imperialism'.

ps: Apologies for the remaining typos and mis-spellings but if I don't cut my losses I'll never finish.

Posted by b on July 22, 2008 at 19:06 UTC | Permalink | Comments (32)

Fannie Freddie Bailout Cover

The Congressional Budget Office (CBO) wrote a letter on how much the proposed bailout for Fannie Mae, Freddie Mac and the Federal Home Loan Banks (FHLB) would cost. The letter is simply a measure to cover up the big money the taxpayers will have to pay for this.

The current plan put forward by SecTreas Paulson is to give the Treasury the financially unlimited authority to buy the bad stuff the companies hold and to socialize their losses. The CBO letter is the typical economic 'on one hand..., on the other hand...' answer one would expect. But it then uses some curious probablilities to in the end come up with only one number:

The Congressional Budget Office (CBO) estimates that there is a significant chance—probably better than 50 percent—that the proposed new Treasury authority would not be used before it expired at the end of December 2009. [...] Under that scenario, the temporary authority would not be used and thus would involve no budgetary cost.
[...]
In CBO’s view, however, that scenario is far from the only possible result. [...] Taking into account the probability of various possible outcomes, CBO estimates that the expected value of the federal budgetary cost from enacting this proposal would be $25 billion over fiscal years 2009 and 2010. That estimate accounts for both the possibility that federal funds would not have to be expended under the new authority and the possibility that the government would have to use that authority to provide assistance to the GSEs.

The $25 billion will be presented in the MSM as the total bailout cost for the mess. Indeed Bloomberg currently runs the headline Fannie, Freddie Rescue May Cost $25 Billion, CBO Says.

That headline is totally wrong. Those are not the costs. The $25 billion is some calculation of, for example, a 50% probability of zero loss, a 45% probability of $10 billion loss and a 5% probability of $300 billion loss for the taxpayer. The CBO notes that the possible upside from that 'bet' is zero.

One wonders how the CBO reached these or similar probabilities. Is the chance that no intervention is needed really 50%? Why then is Paulson proposing this at all? Is the chance of the big bang loss really only 5%? And why does the possible loss estimate stop in 2010? If the Treasury buys dubious assets from these companies could losses on these assets not occur later than 2010?

The attachment to the letter does not provide much answers to these questions. But it has some interesting numbers. The 'Fair value' of the three companies at the end of March was just $7 billion. Fair value is market value of all assets minus the market value of all debt. But the companies have liabilities and dubious assets in the trillions. They have

a book of business with a value of about $5.2 trillion. The riskiest loans, known as alt-A and subprime mortgages, accounted for about 15 percent of that portfolio.

Those are $780 billion of dubious Alt-A and subprime 'assets' that may have a real value of 80%, 60% or 40% of their nominal face value. That is the stuff the Treasury would likely buy for their nominal price. The difference to their real value would be payed by the taxpayers.

So while the top number of the CBO letter sounds like $25 billion and is headlining the MSM reports, the possible, and in my view likely, losses the U.S. taxpayer would have to carry under the Paulson plan, might well be in the hundreds of billions.

Are there better solutions than the Paulson plan? Yes, of course there are.

The Paulson plan has no possible upside for the taxpayer only downside risk. It also does not take any money away from the private shareholders of these bankrupt companies. Indeed the value of their shares would soar when the taxpayers take over the risk of these companies' bad assets. Instead the share holdings should be wiped out and the companies outright nationalized. The owners of Fannie and Freddy debt should also take a haircut. Fannie and Freddy debt always payed higher interest than treasury notes. If the U.S. government takes over these companies, their debt will be as secure as treasuries and should pay the same interest rate.

The CBO letter is just a cover so that Paulson, Schumer, Frank and their like screw the taxpayer with the losses of these companies while protecting their shareholders. That is free market capitalism in its purest form.

Posted by b on July 22, 2008 at 18:43 UTC | Permalink | Comments (5)

July 21, 2008

Hunting for Bin Laden - Again

The Pentagon and the CIA are again focusing on catching Osama Bin Laden. I wonder why I have not read anything about that new effort in the mainstream news.

In a recent interview for the Real News Network Pepe Escobar and Pakistan/Afghanistan expert Barnett R. Rubin talk about the issue (5 minutes into the interview). Rubin blogs on Afghanistan at Informed Comment: Global Affairs.

When Escobar pushes the issue the well connected Rubin acknowledges that there is an intelligence and special operations 'surge' in an attempt to capture Bin Laden before the election. The intelligence agencies, as Rubin heard from them, are not very happy to be part of electoral campaign, but will the issue give a new try.

Earlier Rubin says he has heard that Bin Laden is suspected to be in the northern area on Pakistan's tribal regions and probably moving back and forth between the districts Nuristan on the Afghan side and Bajaur on the Pakistan side and maybe even further north.


