They Comment on the Tsunami

The New York Pravda's singing the line that the little people have no need to worry about Wall Street, because, you know, it's all good.

Unwisely, they allowed comments to the positive thinking on their website. Not surprising, there is something of a chorus of agreement at first. But there's also quips like this from Scott Baker:

...Yes, ordinary investors should be worried - not because the global growth story isn’t intact, or because real companies have real earnings, but because the $%^&@@#$ hedge funds leveraged themselves 8-10 times over their assets and now have to dump everything in sight - especially the good stuff - to meet massive redemptions. Oh, rich investors are not immune from panic selling either, nor are lending institutions like banks etc. The hedge fund industry is ruining the market for the rest of the world, which rightly looks at fundamentals and the economy, and they need to be regulated. No one should be allowed to take on more than 1.5 times margin. I don’t give a damn how many hedge funds blow up - let their managers live on the street in cardboard boxes. Their returns after huge fees were never worth the risks anyway - as is now apparent - but they are destroying the markets and even economies for the rest of the world and need to be stopped or put out of business, hopefully without the current carnage...

As much as I'd like to blame it all on hedge funds and my ex-girlfiend's husband, it's not just that. Look at how the "bluest of the blue chip" mortgage lender constructs its loans:

...Traditionally, banks made mortgages by lending the money that they took in as deposits, and they held the loans until they were repaid. Countrywide and most rivals largely do not operate that way. They borrow money from banks and investors on Wall Street, and when they close a mortgage they quickly sell, repeating the cycle over and over. Until recently, the relationship has been extremely profitable for both sides.

But as defaults on mortgages made in recent years have surged, the system has started to break down.

On Wednesday, Countrywide sought to raise money by issuing short-term debt known as commercial paper, something it does regularly. But there was no demand on Wall Street, according to two people briefed on the situation. Less than two weeks ago, the company said it had access to $50 billion in commercial paper, which has a term of nine months or less. In the last few days, the market for short-term debt has seized up, particularly for loans that are tied to mortgages, because investors say they can no longer value them...

Ponzi schemes tend to work that way.

My comment to Pravda?

Once upon a time before the invasion of the pod people markets were, you know, regulated.

Somewhere along the line some nitwit suggested government needed to be shrunk to the size where you could drown it in a bathtub. Strangely enough, that did not apply to the military industrial complex, but that's a rant for another day. When you remove all the safeguards against predators from the economy, the wolves move right in with the sheep, usually with promises of high yield at minimal risk.

Throw the crooks out of Washington, and strangely enough, things will stabilize on Wall Street as well. If FDR were alive, he'd tell you that today; and even though he's not, his record and his words and his spirit still do.

Context of the Dialog

via Lambert via bluegal, Sinfonian at BlastOff runs a test on the political positions of the major presidential candidates as presented by a recent article on London's TimesOnline.

All three are correct. The mind boggling item here is that the restoration of Constitutional government is a centrist position. The window of political possibility is no open view of the wider world. It a fortified thin narrow slit where paranoid gun men snipe at the crowd below.

Zombie Markets Eat Your Brain First and Then Your Wallet

Nouriel Roubini, via Atrios:

...First, you take a bunch of shaky and risky subprime mortgages and repackage them into residential mortgage backed securities (RMBS); then you repackage these RMBS in different (equity, mezzanine, senior) tranches of cash CDOs that receive a misleading investment grade rating by the credit rating agencies; then you create synthetic CDOs out of the same underlying RMBS; then you create CDOs of CDOs (or squared CDOs) out of these CDOs; and then you create CDOs of CDOs of CDOs (or cubed CDOs) out of the same murky securities; then you stuff some of these RMBS and CDO tranches into SIV (structured investment vehicles) or into ABCP (Asset Backed Commercial Paper) or into money market funds. Then no wonder that eventually people panic and run - as they did yesterday – on an apparently “safe” money market fund such as Sentinel. That “toxic waste” of unpriceable and uncertain junk and zombie corpses is now emerging in the most unlikely places in the financial markets.

Haven't I seen her on Fox News?

...Second example: today any wealthy individual can take $1 million and go to a prime broker and leverage this amount three times; then the resulting $4 million ($1 equity and $3 debt) can be invested in a fund of funds that will in turn leverage these $4 millions three or four times and invest them in a hedge fund; then the hedge fund will take these funds and leverage them three or four times and buy some very junior tranche of a CDO that is itself levered nine or ten times. At the end of this credit chain, the initial $1 million of equity becomes a $100 million investment out of which $99 million is debt (leverage) and only $1 million is equity. So we got an overall leverage ratio of 100 to 1. Then, even a small 1% fall in the price of the final investment (CDO) wipes out the initial capital and creates a chain of margin calls that unravel this debt house of cards. This unraveling of a Minskian Ponzi credit scheme is exactly what is happening right now in financial markets.

Nothing to see here! Shuffle along, shuffle along. Until you find some more easy money, anyway.

The problem being, that even though it's tough to have sympathy with the members of Bu$hie's zombie ba$e who can no longer float multimillion dollar loan scams that run up the costs of everything, these undead are so firmly entwined with the 'Merikan economic system that any attempt to toss them in their graves with their consumerist lifestyles will entangle you, your family, and your little dog, too.

I hear headshots of rational dialog work, but some of these individuals are so acerebral, it's hard to find a locus to communicate with. And then there are those who simply live with their heads up their asses.

Good-Bye and Good Riddance. If Only.

Garrison Keillor says it better than I could.

But are we really rid of him? I think not.

Jomamma points towards a timely analysis of the international response to the Rovian Dominion:

...Russia and China have now witnessed enough of the Bush administration's unprovoked aggression in the world to take neocon intentions seriously. As the US has proven that it cannot occupy the Iraqi city of Baghdad despite 5 years of efforts, it most certainly cannot occupy Russia or China. That means the conflict toward which the neocons are driving will be a nuclear conflict...

Americans need to understand what the neocon Bush regime cannot: a nuclear exchange between the US, Russia, and China would establish the hegemony of the cockroach...

Establish? There are places in this land of the Bravado and Home of the Lien, 'Merika, where the cockroach has Authority and knows how to use it.

The 11th Hour

An interesting interview with one of the producers of Leonardo DiCaprio's The 11th Hour, and check out the trailer at the link:

...KW: I know that documentaries are becoming increasingly popular, but how is this film different from Al Gore's, and why would anyone want to see another film on eco-catastrophe?

NC: Our films are totally different - we contextualize environmental problems so that you come away with a greater understanding of how and why we got here - an essential component to understanding how to reverse the damage that has created our problems. Additionally, we deal with global warming only for seven minutes out of 90 - the rest of the film examines the state of environmental degradation and ecosystem collapse as a symptom of a larger problem, which we see as the industrial revolution and the way our culture relates to the planet as a resource to be consumed. Our film is a journey through man's relationship to the planet - how we got to this critical point - the forces in our society that are stalling us, keeping us here - and the hope for the future. We focus the entire last third of the film on solutions.

KW: I watched the trailer, and it looked a compilation of every Hollywood disaster movie ever made, except that it was all real. Do you think those disaster movies that were big in the 1980s and 1990s were in some way a premonition of the reality we are facing today?

NC: I think on a deep level we know we have been destroying nature and we have projected onto other forces, like alien invasions in films, the very thing we are doing to ourselves. We have been living extremely out of balance with not only the planet, but with ourselves, so if cinema is a kind of reflection of our unconscious, then one could see we are in crisis for sure. The problem with a lot of these disaster films is that they play upon fear without delivering any purpose or meaning. What is all this destruction in the service of? What kinds of stories are we really trying to tell? Frequently, nature is positioned as the enemy - we are battling a volcano, a quake, a tidal wave, a comet. This idea of us against the world is something that has been perpetuated for a long time in human civilization, and it does not ultimately serve us - we have to see ourselves as a part of nature.

KW: You've got some great people appearing in the film, including Diane Wilson, whom I have interviewed. Gloria Flora appears in the trailer and talks about the importance of voting. I happen to know that as the supervisor of one of our national forests, she became a victim of right-wing politics. Does her story come out in the film?

NC: We interviewed 71 people for this film, and 54 people made it into our 90-minute cut. As you will see, the film is really a seamless dialogue amongst these specialists, visionaries and experts, who have been on the front lines of this issue for decades. Unfortunately, we did not have an opportunity to get into their personal stories, but frequently we selected people because of their vast knowledge of these issues and of how hard it has been to do their work unobstructed. For instance, we had an interview slated with James Hansen during the summer he issued his report to Congress on global warming. He was subsequently shut down or censored from talking to anyone - including us.

KW: The film seems like it will emphasize technical solutions to our problems. Does that mean there is nothing we can really do until science comes up with these solutions?

