Monday, May 31, 2004

Not only has the United States secured its man as Interim Prime Minister of The New IraqTM. Now the US is bound and determined to bag the ceremonial position of Interim President as well.
Talks on naming an interim president for Iraq were deadlocked yesterday as a rift between US occupation officials and the Iraqi leadership they appointed threatens to undermine American plans to hand over sovereignty to an interim Iraqi government on 30 June.

The US-appointed Iraqi Governing Council wants to appoint its current leader, Sheikh Ghazi al-Yawar, who has spoken out against the failure of the occupation, but the US occupation governor, Paul Bremer, is insisting that they choose instead Adnan al-Pachachi, an 81-year-old former diplomat, who has said he believes American troops need to stay in Iraq until the security situation improves.

It emerged yesterday that Mr Bremer warned the council during talks on Sunday not to put the decision to the vote, saying that if it elected Sheikh Yawar, he would veto the decision. Further talks scheduled for yesterday were postponed at America's request until today, meaning that the deadline to name the interim government by the end of May was missed. . . .

America's reasons for preferring Mr Pachachi over Sheikh Yawar are obvious. Both are in fact popular choices with the Iraqi street - although the US attempts to arm-twist the Governing Council have dented Mr Pachachi's standing badly. Both are Sunnis, to balance the fact that Mr Allawi is a Shia, and both are members of the Governing Council.

But Sheikh Yawar, the head of one of the country's most powerful tribes, has recently criticised the US occupation. "We blame the United States 100 per cent for the security in Iraq," he said. "They occupied the country, disbanded the security agencies and for 10 months left Iraq's borders open for anyone to come in without a visa or even a passport." Mr Pachachi, by contrast, has said he believes that only the US forces can restore security.
It is stunning how both Paul Bremer and the Iraqi Governing Council have completely and utterly routed UN envoy Lakhdar Brahimi. Brahimi openly confessed that he was looking for technocrats who were neither from the exile community nor on the IGC to staff the new positions in the "sovereign" interim administration. Instead, Allawi, Pachachi and Yawar are all IGC members, and Allawi and Pachaci are from the exile community. So much for those plans! And still Bush expects the UN Security Council to rubber stamp his new resolution?

The choice of Ayad Allawi as the new Iraqi interim prime minister shows that the Bush administration is far, far away from simply handing over key decisions regarding the Iraq colony to -- in the words of Richard Holbrooke, a John Kerry foreign policy advisor, "Lakhdar Brahimi, a U.N. official, an Algerian Sunni Muslim . . . we don't know what he's going to come up with or when he's going to come up with it or whether it serves America's national interests."

Considering Allawi is from the Iraqi exile community, long-time CIA and MI6 darling, and a member of the US-established Iraqi Governing Council with relatives and supporters running the Iraqi defense and interior ministries, I think the guy serves "America's national interests" to a freakin' T!

Is Holbrooke happy now?

After grilling some burgers and feasting on the first good canteloupe of the season, the General is back to blogging. This was the first article that caught my eye tonight:
Iraqi crude oil sales since last year's U.S.-led invasion have hit more than $10 billion, the U.S.-led authority governing Iraq said on Monday.

The Coalition Provisional Authority had deposited a total of $10.004 billion in its Development Fund for Iraq as of last Thursday, it said in an Internet posting.
This bit of news brings to light once again the importance of the Development Fund for Iraq (sic) in the future wrangling over a new UN Security Council resolution for Iraq.

Recall that the Development Fund for Iraq was set up by UNSC Resolution 1483 (2003) which largely replaced the UN Oil for Food Program, itself discontinued in November. The DFI is designed to be the Treasury of The New IraqTM, concentrating in it not only all of Iraq's oil and natural gas revenues, but also all revenues frozen by Western governments after 1990, US Congressional grants, and the like. According to 1483, the aim of the Fund is to provide for
the humanitarian needs of the Iraqi people, for the economic reconstruction and repair of Iraq�s infrastructure, for the continued disarmament of Iraq, and for the costs of Iraqi civilian administration, and for other purposes benefiting the people of Iraq
It's a multibillion dollar pot of gold well worth having your hands on.

From the text of the latest draft resolution cooked up in Washington and London, it appears the same masters are going to be running the show regardless of any details about "sovereignty".
The Security Council . . . Notes that upon dissolution of the Coalition Provisional Authority that funds in the Development Fund for Iraq shall be disbursed at the direction of the Interim Government of Iraq and its successors, and decides that the Development Fond for Iraq shall be utilized in a transparent manner and through the Iraqi budget including to satisfy outstanding obligations against the Development Fund for Iraq, that the arrangements for depositing of proceeds from export sales of petroleum, petroleum products, and natural gas and its products established in paragraph 20 of resolution 1483 (2003) shall continue to apply, that the International Advisory and Monitoring Board referred to in resolution 1483 (2003) shall continue its activities in monitoring the Development Fund for Iraq and shall include as an additional member a duly qualified representative of the sovereign government of Iraq and that the provisions above shall be reviewed no later than 12 months from the date of this resolution or at the request of the Transitional Government of Iraq, and that appropriate arrangements shall be made for the continuation of deposits of the proceeds referred to in paragraph 21 of resolution 1483 (2003);
Clearly the draft US/UK resolution continues to dramatically limit the sovereignty of the new post-June 30 "sovereign" Iraqi government by continuing to internationalize the country's treasury including all the revenue from the only viable export sector the country has. Counterpunch has called the DFI "The Corporate Slush Fund for Iraq", and Christian Aid dubbed it "a financial black hole". While DFI funds will be disbursed by the new interim government after June 30, they will still be disbursed to (primarily US) corporations reconstructing Iraq. They are supposed to be disbursed under the watchful eye of the extant International Advisory and Monitoring Board -- led by the IMF and the World Bank -- but that may not be terribly reassuring. Finally, the DFI will continue to be the means by which Iraqi oil money is funneled to Kuwait in the form of "reparations" dating back to the 1990-91 Gulf War; that is what "paragraph 21 of resolution 1483" is all about.

Formally we all know that after June 30 the interim Iraqi government will be sovereign; if they ask US and UK troops to leave, we are told they will leave. If you believe that one, you'll probably believe the interim Iraqi government also has control over the Iraqi treasury, too. And by the way, I have this bridge in Brooklyn . . .

Friday, May 28, 2004

You've heard of of the G7. Now meet the G5.
Luiz Inacio Lula da Silva, the president of Brazil, led a delegation of eight cabinet ministers, six state governors and 450 business leaders to China in a push to foster closer ties in Asia's fastest growing economy.

The range and dimension of the commercial deals demonstrated a degree of economic synergy rarely seen between two developing countries. . . .

President Da Silva was able to use the visit to further his own diplomatic agenda of forging developing nation trade blocs to counter the dominance of Europe and the US in world trade and diplomatic forums.

He urged China to consider joining the embryonic G3 alliance consisting of Brazil, India and South Africa. "We dream that in the near future it will be a G5 with Russia and China," Mr Da Silva said. "We want to build a political force capable of convincing rich nations ... that they can ease their protectionist policies and give access to the so-called developing world."

According to certifiable nutjob Victor Davis Hanson, the United States need not worry about an extra 40,000 troops for empire. There are more, shall we say, "efficient" ways of pacifying The New IraqTM.
In short, I think our sole serious mistake in this war is that we have forgotten the lessons of history, the essence of human nature, and what constitutes real morality. Small armies, whether those of Caesar, Alexander, or Hernan Cort�s can defeat enormous enemies and hold vast amounts of territory � but only if they are used audaciously and establish the immediate reputation that they are lethal and dangerous to confront. Deterrence, not numbers, creates tranquility and the two are not always synonymous.

A thousand Marines shooting the first 500 gunmen they saw, broadcast on al Jazeera, would be worth the deterrence of another armored division. Taking Fallujah and killing Baathist killers while putting victorious Iraqi coalitionists on television would have been the equivalent of calling up another 40,000 reservists.
This is truly "bourgeois man" in his full flower. As Hannah Arendt writes concerning the philosophy of Thomas Hobbes (you know, Mr. "solitary, poor, nasty, brutish and short"):
Hobbes liberates those who are excluded from society -- the unsuccessful, the unfortunate, the criminal -- . . . They may give free rein to their desire for power and are told to take advantage of their elemental ability to kill, thus restoring that natural equality which society conceals only for the sake of expediency. Hobbes foresees and justifies the social outcasts' organization into a gang of murderers as a logical outcome of the bourgeoisie's moral philosophy.

Everyone is going ga-ga over the April personal income report released today.
The increase reported by the Commerce Department on Friday came after a brisk 0.5 percent advance in March and suggested that consumers continued to do their part to support the economy.

Americans' incomes, meanwhile, rose by a strong 0.6 percent in April, marking the largest gain since January 2001. The growth in income last month, which followed a 0.4 percent rise in March, was especially encouraging because that is the fuel for spending in the future.

