February 2007
Monthly Archive
February 26, 2007
For many, many years the American economy has depended on the willingness of foreigners to buy US debt. Foreign lenders have propped up America’s enormous, balance of trade deficits and its government’s borrowing. It didn’t really matter. The money was cheap and the lenders needed the US as much as it needed them – or at least that was how the story went. Every now and then there would be speculation as to what might happen if the foreign lenders changed their minds and stopped financing US overspending but there wasn’t much sign of that happening.
Now, according to Bloomberg News, that may be starting to change as foreign reserve banks diversify their holdings by investing in euros and pounds rather than dollars:
“‘Central banks are open to saying they’ve been diversifying to improve returns and reduce exposure to any single currency,’ said Sean Callow, senior currency strategist at Westpac Banking in Singapore. ‘There’s no doubt that when they say ‘diversification’ they mean selling dollars.’
“Diversification of official reserves could make it more difficult for the United States to fund its current account deficit, the broadest measure of trade in goods and services, and cause yields on U.S. Treasury bonds to rise. The dollar accounted for 65.6 percent of the world’s currency reserves in the third quarter, according to the International Monetary Fund.
“The U.S. current account deficit widened to a record $255.6 billion in the third quarter of last year, according to the Commerce Department.
“When a country runs a deficit in the current account, it relies on overseas investment to offset a shortfall in savings. Net purchases of U.S. stocks, notes and bonds by investors from abroad fell to $15.6 billion in December, the lowest in almost five years, according to the Treasury Department.
“Nineteen of the 47 central banks surveyed had cut their share of dollars, with 10 saying they had increased holdings of the U.S. currency. Twenty-one respondents said they had increased their reserves of euros, compared with seven who said they had reduced their holdings of the single currency.”
Why should we care? Because the United States is our key trading partner. It buys the majority of our exports. Its financial health therefore impacts directly on our own. The strength of the American dollar also impacts on our ability to export to the US.
February 26, 2007
More advice that George Cheney-Bush isn’t going to want to hear.
Henry Kissinger has called for an international conference to decide the future of Iraq. He says there’s no other way:
“If America fails to achieve its immediate objectives — if terrorist camps or terrorist regimes emerge on the soil of Iraq, backed by its huge oil resources — no county with a significant Muslim population will be able to escape the consequences: not India, with the second largest Muslim population in the world; not Indonesia, with the largest; not Turkey, already contending with incursions from the Kurdish portion of Iraq; not Malaysia, Pakistan or any of the countries of Western Europe; not Russia, with its Muslim south; nor, in the end, China.
“If the Iraq war culminates in a nuclear Iran (as an indirect consequence) and an Islamic fundamentalism that can claim to have ejected Russia from Afghanistan and America from Iraq, a period of extreme turbulence verging on chaos is unavoidable, and it will not be confined to the Middle East. A threat to global oil supplies would have a shattering impact on the world economy, especially the economies of the industrialized countries.
“…what is most frequently debated is whether diplomacy should be invoked at all. The administration, following one strain of American attitudes towards diplomacy [the neo-cons], has implied that it is not yet ready to negotiate over Iraq — especially not with Iran and Syria, which are accused of fomenting the conflict and stirring up the violence.
“The political framework needs to be created by countries with a stake in the outcome. These would include the permanent members of the Security Council; Iraq’s neighbors; key Islamic countries like India, Pakistan, Indonesia and Malaysia; and major oil consumers like Germany and Japan.
“These countries have many conflicting interests, but should have a common concern in preventing jihadist fanaticism from driving the world towards an ever-widening conflict.
“The international conference should be the occasion, as well, to go beyond the warring factions in Iraq to moving toward a stable energy supply. It would be the best framework for a transition from American military occupation. Paradoxically, it may also prove the best framework for bilateral discussions with Syria and Iran.
“American military policy in Iraq must be related to such a diplomatic strategy. Unilateral withdrawal on fixed timetables, unrelated to local conditions, is incompatible with the diplomacy described here.”
There’s a certain beauty to Kissinger’s proposal but its questionable whether the Bush administration, it’s credibility at home and abroad in tatters, could initiate such a conference even if it chose to try. A lot of lines have been drawn and interests already defined and it would take a strong America to sweep those aside. That’s not to say the international approach isn’t worth trying but is there any reason to believe that Bush is willing to take that step?