NC: We do talk about existing technologies as both transitional solutions and long-term solutions, but technology is nothing without an evolution in culture. We need to regain our citizenship - we have been turned into full-time consumers, and as a result, the infrastructure of our physical and mental society is in collapse. How are we going to demand that the administration - this one or the next - build green or develop better transportation systems or retool the wasteful processes of the industrial production system if we don't engage as humans on a political level? The technologies exist right now that can dramatically reduce our impact on the planet - but they are not being implemented at the scale needed to make the difference we desperately need right now. We need a societal movement on the level of the civil rights movement to take back the power we have lost, so that we can begin to push for changes that serve the greater good of people and the planet, and not just the corporate few...

The difference between bad and worse

...is always sharper than the difference between good and better.

There is too much still at stake. Abu Gonzoles is still out there, with plans for the likes of us. You aren't in a concentration camp yet, are you?

You had better continue to vote and fight Democratic if you want to stay out of the Cheneyburton Work Corp.

Yes, aside from the casinos, AT&T and Citibank (among others) have a big piece of Harry Reid. And Nancy too.

They're crooks, and not just capitulators, they're active manipulators. But the they aren't neo-nazi TheoCon Dominionists, and they won't sign on to imprisonments and torture of their political opposition. Look at what Bu$hCo has shown itself capable of. This crap isn't going away because Rove leaves his Washington office. He's still out there.

And there are others worse than Rove working behind the scenes. Does the name David Addington mean anything to anyone?

The DINOcrats steal and trash the Constitution. They steal millions, and dump on the concepts that built this country. They are corrupt.

The Rethuglicans steal billions and use the Constitution to light their cigars.

The really cold blooded ones that own the Rethuglicans, the Reptilicans, think nothing of starting wars, covert or overt, of conquest that kill thousands of innocent Americans and hundreds of thousands - if not millions- of others. They think nothing of stealing trillions of dollars to feed their Empire. They are willing to advocate the use thermonuclear weapons for political ends and would have used them by now if they could. The main problem being that the people smart enough to actually fire them have been too smart to let it happen.

Yet.

Yes, there is venal corruption among the DINOcrats. But there is gibbering madness in the intellects behind the Rethuglicans. Don't forget it. Criticize the Democrats, but realize there is a significant difference between the two evils.

Poppy Strikes Back

So much for Cheneyburton dissing the Iraq Study Group and the Saudi Royals last Fall.

So much for posturing about the Plamegate that never quite seems won for either side.

Here's the real reason for Karl's bug out, and it wasn't the subpoenas. Or subpoenae. It's 'cause he needs to see his family, and because Dear Leader's got a whole new game!

If you're gullible enough to take it at face value:

With Rove’s Departure, a New Era

By JIM RUTENBERG and STEVEN LEE MYERS
Published: August 15, 2007

CRAWFORD, Tex., Aug. 14 — President Bush took the White House in 2001 with Texas swagger, and promptly filled the West Wing with fellow Texans who shared his ideology and determination to fundamentally change the way the capital worked...

Boyo, Mission Accomplished! Gimme a lighter for this copy of the Constitution, pardner.

...Six years later, the departure of Karl Rove from Mr. Bush’s brain trust will bring an end to that outsider approach. With the exception of Vice President Dick Cheney, Mr. Bush’s inner circle is now populated entirely by the kinds of Washington pragmatists and insiders whom the incoming president had seemed to dismiss openly...

That's right. He only seemed to diss 'em. Time for a nice, shiny new insider approach.

Couched in the warm and fuzzy glow of pangyric fluff piece, and there've been quite a few of them over the last 24 hours, the facts boil down to this: the Consigliere presented Dear Leader with a plan. Dear Leader, doubtless at Rove and Cheney's behest, laughed it off. The King was not amused.

So much, sooner or later, Karl had to walk, to spin his agenda another day.

Wise Fools

If Charlie Rangel invokes a more draconian version of the draft, the DINOcrats will lose both Congress and the Presidency in a landslide.

If they try to do this without ending or even attempting to end the war, they are going to get their asses handed to them.

And even if Rangel does pass legistlation to "close" all the deferment loopholes, there will be no Young Republicans going. As soon as that legistlation leaves his hands, there will be Amendments. And signing statements. And waivers for people with the Right reasons.

Once again, the DINOcrats will have enabled the march towards Rethuglican fascism.

This time, they will have created slave armies, and the capacity for Dear Leader to identify, segregate, and eliminate all vocal opposition among the young.

Gridlock by Strategic Neccessity

Via Avedon [how does she spot all this], Matthew at Scary Shit:

...We have to act now. Extreme pressure must be brought to bear against the Democratic leadership at the DNC. We need Howard Dean and the boys to understand that by counting their chickens now, and by not trying to rock the boat, and by not holding on to their bird in their hand (and any other fucking cliches I can think of), and not taking advantage of having both houses of congress, and not holding this criminal administration accountable RIGHT NOW, that Democrats will stay home in droves in 2008. That we will not donate, we will not volunteer, and we will not vote for Democrats in 2008 unless they step up to the plate and do their fucking jobs right now and start functioning as an opposition party.

I am sick and tired of the hostage game that the Dems are playing. I am already well fucking aware of the terrifying nature of the Republican party. However, I refuse to accept their lesser of two evils act any fucking more. Their bullshit rationale that they can't do anything, or they might not win any more elections is over. If they can't win any more elections, ever again, by standing up for the Constitution, freedom and democracy, then fuck it. For real. Fuck it sideways. I would rather see them make the other side explicitly endorse fascism, at least. I'm just done with the Kabuki. No more.

The big name bloggers are failing us. Every movement needs leaders, and Digby and Greenwald are two of the best on our side. They have the readers, they have the responsibility to put the pressure on the hapless Democrats, and force them to do what is right. God knows they won't do it on their own.

LudditeRobot knows the score:

A bridge fell down in my city recently. When I listen to all of the elected officials — our leaders, in this DFL-controlled legislature or even in the Republican Governor’s circle — all I can hear is noise and blatant, ham-fisted opportunism. And predictable nastiness from the predictably nasty. As in most catastrophes, the heroism and true leadership came from ordinary people, not elected officials. From, for instance, a 20 year old who rescued children from a bus — and, when asked whether he would like to meet with the President, had this to say: “Nope.”

I think we’re in a societal catastrophe more generally. It’s almost painfully obvious where we should look for the structures of fundamental change. And it ain’t the Democratic Party.

LudditeRobot is right, it is not the Democratic party, it is us.

Unfortunately, in my view, the Democratic party is all that we've got until the new congress and president take office in 2009. The VRWC's conduct in the immigration debate is the blueprint for action. It is much easier to stop bad legislation than to pass good legislation. The founders set up our country that way for a reason. As distasteful as it may be, we must use the Democrats in congress as a means to an end. That end is stopping literally everything until a new congress and president can be elected.

Stopping any more legislation, no matter what it is. No more surveillance legislation, no legislation to institute a draft, no more feel-good post office naming legislation, no more pork, no more nothing. I accept the premise made by many people out there (sorry don't feel like finding a link) that the Democrats are not a functioning party because of all of the blue-dogs and DLC members floating around out there, and that Pelosi's leadership is so fragile that a stiff breze could shatter it. So be it.

Harry Reid, so-called master parliamentarian, and Nancy Pelosi, so-called San Francisco liberal need a functioning caucus to pass legislation. Harry Reid only needs 40 senators to stop every single damn piece of legislation from now until January 2009.

Of course, Harry's list of donors wouldn't be very happy with that, would they?

His list of donors is reproduced here, because sooner or later that link will vaporize into the ether of cyberspace:

1 MGM Mirage $158,450
2 Mandalay Resort Group $130,100
3 Harrah's Entertainment $93,100
4 Lionel, Sawyer & Collins $73,516
5 Simmons Cooper LLC $73,400
6 Sierra Nevada Corp $59,300
7 Newmont Mining $55,808
8 Sierra Health Services $54,250
9 Station Casinos $52,250
10 Citigroup Inc $42,750
11 Park Place Entertainment $40,850
12 AT&T Inc $40,050
13 Boyd Gaming $39,549
14 Bass Brothers Enterprises $39,000
15 Baron & Budd $38,000
16 Outdoor Advertising Assn of America $36,738
17 Cassidy & Assoc/Interpublic Group $35,594
18 UNITE HERE $34,261
19 National Cable & Telecommunications Assn $34,001
20 Don King Productions $34,000

Your DINOcratic Frontrunners, Brought to You by the Iraq Study Group

So why do all three of the DINOcratic frontrunners have positions on the Iraq war that might have been written by James Baker, Poppy Bu$h, and the Saudi Royal House?

