The Buying Of America

The Supreme Court just barely did the right thing in the case of a West Virginia coal baron who bought a judge, exposing the right wing of the Court as openly hostile to the rule of law so long as corporations are involved.

When West Virginia coal overlord Don Blankenship’s company lost a $50 million verdict to one of its competitors, Blankenship set out to buy a judge. Rather than appeal his case to a fair tribunal, Blankenship spent $3 million to elect a friendly lawyer to the West Virginia Supreme Court, even running ads accusing the lawyer’s opponent of voting to free an incarcerated child rapist, and of allowing that rapist to work in a public school. Once elected by a Blankenship-funded campaign, the newly-minted justice cast the deciding vote overturning the verdict against Blankenship’s company.

Today, the Supreme Court held that this kind of justice-for-sale bribery has no place under the United States Constitution. But all four of the Court’s most conservative members voted that there is no problem when a wealthy businessman literally buys a judge. In a dissent joined by conservative justices Antonin Scalia, Clarence Thomas, and Samuel Alito, Chief Justice John Roberts argued that this decision — on a case so egregious that John Grisham turned it into a legal thriller — would encourage “groundless” charges that other “judges are biased”.

Despite the slaivishness of the Scalia-Thomas-Alito-Roberts faction, the Court ruled correctly that wealthy defendants should not interfere with the legal process through campaign contributions. But what about the wealthy who contribute to the campaigns of politicians who make decisions affecting their interests?

It seems strange, almost surreal, to say this, but the Republican Party, and arguably the whole conservative movement, is not the left's biggest enemy at the moment. On keeping a public plan in healthcare reform; streamlining student lending; and passing the Employee Free Choice Act (EFCA), cap and trade, financial regulation and a host of other structural economic reforms progressives hope to enact, the GOP is more akin to the garbage men than the alderman.

"Most Republicans aren't waking up every day thinking, How do we kill banking regulation?" says Goehl. "Most people who listen to Rush Limbaugh aren't waking up thinking about how do we kill banking regulation. But the people with the deep pockets who have power in DC are thinking that [...]

While the Republican Party shrinks, corporate interests are deftly molting their old K Street Project skin and crawling en masse inside the big tent being pitched by the Democratic Party. These same corporate interests have always had a purchase on Democrats, of course. But for much of the last decade, business interests had the luxury of spending most of their resources aiding their allies in the GOP.

No more. Writing on The Atlantic's website, Scott Bland and Ronald Brownstein identify the emergence of what they dub "The Democratic Industrial Complex." Energy and healthcare companies, automakers and banks all understand that the Democrats control much of their fate, so they've cast their lot with the majority party in a big way: John Kerry got less than 20 percent of the donations from electric utilities; Barack Obama got almost 60 percent. So far in this cycle, Democrats have captured two-thirds of the donations from the healthcare industry.

If big business's old legislative strategy was centered on relentless opposition to progressive initiatives--an approach that continues in areas like EFCA--the new strategy is to subvert legislation through co-optation, as in healthcare and cap and trade. By converting themselves, ostensibly, from opponents to "partners," corporate lobbies are trying to have it both ways: to block reforms while changing overt power struggles over the future of the economy into seemingly cooperative negotiations. At these negotiations, to use the president's favorite phrase, "everyone has a seat at the table"--except, the lobbyists get by far the best seats. (Alinsky didn't have much patience for this approach. "This liberal cliché about reconciliation of opposing forces is a load of crap," he once said. "When one side gets enough power, then the other side gets reconciled to it.")

Paul Krugman kind of gets at this today, in discussing the imminent fall of Gordon Brown in Britain. He generally acknowledges that thrall to financial innovation is a bipartisan problem, and the punishment from the electorate just depends on a kind of musical chairs, where whoever happens to be in the leadership bears the brunt of the pain.

Now, I don't expect this Supreme Court to strike down all campaign contributions. But it certainly does argue for full public financing, to remove this coziness between the oligarchs and the government they routinely buy.

The Fall Of Gordon Brown

So Gordon Brown is either just barely holding on, if you read the stateside papers, or probably in a good position to survive if you read the papers in Britain. Clearly Brown is just marking time until his inevitable exit after elections in around 2010, because I cannot see Labour being able to hold off the challenge from the Conservatives. Basically every incumbent from around the time of the financial meltdown has no shot of surviving, as a rule of thumb. But the tenor of the immediate, near-term threat to Brown's power really changes depending on what paper you read.

What makes this truly sad is that Brown exercised early and decisive leadership on the financial crisis, and steered the policy discussion in the right direction. Nevertheless, he's being blamed both for scandals beyond his control, like the expense account scandal among top political leaders, as well as general blame for the worsening economic conditions, for which he also should not necessarily be faulted, although he was the exchequer while the bubble was inflated.

Back To Reality

The stock market provided perhaps the right punctuation to this Inauguration Day, reminding everyone that the economy won't magically repair itself because of the change in occupancy at the White House. In fact, given the deterioration in the banking sector this past week, I'd say we got off easy with just a 4% drop.

NEW YORK (AP) -- Fear that the global banking crisis is worsening sent financial stocks plunging Tuesday, with many companies' shares down by double-digit percentages and Citigroup Inc. diving to a 17-year low.

