30 July 2011

Turkish Army

I was rather surprised to see the "Military Chiefs Resign en Masse" headline on BBC.

In the past such symbolic moves were considered precursors of coup d'etats and given the central role I assigned to Turkey as a regional power with the mission to help solve two of the most intractable regional problems, I was worried that, were these resignations lead to a coup d'etat, I would lose face.

I would, if anyone was reading this blog, that is. Fortunately, no one does. And equally fortunately, I doubt that these announcements would lead to a coup d'etat.

How do I know that?

Christian Terrorism

According to the liberal New York Times, terrorism applies only to acts committed by Muslims. As JackinStL over at Daily Kos noted:
Put this one in the "terrorism-is-for-brown-people" file:
Initial reports focused on the possibility of Islamic militants, in particular Ansar al-Jihad al-Alami, or Helpers of the Global Jihad, cited by some analysts as claiming responsibility for the attacks... Still, there was ample reason for concern that terrorists might be responsible. In 2004 and again in 2008, the No. 2 leader of Al Qaeda, Ayman al-Zawahri, who took over after the death of Osama bin Laden, threatened Norway because of its support of the American-led NATO military operation in Afghanistan.
Did you see that? How they said that once we eliminated the Arabic terrorists and found our right-wing Christian perp, he's suddenly not a "terrorist?" There's more.
Terrorism specialists said that even if the authorities ultimately ruled out terrorism as the cause of Friday’s assaults, other kinds of groups or individuals were mimicking Al Qaeda’s signature brutality and multiple attacks.
Greenwald covered the same ground in his usually thorough manner, underlining the fact that most of the media blamed Muslims early on and how reluctant to retract what they wrote once it became clear that a conservative Christian and race purity nut was to be blamed for these terrorist acts. He then quotes Silverstein who was the first to catch the NYT use of the term exclusively for Muslims:
How's that again? Are the only terrorists in the world Muslim? If so, what do we call a right-wing nationalist capable of planting major bombs and mowing down scores of people for the sake of the greater glory of his cause? If even a liberal newspaper like the Times can't call this guy a terrorist, what does that say about the mindset of the western world?
Greenwald answers that:
 What it says is what we've seen repeatedly: that Terrorism has no objective meaning and, at least in American political discourse, has come functionally to mean: violence committed by Muslims whom the West dislikes, no matter the cause or the target.  Indeed, in many (though not all) media circles, discussion of the Oslo attack quickly morphed from this is Terrorism (when it was believed Muslims did it) to no, this isn't Terrorism, just extremism (once it became likely that Muslims didn't).
I should add that none of this surprises me. The creation of an "other" was in full swing for some time and it will continue unabated. It was created originally to replace the other boogeyman (the Soviet Union) as vested interests were not very happy with a reduction of military spending at the end of the Cold War. A new enemy was needed and Bin Ladin provided the justification and the rest is history.

What I find worrisome is this: I believe we are going through a very tumultuous period, the kind that reminds me of the latter days of the Weimar Republic, only on a global scale. European economies are extremely vulnerable and they will not withstand a prolonged crisis. American economy seems to have less fundamental problems but the US is even more incapable of solving them than the 27-headed hydra that is EU.

Parallel to these severe crises, social safety nets are being dismantled everywhere and unnecessary and crippling austerity measures are being implemented.  When that kind of widespread economic disruption takes place, the consensus discourses that reproduce societies may stop to fulfill their function. Social and political polarization may become too deep to allow regular governance.

If and when that happens (and if these processes are not stopped it will happen) I expect to see a radical transformation of open and democratic societies. Anti-Muslim hatred will provide an easy justification for these changes and we already see clear examples in the US. As the goal will be to keep deeply unequal societies from exploding, I worry that these authoritarian structures will use their dolchstosslegende to undertake some nasty distraction moves.

Let's hope that I am wrong.


There is a very interesting post by Justin Raimondo where he examines the money trail that allowed the Norwegian terrorist to plan his operation for nine years without having to work. He also quotes an anonymous Norwegian nutcase who explained to Pam Geller, the anti-Muslim crusader, that the Norwegian immigration will end up in bloodshed.

I have to add that I am not surprised that Norwegian authorities quickly declared that Breivik was acting alone and his boasts about other Knights Templar should not be taken seriously. To my knowledge, just like terrorism is associated with Islam, extremism is associated with left wing politics. Right wing extremism has always enjoyed police sympathy and tacit covert support in every country I know.

29 July 2011

American Presidential Elections

The other day I saw this post on Balloon Juice Weimar on the Potomac and I had a light-bulb-above-my-head moment.

In the post, Tom Levenson was suggesting that there are a few parallels between the events that ended up sweeping Hitler to power and what is taking place now in Washington. But he was careful not to take the historical analogy too far.

I, on the other hand, would like to suggest that we can gleefully take the analogy as far as we like, as the parallels between those two contextual setups are astounding.

