Thursday, June 28, 2007

Ask Not For Whom The Bell Tolls...

"The Seventh Seal" - Ingmar Bergman
David Seaton's News Links
Dong...... Dong...... Dong...... Dong...... Dong...... Dong...... Dong........ Dong.... DS

Does it all add up? - Financial Times
Abstract: When Wall Street creditors last week threatened fire sales of CDOs seized from the stricken Bear Stearns funds, thus creating a market price for them for the first time, they also threatened to create a wider shock for the system. Fire sales rarely realise anything close to the previously expected value of assets. But if these deals went ahead, they would provide a legitimate trading level that would challenge current portfolio valuations. In the event, Bear Stearns' creditors sold only a fraction of the assets put up for auction. Market participants suggest that this was in part because bids fell far below expectations, with traders increasingly reluctant to take on CDOs tainted with subprime exposure. But the crisis at Bear's funds has left investors, brokers and regulators asking an uncomfortable question: can the pricing models that have provided the foundations for this new financial edifice really be trusted? Or will valuations turn out to be over-optimistic and result in further investor losses?(...) Christian Stracke, analyst at CreditSights, a research company, says: "With so little truly relevant historical data on the behaviour of subprime mortgages, and with such massive structural changes having occurred in the mortgage landscape in recent years, any time-series analysis approach is little more than a not-so-educated guess."(...) That means that on the rare occasions that instruments are traded, a large gap can suddenly emerge between the market price and its book value. This week Queen's Walk Fund, a London hedge fund, admitted it had been forced to write down the value of its US subprime securities by almost 50 per cent in just a few months. That was because when it was forced to sell them, the price achieved was far lower than the value created with the models the fund had previously used - which had been supplemented with brokers' quotes.(...) Some bankers and policymakers argue that this is simply a teething problem that will fade as structured finance becomes more mature. History suggests that most opaque, illiquid markets eventually become more transparent when they grow large enough - and behind the scenes, the Bear Stearns hedge fund problems are prompting bankers and investment managers to re-examine their valuation techniques. "We are getting a lot of calls from worried people," says one third-party data provider. However, history also shows that large-scale structural dislocations - such as a serious mispricing of assets - are rarely corrected in an orderly manner. Thus the big risk now is that if thousands of banks and investment groups suddenly have to slash the value of the securities they hold, the wave of accounting losses might at best leave investors wary of purchasing all manner of complex financial instruments. At worst, it could trigger more distressed sales and a broader repricing of financial assets, not just in the subprime sector but in other illiquid markets too. "If every CDO [manager] was forced to mark to market their subprime holdings, it would be - well, I can't think of a strong enough word to describe what it would be," confesses a US policymaker. READ IT ALL

Wednesday, June 27, 2007

Tony Blair: Autism as a Political Philosophy

David Seaton's News Links
Autism could be defined as “an abnormal absorption with the self, marked by the inability to treat others as people.” How is autism expressed politically? On June 23rd, Tony Blair, who Bush has chosen to be the "International Community's" special peace envoy to the Middle East, had an audience with Pope Benedict XVI. According to the Guardian, "Mr. Blair's talks in Rome were largely centered on his strategy to secure a reconciliation between Islam and Christianity.” However, on the 16th June, Blair had already recommended novelist Salman Rushdie for a knighthood, an honor which appears to have set back the reconciliation between Islam and Christianity considerably. As you probably remember, in the future Sir Salman’s 1988 book, “The Satanic Verses”, the wives of the Prophet Mohammad were portrayed as prostitutes and it seems that the world’s 1.3 billion Muslims, who still take these things seriously, have taken permanent offense at this artistic liberty. Agence France-Presse quoted Egypt's parliament "To honor someone who has become famous because of his hostility to Islam is a rejection of all diplomatic principles and respect for religions". Certainly, with the death of an estimated 650,000 Iraqis already partially on his shoulders, knighting Rushdie as the opening of a diplomatic mission to the Muslim Middle East might just qualify as autistic. DS

The Media Transparency Web site

Septic tank
David Seaton's News Links
I just received the note below from informing about their mega-exposé of the "tanks" and I thought I should pass it on to my readers. It seems a very worthwhile effort. The "Think Tank" industry has totally debased America's political thought. As a simple test of this assertion, try to imagine Benjamin Franklin, William James, John Dewey or Ralph Waldo Emerson working for a think tank to realize how far we have fallen and how decadent we have become. DS

I thought you might enjoy these pages that we've put together to promote our Media Transparency Web site, which tracks the billions of dollars doled out by conservative philanthropies.

Neo-Conning the Media

Fox's Rich Heritage
In the Tanks

Where the Money Leads

We could really use your help to spread the word. To that end we've also created twenty graphics that can be used as blog posts, public service ads, or just to ridicule nefarious characters like Richard Perle and Sean Hannity and a host of others...

Promo Page Promo

Any assistance, including forwarding this e-mail, would be greatly appreciated.

Mike Tronnes

Monday, June 25, 2007

Social Democracy: just waiting to happen

This nifty montage is from The Center for American Progress and dates from 2003, some of the names may change, but the story remains the same.

David Seaton's News Links
Poll after poll shows that the majority of Americans line up with European social democrats on most major issues. Why is this not reflected in America's policies? Obviously because, although nominally a democracy -- the world's oldest -- the United States of America is in fact run by and for special interest groups. Public opinion is simply ignored. Sometime in the future, perhaps quite soon, some intrepid politician is going to ride this tiger to power. DS

Will the Progressive Majority Emerge? - The Nation
Abstract: Trends in Political Values and Core Attitudes: 1987-2007, a massive twenty-year roundup of public opinion from the Pew Research Center for the People and the Press, tells the story. Is it the responsibility of government to care for those who can't take care of themselves? In 1994, the year conservative Republicans captured Congress, 57 percent of those polled thought so. Now, says Pew, it's 69 percent. (Even 58 percent of Republicans agree. Would that some of them were in Congress.) The proportion of Americans who believe government should guarantee every citizen enough to eat and a place to sleep is 69 percent, too--the highest since 1991. Even 69 percent of self-identified Republicans--and 75 percent of small-business owners!--favor raising the minimum wage by more than $2. The Pew study was not just asking about do-good, something-for-nothing abstractions. It asked about trade-offs. A majority, 54 percent, think "government should help the needy even if it means greater debt" (it was only 41 percent in 1994). Two-thirds want the government to guarantee health insurance for all citizens. Even among those who otherwise say they would prefer a smaller government, it's 57 percent--the same as the percentage of Americans making more than $75,000 a year who believe "labor unions are necessary to protect the working person." It's not just Pew. In the authoritative National Election Studies (NES) survey, more than twice as many Americans want "government to provide many more services even if it means an increase in spending" as want fewer services "in order to reduce spending." According to Gallup, a majority say they generally side with labor in disputes and only 34 percent with companies; 53 percent think unions help the economy and only 36 percent think they hurt. A 2005 NBC News/Wall Street Journal poll found that 53 percent of Americans thought the Bush tax cuts were "not worth it because they have increased the deficit and caused cuts in government programs." CNN/Opinion Research Corp. found that only 25 percent want to see Roe v. Wade overturned; NPR/Kaiser Family Foundation/Harvard found the public rejecting government-funded abstinence-only sex education in favor of "more comprehensive sex education programs that include information on how to obtain and use condoms and other contraceptives" by 67 percent to 30 percent. Public Agenda/Foreign Affairs discovered that 67 percent of Americans favor "diplomatic and economic efforts over military efforts in fighting terrorism." Want hot-button issues? The public is in love with rehabilitation over incarceration for youth offenders. Zogby/National council on Crime and Delinquency found that 89 percent think it reduces crime and 80 percent that it saves money over the long run. "Amnesty"? Sixty-two percent told CBS/New York Times surveyors that undocumented immigrants should be allowed to "keep their jobs and eventually apply for legal status." And the gap between the clichés about what Americans believe about gun control and what they actually believe is startling: NBC News/Wall Street Journal found 58 percent favoring "tougher gun control laws," and Annenberg found that only 10 percent want laws controlling firearms to be less strict, a finding reproduced by the NES survey in 2004 and Gallup in 2006. READ IT ALL

