Interesting article related to the recent gains we've seen in the stock market.

Bubble tipped to burst in 2011

Andy Mukherjee COMMENTARY

Thursday, May 10, 2007

Harvard University economist Jeffrey Frankel has an interesting theory about the timing of the next emerging- market meltdown.
He says capital flows into developing economies follow a 15-year pattern: "seven fat years followed by seven lean years." The year between the two phases is when the flow of money suddenly stops. Why 15 years?

"After 15 years have gone by, there is somebody new on the trading desk who did not personally live through the last crash," Frankel said at a globalization forum, organized by the International Monetary Fund in Washington. "They sort of know about it, but it is easier for them to say the world has changed than if they lost money in it."

There have been two such cycles in the recent past, according to Frankel. The first wave began around 1975, following a sharp increase in oil prices in 1973-74. After seven years of frenzied recycling of petrodollars into emerging-market securities, Mexico blew up in 1982.

Then there were seven slow years, before investors came back to these markets with renewed vigor in the early 1990s. That boom, which again went on for seven years, ended with the Asian crisis in 1997. By this logic, the next blow to emerging-market economies will come in 2011 or 2012. So all those who envision that the current subprime mortgage crisis in the United States will lead to investors bailing out of risky, emerging-market securities may be disappointed.

The time is not ripe, yet, for a disaster. "It is too soon, memories are still fresh," Frankel said. "Argentina and Turkey, they were not that long ago, so I think it is too soon."

Could the next meltdown start in Asia? The region has a seemingly inexhaustible war chest of US$2.5 trillion (HK$19.5 trillion) in foreign- exchange reserves. Besides, most Asian current accounts are now in surplus. East Asia is no longer funding its expansion with capital borrowed from overseas. Now it is exporting capital to the rest of the world.

All of this makes a currency crisis unlikely. But other risks remain.

Nouriel Roubini, chairman of Roubini Global Economics in New York, is predicting "a new and different type of financial crisis in Asia," one that is triggered by excessive liquidity and asset bubbles. The risks stem from Asia's currency policies. China remains reluctant to allow the yuan to trade more freely.

That means other Asian nations will not be able to tolerate significant currency appreciation without their exports losing market share to cheap Chinese-made goods in Western markets.

One country that did try to live with faster currency gains - Thailand - had to resort to capital controls to prevent its exports from sinking under the weight of a stronger baht.

Cheap Asian currencies are not a free lunch. The bloated and growing Asian forex reserves are being increasingly financed by an expansion in the monetary base. Base-money growth in China was 21 percent in 2006, double the annual average of 2004 and 2005. It was about 20 percent in Korea in 2006, six times the average in the preceding two years, according to a World Bank report last month.

Unmistakably, Asia is contributing - along with petrodollars and Japanese carry trades - to a surfeit of global liquidity and a mispricing of risk. For now, excesses may continue to build up. The spread, or the extra yield demanded by investors to hold dollar-denominated emerging-market bonds instead of risk-free US securities, has shrunk to about a 10th of its post-Asian crisis level, according to a JPMorgan Chase index.

Those who want to sell you developing-country debt will tell you what a fine job these nations have done in containing public debt and inflation.

Besides, countries such as Brazil are buying back dollar bonds, reducing supply; so the high valuations are warranted, they will say.

Standard & Poor's, which raised the credit rating on eight out of 34 emerging-market sovereigns and lowered its assessment on just one in the 12 months through August 2006, is talking about the need to redefine the "emerging market" label, and in certain cases, even eliminate it.

This excessive show of optimism has "bubble" written on it in bright neon. Yet, investors will wait to see emerging-market risk turn to zero before being stung by losses.

The same is true for equity.

Morgan Stanley Capital International's MSCI index of emerging- market shares reached 1000 this week. It has doubled in 2 years. Do not be surprised if it doubles again. The bubble is alive and well. It just might keep growing for the next five years, if Frankel's prophecy is right.