South-West Asia and Central Asia, administrative map (pdf)

You will remember that recently 9 U.S. soldiers were killed in Wanat village in Kunar province slightly south of Nuristan when parts of their outpost were overrun. It was never explained why the outpost was positioned there at all. In Nuristan the U.S. also recently bombed and killed 47 people who were on their way to a wedding. Something undisclosed is going on there?

Catching Bin Laden, for real or pretended, would be a perfect October surprise.

But even if Bin Laden is where he is suspected to be, the physical terrain and 'human terrain' of that area is so complicate that I doubt that any 'surged' operation there will succeed. Consider the fascinating tribal relations, history (recommended) and languages in that area of Nuristan and Kunar (via Registan).

There are five feuding main tribes with various feuding sub tribes speaking a total 15 different language variants. There is also no infrastructure to talk of and a very mountainous area to cope with.

I regard the chances for the U.S. to capture Bin Laden there as quite low. Contrasting that the chances of 'collateral damage' of such a 'surge', i.e. accidental or intentional killing of civilians, is quite high.

Posted by b on July 21, 2008 at 18:30 UTC | Permalink | Comments (26)

July 20, 2008

Faith and International Relations

Atheists or, more general, 'western' non-believers have difficulties to understand faithful people. The consequence is that we tend to analyze and interpret international relations in a sole 'western' secular framework. We assume that our framework is the 'right' one because our morals, values and judgments that make up that framework are the 'right' ones.

The neo-cons and liberal interventionists think we should and can remake other societies in our image. But people in faithful societies see themselves as made in the image of their god. That competitor is hard to beat.

Ryan J. Maher, a Jesuit who has been teaching theology for international affairs students in Qatar, points out:

During my two years in Qatar, I learned that many of my students approached discussions of faith and religion with an intensity and passion that differed in kind, not just in degree, from what I had grown accustomed to in the United States. Sure, there were those, Muslim and Christian alike, who were more interested in arguing than learning. But there were many more for whom religion was something more profound: the outward manifestation of an inner relationship with the divine.
...
The majority of people I know in higher education would argue that there is nothing wrong with religion for people who feel they need it. Their sentiments come down to something like this: "You have your religious convictions, I have mine. Let's acknowledge our differences and agree to disagree with one another within the confines of polite debate."
...
This template for discussing religion and faith is fundamentally flawed. It presumes that different groups of faithful people approach their religions in the same way football fans approach their favorite teams: .. For people of faith, religion isn't like that. A person of Muslim faith and a person of Christian faith engaged in honest conversation about religion are not like two fans pulling for their respective teams. They are more like two men in love with the same woman, each trying to express, safeguard and be faithful to his relationship with his beloved. Love brings with it complexities that football does not.

A Jesuit should probably use a better picture than two men in love with the same women, but I think the general idea here is correct.

People without faith have their subjective rational. For them it is difficult to 'get' the subjective rational of people with intense faith. Vice-versa probably applies. That is not an argument for or against following a religion. It is to point out that one needs to leave ones on subjective rational to understand the other. That is neither easy nor without fear. It also takes time.

Pat Lang recently picked that theme up again with regards to the Middle East:

The local cultures in the Middle East and Islamic "worlds" are very strong.  They are likely to change at their own pace, influenced by the flood tides of information in the world today, but they will strongly resist change at anyone else's pace.

The belief that outsiders can "manage" that change is as destructive today as it has always been.

I think the argument is also right with regard to religions others than Islam. Do we understand deeply Buddhist Burma? Do we understand how faithful Hindi think?

I have argued the issue before in a piece about the Russian president Dmitry Medvedev.

Medvedev is now the leader of the Orthodox-Christian realm. He and the Russian voters and the Orthodox-Christian people elsewhere are aware of this. The "west" is not.

We are faithful that our believe in democratic states, universal justice and enlightenment is right. But to many those are relative things and there are alternatives to each. We may not like those and we have the right to disregard them within our communities. We have no right to press others communities into our frames. Doing so will lead to conflicts we might well lose.

Posted by b on July 20, 2008 at 17:36 UTC | Permalink | Comments (118)

Eternal Exit Strategies

November 16, 2003 - Bush and Blair agree Iraq exit plan to end occupation

President George Bush and Tony Blair have agreed an exit strategy for pulling out of Iraq, officially ending the occupation next year while committing troops to the region until 2006.
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British officials told The Observer that, although the occupation of Iraq would be over next year, it was likely that troops would need to stay, possibly until 2006. 'The whole process will take two to three years, as in Afghanistan,' said a senior Number 10 official closely involved in the Iraq negotiations.

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May 5, 2004 - Blair sets target for Iraq exit strategy

Tony Blair set himself an 18-month target yesterday for pulling "substantial" numbers of British troops out of Iraq as he admitted that the crisis casts a "shadow" over support for his government.
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For the first time, he outlined a timetable for a British "exit strategy". Within a year, he said, the Iraqis should have made enough progress to allow most British troops to go.