The income and spending figures are not adjusted for price changes.
Well, let's look at these numbers in real terms instead, then.

While nominal personal income rose 0.57%, real personal income ticked up a lower 0.44%. The all-important wages and salaries increased 0.53% in nominal terms but 0.40% in real terms. These numbers are indeed positive for those looking for a sustainable recovery, but not robustly so. In real terms for the period of the last seven months, these April figures are slightly better than average.

Real employee compensation growth for the last three months is at 4.0% in annualized terms, and real wage and salary growth is up 3.1%. Of all the numbers, these seem the most welcome for the sustainable recovery crowd.

Chickenhawk wingnuts fought the law, and the law won?

The General has blogged previously on the dangerous game the far-right-wing of the Republican Party is playing by directly attacking the US national security state: the military, the CIA and the Congressional oversight structure -- especially the Armed Services and Foreign Relations committees in the Senate. Not only is the national security state a cornerstone of any Republican political bloc, but it also has a good deal of autonomous power which it can wield against any who attack it.

In the face of strong resistance from pinheads like Sen. James Inhofe, Sen. John Cornyn, House Armed Services Committee Chairman Duncan Hunter and Donald Rumsfeld among a host of others, national security state rock Sen. John Warner (R-VA) is standing his ground.
The silver-haired Virginian with courtly manners is a throwback to a forgotten era of congressional comity. But as he leads the Senate's inquiry into abuse of Iraqi prisoners, Armed Services Committee Chairman John W. Warner (R-Va.) also shows another side: a penchant for bucking his party, taking heat and surviving.

Warner says his committee has a "solemn responsibility" to discover what went wrong and to "make sure it never, never happens again."

. . . Warner -- a sailor in World War II, a Marine during the Korean War and secretary of the Navy before he came to the Senate in 1979 -- is motivated by a strong belief that the reputations of both the military and the Senate are at stake unless they get to the bottom of the scandal. "To do otherwise would be contradictory to everything he has experienced in his professional life," said committee member John McCain (R-Ariz.). Besides, McCain added, "it would be incredibly stupid politically."

. . . "Senator Warner is a military guy through and through. He volunteered twice, served in the armed forces twice -- that's twice more than a lot of members," said Rep. Thomas M. Davis III (R-Va.). . . .

Some see Warner's intervention against [Oliver] North and his outrage over the prisoner abuse as dual reflections of his devotion to the military.

Warner puts it in more personal terms. He went through both undergraduate and law school under the G.I. Bill of Rights and feels he owes the military for everything he has become. "I have a tremendous obligation to the military," he said.
There is no doubt that Warner is a dyed-in-the-wool member of the national security state, and he is defending its authority and legitimacy in the face of those interested in destroying it as an autonomous force within Republican politics.

Who ever thought somebody on the left could be cheering for the representatives of the national security state to win?

Thursday, May 27, 2004

The revised GDP figures for 2004:I are out today. You can get the broad outline anywhere, but here's an angle you might have missed.

Folks over at Angry Bear have been debating this week whether George W. Bush is the worst President of all time. While that may be true, there seems no doubt that the Boy King has been among the best Presidents of all time for corporate profits. When Bush came into office in 2001, corporate America was in crisis. After peaking in 1997:III at $817bn (all figures are in constant 2000 dollars), corporate profits sank over the next four years to $555bn in 2001:III -- a real 32% decline. Dubya set about quickly reversing course. In a single quarter real corporate profits jumped 16%; in three quarters, 32%. By 2003:I real corporate profits had skyrocketed to $740bn, all in the midst of a nationwide recession and sluggish recovery. And that was just the beginning.

According to the revised 2004:I GDP figures, real corporate profits stood at $969.4bn. In just one year, they rose an amazing 31%. Real after-tax profits rose even more, from $537bn in 2003:I to $741bn in 2004:I -- a stunning 38% ascent in a single year. Since Bush first took office, real corporate profits have jumped 62% while real after-tax corporate profits have ascended an amazing 94%.

The worst president in history? Not for capital -- not by a long shot.

John Kerry launced his big eleven day campaign focus on national security today in Seattle. If you missed it, don't worry. You didn't miss much. As the Associated Press wisely discerned,
Although Kerry's advisers promoted the speech as a major policy address, the Democrat did not stake new ground as he outlined positions he has taken on the campaign trail in recent months. He said he will provide details in the coming days.
If you've been following the General's series on the liberal hawk manifesto "Progressive Internationalism" then you know what the Kerry plan is and how the General feels about it. Kerry staked no new ground in Seattle but merely continued to agree with Bush strategy, critique Bush tactics, and claim that somehow someway a Kerry presidency can "launch and lead a new era of alliances for the post 9-11 world".

Kerry is giving two more big national security speeches, one in West Palm Beach, FL on June 1, and a second in Independence, MO on June 3. We wait for something new until then.

This just shows you how much of a plutocracy the United States really is.
Treasury Secretary John W. Snow, who has helped lead Bush administration efforts to tighten regulation of Fannie Mae and Freddie Mac, unwittingly held more than $10 million worth of securities of those and other government-sponsored housing finance companies until recently, a Treasury spokesman said last night.

Snow's bond holdings were discovered by the Treasury Department this month during preparation of his annual financial disclosure form, and Snow quickly sold them for about $10.4 million, taking a loss of $477,467, said spokesman Rob Nichols.

Snow had orally instructed a financial adviser to invest the money in Treasury securities, but "because of a misunderstanding or miscommunication," Nichols said, the money was instead invested in bonds of Fannie, Freddie and the Federal Home Loan Banks. The secretary's "clear intent was somehow lost in translation."

The holdings were listed on periodic brokerage statements that Snow received but did not read, Nichols said. "Probably four or five were sent to his home and he simply did not look at them," he said.
Snow is so amazingly rich that he had a $10 million investment position that he was not only totally unaware of but also totally unintereted in! Man, when $10 million is pocket change, no wonder the guy is completely unperturbed by a $500bn budget deficit.

More evidence is in on how Greenspan is nothing more than a Republican shill.

Since the 1950s, when the Fed's independence was firmly established, its chairmen have generally taken pains to maintain their distance from the executive branch. The Fed's ability to conduct monetary policy without regard to political fallout is thought to be key to its credibility in financial markets.

Greenspan has always maintained public contact with administration officials. But the Fed was seen as so independent early in his 17-year tenure as chairman that some in the first Bush White House blamed him for contributing to their 1992 election loss to Bill Clinton. . . .

Greenspan's frequent contacts with the Bush administration do raise questions for Kenneth H. Thomas, a lecturer in finance at the Wharton School at the University of Pennsylvania. "There's the appearance that [Greenspan] might not just be affected by economic winds, but possibly by political winds," said Thomas, who obtained records of Greenspan's appointments back to 1996 through the Freedom of Information Act, and who published his findings in an article in the American Banker last month. . . .

Greenspan's meetings do mark "a huge and historic shift," said Donald Kettl, a professor of political science at the University of Wisconsin at Madison and author of a book about political influence on the Fed.
While the "experts" warn that Greenspan has to maintain the Fed's distance from the executive branch so as to maintain the Fed's power and credibility, it hasn't seemed to have hurt the central bank yet. Perhaps Alan learned the lesson of the US Supreme Court in 2000, which demonstrated that you can baldfacedly play the role of political hack and still maintain your power and authority with no damage to the institution itself.

The Bank of England has boosted UK interest rates three times since November. Housing markets just don't care.
Britain's largest building society said the average house price rose by 1.9 per cent this month to �149,020. This put the annual rate of house price inflation at 19.5 per cent, accelerating from April's 18.9 per cent to the fastest rate in a year.

But Nationwide warned that the longer the house price surge goes on, the more serious the result of a downturn was likely to be.

Lenders and the Bank of England alike have been predicting house price inflation would slow dramatically after last year's 25 per cent gains but this has so far failed to materialise.

"The likelihood of a potentially drawn out period of house price inflation is rising," said Alex Bannister, Nationwide's group economist.
Just last month the IMF warned yet again of the likelihood of popping housing bubbles in much of the Anglosphere (UK, Australia, Ireland, US) along with a few other countries (Netherlands, Spain). In the UK, rising real interest rates haven't put off homebuyers, and the gap between British annual real housing price growth (10.4%) and annual real disposable income growth (3.16%) is the largest of the 11 countries studies by the IMF.

The ever-swelling housing bubble in the UK suggests that a gradualist interest rate hike approach to tackling inflation may not be the best approach -- a lesson that Alan Greenspan and Co. might want to consider as they continue putting off raising interest rates in the US, now perhaps as late as August.

Lest we think that all is well in the British sector of Iraq.
The Defence Secretary Geoff Hoon today announced a further 370 British troops are to be sent to Iraq.