Disheartening news came from U.S. and British banks: They are still suffering losses from loans and are warning that those losses will not subside anytime soon. Regional banks as well as the big money center banks are struggling [...]

Evidence that the banking crisis is worsening overseas also rattled investors. On Monday, the Royal Bank of Scotland forecast a loss of $41.3 billion in 2008. That led the British government to increase its stake in RBS to nearly 70 percent, essentially nationalizing the bank. Separately, the British government announced a new round of bailouts for the country's troubled banking industry.

Bank stocks also dropped in the aftermath of multibillion losses announced Friday by Citigroup Inc. and Bank of America Corp.

15-20% losses were the NORM for a lot of banks today. The UK banks are getting a very generous bailout, with guarantees made against their losses in mortgage-backed securities, instead of allowing the shareholders to bear the brunt of the pain. Gordon Brown may want to clean up the balance sheets but he's really just sinking massive amounts of money into the system. Meanwhile, the US is considering building a "bad bank" where the toxic waste would all flow to, paying off banks for ridding themselves of their own self-created problems. Paul Krugman had a good piece on this yesterday; basically, we're using an artificial respirator to keep the banks alive. They are completely dependent on the government, and yet we are unwilling to do the cheaper and more sensible thing and just nationalize them.

Sheila Bair, the chairwoman of the Federal Deposit Insurance Corporation, recently tried to describe how this would work: “The aggregator bank would buy the assets at fair value.” But what does “fair value” mean?

In my example, Gothamgroup is insolvent because the alleged $400 billion of toxic waste on its books is actually worth only $200 billion. The only way a government purchase of that toxic waste can make Gotham solvent again is if the government pays much more than private buyers are willing to offer.

Now, maybe private buyers aren’t willing to pay what toxic waste is really worth: “We don’t have really any rational pricing right now for some of these asset categories,” Ms. Bair says. But should the government be in the business of declaring that it knows better than the market what assets are worth? And is it really likely that paying “fair value,” whatever that means, would be enough to make Gotham solvent again?

What I suspect is that policy makers — possibly without realizing it — are gearing up to attempt a bait-and-switch: a policy that looks like the cleanup of the savings and loans, but in practice amounts to making huge gifts to bank shareholders at taxpayer expense, disguised as “fair value” purchases of toxic assets.

Why go through these contortions? The answer seems to be that Washington remains deathly afraid of the N-word — nationalization. The truth is that Gothamgroup and its sister institutions are already wards of the state, utterly dependent on taxpayer support; but nobody wants to recognize that fact and implement the obvious solution: an explicit, though temporary, government takeover. Hence the popularity of the new voodoo, which claims, as I said, that elaborate financial rituals can reanimate dead banks.

There are very real consequences to this. We've already lost something like $64 billion dollars from the initial TARP release (remember when that was called an "investment" and we were all assured we would get the money back?). Everybody's tiptoeing around the solution. England owns 70% of the Royal Bank of Scotland and won't nationalize it.

Without President Obama (yay, I get to write that!) leveling with the American people, we will continue to waste more money propping up an insolvent set of banks.

Scumbag Millionaires

You can be forgiven for wondering why Bernard Madoff would try to steal billions in the first place. He was already rich and well-respected, and none of his investors would have complained, presumably, about losses in the midst of the economic collapse of the past few years. But what's coming out in the past 48 hours, about how Madoff had signed checks totaling $173 million ready to pass off to employees at the time of his arrest (I'm assuming to hold it for him), and how he's been mailing jewelry and watches SINCE his arrest, suggests that he's just one of these "greed is good" thieves who always needed more, no matter his position or standing.

The detail was provided in a court filing Thursday as prosecutors argued that Madoff should have his bail revoked and be sent to jail. They said the checks were further evidence that he wants to keep his assets away from burned investors.

In the filing, Assistant U.S. Attorney Marc Litt said Madoff cannot be trusted because he had long engaged in a "scheme that required the defendant to lie routinely to thousands of people and a scheme which has caused extraordinary damage to individuals, families, and institutions all over the world."

The judge will now decide whether Madoff should be sent to jail or remain free on bail in his luxury Upper East Side penthouse.

I would say jail at the very least. And some investors or the US Treasury could use all those assets, too.

As for what to do about the larger problem of financial industry fraud, the SEC is broadening their investigation, and even Republican Congressmen are talking about a "statutory and regulatory structure for the 21st century." I would hope that this doesn't narrow into a solution about how to stop Ponzi schemes. The sickness lies in the lack of regulation throughout the financial services industry. Here's what the President-elect had to say about it, and I think it's largely on point.

Obama: Well, by the time that G-20 meeting takes place, we, I believe, will have presented our approach to financial regulation. I think some international coordination has to be done. But right now, we just have to take care ... (unintelligible) ... and Wall Street has not worked, our regulatory system has not worked the way it's supposed to. So it's going to be a substantial overhaul. We're going to have better enforcement, better oversight, better disclosure, increased transparency. We're going to have to look at this alphabet soup of agencies and figure out how do we get them to work together more effectively. We've got to stop splintering functions in such a way that capital in one form is treated one way and capital in another form is treated another way, because these days in global financial markets, they're all fungible. And there's systemic risks that are possible, whether it's in the form of derivatives or insurance or traditional bank deposits. So we've got to update the whole system to meet the needs of the 21st century. This is an assignment that my team is already beginning to work on and I think that we will have, fairly shortly, a package that we've worked alongside Barney Frank and Chris Dodd, to present to the American people.