BLOOMBERG

http://www.thestandard.com.hk/news_detail.asp?pp_cat=22&art_id=44077&sid=13528100&con_type=1

Commentary

Bear in mind that the Dow Theory triple high back in February in the Dow Transports, Industrials, and Utilities gave a new market buy signal that is extremely rare, and combined with the all-time record short interest on the NYSE, it puts a tremendous "bid" under the market as shorts get scared and cover their positions. The higher the markets go, the more the shorts are losing and the higher their financial "pain". It's also worth noting, for those unfamiliar with short-selling that the potential risk of loss for a short is infinite. If a "long" buys a stock, the most they can lose is the total purchase price of their stock (ie: it goes to zero value). When a short seller initiates a position, they borrow the stock certificate (generally this is electronically executed) and sell it with the promise to replace that stock certificate at a later date. If they stock they shorted is valued less when they buy it back to return to the brokerage (covering their short is what it's called) than the price they sold it at when they initiated their position, they pocket the difference as profit.

However, if the stock increases in value ABOVE what they shorted it at, then they lose money with each dollar that stock increases in value. And since there is no limit to how high a stock can go in price, their potential for loss is infinite.

Something to thing about in coming weeks/months as we assess the long term potential for the indices, and stock overall. Let's not forget that, even though the Dow and S&P have reach new highs, the Nasdaq has yet to achieve the same. It's unlikely we'll see 5000 on the Nasdaq anytime soon, given how high it assailed in 2000. But it's quite possible we could print 3400 by this time next year.

It all depends on Asia, in my opinion. China's markets are definitely due for a correction, but with the Olympics coming up next year, we can all anticipate that the government in Bejing will do anything they can to delay the pain of such a correction until after the medals are all passed out.

So, I might be wrong, but I suggest we all try and enjoy the next couple of years. Because when the financial hangover comes, it's going to be a doozy!!

The Scrutinizer

We Support the Stupid Mercenaries

May 2, 2007:

Yet another example of a media celebrity letting their true feeling about the troops slip out. In this case, it is "The View" guest co-host Ricki Lake (best known for a trashy talk show), who used the word "ineducation" to describe why young Americans join the military. This was in response to a question from co-host Rosie O'Donnell as to why they enlist. An attempt to challenge that by co-host Elizabeth Hasselback was slapped down by O'Donnell, who went on to claim that felons were being allowed to enlist. This is not the first time that such insults have been fired off, but it does show the contempt that is held for the troops in at least some quarters of the anti-war movement.

This is not the first time such comments have been made by opponents of the Iraqi component campaign of the war on terror. In February, NBC commentator William Arkin, criticized American soldiers who defended their efforts in the war on terror. Arkin also had expressed his hope the troops who made the comments had been counseled. Arkin also raised the specter of a military coup, and then referred to them as mercenaries.

In November, 2006, Senator John Kerry made comments concerning an alleged lack of intelligence among the troops and the notion that many of the recruits are poor. Like Kerry's comments, which killed his 2008 presidential bid, Rosie O'Donnell's comments also have little, if any, basis in truth. Every year since 1983, over 90 percent of all recruits have at least a high school diploma. Many officers and enlisted personnel tend to get college degrees (both graduate and undergraduate), often paid for by the armed services. The claim that most of the recruits are poor also did not stand up to facts. Most of the recruits come from middle-class families. These recruits also score high on the AVSAB tests (two-thirds of recruits score over 60 percent on the test), another indication that they are not stupid. Also, felonies are a bar to enlistment.

The comments from Ricki Lake, Rosie O'Donnell, and John Kerry are not the worst things that have been said about the troops. Some scurrilous and very incendiary charges came from Seymour Hersh, a journalist who broke various stories in the Vietnam War. Hersh openly called for American troops to be treated as they were when they returned from Vietnam. Hersh claimed that the American forces in Iraq were carrying out atrocities. In one instance, he claimed a video of a massacre at a soccer game in the wake of an IED attack existed. Yet Hersh made this claim at a lecture at McGill University in Canada. He apparently had not heard of the Army's Criminal Investigative Division and the Naval Criminal Investigative Service (the latter of which is the subject of a popular prime-time TV series).

In a very real sense, there is only so much hypocrisy that the anti-war movement will be able to get away with. It certainly is fair to ask the anti-war movement how they reconcile their belief that they support the troops, when they express almost implacable opposition to what the troops are doing. These claims of support become harder to buy when they come right after the person making them has called the troops stupid on national TV. – Harold C. Hutchison (haroldc.hutchison@gmail.com)

http://www.strategypage.com/htmw/htiw/articles/20070502.aspx

Commentary:

I have to admit, this is one of reasons that I have yet to vote Democrat. It's one thing to play partisan politics with domestic or foreign policy, but quite another to disparage the people tasked with implementing that policy as idiots. And what are the soldiers to do when it comes to defending themselves from such denigrating abuse?