He said the 1st Battalion the Black Watch, trained in operating out of Warrior personnel carriers, would replace the 1 Argyll and Sutherland Highlanders who were due to return to the UK.

That would mean a net increase of 200 troops, responding to the "continuing threat from violent groups in the area around Al Amarah", Mr Hoon told MPs in a Commons statement.

In addition, after mortar and rocket attacks targeted at British forces around Al Amarah, 69 Squadron from 36 Regiment Royal Engineers - 170 troops - will be sent to Iraq.

Mr Hoon said they would "carry out force protection work, including the construction of additional physical defences in British bases to reduce the threat posed by the kind of attacks we have seen in recent weeks".
The Financial Times called the troop deployment "a modest increase," and while it is in an absolute sense, in a relative sense Blair is upping the British forces in Iraq by over 2%. Of course, that's a far cry from John Kerry's call to boost US troop presence by 30%.

Wednesday, May 26, 2004

Ilya Shapiro at Tech Central Station thinks he's discovered something profound: Purple America.
I am a cosmopolitan conservative, residing in that nebulous region distrusted by both coastal elites and the populist sages of the heartland, Purple America.

Purple America is not so much a place as an idea, or more precisely a confluence of values from Red America with tastes from Blue America. It believes in personal responsibility, discipline, civil society, spontaneous order, ordered liberty, and that the best thing government can do is not get in the way. Yet it craves independent films, fine cigars, Belgian ales, and South American f�tbol -- along with a good baseball game (preferably without the designated hitter).
Hmm, didn't David Brooks discover these people four years ago and dub them "bourgeois bohemians"?

In his column today John Kay of the Financial Times (subscription only) cuts through all the crap about the stock market and gets down to bare bones.
The level of the stock market is a measure of national self-congratulation. It tells you how much you think your children and grandchildren owe you. . . .

As the myth of the new economy has dissolved, however, two new illusions have emerged: not only are the businesses we have created worth more to future generations than we had previously supposed, the houses we have built are also worth far more. Better still, the beneficial effects of tax cuts on productivity and growth are so large that not only are George W. Bush's friends better off today but everyone, including the federal government itself, will be better off in future.
The American "baby boom" generation astride the world is not only running an empire on its own behalf today; it's colonizing the future as well. Whether government debt, current account deficits, climate change, or ecological unsustainability, I fear the baby boomers are the most profligate bunch of bums, cheats and wastrels the world has ever known.

Yes, I know, spoken like a true thankless member of Generation X.

Congratulations to the Calgary Flames, who not only won Game 1 of the Stanley Cup Championship last night but are also the first Canadian team in the NHL finals in ten years. C'est chocolat!

Even the evil Bill Safire cannot see the daylight shine between Bush and Kerry on Iraq.
Four weeks ago, at Westminster College in Fulton, Mo.,, Kerry laid out three basic options: (1) "continue to do this largely by ourselves" (would never work); (2) "pull out and hope against hope that the worst won't happen" (worst would happen); or (3) "get the Iraqi people and the world's major powers invested with us in building Iraq's future" (that's it!).

In his address the other night, President Bush agreed with Kerry's unassailable Option 3 by recounting his own five-step plan:

(1) Turn over sovereignty as promised in a month, the date O.K.'d by Kerry; (2) help establish security (like Kerry, Bush is ready to send over more troops if our generals ask, and they'd better not ask); (3) "rebuilding that nation's infrastructure," echoing Kerry's call for "tangible benefits of reconstruction in the form of jobs, infrastructure and services"; (4) "Next month at the NATO summit in Istanbul," Bush promised to "discuss NATO's role in helping Iraq build and secure its democracy." As Kerry said last month: "He must also convince NATO as an organization that Iraq should be a NATO mission."

Only on the fifth step can we find daylight between the two men's positions. The neomultilateral Bush boasted that "a United Nations team headed by Karina Pirelli is now in Iraq helping form an independent election commission that will oversee an orderly, accurate national election."

But Kerry prefers a "high commissioner . . . charged with overseeing elections . . . highly regarded by the international community." Sorry, Pirelli; step aside, Brahimi; we need a celebrated heavy hitter like Nelson Mandela or Jimmy Carter to order those so-called sovereign Iraqis around. (Who'd a-thunk it: Bush caving in to the U.N., while Kerry gives Kofi Annan's envoys the back of his hand.)

Aside from this minor divergence of views � which could be rectified the moment Bob Shrum reads this � the speeches of the two candidates show that they see eye to eye not only about staying the course, but about what course to pursue. "If the president will take the needed steps to share the burden," said Kerry, ". . . then I will support him on this issue." And the Bush five-step plan takes those steps.
Kerry's enthusiasm for some kind of High Commissioner to oversee Iraq is echoed very clearly by his foreign policy advisor Richard Holbrooke who couldn't help but point out twice on the NewsHour last week that Lakhdar Brahimi is a Muslim (wellll . . .), a Sunni (gasp!), an Algerian (what?!?) and a "U.N. official" (lynch him!).

I hate to sound like a broken record . . . broken record . . . broken record . . . but this stuff is just too spot-on to ignore.
When it comes to Iraq, it is getting harder every day to distinguish between President Bush's prescription and that of Senator John Kerry.

They still differ on some details, and Mr. Kerry continues to assert that Mr. Bush has lost so much credibility around the world that only a new president can rally other nations to provide the necessary assistance, a point he made Tuesday while campaigning in Oregon.

But as became evident with Mr. Bush's latest speech on Iraq on Monday night, which followed a detailed speech Mr. Kerry gave on Iraq's future one month ago, the broad outlines of their approaches are more alike than not.

. . . Mr. Kerry is left to argue that while both men have similar ideas about what to do, he has more credibility to do it, given the breakdown in relations between Mr. Bush and many world leaders over Iraq.
To be fair, there are one or two minor differences between Bush and Kerry.
Mr. Kerry has called for NATO to take a major role in Iraq, freeing up American troops and providing an opening to attract military support from non-NATO nations like India and Pakistan.

. . . Secretary of State Colin L. Powell said Tuesday that Iraq would be discussed at the NATO summit at the end of next month in Turkey, and that 16 of the 26 NATO member nations are already involved in Iraq in some way.
And then there is
Mr. Kerry has also called for the establishment of a United Nations high commissioner to oversee the political development of Iraq and the rebuilding efforts.

. . . Administration officials have been dismissive of Mr. Kerry's idea of putting a United Nations high commissioner in Iraq. They have argued that the Iraqis do not want the United Nations in power any more than they want the United States in power.

"This is not East Timor," one senior administration official said
While is is good fun to pile on top of Bush and kick him while he's down, it is more important to show how the broad -- and in some respects narrow -- elements of American imperialism will sail confidently ahead under a Kerry presidency. Talk of NATO and a UN High Commissioner is almost pure politicking, not a real strategic alternative to Mr. Bush's War.

Is there any doubt that the world-historic role of John Kerry is to have his most famous quote, "How do you ask a man to be the last man to die for a mistake?", thrown back at him?

Tuesday, May 25, 2004

FYI, I've added John Quiggin to the blogroll. Not only does he run a great site, but this quote about him is one of the best I've read in the blogosphere:
"I do not know how he is a professor, but anyway he purports to be an economist."

--Senator Richard Alston, Minister for Communications [Australia]

Hey, my very first comment on General Glut's Globblog! Thanks to baoutsi who wins the Big Globblog Prize -- to be clothed in eternal glory.
You write:

The point is that liberal empire is not about creating order. It is about creating order favorable to the interests of the empire.

I fully agree but I don't think the interventions of the North were successful. The multilateral approach (Bosnia, Kosovo) just froze the chaos and it didn't create a self-sustaining order. The semi-multilateral (Afghanistan) and the unilateral (Iraq) are even worse. In these cases the state couldn't be reconstituted.

I think that the great weapon of the countries of the North is economic sanctions. Military intervention is costly, fraught with dangers and doesn't seem to work.

As of April 2004, the US economy is down 1.6 million (non-farm) jobs overall under the Boy King, but down 2.3 million private sector jobs (one assumes Republicans won't be crowing over more government employment under Bush). Paul Krugman reminds us today that it's even worse than that, however.
The job forecast in the 2002 Economic Report of the President assumed that by 2004 the economy would have fully recovered from the 2001 recession. That recovery, according to the official projection, would lead to average payroll employment of 138 million this year � 7 million more than the actual number. So we have a gap of 7 million jobs to make up.

And employment is chasing a moving target: it must rise by about 140,000 a month just to keep up with a growing population. In April, the economy added 288,000 jobs. If you do the math, you discover that President Bush needs about four years of job growth at last month's rate to reach what his own economists consider full employment.
Well, I guess we've got the Republican campaign theme for 2008 already worked out!

