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Thursday, November 30, 2006

Evolution of the Bush Strategy

The news of a botched start to the Bush / Maliki summit on strategies for improving the situation in Iraq divulged a new chapter in the evolution of the Bush strategy for the War on Terror (TM).

For those playing along with the homegame version of "How to Lose Allies and Aid Your Enemies", the War in Iraq has evolved over time through the following key phases:

1) fantasy (the war being a good idea)
2) deception (lying to the public to justify starting it)
3) incompetence (botching the occupation)
4) corruption (losing billions in cash)
5) denial ("democracy is untidy")
6) deep denial ("what civil war?")

The leak on the front page of New York Times of a supposed classified internal briefing given to President Bush in October PRIOR to the American mid-term elections confirms a new tactic will become a key part of the new Bush strategy:

7) blame the victim

The United States trumped up bogus intelligence about WMD in a country that posed no immediate threat to us. We launched a war. We toppled a dictator who, if nothing else, had been containing some of the ethnic / sectarian factions within his country that would be killing each other, and prevented outside Islamic fundamentalist terrorists from operating within his borders. While racing to Baghdad to topple the dictator, we failed to secure TONS of high-explosives of great interest to terrorists dreaming of future roadside bombs and martyrdom. We then dismantled any military or civil organizations in the country. Then we waited a few months doing virtually NOTHING to make sure that the chaos had a good chance to take root.

Into that environment, a "freely elected" government and prime minister are then inserted and expected to defend themselves and civilians against a flood of immigrant terrorists and home-grown war lords now free to settle 800 year old tribal scores?

The attempt to leak this memo the day of a face-to-face summit to "pressure" a politician who is powerless to fix a disaster that the United States created did NOTHING to help anyone. It furthers the perception of the Prime Minister and parliament as puppets of American whim which seriously jeopardizes the stability of the government already near collapse. It strengthens the hands of war lords within Iraq like Muqtada al-Sadr who are fueling the sectarian violence from within. It also strengthens the bargaining position of Iran and Syria who are already causing enough problems in Lebanon. Finally, it sends a message to America's allies and uneasy partners that our policy making team is fickle, short-sighted and vindictive in ways with deadly consequences to our "partners."

Interestingly, one key part of the Bush war plan remains unchanged.


Nothing in the commentary from Tony Snow or anyone in the Bush Administration complained about the "leak" of a classified policy document on the front page of the New York Times. A document that has clearly damaged our war effort, weakened the position of the Iraqi government, and aided the two countries (Iran and Syria) that can do the most to complicate our efforts in Iraq.

Why is there no Bush administration outrage over this leak? They were the leakers. It's OK to leak classified material when you think it helps your side. Even when you're wrong.

Some strategies never change.

Friday, November 24, 2006

A Different Sense of His Soul, Maybe?

On June 18 of 2001, President George Bush was asked in a press conference if Russian President Vladmir Putin was a man America could trust. Bush infamously replied (#1):

I will answer the question. I looked the man in the eye. I found him to be very straightforward and trustworthy. We had a very good dialogue. I was able to get a sense of his soul; a man deeply committed to his country and the best interests of his country.

Hmmmm. Straightforward huh? Trustworthy huh? Events would seem to indicate it might be a good idea for Mr. Bush to rethink that sense of Putin's soul. A pattern seems to be emerging.

Starting with the most recent event and working backwards…

On November 1, 2006, a former Russian spy, Alexander Litvinenko, was poisoned in Britain. Initial stories indicated the poison might have been thallium but recent stories now cite polonium-210 as the likely poison. (#2) Litvinenko died November 23 but not before releasing a statement saying that Vladmir Putin initiated the poisoning. Polonium is a perfect choice for cloak and dagger operations because its radiation is due to alpha particles which are unlikely to set off radiation detectors at any airport or seaport entry point. Polonium is also relatively safe because it is only lethal when ingested.

On October 7, 2006, the most prominent opposition journalist in Russia, a woman named Anna Politkovskaya, was murdered in her Moscow apartment. Her death was being investigated by Litvinenko when he was poisoned in Britain. She claims to have been poisoned in 2004 which was the same year that Victor Yushchenko, a pro-Western anti-Russian presidential candidate in Ukraine, was severely disfigured and nearly killed after being poisoned by dioxin. The editor of her newspaper, Yuri Shchekochikhin, was poisoned in 2003. (#3)

Now, against that backdrop of integrity and openness, the Russian government announced November 24, 2006 that they will be selling new air defense missile systems to Iran. (#4) Purely for defensive purposes, of course. For a country that is likely sponsoring Shiite terrorist attacks that are deepening the civil war within Iraq and backing Hezbollah forces that are pulling Lebanon back to a civil war as well. For a country that has renewed its efforts to develop uranium enrichment capabilities for nuclear weapons.

George, you REALLY know how to pick people to trust.


#1) http://www.whitehouse.gov/news/releases/2001/06/20010618.html

#2) http://www.smh.com.au/news/world/radiation-killed-russian-spy-says-britain/2006/11/25/1164341430937.html

#3) http://www.washingtonpost.com/wp-dyn/content/article/2006/11/20/AR2006112001135.html

#4) http://edition.cnn.com/2006/WORLD/meast/11/24/russia.iran.reut/

Wednesday, November 22, 2006

News for the Next 30 Years

If you started paying attention to the news in the 1970s, you grew up watching year after year of news about the "peace process" in the middle east, militant militias toppling governments and scenes of desert-camouflaged tanks rolling through barren hillside towns with names like "Golan Heights" that sound like they could be a suburb of Cleveland. Based on events from the week of November 19, 2006, the news for the next 30 years is going to sound horribly familiar -- like your Tivo stuck on permanent replay.

