Saturday, November 29, 2008

Mumbai changes the playing field

David Seaton's News Links
As we wait to finally discover who actually organized this bloodbath in Mumbai, I would like to point out something obvious: the Indian economic "miracle" has been more than tempting fate to have created such a growing number of exuberant and ostentatious nouveau riche in a country where hundreds of millions of people are as scandalously poor Islamist, Maoist or things as yet undreamed of are bound to grow in the gigantic, bubbling petri dish. globalization has created in India.

So if all we had to go on was potential rage and resentment themselves, we would be looking for a needle in a haystack. It would probably be more profitable to look at the wide effects of this attack as a way of narrowing down the list of possible culprits.

Although it does massive harm to India, I don't think this attack was really about India as much as it was designed to throw a monkey wrench in the American strategy of pressuring Pakistan.

The United States wants the Pakistanis to use their army to control the Pashtun areas of their country, the areas which harbor the taliban who attack NATO forces in Afghanistan.

If the Pakistani army does this it will mean a civil war, which might lead to the breakup of Pakistan: that is a result that only a drunken neocon could contemplate sanguinely.

Despite this danger to Pakistan's unity, president Bush has been pushing the Zardari government very hard and, if his statements during the campaign are to be taken seriously, president Barack Obama will press them even harder.

What this attack on Mumbai certainly does is to change the subject from America’s problems in Afghanistan to the possibility of an armed confrontation between nuclear India and nuclear Pakistan. This prospect should focus Washington’s mind wonderfully. Both incoming and outgoing presidents will have to everything they can to defuse tension between the countries.

I think by now it is clear that the objective of the attacks is too make it impossible for Pakistan, with India threatening, to collaborate with the USA on its northwest frontier. Certainly the Pakistani army will have no resources to spare for chasing the taliban when a conflict with Indian is in the offing. The pressure on Zardari now from the military will be much too great.

Today some are blaming Al Qaeda for the attacks in Bombay and others are pointing fingers at Pakistan's army intelligence, the notorius ISI. The relation between the ISI and Al Qaeda, or even where one leaves off and the other begins is not really clear. This “joined twin” effect is said to be blowback from the CIA and Saudi collaboration during the USSR’s futile attempts to modernize Afghanistan.

It is my impression that what we call Al Qaeda today is more a general consensus and willingness to collaborate among a very wide number of Islamic activists all over the world than the finite hierarchy that it was in 2001.

Many if not all the diverse jihadist groups now see their local struggles in the context of a wide international one and this multiplies their effectiveness as this leads to a wide consensus on their priorities.

Priority number one is to degrade American influence in the Muslim world and they seem to be having some success. You could say that bin Laden began a "worldwide conversation about killing people and blowing things up" among millions of angry young men. This instrument for building and implementing consensus is his greatest achievement.

The attack in Mumbai has changed the playing field and its scale. From worrying about guerrillas crossing from Waziristan to attack Americans in Afghanistan, we can worry now about the serious possibility of an atomic war in South Asia. DS

Thursday, November 27, 2008

Next stop: Weimar America?

"That’s how we got here — a near total breakdown of responsibility at every link in our financial chain, and now we either bail out the people who brought us here or risk a total systemic crash." Thomas Friedman - NYT

“Excessively cheap money in the US was a driver of today’s crisis,” (Angela Merkel, the German chancellor) told the German parliament. “I am deeply concerned about whether we are now reinforcing this trend through measures being adopted in the US and elsewhere and whether we could find ourselves in five years facing the exact same crisis.” - Financial Times

David Seaton's News Links
A link at Doonesbury led me to the following, fascinating, information:
Big Bailouts, Bigger Bucks - The Big Picture
(...)If we add in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars. People have a hard time conceptualizing very large numbers, so let's give this some context. The current Credit Crisis bailout is now the largest outlay In American history. Jim Bianco of Bianco Research crunched the inflation adjusted numbers. The bailout has cost more than all of these big budget government expenditures - combined:

• Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
• Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
• Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
• S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
• Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
• The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
• Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

TOTAL: $3.92 trillion
If a currency is supposed to have any relation to actual value, when I see these numbers it seems obvious to me that the dollar is entering the territory of the Wiemar Republic Deutsche Mark: meaningless paper.

The fear, of course is deflation, but a dollar that once bought victory in WWII and trips to the Moon, but today cannot save a few banks, must be a ticket to coming hyperinflation.

It is impossible to escape certain unpleasant realities of world power

No matter how seductive the figure of Barack Obama might be, glamor cannot offset the drag of worthless money combined with military impotence.

Joseph Nye's "soft power" is just that "soft". The brutal truth is that candy and flowers, a thoughtful word, are important rites of seduction, but after these rites are performed, something hard is expected. If the USA cannot "cut the mustard", other, perhaps ruder suitors will be sought and found.

To me these numbers mean that we are living suspended over an abyss, held only in the slippery hands of a fraudulent system. DS

Wednesday, November 26, 2008

Who really understands the USA?

"Poor Mexico, so far from God and so near to the United States!"
Porfirio Díaz

O wad some Power the giftie gie us
To see oursels as ithers see us!
It wad frae mony a blunder free us,
An' foolish notion:
What airs in dress an' gait wad lea'e us,
An' ev'n devotion!
To a Louse - Robert Burns

Mexico's war on drugs costs more lives with every passing day. Drug-related killings this year exceed 4,300, according to media reports, almost double the rate of 2007. Swathes of Mexican territory are in the control of drug cartels, rather than the government. The heavy cost of fighting them is also paid in the corrosion of Mexican democracy and its institutions, as emphasised by recent arrests of high-profile police officers allegedly in the pay of the drug barons.(...) In his most dramatic decision, Mr Calderón also sent in Mexico's army to confront the traffickers. This move has had some success, though it could perhaps have been more precisely targeted, but it has stirred up a hornets' nest. Unfortunately, the effectiveness of this policy is likely to weaken over time as corruption takes its toll in the military.(...) the role that the US plays in this crisis is clear. As well as being the largest cocaine market, it supplies most of the traffickers' weaponry. Meanwhile, US aid for Mexico's drug efforts focuses excessively on hardware such as helicopters and is not sufficiently directed at supporting the police, the legal system and the judiciary. (...) (President Obama) should acknowledge that reopening negotiations over the North American Free Trade Agreement, as he pledged during his election campaign, would severely undermine legitimate business south of the border. That would bode ill for Mexico - and for the US. (emphasis mine) Financial Times
Former Mexican President Ernesto Zedillo said he and his countrymen “regret” and “resent” the construction of a security fence on the border between the United States and Mexico and called for more “intelligent” security between the two countries on Monday.

Zedillo also blamed drug violence largely on Americans’ use of illegal drugs(...) (Zedillo) appeared at the panel discussion with the co-chairman of the commission, former U.S. Undersecretary of State Thomas R. Pickering.