Last Thursday the General weighed in on the lefty blog tussle between new middle class liberals (Yglesias, Drum, DeLong) and working class populists (Newman, General Glut). Nathan Newman has another great reply to Yglesias.
That Matt sees this stuff as tangential to "true" conservatism is exactly the point-- like a lot of liberals he's more obsessed with the culture war, while thinking the economic war can be managed once a few good technocrats are put into office under a nice liberal President.

While I'll defend Clinton relative to Reagan and the Bushes and want Kerry to win, Robert Rubin or the equivalent that Kerry will appoint is not going to confront head-on the economic warfare that working people are facing, at both the government level and by private sector corporate organizing. And the fact that liberals don't take the economic component of conservatism seriously enough is exactly why the rightwing can get away with it given the often deadening media silence.
Contemporary DLC Democrats (including John Kerry) as well as most "liberal" bloggers are little other than the reincarnation of liberal Republicans of a bygone age. Compare John Anderson of 1980 to any of these guys and try to measure the difference. Warning: bring your micrometer.

Niall Ferguson is busy shooting his mouth off today at The Atlantic webpage. If you've read any of his opinion pieces over the last two years, there is really very little that is new to be gleaned. I suspect it is really just part of Ferguson's grand strategy of getting published in every English-speaking periodical in the world (he's in the most recent issue of Mother Jones, of all places, too). The small bit that is new is that Ferguson is plugging his new book, Colossus: The Price of America's Empire. I admit that I haven't read it yet; I'll get around to it this summer. That being said, the interview in The Atlantic together with Mother Jones and even Ferguson's piece in today's Telegraph make me feel like I've already read the thing.

The long and short of Ferguson's claim is that the British did empire a hell of a lot better than the US did in the past or does now and thus the upstarts need to learn a lesson or two from the old master. What made the British so damned successful, apparently, is that they were all about "liberal empire".
there were self-proclaimed liberal imperialists in Britain, liberals who saw the British Empire as a means of spreading liberal values in terms of free markets, the rule of law, and ultimately representative government. There was an important and influential faction within the Liberal Party who saw empire as an instrument for globalizing the British liberal model.
This is to be contrasted to the "defective" US model.
it had been the model even before the Cold War, in the days of Hoover and Franklin Roosevelt�the "Our Son of a Bitch" model. And when you look at what happened in countries from Chile to Iran, I think it's obvious that the cost of that approach probably outweighed the benefits. The legitimacy of American foreign policy suffered serious long-term damage because support was given rather uncritically to some pretty lousy regimes. Indirect rule through petty dictators has the defect that you really have a problem controlling the bastards that you are notionally sponsoring.
Let's stop right there. What is the evidence of British "success" and US "failure"? That British imperialism created "successful" (i.e. rich, stable, representative) societies whereas American imperialism created "defective" (i.e. poor, unstable, autocratic) ones? Ferguson waxes eloquently on the British experience: Canada, New Zealand, Australia, India, Egypt, Iraq . . . huh??

First of all, no honest historian can count the so-called "white settler colonies" in the tally sheet of successful British imperialism. These are colonies in the proper sense of the term, appendages of Britain itself. The real proof in the pudding is places the British didn't colonize but simply conquered. And there the record is lousy. India can be placed in the "success" column on Ferguson's terms (of course, he ignores all the death and destruction, but at least the country has stable democratic institutions) and perhaps Sri Lanka (although stability seems wanting there). If I was being especially generous I might grant Malaysia. Where else can the British empire claim "success"? Sudan? Sierra Leone? Nigeria? Bangladesh? Pakistan? South Africa? Zimbabwe? Oman? Kuwait? Iraq? I think you get my drift.

Secondly, Ferguson is painfully naive and intentionally so when evaluating American imperialism, the goal of which was never to create liberal democracies but rather capitalist societies in which the rule of property could be carried out. In core countries like Germany and Japan post-WWII, the kind of capitalism created looked relatively benign. In the periphery of the Caribbean, Central America, the Philippines, Liberia, etc., it created a typically peripheral form of capitalism that was not designed to generate local wealth or representative government but stability toward the end of the enrichment of the core.

"Liberal empire" does indeed create the "rule of law," but it also undermines the "rule of law" at the same time. In the 19th century it destroyed one law (traditional) and replaced it with another (modern). Today it also destroys one law (national sovereignty) and replaces it with another (transnational globalization). Ferguson is incredibly sloppy on this point. He states boldly
So liberal empire has a discrete and distinct function to perform. It has to impose�and I stress impose�the rule of law.
Of course, that which liberal empire seeks to bring to an end is not always anarchy and chaos. Iraq in 2003 was hardly anarchic, and neither was Afghanistan in 2001. Clearly there were pretty nasty forms of order in both places, but the point is there was order. If liberal empire is all about replacing disorder with order, where is Ferguson on Sudan, DR Congo or West Africa?

The point is that liberal empire is not about creating order. It is about creating order favorable to the interests of the empire. Sometimes that is good for the imperialized (e.g. Germany, Japan) but usually it is not (e.g. Vietnam, Haiti, Nicaragua). Enough of this nonsense about "liberal empire" and global civil war as the only two options for the 21st century.

Important nuances you should know when following global oil prices:
Other analysts noted that the new oil that Saudi Arabia could pump quickly is high in sulfur content, while it is the low-sulfur "light sweet" crude that is in short supply. Refiners in the major consuming nations, including the United States and China, generally want only light sweet crude, and that is the type specified in widely quoted market prices.

The fact that Saudi Arabia has not been able to calm the energy markets with promises of more oil demonstrated just how high fears have been running about global shortages, oil industry officials and analysts said.

The Economist weighs in on OPEC, the G8 and oil prices.
At the next official meeting of OPEC, in Beirut on June 3rd, Saudi Arabia will be asked to demonstrate solidarity with its co-conspirators in the cartel. The bargain that holds OPEC together�each member shows restraint in production, so that all can enjoy higher prices�is at stake, they will say. But it is widely assumed that Saudi Arabia must also keep its side of a more fundamental bargain. It must be conscious of American petrol prices, especially in an election year, and, in return, the world�s only superpower will continue to offer the desert kingdom its protection. The other members of the G7 have rather less leverage, but they are promising to flex whatever diplomatic muscles they can find. Nicolas Sarkozy, France�s newish finance minister, in particular, is not one to sit still while others decide the fate of his economy. Those oil-producing nations with which France is most �easily in touch� will be hearing from him soon, he promised in New York.

Mr Sarkozy�s powers of persuasion and America�s promises of protection may be enough, for the moment, to keep the Saudis on side and the rest of OPEC quiescent. Oil prices of $50 per barrel no longer look an immediate prospect. But, by the same token, oil prices of $25 per barrel may, as the Venezuelans insist, belong to a bygone era. If the Chinese economy continues to grow and security fears continue to mount, there may be little anyone, in New Amsterdam or Old, can do.
The thing the General finds most odd in this passage is the assumption that the G8 has a great deal of weight to throw around regarding oil prices. They do not. Most of the smaller OPEC members are producing near or at full capacity, so shaking a stick at Venezuela (OPEC's #3 producer) or Libya (#7) won't do any good. With the West already in a complicated dance with Iran (OPEC's #2) to get the country to suspend its nuclear weapons program, piling demands for more oil on Iran (the most likely of the countries with which France is "easily in touch") as well is likely to backfire. That really leaves Saudi Arabia as the only significant player with enough spare capacity to throw into production in a pinch to make a real difference in the global market.

The Economist suggests the US has considerable leverage over the Saudis because of the "more fundamental bargain" between the two countries: oil for protection. Yet with the demise of Saddam, from whom exactly is the US now protecting the House of Sa'ud? From al-Qaeda? From its own subjects? I am unconvinced that the US can do much of anything to protect Crown Prince Abdullah and all his brothers, half-brothers, lackies, cronies and hangers-on from either.

In fact, higher oil prices are probably the best vehicle for the preservation of the House of Sa'ud in that it allows them to drown resistance and disaffection in a shower of petrodollars. Clearly the Saudis don't want to get too greedy and send the nascent recovery into a tailspin, but anything below $30/barrel seems increasingly unlikely.

Monday, May 24, 2004

Over at Political Animal, Kevin Drum is fond of blogging on Christianity. A good example is this post in which Drum links to a host of liberal sites commenting on the compatability or lack thereof between the secular left and the "progressive Christian left", i.e. religious people who also endorse the liberal cultural agenda (funny how very little of the arguing is over economics). What liberals like Drum fail to recognize, however, is that in the "progressive Christian left" they're not really dealing with Christianity, but with Christianity Lite.
Call it Christianity Lite. It's the assertion � no, the insistence � that you can be a Christian in good standing though you reject all or significant parts of the brand of Christianity to which you formally adhere. Even Jesus Christ � and who he was � is negotiable, not to mention traditional teachings on sex, abortion and divorce. Who's to tell you what to think and do as a Christian � or to judge you wanting? It's a heresy nowadays to accuse someone of heresy.