Lebanon is now closer to collapse and civil war due to the assassination of Lebanese Cabinet member Pierre Gemayel. Lebanon's current round of problems began with the assassination of its prime minister in a bomb blast February 12, 2005 that was subsequently traced by United Nations investigators to four Lebanese generals with pro-Syrian ties. (#1) Public outcry over the assassination prompted Syria to "withdraw" from Lebanon but shortly afterwards, killings of other anti-Syrian government officials began. Lebanon reached the boiling point earlier in November 2006 when Cabinet members allied with Hezbollah quit their posts to further destabilize the ruling government. With the assassination of Gemayel, Lebanon is now one body (literally...) away from its Cabinet having to surrender power and attempt to reform a coalition.

Regardless of exactly who gets linked to the trigger, there's no doubt about who directed the assassination. Iran, Syria and their Hezbollah terrorist militia proxies all share the same goals of toppling the shaky democracy in Lebanon and reasserting their own influence over the country. Of course, they don't really have any practical plan to IMRPOVE anything in Lebanon, they just want to ensure it isn't dominated by the United States.

Sound familiar?

That's exactly what's happening in Iraq right now and the United States is now equally powerless to improve the situation there as well. Iran and Syria are even volunteering to "assist" Iraq to stabilize the country. By the time the Iraq Study Group reports its findings, the list of possible options will have already been whittled down to virtually nothing by daily events. One of the options is to actually INCREASE troop levels by 10,000 or 20,000 troops to either make a push towards stabilizing a major chunk of the country or use those forces to focus on training Iraqi forces so they can both fire their tanks and guns and also keep them supplied.

Based on comments from American forces who would be responsible for providing that training, the likelihood of success with this plan would seem to be nil. When asked to comment on the value of his stateside training for the actual challenges experienced in Iraq, one colonel characterized his training as "a phenomenal waste of time… nearly irrelevant to the current situation." (#2)

We also know that adding vastly larger numbers of troops to the deployment isn't practical. The skill, dedication and courage of the troops isn't a limiting factor. A fickle American public unwilling to take a few setbacks as the troops pursue a clear, militarily sound war plan isn't a limiting factor either. More troops aren't a practical alternative because WE DON'T HAVE ANY MORE TO SEND. Nearly EVERY possible full time or National Guard soldier with the training required is already deployed in the region or cannot be re-deployed from other commitments. Some Guard units are now looking at a possible third tour of duty. More importantly, sending more troops isn't practical when the Pentagon is unable to articulate ANY specific military strategy on how those troops would be used to eliminate even one of the social / security / political problems preventing Iraq from managing its security without our presence.

Of course, maintaining current troop levels is an option. However, the results to date speak for themselves about the viability of that approach. The mid-term elections also clearly communicated the message to American politicians that "stay the course" will not be accepted as a strategy. We are tired of seeing our troops absorbing bombing attacks and bullets when those "engagements" fail to draw the enemy out where they can be destroyed.

The only other option in play is reducing American troop levels. There seems to be little question that reductions will eventually pursued. The pattern of events in Lebanon also leaves little doubt about what the long term results of our withdrawal will be. A middle east quickly abandoning any semblance of "liberal democracy" and heading directly back to 700 A.D. under the thumb of Iran. The West and America in particular will be left just watching another 30 years or more of news stories about bombings, sectarian wars, assassinations and oil crises.

The only question remaining about the carnage set to unfold is the "brand" that will be assigned by the news shows and talking head programs. Will it be "Baghdad on the Mediterranean" or "Beruit on the Euphrates?" Sadly, the answer will be "both."


#1) http://www.chinadaily.com.cn/english/doc/2005-08/31/content_473723.htm

#2) http://www.cbsnews.com/stories/2006/11/21/eveningnews/main2204339.shtml

Sunday, November 19, 2006

BOOK REVIEW: What Went Wrong?

The mid-term elections of 2006 served a stunning rebuke to the Bush Administration for its execution of the war in Iraq. Recommendations are expected shortly from both the Iraq Study Group and from a hastily commissioned internal review by the Bush Administration on possible strategies for salvaging some approximation of a "win" from the current debacle. The sad reality is that any strategy aimed at "winning" may be fatally flawed for one reason. A win involving the external imposition of a democratic government on an Arab / Islamic country may never have been possible. No book explains why this is likely the case better than What Went Wrong? -- The Clash Between Islam and Modernity in the Middle East by Bernard Lewis.

What Went Wrong provides amazing insights into the relationship between Islam and the societies in which it evolved. The book describes multiple negative synergies between Islam and its surroundings that over time carved the canyon that now exists between the modern world and Islamic fundamentalists. The original text was published in October 2001 but written before the attacks of September 11. As a result, the points it makes seem even more noteworthy for their lack of any post-9/11 colorization. They're damning enough on their own.

Parallels with Democracy in America

Americans in particular are puzzled by the attraction of Muslims to a theocratic model of government, partly because of our ignorance of cultures outside the Judeo-Christian realm but also because of the mythology of our own country's founding. Assuming you can find an American who knows the basic dates and players involved, the American mythology states that a collection of intelligent, successful businessmen and gentlemen farmers became fed up with the remote tyranny of King George III, decided to set our country out on its own and wrote a great little declaration of our reasons for doing so. An even smaller number of Americans might remember that it took us two tries at forming a Constitution that struck a reasonable balance between federal and state powers. Overall, I suspect most Americans assume that once we decided "enough" with King George III, the actual structure of our government and separation of roles between the civil and religious realms were somehow "obvious" and "inevitable."