Pickering noted that 90 percent of the guns seized in drug law enforcement operations in Mexico can be traced back to the United States, a statistic also cited by officials from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) in testimony before the House Foreign Affair Committee’s subcommittee on the Western Hemisphere in February 2008. CNSNews
David Seaton's News Links
Every so often some irate reader who lives in the states asks me how I can know anything about the USA if I no longer live there.

To this I reply that the USA is everywhere, all the time, intruding into people's lives in endless ways all over the world: it is outside the United States where people really understand the USA. It is the Americans who have a totally fictionalized view of themselves.

Don't you think by now that any inhabitant of Baghdad is an expert on Americans, their foibles and their reality, the space between their words and their actions?

But of course this deep and intimate knowledge of the USA is new to Iraqis and most Middle Easterners. Where Americans are really known, where the USA has bent everything and everyone out of shape for nearly 200 years, is south of the border, in Latin America in general and in Mexico, most blatantly, in particular.

Americans are massively addicted to drugs and spend enormous amounts of cash on their habit. The Mexican drug cartels are formed to service that habit and they thus have the money to corrupt even key Mexican government officials (and key Mexican officials have never come cheaply) something which threatens the very existence of the Mexican state.

And the United States not only supplies the drug lords with cash. The United States is where they buy military grade weapons on the open market. This is made possible by a loose interpretation the Second Amendment of the US Constitution, which constitutional law professor, president-elect Barack Obama, has declared he has no intention of tightening up.

If, to top all this, the United States revised NAFTA, as the president-elect has promised during the campaign, Mexico might literally become a failed state.

It seems so long ago, that it is hard to recall that once upon a time, when he was running for president in the year 2000, Bush said a number of sensible things that he quickly forgot on being elected. One of the most sensible was defining America's relationship with Mexico as its the most important foreign policy relationship. It was true then and it is true today: what happens in and to Mexico affects Americans, their prosperity and even their physical safety, much more than what happens in and to, say, Israel... Much, much, more.

9-11 and the invasion of Iraq caused Mexico to disappear from America's agenda. However while we are following events far, far away, the rise in the price of corn, the staple food of Mexico's masses, due to ethanol production in the United States, which our president-elect also supports, combined with the corruption flowing from drug money derived from from the bottomless appetites of American addicts, has put the political stability of Mexico in grave danger.

If we add to that the effects of massive layoffs of Mexican workers in the USA due to the recession, with waves of unemployed immigrants returning home empty handed to find corn meal priced out of their reach... combined with stringent border controls and the mass expulsions that so many US politicians are clamoring for... Add to that many armed and horribly violent cartel gunmen with money and automatic weapons.... we are looking at a potential geopolitical disaster far worse than the war in Iraq...

If Mexico collapsed into anarchy, besides having to find space for the entire Mexican middle class, the United States could find itself fighting a real counter-insurgency; a conflict where the southern US border would be little more than a line drawn on a map and with the whole South West under virtual martial law.

Anything even remotely like this scenario would multiply the effects of the deep recession/depression we are entering beyond imagining.
All the elements are in place for a disaster and nobody seems to care very much.

Who knows who?

Who could know America and the Americans, who they are, what really motivates them and why they do the things they do more truly than Mexico and the Mexicans? It is the Americans themselves that don't know America and what it is. DS

Tuesday, November 25, 2008

My mini epiphany

David Seaton's News Links
As anyone who has read my posts over the last few months can testify, I have been notably unenthusiastic and irritated by Obama worship. I have been called "Mr. Wet Blanket", the "glass half empty" guy, and decorated with other much less flattering labels that have been pinned on me as I tried to point out how precarious were the foundations upon which this new church was built. But today reading the news I had a little epiphany and suddenly my heart melted and I was filled with warm compassion for the Obamite devotees as they adored at The One's Lotus Feet.

I was reading the blog of the prophetic professor Roubini, a voice that once cried out in the wilderness, preaching repentance and doom and who now is a talk show favorite. He is an enthusiastic fan of Obama's proposed economic team, but here is his take on the situation they will confront:
I have also to add that – as I argued in an interview with CNBC Monday morning - while I have the greatest respect for the new Obama economic team, they will inherit a huge economic and financial mess that will be extremely hard to fix even if they were to implement the most sound and consistent economic and financial policy package. This is going to be the worst US recession in decades as the strapped US consumer is now faltering. The recession train and the financial crisis train have left the station. What policy can do – at best – is to minimize the financial and economic losses and limit the extent and severity and length of the economic and financial crisis, not to prevent it. President Elect Obama and his top notch team will inherit two wars and the worst economic and financial crisis in decades. So expect very difficult times ahead for the economy and for financial markets regardless of the best effort of Obama’s excellent economic team in trying to address these problems. Even a massive fiscal stimulus, a more rapid and coherent plan to recapitalize financial institutions and resolve the credit crunch, an aggressive plan to reduce the debt burden of insolvent household, and more aggressive and radical set of unorthodox monetary policies will not prevent a global stag-deflation in 2009 and possibly longer.
Then seeking some relief from Roubini's prognosis, I opened the Washington Post and stumbled upon this column by Robert J. Samuelson:
What terrifies Americans is the prospect that the slump will become much worse than average -- and that the government has lost control of events. (...) Perhaps Barack Obama will change that, but so far, government officials, business leaders and economists seem overwhelmed. They're constantly playing catch-up and losing. Americans feel unprotected against accumulating misfortune. The hyper-anxiety is not irrational pessimism, though it may prove unfounded. Every major episode of this crisis -- from Bear Stearns's failure to General Motors' possible bankruptcy -- has come as a surprise. Similarly, the crisis's three main causes have repeatedly been underestimated: the burst housing "bubble"; fragile financial institutions; and a reversal of the "wealth effect." Of these, the last is least recognized.(...) But now the wealth effect is reversing. (...) Since September 2007, Americans' personal wealth has dropped about $9 trillion, says economist Nigel Gault of IHS Global Insight. (...) If the swing toward saving is too sharp, consumer spending wouldn't just weaken; it would collapse. (...) And these problems feed on each other. Lower consumer spending depresses profits and stock prices, which corrodes confidence, further dampens spending, raises unemployment and increases loan defaults. Credit card losses could be the next big blow to financial institutions.
The case for a sizable economic "stimulus" package is that it would temporarily compensate for the erosion of consumer spending. But if the positive "wealth effect" is now giving way to a lasting negative or neutral "wealth effect" -- as people try to replenish savings and offset lost wealth -- then even a recovery would be sluggish. A new source of demand is needed to sustain faster growth. An obvious solution is for high-saving Asian countries, led by China, to consume and spend more so that their imports increase. Whether they have the political capacity to reduce their dependence on export-led growth is unclear.
Yesterday I quoted Fareed Zakaria on the Chinese:
In September, Beijing became America's largest foreign creditor, surpassing Japan, which no longer buys large amounts of American Treasury notes. In fact, though the Treasury Department does not keep records of American bondholders, it is virtually certain that, holding 10 percent of all U.S. public debt, the government of the People's Republic of China has become Washington's largest creditor, foreign or domestic. It is America's banker.
To Zakaria I tacked on this jewel from the classic Chinese wiseguy's handbook, "The Thirty Six Strategies":
Besiege Wèi to rescue Zhào (Thirty Six Strategies - 2)
When the enemy is too strong to be attacked directly, then attack something he holds dear. Know that he cannot be superior in all things. Somewhere there is a gap in the armor, a weakness that can be attacked instead.
All this flotsam and jetsam swirled around in my consciousness until suddenly the dam broke and compassion welled up in my flinty, shrunken heart. How could I laugh at something like William Greider wrote in The Nation:
His victory, it appears, was a triumph for the cautious center-right politics that has described the Democratic party for several decades. Those of us who expected more were duped, not so much by Obama but by our own wishful thinking.
To criticize the Obamites suddenly seemed to my opened consciousness like making fun of a cancer patient that desperately clutches to his rosary beads between spasms.

