True True!

David Lindorff in Counterpunch:

With honesty, we could also confront the other big obstacle to national recovery—the nation’s obsession with militarism and foreign wars. The honest truth is that the US is technically bankrupt and in a state of chronic decline, and yet the nation persists in spending a trillion dollars a year on war and preparations for war, as though America were in mortal danger from foreign enemies.

The truth is that we are not threatened by Communism, by drug lords, or by Muslim Jihadists in any serious way. Rather, we have become our own worst enemy.

So This Is Why The Gummint is Acting Stupid!

Why is the government pumping all this money into zombie banks? Josh Marshall nails it:

One point that might be worth considering. I've heard that a number of sovereign wealth funds -- i.e., foreign governments who've invested big chunks of money -- have put us on notice that they would not sit still for seeing their own assets wiped out in any global financial sector plan.

Scream All You Like...

An interesting post by David Seaton, where he argues that there is increased pressure on Arab countries, from their own populations, to punish the US for its support of Israel:

They are not going to cut off the oil like in 1973, they simply will refuse to buy any more US treasury bills until the US government pressures Israel into accepting the two state solution outlined in the Saudi plan.

In this refusal to finance the American economy that arms and enables Israel, they will be probably be accompanied by all the other kinglets and princelings of the Persian Gulf, who are also anxious to prove their Muslim credentials in the face of militant Iran's growing influence over their infuriated subjects.

In short a creditors strike, which in America present condition would be terminally devastating.

This will mean the bursting of the T-Bill bubble and with it any hope of success for a stimulus plan to save the US economy by printing more money. It might also cause America's creditors, such as China, to unload their dollar reserves. This would mean the collapse of the dollar and a galloping, Argentine style, inflation which would wipe out what little purchasing power America's middle class might still possess and leave all those on fixed incomes destitute.

"Impossible! They wouldn't dare!", you say.

If you don't believe that great disasters that everyone can see coming and would want to avoid can happen, think about the tragic summer of 1914, the lead up to World War One, that Barbara Tuchman so perfectly described in her best-selling masterpiece "The Guns of August".

Like then, a complex mechanism that we do not, perhaps cannot, fully understand, has been set in motion and as in classic Greek tragedies the character of the participants leads irremediably to their downfall. In this play Israel's attack on Gaza takes the role of Gavilo Princip.

This scenario is not impossible, though it seems unlikely. Dollar devaluation would hurt these countries as well, as they hold billions of Dollars in US Treasuries. Pulling the trigger on this would bring about their own downfall, and they know it.

Idiocy You Can Believe In

From Krugman:

The House has passed the stimulus bill with not a single Republican vote.

Aren’t you glad that Obama watered it down and added ineffective tax cuts, so as to win bipartisan support?

Get Your War On!

Awesome Madoff cartoon by Dave Rees of Get Your War On fame. Click on it to enlarge:

A Walk Down Memory Lane

A great, very prescient post by Mike Shedlock from July of last year, titled You Know the Banking System is Unsound When... Here are a few of the 25 examples:

1. Paulson appears on Face The Nation and says "Our banking system is a safe and a sound one." If the banking system was safe and sound, everyone would know it (or at least think it). There would be no need to say it.

4. Washington Mutual (WM), another troubled bank, refused to honor Indymac cashier's checks. The irony is it makes no sense for customers to pull insured deposits out of Indymac after it went into receivership. The second irony is the last place one would want to put those funds would be Washington Mutual. Eventually Washington Mutual decided it would take those checks but with an 8 week hold. Will Washington Mutual even be around 8 weeks from now? (It was, but not for much longer - Jose)

13. Citigroup (C), Lehman (LEH), Morgan Stanley(MS), Goldman Sachs (GS) and Merrill Lynch (MER) all have a huge percentage of level 3 assets. Level 3 assets are commonly known as "marked to fantasy" assets. In other words, the value of those assets is significantly if not ridiculously overvalued in comparison to what those assets would fetch on the open market. It is debatable if any of the above firms survive in their present form. Some may not survive in any form.

19. Bank of America (BAC) agreed to take over Countywide Financial (CFC) and twice announced Countrywide will add profits to B of A. Inquiring minds were asking "How the hell can Countrywide add to Bank of America earnings?" Here's how. Bank of America just announced it will not guarantee $38.1 billion in Countrywide debt. Questions over "Fraudulent Conveyance" are now surfacing.

And the most important two examples, followed by a pretty gloomy but likely correct conclusion:

24. There is roughly $6.84 Trillion in bank deposits. $2.60 Trillion of that is uninsured. There is only $53 billion in FDIC insurance to cover $6.84 Trillion in bank deposits. Indymac will eat up roughly $8 billion of that.

25. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back.

What cannot be paid back will be defaulted on. If you did not know it before, you do now. The entire US banking system is insolvent.

Matt Taibbi Vivisects Thomas Friedman!

