July 31st, 2008
This chart goes back to late 1999. Thus captures the disaster of Bush-Cheney in its entirety.
Simple question before us now, post Fannie/Freddie fix, is whether the long term support line circa 10,750 will hold.
Thinking “Yes,” I began to put some of my retirement money back in the market last week. Financials. Having held mostly cash (except for energy) since March.
July 27th, 2008
Here is an “intelligence briefing” delivered by american Herbert Meyer at the Davos gathering this past spring.
Much of what he has to say is familiar Likud Lobby fare. Europe-bashing. Certitude that the war in Iraq was a good idea. Straussian insistence that Myth (religious) must underlie successful politics.
Also seems gung ho on oil as the key to the future. Not much hope there, seems to me.
Nevertheless it’s certainly worth reading.
Comments perhaps to come when time permits.
July 24th, 2008
What a surprise, this week, to find Radovan Karadzic in custody, and the game still afoot.
Mad Rad. A strange case. Surely nothing stranger than man walks the earth.
One was then led to wonder about the likelihood that the likes of baby Bush, Cheney, Rumsfeld, Wolfowitz and Feith might someday be indicted by international authorities for crimes in Iraq, Egypt, Guantanamo Bay and who knows where else.
A friend who knows about these things explains the international legal framework:
1. The court where our friend Radovan is about to face justice at long last is the International Criminal for the Former Yugoslavia (ICTY). As its name implies, this court’s jurisdiction is limited to serious violations of international humanitarian law (war crimes, crimes against humanity, genocide) committed on the territory of the former Yugoslavia during the 1990s.
The time-frame of the ICTY’s jurisdiction starts in 1991 and effectively ends a decade later, when the ICTY was told by the UN Security Council to cease issuing new indictments and to wind up all cases and appeals by 2010.
The Russians and the Chinese were particularly insistent on this, but the other permanent members (US, France, UK) did not object too strongly. The only reason our friend Radovan is still eligible for trial is because he was indicted by the ICTY more than 13 years ago and has been on the lam ever since.
See here for details about the ICTY, and the reasons why it cannot charge or try Feith, Rumsfeld et al.
2. There is another famous UN court based in The Hague, the International Court of Justice (ICJ), also known as the World Court. Unlike the ICTY, the ICJ is a permanent court and won’t be told to shut down by the Security Council.
However, it has no jurisdiction to try any individuals. It’s strictly a legal venue where states can turn to resolve disputes about, e.g., the delineation of borders, observance of treaties etc. It’s essentially the large-scale equivalent of a civil court, where one can sue for damages and determinations of ownership and the like.
For more, see the ICJ’s website.
So Rumsfeld & co. aren’t eligible for prosecution in either of the above, simply because the ICTY and the ICJ lack jurisdiction.
3. But there’s also a third court in The Hague, so brand new that it’s still in rented space, awaiting construction of its permanent premises and has yet to bring its first case to trial. That new court is the International Criminal Court (ICC).
Unlike the other two Hague courts (ICJ and ICTY), the new International Criminal Court was not set up by the United Nations. The ICC is a treaty body, established by the Treaty of Rome, which came into effect on 1 July 2002, 60 days ater the 60th state had deposited its ratification of the Rome Treaty.
The ICC can prosecute individuals (not states) for serious violations of international humanitarian law specified in its statute. While it’s somewhat complicated (see the ICC’s FAQ page), the important catch for our purposes is that the U.S. is not a signatory to the Rome Treaty.
4. In short, it’s unlikely Rumsfeld et al. have reason to worry about facing prosecution by the ICC, or by any other international court at The Hague.
The eventuality that should give them reason to worry is cases brought in national jurisdictions — such as the UK court case that gave Pinochet the scare of his life back in 1999-2000, when the retired Chilean dictator came to London for a bit of quiet rest and relaxation and shopping and found himself under house arrest for 16 months, potentially facing trial for torture and other crimes against humanity.
For these reasons (again, the legal side is a bit complicated) the Bush administration’s torturers and enablers of torture, as well as certain Israeli and other officials with similarly murky pasts are well-advised these days to be consult a lawyer before they make their travel plans. See here for more on this heartening new trend.