The famous words of a great American echoed in my repentant brain:

"Basically, I'm for anything that gets you through the night - be it prayer, tranquilizers or a bottle of Jack Daniels."
Or Barack Obama.... Amen. DS

Monday, November 24, 2008

China/USA: those in the red must read the little red book

David Seaton's News Links
Fareed Zakaria has written a very interesting article that tells us more about what is really happening to the USA and the rest of the world, than anything that I have read in the MSM in quite a while:
For weeks the world has eagerly awaited word from the Obama transition team about the people who will head up the next administration -- the new secretaries of state and treasury, the attorney general. But one of the more crucial positions in the Obama administration probably isn't going to be filled for months and is likely to get little attention when it is -- the post of U.S. ambassador to China.

China has become the key to America getting through the worsening economic crisis. The American ambassador in Beijing (okay, this is a metaphor for all those officials who will be managing this relationship) will need to make sure that China sees its interests as aligned with America's. Or else things could get very, very ugly.
Then it gets really interesting, but before reading more Zakaria, let us read a little Chinese:
So it is said that if you know your enemies and know yourself, you will fight without danger in battles. If you only know yourself, but not your opponent, you may win or may lose. If you know neither yourself nor your enemy, you will always endanger yourself. - Sun Tzu

Therefore one hundred victories in one hundred battles is not the most skillful. Seizing the enemy without fighting is the most skillful. Sun Tzu

Besiege Wèi to rescue Zhào (Thirty Six Strategies - 2)
When the enemy is too strong to be attacked directly, then attack something he holds dear. Know that he cannot be superior in all things. Somewhere there is a gap in the armor, a weakness that can be attacked instead.

Kill with a borrowed knife (Thirty Six Strategies - 3)
Attack using the strength of another (in a situation where using one's own strength is not favourable). Trick an ally into attacking him, bribe an official to turn traitor, or use the enemy's own strength against him.

"We must not belittle the saying in the book of Sun Wu Tzu, the great military expert of ancient China, 'Know your enemy and know yourself and you can fight a thousand battles without disaster.'" - Mao Tse-Tung

"Mao was seventy-percent good and thirty-percent bad" Deng Xiaoping

"White cat, black cat, as long as it catches mice." Deng Xiaoping
Now let's read some more of Fareed Zakaria's article in the Washington PostGlobal:
In September, Beijing became America's largest foreign creditor, surpassing Japan, which no longer buys large amounts of American Treasury notes. In fact, though the Treasury Department does not keep records of American bondholders, it is virtually certain that, holding 10 percent of all U.S. public debt, the government of the People's Republic of China has become Washington's largest creditor, foreign or domestic. It is America's banker.

But will the Chinese continue to play this role? They certainly have the means to do so. China's foreign-exchange reserves stand at about $2 trillion (compared with America's at a relatively puny $73 billion). But the Chinese government is worried that its own economy is slowing down sharply, as Americans and Europeans stop buying Chinese exports. They hope to revive growth in China (to levels around 6 or 7 percent rather than last year's 12 percent) with a massive stimulus program of their own.

The spending initiatives that Beijing announced a few weeks ago would total almost $600 billion (some of which include existing projects), a staggering 15 percent of China's GDP. Given their focus on keeping people employed and minimizing strikes and protests, Beijing will not hesitate to add tens of billions more to that package if need be.

At the same time, Washington desperately needs Beijing to keep buying American bonds, so that the U.S. government can run up a deficit and launch its own fiscal stimulus. In effect, we're asking China to finance simultaneously the two largest fiscal expansions in human history -- theirs and ours. They will probably try to accommodate us, because it's in their interest to jump-start the American economy. But naturally their priority is likely to be their own growth.

"People often say that China and America are equally dependent on each other," says Joseph Stiglitz, winner of the 2001 Nobel Prize in Economics. "But that's no longer true. China has two ways to keep its economy growing. One way is to finance the American consumer. But another way is to finance its own citizens, who are increasingly able to consume in large enough quantities to stimulate economic growth in China. They have options, we don't. There isn't really any other country that could finance the American deficit."
Quoting oneself at length is not really considered good form, but I wrote this almost exactly a year ago and I think that it's more relevant now than when I wrote it, so here it is again:

Friday, November 30, 2007
China : on getting rich with the "little red book"
If you study modern China, its Communist Party and the Chinese people even a little, you will see that their obsession, with or without Marxism, is to maintain China's unity, sovereignty and independence.

It is not difficult to imagine the unease of the Chinese leadership at the prospect of facing the United States alone in its role as "sole superpower" at the fall of the USSR and its "really existing socialism" and the subsequent "color revolutions" instigated by the USA.

Obviously something had to be done to keep China from returning to its pre-Mao status of client and near-colony of the west and obviously... something has been done.

Reading Mao Tse-Tung's 1957 speech, "On the Correct Handling of Contradictions Among the People", when he talks about joining forces with China's middle class to defeat the Japanese will make this clearer:
"To understand these two different types of contradictions correctly, we must first be clear on what is meant by "the people" and what is meant by "the enemy". The concept of "the people" varies in content in different countries and in different periods of history in a given country. Take our own country for example. During the War of Resistance Against Japan, all those classes, strata and social groups opposing Japanese aggression came within the category of the people, while the Japanese imperialists, their Chinese collaborators and the pro-Japanese elements were all enemies of the people."
That phrase is the key. The Chinese Communists (who still control China) waited to defeat the Japanese before continuing "class struggle": for the Chinese Communist Party the "primary contradiction" was the struggle against the Japanese.

Reading what Mao wrote you will see what is happening now has a long pedigree.

You would have to go back to the "Long March" of 1934 to find the equivalent of China's entry into the global economy. A long retreat, a regrouping, a devastating counter-attack. With its entry sui generis into globalization, China has neatly turned the tables on the United States, firmly entrapping the Americans in their own free trade ideology.

