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25551  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Early draft of C. found on: February 02, 2010, 11:28:39 AM
Early draft of the Constitution found in Phila.
By Edward Colimore

Inquirer Staff Writer

Researcher Lorianne Updike Toler was intrigued by the centuries-old document at the Historical Society of Pennsylvania.

On the back of a treasured draft of the U.S. Constitution was a truncated version of the same document, starting with the familiar words: "We The People. . . ."

They had been scribbled upside down by one of the Constitution's framers, James Wilson, in the summer of 1787. The cursive continued, then abruptly stopped, as if pages were missing.

A mystery, Toler thought, until she examined other Wilson papers from the Historical Society's vault in Philadelphia and found what appeared to be the rest of the draft, titled "The Continuation of the Scheme."

The document - one of 21 million in the Historical Society's collection - was known to scholars, but probably should have been placed with the other drafts, said constitutional scholar John P. Kaminski, director of the Center for the Study of the American Constitution in the history department at the University of Wisconsin-Madison.

"This was the kind of moment historians dream about," said Toler, 30, a lawyer and founding president of the Constitutional Sources Project (, a nonprofit organization, based in Washington, that promotes an understanding of and access to U.S. Constitution documents.

"This was national scripture, a piece of our Constitution's history," she said of her find in November. "It was difficult to keep my hands from trembling."

As other researchers "realized what was happening, there was a sort of hushed awe that settled over the reading room," Toler said. "One of them said the hair on her arms stood on end."

Two drafts of the Constitution in Wilson's hand had been separated from his papers long ago. One of them included the beginning of still another draft and was apparently seen as part of a single working version, instead of a separate draft.

Toler said "The Continuation of the Scheme," including its provisions about the executive and judiciary branches, completes that draft, making it a third.

She "found a document that was sort of buried in its right place, but not taken out by an archivist for special treatment," said Kaminski, the constitutional scholar. "This is a valuable document. It is in Wilson's hand, and it was in Wilson's papers, where it should have been."

With so many historical documents "going online, you don't have that kind of discovery in an archives," he added. "I can understand why [Toler] would be excited."

For Nathan Raab, a member of the Board of Councilors of the Historical Society, the documents are reminders "of the great depth of the archives there and the emotional power of holding a piece of history in your hand."

"The Continuation of the Scheme" and countless other documents had been evaluated by scholars decades ago before being carefully filed away at the Historical Society at 13th and Locust Streets.

"Perhaps this one should have been placed with the other drafts," said Lee Arnold, senior director of the library and collections at the Historical Society. "We may do that, but no decision has been made.

"We want to look at it more thoroughly," he said. "In the end, though, [the document] is perfectly fine."

The drafts of the Constitution in Wilson's hand were removed from his other papers and placed in Mylar and acid-free folios and have been occasionally displayed.

"The Continuation of the Scheme" document "was safe and preserved, but not given the prominence," said Kaminski, chief editor of the book The Documentary History of the Ratification of the Constitution.

"Wilson was a great man and one of the great founders and should be respected for that," he said. "We owe him our gratitude for the role he played."

Wilson, who lived in Philadelphia, was selected July 24, 1787, with four other members of the Constitutional Convention to serve on the Committee of Detail.

The committee - which also had John Rutledge, Edmund Randolph, Nathaniel Gorham, and Oliver Ellsworth - used 28 resolutions passed by members of the convention to flesh out the Constitution.

They finished their work and presented it Aug. 6, 1787, to the Constitutional Convention. It included Wilson's famous "We the People" beginning.

Seeing the framers' drafts and thought processes leading up to that point was especially thrilling to Toler, who is studying at Oxford University, where she is seeking a doctorate in U.S. history and specializing in constitutional legal history.

"The Constitution may be the most important document written in modern history," said Toler. "It is the longest-standing written constitution and the basis for most of the constitutions in the world."

After finding the draft, "I felt like an actor in the movie National Treasure, but [actor] Nicolas Cage was nowhere to be found," Toler added.

"However, what I found was a national treasure - the real national treasure."
25552  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Read his leaps: Lots of new taxes on: February 02, 2010, 11:26:04 AM

Backdoor taxes to hit middle class
By Terri Cullen Terri Cullen
Mon Feb 1, 4:09 pm ET
NEW YORK ( --The Obama administration's plan to cut more
than $1 trillion from the deficit over the next decade relies heavily on
so-called backdoor tax increases that will result in a bigger tax bill
for middle-class families.

In the 2010 budget tabled by President Barack Obama on Monday, the White
House wants to let billions of dollars in tax breaks expire by the end
of the year -- effectively a tax hike by stealth.

While the administration is focusing its proposal on eliminating tax
breaks for individuals who earn $250,000 a year or more, middle-class
families will face a slew of these backdoor increases.

The targeted tax provisions were enacted under the Bush administration's
Economic Growth and Tax Relief Reconciliation Act of 2001. Among other
things, the law lowered individual tax rates, slashed taxes on capital
gains and dividends, and steadily scaled back the estate tax to zero in

If the provisions are allowed to expire on December 31, the top-tier
personal income tax rate will rise to 39.6 percent from 35 percent. But
lower-income families will pay more as well: the 25 percent tax bracket
will revert back to 28 percent; the 28 percent bracket will increase to
31 percent; and the 33 percent bracket will increase to 36 percent. The
special 10 percent bracket is eliminated.

Investors will pay more on their earnings next year as well, with the
tax on dividends jumping to 39.6 percent from 15 percent and the
capital-gains tax increasing to 20 percent from 15 percent. The estate
tax is eliminated this year, but it will return in 2011 -- though there
has been talk about reinstating the death tax sooner.

Millions of middle-class households already may be facing higher taxes
in 2010 because Congress has failed to extend tax breaks that expired on
January 1, most notably a "patch" that limited the impact of the
alternative minimum tax. The AMT, initially designed to prevent the very
rich from avoiding income taxes, was never indexed for inflation. Now
the tax is affecting millions of middle-income households, but lawmakers
have been reluctant to repeal it because it has become a key source of

Without annual legislation to renew the patch this year, the AMT could
affect an estimated 25 million taxpayers with incomes as low as $33,750
(or $45,000 for joint filers). Even if the patch is extended to last
year's levels, the tax will hit American families that can hardly be
considered wealthy -- the AMT exemption for 2009 was $46,700 for singles
and $70,950 for married couples filing jointly.

Middle-class families also will find fewer tax breaks available to them
in 2010 if other popular tax provisions are allowed to expire. Among

* Taxpayers who itemize will lose the option to deduct state sales-tax
payments instead of state and local income taxes;

* The $250 teacher tax credit for classroom supplies;

* The tax deduction for up to $4,000 of college tuition and expenses;

* Individuals who don't itemize will no longer be able to increase their
standard deduction by up to $1,000 for property taxes paid;

* The first $2,400 of unemployment benefits are taxable, in 2009 that
amount was tax-free.
25553  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Re: Privacy on: February 02, 2010, 09:57:14 AM

I hope you will be able to stay on top of this story for us as it develops.

Thank you.
25554  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Military Science on: February 02, 2010, 09:54:03 AM
Ummm , , , "polishing the rifle" was intended as a euphemism for fellatio.
25555  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Paulson on bail-out on: February 02, 2010, 09:52:42 AM

I'm not really sure of which is the right thread for this amazing little report, but put it here as an example of the human reality of the Mussolini-like economic path which we have undertaken.

Some random questions noted by one blogger: 

"This is the same Hank Paulson that, as head of Goldman Sachs, lobbied the SEC in 2004 for relaxed capital standards and self-monitoring of risk for investment banks. Goldman was one of the major players in securitizing private mortgage loans before the bubble burst. How could he not know how these debt instruments were structured by his own firm that he headed? This statement now does not seem very credible to me."

The Adventure continues  , , , tongue

Paulson says he was scared and clueless during Lehman collapse

Henry Paulson, the former U.S. Treasury Department secretary, just said in a CNBC interview that in the midst of the Lehman Brothers collapse he had no idea what to do and was so afraid he excused himself from an emergency meeting on the matter and called his wife.

"I'm scared," he said he told his wife on a cell phone, while appearing to the others in the meeting that he was making a business telephone call.  "I didn't know what to do."

He asked his wife to pray for him. "Then, I put on my armor and went back into the room and acted like I knew what to do."

Paulson's just written a new book, "On the Brink," in which he recalls the details of the weekend when he dealt with the Lehman collapse.

More shocking, is Paulson's contention that prior to the collapse, neither he nor other administration officials had any idea how housing debt was structured in various Wall Street creations. Paulson has said that he discovered all of this in the midst of the crisis.  Prior to the collapse, his department had done a study of housing and concluded there was no problem.  The study left out the esoteric financial structures that turned out to be a disaster.

Now, there are two things that must be done, said Paulson.  "We need one systemic regulator" and "we need resolution authority so no institution is too big to fail."

He thinks the public should channel its anger into demanding financial reforms.  But he also agrees with the public's anger over tremendous Wall Street bonuses.

"When I ran Goldman, even during benign times, I thought compensation was out of whack," he said.  He claims he told his staff during meetings "people don't like you" because of compensation levels.

Still, although he headed the company before taking over as U.S. Treasury secretary, he was not able to curtail the bonuses that have so angered the public after bailouts with public money.

And he claims Goldman would have been in danger of collapsing if the government had not stepped into the financial crisis with emergency measures.

"It seemed like there was a good chance Morgan Stanley could go down, and if it did that could take Goldman down," said Paulson. 

If that had happened, added Paulson: "It would have been all she wrote for the American economy."
25556  Politics, Religion, Science, Culture and Humanities / Politics & Religion / China's new tone on: January 31, 2010, 07:30:36 PM
The meaning of the last sentence is not clear to me, but an interesting read nonetheless.

China's strident tone raises concerns among Western governments, analysts
By John Pomfret
Washington Post Staff Writer
Sunday, January 31, 2010;

China's indignant reaction to the announcement of U.S. plans to sell weapons to Taiwan appears to be in keeping with a new triumphalist attitude from Beijing that is worrying governments and analysts across the globe.

From the Copenhagen climate change conference to Internet freedom to China's border with India, China observers have noticed a tough tone emanating from its government, its representatives and influential analysts from its state-funded think tanks.

Calling in U.S. Ambassador Jon Huntsman on Saturday, Chinese Vice Foreign Minister He Yafei said the United States would be responsible for "serious repercussions" if it did not reverse the decision to sell Taiwan $6.4 billion worth of helicopters, Patriot Advanced Capability-3 missiles, minesweepers and communications gear. The reaction came even though China has known for months about the planned deal, U.S. officials said.

"There has been a change in China's attitude," said Kenneth G. Lieberthal, a former senior National Security Council official who is currently at the Brookings Institution. "The Chinese find with startling speed that people have come to view them as a major global player. And that has fed a sense of confidence."

Lieberthal said another factor in China's new tone is a sense that after two centuries of exploitation by the West, China is resuming its role as one of the great nations of the world.

This new posture has befuddled Western officials and analysts: Is it just China's tone that is changing or are its policies changing as well?

In a case in point, one senior U.S. official termed as unusual China's behavior at the December climate conference, during which China publicly reprimanded White House envoy Todd Stern, dispatched a Foreign Ministry functionary to an event for state leaders and fought strenuously against fixed targets for emission cuts in the developed world.

Another issue is Internet freedom and cybersecurity, highlighted by Google's recent threat to leave China unless the country stops its Web censorship. At China's request, that topic was left off the table at this year's World Economic Forum in Davos, Switzerland, Josef Ackermann, chief executive of Deutsche Bank and co-chairman of the event, told Bloomberg News. The forum ends Sunday.

China dismisses concerns

Analysts say a combination of hubris and insecurity appears to be driving China's mood. On one hand, Beijing thinks that the relative ease with which it skated over the global financial crisis underscores the superiority of its system and that China is not only rising but has arrived on the global stage -- much faster than anyone could have predicted. On the other, recent uprisings in the western regions of Tibet and Xinjiang have fed Chinese leaders' insecurity about their one-party state. As such, any perceived threat to their power is met with a backlash.

A spokesman for the Chinese Embassy in Washington said China's tone had not changed.

"China's positions on issues like arms sales to Taiwan and Tibet have been consistent and clear," Wang Baodong said, "as these issues bear on sovereignty and territorial integrity, which are closely related to Chinese core national interests."

The unease over China's new tone is shared by Europeans as well. "How Should Europe Respond to China's Strident Rise?" is the title of a new paper from the Center for European Reform. Just two years earlier, its author, institute director Charles Grant, had predicted that China and the European Union would shape the new world order.

"There is a real rethink going on about China in Europe," Grant said in an interview from Davos. "I don't think governments know what to do, but they know that their policies aren't working."

U.S. officials first began noticing the new Chinese attitude last year. Anecdotes range from the political to the personal.
At the World Economic Forum last year, Premier Wen Jiabao lambasted the United States for its economic mismanagement. A few weeks later, China's central bank questioned whether the dollar could continue to play its role as the international reserve currency.
And in another vignette, confirmed by several sources, a senior U.S. official involved in the economy hosted his Chinese counterpart, who then made a series of disparaging remarks about the bureau that the American ran. Later that night, the two were to dine at the American's house. The Chinese representatives called ahead, asking what was for dinner. They were informed that it was fish. "The director doesn't eat fish," one of them told his American interlocutor. "He wants steak. He says fish makes you weak." The menu was changed.