Back to class war

The worst is yet to come for the U.S. housing market.(...) The national median home price is poised for its first annual decline since the Great Depression(...) ``It's a blood bath,'' said Mark Kiesel, executive vice president of Pacific Investment Management Co. ``We're talking about a two- to three-year downturn that will take a whole host of characters with it, from job creation to consumer confidence. Eventually it will take the stock market and corporate profit.''(...) ``It's not just a housing recession anymore, it looks more and more like an economic recession,'' said Nouriel Roubini(...) ``When all these people see their mortgage payment and it's up 40 or 50 percent, they're going to say, `We can't stay in this house,''' Pimco's Kiesel said. ``And there are millions of people in this situation.'' Bloomberg
David Seaton's News Links
I can think of no more wrenching yet predictable political trend on the horizon than a general souring on the super rich. There is nothing especially new about it, quite the contrary, but like all the other "end of history" myths, the supposed end of "class struggle" is also about to hit the fan and after a long absence, the tensions that brought the social-democracy movement on stage in the first place, are eagerly waiting in the wings.

As interest rates rise and lending restrictions are put into place, millions of middle-middle class people who have been living in a dream world, thinking that were somehow part of the same universe as Bill Gates, are going to have to make drastic decisions about allocating their resources if they are not to lose their homes. They are going to re-discover why there was
ever a universal demand for good, free public schools and universities or (in the countries lucky enough to have gotten that far) first class, free public health care in the first place. They will rediscover the nearness of the abyss of destitution and humiliation that terrified their parents and grandparents who lived through the Great Depression.

As much as an economic and political readjustment, it will be a cultural change, for never before in history have so many "normal" people identified with the wealthy and considered them harmless or even benevolent. DS

The rich must be penalised - Guardian
Abstract: (...) Equality is not a penalty-free condition. It increases rather than reduces the sum of freedom - giving millions more men and women the ability and the right to exercise the choices of a free society. But it reduces the purchasing power of the top earners, whose taxes are increased to pay for the improved pensions and health care. Every great leap forward towards redistribution has been accompanied by a frank acceptance of the price that the wealthy must pay, usually accompanied by an attack on their reluctance to meet the bill.

A hundred years ago, David Lloyd George - fearful that the House of Lords would reject his budget because of the introduction of a land tax to finance "provision for the aged and deserving poor" - mounted an attack on landlords in general and landowning dukes in particular. He told of a visit to a Welsh coalmine - "three-quarters of a mile of rock and shale above us" - to illustrate the infamy of the coal-owning classes.

"The prime minister and I knock on the doors of these great landlords and say to them, 'You know these poor fellows ... Some of them are old, they have survived the perils of the trade, they are broken and they can earn no more. Won't you give something towards keeping them out of the workhouse ...?' They retort, 'You thieves ...!' If this is the view taken by these great landlords of their responsibilities to the people who, at risk of life, create their wealth, the day of reckoning is at hand."

The rhetoric is as old-fashioned as the overt class antagonism, but the essential point remains. Lloyd George was not advising the coal owners to subscribe towards the cost of a pension in order to improve productivity. He was saying to the world that security in old age is a moral necessity and has to be financed by the wealthy. Politicians who run away from the underlying principle that greater economic equality penalises the rich will never have the nerve necessary to bring about economic equality. READ IT ALL

Saturday, June 23, 2007

Walt Disney's "Adolph Eichmann"

The toothpaste smile of the all-American, "girl next door"
David Seaton's News Links
This article by William Pfaff is a "must read". This subject has gotten me rereading Hannah Arendt's "Eichmann in Jerusalem", whose subtitle, "A Report on the Banality of Evil", perfectly describes the system that has been created and which, for want of a better name, we call "Bush". DS

The American Enthusiasm for Torture - William Pfaff
Abstract: Probably the most disturbing – to an American – of the developments in the United States since 2001 has been the manner-of-fact way in which torture has been adopted by the United States as a normal aspect of its military and intelligence operations. At the beginning there was very little protest, and indeed very little discussion, in Congress and the mainstream media at the adoption by the United States of what a few years before had been Nazi wartime SS and Gestapo methods.(...) The first serious public protest followed the Abu Ghraib prison revelations, and the main objection articulated was that they made the United States look bad. They were passed over in military reports as merely the clumsy brutalities of untrained “hillbilly” National Guardsmen, and an NCO was sent to prison. In fact he and the others had been ordered to “soften up” the victims before the real torturers arrived. The same absence of protest was largely true throughout the American military services, supposedly committed to an ethic of “honor” (remember the West Point oath, to “duty, honor, country”?), and legally bound by international treaty, national law, and military regulations to eschew torture. Still more significant was the apparent indifference (or political intimidation) of the public and politicians, again reflected in the press. At the end of May of this year, the Bush administration was reportedly reviewing its methods of torture, in order to ban or limit some methods that, when revealed, had eventually stirred public expressions of disapproval, such as simulated drowning or “waterboarding,” while at the same time enlarging or intensifying the permitted use of other methods as yet secret. This review continues to be reported in the same manner-of-fact way as discussion of farm subsidies, trade talks, or tax legislation.(...) We are also encouraged to feel concern for America’s patriotic torturers and give them our support. An article in The Washington Post early in June wrote of the “tortured lives” of the torturers themselves.(...) Only amateurs think that ever-increasing pain produces accurate and useful information, although this seems from the beginning to have been the conviction of the President and his legal advisor, now America’s attorney general. Allied interrogators during world war II, who knew the language and culture of the peoples they were dealing with, used widely-known non-coercive techniques, including those employed with consistent success by intelligence and criminal police interrogators the world over (including the FBI men who visited Iraq and sent scandalized reports back to Washington, to be ignored). The president’s terminology concerning the still-secret “enhanced interrogation techniques” that he insists are “crucial” to American success, according to the conservative writer Andrew Sullivan of The Atlantic magazine was originally Nazi. It was used to describe SS and Gestapo practices that in 1948 were determined to have been war crimes subject to the death penalty. Current discussion, such as it is, still mainly concerns the legality of these practices. Philip Zelikow, executive director of the 9/11 commission and a former advisor to Condoleezza Rice, stated the vital point when he recently said that a concern to established the legal frontier “obscures the core of the issue....My own view is that the cool, carefully considered, methodical, prolonged, and repeated subjection of captives to physical torment, and the accompanying psychological terror, is immoral. I offer no opinion as to whether such conduct is a federal crime, merely that it is immoral.” READ IT ALL

Thursday, June 21, 2007

Fred Thompson? Don't wake me up till October

Not a pretty sight
David Seaton's News Links
This endless campaign has me really stumped. As a long term expatriate I feel completely lost. Fred Thompson, who I seem to remember seeing on TV in a Lawyer thing, dubbed into Spanish, playing in the background in a friend's house one evening while we waited for the wives to powder their noses before we all went out to dinner, is now the leading Republican candidate for the person who gets to solve the Iraq mess.