I have thought that Thomas Friedman is a buffoon for quite a while, but I could have never put it into words as beautifully as Matt Taibbi does as he runs him over and then backs up and runs him over again (and again and again) in his review of Friedman's latest book, Hot, Flat and Crowded. For instance:

I’ve been unhealthily obsessed with Thomas Friedman for more than a decade now. For most of that time, I just thought he was funny. And admittedly, what I thought was funniest about him was the kind of stuff that only another writer would really care about—in particular his tortured use of the English language. Like George W. Bush with his Bushisms, Friedman came up with lines so hilarious you couldn’t make them up even if you were trying—and when you tried to actually picture the “illustrative” figures of speech he offered to explain himself, what you often ended up with was pure physical comedy of the Buster Keaton/Three Stooges school, with whole nations and peoples slipping and falling on the misplaced banana peels of his literary endeavors.

Remember Friedman’s take on Bush’s Iraq policy? “It’s OK to throw out your steering wheel,” he wrote, “as long as you remember you’re driving without one.” Picture that for a minute. Or how about Friedman’s analysis of America’s foreign policy outlook last May:

The first rule of holes is when you’re in one, stop digging.When you’re in three, bring a lot of shovels.”

First of all, how can any single person be in three holes at once? Secondly, what the f*ck is he talking about? If you’re supposed to stop digging when you’re in one hole, why should you dig more in three? How does that even begin to make sense? It’s stuff like this that makes me wonder if the editors over at the New York Times editorial page spend their afternoons dropping acid or drinking rubbing alcohol. Sending a line like that into print is the journalism equivalent of a security guard at a nuke plant waving a pair of mullahs in explosive vests through the front gate. It should never, ever happen.

It goes on and on like that 'til there is nothing left of Friedman to mock.

Big Silver Lining!

Radical take on the Bush presidency by Alexander Cockburn. First graph:

I've always been a fan of George Bush, on the simple grounds that the American empire needs taking down several notches and George Jr has been the right man for the job. It was always odd to listen to liberals and leftists howling about Bush’s poor showing, how he’d reduced America’s standing in the family of nations. Did the Goths fret at the manifest weakness of the Emperor Honorius and lament the lack of a robust or intelligent Roman commander?

It only goes downhill (or uphill, depending on where you were when you started) from there. Take this, for instance:

Bush leaves America a poorer but in some ways a better place, more conscious of its blessings. Just as it took bad King John to force the drafting of the Magna Carta, on Bush’s watch Americans have learned, amidst the threat of losing them, that they have constitutional protections. A commander in chief who made Jerry Ford sound like Demosthenes has given them a fresh sensitivity to language, even the dream that they might have a president who can speak in whole sentences.

Read the whole thing - it's lovely!

Good Ol' Shimon Peres

Illuminating article from the Jerusalem Post about Shimon Peres speaking to an AIPAC mission in Jerusalem this past Wednesday. Money quotes from Peres, a Nobel Peace Prize winner in the fine tradition of Henry Kissinger:

Peres had no quarrel with those television networks broadcasting difficult images from Gaza. "I don't blame the TV," he said, noting that it was natural for television camera crews to focus on such scenes. He even understood that coverage could not be balanced, "because TV cannot show what it means for one million Israelis to be constantly nervous. We cannot show the daily tensions on TV."

It's true that Israeli's being constantly nervous can't compare with Palestinians being constantly starved or constantly dead.

And finally:

Israel's aim, he said, was to provide a strong blow to the people of Gaza so that they would lose their appetite for shooting at Israel.

Which, interestingly enough, squares pretty well with the definition of terrorism according to the a 2001 State Department report titled Patterns of Terrorism:

No one definition of terrorism has gained universal acceptance. For the purposes of this report, however, we have chosen the definition of terrorism contained in Title 22 of the United States Code, Section 2656f(d). That statute contains the following definitions:

The term "terrorism" means premeditated, politically motivated violence perpetrated against noncombatant (1) targets by subnational groups or clandestine agents, usually intended to influence an audience. . . .

(1) For purposes of this definition, the term "noncombatant" is interpreted to include, in addition to civilians, military personnel who at the time of the incident are unarmed and/or not on duty.

50 Most Loathsome Americans for 2008

Awesome list of the 50 worst Americans. Here's an example:

33. Jeremiah Wright

Charges: It’s said that in politics, a gaffe is when someone tells the truth, like connecting 9/11 to blowback from America’s long history of Middle East meddling. But then again, sometimes they just say something incredibly f*cking stupid, like that AIDS was created by the U.S. government to kill black people. Seriously, you don’t think the U.S. government could do a better job than AIDS? AIDS takes years to kill, spreads relatively slowly, and kills white people all the time. A CIA super-virus that can’t beat Magic Johnson? Unlikely. But beyond past statements of viral delusion, Wright’s weird-a*s grandstanding at the height of the sound bite frenzy seemed to indicate he really didn’t give a sh*t whether Obama was elected president, and might even be jealous.

Exhibit A: “And I stand before you… with the hope that this most recent attack on the black church is not an attack on Jeremiah Wright; it is an attack on the black church.”

Sentence: Sickle cell anemia.

What is Israel's End Game?