...John Edwards, the former North Carolina senator, would keep troops in the region to intervene in an Iraqi genocide and be prepared for military action if violence spills into other countries. Senator Hillary Rodham Clinton of New York would leave residual forces to fight terrorism and to stabilize the Kurdish region in the north. And Senator Barack Obama of Illinois would leave a military presence of as-yet unspecified size in Iraq to provide security for American personnel, fight terrorism and train Iraqis.



These positions and those of some rivals suggest that the Democratic bumper-sticker message of a quick end to the conflict — however much it appeals to primary voters — oversimplifies the problems likely to be inherited by the next commander in chief. Antiwar advocates have raised little challenge to such positions by Democrats...

That line, of course, being a candidate for Pravda's Big Lie of the Day.

Antiwar groups, and thousands of individuals are continually bombarding Congress and all the major news outlets with the message that we want out, now. However, once again, the serious pundits and Wise Old Men of Washington and the corporate state have decided this isn't a serious position. Now, all that oil wouldn't have anything to do with that, would it?

Speaking of all that oil, apparently Dear Leader's allowing his mouthpieces to float the draft ballon in order to help keep the oil flowing.

Despite all assurances to the contrary, who gets drafted this time around? It won’t be the Young Republicans.

It will be blacks, Mexicans, and poor whites. It will be overtly Democratic or atheist kids naive enough to let it be known. It will be any prisoners younger than 42 and of color. The white fundamentalist supramacists from the trailer parks will be your noncom officers, and the Christian TheoCon fundies your brass.

You get the job of clearing Basra of all opposition. In 120 degree heat. With body armor that doesn’t work. Against insurgents armed with AK-47s made in China, bought by the Pentagon, and issued to Sunnis and Shiites- both sides- the week before in the Pentagon's latest efforts to arm the "civilians" against the "insurgents".

Like that uranium dust you’re breathing?

We are in Iraq, soon to be Iran and Syria too, for the rest of your life, which won’t be long if you let yourself be drafted. There is only a limited amount of oil in the world, Cheneyburton and the Saudis won’t allow alternatives to be developed, and the banker that’s mortgaged your house, car, and soul needs a tank of gas for his Hummer.

There are hundreds of thousands of private contractors associated with this war, and possibly millions of Americans making a lot of money off it. They have tools of a police state nobody except George Orwell and Phillip K. Dick ever dreamed about when I was a teenager fighting against the Viet Nam war.

It will be far worse, far more unjust, and far more unfair than anything we had to deal with.

And you will hear nothing of injustice from the main$tream media. Likely by the time the draft is fully in swing the blogsphere will be totally marginalized due to the corporatization of the internet. Net neutrality means that blacklisted websites take a long time to load- and you get noticed for loading them.

The new draft may target people into their late 30s. The new draft may involve conscription of men and women for “public service”. The new draft will be like nothing you’ve ever seen, because it will be constructed to fight a war for oil for the next 50 years in an increasingly policed state.

Place your trust in your leaders, don’t rock the boat, and watch where it takes you.

Zeitgeist

When you have a couple of hours, check it out.

Seven Years & Seven Months Until Global Nuclear War

As of August 11, 2007.

So okay, we don't fit John Titor's timeline precisely.

It's a big multiverse.

Keeping Up with the Jonesenovs

Canada sez anything you can do we can do better:

An international scramble for the Arctic's oil and gas resources accelerated yesterday when Canada responded to Russia's recent sovereignty claims with a plan to build two military bases in the region.

On a trip to the far north, the prime minister, Stephen Harper, said: "Canada's new government understands that the first principle of Arctic sovereignty is: use it or lose it. Today's announcements tell the world that Canada has a real, growing, long-term presence in the Arctic."

An army training centre for 100 troops is to be built in Resolute Bay, and a deep-water port will be built on Baffin Island, to bolster Canada's claim to ownership.

The move comes a week after a Russian sub planted a flag on the Arctic seabed. Moscow claims rights to half the Arctic. The US, Norway and Denmark also have claims.



A US state department official, speaking last week, signalled that Washington will not stand by in the face of what it sees as a Russian land-grab, though America's position is complicated by its failure so far to sign the treaty of the seas.

As Canada was making its move, Danish scientists were preparing to head for the Arctic tomorrow as part of their bid for a share of the region's wealth. A US coast guard icebreaker was heading to the Arctic to map the seafloor north of Alaska.

Although the US and Canada enjoy good relations, the American ambassador to Canada, David Wilkins, has expressed annoyance with the prime minister's claims in the past.

No country owns the Arctic Ocean and north pole, but there are international laws governing its use. Under one UN convention, each country with a coast has sole exploitation rights in a limited "exclusive economic zone", beyond which mineral resources are controlled by the International Seabed Authority. However, upon ratification of the UN convention, each country was given a 10-year period within which to make claims to extend its zone. Norway (ratified in 1996), Russia (1997), Canada (2003), and Denmark (2004) have all launched claims that certain Arctic sectors should belong to their territories.

The UN's ruling on these submissions will determine who gets the right to extract the Arctic's huge reserves of oil and gas, estimated at 10bn tonnes.

Arguments over the Arctic were until recently academic because of the depth of the ice, but global warming has seen some of it melt, making drilling feasible. The US geological survey estimates that 25% of the world's undiscovered oil and gas could be located under the polar cap...

[graphics from here]

Which makes global warming a winning situation for both Canada and Russia. While Denmark will be even more underwater than it already is, the thawing of Greenland produces a subcontinent. The Southern and Atlantic states will face great hardship as the world warms, but most of the West rises up abruptly from seal level, and makes Alaska far more clement than it is right now.

Those who would rule here will win from the warming of the world, and the rise of the seas.

If you don't think they've thought about it, then it may be you aren't thinking about it enough either.

Liquidity Problem

Just when credit is drying up globally, a different sort of liquidity looms. With thanks to Dr. William L. Chapman at UI Urbana, who's had to pick up the climate bullhorn now that the National Snow and Ice Data Center, NOAA, and NASA face Federal orders to keep quiet and Regent University-trained commissars who keep an eye on them:

Today, the Northern Hemisphere sea ice area broke the record for the lowest recorded ice area in recorded history. The new record came a full month before the historic summer minimum typically occurs. There is still a month or more of melt likely this year. It is therefore almost certain that the previous 2005 record will be annihilated by the final 2007 annual minima closer to the end of this summer.



In previous record sea ice minima years, ice area anomalies were confined to certain sectors (N. Atlantic, Beaufort/Bering Sea, etc). The character of 2007's sea ice melt is unique in that it is dramatic and covers the entire Arctic sector. Atlantic, Pacific and even the central Arctic sectors are showing large negative sea ice area anomalies.



While we use sea ice concentration data supplied by NASA via the National Snow and Ice Data Center (NSIDC), there are some differencesbetween the way we and NSIDC process our sea ice indices. NSIDC uses 10-day running means; we use 3-day running means. NSIDC will o ften report sea ice extent indices and records, we are reporting a new sea ice minima sea ice area. The ice area metric includes year-to-year variations within the central pack ice and not just variations in the southern sea ice edge. Regardless of these differences, the rapid rate of sea ice melt this summer, along with the current negative sea ice anomalies almost guarantees a record Northern Hemisphere summer sea ice minimum this summer, by any metric...

Strategeric Problem

What Paul Krugman says today:

...What’s been happening in financial markets over the past few days is something that truly scares monetary economists: liquidity has dried up. That is, markets in stuff that is normally traded all the time — in particular, financial instruments backed by home mortgages — have shut down because there are no buyers.

This could turn out to be nothing more than a brief scare. At worst, however, it could cause a chain reaction of debt defaults.

The origins of the current crunch lie in the financial follies of the last few years, which in retrospect were as irrational as the dot-com mania. The housing bubble was only part of it; across the board, people began acting as if risk had disappeared.

Everyone knows now about the explosion in subprime loans, which allowed people without the usual financial qualifications to buy houses, and the eagerness with which investors bought securities backed by these loans. But investors also snapped up high-yield corporate debt, a k a junk bonds, driving the spread between junk bond yields and U.S. Treasuries down to record lows.

Then reality hit — not all at once, but in a series of blows. First, the housing bubble popped. Then subprime melted down. Then there was a surge in investor nervousness about junk bonds: two months ago the yield on corporate bonds rated B was only 2.45 percent higher than that on government bonds; now the spread is well over 4 percent.

Investors were rattled recently when the subprime meltdown caused the collapse of two hedge funds operated by Bear Stearns, the investment bank. Since then, markets have been manic-depressive, with triple-digit gains or losses in the Dow Jones industrial average — the rule rather than the exception for the past two weeks.

But yesterday’s announcement by BNP Paribas, a large French bank, that it was suspending the operations of three of its own funds was, if anything, the most ominous news yet. The suspension was necessary, the bank said, because of “the complete evaporation of liquidity in certain market segments” — that is, there are no buyers.