Tone with Europe, India

With Europe and India, China's strident tone has been even more apparent. In autumn 2008, China canceled a summit with the European Union after French President Nicolas Sarkozy met with the exiled Tibetan leader, the Dalai Lama. Before that, it had denounced German Chancellor Angela Merkel over her contacts with the Tibetan spiritual leader. And in recent weeks, it has engaged in a heated exchange with British officials over its moves to block a broader agreement at the climate conference.
At the Chinese Embassy, Wang differed on the climate issue. "China is strongly behind the idea of meeting the issue of climate change," he said, "but at the same time we think that there are some people who want to confuse the situation, and we feel the need to try to let the rest of the world know our position clearly."

China also suspended ties with Denmark after its prime minister met the Dalai Lama and resumed them only after the Danish government issued a statement in December saying it would oppose Tibetan independence and consider Beijing's reaction before inviting him again.

"The Europeans have competed to be China's favored friend," Grant said, "but then they get put in the doghouse one by one."
China's newfound toughness also played out in a renewed dispute with India over Beijing's claims to the Indian state of Arunachal Pradesh, which borders Tibet. Last summer, China blocked the Asian Development Bank from making a $60 million loan for infrastructure improvements in the state. India then moved to fund the projects itself, prompting China to send more troops to the border.

David Finkelstein, a former U.S. Army officer at the Defense Intelligence Agency who now runs the China program at the Center for Naval Analyses, said the new tone underscores a shift in China. "On the external front," he said, "we will likely see a China that is more willing than in the past to proactively shape the external environment and international order rather than passively react to it."
An example would be events that unfolded in December when 22 Chinese Muslims showed up in Cambodia and requested political asylum. China wanted to hold seven of them on suspicion of participating in anti-Chinese riots in the Xinjiang region in July.

Under intense pressure from Beijing, Cambodia sent the group home, despite protests from the United States. Two days after the group was repatriated, China signed 14 deals with Cambodia worth about $1 billion.

What the future holds

Whether this new bluster from Beijing presages tougher policies and actions in areas of direct concern to the United States is a key question, Lieberthal said. What China does after the United States sells Taiwan the weapons may provide some clues.
Even before the United States announced its plans Friday, at least six senior Chinese officials, including officers from the People's Liberation Army, had warned Washington against the sale.
Once the deal was announced, China's Defense Ministry said it was suspending a portion of the recently resumed military relations with the United States. China also announced that it would sanction the U.S. companies involved in the sale.
What happens next will be crucial. China quietly sanctioned several U.S. companies for participating in such weapons sales in the past. However, it would mark a major change if China makes the list public and includes, for example, Boeing, which sells billions of dollars worth of airplanes to China each year.

He, the vice foreign minister, warned that the sales would also affect China's cooperation with the United States on regional issues. Does that mean China will continue to block Western efforts to tighten sanctions on Iran? Bonnie S. Glaser, a China security analyst at the Center for Strategic and International Studies, said the answer will probably come soon.

France takes over the presidency of the U.N. Security Council on Monday and is expected to push for a rapid move in that direction.
25557  DBMA Martial Arts Forum / Martial Arts Topics / Re: KALI TUDO (tm) Article on: January 31, 2010, 03:56:54 PM
Good times with Boo Dog this morning. Boo has some really nice things with regard to our Kali Tudo anti-guard that will be appearing in DBMA curriculum. We have The Running Dog Game, and Boo is bringing what we will probably be calling The Dog Leg Game.
25558  DBMA Martial Arts Forum / Martial Arts Topics / Re: DBMA Kali Tudo (tm) Training Camp Feb 6-7 on: January 31, 2010, 03:23:40 PM
Absolutely!  Please remind me after this Camp is over to start a thread about the next one.


25559  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Maudlin part two on: January 31, 2010, 10:20:10 AM
As Reinhart and Rogoff wrote: "Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang! - confidence collapses, lenders disappear, and a crisis hits."

Bang is the right word. It is the nature of human beings to assume that the current trend will work out, that things can't really be that bad. Look at the bond markets only a year and then just a few months before World War I. There was no sign of an impending war. Everyone "knew" that cooler heads would prevail.

We can look back now and see where we made mistakes in the current crisis. We actually believed that this time was different, that we had better financial instruments, smarter regulators, and were so, well, modern. Times were different. We knew how to deal with leverage. Borrowing against your home was a good thing. Housing values would always go up. Etc.

Now, there are bullish voices telling us that things are headed back to normal. Mainstream forecasts for GDP growth this year are quite robust, north of 4% for the year, based on evidence from past recoveries. However, the underlying fundamentals of a banking crisis are far different from those of a typical business-cycle recession, as Reinhart and Rogoff's work so clearly reveals. It typically takes years to work off excess leverage in a banking crisis, with unemployment often rising for 4 years running. We will look at the evidence in coming weeks.

The point is that complacency almost always ends suddenly. You just don't slide gradually into a crisis, over years. It happens! All of a sudden there is a trigger event, and it is August of 2008. And the evidence in the book is that things go along fine until there is that crisis of confidence. There is no way to know when it will happen. There is no magic debt level, no magic drop in currencies, no percentage level of fiscal deficits, no single point where we can say "This is it." It is different in different crises.

One point I found fascinating, and we'll explore it in later weeks. First, when it comes to the various types of crises with the authors identify, there is very little difference between developed and emerging-market countries, especially as to the fallout. It seems that the developed world has no corner on special wisdom that would allow crises to be avoided, or allow them to be recovered from more quickly. In fact, because of their overconfidence - because they actually feel they have superior systems - developed countries can dig deeper holes for themselves than emerging markets.

Oh, and the Fed should have seen this crisis coming. The authors point to some very clear precursors to debt crises. This bears further review, and we will do so in coming weeks.

Greeks Bearing Gifts
On Monday, the government of Greece offered a "gift" to the markets of 8 billion euros worth of bonds at a rather high 6.25%. The demand was for 25 billion euros, so this offering was rather robust. Today, those same Greek bonds closed on 6.5%, more than offsetting the first year's coupon. Greek bond yields are up more than 150 basis points in the last month!

Why such a one-week turnaround? Ambrose Evans Pritchard offers up this thought: "Marc Ostwald, from Monument Securities, said the botched bond issue of €8bn (£6.9bn) of Greek debt earlier this week has made matters worse. Many of the investors were 'hot money' funds that bought on rumors that China was emerging as a buyer, offering them a chance for quick profit. When the China story was denied by Beijing and Athens, these funds rushed for the exit."

Greece is running a budget deficit of 12.5%. Under the Maastricht Treaty, they are supposed to keep it at 3%. Their GDP was $374 billion in 2008 (about €240 billion). If they can cut their budget deficit to 10% this year, that means they will need to go into the bond market for another €25 billion or so. But they already have a problem with rising debt. Look at the following graph on the debt of various countries.


When Russia defaulted on its debt and sent the world into crisis in 1998, they had total debt of only €51 billion. Greece now has €254 billion and added another €8 billion this week, and needs to add another €24 billion (or so) later this year. That's a debt-to-GDP ratio of over 100%, well above the limit of the treaty, which is 60%.

Greece benefitted from being in the Eurozone by getting very low interest rates, up until recently. Being in the Eurozone made investors confident. Now that confidence is eroding daily. And this week's market action says rates will go higher, without some fiscal discipline. To help my US readers put this in perspective, let's assume that Greece was the size of the US. To get back to Maastricht Treaty levels, they would need to cut the deficit by 4% of GDP for the next few years. If the US did that, it would mean an equivalent budget cut of $500 billion dollars. Per year. For three years running.

That would guarantee a very deep recession. Just a 10% suggested pay cut has Greek government unions already planning strikes. Nevertheless, the government of Greece recognizes that it simply cannot continue to run such huge deficits. They have developed a plan that aims to narrow the shortfall from 12.7% of output, more than four times the EU limit, to 8.7% this year. That reduction will be achieved even though the economy will contract 0.3%, the plan says. The deficit will shrink to 5.6% next year and 2.8% in 2012.

The market is saying they don't believe that will happen. For one thing, if the Greek economy goes into recession, the amount collected in taxes will fall, meaning the shortfall will increase. Second, it is not clear that Greek voters will approve such a plan at their next elections. Riots and demonstrations are a popular pastime.

Both French and German ministers made it clear that there would be no bailout of Greece. But here's the problem. If they ignore the noncompliance, there is no meaning to the treaty. The euro will be called into question. And the other countries with serious fiscal problems will ask why they should cut back if Greece does not. If Greece does not choose deep cutbacks and recession, the markets will keep demanding hikes in interest rates, and eventually Greece will have problems meeting just its interest payments.

Can this go on for some time? The analysis of debt crises in history says yes, but there comes a time when confidence breaks. My friends from GaveKal had this thought:

"What is the next step? Having lived through the Mexican, Thai, Korean and Argentine crises, it is hard not to distinguish a common pattern. In our view, this means that investors need to confront the fact that we are at an important crossroads for Greece, best symbolized by a simple question: 'If you were a Greek saver with all of your income in a Greek bank, given what is happening to the debt of your sovereign, would you feel comfortable keeping all of your life savings in your savings institution? Or would you start thinking about opening an account in a foreign bank and/or redeeming your currency in cash?' The answer to this question will likely direct the next phase of the crisis. If we start to see bank runs in Greece, then investors will have to accept that the crisis has run out of control and that we are facing a far more bearish investment environment. However, if the Greek population does not panic and does not liquefy/transfer its savings, then European policy-makers may still have a chance to find a political solution to this growing problem.

"What could a political solution be? The answer here is simple: there is none. So if Europe wants to save Greece from hitting the wall towards which it is now heading, the European commission, the ECB and/or other institutions (IMF?) will have to bend the rules massively. In turn, this will likely lead to a further collapse in the euro. But for us, an important question is whether it could also lead to a serious political backlash. Indeed, at this stage, elected politicians are likely pondering how much appetite there is amongst their electorate for yet another bailout, and for further expansions in government debt levels. The fact that the intervention would occur on behalf of a foreign country probably makes it all the more unpalatable (it's one thing to save your domestic banking system ... but why save Greece?)."

If Greece is bailed out, Portugal and Ireland will ask "Why not us?" And Spain? Italy? If Greece is allowed to flaunt the rules, what does that say about the future of the euro? Will Germany and France insist on compliance or be willing to kick Greece out?

A few months ago, the markets assumed that not only Greece but Portugal, Italy, Spain, and Ireland would have a few years to get their houses in order. This week, the markets shortened their time horizon for Greece.

Even so, we get this quote, which may end up ranking alongside Fisher's quote in 1929, that the stock market was at a permanently high plateau, or Bernanke's quote that "The subprime debt problem will be contained."

"There is no bailout problem," Monetary Affairs Commissioner Joaquin Almunia said today at the World Economic Forum's annual meeting in Davos, Switzerland. "Greece will not default. In the euro area, default does not exist."

The evidence in This Time is Different is that default risk does in fact exist. You cannot keep borrowing past your income, whether as a family or a government, and not eventually go bankrupt.

Are we at an inflection point? Too early to say. It all depends on the willingness of the Greek people to endure what will not be a fun next few years, for the privilege of staying in the Eurozone. And on whether the bond market believes that this time is different and the Greeks will actually get their fiscal house in order.

Oh by the way, did I mention that the history of Greece is not exactly pristine in terms of default? In fact, they have been in default in one way or another for 105 out of the past 200 years. Aristotle, can you spare a dime?

And one last thought. The US is running massive deficits. If we do not get them under control, we will one day, and perhaps quite soon, face our own "Greek moment." Look at the graph below, and weep.


Obama offering to freeze spending by 17% in US discretionary-spending programs, after he ran them up over 20% in just one year, is laughable. Greece is an object lesson for the world, as Japan soon will be. You cannot cure too much debt with more debt.
25560  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Maudlin: Different this time? part 1 on: January 31, 2010, 10:18:52 AM
In this issue:
The Statistical Recovery has Arrived
This Time Is Different
A Crisis of Confidence
Greeks Bearing Gifts
Biotech, Conversations and Babies

"Our immersion in the details of crises that have arisen over the past eight centuries and in data on them has led us to conclude that the most commonly repeated and most expensive investment advice ever given in the boom just before a financial crisis stems from the perception that 'this time is different.' That advice, that the old rules of valuation no longer apply, is usually followed up with vigor. Financial professionals and, all too often, government leaders explain that we are doing things better than before, we are smarter, and we have learned from past mistakes. Each time, society convinces itself that the current boom, unlike the many booms that preceded catastrophic collapses in the past, is built on sound fundamentals, structural reforms, technological innovation, and good policy."

- This Time is Different (Carmen M. Reinhart and Kenneth Rogoff)

When does a potential crisis become an actual crisis, and how and why does it happen? Why did most everyone believe there were no problems in the US (or Japanese or European or British) economies in 2006? Yet now we are mired in a very difficult situation. "The subprime problem will be contained," said now controversially confirmed Fed Chairman Bernanke, just months before the implosion and significant Fed intervention. I have just returned from Europe, and the discussion often turned to the potential of a crisis in the Eurozone if Greece defaults. Plus, we take a look at the very positive US GDP numbers released this morning. Are we finally back to the Old Normal? There's just so much to talk about.

