Bill Kristol The Über-Hypocrite
Bill Kristol gave lots of bad advice to the McCain campaign. Now, he says, McCain should fire his campaign. This of course without one ounce of acknowledgment that it was Kristol himself who had pushed for all the points that went wrong. Consider two of his recent columns:
As one McCain adviser told The Washington Post, “you’ve got to get it [the financial crisis] over with and start having a normal campaign.”
Wrong.
..
McCain should break the mold and acknowledge, even emphasize the crisis.
How McCain Wins, September 28, 2008
McCain should stop unveiling gimmicky proposals every couple of days that pretend to deal with the financial crisis.
Fire the Campaign, October 12, 2008
Can he turn it around, and surge to victory?
He has a chance. But only if he overrules those of his aides who are trapped by conventional wisdom, huddled in a defensive crouch and overcome by ideological timidity.
...
With respect to his campaign, McCain needs to liberate his running mate from the former Bush aides brought in to handle her — aides who seem to have succeeded in importing to the Palin campaign the trademark defensive crouch of the Bush White House.
How McCain Wins, September 28, 2008
At Wednesday night’s debate at Hofstra, McCain might want to volunteer a mild mea culpa about the extent to which the presidential race has degenerated into a shouting match. And then he can pledge to the voters that the last three weeks will feature a contest worthy of this moment in our history.
Fire the Campaign, October 12, 2008
[Palin] should spend her time making the case for McCain and, more important, the case against Obama. As one shrewd McCain supporter told me, “Every minute she spends not telling the American people something that makes them less well disposed to Obama is a minute wasted.”
How McCain Wins, September 28, 2008
Obama’s [approval/disapproval rating] is a bit higher than it was a month ago. That suggests the failure of the McCain campaign’s attacks on Obama.
So drop them.
Fire the Campaign, October 12, 2008
Why such turncoat behavior? Best guess: Kristol is running for cover. In a few weeks he will point to his October 12 column and tell anyone who listens that if only McCain had followed his advice and fired his campaign all would have been well.
The scary thing is that some folks will believe him.
Posted by b on October 13, 2008 at 13:53 UTC | Permalink | Comments (6)
Congrats to Krugman
Paul Krugman wins the Nobel economics prize
STOCKHOLM, Sweden - Princeton economist and New York Times columnist Paul Krugman won the Nobel economics prize on Monday for his analysis of how economies of scale can affect trade patterns and the location of economic activity.
...
"What are the effects of free trade and globalization? What are the driving forces behind worldwide urbanization? Paul Krugman has formulated a new theory to answer these questions," the academy said in its citation."He has thereby integrated the previously disparate research fields of international trade and economic geography," it said.
Krugman's sparse comment at his blog:
A funny thing happened to me this morning …
Indeed. After years of favoring 'Chicago economists', who laid the grounds for the current disaster, the Royal Swedish Academy of Sciences finally seems to change course.
Signs of the times?
Posted by b on October 13, 2008 at 11:51 UTC | Permalink | Comments (19)
Politics Of Rocket Launches
Current 'Top World News' at Yahoo: Russia's Medvedev test fires long-range missile
PLESETSK COSMODROME, Russia (Reuters) - President Dmitry Medvedev oversaw the test firing of an intercontinental Topol missile on Sunday and vowed to commission new generation weapons for Russia's armed forces.
A Reuters reporter said the truck-mounted Topol was fired at 3:23 a.m. EDT in drizzling rain from the Plesetsk cosmodrome, which is nestled among the taiga forests of Russia's north.
Current 'Top U.S. News' at Yahoo: U.S. space tourist blasts off in Russian rocket
BAIKONUR, Kazakhstan (Reuters) - U.S. video game magnate Richard Garriott blasted off into space aboard a Russian rocket on Sunday watched by his father, a NASA astronaut who went into space at the height of the Cold War.
The Russian Soyuz TMA-13 spacecraft lifted off in clear weather from the Baikonur Cosmodrome on the Kazakh steppes just after 1.00 p.m. (3 a.m. EDT).
For the next ten years the U.S. will have no human access to space as the Space Shuttle will be retired and no domestic substitute is available.