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September 25, 2005 - Britain to pull troops from Iraq as Blair says 'don't force me out'

British troops will start a major withdrawal from Iraq next May under detailed plans on military disengagement to be published next month, The Observer can reveal.
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The phased withdrawal strategy - the British side of which is expected to take at least 12 months to complete - would see UK troops hand over command responsibility for security to senior Iraqi officers, while remaining in support as a reserve force.

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May 26, 2006 - Blair and Bush begin talks to work out exit strategy

Tony Blair and George Bush began crucial talks on strategy last night, after the installation of a new government in Baghdad. The talks were focused on the withdrawal of US and British troops from Iraq as quickly as possible.
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London and Washington are desperately hoping the arrival of the new government under Prime Minister Nouri Maliki marks a turning point, where Iraqi troops will gradually take over full responsibility for security - if possible by the target date set out by Mr Maliki' the end of 2007.

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February 21, 2007 - Blair Set To Announce Timetable For British Exit From Iraq

Prime Minister Blair will announce today a new timetable for the withdrawal of British troops from Iraq, with 1,500 to return home in several weeks, the BBC reported.

Mr. Blair will also tell the House of Commons during his regular weekly appearance that a total of about 3,000 British soldiers will have left southern Iraq by the end of 2007, if the security there is sufficient, the British Broadcasting Corp. said, quoting government officials who weren't further identified.
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Treasury chief Gordon Brown, who is likely to succeed Mr. Blair by September, has said he hoped several thousand British soldiers would be withdrawn by December.

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July 20, 2008 - Brown sets out plan for UK pull-out from Iraq

Gordon Brown yesterday held out the prospect of a substantial withdrawal of British troops from Iraq, possibly as early as next year, when he outlined a four-point road map paving the way for an end to Britain's involvement.
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His declaration, which could lead to the bulk of British forces leaving Iraq by the time of the general election in 2010, came 24 hours after the White House announced that the US and the Iraqi authorities had agreed a 'general time horizon' for the 'further reduction of US combat forces in Iraq'.

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Month 00, 2009

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Month 00, 2010

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Month 00, 2011

...

Posted by b on July 20, 2008 at 11:09 UTC | Permalink | Comments (3)

July 19, 2008

OT 08-26

MoA lives off comments. Feed me now!

News & views ... open thread ...

Posted by b on July 19, 2008 at 17:59 UTC | Permalink | Comments (106)

July 18, 2008

Anchoring

For some time now I feel the need for some new anchoring. It is diffuse and I am not sure what it is really about.


bigger

Please let me know your thoughts about it.

Posted by b on July 18, 2008 at 19:12 UTC | Permalink | Comments (42)

Iran and Israel Have the U.S. Over a Barrel

Laura Rozen and her colleague suspect that the real reason why an attack on Iran was, for now, called off are the unstable U.S. economy and oil prices.

High oil prices threaten to push the U.S. from a credit crunch induced recession into a depression. The only way to avoid this is for the White House to take the war premium out of the oil price, hence negotiations with Iran.

Was this the result of economic 'sanctions' Iran put onto the U.S.? Yes.

On May 1st oil was at $110/bl. In April and May Iran rented some 10 huge crude carriers to store oil on them. The official argument was a lack of refining capacity for heavy Iranian oil. But the move not only took oil off the market, it also led to a scarcity of tanker capacity in world markets and thereby to a hefty increase in prices:

Rates for tankers have more than tripled since April 8, based on data from the Baltic Exchange and ship-fuel prices.

Some suspected back then (I did not) that this was a deliberate strategy by Iran and done with help from Venezuela.

On Friday July 3 oil had reached $145/bl. Then over the weekend the New Yorker published Hersh's piece about clandestine operations against Iran. It included strong voices including Sec. Def. Gates' against an open attack on Iran. Monday and Tuesday oil fell to $135/bl.

On Wednesday and Thursday Iran launched a bunch of missiles. It claimed that some of these were Shahab 3 missiles with a range of 2000 km. Experts disputed this. Iran also release a photoshopped still picture of the missile launch but at the same time also released not manipulated video. That made sure that an extended discussion led to a multiplication of the reporting about the issue. Filmmaker Errol Morris noted:

Take several steps back. Are we being tricked into thinking that Iran is a bigger threat than it is?

Oddly enough, the effect of all this publicity — including this essay — is to draw further attention to the missiles. If the casual reader passed over them quickly when they first appeared on the front pages of American newspapers, the missiles are now more than ever firmly embedded in the popular imagination.

On Thursday oil jumped up to $140/bl. On Friday June 11 it was back to $145/bl.