, , ,

The Statistical Recovery Has Arrived
Before we get into the main discussion point, let me briefly comment on today's GDP numbers, which came in at an amazingly strong 5.7% growth rate. While that is stronger than I thought it would be (I said 4-5%), there are reasons to be cautious before we sound the "all clear" bell.

First, over 60% (3.7%) of the growth came from inventory rebuilding, as opposed to just 0.7% in the third quarter. If you examine the numbers, you find that inventories had dropped below sales, so a buildup was needed. Increasing inventories add to GDP, while, counterintuitively, sales from inventory decrease GDP. Businesses are just adjusting to the New Normal level of sales. I expect further inventory build-up in the next two quarters, although not at this level, and then we level off the latter half of the year.

While rebuilding inventories is a very good thing, that growth will only continue if sales grow. Otherwise inventories will find the level of the New Normal and stop growing. And if you look at consumer spending in the data, you find that it actually declined in the 4th quarter, both annually and from the previous quarter. "Domestic demand" declined from 2.3% in the third quarter to only 1.7% in the fourth quarter. Part of that is clearly the absence of "Cash for Clunkers," but even so that is not a sign of economic strength.

Second, as my friend David Rosenberg pointed out, imports fell over the 4th quarter. Usually in a heavy inventory-rebuilding cycle, imports rise because a portion of the materials businesses need to build their own products comes from foreign sources. Thus the drop in imports is most unusual. Falling imports, which is a sign of economic retrenching, also increases the statistical GDP number.

Third, I have seen no analysis (yet) on the impact of the stimulus spending, but it was 90% of the growth in the third quarter, or a little less than 2%.

Fourth (and quoting David): "... if you believe the GDP data - remember, there are more revisions to come - then you de facto must be of the view that productivity growth is soaring at over a 6% annual rate. No doubt productivity is rising - just look at the never-ending slate of layoff announcements. But we came off a cycle with no technological advance and no capital deepening, so it is hard to believe that productivity at this time is growing at a pace that is four times the historical norm. Sorry, but we're not buyers of that view. In the fourth quarter, aggregate private hours worked contracted at a 0.5% annual rate and what we can tell you is that such a decline in labor input has never before, scanning over 50 years of data, coincided with a GDP headline this good.

"Normally, GDP growth is 1.7% when hours worked is this weak, and that is exactly the trend that was depicted this week in the release of the Chicago Fed's National Activity Index, which was widely ignored. On the flip side, when we have in the past seen GDP growth come in at or near a 5.7% annual rate, what is typical is that hours worked grows at a 3.7% rate. No matter how you slice it, the GDP number today represented not just a rare but an unprecedented event, and as such, we are willing to treat the report with an entire saltshaker - a few grains won't do."

Finally, remember that third-quarter GDP was revised downward by over 30%, from 3.5% to just 2.2% only 60 days later. (There is the first release, to be followed by revisions over the next two months.) The first release is based on a lot of estimates, otherwise known as guesswork. The fourth-quarter number is likely to be revised down as well.

Unemployment rose by several hundred thousand jobs in the fourth quarter, and if you look at some surveys, it approached 500,000. That is hardly consistent with a 5.7% growth rate. Further, sales taxes and income-tax receipts are still falling. As I said last year that it would be, this is a Statistical Recovery. When unemployment is rising, it is hard to talk of real recovery. Without the stimulus in the latter half of the year, growth would be much slower.

So should we, as Paul Krugman suggests, spend another trillion in stimulus if it helps growth? No, because, as I have written for a very long time, and will focus on in future weeks, increased deficits and rising debt-to-GDP is a long-term losing proposition. It simply puts off what will be a reckoning that will be even worse, with yet higher debt levels. You cannot borrow your way out of a debt crisis.

This Time Is Different
While I was in Europe, and flying back, I had the great pleasure of reading This Time is Different, by Carmen M. Reinhart and Kenneth Rogoff, on my new Kindle, courtesy of Fred Fern.

I am going to be writing about and quoting from this book for several weeks. It is a very important work, as it gives us the first really comprehensive analysis of financial crises. I highlighted more pages than in any book in recent memory (easy to do on the Kindle, and even easier to find the highlights). Rather than offering up theories on how to deal with the current financial crisis, the authors show us what happened in over 250 historical crises in 66 countries. And they offer some very clear ideas on how this current crisis might play out. Sadly, the lesson is not a happy one. There are no good endings once you start down a deleveraging path. As I have been writing for several years, we now are faced with choosing from among several bad choices, some being worse than others. This Time is Different offers up some ideas as to which are the worst choices.

If you are a serious student of economics, you should read this book. If you want to get a sense of the problems we face, the authors conveniently summarize the situation in chapters 13-16, purposefully allowing people to get the main points without drilling into the mountain of details they provide. Get the book at a 45% discount at

Buy it with the excellent book I am now reading, Wall Street Revalued, and get free shipping.

A Crisis of Confidence
Let's lead off with a few quotes from This Time is Different, and then I'll add some comments. Today I'll focus on the theme of confidence, which runs throughout the entire book.

"But highly leveraged economies, particularly those in which continual rollover of short-term debt is sustained only by confidence in relatively illiquid underlying assets, seldom survive forever, particularly if leverage continues to grow unchecked."

"If there is one common theme to the vast range of crises we consider in this book, it is that excessive debt accumulation, whether it be by the government, banks, corporations, or consumers, often poses greater systemic risks than it seems during a boom. Infusions of cash can make a government look like it is providing greater growth to its economy than it really is. Private sector borrowing binges can inflate housing and stock prices far beyond their long-run sustainable levels, and make banks seem more stable and profitable than they really are. Such large-scale debt buildups pose risks because they make an economy vulnerable to crises of confidence, particularly when debt is short term and needs to be constantly refinanced. Debt-fueled booms all too often provide false affirmation of a government's policies, a financial institution's ability to make outsized profits, or a country's standard of living. Most of these booms end badly. Of course, debt instruments are crucial to all economies, ancient and modern, but balancing the risk and opportunities of debt is always a challenge, a challenge policy makers, investors, and ordinary citizens must never forget."

And this is key. Read it twice (at least!):

"Perhaps more than anything else, failure to recognize the precariousness and fickleness of confidence-especially in cases in which large short-term debts need to be rolled over continuously-is the key factor that gives rise to the this-time-is-different syndrome. Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang!-confidence collapses, lenders disappear, and a crisis hits.

"Economic theory tells us that it is precisely the fickle nature of confidence, including its dependence on the public's expectation of future events, that makes it so difficult to predict the timing of debt crises. High debt levels lead, in many mathematical economics models, to "multiple equilibria" in which the debt level might be sustained - or might not be. Economists do not have a terribly good idea of what kinds of events shift confidence and of how to concretely assess confidence vulnerability. What one does see, again and again, in the history of financial crises is that when an accident is waiting to happen, it eventually does. When countries become too deeply indebted, they are headed for trouble. When debt-fueled asset price explosions seem too good to be true, they probably are. But the exact timing can be very difficult to guess, and a crisis that seems imminent can sometimes take years to ignite."

How confident was the world in October of 2006? I was writing that there would be a recession, a subprime crisis, and a credit crisis in our future. I was on Larry Kudlow's show with Nouriel Roubini, and Larry and John Rutledge were giving us a hard time about our so-called "doom and gloom." If there is going to be a recession you should get out of the stock market, was my call. I was a tad early, as the market proceeded to go up another 20% over the next 8 months.
25561  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Latin America on: January 31, 2010, 09:53:16 AM
Very interesting Capt.  In your opinion, what comes next?
25562  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Military Science on: January 31, 2010, 09:46:25 AM
So, therefore , , , you disagree with BO's new policy?
25563  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / A post from another forum on: January 31, 2010, 09:45:13 AM
An interesting analysis of the current state of affairs.  Of course there is also the question of where things are headed , , ,

What I believe that ___ is talking about here is NOT that someone can do a "Criminal Minds" style trace you across three continents using video footage hacked from random sources after identifying you by comparing a single grainy image against every drivers license database. That can't be done *yet*, and we're quite a ways from it.

What *can* happen is that some incident comes to the police's attention in front of the Licquor Store on State St. and Broadway. They know that the parking garage across the street has video cameras for liability. It shows the event and some amorphous blob about 5'6-6 foot walking away (and yes, knowing the height and angle of the camera, the distance to the event, and the height of one or more objects in the for and background they can, depending on image clarity get a LOT closer than that). This doesn't help them much, but they know there is another parking garage 1/2 block west, and licquor store with a couple of cameras in the parking lot 1/2 block east.

They also know the time, and approximately how long it takes to walk that far. So they don't have to scan a lot of video, maybe 10 minutes (more if the clocks are significantly off). If they see Mr. Blob on one video they move to the next camera that direction, establishing a route and asking questions along the way.

Given the proliferation (due to Moore's Law if nothing else) of video cameras all they have to do is stroll possible routes with an eye for video cameras. I'm betting you'll find them over watching alleys (to watch for employee pilferage and for employee security), loading docks etc. as well as front doors.

And on NONE of these are they really all that concerned with getting a good picture of your face. If they do, bonus. As long as they can track you, that's good enough. Eventually they'll find something, a store you ducked in to to buy a soda, or a car with a license plate or *something*.

Even in residential neighborhoods people are starting to monitor their houses and the streets ( ) and sometimes the cops know about it. Since these folks are buying consumer grade stuff it's *better* video than what the stores are putting in, but has a shorter lifespan, so it gets replaced every 3-4 year with BETTER stuff. And when they hear that the police are looking for any information on who killed Officer Joe Hero with three kids and who fled down Broadway in a blue car, they pull up their video and there you are. And their neighbor, who also has a system has a different angle and knows a guy on the next block...

You're also going to have about 1/2 the people filming/taking your picture on their cellphone.

And then they show these to a sketch artist.

And when they *catch* you, unless you're either well practiced, or a sociopath, if they have enough evidence to question you, they will find *some* handle to question you further.

Note that none of this has anything to do with actually seeing your picture on video.

Some of the tricks mentioned might work, but if they catch you slipping off that nasty overcoat and slipping on a tie, then they'd just change the blob they're looking for. And if they DO find some way to prove that blob was you, they just proved intent--otherwise you'd not have prepared a disguise ahead of time.

If something happens that you didn't expect and you need to flee the law you'd best just keep running until you're in a jurisdiction that doesn't have and extradition treaty, hope that the event is below the police's radar, or is sufficiently political that you can flee somewhere and ask for political asylum.

Seriously, if you act in accordance with the law, and act, to the extent the law allows, in a moral manner then either your best bet is to stay on scene and act like you did the right thing, or if the local gendarmes are corrupt to the point where that's not possible, then you're back to fleeing the jurisdiction. The only possible alternative is to get to your lawyers and arrange to turn yourself in to a different LEA, as an example if you had to shoot a dirty cop, you turn yourself in to the FBI, or if you had to shoot a sheriff who was doing Bad Things then go to the city police.
25564  DBMA Espanol / Espanol Discussion / Re: Chistes, Bromas on: January 30, 2010, 10:20:17 PM
Un dia un gerente de banco se cansa de que un empleado le pida tiempo libre todas las tardes, por diferentes razones como el tener cita con el medico, llevar el carro al mecanico, ir al funeral de la bisabuela del primo del novio de la hija de su hermana, etc, etc...

El gerente cansado llama a uno de sus empleados y le dice:

"Lopez, apenitas se vaya hoy Gonzalez usted lo sigue y manana a primera hora me hace saber que hizo el desde em momento que salio de aqui".

Cuando Gonzalez se va, Lopez lo sigue y presta mucha atencion a todo lo que el hace. A la manana siguiente Lopez entra a dar el reporte a la oficina del gerente.

"Sr gerente, le comunico que cuando Gonzalez salio de aqui ayer en la tarde el se fue directamente a su casa, donde su esposa lo esperaba vestida con ropa interior muy sexy de Victoria's Secret.
Despues de haberse dado un beso muy apasionado en la puerta de su casa entraron y por su ventana observe que procedieron a hacer al amor salvajemente en el sofa de su living room, sobre la mesa de su comedor, en el piso de su cocina y ultimamente en su cama matrimonial."

El gerente se sonrie y dice: " Que cosa, debe ser recien casado y con razon quiere todo este tiempo libre para estar con su mujer".

A lo cual Lopez le dice:

"Con mucho respecto Sr gerente, y para que me entienda mejor, me permite usted hablarle con un poco de informalidad?".

El gerente confundido accede y Lopez le dice:

"Cuando Gonzalez salio de aqui ayer en la tarde el se fue directamente a tu casa, donde tu esposa lo esperaba vestida con ropa interior muy sexy de Victoria's Secret.
Despues de haberse dado un beso muy apasionado en la puerta de tu casa entraron y por tu ventana observe que procedieron a hacer al amor salvajemente en el sofa de tu living room, sobre la mesa de tu comedor, en el piso de tu cocina y ultimamente en tu cama matrimonial."
25565  DBMA Espanol / Espanol Discussion / Chistes, Bromas on: January 30, 2010, 08:31:28 PM
Las Dos Monjas Mexicanas:

Se van al Italia a ver al Papa.  No hablan italiano, pero los dos idiomas se parecen tanto que mas o menos pueden entender lo que se les diga los italianos.

Un dia una de las monjas pregunta por la hora a la otra.

"No se, mi reloj esta' descompuesto"
"Pues preguntale a esa italiana alli'"

Ella va a la italiana y con gestos de mano, pregunta por la hora.