. . . the consumer mentality rules in the world of Christianity Lite: The notion that no one has the right to tell anyone how to practice his or her faith, or indeed what that faith should consist of. Individual choice, not the tradition handed down by parents or grandparents, increasingly governs belief, practice and denominational affiliation.
Christianity Lite is not Christianity. It is consumerism run amok, the perfect ideological orientation for post-modern capitalism. Even religion has become little more than a niche market which capital seeks to cultivate and control, with secular liberals helping to pave the way.

So grab those Tarot cards, pray that rosary and fill that Hummer. God's on your side!

John Quiggin at Crooked Timber is running down the so-called "Copenhagen Consensus" again today. The Copenhagen Consensus is a joint project between Bjorn Lomborg's Environmental Assessment Institute and the arch-liberal (in the European sense) magazine The Economist devoted to helping Northern governments and NGOs spend their aid money in the South via answering the question "Where, among all the projects that governments might undertake to make the world a better place, are the net returns to their efforts likely to be greatest?"

Quiggin has two major qualms: [1] a general ranking of problems to be tackled (e.g. disease, education, sanitation, armed conflict) cannot be achieved uniformly for every country; and [2] as Quiggin calls it "the joker in the pack, climate change," which of course is Lomborg's pet bugbear and which Quiggin suspects the entire project is in part simply a means of obfuscating.

Two important objections indeed, but how about a third much more fundamental objection?

In the words of The Economist, "a series of distinguished experts in each field was commissioned to write a review paper on each issue and on actions that might feasibly be taken in response, with due emphasis on costs and benefits." Each topic has one expert author and The Economist publishes short summaries of each.

Of the ten experts assembled by the Copenhagen Consensus, a full ten are from universities and think tanks in the Global North.

Now if you are interested in how best to help people in the Global South, wouldn't one want to, oh, I don't know . . . ask them? Unless of course the point is not to generate actual economic development but rather do charity work (worthy work but radically different from "development") and advance "the religion of modernity".

If John Kerry does not accept the Democratic Party's nomination for the presidency until five weeks after the party's national convention in Boston, what exactly is the point of the convention then? Not surprisingly, Boston Mayor Thomas Menino is asking the same question.
Menino has much on the line politically regarding the success of the convention, because he was instrumental in bringing it to Boston. Recent studies have predicted that the convention will be a net economic loss in Boston, because it is displacing other big events this summer and because shutdowns of major roadways for security needs will affect worker productivity.

The mayor may also need city taxpayers to chip in for the convention, because fund-raising has slowed in recent months and costs are threatening to increase. A convention without a formal nomination could take away from the event and make it harder for organizers to draw interest from television networks.

. . . the move could further sour relations with the host committee and the businesses that are supporting its efforts. Clayton Turnbull, vice president of the convention host committee, said Kerry should accept the nomination at the convention to make the point that the event "is about patriotism," and not simply part of a "business deal."
It's bad enough that party conventions in the US have become nothing more than live mega-commercials with a pro forma nominating ceremony at the end. Now apparently they're going to go as pure unadulterated commercials -- 100% "business deal" decked out in red, white and blue. Even reruns of Fear Factor could beat this out in the ratings.

It looks like Bush has really painted himself into a corner on the transfer of Iraqi "sovereignty".
But coalition partners and some of his closest officials are sceptical that events on the ground will permit even the best laid plans to run their course. They are also concerned that the White House has no back-up plan if Mr Brahimi fails to put together a caretaker government by June 30.

Mr Bush recently told Silvio Berlusconi, the Italian prime minister, that the UN envoy was doing a good job and would come up with a proposed list of names within two weeks. But one senior official, who gave Mr Brahimi only a "60-40" chance of success, said there was no "Plan B".
At least we can be pretty sure Ahmed Chalabi no longer has the inside track on running The New IraqTM.

The ceiling becomes the floor?

The big oil news over the weekend was the juxtaposed meetings of the oil consumers in New York and the oil producers in Amsterdam. The consumers made what the New York Times characterized as an "unusually blunt demand" of the producers to lower oil prices in the interests of "lasting economic prosperity and stability, particularly for developing countries" (considering the G8, the richest countries in the world, issued the statement, the concern for the fate of "developing countries" is a heartwarming touch). The producers -- but for one important exception -- were not swayed by the appeal, at least one stating in respone that "The market is already sufficiently supplied with oil". The one important exception, of course, is Saudi Arabia, which over the weekend unilaterally declared its intention to boost production by up to 11% to meet global demand.

So much for the news wrap-up. What does it all mean? The General already reported that many in the oil biz think up to $8/bar. of current prices are due to speculation and political instability in Iraq. Notably, three countries -- Libya, Venezuela and Iraq -- have publicly stated their confidence in this analysis and its conclusion that production shortfalls are not the current problem. Even if OPEC boosts production (i.e. Saudi Arabia goes to full production capacity), oil prices are unlikely to fall much in that many say OPEC is already exceeding its quotas and a formal pledge to boost official production levels will simply make the de facto situation de jure. And OPEC countries are wary of opening up the spigots for fear it will provoke another big fall in oil prices once speculation and instability are quelled, leaving them holding the bag while the consumers have fun, fun, fun 'till daddy takes the T-Bird away.

A pretty sure bet for the June 3 OPEC meeting in Beirut will be a formal increase in the OPEC price band. Currently at $22-28/barrel, countries such as Nigeria, Venezuela and Indonesia have in the recent past suggested a significant upward revision. Over the weekend both Qatar and Nigeria stated that $28/barrel should be the new price band minimum, effectively turning the old oil ceiling into the new oil floor. If $8/barrel is really froth on the top of supply and demand, a new OPEC price band of $28-32/barrel is entirely likely.

Saturday, May 22, 2004

It's always nice to see that the best and the brightest are running the empire.
When the U.S. government went looking for people to help rebuild Iraq, they had responded to the call. They supported the war effort and President Bush. Many had strong Republican credentials. They were in their twenties or early thirties and had no foreign service experience. . . .

They had been hired to perform a low-level task: collecting and organizing statistics, surveys and wish lists from the Iraqi ministries for a report that would be presented to potential donors at the end of the month. But as suicide bombs and rocket attacks became almost daily occurrences, more and more senior staffers defected. In short order, six of the new young hires found themselves managing the country's $13 billion budget, making decisions affecting millions of Iraqis.

. . . none had ever worked in the Middle East, none spoke Arabic, and few could tell a balance sheet from an accounts receivable statement.
Note that the young Turk profiled in the article is one Simone Ledeen, daughter of rabid mad-dog neocon Michael Ledeen. Ledeen p�re is late of the Iran-Contra scandal and now of the neocon haven American Enterprise Institute. He is also the nut who admires what he calls "fascism-movement" and the revolutionary spirit of the Right (which apparently Mussolini failed in not going far enough!) and thinks the US should help overthrow the Islamic Republic in Iran as the next step of its calling to "creative destruction". Ledeen is one of the most important intellectual sources for the neocon devotion to the power of pure will over all (I was tempted to say �ber alles but I held off), which one cannot help but see realized in Bush speeches and government policy in Iraq. Somehow if we simply will it enough, it shall come to be. Thanks to his neocon advisors like Ledeen (who has bragged about his special access to Karl Rove's ear), Bush may be saying "Jesus Christ" but he is following Schopenhauer.

Funny how the crack reporters at the Washington Post never got around to mentioning Simone's daddy. I'm sure this was an innocent oversight, of course.

Has Europe lost the ability to grow? That's the bold claim from Hamish McRae in The Independent.
My worry for core Europe is that the problems are really too deep to be solved by either the odd quarter per cent off interest rates or the extra half per cent on fiscal deficits. It is that the European economic and social model, for all its attractive features, has created a climate of non-growth. The underlying capacity of core Europe to grow may be only 1.5 per cent a year, and a lot of that growth has to be diverted into caring for the swelling army of elderly people. So young people entering the workforce may have a lower standard of living than their parents, which is liable to make them even more cautious about spending - particularly in Germany, maybe a bit less so in France. The problem for Europe is that Germany is the bigger economy. Until Germany comes right, even France will struggle.
If this is true, the world will be forced to depend more and more on the Anglosphere to drive global consumption and economic growth. France has had three good quarters in a row of over +2.4% annualized growth, but it is coming off three years of especially anemic economic expansion (2001, +2.1%; 2002, +1.2%; 2003, +0.5%). Over the last twenty-four years, French GDP has growth at or beyond a 3% clip just five times (1988-89, 1998-2000).

German growth was respectable in 2000 at +2.9% -- with three quarters of GDP growth over 3% back in 1999:IV to 2000:II -- but since then has been quite weak as this figure from the Statistische Bundesamt shows:



In fact, the German economy has been in the doldrums really since unification . If "core Europe" cannot hold itself up as an autonomous engine of global growth, East Asia truly is the only possible balance to the Anglosphere going deeper and deeper into debt, running larger and larger current account deficits and paying out greater and greater sums of net investment income -- the very definition of "unsustainable". The first quarter of 2004 looks barely promising on the re-balancing front as far as Japan and France go. But one quarter does not a balance make.

