http://www.informationclearinghouse.info/article20631.htm
Kucinich wakes up Democratic Convention
26/08/08 DENVER -- Who lit a fire under U.S. Rep. Dennis J. Kucinich?
The Ohio Democrat went to church at the Democratic National Convention today, lighting up the 4 o’clock hour as time marched toward Sen. Hillary Clinton’s much anticipated appearance.
Kucinich preached.
I mean he preached like he’d had some lessons from the Rev. Jesse Jackson. And he woke up an audience that until that moment appeared to be mostly waiting to hear anybody else.
“We Democrats are giving America a wake-up call,” he preached. “Wake up, America. In 2001, the oil companies, the war contractors and the neo-con artists seized the economy and have added $4 trillion of unproductive spending to the national debt. We now pay four times more for defense, three times more for gasoline and home heating oil, and twice what we paid for health care.”
Sleepy delegates in a half-empty arena began to take notice. A couple of them pointed.
“If there was an Olympics for misleading, mismanaging and misappropriating, this administration would take the gold,” Kucinich said. “World records for violations of national and international laws … we can't afford another Republican administration. Wake up, America.
“The insurance companies took over health care. Wake up, America. The pharmaceutical companies took over drug pricing. Wake up, America. The speculators took over Wall Street. Wake up, America. They want to take your Social Security. Wake up, America.
He had them. Where was this speech when the tiny Ohio congressman was running for president? Or did we really just not pay attention?
“This administration can tap our phones. They can't tap our creative spirit,” he said. “They can open our mail. They can't open economic opportunities. They can track our every move. They lost track of the economy while the cost of food, gasoline and electricity skyrockets. They skillfully played our post-9/11 fears and allowed the few to profit at the expense of the many. Every day we get the color orange while the oil companies, the insurance companies, the speculators, the war contractors get the color green.
“Wake up, America! This is not a call for you to take a new direction from right to left. This is call for you to go from down to up. Up with the rights of workers. Up with wages.”
And Dennis Kucinich began to bounce, the way the ministers of my girlhood churches did.
“Up with fair trade. Up with creating millions of good paying jobs, rebuilding our bridges, ports and water systems,” he said, his voice rising, people rising and grinning at the Dennis Kucinich who was surprising them.
“Up with health care for all,” he said. “Up with education for all. Up with homeownership. Up with guaranteed retirement benefits. Up with peace. Up with prosperity. Up with the Democratic Party. Up with Obama-Biden!”
Hmmmmm. Did the Democrats miss something along the way from the only man with the courage to introduce a resolution in June to impeach President George W. Bush and whose speech reminded those gathered who their fight actually was with?
____________________________________
Wahyusamputra writes "As for Obama, in return for signing on to all the main programs, oath of allegiance to AIPAC, greatly increased military spending, invasion of Pakistan, support of Georgia and Poland schemes, and so forth, all his initiatives have been followed, or rather the administration's initiatives that he's signed on to, invasion of Pakistan, increased troops for Afghanistan and so on. Not that any of them are any more likely to succeed, but there is now no daylight between what Obama recommends and what the Bushies are doing. Assassination remains as likely as when Hillary hinted at it, but that 's mainly all the folks who can't abide the thought of a dark complexioned gentleman running things, and Bill and Hillary are still waiting in the wings, of course.
"And everyone agrees the great dollar rally is smoke and mirrors..."
Aug 29, 2008
Aug 26, 2008
Paean for the good laborers on Labor Day
(Including all great successes, such as the Chinese Olympic Games display.)
This paean – old fashioned word for song of praise – deals with Eric Clapton, born in Ripley, Surrey, England, and why the BBC referred to him as “God” in one broadcast.
Those interested in music may remember that according to general acknowledgement, Jimi Hendrix and Eric Clapton were the two people who taught us all how to play the electric, as opposed to acoustic, guitar, and the voice of Eric "Slowhand" Clapton's guitar is unmistakable, that high singing tone that goes like a knife through butter, like a laser through a lump of tofu, and he didn't go under in the colorful seas of the sixties like Hendrix.
Those with more detailed memories may recall that “Cream,” called that because they were indisputably the cream in the heady 1960’s Carnaby Street days, consisted of Eric Clapton, Ginger Baker, and Bruce. Clapton went on to a very successful solo career also, - who can forget "Long tall Sally,” or “Wonderful tonight”? – but more important than any of this was the fact that he carried on working as a session musician, i.e., when the local session musicians were called in to do, say a jingle for a breakfast cereal manufacturer, one of the sound technicians would nudge one of the other sound technicians and say, “Hey, you see that guy in the sports jacket who just went out? You know who that was? That was Eric Clapton.”
In this spirit of determined anonymity, it was hardly surprising that perhaps his greatest success, “Layla,” a favorite even of President George Bush, was put out as performed by “Derek and the Dominoes,” yeah, you remember them, surely! Derek and the Dominoes, Layla and other love songs, but dominated by the title track with its haunting final minor key instrumental, like Steve Miller’s Song for the Ancestors track with the ships hooting in the bay.
It was that spirit of determined anonymity, with stellar accomplishments to brag about but never mentioned, that gave him the awed recognition they owed him, and made the BBC refer to him as “God,” – yes, this is where you get in and say “Oh, I thought it was Guaranteed Overnight Delivery” - and in a sense that was the kind of attitude that his fans seemed to adopt. Everybody knew what the BBC meant, and agreed with it, and there was never, God be thanked, as there certainly would have been in these good ole US of A, an attempt to ban the program by right wing religious groups for blasphemy.
Happy Labor Day, successful laborers of the world. More power to your elbow!
This paean – old fashioned word for song of praise – deals with Eric Clapton, born in Ripley, Surrey, England, and why the BBC referred to him as “God” in one broadcast.
Those interested in music may remember that according to general acknowledgement, Jimi Hendrix and Eric Clapton were the two people who taught us all how to play the electric, as opposed to acoustic, guitar, and the voice of Eric "Slowhand" Clapton's guitar is unmistakable, that high singing tone that goes like a knife through butter, like a laser through a lump of tofu, and he didn't go under in the colorful seas of the sixties like Hendrix.
Those with more detailed memories may recall that “Cream,” called that because they were indisputably the cream in the heady 1960’s Carnaby Street days, consisted of Eric Clapton, Ginger Baker, and Bruce. Clapton went on to a very successful solo career also, - who can forget "Long tall Sally,” or “Wonderful tonight”? – but more important than any of this was the fact that he carried on working as a session musician, i.e., when the local session musicians were called in to do, say a jingle for a breakfast cereal manufacturer, one of the sound technicians would nudge one of the other sound technicians and say, “Hey, you see that guy in the sports jacket who just went out? You know who that was? That was Eric Clapton.”
In this spirit of determined anonymity, it was hardly surprising that perhaps his greatest success, “Layla,” a favorite even of President George Bush, was put out as performed by “Derek and the Dominoes,” yeah, you remember them, surely! Derek and the Dominoes, Layla and other love songs, but dominated by the title track with its haunting final minor key instrumental, like Steve Miller’s Song for the Ancestors track with the ships hooting in the bay.
It was that spirit of determined anonymity, with stellar accomplishments to brag about but never mentioned, that gave him the awed recognition they owed him, and made the BBC refer to him as “God,” – yes, this is where you get in and say “Oh, I thought it was Guaranteed Overnight Delivery” - and in a sense that was the kind of attitude that his fans seemed to adopt. Everybody knew what the BBC meant, and agreed with it, and there was never, God be thanked, as there certainly would have been in these good ole US of A, an attempt to ban the program by right wing religious groups for blasphemy.
Happy Labor Day, successful laborers of the world. More power to your elbow!
Aug 25, 2008
Long Chen
http://www.ipsnews.net/news.asp?idnews=43635
Synopsis: Long Chen is the last chapter of the Vietnam War and both governments want it forgotten Published: August 22, 2008 Author: Andrew Nette
PHNOM PENH, Aug 22 (IPS) - It was known as the ‘secret war’, a covert operation waged by the U.S. Central Intelligence Agency (CIA) throughout the sixties and early seventies against communist guerrillas in Laos.
And the most secret location in this clandestine war was the former CIA air base of Long Chen, in central Laos, a place that remain off limits even today.
A new film, ‘The Most Secret Place on Earth’, to be released in cinemas across Europe later this year, explores this little known conflict.
The film, which previewed for the first time in Phnom Penh in mid-August, includes images of Long Chen shot by the first Western camera crew to enter the base since the communists took control of the country in 1975.
"I first got the idea to do the film when I visited the Plain of Jars in Laos in 2002," recalled Marc Eberle,36, the German director in an interview with IPS.
"You could still see the craters from the air bombing and unexploded ordnance was everywhere."
"Then I heard about Long Chen and the fact that no one had got there since the war and I thought, how do I visit and how do I make a film about it?"
Little is known about the Lao conflict despite the fact that it remains the largest and most expensive paramilitary operation ever run by the U.S.
It was completely run by the CIA using largely civilian pilots from the agency’s own airline, Air America, and mercenaries recruited from the Hmong, an ethnic tribe living in mountainous areas in central and northern Laos.
Despite being the centre of the covert operation and, at its peak, one of the world’s busiest airports with a population of 50,000 people, Long Chen’s location was never marked on any map.
"I found it bizarre that at one time this was the second biggest city in Laos and it was completely secret," Eberle says.
Long Chen remains off limits to foreigners and most Lao due to clashes with remnants of the CIA’s Hmong army. Until recently it formed part of a special administrative zone under the direct control of the Lao army.
Renewed interest in the Laos’ secret war was briefly rekindled in 2003 when two Western journalists made contact with members of the Hmong resistance, the first white people they had seen since the CIA abandoned them 27 years ago.
Although pictures from the encounter were printed in Time Asia and won a world press award, U.S. media failed to pick up the story and it died.
The decades-old conflict again made headlines last year when U.S. authorities arrested 78 year-old Vang Pao, the head of the CIA’s Hmong forces in the sixties, and indicted him on terrorism charges relating to his alleged involvement in a plot to over throw the Lao government.
Eberle also believes what happened in Laos in the sixties is relevant in that it shares strong parallels with the conflict in Iraq.
"Laos was the progenitor of the way America fights wars in the 21st century," he says.
"Outsourcing the war to private companies, gathering public support by falsifying intelligence and documents, embedded journalism and automated warfare including the use of so-called ‘smart weapons’, all these methods were first tested in Laos."
The conflict began in the late fifties, as Washington sought to counter communist Pathet Lao forces and their North Vietnamese allies who had began building the Ho Chi Minh trail through the jungles running down the eastern border of Laos.
The operation was placed under CIA control to get around Laos’ supposed political neutrality and the conditions set by the Geneva Accords.
Vang Pao, then an officer in the Royal Lao Army, was recruited in 1960 to lead the Hmong troops drafted to fight the communists, which at the peak of the fighting numbered up to 30,000.
The largest of hundreds of airstrips built by the CIA throughout Laos, Long Chen was established soon after.
The Most Secret Place examines the conflict through the stories of players involved in the covert, diplomatic and military aspects of the conflict, including former diplomats, CIA officers and Air America pilots.
It also draws on critics such as Alfred McCoy, author of The Politics of Heroin: CIA Complicity in the Global Drug Trade and a reporter in Laos at the time, and Fred Branfman, an aid worker turned anti-war activist who worked to expose the conflict.
Ordinary Lao people at the receiving end of the world’s most technologically sophisticated military machine get a chance to tell their story.
Although there is a short interview with Vang Pao, the one aspect of the story not adequately dealt with is the plight of the Hmong, who bore the brunt of some of the most savage fighting. With the exception of senior officers like Vang Pao and their families, the Hmong fighters were abandoned when the U.S. pulled out.
One of the most interesting aspects of ‘The Most Secret Place’ is that it incorporates previously unused footage Eberle managed to collect, including film of actual combat missions and day-to-day life at Long Chen.
This was gathered from myriad sources, including the U.S. National Film Archive and footage held by television stations from across Europe.