When liquidity dries up, as I said, it can produce a chain reaction of defaults. Financial institution A can’t sell its mortgage-backed securities, so it can’t raise enough cash to make the payment it owes to institution B, which then doesn’t have the cash to pay institution C — and those who do have cash sit on it, because they don’t trust anyone else to repay a loan, which makes things even worse.

And here’s the truly scary thing about liquidity crises: it’s very hard for policy makers to do anything about them.

The Fed normally responds to economic problems by cutting interest rates — and as of yesterday morning the futures markets put the probability of a rate cut by the Fed before the end of next month at almost 100 percent. It can also lend money to banks that are short of cash: yesterday the European Central Bank, the Fed’s trans-Atlantic counterpart, lent banks $130 billion, saying that it would provide unlimited cash if necessary, and the Fed pumped in $24 billion.

But when liquidity dries up, the normal tools of policy lose much of their effectiveness. Reducing the cost of money doesn’t do much for borrowers if nobody is willing to make loans. Ensuring that banks have plenty of cash doesn’t do much if the cash stays in the banks’ vaults.

There are other, more exotic things the Fed and, more important, the executive branch of the U.S. government could do to contain the crisis if the standard policies don’t work. But for a variety of reasons, not least the current administration’s record of incompetence, we’d really rather not go there...

And it's catching:

Market declines in Europe and New York Thursday sparked a similar rout today in Asia. Stocks in Japan, Hong Kong and Australia dropped by more than 2.5 percent, with South Korea’s benchmark dropping 4.27 percent. As investors sold off assets considered relatively risky, such as Philippine stocks, they bought those considered safer, such as Japanese government bonds. Asian currencies such as the Thai baht also retreated against the U.S. dollar and more liquid and stable currencies such as the Japanese yen.

“Everyone’s been talking about a credit crunch and not surprisingly it turned into one,” said Jan Lambregts, head of Asia research at Rabobank in Hong Kong. While Asian banks didn’t seem to be directly affected, he said, “the main problem is we don’t know who is bearing the losses and that kind of uncertainty is creating the situation that we’re in right now...”

The quandary faced by central bankers was illustrated nowhere better than in South Korea. After raising interest rates on Thursday in an attempt to discourage excessive lending by bankers, Korean central bankers today were reportedly attending crisis meetings on how to handle fears of a liquidity crunch...

Economic regulation works only for the components of the economy the government regulates. Banks weren't designed to deal with the problems they now face. In the 1990s, that AEI stalwart and $upreme Court wannabee Robert Bork said that the only way to restore Righteousness would be to re-create the Great Depression. It does seem, with Bu$hCo-Cheneyburton popularity in the 20 percentile, sodomy as popular as ever, and the TheoCon takeover of the country pretty much stalled that the Wise Old Men of Washington are entertaining just such ideas again.

And it may be Mr. Norquist, you have successfully drowned your government in your bath tub this time.

Unthinkable, until it isn't...

Like my anonymous commenter, most of cyberspace that's noticed the currency threat from Team Xinhua has written it off: the typical response is they would never do that along with look who noticed it first.

Except for Ian Welsh at The Agonist, who's noticed a complicating factor or three or four...

The reaction of most market watchers and economists has been to note that if China really does that the value of their reserves will tank--when you tank the US dollar, the value of all assets in US dollars also tank. It would also badly damage the Chinese competitive position, since a low Yuan relative to the dollar is how they subsidize their exports to the US. Dumping T-bills, then, would be the equivalent of cutting off your nose to spite your face.

But . . . Congress is, in fact, getting uppity. And what China is saying is that if Congress eventually does pass real, significant tariffs then China is in a position to retaliate - hard.

So higher levels of the government are now pouring oil on the waters, no, no, we would never do that... but the message has been sent.

Meanwhile, the Nelson Report says:

'Our conversation this afternoon can be paraphrased this way: "Putin is really angry with the US now because of Bush policy on any number of fronts, and as we are seeing on everything from using their intelligence services to carry out contract killings, to shooting rockets into Georgia, we are not dealing with a leader who feels he needs to be subtle."

'In fact, our friend insists, "Russia thinks the US economy now is really vulnerable, and that using their huge foreign exchange reserves as a weapon against us...say by demanding payment for their oil only in Euros...may make a lot of sense."

'This expert's conclusion: "I can tell you right now that Wall Street may not think the Chinese are serious, but Moscow is watching this very closely, and may well come to a conclusion that we don't like!" '

The Agonist has made the argument that America has screwed around with Russia too often as well. I don't see any significant downside to Russia from doing this. And it is one more nail in the coffin being constructed for the US dollar's days as world reserve currency. As country after country moves off the dollar and onto the Euro, the dollar will lose its reserve status. We were talking about this 3 years ago at the BOPnews, and it is continuing apace. People forget about it, because it's happening slowly - but it is happening. And as the dollar continues under downward pressure (pressure that is only kept survivable because of central bank intervention) the willingness of investors to hold dollar denominated assets will continue to decline. We're looking at dollar/Yuan parity eventually. And I don't think eventually is as far out as people might think.

Now, let's push this out 5 to 10 years.

Everyone likes to say that the market for oil is global - prices are set on global markets, and so it doesn't matter who controls it.

True... until it isn't. The majority of world oil is in the control of various government companies, not private ones. As the supply continues to tighten at various price points, and as that oil which isn't under control is tied into long term specific contracts (for example, the way China is paying a premium to lock up African oil reserves) this will become less and less true. Oil will be sold based on long term contracts from national oil companies. There is going to come a point, and most of us here today will see it, where you just can't buy oil on "the market" because it's going to be all tied up.

At the point that both these things happen, the US is going to be in a world of hurt. The US economy, at the top end, is now about selling paper. But no one's going to want that paper in such a world.

Hearts, Minds, and Wallets

You know, he should really know better than to try to calm people down:

WASHINGTON, Aug. 8 — President Bush, seeking to reassure Americans about the economy and combat Democratic criticism of his policies, said on Wednesday that recent financial market turbulence was not a cause for worry but a natural adjustment from the improvident lending of recent years.

Speaking at the Treasury Department, with Treasury Secretary Henry M. Paulson Jr. sitting across the table and reporters seated in a circle around them, Mr. Bush said that his economic advisers would be “paying close attention as the market begins to readjust its assessment of risk” in housing and other sectors.

The president said he also discussed with Mr. Paulson and other cabinet members the possibility of tax cuts and reduced regulations aimed at overcoming what some see as a weakening of the competitiveness of American capital markets compared with those overseas...

It was an unusual presentation for Mr. Bush, both politically and economically. Presidents are usually advised not to wade into discussions of markets at a time when they are so unpredictable and anxiety-inducing.

Mr. Bush’s suggestion that the recent housing declines should be seen as a normal market correction from past excesses and that the government should avoid interfering with the process carries political risks at a time when some people are losing their homes, lending institutions are shaky and Democrats are demanding action.

Indeed, immediately after the president’s comments, Democrats excoriated him for saying that the economy was in sound shape, and many called on the administration to encourage federal housing agencies to step in and make more money available, perhaps by buying up troubled mortgages to avoid foreclosures.

For his part, Mr. Bush, in a verbal tour of the current economic scene, was eager both to calm the markets and knock down the Democratic calls for the administration to intervene, predicting that the turmoil in the housing sector would end with a “soft landing” and would not damage the larger economy.

“I believe that markets ultimately look at the fundamentals of any economy,” Mr. Bush said. “And the fundamentals of our economy are strong. Inflation is down. Real wages are increasing. The job market is a strong job market. People are working. Small businesses are flourishing.”

They'll greet us as liberators, with roses, too.

And where's that codpiece uniform?

A Fist Full of Dollars

Strange, this wasn't in the 'Merikan press today:

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation...

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing's foreign reserves should be used as a "bargaining chip" in talks with the US.

"Of course, China doesn't want any undesirable phenomenon in the global financial order," he added.

He Fan, an official at the Chinese Academy of Social Sciences, went even further today, letting it be known that Beijing had the power to set off a dollar collapse if it choose to do so.

"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings.

"China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar," he told China Daily...

Now we see just how insane the Company really is. This is brinksmanship of a whole different order. Here, the Kennebunkport Corleones stand to lose in a big way. The question is whether they realize it or not, whether they're betting Team Xinhua will blink first, or whether China has given them an offer they cannot refuse.

In the Halls of the Scholars of the Kingdom

Via Atrios, a link to Glenn Greenwald describing the world of those born, in their minds, to dictate to the rest of us the Right Way to Live.

