Global Christmas and Merry Thoughts

For reasons too long to explain I found myself at Hong Kong Airport en route to Ho Chi Minh City just before Christmas. After submitting myself to all the indignities air travel includes these days I sought refuge in a fake Italian restaurant. I first noticed Jingle Bells, then I am Dreaming of a White Christmas. And the whole Christmas repertoire followed.

In North America, we are used to a specific Christmas routine. The first few days you hum along as everything you hear is very familiar. And it is everywhere. The mall, car radio, commercials on TV. Everywhere. You sing along and hum. Then it starts to get quite annoying. By the nth day of Christmas you feel like begging strangers to shoot you to stop the looping reel in your brain.

This is also the main reason I believed for the longest time that suicide rates were higher during the holiday season (they are not)

But finding the same reel at Hong Kong Airport makes me both depressed a bit and joyful as I realize that the whole world has joined us in our seasonal misery. Very compassionate of them.

This is also my segueway to wish my tiny readership a very joyous holiday season.

It is going to get better.

You'll see.

Just stop "Santa Is Coming to Town" in you brain. Peace in the Middle East is a child play afterwards...

Arab Spring: One Year Later

17 December was the anniversary of Mohamed Bouazizi's death. He was the Tunisian vegetable vendor who set himself on fire and who triggered the events collectively known as the Arab Spring.

The change that took place within a year is breathtaking. Three autocratic Arab rulers were toppled in Tunisia, Egypt and Libya. Yemen and Syria are trying to get rid of their own dictators and both countries are on the verge of civil war. There was turmoil in Bahrain, Morocco and early on even in Jordan and Saudi Arabia.

Bouazizi' sacrifice notwithstanding, my position has been that the mass movement called Arab Spring was effective and led to regime change only in cases where some external and internal actors wanted that change and it failed where such a outside push and inside assistance did not exist. In both Tunisia and Egypt, the US controlled armies sided with the protesters and ousted the existing governments. In Libya, NATO forces provided air support and arms to the anti-government side and ensured their victory.

Syria

Now, in Syria a regime change is imminent for the same reasons. The US wants Bashar al Assad gone and Turkey is willing to make that happen.

You might have noticed that Russia suddenly changed its tune and instead of blocking all UN efforts against Syria it has just circulated a draft resolution that talked about excessive use of force against those exercising their rights.

There are several reasons for that.

Christopher Hitchens R.I.P.

I discovered Graydon Carter through Spy Magazine. It was the first publication in English that I thought was consistently funny and clever. None of that Alfred E. Neuman hit and miss silliness. The reason I gave a huge credit to Craydon Carter for the tone of the magazine was because after his departure, despite co founder Kurt Andersen's continued presence, the magazine became a lot less intelligent and trenchant and funny.

So when I heard that Graydon Carter took over from Tina Brown as Editor-in-Chief of Vanity Fair, I began reading the publication. That's how I discovered Christopher Hitchens as Carter hired him siz months into his tenure. The guy was incredible. His prose was exceptionally clear and evocative. His tone was erudite without being pedantic. His knowledge of world events and history seemed endless.

I remember reading his first piece for Vanity Fair and marveling how this atheist and Marxist guy managed to get this job in them US of A. And I remember silently thanking Graydon Carter for having the guts to give that guy a forum.

Over the years, I had many reactions to Hitchens. Some positive, some negative. On the good side, I never stopped appreciating his command of the English language and his immense knowledge. Unlike darlings of the intelligentsia (e.g. luminaries like Slavoj Zizek) he never showed off just for the sake of letting the reader know how great he could be and he always explained openly and clearly where he was coming from and why he was advancing whatever thesis he was advancing.

When Banksters Eyes Are Smiling

My long time readers will remember that, for almost six months now, I have been maintaining that the Eurozone crisis was an artificial one, engineered by the bond holders to get all of their money regardless of the risk premiums they got for their investments.

Recent developments seem to confirm this notion.