"The CIA had just declassified a whole lot of material so that helped as well," he says. "The most important source was the guys who were over there filming with their little Super 8 cameras, often illegally."
This film’s analysis sets it apart from other books and documentaries on the subject, most of which justify the conflict, lauding the CIA operatives and their Air America pilots as heroes.
The reality, as Alfred McCoy says towards the end of the film, was very different. "We destroyed a whole civilisation, we wiped it off the map. We incinerated, atomised human remains in this air war and what happened in the end? We lost."
The covert nature of the conflict meant that U.S. forces were able to ignore virtually all the rules of engagement operating in Vietnam. Every building was a potential target and the civilian toll was huge.
The situation grew worse in 1970 when U.S. President Nixon authorised massive B-52 bombing strikes on Laos, which remained classified information until many years later.
American planes dropped an average of one planeload of bombs on targets in Laos every eight minutes, 24 hours a day for nine years, making it the most heavily bombed country on earth per capita in the history of warfare.
Eberle remains cagey about exactly how he managed to gain access to film at Long Chen. "It was a matter of having the right contacts," he says.
The last film crew to try and get there were caught and convicted to 15 years prison, although they were eventually freed after four weeks due to international pressure.
"After we went another UK crew tried to get there but they were caught and deported," he adds.
"There are some places in the world that have a different energy and Long Chen is one of these. You look down the runway and think this is the place were it all happened. The planes took off from here and bombed all those people."
The film, which contains aerial footage of the base as well as shots from the ground, shows Long Chen today as an overgrown airstrip surrounded by heavily forested mountains.
"It’s just an army outpost now. A small village, a couple of hundred people, soldiers and their families."
The buildings, including Californian bungalows and a number of other structures designed in sixties style, largely lie vacant and derelict.
"The golden age of Long Chen is over. It used to be the high-tech oasis for spooks in Laos. There were allegedly more antennas there than trees. Now they do not even have power."
The 2007 arrest of Vang Pao in California, along with eight other Hmong and a former U.S. army ranger who served in Vietnam, on charges of allegedly plotting to topple the Lao government, has highlighted the current state of Hmong resistance inside Laos.
Eberle believes, as do many other observers in Laos, that the resistance is on its last legs.
"There are still some groups but they are not organised. They are certainly not politically or militarily organised. They are remnants, the children and grandchildren of those involved in the war who are scared to come out of the jungle because they have never known anything else."
"Whether Vang Pao is guilty or not of the charges he is facing, one thing that is true is that he and other expatriate Hmong have used these people as pawns," maintains Eberle.
"Vang Pao has also got millions [of dollars] out of the Hmong community in the U.S. under the guise of liberating their homeland."
The decline in the resistance has been accompanied by talk of opening up Long Chen and the area around it to tourism.
"I do not see that happening in the next few years. It is still far too sensitive on the part of the Lao government," says Eberle. "They are also keen not to risk unsettling relations with the Americans by opening it up."
"It is the last chapter of the Vietnam War and both governments have an interest in making sure it is forgotten."
--------------------------------------------------------------------------
Wahyusamputra writes: The Long Chen story not only illustrates a totally out of control agency, “an empire within an empire,” as the Pakistani ISI is often described, creators and supporters of the Taliban in much the same way as the CIA created and supported the Hmong forces, and that should also make it easy to understand the precisely similar Pakistani situation. (Except in Pakistan’s case they didn’t walk off and abandon them, of course.)
Well, isn't it grand!? The geniuses who rule us have managed to get us back to the Cold War days, complete with permanent possibly imminent MAD (Mutually Assured Destruction) by nuclear war. Where do they dig these geniuses up? While total bankruptcy looms ever nearer, and the country is flooded, burnt, and generally crumbling anyway. Medals all round, perhaps? At least. And Russia's huge wheat harvest, so large they've run out of storage for it, makes an additional reason for Mr. Obama to go along with the administration's policy of aggressive confrontation with Russia. Who needs wheat?
Hear now the immortal words of Mr. Vonnegut: "There is a tragic flaw in our precious Constitution, and I don't know what can be done to fix it. This is it: only nut cases want to be president. This was true even in high school. Only clearly disturbed people ran for class president."
Synopsis: Long Chen is the last chapter of the Vietnam War and both governments want it forgotten Published: August 22, 2008 Author: Andrew Nette
PHNOM PENH, Aug 22 (IPS) - It was known as the ‘secret war’, a covert operation waged by the U.S. Central Intelligence Agency (CIA) throughout the sixties and early seventies against communist guerrillas in Laos.
And the most secret location in this clandestine war was the former CIA air base of Long Chen, in central Laos, a place that remain off limits even today.
A new film, ‘The Most Secret Place on Earth’, to be released in cinemas across Europe later this year, explores this little known conflict.
The film, which previewed for the first time in Phnom Penh in mid-August, includes images of Long Chen shot by the first Western camera crew to enter the base since the communists took control of the country in 1975.
"I first got the idea to do the film when I visited the Plain of Jars in Laos in 2002," recalled Marc Eberle,36, the German director in an interview with IPS.
"You could still see the craters from the air bombing and unexploded ordnance was everywhere."
"Then I heard about Long Chen and the fact that no one had got there since the war and I thought, how do I visit and how do I make a film about it?"
Little is known about the Lao conflict despite the fact that it remains the largest and most expensive paramilitary operation ever run by the U.S.
It was completely run by the CIA using largely civilian pilots from the agency’s own airline, Air America, and mercenaries recruited from the Hmong, an ethnic tribe living in mountainous areas in central and northern Laos.
Despite being the centre of the covert operation and, at its peak, one of the world’s busiest airports with a population of 50,000 people, Long Chen’s location was never marked on any map.
"I found it bizarre that at one time this was the second biggest city in Laos and it was completely secret," Eberle says.
Long Chen remains off limits to foreigners and most Lao due to clashes with remnants of the CIA’s Hmong army. Until recently it formed part of a special administrative zone under the direct control of the Lao army.
Renewed interest in the Laos’ secret war was briefly rekindled in 2003 when two Western journalists made contact with members of the Hmong resistance, the first white people they had seen since the CIA abandoned them 27 years ago.
Although pictures from the encounter were printed in Time Asia and won a world press award, U.S. media failed to pick up the story and it died.
The decades-old conflict again made headlines last year when U.S. authorities arrested 78 year-old Vang Pao, the head of the CIA’s Hmong forces in the sixties, and indicted him on terrorism charges relating to his alleged involvement in a plot to over throw the Lao government.
Eberle also believes what happened in Laos in the sixties is relevant in that it shares strong parallels with the conflict in Iraq.
"Laos was the progenitor of the way America fights wars in the 21st century," he says.
"Outsourcing the war to private companies, gathering public support by falsifying intelligence and documents, embedded journalism and automated warfare including the use of so-called ‘smart weapons’, all these methods were first tested in Laos."
The conflict began in the late fifties, as Washington sought to counter communist Pathet Lao forces and their North Vietnamese allies who had began building the Ho Chi Minh trail through the jungles running down the eastern border of Laos.
The operation was placed under CIA control to get around Laos’ supposed political neutrality and the conditions set by the Geneva Accords.
Vang Pao, then an officer in the Royal Lao Army, was recruited in 1960 to lead the Hmong troops drafted to fight the communists, which at the peak of the fighting numbered up to 30,000.
The largest of hundreds of airstrips built by the CIA throughout Laos, Long Chen was established soon after.
The Most Secret Place examines the conflict through the stories of players involved in the covert, diplomatic and military aspects of the conflict, including former diplomats, CIA officers and Air America pilots.
It also draws on critics such as Alfred McCoy, author of The Politics of Heroin: CIA Complicity in the Global Drug Trade and a reporter in Laos at the time, and Fred Branfman, an aid worker turned anti-war activist who worked to expose the conflict.
Ordinary Lao people at the receiving end of the world’s most technologically sophisticated military machine get a chance to tell their story.
Although there is a short interview with Vang Pao, the one aspect of the story not adequately dealt with is the plight of the Hmong, who bore the brunt of some of the most savage fighting. With the exception of senior officers like Vang Pao and their families, the Hmong fighters were abandoned when the U.S. pulled out.
One of the most interesting aspects of ‘The Most Secret Place’ is that it incorporates previously unused footage Eberle managed to collect, including film of actual combat missions and day-to-day life at Long Chen.
This was gathered from myriad sources, including the U.S. National Film Archive and footage held by television stations from across Europe.
"The CIA had just declassified a whole lot of material so that helped as well," he says. "The most important source was the guys who were over there filming with their little Super 8 cameras, often illegally."
This film’s analysis sets it apart from other books and documentaries on the subject, most of which justify the conflict, lauding the CIA operatives and their Air America pilots as heroes.
The reality, as Alfred McCoy says towards the end of the film, was very different. "We destroyed a whole civilisation, we wiped it off the map. We incinerated, atomised human remains in this air war and what happened in the end? We lost."
The covert nature of the conflict meant that U.S. forces were able to ignore virtually all the rules of engagement operating in Vietnam. Every building was a potential target and the civilian toll was huge.
The situation grew worse in 1970 when U.S. President Nixon authorised massive B-52 bombing strikes on Laos, which remained classified information until many years later.
American planes dropped an average of one planeload of bombs on targets in Laos every eight minutes, 24 hours a day for nine years, making it the most heavily bombed country on earth per capita in the history of warfare.
Eberle remains cagey about exactly how he managed to gain access to film at Long Chen. "It was a matter of having the right contacts," he says.
The last film crew to try and get there were caught and convicted to 15 years prison, although they were eventually freed after four weeks due to international pressure.
"After we went another UK crew tried to get there but they were caught and deported," he adds.
"There are some places in the world that have a different energy and Long Chen is one of these. You look down the runway and think this is the place were it all happened. The planes took off from here and bombed all those people."
The film, which contains aerial footage of the base as well as shots from the ground, shows Long Chen today as an overgrown airstrip surrounded by heavily forested mountains.
"It’s just an army outpost now. A small village, a couple of hundred people, soldiers and their families."
The buildings, including Californian bungalows and a number of other structures designed in sixties style, largely lie vacant and derelict.
"The golden age of Long Chen is over. It used to be the high-tech oasis for spooks in Laos. There were allegedly more antennas there than trees. Now they do not even have power."
The 2007 arrest of Vang Pao in California, along with eight other Hmong and a former U.S. army ranger who served in Vietnam, on charges of allegedly plotting to topple the Lao government, has highlighted the current state of Hmong resistance inside Laos.
Eberle believes, as do many other observers in Laos, that the resistance is on its last legs.
"There are still some groups but they are not organised. They are certainly not politically or militarily organised. They are remnants, the children and grandchildren of those involved in the war who are scared to come out of the jungle because they have never known anything else."
"Whether Vang Pao is guilty or not of the charges he is facing, one thing that is true is that he and other expatriate Hmong have used these people as pawns," maintains Eberle.
"Vang Pao has also got millions [of dollars] out of the Hmong community in the U.S. under the guise of liberating their homeland."
The decline in the resistance has been accompanied by talk of opening up Long Chen and the area around it to tourism.
"I do not see that happening in the next few years. It is still far too sensitive on the part of the Lao government," says Eberle. "They are also keen not to risk unsettling relations with the Americans by opening it up."
"It is the last chapter of the Vietnam War and both governments have an interest in making sure it is forgotten."
--------------------------------------------------------------------------
Wahyusamputra writes: The Long Chen story not only illustrates a totally out of control agency, “an empire within an empire,” as the Pakistani ISI is often described, creators and supporters of the Taliban in much the same way as the CIA created and supported the Hmong forces, and that should also make it easy to understand the precisely similar Pakistani situation. (Except in Pakistan’s case they didn’t walk off and abandon them, of course.)
