5 posts: (1) Barack's West Bank Baker--Cyber Serendip; (2) Iraq: Maliki Enters Our 2008 Race--Wobble Watch; (3) Markets: Laws of Leverage Kick In--"It's the Earth Stupid!"; (4) Guantanamo Meltdown: Lawfare Ascendant--The Home Front; (5) Entitlement Reform: What Might Have Been--The Home Front.
No, NOT James Baker. A real baker. A Palestinian baker in Ramallah has named a creation of his the Obama bagel. Yes, bagel. What next, McCain matzoh ball soup in Tel Aviv?
Iraqi PM Nuri al-Maliki is playing a dangerous game, supporting both Obama's "troops out by 2010" + McCain's George M. Cohan "Over There" Iraq policy--"and we're not coming home 'til it's over over there!" Charles Krauthammer speculates that Maliki thinks, once gain, that his troops will be ready to hold the fort by then, despite a record of prior miscalculations as to the readiness of Iraqi troops to take the lead. Perhaps, or perhaps Maliki merely wishes to avoid being seen as favoring either candidate, as he does not know who will win.
Worse for McCain, argues Jonah Goldberg, Big Mac cannot win using the surge, as its success takes it off the table as a political issue. This, of course, is what happened to Britain's wartime Prime Minister, Winston Churchill; voters chose Labor Party leader Clement Atlee in July 1945, and Churchill was recalled halfway through the Potsdam peace parley. Goldberg says Mac must look ahead; presumably, this means Iran & Afghanistan, not Iraq, are the foreign policy election keys.
Obama, incredibly, stuck to his guns about opposing the surge, a strategy that, to anyone intellectually sentient and not imprisoned by ideology or a political base white-hot over Iraq, clearly succeeded in creating the secure space that was universally understood as a predicate for political reform, now well underway. We are to believe that without the surge, a negotiations strategy as championed by the Iraq Study Group would have reached the same result via a regional parley. Iran and Syria, which had been destabilizing Iraq, would suddenly discover the virtue of a stable Iraq if we left, and given America a graceful exit, head held high. Right. And Madonna will give up all her dough and relocate to a desert island.
Yet Obama, at his July 22 press conference in Amman (hard to follow because there was no microphone picking up questions), tacked toward Mac by conceding that yes, the surge has produced positive results. So as Obama narrows the distance between his position and Mac's, Maliki can safely draw away from Mac & Bush 43 and closer to Obama. Perhaps Mac's best hope, then, is that Obama continues to say that although the surge succeeded he still would have opposed it from the start. If enough voters digest that one, Obama's halo--what is left of it--could disappear for the mass of voters in the center.
There is a more straightforward solution: Obama should pick Maliki as his vice-presidential running mate.
A Business Week cover story looks at Wall Street and the financial mess. Behind it is the downside pull of leverage in a declining market. Banks lend $15 for every $1 of capital, e.g., $10 billion of capital turns into $150 billion in loans. Works great on the way up. But now, suppose that there is a measly 2% drop in the bank's asset value, $3 billion dollars. At 15:1 the bank loses 30 percent of its portfolio, down to $105 billion.
Already there has been a $400 billion meltdown in global credit markets, a figure that the IMF fears may grow to $1 trillion. Now, multiply these numbers by 15 to see the total impact. Worse, credit markets take longer, on average, to recover than do stock markets. For the three months ending in mid-June, credit contracted by 9% at an annualized rate, the worst number in the 35 years since data first was collected. Mortgage-backed bond issuances are down 87%, and corporate junk bond issuances are down 65%. Mortgage-backed bond losses alone could amount to $1 trillion.