Since the 15th July announcement that Undersecretary of State William J. Burns will take part in negotiations with Iran crude oil prices fell from $145/bl to $130/bl.

Iran can deliberately increase the price of oil even when the U.S. tries to talk down the possibility of war. The U.S. economy is already in big trouble. With a little incident in the Strait of Hormuz Iran could take oil immediately back up to $150/bl. That would make a depression in the U.S. quite possible.

Iran indeed has the U.S. over a barrel.

Laura's colleague wonders "Everyone seems to have missed the obvious." That is certainly not the case. But as noted here before the U.S. press is suppressing the relation between the war on Iran Israel demands the U.S. to wage and oil price increases.

With this Israel also has the U.S. over the barrel. On June 7 oil prices jumped $11 because an Israeli minister talked about "unavoidable war." Today the NYT publishes on op-ed by the Israeli historian Benny Morris. He essentially argues that the risk of Iran having a nuclear bomb (which it neither has nor wants) justifies Israel to nuke Iran. He believes that it will happen "in the next four to seven months."

Such talk and Israeli provocations against Iran can shut down the U.S. economy for good.

Do the Israelis recognize this ability? If they do what goodie do/will they request from the U.S. to not use their deadly weapon against the U.S. economy?

Posted by b on July 18, 2008 at 16:01 UTC | Permalink | Comments (65)

July 17, 2008

Enemy Buildings Attack U.S. Troops

The U.S. is finally fighting the real enemy in Afghanistan.

As the Air Force Print News service reports:

An F/A-18C dropped a GBU-12 onto an enemy building engaging coalition forces near Delaram.

Buildings shooting at coalition forces are easy to fight.

Obama will certainly have no problem obliterating all of them.

Posted by b on July 17, 2008 at 18:12 UTC | Permalink | Comments (18)

The Follies of Attacking Pakistan

According to the Murdoch Times the U.S. is preparing to raid Afghan resistance bases in Pakistan:

Reports from the area said that hundreds of Nato troops were airlifted across the mountains from the village of Lowara Mandi, which has been an important base for cross-border attacks in Afghanistan. Heavy artillery and armoured vehicles were also being moved into position.

That move may suit the aggressive liberal interventionism of Obama, but it does not make any sense. At Pat Lang's site FB Ali has two pieces describing the current situation in Pakistan and the likely consequences of such a move.

If the US mounts sustained attacks on the tribal areas, this will be regarded by all Pakistanis as an attack on their country. The upsurge of anti-US feeling will be such that neither the government nor the military could thereafter afford to show any sign of cooperation with the US. That will seriously compound US problems in Afghanistan and the region.

The mood in Pakistan is already very bad. As a traveler just back from Pakistan reports:

[T]he annual GDP per capita is under $3,000. In spite of this, over the past few months, prices for seemingly everything except pirated DVDs have risen sharply. I paid the exact same for meat and vegetables in Karachi as I do in Washington, DC.
...
Usually, electricity would be out for an hour or two in some areas, at most once a day. This time, however, power goes out several times a day for anywhere between 5-12 hours, as part of nationwide power load sharing.

Additionally there is a severe water shortage and the coalition government is on the brink of falling apart. Today people stoned the Karachi stock exchange after shares plunged 30%.

The Pakistani government might indeed be tempted to turn that rage against away from itself and against the U.S.

Most 'western' media are currently propagating that the problems in Afghanistan would be solved if only Pakistan would fight the Taliban within its borders. That impression is certainly wrong. Most of the Taliban and other parts of the resistance do not even come from the Pakistani border area but are genuine Afghans. Except for a few cities the Taliban rule the whole south and east of Afghanistan and even some sectors in the west. The only stable areas are the north where the non-Pashtun warlords of the Northern Alliance are in charge and Herat in the west which is under benign Iranian control.

Fighting the Taliban in the Pakistani border areas would not change the general situation in favor of the 'western' forces and their puppets in Kabul. It would instead make the situation for the troops much worse.

Seventy percent of ISAF and U.S. supplies are landed in Karachi harbor and transported by private trucks through the Khyber pass into Afghanistan. Given the current mood in Pakistan, how long would that supply line stay open if the U.S. increases attacks on that country?

Posted by b on July 17, 2008 at 16:06 UTC | Permalink | Comments (9)

Did the Wind Really Change over Iran

The U.S. will open a diplomatic interest section within the Swiss embassy in Tehran. That does not mean that peace will now break out. The U.S. has such an interest section in Havana since 1977 and it is still sees Cuba as an enemy.

That Undersecretary of State William J. Burns will sit in during one negotiation between Iran and the 5+1 group may not mean anything either. As Laura Rozen writes:

What remains uncertain at this point is whether the move represents what Bush administration officials publicly insist – a one-time offer by Washington to demonstrate its willingness to negotiate only if Iran should agree to halt its uranium enrichment activities, or the beginnings of a greater flexibility and willingness by the Bush administration in its twilight months to engage in a more sustained diplomatic process toward Tehran ...