The U.S. will rent access through Russian capabilities. The revenue from that will increase Russian capabilities.
Fine with me.
How will the U.S.A. First crowd react to that?
Posted by b on October 12, 2008 at 19:40 UTC | Permalink | Comments (18)
How Will The Right React?
Assuming Obama wins the election, what will be the reaction on the right?
As far as I can distinguish them, there are three groups on the Republican side:
- the libertarians somewhat overlapping with
- the classic small state conservatives
- the value conservatives
- the neo-conservatives
We can assume that the economic situation will get worse and stay bad for at least two years.
How will these groups react under economic stress and out of power?
My estimation:
- Some kind of capitulation within the first two groups. They understand that state intervention, even though they hate it, is sometimes necessary.
- The neo-conservative group will try to change its mantle and to wiggle themselves into the Democratic realm.
- The middle group includes a lot of workers who will get screwed by the crisis. It includes the religious nuts. These are the people that think Obama is an Arab and a terrorist. If they find some kind of 'leader' they could become dangerous.
But I haven't been around in the states recently, so my take is likely not correct.
Please let us know your predictions.
Posted by b on October 12, 2008 at 16:13 UTC | Permalink | Comments (41)
Open Thread - 08-34
Please add your news and views ...
Posted by b on October 11, 2008 at 18:38 UTC | Permalink | Comments (86)
Financial Markets: The Fuse Continues To Burn
The global stock markets plunged again today. Barry Ritholz sees some reason to become bullish again, or at least to expect a counter rally. While we may get that, the rot in the system is now too deep to allow for a big one and another plunge is certain to follow.
President Bush asked today to have confidence. Also today U.S. banks were allowed to again lie about the value of their assets as the 'mark to market' rules are now suspended. Can we have confidence in the banks when we do not know what they hold and what the real value of these holdings are? No, we can't. That is why Morgan Stanley and Goldman, banks by now, are down 40% and 20% today.
Roubini says The world is at severe risk of a global systemic financial meltdown and a severe global depression. I agree.
There will be a meeting of global central bankers and finance ministers this weekend. They will now likely agree to proceed with the 'Swedish solution', i.e. to recapitalize the banks in exchange for stakes in these. While in principle a better plan than most others, it still has flaws.
The banks need to be triaged. Some are so broke that any capital injection will be a waste of taxpayer money that only delays their certain death. Some are so well off that they do not need any injection at all. They should not be offered such on favorable terms. Some are sound but lack capital. Those should be nationalized outright.
To do the triage a week long bank holiday needs to be declared which would allow time to evaluate the patients state, i.e. to have regulators take a real look into their books.
A really decisive move over the weekend would be to Declare All Credit Default Swaps Null And Void. That would solve 80% of the problems the banks have right now. Some would still fail, but with the big issue removed, interbank lending and commercial lending would carry less risk and revive.
If that does not happen, a global depression is now indeed a possibility.
Posted by b on October 10, 2008 at 18:11 UTC | Permalink | Comments (43)
Talks with the 'Taliban'
The Saudi Arabia had been asked by Afghanistan's president Hamid Karzai to arrange talks with the 'Taliban' about some kind of power-sharing. The British government supports such attempts and British military have spoken in favor of negotiations. The U.S. administration does not want such negotiations (or at least not now while McCain campaigns on a 'surge' strategy in Afghanistan.) Secretary of Defense Gates called such talks 'defeatist' even while U.S. military folks are pessimistic about Afghanistan and have spoken in favor of political solutions.
Reports about a first round of negotiations were first published two weeks ago. They took place in Saudi Arabia with Karzai's elder brother Qayum in attendance. From the anti-U.S. side Gulbuddin Hekmatyar took part. Not a real Taliban, but one of three major war lords fighting the U.S. with his own gang, Hekmatyar is also a former 'freedom fighter' who even was invited for a photo with Reagan in the Oval Office. But in current U.S. parlor he is a 'global terrorist'.