The Federal Reserve will open its discount window, but--quite understandably--will limit lending leverage. Similar tighter lending criteria will be imposed by banks who acquire troubled institutions--equally understandably. Re the Fed, financial writer Allan Sloan reminds us that the Fed controls only short-term (overnight) interest rates; the financial markets set the remainder, and longer-term rates often move in different directions than short-term rates. Since September, the Fed's discount rate has declined 62%, from 5.25 to 2%, while 30-year mortgage rates rose slightly, from 7.26% to 7.63%. This is what happens when the Fed's easy money policy spooks inflation-wary investors--long-term rates rise in anticipation of inflation increases due to excess money creation. On the plus side, Sloan notes that the Fed can create money beyond its $800 billion in Treasury bill reserve, either by buying securities on the open market and reselling them to needy financial institutions, or by entering a credit on its books and lending the same amount to a needy institution, the credit to be redeemed later. Thus the Fed will not, as a practical matter, run out of money to support Fannie & Freddie.
Also on the sunnier side of the financial street, Hudson Institute's Irwin Stelzer sees cautious optimism in the fact that our economy is growing, if sluggishly, and that it is more flexible it was than a generation ago. Leverage is the key worry in the rosier scenario. Leverage, in sum, works like a roller coaster: a thrilling ride on the way up, a heart-stopping moment at the top, and a stomach-upending, screaming descent. And as the descent continues, gravity works its way, accelerating the roller coaster. At the amusement park, acceleration is kept within manageable bounds. For today's financial markets, the hope is that the same can be done by a partnership of public and private entities. Stay tuned, and hold on to your hat (and wallet).
Yesterday's ruling in the Guantanamo habeas corpus review of Osama's chauffeur, excluding "coercive" evidence, drives the legal process towards total meltdown on detainees. Further, the judge ruled that no statements under interrogation are be admissible, unless the prosecution can vouch for the methods used by interrogators to extract the statements. Absent video, establishing legitimacy will be very difficult. So, forget about confession evidence drawn from aggressive interrogation being used against Gitmo detainees. And that is probably most of the evidence in most of the cases. Instead of holding detainees indefinitely without trial as unlawful combatants, the administration walked into a trap set by attack-dog lawyers: increasingly, legal process akin to that for domestic criminal trials will be imposed, a standard that will make convictions rare.
True, those acquitted can still be held. But just how do you think that will play with "world opinion"--already up in arms over Gitmo? It will play as the ultimate war game of "bait & switch"--the legal process established by the administration will be derided as a total fraud. After the firestorm, holding the detainees will prove politically untenable.
Meanwhile, Attorney-General Michael Mukasey, the superb judge who presided over terror trials in the 1990s (and needed 24-hour security to guard his life afterward, for years), told an American Enterprise Institute audience (full text) that Congress should pre-empt federal courts by passing a law barring admission of Gitmo detainees into the USA, for any reason whatsoever; more detail of interest is in his text. Well-intentioned is the distinguished judge, but where does he think we can send them? To Islamic countries that will release them forthwith? A Wall Street Journal editorial predicts (rightly) that the process will "bog down in a Babel of conflicting procedural and legal rulings" and that (right again) a Democratic Congress will do nothing.
Thus the meltdown of administration policy on detainees continues, with no end in sight. Thus the folly of trying to have their cake (legal proceedings) and eat it (indefinite wartime detention). Holding detainees as unlawful combatants with bare-bones legal procedure would have clarified the issue. Sure, the courts might well have meddled and insisted otherwise, but at least the administration's policy would have been coherent and easily comprehensible to voters, most of whom are not lawyers. Once you concede that detainees are entitled to legal process, you get into what process is due. And in American jurisprudence, it is hard to limit process; it goes against the grain of our judiciary and the bar.
Our legal system is the worst possible for fighting a war against unlawful combatants. Its biases all lean in the wrong direction: against effective terror-fighting: prime focus on rights of the accused, disclosure of the government's case in detail, lengthy, multiple review of lower court rulings--not infrequently, prior to final decision, the glare of media publicity, you name it. All these are glories--except endless rounds of proceedings--in the world of criminal law. They are potentially lethal here. As Thomas Jefferson once said, justifying his order to seize a British vessel while Congress was in recess: "To lose our country by a scrupulous adherence to written law, would be to lose the law itself...thus absurdly sacrificing the end to the means."