In reality, the operating principles of our form of democracy didn’t emerge from a few months of concentrated effort in Philadelphia in 1776. Alexis de Tocqueville's Democracy In America traced much of America's cultural and civic DNA to concepts of local government, business and law that arrived in Plymouth and Jamestown nearly 200 years before our Constitution then evolved over time to adapt themselves to the unique challenges and opportunities of North America. If a society with 169 years of practice at democracy had trouble with "obvious" concepts like separation of church and state and checks and balances within a government, imagine the difficulty countries with no such history would have.

What Went Wrong essentially serves as the Islamic equivalent to Democracy in America, with one key difference. Tocqueville's book identified a variety of positive synergies between the traditions the American settlers brought with them and the challenges and opportunities they encountered that strengthened America's political freedoms after its independence. Lewis' book describes a variety of negative synergies between Islam and its societies that in the end turned the religion and its societies inward, leaving them far behind the rest of the world economically, politically and militarily.

The Roots of Islamic Isolationism

Early Islamic teachings held that Judaism and Christianity were earlier, corrupted representations of God's will that were perfected within Islam. Considering this tenet of Islam from a Western perspective doesn't really trigger any alarm bells because few Westerners consciously consider a separation between their religious / spiritual life and simple, practical aspects of their everyday material lives. However, early Islamic teachings drew no distinction between religious and non-religious aspects of one's life. If religious ideas / concepts should be rejected from non-believers ('"infidels"), ALL ideas from non-believers are equally suspect or corrupt.

Lewis cites numerous examples of how this attitude altered Islamic society to its detriment. For the first few hundred years, its societies made significant contributions to mathematics (use of "Arabic" numbering with decimal positioning from India), medicine (extensive writings by a Syrian doctor and writer in the 1200s on the human circulatory system were completely ignored after his death until the 1500s) and astronomy (a state of the art observatory was built in Istanbul in 1577 but shortly afterwards destroyed on orders of a local sultan and none were built afterwards anywhere in the Islamic world). Islamic scholars also translated and preserved many ancient Greek texts into Arabic that were then consulted by Westerners and became incorporated into Western thought.

Over time, the reflexive rejection of all external influences from infidels gradually crippled the Islamic world scientifically, economically, politically and militarily. What was the effect? By the 1700s, Western forces were conquering territories in the Ottoman Empire pretty much at will. The first chapter of the book describes this period and describes how, at the same time, Islamic powers felt humiliation at being so easily conquered by infidels yet grew to depend upon infidel forces to defend them from other Islamic adversaries. Does this ring a bell? How many Islamic countries are still dependent upon military and economic support from the West to preserve their hold on power (Saudi Arabia, Kuwait, Egypt) and fend off Islamic extremists? How many of these countries resent the West for being dependent on the West to save them from being slaughtered by their own internal divisions?

Dichotomies of Law and Government

As Americans watch Iraq collapse into deepening chaos, we seem completely puzzled by the difficulty Iraqis are having adopting even basic concepts of representative government. Isn't it obvious that freedom is better than dictatorship? Isn't it obvious that decisions about taxes to build a new road in your town can be made without religions implications? What is WRONG with these people? It's like they insist on thinking in terms of north and south in a world we view in left and right. Incompatible dimensions that produce incompatible comparisons and debates between cultures.

That's exactly what is taking place. Lewis describes differences in thought about law and freedom that continue to complicate relations between the West and Islamic societies to this day. In law, Western society sees value in maintaining separation between contract / civil law and criminal law and value in separating all of those fields from religious considerations. Islamic societies not only made no such distinctions in the beginning, the very idea was antithecal to Islam itself. As Lewis writes,

In an Islamic state, there is in principle no other law than the Shari'a, the Holy Law of Islam. The reforms of the nineteenth century and the needs of commercial and other contacts with Europe led to the enactment of new laws, modeled on those of Europe -- commercial, civil, criminal and finally constitutional. In the traditional order the only lawyers were the ulema, the doctors of the Holy Law, at once jurists and theologians.

Lewis also points out effectively that even when common words are used, differences in underlying philosophy behind the language immediately put the discussion on divergent paths:

Westerners have become accustomed to think of good and bad government in terms of tyranny versus liberty. For traditional Muslims, the converse of tyranny was not liberty but justice. Justice in this context meant essentially two things, that the ruler was there by right and not by usurpation, and that he governed according to God's law, or at least according to recognizable moral and legal principles.

Think about that difference in political dichotomies in terms of Western and Muslim attitudes towards countries like Iraq, Iran and Saudi Arabia. Most Muslims will probably agree Saddam Hussein's rule over Iraq was gained by usurpation and thus illegitimate. However, the current Iraqi government isn't viewed as legitimate either since most Iraqis probably view it as a puppet of America which usurped control of the country from another illegitimate ruler. In contrast, the current rulers of Iran and Saudi Arabia are likely viewed as legitimate since they were elected (Iran) or have ruled through family ties for generations (Saudi Arabia) and both claim to rule according to Islamic principles. With hundreds of years of that type of thinking about tyranny versus "justice" ingrained in the culture, should Americans have much hope of democracy taking root in these environments?

The Separation of Church and State

The famous "Render unto Caesar what is Caesar's…" quote of Jesus in the New Testament gospels anchors one of the key points Lewis makes in the book. The quote involves an idea that became incorporated into Western / Christian societies that a separation of civic and religious realms was at least permissible. As previously mentioned, Islam only recognized one source of law and governance -- the Holy Law derived from the Koran. Separation of religious and civic rule was impermissible under Islamic law. The interesting point made by Lewis is that initially, the unity of rule in Islamic societies over religious and civic issues helped the faith spread while maintaining a fairly consistent interpretation of its key teachings. In contrast, Western societies allowed more of a separation of civic versus religious influences earlier in the evolution of both the Christian faith and its host societies. In the short term, this early separation actually contributed to the rifts between Christian sects since their host governments were comfortable letting mere religious debates to take place as long as they didn't spill over into the civic realm.