This is the perspective we need. The failure of the SEC to recognize the Madoff crime is shameful, especially considering the warning signs were there and investment officers were actually trying to warn them. But the real failure is that the financial industry as an institution was disinclined to blow the whistle.

What’s interesting about the Madoff scandal, in retrospect, is how little interest anyone inside the financial system had in exposing it. It wasn’t just Harry Markopolos who smelled a rat. As Mr. Markopolos explained in his letter, Goldman Sachs was refusing to do business with Mr. Madoff; many others doubted Mr. Madoff’s profits or assumed he was front-running his customers and steered clear of him. Between the lines, Mr. Markopolos hinted that even some of Mr. Madoff’s investors may have suspected that they were the beneficiaries of a scam. After all, it wasn’t all that hard to see that the profits were too good to be true. Some of Mr. Madoff’s investors may have reasoned that the worst that could happen to them, if the authorities put a stop to the front-running, was that a good thing would come to an end.

The Madoff scandal echoes a deeper absence inside our financial system, which has been undermined not merely by bad behavior but by the lack of checks and balances to discourage it. “Greed” doesn’t cut it as a satisfying explanation for the current financial crisis. Greed was necessary but insufficient; in any case, we are as likely to eliminate greed from our national character as we are lust and envy. The fixable problem isn’t the greed of the few but the misaligned interests of the many.

(More here.)

You can say much the same about credit default swaps, or mortgage-backed securities, or the credit-rating industry, or any of the instruments and institutions that failed the country. In short there was nothing stopping them from maximizing their own interests and insulating themselves, not the economy, from risk. The problem is bad incentives, and they directly stem from free-market fundamentalism without limits or controls. It's a system where cheerleading is encouraged and dissent is verboten. Where the interests of the shareholders are subservient to the interests of the bondholders and the CEOs. And that MUST change. To quote Gordon Brown, one of the few leaders on the global scene during this crisis:

The prime minister said 2008 would be remembered as the year in which "the old era of unbridled free market dogma was finally ushered out". In his traditional new year message, Brown struck a tone of tempered optimism, saying that Britain can this year build a better tomorrow through strategic investments while dealing with the dangerous challenges of today.

He said: "The failure of previous governments in previous global downturns was to succumb to political expediency and to cut back investment across the board, thereby stunting our ability to grow and strangling hope during the upturn. This will not happen on my watch."

Absolutely. 2008 was the year when free market dogma became so toxic it nearly swallowed up the entire financial system and the fortunes of untold millions. Madoff is not an oddity; he's an EXAMPLE. An example of what can never happen again.

World Report

Here are a few things that caught my eye.

• Will you look at that, another foreign policy failure for the Bush Administration. They're basically saying that, with the Israeli government in a fair bit of turmoil, there isn't likely to be any movement on a Mideast peace deal. This is what happens when you wait 7 1/2 years to pay any attention to the Arab-Israeli conflict. I know the economic crisis is all-consuming, but Obama would do well to attack this early in his Administration, because it truly is the linchpin to peace throughout the region, and ignoring it for years will only cause more violence and resentment.

• Not that Israel is necessarily going to be inclined to cooperation with Obama. Tzipi Livni, who is the more "dovish" of aspirants for the Prime Minister's post, warned the President-elect that dialogue with Iran would be unwise because it may project "weakness." I don't think Obama will agree - but this gives you an insight into the prevailing mindset in Israel regarding Iran, driven more by paranoia than facts (the consensus of the US intelligence community is that Iran has no nukes, a fact that is conveniently forgotten).

• The E.U. is eager for financial reforms to regulate international banks, but waiting for President Bush to do the right thing is a Godot-like experience. Their plan, to hammer out reforms now and reassess them when Obama takes office with his input, is decent enough, I just think it's wishful thinking.

• Practically the only politician coming out of the financial fallout looking sound is Gordon Brown, who was one of the few to implement a solution that matched the problem. Voters in England appear to be responding by giving his party a boost, as Labour won a key byelection in Scotland. Brown was part of the Blair regime that was as asleep at the switch as every other world government leading up to the crisis, so I'm not sure he deserves all this praise, but I do think he's recovered enough to actually contend for his re-election instead of the sure defeat to the Tories predicted earlier.

• All hell is breaking loose in Zimbabwe, and right on schedule. After negotiating a power-sharing agreement, Robert Mugabe is now going to form his own government and deny cabinet posts to his rival Morgan Tsvangirai. The only surprise is that this didn't happen sooner. I hope Tsvangirai has a food-taster. Mugabe plays for keeps.

• Remember when the Russian "invasion" of Georgia was the greatest international crisis since the end of the Cold War? Turns out that it not only was not a consequential crisis on par with, say, the war in Iraq, but it was not a Russian invasion.

TBILISI, Georgia — Newly available accounts by independent military observers of the beginning of the war between Georgia and Russia this summer call into question the longstanding Georgian assertion that it was acting defensively against separatist and Russian aggression.

Instead, the accounts suggest that Georgia’s inexperienced military attacked the isolated separatist capital of Tskhinvali on Aug. 7 with indiscriminate artillery and rocket fire, exposing civilians, Russian peacekeepers and unarmed monitors to harm.

