Posted by: quiscus | November 24, 2008

November 24, 2008

1.  The misleading ‘surge’:

“After meeting in Canada on Friday with counterparts from countries with troops in Afghanistan, Defense Secretary Gates emphasized to reporters there is a shared interest in “surging as many forces as we can” into Afghanistan before the elections there in late September 2009.

Basking in the alleged success of the Iraq “surge,” Gates knows a winning word when he hears one – whether the facts are with him or not.

Although the conventional wisdom in Washington credits the “surge” with reducing violence in Iraq, military analysts point to other reasons – including Sunni tribes repudiating al-Qaeda extremists before the “surge” and the de facto ethnic cleansing of Sunni and Shiite neighborhoods.

In Washington political circles, there’s also little concern about the 1,000 additional U.S. soldiers who have died in Iraq since President George W. Bush started the “surge” early in 2007. The Americans killed during the “surge” represent roughly one-quarter of the total war dead whose numbers passed the 4,200 mark last week.

The real “success” of the Iraq “surge” is proving to be that it will let President Bush and Vice President Dick Cheney leave office on Jan. 20, 2009, without having to admit that they were responsible for a strategic disaster. They can lay the blame for failure on their successors.”

http://www.consortiumnews.com/Print/2008/112308a.html

2.  “Few people know as much about irregular warfare as Luttwak does — and he is not impressed by what he has seen in the Middle East. Luttwak, 65, who is the author of Coup d’État: A Practical Handbook, says U.S. troops should pull out of Afghanistan. “What the fuck are we doing there?” he asks. “Much better to abandon it and do occasional punitive expeditions as opposed to counterinsurgency and its enormous costs. I’ve been to Afghanistan. Basically, you’d have to kill every single Afghan and take all the children and put them in boarding school, preferably in England.”
Luttwak has come to the conclusion that the U.S. doctrine of counterinsurgency is doomed, largely because nearly all counterinsurgency campaigns end in disaster. Other critics say the current policy is less about making the world safe for democracy than it is about making the world safe for U.S. economic and political interests. The specter of Vietnam — with all its disappointments, bloodshed, and suffering — looms.”

http://www.prospect.org/cs/articles?article=the_cult_of_counterinsurgency

3.  “The Citigroup Deal is Lousy for America

The verdict on the Citigroup bailout is pretty much unanimous: its a terrible deal for America.

“A bailout was necessary — but this bailout is an outrage: a lousy deal for the taxpayers, no accountability for management, and just to make things perfect, quite possibly inadequate, so that Citi will be back for more. Amazing how much damage the lame ducks can do in the time remaining.”

“This is not a particularly good deal for American taxpayers, but it is a marvelous deal for Citi. In return for all the cash and guarantees they are giving away, taxpayers will get only $27 billion of preferred shares paying an 8 percent dividend. No other strings are attached. The senior executives of Citi, including those who have served at the highest levels in the US government, have done their jobs exceedingly well. The American public, including the media, have not the slightest clue what just happened.”

“So far I’m not impressed”

http://georgewashington2.blogspot.com/2008/11/citi-deal-is-lousy-for-america.html

“Note key element of the deal is that the Federal government will guarantee $300 billion of Citi assets, a much bigger number than had been leaked earlier, with a rather convoluted loss-sharing arrangement, but the bottom line is that Citi is at risk for at most $40 billion. Citi also gets a $20 billion equity injection, on slightly more onerous terms than the initial TARP investments, but still more favorable than Warren Buffett’s investment in Goldman. Oh, and it appears there will be NO management changes.”

.

Instead of Giving Citigroup $20 Billion and Guaranteeing $306 Billion in Toxic Assets, The Government Should Have Cancelled Credit Default Swaps

As of June, Citibank was perhaps the world’s third largest holder of derivatives, with over thirty trillion dollars (nominal value) in derivatives.

On Friday, Business Week wrote about the risk of counterparties to Citigroup’s credit default swaps defaulting on their payments to Citibank:

For each dollar of risk-based capital, Citibank was exposed to $2.58 in such credit risk on June 30 ….