America is plagued by a self-anointed, highly influential, and insular so-called Foreign Policy Community which spans both political parties. They consider themselves Extremely Serious and have a whole litany of decades-old orthodoxies which one must embrace lest one be declared irresponsible, naive and unserious. Most of these orthodoxies are ossified 50-year-old relics from the Cold War, and the rest are designed to place off limits from debate the question of whether the U.S. should continue to act as an imperial force, ruling the world with its superior military power.

Most of the recent "controversies" involving Barack Obama's foreign policy statements -- including his oh-so-shocking statement that it would not make moral or political sense to use tactical nuclear weapons to bomb isolated terrorist camps as well as his willingness to attack Al Qaeda elements inside Pakistan if the Musharraf government refuses (as they did for some time) -- were not "controversial" among the Establishment on the merits. They were "controversial" (and "naive" and "irresponsible") because they breached the protocols and orthodoxies imposed by the Foreign Policy Community governing how we are allowed to talk about these issues...

This was vividly illustrated by the sharpest exchange from last night's debate, where both Hillary Clinton and Chris Dodd excoriated Obama for his comments on Pakistan, not on the ground that Obama's statements were wrong on the merits (i.e, not that we should avoid military action inside Pakistan under those circumstances), but instead on the ground that he committed the sin of actually discussing with the American people what our foreign policy would be.

The Foreign Policy Community is more secretive than the Fight Club. They believe that all foreign policy should be formulated only by our secret "scholar"-geniuses in the think tanks and institutes comprising the Foreign Policy Community and that the American people should not and need not know anything about any of it short of the most meaningless platitudes...

...The Foreign Policy Community -- our establishment "scholars" -- were almost unanimously supportive of George Bush's invasion, worked themselves into a lather over Saddam's WMDs and mushroom clouds over U.S. cities, stayed silent in the face of obvious Bush abuses and excesses, embraced the most manipulative and fictitious neoconservative doctrines, and they still continuously issue all sorts of theoretical constructs to justify America's increasingly militaristic and imperial role.

There is no real dispute within it about the most fundamental foreign policy questions we face (which is why the "liberal" Brookings Institutional "scholars" are so pro-war and work so cooperatively with the neoconservative AEI). And they not only have a monopoly over deciding who is Serious and who is not, but also in declaring which issues are off-limits from real debate. The foreign policy disasters of the last six years, at least, are their doing.

... Let us also take note of the bizarre fact that the Rules of Seriousness seem to allow someone to run around talking about attacking, invading, and bombing everyone except for the people who actually attacked us on 9/11. All the Serious People cheered on the invasion of Iraq and talk openly about attacking and bombing Iran and Syria. None of those countries, of course, had anything to do with 9/11, but no matter. The Serious People are free to speak as openly and explicitly as possible about new wars with those nations.

But Barack Obama speaks of the possibility of attacking the actual individuals who attacked us on 9/11 if we know where they are and Pakistan leaves them be, and suddenly, he is a terribly Unserious and Naive and Irresponsible person for suggesting such a thing. Apparently, it is very Serious to ponder new wars on a whole list of countries and groups provided they had nothing to do with the 9/11 attacks...

Deep within the secret enclaves of those scholars, there is a body of policy they speak with no one, but that derives from the Poppy of the House of Bu$h and his Consigliere.

That policy is the Grand Strategy designed to rule 'Merika and assign its place in the world for at least the next fifty years, and if successful, possibly for the next millenium.

That strategem is this: chaos.

Might is right, and if destruction and desolation result, and Power is consolidated, then the path of war is the Righteous one.

Might is the Hand of their God, and their God serves them the Power they view as their just reward.

The weak live to serve, and their suffering increases their service.

Now the day approaches when they can openly declare their Manifest Destiny. It has not arrived yet. The plans of the usurpers have not fully blossomed. But with every day that passes another liberty is discarded, and their dream of endless, Holy Power comes closer to reality.

There is a real reason the last thing the Scholars would allow is an attack on the actual perpetrators of the crimes of September 11, 2001.

They'll Call It Freedom Flies

You just can't make up this stuff:

Washington policy hawks are having fits about the fact that the U.S. Air Force has two choices when it comes to a new tanker aircraft: accept Boeing as a monopoly supplier, or accept an open, equal competition that could result in the aircraft being assembled in France.

The scene is being set for even more fun a few years down the road. When USAF's fleet of long-range airlifters starts to wear out--a date being driven closer by combat operations--there will be one military cargo aircraft in production that can do a long-distance mission for the U.S. military, and it will be made in Europe by Airbus...

Alternatively, they'll probably classify the source and proclaim it a patriotic subcontractor of Lockheed.

That, or likely revert to zeppelins.

Lost Toys for and from Lost Boys

The US arsenal lost in Iraq


· 110,000 AK-47s
· 80,000 pistols
· 135,000 bits of armour & 115,000 helmets


Ewen MacAskill in Washington
Tuesday August 7, 2007
The Guardian.

The US has lost track of about 190,000 weapons issued to Iraqi security forces since the 2003 invasion, some of which will have ended up in the hands of insurgents, according to an official report published in Washington. Among the missing items are AK-47 rifles, pistols, body armour and helmets.

The disclosure adds to the picture of the chaotic and clumsy administration of Iraq that has emerged over the last four years.The report, by the government accountability office, which sent its report to Congress last week, found a 30% gap between the number of weapons issued to Iraqi forces and records held by US forces in Iraq. No one in the Bush administration knows where the weapons are now...

What's the deal with the D.o'D. issuing AK-47s? Free trade is a priority of Bu$hCo. The Pentagon is buying and issuing the very weapons of choice for use in street fighting against itself and giving them away... and most likely made in China, at that.

Elsewhere in the global black market, human organs remain a hot item for the Cheneyburtons among us:

...The World Health Organisation estimates that 21,000 liver transplants are carried out annually, but medical experts put annual worldwide demand at at least 90,000.

Demand for kidneys also exceeds supply, and that has given rise to organ trafficking and a black market for rich people and "transplant tourists" who travel to poor countries to buy body parts from people with few other routes to a better living.

A donor in South Africa receives $700 for a kidney compared with $30,000 in the United States. A lack of transparency and little protection for donors has spurred calls by international bodies to crack down on, or at least regulate, the trade.

But even where the trade is banned, laws are often muddled or laced with loopholes, which are sometimes defended by vested interests.

... the unregulated route is much less complicated for the recipient. Any transplant procedure involving a living donor carries risks for the donor -- especially for liver transplants which involve removing part of the donor's liver.

The complications can include bleeding, infection, even death.

In the transplant trade, the recipient need not worry about, for example, exposing a living relative to that risk.

"It is cheaper and your next of kin is not taking the risk and you don't have to care for someone you don't know. Once you pay, it is discarded in a way, it is dispensable," said Luc Noel, a Geneva-based coordinator for Clinical Procedures at the World Health Organisation.

China recently banned the sale of human organs and restricted transplants for foreigners, saying it must first meet demand at home for 2 million organs a year.

Only 20,000 transplants are carried out in China each year. Of these, 3,000 are liver transplants and 95 percent of them use livers from dead donors.

China defended its use of organs from executed prisoners, saying consent was obtained from convicts or their families. A transplant operation using the liver of a dead donor costs around $33,000 in China.

...Pakistan, where trade in human organs is not illegal, is turning into a "kidney bazaar," said the chief executive of Pakistan's Kidney Foundation, Jaffar Naqvi.

There are no confirmed figures for the number of foreigners coming to the country for new kidneys but Naqvi said there were 13 centers in Lahore alone which reported more than 2,000 transplants last year from bought kidneys.

Patients, mostly from Europe, Saudi Arabia and India, pay about 500,000 rupees ($8,500) for a new kidney, he said. Donors are paid $300 to $1,000 and often get no medical care after the surgery.

There is no consent in some cases. In May police arrested nine people, four of them doctors, for abducting people, drugging them and stealing their kidneys for transplant operations.

In the pipeline is a draft law aimed at banning the trade, but a powerful lobby bent on preserving it is trying to ensure it allows kidney donations for a non-relative, with no payment. Such a clause allowing "altruistic" organ donations will ensure the trade continues with secret payment to donors, Naqvi said.

...Stories of people selling their organs, especially kidneys, are not uncommon in Egypt, where more than 30 percent of a population of more than 73 million people live below the poverty line.

Karam, who asked to be identified only by his first name because organ trading is illegal, said it took him only 15 days to secure a kidney for his sister who was suffering from kidney failure. He said a doctor found him a man willing to sell his kidney for 30,000 Egyptian pounds ($5,300).

"The fees of the doctor were 5,000 pounds. Both his money and the fees of the hospital were deducted from the money the 'donor' received," said Karam.

He said doctors usually help in finding people willing to sell their organs from their patients' lists.