Iran will not suspend enrichment and I do not believe yet that the Bush administration will accept that stand.

But here is one sign that this may be the start of a real negotiation attempt. The Israelis are getting nervous about it:

"There is a bad feeling in Israel and dissatisfaction with the U.S. move," Israel told senior Washington officials, according to a source in Jerusalem. "There can be no concession on the demand to end uranium enrichment as a precondition to negotiating with Iran," Israel added.

The Israel lobby in Washington will certainly want to have a say in this. I expect a renewed push in Congress for the Congressional Resolution 362 and some other serious interference by the hawks in both parties.

Posted by b on July 17, 2008 at 14:30 UTC | Permalink | Comments (5)

July 16, 2008

Saudis Bribe Russia Against Iran? No.

Are the Saudis trying to buy of Russia? That is what Kommersant reported yesterday:

[In] February, Saud Al-Faisal, Minister of Foreign Affairs, paid a brief visit to Moscow to conduct negotiations with the then President Vladimir Putin. At that time the prince conveyed a personal message of King Abdullah, where Riyadh expressed its concerns over Iran’s growing impact in the Middle East. The authorities of the kingdom suggested that Moscow should scale down its cooperation with Teheran. In exchange, Saudi Arabia offered beneficial contracts.

Currently the well known Saudi weapon dealer Prince Bandar is in Moscow and is said to have specified the offer to pay Russia for distancing itself from Iran.

A Kremlin spokesperson denies the rumors:

"Any claims that military-technical cooperation between Russia and Saudi Arabia is in any way linked to Russian-Iranian dialogue are inappropriate and do not correspond to reality," said [Kremlin spokesman Dmitry] Peskov on Wednesday.

In this case I tend to believe the Kremlin spokesperson. The rumor might fit U.S. or Israeli intentions but it does not fit the real releations.

The weapon deal in preparation between the Saudis and Russia has a volume of some $2.3 billion over several years. That is less in financial volume than two days of oil production each for Saudi Arabia and for Russia. Such a modest bribe is certainly not big enough for Russia to give up on a strategic partnership with Iran. For comparison, the recent Saudi deal with Britain to buy Eurofighter planes is worth some $20 billion.

The Saudis will buy some weapons from Russia, T-90 tanks, BMP infantry carriers and helos, to have fun driving around and flying over their dunes. The helicopters may be useful for this or that ride of a prince to some foreign whorehouse but not for war. The Saudis don't fight their wars. They pay others to fight for them.

This small weapon deal is a simply a mild snub to the U.S. by the Saudis with the additional value of getting some access to Russian thinking. Russia has no reason to give up its good relations with Teheran. Iran is their direct land access route to the Gulf.  For several reasons such access might be very useful in the future.

The Saudis are more or less under U.S. control since Roosevelt signed a pact with King Ibn Saud 63 years ago. Unless the U.S. gives up fighting in Afghanistan, Iraq and Pakistan against those radical Salafi movements instead of going against their Saudi Wahabbi financies the Saudis are safe and the old pact will hold.

The Kremlin is certainly able to understand that.

Posted by b on July 16, 2008 at 18:54 UTC | Permalink | Comments (6)

Mr. Contained

At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained
Testimony Chairman Ben S. Bernanke , March 28, 2007

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Shares of Bank of America, which recently completed its acquisition of mortgage lender Countrywide Financial, lost 8.1 percent in trading yesterday. National City, an Ohio-based bank whose shares have taken a recent beating, was down 4.5 percent. U.S. Bancorp, Minnesota's biggest bank, said that its second-quarter earnings fell 18 percent and that its level of bad loans would continue to rise as more customers fell behind on payments. Its shares dropped as much as 12 percent before recovering to end the day slightly in the red.

The S&P banking index was down 5.4 percent yesterday and 14 percent since Friday.
Wachovia Faces Shallow Reserves but Says It Is Raising More Capital, July 16, 2008

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It is encouraging that inflation expectations appear to be contained.
Testimony Chairman Ben S. Bernanke , March 28, 2007

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The unexpectedly large increase in CPI was led by a 6.6% jump in energy prices and a 0.8% increase in food prices.
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With prices rising so fast, inflation-adjusted or real weekly earnings fell 0.9% last month. Real earnings are down 2.4% in the past year, a vivid illustration of how the average worker is falling behind as prices rise and the weekly workweek contracts.
Consumer prices jump 1.1% in June, July 16, 2008

Posted by b on July 16, 2008 at 14:45 UTC | Permalink | Comments (12)

A New NATO Campaign

BRUSSELS - (RBN) - In an effort to shore up support for its globalization project NATO has hired a  high-caliber manager to head its new marketing department.