Under normal circumstances, in capitalism, political arrangements are largely in line with the interests and expectations of business classes. This is not because lobbyist "buy" political influence. That is the obvious tip of the iceberg. It is because "power"in capitalism is rooted in economic power and if that power is challenged or disrupted, social and political (including the military) institutions would be unable to survive.

So, all the actors in the system work towards maintaining the status quo and make sure that business classes are never more than marginally or temporarily challenged. In other words, business classes do not have to intervene actively to preserve their interest. It is in the interest of most major players to do so. This way, the reproduction of the status quo becomes a neutral process, as most members in that society believes in the axiomatic value of "free markets," "rationality of the marketplace," "the efficiency of private enterprises," "the importance of freeing businesses to create wealth and jobs," and "the greatness of that society because of the status quo."

But there is an exception to that rule. If that society undergoes a highly traumatic event which reveals its less than great nature, these axiomatic truths will be questioned quite vocally and the existing consensus will be in jeopardy. By traumatic event, I mean something like loosing a war.

The first thing that is needed is to adjust the existing consensus discourse in order to explain this terrible situation. The first modern attempt to do this was the dolchstosslegende or "stab-in-the-back" legend. Accordingly, Germany did not lose WWI because it was fighting a colonial land-grab war against established colonial powers, it lost because it was hampered by the traitorous betrayal of its internal enemies.

That is the Jews.

19 July 2011

Moody's Blues

The last couple of weeks were interesting, not just for the obvious Guardian taking down the Evil Empire but also, for rating agencies asserting their role to protect the global finance capital.

It began with Standard and Poor warning that rolling over the Greek debt will be treated as a technical default because it would give investors less than the maximum they hoped to gain by lending to Greece.

It continued with Moody's it's-the-fourth-of-July-but-this-can't-wait decision to downgrade Portugal debt to junk. Which was countered with this timid statement by the mighty European Commission:
"The timing of Moody's decision is not only questionable, but also based on absolutely hypothetical scenarios which are not in line at all with implementation," said Commission spokesman Amadeu Altafaj.

"This is an unfortunate episode and it raises once more the issue of the appropriateness of behaviour of credit rating agencies."

Commission President Manuel Barroso added that the move by Moody's "added another speculative element to the situation".

He also said it was strange that none of the ratings agencies were based in Europe.
"[This] shows there may be some bias in the markets when it comes to the evaluation of specific issues of Europe," he said.
No kidding.

05 July 2011

Holding Hostage the World Economy

Standard and Poor, one of the rating agencies that gleefully rubber stamped toxic assets as AAA grade investment vehicles for years, has declared that if the investors do not get fully all the benefits they were entitled to expect when they bought Greek securities, they will declare all solutions as technical defaults.
Standard & Poor’s said Monday that it “views certain types of debt exchanges and similar restructurings as equivalent to a payment default”: when a transaction is seen as “distressed rather than purely opportunistic” and when it results “in investors receiving less value than the promise of the original securities.”
Translation: Not only will we not accept any "haircut" deal for our buddies the banksters, we will bring the whole system down unless they are paid in full what they are owed.

It essentially means that there is no risk left in capitalism for these players.

If they gamble, as they did with the housing bubble, they need to be bailed out because they are too big to fail. If they invest in risky ventures (priced accordingly by the way) they are entitled to their money if the ventures go south.

How can they do that?

Well by now everyone has heard about the credit default swaps, the largely unregulated arrangements that enable large financial institutions to make high risk and high return investments and be insured for them. The most famous example was AIG that went down during the height of the 2008 crisis and needed a $200 billion bailout.

Depending on how many such contracts were written on the European debt, a technical default could have enormous implications for not just the EU banks but a lot of other financial institutions as well. As the NY Times put it:
More worryingly, Western banks, including the giants of Wall Street, have built a tower of credit default swaps — essentially insurance — on the debts of those countries, and the cost of paying up in a default would be huge. While the French and German banks have the biggest direct exposure to Greek's debt, it is American banks and insurance companies that would have the largest obligations to cover payments to those holding the swaps. 

A finding by the credit ratings agencies of default would also require the E.C.B. to impose discounts, known as haircuts, on the Greek debt it has accepted as collateral. That would inflict more financial pain on banks holding that debt.        
In other words, even the restructuring of debt not by a haircut but by spreading returns over time was not acceptable to these agencies: they want their buddies' money and they want it now.

The question everyone should be asking why were the financial institutions given such an unregulated casino tool and why is no one is doing anything about it?

I understand that it is impossible to get any reforms passed in the US as "they own the place" but what about Europe?