What a weird country! The only two people that might actually make reasonably good presidents, Al Gore and Michael Bloomberg, are on everyone's lips, but officially aren't running... I think I'm gonna do a Rip Van Winkle on this story till about October... Maybe when I "wake up" it will make some sense. DS

National Poll: Thompson 28% Giuliani 27% - Rasmussen
There’s change at the top in the race for the Republican Presidential nomination. The latest Rasmussen Reports national telephone survey finds former Tennessee Senator Fred Thompson earning support from 28% of Likely Republican Primary Voters. Former New York City Mayor Rudy Giuliani attracts support from 27%. While Thompson’s one-point edge is statistically insignificant, it is the first time all year that anybody but Giuliani has been on top in Rasmussen Reports polling. A week ago, Thompson and Giuliani were tied at 24%. READ IT ALL

Wednesday, June 20, 2007

Fatah's corruption is the origin of Hamas's power

David Seaton's News Links
In contemplating the Hamas takeover of Gaza, observers seem to be missing something obvious: Hamas has just produced a de facto "two state solution"… history's first example of a "free Palestine". Gaza is now governed by the winner of what international observers considered at the time a "model" democratic election and they are untainted in Arab eyes by subservience to Washington. At the same time, on the West Bank, the "other" Palestine, is still effectively controlled by the Israelis and their “separation wall”, private roads, checkpoints and growing settlements, all of which makes president, Mohammed Abbas look like little more than an American puppet charged with protecting Israeli lives and property. In Gaza, as Tony Karon, a senior editor of Time Magazine and expert on Middle Eastern affairs wrote, “Having trounced Fatah on the polls, Hamas now moved to trounce them on the streets,” using what Jimmy Carter called Hamas’s, "superior skills and discipline."

It wasn’t Palestinian religious fervor that opened the doors for Hamas, it was Hamas's honesty and Fatah's corruption. The strategy the "west" has decided to follow now is to strangle Hamas and fatten Fatah. This is difficult because Hamas needs very little to get by and Fatah's proven capacity to engulf donor's money uselessly is limitless. A basic principal is at work here that explains the fall of Fatah and the rise of Hamas: when public servants are honest and hardworking it is surprising how much can be done with little money, but crooked politicians are a literally a bottomless pit. If the United States, Israel and the hapless European Union, were intelligent they would shower money on Hamas, hoping to corrupt them in the same way they did Fatah during the "Peace Process".>Hamas’s strategy is simple, as Ahmed Yousef the political adviser to the democratically elected Palestinian prime minister Ismail Haniya, explained in the New York Times, "We have begun disarming the drug dealers and the armed gangs and we hope to restore a sense of security and safety to the citizens of Gaza. We want to get children back to school, get basic services functioning again. (...) Our sole focus is Palestinian rights and good governance."

The "international community", by encouraging the Palestinian split, are giving Hamas and Fatah each their separate, universally publicized, chemically pure showcase: one for Hamas to demonstrate disciplined sacrifice and another for Fatah to demonstrate feckless larceny. This may have the unintended result of publicizing the Muslim Brotherhood style of government all over the endemically corrupt Middle East: something that could destabilize the west's "moderate" allies in the region. DS

The scene of Fatahland flowering as Hamastan wilts is sheer fantasy - Freedland - Guardian
Abstract: It sounds logical enough. Nurture a flowering Fatahland while pariah Hamastan withers away. But it is surely a delusion. The first and most obvious danger is that the more generous the west is to Abbas, the more his credibility will be destroyed. Every dollar or euro he takes will confirm him as the lackey of foreign powers, casting him alongside Hamid Karzai of Afghanistan, Nuri al-Maliki of Iraq and Fuad Siniora of Lebanon as a mere western proxy. Each bouquet from Israel will tarnish him further, establishing him as the servant of the enemy. Already the Arab press is comparing Abbas with Antoine Lahad, the strongman whose hated South Lebanon Army served as Israel's policeman. As has happened so often before, in seeking to boost "moderates," the west only hugs them to death. Besides, the whole idea rests on a series of faulty assumptions. First, it assumes that Israel will indeed come through with the goodies it promises. On this, the record is not encouraging. Ehud Olmert has repeatedly met Abbas and promised the release of tax funds or greater freedom of movement, only to do nothing. Second, even if Israel does hand over the cash, there is no guarantee that Abbas's Fatah-dominated administration could translate that into improvements on the ground. Again, past experience is not encouraging. Put crudely, Fatah has shown itself to be either corrupt or incompetent or both. But let's be optimistic and imagine the new approach did indeed bear fruit on the West Bank. Do we imagine that Hamas would calmly sit by, watching itself being pushed out of the Palestinian future? Veteran Palestinian analyst and negotiator Ahmad Khalidi asks, "What incentive is there for Hamas to play along and not spoil it?" We all know how easy it would be to wreck any rapprochement between Fatahland and Israel: a simple terror attack on Israeli civilians and it would all be over. Hamas could be clever about it and ensure the attack came not from Gaza but from the West Bank, say in the Hamas stronghold of Nablus. That would undermine Abbas instantly. The dangers are multiple. If the West Bank is lavished with money but much of it stays in Fatah's gilded circle, thereby creating a class of haves and have-nots, there would be a surge of precisely the resentment that led to Hamas's election victory in January 2006. Who knows, Hamas could even end up taking over the West Bank too - after all, they had the edge over Fatah in elections there. Precedent makes clear that shunning the movement only makes it stronger. Ostracised for the last 18 months, they are more powerful than ever. READ IT ALL

Tuesday, June 19, 2007

Gaza: making an example or creating a model?

David Seaton's News Links
Most of the analysis that I am reading about the Gaza situation seems to ignore what for me the major fact: Gaza is not under Israeli control nor under the control of anyone who bows their head to Washington. That is a revolution.

Washington and Jerusalem would like to starve Gaza into submission, but in today's news environment that is not an option, so there will be bread and lentils. Gaza is not Beverly Hills, the Gazans are tough as boots.

The next idea is to shower beneficence on the West Bank to create support for Fatah, but experience tells us that the Fatah's leaders will steal most of it... That's why the party of Yassir Arafat lost the elections to Hamas in the first place. Fatah is divided and corrupt, that is why despite better weapons they were so easily routed by Hamas in the Gaza fighting.

Prediction: In Gaza, the first thing that Hamas
will do is install Sharia, which means orderly life in chaotic societies. They will clean up the streets, literally and figuratively. They will shoot the drug dealers and end price gouging in the markets. They will run the schools and the hospitals without stealing and before long the people of the West Bank will be longing to live like in Gaza, with honest leaders and no Israeli checkpoints or settlers. DS

World moves to support West Bank - BBC News Abstract: Hamas was and is boycotted because it does not accept the Quartet's conditions for engagement - recognition of Israel, renunciation of violence and acceptance of previous peace agreements. The aim is to revive the fortunes of President Abbas and Fatah (the main element in the PLO and once the arch-enemy of Israel but now seen as its negotiating partner) in the hope that he will be able to show that moderation is a better way forward for the Palestinians than extremism. The problem with this scenario is that it has been tried so often before and has failed because it has not delivered the state the Palestinians desire. The Israelis used to predict that moderate pro-Jordanian factions on the West Bank, the old families that prospered under King Hussein's rule there, would see off the radicals of Fatah. Now Fatah, rejected by Palestinian voters in January 2006 as corrupt and inefficient, is seen as the moderate grouping and the effort is on to push Hamas into a corner. The possibility now is that the West Bank will be favoured and Gaza be left to wither. At some stage, though, there will have to be new elections. These should show if the Western approach bears fruit.(...) Mouin Rabbani, senior analyst for the International Crisis Group, told Reuters: "My suspicion is that Gaza is going to come under an even stronger siege than before. "What the international community will try and do now is turn Gaza into hell while helping the West Bank, to show what you get when you elect people we like."(...) Israel itself has nearly $600m it owes the Palestinians from tax revenues and Prime Minister Ehud Olmert, who is in Washington for talks with President George W Bush on Tuesday, says this will be released. Israel, he said, would "empower the moderates". The moderates will want more than direct cash aid. Mr Abbas wants greater freedom of movement on the West Bank, the release of Palestinian prisoners, especially the leading Fatah figure Marwan Baghouti, and beyond that, a new effort to get peace talks going. How far Israel goes in that direction remains to be seen.(...) Internationally there might be a policy divergence between the EU and the US. Washington might see in this the chance of trying to crush Hamas, and through that, to diminish one of its supporters, Iran.(...) But an EU official said: "The question is whether it is positive to distinguish between the good guys on one side, and the bad guys on the other. We want to avoid partition." Russia takes the same view. READ IT ALL

Saturday, June 16, 2007

Hamas puts a cat among the pigeons

David Seaton's News Links
Most observers seem oblivious to the most obvious fact that is staring them right in the face: Hamas controlled Gaza is the first example in all history of a "free Palestine"... and it has a democratically elected government.