The administration and its supporters failed to grasp thus fully. It--and we--will pay the price, as detainees are released and the legal process--driven by lawyers steeped in the arts of a "lawfare" that piles on unilateral constraints on our ability to fight, gather intelligence, hold dangerous detainees, et., while our adversary remains free to conduct warfare alone.
Urban historian Fred Siegel reviews a book on the Grand Alliance that might, in 1998, have saved entitlements from the train wreck that now is all but inevitable. Improbable allies were Bill Clinton and Newt Gingrich, but they had already collaborated on NAFTA and (Clinton reluctantly, upon Dick Morris's warning that the 1996 election was at stake) on welfare reform. Thus, the stage was set to bring the remaining two pillars of the Great Society & New Deal, Medicare & Social Security, into the 21st century, liberated from the pay-as-you-go inter-generational treadmill they remain mired in.
The deal, which was negotiated in 1997, would have traded partial privatization of entitlements in return for surrendering tax cuts. With a surplus for FY1997, and a projected $4.5 trillion surplus over the next 15 years, politically sensitive entitlement reform could have been made palatable to a country still enjoying a "Goldilocks Economy" and the party decade. President Clinton was to unveil the plan at his Jan. 27, 1998 State of the Union address. But on Jan. 21 Monica became a household name. GOP conservatives surrendered to Clinton hatred and pushed an impeachment that was technically sufficient as a legal matter (Clinton had perjured himself under oath in federal court), while liberal Democrats extracted deep-sixing entitlement reform as the price of keeping Clinton in office.
Siegel writes that a censure of President Clinton would have sufficed to make the point about ML. The upshot: warring political camps, intensified after Florida in 2000. It is now too late for entitlement reform, even if the Democrats had real leaders, instead of hacks like Nancy Pelosi & Harry Reid, the worst pairing of party legislative leaders in memory. When Ronald Reagan tried to fix entitlements in 1981, the eldest baby boomers were 35. Come 2009, the youngest boomers will turn 45. Thus passed 28 wasted years, during which time the generational arithmetic of the baby boomer bulge moved inexorably up the demographic ladder. A train wreck is now unavoidable, under any foreseeable scenario.
All that said, had Clinton been merely censured, and left office a Great Statesman, Al Gore would surely have won in 2000, without need of any recount, and would have been in office on September 11, 2001. Would lasting entitlement reform have been worth having President Mr. Global Warming? You make the call.
6 posts: (1) Teheran Gabfest: Condi Gets It Backwards--Us v. Them; (2) Afghanistan: A Low-Profile Option?--Us v. Them; (3) Subway: Imam Rapid Transit--The Ap & the Cap; (4) Somalia: GloboCop Challenge--Turtle Bay Tortoise; (5) Obama: Polling the "Muslim" Issue--The Home Front; (6) Fred Thompson's Good Deed--The Home Front.
Secretary of State Rice accused Iran negotiators of not being serious about the weekend non-event talks over Iran's nuclear program. Seems that at the P5 + 1(us) talks over the weekend the Iranians, in response to the latest offer of sweetened carrots from our side, answered with what Madame Secretary called "meandering...small talk about culture." Iran now faces a fortnight deadline, else they will be hit, we say, with a new round of UN sanctions.
Our elegant diplomat got is exactly wrong: We are the ones who are not serious. Russia & China will veto any sanctions that might be strong enough to actually halt Iran's uranium enrichment program. We are, as a Wall Street Journal editorial notes ruefully, surrendering in stages to the Iranians, in pursuit of an elusive grand bargain.
Author & Afghanistan expert Rory Stewart proposes that America and its NATO allies adopt a scaled-down, more focused effort stressing counter-terror but not counter-insurgency--the latter involving hundreds of thousands of troops and thus not feasible--and also targeting provinces and programs where success has already been demonstrated as being possible. Stewart's piece is thoughtful, and worth a look by, among others, both campaigns, whose candidates both wish to increase troops there (McCain also embracing counter-insurgency). Stewart may underestimate the amount of hard power needed, but his assessment of soft power options, and his intimate knowledge of the country--Stewart resides in Kabul--make his 6-pager well worth a careful read. Writer Ann Marlowe, 10 times a visitor to Afghanistan, echoes Stewart's theme, urging that Special Forces targeting infiltrators from Pakistan be the priority, not troops inside Afghanistan.