After these negotiations became public, indirect pressure was put on Hamid Karzai. Old reports of his younger brother's drug mafia relations were suddenly relaunched in the NYT. His older brother who led the talks and is also a member of the Afghan parliament was accused of lack of attendance and had to resign.
The U.S. wants permanent presence in Afghanistan. The British and other NATO countries are smart enough to know that this can not be achieved. They want out and to get out some kind of talks need to happen. The Afghan mujaheddin have no reason to agree to any U.S. or NATO presence. They are winning for now and that is unlikely to change.
Hamid Karzai may get fired one of these days and may get be replaced with current U.S. ambassador to the UN (and neocon) Zalmay Khalilzad.
Posted by b on October 10, 2008 at 17:32 UTC | Permalink | Comments (6)
Iran's 'Nuclear Detonators' Are A CIA Fake
The New York Times' Judith Miller Elaine Sciolino has another 'nuclear Iran' scare story which immediately got picked up by other media:
International nuclear inspectors are investigating whether a Russian scientist helped Iran conduct complex experiments on how to detonate a nuclear weapon, according to European and American officials. As part of the investigation, inspectors at the International Atomic Energy Agency are seeking information from the scientist, who they believe acted on his own as an adviser on experiments described in a lengthy document obtained by the agency, the officials said.
...
Although officials would not say how they had obtained the new document, it was first publicly mentioned in an agency report in May as one of 18 documents presented to Iran in connection with suspected nuclear weapons studies. At the time it was described as a “five-page document in English” about experiments with a complex initiation system to detonate a large amount of high explosives and to monitor the detonation with probes. There was no indication that the document was a translation of a much longer, more comprehensive document in Farsi.The original, Farsi document is described by officials familiar with it as a detailed narrative of experiments aimed at creating a perfectly timed implosion of nuclear material.
Wait a second: Iran, nuclear detonators and a Russian engineer? Where was that about? Oh yeah: "Operation Merlin"
The New York Times piece mentions nothing about the story which James Risen described in his book State of War partly published in The Guardian. But this seems quite related:
To be precise, [the Russian scientist] was carrying technical designs for a TBA 480 high-voltage block, otherwise known as a "firing set", for a Russian-designed nuclear weapon. He held in his hands the knowledge needed to create a perfect implosion that could trigger a nuclear chain reaction inside a small spherical core.
...
The Russian, who had defected to the US years earlier, still couldn't believe the orders he had received from CIA headquarters. The CIA had given him the nuclear blueprints and then sent him to Vienna to sell them - or simply give them - to the Iranian representatives to the International Atomic Energy Agency (IAEA).
Gordon Prather did not believe Risen's tale that this was an attempt to lead Iran on a false technical path. He argues that the whole story was simply an attempt by the CIA to plant evidence against Iran. Also here.
The U.S. sent a Russian scientist as an agent to Vienna with manipulated blueprints of special detonators to hand them to a delegate from Iran. Eight years later the IAEA gets handed material by the U.S. about special detonator experiments allegedly made in Iran
Now Iran gets accused by U.S. and European 'officials' (note: NOT IAEA officials) of having worked or planed to work with such detonators based on a 'secret' long brief in Farsi of which the IAEA first only got handed a five page English copy.
I do smell a rat here - a big one. This is Iraq and 'Niger papers' all over.
Posted by b on October 10, 2008 at 14:34 UTC | Permalink | Comments (18)
Financial Markets: The Fuse Is Lit
The inverted pyramid of credit derivatives, insurances against bond failures, that sit on top of collateralized debt obligation which sit on top of bad loans is now really threatening to crash down on the financial system.
The failure of Lehman Brothers triggered 'credit default events' on bonds Lehman had issued. On Friday an auction will clarify what holders of Lehman bonds might get payed out of the bankruptcy assets. The difference of that value to the face value of the bonds will then have to be payed out by those who sold insurances in form of Credit Default Swaps on Lehman bonds to other parties.
As such risk insurances have not only be sold to people who actually hold Lehman bonds, but to anyone who wanted to buy and speculate with them, the amount that will have to be payed out will be a multiple of the nominal bond value Lehman defaulted on.