The long term results of this disparity were much different. In Western societies, the different Christian sects eventually gained dominance over government powers which were then driven by those sectarian differences to launch multiple deadly conflicts over hundreds of years. However, a few centuries of this destruction eventually led the host societies to realize the pointlessness of such conflicts and they began to formally define boundaries between religious and civic realms to avoid further bloodshed. As a result, Western societies now tend to institutionalize the separation of church and state and generally tend to be tolerant of individual faiths within their societies.

The Islamic world learned no such lesson. The initial success of Islamic societies at spreading a faith that remained relatively unified further cemented the perceived value of a unified civic and religious government. By the time internal sectarian differences within Islam began to crop up, the ignorance induced by the systematic rejection of infidel influences had taken root and blinded Islamic societies from seeing the possible value of separating civic and religious life. Islamic fundamentalists continue to call for unified Islamic government today, despite the disastrous social and economic results produced in countries like Lebanon, Sudan, Afghanistan under the Taliban and "independent" Iraq. Current Islamic fundamentalists are repeating the same mistake Lewis spotted in attitudes from the 1800s. Rather than viewing their numerous defeats and territorial losses as a sign that adoption of new ideas was necessary, fundamentalists then and now instead believe their problem lies in not being true enough to the original requirements of living under one unified Holy Law.

Other Interesting Points

Several smaller but interesting points are made throughout the book regarding concepts of "clergy" within Islam, anti-Semitism, etc. Many Americans' first exposure to what we thought was the hierarchy of Islam was likely hearing of the Ayatollah Khomeini during the Iranian Revolution in 1979. What is an "Ayatollah"? In terms of organizational power or theological influence, is an ayatollah akin to a bishop? An archbishop? A cardinal? A Pope? Is an ayatollah someone recognized by the larger faith as someone capable of speaking definitively about matters of belief and theology?

Lewis addresses the question with an interesting conclusion:

I have used the word "clergy." It is of course a Christian word, alien to both the Muslim and Jewish traditions but very much a part of present-day Muslim and Jewish realities. The appointment of a mufti of a place, with jurisdiction over a territorially defined entity, dates from Ottoman times and almost certainly follows Christian examples or responds to Christian influences. Not only were there muftis of places but there was a hierarchy of muftis culminating in the Chief Mufti of Istanbul whom one might reasonably describe as the primate of the Ottoman Empire, the Muslim archbishop of the capital. Even after the fall of the Ottoman Empire, the practice continued in the Ottoman successor states in the Middle East… One sees it even more dramatically in the ayatollahs of Iran, a title dating from quite modern times and unknown to classical Islamic history. If the rulers of the Islamic Republic of Iran but knew it, what they are doing is Christianizing Islam in an institutional sense, thought not of course in any religious sense. They have already endowed Iran with the functional equivalents of a pontificate, a college of cardinals, a bench of bishops, and, especially, an inquisition, all previously alien to Islam. They may in time provoke a Reformation.

It is interesting to see that a country so intent on complying with 1600 year old interpretations of the word of God has established a hierarchy of religious middlemen in the process whose very roles are described nowhere in the ancient texts they claim to support as the one true way.

Regarding anti-Semitism, Lewis notes that the anti-Semitism within Islam today is a relatively recent development.

Another European contribution to this debate is anti-Semitism, and blaming "the Jews" for all that goes wrong. Jews in traditional Islamic societies experienced the normal constraints and occasional hazards of minority status. In most significant respects, they were better off under Muslim than under Christian rule, until the rise and spread of Western tolerance in the seventeenth and eighteenth centuries. With rare exceptions, where hostile stereotypes of the Jew existed in the Islamic tradition, they tended to be contemptuous and dismissive rather than suspicious and obsessive. The earliest specifically anti-Semitic statements in the Middle East occurred among the Christian minorities, and can usually be traced back to European originals. But the poison continued to spread, and from 1933 Nazi Germany and its various agencies made a concerted and on the whole remarkably successful effort to promote and disseminate European style anti-Semitism in the Arab world.

That seems about par for the course for such a disastrous path of history. The most notable outside idea adopted in modern times by a society struggling with hundreds of years of isolation is one of the most abhorrent, moronic, corrosive and deadly ideas the West has ever produced.


In the conclusion to the book (worth the $12.95 price of the paperback alone), Lewis recognizes that it is impossible to obtain the correct answers by asking the wrong questions. He makes an interesting logical point by stating that rather than the question "What has Islam done to the Muslims?" the more appropriate question the Islamic world needs to answer might be "What have Muslims done to Islam?"

Friday, November 10, 2006

What? Enron and Worldcom Weren't Enough?

All on the same day, November 10, 2006, the following three items appear in the Wall Street Journal:

  • news that standards for section 404 of Sarbanes-Oxley may be relaxed

  • news that the Public Company Accounting Oversight Board has yet to complete its audits of the four biggest accounting firms in the country

  • a full page ad from The National Association of Realtors aimed at getting home buyers back in the pool - the water's fine, don't worry, Greenspan said things are getting better.

To quote the character Old Lodge Skins in the movie Little Big Man, "the ponies are trying to tell us something."