La Italiana dice "Nove cinque" (9:05)

Regresa la monja a su hermana.

"Que te dijo la italiana?"

"Que no la moleste."

25566  DBMA Espanol / Espanol Discussion / Re: Video-Clips de DBMA en espanol on: January 30, 2010, 08:06:16 PM
Hola Gwen:

Primero, antes que nada, bienvenidos a nuestro foro  smiley

Segundo, disculpame el egoismo, pero lo que se ve en los clips es Dog Brother Martial Arts Kali.  cheesy

Tercero, cabe mencionar que los clips son gratis y que tambien vendemos cosas que , , , no son gratis smiley  Alli' vas a encontrar muchas respuestas a tus preguntas.


Va a tardar un rato la segunda edicion de DBMA clips en Espanol.  Nuestro editor esta' metido profundamente en nuestro proyecto de una pelicula.

Mientras tanto invito la participacion de todos en este foro.  Lo mas que se participen Uds, de mas utilidad sera' este foro para todos.

25567  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Military Science on: January 30, 2010, 07:42:07 PM
So, the answer to my question is "Yes" or "No"? smiley
25568  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / POTH: Deflation in Japan on: January 30, 2010, 04:08:28 PM
I am sympathetic to the notion that BO and his running dog progressives are following the Japanese strategy-- so lets take a look at Japan. 

The following article from Pravda on the Hudson, has much that is hideous economics, so caveat lector.

TOKYO — The broiled meat is tender and the rice is silky-smooth. But as Japan’s economic recovery falters, beef bowls have come to symbolize one of its most pressing woes: deflation.

Shokuan, which has vending machines but no table service, is an inexpensive place to eat.

Japan’s big three beef bowl restaurant chains, the country’s answer to hamburger giants like McDonald’s, are in a price war. It is a sign, many people say, of the dire state of Japan’s economy that even dirt-cheap beef bowl restaurants must slash their already low prices to keep customers.

The battle has also come to epitomize a destructive pattern repeated across Japan’s economy. By cutting prices hastily and aggressively to attract consumers, critics say, restaurants decimate profits, squeeze workers’ pay and drive the weak out of business — a deflationary cycle that threatens the nation’s economy.

“These cutthroat price wars could usher in another recessionary hell,” the influential economist Noriko Hama wrote in a magazine article that has won much attention. “If we all got used to spending just 250 yen for every meal, then meals priced respectably will soon become too expensive,” she said. “When you buy something cheap, you lower the value of your own life.”

Deflation — defined as a decline in the prices of goods and services — is back in Japan as it struggles to shake off the effects of its worst recession since World War II.

While prices have fallen elsewhere during the global economic crisis, deflation has been the most persistent here: consumer prices among industrialized economies rose by a robust 1.3 percent in the year to November, but fell 1.9 percent in Japan.

In the decline, companies that undercut rivals too aggressively are being chastised as reckless at best, or as traitors undermining the country’s recovery at worst. Every markdown of beef bowl prices by the big three restaurants — Sukiya, Yoshinoya and Matsuya — has been promptly broadcast by the national news media here.

Japan has reason to be worried. Deflation hampered Japan from the mid-1990s, after the collapse of its bubble economy, to at least 2005. Households held back spending on big-ticket goods, knowing they would only get cheaper. Companies were unsure of how much to invest. At the time, the three beef bowl chains were in a similar price war.

Still, government officials back then emphasized the supposed benefits of deflation; falling prices were good for households, they said. Others said deflation would help restructure the economy by weeding out weak companies.

But the drawn-out deflationary cycle weighed heavily on Japan’s recovery. Apart from putting a damper on consumption and investment, asset deflation ravaged the country’s banks and shut out new businesses from credit.

Now that deflation is back, Japan is wary. Unemployment remains near record highs, and wages are falling. Mounting public debt is also a problem, causing Standard & Poor’s on Tuesday to cut its outlook for Japan’s sovereign rating for the first time since 2002. Japan must do more to lift its economy out of deflation and bolster long-term growth, S.& P. said.

Moreover, the population is shrinking, making demand inherently weak. Economists say Japan’s economy is saddled with a 35 trillion yen, or $388 billion, “demand gap,” or almost 7 percent of the country’s economic output.

“With supply continuing to exceed demand by a massive margin, deflationary expectations are proving very difficult to shake,” said Ryutaro Kono, an economist at BNP Paribas in Tokyo. “Households have been tightening their purse strings as the income outlook looks increasingly bleak, and we believe firms will continue to respond by lowering prices.”

Matsuya, the smallest of the three chains, set off the price war by cutting the price of its standard beef bowl to 320 yen, or $3.55, from 380 yen in early December. The market leader, Sukiya, followed suit that month, lowering its price to 280 yen, from 330 yen.

This month, the No. 2 beef bowl chain, Yoshinoya, lowered the price of its beef bowl to 300 yen, from 380 yen, though it says the cut is temporary. A smaller chain, Nakau, has also lowered prices.

The restaurant chains insist they have not downsized their portions, and will make up for cheaper prices by raising efficiency.

“We don’t consider this a price cut. We’ve simply set a new price,” said Naoki Fujita at Zensho, which runs the Sukiya chain. “With incomes falling, we needed to figure out what would be a reasonable price,” he said. “We hope customers who came every week will now come twice a week.”


Page 2 of 2)

In a sense, the beef bowl has always been about low prices. Yoshinoya, the beef bowl pioneer with about 1,560 stores in Japan and overseas, helped bring beef to the Japanese working class with its first restaurant in the Nihonbashi district of Tokyo in 1899.

Though beef was a delicacy at the time, Eikichi Matsuda, the Yoshinoya founder, kept prices cheap by buying in bulk, and serving as many customers as possible from his tiny stall. Speed and efficiency reigned, with workers trained to start preparing a bowl even before a customer sat down.
The same principles still apply at Yoshinoya. At a branch in central Tokyo, servers rarely take more than a minute to fill an order. The average customer spends just 7.5 minutes on a meal, and a small restaurant can serve more than 3,000 customers a day.

But forced to sell at ever-lower prices — and hurt by lower-priced competitors — making a profit has been increasingly difficult. The company suffered a 2.3 billion yen net loss in the nine months to November, and the next month, before Yoshinoya slashed prices, its sales slumped 22.2 percent. In contrast, sales at Sukiya, which serves up the cheapest beef bowl, surged 15.9 percent that month from the previous year.

Yoshinoya is not considering further price cuts. Squeezing out more savings is “like wringing a dry towel,” said a spokesman, Haruhiko Kizu.

Meanwhile, labor disputes at Sukiya show how falling prices and revenue can quickly hurt workers. A string of former workers have sued the chain over withholding overtime pay. Sukiya denies the accusations.

Other companies have been harshly criticized for slashing prices. Fast Retailing, the company behind the fast-growing Uniqlo brand, has garnered as much disapproval as awe for selling jeans as low as 990 yen. McDonald’s, on the other hand, has won kudos for resisting bargain basement prices by introducing a series of big “American-style” burgers for more than 400 yen, considered expensive in today’s Japan.

“Some Japanese companies are waging such reckless price wars, they’re wringing their own necks,” said Masamitsu Sakurai, who heads the influential business lobby Keizai Doyukai. “Companies need to be more creative. They should come up with products that add value.”

Economists say it is absurd to blame individual companies for Japan’s deflation. “For prices to fall during an economic downturn is natural. That stimulates demand and facilitates an eventual recovery,” said Takuji Aida, chief economist for UBS in Tokyo. “But this mechanism doesn’t work when there is such a big demand shortfall.”

“When prices fall because of an increase in productivity at a company, it’s good for the economy,” said Sean Yokota, an economist for UBS based in Tokyo. “It’s the demand gap that’s damaging.”

The government has vowed to lift household incomes through a series of subsidies, including new cash payments to families with small children. But the scale of government payments — 2.3 trillion yen in the case of the child subsidies — is hardly enough to fill the nation’s huge demand shortfall. With interest rates close to zero, Japan also has few options left in monetary policy.

In the meantime, cutthroat price battles are already driving laggards out of business. Wendy’s, the American burger chain, left Japan on Dec. 31.

It is not surprising, considering the competition. A mere stone’s throw from Tokyo’s celebrated Ginza district is Shokuan, the kind of restaurant that is undercutting everyone.

Shokuan, which has no chairs nor table service, is a cluster of beer vending machines huddled under the train tracks. A man behind a tiny counter sells dirt-cheap morsels: fish sausages for 50 yen, prawn crackers for 60 yen, canned yakitori for 160 yen. Many days of the week, Shokuan is spilling over with customers.

“I don’t think there’s anything around here cheaper than this. That’s why I started to come,” said Yasunori Miura, a manufacturing company employee and a recent regular. “This here,” he said, pointing to his fish sausage, “is deflation.”
25569  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Military Science on: January 30, 2010, 09:22:40 AM
Question:  Contrasting a base at home or a safe base abroad; does the balance change the closer one gets to combat zones/the front lines?  Would you want to have a NCO who thought you had a cute butt and wanted you to polish his rifle deciding whether you had to take extra risky missions?
25570  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: China on: January 30, 2010, 09:19:10 AM
With our accumulating and seemingly accelerating economic, political, and military weakness there is going to be more and more of this.

My guess is that BO looks for an exit from Afpakia, he has already committed to an exit from Iraq, Iran will get the bomb, and Russia already retakes the Ukraine (and prepares Georgia) and the confidence of the Poles and the Czechs in our work is minimal.  Seeing this Turkey will not place much value on our friendship.

But I digress-- this thread is about China.  On our current path, China is preparing to retake Taiwan.
25571  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Strat's take on the same piece on: January 29, 2010, 11:44:42 PM
China's Planned Evolution of Naval Capabilities
THE CHINA INTERNET INFORMATION CENTER, an online outlet for news and information run by the Chinese central government, published a commentary on Thursday discussing China’s right to build overseas bases to support naval operations and protect Chinese interests abroad. The article, written by Fudan University’s Institute of International Studies executive dean Shen Dingli, is a response to debates inside China and abroad over whether Beijing should establish naval bases, supply depots and related facilities overseas to support China’s naval participation in anti-piracy operations off the coast of Somalia, and ultimately defend China’s broader maritime interests.

The article comes a day after Captain Chris Chambers, director of operations for the U.S.-led Combined Maritime Forces (CMF), which jointly heads the Shared Awareness and Deconfliction (SHADE) working group that helps coordinate multinational anti-piracy operations off of the Somali coast, told a conference in Singapore that China would soon be enhancing its participation in SHADE, and would take on the rotating leadership role in the working group in a few months. Currently SHADE leadership rotates between the CMF and European Union maritime forces and coordinates operations among these and other independent anti-piracy forces in the area.

China will be the first nation participating in the anti-piracy operations to take a leadership role in SHADE, and will expand its naval contribution above its current three-ship task force and take responsibility for patrolling an area with more active piracy. The expansion of China’s contributions and coordinating role are currently awaiting final approval in Beijing, and the extended mission is raising the discussion of a resupply base in the Indian Ocean basin to ease logistics for maintaining China’s fleet. China has kept an anti-piracy task force in the area since December 2008 and has not indicated it is leaving anytime soon. This makes a more local supply depot something that would ease the logistical burden of maintaining the small fleet so far from mainland China.

“The idea of Chinese bases abroad, particularly in the Indian Ocean, immediately raises concerns that China is growing more active and aggressive in its naval activities.”

Beijing has used the anti-piracy operations to demonstrate its growing participation in international operations and develop capabilities to deploy Chinese naval forces far from home for an extended period of time. A natural outgrowth of this is the discussion of establishing overseas naval bases, or at least arranging docking and resupply agreements at other countries’ ports to sustain Chinese maritime operations. But the idea of Chinese bases abroad, particularly in the Indian Ocean, immediately raises concerns in India and elsewhere that China is growing more active and aggressive in its naval activities.

In some sense, these perceptions are accurate, at least so far as China’s planned evolution of capabilities are concerned. China’s economic growth has led to a major shift in the country’s resource needs. China now imports large amounts of raw materials, including oil and minerals, from the Middle East and Africa. As China grows more dependent upon the steady flow of these supplies, it has also grown concerned about the security of its supply lines.

China has long been a land power and its forays into international waters have been few and far between, despite a series of explorations along the Indian and African coasts in the 15th century. Redesigning and training its navy to take a more active role in maritime security is now a major focus of its recent military reforms and a key area is the ability to protect one of its main supply arteries through the Indian Ocean. Beijing has been cautious in this task as it faces opposition from India and the United States, both of which have a much stronger and more secure presence in the region, and both of which have little interest in seeing China significantly expand its naval capabilities.

The anti-piracy operations have given Beijing the perfect opportunity to test and refine its capabilities in a non-threatening manner, and talk of resupply bases — and thus a more permanent Chinese naval presence — is something Beijing is considering carefully but seriously. China is years, if not decades, away from having the ability to sustain a true blue water naval capability and even further from being able to truly challenge U.S. maritime dominance, but each step Beijing takes gives it the skills and experience necessary to make the next move forward. Taking a leadership role in SHADE also gives China a valuable opportunity to observe and learn the protocols and operations of other nations’ fleets — lessons it can apply to its own operations.