If you remember, this whole idea began with Irish government underwriting some banking bonds at the urging of Merrill Lynch to restore "market confidence:" As Michael Lewis put it:

It would have been difficult for Merrill Lynch’s investment bankers not to know, at some level, that in a reckless market the Irish banks had acted with a recklessness all their own. But in the seven-page memo to Brian Lenihan—for which the Irish taxpayer forked over to Merrill Lynch seven million euros—they kept whatever reservations they may have had to themselves. “All of the Irish banks are profitable and well capitalised,” wrote the Merrill Lynch advisers, who then went on to suggest that the banks’ problem wasn’t at all the bad loans they had made but the panic in the market. The Merrill Lynch memo listed a number of possible responses the Irish government might have to any run on Irish banks. It refrained from explicitly recommending one course of action over another, but its analysis of the problem implied that the most sensible thing to do was guarantee the banks. After all, the banks were fundamentally sound. Promise to eat all losses, and markets would quickly settle down—and the Irish banks would go back to being in perfectly good shape. As there would be no losses, the promise would be free.

As I noted in July, this was both an amazing and an ironic development:

The bondholders didn’t even expect to be made whole by the Irish government. Not long ago I spoke with a former senior Merrill Lynch bond trader who, on September 29, 2008, owned a pile of bonds in one of the Irish banks. He’d already tried to sell them back to the bank for 50 cents on the dollar—that is, he’d offered to take a huge loss, just to get out of them. On the morning of September 30 he awakened to find his bonds worth 100 cents on the dollar. The Irish government had guaranteed them! He couldn’t believe his luck. Across the financial markets this episode repeated itself. People who had made a private bet that went bad, and didn’t expect to be repaid in full, were handed their money back—from the Irish taxpayer.

Incidentally, the title of Michael Lewis' article was "When Irish Eyes Are Crying."

Once the free market rule was broken, that is, if you are a bankster, you are now entitled to your gains but if you lose, we, the people, will take care of the bill, the sky was the limit. Banksters eyes were indeed smiling.

Is Likud Getting Ready to Deal?

I stumbled upon a news items the other day. Israel's Prime Minister Netanyahu called a snap leadership election within Likud.

The Likud charter requires party leadership votes to take place at least six months before national elections.

Since Israeli general elections are scheduled for November 2013, this is way too early for Netanyahu to ask for a vote on his leadership. Consequently, people began asking questions:

Hanan Krystal, Israel Radio's political analyst, said Netanyahu might also opt to bring forward the next Israeli general election, due in November 2013, should Obama look likely to beat Republican rivals in the U.S. ballot. (...)

"At the highest echelons, they have long been saying that if Obama is elected for a second term, the carrot will be replaced by a stick," Krystal said. 

"In other words, the election of Netanyahu in January or February to head the Likud allows him to bring the (general) election forward in accordance with Obama's prospects, which are currently good," he said, adding that, if rescheduled, the national ballot would likely be held in mid-2012.

After the US elections a more vigorous push might become the norm but I think that push has already started. In a widely publicized recent speech Defense Secretary Panetta said that "Israel must get to the damn peace table"

He said Israel needed to take risks, including by breathing new life into moribund peace talks with Palestinians. When asked by a moderator what steps Israel needed to take to pursue peace, Panetta said: "Just get to the damn table." 

"The problem right now is we can't get 'em to the damn table, to at least sit down and begin to discuss their differences," Panetta said.

These are very strong words from any American senior politicians and certainly a first from a Defense Secretary. Panetta also urged Israel to end its isolation by cooperating with regional players:

Panetta suggested that Israel reach out and mend fences with countries like Turkey, Egypt and Jordan which "share an interest in regional stability." 

Turkey was the first Muslim state to recognize Israel, in 1949, but relations worsened last year when Israeli commandos boarded an aid flotilla challenging a naval blockade of the Palestinian enclave of Gaza and killing nine Turks in ensuing clashes. 

"It is in Israel's interest, Turkey's interest, and U.S. interest for Israel to reconcile with Turkey, and both Turkey and Israel need to do more to put their relationship back on track," Panetta said.

Notice the emphasis on Turkey. It is not an Arab country, it is not an immediate neighbor of Israel and yet the US Secretary of Defense singles it out as Israel's primary interlocutor. You know my views on why that is the case.

My guess is that Netanyahu is not just getting ready for Obama's second term. He is also getting ready for a likely fracture in his coalition in the near future. Lieberman is dogged by a corruption investigation which could bring him down. Also:

Another powerful coalition partner, Interior Minister Eli Yishai of the Orthodox Jewish party Shas, has been dogged by allegations of mismanaging a forest fire in northern Israel last year. A state audit on the affair is due out within months.

At the time of the Mount Carmel fire outside Haifa people called for his resignation (especially after he blamed the dead police chief) and if the audit finds him responsible he might not be able to remain in government.