Writes the Financial Times (behind free subscription walls):
Banks are hoarding cash in expectation of pay-outs on up to $400bn of defaulted credit derivatives linked to Lehman Brothers and other institutions, according to analysts and -dealers.
...
Yesterday, the default of up to $500bn in derivative contracts linked to Fannie Mae and Freddie Mac was settled, the biggest such exercise ever carried out.The Fannie and Freddie CDS settled at between 91.5 and 99.9 cents on the dollar, reflecting the fact its underlying debt is not in default after the mortgage groups were seized by the US government. The seizure did trigger defaults on derivatives, however.
The next test will be the unwinding of CDS linked to Lehman, which filed for bankruptcy three weeks ago. Michael Hampden-Turner, a credit strategist at Citi, estimates that there could be $400bn of credit derivatives referenced to Lehman.
These contracts will be settled on Friday, and with the recovery value on Lehman bonds currently estimated at about 10 cents on the dollar, the pay-out by banks and other sellers of credit protection on Lehman could reach a gross $360bn.
Anyone who still thinks that the Paulson plan with some $700 billion can safe the world from a crash needs to see a doctor. This was only one bank going under and it triggers payments of half the size of the Paulson plan.
The $360 billion in CDS payments probably triggered by Lehman's default might well take down some of those who wrote such insurances. That would then trigger additional 'credit default events' which would trigger further CDS payments in the hundreds of billions. This could quickly cascade taking down one financial entity after the other.
The numbers involved here are mind numbing. See the tables here for who holds how many of these nuclear time bombs. JP Morgan Chase leads the pack with $8 trillion of CDS in notional value.
Iceland has now seized the last of its three big banks, Kaupthing, and put it into receivership. That will trigger another round of CDS losses, more multi-billions that will have to be payed.
The threat of huge payouts that may trigger more defaults and the threat of additional credit default events is what freezes the interbank credit market and today send the LIBOR-Treasuries spread, the difference between interbank lending risk and the risk of lending to the government, to historic highs.
The fuse is now lit and its is only so long. The only way to stop the danger of an exothermic CDS chain reaction in the financial markets is by executive or legislative means: Declare All Credit Default Swaps Null And Void.
There is court tested precedence for this from the Roosevelt administration. Simply do it.
Posted by b on October 9, 2008 at 15:21 UTC | Permalink | Comments (40)
The U.S. Is Still Leading
Some have questioned the leading role of the United States in the 'free world.' They were wrong.
The U.S. is still leading and the world is still following. That is why the Associated Press headlines:
also here
Posted by b on October 9, 2008 at 14:02 UTC | Permalink | Comments (1)
Molehills in Iran
While checking the satellite pictures of a road between Herat in Afghanistan and Iran yesterday, this chain of 'molehills' got my attention. What are those?
detail of google sat picture
The black strip on the left is the two lane road between the Iranian towns Khvaf to the north and and Nishtafun to the south. There are two line of 'molehills' from north east to south west. On the bigger sat picture another line can be seen east of them.
Today Joshua Foust has a recommendable post on Afghan opium economics with a picture of similar structures in Afghanistan. It turns out that these are Karez wells first(?) known from Turpan in China:
Vertical wells are dug at various points to tap into the water current flowing down sloping land from the source, the mountain runoff. The water is then channeled through underground canals dug from the bottom of one well to the next well and then to the desired destination, Turfan's irrigation system. This irrigation system of special connected wells originated during the Han Dynasty (206 BC – 24 AD).
Some photos of the underground canals are here plus a model of such a system.
'Driving' the road in the google sat picture north or south (keep mouse button pressed and shove the picture down or up) one finds several more of these 'molehill' canals. The longest one in that area seems to be some three miles with a well holes every 60 yards.
When were these build? Are they still active and maintained?
Maybe I should travel there and take a look.
Posted by b on October 9, 2008 at 9:30 UTC | Permalink | Comments (15)
Strategic Consequences: Iceland For Starters
As I haven't followed the Iceland banking story with much diligence, the following is naturally incomplete. Please add to it in comments.