Friday, May 21, 2004

There is a great layman's introductory article on the global oil economy in the latest issue of National Geographic that I would recommend. It has some very cool maps like this one as well as enough information on tar sand to make the subject actually interesting.

The article also contains a great photo on pp. 82-83 (not on-line) of a Stow, OH family on their front lawn lost amidst all the stuff they own which is made from oil. In the picture I can pick out: footwear, athletic equipment, toys, sewing machine, booster seat, storage bins, food containers, furniture, clothing, electronics, household appliances, lawn tools, sunglasses, tires, the car . . . well, you get the picture. Another photo on pp. 98-99 of a 1250-lb. steer standing next to six big red 42-gal. oil barrels gets another important point across; the caption reads "a pound of beef takes three-quarters of a gallon of oil to produce".

All this underlines the point that oil is about a lot more than simply "energy".
In the U.S. about two-thirds of the oil goes to make fuel for cars, trucks, and planes. But the synthetic fabrics in our wardrobe and the plastics in just about everything we touch started out as oil too. We can also thank oil and its cousin, natural gas, for the cheap and plentiful food at the supermarket, grown with the help of hydrocarbon-based fertilizers and pesticides. As Daniel Yergin writes in his oil history The Prize, we live in "the Age of Hydrocarbon Man."
Factor in all the oil embodied in the goods and services the US imports via its $500bn annual trade deficit and you can't help but see that our entire civilization floats atop a sea of oil. $40/bar. is about far far more than the price at the pump.

Uh-oh. Talk of a "national unity government" under the banner of Kerry-McCain is now worthy enough to be awarded 750 words in the Washington Post today.
This is an election in which both sides need to give up things that matter to them, for the sake of a country that matters more.

In normal times, people would accept McCain's response to joining Kerry: "I have totally ruled it out." But these aren't normal times, and McCain's response is unworthy. Simply put, the country needs him. The logic of a Kerry-McCain ticket isn't to win an election but to provide leadership for a divided country at war.
This sounds frighteningly like the talk surrounding New York City Mayor Rudy Guliani in Fall 2001 when the guy was floating the idea of extending his term in order to "unite the city" in the wake of 9/11. Thankfully that extra-constitutional power grab was ruled out of line, and NYC survived just fine thank you very much without Guliani. When we have people running around barking mad about how these are not "normal times" and regular politics needs to be suspended, I get real uneasy. Does David Ignatius really think the US is facing a 1958 moment a la France, and McCain is an American De Gaulle needed to finish off the Fourth Republic for the good of the nation?

How about this for an alternative? Throw every neocon into the Potomac and start planning now on how to get the hell out of Iraq!

WITH FRIENDS LIKE THIS . . .

Part Five of a six-part series on 'Progressive Internationalism'


Nobody to the left of George W. Bush regarding the war in Iraq could be comforted by the appearance of former Ambassador Richard Holbrooke on the NewsHour with Jim Lehrer last night. Speaking on behalf of John Kerry, Holbrooke was completely unable to differentiate Kerry from Bush on future Iraq policy, replayed the tactical critique of Bush in lieu of a principled critique of Mr. Bush's War (characteristic of Progressive Internationalism), and suggested an even tougher line on Iraq than the Bush administration has yet voiced, especially vis-a-vis the United Nations. Nothing out of Holbrooke's mouth put even a single worry of the General's to rest.

The interview started poorly for Holbrooke. Although coming off as much more statesmanlike and intelligent than Kenneth Adelman (there to represent the Bush camp), Holbrooke used time in his opening statement to directly undermine the very institution that Kerry is claiming a unique capacity to work with to solve problems in Iraq: the United Nations.
How in God's name could the United States be prepared to turn over sovereignty without knowing who to a group that will be determined by Lakhdar Brahimi, a U.N. official, an Algerian Sunni Muslim [ed. - emphasis added], a very good guy in many ways. He's smart. I worked with him. But we don't know what he's going to come up with or when he's going to come up with it or whether it serves America's national interests.

This administration, which has undermined, demeaned, and under funded the U.N. for three years has now turned its fate and destiny in Iraq over to the U.N. while leaving 135,000 American men and women at risk.
Holbrooke made this insinuation not once but twice during the interview ("a U.N. official, a Muslim, Sunni, Algerian" -- why not mention his receding hairline and goofy tinted glasses, too?). Good Lord, Jesse Helms or Pat Buchanan could have said the same thing!

When Holbrooke was asked what the differences would be between Bush and Kerry for future Iraq policy, Holbrooke completely flubbed it.
MARGARET WARNER: All right. So you both disagree. What are the differences on where to go from here?

RICHARD HOLBROOKE: First of all, the president has not yet gotten to the point where Sen. Kerry has been for over a year. Secondly, the president's movement in the direction that Sen. Kerry and many other leading Democrats and many Republicans have advocated, ought to indicate to your viewers which of the two men has the better prospect of bringing America its national security objectives in Iraq.

MARGARET WARNER: Are there specific policy differences that you see between Sen. Kerry's approach and the president's approach at this moment?

RICHARD HOLBROOKE: Anyone who knows the two men, their background and what they've said, knows that they would have pursued Iraq differently and the challenge...

KENNETH ADELMAN: Let me answer your question. If Richard is not going to answer your question, I'll answer it.
When pressed for a substantive answer, all Holbrooke could offer was a criticism of Bush administration incompetence combined with [1] agreement with Bush on the principles of the war ("Now, on Iraq itself, Saddam Hussein was an extreme tyrant. Getting rid of him was a correct objective. Sen. Kerry supported the resolution in September of 2002, as did I, that authorized the president to take action against him."); and [2] praise for Kerry's big brain, big skills as a diplomat and big heroism in Vietnam ("Let me just say one other thing, Ken, he is a very experienced diplomat and a professional and an international expert, as well as his famous Vietnam service.")

In short, Holbrooke defended Kerry with one line: "Trust him."

Kerry's "alternative plan" amounts to
He has never stopped talking about the need to bring in an international cover for our presence through the U.N., of bringing in more forces, of building the kind of diplomatic coalitions which would have worked.
But as Adelman accurately points out,
KENNETH ADELMAN: That's the advantage of being an outsider and not an incumbent. You can promise everything. Are they really talking about the French, are they really talking about the French and the Russians are going to go along?

Listen, Margaret, the French and Russians wanted to keep Saddam Hussein in power. They wanted to do the opposite that Richard Holbrooke says he wanted to do, which was get rid of Saddam Hussein. They're not going to come along and cooperate.
A foundational and repeated assumption of Kerry and the whole crew around "progressive internationalism" is that the world would have cooperated with the US in overthrowing Saddam if only the administration would have been nicer about it all. Liberal hawks are either unwilling or unable to admit that the fundamental interests of the French, Germans, Russians and others were opposed to those of the US in this situation. It is an important intentional ignorance, however, for it allows them to fight Bush on tactical grounds while completely agreeing with him on principled and even strategic grounds.

Note that Kerry wants to do more, not less, in Iraq: more troops, more money, more of the political agenda consumed by Iraq.
RICHARD HOLBROOKE: . . . contrary to what Ken just said, there is no chance at all that Sen. Kerry would follow the advocacy of anyone who wants to cut and run. He is a strong national security Democrat from his three purple hearts, his silver star and his bronze star in Vietnam, all the way through to his principled stands on many foreign policy issues, including, I want to stress, his strong support for the Clinton administration in overthrowing Milosevic and cleaning up Bosnia and Kosovo.
"Cut and run" -- i.e. even thinking about an exit strategy -- is anathema to Kerry. Even the United Nations cannot be trusted thanks to that Sunni Muslim Algerian guy. Liberal hawks talk a lot about cooperation, but cooperation is not a fundamental value; US "national security interests" are. How is this any different from what Bush has already done or proposed doing?

Somehow Kerry is going to work his magic with the Europeans and the UN starting in January 2005, we are told, because the dispute between the US and the rest of the world is quite frankly one big misunderstanding caused by a crazed zealot in the White House; it has nothing at all to do with state interests or American empire. If you believe this, I suggest you sign up for the National Guard ASAP and trust Kerry to do the right thing.

PART FOUR: The Land of the Free Traders

PART THREE: Mo' Better Blues

PART TWO: Building a Better Bush

PART ONE: Kerry is So Very . .

Thursday, May 20, 2004

A small tussle among liberal bloggers was engaged yesterday in responses to Matt Yglesias' claim that "conservatives" haven't really been all that successful in enacting their agenda since 1964. Kevin Drum chimed in with basic agreement ("Matt is right") and Brad DeLong seconded the motion ("It's twue! It's twue!").