Obama was told by commanders that more troops are needed in Afghanistan. So be it, but these articles above merit a read anyway.
New York City's fabled Interborough Rapid Transit (IRT) subway, which I rode countless times as a kid, is, the New York Post Monday cover story reports, about to get an ad makeover. It seems that a group innocuously named the Islamic Circle of North America plans an ad campaign to "educate" the system's 4.9 million daily straphangers (Apple-speak for subway riders) about Islam. Oops! Seems that a prime spokesman for the ad is a radical imam who--get this--appeared at the World Trade Center bombing trial...as a character witness (per Dave Barry, I am NOT making this up) for...Sheik Omar abd-el Rahman. Yes, that Sheik Omar, the "Blind Sheik" who orchestrated the 1993 WTC bombing.
The Brooklyn imam who appears in the ad, one Shiraj Warraj (try to pronounce that one), once said: "In time, this so-called democracy will crumble, and there will be nothing, and the only thing that will remain will be Islam."
Democracy will crumble? Sounds like a twist on Ira Gershwin's "It's Very Clear" lyric: "In time, the Rockies may crumble, Gibraltar may tumble..." Bet you the imam does not know who the Gershwin brothers were. Which is reason enough for the MTA to reverse field and reject the ads.
To the extent that one may wish for a meaningful role for the United Nations in matters of international security (I do not so wish), a New York Times front-pager offers the classic example of low-grade barbarism of the kind the UN might usefully confront: Somali Islamist gangs are targeting international aid workers, to force them out, which would result in greater mass starvation. The UN cannot be effective vis-a-vis Iran, where vetoes in the Security Council by the likes of Russia, China & France, three realpolitik-oriented countries, frustrate useful policy aims, save in the rare "alignment of the planets" case like the Gulf War--and even then, UN resolutions impeded America's options at the end of the war.
Somalia represents the kind of low-grade challenge where UN troops, were they competent and well-commanded, could make a difference, bringing minimal post-colonial stability to places of anarchy. Darfur is another. No major military is needed, no megabuck expenses. The UN, needless to say, dithers, as ever.
Human Events notes a Gallup poll on Obama and voter attitudes & beliefs re the Muslim suspicion among the electorate. Seems that an identical 12% of Rs & Ds believe Obama is a Muslim. Yet among Rs there is no difference in support for McCain among the 12% and the rest. Among Ds, there is a 28-point gap: Ds who believe Obama is Muslim are much less likely to support him. Another Vast Right-Wing Conspiracy bites the dust.
Politics maven John Fund details a Monument to Me binge in Congress, with Members getting earmarks to name buildings and monuments after themselves, unlike in past times where only the dead were eligible for such distinction. Members scorn the few who oppose earmarks for self-memorials. Georgia even has a highway named after nut-job Cynthia McKinney, who thinks 9/11 was an inside job.
Thus credit goes to former Senator Fred Thompson for telling colleagues not to name Tennessee's Highway 43 after him. Said Fred, he would prefer the road kept the name he knew it by as a boy growing up. Bravo.
6 posts: 1) Pakistan: Democracy Disappoints--Worldly Watch; (2) Iraq: Petty Politics; Timetables & Horizons--Us v. Them; (3) The EPA: Our New Guardians--"It's the Earth Stupid!"; (4) New York City Exports Its Finest--The Ap & the Cap; (5) Europe Escapes Time Warp; Congress Still Captive--"It's the Earth Stupid!"; (6) Sinatra Favorite "GI Jo" Sings Goodbye--Classics.
Con Coughlin pinpoints the Achilles' heel of democracy promotion: unhelpful democratic leaders. Pakistan's coalition government is not fighting the terrorists. Now, Pervez Musharraf was no bargain, either, and the United States could not simply place its entire wager on Musharraf. Fact is, we had no good options in Pakistan, a grim reality that will prevail for the foreseeable future.
Learn more in my new book: The Long War Ahead And
The Short War Upon Us