Andrew Sullivan linked to this great post by Gregory Djerejian. Money graph-and-a-third:

In short then, Barak (along with Olmert and Livni) might really believe they are pursuing a reasonably successful operation, perhaps even beginning to praise themselves that victory may be nigh.

This however is most certainly not my view, for yet again (and as with the misadventure in Lebanon) the Israeli action is materially disproportionate to the threat being faced, thus reducing its ultimate prospects for success given a too heavy hand lending itself to further radicalization. I know, I know. Those who fancy themselves pro-Israeli scoff at the 'p' word (proportion). And yet true friends of Israel well realize that one cannot decimate terrorist or resistance movements through force of arms alone, even under the cover of phosphorus and half-ton bombs. Nor even fully eradicate the threat of rocket attacks, as Tzipi Livni seems to be signaling of late is the end-game marker the Israeli Government has set down for itself. Instead, you play into the hands of the radicals, while putting pressure on friendly governments through the region like Cairo and Amman forced to reckon with roiling bouts of popular anger, while not necessarily even having affected permanent changes to the security situation in the south of Israel given some of these strategic shortcomings.

Muchos Dolores...

Paul Craig Roberts in today's Counterpunch about how the economic stimulus package is going to be paid for, or not. It ain't pretty:

The federal government budget deficit for the 2009 fiscal year will be $2 trillion at a minimum. That is five times larger than the 2008 budget deficit.

How can the Treasury finance such a huge deficit?

There are three sources of financing. Possibly people will flee from stocks, bank deposits, and money market funds into Treasury “securities.” This would require a form of “money illusion” on the part of people. People would have to believe that investments can be printed, and that printing so many new Treasury bonds would not dilute the value of existing bonds or reduce their chance of redemption. They would have to believe that the bonds would be repaid with honest money, not by running the printing presses.

A second source of financing might be America’s foreign creditors. So far in our descent into massive debt foreigners have footed the bill. Our foreign creditors now hold very large amounts of US debt and other dollar-denominated “securities.” They are likely to develop a case of cold feet when they see a $2 trillion expansion in US debt in one year. Their most likely response will be to start selling their existing holdings.

Who would purchase them? The only way the Treasury can redeem the bonds that come due each year is by selling new bonds. Not only must the Treasury find purchasers for $2 trillion in new debt this year but also must find buyers for the bonds that must be sold in order to redeem old bonds that come due.

If foreigners cease buying and instead start selling from their existing holdings--China alone holds $500 billion in Treasury debt--a deluge will fall on an already flooded market.

The third source of financing is for the Federal Reserve to monetize the debt. In other words, the Treasury prints bonds and the Fed purchases them by printing money. The supply of money thus expands dramatically in relation to goods and services, and high inflation, possibly hyperinflation, would engulf America.

At that point the US dollar, if still on its feet, collapses. The import-dependent American population, dependent on imports for their mobility, their clothes, shoes, manufactured goods, and advanced technology products, no longer will be able to afford these imports.

Analogies

Uri Avnery, Israeli journalist and peace activist, in today's Counterpunch:

Nearly seventy years ago, in the course of World War II, a heinous crime was committed in the city of Leningrad. For more than a thousand days, a gang of extremists called “the Red Army” held the millions of the town’s inhabitants hostage and provoked retaliation from the German Wehrmacht from inside the population centers. The Germans had no alternative but to bomb and shell the population and to impose a total blockade, which caused the death of hundreds of thousands.

Some time before that, a similar crime was committed in England. The Churchill gang hid among the population of London, misusing the millions of citizens as a human shield. The Germans were compelled to send their Luftwaffe and reluctantly reduce the city to ruins. They called it the Blitz.

This is the description that would now appear in the history books – if the Germans had won the war.

Absurd? No more than the daily descriptions in our media, which are being repeated ad nauseam: the Hamas terrorists use the inhabitants of Gaza as “hostages” and exploit the women and children as “human shields”, they leave us no alternative but to carry out massive bombardments, in which, to our deep sorrow, thousands of women, children and unarmed men are killed and injured.

Israeli "Truthers"

Today, Andrew Sullivan linked to a 2003 article by James Fallows of The Atlantic about the death of Mohammad al-Dura, a 12-year-old Palestinian boy killed in 2000, apparently by Israeli troops, during the 2nd Intifada. Film of the event, shot by a French journalist and seen all over the world, shows a boy cowering behind his father as shots ring out all around them - eventually, both are shot, the father is wounded and the boy is killed. Mohammad al-Dura became a martyr for the Palestinian cause, a potent symbol of Israeli blood lust. However, a number of Israeli "truthers" believe that the entire event was staged (the maximalist position), or that the boy was shot by Palestinians (the minimalist position), not Israelis.

Here's a video from You Tube making the case that the entire event was manufactured:


It's true, in this particular case things look a little fishy. However, if the IDF did not routinely kill civilians, this would be a little easier to believe. It's like a concentration camp commandaer arguing, in his defense, "but this one inmate died of natural causes."

A Tale of Two Muppets Shorts

Enjoy!