Nathan Newman pointed out the big big hole in this liberal retort.
So arguably, the mainstream conservatives may have been defeated in some of their goals, but the corporate wing-- which funded Ronald Reagan's rise to power -- has been quite successful.
What Newman is too polite or coy to point out is that liberals like Yglesias, Drum and DeLong reflect the interests and ideology of the new middle class. Thus it's no surprise that things like union-smashing, deregulation, capital mobility, lower real wages, shifting tax burden, privatization, imperialism and free trade are all ignored by them, because these are working class issues. To liberals, getting bigger government, birth control, working mothers, abortion rights and gay marriage is far more significant than anything going on at the bottom rungs of the class struggle.

It is the case that the Goldwater agenda of small government has been soundly turned back, but capital was never really on board this project in the first place. Capital likes a big state if that state can and will do capital's bidding, and that is more or less what Republicans have accomplished since the days of Reagan. The "conservatives" in the US House ranting about the "guvment" would never give up management of a floating dollar, corporate welfare or defense contractor largesse, after all.

In response to this liberal tussle, the General can only quote Floyd B. Olson, the great Farmer-Labor Governor of Minnesota, who once said,
I am frank to say that I am not a liberal. I enjoy working on a common basis with liberals for their platforms, etc., but I am not a liberal. I am what I want to be -- I am a radical.

Yesterday the General blogged on how the US national security state has defected from the Bush coalition -- an amazing thing considering the military, the intelligence bureaucracy and Senators on the Armed Services and Foreign Relations committees are key members of any Republican bloc. Recent news suggests that the morons in the GOP who cut up the national security state interests just can't help continuing to rub salt in the wound they caused in the first place!

From today's Washington Post:
A two-month-old House-Senate standoff over the 2005 budget burst into public acrimony yesterday, when the GOP House speaker questioned Sen. John McCain's credentials as a Republican and suggested that the decorated Vietnam War veteran did not understand the meaning of sacrifice.

The battle over the budget has highlighted rising tensions between a House dominated by conservatives and a Senate where moderates still wield considerable influence, with President Bush's agenda caught in the crossfire.

House Speaker J. Dennis Hastert (Ill.) lectured McCain (Ariz.) -- an outspoken opponent of Bush's tax cuts -- over war sacrifices, drawing a blistering retort from McCain, who nearly died of war wounds in a North Vietnamese prison camp.
From today's CNN:
In a rare public swipe at a fellow Republican, House Speaker Dennis Hastert on Wednesday questioned the GOP credentials of John McCain, a U.S. senator who has often challenged party orthodoxy.

Talking to reporters, Hastert pretended not to know who McCain was when asked about a recent statement by the GOP senator from Arizona.

As other House GOP members stood behind him laughing, Hastert, R-Illinois, then expressed doubt that McCain was indeed a Republican.
And from Maureen Dowd today:
In a bracing display of old-fashioned public spiritedness, the courtly Virginian joined up with the crusty Arizonan, John McCain, to brush back Rummy and the partisan whippersnappers in Congress who are yelping that the Senate Armed Services Committee's public hearings into prison abuse by American soldiers are distracting our warriors from taking care of business in Iraq.

"I think the Senate has become mesmerized by cameras, and I think that's sad," said a California Republican, Representative Duncan Hunter.

Then Senator John Cornyn of Texas weighed in, suggesting that Mr. Warner, a Navy officer in World War II, a Marine lieutenant in the Korean War and a Navy secretary under Nixon, and Mr. McCain, who lived in a dirt suite at the Hanoi Hilton for five years, were not patriotic. Their "collective hand-wringing," Mr. Cornyn sniffed, could be "a distraction from fighting and winning the war."
The ideologues and true-believers among the Republican Party are truly playing with fire on this one. This is a very serious process of jockeying and struggling over position and power within the GOP. In the current US political climate, my money is on the war heroes to defeat the posers. But perhaps I should root for Hastert? A win by the wingnut set will surely burn the entire GOP to the ground this fall. The national security state will be leaking to Sy Hersh like a sieve.

Thanks to No More Mr. Nice Blog for the heads up.

The G8 is preparing to demand a dramatic increase in oil production from OPEC as both blocs conduct important meetings this weekend. However, the failure of two key G8 members (which will go unnamed) to establish security in Iraq may make any effort the Saudis take to be in vain.
Iraq's oil exports fell by nearly 1m barrels a day last week after its southern oil pipeline was bombed on May 8. The loss was substantially greater than the 400,000 b/d drop reported by Iraqi oil officials last week and is likely to drive already-high world oil prices higher yet. The loss was in part also due to technical problems at Iraq's northern export pipeline.

"This is way bigger than people had been expecting. It is not fully known in the market and is bullish in the medium term," said Neil McMahon, analyst at Sanford Bernstein.

"The reduction of 1m barrels a day in Iraqi exports effectively nearly wipes out any Opec increase we could get."
Internal OPEC politics are likely to make the big OPEC meeting on June 3 a real fight. The Saudis have the luxury of looking to the long term. They can afford lower prices are are keen to achieve them in order to appease the North while keeping it dependent on Middle Eastern oil. Other OPEC members like Indonesia are more worried about short-term problems which high prices will help address. For example, Indonesia became a net importer of crude oil for the first time earlier this year, and a long dearth of foreign investment into its oil fields means status as a net oil importer may be more than just a temporary bump in the road. High prices help the Indonesians boost their declining current revenues while at the same time help attract investment to its oil fields, thus ensuring future production. Combine this with statements from the likes of Indonesia, Nigeria and Venezuela that the famous $22-28/barrel price band needs to be dramatically revised upwards, and you get an OPEC which the Saudis cannot simply push around at will.

High global oil demand means the smaller OPEC members have a stronger hand to play than in a period of weak demand making serious restrictions of supply necessary. Surely the Saudis will push some quota increase through, either this weekend in Amsterdam or next weekend in Beirut. I doubt it will cast away the fears that are driving what some claim is an extra $8/barrel into global oil prices, however.

More news on everybody's dependence on ever-widening current account deficits in the Anglosphere.
Hinrich M�hlmann, chief executive, says overseas orders have risen powerfully since the beginning of 2004 and Putzmeister expects to increase its staff by 10 per cent this year to cope. "Germany stands for quality," he says. "As with German cars, people are prepared to pay premium prices." Overseas sales now account for 90 per cent of production, up from 60 per cent a decade ago.

Official statistics in recent days have confirmed that Mr M�hlmann is not alone in turning his back on a weak domestic economy to take advantage of markets in the US, Asia and elsewhere.

German exports in March were up almost 17 per cent compared with the same month a year before - one of the fastest growth rates since records began in 1950. For the three months to March, exports of goods were up almost 9 per cent while figures for the whole of 2003 showed Germany overtaking the US to regain its position as Exportweltmeister.

If due to reasons of health, citizenship or common sense you cannot join the United States Army, fear not. There is still room for you in the US reserve army of the unemployed!
In the week ending May 15, the advance figure for seasonally adjusted initial claims was 345,000, an increase of 12,000 from the previous week's revised figure of 333,000. The 4-week moving average was 333,500, a decrease of 2,750 from the previous week's revised average of 336,250.
For an economy supposedly in robust recovery mode, this uptick in jobless claims is surprising. The FT reports today that "Economists assume that any figure below 350,000 is consistent with an expanding jobs market." and thus try to asuage us that this news really isn't all that bad. But looking at the larger employment picture gives one little comfort.

Jobless claims first dipped below the magic 350,000 mark in late December 2003 but sustained a sub-350,000 level only by late February/early March 2004. Since that time, the lowest weekly seasonally adjusted jobless claims number has come in at 318,000 and spent two weeks in mid-April above the 350,000 line. Now the four-week moving average is 333,500; below the 'expanding jobs market' line, but only by a whisker.

The overall US jobs picture is still pretty bleak. This George W. Bush jobs recession is now at 38 months, the longest since the Great Depression and with no end in sight. For comparision, his father's lasted 37 months; under Reagan, 25 months; under Nixon/Ford, 23 months; under Nixon, 20 months; and under Carter, a mere 10 months. The US economy is still down 2.26 million private sector jobs from its February 2001 peak and at the most recent growth pace will fully recover only in 10 months time. And did I mention that real wages in the private sector have been stagnant for 18 months?

Is the jobs situation in the US "getting better"? Well, of course. Like every sick patient, you do one of two things: get better or die. But this is still the most drawn-out, languishing process of "getting better" since the 1930s.

Wednesday, May 19, 2004

I wanted to write a post like this one by Kash over at AngryBear on the tragedy of yet another four years of High Priest Greenspan wearing the triregnum, but he beat me to it. Thank, Kash, for doing my work for me!

The national security state seems to have finally had it with the Bush administration.
Even worse for Rumsfeld and his coterie of neo-conservative true believers who have run the Pentagon for the past 3� years, three major institutions in the Washington power structure have decided that after almost a full presidential term of being treated with contempt and abuse by them, it's payback time.