Well, isn't it grand!? The geniuses who rule us have managed to get us back to the Cold War days, complete with permanent possibly imminent MAD (Mutually Assured Destruction) by nuclear war. Where do they dig these geniuses up? While total bankruptcy looms ever nearer, and the country is flooded, burnt, and generally crumbling anyway. Medals all round, perhaps? At least. And Russia's huge wheat harvest, so large they've run out of storage for it, makes an additional reason for Mr. Obama to go along with the administration's policy of aggressive confrontation with Russia. Who needs wheat?
Hear now the immortal words of Mr. Vonnegut: "There is a tragic flaw in our precious Constitution, and I don't know what can be done to fix it. This is it: only nut cases want to be president. This was true even in high school. Only clearly disturbed people ran for class president."
Aug 20, 2008
Reality bites again
http://www.dailyreckoning.com/
August 19, 2008
The Daily Reckoning PRESENTS: The feeble American response to Russia’s assertion of power in the Caucasus of Central Asia was appropriate, since, according to James Howard Kunstler, the United States’ claims of influence in that part of the world are laughable. Read on...
REALITY BITES AGAIN by James Howard Kunstler
The U.S. had taken advantage of temporary confusion in Russia, during the ten-year-long post-Soviet-collapse interval, and set up a client government in Georgia, complete with military advisors, sales of weapons, and even the promise of club membership in the Western alliance known as NATO. These blandishments were all in the service of the Baku-to-Ceyhan oil pipeline, which was designed specifically to drain the oil region around the Caspian Basin with an outlet on the Mediterranean, avoiding unfriendly nations all along the way.
At the time this gambit was first set up, in the early 1990s, there was some notion (or wish, really) among the so-called western powers that the Caspian would provide an end-run around OPEC and the Arabs, as well as the Persians, and deliver all the oil that the US and Europe would ever need – a foolish wish and a dumb gambit, as things have turned out.
For one thing, the latterly explorations of this very old oil region – first opened to drilling in the 19th century – proved somewhat disappointing. U.S. officials had been touting it as like unto “another Saudi Arabia” but the oil actually produced from the new drilling areas of Kazakhstan, Turkmenistan, and the other Stans turned out to be preponderantly heavy-and-sour crudes, in smaller quantities than previously dreamed-of, and harder to transport across the extremely challenging terrain to even get to the pipeline head in Baku.
Meanwhile, Russia got its house in order under the non-senile, non-alcoholic Vladimir Putin, and woke up along about 2007 to find itself the leading oil and natural gas producer in the world.
Among the various consequences of this was Russia’s reemergence as a new kind of world power – an energy resource power, with the energy destiny of Europe pretty much in its hands. Also, meanwhile, the USA had set up other client states in the ring of former Soviet republics along Russia’s southern underbelly, complete with U.S. military bases, while fighting active engagements in Iraq and Afghanistan. Now, if this wasn’t the dumbest, vainest move in modern geopolitical history!
It’s one thing that U.S. foreign policy wonks imagined that Russia would remain in a coma forever, but the idea that we could encircle Russia strategically with defensible bases in landlocked mountainous countries halfway around the world...? You have to ask what were they smoking over at the Pentagon and the CIA and the NSC?
So, this asinine policy has now come to grief. Not only does Russia stand to gain control over the Baku-to-Ceyhan pipeline, but we now have every indication that they will bring the states on its southern flank back into an active sphere of influence, and there is really not a damn thing that the U.S. can pretend to do about it.
We could have spent the past ten years getting our own house in order – waking up to the obsolescence of our suburban life-style, scaling back on the Happy Motoring, reconnecting our cities with world-class passenger rail, creating wealth by producing things of value (instead of resorting to financial racketeering), protecting our borders, and taking the necessary measures to defend and update our own industries. Instead, we pissed our time and resources away.
Nations do make tragic errors of the collective will. The cluelessness of George Bush is nothing less than a perfect metaphor for the failure of a whole generation. The Boomers will be identified as the generation that wrecked America.
So, as the vacation season winds down, this country greets a new reality. We miscalculated in Western and Central Asia. Russia still “owns” that part of the world. Are we going to extend our current land wars there into the even more distant and landlocked Stan-nations? At some point, as we face financial and military exhaustion, we have to ask ourselves if we can even successfully evacuate our personnel from the far-flung bases in Uzbekistan and Kyrgyzstan.
This must be an equally sobering moment for Europe, and an additional reason for the recent plunge in the relative value of the Euro, for Europe is now at the mercy of Russia in terms of staying warm in the winter, running their kitchen stoves, and keeping the lights on. Russia also exerts substantial financial leverage over the U.S. in all the dollars and securitized U.S. debt paper it holds. In effect, Russia can shake the U.S. banking system at will now by threatening to dump its dollar holdings.
The American banking system may not need a shove from Russia to fall on its face. It’s effectively dead now, just lurching around zombie-like from one loan “window” to the next pretending to “borrow” capital – while handing over shreds of its moldy clothing as “collateral” to the Federal Reserve. The entire US, beyond the banks, is becoming a land of the walking dead. Business is dying, home-ownership has become a death dance, whole regions are turning into wastelands of “for sale” signs, empty parking lots, vacant buildings, and dashed hopes. And all this beats a path directly to a failure of collective national imagination. We really don’t know what’s going on.
The fantasy that we can sustain our influence nine thousand miles away, when we can’t even get our act together in Ohio is just a dark joke. One might state categorically that it would be a salubrious thing for America to knock off all its vaunted “dreaming” and just wake up.
Until next time,
James Howard Kunstler for The Daily Reckoning
August 19, 2008
The Daily Reckoning PRESENTS: The feeble American response to Russia’s assertion of power in the Caucasus of Central Asia was appropriate, since, according to James Howard Kunstler, the United States’ claims of influence in that part of the world are laughable. Read on...
REALITY BITES AGAIN by James Howard Kunstler
The U.S. had taken advantage of temporary confusion in Russia, during the ten-year-long post-Soviet-collapse interval, and set up a client government in Georgia, complete with military advisors, sales of weapons, and even the promise of club membership in the Western alliance known as NATO. These blandishments were all in the service of the Baku-to-Ceyhan oil pipeline, which was designed specifically to drain the oil region around the Caspian Basin with an outlet on the Mediterranean, avoiding unfriendly nations all along the way.
At the time this gambit was first set up, in the early 1990s, there was some notion (or wish, really) among the so-called western powers that the Caspian would provide an end-run around OPEC and the Arabs, as well as the Persians, and deliver all the oil that the US and Europe would ever need – a foolish wish and a dumb gambit, as things have turned out.
For one thing, the latterly explorations of this very old oil region – first opened to drilling in the 19th century – proved somewhat disappointing. U.S. officials had been touting it as like unto “another Saudi Arabia” but the oil actually produced from the new drilling areas of Kazakhstan, Turkmenistan, and the other Stans turned out to be preponderantly heavy-and-sour crudes, in smaller quantities than previously dreamed-of, and harder to transport across the extremely challenging terrain to even get to the pipeline head in Baku.
Meanwhile, Russia got its house in order under the non-senile, non-alcoholic Vladimir Putin, and woke up along about 2007 to find itself the leading oil and natural gas producer in the world.
Among the various consequences of this was Russia’s reemergence as a new kind of world power – an energy resource power, with the energy destiny of Europe pretty much in its hands. Also, meanwhile, the USA had set up other client states in the ring of former Soviet republics along Russia’s southern underbelly, complete with U.S. military bases, while fighting active engagements in Iraq and Afghanistan. Now, if this wasn’t the dumbest, vainest move in modern geopolitical history!
It’s one thing that U.S. foreign policy wonks imagined that Russia would remain in a coma forever, but the idea that we could encircle Russia strategically with defensible bases in landlocked mountainous countries halfway around the world...? You have to ask what were they smoking over at the Pentagon and the CIA and the NSC?
So, this asinine policy has now come to grief. Not only does Russia stand to gain control over the Baku-to-Ceyhan pipeline, but we now have every indication that they will bring the states on its southern flank back into an active sphere of influence, and there is really not a damn thing that the U.S. can pretend to do about it.
We could have spent the past ten years getting our own house in order – waking up to the obsolescence of our suburban life-style, scaling back on the Happy Motoring, reconnecting our cities with world-class passenger rail, creating wealth by producing things of value (instead of resorting to financial racketeering), protecting our borders, and taking the necessary measures to defend and update our own industries. Instead, we pissed our time and resources away.
Nations do make tragic errors of the collective will. The cluelessness of George Bush is nothing less than a perfect metaphor for the failure of a whole generation. The Boomers will be identified as the generation that wrecked America.
So, as the vacation season winds down, this country greets a new reality. We miscalculated in Western and Central Asia. Russia still “owns” that part of the world. Are we going to extend our current land wars there into the even more distant and landlocked Stan-nations? At some point, as we face financial and military exhaustion, we have to ask ourselves if we can even successfully evacuate our personnel from the far-flung bases in Uzbekistan and Kyrgyzstan.
This must be an equally sobering moment for Europe, and an additional reason for the recent plunge in the relative value of the Euro, for Europe is now at the mercy of Russia in terms of staying warm in the winter, running their kitchen stoves, and keeping the lights on. Russia also exerts substantial financial leverage over the U.S. in all the dollars and securitized U.S. debt paper it holds. In effect, Russia can shake the U.S. banking system at will now by threatening to dump its dollar holdings.
The American banking system may not need a shove from Russia to fall on its face. It’s effectively dead now, just lurching around zombie-like from one loan “window” to the next pretending to “borrow” capital – while handing over shreds of its moldy clothing as “collateral” to the Federal Reserve. The entire US, beyond the banks, is becoming a land of the walking dead. Business is dying, home-ownership has become a death dance, whole regions are turning into wastelands of “for sale” signs, empty parking lots, vacant buildings, and dashed hopes. And all this beats a path directly to a failure of collective national imagination. We really don’t know what’s going on.
The fantasy that we can sustain our influence nine thousand miles away, when we can’t even get our act together in Ohio is just a dark joke. One might state categorically that it would be a salubrious thing for America to knock off all its vaunted “dreaming” and just wake up.
Until next time,
James Howard Kunstler for The Daily Reckoning
Aug 19, 2008
A fable for our times
Once there was a country, large and important, but burdened by many debts, and with most of its financial systems bankrupt. The country was also very short of oil and gas, and had to spend huge amounts every month to import these, adding to its debts, and its infrastructure, its roads, bridges, sewers, viaducts, and transport systems were all very old and crumbling.
A very long way away there was another country, three or four times the size of the first one, less advanced in many ways, but with vast stores of oil and gas, which were making it very rich. (It also had many missiles aimed at the first country, a relic of the “Cold War” between the two, lasting some fifty years, though without direct attack. Its people, though much poorer, had centuries of experience of fighting invading armies on its own soil.)
Now the first country could have said to the second country, hey, we could give you a hand in all sorts of ways, technical expertise to develop your resources, all kinds of organizations we belong to, and we’d really appreciate some help with our oil and gas shortage, but instead of taking this obvious course, the first country borrowed even more money to increase its military, and worked hard to make arrangements with the neighbors of the second country to cause them as much trouble as possible, and surrounded the second country with as many missile bases as it could persuade the neighbors to let them build.
Both countries also faced some fifty years or so of climate change, with floods, drought, and storms of increasing violence.
What the first country had in mind was never very clear, since it clearly could not take over and rule such a vast country, several times its own size, so far away. Nor was it clear how the various military adventures could help their bankrupt institutions, or rebuild their crumbling infrastructure.
“Whom the gods wish to destroy, they first make mad.” Perhaps that was the moral.
A very long way away there was another country, three or four times the size of the first one, less advanced in many ways, but with vast stores of oil and gas, which were making it very rich. (It also had many missiles aimed at the first country, a relic of the “Cold War” between the two, lasting some fifty years, though without direct attack. Its people, though much poorer, had centuries of experience of fighting invading armies on its own soil.)