Citibank’s parent corporation – Citigroup – is many times larger than Citibank. Given that Citigroup is a highly diversified financial services company, it is certain that derivatives were held by many subsidiaries besides Citibank, so Citigroup’s total derivatives holdings had to have been a lot higher.

Today, the U.S. government is giving Citigroup another $20 billion dollars (in addition to the $25 billion already given), and guaranteeing $306 Billion in toxic assets.

Given that alot of Citigroup’s toxic assets – which American taxpayers are going to have to pay for – are derivatives (and the failure of a major financial institution like Citigroup could have caused direct derivatives losses of $400 billion and indirect losses of $1.5 trillion), and given that part of the reason that Citigroup fell so fast is because piranhas bet against it using credit default swaps (driving the price of business way up), wouldn’t it have been cheaper for the government to just rescind CDS owned or bet against Citigroup than to bailout Citigroup? Wouldn’t canceling AIG’s CDS have been cheaper than bailing out that giant?

And because all of the trillions spent and all of the dramatic measures taken by the government have completely failed to stabilize the economy, isn’t it obvious by now that the only way to avoid a depression is to rescind the toxic CDS – the market for which is bigger than the world economy? Putting CDS on exchanges – the current proposal of the G-20, Bush, Bernanke, Cox and the gang – is too little, too late. We’ll crash and burn before the exchange is even launched.

Nothing Paulson, Bernanke, Obama, Geithner or anyone else does will work unless these weapons of mass destruction are taken apart and buried in the ground piece-by-piece.

Again, the legal theory for rescinding CDS is that they were sold using fraudulent claims that they were fairly safe and risk-free. It is basic law 101 that fraud is basis for rescission of a contract, and CDS are a type of contract.
And I am not for rewarding the purveyors of these weapons of mass destruction., but it would have been much cheaper for taxpayers if the government had bought out the CDS effecting the most vulnerable companies by “condemning them” in the same way the government uses eminent domain to condemn land, and to pay the sellers and/or holders of the CDS some small sum to compensate them. Again, I think they should be rescinded with no money spent. But if our leaders don’t have the spine to do that, then condemn them and pay out some nominal sum. But deal with them – don’t fritter away billions more on schemes which won’t work because they don’t address the core issues.”

4.  “Instead of Giving Citigroup $20 Billion and Guaranteeing $306 Billion in Toxic Assets, The Government Should Have Cancelled Credit Default Swaps

Today, the U.S. government is giving Citigroup another $20 billion dollars (in addition to the $25 billion already given), and guaranteeing $306 Billion in toxic assets.

Given that alot of Citigroup’s toxic assets – which American taxpayers are going to have to pay for – are derivatives (and the failure of a major financial institution like Citigroup could have caused direct derivatives losses of $400 billion and indirect losses of $1.5 trillion), and given that part of the reason that Citigroup fell so fast is because piranhas bet against it using credit default swaps (driving the price of business way up), wouldn’t it have been cheaper for the government to just rescind CDS owned or bet against Citigroup than to bailout Citigroup? Wouldn’t canceling AIG’s CDS have been cheaper than bailing out that giant?

And because all of the trillions spent and all of the dramatic measures taken by the government have completely failed to stabilize the economy, isn’t it obvious by now that the only way to avoid a depression is to rescind the toxic CDS – the market for which is bigger than the world economy? Putting CDS on exchanges – the current proposal of the G-20, Bush, Bernanke, Cox and the gang – is too little, too late. We’ll crash and burn before the exchange is even launched.

Nothing Paulson, Bernanke, Obama, Geithner or anyone else does will work unless these weapons of mass destruction are taken apart and buried in the ground piece-by-piece.

Again, the legal theory for rescinding CDS is that they were sold using fraudulent claims that they were fairly safe and risk-free. It is basic law 101 that fraud is basis for rescission of a contract, and CDS are a type of contract.

And I am not for rewarding the purveyors of these weapons of mass destruction., but it would have been much cheaper for taxpayers if the government had bought out the CDS effecting the most vulnerable companies by “condemning them” in the same way the government uses eminent domain to condemn land, and to pay the sellers and/or holders of the CDS some small sum to compensate them. Again, I think they should be rescinded with no money spent. But if our leaders don’t have the spine to do that, then condemn them and pay out some nominal sum. But deal with them – don’t fritter away billions more on schemes which won’t work because they don’t address the core issues.”

http://georgewashington2.blogspot.com/2008/11/instead-of-giving-citigroup-20-billion.html

5.  “Paulson and Bernanke: Ineffective, Dishonest, And Criminal

Everyone knows that Paulson and Bernanke’s actions have been ineffective.