Abdel-Kader Hegazy, head of the disciplinary committee at the Doctors' Union, said Egyptian law lacks clear punishment for those involved in illegal transplants, making it easy for doctors to repeat the offence.

"The law says it is illegal to trade in organs but does not specify the punishment. We at the union suspended many doctors and closed their practices, but they have appealed before courts and won their licenses back," he told Reuters.

"It is an annoying and a regrettable situation. Well-known doctors and professors are doing this. They are rich people but they do it because they have no moral values."

...In Turkey, students, unemployed young men and struggling fathers post adverts on the Internet selling their kidneys, listing their drinking and smoking habits and blood type.

These would-be donors say they have had enquiries from Germany, Israel and Turkey with asking prices going up to 50,000 lira ($38,760).

Hakan, a 27-year-old security guard in Istanbul with two young children who also requested only his first name be published, told Reuters he received five or six offers from Turkey and Germany, offering 10,000-15,000 lira ($11,600), but he's holding out for 40,000 lira.

"Of course it's frightening but there's nothing else to be done," he said, adding he hadn't told his wife as he knew she would object.

"I'm doing it because of my family, if I was alone it wouldn't matter. I've got two children ... there's nothing else I can do for them."

Ah, the blessings of a free market and unregulated business.

Distracted

Just read what Shystee has to say about it.



Well little girls and boys, what did you get out of Fitzmas?

On the Legacy of Ashes

MaxSpeak picks out some highlights from Chalmers Johnson's review of Anthony Weiner's Legacy of Ashes: The History of the CIA.

Perhaps the most comical of all CIA clandestine activities -- unfortunately all too typical of its covert operations over the last 60 years -- was the spying it did in 1994 on the newly appointed American ambassador to Guatemala, Marilyn McAfee, who sought to promote policies of human rights and justice in that country. Loyal to the murderous Guatemalan intelligence service, the CIA had bugged her bedroom and picked up sounds that led their agents to conclude that the ambassador was having a lesbian love affair with her secretary, Carol Murphy. The CIA station chief "recorded her cooing endearments to Murphy." The agency spread the word in Washington that the liberal ambassador was a lesbian without realizing that "Murphy" was also the name of her two-year-old black standard poodle. The bug in her bedroom had recorded her petting her dog. She was actually a married woman from a conservative family...

...The historical record is unequivocal. The United States is ham-handed and brutal in conceiving and executing clandestine operations, and it is simply no good at espionage; its operatives never have enough linguistic and cultural knowledge of target countries to recruit spies effectively. The CIA also appears to be one of the most easily penetrated espionage organizations on the planet. From the beginning, it repeatedly lost its assets to double agents...

...Nothing has done more to undercut the reputation of the United States than the CIA's "clandestine" (only in terms of the American people) murders of the presidents of South Vietnam and the Congo, its ravishing of the governments of Iran, Indonesia (three times), South Korea (twice), all of the Indochinese states, virtually every government in Latin America, and Lebanon, Afghanistan, and Iraq. The deaths from these armed assaults run into the millions. After 9/11, President Bush asked "Why do they hate us?" From Iran (1953) to Iraq (2003), the better question would be, "Who does not?"

Secret wars that are secret only to the 'Merikans have an inevitable blowback. But when the blowback is part of the calculus to upgrade the secret war to the real deal, it's an ill wind that blows the Company good.

Hearts and minds and pipes and needles

WASHINGTON - Afghanistan will produce another record poppy harvest this year that cements its status as the world's near-sole supplier of the heroin source, yet a furious debate over how to reverse the trend is stalling proposals to cut the crop, U.S. officials say...

U.N. figures to be released in September are expected to show that Afghanistan's poppy production has risen up to 15 percent since 2006 and that the country now accounts for 95 percent of the world's crop, 3 percentage points more than last year, officials familiar with preliminary statistics told The Associated Press.

But counterdrug proposals by some U.S. officials have met fierce resistance, including boosting the amount of forcible poppy field destruction in provinces that grow the most, officials said. The approach also would link millions of dollars in development aid to benchmarks on eradication; arrests and prosecutions of narcotraders, corrupt officials; and on alternative crop production.

Those ideas represent what proponents call an "enhanced carrot-and-stick approach" to supplement existing anti-drug efforts. They are the focus of the new $475 million program outlined in a 995-page report, the release of which has been postponed twice and may be again delayed due to disagreements, officials said.

The officials spoke on condition of anonymity because parts of the report remain classified.

Counternarcotics agents at the State Department had wanted to release a 123-page summary of the strategy last month and then again last week, but were forced to hold off because of concerns it may not be feasible, the officials said...

Vichy DINOcrats and Hoover Rethuglicans Serve Cake for Dinner

...as in "Let them eat..."

Via Atrios, many interesting things today.

Steven Benen:

It's disappointing, but not surprising. After the president scuttled a compromise between Director of National Intelligence Mike McConnell and congressional Democrats, Senate Dems did what many expected they would do: they caved...

Bush is getting practically everything he asked for. Indeed, under Bush's warrantless-search program launched in 2001, the administration could conduct oversight-free surveillance only if it suspected someone on the call was a terrorist. Under the bill passed by the Senate yesterday, that condition no longer exists.

This won Harry Reid Atrios's Wanker of the Day Award. But really, what else could Harry do? Abu Gonzo was threatening to release the tapes where Harry gets the payola from MGM Grand Casino for rolling over at the start of the Iraq war, not to even mention Patriot2.

Next, it's true, I didn't believe it, but HHHillary and Obama are talking nukes against Terra. Will somebody pour these two idiots a cup of shut the fuck up? This is Yearly Kos they're talking to, not the Tom Tancredo fan club. They doubtless managed to turn off a thousand or so of the most influential bloggers in cyberspace.

Juan Cole:

I'm going to hear Senator Barack Obama on Saturday afternoon at the Yearly Kos convention. Will report back on Sunday about his remarks.

On Thursday, he said he would not use nuclear weapons against al-Qaeda in Pakistan and Afghanistan, then backed up and said "scratch that," there had been no discussion of nuclear weapons.

Hillary Clinton criticized Obama for (initially?) ruling out the use of nuclear weapons, saying that a president should not take any weapon in the arsenal off the table.

I really think the Democrats are misunderstanding the mood of the American people. Is Senator Clinton saying she would entertain the option of nuking Pakistan or Afghanistan? Wouldn't that kill a lot of innocents and spread radioactive materials around on the grass that cows eat, putting it into milk and thence into local children, increasing their chances of contracting cancer? Isn't Obama absolutely right that this is one instance in which nukes are useless for tactical purposes?

Pakistan, by the way, is a) an ally, b) a nuclear power in its own right, c) a major Muslim country of 160 million, the population of which will soon equal that of the United States, and d) an opinion leader among other Muslim states. Most Pakistanis are not fundamentalists but rather Sufis, traditionalists, mild reformists or secularists. Or at least that is the case now. If US presidential candidates push them to the wall, they can after all decide to turn radical...

But boy howdy those Company kids loved it. That was probably worth a cool million in war bucks for the campaign for them both.

Something else striking Atrios pointed to, the meltdown of Jim Cramer on CNBC about the bursting mortgage bubble.

No, it isn't the job of the Fed to bail out market speculators, but even though Cramer's hedge fund buddies are using them as a human shield, the possibility that 14 million people are about to be made homeless is not anything to shrug off with an "I-told-you-so" either.

The biggest tradgedy is solving this problem requires an intelligence and flexibility you are not going to find in any Bu$hCo-appointed Fed chief, even if a big chunk of Dear Leader's ba$e loses their shirts. And homes.

If chaos really is the plan, the people who have sown the wind are about to reap the whirlwind. And all the oil in Iraq won't save them.

Jay Leno Interviews Darth Cheneyburton

Here.

But it does seem hard to believe. The Jay's parsing of the Sith Lord's likely responses are much too human...

What part of paying your way don’t the GOP get?

What Sarah says.

And this, too, by Nick Coleman:

Minneapolis suffered a perfect storm of nightmares Wednesday evening, as anyone who couldn't sleep last night can tell you. Including the parents who clench their jaws and tighten their hands on the wheel every time they drive a carload of strapped-in kids across a steep chasm or a rushing river. Don't panic, you tell yourself. The people in charge of this know what they are doing. They make sure that the bridges stay standing. And if there were a problem, they would tell us. Wouldn't they?

What if they didn't?

The death bridge was "structurally deficient," we now learn, and had a rating of just 50 percent, the threshold for replacement. But no one appears to have erred on the side of public safety. The errors were all the other way.

Would you drive your kids or let your spouse drive over a bridge that had a sign saying, "CAUTION: Fifty-Percent Bridge Ahead"?

Don't blame the engineers, who seem to have evaluated this well.

Blame the federal bureaucrats who would rather fight an endless war for oil than take care of the real national security issues like maintaining the infrastructure of America.

