Year: 2008

Putin: Russia Opposed to NATO Expansion in Principle

This statement is not in any way surprising. The Russians, and the Soviet Union before them, have always seen NATO as a spear pointed at them.

That is why they demanded, and got, promises that following the reunification of Germany that there would be no eastward expansion of NATO.

Unfortunately, this promise was promptly ignored, and countries have been added to NATO with abandon, and the Russians see this as a ring of steel intended to threaten and pacify them.

There is nothing that has contributed to the bellicose nature of current Russian foreign policy as much. They are completely justified in seeing this as a threat and a provocation.

First FCS NLOS- C Howitzer to be Unveiled

This is, I think, the only variant of the FCS manned ground vehicle (FCS-MGV) at all likely to see large scale production.

The artillery Mafia in the Army have been clamoring for a replacement for the M109 Paladin for years, and the downsides of the FCS-MGV in a counter-insurgency scenario really do not apply to this vehicle, as a self propelled Howitzer should never be in a position where it would be in close contact with the populace.

That being said, it would have been far cheaper to buy something from our European allies.

The Real Problem with Nuclear Power: Too Damn Expensive

This fact comes as no surprise to me. I work in nuclear power, on end of life and spent fuel issues, and this is something that costs a lot of money, and is rarely even quoted in the price of a plant.

So, even without considering that US plants inevitable delays and cost overruns (the French have their act together better), nuclear power is not economically viable without massive government subsidies.

Looks Like the Iraqis May Kill Bush’s “Iraq Forever” Deal

It turns out that almost every political party in Iraq hates it, including the largest party in parliament, the ISCI, the Iranian stooges party, oppose it too, “Officials from the Islamic Supreme Council of Iraq, an important Maliki ally, said several parts of the proposal violated Iraq’s sovereignty.”

This is not surprising:

The Americans want to continue to have “a free hand” to arrest Iraqis and carry out military operations, and they want authority for more than 50 long-term military bases, Mr. Adeeb said. He said that he doubted that a security pact along the lines sought by the Americans would pass in the Iraqi Parliament.

Mr. Abadi, another senior member of Dawa, said Americans were insisting on keeping control of Iraqi airspace and retaining legal immunity for American troops, contractors and private security guards.

The US is claiming that this is “Iranian disinformation”, and ambassador Crocker is saying that, “the agreement will not establish permanent bases in Iraq, and we anticipate that it will expressly forswear them”, but Bush already said that no agreement is permanent, in a thousand years of so something might change.

It’s also noted that Iraqi leaders are dubious about negotiating with a lame duck president, so come January 1, 2009, when the UN authorizations expire, both mercenaries contractors and US troops will be subject to Iraqi courts.

Titanic — Deck Chairs

Deutsche Bank asset management devision is looking to, “repackaging their home-loan bonds into new securities without creating collateralized debt obligations, which are being shunned by investors“.

They are called REMICs, are real estate mortgage investment conduits:

REMICs are real estate mortgage investment conduits, the tax-exempt vehicles used to turn mortgages into bonds by passing payments from the loans to different investors in varying orders of priority or at different times. Re-REMICs repackage some of those securities or a single class into new bonds in which payments are also directed in different ways.

I’m not seeing a difference here. It appears to me that they are putting a new wrapper on the big sh$#pile, as Atrios is wont to call it, and calling it George.

Geoff Fieger Acquitted in Politically Motivated Trial

It appears that the US attorney scandal is bearing bitter fruit, and that the defense’s suggestions that this was a politically motivated prosecution found favor with the jury as a result. Feiger was found not guilty of felony campaign finance violations.

Unfortunately, once destroyed, faith in the Department of Justice will not come back simply through regime change, so public corruption charges will be difficult to prosecute for many years to come.

Fed Vice Chairman Donald Kohn Suggests Permanent Access for Wall Street

This seems to be a day for very stupid ideas.

Kohn is suggesting that the cash for the big sh&^ pile program be continued, “as long as regulators tighten oversight of the companies.”

A better ideal would be to apply anti-trust to make the investment banks small enough to be small enough to fail.

Constant bailouts would be norm under the system proposed, because financial experts have an unlimited capability to delude themselves that, “This time is different“.

We do not want the Fed, and thus the taxpayer, to be supporting the gut instincts of a Harvard MBA whiz kid.

Former German FM Posits Israeli Attack on Iran

Joschka Fischer, former German Foreign Minister, is writing that he expects an Israeli military strike on Iran.