Now the first country could have said to the second country, hey, we could give you a hand in all sorts of ways, technical expertise to develop your resources, all kinds of organizations we belong to, and we’d really appreciate some help with our oil and gas shortage, but instead of taking this obvious course, the first country borrowed even more money to increase its military, and worked hard to make arrangements with the neighbors of the second country to cause them as much trouble as possible, and surrounded the second country with as many missile bases as it could persuade the neighbors to let them build.
Both countries also faced some fifty years or so of climate change, with floods, drought, and storms of increasing violence.
What the first country had in mind was never very clear, since it clearly could not take over and rule such a vast country, several times its own size, so far away. Nor was it clear how the various military adventures could help their bankrupt institutions, or rebuild their crumbling infrastructure.
“Whom the gods wish to destroy, they first make mad.” Perhaps that was the moral.
Aug 14, 2008
Labor Day Overview 2008
Labor Day 2008 Overview: the silence of the lambs
The conglomerate of western TV news stands like Cleopatra’s needle, polished, impenetrable, immaculate.
A number of subjects are banned by the conglomerate of western TV news media – the BBC is a participating member, though taking a wider view:
1. How “Songbird” McCain acquired his name
2. The bill for impeachment of the president being read for the second time by Senators Kuchinic and Waxman in the US Senate (Even the Pakistanis are allowed to know about bills of impeachment of their president, for God’s sake![1] )
3. When, in a universally acknowledged free and fair election – the only one I can think of, actually, without allegations of vote rigging – the Palestinian elections returned a winner by a landslide, the US and its allies immediately put their backing behind the loser in the election, Abu Mazen and Fatah, and declared the winner could not legally exercise power unless it accepted and promised to abide by, all arrangements, treaties, agreements, understandings that had been reached with the Israelis by the previous Palestinian administration, i.e., Fatah, which is what the election had been all about in the first place. The election winners, Hamas, were then declared “Islamist insurgents,” and must be only so referred to in all news items. (A fine example of a free press, also to be found in places like Myanmar.)
4. The list could be greatly extended.
Other developments since June, 2007: Mostly none.
Mr. Sarkozy, or “President Bling Bling” as he is better known in France, a sayan (helper) of the Israeli Mossad, as the French press has dryly noticed and not made an issue out of, (a genuinely free press works quite well in some places) had his finance minister declare that France was bankrupt at the very beginning of his presidency.
France produces 120% (one hundred and twenty per cent) of what it requires to keep eating, (Japan produces 39 % (thirty nine per cent) of the food required to keep everybody eating, a difference which explains a great deal.)
One of France’s main money spinners left is the CAP, the Common Agricultural Policy, of Europe. Under which France collects vast sums from EU budgets to support its farmers. The extra twenty per cent of French agricultural production is basically sold abroad, but often and mainly used for food support in African and Asian countries, essentially dumping the produce, driving the farmers to despair and suicide and getting on leaky boats in their thousands and causing immense problems in the European countries they flee to. “The mills of God grind slowly, but they grind exceeding small.”
France could be relied upon in any case to be a strong supporter of such programs as the Monsanto “one season seeds,” buy your next season’s seeds from Monsanto, but the crux of their situation is that essentially they could not afford, being bankrupt, to lose their main remaining source of income. The demand of the poor countries in the Doha round that the rich countries stop dumping their agricultural surpluses in Africa and Asia was bound to be refused, as it duly was for the seventh time in a row, and this year the Doha round of trade talks failed again, just as it had always failed previously, and for the same reasons. You can not really expect France to give up its main remaining source of income without a titanic struggle. Not that France is the only one, of course.
The three dead American and four dead Israeli soldiers found among the casualties of the Georgian attack on South Ossetia will be one of those items never mentioned listed above. Won’t it? You mean it’ll be like the instructions from Cheney’s office to produce a forgery to tie Saddam in to 9/11 that so many people have seen and admired in passing that there’s no alternative to claim it as a master stroke of policy? (That little job, incidentally, the forging of the evidence, was passed to Douglas Feith (recently voted by acclaim of political journalists the stupidest person in Washington) at the OSP, Rumsfeld’s famous Office of Special Plans, which had already produced so much smelly stuff planted by the Israeli guests that Feith waved though security, like Saddam’s plan to aim planes carrying biological weapons on the US, re fuelled by Saddam’s extensive Atlantic fleet, that one more would hardly notice.
So everything happened pretty much as expected, Doha round fails again, France and allies hang tough on agriculture, President Bing Bling marries Eric Clapton’s girl friend and makes like a rock star, and sucks up enthusiastically to the Bushies. Germany oddly strident in anti-Iran campaign, announces intention to implement Bill 232 restrictions on Iran immediately “under strong American pressure” says my TV banner, probably the Secret Vassal till 2099 Treaty, building on all that good work done by France.
As for the agonized appeal to McCain by Saakashvili, president of Georgia, that’s just further illustration of a principle established in the Clinton administration, when, as one Asian politician put it, “It’s a turnstile. You put your money in, and you get access.” It seems Mr. Saakashvili took a little too trustingly the bumper sticker message “Invest in America – buy a congressman.” Buying a congressman is no guarantee that the congressman can actually deliver anything for you. Not even if his main foreign policy advisor, as in this case, was also a lobbyist for Georgia, bought and paid for.
Decoupling
The slow decoupling. or drifting away, of the Asian economies from the west, much misunderstood, usually deliberately, is an obvious fact.
China gains greatly in basic industrial training for its population by manufacturing and exporting to the west, but the process of getting paid in dollar loans which are then used to stop the dollar collapsing and ruining the game has gone about as far as it can, and China is doing a slow tanker turn to pour its production into improving the lives of its own population, (the Chinese can do attitude at three thousand years old is even more impressive than the American can do attitude at three hundred years old) as also are Brazil, Venezuela, and most other developing countries. (India has itself temporarily entangled in a proposed US nuclear deal and fighting in Kashmir, but will probably end up doing the same.)
With most western countries essentially bankrupt (America heads the list, closely followed by Britain, France, and Italy, to name only a few) and the majority of world trade in the hands of Brazil, China, and India, the west is marginalized. Even occasional military adventures like Georgia, and Poland in the north, where the hatred between Poles and Russians is ancient and virulent, seems unlikely to halt this tidal change.
[1] The phrase freedom of the press, or free speech, or the right to free expression can only be used in cases where a properly constituted panel of experts have scientifically established, e.g., the most offensive thing one could possibly say in respect of a certain group (say, Moslems) and then proceeding to create, print, and publish the said scientifically designed project, i.e., to drive twenty per cent of the world’s population into a frenzy of rage, such as, for example, the cartoons of the prophet created in Denmark and published as widely as possible. Other “freedom of speech” projects may have no such scientific basis.
The difference in cultures might be illustrated by imagining what the threat to humiliate him by draping women's knickers over his head might have done to a Viet Cong combatant? He'd have laughed in your face and blown his nose on the knickers, right?
MBIA stock rose on Thursday 8/28/08 because the company had agreed to reinsure $184 billion in municipal bonds.
(Yes, you’re right, MBIA was not asked from where it was going to get $184 billion to make good on the insurance if municipalities should fail – one county in Alabama has just declared bankruptcy.)
The US is to crack down, says the news banner, on prosecutors pursuing white collar crime, of which this would be a clear example, of insurance fraud – MBIA is undertaking risks it has no way of paying for.
The message is clear, however, continue as if nothing is wrong and everything is as it was before. Keep up the pretence. With imminent bankruptcy barreling down, and the land crumbling under climate change, not the most reassuring action, one feels.
If you manage to ignore the Tara-ra-boom-dee-ay of the Democratic Convention, and watch what’s actually happening, the thought “Do these clowns really know what they’re doing?” is bound to occur.
I mean, the awful question is beginning loom "Why are we fighting in Afghanistan at all?" "Yeah, I know about this feller Osama you're chasing for knocking down your two towers, but he ain't here, see? Left with no forwarding address. They say he's in Pakistan. Now will you please stop air strikes on our wedding parties and get your butts out of here?" an attitude beginning to seep into the pronouncements even of Mr. Karzai. And with the Taliban almost having their hands round the throats of the capital Kabul, well, hey guys, how about listening to what they wanna say?
The conglomerate of western TV news stands like Cleopatra’s needle, polished, impenetrable, immaculate.
A number of subjects are banned by the conglomerate of western TV news media – the BBC is a participating member, though taking a wider view:
1. How “Songbird” McCain acquired his name
2. The bill for impeachment of the president being read for the second time by Senators Kuchinic and Waxman in the US Senate (Even the Pakistanis are allowed to know about bills of impeachment of their president, for God’s sake![1] )
3. When, in a universally acknowledged free and fair election – the only one I can think of, actually, without allegations of vote rigging – the Palestinian elections returned a winner by a landslide, the US and its allies immediately put their backing behind the loser in the election, Abu Mazen and Fatah, and declared the winner could not legally exercise power unless it accepted and promised to abide by, all arrangements, treaties, agreements, understandings that had been reached with the Israelis by the previous Palestinian administration, i.e., Fatah, which is what the election had been all about in the first place. The election winners, Hamas, were then declared “Islamist insurgents,” and must be only so referred to in all news items. (A fine example of a free press, also to be found in places like Myanmar.)
4. The list could be greatly extended.
Other developments since June, 2007: Mostly none.
Mr. Sarkozy, or “President Bling Bling” as he is better known in France, a sayan (helper) of the Israeli Mossad, as the French press has dryly noticed and not made an issue out of, (a genuinely free press works quite well in some places) had his finance minister declare that France was bankrupt at the very beginning of his presidency.
France produces 120% (one hundred and twenty per cent) of what it requires to keep eating, (Japan produces 39 % (thirty nine per cent) of the food required to keep everybody eating, a difference which explains a great deal.)
One of France’s main money spinners left is the CAP, the Common Agricultural Policy, of Europe. Under which France collects vast sums from EU budgets to support its farmers. The extra twenty per cent of French agricultural production is basically sold abroad, but often and mainly used for food support in African and Asian countries, essentially dumping the produce, driving the farmers to despair and suicide and getting on leaky boats in their thousands and causing immense problems in the European countries they flee to. “The mills of God grind slowly, but they grind exceeding small.”
France could be relied upon in any case to be a strong supporter of such programs as the Monsanto “one season seeds,” buy your next season’s seeds from Monsanto, but the crux of their situation is that essentially they could not afford, being bankrupt, to lose their main remaining source of income. The demand of the poor countries in the Doha round that the rich countries stop dumping their agricultural surpluses in Africa and Asia was bound to be refused, as it duly was for the seventh time in a row, and this year the Doha round of trade talks failed again, just as it had always failed previously, and for the same reasons. You can not really expect France to give up its main remaining source of income without a titanic struggle. Not that France is the only one, of course.
The three dead American and four dead Israeli soldiers found among the casualties of the Georgian attack on South Ossetia will be one of those items never mentioned listed above. Won’t it? You mean it’ll be like the instructions from Cheney’s office to produce a forgery to tie Saddam in to 9/11 that so many people have seen and admired in passing that there’s no alternative to claim it as a master stroke of policy? (That little job, incidentally, the forging of the evidence, was passed to Douglas Feith (recently voted by acclaim of political journalists the stupidest person in Washington) at the OSP, Rumsfeld’s famous Office of Special Plans, which had already produced so much smelly stuff planted by the Israeli guests that Feith waved though security, like Saddam’s plan to aim planes carrying biological weapons on the US, re fuelled by Saddam’s extensive Atlantic fleet, that one more would hardly notice.
So everything happened pretty much as expected, Doha round fails again, France and allies hang tough on agriculture, President Bing Bling marries Eric Clapton’s girl friend and makes like a rock star, and sucks up enthusiastically to the Bushies. Germany oddly strident in anti-Iran campaign, announces intention to implement Bill 232 restrictions on Iran immediately “under strong American pressure” says my TV banner, probably the Secret Vassal till 2099 Treaty, building on all that good work done by France.