In fact by expelling American and Israeli dominated Fatah from Gaza we now have a de facto "two state solution". Israelis have always called this sort of thing, "creating facts on the ground"... They are now being paid in their own coin.

The West Bank is still effectively occupied by the Israelis, which makes Abu Mazen little more than a puppet president. The only power in Gaza is Palestinian, Hamas was freely elected to govern the Palestinian Authority in elections that
international observers considered "model" and is uncompromised and untainted in Arab eyes by subservience to Washington.

Surrounded by Israel on three sides, "Hamasitan" has one open frontier to Egypt. For them to be starved into submission, Israel and the USA would need the active, open and admitted collaboration of Egypt, the shame of which the Egyptian population, duly informed by satellite TV and the Internet, might not be prepared to tolerate.

It will now be possible for Hamas governed Palestine to declare its "independence" and be recognized by Iran, Syria, Cuba, Venezuela etc, and hundreds of assorted NGOs. Any Israeli attempt to crush "independent" Gaza militarily, if it lasted more than a few days, would have an electrifying effect on the entire Middle East and on the European left as well. If the defense of Gaza lasted too long and caused too many casualties, it might even destabilize the Jordanian monarchy. We are looking at a brilliant, revolutionary stroke. DS

Hamas capture priceless Palestinian Authority intelligence archives - Debka
Abstract: The Fatah-led general intelligence and security services caved in too fast to shred, wipe or burn documents, computer disks and archives. The entire collection fell into Hamas’ hands when they seized Palestinian Preventive Intelligence HQ at Tel Awa (henceforth Tel al-Islam) and the Palestinian General Intelligence center near Gaza port. DEBKAfile’s intelligence sources say: Never before has a bonanza of Western intelligence secrets on this scale ever reached an implacably hostile Islamist terrorist gang. The US, British and Israeli intelligence services may have suffered their greatest debacle in the war on Islamist terror. It will take them many years to recover. Hamas has taken possession of hundreds of thousands of documents cataloguing the clandestine operations of Western intelligence services in the Middle East, including Saudi Arabia and the oil emirates. It is now the owner of complete archives of Palestinian undercover links with foreign intelligence services going back decades, with names of spies, political collaborators and double agents. The documentation covers the secret ties Palestinian intelligence maintained from the 1970s, when Yasser Arafat was based in Lebanon, with the Americans, the British, the French, the Israelis and many others. Most intelligence experts say Israel should have bombed the two buildings and destroyed their contents rather than letting them fall into the hands of an organization and country dedicated to its eclipse.(...) For Hamas, this booty is priceless – and not only as the repository of bombs for planting under Mahmoud Abbas and his cohorts. The Palestinian group’s Syrian and Iranian sponsors will pay a king’s ransom for this unique collection of explosive secrets hidden by many a Western intelligence agency and government. Damascus and Tehran will be hugely empowered with the means to stay a jump ahead of American moves in the region and tools to sabotage US policies at any time. They will have a store of national secrets and compromising information to hold over the heads of Western leaders and officials, lists of undercover agents, and records of covert operations carried out by the Israeli Mossad, Shin Bet and Military Intelligence, CIA, British MI6 and other Western agencies. Iran, Syria and Hamas will know the names of politicians, including Israelis, who worked secretly with Palestinians and their shady deals. One intelligence expert said that the Gaza hoard left in enemy hands by Abbas and Mohammed Dahlan are the crown jewels compared with the Saddam Hussein’s intelligence archives. READ IT ALL

Thursday, June 14, 2007

Witless in Gaza

David Seaton's News Links
Nowhere, not even in Iraq, are the miseries and failings of American foreign policy as evident as in the Gaza strip. Nowhere has the distance between the rhetoric and the reality so painfully, so obscenely evident.

And nowhere has Israel acted more stupidly... The two state solution is dead and short of ethnic cleansing on a huge scale or an atomic war against all comers... or both, Israel's future consists of facing eternally a people who fight them by day and make babies by night. DS

Few Good Options for U.S. on Palestinian Violence - New York Times
Abstract: For two years, the United States has tried to choke off Hamas, the militant Islamic group that has been ascendant in Gaza and the West Bank, while throwing limited aid and support to Fatah, its more moderate Palestinian rival. Now, with Fatah, the party of the Palestinian president, Mahmoud Abbas, on the verge of collapse in Gaza, Washington is facing a shrinking menu of alternatives. “We have limited options, and most of them are bad,” said Martin S. Indyk, the former United States ambassador to Israel. America’s options are limited in part because its role has been limited, with the Bush administration pursuing what for the most part has been a hands-off policy toward the Palestinians. In public comments on Wednesday, Tony Snow, the White House spokesman, said that the hope of averting a wider civil war remained largely in the Palestinians’ hands.(,,,) “There are a lot of people now who are angry and are saying, ‘Let Hamas govern Gaza, let Gaza go to hell,’ ” said Ghaith al-Omari, a former foreign policy adviser to Mr. Abbas who is now a fellow at the New America Foundation, a public-policy institute in Washington. But that is a prospect that Israel and the United States fear could lead to a situation in which Gaza becomes a breeding ground for terrorists. “There appears to be a near-total takeover of Gaza by Hamas, which could create a major danger because it would result in an Iranian-backed terrorist state on our doorsteps, between us and Egypt,” Sallai Meridor, Israel’s ambassador to the United States, said in an interview. “We are watching the developments very seriously.” Mr. Indyk, who is head of the Brookings Institution’s Saban Center for Middle East Policy, argued that such a development could have consequences far beyond the carnage of a civil war between rival Palestinian factions. “What would happen is that Hamas would take over and Gaza will be a full terrorist state, right on the fault line of the Western world,” Mr. Indyk said. “We should all understand what the stakes are here. It will be a haven for all the bad guys — Hezbollah, Islamic Jihad.”(...) Israeli and some Fatah officials have appealed for an international force — possibly under the auspices of the United Nations — to try to restore order in Gaza. But Middle East experts say that few countries are willing to send troops into the increasingly lawless territory, and Bush administration officials expressed little interest on Wednesday in supporting such a force. READ IT ALL

Tuesday, June 12, 2007

Sarko blotto?

David Seaton's News Links
Here is the video of Sarkozy apparently (obviously?) drunk at a press conference at the G8. It is one of the big hits on francophone YouTube.

I find it interesting for two reasons. First, that he allows himself to be seen drunk and second, the sort of drunk he seems to be... a weak, silly, (girlish?) drunk. Not Yeltsin class at all. Not even Dubya class.

It confirms for me the impression that I have had that victory has caused some sort of strange metamorphosis in Sarkozy. From the very first day as president of France he seems physically different. I noticed the change even in his first official photograph. It is something I can't quite put my finger on yet and I won't indulge in psychobabble trying to analyze that difference, I only invite readers to keep their eyes peeled and see if they notice what I do and help me define it.