This is good journalism but you could have considered the source of the scaremongering - neocons with an agenda - back when the whole thing was in the news, and drawn the same conclusion. Neocons are wrong about everything. And the way to break their lock on power is to find everyone who hasn't been wrong about everything, regardless of ideology or political party, and put them in a room together, and unify them against these clowns. There's a lot at stake.

Comeback

Stocks are shooting up today. Why? Well, over the weekend, European leaders followed the lead of Gordon Brown and Britain (who bought up the Royal Bank of Scotland today), announcing plans for equity stakes in banks, and more important, vows to guarantee interbank lending. If that can't grease the skids of the credit market, absolutely nothing can. And since it's a global financial market, this affects Wall Street.

There's also Mitsubishi's buy of a stake of Morgan Stanley, and federal officials guaranteed that stake, protecting the company.

This has appeared to be enough, for now.

As I said a couple days ago, Brown seemed to have the right idea all along, to recapitalize the banks in exchange for equity stakes. Here's Nobel Prize winner Paul Krugman:

This sort of temporary part-nationalization, which is often referred to as an “equity injection,” is the crisis solution advocated by many economists — and sources told The Times that it was also the solution privately favored by Ben Bernanke, the Federal Reserve chairman.

But when Henry Paulson, the U.S. Treasury secretary, announced his plan for a $700 billion financial bailout, he rejected this obvious path, saying, “That’s what you do when you have failure.” Instead, he called for government purchases of toxic mortgage-backed securities, based on the theory that ... actually, it never was clear what his theory was.

Meanwhile, the British government went straight to the heart of the problem — and moved to address it with stunning speed. On Wednesday, Mr. Brown’s officials announced a plan for major equity injections into British banks, backed up by guarantees on bank debt that should get lending among banks, a crucial part of the financial mechanism, running again. And the first major commitment of funds will come on Monday — five days after the plan’s announcement.

At a special European summit meeting on Sunday, the major economies of continental Europe in effect declared themselves ready to follow Britain’s lead, injecting hundreds of billions of dollars into banks while guaranteeing their debts. And whaddya know, Mr. Paulson — after arguably wasting several precious weeks — has also reversed course, and now plans to buy equity stakes rather than bad mortgage securities (although he still seems to be moving with painful slowness).

While President Paulson was concerned with whether any plan fit with a carefully constructed ideology, Brown actually looked at the problem and sought to fix it.

It's important not to breathe a sigh of relief and think the crisis is solved. It's not. There are still systemic problems and a virtual certainty of recession. That requires an entirely different response. Getting the credit markets working again is only a start.

Today In Economic Armageddon

The Federal Reserve joined forces with central banks across the world for a coordinated interest rate cut of 50 basis points. They're obviously throwing concerns about inflation out the window and trying to kickstart the credit markets, but Paul Krugman explains why that is not likely to work.

A quick illustration: in early July 2007, before the crisis, the target Fed funds rate was 5.25% and the rate on 30-day A2/P2 commercial paper — that is, CP issued by less-than-sterling borrowers — was 5.4%. On Monday of this week, the target Fed funds rate was 2%, down 325 basis points from pre-crisis levels, but the CP rate was 5.61% — up from pre-crisis levels.

So will this latest rate cut make any difference to borrowers? Maybe — but only to a few of them. We’re way past the point at which conventional monetary policy has much traction.

On top of this you have the Fed jumping into the commercial paper market, perhaps illegally, to get the rates they can't touch through monetary policy lowered. And they're starting to lend to private companies, putting more taxpayer dollars at risk.

These look like desperate attempts to stave off the inevitable, and nobody's really certain whether or not they'll work. What I think we have here is the policymakers in the White House trying to rescue their failed ideology and not the market. They want to use everything in their power (and a few things that aren't) to halt a slide to recession, as long as it doesn't look socialist and icky. What's more, they'd rather reward their friends on Wall Street than punish them, even though they have the opportunity to do either with the authority granted in the Paulson plan. The wiser move would be to follow Britain and just nationalize the banks already.

Britain’s largest banks are to be part-nationalised after the government took the momentous decision to pump tens of billions of pounds of public money into the sector to avert a banking collapse [...]

Under the UK bank rescue, the government is to put up to £250bn into the banking system in an effort to keep banks lending. It will also offer a guarantee to banks issuing medium term debt, which could mean backing a further £250bn of bank borrowings. But it is likely to demand dividend cuts and the end of big bonuses at the banks in return.

This is clearly what we should be doing here; a Swedish-style temporary nationalization with large equity stakes. It's cheaper and is more likely to be effective. And it looks like Emperor Paulson is slowly resigning himself to that reality:

Did anybody else notice that when Hank Paulson was describing in his press conference today what the Emergency Economic Stabilization Act enables Treasury to do, the first thing he listed was “to inject capital into financial institutions”?

That wasn’t how Treasury initially advertised its Troubled Asset Relief Program. It was sold as a way to get the market for mortgage securities moving (or, to use the jargon, liquid). Lots of academic economists objected that liquidity wasn’t the problem, it was insolvency. What Treasury needed to do was recapitalize financial institutions and take equity stakes in return […]

None of the people asking questions at the press conference really seemed to pick up on this, of course (&%%$# Washington journalists!). Along with Paulson’s affirmation that the FDIC was going to use its “systemic risk” powers to protect depositors and unsecured creditors “as appropriate,” I take it as one more sign that we’re headed toward a Swedish solution of our banking crisis—recapitalization and temporary nationalization of much of the banking system.