Recently, DOD issued a policy stating that all "mil-bloggers" have to clear their postings with their chain of command before publicizing their comments on their personal blogs due to concerns about Operational Security concerns. Aside from being this potentially becoming an excessive burden upon the chain of command to undertake censorship duties, it also deprives our soldiers the ability to voice their owns opinions as to whether they believe in their mission or not. My view is that if a soldier commits an OPSEC violation, they should be punished. If they insult their chain of command, or engage in partisan political activities online, they should be punished. This preserves the professional quality of our military force and maintains their subservience to civilian control.

There should be nothing wrong with servicemen creating blogs as a means of letting the American people know what they are doing and how they live. For one thing, in this day and age, it's almost technically impossible to stop. If China, with its near complete control over internet access in that country, can't stop their people from posting anti-government comments, what makes us think the US military can do so in our open societies? What's to stop a soldier from typing up comments on his laptop, storing it on a thumb drive, and mailing it to some accomplice who will post it anonymously?

Collective punishment perpetrated against all soldiers trying to educate the American homefront is not the answer. It's difficult for most Americans to understand their frustrations, as well as their triumphs, when the main stream media doesn't consider it important enough to report.

No wonder the people in this country don't understand what's at stake in Iraq (let alone the entire Middle East).

The Scrutinizer

Reaping What We Have Sown

Why is there an Militant Islamist insurgency in Iraq? Did it just "appear" when Saddam was overthrown, or was the foundation of a Salafist/Takfirist Islamist state already taking root during the '90s when Saddam's regime was weakened by international sanctions, as well as Shi'a and Kurdish rebellion (after years of oppression).

One of the epiphanies I experienced while I was in Iraq was the degree to which former Ba'thists were involved in the leadership of various Jihadist groups which MNF-I all, rightly or wrongly, categorized as Al Qai'da in Iraq (AQIZ, IZ being the country code for Iraq). Ansar Al-Islam, Ansar Al-Sunnah, 1920 Brigades.. Umar Brigades, and let's not forget Al Qai'da. All of these are among the most prevalent of the Sunni based insurgent groups. For the moment, I will refrain from addressing the Shi'a factions, since the focus of this post is to point out that militant Islamism was a rising force that not even Saddam was successful at containing. But here is a general list of current insurgent groups operating in Iraq:

http://www.milnet.com/pentagon/centcom/iraq/Terrorism-in-Iraq.html

One of the fundamental questions that has remained begging to be asked is why has the nature of the insurgency taken on an Islamist tone? Why, in the wake of Saddam's overthrow, did we not see the Sunnis rally around already organized resistance movements such as the Fidayin Saddam (Saddam's men of sacrifice) and thus, preserving a Ba'thist "tone" to the insurgency? The message from many in the main stream media and anti-war pundits is that Saddam, nasty as he might have been, was at least secular dictator and thus, a "ally" in our war against militant Islam. But if Saddam were really as powerful as everyone claims, Al Qai'da should have been squashed by the Sunnis tribal leaders the very minute it attempted to compete with the Ba'thists for control over the insurgency.

Instead, the Fidayin (also anglicized as Fedayeen), although a force of resistance during the early months after Saddam's fall, were quickly dismantled as an organization, and their members drifted to the Islamist groups. Of course, this might have been also due to their proclivity to tatoo themselves with heart or wings, topped by an F (for Fidayin).

Now, another point that seemed to elude understanding is why Syria, despite long standing rivalries between the Syrian Ba'thist party and Saddam, did not provide support to the Iraqi Ba'thist, if only out of sheer self-preservation of their veracity of their own ideology (as as to potentially finally seize control over the Iraqi Ba'thist political apparatus). One would think that the Syrians would have had an interest in promoting a Ba'thist insurgency, rather than assisting in inciting an militant Sunni Islamist resistance movement that might undermine its own authority in Damascus (look up Hama and Assad to fully understand the logic).

IMO, the reality is that the only authority the Ba'thists had in ruling Iraq was their ability to implement a "divide and conquer" strategy amongst the Sunni tribes, pitting them against one another for Saddam's favor (translate as money and political power), while increasing their representation within Saddam's administrative and military/intelligence machine (think patronage system). I believe the same situation exists within Syria, and Bashir Al-Assad has relatively little control over the activities those Ba'thist officials who secretly have a duel allegiance to the Islamist factions.