As for the agonized appeal to McCain by Saakashvili, president of Georgia, that’s just further illustration of a principle established in the Clinton administration, when, as one Asian politician put it, “It’s a turnstile. You put your money in, and you get access.” It seems Mr. Saakashvili took a little too trustingly the bumper sticker message “Invest in America – buy a congressman.” Buying a congressman is no guarantee that the congressman can actually deliver anything for you. Not even if his main foreign policy advisor, as in this case, was also a lobbyist for Georgia, bought and paid for.
Decoupling
The slow decoupling. or drifting away, of the Asian economies from the west, much misunderstood, usually deliberately, is an obvious fact.
China gains greatly in basic industrial training for its population by manufacturing and exporting to the west, but the process of getting paid in dollar loans which are then used to stop the dollar collapsing and ruining the game has gone about as far as it can, and China is doing a slow tanker turn to pour its production into improving the lives of its own population, (the Chinese can do attitude at three thousand years old is even more impressive than the American can do attitude at three hundred years old) as also are Brazil, Venezuela, and most other developing countries. (India has itself temporarily entangled in a proposed US nuclear deal and fighting in Kashmir, but will probably end up doing the same.)
With most western countries essentially bankrupt (America heads the list, closely followed by Britain, France, and Italy, to name only a few) and the majority of world trade in the hands of Brazil, China, and India, the west is marginalized. Even occasional military adventures like Georgia, and Poland in the north, where the hatred between Poles and Russians is ancient and virulent, seems unlikely to halt this tidal change.
[1] The phrase freedom of the press, or free speech, or the right to free expression can only be used in cases where a properly constituted panel of experts have scientifically established, e.g., the most offensive thing one could possibly say in respect of a certain group (say, Moslems) and then proceeding to create, print, and publish the said scientifically designed project, i.e., to drive twenty per cent of the world’s population into a frenzy of rage, such as, for example, the cartoons of the prophet created in Denmark and published as widely as possible. Other “freedom of speech” projects may have no such scientific basis.
The difference in cultures might be illustrated by imagining what the threat to humiliate him by draping women's knickers over his head might have done to a Viet Cong combatant? He'd have laughed in your face and blown his nose on the knickers, right?
MBIA stock rose on Thursday 8/28/08 because the company had agreed to reinsure $184 billion in municipal bonds.
(Yes, you’re right, MBIA was not asked from where it was going to get $184 billion to make good on the insurance if municipalities should fail – one county in Alabama has just declared bankruptcy.)
The US is to crack down, says the news banner, on prosecutors pursuing white collar crime, of which this would be a clear example, of insurance fraud – MBIA is undertaking risks it has no way of paying for.
The message is clear, however, continue as if nothing is wrong and everything is as it was before. Keep up the pretence. With imminent bankruptcy barreling down, and the land crumbling under climate change, not the most reassuring action, one feels.
If you manage to ignore the Tara-ra-boom-dee-ay of the Democratic Convention, and watch what’s actually happening, the thought “Do these clowns really know what they’re doing?” is bound to occur.
I mean, the awful question is beginning loom "Why are we fighting in Afghanistan at all?" "Yeah, I know about this feller Osama you're chasing for knocking down your two towers, but he ain't here, see? Left with no forwarding address. They say he's in Pakistan. Now will you please stop air strikes on our wedding parties and get your butts out of here?" an attitude beginning to seep into the pronouncements even of Mr. Karzai. And with the Taliban almost having their hands round the throats of the capital Kabul, well, hey guys, how about listening to what they wanna say?
Aug 12, 2008
Haircut
“What is woman that you forsake her
And the hearth and the home acre
To go with the old gray widowmaker?”
Well, here we go now, “the ignorant armies clash by night” bit, lots of gore and mindless violence.
If you wish for confirmation, I suggest two items. (1) Mr. Cheney's expressed interest in the scheme to build replicas of Iranian vessels, crew them with Navy Seals dressed in Iranian Quds uniforms, and have them attack US vessels, to provide a clear cause for military attack on Iran. (2) The strange instructions to Mr. Obama's entourage on his recent trip abroad that no one was ever to wear anything green. (It's a good job the trip did not fall on St. Patrick's Day.)
I'm just transfixed by the haircut I'm watching Uncle Sam take, Georgia for the latest lightning fast one, the Georgian troops still in South Ossetia from the invasion, including US and Ukrainian mercenaries, now surrendering to the Russians.
What actually happened there?
Well, Georgia, where Stalin came from, has long been a best buddy of the west, wants to join NATO, though that can’t quite be managed yet, has 2000 troops in Iraq, arms supplies and $1 billion of Israeli investment, and US Marine Corps “military advisors,” is given the green light by the US – it certainly couldn’t have been done without that - to attack two separatist enclaves, (composed mainly of Russian citizens) first South Ossetia, attack to be coordinated with Beijing Olympics Grand Opening.
Georgian attack on South Ossetia rolls forward, much carnage, etcetera. Russians mobilize not only “Peacekeeper” force but also a massive military counter-attack. More carnage etcetera. US Marine Corps “military advisors” are withdrawn, also Israeli arms deliveries. Russians not only re-take South Ossetia, but drive forward into Georgia, start taking towns and drive towards Tibilisi, the Georgian capital, Mr. Saakashvili in charge. That’s it as of 11th of August, 2008.
The printing of a trillion dollars for the Freddie bailout is still drifting down on us. Ah, well, interesting times, as you would no doubt say. Or stock up during an election year as I'd say[1].
NATO and the Americans have kindly dropped their Georgian dupes under the bus, together with a billion dollar Israeli investment in Georgia, and agreed, yes, there’s really no NATO or American involvement. So what does Ms. Rice get to say next?
Note: India/Pakistan is blowing up again, but at least Pakistanis can read details of the proposed impeachment of President Musharraf. Audiences of the western "news" conglomerate are confined to footage from the Olympic Panda House.
Interesting, though, to see Condi Rice pleading for a cease fire. The last time major mayhem broke out, the Israeli attack on Lebanon, Condy, in concert with Toxic Tony, was saying "No, no, no ceasefire, let the cleaning out of the rat's nest be completed" giving the Israelis a couple extra days, used to sow a million cluster bombs in southern Lebanon.
That alone sums up the situation, please let's have a ceasefire, rather than "No, no, let's get it settled." See [url=http://english.pravda.ru/world/ussr/11-08-2008/106054-georgia_usa-0]”Stratfor acknowledges Russia defeated US, not Georgian army in South Ossetia”[/url]
You may remember the Americans pulled the same stunt on the Kurds, encouraging them to revolt against Saddam after the first Gulf War, and when they did, and Saddam moved to crush them, washing their hands of the whole affair. “Ah well, better luck next time.”
One is irresistibly reminded of John Laughland’s comment “Washington is unforgiving towards people who think loyalty is a two-way street, and the Uzbek president is about to learn the lesson learned by Manuel Noriega, Saddam Hussein, Eduard Shevardnadze and scores of others: that it is better to be an enemy of the Americans than their friend. If you are their enemy, they might try to buy you; but if you are their friend they will definitely sell you.” (John Laughland, The Guardian, 5/19/05)
Welcome to the New World Order (NWO) where the Russians are about to give the Georgians a very bloody nose in retribution for the failed invasion attempt, the Ceyhan pipeline, the only one into Europe not already owned by Russia, does not seem likely to last very long, and no one listens to the noises coming out of the West, who openly admit their irrelevance. Any questions?
What about the Money?
“In the case at hand, by the year 2007, the CEOs of Fannie and Freddie were earning salaries that would have been respectable, even on Wall Street. Fannie’s main man, Daniel Mudd took home $13.4 million in 2007, a year in which the firm lost $2.1 billion. While the Freddie Kruger of mortgage finance, Dick Syron, pocketed $18.3 for helping Freddie Mac to a $3 billion loss and a 33% trim for the shareholders.
“As recently as May of this year, Mr. Mudd told the New York Times that he was “seeing the best opportunities since I’ve been in this business.” Two months later, both Fannie and Freddie are “insolvent,” says former Fed governor William Poole.
“In a better world, Mudd and Syron would be hanged...and the bondholders would be wiped out along with the shareholders. But last Sunday, U.S. Treasury Secretary Henry Paulson announced a bailout. And on Monday, an auction of Freddie Mac debt was oversubscribed. The Russians were right; the deck was stacked from the very beginning.” Bonner – The Daily Reckoning – July 18, 2008
Ah yes, tried and trusted strategies have been employed here too, with equally negligible mid term effect.
"Yes, the surge in the dollar, and the stock markets, is surprising, equally now in 2008, but apart from perhaps leading one to the relaxed Buddhist attitude of Mr. Meklai’s article “Making God laugh.” [url=http://wahyusamputra.blogspot.com/2008/08/making-god-laugh.html][b]”Making God laugh”[/b][/url], there are also some much more traditional mechanical devices, tried and trusted, but temporary and fortunately not effective even in the medium term, whose levers are sticking out. Here are some of the “levers of power” sticking out of the “Amazing Dollar Rally.”
One is Germany’s decision to implement the proposed Iran sanctions before they’re even passed. Another is Jean Claude Trichet’s decision to hold EU interest rates where they are, and even speak dismissively of future rate rises.
One of the clues, perhaps, lies in the EU’s decision, under strong American pressure, it said on the TV news banner, to get moving pre-emptively on implementing the anti-Iran sanctions. This is surprising in a way because Teheran’s enriching to three or four per cent, rigorously surprise inspected by Mohammaed El Barradei, and the IAEA and found to be in compliance, sufficient to run power stations but nowhere near the 98 per cent enrichment needed for atomic weapons, and this is precisely the kind of solid evidence that Teheran had done no wrong that would normally encourage the Europeans to resist American pressure to ratchet up the tension, so the Americans must have been wielding a very big stick. The net effect is that “America is still in charge,” (and the neocons still call the shots) temporary though that might be. The very intensity of the pressure suggests lack of certainty that the opportunity will last as a possible rationale.
A similar example may perhaps be found in Trichet’s (Head of EU Central Bank’s) decision to hang tight on interest rates, even in his language, helping the Euro to lose strength against the dollar, a very helpful move in helping propel the dollar upwards. (That doesn't mean it wasn't very convenient for Trichet for other reasons also, of course. A nice drop in the Euro would make things easier for him on a number of fronts.)
They don’t usually get up to these sort of games at this time of the year, says my patchy memory; it’s usually in the run up to Christmas that the fat cats start enormous run ups, the “pump” before the “dump,” before the inevitable dreary hung over slump in January.
Both might have some basis in the recently revealed secret treaty forced on the Germans after World War Two, whereby the US has total control of a number of areas, see [url=http://www.rpmonitor.ru/en/en/detail.php?ID=8857]"Secret Vassal Treaty"[/url] . With Germany leading, the others would probably go along. So therefore, I guess, we’ve done the “pump” bit of the operation, masterminded by the bald Wall Street guy currently running the Treasury, though at an unusual time of year for it.
The fact remains that nothing has changed. Freddie duly reported a set of results at least as dismal as Fannie had a few days ago, Senator Dunning remains the only member of the Senate (“The world’s premier debating forum,” hahahaha) who understands, or is willing to point out, perhaps, the calamitous results the bailout will have on the final remaining foundation of everything, the marketability of sovereign scrip issued by the US government. Such as T bills.
And they're still going to print a trillion dollars to pay for the bailout. But the dutiful confederation of US News channels invariably puts the thing out as help for struggling home owners. So it goes.
Some interesting new names have been created, though, for example “Demand Destruction ‘ for the fact that if no one has any money, people don’t buy things, all orchestrated by that marketing master, the Wall Street guy who’s running the treasury, no doubt.
Ah, well, lie back and enjoy it, I guess.
If you need something ominous to get your juices flowing on this fine day, try South Ossetia. In response to an all out Georgian military attack on the breakaway province, containing mostly Russian citizens, timed for the Olympic Games opening ceremonies as a surprise attack, Russia moved massive troops into South Ossetia, and the Russian president, Medvedvev, announced it was his constitutional duty to protect Russian citizens. Most ominous, 1,000 Georgian troops withdrawn from Iraq and sent to South Ossetia. And Rice has of course told Russia that South Ossetia is “important to American interests in the region,” and he’s therefore been told to back off. Russia close to taking Georgian capital at last reports.