The second half of this needs to be a real stimulus bill for ordinary Americans which includes aid to state and local governments as well as infrastructure investment. And that's exactly what Nancy Pelosi is calling for.

DENVER - House Speaker Nancy Pelosi said Wednesday that a $150 billion economic stimulus plan is needed now because of the faltering economy and she may call the House into session after the election to pass it [...]

The Senate is expected to be back at work after Election Day to complete a public lands bill and perhaps deal with other matters, such as a measure to extend unemployment benefits. The House also could return to consider a stimulus plan and additional issues in a lame-duck session before the newly elected Congress takes over in January.

"We may have to go back into session before the next Congress," Pelosi said.

Pelosi said a stimulus package would create jobs by investing in public works, increasing food stamps benefits and extending unemployment insurance for the long-term jobless. She said lawmakers need to "hunker down" and look closely at the federal budget for possible savings, and reconsider whether the U.S. can afford to fight "a war without end" in Iraq.

Reality is intruding on the fantasy scenario that we can continue to prop up the financial system with funny money. The reckoning is going to be painful but we should at least start to head in the right direction.

Cluster Bomb Breakthrough

Gordon Brown hasn't had a great couple of months, but he showed some backbone today and greatly improved prospects for an international ban on cluster bombs.

In a major diplomatic defeat for the U.S., Britain broke ranks Wednesday and joined more than 100 nations in agreeing in principle to an international ban on cluster bombs, the small, insidious weapons that have killed thousands of civilians in the aftermath of battle.

Though the Bush administration has lobbied hard against the treaty and many U.S. and British officials consider cluster bombs valuable weapons, British Prime Minister Gordon Brown overruled elements of his own military and threw his support behind the prohibition. Brown's decision cleared the way for an agreement that supporters said would lead to the removal of cluster munitions from arsenals around the world.

Most interestingly, the convention not only prohibits the use and stockpiling of cluster bombs among signatories, but it calls on any nation conducting joint military operations with a non-signatory to "actively discourage use of the weapons." With Britain on board, that will have an impact on the United States regardless of what a future President and Congress do with the treaty (for example, these have been used in Iraq).

Cluster bombs are a truly hideous by-product of modern warfare, canisters that open upon ejection and pour a series of "bomblets" across a wide area that are meant to explode on impact. However, up to 25 percent do not, creating minefields that kill hundreds or even thousands of civilians wherever they are deployed.

But while a ban on these weapons would be a major human rights victory, it is more reflective of the waning credibility of the United States under Bush. It would have been unthinkable a few years ago for a stalwart ally like Great Britain to break with the US on a diplomatic issue such as this. But Brown is in trouble domestically, and may have seen such a split as a political cure-all. It's not only McCain who wants to show his independence from Bush. Moreover, here is the United States, on the wrong side of a human rights issue YET AGAIN, lining up with China and Russia and using technicalities like "China and Russia don't support it, so we won't" to justify their behavior. Which is essentially saying that "We don't think this effort will succeed until you bring users of the weapons, like us, to the table."

How many foreign policy failures from this Administration can you name off the top of your head? Because you can add this one.

Security Van Relay Today In San Francisco

The phalanx of security around this Olympic torch relay in San Francisco is ridiculous. You probably can't even see the runners unless you're in a helicopter. Mayor Newsom truncated the relay from 8 miles to 3 just a few hours before the parade started. And they keep changing the route with each passing corner, as if they're making it up on the fly. Not sure why Newsom should have bothered at all. Hundreds of security forces forming a human chain - must be proud, eh, San Francisco?

There are some live photos of the protest here, including a bus driver coming perilously close to running over protesters.

Meanwhile, British Prime Minister Gordon Brown has vowed to skip the opening ceremonies in Beijing. The will of the people is being democratically expressed.

Here's a live feed of the relay.

...There's also a liveblog at Daily Kos. Apparently the protesters got fairly close to the relay a couple minutes ago, halting it for a stretch.

A friend emails:

i just stood out on embarcadero for over an hour while the cops told us "it's coming, it's coming right along here." meanwhile the torch was already headed at its ponderous pace down van ness. fucking pissed.

Yes, the route apparently keeps changing. Apparently the protesters got fairly close to the relay a couple minutes ago, halting it for a short while. It's kind of a cat-and-mouse game right now. The torch isn't going anywhere near the scheduled finish line at Justin Herman Plaza, that's pretty clear. It's around Crissy Field right now, headed west toward the GG Bridge. And I guess there's an amphibious vehicle out in front of the relay runners. That torch may be getting wet.

UPDATE: AP: "Closing ceremony for torch relay will take place at an undisclosed location." Will Dick Cheney be lighting the torch with his eyes, then?

It's a good thing that the people of San Francisco were honored with the ability to have this ceremony hidden from them.

No Fair, WE Get To Start The Next War

Not Turkey, I mean, who are they?