In case you forgot who the real playahs are

R.J. Hillhouse reminds everybody:

At the heart of the Constitutional dispute over domestic spying between current Attorney General Gonzales and former Attorney General John Ashcroft is corporate America. Almost all of the government data mining has been outsourced to corporations. The data mining controversy isn’t about the US government spying on Americans. It’s about the government using big corporations as a Constitutional workarounds to spy on Americans. It’s not the government that actually sifts through our emails and phone records but companies such as Lockheed Marin, Raytheon, SAIC and Booz Allen Hamilton and their subcontractors.

On Sunday, July 29th, 2007, the New York Times reported that the dispute between Gonzales and Ashcroft involved data mining and its threat to privacy and noted, “It is not known precisely why searching the databases, or data mining, raised such a furious legal debate.” The reason is most likely the growing use of corporations to perform critical intelligence functions and how these corporations can be used to circumvent legal restrictions upon the government. Outsourcing shifts the legalities or apparently that was what Gonzales was hoping.

In most cases, corporations are contracted to provide full traffic and pattern analysis services with the US government providing the targets. However, in some instances, contractors actually prepare the target list then conduct the data mining themselves. Not only can corporations be used to violate civil liberties where the government is prohibited, they also have the potential to spy on our email and phone records for their own corporate or client needs. The potential for abuse is tremendous, and, just like with corporate involvement in the President’s Daily Brief, there are no serious mechanisms to guard against this. And some of the very same tools they’re using for data mining could be adapted to monitor for misuse. Of course, abuse on the level of the Administration using corporations to conveniently ignore US law needs Congressional oversight.

Over the past five to ten years, most government intelligence functions have been outsourced to corporations, with seventy percent of the intelligence budget now going to contractors. As the Associate Director of National Intelligence recently admitted in the Washington Post in response to my article there, “we could not accomplish our intelligence missions without them [contractors].” The National Security Agency (NSA) which is responsible for monitoring communications has been at the forefront of intelligence outsourcing and has even handed over some of its own management and administrative structures to industrial contractors.

The Mainstream Media is missing the biggest part of the story, that systemic changes due to the outsourcing of critical intelligence functions open up new possibilities for circumventing the Constitution...

The reason the main$tream is missing this is because the main$tream is owned by the same people that own or contract out to the private intelligence firms.

Because we wouldn't want to break the law...

A federal intelligence court judge earlier this year secretly declared a key element of the Bush administration's wiretapping efforts illegal, according to a lawmaker and government sources, providing a previously unstated rationale for fevered efforts by congressional lawmakers this week to expand the president's spying powers...

Your DINOcrat Congress at work enabling the Company takeover of 'Merika. Rethuglican or DINOcrat... it's like chosing whether Certs is a breath mint or a candy mint.

Elsewhere, proceeding apace, the media coverup of this mortagage loan earthquake.

Things are moving faster than even Rupert Murdoch can cover them up.

Take a look at your junk mail and see what the interest rates on those trash credit cards you're being offered are. !!?32.5% per annum?%%$#! That means there are poor fools out there forced to pay that.

That's only a minor shock compared to what's coming: a harbinger of the change.



When an iceberg melts, and no one reports it, the water still rises.

The First Amendent Right to Lie to the People

Olberman and Maddow on Murdoch's ascension to the number 1 media mogul in 'Merika. Watch it [thanks, Avedon].

While you're at it, check out her links to Nick Coleman's piece on the breakdown of 'Merikan infrastructure.

Avedon:

This is, of course, what tax-cut mania really means, but it's also what it means when politicians prioritize showy expenditures over basic maintenance and services. This is America, breaking down.

Unfortunately, the cover-up of the Minneapolis bridge failure is already proceeding apace, with Bu$hie trying to smooth the waters at the home of the 2008 Rethuglican National Convention next year. Doubtless some engineers will be lynched. Engineers who probably had to tone down their critiques of the bridge's safety in order to keep their jobs will lose their jobs because of this.

No one will ever hold the contractors and rethuglican managers overseeing the bridge's overhaul responsible. Evah.

This is 'Merika, land of the bravado, home of the lien.

Exactly what is to be gained by chaos in Iraq?

Or anywhere else the Empire wants to be?

In the old Imperial model, say the British model, a central government controls vassal states, in turn controlled by local strongmen- but vassals nonetheless- or governors.

In the new Imperial model, what, exactly, is to be gained by territory? What good does it do the Company to control Baghdad with American soldiers as enforcers. Nothing!

What's valuable are the resources under the territory, which can be effectively controlled by a series of bases in the wilderness, armed to the teeth, and protecting the oil.

In a country like Iraq, if the people stood together, they might stop the flow of oil.

The simple solution: arm all factions, and set them against each other. Make it impossible for the Shiite government, or the Sunni Ba'athists, or the Sunni Wa'habbi, or the Kurds, or anybody to form any resistance to the will of the Company.

Note that's a different thing than the control of the American government, or the American military. An organization like the American military might like some peace and quiet. If there is peace and quiet, people might get a chance to look around and actually think about what's going on.

If you are part of a multinational consortium who's main goal is to gain control of a limiting resource, you might not want other people to have too much time to think about what you're doing. The different factions might not appreciate that you're draining their nation of its one remaining asset, and keeping that nation from being able to be anything more than a drained husk in the sand a few generations from now. They might even organize against you to stop you.

As goes Iraq, so will go the rest of the world as the fossil fuels are burned up. Recall the supply is an exponential curve: there will be some for a very long time. The goal of the loose coalition of multinationals I call the Company is to maintain control of these supplies as we follow the curve down with time. The easiest way to do this is to sow strife among the multitude of religious and political factions in the world, while the Company keeps its focus on what it knows really matters.

The last one with the most toys at the end runs a world wide hydraulic empire, controlling the limiting resource, fuel and energy. A corrollary to this is that no substitute for fossil fuels will be allowed to develop. As long as the Company controls all energy development, this will be assurred.

Which is the main reason why Darth Cheneyburton's energy policy plans are marked "Top Secret".

Chaos is the plan.

Producing Results & Working According to Plan

…because chaos is the plan.

Undermining ‘The Very Government That America Created’

Last night, during his interview with Larry King, Vice President Cheney claimed that “the reports I’m hearing, from people whose views I respect, indicate that the Petraeus plan is in fact producing results.”

On Anderson Cooper’s show later in the evening, CNN Baghdad correspondent Michael Ware, who spoke live on a night scope camera while embedded with troops responded to “the vice president’s evaluation” of progress in Iraq, calling it “sleight of hand.” “Yeah, sectarian violence is down, but let’s have a look at that,” said Ware. “More than two million people have fled this country. 50,000 are still fleeing every month, according to the United Nations. So there’s less people to be killed. And those who stay, increasingly are in ethnically-cleansed neighborhoods. They’ve been segregated.”

“There is still no sense of unity. And without America to act as the big baby sitter, this thing is not going to last.” Watch it…

Ware also responded to Brookings Institution analysts Michael O’Hanlon and Kenneth Pollack’s recent New York Times op-ed offering a sunny appraisal of progress in Iraq, calling the report “very one dimensional.” “It doesn’t look at what’s been done to achieve this and what long term sustainability there is,” said Ware. “I mean, these guys unfortunately were only in the country for eight days…”

“By achieving these successes, America is building Sunni militias,” said Ware. “Yes, they’re targeting al Qaeda, but these are also anti-government forces opposed to the very government that America created.”

Which is precisely what you'd want to do if you wanted no government at all.

The Good Shepherd and the Imperial President

Via bringiton:

...James J. Angleton was a brilliant paranoid who channeled his attributes into the espionage business. Early successes merited his appointment by CIA founder Allen Dulles in 1954 as the first Chief of the newly formed Department of Counterintelligence. His charter was to protect the CIA from penetration by foreign intelligence agencies. Over time he formed suspicions about the presence of Soviet moles in both the CIA and the FBI that eventually turned out to be correct, but not until after he had left the Agency. The exposure of his close friend Harold “Kim” Philby as a Soviet agent shattered Angleton’s self-confidence and drove him ever deeper into paranoia. Everyone was now suspect; no one could be trusted.

In a wilderness of mirrors.
What will the spider do?
T.S. Eliot, Gerontion 1919-1920

By the time of Nixon’s election Angleton had broadened his intelligence net around the world and across the nation, tapping phones, opening mail, intercepting telegrams, planting bugs; almost nowhere, and almost no one, was beyond his reach. But the frustration of not finding the traitor combined with a growing paranoia to increase his thirst for information. He desperately wanted much more, to reach beyond what his already immense network could provide. Then fortune struck.