In short, with Marxism or with capitalism the Chinese obsession is to regain their full sovereignty. As Deng Xiaoping said, "White cat, black cat, as long as it catches mice." Their "primary contradiction" is to be "rule makers" and not "rule takers" and we, neither really understanding ourselves or much less understanding them, have handed it all to them on a plate and now we must be very grateful if they deign to take it. Chapeau! DS

Friday, November 21, 2008

Deflation as a metaphor

The world is shifting towards a multi-polar system with a less dominant US and a more powerful China and India, and a “historic” transfer of wealth from west to east, according to a new US intelligence report. Financial Times

In the NIC’s view, the rise of China, India and the rest will mean that by 2025 the US will be “one [my emphasis] of a number of important actors on the world stage, albeit still the most powerful”. For more than 200 years, even when challenged, the US has been a rising power. The adjustment will not be easy. Philip Stephens -FT

This week's news of a drop in consumer prices may sound on the surface like a good deal for financially strapped U.S. households. But economists warn that sustained deflation -- a period of falling overall prices -- would deepen the nation's economic troubles. Such a period would make it harder for people to repay debts and would prompt consumers to delay purchases in anticipation of lower prices and harder times. "Everyone is having these huge sales, and consumers know if they wait longer, the chances of them not having a good selection is fairly small and the chances are that the prices will be lower," said Charles McMillion, an economist who runs MBG Information Services. "So why buy today? This is exactly why economists are always scared to death of deflation." Washington Post

When Obama takes office in two months, he will find a number of difficult foreign policy issues competing for his attention, each with strong advocates among his advisers. We believe that the Arab-Israeli peace process is one issue that requires priority attention.(...)The major elements of an agreement are well known. A key element in any new initiative would be for the U.S. president to declare publicly what, in the view of this country, the basic parameters of a fair and enduring peace ought to be. These should contain four principal elements: 1967 borders, with minor, reciprocal and agreed-upon modifications; compensation in lieu of the right of return for Palestinian refugees; Jerusalem as real home to two capitals; and a nonmilitarized Palestinian state. Brent Scowcroft and Zbigniew Brzezinski - Washington Post

David Seaton's News Links
"Deflation as a metaphor" compares the perception of America's relative decline as a superpower to economic deflation, where people hold off from making a purchase because, with prices falling, they think that they can get a better deal if they wait longer. When this happens, prices fall even faster as frantic sellers try to attract reluctant buyers with even lower prices and the potential buyers become even more reluctant to buy. Finally the economy seizes up and only those with great cash reserves benefit. Deflation is a process, a self-fulfilling prophecy that feeds on itself: falling prices make prices fall faster.

The National Intelligence Council's report, "Global Trends 2025: A Transformed World" postulates that by the year 2025 the United States will be dramatically less powerful than it is today. If we take deflationary process as our guide, the universal perception of America's decline should quickly accelerate that decline.

I agree with Brent Scowcroft and Zbigniew Brzezinski when they say that solving the Palestinian/Israeli conflict would be the keystone to a re-invigorated US presence in the Middle East. As they put it:

(To) let attention lapse would reinforce the feelings of injustice and neglect in the region. That could spur another eruption of violence between the warring parties or in places such as Lebanon or Gaza, reversing what progress has been made and sending the parties back to square one. Lurking in the background is the possibility that the quest for a two-state solution may be abandoned by the Palestinians, the Israelis, or both -- with unfortunate consequences for all. Resolution of the Palestinian issue would have a positive impact on the region. It would liberate Arab governments to support U.S. leadership in dealing with regional problems, as they did before the Iraq invasion. It would dissipate much of the appeal of Hezbollah and Hamas, dependent as it is on the Palestinians' plight. It would change the region's psychological climate, putting Iran back on the defensive and putting a stop to its swagger.
However, I think that in no other question is the "superpower deflation paradigm" more applicable than in the Middle East in general and the Israel/Palestine conflict in particular.

To cut to the chase, I think the “two state” solution is dead on its feet. Even the “painful concessions” necessary to create this "nonmilitarized Palestinian state" Bantustan described by Brent Scowcroft and Zbigniew Brzezinski are beyond the Israelis; and by the shape the new administration appears to be taking, Barack Obama seems even less likely than Bush or Clinton to lean on them.

Without veering off too far into paranoiac scenarios, with Rahm Emanuel as White House chief of staff and Hillary Clinton as Secretary of State the Israelis and the assorted “friends of Israel” in the US establishment must be sleeping much, much easier than when they were fretting over the President-Elect’s middle name.

What is needed is not rocket science, The Palestinians live where, or as near as they can live, to where they have always lived. All of the Palestinians are covered under a multitude of UN resolutions. What is required is a realistic two state solution. A “realistic two state solution” means a Palestinian state with full sovereignty, control of its own airspace, access to the sea, the same right to be armed as the Israelis have etc. in short a real country, not a Bantustan.

The Israelis have always resisted any realistic two state solution, even when the United States was powerful enough to guarantee one very favorable to Israeli interests and more so now when American power is in a sharp decline.

That leaves the Israelis three alternatives:

  1. Ethnic cleansing

  2. Apartheid

  3. Full citizenship for Palestinians in one democratic state containing both Jews and Palestinians.

Giving the superior Palestinian birthrate number three would probably result in the Jews soon being a minority in the new state.

Number two is what we have defacto at the moment.

If neither a realistic two state solution or a democratic one state solution are acceptable to the Israelis. Then it seems obvious to me they are only marking time with defacto apartheid until, when in a moment of great international confusion, say a general war in the Middle East, an occasion arises to ethnically cleanse the Palestinians. It appears to me that much of the talk in Washington and the EU on this subject is just so much smoke to screen this obvious analysis.

In my opinion, the Israelis and especially AIPAC (who use Israel for their own agenda in American politics) are doing nothing and have never done anything but run out the clock, and play for time.

This strategy has been based on the idea that American military, political, economic and cultural hegemony were eternal, and in the last decade, also on the idea that Israel's technologically driven economic growth was also endless. Both of these assumption are proving false. This leaves Israel in a very delicate position indeed. In the end the Israelis being able to maintain their maximalist positions depends almost entirely on US hegemony. As the world becomes more multi-polar and less eurocentric (white), Israel will be looking at a vastly different playing field.

To give you an example, which is already relevant and will become much more so in coming years: there is no China/Israel, Public Affairs Commitee (CHIPAC) in Beijing. Think about it.

The Chinese don't suffer from much Holocaust guilt. Their only interest in the Middle East is that there be peace and cheap, accessible, oil. Israel has zero strategic value for them and little or none of the influence over their domestic politics that it has over America’s.

As America’s influence fades, the Israelis are being left naked. Israel missed its best chance for peace on the best possible terms when the triumphant father Bush dragged them kicking and screaming to the Madrid conference in 1991. That is a ship that will never return.