And they have been dishonest. For example, a New York Times article says that Paulson knowingly lied to Congress, and many people believe that Paulson has treated the U.S. like a banana republic. Indeed, as economist and former labor secretary Robert Reich said today:

“I think that the great bailout that he engineered was really sold to Congress on false pretenses,” Reich said on Late Edition.

But they might also be illegal.

As Paulson himself said last week:

Federal law, and in particular the Anti-Deficiency Act, prohibits Treasury from spending money, lending money, and guaranteeing or buying assets without Congressional approval. The Federal Reserve can and does lend on a secured basis, but only if it expects not to realize losses. The Fed couldn’t legally lend against the Lehman assets if it expected that loan to result in a loss of any size; this was much different than the case with Bear Stearns.

The government has spent trillions of dollars on various bailouts, but Congress only authorized $700 billion.

As Hudson points out:

The Fed has refused to let Congress know any details – any details at all – about its cash-for-trash swaps with these institutions. This is what concerns Congress, and what has prompted reporters at Bloomberg to bring a lawsuit in order to discover and publicize the details. It is not hard to see why this curiosity exists.

Hudson then implies that it is certain that the Fed will suffer tremendous losses on these assets.

Ineffective. Dishonest. And probably criminal.

But that’s just par for the course for the Bush administration and their bipartisan allies in Congress.”

http://georgewashington2.blogspot.com/2008/11/paulson-and-bernanke-ineffective.html

6.  Israel war crimes:

It has been two weeks since Israel imposed a complete closure of Gaza, after months when its crossings have been open only for the most minimal of humanitarian supplies. Now it is even worse: two weeks without United Nations food trucks for the 80% of the population entirely dependent on food aid, and no medical supplies or drugs for Gaza’s ailing hospitals. No fuel (paid for by the EU) for Gaza’s electricity plant, and no fuel for the generators during the long blackouts. Last Monday morning, 33 trucks of food for UN distribution were finally let in – a few days of few supplies for very few, but as the UN asks, then what?

Israel’s official explanation for blocking even minimal humanitarian aid, according to IDF spokesperson Major Peter Lerner, was “continued rocket fire and security threats at the crossings”. Israel’s blockade, in force since Hamas seized control of Gaza in mid-2007, can be described as an intensification of policies designed to isolate the population of Gaza, cripple its economy, and incentivise the population against Hamas by harsh – and illegal – measures of collective punishment. However, these actions are not all new: the blockade is but the terminal end of Israel’s closure policy, in place since 1991, which in turn builds on Israel’s policies as occupier since 1967.


In practice, Israel’s blockade means the denial of a broad range of items – food, industrial, educational, medical – deemed “non-essential” for a population largely unable to be self-sufficient at the end of decades of occupation. It means that industrial, cooking and diesel fuel, normally scarce, are virtually absent now. There are no queues at petrol stations; they are simply shut. The lack of fuel in turn means that sewage and treatment stations cannot function properly, resulting in decreased potable water and tens of millions of litres of untreated or partly treated sewage being dumped into the sea every day. Electricity cuts – previously around eight hours a day, now up to 16 hours a day in many areas – affect all homes and hospitals. Those lucky enough to have generators struggle to find the fuel to make them work, or spare parts to repair them when they break from overuse. Even candles are running out.