Beijing may be far from floating a blue water navy in any sustainable way, but China has recognized the vulnerability of its dependence on overseas resources and is actively working to improve its ability to protect its own supply lines. But when these lines match those of others with equal or even more severe dependencies, like Japan, or pass through competitor’s areas of strategic interest, like India or the United States, even a defensive intent can be perceived as potentially aggressive preparation or action. It is this sort of perception of capabilities that can quickly escalate into competition or an arms race and keep tensions high. It also creates room for misunderstandings and accidents — as we have already seen in China’s more active operations in the South China Sea, and in the U.S. moves to temper Beijing’s advances.
25572  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Gays in the military on: January 29, 2010, 12:57:34 PM
Woof All:

I see that our CinC has proposed ending "Don't ask, don't tell" and allowing open gays in the military.

Although I am opinionated, as a lifelong civilian I must be humble here.  Thoughts from our military friends especially appreciated.

Lets kick things off with this:
25573  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Surveillance cameras on: January 29, 2010, 12:19:33 PM
From a thread started by our friend Cold War Scout on another forum:

Surveillance Cameras: How Does the Operator Contend With Them?

I am posting this article because it is an example of the informal network of video cameras that exists out there in urban areas. It does not matter whether you like surveillance cameras or not, they are out there. Any police department worth its salt has figured out what level of connectivity exists out there which they can use as the basis for trying to determine a suspect's movements to/from a crime scene. Sometimes this allows for determining which vehicle a suspect ultimately got into (e.g. a parking lot) because the "network" only needs to track you to a point where an indentification can be established.

Ergo, when you talk about throw downs and throw aways, or smoking a dirtbag and simply fleeing, keep in mind that you could have the effectiveness of this informal network hanging over your head.

Police capture student's accused rapist
Scott McCabe
Examiner Staff Writer
January 28, 2010
Montgomery County police arrested a man accused of the sexual assault of a 19-year-old student, capping off a five-hour manhunt and the temporary lockdown of Montgomery College's Takoma Park campus. Nathaniel L. Hart, 34, was charged with two counts of first-degree rape, first-degree sexual offense and attempting to escape after arrest. Authorities shut down the campus around 3:30 p.m. Tuesday after a student reported that she had been raped in the bathroom of the performing arts center.Video footage led police to the Days Inn in Silver Spring, where they arrested Hart after officers noticed an open door of a room that hotel management said had been vacant.

Read more at the Washington Examiner:

You might be well served right now to try and figure out where cameras are located in the areas you frequent and whether/how it is possible to avoid them (e.g. shopping centers, malls, traffic cameras on the main road outside your house).

There is a reason why talented bandits where layers of clothing. Police are looking for a man with a long sleeve blue flannel shirt, but bandit has pulled that off, thrown it away, and is now down to maybe long sleeve (or short sleeve) gray t-shirt. Same with pants. What started out as gray fleece sweat pants may wind up as blue jeans.

Hoodies and watch caps can be worth their weight in gold. Especially if you have flaming red hair or a Mohawk. Hoodies also seriously cut down the available angles and lighting in photo enhancements.

Is the logo on your jacket or shirt very distinctive or memorable? It might be to witnesses or a camera enhancement as well.

Are you driving a flaming red Hummer (or one of those yellow ones I see so many of)?

Wearing distinctive boots with a distinctive print? Running across a muddy field to your car?

So what thoughts come to YOUR mind as/if you need to successfully urban E and E?

We put in a lot of these systems.

The factors that affect their usefulness for both actionable and forensic intel are:

1. Are the systems properly monitored?
2. Are they maintained?
3. Are they cohesive systems - ie all on one media server?
4. Do they store the video? Many places just store one day or not at all.
5. Do they have active detection software running? ( ie looks for a stopped car?)

Most university campuses have one system and its easy to put all cameras of interest on one pane of glass and then roll forward from a point in time. Universities are pretty good at 1-4. If they have a Dispatch/Security team looking at the systems actively, then they can respond pretty quick.

Many government agencies from airports to towns are not very good at 1-4. If they do 1-4 internally, then the chance is greater that the system is subpar - if they contract out the work of 1-4 then there is a greater chance its pretty good.

You could always slop some material on a camera and then come back a week later to see if they have cleaned it. If not, then the system is probably not a good one.

Public transit is the worst environment for tracking people. Most systems are not integrated because they are so big and there are too many people and they then dissappear into the urban environment.

Many urban roads have an ITS ( Intelligent Transportation System) running which has #5 - that detects stalled vehicles and some types of debris. Some will detect people on the road, too. Some campuses and other installations will detect movement as well.

If you had to do something specific, then you can create blind spots a few days before by disabling the systems in a random matter to reduce focus on your area of interest. You can use lasers or high power LED lights to disable the cameras in real time but would need to test this before hand on models under your control. Some cameras are wireless and you can jam their signals. Others will PTZ ( Pan-Tilt-Zoom) on movement.

These systems are not the all-seeing eyes.

25574  DBMA Martial Arts Forum / Martial Arts Topics / Master done on: January 29, 2010, 11:27:37 AM
After much misadventure (wife sick over the holidays, editor sick for a goodly part of January, etc.) the master disc for DLO 3 is now at long last finally DONE.  Today we choose a picture for the cover and I write the copy for the back.  We are getting very close , , ,
25575  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Re: Stock Market on: January 29, 2010, 11:11:12 AM
See my post today on the "Fascism, Liberal Fascism" thread.
25576  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Little Rock AK attack by AQAP? on: January 29, 2010, 11:09:40 AM
On Jan. 12, Abdulhakim Mujahid Muhammad (aka Carlos Bledsoe), the man who allegedly shot and killed a U.S. soldier and wounded another outside a Little Rock, Ark., recruiting center in June 2009, wrote a letter to the judge in his case admitting his guilt and requesting to change his plea from innocent to guilty. In the letter, Muhammad also said he has ties to al Qaeda in the Arabian Peninsula (AQAP) and that he is part of “Abu Basir’s Army.” (Abu Basir is the honorific name, or kunya, for Nasir al-Wahayshi, the current leader of AQAP.)

If his claims are true — which is entirely possible — this is yet another example of AQAP striking targets far from Yemen and the Arabian Peninsula.

A Tennessee native and recent convert to Islam, Muhammad left Tennessee State University in September 2007 to travel to Yemen to learn Arabic and teach English. He was arrested in the southern Yemen city of Aden in November 2008 for overstaying his visa and was subsequently deported back to the United States months prior to the Arkansas attack.

Judging from Muhammad’s statement — which also claims, “this was [a] jihadi[st] attack on infidel forces that didn’t go as plan[ned]” — he appears to be a militant who undertook the type of “simple attack” that al-Wahayshi called for in late October 2009 — shortly before the Fort Hood shooting. In the analysis STRATFOR wrote on al-Wahayshi’s call for simple attacks (which was published the day before the Fort Hood shooting) we discussed the Little Rock shooting as an example of how easy as it is to conduct simple attacks using firearms.

It is also important to remember that Umar Farouk Abdulmutallab, the perpetrator of the failed Christmas Day 2009 airline bombing, also was linked to AQAP. That attack demonstrated AQAP’s interest in targeting the United States, further supporting the premise that Muhammad could be linked to the group.

Considering the timing of the attacks and documented links between Fort Hood shooter Maj. Nidal Hasan and Anwar al-Awlaki, a cleric who has been linked to AQAP, it will be even more important for the government to attempt to determine if both Hasan and Abdulmutallab were also a part of “Abu Basir’s army.”
25577  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Burqa bans coming? on: January 29, 2010, 11:02:37 AM
French proposals for a burqa ban have been echoed in the Netherlands, Germany and Italy. The proposed bans, which come at a time of economic uncertainty, are popular across the European political spectrum. While such a ban would affect a very small minority of Muslims in continental Europe, it could spark Muslim ire in Europe and abroad.

German politicians from across the political spectrum called Jan. 28 for a French-styled ban on the Muslim face veil known as the niqab. The calls come just days after a Jan. 26 French parliamentary commission ruling in favor of a ban on the burqa, a garment that covers the entire body; the French ban also forbids wearing the niqab in public institutions. Voices in the governments of Italy and Denmark are joining calls for a similar ban, with Italian Minister for Equal Opportunity Mara Carfagna saying Jan. 27 that she was in absolute agreement with the French initiative, which she said will encourage other European countries to legislate on the issue.

A small minority of Muslim women in Europe wear the niqab, and even smaller minority wears the burqa. Even so, the ban is becoming a symbol of the opposition to what is seen as excessive Muslim immigration to Europe.

Calls for a “burqa ban” are not new in France. French President Nicolas Sarkozy asked parliament to form a commission to consider the issue in June 2009, and the topic has been debated for years. With the negative consequences of the economic crisis in full swing across Europe and with regional elections scheduled for March in France, the burqa ban has returned to the forefront.

Calls for such a ban represent an easy way to score political points during a time when Europeans are worried about job and economic security, which explains why the debate in France has so quickly traveled to other European states. They follow the recent ban in Switzerland on the building of minarets, which was also picked up across Europe by various right-wing politicians as a useful way to score political points.

Burqa bans also appeal to the left, however. The left often sees the burqa and the niqab as an affront to women’s rights and personal dignity. In Germany, for example, the liberal Free Democratic Party, part of the current ruling coalition, favors some sort of a ban.

More broadly, widespread calls for policies like the burqa ban underlie growing native European resentment against Muslim immigrants. These resentments historically have become more intense and more accepted during times of economic crises — like the one under way in Europe.

How Muslims inside and outside Europe react to the growing resentment of Muslims within Europe remains an open question. The 2005 Danish cartoon controversy taught that such sensitive matters can whip up antagonism throughout the Muslim world. So far, the burqa ban debate has not had such an effect on Europe’s Muslim population, but a widespread European campaign to ban the niqab — which is more common than the burqa — could be interpreted as widespread anti-Muslim discrimination and invite a violent reaction in Europe and abroad. A possible mitigating factor is that while there was little argument among Muslims regarding the offensiveness of the cartoons caricaturing the prophet, many in the Muslim community — especially the European Muslim community — do oppose the niqab and burqa.
25578  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Iran on: January 29, 2010, 10:58:52 AM
second post

Iran’s To-Do List
WITH JUST A LITTLE UNDER TWO MONTHS to go before post-Baathist Iraq holds its second round of elections, Iraq’s Sunnis are being pushed into an all-too-familiar corner by Iran’s political allies in Baghdad. A Shiite-led government commission in Iraq is currently examining a list of 511 Sunni politicians who, depending on the commission’s final decision, could be deemed too Baathist to be considered eligible to participate in the elections. Meanwhile, in the Iraqi Shiite holy city of Najaf, the provincial council has ordered the expulsion of Sunni Baathists from the city. Any remaining Baathists, according to the local council, would face “an iron hand.”

This is quite disconcerting for the United States. The last time Iraq’s Shiite faction attempted to cut Iraq’s Sunnis out of the political process was in 2003 under a highly controversial debaathification policy that essentially drove the Sunnis toward insurgency as a means of regaining political power. At that time, the Iranians had a golden opportunity at hand: the fall of Saddam Hussein meant the door was wide open for Iran to establish a Shiite foothold in the heart of the Arab world. After initially facilitating the U.S. invasion of Iraq, Tehran spent the next several years working on locking down Shiite influence in Baghdad. Iran did so with the help of its political, intelligence, economic and militant assets, but was also greatly aided by the nuclear bogeyman.

Throughout the Iraq war, STRATFOR watched as Iran used its nuclear program as a bargaining chip with the United States to consolidate influence over Iraq. This isn’t to say that the Iranians were never seriously interested in a nuclear weapons program. Indeed, such a program would be a welcome insurance policy and status symbol for the Iranian regime. But Iran’s nuclear ambitions ranked second on its priority list. Iran’s primary goal was always Iraq, Iran’s historic rival.

“By creating a nightmare scenario for the United States in Iraq, Iran effectively multiplies the value of its cooperation to Washington.”
Roughly seven years later, Iran is now ready to move down that list of priorities. In the weeks leading up to the Iraqi elections, STRATFOR has seen our forecast of Iran’s power consolidation in Iraq come to fruition. The Iranian incursion and seizure of the al Fakkah oil well in southern Iraq was the first warning shot to the United States, followed by some very obvious signs that Iraqi Prime Minister Nouri al Maliki — long known for keeping his distance from Tehran -– was beginning to align with Iran’s political allies in Baghdad. In a diplomatic slap to Washington’s face, al Maliki’s spokesman Ali al Dabbagh said Tuesday that U.S. attempts to intervene in the Iraqi political process to save a place for the Sunnis in the government would “not achieve anything.” The message Tehran is telegraphing to Washington is clear: Iran –- not the United States — holds the upper hand in Iraq.

With Iraq under its belt, Iran can now afford to focus on its next objective: nuclear weapons. But this particular agenda item carries a load of complications for Tehran, the most obvious of which is the threat of a pre-emptive U.S./Israeli strike on its nuclear facilities.

In a shifting of priorities, Iran is now effectively using Iraq as a bargaining chip with the United States in its nuclear negotiations. Iran can see how desperately the United States needs to disengage from Iraq to tend to other issues. The threat of a major Sunni insurgency revival could run a good chance of throwing those withdrawal plans off course. Iran can also see how the United States, with its military focus now on Afghanistan, is no longer in a position to provide the same security guarantees to the Sunnis as it could at the height of the 2007 surge. Therefore, by creating a nightmare scenario for the United States in Iraq, Iran effectively multiplies the value of its cooperation to Washington.