In case a refresher is needed, section 404 of the legislation known as Sarbanes-Oxley (SOX) calls for publicly traded firms to include a report with their annual financial reports summarizing the state of the business process and systems used to produce the numbers in their financial reports and for officers to sign a statement which states they understand their responsibility for the accuracy of those systems and the resulting statements. It also requires the firm's auditors to include and sign a similar statement. See (#1) for a link to the exact language.

I've commented previously (see #2) that while SOX may have produced some unintended consequences and may have raised the cost of operating public companies, in a larger sense the requirements of SOX act as a form of relatively cheap macroeconomic mal-practice insurance. Insurance that protects the larger economy from the distorting effects and potential collapse of giant multi-national firms who accidentally or purposely exploit legal or financial loopholes to create fictitious profits.

Probably the key point from that prior commentary that still holds true is this:

On the flip side, how many public companies are going to come forward and announce cases where a new SOX-based process uncovered a major mistake in the company's accounting that averted a major correction in its public books? NONE. For the same reason banks never disclose when they've been hacked or suspect internal breaches of security affecting customer information -- doing so would spook customers or investors. Unless the new SOX-based audits turn up mistakes in books they've already closed and now HAVE to go back and correct, you'll never hear of a SOX success story."

If you need a reminder about the damage that can be done by huge companies with inadequate financial controls, look back to the bankruptcy of Enron ($63.4 billion in assets, $13 billion in debt according to their official books but another $25 billion in "off-balance-sheet" debt - see #3) and Worldcom ($107 billion in assets, $41 billion in debt -- see #4). Look at the jobs destroyed and retirement savings evaporated in those implosions.

If you need convincing that there are major portions of our economy still gambling on unsustainable bubbles and dependent upon suspect accounting and property valuations, just look at the full page ad from the National Association of Realtors, then look at recent statistics about mortgages in default. Per an October 23 story from Bloomberg (see #5), the 60-day delinquent rate on home mortgages reached 7.23 percent in July 2006 from 5.9 percent a year earlier. According to an article on CCNmoney.com (see #6), roughly 1.3 million ARM loans were issued in the past two years with interest rates below 2%. Now, roughly 21 percent of those mortgages involve properties whose outstanding principle exceeds the market value of the home. If both of these numbers are true and 7 percent of that 21 percent of loans are delinquent, that results in 19,110 homes getting dumped on an already glutted home market. This is just a few days of inventory at current sales rates but when dropped on the market at depressed prices, an extra 19,110 units can have a disproportionate effect on the larger market.

Think of Sarbanes-Oxley as a required annual inspection of the x-ray machine or CAT scan machine at your local hospital. Do you want to rely on the diagnosis of a machine that hasn't been calibrated since it left the factory? Would you really trust a clean bill of health from the machine? Why would you do the same for multi-billion dollar companies with pension obligations to you and your neighbors in an environment where we have recurring evidence their financial x-ray and CAT scan machinery cannot and should not be trusted?


#1) http://www.sarbanes-oxley.com/displaysection.php?level=2&pub_id=Sarbanes-Oxley&chap_id=PCAOB4&message_id=28

#2) http://watchingtheherd.blogspot.com/2006/05/is-sarbanes-oxley-really-problem.html

#3) http://foi.missouri.edu/usenergypolicies/enronexam.html

#4) http://money.cnn.com/2002/07/19/news/worldcom_bankruptcy/

#5) http://www.bloomberg.com/apps/news?pid=20601103&sid=adbsVAhN68TM&refer=us

#6) http://money.cnn.com/2006/10/09/real_estate/arms_nightmare/index.htm?postversion=2006100913

Wednesday, November 08, 2006

Now What? A Non-Partisan Agenda

After twenty four hours of nail-biting over one final close Senate race, it's official. Americans applied shock therapy to a Republican Party and President stuck on a failed military strategy in Iraq, bent on buying electoral votes with out-of-control pork spending and in denial about a seemingly endless series of scandals involving individual and collective failures on moral, financial and ethical issues.

The media is already fixated on the inside the beltway power struggles, committee control squabbles, and impacts on the next Presidential election. Congress is too. Of course, this confirms that both the media and the politicians have already completely missed the point they needed to learn from this election. Our Constitution begins with "We the people" for a reason. It doesn't begin with "We the politicians" or "We the lobbyists." You are there to serve us.

Democratic candidates didn't focus on specifics of alternative plans to win power but now that it is here, what's likely to happen? If you believe the campaign literature mailed to your house prior to the election, a Democratic House plans on converting the lyrics to "Taxman" directly into law verbatim. It's pointless to speculate. We the people should instead focus on discussing what SHOULD be done. If they don’t do what SHOULD be done, it will be their turn on the dunking booth next.

So what SHOULD be done? Here's a start.


Why should this be first? Is there anyone that can argue an effort to locate NINE BILLION DOLLARS of American taxpayers' money missing in Iraq is a partisan issue? Democrats and Republicans have been completely AWOL in their duty to mind our money to ensure as much of the money we spend on Iraq goes to actually equipping Iraqis to control the country and get us out of there as soon as practical. Congress has failed to issue a SINGLE SUBPOENA to investigate ANYTHING within the Bush Administration. There is no other action the new Congress could take that would demonstrate their non-partisanship and return to financial responsibility than FINDING OUR NINE BILLION DOLLARS. A subpoena to the Pentagon officials handling the planning of arms deals for the new Iraqi military and related cash outlays for local "on the spot diplomacy" should be the first subpoena issued by Congress. Of course, Congress should also follow this first subpoena wherever it legitimately leads.


Rescind the Military Commissions / Torture Legislation

Why should this be second? We shouldn't be slaves to mere public opinion anywhere in the world but something is SERIOUSLY wrong when polls abroad of our closest allies reflect a view that America is viewed as a more destabilizing force in the world than people like Kim Jong Il, the pompadoured nut-job running North Korea. We owe the rest of the modern world a clear sign that we intend to step back from the Stalin-esque abyss to which this legislation has taken us.