Will the Palestinians wait for a better deal as US influence fades? Will the Israelis do something desperate like lighting the fuse to a general war in the Middle East to interrupt this spiral? DS

Thursday, November 20, 2008

The fable of the mountain and the mouse

"A mountain had gone into labour and was groaning terribly. Such rumours excited great expectations all over the country. In the end, however, the mountain gave birth to a mouse." Aesop

"The Americans who voted for Barack Obama as president were promised change they could count on, but it rather looks as if they may actually be asked to make do with a mildly refurbished Clinton Administration, with many of the same officials and nearly all of the same policies. The policies are drawn from the same centrist Democratic Party sources as those of Bill Clinton, and Obama’s admirers might even find themselves with Hillary Rodham Clinton as Secretary of State -- which makes no sense whatever. Are there no significant differences of view on war and peace between the two of them? Why did the American (and international) public have inflicted upon it a year and a half of Democratic party primaries in addition to the national election contest if the Democratic race could have been settled by the flip of a coin between people who believed in the same policies and thought the same thoughts?" William Pfaff
David Seaton's News Links
There is a saying in Spanish, "did we need such big saddlebags for such a short ride?"

You'd think I'd be happy to have all my past cynicism proved right... and so quickly, but I'm not... maybe if I lived on another planet, or if I were a future Chinese historian lounging in my comfortable study in Beijing a hundred years from now, chuckling as I read about the absurdity of America's slow motion drop into inanity, I would, but I'm not, so I wont.

People are talking about another "Great Depression" and comparing our period to the terrible 1930s, but aside from the "clack-clack-CLACK" feeling of a roller coaster about to go over the top and down, there is not much similarity.

The first and biggest difference that strikes me is the terribly tacky, almost drugged quality of superficiality and shallowness in everything today. The 1930s were serious times with great writers, poets, painters, cinematographers, philosophers and politicians all at the top of their game. Ideas, utopias, infernos, evil and innocence fought using meaningful language and memorable symbols. Only Bush and Cheney briefly managed to recapture some of the sinister deadliness of those times. The ghastliness of Bush had some seriousness about it. The veils were torn off of many things and for the first time most Americans were forced to take a good, hard look at ourselves: to waken from childish dreams and see ourselves as other see us.

At least, if nothing else, George W. Bush caused thousands of people to read America's last great public intellectual, Noam Chomsky, people that never would have read him otherwise. Bush brought Chomsky's texts alive and gave flesh to his insights.

Insight and consciousness are precious things, building blocks.

The left is about ideas, about facing reality bravely with full unblinking consciousness. An opportunity for the left to rebuild itself arose in the unlikely shape of George W. Bush and now it is about to be wasted.

Now after lengthy labor pains, with much moaning and groaning, the mountain has given birth to a mouse.

What makes me sad and angry is that the consciousness that has been raised during the Bush years is going to be sanitized and neutered as we tell ourselves another soothing bedtime story about ourselves to ourselves. DS

Wednesday, November 19, 2008

A brief note from a changing world

The changing face of piracy
As negotiations started for the release of a Saudi-owned supertanker seized by pirates off Somalia, the Indian Navy said on Wednesday that one of its warships fought a battle at sea with would-be hijackers in the Gulf of Aden, sinking one suspect vessel and forcing the pirates to abandon a second as they fled.(...) Cyrus Mody, of the International Maritime Bureau, which monitors global piracy, said in a telephone interview from London that the shipping industry had been urging stronger naval measures against the pirates’ “mother ships” for some time and would approve of the Indian Navy’s action. “This is the sort of action which should be taken to try to deal with the situation,” he said. Peter Hinchliffe, the marine director of the International Chamber of Shipping in London, said in a separate telephone interview that the Indian Navy’s action “is going to start to bring the message home” to pirates “that the international community really is ranged against them.”(...) This year, at least 92 ships have been attacked in and around the Gulf of Aden, more than triple the number in 2007, according to the International Maritime Bureau. At least 14 of those ships, carrying more than 250 crew members, are still in the control of hijackers. New York Times
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With all the speculations about new presidential appointments, readers may have missed one of those news items that alert the watchful to the arrival of a new era.

An Indian Navy warship has engaged and destroyed a Somali pirate vessel.

Suppressing piracy is perhaps the first job of a standing navy and the ability to keep the sea lanes open for commerce is its fundamental role.

The Indian Navy has taken up "the white man's burden", formerly the exclusive of European empires and on their disappearance, the United States of America.

Much of most of the world's relatively cheerful acquiescence to American military and financial supremacy has always been the guarantee of "law and order" around the world, twenty four times seven, that people thought the US forces provided. Much of the value of the dollar and America's subsequent prosperity is based on the world's trust in that implicit guarantee.

An enormous Saudi oil tanker, the Sirius Star, carrying two million barrels of oil valued at around $100 million to the United States itself has been hijacked off the coast of Somalia. The mastodontic, but overstretched, US Navy itself seems strangely ineffective in this crisis.

People call for the "Seventh Cavalry" and the "Indians" come to the rescue instead.

What could be a clearer sign of a changing world than that?

Tuesday, November 18, 2008

Bait and switch: Hillary and the end of the "children's crusade"

Barack Obama's serious flirtation with his one-time rival, Hillary Clinton, over the post of secretary of State has been welcomed by everyone from Henry Kissinger to Bill Clinton as an effective, grand gesture by the president-elect. It's not playing quite as well, however, in some precincts of Obamaland. From his supporters on the progressive wing of the Democratic Party, to campaign aides of the soon-to-be commander-in-chief, there's a sense of ambivalence about giving a top political plum to a woman they spent 18 months hammering as the compromised standard-bearer of an era that deserves to be forgotten. "These are people who believe in this stuff more than Barack himself does," said a Democrat close to Obama's campaign. "These guys didn't put together a campaign in order to turn the government over to the Clintons." Ben Smith - Politico
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In a sense Barack Obama naming Hillary Clinton as his Secretary of State would be as if George W. Bush had named a pro-choice feminist to the Supreme Court: an insult to his base. All the youngsters that rang the doorbells and manned the phones and computers, expecting a change they believed in, are now learning what the word "sucker" means.

In America's divided political environment offending the base is not a wise thing to do. The base, as its name implies, is what keeps the whole thing from falling down and going boom. When times get tough all that keeps things going are people with real commitment; they are a precious resource and not to be frittered away. Times look like getting really tough and gratuitously offending the people that put Obama in the White House seems to me a huge mistake on his part. Making an enthusiast feel like a fool is one of the cruelest and dumbest things a leader can do.

As an example of how valuable the hardcore base is, some observers are of the opinion that Sarah Palin hurt the Republicans this year, but I would maintain that the enthusiasm she generated in the Republican base is all that kept McCain from sharing the fate of Barry Goldwater, George McGovern or Walter Mondale.

If McCain had chosen Mitt Romney as his running mate the base would have stayed home and his defeat could have been much worse.

In a year that should have been an epoch making Democratic landslide the Republicans lived to fight another day... Sarah Palin got the base out and voting. The "undecided" and the independents are like sand: the lukewarm are what you add to the base. You can build nothing upon them.