There is a saying in Spanish, "si quieres conocer a Dieguillo, dale un carguillo". Which translates roughly as, "if you want to know what somebody's really like, put them in charge of something." Below I have included Charlie Chaplin's classic "globe dance" from "The Great Dictator"... maybe it's relevant. DS

Monday, June 11, 2007

Throwing the book(s) at Hillary

David Seaton's News Links
Full disclosure: personally I think Hillary Clinton could be an even worse president than George W. Bush, but let not this be considered an anti-feminist position on my part. In my opinion her being a woman is one of her few redeeming features. I think she is simply a crummy example of our species. Her ego and ineptitude have caused millions of Americans to live without health care since the 1980s and thus she has caused or hastened the death of many of them and caused untold suffering to millions of her fellow citizens. I don't think even Bush has caused as much actual harm to Americans as she has... and she was only the president's wife! It would be insane to elect someone with her record. DS

Hillary Clinton: The Lady Vanishes - New Yorker
Abstract: The repeated failure to get at the “real” Hillary can itself be variously interpreted. It can be taken as a reason to abandon the project or, alternatively, to rethink the question. On the face of it, one would be hard pressed to maintain that the public doesn’t yet know enough of the relevant facts. By now, even those who have been only half paying attention possess more information—much of it intimate—about Hillary Clinton than they do about their neighbors, their co-workers, and, quite possibly, their parents. If many Americans, including many of Clinton’s biographers, still feel that they don’t know the real Hillary, then surely that must say something about who Hillary really is.(...) Bernstein makes several things clear about the health-care debacle, one of which is that it didn’t have to happen. As he reports the story, the first critical misstep was Bill’s. Many of the new President’s advisers, including Lloyd Bentsen, the Treasury Secretary, and Donna Shalala, the Secretary of Health and Human Services, opposed the choice of Hillary to lead what was formally known as the President’s Task Force on National Health Care Reform. They doubted her qualifications and advised the President to keep his distance. Shalala tells Bernstein that she warned the President, “You can’t run a major policy like this out of the White House. You’ve got to have some insulation from it, in case it falls on its face.” But he wouldn’t—or couldn’t—listen. As an anonymous deputy explains to Bernstein, it was a matter of politics in the most domestic sense. Hillary had “stood by him in the Gennifer Flowers mess. And he had to pay her back. This is what she wanted.”(...) Clinton’s biggest blunder, as Bernstein tells it, was to offend the very legislators whose support she needed most. At a retreat for Democratic senators in the spring of 1993, Clinton was asked whether it was realistic to pursue such an ambitious health-care program, given her husband’s many other legislative initiatives. She responded that the Administration was prepared to “demonize” those who opposed the task force’s recommendations. “That was it for me in terms of Hillary Clinton,” Senator Bill Bradley, of New Jersey, told Bernstein. “You don’t tell members of the Senate you are going to demonize them. It was obviously so basic to who she is. The arrogance. The assumption that people with questions are enemies. The disdain. The hypocrisy.”(...) “I find her to be among the most self-righteous people I’ve ever known in my life,” Bob Boorstin, the task force’s deputy for media relations, told Bernstein. “And it’s her great flaw, it’s what killed health care.” READ IT ALL

Bush's legacy versus the world's tuchus: guess who wins?

David Seaton's News Links
Bush is looking total failure straight in the face, the only place on the planet where he is popular is... Albania. He may see his choices as follows:
  1. Continue as is = Miserable failure
  2. Attack Iran and fail, thereby provoking more death and chaos in the Middle East (not Crawford Texas) = Miserable failure
  3. Attack Iran and succeed in collapsing that country = Would guarantee Zionist media and organizational support in his retirement.
Of the three choices that I see open to Bush, attacking Iran is the only one that offers any chance of avoiding miserable failure. It seems to me that choice three is the only one that entails little personal risk for Bush and his family and holds out even a minimum chance of saving his "legacy". On those grounds I consider war in the Middle East this summer a high probability. DS

Iran Threatens to Hit U.S. Interests in Persian Gulf - Bloomberg
Abstract: Iran will attack U.S. interests in the Persian Gulf if American forces launch an assault on the nation over its nuclear program, Deputy Interior Minister Mohammad Bagher Zolghadr said. ``The U.S. may initiate a devilish act, but continuing and ending that event would certainly be out of its control,'' Zolghadr said yesterday, the state-run Fars news agency reported. ``All U.S. bases in the region'' are ``within the range'' of Iran's weapons, he said.(...) Zolghadr also warned that oil prices would rise to $250 a barrel ``if security in the region, the Strait of Hormuz and the Persian Gulf is disturbed.'' Brent crude oil closed at $68.60 a barrel on June 8. READ IT ALL

Sunday, June 10, 2007

Bush Boffo in Albania

David Seaton's News Links
Bush's reception in Albania reminds me of a story ex-movie star, Michael York, charmingly told on himself a while ago at a dinner I attended here in Madrid.

Michael York and his wife Pat visited Myanmar (Burma) as tourists and suddenly, there he was being mobbed by hundreds of fans from the moment he went through customs till the moment he left the country, just like his "Cabaret" salad days of the 1970s... since he had been out of the limelight for years and years and could by now move through the world's airports and streets with ease, he was totally mystified.

It turned out that, due to international sanctions placed on the Burmese dictatorship, the only movie that had been playing in Rangoon for several years was an old film of his, so in fact... he was the only movie star in the world for the people of Burma!

Somehow Bush's reception in Albania reminds me of Michael York's story, with the huge difference, of course, that Michael York is a talented actor and a very nice man, who isn't responsible for anybody's death or mutilation anywhere.

In the defense of the Albanian people, I imagine that after decades of Enver Hoxa, even George W. Bush might look good... who could know?

Saturday, June 09, 2007

This summer's great war in the Middle East

David Seaton's News Links
There is a very good chance of a US attack on Iran,with Israel attacking Syria, Hamas and Hezbollah this summer: Bush and Olmert are the lamest of ducks and a "double or nothing" ploy is well within their characters. The chances that Israel could lose this war are the greatest (in my opinion much greater) than at any time since 1948.

Before undertaking a war, it is vital to have a very clear idea of what victory would look like. That is certainly missing here. But, defeat could take many forms.

Losing the war could mean making a supreme effort and reaching no more than a stalemate or having to resort to "first use" of atomic weapons. Using the A-bomb to resolve a war that Israel and the United States had started.would mean taking on universal pariah status for generations. Not a good prognosis. DS

Syrian and Iranian Generals in Intensive War Consultations - Debka
Abstract: During most of last week, two high-ranking Iranian delegations spent time in Damascus. One was composed of generals who held talks with Syrian leaders on coordinated preparations for a Middle East war in the coming months. At the Iranian end, a similar high-ranking Syrian military delegation called in at Iranian army and Revolutionary Guards headquarters to tighten operational coordination between them at the command level, as well as inspecting the Iranian arsenal. The Syrian general staff will draw up a list of items it is short of for a possible military confrontation with Israel this summer. Our sources report that last week, Tehran sent Moscow a check for $327 m to pay for assorted missiles consigned to Damascus. A further $438 m has been pledged by the end of June for more hardware to Syria. Iranian foreign minister Manouchehr Mottaki’s three days of talks in Damascus at the end of May further consolidated the strategic partnership between the two governments under the mutual defense pact they signed a year ago.(...) The regime heads in Tehran are basing their common front with Damascus on intelligence reports whereby the US and Israel have drawn up plans for coordinated military action against Iran, Syria and Hizballah in the summer. According to this hypothesis, Iranian leaders foresee the next UN Security Council in New York at the end of June or early July ending with an American announcement that the sanctions against Tehran are inadequate because Russia and China has toned them down. Therefore, the military option is the only one left on the table. The ayatollahs have concluded that US president George W. Bush is determined to bow out of office on the high note of a glittering military success against Iran to eclipse his failures in Iraq. They believe he will not risk the lives of more Americans by mounting a ground operation, but rather unleash a broad missile assault that will wipe out Iran’s nuclear facilities and seriously cripple its economic infrastructure. According to the Iranian scenario, the timeline for hostilities has already been fixed between Washington and Jerusalem - and so has the plan of action. The US will strike Iran first, after which Israel will use the opportunity to go for Syria, targeting its air force, missile bases and deployments, as well as Hizballah’s missile and weapons stocks which Iran replenished this year. Officials in Tehran and Damascus find confirmation of their intelligence evaluations in the visit Israel’s transport minister Shaul Mofaz paid to Washington last week at the head of a large military delegation. They are certain Mofaz, a former defense minister and chief of staff, used the strategic talks to tie the last ends of the planned offensive. They were perturbed in particular by the Israel minister’s reported advice to secretary of state Condoleezza Rice of the importance of setting a deadline, beyond which the US will abandon sanctions as ineffective and turn to its remaining options for dealing with Iran’s advance towards a nuclear weapons capability. READ IT ALL