Eliminate Closed Debate in the House and Senate

As Matt Taibbi summarized in his Rolling Stone article on the Worst Congress Ever, Democrats and Republicans have been engaged in a decades long, escalating tit-for-tat parliamentary war that has gradually eliminated ALL amendments on the floor of the House from consideration. Literally. Not a single non-appropriations bill was taken to the floor in the past session with amendments allowed. This not only prevented the minority Democrats from influencing ANY language in legislation, it also locked out moderate Republicans since Republican leaders locked down most legislation in private outside committees. We've had too many surprises (fraudulent cost estimates for the Medicare drug plan, most notably) to allow Congress to continue the practice of intentionally blindfolding itself before voting on legislation crafted by lobbyists and corrupt committee chairs.


Pass A Special Iraq War Veteran Support Bill

Besides the 2783 Americans who have died in Iraq, roughly 44,800 additional Americans have suffered injuries in the war, including a large number of injuries previously unimaginable from a survivor standpoint. The number of veterans requiring long term, expensive medical care will be substantial. Congress needs to ensure proper funding for this long term care is set aside so returning veterans don't have to battle the entire American VA bureauacracy and medical-industrial complex to obtain the care they need. How much would this cost? There are at least 1700 soldiers who have experience traumatic head injuries. Assume roughly 5000 have lost limbs (the number could be much higher). If ongoing care for head injuries costs $400,000 per soldier and artificial limbs and therapy cost $100,000 per limb, that's $1.18 billion.


Reinvent Campaign Finance

Previous attempts at campaign finance reform have been an utter failure. You only need to look at the Delay / Abramhoff scandal and the sewer pipe of campaign ads and accountability slight of hand we just witnessed in this election for that to become clear. Attempts that focus on the source of funding as the root of the evil in our election process are flawed because they only address the "supply side" of campaign communications -- the supply of money that pays for them. They completely fail to address the demand side of the equation -- what voters should demand from candidates about details on their opinions and proposals to address public issues.

Estimates for the cost of the 2006 mid-term election cycle are in the $2.6 billion dollar range. Do YOU feel $2.6 billion dollars more informed about how your Representative or Senator will actually vote on a future issue? Have you ever HEARD your Representative or Senator attempt to speak on their feet for more than five minutes outside the friendly confines of a staged press conference? Most can't, yet they somehow get re-elected.

If even one billion of the NINE BILLION dollars of cash missing in Iraq could be tracked down and recovered, America owes it to itself to spend that one billion dollars on a simple campaign finance experiment in the 2008 election season. Allow ANY candidate who can collect enough signatures to appear on a primary ballot to receive dollars for print, radio or TV advertising of their choice in return for appearing on local or national TV debates. Not just one or two 90 minute debates hosted by a mainstream media anchor asking typical "insider" questions. A minimum of five appearances on one hour debates spread over at least five months. The PUBLIC gets to submit the questions. The mainstream media is required to carry the debates but doesn't pick the questions. This serves many synergistic purposes:

  • independents get heard without battling biases of party bosses who might stifle them

  • voters get to ask questions DIRECTLY of the candidates without filtering by the media

  • the media is taken out of its current, pointless "horserace analysis" mode of reporting

  • the public still gets to see the candidate over several months to see how their positions hold up

  • the public airwaves get used for a valid, civic function

  • independents can reach the national stage without enslaving themselves to special interest funds

  • even if the candidate doesn't survive, the ideas might improve the campaign

Think of it as American Idol meets Democracy. Seriously. The number of Americans who can identify Kelly Clarkson as a winner of American Idol is probably larger than the number that can pick Dick Cheney out of a lineup (hold that thought...) Clearly, the right candidate given the right forum and a chance to lay out a better plan for public policy issues could make an impact and gain a foothold. Critics might argue a long grueling campaign actually does serve a purpose as a rough character test for would-be winners. If you have trouble handling the stress of a campaign or cannot articulate a consistent message, you probably lack the leadership skills for public office. Maybe. However, the only way to widen the talent pool beyond the independently wealthy and traditional party players is to give others a chance to get new ideas into the process. The current money oriented campaign process has surrendered our democracy to Madison Avenue techniques for manipulation and "market segmentation". No amount of funding will improve the quality of debate in the current model.

Sunday, November 05, 2006

Contradictory Numbers on the Economy

Reports were issued last week about job growth, inflation and growing tax revenues lowering previously predicted budget deficit figures. Like everything else in economics, the numbers serve more as a political Rorschach test indicator of the observer than a useful measure of the economy worth using to support policies.

JOBS AND UNEMPLOYMENT -- Last week's labor numbers reflected both a drop in long term unemployment claims, an increase in first-time unemployment claims and the lowest overall unemployment figure (4.4 percent nationally) in four years. Conservatives viewed this as proof that tax cuts have stimulated the economy, producing more jobs. Wall Street viewed this as a sign that low unemployment would strengthen workers' position bargaining for wages, drive UP inflation, and make the Federal Reserve reconsider some interest rate hikes to thwart inflation.

The jobs numbers are troubling for two reasons. First, the overall unemployment calculation includes a recalculation of job growth figures from August and September that added 139,000 additional jobs. The constant readjustment of economic statistics from the government for the past few years is highly suspect. I don't recall a single readjustment that WORSENED economic news. Deficits were always miraculously smaller than predicted. Job growth has always been mysteriously greater than predicted.