On a somewhat related note, Le Monde reports today that Christine Lagarde will follow a policy line very similar to DSK's.
Le bilan de DSK au FMI est le suivant. Profitant du tremplin de la crise, il a rendu au Fonds un rôle de sauveteur financier, une légitimité en donnant plus de place aux pays émergents dans ses préoccupations et dans son fonctionnement. De facto, le FMI est devenu le secrétariat du G20, l'inventeur de formules que les chefs d'Etat et de gouvernements ont reprises.
Enfin, il a rendu au personnel du FMI le moral qu'il avait perdu. Mme Lagarde a présenté au Conseil d'administration du FMI un programme qui ressemble furieusement à celui qu'appliquait DSK, y compris dans son souci nouveau des conséquences sociales de la crise et des remèdes à mettre en place par le FMI.
I hope so but I am not so sure.

What Dominique Strauss-Kahn did was to use the crisis to inject a heavy dose of Keynesianism into the strict monetarist perspective of IMF. Those were the confused days of "too big to fail" and to avoid a meltdown they did not object. But by now, these forces have regrouped and they will not allow any such heresy anymore.

If we learn in the next weeks that the rating agencies changed their mind about "technical default" we will know that the financial sector was given a major concession on something very important to them. Otherwise they will play the game of chicken to the end and not even IMF can do anything about it.

I gather rioting Greek people think that their politicians are turncoats who sold them out but I have a feeling that Papandreou and his allies acted the way they did because they were told of the consequences of a default by their European counterparts. And they all must be scared beyond words.

Remember, Hank Paulson coming in on a weekend in September 2008, with a two and a half page proposal asking $700 billion and telling everyone if it is not approved right away the whole world would collapse?

And everybody caving in?

We are looking at a different version of the same play.

Welcome to the world of Galtian Overlords.

04 July 2011

The Arab Spring: New Developments

When I started this blog, my main goal was to provide an alternative framework to inane explanations like Secretary Rice's 2005 freedom speech being the root cause of the Arab Spring or President Obama's 2009 speech being the real inspiration behind the movement, not to mention too-numerous-to link-to Facebook and Twitter claims.

All of which prompted Jon Stewart to ask a very pertinent question: if two speeches and a social networking site are all it took to bring democracy to a country why did the US invade Iraq?

My main argument was that, far from being a spontaneous revolutionary upheaval, the Arab Spring in Tunisia and Egypt was a series of well coordinated and logistically well prepared popular protests which were followed by de facto coup d'etats, with both armies disobeying their commander in chief and refusing to intervene to quash the uprisings.

This is not to take away or diminish the heroism of those who fought and died: all I am saying, under other circumstances, the same heroism would have ended very differently.

I also claimed that Syria was one of the main targets of this well executed intervention and Syria will be the biggest loser in this process.

Finally I maintained (and I believe I am the only person who ever claimed this) that the tension between Israel and Turkey was largely artificial and the objective of that Kabuki theater was to establish Turkey as an honest broker/super power in the region who can legitimately act as a peace builder.

02 July 2011

The Case for Greek Default

When I wrote that the whole debate on Greek debt sits on a bedrock of ideology or to put it more academically, on a paradigmatic fight about who is holding the ultimate truth, one of the two or three friends who read this blog told me that I might be exaggerating.

Well, here is the New York Times:
As negotiations proceeded in Europe this spring over Greek Bailout II, Mr. Trichet laid down a line in the sand: Nothing must be done to force banks to take losses on the bad loans they have made to Greece.
That is interesting by itself, isn't it?

That is why I keep saying that the bailout is for French and German banks (just like the TARP bailout was for US banks and oddly enough the same risk loving European banks, like Société Générale and Deutsche Bank- most of the billions injected to AIG went to these latter).

01 July 2011

Today in Gender Equality

Glenn Greenwald has been making the point that, these days, most pundits are quite careful not to appear racist or sexist. And in that climate, he says, open anti-Muslim bigotry is the only form of bigotry that is currently being tolerated.

I guess it is.

But I would argue that, in the case of women, that cautious attitude only covers political speech. It is true that, an overtly sexist comment might no longer be welcome in many situations and might earn the speaker at least a mild rebuke. Of course, in that situation the offender would likely roll his eyes knowingly about humorless harpies and over-the-top political correctness, but the disapproval would stand. However, when it comes to policy choices, I contend that this is not true and it costs nothing to throw women under the bus.

You could say it is the age old distinction between form and substance.

For instance, the plight of a Saudi woman who tried very hard to become a surgeon only to get her salary confiscated by her father and locked away in her room did not warrant the same kind of support for the Saudi woman who wanted to drive by herself.

Imagine, if you will, a group of people who are unable to leave their homes unaccompanied, unable to pursue a career, unable to travel or move around without the permission of their rightful guardian, or have no right to question or rebel against the authority of that guardian. Imagine that they have no social, political or economic rights: they cannot work, they cannot vote, they cannot open a bank account.

Imagine, now, that submissive group sharing an ethnicity and being in that secondary position because of that ethnicity. And imaging the guardians belonging to another ethnic group.

How long would it take for us to declare this arrangement unacceptable?

Yet, when it comes to women, nothing. Not a peep.