Those three institutions are: The United States Army, the Central Intelligence Agency and the old, relatively moderate but highly experienced Republican leadership in the United States Senate.
Clearly the Army and the CIA are constituent members of the national security state. The Senate Republicans in question are Sens. Lindsey Graham (R-SC), Orrin Hatch (R-UT), Richard Lugar (R-IN), Pat Roberts (R-KS) and John Warner (R-VA). Warner, Roberts and Graham are all on the Senate Armed Services Committee, with Warner being the Chair; Lugar is Chair of the Senate Foreign Relations Committee; and Hatch the Chair of the Senate Judiciary Committee. All but Hatch are clearly tied into the national security state by their positions in the Senate. Throw in McCain (R-AZ), also a member of the Senate Armed Services Committee, and you have a powerful element of the Bush bloc in outright revolt.

According to Jack Nelson-Pallmeyer,
The first characteristic of a National Security State is that the military is the highest authority. In a National Security State the military not only guarantees the security of the state against all internal and external enemies, it has enough power to determine the overall direction of the society. In a National Security State the military exerts important influence over political, economic, as well as military affairs.
Both through the Iraq war in general and the torture scandal in particular, the Bush administration has violated this cardinal principle of the national security state. First, the "military experts" -- uniformed officers and their non-uniformed supporters in Congress -- were screwed over by a rather small collection of neocon ideologues from outside the national security state. Second, the national security state is clearly enraged that the neocons besmirched their social prestige and honor by dealing with the Abu Ghraib scandal with such obvious political calculation. Now it's time to pay.

Democrats going ga-ga over a Kerry-McCain ticket need to look before they leap. While McCain and the others are clearly serving the short-term interests of anybody interesting in taking Bush down a few dozen pegs, one cannot forget that these Senate Republicans are all core members of the national security state and thus devoted to militarism, secrecy and the power of capital. They may look good enough to flirt with across the room, but do you really want to wake up in the morning next to them?

What's driving Japanese growth? Takehiro Sato and Osamu Tanaka at Morgan Stanley gives us the straight dope.
Components that drove growth were personal consumption (+1.0% QoQ), capex (+2.4%), private-sector inventory (a contribution of +0.2ppt QoQ), and exports (+3.9%).
Note that Japanese exports grew faster than any other component of the recent growth profile.

After hiking interest rates 25 basis points in May, the Bank of England looks set for another go 'round in the near future, perhaps as early as July.
Bank minutes show the MPC voted 9-0 in favour of raising rates by 25 points to 4.25 per cent. Alongside the revelation that the committee discussed a hike twice this size, the minutes were more hawkish than expected, boosting sterling.

"It points to further rate rises ahead and it looks increasingly likely that they [the MPC] may not wait until the next inflation report to raise rates, making July the most likely time for a hike given inflation is likely to have crept higher by then," said James Knightley at ING Financial Markets.
Combine this with new beliefs that the Fed is in no hurry to begin raising US interest rates above their 1% level, and you get another big boost to the speculators running the dollar "mother of all carry trades".

Tuesday, May 18, 2004

The blog run by The American Prospect has an important posting today regarding the chances of a US military draft. Here's the whole thing:
IT'S DRAFTY IN HERE. A friend of mine who is currently an inactive Army reservist forwarded me some memos he received regarding future mobilizations [Ed. -- Kevin Drum has excerpts from the memos] -- memos that indicate that we are not far from some kind of conscription in the next few years. According to my friend, recruiters are telling inactive reservists that they're going to be called up one way or another eventually, so they might as well sign up now and get into non-Iraq-deploying units while they still can. There's also a "warning order" -- i.e., a heads-up -- from the Army's personnel command that talks about the involuntary transfer of inactive reservists to the active reserves, and thus into units that are on deck for the next few Iraq rotations.

My understanding of how reserve call-ups work is imperfect, but if memory serves, the inactive reservists -- known as the Individual Ready Reserve -- are people who have already fulfilled their term of enlistment but can be called up as individuals if the military needs their particular skills or specialty badly enough. In other words, after a couple of years of dipping into the main reserves -- essentially chewing through them to sustain post-9/11 deployments, the Afghanistan occupation, and then the Iraq invasion -- we're now dipping into the inactive reserves. And if we still need more manpower after that -- well, then we start drafting.

There is no question we do not have enough manpower (among other things) in the active-duty military to sustain our current "operations tempo," as the military wonks call it. And there are many good arguments to be made for reinstating the draft, albeit one that would look very different from the corrupt and unfair Vietnam-era draft. It's worth thinking now about what kind of draft we'd like to see if the need for one becomes inavoidable.

--Nick Confessore
A couple of comments.

First, it is just downright scary how many liberals are completely on-board a universal draft to fight Mr. Bush's War. Both TAP and Washington Monthly are supportive, and the General has already blogged on the enthusiasm of the liberal hawks associated with "progressive internationalism" for both the war and for 'service and sacrifice' from the American people for it.

Second, beginning today up to 23,000 inactive reservists are eligible for becoming active; these are truly the last drops from the domestic coffee cup. The next step would likely be wholesale redeployments out of Germany, Italy, Korea and Japan for Iraq, plus more onerous active duty for the National Guard. If even this was not enough, a military draft becomes not only possible but necessary. It looks like Bush is determined to wait the war out for another six months before making any serious decisions.

Third, most states are seeing at least one-third of their National Guardsmen sent to Iraq and some a lot more than that (Idaho 81%; Maine 60%; Louisiana 59%; New Jersey 59%; New Hampshire 56%; Washington 55%; Tennessee 54%; Montana 53%). Today's high-tech US military doesn't need grunts carrying guns a la Vietnam; it needs particular skills. I can very easily envision a universal registration for military service combined with a limited military draft in 2005 designed to replenish the ranks of the National Guard both for service in Iraq as well as at home to respond to natural disasters and civil emergencies.

And that's under Kerry as well as Bush.

Iraq's Grand Ayatollah Ali Sistani must have one incredible case of cabin fever.
The home and office of Grand Ayatollah Ali Sistani, Iraq's highest Shiite Muslim authority, was targeted by gunfire in the holy city of Najaf, a spokesman for the religious leader said.

"The home has been targeted by fire this morning," the spokesman told AFP on condition of anonymity, but declined to say if US-led forces or militiamen of radical Shiite cleric Moqtada Sadr were responsible.

"Bullets broke some window panes of the home," he said, without reporting any injuries. . . .

Sistani, 73, has not left his home for seven years since a failed attempt on his life during Saddam Hussein's regime.

Maybe George Bush isn't interested in a new UN Security Council resolution on Iraq because somebody might decide that the cozy little arrangment between "the Authority" (i.e. the US and UK as "occupying powers under unified command") and the "Development Fund for Iraq" established by Resolution 1483 last year needs to be changed?
As the occupation of Iraq dissolves further into bloody chaos, the colonial overseers in Baghdad are keeping their eyes fixed on what is really important: Iraq's money and how to keep it. Whatever apology for a "sovereign" Iraqi government is permitted to take office after June 30 -- and U.N. envoy Lakhdar Brahimi admits in private that he "has to do" whatever the Americans tell him to do -- the United States is making sure that the Iraqis do not get their hands on their country's oil revenues. . . .

Queried on this crucial topic, the CPA has stated that it will continue to control the revenues beyond June 30 "until such time as an internationally recognized, representative government of Iraq is properly constituted." Whatever entity is unveiled for June 30, it apparently will not fit these requirements, so the hand-over date is, essentially, meaningless.
Resolution 1483 eliminated the oil-for-food program under UN authority and replaced it with the Development Fund for Iraq under US/UK control. Through the DFI all of Iraq's finances are controlled by levers at the New York Fed.

When the US invaded the Dominican Republic or Britain took control of Egypt in ages past, the imperial powers were always careful to seize the customs house first to ensure that Southern countries would not reneg on their debts and Northern creditors got repaid in full. In today's globalized financial world there is no need to physically seize a building to accomplish more or less the same thing -- funneling money from Southern countries (e.g. Iraq) to Northern investors (e.g. Halliburton).

Good luck on this one, Jack -- you'll need it!
Britain has urged the United States to join urgent efforts to combat global warming even though President George W. Bush has rejected cooperation under the U.N.'s Kyoto protocol.

Foreign Secretary Jack Straw reiterated that Britain reckoned that global climate change, largely blamed on emissions from burning oil, gas and coal, was "the most important long-term issue which we face as a global community".

"I know that Europe and the U.S. have not taken identical approaches to this challenge," he said in a speech at Howard University in Washington on Thursday night.

"But, as a friend of the United States, I hope you will allow me to argue that urgent international action is needed. It is critically important that we address the issue of climate change now, and together," he said.
While a Kerry presidency will certainly change the US government's tone on global climate change, the Republican Congress will ensure that nothing actually gets done.