Turkey's ruling party decided Tuesday to seek parliamentary approval for an offensive against Kurdish rebels based in northern Iraq, a move that could open a new front in the Iraq war and disrupt one of that nation's few relatively peaceful areas.

The government did not say it had decided to launch such an attack, which could jeopardize Turkey's ties with the United States. The U.S. warned against sending troops across the border and urged Turkey to work with Iraq's government to quell the Turkish Kurd guerrillas.

Considering that the Iraqi government has little leverage in Kurdistan, and is also non-functional in general, I don't see how they can help any nation with anything.

This has been the great fear coming out of Iraq for some time. Allowing the Kurds to go basically autonomous invited this kind of cross-border terrorism, and Turkey honestly has a right to defend themselves. The problem is that this has the potential to spill out far beyond Turkey and provoke a wider war, with the involvement of all kinds of ethnic regions. And the US will be stuck right in the middle.

I don't really trust the diplomatic power of the White House to massage this into a good place, do you?

As a side note, maybe we can get Gordon Brown to work on this one, he seems to have figured out that Middle Easterners are tired of colonialism:

Prime Minister Gordon Brown of Britain told the House of Commons on Monday that the number of British troops in Iraq will be cut in half to 2,500 by next spring, and he left open the strong possibility that all British soldiers will leave Iraq by the end of 2008.

Brown said the reductions -- down from about 5,000 British soldiers now -- are possible because of the progress made in training Iraqi security forces. He described the situation in Basrah in southern Iraq, where the British troops are based, as "calmer."

See, foreign troops occupying your country has a tendency to inflame the local populace.

As for the next war in Turkey, a NATO ally by the way... well, that's a whole other kettle of fish.

Loyalty Is A One-Way Street

Under HLIC (head lapdog in charge) Tony Blair, Great Britain did absolutely everything that the Bush Administration wished, and covered for the disastrous policy in Iraq. Now that Gordon Brown is in charge, and he clearly doesn't share the same neocon ideology (and he wants to get elected at some point, so he's keeping his distance from Bush), British policies are changing. They're withdrawing from Iraq rapidly. And the White House is peeved, so they're lashing out, not at Brown's judgment, but the performance of their armed forces:

“There’s concern about Brown,” a senior White House foreign policy official told The Daily Telegraph. “But this is compensated by the fact that Paris and Berlin are much less of a headache. The need to hinge everything on London as the guarantor of European security has gone.”

The White House official added that Britain would always be “the cornerstone” of US policy towards Europe but there was “a lot of unhappiness” about how British forces had performed in Basra and an acceptance that Mr Brown would pull the remaining 4,500 troops out of Iraq next year.

“Operationally, British forces have performed poorly in Basra,” said the official. “Maybe it’s best that they leave. Now we will have a clear field in southern Iraq.”

I eagerly await the reoslution of censure in the British House of Parliament for the White House's slander of their fighting men and women. Of course, if you're Republican, it's OK to defame the troops (and it's doubly OK to censor any rebuttals to that slander). If you're a Democrat, it calls for immediate action (even if it's not actually slander).

It's pretty disgraceful for the US to drop their most loyal ally because they won't set the same course for the center of the sun. Indeed, the relations are now quite frosty.

There has been a notable reduction in contact between Downing Street and the White House since Mr Blair left and US officials have remarked on how few British ministers have visited Washington in recent months.

Mr Brown and Mr Bush are understood to have spoken twice by telephone in three months since they met at Camp David in June, whereas Mr Blair and Mr Bush held video-link conferences, often weekly.

....A British diplomatic source said: "In the White House there's a sense of enormous change from Blair. They used to be on the phone to Blair all the time and that's no longer the case because Brown clearly wants to be the unBlair."

Of course, this fits in with the Bush definition of ally: a country that agrees with me wholly and completely. Anyone else is an enemy. With us or agin' us.

UPDATE: Here's an example of how that plays out.

Bush is a classic insecure authoritarian who imposes humiliating tests of obedience on others in order to prove his superiority and their inferiority. In 1999, according to Draper, at a meeting of economic experts at the Texas governor's mansion, Bush interrupted Rove when he joined in the discussion, saying, "Karl, hang up my jacket." In front of other aides, Bush joked repeatedly that he would fire Rove. (Laura Bush's attitude toward Rove was pointedly disdainful. She nicknamed him "Pigpen," for wallowing in dirty politics. He was staff, not family -- certainly not people like them.) [...]

At a political strategy meeting in May 2004, when Matthew Dowd and Rove explained to him that he was not likely to win in a Reagan-like landslide, as Bush had imagined, he lashed out at Rove: "KARL!" Rove, according to Draper, was Bush's "favorite punching bag," and the president often threw futile and meaningless questions at him, and shouted, "You don't know what the hell you're talking about."

Those around him have learned how to manipulate him through the art of flattery. Former Secretary of Defense Donald Rumsfeld played Bush like a Stradivarius, exploiting his grandiosity. "Rumsfeld would later tell his lieutenants that if you wanted the president's support for an initiative, it was always best to frame it as a 'Big New Thing.'" Other aides played on Bush's self-conception as "the Decider." "To sell him on an idea," writes Draper, "aides were now learning, the best approach was to tell the president, This is going to be a really tough decision." But flattery always requires deference. Every morning, Josh Bolten, the chief of staff, greets Bush with the same words: "Thank you for the privilege of serving today."