As intended, this leverage will prove quite useful to Tehran in its current nuclear tango with the United States. If the United States wants to avoid a major conflagration in Iraq, then, according to Iran’s agenda, Washington is going to have to meet Tehran’s terms on the nuclear issue and give serious pause to any plans for military action. Iran has already made this clear by officially rejecting the West’s latest proposal to remove the bulk of its low-enriched uranium abroad. Some might call this defiance, others might call it overconfidence, but at its core, this is a negotiation and Iran still holds a lot of cards.
25579  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Fascism, liberal fascism, progressivism: on: January 29, 2010, 10:55:48 AM
Secretary of the Treasury under Clinton: Robert Rubin of Goldman Sachs
                                    under Bush:  Henry Paulsen of Goldman Sachs
                                    under BO:  Timothy Geithner of Goldman Sachs

From a recent email conversation:

"The real reason that AIG was bailed out was very simple.  All Swap sellers had special terms in their contracts that could be adverse to the Wall Street buyers.  AIG did not have these terms in their agreements at the "request" of Goldman Sacs.  Goldman ran all their Swaps through AIG.  And that is.............the rest of the story."

"I am sorry-- this went over my head a bit.  May I ask you to flesh this out?"

"I have to find the original article again, but here is the essence of it:

"Goldman Sachs demanded that one condition be placed in their Swaps that other firms did not demand.  As a result, Goldman used AIG most of the time.  If AIG had failed, then Goldman could never collect on the Swaps.  As well, when GS securitized loans, there were hundreds of millions of dollars in each pool.  Some went over one billion. The loans were sold to the investors, mutual funds, hedge funds, etc. These loans were headed for failure from Day One.
GS, after selling the loans, immediately took out Swaps on these pools.  They did not have to own the pools or loans to take out a SWAP.  I could even do it.  GS knew the loans would fail, so they took out the Swaps, betting against the loans and knowing that they would make significant amounts of money when the loans failed. GS would buy a Swap, say $20m, and then they would at times sell the Swap to other buyers.......for $40m.  Other times, they kept it, based upon the Pool.  GS was the biggest crook in all of this.  It was criminal what they did.  Yet Timmie and Paulie are covering for them.

"This will eventually come out, in about a decade or so.  Someone will write the definitive book on this. I would, but I would need someone from the Securitization side who understands this part much better than I do.  Actually, I have guy in mind who could do that.  He was former FDIC in the S&L crisis, and led the response team to bailing out banks then.  I am working with him on another project and it might be something to team up with him on the book."               
25580  Politics, Religion, Science, Culture and Humanities / Politics & Religion / USMC Sgt Proietto on: January 29, 2010, 10:45:02 AM
Profiles of Valor: U.S. Marine Corps MGySgt Peter Proietto
United States Marine Corps Master Gunnery Sergeant Peter Proietto was serving in Afghanistan when, on March 12, 2003, his patrol was ambushed by Taliban fighters. As the other Marines in the forward element of the patrol sought cover, Proietto stayed in position -- exposed to enemy fire though he was -- in order to provide suppressive fire for the protection of his comrades.

ProiettoAs the firefight continued, Proietto bravely stayed at the machine gun atop his unarmored vehicle on an open road. The Team Sergeant advised him to leave that position for cover, but he stayed and fired on the enemy for almost an hour until he ran out of ammunition. When the ammunition was gone, he grabbed his M4 carbine and continued to engage the enemy. Soon, the Taliban were pushed from their positions. For his actions, Proietto received the Bronze Star with combat "V" for valor. His citation says he "displayed himself in a courageous professional manner and his heroic and immediate response to enemy fire and willingness to jeopardize his own safety to provide supporting fire for the rest of the team demonstrated a level of dedication to the mission and his fellow soldiers, which is rarely surpassed."
25581  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Stratfor: Russia-Georgia on: January 29, 2010, 08:55:35 AM
January 27, 2010 | 2219 GMT

Zurab Nogaideli in July 2006The leader of Georgian opposition party the Movement for a Fair Georgia, former Prime Minister Zurab Nogaideli, said Jan. 26 that his party would like to form a partnership with United Russia, the ruling party in Russia led by Prime Minister Vladimir Putin. Nogaideli stated that “previous experience has shown that this kind of cooperation works,” adding that his recent visits to Moscow resulted in the release of detained Georgian teenagers from the breakaway region of South Ossetia as well as a resumption of civilian flights between Georgia and Russia.

Nogaideli’s proposal is indicative of a growing movement within the Georgian opposition that favors a more pragmatic and workable relationship with Russia than the strongly pro-Western and anti-Russian stance of Georgian President Mikhail Saakashvili. While Saakashvili has grown increasingly unpopular among the Georgian public ever since the August 2008 Russo-Georgian war, the country’s opposition has been largely fractured, split between 14 or more parties unable to pose a united front against Saakashvili. That may now be changing, as significant elements of the opposition have seen the writing on the wall in Ukraine and have begun to rally around Nogaideli and his proven record of being able to work with the Russians.

A partnership between the Georgian opposition and the Russian ruling party, by far the most dominant political force in Russia, would be an unprecedented move. While United Russia has yet to respond officially to Nogaideli’s request, the very fact that it was made undoubtedly is pleasing to Moscow (and unpleasant to Saaskashvili). There will be much to discuss on Nogaideli’s upcoming trip to Moscow to meet with Putin in February.
25582  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Pension funds leveraging bonds? on: January 29, 2010, 08:09:24 AM

This sounds really unpromising , , ,
25583  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Washington, 1790; Justice Joseph Story on: January 29, 2010, 07:57:45 AM
"[A] good moral character is the first essential in a man, and that the habits contracted at your age are generally indelible, and your conduct here may stamp your character through life. It is therefore highly important that you should endeavor not only to be learned but virtuous." --George Washington, letter to Steptoe Washington, 1790

"The duty imposed upon him to take care, that the laws be faithfully executed, follows out the strong injunctions of his oath of office, that he will 'preserve, protect, and defend the constitution.' The great object of the executive department is to accomplish this purpose; and without it, be the form of government whatever it may, it will be utterly worthless for offence, or defence; for the redress of grievances, or the protection of rights; for the happiness, or good order, or safety of the people." --Justice Joseph Story
25584  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Germany and Iran on: January 28, 2010, 11:22:07 PM
Obama Silent on Iran, Merkel Picks up the Slack
U.S. PRESIDENT BARACK OBAMA presented the nation with his first ever State of the Union address on Wednesday. The speech focused almost entirely on domestic affairs, revealing the world’s sole superpower to be wholly engrossed in domestic politics and economic concerns. Barely one out of the approximately 16 and a half pages of the address looked beyond U.S. shores. There were no profound challenges to U.S. rivals as we have seen in previous speeches.

Geopolitically speaking, a global hegemon preoccupied with domestic concerns is significant in and of itself. Simply put, it means that its challengers can take note of the acrimonious political debates on the home front and hope to catch America distracted on a number of global issues. One such front is Iran, where the United States is engaged with its Western allies in trying to prevent Tehran from developing a nuclear weapon. There was barely a mention of Iran in Obama’s State of the Union, aside from a fleeting reference to “growing consequences.” But this does not mean that Wednesday carried no developments on the issue of Iranian nuclear ambition; it just means that they did not occur in Washington.

We therefore turn to Berlin where German Chancellor Angela Merkel made her most forceful statement to date on the question of sanctions against the Iranian regime. Standing next to Israeli President Shimon Peres on Tuesday, Merkel said, “Iran’s time is up. It is now time to discuss widespread international sanctions. We have shown much patience and that patience is up.”

Tehran responded to the change in tone almost immediately, issuing a statement through the Iranian Deputy Minister of Intelligence on Wednesday that claimed that two German diplomats were involved in the December Ashura anti-government protests in Iran and were promptly arrested. The statement further alluded that “Western intelligence networks” were responsible for the protests. This leads one to wonder if Tehran was publicly linking the protests and covert activity on the part of the German government.

The spat between Iran and Germany makes for some interesting geopolitical drama. First, Germany’s relationship with Iran is not a recent phenomenon. Historically, Germany has always felt more comfortable expanding via the continental route. For example, it attempted to use the Berlin-Istanbul-Baghdad-Tehran path to compensate for its inability to break through the Skagerrak Strait and into the Atlantic due to the presence of the British navy. Furthermore, arriving late to the colonial game, Germany looked to expand its influence in the Ottoman and Persian territories where local rulers saw Berlin as a benign European power due to its status as the challenger nation.

“The spat between Iran and Germany makes for some interesting geopolitical drama.”
Fast forward to today. Tehran has relied on Germany as one of its most consistent supporters in the West. German businesses, particularly in the heavy industrial sector, exported nearly $6 billion worth of goods in 2008, a marked increase from barely $1 billion in 2000, especially considering the worsening relations between Tehran and the rest of the West’s powers. While trade with Iran only makes up around 0.4 percent of total German exports — on par with Berlin’s exports to Slovenia — industrial giants such as ThyssenKrupp and Siemens do a lot of business with Tehran, particularly in the steel pipe sector. Exports of steel pipe to Iran make up a sizable 18 percent of total global German exports of that particular sector and are valued at around $400 million, a sum Germany cannot ignore amidst rising unemployment and uncertain economic times.

As such, Germany has repeatedly looked to avoid cracking down on Tehran, keeping sanctions language constrained to the United Nations arena where it is clear that no progress can be made without a change in Russian and Chinese positions. However, Merkel’s comments seem to suggest that change may actually be afoot. This is particularly true when one puts them in the context of the announcement from Siemens on Wednesday that it plans to cut future trade relations with Iran, and by Hamburg-based ports company HHLA that it will cancel its planned agreement to modernize Iran’s Bandar-Abbas port. It should be noted that both companies have close ties to the German state.

To explain Germany’s change in tone we can point to two factors. One is increased pressure from the United States. STRATFOR sources have reported that German banks were facing up to $1 billion in fines from the United States for doing business with Iran. German banks — which are already hurting from the economic crisis and are almost certain to experience more pain in 2010 — are key in financing German exporters. A crackdown on their operations would have effectively forced them to stop providing credit to any business intending to export to Tehran. The second pressure came from Israel, whose intelligence services have close ties to German intelligence services, and whose entire Cabinet held a joint session with German intelligence officials last week. President Peres also came to Berlin to commemorate the 65th anniversary of the liberation of Auschwitz, not the time for Berlin to eschew cracking down on Tehran’s Holocaust-denying government. The image of modern Germany being a friend to the state of Israel is very important to Berlin.

Merkel may have ultimately decided that with the elections in Germany behind her, the time to protect businesses in the face of American and Israeli pressure was over. On the other hand, she may have calculated that changing her tone on Iran would save German businesses that export to Tehran because the United States would then not crack down on banks that deal with export financing.

Whatever Berlin’s reasoning may be, it is important for us to determine whether it is merely a change in tone or a concrete change of policy. It is therefore going to require a careful study of Berlin’s moves in the coming weeks as the approaching February deadline — set by the international community for Tehran to comply with demands on its nuclear program — reveals just how serious Merkel is and whether she is willing to impose sanctions against Iran without a U.N. agreement. If Germany is serious about enforcing sanctions against Iran, it will place concrete pressure on Tehran, the kind of pressure that an entire U.S. State of the Union address dedicated to the Iranian nuclear program would not have been able to bear.
25585  Politics, Religion, Science, Culture and Humanities / Politics & Religion / A thought piece on: January 28, 2010, 04:46:18 PM
Broke? Blame The Government
Brian S. Wesbury and Robert Stein, 01.26.10, 12:01 AM EST
The private financial system didn't cause the recession.
Last week President Obama announced a new set of policies to deal with financial institutions that are "too big to fail." While a debate about too-big-to-fail institutions and policy is important, a more critical set of issues is being ignored.

First the Federal Reserve should have followed a rule for monetary policy, such as using the growth rate of nominal gross domestic product to guide short-term rates, or a gold standard, or the Taylor rule. If they had, the federal funds rate never would have been cut to 1% in 2003 and housing over-investment would have been either nonexistent or much less damaging.

Second, if mark-to-market accounting rules had not been re-instituted in late 2007, loan problems would have never spread as far or as fast as they eventually did in 2008. Mark-to-market accounting rules are pro-cyclical in the extreme--there is a reason FDR got rid of them in 1938. These accounting rules--which require banks to price assets to illiquid market bids, even when cash-flows are unimpeded--turn a problem in the financial system into a catastrophe.

The banking crisis of the early 1980s, also largely created by easy Fed policy, had more loan losses than the beginning of the 2007-08 crisis. Adding the early '80s bad debts in agriculture, oil and Latin America to those of the Savings & Loan Industry created bank losses of roughly 6% of GDP. Subprime and Alt-A loan losses in 2007 were roughly 4% of GDP. But once mark-to-market accounting started to accelerate, even those smaller losses undermined confidence and created a vicious feedback loop which put the system in jeopardy. While some argue that it is too-big-to-fail institutions that create systemic risk, it's really misapplied government action and policy that creates this risk.

Government action and reaction is why a large (but nonlethal) set of banking losses spread so rapidly and turned into the Panic of 2008.