(If we say it’s important to us, ya gotta to just hand it over. Those are the rules!)
Hmmm. So we now have a border (in South Ossetia, in or around the northern parts of Georgia), where Russian troops are facing a little squirt of an army, not military likely to swing any balances, with “American advisors.” Now where have I heard that before?
[1] The mushroom system (“Keep ‘em in the dark and feed them lots of bullsh**”) as described by a senior language teacher in Saudi Arabia as his teaching methodology for Saudis, is hardly new. The most extreme example of it is the United States of America, where it has been relentlessly and successfully employed over centuries. There are very few countries indeed where two bills for impeachment of the president, presented for many hours in the Upper House, the Senate, could successfully avoid all mention as a news item in the conglomerate of “News” channels, or any reference at all by any of the candidates in the ongoing year-long carnival of the coming election. Just like “Songbird” McCain as a news item. Tight - like a mouse’s ear hole.
And the hearth and the home acre
To go with the old gray widowmaker?”
Well, here we go now, “the ignorant armies clash by night” bit, lots of gore and mindless violence.
If you wish for confirmation, I suggest two items. (1) Mr. Cheney's expressed interest in the scheme to build replicas of Iranian vessels, crew them with Navy Seals dressed in Iranian Quds uniforms, and have them attack US vessels, to provide a clear cause for military attack on Iran. (2) The strange instructions to Mr. Obama's entourage on his recent trip abroad that no one was ever to wear anything green. (It's a good job the trip did not fall on St. Patrick's Day.)
I'm just transfixed by the haircut I'm watching Uncle Sam take, Georgia for the latest lightning fast one, the Georgian troops still in South Ossetia from the invasion, including US and Ukrainian mercenaries, now surrendering to the Russians.
What actually happened there?
Well, Georgia, where Stalin came from, has long been a best buddy of the west, wants to join NATO, though that can’t quite be managed yet, has 2000 troops in Iraq, arms supplies and $1 billion of Israeli investment, and US Marine Corps “military advisors,” is given the green light by the US – it certainly couldn’t have been done without that - to attack two separatist enclaves, (composed mainly of Russian citizens) first South Ossetia, attack to be coordinated with Beijing Olympics Grand Opening.
Georgian attack on South Ossetia rolls forward, much carnage, etcetera. Russians mobilize not only “Peacekeeper” force but also a massive military counter-attack. More carnage etcetera. US Marine Corps “military advisors” are withdrawn, also Israeli arms deliveries. Russians not only re-take South Ossetia, but drive forward into Georgia, start taking towns and drive towards Tibilisi, the Georgian capital, Mr. Saakashvili in charge. That’s it as of 11th of August, 2008.
The printing of a trillion dollars for the Freddie bailout is still drifting down on us. Ah, well, interesting times, as you would no doubt say. Or stock up during an election year as I'd say[1].
NATO and the Americans have kindly dropped their Georgian dupes under the bus, together with a billion dollar Israeli investment in Georgia, and agreed, yes, there’s really no NATO or American involvement. So what does Ms. Rice get to say next?
Note: India/Pakistan is blowing up again, but at least Pakistanis can read details of the proposed impeachment of President Musharraf. Audiences of the western "news" conglomerate are confined to footage from the Olympic Panda House.
Interesting, though, to see Condi Rice pleading for a cease fire. The last time major mayhem broke out, the Israeli attack on Lebanon, Condy, in concert with Toxic Tony, was saying "No, no, no ceasefire, let the cleaning out of the rat's nest be completed" giving the Israelis a couple extra days, used to sow a million cluster bombs in southern Lebanon.
That alone sums up the situation, please let's have a ceasefire, rather than "No, no, let's get it settled." See [url=http://english.pravda.ru/world/ussr/11-08-2008/106054-georgia_usa-0]”Stratfor acknowledges Russia defeated US, not Georgian army in South Ossetia”[/url]
You may remember the Americans pulled the same stunt on the Kurds, encouraging them to revolt against Saddam after the first Gulf War, and when they did, and Saddam moved to crush them, washing their hands of the whole affair. “Ah well, better luck next time.”
One is irresistibly reminded of John Laughland’s comment “Washington is unforgiving towards people who think loyalty is a two-way street, and the Uzbek president is about to learn the lesson learned by Manuel Noriega, Saddam Hussein, Eduard Shevardnadze and scores of others: that it is better to be an enemy of the Americans than their friend. If you are their enemy, they might try to buy you; but if you are their friend they will definitely sell you.” (John Laughland, The Guardian, 5/19/05)
Welcome to the New World Order (NWO) where the Russians are about to give the Georgians a very bloody nose in retribution for the failed invasion attempt, the Ceyhan pipeline, the only one into Europe not already owned by Russia, does not seem likely to last very long, and no one listens to the noises coming out of the West, who openly admit their irrelevance. Any questions?
What about the Money?
“In the case at hand, by the year 2007, the CEOs of Fannie and Freddie were earning salaries that would have been respectable, even on Wall Street. Fannie’s main man, Daniel Mudd took home $13.4 million in 2007, a year in which the firm lost $2.1 billion. While the Freddie Kruger of mortgage finance, Dick Syron, pocketed $18.3 for helping Freddie Mac to a $3 billion loss and a 33% trim for the shareholders.
“As recently as May of this year, Mr. Mudd told the New York Times that he was “seeing the best opportunities since I’ve been in this business.” Two months later, both Fannie and Freddie are “insolvent,” says former Fed governor William Poole.
“In a better world, Mudd and Syron would be hanged...and the bondholders would be wiped out along with the shareholders. But last Sunday, U.S. Treasury Secretary Henry Paulson announced a bailout. And on Monday, an auction of Freddie Mac debt was oversubscribed. The Russians were right; the deck was stacked from the very beginning.” Bonner – The Daily Reckoning – July 18, 2008
Ah yes, tried and trusted strategies have been employed here too, with equally negligible mid term effect.
"Yes, the surge in the dollar, and the stock markets, is surprising, equally now in 2008, but apart from perhaps leading one to the relaxed Buddhist attitude of Mr. Meklai’s article “Making God laugh.” [url=http://wahyusamputra.blogspot.com/2008/08/making-god-laugh.html][b]”Making God laugh”[/b][/url], there are also some much more traditional mechanical devices, tried and trusted, but temporary and fortunately not effective even in the medium term, whose levers are sticking out. Here are some of the “levers of power” sticking out of the “Amazing Dollar Rally.”
One is Germany’s decision to implement the proposed Iran sanctions before they’re even passed. Another is Jean Claude Trichet’s decision to hold EU interest rates where they are, and even speak dismissively of future rate rises.
One of the clues, perhaps, lies in the EU’s decision, under strong American pressure, it said on the TV news banner, to get moving pre-emptively on implementing the anti-Iran sanctions. This is surprising in a way because Teheran’s enriching to three or four per cent, rigorously surprise inspected by Mohammaed El Barradei, and the IAEA and found to be in compliance, sufficient to run power stations but nowhere near the 98 per cent enrichment needed for atomic weapons, and this is precisely the kind of solid evidence that Teheran had done no wrong that would normally encourage the Europeans to resist American pressure to ratchet up the tension, so the Americans must have been wielding a very big stick. The net effect is that “America is still in charge,” (and the neocons still call the shots) temporary though that might be. The very intensity of the pressure suggests lack of certainty that the opportunity will last as a possible rationale.
A similar example may perhaps be found in Trichet’s (Head of EU Central Bank’s) decision to hang tight on interest rates, even in his language, helping the Euro to lose strength against the dollar, a very helpful move in helping propel the dollar upwards. (That doesn't mean it wasn't very convenient for Trichet for other reasons also, of course. A nice drop in the Euro would make things easier for him on a number of fronts.)
They don’t usually get up to these sort of games at this time of the year, says my patchy memory; it’s usually in the run up to Christmas that the fat cats start enormous run ups, the “pump” before the “dump,” before the inevitable dreary hung over slump in January.
Both might have some basis in the recently revealed secret treaty forced on the Germans after World War Two, whereby the US has total control of a number of areas, see [url=http://www.rpmonitor.ru/en/en/detail.php?ID=8857]"Secret Vassal Treaty"[/url] . With Germany leading, the others would probably go along. So therefore, I guess, we’ve done the “pump” bit of the operation, masterminded by the bald Wall Street guy currently running the Treasury, though at an unusual time of year for it.
The fact remains that nothing has changed. Freddie duly reported a set of results at least as dismal as Fannie had a few days ago, Senator Dunning remains the only member of the Senate (“The world’s premier debating forum,” hahahaha) who understands, or is willing to point out, perhaps, the calamitous results the bailout will have on the final remaining foundation of everything, the marketability of sovereign scrip issued by the US government. Such as T bills.
And they're still going to print a trillion dollars to pay for the bailout. But the dutiful confederation of US News channels invariably puts the thing out as help for struggling home owners. So it goes.
Some interesting new names have been created, though, for example “Demand Destruction ‘ for the fact that if no one has any money, people don’t buy things, all orchestrated by that marketing master, the Wall Street guy who’s running the treasury, no doubt.
Ah, well, lie back and enjoy it, I guess.
If you need something ominous to get your juices flowing on this fine day, try South Ossetia. In response to an all out Georgian military attack on the breakaway province, containing mostly Russian citizens, timed for the Olympic Games opening ceremonies as a surprise attack, Russia moved massive troops into South Ossetia, and the Russian president, Medvedvev, announced it was his constitutional duty to protect Russian citizens. Most ominous, 1,000 Georgian troops withdrawn from Iraq and sent to South Ossetia. And Rice has of course told Russia that South Ossetia is “important to American interests in the region,” and he’s therefore been told to back off. Russia close to taking Georgian capital at last reports.
(If we say it’s important to us, ya gotta to just hand it over. Those are the rules!)
Hmmm. So we now have a border (in South Ossetia, in or around the northern parts of Georgia), where Russian troops are facing a little squirt of an army, not military likely to swing any balances, with “American advisors.” Now where have I heard that before?
[1] The mushroom system (“Keep ‘em in the dark and feed them lots of bullsh**”) as described by a senior language teacher in Saudi Arabia as his teaching methodology for Saudis, is hardly new. The most extreme example of it is the United States of America, where it has been relentlessly and successfully employed over centuries. There are very few countries indeed where two bills for impeachment of the president, presented for many hours in the Upper House, the Senate, could successfully avoid all mention as a news item in the conglomerate of “News” channels, or any reference at all by any of the candidates in the ongoing year-long carnival of the coming election. Just like “Songbird” McCain as a news item. Tight - like a mouse’s ear hole.
Aug 11, 2008
The Fannie and Freddie Fraud
http://www.dailyreckoning.com/Issues/2008/DR071808.html
Synopsis: Nonsense and fraud in public finance Source: http://www.dailyreckoning.com/ Published: July 18, 2008 Author: Bill Bonner
The Daily Reckoning PRESENTS: Much of what goes on in public finance is fraudulent. The rest is nonsense. The hardest part of our métier is just figuring out which is which.
Bill Bonner explores... "The Daily Reckoning"
FANNIE AND FREDDIE: PLAYING WITH A STACKED DECK by Bill Bonner
As recently as February of this year, Russian officials cleared the way for two of its sovereign wealth funds, the Reserve Fund and National Wellbeing Fund, to invest in various foreign bonds, including those issued by the twin towers of American residential finance, Fannie and Freddie.
“The prospect for every GSE bond clearly states that it is not backed by the United States government,” says Matt Kibbe, president of FreedomWorks. “That’s why investors holding agency bonds already receive a significant risk premium over Treasuries.”
The Russians ignored the warnings and grabbed the risk premium. Today, fully 21% of Russia’s monetary reserves are invested in the obligations of Fannie, Freddie and the Home Loan Banks. And the largest holder of Fannie and Freddie debt is another friendly foreigner, China. The middle kingdom, according to the FreedomWorks organization, owns $376 billion worth of U.S. agency bonds. Altogether, foreigners hold $1.3 trillion of them.