Saying that Hillary is a disastrous choice is not to say that Hillary Clinton wouldn't be a competent Secretary of State. Simply that she voted for the war in Iraq, carries too much baggage (Bill) and doesn't seem to be the ideal person to carry out the policies that those who voted for Obama thought he personified when they voted for him. David Ignatius writes over at the Washington Post:
The idea of subcontracting foreign policy to Clinton -- a big, hungry, needy ego surrounded by a team that’s hungrier and needier still -- strikes me as a mistake of potentially enormous proportions. It would, at a stroke, undercut much of the advantage Obama brings to foreign policy. And because Clinton is such a high-visibility figure, it would make almost impossible (at least through the State Department) the kind of quiet diplomacy that will be needed to explore options.
A job without any of these conflicts that Obama could offer Hillary and which would not offend his hardcore base might be to put her in charge of making health care happen, which is something she could do without leaving the Senate.

What all this probably means is that Obama
simply hasn't been around long enough to have any real team of his own, he has not had the time to acquire as collaborators people of stature that he has worked with over years, people who owe their careers only to him: his people that he can trust to put his interests first.

Not having those people, it looks like he is already being managed by the fixers and the arrangers: he is not managing them. This will surely get worse as the game gathers speed. DS

Monday, November 17, 2008

The world in waiting

You might have thought that an emergency gathering of leaders from the world’s 20 main rich and emerging economies, with the global economy poised for its worst slump since the Great Depression, would have aroused some interest. The event was deemed unworthy of the main section of Saturday’s New York Times. (Room was found on the front page for a story about how hard it is to open the “clamshell” packaging of toys and electronic gadgets. The summit, “A crisis in finance”, made page 3 of the business section.) On television news, world leaders’ efforts to stave off disaster were displaced by speculation about Hillary Clinton’s next job and by fires in California (four firemen injured).(...) neither the new president nor the Congress will seriously contemplate anything that might be seen as a surrender of sovereignty to international bodies. Desirable though it may be in principle to create some kind of supranational financial regulator, for example, this is not going to happen. In the regulatory sphere, as with fiscal and monetary policy, US policymaking will remain national for the foreseeable future. Clive Crook - Financial Times

It is notable that two major centers of power issued statements on the geopolitical scene that were quite forthright. Both the European Union in a unanimous statement and President Lula of Brazil said they looked forward to renewing collaboration with the United States, but this time as equals, not as junior partners. (...) Can Obama accept the fact that the United States is no longer the world's leader, merely a partner with other power centers? And, even if he can, can he somehow get the American people to accept this new reality? Immanuel Wallerstein
David Seaton's News Links
The ground breaking "Bretton Woods II" meeting in Washington last weekend was strangely absent from American media. Why?

It may be because the end of American world hegemony it foretells is simply too depressing for Americans to read and hear about. Immanuel Wallerstein, who is otherwise quite hopeful in regards to Obama, asks the $64 question upon which much of the success or failure of his presidency depends:
Can Obama accept the fact that the United States is no longer the world's leader, merely a partner with other power centers? And, even if he can, can he somehow get the American people to accept this new reality?
That is the central question: can he himself accept it and if so can he get Americans to accept that "American Exceptionalism", of which he is considered by many to be "exhibit A", is finished?

Probably not. As different as he and Bush and Clinton and Reagan are, they are all presidents of the USA and form follows function. Only Jimmy Carter, timidly and briefly, tried to awaken Americans to reality and he is still reviled for doing so.

However, if with his intelligence and eloquence, Barack Obama can somehow midwife this end of the "dream" and the liberation that the reality of its ending represents, then and only then, will he have the chance to become one of America's greatest presidents. DS

The dangers of thinking that everyone is as superficial as we are

shahahdahBarack Obama is being given ominous advice from leaders on both sides of the Atlantic to brace himself for an early assault from terrorists.(...) Lord West of Spithead, the Home Office Security Minister, spoke recently of a "huge threat", saying: "There is another great plot building up again and we are monitoring this." The Times

The day after the new president's election, al Qaeda issued a little-noticed statement declaring Barack Obama a murtad, i.e. an apostate whose betrayal of Islam is judged the most heinous. Believers have the duty to execute a murtad unlike other non-believers whose death sentence is optional. Debka
David Seaton's News Links
During the recent presidential campaign there were many scurrilous and totally unfounded attacks circulating on the Internet accusing Barack Obama of being a crypto-Muslim and an enemy of Israel. This is nonsense.

I think that it is idiotic for anyone to say or to suggest that Barack Obama is not a Christian or a friend of Israel or that he in any way supports the Palestinians. Everything he says or has said, does or has done, his every vote in the Senate, even his naming Rahm Emanuel as his chief of staff, all bear this out. I repeat, that this line of attack is both ignorant and stupid.

What I do find strange is that at the same time some of Obama's most enthusiastic supporters think that, in spite of his support for Israel and his conspicuous Christianity, that simply because of his color or because he is famously named "Barack Hussein" it is going to have some enormous "healing" or soothing effect on America' relations with the Islamic world. As we can see from Al Qaeda's communique above... Nothing could be further from the truth.

These people are not Disneyland "cast members": they are not playing word games. This is not a drill.

As I have had it explained to me, if your father and grandfather were Muslims and if you have a Muslim name, but profess another religion publicly and support the enemies of Islam (Israel) that makes you an apostate, a "murtad". Here is a quote from the Wikipedia article on the subject of apostasy.
The four major Sunni and the one major Shia Madh'hab (schools of Islamic jurisprudence) agree that a sane adult male apostate must be executed
If you look up the subject in Google you will find some 1,160,000 entries referring to the subject. Laws to this effect are on the books of several Muslim countries at this very moment.

It seems to me obvious that for the United States of America to elect a president named "Barack Hussein", who is a practicing Christian and a supporter of Israel will be seen by many Muslims as the ultimate provocation and the fulfillment of the most paranoiac fantasies of the most extreme Salafists.

They would say that this is what America does to Muslims: not only does it persecute them, insult the Prophet and defame their faith, it takes the son and grandson of Muslims and turns him into the chief killer and persecutor of Muslims. A Muslim version of Damien.

The bottom line is that you can't have it both ways. It is one thing if somebody named "Bill" or "George" or "John" or "Hillary" bombs Pakistan or Iran and supplies the Israelis with weapons and quite another if someone with "Hussein" anywhere in his name does it... It's adding insult to injury. Even Daniel Pipes couldn't invent a more insulting provocation to Muslims. DS

Thursday, November 13, 2008

Reality you can believe in


A couple of quotes from two of my heroes, Nouriel Roubini and Tom Engelhardt: The title of Tom Engelhardt's piece is "Don't Let Obama Break Your Heart" and Roubini's title is, "The Dismal Outlook for the US and Global Economy and the Financial Markets".
Obama will inherit and economic and financial mess worse than anything the U.S. has faced in decades: the most severe recession in 50 years; the worst financial and banking crisis since the Great Depression; a ballooning fiscal deficit that may be as high as a trillion dollar in 2009 and 2010; a huge current account deficit; a financial system that is in a severe crisis and where deleveraging is still occurring at a very rapid pace, thus causing a worsening of the credit crunch; a household sector where millions of households are insolvent, into negative equity territory and on the verge of losing their homes; a serious risk of deflation as the slack in goods, labor and commodity markets becomes deeper; the risk that we will end in a deflationary liquidity trap as the Fed is fast approaching the zero-bound constraint for the Fed Funds rate; the risk of a severe debt deflation as the real value of nominal liabilities will rise given price deflation while the value of financial assets is still plunging. Nouriel Roubini