As the New York Times reports today the job will go to Michael Stopford, an executive from the Coca-Cola Company. Mr. Stopford has spent two years guarding Coca-Cola’s image and will join NATO as deputy assistant secretary general for strategic communication services in August.

A trusted source in Brussels confided to RBN that Mr Stopford was selected after he impressed the NATO secretariat with a list of new slogans he exclusively developed for NATO. The source gave RBN access to the list.

As part of NATO's future global image campaign one of Mr. Stopford's slogans, printed below, will be selected and engraved in all NATO weapon delivery systems and ammunition.

  • NATO Revives and Sustains
  • When It's Hard To Get Started, Start With NATO
  • All Trails Lead To NATO
  • NATO Goes Along
  • Time Out For NATO
  • Good Food And NATO Just Naturally Go Together
  • NATO Follows Thirst Everywhere
  • For People On The Go
  • It's The Real Thing
  • I'd Like To Buy The World A NATO
  • NATO Adds Life
  • NATO Is It!
  • Can't Beat The Real Thing
  • Always NATO
  • All the world loves a NATO
  • Welcome to the NATO Side of Life
---
list

Posted by b on July 16, 2008 at 11:13 UTC | Permalink | Comments (6)

July 15, 2008

Housing Bust Answers

Bellfong asks:

Off topic, but isn't the crackdown on poor lending practices just cover for defaults based on variable rate mortgages? I recall mortgage rates rising moderately, never going back to record lows even with the fed dropping its rate further in the last couple years. So, was the scam to get people who were happy to qualify for any loan at all into a variable rate mortgage, then take the properties from them down the road? Is this the real scam, with the income-not-verified practice just a cover? Obviously it all fell apart with recession, job losses, cost of living gone up and drying up of liquidity in the mortgage market pushing rates up, but it seems like there's more to tell, ..

Let me take that in parts:

  • isn't the crackdown on poor lending practices just cover for defaults based on variable rate mortgages?

No. The defaults will happen anyway. There is nothing left to cover. Yesterdays the Fed revived regulation that will discontinue some loans types. It is closing the barn door after the horse is out of sight. This is ass covering by a Fed that has not done its regulatory job for more than a decade.

  • I recall mortgage rates rising moderately, never going back to record lows even with the fed dropping its rate further in the last couple years.

Hmm - that is not really true if one looks at this chart. Mortgage rates pretty much followed the Fed's fund rate.

  • So, was the scam to get people who were happy to qualify for any loan at all into a variable rate mortgage, then take the properties from them down the road?

The people who sell the mortgages to the borrowers only care for the money they get when the mortgage is signed. They are not interested in anything else. What drove this bubble was greed at every level and the ability to obfuscate the risk and then push it to investors who lacked the ability or will to see it. I for one don't see any great conspiracy in that.

Greed is driving markets and unchecked greed leads to bad decision. That is the reason why sane societies decided to regulate markets centuries ago. The U.S. forgot the lesson last learned during the 1930s depression that free markets are indeed bad. Since Reagan the trend was to deregulate. We now see and feel the consequences.

  • Obviously it all fell apart with recession, job losses, cost of living gone up and drying up of liquidity in the mortgage market pushing rates up, but it seems like there's more to tell

The current recession is very much the consequence of the bursting of the housing bubble (and higher oil prices) rather than the the other way around. The housing bubble burst because the housing market ran out of customers and housing prices stopped to increase. The homeownership rate reached a historic high (graph) of 69% at the beginning of 2005 and went back down from there. All new houses built after that date added to inventory and depressed prices. Lending to 'dead' people and speculation obfuscated the situation for a while, but the bubble burst because it ran out of people who needed houses. (The 'natural' historic homeownership rate in the U.S. is some 63%.)

One should note that the expansion after the 2000 dot.com bubble burst was a small and artificial one. It was driven by too low fed rates that led to investment in unproductive real estate and by a classic Keynesian program of debt financed government spending in the unproductive homeland security and defense sectors. This leg of the recession will be very deep because the last 8 years were wasted. They were not used to invest in productive stuff like infrastructure, production equipment and research. I believe that economic historians will see the current recession as a continuation of the 2000 bust.

YY asks:

Can some enlightened soul explain to me how the so called sub-prime crisis isn't just the end of what is in fact a ponzi scheme. The part I'm suspecting is that when the CDO's are reconfigured to AAA and junk, wouldn't there have to be an ever increasing stream of "good" portions of mortgages to come in to offset the junk which may as well be discarded. And since the source is the same collection of dubious debts, wouldn't the volume need to increase exponentially to even keep the marketing going? Never mind what happens(ed) when the payments started coming due.

Yes, it was a ponzi like scheme.