Instead of suspending mark-to-market accounting rules in 2008 the Fed, Treasury, SEC and FDIC arbitrarily saved certain firms while allowing others to fail. The crisis accelerated after Lehman Brothers ( LEHMQ - news - people ) collapsed, which then led to more government bailouts. Instead of allowing banks to value loans using cash-flow, the government forced these loans to be priced to illiquid market prices. When this put institutions in technical violation of arbitrary capital requirements, Treasury Secretary Hank Paulson forced these banks to swallow TARP money and accept government ownership.

Many conservatives, who profess to believe in free markets, supported these government actions. In a de facto sense this support for government bailouts created a vacuum in Washington. People say, "If conservative Republicans supported emergency bank bailouts, then John Maynard Keynes must have been right. The free market system is inherently unstable. We need the government to save us from the animal spirit of greed." There are few left to defend free markets.

But Keynes wasn't right. It was government that caused the Panic of 2008, not the private financial system. If government had run a stable monetary policy and hadn't artificially boosted housing or enforced a dumb accounting rule, the Panic of 2008 would not have happened. Unfortunately, many leading conservatives do not see the world this way. They panicked in 2008 and supported government bailouts. This leaves them with little firm ground to stand on when debating the merits of more government action against banks.

With any luck, creative politicians can figure out how to circumvent this political stumbling block and focus on fixing the real problems of the financial crisis. Following a price rule for monetary policy would minimize the potential for bubbles, while suspending mark-to-market accounting would end the potential of a crisis spinning completely out of control.

Brian S. Wesbury is chief economist and Robert Stein senior economist at First Trust Advisors in Wheaton, Ill. They write a weekly columnfor Forbes. Brian S. Wesbury is the author of It's Not As Bad As You Think: Why Capitalism Trumps Fear and the Economy Will Thrive.

25586  Politics, Religion, Science, Culture and Humanities / Politics & Religion / WSJ: Fannie and Freddie on: January 28, 2010, 01:25:11 PM
The Congressional Budget Office has lopped $20 billion off its estimate of the cost of keeping Fannie Mae and Freddie Mac afloat for the next decade—to a mere $79 billion. That will have to pass for good news, even if the estimate comes loaded with caveats. The bigger story is why the White House continues to keep these wards of the state off-budget.

As the CBO notes in a recent background paper, the standards for when to include government-sponsored entities in the budget go back to the 1960s, when a Presidential commission laid out a set of questions.

To wit: "Who owns the agency?" (In the case of Fan and Fred, taxpayers.) "Who supplies its capital?" (Taxpayers.) "Who selects its managers?" (The federal government.) And finally, "Do the Congress and the President have control over the agency's program and budget, or are the agency's policies the responsibility of the Congress or the President only in some broad ultimate sense?" (The feds have control in every sense.)

Since Hank Paulson placed them in conservatorship in September 2008, Fan and Fred have stopped even pretending to be run for profit. Losses have mounted accordingly: Some $291 billion for taxpayers through 2009, $48 billion for the cost of new business in 2009 alone, and $21 billion more this year. Last August, CBO estimated the 10-year cost to taxpayers of keeping Fannie and Freddie afloat at $389 billion.

Yesterday's estimate reduces that by some 5%, but this assumes the companies will stabilize at a loss rate of nearly $8 billion a year on average over the next decade. CBO bases its projection on an expectation that the housing market will "normalize" as the recession ends. However, there is no more normal in a housing market that now depends almost entirely on government subsidies. The full cost of subsidizing mortgages via Fannie and Freddie, the FHA and Ginnie Mae remains hidden and off the official balance sheet, so there is little political pressure to stop the losses.

As the CBO notes, Fannie and Freddie "purchase mortgages at above-market prices," driving down interest rates and passing some of the savings to home buyers. That subsidy is felt right away, but the risks in providing it are stored up over time, and their real costs may not be felt for years or even decades—as was the case in the years leading up to their spectacular collapse in 2008.

Yet this is precisely the fiction that the Obama Administration seeks to preserve by keeping the cost of Fan and Fred off the government's books. The Administration's budget accounting assumes Fannie and Freddie are private companies. So under its preferred treatment, the only recognized cost to taxpayers is the money that is being pumped in to keep them afloat—$110 billion so far.

That's plenty as it is, but in the wake of their government takeover, there is no justification for pretending that their risks aren't taxpayer risks. This is all the more true with the likes of New York Senator Chuck Schumer giving the companies marching orders to rescue tenants in the Stuyvesant Town development in Manhattan.

We suspect the real reason the White House wants Fan and Fred off budget is to disguise their real costs to taxpayers. They have become off-the-books subsidy engines for the housing lobby, and it is easier to push off the recognition of their losses to some future Administration and Congress rather than pay for them today. The new age of transparency has once again died aborning.
25587  Politics, Religion, Science, Culture and Humanities / Politics & Religion / SoCal Kaiser votes out SEIU on: January 28, 2010, 01:09:56 PM
The LA Times reports today that Kaiser Permanente health care workers have voted themselves out of SEIU by a 6 to 1 margin.  They are aligning with a break-away faction National Union of Health Care Workers.
25588  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Political Economics on: January 27, 2010, 10:08:32 PM
I remember how the Reagan rate cuts were phased in over three year.  Laffer predicted huge growth kicking in as the final lowest rate kicked in.  Monetarist Milt Friedman, reading his monetary tea leaves predicted quite the contrary.  Laffer was proven right. 

I think his analysis is dead on here unless BO dramatically reverses course.
25589  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: We the Well-armed People on: January 27, 2010, 08:51:25 AM

As I am sure you already know, the real reason a big deal is made of this though is part of the deep plan to subvert US C'l gun rights via international treaty.
25590  Politics, Religion, Science, Culture and Humanities / Politics & Religion / US teams and intel deeply involved on: January 27, 2010, 08:49:41 AM
25591  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Artillery fire exchanged on: January 27, 2010, 08:38:26 AM
25592  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: We the Well-armed People on: January 27, 2010, 08:32:48 AM
I believe the great majority of the Mexican issue to be a red herring.  The armaments used by the gangs are not available to civilians in America.  Just as the Zetas were originally trained by the US govt, so too automatics, grenade launchers and the like are available only from govts-- including the Mexican govt.  The Mexican army is IMHO a major source of the arms purchased by the narcos.
25593  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Political Economics on: January 27, 2010, 08:26:49 AM
Abolish the Dept of Education and leave education to the States.

Abolish the Dept of Agriculture

Abolish the NEA (Nat. Endowment of the Arts)

Gradually raise the age for Soc. Security.  When the age of 65 was set the average lifespan was 68.  Now its somewhere around 80.

Super important:  Abolish the Orwellian fiction/fraud called "baseline budgeting" and require govt to use the same accounting principles as everyone else.   Under BB reductions in the rate of increase are called "cuts" even though more money than the year before is being spent.  Until we do this, I fear we will always lose the current game of Three Card Monte.
25594  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Our Troops in Action on: January 27, 2010, 08:20:30 AM
25595  DBMA Martial Arts Forum / Martial Arts Topics / Re: Movies/TV of interest on: January 27, 2010, 07:48:58 AM
Bless you for the thought but I caught and paused it at 1:59 and what I see there is an X-block against an icepick attack.
25596  Politics, Religion, Science, Culture and Humanities / Politics & Religion / WSJ: Du Pont-- the coming tax increases on: January 26, 2010, 11:35:32 AM
Weather-wise it has been a very cold January, and politically the Scott Brown Senate victory has chilled Washington even further for Democrats. But if the Democratic economic policies continue nevertheless, this year will be nothing like the bitter economic January we will be living in a year from now.

Government spending has already hugely increased, and so has the size and scope of government, but next year there will also be substantial tax increases for a great many Americans. The first reason will be the expiration of the Bush tax cuts . The top personal income tax rate will rise next Jan. 1 to 39.6% from 35%, a hike of nearly one-eighth. The dividend tax rate will rise to 39.6%, more than 2½ times the current 15%. And the capital gains tax rate will rise by a third, to 20% from 15%. If the House health care bill had passed, all three of these rates would have risen to 45%.

The estate tax, which fell to zero this year under the Bush tax cuts, will return in 2011--or sooner, if Congress acts to restore it. Another likely tax increase will be on the income of private equity and hedge-fund managers, from the capital gains rate of 15% to the new higher income tax rates. It has already been passed by the House and is supported by the Obama administration, as is an additional 10-year, $90 billion tax on banks aimed at "rolling back bonuses for top earners." It would affect some 50 banks, insurance companies, and large broker-dealers.

Meanwhile a number of last year's tax deductions have disappeared due to the failure of Congress to extend them into this year. The tax deduction for state and local sales taxes is one; the deduction for college tuition and fees is another; and the 50% write-off for small businesses for capital purchases--equipment, machinery or building a new plant--has disappeared as well, which will have a negative effect upon the construction of new business operation facilities.

Add on to all of these increases the biggest government deficits and spending increases (to 26.5% of gross domestic product from 21%) in half a century, the protectionism of free trade downsizing through the "buy American" requirements, China import restrictions, and the administration limitations of Columbia, South Korea, and Panama free trade agreements, and we have a very different, and not very prosperous, America ahead of us.

Or as economist Arthur Laffer wrote in his January Economic Outlook, we "cannot have a prosperous economy when government is overspending, raising tax rates, printing too much money, over-regulating and restricting the free flow of goods and services across national boundaries." We are, in his words, simply "moving in the wrong direction."

But what Mr. Laffer sees as most important is a substantial American economic collapse coming to us in 2011. His reasoning is simple and sensible: the impending 2011 tax increases will lead Americans to get their incomes into this year and pay the current lower tax rates. That will mean a 2010 GDP growth 3% to 4% higher than it otherwise would have been, and that will look very good.

But when the huge tax-increase agenda arrives a year from now, the economy will begin to decline, and will be some 3% to 4% smaller than it otherwise would have been. The artificially high growth in 2010 followed by artificially low growth in 2011 would "represent a larger collapse than occurred in 2008 and early 2009," Mr. Laffer writes.

He also points out that there is a four- to eight-month gap between market performance and economic performance. Indeed, the market has often reflected good or bad tax news four to eight months ahead of their impact on the economy. We historically saw that after the Harding tax cuts (1922), the Smoot-Hawley tariff bill (1929), the Kennedy tax cuts (1963) and the Reagan tax cuts of 1983. If this pattern repeats, we could see the market begin to deteriorate sometime in the summer or fall of this year.

In modern times the Kennedy, Reagan and George W. Bush tax rate reductions helped spur economic growth. the Obama tax rate increases will have the opposite effect. Americans headed to the polls this fall, worried about the increasing size and spending of the federal government, possibly a falling market, and next year's looming tax increases, may reproduce next November the voter revolt we saw in the 1994 congressional elections. That led to a Democratic presidency and a Republican Congress, which together were better for the American people than the full-scale liberalism we see in the current administration.
25597  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Madison: VA Ratification Convention 1788 on: January 26, 2010, 11:13:40 AM
"There are more instances of the abridgment of the freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpations." --James Madison, speech to the Virginia Ratifying Convention, 1788
25598  Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Complaining to God on: January 26, 2010, 10:49:16 AM
By Tzvi Freeman

When Moses saw things backfired in Egypt, he complained to G‑d, "Why have you done bad to these people? From the time You sent me, things have gotten worse instead of better!"

Didn't G‑d know that things had gotten worse? Isn't G‑d aware of what's going on in His world? Why does He need Moses to tell him?


G‑d sees all and knows all. But sometimes you need a report from down on the ground.

Here's an example: As a music composition major at the University of British Columbia (had a great faculty at the time), I set myself the task of writing a string quintet. With lots of help from my mentor, I toiled for months to come up with an original piece of complex counterpoint and clean form. Eventually, it won first place in its category in a provincial festival of the arts.

I recall vividly the morning that we first placed the sheet music in front of the quintet. This was in the days before instrument synthesizers, so I had heard nothing until now except whatever could be duplicated on the piano, plus the constructions of my own mind. As you can imagine, it was hard to keep my seat from shaking across the floor as my music came alive before me.

Then the double-bass player stopped the rehearsal. He took out his pencil and started changing some of the notes. I almost leaped at his neck, but my mentor grabbed my arm. I could see he was reading my very loud thoughts: "A chutzpah! The counterpoint is perfect! It's all been checked by my professors. The form is exquisite--I spent months on this! He thinks he knows the intent of the composer better than the composer himself!"

"They do that," he said. "And they're usually right. It's different when you're playing from the inside."

G‑d has two views of reality. One is the grand view from above. From there, the ugliness blends with its context to create even greater beauty. All is exquisite and ideal, a perfect whole.

Then He has the view from within. Within time, within space, within the confines of a flesh body that cringes at pain and is outraged at suffering; a view for which the now is more real than a thousand years of the future. The view not of the Composer, but of those who must play the music. And sometimes, what looks magnificent from above, is the pits from within.

Both views are true. Both views are G‑d.

In the Torah, the view from above is presented in G‑d's voice. G‑d's view from within is presented in the voice of Moses. The two come together to compose the ultimate truth of Torah.

Moses was simply practicing a common Jewish habit: Kvetching to G‑d. We call it prayer. It's the pencil granted us by the Composer. We preface our prayer with the verse, "G‑d, open my lips, that my mouth may speak Your praise." We ask, in other words, that our prayers should be the words of G‑d from within, speaking to G‑d as He stands above.
25599  Politics, Religion, Science, Culture and Humanities / Politics & Religion / WSJ on: January 26, 2010, 09:01:38 AM
The attempted Christmas Day destruction over Detroit of Northwest Flight 253 by Umar Farouk Abdulmutallab is fading from public memory as a fortunate near-miss. This incident should not fade from view. As more information emerges, the picture it paints about the antiterror mindset of the current U.S. government is—there is no other word—scary.