There can be no dispute that measures of collective punishment against the civilian population of Gaza are illegal under international humanitarian law. Fuel and food cannot be withheld or wielded as reward or punishment. But international law was tossed aside long ago. The blockade has been presented as punishment for the democratic election of Hamas, punishment for its subsequent takeover of Gaza, and punishment for militant attacks on Israeli civilians. The civilians of Gaza, from the maths teacher in a United Nations refugee camp to the premature baby in an incubator, properly punished for actions over which they have no control, will rise up and get rid of Hamas. Or so it goes.”

http://www.informationclearinghouse.info/article21309.htm

7.  “7.4 Trillion Dollars And Counting

The Cost Of “Rescuing” The US Financial System

Hey, the government has agreed to bail out Citigroup. Surely we’ll now be saved from worldwide insolvency! Right? Or is this a profligate waste of money? We have to level with you: this whole bailout thing has now exceeded the media’s ability to critically analyze it. You’ve heard everyone throw around figures like $750 billion for the earlier bailout costs. This Citigroup thing includes a guarantee of $306 billion in assets. But think about this: according to Bloomberg, the US government has now pledged more than $7.4 trillion to rescue the financial system in the past 15 months. How much is 7.4 trillion?

  • It is “half the value of everything produced in the nation last year,” according to Bloomberg.
  • It’s enough to cut a check for almost $25,000 to every single citizen of the USA!
  • If you had 7.4 trillion pennies, you would have $74,000,000,000. That’s enough money to buy the New York Times Co. 86 times over. If we say that 100 pennies stack up 4 inches high, 7.4 trillion pennies would stack up 4,671,717 miles high. That’s enough to go to the moon and back ten times.

Fun with math! If you think the US media is equipped to evaluate numbers like this precisely, you’re out of your mind. Even the media outlets that are most qualified to report on money matters have a hard time putting $1 trillion into perspective (try this: “It would take almost three decades to spend a trillion dollars at $1,000 per second), much less $7.4 trillion.


If it makes you feel better though: this financial crisis has actually erased $23 trillion in corporate value. So 7.4 tril isn’t too bad!”

http://www.informationclearinghouse.info/article21311.htm

8.  “The Confederation Of British Industry has written to Gordon Brown with a ten-point plan that they feel can boost Britain’s ailing economy and save many small businesses. “This is the worst financial crisis since records began” said CBI boss Richard Lambert. “Things are getting so bad that pretty soon we won’t be able to afford to employ the people that keep the records of how bad things have been in the past. It really is going to get that confusingly scary.”

The CBI’s plan is as follows:

1: Employ workers to go around shops and nudge potential buyers, saying things like “Those plasma tellies look mint, don’t they? I’m going to buy one. Are you?”
2: Government subsidised tea fund for offices to increase productivity “With a sliding scale of biscuit support” added Lambert.
3: Add ‘Best Before” dates to expensive electrical items, forcing gadget-obsessed trust fund cockfaces to replace their integrated Blackberry/MP3/Capuccino machines every three months.
4: Lend everyone a fiver until next payday. “People always feel a bit more flush with a borrowed fiver in their pocket” said Lambert.
5: Motivational speakers to give the pound daily pep talks. Key phrases such as “Who’s that handsome son-of-a-currency?”, “Way to fluctuate against the dollar, big P!” and “Who the pound? YOU the pound!” to be barked at currency reserves around the clock.
6: Unemployed models to eye up city traders on the tube during rush hour. “Trading floor confidence is vital to keep the economy stable and what better boost to confidence than having some gazelle-thighed stranger lick her lips at you on a packed Jubilee Line?”
7: No denomination above a five pound note. “People will feel wealthier carrying around sackfuls of pound coins, like a Lord Snooty cartoon” enthused Lambert.
8: Make forgetting a relative’s birthday a criminal offence. Gifts to the value of £10 or more must be exchanged or offenders face three months in jail “Which will be spent as cheap factory labour. It’s win-win, really.” said Lambert.
9: Outlaw the translation of assembly instructions of flat pack furniture, forcing the public to buy British.
10: Temporary freezes on NI contribution liabilites indexed to a stepped reduction on VAT combined with a streamlining of governmental capital spend projects. “I’ll level with you here. I’ve no idea what the last one means but it’ll make Alistair Darling shit his eyebrows when he reads it.” chuckled Lambert.

Gordon Brown has yet to comment on the CBI’s proposals but was recently seen watching a bare knuckle female boxing match whilst idly stroking his crotch and mumbling “Mmm, prudent. You’re a prudent wee ride, aren’t ye?”

http://pushjelly.blogspot.com/2008/11/cbi-10-point-plan-unveiled.html

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