The reconfiguring of Collateral Debt Obligations (bundles of mortgages) into well rated parts and badly or not rated parts was a critical point. When the originators of the CDOs couldn't come up with enough good AAA parts, they just declared the AA parts to be AAA. The rating agencies are only payed by the originator when they rate the originators stuff. If they would have denied these AAA ratings of essentially junk they would have lost business. So they took the bribes, agreed to the scheme and investors who trusted their ratings got scammed. The next years will see a lot of litigation against these agencies.

Posted by b on July 15, 2008 at 18:27 UTC | Permalink | Comments (12)

July 14, 2008

The Obama Cover

This New Yorker cover graphic is summing up negative cliches on Obama. The same cartoon would fit on the Weekly Standard or National Review. Unlike others I am not surprised at all to find it where it is.

Why is the New Yorker seen as a 'liberal' magazine at all? The only readable stuff I ever find in it are the Hersh pieces. Even those are often dubious as Hersh seldom lets one in on his sources and their special interests in talking with him. He made his name with sound stories on My Lai, Abu Ghraib and recently with reporting on a new executive order for silent attacks on Iran. But all of these stories were reported elsewhere before he even got near to them. He added interesting details though.

Other than Hersh the New Yorker peddles warmongerers like George Packer and neo-liberal pseudo economist stuff by James Surowiecki. The rest is on U.S. scales middle of the road culture writing which is essentially rightwing nonsense when measured in international benchmarks.

So again: Why are 'progressives' astonished about such an attack cover by the New Yorker?

The primary task of media entities is to make profit for their owners. Tight races in elections and controversies create an atmosphere were people yearn for news and commentary and buy media products. Therefore the media owners interest is to create tight races and controversies. It sells the mags and with them lots of ads.

Posted by b on July 14, 2008 at 20:40 UTC | Permalink | Comments (56)

Dubious Sudan ICC Indictment

The prosecutor at the International Criminal Court has asked a panel of judges to issue an arrest warrant for the Sudanese President Omar Hassan al-Bashir. Bashir is accused of 'criminal responsibility' for 'genocide.'

Alex de Waal and Julie Flint, who know a bit or two of that conflict, find this to be wrong. They believe that this move will have no positive effect on the conflict and that a backlash from it is likely to hit those who are already victims. In a recent Guardian op-ed de Waal and Flint explain:

The immediate dangers are easy to foresee. The very people the ICC seeks to defend - the survivors of the Darfur war - are the most vulnerable to whatever steps the regime takes in its fightback.

The UN peacekeeping force in Darfur is already almost at a standstill. A few more restrictions - or deaths - would paralyse it. Humanitarian aid that feeds two million displaced people is dependent on a UN airlift that can be choked off at any moment. Popular demonstrations of support for the ICC could be met with lethal force, prompting a response from the armed rebel supporters who control many of the displaced camps.

The writers do not mention the real issue here. There is oil under the sands of Darfur and the 'west' wants regime change in Khartoum or the alternative of splitting off Darfur from Sudan to have free access to its resources.

Unlike de Waal and Flint assume, there is no real interest at the ICC or within 'western' politics for the plight of the people in Darfur.

This is a resource conflict on two scales.

For the people on the ground the main issue is water. Lack of rain forced nomading pastoralist from their desertifying grounds towards settled farm land.

On the international level the main issue is oil. China has good relations with Sudan and is developing oil fields in the Sudanese south. It is now helping with seismic pre-exploration work in Darfur.

Bipartisan U.S. (and 'western') policy is to have control over hydrocarbon resources where- and whenever possible. As the regime in Sudan has not so friendly relation with the west it must be changed or, as an alternative, Darfur must be split off Sudan.

In its five years of operation the International Criminal Court has opened four investigations and issued twelve arrest warrants. All of those cases were in Africa. Is that by coincidence? Wars of aggression, suppression of opposition and human rights violations also happen on other continents. It is not the that Africa is somehow a special case. But it seems that the ICC has a special interest for that part of the world.

Why is that the case?

Posted by b on July 14, 2008 at 19:29 UTC | Permalink | Comments (16)

Irrelevant

Irrelevant is what Bush seems to be now in international politics. This is certainly evident in the Middle East. The 'new middle east' Condi Rice announced is not happening the way she and her man envisioned it.

The tactic of isolation of any perceived enemy Bush used and also demanded U.S. allies to use has completely broken down.

Instead of isolation there are talks, many of those, and the U.S. simply gets ignored in these.