Apparently, Gordon Brown isn't whispering the right sweet nothings.

Hope In Darfur

This is indeed good news, and it was orchestrated by the UK, not the US. This is kind of what I was talking about when I discussed Gordon Brown's visit the other day. He appears to be skilled at getting others to agree with him and also think it was their idea all along:

Gordon Brown scored a dramatic first foreign policy victory last night when the UN security council voted to deploy a 26,000-strong international force to Darfur, with a mandate to stop the massacres of civilians which have driven 2 million people from their homes.

Mr Brown has made Darfur a foreign policy priority, and the UN resolution was an initiative he promoted 10 days earlier with the French president, Nicolas Sarkozy, aiming to end a year of international drift on the issue. This week he secured George Bush's support for the draft.

The vote was passed unanimously after China, the Sudanese government's main defender at the UN, dropped its objections. British officials said that China's oil interests in Sudan were eventually outweighed by anxiety about a possible international human rights backlash over Darfur aimed at next year's Olympic Games in Beijing.

It looks like Sudan will support the force as well. I'm liking Gordon Brown so far. It's also important for the credibility of the UN to achieve some global consensus on the side of human rights. Though there is reason for reservation:

Human rights activists welcomed last night's vote, but warned that a lot more political will would be needed to ensure the security council decision was implemented in the face of potential obstructionist tactics by Khartoum, which had referred to similar versions of the resolution as "ugly" and "awful".

The resolution had been stripped of any threat of sanctions against the Sudanese government if it blocked the force's deployment, though Mr Brown said his government would "redouble" efforts to impose an embargo if that happened.

"It is not time ... to pop open the champagne bottles. The true test of this measure is not what happens today in New York, but what happens over the coming weeks in Darfur," Allyn Brooks-LaSure of the Save Darfur Coalition said last night.

Incidentally, the breakthrough in Darfur may be coming about due to a giant underground lke recently discovered there. If the resource wars can end there, suddenly there would be less of a need to drive people off their land. It's amazing how much the environment can be linked to gloal security.

The Chocolate Labradoodle

(Get it, it means a Brown poodle! Damn I'm good!)

I listened to this press conference from the new UK Prime Minister Gordon Brown and Bush this morning, and I didn't get this impression at all. Brown was cordial in agreeing with Bush on a number of issues, but a lot of those issues he assumed agreement were things like Darfur and global warming, where Brown wants to push Bush to his side. And as far as Iraq was concerned, Brown refused to go any further than discuss the four provinces over which the UK has specific authority. He didn't venture outside of Basra. And he said Afghanistan was "the central front in the war on terror," despite denying he said so within 10 minutes of that remark.

I think Brown's playing an interesting political game, playing to Bush's obvious vanity while forcing his hand on global issues other than Iraq. I came out of listening to him liking his approach.

Good Progress

Six more soldiers were killed by a roadside bomb yesterday west of Baghdad, adding to a bloody weekend. This in a week when we learn that al Qaeda is raking in the dough thanks to our continued presence in Iraq.

A major CIA effort launched last year to hunt down Osama bin Laden has produced no significant leads, but has helped track an alarming increase in the movement of al-Qaida operatives and money into Pakistan's tribal territories, according to senior U.S. intelligence officials.

In one of the most troubling trends, U.S. officials said al-Qaida's command base in Pakistan increasingly is being funded by cash from Iraq, where the terrorist network's operatives are raising substantial sums from donations to the insurgency as well as kidnappings of wealthy Iraqis and other criminal activity.

And when we learn that Iraq is likely to become a failed state:

There is not 'one' civil war, nor 'one' insurgency, but several civil wars and insurgencies between different communities in today's Iraq. Within this warring society, the Iraqi government is only one among many 'state-like' actors, and is largely irrelevant in terms of ordering social, economic, and political life. It is now possible to argue that Iraq is on the verge of being a failed state which faces the distinct possibility of collapse and fragmentation. These are some of the key findings of Accepting Realities in Iraq a new Briefing Paper written by Dr Gareth Stansfield and published today by Chatham House.

The paper also assesses Al-Qaeda activity within Iraq, especially in the major cities in the centre and north of the country. Dr Stansfield argues that, although Al-Qaeda is challenged by local groups, there is momentum behind its activity. Iraq's neighbors too have a greater capacity to affect the situation on the ground than either the UK or the US. Iran, Saudi Arabia and Turkey all have different reasons for seeing the instability in Iraq continue, and each uses different methods to influence developments.

This whole idea of Al Qaeda is significant. I truly believe that what the Administration is peddling about Al Anbar, where Sunni tribal leaders have turned on Al Qaeda (Marc Lynch independently confirms this in Harper's), proves that they would not in any way be able to take over the country if we leave. There's no political organ to Al Qaeda the way there was in Afghanistan with the Taliban. In fact, the only thing that appears to keep AQ in Iraq in the game is our presence. They can raise money off of our presence, they can gain local support by attacking us. If we left, their target would have to turn to the Iraqis, and there is simply no support for radical Wahhabism in a majority Shiite country, not even from Sunnis in Al Anbar. They would not have a safe haven at all, and it would be far smarter to go after Al Qaeda around the world than claiming dishonestly that we're fighting them in Iraq when they would be expelled much faster if we left. Here's Marc Lynch on that point:

The insurgents are very critical of Al Qaeda, its treatment of Sunnis and its extreme interpretation of Islam, but at the same time they are deeply committed to continued resistance to the American occupation. They want a less divided and more effective resistance, not an end to resistance. But there’s also a real divide in strategy that goes beyond the local grievances, which Americans really need to understand. Al Qaeda wants the United States to stay in Iraq as long as possible. It gets tremendous benefits from having American troops close at hand to kill – Iraq is the primary source of its propaganda and recruitment, and an integral part of its global strategy. They really want to turn Iraq into a base for exporting global jihad. But these major insurgency factions are focused on driving Americans out of Iraq and creating a political system that gives Sunnis a reasonable stake in politics [...]