February 26, 2007
Strom Thurmond and Al Sharpton, there’s an odd couple for you.
The late senator Thurmond had been a segregationist when he ran for a presidential nomination in the 50’s. Sharpton is, of course, a colourful and outspoken champion of black civil rights. So, what could these two possibly have in common?
Thurmond’s ancestors owned Sharpton’s ancestors, that’s what. Geneaological searches reveal that a distant cousin of Thurmond’s had owned Coleman Sharpton, the reverend’s great-grandfather.
February 26, 2007
Poor old Pervez, he’s getting it from all directions. George Bush is demanding that he crack down on al-Qaeda while his own people are giving him hell for being Bush’s puppet.
Hundreds of female students from an Islamic seminary in Islamabad have occupied a public library demanding that Musharraf rebuild a half dozen mosques the government destroyed because they were built on illegally seized lands and dozens more demos are planned.
According to the LA Times, the protest is about a lot more than a handful of mosques:
“…the dissident Muslim cleric who appears to have masterminded the protest has parlayed it into a broader challenge to Musharraf’s authority, at a time when the president is under growing Western pressure to act against Islamic militants who find sanctuary in Pakistan.
“‘People are angry that Musharraf is a puppet of America,’ said Abdul Rashid Ghazi, who together with his cleric brother, Abdul Aziz, runs the Lal Masjid, or Red Mosque, which adjoins the girls’ seminary and the library. ‘That is the heart of the matter.’ Pakistani authorities view the mosque as a hotbed of radicalism, and orders are out for the arrest of both clerics.
“The confrontation is playing out against the backdrop of some of the most stringent state precautions in years against suicide bombings by Islamic militants in Pakistan, which have claimed scores of lives since the start of the year. Attackers have targeted the capital’s international airport, a luxury hotel, a courtroom and various security installations.
“The mosque protest appears to be an explicit warning to Musharraf against bowing to Western demands that he reform the country’s network of more than 13,000 madrasas, or religious schools. Many are known to have direct links to militant groups that have been staging attacks both in Pakistan and abroad, and have sent fighters to battle North Atlantic Treaty Organization troops across the border in Afghanistan.
“The young women now say they will not abandon their protest until Sharia, or Islamic law, is imposed throughout Pakistan.’That is the only way that this will end,’ said Amna Adeem, a 20-year-old protester wearing a black veil that left only her flashing brown eyes uncovered. Like many of the seminary students taking part in the sit-in, she is from Pakistan’s North-West Frontier Province, which is far more religiously conservative than Islamabad, the relatively cosmopolitan seat of government.”
As though he didn’t have enough problems with appearing to be a puppet of Washington, Dick Cheney made a surprise visit to Musharraf today to pressure for a crackdown in the tribal lands. Cheney’s timing, and judgment, are astonishing.
February 26, 2007
The New York Times reports that George Bush is sending a stern warning to Pakistan’s president Musharraf – start cracking down on al-Qaeda operations within Pakistan or face a cut off in aid by the Democrat-controlled congress.
Like previous dealings the message refers to al-Qaeda and seems to make no mention of the Taliban. Whenever he’s pushed, Musharraf makes a few, token strikes on al-Qaeda compounds and arrests a few of its leaders in Pakistan cities and then the business winds down.
Why leave out the Taliban? Because they’re the “home team” of the Pashtuns, slightly more of whom live in Paksitan than Afghanistan. The Pashtuns and Balochs occupy the ungovernable tribal lands adjacent to the Afghan border including Waziristan.
A military campaign against the Taliban could easily turn into a civil war with the Pashtuns and Balochs and that could be fatal for the vulnerable Musharraf. There have already been two assassination attempts against the Pakistan president. It is quite possible that, if Musharraf was assassinated or toppled, he could be replaced by an Islamist regime and the idea of Islamists with nuclear weapons and North Korean missile technology is a prospect that Washington doesn’t even want to contemplate.