In other words, it is rather likely that Netanyahu will call general elections in mid 2012.

If he wins, as expected and if my working hypothesis is correct, he will reach out to less conservative parties like Kadima for a national unity coalition. This way, they can sit at the "damn" table to bring a reasonable solution to that festering problem.

After months of playing hardball (withholding tax revenues after the UNESCO membership or announcing new settlements) Likud seems to have changed its tune. First they decided to release the tax funds and yesterday they called upon Palestinians to start negotiations ahead of the visit of the envoys of the Quartet.

And when they were rebuffed, very uncharacteristically for Likud, they complained about it loudly and publicly.

Wes Clark, Neocon plans and My Hypothesis: A Recap

When people discover your humble soap box on the Internet, they continue to read it from that moment onwards, but they rarely go back to see what points you might have covered before. That's understandable. And that's why, occasionally, you need go over previously made points to bring everybody up to speed.

The trick is to find an à propos moment to be able to do it without annoying your regular readers. So, when I spotted a post by Glenn Greenwald a couple of weeks ago, I thought that I could use it as a starting point to reiterate my working hypothesis on the Middle East.

Greenwald's piece was about a speech delivered by Wes Clark, the former commander of NATO forces in Europe. It entailed a remarkable claim.

You can watch the clip here.

General Clark tells the story of a chance encounter with a Pentagon employee several weeks after 9/11. This officer tells Clark that he had just found out that the US was going to attack Iraq. Clark runs into him again six weeks later:

Six weeks later, I saw the same officer, and asked: “Why haven’t we attacked Iraq? Are we still going to attack Iraq?”
He said: “Sir, it’s worse than that. He said – he pulled up a piece of paper off his desk – he said: “I just got this memo from the Secretary of Defense’s office. It says we’re going to attack and destroy the governments in 7 countries in five years – we’re going to start with Iraq, and then we’re going to move to Syria, Lebanon, Libya, Somalia, Sudan and Iran.”[emphasis Greenwald]

Clark believes that this was a policy coup (I assume he means that it is like a coup d'etat that only takes over a policy area) and he is convinced that a half a dozen people, like Wolfowitz, Rumsfeld, Cheney (and probably Richard Perle, Elliott Abrams etc), took control of American foreign policy and steered it to "to destabilize the Middle East, turn it upside down, make it under our control.”

The idea that there was an early list of countries to be turned upside down and placed under US control is intriguing. And it does not surprise me.

And Now For Something Completely Different

For some reason, I am convinced that my tiny readership would not require a link for the title.

The title is a propos because a couple of days ago, a good friend of mine sent this link:

http://xkcd.com/

a site which bills itself as a Webcomic of romance, sarcasm, math and language.

Why is this a propos?

That's why:

http://xkcd.com/16/

By the way, I am not a huge Python fan, I watched everything they produced, I get their humour and I understand their importance. This site is way beyond that. I kept clicking through cartoons, nodding and smiling all the way.

Next time I am in Canada I am buying a couple of his posters.

Common Misconceptions About the Eurozone Crisis

Lately, I have been talking with friends about the financial crisis in Europe. Some of them are very well informed, others formed a basic opinion through occasional glances to online news sources. But the surprising thing is that they all share the same common misconceptions and do not know why the crisis happened and why it is very hard to solve.

I thought I should perhaps address these issues and spare my future dinner companions of long discussions by simply pointing to this post.

1) We need to save Greece (or GIIPS) out of solidarity

"We" are not bailing out or saving Greece. And what we are doing has certainly nothing to do with solidarity. What "we" are doing is bailing out and saving German and French banks. And by extension US banks.

Take a look at the two charts on that linked June post and you will see it immediately. Their exposure to Greek debt is about $120 billion. Their total exposure to Greece, Ireland, Portugal and Spain is $900 billion. Note that this is not GIIPS as Italy is not included in that exposure. You don't want to know what their exposure looks like with Italy in the equation.

And "we" are bailing out US banks by extensions. No one knows for sure the extent of their exposure because most of it is hidden through French and German banks but what is known is enough to make Fitch to ring alarm bells. You could say that it is only fair that "we" return the favor as the US bailed out many European banks (chief among them, Deutsche Bank and Société Générale) with the first TARP intervention. Without it both banks (and many others) probably would have gone bankrupt.