Iceland is in the news big time because that founding member of NATO asked Russia to lend it billions to keep its state running. Writes the FT:
Iceland expressed disappointment yesterday that western allies had failed to provide support to help ease the country's financial crisis, forcing it to turn to Russia for a €4bn loan.
"We have not received the kind of support that we were requesting from our friends," said Geir Haarde, prime minister. "So in a situation like that one has to look for new friends."
Expect a lot of pressure on Iceland by its 'friends' to shun the Russian loan deal and to turn over its sovereignty to the IMF. Geir Haarde an his compatriots will resist such a move.
In Tom Clancy's Red Storm Rising, a fiction describing a NATO-Warsaw Pact war, the Russians deploy a division of paratroopers to occupy the island and lose it a few weeks later. Now some chump change might achieve better strategic results. Wouldn't Iceland be the perfect place for a Russian 'missile defense' system? If the deal happens it will be the first obvious geostrategic consequence of the current breakdown. There will be many more.
The whole Iceland story is a mixture of economic mismanagement and possibly criminal energy. A small country with some 300,000 inhabitants, the most developed one on this planet according to the UN, grew three local banks within less than 20 years to a $100 billion of debt industry with likely somewhat less in assets. Two of these banks are now under regulator control and may get closed down.
There are long standing rumors that these banks were fed with lots of shady money from Russian oligarchs. Double digit inflation and interest rates attracted additional money from abroad. That money was used to finance real estate deals in London and to buy up various retail chains in northern Europe in not so profitable deals.
Additionally currency speculation from the outside led to a sharp devaluation of the Iceland Króna. The result is a country which is now overwhelmed with the consequences of the downturn.
Like hedge funds, Iceland's banks borrowed short term and invested long term. With short term lending freezing up, that business model is no longer profitable. Time to go back to fishing.
Brad Setser points out that Dubai is comparable to Iceland in that short term debt is used to finance longterm investment. Illiquid, immobile investment in form of sky scrapers and luxury apartments in Dubai's case. Will Russia jump in when Dubai gets into trouble? Iran?
Posted by b on October 8, 2008 at 19:24 UTC | Permalink | Comments (42)
Financial Crisis: Act Forcefully
The major central banks have lowered the interest rates. That may stop the stocks to drop for a few hours. Then it will occur to someone that interest rates do not matter if no bank has the capacity to lend.
The great de-leveraging continues apace. Billions of imaginary wealth kept as assets in the books went 'poof'. Covering those losses ate away from the basic capital of the banks. To keep a reasonable debt to capital ratio they needed to sell stuff into declining markets and to recall loans they made. That is a downward spiral which is hard to stop. Until a bottom is found, the banks will have no capacity for new big loans.
Two trillion of retirement savings in 401ks and pension funds were lost in the last 15 month. There are some hard times coming for a lot of people. It will be even harder if this crash continues
The Fed and the Treasury as well as their international companions are still behind the curve. Instead of acting forcefully, each week they add a new trough for Wall Street to feed on.
The crisis is so out of control that monetary tools are losing their effect. There are some things only national states can do and now such things need to be done in a worldwide concert:
- Close financial markets worldwide for a week, longer if needed.
- Declare all outstanding financial derivatives (except covered puts and calls on simple stocks and covered commodities derivatives) and synthetic financial products null and void.
- Reassess the balance sheets of all bigger financial entities under the new realities.
- Triage those entities: Some are too broken to be saved. Close them down. Some will need capital. Nationalize them. Some will be fine.
- Take over and destroy the excess housing supply that threatens to draw down U.S. housing values and the correlated assets deep below reasonable levels.
- Initiate a huge infrastructure repair program to reignite the basic economy.
Those steps can be taken now, or in six month. Now they could help. Six month from now there will be so much damage done to the real economy, that a very deep and multi-year long recession will be needed to recover.
Posted by b on October 8, 2008 at 13:22 UTC | Permalink | Comments (46)
Debate Talk
There is an election competition going on and today is one of those debates that are sold as being important.
By now, I believe, the elite that gives guidance to the media has decided on the winner. Obama will be the next prez of the U.S. people.
