The ever vigilant Tinfoil Hat Boy has noted that Dear Leader seems to think the NIE isn't a bug in his plan to extend the Free Market Faith to the heathen, it's a feature:
...Once again facing criticism over the handling — and meaning — of intelligence reports, Mr. Bush said the new assessment underscored the need to intensify international efforts to prevent Iran from acquiring a nuclear weapon.
He said Iran could not be entrusted with acquiring even the scientific knowledge to enrich uranium for peaceful civilian use, explicitly declaring for the first time what has been an underlying premise of the Bush administration’s policy. He also appeared to rule out any new diplomatic initiative with the current president of Iran, Mahmoud Ahmadinejad.
“Look, Iran was dangerous, Iran is dangerous, and Iran will be dangerous, if they have the knowledge necessary to make a nuclear weapon,” Mr. Bush said, sounding defensive at times, during a news conference dominated by questions about the assessment, known as a National Intelligence Estimate. “What’s to say they couldn’t start another covert nuclear weapons program?”
This is right along the teachings of the Great GOP Guru Rove, who says when Republicans win, they win, and when they lose, they win.
Arthur Silber warns that it ain't over yet, pilgrims, and frankly I agree with this position.
On the observation that perhaps it looks like the CIA won’t light the fuse (this time), let me suggest that it is not altruism that's slowed down the march.
After all, which faction of the CIA do we speak of?
The faction that prefers intelligence gathering, or the faction that loves them some covert boogaloo?
The faction that farms out work to DynCorp, or the faction that prefers Blackwater perfidy? Or has relatives in any of a dozen other companies that do dirty deeds dirt cheap?
Are we talking about the Poppy Bu$h geriatric Reptilicans, or L’il Boots’ NeoCon faithful? Or the Third Way faction of the Clintonista?
It's highly likely that the Big Shitpile (with a tip o' the tinfoil to Atrios, the originator of the descriptor) is starting to clog the pipes all over the world. And the last thing any Company subsidiary wants is a corporate venture that might lead to Pootie-poot or Team Xinhua making off with all the Texas Tea.
But back to Silber:
…with the news of the latest NIE about Iran, many people breathe sighs of relief, believing the danger has lessened. It has not, except perhaps for a tragically brief moment. Their relief, even in the smallest degree, reveals their inability and/or refusal to understand the lethal forces in play, and their inability and/or refusal to comprehend that those dangers continue on their murderous and bloody path.
Of course, a global understanding like that would really bring the Big Shitpile crashing down, and then who would profit?
...How bad is it? Well, I’ve never seen financial insiders this spooked — not even during the Asian crisis of 1997-98, when economic dominoes seemed to be falling all around the world.
This time, market players seem truly horrified — because they’ve suddenly realized that they don’t understand the complex financial system they created.
Before I get to that, however, let’s talk about what’s happening right now.
Credit — lending between market players — is to the financial markets what motor oil is to car engines. The ability to raise cash on short notice, which is what people mean when they talk about “liquidity,” is an essential lubricant for the markets, and for the economy as a whole.
But liquidity has been drying up. Some credit markets have effectively closed up shop. Interest rates in other markets — like the London market, in which banks lend to each other — have risen even as interest rates on U.S. government debt, which is still considered safe, have plunged.
“What we are witnessing,” says Bill Gross of the bond manager Pimco, “is essentially the breakdown of our modern-day banking system, a complex of leveraged lending so hard to understand that Federal Reserve Chairman Ben Bernanke required a face-to-face refresher course from hedge fund managers in mid-August.”
The freezing up of the financial markets will, if it goes on much longer, lead to a severe reduction in overall lending, causing business investment to go the way of home construction — and that will mean a recession, possibly a nasty one.
Behind the disappearance of liquidity lies a collapse of trust: market players don’t want to lend to each other, because they’re not sure they’ll be repaid.
In a direct sense, this collapse of trust has been caused by the bursting of the housing bubble. The run-up of home prices made even less sense than the dot-com bubble — I mean, there wasn’t even a glamorous new technology to justify claims that old rules no longer applied — but somehow financial markets accepted crazy home prices as the new normal. And when the bubble burst, a lot of investments that were labeled AAA turned out to be junk.
Thus, “super-senior” claims against subprime mortgages — that is, investments that have first dibs on whatever mortgage payments borrowers make, and were therefore supposed to pay off in full even if a sizable fraction of these borrowers defaulted on their debts — have lost a third of their market value since July.
But what has really undermined trust is the fact that nobody knows where the financial toxic waste is buried. Citigroup wasn’t supposed to have tens of billions of dollars in subprime exposure; it did. Florida’s Local Government Investment Pool, which acts as a bank for the state’s school districts, was supposed to be risk-free; it wasn’t (and now schools don’t have the money to pay teachers).
How did things get so opaque? The answer is “financial innovation” — two words that should, from now on, strike fear into investors’ hearts...
But the innovations of recent years — the alphabet soup of C.D.O.’s and S.I.V.’s, R.M.B.S. and A.B.C.P. — were sold on false pretenses. They were promoted as ways to spread risk, making investment safer. What they did instead — aside from making their creators a lot of money, which they didn’t have to repay when it all went bust — was to spread confusion, luring investors into taking on more risk than they realized.
Why was this allowed to happen? At a deep level, I believe that the problem was ideological: policy makers, committed to the view that the market is always right, simply ignored the warning signs. We know, in particular, that Alan Greenspan brushed aside warnings from Edward Gramlich, who was a member of the Federal Reserve Board, about a potential subprime crisis.
And free-market orthodoxy dies hard. Just a few weeks ago Henry Paulson, the Treasury secretary, admitted to Fortune magazine that financial innovation got ahead of regulation — but added, “I don’t think we’d want it the other way around.” Is that your final answer, Mr. Secretary?
Now, Mr. Paulson’s new proposal to help borrowers renegotiate their mortgage payments and avoid foreclosure sounds in principle like a good idea (although we have yet to hear any details). Realistically, however, it won’t make more than a small dent in the subprime problem.
The bottom line is that policy makers left the financial industry free to innovate — and what it did was to innovate itself, and the rest of us, into a big, nasty mess.
But this brings up another point: the distinct possibility the Big Shitpile was a hot potato that simply went bad before its time. The markets may have been 'pozed to head south after Dear Leader's wrecking crew had left the building, not while they were still planting the thermite. nezua limón xolagrafik-jonez points to what was 'pozed to be the direction of the new frontier of the War on Terra. There's all the homegrown cynics who...
...’challenge the intrinsic qualities of capitalism, charging that in the insatiable quest for growth and profit, the philosophy is serving to destroy the world’s ecology, indigenous cultures, and individual welfare.’
Does pointing out the Big Shitpile threatens to completely unravel the global consumerist culture constitute an act of terror?
One supposes, like torture, it all matters whom one informs about it, and how one goes about it.
The principal problem of chaos as strategery is that its effects have a tendency to spin far out of control.
Not to mention the smell.