Over and over again, I would see reports of individuals formerly part of the Ba'thist party apparatus, now apparently involved with Al Qai'da and/or Ansar Al-Sunnah (the 2 dominant Jihadist factions). The Umar (Omar) Brigrade was reportedly recruited from the ranks of former Republican Guards, Special Security, and Intelligence members, to fight against the Shi'a Badr brigades. But no one willing to claim allegiance to Ba'thism.

If one doubts me, then let's look at the capture of Abu Ayman, one of the biggest, baddest, terrorist cell leaders in the Baghdad area for several years. He was someone who was closely linked to Abu Mu'sab Al-Zarqawi, and was reported next in line to become the "Amir" (Prince) of Baghdad representing Al Qai'da in 2005, after Abu Azzam was killed. But who is Abu Ayman?:

http://jamestown.org/terrorism/news/article.php?articleid=2369955

Mohammed Hila Hammad Obeidi(Ubaydi), aka Abu Ayman, "was formerly the chief of staff of intelligence under the regime of Saddam Hussein and was most recently the leader of the Secret Islamic Army, a secret militia operating in the Babil province".

Now ask yourselves how a man, supposedly one of the highest members of Saddam's Intelligence Service, heavily vetted for his Ba'thist loyalties, suddenly opted to become a militant Islamist? Why didn't he just represent himself as a Ba'thist, with aim of restoring Ba'thism to nation of Iraq? How did a man, who would rapidly turn from secular ideology, strongly oppsed to militant Islam, rise to such a rank that he became the COS of Saddam's intelligence service?

And then there is the case of Sa'ad Ali Firas and his associates, most of whom were former members of Saddam's intelligence/security entities:

http://www.globalsecurity.org/military/library/news/2005/10/mil-051020-mnfi01.htm

Now, I could go on about discussing the multitude of former members of Saddam's intelligence and security agencies who have risen to leadership within either Al Qai'da or Ansar Al Sunnah, including some who were former bodyguards for Saddam's family. But there's not much "publicly available" documentation to support this, primarily because the members of the press have not posed these questions to MNF-I PAO briefers and much of it remains classifed.

Why is no one asking this question, you might ask?

Well, some people HAVE asked this question. Ray Robinson was a member of the DOCEX operation for the Iraq Survey Group, and he has expressed many of the same questions and perspectives that I did during my period in Iraq:

http://www.americanthinker.com/2006/10/fallujah_baathist_and_wahhabis.html

To sum this up.. those who would contend that Saddam's regime was a secular dictatorship ignore the fact that it was increasingly becoming dependent upon, if not infiltrated by, individuals who did not share the secular ideology of Ba'thism. It was merely a convenient means for them to survive, until such a time that they possessed sufficient control over the military and intelligence, to stage a coup.

Anyone remember what happened to Sadat?

http://www.nmhschool.org/tthornton/jihadorgan.php

"In the 1990s, Egyptian members of al-Jihad merged with Osama bin Laden's organization, al-Qaeda ("the Foundation"). One of Jihad's leaders, Ayman al-Zawahiri, became one of Osama bin Laden's chief lieutenants.

And what would have been the US response to such a coup by a Jihadist motivated government? What COULD our response have been, except to wring our hands and accept it. After all, Saddam's overthrow was what we were hoping for, right? How could we oppose any faction that managed to accomplish that?

By overthrowing Saddam ourselves, what we did was unleash the pent-up Salafist forces that ALREADY existed in Iraq and were simply binding their time until the proper opportunity arose to take charge. We permitted these Salafists to gain power during the '90s by weakening Saddam's power, rather than just overthrowing him as punishment for the invasion of Kuwait. We threw him into the hands of the Salafists, without who's support, he could not defend the regime against the rebellious Shi'a and Kurds. He put "Allah Ahkbar" on the Ba'thist Iraqi flag in recognition of his growing dependence on the Salafists. He built them HUGE mosques within which to pray and spread their Islamist ideas. Saddam was riding the back of an Islamist "Tiger", hoping that controlling it's agenda, he could prevent himself from being devoured by it.

Thus, by not removing Saddam in 1991, when we had real justification (and the necessary troops) we have reaped what we have sown.