Last week in these columns, we discussed Director of National Intelligence Dennis Blair's Congressional testimony on the Abdulmutallab case. This was Mr. Blair's famous "duh" remark about the government's failure to invoke the new High-Value Detainee Interrogration Group (HIG) to question Abdulmutallab. A remarkable Associated Press story this past weekend makes clear that "duh" was mainly another word for disgust inside the intelligence bureaucracy over what happened that day in Detroit.

Here, compressed, is AP's account of how Abdulmutallab was handled after the plane landed. Read it and weep.

He was taken to the hospital by U.S. Customs agents and local cops, to whom he babbled that he was trying to blow up the plane.

View Full Image

Associated Press
Umar Farouk Abdulmutallab
.Agents from the FBI's Detroit bureau were called in about 2:15. He "spoke openly" and admitted he was from al Qaeda in Yemen. Under a Miranda exception meant to let officials find out fast if another bomb is imminent, the agents didn't issue the standard self-incrimination warning. He talked for 50 minutes. Then, to let the suspect's medications wear off, the interrogators stopped.

Five hours later, the FBI in Washington said it wanted a new interrogation team to do a second interview. This new group of FBI interrogators is called a "clean team."

The AP explains: "By bringing in a so-called 'clean team' of investigators to talk to the suspect, federal officials aimed to ensure that Abdulmutallab's statements would still be admissible if the failure to give him his Miranda warning led a judge to rule out the use of his first admissions . . . . In the end, though, the 'clean team' of interrogators did not prod more revelations from the suspect."

After he was rested and revived, Abdulmutallab was given his Miranda warning. He never said another thing.

On "Fox News Sunday," Chris Wallace asked White House Press Secretary Robert Gibbs whether the President was told that Abdulmutallab was Mirandized after only 50 minutes of interrogation. Mr. Gibbs said the decision was made "by the Justice Department and the FBI" and insisted they got "valuable intelligence."

This is awful. This talky terrorist should have been questioned for 50 hours, not 50 minutes. More pointedly, Abdulmutallab should not have been questioned by local G-men concerned principally with getting a conviction in court. He should have been interrogated by agents who know enough about the current state of al Qaeda to know what to ask, what names or locations to listen for, and what answers to follow up. The urgent matter is deterring future plots, not getting Abdulmutallab behind bars.

It gets worse. Appearing before Congress last week, FBI Director Robert Mueller admitted that the HIG group essentially doesn't even exist yet. They haven't pulled it together.

Recall that in August Mr. Obama announced the intention to create a multi-agency HIG, transferring lead responsibility for interrogations away from the CIA and into the FBI, with techniques limited to the Army Field Manual.

And worse. As a Wall Street Journal account of last week's Senate Judiciary hearings noted, the HIG team is intended only for interrogations overseas; the Administration hasn't decided whether to use it domestically. In any event, that's moot until there is an HIG team.

We hope the appropriate committees of Congress do not let this drop, for many obvious reasons. We'll make one point:

Ultimately, the national security bureaucracies take their signals from the top. In August Mr. Obama and Attorney General Eric Holder made it clear that their war on terror would be fought inside the framework of Miranda and the civilian justice system. Before Justice ordered him Mirandized, would-be suicide bomber Abdulmutallab thus gave us 50 minutes in the mortal war against al Qaeda.

It has to get better than this. But it won't unless the President throws his weight publicly behind the officials who want to make it better than this.
25600  Politics, Religion, Science, Culture and Humanities / Politics & Religion / Also posted in the Ukraine thread on: January 26, 2010, 08:52:46 AM
Ukraine's Election and the Russian Resurgence
January 26, 2010

By Peter Zeihan

Ukrainians go to the polls Feb. 7 to choose their next president. The last time they did this, in November 2004, the result was the prolonged international incident that became known as the Orange Revolution. That event saw Ukraine cleaved off from the Russian sphere of influence, triggering a chain of events that rekindled the Russian-Western Cold War. Next week’s runoff election seals the Orange Revolution’s reversal. Russia owns the first candidate, Viktor Yanukovich, outright and has a workable agreement with the other, Yulia Timoshenko. The next few months will therefore see the de facto folding of Ukraine back into the Russian sphere of influence; discussion in Ukraine now consists of debate over the speed and depth of that reintegration.

The Centrality of Ukraine
Russia has been working to arrest its slide for several years. Next week’s election in Ukraine marks not so much the end of the post-Cold War period of Russian retreat as the beginning of a new era of Russian aggressiveness. To understand why, one must first absorb the Russian view of Ukraine.

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The Russian Resurgence
Since the break-up of the Soviet Union, most of the former Soviet republics and satellites found themselves cast adrift, not part of the Russian orbit and not really part of any other grouping. Moscow still held links to all of them, but it exercised few of its levers of control over them during Russia’s internal meltdown during the 1990s. During that period, a number of these states — Estonia, Latvia, Lithuania, Poland, Hungary, Romania, Bulgaria and the former Czechoslovakia to be exact — managed to spin themselves out of the Russian orbit and attach themselves to the European Union and NATO. Others — Azerbaijan, Georgia, Moldova, Uzbekistan, Kyrgyzstan and Ukraine — attempted to follow the path Westward, but have not succeeded at this point. Of these six, Ukraine is by far the most critical. It is not simply the most populous of Russia’s former possessions or the birthplace of the Russian ethnicity, it is the most important province of the former Russian Empire and holds the key to the future of Eurasia.

First, the incidental reasons. Ukraine is the Russian Empire’s breadbasket. It is also the location of nearly all of Russia’s infrastructure links not only to Europe, but also to the Caucasus, making it critical for both trade and internal coherence; it is central to the existence of a state as multiethnic and chronically poor as Russia. The Ukrainian port of Sevastopol is home to Russia’s Black Sea fleet, and Ukrainian ports are the only well-developed warm-water ports Russia has ever had. Belarus’ only waterborne exports traverse the Dnieper River, which empties into the Black Sea via Ukraine. Therefore, as goes Ukraine, so goes Belarus. Not only is Ukraine home to some 15 million ethnic Russians — the largest concentration of Russians outside Russia proper — they reside in a zone geographically identical and contiguous to Russia itself. That zone is also the Ukrainian agricultural and industrial heartland, which again is integrated tightly into the Russian core.

These are all important factors for Moscow, but ultimately they pale before the only rationale that really matters: Ukraine is the only former Russian imperial territory that is both useful and has a natural barrier protecting it. Belarus is on the Northern European Plain, aka the invasion highway of Europe. The Baltics are all easily accessible by sea. The Caucasian states of Armenia, Azerbaijan and Georgia are on the wrong side of the Caucasus Mountains (and Russia’s northern Caucasus republics — remember Chechnya? — aren’t exactly the cream of the crop of Russian possessions). It is true that Central Asia is anchored in mountains to the south, but the region is so large and boasts so few Slavs that it cannot be controlled reliably or cheaply. And Siberia is too huge to be useful.

Without Ukraine, Russia is a desperately defensive power, lacking any natural defenses aside from sheer distance. Moscow and Volgograd, two of Russia’s critically strategic cities, are within 300 miles of Ukraine’s eastern border. Russia lacks any natural internal transport options — its rivers neither interconnect nor flow anywhere useful, and are frozen much of the year — so it must preposition defensive forces everywhere, a burden that has been beyond Russia’s capacity to sustain even in the best of times. The (quite realistic) Russian fear is that without Ukraine, the Europeans will pressure Russia along its entire western periphery, the Islamic world will pressure Russia along its entire southern periphery, the Chinese will pressure Russia along its southeastern periphery, and the Americans will pressure Russia wherever opportunity presents itself.

Ukraine by contrast has the Carpathians to its west, a handy little barrier that has deflected invaders of all stripes for millennia. These mountains defend Ukraine against tanks coming from the west as effectively as they protected the Balkans against Mongols attacking from the east. Having the Carpathians as a western border reduces Russia’s massive defensive burden. Most important, if Russia can redirect the resources it would have used for defensive purposes on the Ukrainian frontier — whether those resources be economic, intelligence, industrial, diplomatic or military — then Russia retains at least a modicum of offensive capability. And that modicum of offensive ability is more than enough to overmatch any of Russia’s neighbors (with the exception of China).

When Retreat Ends, the Neighbors Get Nervous
This view of Ukraine is not alien to countries in Russia’s neighborhood. They fully understand the difference between a Russia with Ukraine and a Russia without Ukraine, and understand that so long as Ukraine remains independent they have a great deal of maneuvering room. Now that all that remains is the result of an election with no strategic choice at stake, the former Soviet states and satellites realize that their world has just changed.

Georgia traditionally has been the most resistant to Russian influence regardless of its leadership, so defiant that Moscow felt it necessary to trounce Georgia in a brief war in August 2008. Georgia’s poor strategic position is nothing new, but a Russia that can redirect efforts from Ukraine is one that can crush Georgia as an afterthought. That is turning the normally rambunctious Georgians pensive, and nudging them toward pragmatism. An opposition group, the Conservative Party, is launching a movement to moderate policy toward Russia, which among other things would mean abandoning Georgia’s bid for NATO membership and re-establishing formal political ties with Moscow.

A recent Lithuanian power struggle has resulted in the forced resignation of Foreign Minister Minister Vygaudas. The main public point of contention was the foreign minister’s previous participation in facilitating U.S. renditions. Vygaudas, like most in the Lithuanian leadership, saw such participation as critical to maintaining the tiny country’s alliance with the United States. President Dalia Grybauskaite, however, saw the writing on the wall in Ukraine, and feels the need to foster a more conciliatory view of Russia. Part of that meant offering up a sacrificial lamb in the form of the foreign minister.

Poland is in a unique position. It knows that should the Russians turn seriously aggressive, its position on the Northern European Plain makes it the focal point of Russian attention. Its location and vulnerability makes Warsaw very sensitive to Russian moves, so it has been watching Ukraine with alarm for several months.

As a result, the Poles have come up with some (admittedly small) olive branches, including an offer for Putin to visit Gdansk last September in an attempt to foster warmer (read: slightly less overtly hostile) relations. Putin not only seized upon the offer, but issued a public letter denouncing the World War II-era Molotov-Ribbentrop Treaty, long considered by Poles as the most outrageous Russian offense to Poland. Warsaw has since replied with invitations for future visits. As with Georgia, Poland will never be pro-Russian — Poland is not only a NATO member but also hopes to host an American Patriot battery and participate in Washington’s developing ballistic missile defense program. But if Warsaw cannot hold Washington’s attention — and it has pulled out all the stops in trying to — it fears the writing might already be on the wall, and it must plan accordingly.

Azerbaijan has always attempted to walk a fine line between Russia and the West, knowing that any serious bid for membership in something like the European Union or NATO was contingent upon Georgia’s first succeeding in joining up. Baku would prefer a more independent arrangement, but it knows that it is too far from Russia’s western frontier to achieve such unless the stars are somewhat aligned. As Georgia’s plans have met with what can best be described as abject failure, and with Ukraine now appearing headed toward Russian suzerainty, Azerbaijan has in essence resigned itself to the inevitable. Baku is well into negotiations that would redirect much of its natural gas output north to Russia rather than west to Turkey and Europe. And Azerbaijan simply has little else to bargain with.

Other states that have long been closer to Russia, but have attempted to balance Russia against other powers in hopes of preserving some measure of sovereignty, are giving up. Of the remaining former Soviet republics Belarus has the most educated workforce and even a functioning information technology industry, while Kazakhstan has a booming energy industry; both are reasonable candidates for integration into Western systems. But both have this month agreed instead to throw their lots in with Russia. The specific method is an economic agreement that is more akin to shackles than a customs union. The deal effectively will gut both countries’ industries in favor of Russian producers. Moscow hopes the union in time will form the foundation of a true successor to the Soviet Union.

Other places continue to show resistance. The new Moldovan prime minister, Vlad Filat, is speaking with the Americans about energy security and is even flirting with the Romanians about reunification. The Latvians are as defiant as ever. The Estonians, too, are holding fast, although they are quietly polling regional powers to at least assess where the next Russian hammer might fall. But for every state that decides it had best accede to Russia’s wishes, Russia has that much more bandwidth to dedicate to the poorly positioned holdouts.

Russia also has the opportunity. The United States is bogged down in its economic and health care debates, two wars and the Iran question — all of which mean Washington’s attention is occupied well away from the former Soviet sphere. With the United States distracted, Russia has a freer hand in re-establishing control over states that would like to be under the American security umbrella.

There is one final factor that is pushing Russia to resurge: It feels the pressure of time. The post-Cold War collapse may well have mortally wounded the Russian nation. The collapse in Russian births has halved the size of the 0-20 age group in comparison to their predecessors born in the 1970s and 1980s. Consequently, Russian demographics are among the worst in the world.

Even if Russia manages an economic renaissance, in a decade its population will have aged and shrunk to the point that the Russians will find holding together Russia proper a huge challenge. Moscow’s plan, therefore, is simple: entrench its influence while it is in a position of relative strength in preparation for when it must trade that influence for additional time. Ultimately, Russia is indeed going into that good night. But not gently. And not today.

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