Ed from the Future says: See comments below to follow the Karadzic trial in October 2009.
July 12th, 2008
Destructive, unpatriotic trends that have obsessed me here across the past two years seem to have accelerated during my Summer Vacation.
The sabre rattling re Iran is at its height: Iran testing missiles in the night, and threatening to strike Tel Aviv if attacked. Rice seems the last muppet in the administration with any ability (not to say credibility) to speak on the world stage, and responded to Tehran Thursday employing the administration’s distinctive English:
“‘We will defend our interests and defend our allies. We take very, very strongly our obligations to defend our allies and no one should be confused of that,’ she said.”
Meanwhile the financial system continues to melt.
– After the market close on Friday (yesterday), the FDIC announced it was taking over IndyMac Bancorp., which had suffered a run of over a billion the past week as accountholders lost confidence that the doors would stay open. The second biggest bank failure in US history.
Citibank, Bank of America, Wachovia, Washington Mutual — all are in equally bad shape. IndyMac’s quietus came about only because it’s just not quite big enough not to fail.
– Fannie Mae and Freddie Mac — the massive core of housing finance in the US ($5 trillion in mortgages held, securitized or guaranteed) — are going under this week. Their stocks have fallen beneath $10 and will soon be measured in pennies.
Once Fannie and Freddie’s just about Dead, then some sort of governmental “recapitalization” — by taxpayers and/or asian investors (in US treasuries) — will reconstitute them. They will likely no longer be quasi-public “government-sponsored entitites” but rather more like an old public utility (the purpose of which is to package and resell residential mortgages). Not for profit. Not for sale.
– Meanwhile Lehman Brothers continued its plunge (down about 20% Wednesday, another 14% Thursday), weighted with mortgage bonds, spiralling it seems for the same drain that consumed Bear Stearns.
– And oil on Friday hit an all time high in dollars at over $147.
The Fed across the past few weeks had signaled it’s thru cutting interest rates due to fears of energy inflation. So that bullet’s been shot.
Also approaching its limits: The Fed’s capacity to continue trading cash/Treasury bonds for market-valueless structured finance bonds (backed by mortgages, auto loans, credit cards, student loans, mall leases, David Bowie royalties, etc).
Before Election Day will all the bullets have been spent?
One of the NY Times financial columnists, Gretchen Morgenstern, concludes her latest roundup (Silence of the Lenders) with:
“A week ago, Bridgewater Associates, a research firm, estimated that losses from the credit crisis we’re now mired in might amount to $1.6 trillion when all is said and done. We’ll have to wait years to see if this is accurate. But whatever the number is, it will also represent, in stunning red ink, the cost to society of financiers who are shortsighted and greedy and regulators who don’t regulate.”
For a broader vision of the near and mid-term future, read Arthur Schlesinger’s The Crisis of the Old Order. About the politico-financial collapse of the early 30s.
Particularly piquant is the account of hearings in the Senate in the fall of ’32, as FDR was running against Hoover, where Wall Street titan after titan, and Federal Reserve governor after Federal Reserve governor, all cleared their throats and told the Senators, We have nothing more to suggest. We are out of ideas. We’ve tried everything and nothing works. Our policies have failed. Our ideas are wrong.
The Fed of the early 30s, too, tried to ease the credit crunch, in a manner quite like today’s — lending Treasuries against market/confidence-challenged collateral. But then as now there was no reason in the world for a bank (healthy or no) to refuse in a confidence-poor environment a Fed offer to exchange Treasuries for wounded bonds. The banks of the early 30s took all there was to take, until the Fed had no more to give. Circa 1932.
When today’s Fed began, last fall, the Switcheroo, it said it was willing to swap 25% of its balance sheet (that 25% being roughly 200 billion). It has since exceeded that limit, while widening time after time the list of wounded bond types its willing to take on. Someday sooner than later the well is going to go dry.
The coming fall, then, is shaping up as a horrendous wild replay of 1932. As Obama challenges the Old Order.