The Scrutinizer

Since my return from Iraq, I've been dabbling with day and swing trading. Last year (2006) was going gangbusters for the first part of the year, but then I forgot my trading discipline and permitted myself to fall into a false sense of security (which caused some financial pain). This year has been going much better and I think I've learned a few lessons about taking profits when I have them and moving on.

A few of the companies that have captured my interest are Internap: INAP and Microvision: MVIS.

INAP surprised the street with some very impressive pre- one time charge earnings which immediately sent the stock soaring back towards previous highs. It's currently in a consolidation phase after this run up, but this company stands, IMO, to provide some serious competition to such 800 pound guerrillas like AKAM. The one time charge was due to INAP consolidating real-estate holdings with its newly acquired CDN (Content Delivery Network) which finally rounds out their IP routing, and co-location services. This enables them to provide the "full package" to prospective customers, along with their 100% up-time guarantee.

Anyone having any doubts about this company's prospects should listen to the most recent conference call by it's CEO, Jim DeBlasio (available for the next couple of weeks at this link):

http://biz.yahoo.com/cc/9/79999.html

And here is a presentation they gave a couple of days ago for the investment community explaining what they do, and what they have to offer:

http://www.internap.com/investor/presentations/files/5-7-07.pdf

As for Microvision: MVIS, I became aware of them in January, 2007 when an acquaintance of mine (friend of a friend) made me aware of the looming "disruptive technology" being presented by Laser Projection Displays. MVIS has developed a laser projector that is the size of your average chocolate mint, small enough to fit in a cell phone:

http://www.microvision.com/

There are a couple of blogs that I pay particularly close attention to for the latest news and insight regarding the prospects for MVIS:

http://microvision.blogspot.com/

And, of course, one cannot overlook the always irreverant (and generally unecessarily profane) "Fly on the Wall", who apparently runs a "bit of money" on the street:

http://flyonwallstreet.blogspot.com/

It's worth reading some of the comments posted on his blog back in April relative to the "special situation" that MVIS shares represent at this level.

http://flyonwallstreet.blogspot.com/2007_04_01_archive.html

That's all for tonight.. maybe I'll have some time to play more "catch-up" in coming days.

The Scrutinizer

Now what has motivated me to reactivate this Blog, you might ask? (is there anyone out there?)

It was this post:

http://turcopolier.typepad.com/sic_semper_tyrannis/2007/05/a_disaster_wait.html

Pat seems to be trying to assert that armored car bombs being used by the "Muj" (Mujahidin) is something new.

This is nonsense. Can we forget when insurgents drove a concrete truck full of high explosive into the courtyard of the Palestine Hotel in Baghdad, nearly succeeding in toppling the building?

It's also been a long-know tactic for insurgents to use dump-trucks as mobile mortar platforms.

And finally, I contend, it's not some "Haji" vehicle decked out with "hill-billy" armor we have to worry about. I would suspect that those can be identified from a considerable distance by sharp eyed snipers, long before they manage to receive a traffic control point (TCP). No, what we should worry about are the the equivalent of of our armored suburbans, vehicles specifically armord in such a manner as to preserve their stock, unmodified, appearance. These are the ones we need to worry about because they will look harmless enough to get close to the TCP, whereupon the driver would punch the gas and attempt to bust through immune to withering return fire, or even worse, catching the soldiers off-guard before they could react with anti-armor weaponry. That's what I worry about.

And lest someone believe that's unlikely, ask yourself who's driving the $185K white armored surbuban that formerly carried the Iraq Survey Group director, Charles Duelfer, between the BIAP and the Green Zone. It was stolen in 2005, while enroute on a car carrier to Kuwait for repairs that were not permitted to be conducted in Baghdad. So far as I know, it was never recovered. One can only hope it was sold on the black market to some wealthy Kuwaiti or Saudi.

Alrighty.. enough of the "sour grapes" over my encounter with Pat Lang (Pat.. if you find this blog, you'll always be be welcome to comment.. I promise I won't censor you, even if I disagree with you.).

The Scrutinizer

Been awhile since I've posted. Was overseas for a couple of years working in Iraq and the experience has given me some new perspectives and insights which I hope to put in coming posts.

Currently, I've been engaged in commenting on a couple of other blogs, including Intel Dump under the name Diogenes (the famous Greek cynic who reported travels the streets blindfolded looking for an "honest man").