His published programs and personal background give too few data points to estimate how he will really act in that capacity. That's frightening, but it will spare us the nightmare of a Palin regency and may balance the Supreme Court.
Obama may reveal some stands in the debate today. I'm currently traveling and can not follow the debate. Please let us all know your impression of the debate and other thoughts about the election and its consequences in the comments.
Posted by b on October 7, 2008 at 20:51 UTC | Permalink | Comments (64)
Open Thread 08-33
The blog lives off comments. Feed it!
News & views ... Mmmh, yummy.
Posted by b on October 7, 2008 at 6:58 UTC | Permalink | Comments (96)
Publishing News
We were just made aware of a new edition of a great Businessweek bestseller.
The revised title is:
by James K. Glassman & Kevin A. Hassett
Kevin A. Hassett currently serves as senior economic adviser to John McCain’s 2008 presidential campaign.
The book will come with a foreword by Hank Paulson.
Posted by b on October 6, 2008 at 15:36 UTC | Permalink | Comments (18)
Stability Operations "At Home And Abroad"?
Today the U.S. army released a new version (14 MB PDF) of its Field Manual for Stability Operations.
The announcement in yesterday's WaPo opened:
The Army on Monday will unveil an unprecedented doctrine that declares nation-building missions will probably become more important than conventional warfare and defines "fragile states" that breed crime, terrorism and religious and ethnic strife as the greatest threat to U.S. national security.
I am not aware of any country that has no crime, no terrorism and no religious or ethnic strife of one kind or another. So who will define what states are "fragile"?
The first sentence of the introduction to the field manual may give an answer:
Today, the Nation remains engaged in an era of persistent conflict against enemies intent on limiting American access and influence throughout the world.
Is every entity that is "intent on limiting American access and influence throughout the world" now an enemy?
The doctrine of military "stability operations" seems to be driven by two urges:
- to justify "intervention" in form of "stability operations" under the pretext of ill-defined "instability" whenever and wherever one likes
- the U.S. military's organizational drive to encroach on foreign policy issues that should be the task of the State Department and to militarize all foreign aid
Yesterday's WaPo piece included this somewhat ambiguous graph that had me wonder:
"This is the document that bridges from conflict to peace," said Lt. Gen. William B. Caldwell IV, commander of the U.S. Army Combined Arms Center at Fort Leavenworth, Kan., where the manual was drafted over the past 10 months. The U.S. military "will never secure the peace until we can conduct stability operations in a collaborative manner" with civilian government and private entities at home and abroad, he said.
At home and abroad - hmm ...
Posted by b on October 6, 2008 at 12:53 UTC | Permalink | Comments (24)
How Bush Tried To Screw India On The Nuke Deal
The Washington Post headlines today: Glitch Delays Signing Of India Nuclear Pact. It is correct that the so called '123 agreement' has not been signed yet as was expected. But this was not a simple glich.
This was a botched attempt by the Bush administration to screw the Indians.
The treaty will allow India to import nuclear technology and fuel for its civil nuclear program, while leaving its military nuclear programs and bombs untouched and unsupervised by the IAEA. The U.S. hopes to make multi-billion dollar deals under this agreement and sees it as the beginning of an U.S.-India alliance aimed against China and Pakistan.
In India the deal is attacked by the left and by hard right nationalists because they fear that it will severely restrict India's sovereignty. Democrats in Washington were also very concerned about the deal as it practically nukes the Nuclear Proliferation Treaty which India is not willing to comply with.
These tensions culminated in one point. What happens if India tests another nuclear weapon?
In the Indian interpretation the deal guarantees access to nuclear fuel even if India does more testing. (For example in response to a Pakistani or Chinese test.) Under the current political conditions the Prime Minister Singh would be in severe political trouble if he would agree to anything else.
But some Democrats, especially Senators Dorgan and Bingaman who had put a hold on the bill and pressed for amendments, wanted the opposite. An explicit U.S. statement that nuclear cooperation would be cut off and delivery of nuclear fuel halted, if India makes another test.
To get their support for the deal, Rice last Wednesday wrote a letter to Senator Reid which said:
Let me reassure you that an Indian test, as I have testified publicly, would result in most serious consequences. Existing US law would require automatic cut-off of cooperation, as well as a number of other sanctions, if India were to test.