The job numbers are also troubling due to the way they are calculated. Short term claims went UP, that's not good. Long term claims declined. However, that literally means the number of people filing for another week of benefits went down. It doesn't mean they found a job. It could mean they are still looking and ran out of eligibility. It could also mean they gave up looking. You are only "unemployed" if you report yourself as looking for work. If you lost your middle management job 6 months ago, looked for 6 months, didn't find anything and have given up for a while as you live off your spouse's income, you aren't unemployed. There's nothing "wrong" with this approach, but you have to be aware of what's really being reported.

Certainly for payrolls, it shouldn't be that hard for the government to accurately counts gains and losses. Every unique combination of a SSN and employer ID on THIS month's withholding payments is a new job. Every unique combination of an SSN and employer ID that was sending withholding dollars LAST month that ISN'T sending them this month is a job lost. Granted, there are exceptions to this based upon how some independent contractors get paid, etc. but it should be easier than the government is making it to report accurate numbers the first time. The constant revisions (always in the rosy direction) smack of incompetence at a minimum or outright manipulation. With the huge volume of highly leveraged derivative investments betting on stock values and macroeconomic factors, the last thing the world economy needs is any government purposely rigging numbers used in the game.

TAX REVENUES AND DEFICITS -- A growing economy adding jobs adds tax revenue on income and capital gains. All other things being equal, higher revenue reduces budget deficits and that's good. Right? Well, it depends on who is paying those taxes. If oil companies who raked in enormous profits from 5 months of $70 plus/barrel oil are paying those taxes, the income being taxed isn't being spread across the larger economy, it's going into the coffers of four or five giant, multi-national companies. If Fortune 100 companies are paying higher income taxes on bigger earnings, that may not help the overall economy if the profits are being increased by eliminating American jobs with off-shore workers making $0.40 on the dollar of American workers. Again, those profits are going into the coffers of large companies that essentially are NOT investing it within America but investing it overseas. That grows corporate profits, in some sense it grows the world economy, but it is not the boost to the American economy suggested by supply siders.

If the deficit is going down, that's good right? Well, it depends on why it is going down. Government spending with two wars going on is an even larger portion of overall GNP than normal. This may have something to do with the "growth" in the economy but in one sense, the economy may not have grown enough to reflect the true cost of the war. Stories were out last week as well about how the Pentagon has been preparing to unleash a flurry of orders for equipment to replace the equipment wearing out in Iraq. The orders will be issued AFTER the elections to avoid spooking voters with more bad news about the cost of the Iraq debacle. In reality, that equipment should have been replaced at the time it was truly worn out, before the military reached the point of operating on fumes, which would have INCREASED military spending over the past 2-3 years. Since no taxes have been specifically levied to pay for this war, all of that spending would increase the deficit. So is the "deficit" really only $248 billion for 2006? Not when the real bill comes due.

ANALYZING THE ECONOMY OVER TIME -- The media recently fixated on the Dow Jones Industrial Average reaching a "record" of 12,000. Us sophisticated investors know the DJIA reflects the dollar value of underlying stocks in the index and yet in large part is "just a number" since it doesn't reflect the value and growth of the entire universe of stocks -- it's not meant to. However, is the Dow around 12,000 today as good as the Dow around 12,000 in April 2000? I've seen arguments made both ways. If the DJIA is itself just an index, it just "is", it's an indicator. However, clearly if the Dow and the larger market it represents stayed flat for 5 years, investors would be better off taking their money out and putting it in T-Bills.

Clearly, that number combined with time and indexing of interest rates and inflation does mean something to investors. More telling, in a recent Forbes editorial, Steve Forbes recently promoted the idea of indexing capital gains for inflation before applying already lowered capital gains tax rates. If it is legitiamte for Steve Forbes to discount his capital gains before paying Uncle Sam, then it is equally legitimate for those watching government policies to do the same before determining if those policies are working as claimed. They're not. We're still WAY behind.

Saddam Hussein: The Making of a Monster

It's official. The Iraqi High Tribunal announced its verdict of guilty in the trial of Saddam Hussein for the killing of 148 Shi'ite Iraqis in 1982. (#1) Of course, the official case against Saddam and today's guilty verdict only act as a proxy for a much greater history of crimes against humanity committed by Saddam during his brutal rule over Iraq as itemized by GlobalSecurity.org (#2):

  • murdering scores of political rivals between 1968 and 1978

  • use of chemical weapons in the Iran-Iraq war which killed at least 150,000 Iraqis and 430,000 Iranians

  • the deaths of 1,000 Kuwaitis in his 1990 invasion of that country

  • at least 30,000 Kurds killed in 1991 as he attempted to regain control of Iraq after U.S. forces withdrew after the Gulf War

There is no lesson to be learned from Saddam's conviction by Saddam or his fellow tribesman and pan-Arabic megalomaniacs. Anyone familiar with his life of brutality who believes he remains the rightful leader of Iraq is a lost cause and needs to be watched carefully and eliminated if they interfere with peaceful Iraqis trying to pick up the pieces of their country.

There ARE lessons to be learned from Saddam's conviction by the rest of the world and, in particular, the United States and supporters of the Iraq War and the larger War On Terror (TM).

Iraqis Have the Courage to Secure Their Freedom

The trial of Saddam bore absolutely no resemblance to any other war crimes tribunal ever conducted in modern history. In other trials, defendants were either tried in locations far away from the locations of their crimes or in an environment where the security of the judges, jury members and prosecution and defense staff was not a material issue. In Iraq, two of Saddam's defense attorneys were murdered, presumably by Shi'ite factions, and two relatives of the trial judge were murdered by Al Quieda terrorists. (#3)

Even if you believe America was pulling strings behind the scenes, it was Iraqis who actively and (for many of them) publicly participated in the trial and accepted the very real threat of murder to pursue the case. There are similar examples of Iraqis fearlessly pursuing prosecution of corrupt officials in post-Saddam Iraq who face similar danger every day. The continued work of these officials and the arrival of new Iraqi citizens at police training camps when they know they are targets for murder is a sign of hope that there are enough Iraqis who can make a difference under the right circumstances.