Interesting experiences of late include the censorship I received at the hands Ret. Col Patrick Lang on his blog:

http://turcopolier.typepad.com/sic_semper_tyrannis/

I, apparently, have been declared "Persona Non Grata" on his Blog because he didn't like some of my comments, calling them "naive and uninformed". When I attempted to explain my perspective in more depth, in order for him to understand my perspectives (and hopefully to edcucate me why my views were illogical or inaccurate), his response consisted of asking me whether I was engaged in some "IO campaign" on behalf of the "Neo-Cons", or the US government (presumably the Bush administration).

This is sad, because I had originally sought him out as a "sounding board" against which I could test my logic, test it's intellectual "armor" against opposing perspectives, and ultimately, get a bit close to some form of "truth".

Admittedly, I am quite disappointed that Pat chose to respond by attempting to "label and categorize" me, rather than taking the time to correct what he presumed were my logical errors.

As I embark on reactivating this blog, I give commentors the promise that I won't censor comments merely because I disagree with them. This will be a moderated forum, if only to keep down the "noise" factor. But if you have a comment, and are prepared to logically defend it with facts, then I will be happy to "bless it".

We don't always have to agree. But if I see you're making an honest attempt to logically argue your perspective, I certainly don't see any reason to invoke censorship.

Been awhile since I've posted... Lots of things going on with that condition known as "life"..

However, as many of you might have heard, the Pakistanis are claiming to have cornered Al-Zawahiri with several hundred of his loyal fighters.. I truly hope we are able to take him alive, as he is the operational heart and mind of Al-Qaeda, and knowlegable of its designs and membership. He is the "power behind the scenes".

But at the very least, his death would deprive Al-Qaeda of its most valuable operative, as well as several hundred potential suicide attackers.. Best to have Al-Qaeda members commit suicide defending themselves from our own attacks, than for them to seek out martyrdom via their own operations.

But while the initiative is slowing changing to favor the Western democracies, the demographic trend in the Mid-East remains in Al-Qaeda's favor. We still face the challenge of offering an alternative socio-economic model to the growing numbers of young people in the muslim world. And just as our own baby boom brought about societal friction and radicalism during the '60s, it's inevitable that the same will likely occur with muslim youth deprived of properous future.

This, imo, is why the current struggle in Iraq remains crucial. It's the most secular of all countries within the middle east, and thus, poses the greater potential for such a socio-economic transition.

One another point, I have been advocating for the past year than the US (now CPA) administration create the equivalent of an Alaskan Permanent Fund in Iraq. I haven't heard anything recently with regard to such a proposal. However, it's evident to me that for Iraq to heal itself as a society and as a national multi-ethnic/religious entity, the people must all have a common stake in the country's economic success.

Furthermore, it is crucial to make any new government accountable to its people, and to dispel the belief that the US is merely there to take Iraq's oil from the people (not that most Iraqi's questioned France and Russia's attempts to actually do that via Saddam's regime).

The Central Scrutinizer

Discovered an interesting article regarding the problem of a drastic increase of unmarried Saudi women within the Kingdom. This ties in with my overall premise that socio-economic strife can be reasonably predicted as the Saudis face the challenge of 50% of their population being under 18 years of age, growing up in a relatively stagnant economy with little economic hope, or unwillingness to perform the menial jobs filled by the 5 million ex-patriates which reside in the kingdom:

Alarming Rise in the Number of Unmarried Girls
Abdullah Bajubeer

It seems that our dear country is going to become one of the pioneers in producing unmarried women. Indeed we now have one million such women and the number is going to increase to four million in the next five years. This is the statement made by Dr. Abdullah Al-Fawzan, an assistant professor in the Department of Sociology at King Saud University, and published in local newspapers.

The reason, according to him, is our culture, which sets the ages between 18 and 24 as the desirable time for marriage. Once a young woman is 25, she joins the list of unmarried women, whereas in the rest of the world, a woman is considered marriageable until the end of her life.

Dr. Al-Fawzan focuses on age as the main reason for the number of unmarried women. After a quarter of a century writing on the subject, I must say that there are other reasons equally important for the number of unmarried girls. One is the absence of social gatherings between families — these exist in other cultures and allow boys and girls to meet and get to know each other. At such gatherings, parents are of course present and aware of what their offspring are doing.

In any case, these meetings often pave the way to engagement and marriage. Here too, there are high walls that surround a girl and prevent her from going out, talking to or meeting young men on different occasions. She becomes a hostage to house and wall, waiting for a groom. And I do not know how a prospective groom could overcome all these obstacles just so he could see his bride-to-be and get to know her.