Maybe the foreigners didn’t understand what they were getting into. Or maybe they did.
Franklin Delano Roosevelt, whose family had made a fortune in the opium trade, promised the nation a “New Deal” during the Great Depression of the ‘30s. But what he gave it was more like the old false shuffle. The president pulled cards from the bottom of the deck, pretending that government bureaucrats could do a better job of allocating capital than private investors. In 1938, he set up the Federal National Mortgage Association, b.k.a. Fannie Mae. Then, as now, the national housing market was in crisis. House prices had been declining for almost a decade. Who wanted to lend money against falling collateral values? Only a fool...or a government.
For the next 32 years, the firm resembled a nationwide savings and loan institution -- borrowing from large institutions and lending to smaller ones, keeping a piece of the spread for its trouble. But Fannie Mae was an imposter from the get-go.
Lenders knew that it had something no free market business ever had – the full faith and credit of the US government behind it. Fannie was able to borrow at below-market rates; lenders knew they had no risk of losing their money in a default or bankruptcy. Fannie, with the aces dealt her by the Roosevelt administration, dominated the business for the next 30 years.
Then, another crisis came along, followed by another bamboozle, this one perpetrated by Lyndon Johnson. Specifically, the feds were spending too much on wars – the War on Poverty at home...and one against the Viet Cong across the ocean. Victory eluded Lyndon Johnson on both fronts, but his handling of Fannie Mae should have brought him at least a bronze star.
Attempting to balance the government’s ledgers (this was in the days when Americans still believed in balanced budgets), he moved the mortgage business off of the Federal government’s books, privatizing it as a ‘government sponsored agency.’ For good measure, he created a competing organization – the Federal Home Mortgage Association, b.k.a. Freddie Mac.
Many are the ham-fisted dictators and sticky-fingered kleptocrats who have nationalized industries. Even without a credit crunch for camouflage, Francois Mitterand nationalized 36 leading French banks in 1982. Robert Mugabe grabbed farmland in the Zimbabwe. Evo Morales took the gas industry. And Hugo Chavez seized the Orinoco oil fields in 2007. But Lyndon Johnson rarely gets credit for his great advance in the history of public larceny: he privatized the profits while nationalizing the losses. This formula has been a honey pot for clever dirigistes ever since, providing countless opportunities for defeated politicians, hacks and hustlers – speaking fees, consulting contracts, board memberships, bonuses, stock options (notably, the $170 million spent on lobbyists over the past 10 years...mentioned above) – things that wouldn’t be possible for a “public” company. In effect, Fannie Mae could pick the taxpayer’s pocket twice – once by sticking him with a mortgage he couldn’t really afford and a second time by raiding the taxpayers’ vault for a bailout.
In the case at hand, by the year 2007, the CEOs of Fannie and Freddie were earning salaries that would have been respectable, even on Wall Street. Fannie’s main man, Daniel Mudd took home $13.4 million in 2007, a year in which the firm lost $2.1 billion. While the Freddie Kruger of mortgage finance, Dick Syron, pocketed $18.3 for helping Freddie Mac to a $3 billion loss and a 33% trim for the shareholders.
As recently as May of this year, Mr. Mudd told the New York Times that he was “seeing the best opportunities since I’ve been in this business.” Two months later, both Fannie and Freddie are “insolvent,” says former Fed governor William Poole.
In a better world, Mudd and Syron would be hanged...and the bondholders would be wiped out along with the shareholders. But last Sunday, U.S. Treasury Secretary Henry Paulson announced a bailout. And on Monday, an auction of Freddie Mac debt was oversubscribed. The Russians were right; the deck was stacked from the very beginning.
Enjoy your weekend, Bill Bonner, The Daily Reckoning
Synopsis: Nonsense and fraud in public finance Source: http://www.dailyreckoning.com/ Published: July 18, 2008 Author: Bill Bonner
The Daily Reckoning PRESENTS: Much of what goes on in public finance is fraudulent. The rest is nonsense. The hardest part of our métier is just figuring out which is which.
Bill Bonner explores... "The Daily Reckoning"
FANNIE AND FREDDIE: PLAYING WITH A STACKED DECK by Bill Bonner
As recently as February of this year, Russian officials cleared the way for two of its sovereign wealth funds, the Reserve Fund and National Wellbeing Fund, to invest in various foreign bonds, including those issued by the twin towers of American residential finance, Fannie and Freddie.
“The prospect for every GSE bond clearly states that it is not backed by the United States government,” says Matt Kibbe, president of FreedomWorks. “That’s why investors holding agency bonds already receive a significant risk premium over Treasuries.”
The Russians ignored the warnings and grabbed the risk premium. Today, fully 21% of Russia’s monetary reserves are invested in the obligations of Fannie, Freddie and the Home Loan Banks. And the largest holder of Fannie and Freddie debt is another friendly foreigner, China. The middle kingdom, according to the FreedomWorks organization, owns $376 billion worth of U.S. agency bonds. Altogether, foreigners hold $1.3 trillion of them.
Maybe the foreigners didn’t understand what they were getting into. Or maybe they did.
Franklin Delano Roosevelt, whose family had made a fortune in the opium trade, promised the nation a “New Deal” during the Great Depression of the ‘30s. But what he gave it was more like the old false shuffle. The president pulled cards from the bottom of the deck, pretending that government bureaucrats could do a better job of allocating capital than private investors. In 1938, he set up the Federal National Mortgage Association, b.k.a. Fannie Mae. Then, as now, the national housing market was in crisis. House prices had been declining for almost a decade. Who wanted to lend money against falling collateral values? Only a fool...or a government.
For the next 32 years, the firm resembled a nationwide savings and loan institution -- borrowing from large institutions and lending to smaller ones, keeping a piece of the spread for its trouble. But Fannie Mae was an imposter from the get-go.
Lenders knew that it had something no free market business ever had – the full faith and credit of the US government behind it. Fannie was able to borrow at below-market rates; lenders knew they had no risk of losing their money in a default or bankruptcy. Fannie, with the aces dealt her by the Roosevelt administration, dominated the business for the next 30 years.
Then, another crisis came along, followed by another bamboozle, this one perpetrated by Lyndon Johnson. Specifically, the feds were spending too much on wars – the War on Poverty at home...and one against the Viet Cong across the ocean. Victory eluded Lyndon Johnson on both fronts, but his handling of Fannie Mae should have brought him at least a bronze star.
Attempting to balance the government’s ledgers (this was in the days when Americans still believed in balanced budgets), he moved the mortgage business off of the Federal government’s books, privatizing it as a ‘government sponsored agency.’ For good measure, he created a competing organization – the Federal Home Mortgage Association, b.k.a. Freddie Mac.
Many are the ham-fisted dictators and sticky-fingered kleptocrats who have nationalized industries. Even without a credit crunch for camouflage, Francois Mitterand nationalized 36 leading French banks in 1982. Robert Mugabe grabbed farmland in the Zimbabwe. Evo Morales took the gas industry. And Hugo Chavez seized the Orinoco oil fields in 2007. But Lyndon Johnson rarely gets credit for his great advance in the history of public larceny: he privatized the profits while nationalizing the losses. This formula has been a honey pot for clever dirigistes ever since, providing countless opportunities for defeated politicians, hacks and hustlers – speaking fees, consulting contracts, board memberships, bonuses, stock options (notably, the $170 million spent on lobbyists over the past 10 years...mentioned above) – things that wouldn’t be possible for a “public” company. In effect, Fannie Mae could pick the taxpayer’s pocket twice – once by sticking him with a mortgage he couldn’t really afford and a second time by raiding the taxpayers’ vault for a bailout.
In the case at hand, by the year 2007, the CEOs of Fannie and Freddie were earning salaries that would have been respectable, even on Wall Street. Fannie’s main man, Daniel Mudd took home $13.4 million in 2007, a year in which the firm lost $2.1 billion. While the Freddie Kruger of mortgage finance, Dick Syron, pocketed $18.3 for helping Freddie Mac to a $3 billion loss and a 33% trim for the shareholders.
As recently as May of this year, Mr. Mudd told the New York Times that he was “seeing the best opportunities since I’ve been in this business.” Two months later, both Fannie and Freddie are “insolvent,” says former Fed governor William Poole.
In a better world, Mudd and Syron would be hanged...and the bondholders would be wiped out along with the shareholders. But last Sunday, U.S. Treasury Secretary Henry Paulson announced a bailout. And on Monday, an auction of Freddie Mac debt was oversubscribed. The Russians were right; the deck was stacked from the very beginning.
Enjoy your weekend, Bill Bonner, The Daily Reckoning
Aug 8, 2008
Making God laugh
MAKING GOD LAUGH Jamal Mecklai March 1, 2004
Some years ago, a friend of mine, recently returned from a sojourn near the Himalayas, told me that his teacher had told him that if you want to make God laugh, make a plan. Circumstance (another word for God) will ensure that the plan changes, probably dramatically. To put it in more mundane terms, man proposes, God disposes.
And so it is with the market, which, as I am sure you all know by now, is another – and vital – instrument of God.
The recent “correction” in the dollar’s long-running bear trend is a case in point. Till recently, there was not an analyst to be found anywhere – except, perhaps in the Himalayas, where I didn’t check – who could come up with any scenario under which the dollar could get stronger. I myself was a fully committed dollar bear. A couple of weeks ago, recognizing that this conviction – that the dollar had to continue to fall – had become so firmly ensconced in the world psyche, I found myself getting nervous. Everybody had the same plan. And I thought I heard a low chuckling in the sky.
The dollar (at that time at 1.2850 to the Euro) was inches below its all-time low, employment reports out of the US continued to show feeble job creation despite strong economic growth, the trade deficit continued to widen, and consumer confidence had slumped sharply in January. So, I wondered, why wasn’t the dollar falling faster? It still hadn’t broken through its all-time low, despite the fact that everyone had been targeting 1.32 to 1.35 for months. I also noticed that intra-day volatility had suddenly risen sharply, with the dollar moving by well over 1% against the Euro on several days; I remembered an old market adage that sometimes works – when a market is coming to the end of a trend, there is often a sharp increase in intra-day volatility.
I started writing an article (for this column, in fact) entitled, “Why is the dollar so strong?” But, I somehow couldn’t convince myself that the trend had actually reversed and so I shelved the piece.
In the event, the dollar did rally – and quite sharply, gaining nearly 4% in a week against the Euro. Everybody’s plans started going awry. The chuckling I heard seemed to get louder.
But, of course, after quite quickly licking their wounds, the analysts brigade pointed out that this is just an overdue correction, possibly even the beginning of a bear market rally, but not a change of trend – after all, nothing fundamental had changed. The US current account deficit, which has been one of the key drivers of the bear trend, continues to be a drain on the balance sheet of America Inc., and, barring a sharp recession in the US or a sharp fall in the dollar, there is little likelihood of a turnaround. Low US interest rates, another key parameter underpinning the carry trade, are extremely unlikely to rise any time soon. In an election year, the Fed is unsurprisingly less concerned with inflation that with job growth, which, more and more is beginning to look like a structural problem.
Thus, the story goes, the bear trend will reassert itself once the oversold (dollar) positions in the market get shaken out. Chart points (around 1.2350) have been alerted as oh-ohs, but the broad consensus is that the dollar decline will commence again. The plan remains in place.
Enter God, laughing more loudly.
Now, lest I be misunderstood, let me explain that I believe that the job of the market (acting, of course, as a favored agent of God) is to teach us humility, that in reality we know nothing. This is not with any malicious intent, of course – nothing personal. It is just that humans – and, particularly, well educated and well heeled humans – tend to believe that their knowledge (and/or their wealth) somehow sets them apart, gives them knowledge in a fundamental sense.
Enter the market (God, laughing infectiously) to turn everything we know to nothing.