It was linked to on Nouriel Roubini’s blog, and he goes into the potential economic/political implications:

  • Oil Spiking to well over $200/bbl.
  • Iran setting their dogs loose in Iraq.
  • Hesbollah going postal in Lebanon.
  • Hamas going postal in Gaza.
  • Difficulties in transiting the Persian Gulf, which might further increase oil prices.

While I agree that these consequences are likely, I disagree with Roubini on one point though, thinks that such an attack would guarantee a McCain victory, because he believes that, “Such October surprise by Israel would also certainly lead to the election of McCain and defeat of Obama as a national security crisis of such an extent would doom the chances of Democrats to win the White House.”

There are two problems, the first is that if the Israelis act after the conventions, it will be explicitly seen as meddling in US partisan politics, and the blow back later will be too intense, and the Israelis understand the ebb and flow of party politics, and the second is that $200/bbl oil would do immediate damage at the gas pump.

Further, I think that Republicans no longer have the confidence of the American people on anything including national security.

Then again, maybe I am an optimist.

Really, Really, Really, Really Bad Ideas, The Juxtaposition of Border Security and Copyright Edition

The newest leaked draft of the Anti-Counterfeiting Trade Agreement (ACTA) is proposing that border security will have the ability to inspect digital devices, determine whether they contain “infringing material”, and then confiscate them.

So if you have MP3’s on your iPod leally ripped from you CD, they get to confiscate it without any due processas, “The draft allows for the confiscation or destruction of any device the agents deem suspect.”

The draft is available at WikiLeaks.

Times Ombud Evicerates Times OP/ED Editor

Clark Hoyt reviews Edward Luttwak’s OP/ED in the New York Times, and finds that his observations have nothing to do with the truth when he said that Barack Obama would be considered an apostate who deserved death under Islamic law.

The Times Op-Ed page, quite properly, is home to a lot of provocative opinions. But all are supposed to be grounded on the bedrock of fact. Op-Ed writers are entitled to emphasize facts that support their arguments and minimize others that don’t. But they are not entitled to get the facts wrong or to so mangle them that they present a false picture.

….

I interviewed five Islamic scholars, at five American universities, recommended by a variety of sources as experts in the field. All of them said that Luttwak’s interpretation of Islamic law was wrong.

David Shipley, the editor of the Op-Ed page, said Luttwak’s article was vetted by editors who consulted the Koran, associated text, newspaper articles and authoritative histories of Islam. No scholars of Islam were consulted because “we do not customarily call experts to invite them to weigh in on the work of our contributors,” he said.

That’s a pity in this case, because it might have sparked a discussion about whether Luttwak’s categorical language was misleading, at best.

Interestingly, in defense of his own article, Luttwak sent me an analysis of it by a scholar of Muslim law whom he did not identify. That scholar also did not agree with Luttwak that Obama was an apostate or that Muslim law would prohibit punishment for any Muslim who killed an apostate. He wrote, “You seem to be describing some anarcho-utopian version of Islamic legalism, which has never existed, and after the birth of the modern nation state will never exist.”

….

Shipley, the Op-Ed editor, said he regretted not urging Luttwak to soften his language about possible assassination, given how sensitive the subject is. But he said he did not think the Op-Ed page was under any obligation to present an alternative view, beyond some letters to the editor.

I do not agree. With a subject this charged, readers would have been far better served with more than a single, extreme point of view. When writers purport to educate readers about complex matters, and they are arguably wrong, I think The Times cannot label it opinion and let it go at that.

Emphasis mine.

The way that I read this, he is calling out David Shipley, and not Edward Luttwak. While he clearly states that Luttwak is speaking from profound ignorance, his main beef is with the NY times OP/ED page, and he is saying that is a disgrace that they let this sh%$ show up on their pages.

Economics Update

The current estimates for may have payrolls dropping by somewhere around 60,000. This number is rather more indicative than the unemployment rate, since those who have given up are not counted for the latter.

To my mind, the percentage of the population working is probably the best number, at least when compared to the BLS which increasingly appears to employ Tinkerbell as their chief statistician.

It’s been a busy time for real estate. We have The Economist noting that house prices are falling even faster than during the great depression, which is worse than it sounds, because we had deflation during the depression, which means that houses are falling even faster in real terms, see the pretty picture:

We are alsoseeing prices fall for houses above $5 million, the NY Daily News is declaring New York to be a renters’ market, and foreclosures in Boston 45% of all housing transactions are foreclosures.

What’s more, the popping of the real estate bubble is now now hitting property taxes, as counties raise rates to account for falling property values and foreclosures.

It’s no wonder that mortgage defaults are surging.

In energy, oil is still below the record, but oil increased to $128.25/bbl, though, for the first time in 25 days, gas did not hit a new record.