Musharraf is the cork that keeps the genie of the Islamic Bomb safely inside the bottle. What that means is that the Afghanistan situation is basically insoluble. We can’t defeat the Taliban because we can’t bring enough pressure on Musharraf because we can’t risk having Pakistan’s nuclear arsenal fall into the hands of Islamists. Game, set and match.
No one understands this reality better than Afghan president Hamid Karzai. He’s regularly sending out overtures to the Taliban, the very same Taliban we’re over there supposedly to fight to protect – why Mr. Karzai and his thoroughly corrupted government.
We can’t allow the Taliban to return to Kabul because, after all, they tacitly allowed bin-Laden’s al-Qaeda to operate from their territory. Okay, fair enough, but then we have to take a kid glove approach, even send hundreds of millions of dollars in aid, to Musharraf who is tacitly allowing al-Qaeda to operate from his territory.
The logical disconnect to all of this is astonishing. We’re not bringing security to Afghanistan because we can’t eliminate the Taliban bases in Pakistan, we’re not bringing anything resembling true democracy to Afghanistan because Karzai has allowed warlords and thugs to infiltrate his government and security services, we’re certainly not liberating the women of Afghanistan from brutal oppression because the countryside has reverted to fundamentalist feudalism, so just what are we doing in Afghanistan?
February 26, 2007
It always had to come down to the tar sands. That was where Harpo had his dream of Canada as an “energy superpower” and where he had to draw his line in the tar. Oh he could claim he had done a 180 and now embraced the global warming issue but it was at the Athabasca Tar Sands that Harpo would face his “put up or shut up” moment. Now its time for our Furious Leader to come clean.
A report in this morning’s Globe claims the Harpo boys are going to allow substantially more greenhouse gas emissions from the tar sands in the future. It shows the Reform Conservative government is going to stick with the discredited, intensity-based, Bush/Cheney approach to the tar sands, ignoring the fact that Canadian GHG emitters are already producing way too much of the stuff and need to be cut back, way back.
What it comes down to is money, or as Harpo likes to refer to it, “the almighty dollar.” He doesn’t care about the almighty dollar when it comes to trade with China but he very much cherishes the almighty dollar when it comes to the filthy business of producing artificial oil for American SUVs.
Nine out of Canada’s top 15 GHG emitting companies are in Alberta. These nine are involved with the tar sands. In terms of trying to halt the onset of global warming, this is where the rubber meets the road.
The report referred to by the Globe came out just before Christmas. That means there could, just possibly could, be a different treatment of the tar sands in the policy Baird is to unveil before the end of next month.
February 25, 2007
According to the Times of London, a number of American generals are prepared to resign in protest if their commander in chief, Dick Cheney (or his ventriloquist’s dummy, George), moves to launch a war against Iran.
“‘There are four or five generals and admirals we know of who would resign if Bush ordered an attack on Iran,’ a source with close ties to British intelligence said. ‘There is simply no stomach for it in the Pentagon, and a lot of people question whether such an attack would be effective or even possible.’
“A British defence source confirmed that there were deep misgivings inside the Pentagon about a military strike. ‘All the generals are perfectly clear that they don’t have the military capacity to take Iran on in any meaningful fashion. Nobody wants to do it and it would be a matter of conscience for them.’
“’There are enough people who feel this would be an error of judgment too far for there to be resignations.’
“A generals’ revolt on such a scale would be unprecedented. ‘American generals usually stay and fight until they get fired,’ said a Pentagon source. Robert Gates, the defence secretary, has repeatedly warned against striking Iran and is believed to represent the view of his senior commanders.
This spreading discontent would go a long way to explaining the actions of the Chairman of the Joint Chiefs of Staff, General Peter Pace, last week when he directly contradicted White House claims that the top Iranian leadership was inolved in sending weapons to Iraq to be used against US forces. Pace may have been rushing to avert a showdown between his top generals and the White House.
“Hillary Mann, the National Security Council’s main Iran expert until 2004, said Pace’s repudiation of the administration’s claims was a sign of grave discontent at the top.
“’He is a very serious and a very loyal soldier,’ she said. ‘It is extraordinary for him to have made these comments publicly, and it suggests there are serious problems between the White House, the National Security Council and the Pentagon.’