That was binding enough for the Senate and the treaty passed on Thursday.
But it somewhat incompatible with what the Indians were told:
[A] senior Indian official said his government wants Bush to make a statement that clearly addresses India's concerns about fuel supplies if it conducts a test. The official said Bush had promised an accompanying statement at the time of signing.
The Indians were wondering: "If on one side the 123 agreement has no restriction or consequence of testing and we get assured by the administration that there is nothing like this, how can Rice write a letter that says the opposite?"
They smelled a rat.
On Saturday Rice flew to New Delhi and it was expected that she would sign the final deal with Premier Minister Manmohan Singh, which Bush has not yet signed:
Before leaving Washington, Rice had told reporters that Bush "does not have to sign before I sign."
and
Many Indians had expected Rice to sign the agreement during her visit, but an Indian foreign ministry advisory issued late Friday did not mention it.
To Rice's embarrassment the Indian's refused to sign. They fear, with reason, that if they sign first, Bush might sign later and add a signing statement that would include what Rice promised to the Senate.
As an Indian official tells WaPo:
"We would like President Bush to sign the legislation into law first and make a statement that alleviates our fears about fuel supplies," the official said on the condition of anonymity because he was not authorized to speak to the media about the matter. "What if we sign it first here in Delhi and then President Bush signs it later and introduces a conditionality that is not acceptable to us?"
But how would such a statement by Bush be compatible with what the Senate was told?
It was now announced that Bush will sign the treaty next Wednesday. But will he add a statement on the fuel supply and testing?
To get the deal done Bush will have to show Congress the finger. That of course would not be the first time.
Posted by b on October 5, 2008 at 12:58 UTC | Permalink | Comments (12)
The Wave
by anna missed
bigger
the wave
by anna missed
oil on wood, 8'' x 14''
The picture somewhat rhymes with this recent magazine title.
Posted by b on October 4, 2008 at 16:44 UTC | Permalink | Comments (24)
Smoot-Hawley By Subsidies
The Smoot-Hawley Tariff Act made the Great Depression worse than it could have been:
[It] raised U.S. tariffs on over 20,000 imported goods to record levels. In the United States 1,028 economists signed a petition against this legislation, and after it was passed, many countries retaliated with their own increased tariffs on U.S. goods, and American exports and imports plunged by more than half.
Bad times often lead to economic fights across borders. Smoot-Hawley used tariffs with the intend to block out imports. Another method of preference of domestic producers is to feed them with subsidies.
Last weekend Congress passed a bill that will give the U.S. auto industry access to $25 billion of subsidized federal loans. Additionally the Paulson bailout is worded in a way that allows the Treasury to buy up bad performing car loans the big three have made to sell their products. If the Treasury pays more than the market value for such 'assets', the result is a direct capital injection by the government into the Detroit companies. (Only without any upside for the taxpayer.)
It took only a week for the auto industry across the pond to come up with the same demand. Writes the Financial Times:
European carmakers on Friday became the latest industry grouping to ask for support when they said they would approach the European Commission about a €40bn loan to develop environmentally friendly products.
The approach imitates a move in the US. Congress has approved a $25bn (€18bn), low-cost programme, mainly aimed at the big three Detroit manufacturers, to develop green vehicles and engines.
Forget the excuse about 'developing environmentally friendly products' and 'green vehicles'. The technology for electric cars, hybrids and natural gas motors already exists and such products are available today.
The easiest way to make cars more environmentally friendly is by building them smaller and lighter. Less mass needs less energy to get accelerated.
Such loans are pure subsidies which will keep excess production capacity alive and will thereby make profit margins smaller for every car producer. The best way forward for consumers, car makers and taxpayers is to let the production capacity shrink the natural way until it fits the demand.
A subsidy race would be bad for everyone on both sides of the pond just like the 1920/30s race towards every higher protectionism tariffs turned out to be bad for all economies.
Posted by b on October 4, 2008 at 13:29 UTC | Permalink | Comments (21)