Wednesday, June 06, 2007

Party's over: uppity Chinese and Indian workers spur inflation

David Seaton's News Links
Gee granddad, is this what Marx called, the "contradictions of capitalism"? What does that mean, exactly pops? Well sonny let's' look at this workmanlike definition from the Online Dictionary of Social Science:
The term is associated with Karl Marx (1818-1883) who claimed that capitalist societies suffered from two unresolvable problems that would prevent both social harmony and a stable economic life. First, Marx assumed that the competitive processes of a capitalist market society would lead to a concentration of capital ownership in fewer and fewer hands. Marx built this claim on the assumption, which he holds in common with laissez faire economics, that a competitive economy must lead inevitably to the elimination of some producers by others, there must be winners and losers and the winners would grow increasingly large. Capitalism, Marx argued, contrary to the general assumption of laissez faire economics, had an inherent tendency towards concentration of capital in oligopolies and monopolies. The concentration of capital involved, first of all, the displacement of the handworker and the craftsworker and increasing domination of factory-based technology. An industrial proletariat of wage workers emerged, and grew larger, as independent producers were eliminated by factory-based competition. Capitalist corporations grew more concentrated and larger, the number of individuals owning the means of production became fewer. The class structure becomes polarized and the economic and social conditions of the two opposed main classes more strongly contrasted, leading to political activation of the working class and prolonged conflict with the dominant bourgeois class through political and industrial organization. It is this development of social polarization that provides the unsolveable social or relational contradiction of capitalist society. The social organization of a capitalist society also presented an inherent structural contradiction in the economic dynamics of capitalism. While capitalism revolutionized the means of production by promoting the greatest economic development in human history, its class structure focused the capacity to consume in a tiny minority of the population. The mass social scale of production could not remain compatible with the concentration of wealth in fewer and fewer hands. As a result, there must be inherent instability, or anarchy, in the whole capitalist system of production. The social effects of such instability in turn must intensify the political struggle of social classes hastening the event of socialist revolution.
You'll notice that it all pretty much makes sense until you get to end bit about, "its class structure focused the capacity to consume in a tiny minority of the population." If you live in a developed country this sounds very strange because the great triumph of the system after WWII was to include ever greater numbers of heretofore working class people into a new, property owning middle class. Probably if you have access to the Internet, you feel yourself a member of this class by 'birthright', don't kid yourself, in the USA it took rivers of blood, but that is another story. I also say "if you live in a developed country". Because if you live in a underdeveloped country, the text makes sense as read.... up till "day before yesterday" and maybe still.

Now, however, this phenomenon of the "new" middle class is hitting China and India and may even be timidly approaching parts of Africa... And that is where the system seems to heading into a brick wall.

On one hand we have global warming... Imagine what we'll have to do for air and water if every Chinese and Indian aspires to the life style of the "average American" and if the Africans even dream of making it to the lifestyle of the average Chinese, they better wake up and apologize because otherwise we go directly to "Soylent Green".

And on the other hand, as this article from the Wall Street Journal shows, "Chinese, Indian Labor Long Damped Prices, But Effect Is Reversing."... They are demanding and getting better wages in order to consume, are consuming and inflation is rising. We are just a hop, skip and a jump away from Marx making sense once more. DS

Years of Global Growth Raise Inflation Worries - Wall Street Journal

Chinese, Indian Labor Long Damped Prices, But Effect Is Reversing

By MARCUS WALKER in Berlin, GREG IP in Washington and ANDREW BATSON in Beijing
June 6, 2007; Page A1

For the past decade, low-priced labor from China, India and Eastern Europe has helped much of the world enjoy economic growth without the sting of inflation. Now that damper on prices is beginning to reverse -- and global inflation pressure is starting to build.

Companies in many countries are operating at close to full capacity, facing shortages of everything from land to equipment. Western workers and their low-cost rivals both are winning higher pay, thanks to rising demand. In some cases, the global links of the economy are increasing costs rather than lowering them, as far-flung businesses compete for the same resources.

Central banks are increasingly worried about spare production capacity running out -- which could force them to raise rates to their highest level in years to stave off inflation. That could puncture the ebullience of stock and bond markets, which have become accustomed to a rare combination of fast growth, low inflation and low interest rates.

Already long-term interest rates are on the rise, in anticipation: U.S. 10-year Treasury bonds hit a nine-month high of nearly 5% yesterday. "Markets have gotten used to the idea that the global economy will keep producing downward pressure on prices," says Ken Rogoff, a Harvard economics professor and former chief economist at the International Monetary Fund. "But that phase may be ending."

In remarks to a bankers conference in South Africa yesterday, U.S. Federal Reserve Chairman Ben Bernanke said rising Chinese domestic costs could eventually feed through to U.S. imports, but likely would only have "modest" effect. Still, he reiterated that risks to moderating inflation "remain to the upside" in the U.S. because demand is high relative to capacity.

European Central Bank president Jean-Claude Trichet has warned that European industries have little scope left to raise production, and has asked unions to show restraint in seeking wage increases for the overall health of the economy. The bank is expected to raise rates when it meets today.

Germany's engineering sector, the mainstay of its export-led revival, is operating at 93% of capacity, leaving the lowest amount of slack since the 1960s. Amid falling unemployment, Germany's most powerful union, IG Metall, recently pushed through a pay raise of 4.1% to cover much of the manufacturing sector this year.

The Bank of England raised interest rates last month in part because "there might be less disinflationary pressure in the global economy," according to the minutes of the meeting. The cost of consumer goods in the United Kingdom has stabilized after falling persistently for many years under pressure from imports, and more U.K. manufacturers plan to raise prices than at any time since the mid-1990s, according to the Confederation of British Industry.

Even the price of Chinese exports such as furniture and clothing is rising, and provincial authorities there raised long-stagnant -- and still tiny -- minimum wages by an average of 21% last year. Indian outsourcing giant Infosys Technologies recently raised entry-level wages 10% and expects to do so again amid increasing competition for its workers.

To be sure, globalization still is helping contain some price pressures, and growth is still strong. Inflation remains moderate, at around 2% in industrialized countries and not much above 5% in many developing countries. The lack of price pressure has allowed central banks to leave their short-term interest rates 1.25 percentage points lower, on average, than at the peak of the world's 1990s economic boom, J.P. Morgan says -- even though the world economy is growing even faster now.

The flood of cheap imports into the U.S. has benefited consumers there and subtracted about one percentage point a year from U.S. inflation for the past decade, says the International Monetary Fund. Goldman Sachs economists said in a report last week, "There are pockets where inflation has risen more than expected, but the most recent evidence ... is that inflation is receding," especially in the U.S. and Japan.

Still, signs are now multiplying that global growth is fueling inflation rather than restraining it, says Richard Fisher, president of the Federal Reserve Bank of Dallas and a nonvoting member of the Fed's policy committee. "More and more, I hear people complain about the rising costs of [hiring] Indian M.B.A.s or the wages paid to Chinese workers," he says. As an inflation-damper, he adds, global capacity has gone from "tailwind to a headwind."

Bruce Kasman, chief economist at J.P. Morgan Chase, warns investors world-wide have been underestimating central banks' willingness to raise rates to avoid a repeat of the spiraling inflation of the 1970s, the last time the world economy grew as strongly as today. It won't require much higher rates, he says, to "cause significant damage in the markets."

Federal Reserve Bank of Dallas President Richard Fisher, who has long championed globalization's influence on U.S. inflation, says that influence has gone from good to bad. "There is a sense things are more expensive," he said in an interview with The Wall Street Journal.

Global crosscurrents from China and India and other fast-growing developing nations are raising some costs in the developed world. U.S. farmers, for instance, are paying more to export grain because the large ships they use are busy serving China's booming domestic market. The price to use the ships has risen to almost $50,000 a day from $17,000 last year, says Oivind Lorentzen III, president Northern Navigation America Inc., a Stamford, Conn.-based shipping company.