Then of course there is the problem of dowries and the cost of marrying, which a young man is unable to bear at so early a stage in his life. The reasons go on but the result is the same. Obviously, we will continue to have large numbers of unmarried girls as long as there is resistance to change.

* * *

One study of emotional life in the US showed that 50 percent of single women are between the ages of 40 and 69. Of that number, the majority are divorcees. The study also showed that a large number of single American women are not embarrassed about relationships with men much younger than them. This particular phenomenon has spread because of Hollywood stars being involved with young men half their age. The young men are thus encouraged to become involved with women who are more fit to play the role of “mother” rather than “girlfriend” or “lover”.

Studies revealed that young men’s enthusiastic interest in older women is due to the fact that many women have important jobs, plenty of money as well as power and influence. And this has driven many young men to go after richer, older women.

Psychologists explain that older women do not need to worry about possible pregnancy or any responsibility resulting from the relationship. She is in the relationship solely for purposes of pleasure. Some doctors say that most women who have relationships with younger men do so after they have brought up their own children and are seeking emotional enjoyment with the extra attraction of rejuvenating themselves.

What is seen in modern American life is that older women chasing younger men have become usual. And American society has accepted the fact, feeling that each person is free in his or her personal life. Now, will other societies accept this or will it be confined to America?

http://www.arabnews.com/?page=9§ion=0&article=37399&d=2&m=1&y=2004

Another article I found via a websearch goes into greater depth on the issue and discusses how the average dowery a Saudi male is expected to pay equates to about $53,000. This is quite a sum for your average unemployed (or underemployed) Saudi male:

http://209.157.64.200/focus/f-news/1019653/posts

COMMENT:

I opine that the demographic within the Muslim world, but in particular the Mid-East, is a major influence upon the recent rise of Islamic militancy. It's little wonder that, when 40% of the muslim world is under 18 years of age, that restless youth with no viable hope of having their economic aspirations and dreams fulfilled, would turn to those who claim to have the answer.

One only has to imagine how the political picture would compare in the US were 50% of our population under 18 and dealing with 30% functional unemployment (and far higher in countries other than Saudi Arabia). These young people would be very impressionable and susceptible to reactionary/radical and militant ideas, whether political or religious.

I believe this is a crucial part of fighting the "War on Terror", and seems to be one of the driving strategies of the Neo-Conservative movement. However, some are theorizing that he Neocons within the Bush administration are falling from grace and the "realists" movement coming back into vogue..

The US will make a major strategic error if we fail to assist in resolving the economic and social problems within the region, something along the lines of a Mid-East Marshall plan. We'll lack any measure of influence (the kind that money can buy), and we'll still eventually bear the brunt of criticism and resentment as the militant clerics continue to assert that their economic plight is due to a US/Zionist conspiracy.

It is sure that democratic reforms would take many years to take root in the Mid-East, but every journey begins with the first step. And ever since the fall of the Ottomans, and subsequent carving up into artificial states, of its empire, there has been little effort to demand such democratic reforms.

This is certainly a situation that must change if we're to avoid 400 million muslims (based upon total 1 Billion population) facing a bleak economic future and looking for someone to blame.

The Central Scrutinizer

Recently the Egyptian Foreign Minister was attacked by a Palestinian mob outside the Al-Aksa mosque in Jerusalem.. Apparently they asserted that his talks that day to salvage the "road map to peace" discussions were a betrayal to their cause. Furthermore, they appeared to be predominantly Islamic militants who raised a call for a resumption of the bloody Jihadist war waged in that country..

Strong language to use against nation that has been one of the primary political patrons of Arafat..

However, the Egyptians are a proud people, and they don't particularly like having their politicians roughed up by a bunch of ungrateful Palestinians. And it doesn't hurt when the state information service, and most newspapers, take their lead from the Mubarak regime.

There's some fascinating stuff on this link related to Egyptian resentment over this attack.

http://www.memri.org/bin/latestnews.cgi?ID=SD63604

The Central Scrutinizer

Seizure Helped Speed Libyan Cooperation on Weapons
Secret Shipment Contained Component Parts Used in Nuclear Production
By Robin Wright
Washington Post Staff Writer
Saturday, January 4, 2003; Page A18


U.S. and British intelligence services in late September discovered that a freighter bound for Libya was hauling thousands of parts for centrifuges, a key component for producing nuclear weapons, senior U.S. officials said Wednesday. Officials said the interception of the cargo, worth tens of millions of dollars, was a factor in squeezing Libya to give up its deadliest weapons programs.