Gas didn’t fall either though, it stayed at Sunday’s level.

The dollar has strengthened somewhat, because the markets are expecting a Fed rate hike, which I doubt, given that the election is 6 months away.

In the real economy, the ISM manufacturing index increased to 49.6, the consensus was that it would fall to 48.0, but this is not good news, just less bad news, since any number under 50 is still a contraction.

In banking, S&P have noticed that some of the major investment banks are using funny accounting on their assets, and so they have cut the ratings or outlooks on Lehman Brothers, Merrill Lynch, Morgan Stanley, Bank of America, Citi, and JPMorgan Chase.

It’s no wonder bank losses are expanding, and you have the Financial Times wondering how much bank failures are likely to increase as more debt goes bad.

On the good news side of the equation, it appears that Wachovia has had a case of temporary sanity, and they fired CEO Kennedy Thompson after hemorrhaging profits and stock price over the last year.

Hopefully, there will be no golden parachute for him.

Rememberance: Steve Gilliard

The folks at Group News Blog have a remembrance far better than I could write.

It’s been a year since he died, and I miss him.

He was a brilliant polemicist and had an encyclopedic knowledge history, which was why he was spot on in Iraq.

I had always thought that if I were to run for office, I would want him, Paul T. Riddell, and Alexei Sayle to be my speech writers.

This is why I would never be elected dog-catcher in the US. Outraged truth telling does not net one votes.

I miss him a lot.

The Beginning of Executive Accountability?

It’s nice that shareholder activists are foing after undeserved executive compensation:

Almost one in five HSBC shareholders refused yesterday to back a controversial executive pay scheme that could see the bank’s top six executives pocket up to £120m over three years.

Shareholder after shareholder at a lengthy and at times fractious meeting in London brought up the subject of the huge bonuses that could be paid at HSBC despite the drop in the bank’s share price and a multibillion-dollar write-down from the US sub-prime mortgage crisis.

“You have been paid a salary; your bonus is not for losing money, which you have consistently done,” one shareholder told the chairman, Stephen Green. “You and the rest of the board have caused misery to millions of people and yet you are there with your hands out taking everything you can … how much is enough?”

I would hope that this becomes more common, and more effective (the activists got 18% of the vote).

This is crony capitalism at its worst.

Steven Pearlstein Gets the Economy

In his article, which I recommend that you all read, The Fading of the Mirage Economy, he nails what is going on in the first three paragraphs:

Suddenly, it seems, we’re getting hit from all directions.

Energy and food prices are soaring. The housing market continues to collapse. Government revenue is falling, and taxes are rising. Airlines are jacking up fares and fees while reducing service. Banks are pulling credit lines. Auto companies are cutting production once again. Even investment bankers are losing their jobs.

The tendency is to see these as separate developments, each with its own causes and dynamic. Fundamentally, however, they are all part of the same story — the story of the global economy purging itself of large and unsustainable imbalances that for a time allowed many Americans to think they were richer than they really were.

I disagree on one point. I do not think that this was some sort of random confluence of events.

I think that this has been mainstream economic policy for the past 28 years. It is the gradual removal of wealth from the bottom 90+% and its transfer to those at the top, with free, easy, and increasingly unregulated credit and credit markets to create the temporary illusion of a high standard of living.

The goal was to create debt peonage, to make our society less like the industrialized world, and more like Mexico.

Commodity Regulator to Scrutinize Markets

It appears taht the Commodities Futures Trading Commission (CFTC) is looking toward an investigation to see if market arbitrage has artificially inflated prices, while this is not regulation, the results of the study may result in new regulations.

In particular, they are looking at the role of commodities index funds on this process.

Interestingly enough, this was not brought on by the oil price run up, but by spikes in cotton prices, which have increased despite events which ordinarily would have lowered prices.

As a part of moving toward greater regulation of the commodities market, Senators Levin and Feinstein are moving toward granting the CFTC explicit regulatory authority on trades on the London Oil Bourse executed from the US, on the basis of the fact that the exchange has physical terminals here.

Obama Resigns from Trinity United Church of Christ

I am not sure as to whether his resignation is a good or a bad thing.

Obviously, the church has embarrassed him repeatedly, but there is the question as to whether he is acquiescing to the Republican bitch slap theory of politics, where they launch an attack not to tell the truth, but to make the Democrat back down, which makes the voters wonder whether he will stand up for them.

I’m inclined to think that it is a losing proposition, because he was 20 years. The Republicans will both claim that it’s the “real Barack Obama”, and that he lacks the guts to stick with the church where he was married and his daughters baptized.