The collision between rising demand and tight supply is evident in Germany, which is leading the 13-nation euro currency area to its fastest growth since the tech boom. Hanover-based tire manufacturer Continental AG says it's struggling to meet extra orders of tires from makers of trucks and cargo trailers, many of whom underestimated the surging demand for commercial transport.

"We're basically sold out," says managing director Hans-Joachim Nikolin. This month, Continental raised its tire prices by up to 5%, partly passing on the cost of natural rubber, which has soared amid high demand from Asia.

The shortage of tires poses a problem in turn for companies like Schmitz Cargobull AG, Europe's largest maker of cargo trailers. The company had planned to make around 44,000 trailers in the year through March, up 30% from the previous year. Instead, it ended up making 52,000 as demand for transporting goods and materials around Europe soared, notably in the fast-growing economies of Europe's ex-communist east. Europe's tire makers didn't have enough tires available to cover the extra production, so Schmitz's purchasing manager Josef Buddenkotte flew to China to buy more tires there to hold down the surge in costs. Schmitz expects to make 65,000 trailers in the year ahead, and has just raised its prices by 3.5%.

Schmitz added a third production shift to cover demand, but with Germany's labor market tightening, has had to pay bonuses to attract enough staff. Schmitz also will have to digest a 4.1% rise in wages this year, under German industry's deal with the IG Metall union.

Demand for wood is booming too, including for the specially treated plywood that Schmitz uses in its trailers. Finnish forestry-products company UPM can't get enough birch timber from Russia at the moment: Mild weather and muddy ground impeded logging this winter, and Russian authorities are planning to raise export duties. "We can serve long-time partners, but new customers can't be served at all at the moment," says Joachim Stinsky, German sales manager at UPM. The price of some of UPM's wood products has risen 20% in the past year, he says.

The rising production costs are passed on to logistics companies that buy or hire trucks and trailers. They too are struggling to meet demand. "The cargo space that's available simply isn't enough," says Heiko Gnam, head of purchasing at Stuttgart-based logistics firm Diehl Spedition. The daily price for chartering a truck has gone up by 10% to 15% in the past year, he says.

In the U.S., central bankers are paying closer attention to the short supply of goods and services around the world. As trade swells, the prices of goods and services are increasingly determined in world markets rather than simply in the U.S. market.

U.S. import prices excluding oil rose 2.9% in the year through April, the fastest clip in 18 months. Employers are boosting wages because despite a slowdown in economic growth, unemployment hovers near a six-year low of 4.5% overall and just 1.9% for professionals. Doug Pruitt, chief executive of Sundt Companies Inc., a Tempe, Ariz., commercial builder, says the long slump following the 2001 recession masked a shortage of skilled professionals that has turned more acute as demand rebounded. He often pays signing bonuses of $10,000 to $20,000 for engineers, project managers, superintendents and estimators.

Labor shortages have constrained Sundt's ability to grow. The company, with annual sales of about $850 million, has turned down $150 million to $200 million of work in the past two years. "I ran this office for 11 years, and we never turned down anything," Mr. Pruitt says. He says he's been charging 12% more than he would have for the same project a year ago.

In China, heavy investment in new factories and infrastructure means the economy is still gaining plenty of new production capacity for the future, a trend that hasn't been stopped by the central bank's modest recent interest-rate increases. Domestic consumer-price inflation there remains low. But labor costs for exporters on the booming coast, who expected to benefit indefinitely from cheap migrant labor to migrate from inland, are going up.

China's export prices rose by 5.3% on average in the year to March, according to China's customs agency, a sharp pickup from a 2.9% gain in the year to last December. Gains are coming both from labor-intensive goods such as textiles and energy-intensive produce like steel. Surveys regularly show that a majority of employers can't fill all of their available jobs, from textile workers in the south to software programmers in the northeast.

At the same time, several hundred million Chinese are still scraping out a living on farms. In theory, they could triple their incomes by taking a job in manufacturing or construction. But the demand for labor and its supply are often not in the same place. In practice, the rural population in the interior can't all move away at once to the coast, where industry and foreign investment are concentrated.

With China's economy looking set to grow by 10% or more for a fifth straight year, employers are aiming to expand their work force by an average of 13%, according to a survey by the labor ministry. That growth is starting to empower workers. Most measures show Chinese wages have been rising by 10% or more annually for several years straight, though rapid gains in productivity have helped contain employers' total labor costs.

Still, migrants from rural areas are getting more assertive: As rising crop prices have boosted farm incomes in the past couple of years, they've also lifted people's expectations of factory life. Prospective migrants are looking for 16% higher wages than a year ago, according to a survey by the Chinese Academy of Social Sciences. "Migrant workers are getting more advanced in their thinking. They are looking at the factory's environment, living conditions, and different kinds of benefits. Now, the workers are the boss," says Hong Yong, who runs a furniture factory in Shunde, Guangdong province.

China's government, under political pressure to address rising inequality, also wants to see higher wages and better social protections for workers. Zhu Changlin, vice chairman of China's furniture makers association, says employers can no longer get away with not paying unemployment insurance and other benefits to staff.

Many furniture manufacturers estimate their labor bill will rise 20% this year, on top of higher costs for wood and other raw materials. Building new factories also is getting more expensive: Land prices are rising as the rapid growth of industrial parks in crowded coastal provinces starts to hit limits.

China also is gradually dismantling administrative practices that have kept prices for electricity, fuel and water far below market levels. In a report this month, China's central bank said the changes would lead to a "certain increase in the overall price level."

Tuesday, June 05, 2007

Europe's wonderful regulations

David Seaton's News Links
Europe's "superpower" secret weapon is its regulatory prowess. To create and enforce regulations that guarantee the quality, safety and healthfulness of an infinite number of products among 25 nations of disparate traditions is Europe's greatest gift to the contemporary world.

A friend of mine, a Spanish restaurateur, tells me that in his opinion the biggest effect of Spain's entry into the European Union has been the effect of EU regulations on the quality of common table wine and bulk olive oil. Before Spain's entry in the EU these products were produced in appalling sanitary conditions. And there was even a case of mass poisoning from tainted rape seed oil in 1981 which has caused the death of 3,000 people over the years and left 20,000 with permanently impaired health. The European Union's stringent regulatory apparatus that many find "interventionist" and anti-democratic with its "faceless bureaucrats in Brussels" has vastly improved the image of Spanish food and wines: especially the food and wine that average people consume daily.

In the USA thousands of pet owners are heart broken because their dogs and cats have died from eating tainted pet food "fillers" from China. In Panama dozens of people have died from brushing their teeth with poisoned, Chinese counterfeit, brand name toothpaste. A major mass poisoning of human beings in a developed country produced by fraudulent Chinese business practices could cast suspicion on all things Chinese and bring the Chinese economic "miracle" crashing to the ground.

In the maelstrom of globalization it is Europe's superior international regulatory capabilities that will ensure that millions will prefer products from the EU over all others.