On the day that Americans turned out in near record numbers to vote, a record was set halfway around the world. In Afghanistan, a U.S. Air Force strike wiped out about 40 people in a wedding party. This represented at least the sixth wedding party eradicated by American air power in Afghanistan and Iraq since December 2001.(...) So, after January 20th, expect Obama to take possession of George Bush's disastrous Afghan War; and unless he is far more skilled than Alexander the Great, British empire builders, and the Russians, his war, too, will continue to rage without ever becoming a raging success. Finally, President-elect Obama accepted the overall framework of a "Global War on Terror" during his presidential campaign. This "war" lies at the heart of the Bush administration's fantasy world of war that has set all-too-real expanses of the planet aflame. Its dangers were further highlighted this week by the New York Times, which revealed that secret orders in the spring of 2004 gave the U.S. military "new authority to attack the Qaeda terrorist network anywhere in the world, and a more sweeping mandate to conduct operations in countries not at war with the United States."(...) Domestically, it's clear enough that we are about to leave the age of Bush -- in tone and policy -- but what that leave-taking will consist of is still an open question.(...) All you had to do was look at that array of Clinton-era economic types and CEOs behind Obama at his first news conference to think: been there, done that.(...) How about former Treasury Secretaries Robert Rubin and Larry Summers, those kings of 1990s globalization, or even the towering former Fed chief from the first Bush era, Paul Volcker? Didn't that have the look of previews for a political zombie movie, a line-up of the undead?(...) You could scan that gathering and not see a genuine rogue thinker in sight; no off-the-reservation figures who might represent a breath of fresh air and fresh thinking (other than, being hopeful, the president-elect himself). Clemons offers an interesting list of just some obvious names left off stage: "Paul Krugman, Joseph Stiglitz, Jeffrey Sachs, James Galbraith, Leo Hindery, Clyde Prestowitz, Charlene Barshefsky, C. Fred Bergsten, Adam Posen, Robert Kuttner, Robert Samuelson, Alan Murray, William Bonvillian, Doug & Heidi Rediker, Bernard Schwartz, Tom Gallagher, Sheila Bair, Sherle Schwenninger, and Kevin Phillips."(...) What Obama looks to have are custodians and bureaucrats of empire, far more cautious, far more sane, and certainly far more grown-up than the first-term Bush appointees, but not a cast of characters fit for reshaping American policy in a new world of disorder and unraveling economies, not a crew ready to break new ground and cede much old ground on this still American-garrisoned planet of ours. Tom Engelhardt

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If I were to make a synthesis of what the two pieces above portend, I would say that progressives have until 2010, barely two years, to make a real difference in the way the world works, because if the economy is as bad as Roubini says it is and if Obama is only going to use warmed over Clintonites to fix it, as Tom Engelhardt says, then the Democrats are going to lose control of Congress in the mid-term elections.

A narrow window of opportunity indeed, but probably the only window opened since the mid 1960s.

So, I agree with Tom Engelhardt that all those who have progressive agendas should press their cases hard and not give Barack Obama a minute's grace.

If progressives don't make a stink from day one we are going to continue with our endless wars, we will continue to torture, we will continue to aid and abet the endless oppression of the Palestinian people: and we will do all this while the Democrats political credit erodes as long discredited bubblemeisters run the world economy into the ground... And to top it off, this whole mishigos will be packaged as "change" and the Sarah Palins of this world will even call it "socialism".

That should not be allowed to happen. The next two years may turn out to be nothing more than what the president-elect calls a "teaching moment", but even that opportunity should not be lost.

So let Tom Englehardt's closing words resound in progressive circles:
Leave Obama to them and he'll break your heart. If you do, then blame yourself, not him; but better than blaming anyone, pitch your own tent on the public commons and make some noise. Let him know that Washington's isn't the only consensus around, that Americans really do want our troops to come home, that we actually are looking for "change we can believe in," which would include a less weaponized, less imperial American world, based on a reinvigorated idea of defense, not aggression, and on the Constitution, not leftover Rumsfeld rules or a bogus Global War on Terror.
At least, if nothing else, our beautiful English language should remain intact and it should remain clear what the word "change" actually means, even if finally, nothing, or hardly anything ever
really gets changed. DS

Wednesday, November 12, 2008

Yet more reality

Der SPIEGEL: So what can Obama do?

Niall Ferguson: He can give a great inauguration speech.

SPIEGEL: And what else?

Ferguson: Give more great speeches.

SPIEGEL: He can't do more?

Ferguson: No, because he will have the least latitude of all presidents we can remember. Obama wants to assemble a nonpartisan government, and we will experience a more cautious first 100 days than we did under Bill Clinton. He will be cautious to the point of being boring. This will be precisely his great strength.

SPIEGEL: Where does the problem lie?

Ferguson: With Hank Paulson.

SPIEGEL: What does the current treasury secretary have to do with Obama?

Ferguson: Because of his big bailout plan, Paulson has already spent the money for Obama's healthcare reform and for his tax cuts. The money is gone.
A big struggle over control of Barack Obama’s foreign policy has already begun with his first White House staff nominees. Many of the people currently advising him, and all of those behind past Bush policies, are going to tell him his administration must choose between “weakness,” on the one hand, and “strength” plus “global leadership.” The latter means a quest for American hegemony that won’t be any more successful under Obama than it has been under Bush, and along the way will destroy his presidency just as it destroyed George Bush’s. William Pfaff
David Seaton's News Links
A window is opening briefly, people all over the world are impressed that the Americans have elected someone with African blood as their leader and most impressed of all are the Americans themselves. But racism will have actually died out when the novelty has worn off and the skin color of the US president finally becomes invisible and nothing else is seen but his job performance.

This "death of racism" is going to come sooner than many of Obama's well-wishers may feel comfortable with.

According to Eric Kleefeld at TPM quoting a Hotline/Diageo poll:
Obama has a favorable rating of 65%, and 66% of voters are somewhat confident or very confident that he can bring change to Washington. On the other hand, large majorities want him to compromise with Republicans (58%) and appoint an even mix of Dems and GOPers to his cabinet (61%).(...) As for the individual issues themselves, voters as a whole want movement on energy independence (24%), financial regulation (22%), a middle-class tax cut (21%), and national health care (15%). Obama's base of Democratic voters rank their priorities a bit differently: Middle-class tax cut 29%, financial regulation 22%, national health care 19%, and energy independence 13%.
I think that the results in California give a key to the complexity of the political climate today. Obama won by 61% to 37%, yet "Proposition Eight", to prohibit gay marriages, passed with the vote of African-Americans and Hispanics. It would appear that there is a very solid, socially conservative vote among those who voted for Obama and made a Democratic victory possible.