  • With the help of Qatar the Lebanese formed a government in which Hizbullah and its allies have a veto. Bush has tried for nearly two years to prevent this.
  • Syrian President Bashar Assad got a warm welcome in France and there is no longer talk of sanctions against Syria.
  • Egypt helped to negotiate a truce between Hamas and Israel in the Gaza strip.
  • Germany is facilitating negotiations between Hizbullah and Israel.
  • Turkey mediates talks between Israel and Syria.
  • In Iraq the long term status of force agreement Bush demanded will not happen. Instead the Iraqis have increased  their demands and want the green zone walls gone by the end of the year and U.S. troops to leave their cities.
  • In Pakistan Bush's man Musharraf is powerless and likely to get impeached.
  • In Afghanistan president Karzai has spoken out against U.S. attacks on Iran from Afghan soil.
  • Kuwait, with several thousand U.S. troops on its ground, openly criticizes Bush's policy towards Iran.

The next few month in the oval office will be lonely. Let us hope that a bored and irrelevant Bush does not come up with any mischievous ideas. 

Posted by b on July 14, 2008 at 16:52 UTC | Permalink | Comments (8)

July 13, 2008

Reading Maps of Incidents in Afghanistan

In what seems to have been a raid against a small U.S. outpost in Afghanistan at least nine U.S. soldiers were killed today:

Militants fired machine guns, rocket-propelled grenades and mortars from homes and a mosque in the village of Wanat in the northeastern province of Kunar, a mountainous region that borders Pakistan, NATO's International Security Assistance Force said in a statement.

Such an incident is unusual. The Taliban now try to avoid big fights as they usually lose in frontal assaults against U.S. fire power. This year they used IED attacks, suicide bombings or PR operations like the attack on the parade in Kabul and the prisoner escape in Kandahar. I don't remember any recent big number assault towards a U.S. outpost. Something is really odd here.

I checked the maps and remembered to have looked at a nearby place recently because of another incident:

A US air strike killed 47 civilians, including 39 women and children, as they were travelling to a wedding in Afghanistan, an official inquiry found today. The bride was among the dead.
...
Fighter aircraft attacked a group of militants near the village of Kacu in the eastern Nuristan province, but one missile went off course and hit the wedding party, said the provincial police chief spokesman, Ghafor Khan.

Different towns and provinces, but Kunar is next to Nuristan.

Hmm.

Kacu is at 34° 1' 12N, 70° 30' 23E and Watan is at 35° 3' 8N,  70° 54' 26E. The distance between these, as the crow flies, is some 77 miles.

The earth bound travel distance between these places is about 120 miles but not really difficult. From Kacu north through the plain of Nangahar to Jalalabad, then north-east along the green river valley and after some 30 miles at Kerala north-west along a smaller river to Watan.


(note: the yellow line is the border to Pakistan)

Under Afghan circumstances that maybe a day or two of driving and riding.

Was the bride killed in the incident in Kacu related to people in Watan or did folks from Kacu travel north to take revenge?

Posted by b on July 13, 2008 at 19:24 UTC | Permalink | Comments (12)

Freddie and Fannie - "Who could have known ..."

Freddie Mac and Fannie Mae, the over-leveraged government sponsored mortgage finance companies, are swimming belly up and will have to be rescued by the taxpayers in one form or another.

"Who could have know ... ?"

Searching through the Moon of Alabama archives I found an exchange I had with anna missed back in November 2004 (typos corrected).

anna missed asked:

So I wonder what happens to all those (Bush) new and old homeowners if the interest rate is jacked up in some significant way to move the Fed debt down. With the housing market, in some measure, carrying both production, financing, and labor through the Bush economy, could rising interest rates create enough of a disruption to precipitate a major deflation in the real estate market? And what happens when people are faced with negative equity, and how does that effect their ability to secure future credit? And how could an import based, retail, and services economy survive such an evaporation of credit?

Should real estate held close to current value be dumped?

My response back then:

Some 50% of the mortgages in the last months were adjustable rates (ARMs). Their rate will increase immediately when treasury rates go up. People will have to default and quite a bunch of houses will be available on the market, subduing prices. With prices going lower more peoples mortgage will exceed their home equity. This could become a chain reaction with a very significant drop in house prices and lots of bankruptcies.

This may have effects in the banking sector (expect Freddie and Fannie to somehow go belly up).

If you want to stay in your house for the rest of your life and if you can pay your fixed rate mortgage rates without problems stay put. If you plan to move in two years or if you are not sure you can pay your future mortgage rates you may better look into renting a place for a few years and buy a house again when they become cheap.

But when will houses become cheap again? Should one buy now?

No. Knife catching is hazardous. The IMF did a study some years ago looking at twenty housing market busts in 14 countries since 1970. House price deflation from peak to trough was usually around 28% and took 4 years. It is likely that the house price deflation in the current bust will be bigger and take longer. I do expect a 40% price decline in average. It will take 5 to 6 years until the markets stabilize.

That the decline will take so long has political consequences. There is nothing anyone can do to prevent it or shorten it. The presidential election in 2012 will be about the declining economy just as the current one. The incumbent in 2012 is therefore likely to lose.

Posted by b on July 13, 2008 at 16:08 UTC | Permalink | Comments (8)