When Nixon entered the White House he directed his Chief of Staff H.R. Haldeman to install the now-famous audio taping system. Haldeman assigned the task to his friend Alexander Butterfield, White House administrator in charge of the Secret Service. The Service’s Technical Installation branch in turn solicited advice from other intelligence resources within the Treasury Department, which is when the plan came to Angleton’s attention. Quietly, he offered the talents of his Department and provided enough support to allow him to learn everything there was to know about the taping setup, including where the recorded tapes were stored in the basement of the Executive Office Building. Once the system was up and running in 1971, Angleton’s espionage reach extended into the offices and most private discussions of the President of the United States, who was unaware of the penetration.

Angleton’s delusional suspicions deepened to encompass a broad range of suspects, eventually including then Secretary of State Henry Kissinger based solely on one defector’s hints that the mole had a connection with Germany and his name started with the letter K. (Angleton also went after career CIA officer Peter Karlow, whose career was ruined even though he was completely innocent.) These increasingly outlandish accusations caused then Director Richard Helms great concern, but his personal affection and respect led him to both reign in Angleton and protect him by keeping the accusations contained. That would soon change.

Nixon rapidly became displeased with Helms, largely because he would not unquestioningly do the President’s bidding; Helms retired in 1973 and was replaced by James Schlesinger, who would. Soon enough, Schlesinger became alarmed at Angleton’s accusations and, with Nixon’s approval, began to wind up Angleton’s network and curtail his power. The accusations against Kissinger surely played a role, as likely did influence from Kissinger himself. By mid-1973 Angleton knew he was in trouble, that his days at CIA were nearly over and so was any chance to track down the elusive mole.

But if Kissinger was a Soviet agent, and Nixon was protecting him by driving out Angleton, then Nixon had to go. With the Watergate hearings beginning to stall for lack of evidence, he made his move. Word was passed to a very junior investigator, attorney Donald Sanders, that it would be a good idea to ask former White House aide Alexander Butterfield, now FAA Director, if conversations in the President’s office were ever recorded. The question was penciled in at the end of a standard list of interview queries and presented as an afterthought, when the session was concluding. Butterfield answered truthfully, and Nixon was doomed...

On Angleton’s failures: http://findarticles.com/p/articles/mi_m1316/is_n6_v23/ai_10843603
On Angleton’s prescience: http://www.edwardjayepstein.com/question_angleton.htm
On CIA “Dirty Tricks”: http://www.theatlantic.com/doc/197908/cia-dirty-tricks
Latest on CIA dysfunctionality: http://www.randomhouse.com/doubleday/legacyofashes/

DINOcrat Dive

Concerning the fact the Congress DINOcrats seem determined to give Abu Gonzo even more power to spy on whomever he wants, Avedon suggests that

Maybe the real question we should be asking legislators is, "What do they have on you?"

Consider that the private contractors affiliated with eavesdropping may also be affiliated with national security contracting as well as prison contracting, and you reach this inescapable conclusion.

Most of them seem bought, paid for, or hiding some major skeletons in their closets.

Some Minorities are Less Minor than Others

The New York Pravda tune changed from yesterday to today, similar to the "we have always/never been at War with Eastasia".

Here's part of what was said yesterday:

Despite an imminent deadline, the Bancroft family and even some of its advisers seem sharply split over whether to sell Dow Jones & Company, the publisher of The Wall Street Journal, to Rupert Murdoch’s News Corporation.

The divisions make it almost impossible to handicap whether enough family members will vote in favor of a sale or even whether they can reach any conclusion by the deadline of 5 p.m. today. [That deadline passed without any immediate word of a decision.]

The boards of both Dow Jones and the News Corporation are bracing for the possibility that they will not have a definitive answer tomorrow, people close to both boards say, and are trying to determine their next moves, which for Dow Jones could include a general shareholder vote.

“The potential for chaos is high,” said a person close to Dow Jones management who had been briefed on the family’s deliberations but who was not authorized to speak about them.

Even within the Bancroft camp, opposition to the deal is divided. Some family trustees, like Christopher Bancroft and Jane Cox MacElree, are opposed to a sale because they do not care for Mr. Murdoch’s brand of journalism and worry that he would interfere in the news pages of the Journal.

Others, like a group of family trusts controlled by lawyers in Denver, are willing to sell but want to hold out for a 10 to 20 percent premium over the $60-per-share offer News Corporation has made, at least for the supervoting shares of the company. Both Dow Jones and News Corporation have emphatically said they would only consider one price for all shares.

It seems the part that got published yesterday that said something along the lines of only a quarter of the Board supported the buyout, has vaporized. It must have been a different timeline, right?

Anyway, now there's no opposition to reporting the Economy is swinging! The party never ends! Record highs! And all those employment and housing sales and mortgage default numbers? Well who really cares about that anyway!

If a bubble bursts and no one reports it, does anyone hear? And if those that hear it can not speak of it, surely the bubble must grow and grow! Happy days are here again!

Rethuglican Lite

Big Sister being sooo much cozier than Big Brother...

WASHINGTON, July 31 — Under pressure from President Bush, Democratic leaders in Congress are scrambling to pass legislation this week to expand the government’s electronic wiretapping powers.

Democratic leaders have expressed a new willingness to work with the White House to amend the Foreign Intelligence Surveillance Act to make it easier for the National Security Agency to eavesdrop on some purely foreign telephone calls and e-mail. Such a step now requires court approval.

It would be the first change in the law since the Bush administration’s program of wiretapping without warrants became public in December 2005.

In the past few days, Mr. Bush and Mike McConnell, director of national intelligence, have publicly called on Congress to make the change before its August recess, which could begin this weekend. Democrats appear to be worried that if they block such legislation, the White House will depict them as being weak on terrorism.

“We hope our Republican counterparts will work together with us to fix the problem, rather than try again to gain partisan political advantage at the expense of our national security,” Senator Harry Reid of Nevada, the majority leader, said in a statement Monday night...

Again, this begs the question of how information is handled in the 21st century. If you want to email your friend on the other side of town, or IM or ichat your brother in Tennessee, your message is routed through Canada. Or India. Or Mexico. Whereever the tubes are the clearest at the moment.

Making it, you know, indistinguishible from a furrin' message. From Terra'ists.

A real terrorist suspects they are being watched all the time, so it does no good to hide the fact you're watching them from government oversight.

What scares a mugger away? A cop in a uniform on the corner, or a perfectly blended undercover narc who most likely won't interfere with a mugging anyway because he's, you know, 'pozed to be watching.

If the DINOcrats wanted to fix the problem they'd be fighting Bu$hCo-Cheneyburton, instead of just trying to Chair their own Company takeover.

That statement earns me the ire of many of my progressive cohorts, who think we should all get behind the DINOcrats and just sign our Constitutional rights over to them to shred just like the Rethuglicans would do except nicer because, you know, we are...

Some how it's better when your gang does the banging, right?

... One obstacle to a deal this week is a disagreement between Democrats and the White House over how to audit the wiretapping of the foreign-to-foreign calls going through switches in the United States.

The Democrats have proposed that the eavesdropping be reviewed by the secret FISA court to make sure that it has not ensnared any Americans.

The administration has proposed that the attorney general perform the review, but Democrats are unwilling to give that kind of authority to Attorney General Alberto R. Gonzales, who is under fire for what some lawmakers describe as his misleading testimony about the dismissals of federal prosecutors and the wiretapping program.

Mr. Gonzalez has insisted that a 2004 dispute between the White House and Justice Department officials that erupted in the hospital room of then Attorney General John Ashcroft related to other intelligence activities. On Sunday, The New York Times reported that the dispute centered on the data mining elements of the N.S.A.’s program, rather than on the eavesdropping, leaving open the possibility that Mr. Gonzalez had been legalistic in his testimony, but had technically not lied.

In a letter Tuesday to Senator Arlen Specter, the Pennsylvania Republican who is the ranking minority member of the Senate Judiciary Committee, Mr. McConnell seemed to confirm the Times account though the letter did not mention Mr. Gonzalez or his testimony.

The letter said that “shortly after 9/11, the president authorized the National Security Agency to undertake various intelligence activities designed to protect the United States from further terrorist attack. A number of these intelligence activities were authorized in one order.”

The letter adds that “one particular aspect of these activities, and nothing more, was publicly acknowledged by the president and described in December 2005, following an unauthorized disclosure.”

Abu Gonzo needs to go down and should not be in charge of this operation, which is more likely to track Dear Leader's political oppostition than real terrorists (you know, the real terrorists, the people operating out of Saudi Arabia and the United Arab Emirates, only some of which are actually Arabs or Arabian or even Islamic).

But administered by secret court? Lack of open oversight is a really bad idea, an excuse for abuse seriously veiled by the criminal justice system. Not that HHHillary would ever do that. She's all on the side of goodness and sweetness and liteness.