If you listen to what these insurgency factions are saying, what Hareth al-Dhari of the Association of Muslim Scholars is saying, they couldn’t be making it more clear: make a credible commitment to withdrawing and the insurgency will dampen down and we’ll take care of the Al Qaeda groups out of our own self-interest.

Indeed, if we would deny Al Qaeda this constant barrage of self-described victories by killing American troops, the world would be rightly repulsed by them as they were in the immediate aftermath of September 11. That doesn't mean you do nothing to stop them, you vigorously go after them, instead of giving Pakistan a billion a year to stop patrolling the areas where the command operations are quartered. But it means you be smarter about how you go about this fight instead of wildly swinging like a drunk in a bar.

neither Al Qaeda as an organization nor bin Laden as an individual is commanding a great deal of respect or support. When you get these attacks in Algeria and Morocco, it repels people rather than attracting them. But the paradox is that even as Al Qaeda repels people with its actions, its core ideas are becoming more widely accepted, and that’s really troubling, and a real indictment of American public diplomacy. That’s also why the situation in Iraq is so devastating at the wider regional and global level. Killing people in Morocco and Algeria triggers a negative reaction, but fighting Americans in Iraq resonates with a much wider part of the Arab population. The Project on International Policy Attitudes at the University of Maryland conducted a survey of Muslim public opinion a few months ago. 91 percent of Egyptians disapproved of attacks against civilians in the United States and only 7 percent disagreed with the statement that “groups that use violence against civilians, such as Al Qaeda, are violating the principles of Islam.” But 91 percent said that attacks on American troops in Iraq were legitimate, and 92 percent agreed with the goal of “getting the U.S. to withdraw forces from Islamic countries”. That gives you a sense of why jihad in Iraq is so vital to Al Qaeda – it’s a place where their violence is popular.

It's the only place where their violence is popular. And the sooner we allow Al Qaeda to collapse under its own weight by being a real beacon of freedom in the world, through global anti-poverty programs and restored moral leadership, the better. Incoming British Prime Minister Gordon Brown is announcing that he'll pull all troops out of Iraq within two years, before the next national elections. I think the number "two years" is significant, as it puts the withdrawal outside the end of Bush's second term, in an amount of time when a successor can implement an American withdrawal program. Brown is banking on sanity in the next American election. So am I, Prime Minister-in-waiting, so am I.

UPDATE: This tremendous post by Mona at Unqualified Offerings lists the 11 causes and lessons Robert McNamara learned in the aftermath of Vietnam, and how closely they relate to today.

We misjudged then — and we have since — the geopolitical intentions of our adversaries … and we exaggerated the dangers to the United States of their actions.

We viewed the people and leaders of South Vietnam in terms of our own experience. We saw in them a thirst for – and a determination to fight for — freedom and democracy. We totally misjudged the political forces within the country.

We underestimated the power of nationalism to motivate a people to fight and die for their beliefs and values….
Our misjudgments of friend and foe alike reflected our profound ignorance of the history, culture, and politics of the people in the area, and the personalities and habits of their leaders….No Southeast Asian [experts] existed for senior officials to consult when making decisions on Vietnam.

We failed then — and have since — to recognize the limitations of modern, high-technology military equipment, forces and doctrine in confronting unconventional, highly motivated people’s movements. We failed as well to adapt our military tactics to …winning the hearts and minds of people from a totally different culture.

We failed to draw Congress and the American people into a full and frank discussion and debate of the pros and cons of a large-scale military involvement … before we initiated the action.

After the action got under way and unanticipated events forced us off our planned course … we did not fully explain what was happening and why we were doing what we did….We had not prepared the public to understand the complex events we faced…confront[ing] uncharted seas and an alien environment. A nation’s deepest strength lies not in its military prowess, bur rather in the unity of its people. We failed to maintain it.

We did not recognize that neither our people nor our leaders are omniscient. Our judgment of what is in another people’s or country’s best interest should be put to the test of open discussion in international forums. We do not have the God-given right to shape every nation in our image or as we choose.

We did not hold to the principle that U.S. military action — other than in response to direct threats to our own national security – should be carried out only in conjunction with multinational forces supported fully (and not merely cosmetically) by the international community.

We failed to recognize that in international affairs, as in other aspects of life, there may be problems for which there are no immediate solutions … At times, we may have to live with an imperfect, untidy world.

…We thus failed to analyze and debate our actions in Southeast Asia - our objectives, the risks and costs of alternative ways of dealing with them, and the necessity of changing course when failure was clear….

These should be nailed above the cubicle of every foreign policy expert in Washington.