When Fakery Turns Fatal - New York Times

Abstract: They might be called China’s renegade businessmen, small entrepreneurs who are experts at counterfeiting and willing to go to extraordinary lengths to make a profit. But just how far out of the Chinese mainstream are they? Here in Wudi in eastern China, a few companies tried to save money by slipping the industrial chemical melamine into pet food ingredients as a cheap protein enhancer, helping incite one of the largest pet food recalls ever. In Taixing, a city far to the south, a small business cheated the system by substituting a cheap toxic chemical for pharmaceutical-grade syrup, leading to a mass poisoning in Panama. And in the eastern province of Anhui, a group of entrepreneurs concocted a fake baby-milk formula that eventually killed dozens of rural children. The incidents are the latest indications that cutting corners or producing fake goods is not just a legacy of China’s initial rush toward the free market three decades ago but still woven into the fabric of the nation’s thriving industrial economy. It is driven by entrepreneurs who are taking advantage of a weak legal system, lax regulations and a business culture where bribery and corruption are rampant.(...) Counterfeiting, of course, is not new to China. Since this country’s economic reforms began to take root in the 1980s, businesses have engineered countless ways to produce everything from fake car parts, cosmetics and brand name bags to counterfeit electrical cables and phony Viagra. Counterfeiting rings are broken nearly every week; nonetheless, the government seems to be waging a losing battle against the operations.(...) But the discovery of dangerous ingredients in foods and drugs has raised more serious questions.(...) But agricultural workers and experts in this region tell a different story. They say the practice of doctoring animal and fish feed with melamine and other ingredients is widespread in China. And Wudi, they say, has long been known as a center for such activity. “Wudi became famous for fake fish powder almost 10 years ago,” said Chen Baojiang, a professor of animal nutrition at the Agricultural University of Hebei. (Fish powder is used as a protein additive to animal feed, including fish feed.) “All kinds of fillers have been used. At the beginning it was vegetable protein, then urea. Now it’s feather powder.”(...) For decades, small entrepreneurs have started out counterfeiting in emerging industries in China, seeking an early advantage and their first pot of gold. Often, they try to get around regulations, or simply believe small-time cheating that involves adding cheap substitutes or low-grade ingredients will not cause much harm. “Basically, for entrepreneurs, if something is not explicitly banned — it’s not banned,” said Dali Yang, who teaches at the University of Chicago and has studied China’s food safety regulations. “As long as people are not sick or dying, it’s O.K.”Experts say counterfeiters are now moving to outlying areas of the country, where it is easier to evade regulation. The counterfeiters are also moving into food and agriculture, which are difficult to monitor because they involve small farmers and entrepreneurs. Small-time entrepreneurs have played the same game over and over with other products, experts say, adding cheap substitute chemicals to toothpaste; using lower-grade materials to produce car parts, batteries and cellphones; and creating factories that specialize in counterfeit goods. Last year, for instance, pirates were caught faking an entire company, setting up a “branch” of the NEC Corporation of Japan, including 18 factories and warehouses in China and Taiwan. “We have to bear in mind they probably don’t think about the consequences at all,” said Steve Tsang, a China specialist who teaches at Oxford University. “They’re probably only thinking of making a fast buck.” READ IT ALL

Monday, June 04, 2007

Global warming: Opening the floodgates

David Seaton's News Links
Before the earth melts, we are going to see a lot of political heat first.

The issues of geopolitics are very complex and even the Iraq disaster with its brutal simplicity can be wrapped in the flag and muddied with patriotic manipulation. Global warming, however is very simple... As the renowned Mr. Little was heard to comment, "the sky is falling!" Except this time,
the sky is really falling.

What Bush doesn't seem to understand is that climate change could quickly turn into the political lightning rod to channel the universal hostility that has been building up
towards him since the invasion of Iraq ... and towards the country he represents.

Once the science is accepted by the majority of the world's population, then a very simple idea takes root: Bush is doing the same thing to the atmosphere that he is doing to Iraq... leading to massive anti-Bush, "save the planet," demonstrations worldwide: similar but more bi-partisan and probably bigger and more violent than the great "stop the war" demonstrations against the invasion of Iraq. DS

Global warming 'is three times faster than worst predictions' - The Independent

Abstract: Global warming is accelerating three times more quickly than feared, a series of startling, authoritative studies has revealed. They have found that emissions of carbon dioxide have been rising at thrice the rate in the 1990s. The Arctic ice cap is melting three times as fast - and the seas are rising twice as rapidly - as had been predicted. News of the studies - which are bound to lead to calls for even tougher anti-pollution measures than have yet been contemplated - comes as the leaders of the world's most powerful nations prepare for the most crucial meeting yet on tackling climate change.(...) The study, published by the US National Academy of Sciences, shows that carbon dioxide emissions have been increasing by about 3 per cent a year during this decade, compared with 1.1 per cent a year in the 1990s. The significance is that this is much faster than even the highest scenario outlined in this year's massive reports by the Intergovernmental Panel on Climate Change (IPCC) - and suggests that their dire forecasts of devastating harvests, dwindling water supplies, melting ice and loss of species are likely to be understating the threat facing the world. The study found that nearly three-quarters of the growth in emissions came from developing countries, with a particularly rapid rise in China. The country, however, will resist being blamed for the problem, pointing out that its people on average still contribute only about a sixth of the carbon dioxide emitted by each American. And, the study shows, developed countries, with less than a sixth of the world's people, still contribute more than two-thirds of total emissions of the greenhouse gas. On the ground, a study by the University of California's National Snow and Ice Data Center shows that Arctic ice has declined by 7.8 per cent a decade over the past 50 years, compared with an average estimate by IPCC computer models of 2.5 per cent. READ IT ALL

Sunday, June 03, 2007

Sunday Treat - Mills Brothers

David Seaton's News Links
The Mills Brothers are probably hands down the best acapella singing group that ever lived and wth Louis Armstrong and Ella Fitzgerald the best scat singers too. Another thing about them: they irradiate pure joy in their talent. If you ever feel down and listening to the Mills Brothers doesn't pick you up, you are on the Prozac trail for sure. In this clip that looks like the early 50s, they still have all their stuff and will give the uninitiated a good idea of what the fuss is all about. Enjoy! DS

Friday, June 01, 2007

The next war: Turkey invades Kurdistan

David Seaton's News Links
The imminent Turkish invasion of Iraqi Kurdistan is not getting much coverage in the English speaking press despite the fact that such an invasion would change the entire situation in the Middle East and also affect NATO and the European Union in many and entirely unpredictable and far reaching ways.

Anyone who has ever read Xenophon's adventures fighting in Kurdistan in 401 BC-399 BC will know what serious business it can be.

We may be looking at the most significant "unforeseen outcome" of Bush's geopolitical suicide. DS

US forces sidestep threatened Turkish invasion - Debka
The heavy Turkish military buildup on the border of Iraqi Kurdistan last week prompted the autonomous region’s president, Massoud Barzani, to send a personal emissary, Safin Dizai, to Ankara with an urgent message.

Turkish tanks would not be allowed to cross into northern Iraq, he said. The Kurdish army known as peshmerga would repel them. “The people of Kurdistan,“ said the messenger, “would not stand by as spectators if Turkish tanks and panzers entered Kirkuk.” And finally, “Turkey also knows that a military incursion is out of the question. The world will not allow this. The US is here and does not want it.”

The Kurdish leader had his answer Thursday, May 31, when Turkish chief of staff Gen. Yasar Büyükanıt declared his army was ready for incursion into northern Iraq. "There is not only the PKK in northern Iraq,” he said. “There is Massoud Barzani as well"

This incursion unheeding of strains with Washington would have two objectives, according to DEBKAfile’s military sources: To prevent the rise of an independent Kurdish state in northern Iraq and the fall of the oil town of Kirkuk into Kurdish hands. “Turkey cannot afford an independent Kurdish state headed by Barzani on its southern border,” said Gen. Büyükanıt.

Our sources add that Ankara has dramatically broadened its objectives since early May, when the Turks talked about a limited strike against separatist PKK hideouts in the Kandil mountains of N. Iraq. At the same time, as DEBKA-Net-Weekly 294 revealed on March 23, 80,000 Turkish troops were concentrated already then at Sirank, opposite the meeting point of the Turkish, Iraqi and Syrian borders.

A bombing in downtown Ankara earlier this month killed six people and injured more than a hundred. The PKK was blamed.

Sunday, May 27, US Secretary of state Condoleezza Rice and Turkish foreign minister Abdullah Gul discussed the possible outbreak of Turkish-Kurdish hostilities. Immediately after the conversation, the US military command began its preparations. Washington decided its first priority must be to avoid a military clash between US forces stationed in Kurdistan and invading Turkish units. No time was lost. May 30, US commanders and Barzani signed a document transferring security responsibility for the region from coalition forces to the Kurdish peshmerga. American troops were hurriedly pulled out of the Kurdish towns of Irbil, Dohuk and Suleimaniyeh, but remain in force in and around Kirkkuk.