And I believe this may be what is happening with the dollar right now. There is no reason for it to strengthen sustainably, correct? We know that. It’s so obvious. Try as I might, I can’t make a rational case for dollar bullishness at the current time. Can you?
So (and the laughter is getting louder all the time), what if the dollar strengthens beyond the 1.2350 level marked in red by the world’s for-once together technical analysts? What if it continues to strengthen to, say, 1.17 to the Euro? [At the same time, it surges to 125 yen. And, let’s say, 1.65 to the pound – I’d really like that, I have to be in London in May.]
What then?
What if it continued to rise – breaking, say, 1.10 to the Euro?
Would you – would we – then find a rational expectation for dollar strength? Will the current account deficit no longer matter? What will happen to US interest rates in all this? What will happen to the rupee?
The laughter is deafening by now.
When you make a plan, make sure you have a sense of humor.
--------------------------------------------------------------------------------
Wahyusamputra writes: "Yes, the surge in the dollar, and the stock markets, is surprising, equally now in 2008, but apart from perhaps leading one to the relaxed Buddhist attitude of the above article, there are also some much more traditional mechanical devices, tried and trusted, but temporary and fortunately not effective even in the medium term, whose levers are sticking out. Here are some of the “levers of power” sticking out of the “Amazing Dollar Rally.”
One is Germany’s decision to implement the proposed Iran sanctions before they’re even passed. Another is Jean Claude Trichet’s decision to hold EU interest rates where they are, and even speak dismissively of future rate rises.
One of the clues, perhaps, lies in the EU’s decision, under strong American pressure, it said on the TV news banner, to get moving pre-emptively on implementing the anti-Iran sanctions. This is surprising in a way because Teheran’s enriching to three or four per cent, rigorously surprise inspected by Mohammaed El Barradei, and the IAEA and found to be in compliance, sufficient to run power stations but nowhere near the 98 per cent enrichment needed for atomic weapons, and this is precisely the kind of solid evidence that Teheran had done no wrong that would normally encourage the Europeans to resist American pressure to ratchet up the tension, so the Americans must have been wielding a very big stick. The net effect is that “America is still in charge,” (and the neocons still call the shots) temporary though that might be. The very intensity of the pressure suggests lack of certainty that the opportunity will last as a possible rationale.
A similar example may perhaps be found in Trichet’s (Head of EU Central Bank’s) decision to hang tight on interest rates, even in his language, helping the Euro to lose strength against the dollar, a very helpful move in helping propel the dollar upwards. (That doesn't mean it wasn't very convenient for Trichet for other reasons also, of course. A nice drop in the Euro would make things easier for him on a number of fronts.)
They don’t usually get up to these sort of games at this time of the year, says my patchy memory; it’s usually in the run up to Christmas that the fat cats start enormous run ups, the “pump” before the “dump,” before the inevitable dreary hung over slump in January.
Both might have some basis in the recently revealed secret treaty forced on the Germans after World War Two, whereby the US has total control of a number of areas, see ”Secret Vassal Treaty”. With Germany leading, the others would probably go along. So therefore, I guess, we’ve done the “pump” bit of the operation, masterminded by the bald Wall Street guy currently running the Treasury, though at an unusual time of year for it.
The fact remains that nothing has changed. Freddie duly reported a set of results at least as dismal as Fannie had a few days ago, Senator Dunning remains the only member of the Senate (“The world’s premier debating forum,” hahahaha) who understands, or is willing to point out, perhaps, the calamitous results the bailout will have on the final remaining foundation of everything, the marketability of sovereign scrip issued by the US government. Such as T bills. And they're still going to print a trillion dollars to pay for the bailout.
Ah, well, lie back and enjoy it, I guess.
If you need something ominous to get your juices flowing on this fine day, try South Ossetia. In response to an all out Georgian military attack on the breakaway province, containing mostly Russian citizens, Russia moved massive troops into South Ossetia, and the Russian president, Medvedvev, announced it was his constitutional duty to protect Russian citizens. Most ominous, are 1,000 troops withdrawn from Iraq/Afghanistan and sent to South Ossetia, by the U.S., one assumes, but it may be one of their allies. And Rice has of course told Russia that South Ossetia is “important to American interests in the region,” and he’s therefore been told to back off. (If we say it’s important to us, ya gotta to just hand it over. Those are the rules!)
Hmmm. So we now have a border (in South Ossetia, in or around the northern parts of Georgia, where Russian troops are facing a little squirt of an army, not military likely to swing any balances, with “American advisors.” Now where have I heard that before?
Some years ago, a friend of mine, recently returned from a sojourn near the Himalayas, told me that his teacher had told him that if you want to make God laugh, make a plan. Circumstance (another word for God) will ensure that the plan changes, probably dramatically. To put it in more mundane terms, man proposes, God disposes.
And so it is with the market, which, as I am sure you all know by now, is another – and vital – instrument of God.
The recent “correction” in the dollar’s long-running bear trend is a case in point. Till recently, there was not an analyst to be found anywhere – except, perhaps in the Himalayas, where I didn’t check – who could come up with any scenario under which the dollar could get stronger. I myself was a fully committed dollar bear. A couple of weeks ago, recognizing that this conviction – that the dollar had to continue to fall – had become so firmly ensconced in the world psyche, I found myself getting nervous. Everybody had the same plan. And I thought I heard a low chuckling in the sky.
The dollar (at that time at 1.2850 to the Euro) was inches below its all-time low, employment reports out of the US continued to show feeble job creation despite strong economic growth, the trade deficit continued to widen, and consumer confidence had slumped sharply in January. So, I wondered, why wasn’t the dollar falling faster? It still hadn’t broken through its all-time low, despite the fact that everyone had been targeting 1.32 to 1.35 for months. I also noticed that intra-day volatility had suddenly risen sharply, with the dollar moving by well over 1% against the Euro on several days; I remembered an old market adage that sometimes works – when a market is coming to the end of a trend, there is often a sharp increase in intra-day volatility.
I started writing an article (for this column, in fact) entitled, “Why is the dollar so strong?” But, I somehow couldn’t convince myself that the trend had actually reversed and so I shelved the piece.
In the event, the dollar did rally – and quite sharply, gaining nearly 4% in a week against the Euro. Everybody’s plans started going awry. The chuckling I heard seemed to get louder.
But, of course, after quite quickly licking their wounds, the analysts brigade pointed out that this is just an overdue correction, possibly even the beginning of a bear market rally, but not a change of trend – after all, nothing fundamental had changed. The US current account deficit, which has been one of the key drivers of the bear trend, continues to be a drain on the balance sheet of America Inc., and, barring a sharp recession in the US or a sharp fall in the dollar, there is little likelihood of a turnaround. Low US interest rates, another key parameter underpinning the carry trade, are extremely unlikely to rise any time soon. In an election year, the Fed is unsurprisingly less concerned with inflation that with job growth, which, more and more is beginning to look like a structural problem.
Thus, the story goes, the bear trend will reassert itself once the oversold (dollar) positions in the market get shaken out. Chart points (around 1.2350) have been alerted as oh-ohs, but the broad consensus is that the dollar decline will commence again. The plan remains in place.
Enter God, laughing more loudly.
Now, lest I be misunderstood, let me explain that I believe that the job of the market (acting, of course, as a favored agent of God) is to teach us humility, that in reality we know nothing. This is not with any malicious intent, of course – nothing personal. It is just that humans – and, particularly, well educated and well heeled humans – tend to believe that their knowledge (and/or their wealth) somehow sets them apart, gives them knowledge in a fundamental sense.
Enter the market (God, laughing infectiously) to turn everything we know to nothing.
And I believe this may be what is happening with the dollar right now. There is no reason for it to strengthen sustainably, correct? We know that. It’s so obvious. Try as I might, I can’t make a rational case for dollar bullishness at the current time. Can you?
So (and the laughter is getting louder all the time), what if the dollar strengthens beyond the 1.2350 level marked in red by the world’s for-once together technical analysts? What if it continues to strengthen to, say, 1.17 to the Euro? [At the same time, it surges to 125 yen. And, let’s say, 1.65 to the pound – I’d really like that, I have to be in London in May.]
What then?
What if it continued to rise – breaking, say, 1.10 to the Euro?
Would you – would we – then find a rational expectation for dollar strength? Will the current account deficit no longer matter? What will happen to US interest rates in all this? What will happen to the rupee?
The laughter is deafening by now.
When you make a plan, make sure you have a sense of humor.
--------------------------------------------------------------------------------
Wahyusamputra writes: "Yes, the surge in the dollar, and the stock markets, is surprising, equally now in 2008, but apart from perhaps leading one to the relaxed Buddhist attitude of the above article, there are also some much more traditional mechanical devices, tried and trusted, but temporary and fortunately not effective even in the medium term, whose levers are sticking out. Here are some of the “levers of power” sticking out of the “Amazing Dollar Rally.”
One is Germany’s decision to implement the proposed Iran sanctions before they’re even passed. Another is Jean Claude Trichet’s decision to hold EU interest rates where they are, and even speak dismissively of future rate rises.
One of the clues, perhaps, lies in the EU’s decision, under strong American pressure, it said on the TV news banner, to get moving pre-emptively on implementing the anti-Iran sanctions. This is surprising in a way because Teheran’s enriching to three or four per cent, rigorously surprise inspected by Mohammaed El Barradei, and the IAEA and found to be in compliance, sufficient to run power stations but nowhere near the 98 per cent enrichment needed for atomic weapons, and this is precisely the kind of solid evidence that Teheran had done no wrong that would normally encourage the Europeans to resist American pressure to ratchet up the tension, so the Americans must have been wielding a very big stick. The net effect is that “America is still in charge,” (and the neocons still call the shots) temporary though that might be. The very intensity of the pressure suggests lack of certainty that the opportunity will last as a possible rationale.
A similar example may perhaps be found in Trichet’s (Head of EU Central Bank’s) decision to hang tight on interest rates, even in his language, helping the Euro to lose strength against the dollar, a very helpful move in helping propel the dollar upwards. (That doesn't mean it wasn't very convenient for Trichet for other reasons also, of course. A nice drop in the Euro would make things easier for him on a number of fronts.)
They don’t usually get up to these sort of games at this time of the year, says my patchy memory; it’s usually in the run up to Christmas that the fat cats start enormous run ups, the “pump” before the “dump,” before the inevitable dreary hung over slump in January.
Both might have some basis in the recently revealed secret treaty forced on the Germans after World War Two, whereby the US has total control of a number of areas, see ”Secret Vassal Treaty”. With Germany leading, the others would probably go along. So therefore, I guess, we’ve done the “pump” bit of the operation, masterminded by the bald Wall Street guy currently running the Treasury, though at an unusual time of year for it.
The fact remains that nothing has changed. Freddie duly reported a set of results at least as dismal as Fannie had a few days ago, Senator Dunning remains the only member of the Senate (“The world’s premier debating forum,” hahahaha) who understands, or is willing to point out, perhaps, the calamitous results the bailout will have on the final remaining foundation of everything, the marketability of sovereign scrip issued by the US government. Such as T bills. And they're still going to print a trillion dollars to pay for the bailout.
Ah, well, lie back and enjoy it, I guess.
If you need something ominous to get your juices flowing on this fine day, try South Ossetia. In response to an all out Georgian military attack on the breakaway province, containing mostly Russian citizens, Russia moved massive troops into South Ossetia, and the Russian president, Medvedvev, announced it was his constitutional duty to protect Russian citizens. Most ominous, are 1,000 troops withdrawn from Iraq/Afghanistan and sent to South Ossetia, by the U.S., one assumes, but it may be one of their allies. And Rice has of course told Russia that South Ossetia is “important to American interests in the region,” and he’s therefore been told to back off. (If we say it’s important to us, ya gotta to just hand it over. Those are the rules!)
Hmmm. So we now have a border (in South Ossetia, in or around the northern parts of Georgia, where Russian troops are facing a little squirt of an army, not military likely to swing any balances, with “American advisors.” Now where have I heard that before?
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