“Mann fears the administration is seeking to provoke Iran into a reaction that could be used as an excuse for an attack. A British official said the US navy was well aware of the risks of confrontation and was being “seriously careful” in the Gulf.
“The US air force is regarded as being more willing to attack Iran. General Michael Moseley, the head of the air force, cited Iran as the main likely target for American aircraft at a military conference earlier this month.
February 25, 2007
Writing in today’s Times, Michael Portillo makes the case for shunning politicians too tightly bound up with their God:
“I worry because men of power who take instruction from unseen forces are essentially fanatics. Blair is filled with a self-confidence and self-satisfaction that are dangerous. They were evident last week as he refused to take responsibility for anything that has happened in Iraq since America and Britain occupied it. Those who look for judgment not from the electorate or parliament or a free press but from God release themselves from the constraints of democracy.
“If today the Church of England is wishy-washy and middle-of-the-road, that is no accident. It is the long-term result of Elizabeth’s design. Britain has benefited enormously from a weak clergy that has mainly remained aloft from politics. Britain’s established church, headed by the monarch, has made few demands of our leaders or people.
“When Blair correctly cites tolerance as one of Britain’s defining virtues, he should recognise that we owe it to those wise rulers who over centuries insisted on separating religion from politics.
Blair, “…was deeply uncomfortable when Jeremy Paxman asked him whether he and President Bush prayed together. If the answer was “no”, the prime minister was open to a charge of hypocrisy. Why wouldn’t two practising Christians share a moment of communication with their maker? If the answer was “yes”, the British electorate would be terrified. Not surprisingly he refused to answer.
“Britons should worry that religion and politics could again be bound together. If moderation and secularism have been overturned in parts of the Muslim world, why should not the same thing happen in Christian societies? Bush aroused that fear unwittingly when he referred to the war against terror as a “crusade”. The remark evoked a return to religious warfare by Christians under the banner of the cross. The idea is not so farfetched given that the president has also said that God had told him to “end the tyranny in Iraq”.
“In other societies theocrats, religious leaders or fanatics citing holy texts dictate violent actions. That constitutes the greatest threat to world peace today. For the first time since the Glorious Revolution of 1688, mainland Britain is menaced by religious violence, now committed at the behest of Al-Qaeda.
“But if our political leaders cite faith as their political guide, then how do we distinguish ourselves from the religious extremists who wreak havoc in our world? It may seem harmless to “do God” a little in an essentially moderate country like ours. But once you claim that He is judging you or telling you what to do, there is no logical defence against another who claims that his God is instructing him to blow up discotheques or fly planes into buildings. If one God sent the Americans into Iraq, why shouldn’t another insist that by every means it be defended against infidel attack?
“My guess is that historians will look back on the early 21st century in puzzlement. How was it possible, they will ask, that man had such deep scientific understanding but clung so tenaciously to his gods? Why did western politicians think that doing God (even a tiny bit) was an electoral or strategic asset? “
February 25, 2007
We’re just weeks away from the start of the fraud trial of Conrad Black, a case that led one observer to note, “Black has taken a huge gamble. He could end up dying in jail.”
The Observer has a pretty good assessment of Black and how he got where he is today:
February 25, 2007
The British seem to begrudgingly endorse Tony Blair’s decision to get British troops out of Iraq. Even the Telegraph supports the move although not the result:
“The British people have shown a lot of patience. Four years is surely enough time to set a successor regime on its feet. Yet, as Douglas Hurd writes on this page – and we support his call for an inquiry into how we got into this mess – little has gone as hoped. Life, liberty and property are less secure now than in the latter days of Saddam. The occupation has served to radicalise Muslim opinion, not only in Iraq, but throughout Europe and the Middle East. The overthrow of the Ba’athists and the Taliban in Afghanistan removed anti-Shia powers on Iran’s flanks, while making a direct confrontation with the ayatollahs politically and logistically impossible. Britain’s standing has plummeted: America is resented, but we are resented and despised, viewed as Washington’s trailing hyena.
“Yet there comes a point when we exhaust our utility. We tried working with the existing police. That failed. We tried scrapping the army and starting anew. That failed, too. If it is not in our power to create a better society in Iraq, there is no point in hanging around.”
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