The Democratic coalition is made up of racial minorities, labor unions, and university educated "intellectuals": the gay issue is one that is basically for up market members of the last group.

Like the abortion issue, the gay issue is a dividing line between all these groups. What the California vote means is that there is still ample ground to grow "Reagan Democrats".

What is the synthesis here? What exactly does "change" mean in this context? A different face, a different way of talking, or the sort of sea change that Roosevelt brought about? Certainly the California vote
is like a Zen koan.

Why am I so skeptical that anything truly important is set to happen?

Simply because nobody is seriously talking about cutting defense spending in order to pay for all the "stimuli" or health or infrastructure reforms.
Speaking from memory, I think Americans spend almost eighty percent of the world's total defense expenditure... something absurd like that and I don't hear Obama or anyone close to Obama talking about "Guns or butter".

It is bailout time, are the Chinese supposed to bankroll the Pentagon?

What I sense is that the ever cautious Obama has brought us to the shores of the Rubicon and is about to hand out fishing polls. DS

Tuesday, November 11, 2008

Reality check

Those who think that they have just voted to legalize Utopia (and I hardly exaggerate when I say this; have you been reading the moist and trusting comments of our commentariat?) are preparing for a disillusionment that I very much doubt they will blame on themselves. The national Treasury is an echoing, empty vault; our Russian and Iranian enemies are acting even more wolfishly even as they sense a repudiation of Bush-Cheney; the lines of jobless and evicted are going to lengthen, and I don't think a diet of hope is going to cover it. Nor even a diet of audacity, though can you picture anything less audacious than the gray, safety-first figures who have so far been chosen by Obama to be on his team? (...) In other words, there is something pain-free and self-congratulatory about the Obama surge. This has happened before, of course, with the high-sounding talk about the "New Frontier," the "Great Society," and "Morning in America." It's just that this time it's more than usually not affordable. There are many causes of the subprime and derivative horror show that has destroyed our trust in the idea of credit, but one way of defining it would be to say that everybody was promised everything, and almost everybody fell for the populist bait. Christopher Hitchens - Slate
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There are many who still believe that history is made from the biographies of "great men", when in fact political reality is the product of the interacting forces generated by the natural conflict of interests of the sum total of the world's inhabitants who press against each other individually and collectively in their struggle to obtain some acceptable result... Some groups, notably the wealthy and the powerful press more than others, but the total interaction is infinitely complex and individuals have little effect on its outcome.

For a long time, many of the most scientific political thinkers were sure that the synthesis of all these conflicts would lead inevitably to a result that would benefit humanity and so the process was called "progress". Today most would agree that we are moving somewhere, but nobody knows really where, and almost no one thinks that we will ever "arrive", or if we did that we would be much pleased with the result.

We are talking about a process.

Truly no man or woman or woman living is above or outside this process.

Barack Obama is a product of the same social and political process that produced and elected Eisenhower (To go back any further than Eisenhower, before the days of television is to engage in political archaeology), JFK, LBJ, Nixon, Ford, Carter, Reagan, G.H. W. Bush, Clinton and... has elected and reelected, George W. Bush.

Many seem to feel that Barack Obama has been anointed more than elected and that he is somehow absolved of the same law of gravity that weighed upon his predecessors, illustrious and otherwise.

The major difference between Obama and his predecessors is not his color or his intelligence, it is the greatly diminished power that he will inherit.

Just as it is a very different thing to be the CEO of General Motors today then it was when "Engine Charlie" Wilson declared that what was "good for General Motors is good for the USA" (and by extension the world) so it too is a very different thing to be President of the USA today then it was in the Reagan period.

It’s another world.

At the end of WWII the United States was “the last man standing”.

At the end of the Cold War, the USA was the unquestioned hegemon.

That has all changed.

Not only is the USA now flat broke, its only unquestioned superiority, its massive military power, is proving ineffective in producing favorable and predictable outcomes.

Another massive change is that the Anglo-American version of capitalism is being seriously questioned, this, in economic terms, is as if Pope Benedict had hung out a “gone fishin’” sign on Saint Peter's, a great vacuum exists where recently there stood a temple of legitimacy.

Everyone around the world is pleased thst Obama, right down to his color, is nothing like Bush, but that doesn't mean that the hard men and women who manage things are so pleased that they will forget for a moment what their objectives are: nor will the stream of events open like the waters of the Red Sea to Obama's "soft power".

I think everything will be sweetness and light with Obama exactly until - and not one moment longer - he tries to show “leadership”: meaning trying to push people to go where they don’t want to go.

At that moment he will be just one more president of a bankrupt USA that loses wars and destroys shareholder value. DS

Monday, November 10, 2008

While he was thinking I was hitting him

China said on Sunday it will loosen credit conditions, cut taxes and embark on a massive infrastructure spending program in a wide-ranging effort to offset adverse global economic conditions by boosting domestic demand. This is a shift long advocated by analysts of the Chinese economy and by some within the government. It comes amid indications that economic growth, exports and various industries are slowing. A stimulus package estimated at 4 trillion yuan (about 570 billion U.S. dollars) will be spent over the next two years to finance programs in 10 major areas, such as low-income housing, rural infrastructure, water, electricity, transportation, the environment, technological innovation and rebuilding from several disasters, most notably the May 12 earthquake. The policies include a comprehensive reform in value-added taxes, which would cut industry costs by 120 billion yuan. - Xinhua

Asian markets welcomed news of the stimulus plan. The Japanese Nikkei index rose 5.6 percent in trading early Monday. Stocks in Hong Kong and Shanghai rallied strongly, jumping over 5 percent and lifting share prices that have been depressed for much of the year. (...) The stimulus plan, though driven by domestic concerns, represents a fresh commitment by China to keep from adding to the economic and financial woes of the United States and Europe. It is also likely to cheer foreign investors in China’s economy by ensuring that the country remains a source of growth. New York Times

"He is a very smart fighter; when he's fighting he is thinking all the time. But, all the time he was thinking I was hitting him." Jack Dempsey
David Seaton's News Links
While Americans and their western allies were all patting themselves on the back for electing Barack Obama, the Chinese actually took a major step to re-float the world economy. In a sense the Chinese are now holding the key to the US economy.

Sun Tzu must be be proud.

What this means is that in less than a week, it will be to China that world leaders will be looking to when they meet in Washington and not toward the USA. Things need to be done quickly and it would be almost impossible for the US to duplicate the Chinese plan. As the the NYT says:
China’s package is not comparable to fiscal stimulus measures that are being discussed in Washington. In China, much of the capital for infrastructure improvements comes not from central and local governments but from state banks and state-owned companies that are encouraged to expand more rapidly. The plan also differs from the $700 billion financial rescue package approved by Congress, which has helped strengthen bank balance sheets but did not directly mandate new lending or support specific investment projects in the United States. China’s overall government spending remains relatively low as a percentage of economic output compared with the United States and Europe. Yet Beijing maintains far more control over investment trends than Washington does, so it has greater flexibility to increase investment to counter a sharp downturn.
Maybe it will be the Chinese that bail out GM. DS