Monsters Aren't Born, They're Made

As I watched the video of Hussein's reaction to his conviction, my main thought was: This is the monster? He's an incoherent, feeble old man. This isn't a doubt about the acts he committed (see above), but a comment on the real manner in which great social / political / military tragedies come about. Monsters aren't born, they are made. They are made by the people and circumstances around them.

Adolf Hitler didn't kill over six million people in twelve years of Nazi rule by himself. He identified core economic and social fears within his generation that were created by the shame and anger over Germany's loss in World War I. He then found language that promised those failures could be avoided and even avenged by a pure Germany free of racial impurities, thus scapegoating everyone else and especially Jews for problems Germany brought upon itself. If Hitler was the only German with dreams of mass genocide and ethnic purity, no one would have ever heard of Adolf Hitler and Adolf would still be a common German first name.

Josef Stalin didn't kill over ten million Russians between 1922 and 1953 by himself. He leveraged the political and social unrest in early Communist Russia to concentrate his own power while pitting enemies against each other to weaken their influence and control. The result? At least four million people killed via purges and repression and at least six million killed by famines induced by flawed strategies for collective farming and a refusal to recognize their consequences or allow Russians to relocate on their own to avoid the famines. (#4)

So Who Made the Saddam Monster?

First and foremost, the Iraqi people created the Saddam Hussein who became the tyrant who started three wars and brought so much suffering to Iraq. As with the other examples above, it is impossible for one person to initiate so much death and destruction without help from "enablers." This is a lesson the Iraqi people must absorb and internalize as an outcome of Saddam's trial and similar trials of other players within his regime.

Sadly, this is also a lesson that was lost on the United States in planning the invasion of Iraq. Our plan assumed a quick invasion that removed Saddam would solve our problem. We completely ignoring the fact that his power was sustained by an entire cabal of equally corrupt, murderous thugs who would not magically or willingly transform into fair and just civil servants in an open democracy. Recent interviews with notable neo-conservatives such as Richard Perle and Kenneth Adelman indicate they now blame Bush, Rumsfeld and Cheney for creating such an obviously flawed strategy for post-invasion Iraq that has led to the current mess. In other words, the idea was brilliant, the execution was incompetent. (#4)

Do not be fooled. There isn't a single neo-conservative who was involved in the dreaming and planning of the Iraq invasion who understood the need to transform the entire "infrastructure" of corruption and cronyism within Iraq. Our plan was "topple / kill Saddam, stabilize oil production, nail down some oil deals, and get the hell out." PERIOD. There are numerous civilian and military people who understood this at the time and fought for a more coherent plan but they were completely ignored by the neo-conservatives staffing the "Office of Special Plans" within the Pentagon that hatched this entire disaster.

The case of Saddam Hussein merits extra consideration by Americans because the United States played a significant "enabling" role in in Saddam's reign as well. Saddam attacked Iran in 1980 to exploit the chaos in post-revolution Iran. Saddam assumed with tragic results that Sunni Muslims within a militant Shi'ite Iran would prefer being under Saddam's tyrannical thumb to being under a repressive Shi'ite thumb. The Carter Administration repeated a mistake common to America's history in assuming the enemy (Iraq) of my enemy (Iran) is my friend and did nothing to limit the fuel applied to the war. Beginning in 1982, the Reagan administration began six years of active financial support of Saddam by arranging for the sale of weapons and equipment worth billions of dollars to ensure Iran did not defeat Iraq. (#6) Saddam was viewed as a strategic ally (albeit a worrisome, murderous, borderline-psychotic ally) by the United States until he surprised us by invading another ally, Kuwait.

Americans and our leaders need to think long and hard about the verdict on Saddam Hussein and what it means. There is already a direct corollary from the "enemy of my enemy is my friend" lesson of the Saddam fiasco. The United States is currently avoiding direct actions to stop the genocide in the Darfur region of Sudan because we believe the Sudan government might eventually share additional information on Osama bin Laden. We are essentially sacrificing hundreds of thousands of innocent Sudanese in the hope of getting information on one terrorist who killed 2793 innocent Americans. If the government of Sudan was truly willing to "play ball" or had any information of value, do you think we would still be waiting for crucial information five years after the attack? Here's a quote from a Los Angeles times story that summarizes this insanity in one simple sentence:

The Sudanese government, an unlikely ally in the U.S. fight against terror, remains on the most recent U.S. list of state sponsors of terrorism. (#7)

What are people in Africa learning about America's morality from that "strategic" calculation? I suppose they're not important. They don't have any oil, right?

The most important lesson from the conviction of Saddam Hussein seems very obvious, however. It is far too easy to create a monster and frightfully difficult to replace one.


#1) http://news.yahoo.com/s/ap/20061105/ap_on_re_mi_ea/saddam_verdict

#2) http://www.globalsecurity.org/military/world/iraq/saddam.htm

#3) http://www.turkishpress.com/news.asp?id=144230

#4) http://en.wikipedia.org/wiki/Stalin

#5) http://www.vanityfair.com/politics/features/2006/12/neocons200612

#6) http://en.wikipedia.org/wiki/U.S._support_for_Iraq_during_the_Iran-Iraq_war

#7) http://www.globalpolicy.org/empire/terrorwar/analysis/2005/0429sudan.htm