The shipment was headed from Dubai in the United Arab Emirates, an interim transshipment point, aboard a German ship. With help from the German government and the German shipping company, the United States was able to get the freighter, BBC China, diverted to a southern Italian port shortly after it passed through the Suez Canal.

Officials boarded the ship in Italy in early October and seized the cargo, which was not listed on the ship's manifest, U.S. officials said. The craft was less than two days from docking in Libya.

The Bush administration believes the intelligence coup accelerated Libya's cooperation with the United States and Britain. Although secret talks on Libya's weapons of mass destruction programs had begun some six months earlier, the government of Moammar Gaddafi had not yet given a date for U.S. and British intelligence to visit Libyan weapons-development sites. After the interdiction, U.S. and British inspectors were in Libya within two weeks, U.S. officials said.

Other U.S. officials, however, said they were concerned at the time that the seizure might undermine the attempt to win Libya's cooperation. "Quite the contrary. It could have derailed the effort," said a well-placed U.S. official who spoke on condition of anonymity.

The operation, details of which were reported today in the Wall Street Journal, was the first interdiction under the new Proliferation Security Initiative, an agreement among 11 countries to stop and search planes and ships suspected of carrying banned weapons or missile technology. Seizure of the cargo proves the initiative's importance as a new tool in tracking and curtailing the spread of weapons technology, U.S. officials said Wednesday.

"It's clearly a success for the proliferation initiative but it's also an allied success, especially for the Germans and Italians," a senior administration official said. The official described both the German government and the shipping company as "extremely cooperative."

The secret shipment also offered important insight into Libya's arms programs. Although U.S. intelligence was aware of Libya's chemical weapons program, Washington was surprised by Tripoli's ongoing interest in developing nuclear arms. The shipment, several large crates, also indicated Gaddafi had an active nuclear program, U.S. officials said.

The Bush administration is still reluctant to provide details of the operation or the source of the centrifuge parts. U.S. officials insisted the shipment did not come from Pakistan, which has been linked to sales of nuclear technology to other countries.

"The technology we're talking about was stolen years ago from Urenco, a European consortium. It was used in Pakistan to enrich uranium but it was also used elsewhere. There's a black market in this material," said the senior U.S. official.

A European official said, however, that a private Pakistani arms specialist is being investigated to see if he was involved in any aspect of the deal.

After the intelligence discovery, the United States tracked the German freighter, U.S. officials said. Most of the operation was conducted by U.S. intelligence in cooperation with other countries, but with no U.S. military involvement. Once the ship docked in the Italian port of Taranto, one of two Italian military ports, U.S. officials boarded the freighter.

U.S. officials are not sure why Gaddafi was reaching out to the international community and pledging privately to disarm at the same time his government was acquiring a large shipment of weapons-development equipment. U.S. officials speculate that Libya was hedging its bets.

Centrifuges of the kind found on the German ship can be used to develop weapons-grade uranium for use in nuclear weapons. On Sunday, U.N. investigators in Libya were shown dozens of centrifuges and other equipment, although no evidence was found that the country had enriched uranium. Mohammed ElBaradei, director of the International Atomic Energy Agency, said Monday the equipment indicated that Libya was at an "early stage" of its weapons program.

Washington Post staff writers Dana Priest and Thomas E. Ricks contributed to this report.

http://www.washingtonpost.com/wp-dyn/articles/A44389-2003Dec31.html

COMMENTARY:

I find it just amazing how some people seem to insist that economic and political sanctions are actually effective against some of these dictatorial megalomaniacs...

Qaddafi obviously was presented a clear choice by the US/UK representatives.

"We know what you're up to..

We have seized sufficient evidence to justify taking military action against you.

So now you have a choice.."

And as the article mentioned, they were not sure that this seizure wasn't going to derail the talks which had been ongoing for some 6 months already..

Can anyone truly claim that Muhammar didn't take a look at what happened to Saddam and factor that into his decision??

The US doesn't want to be in the position of having to use force in every case of proliferation. But we also don't want these rogue regimes to be able to predict exactly when the threshold of tolerance has been crossed. Don't let them be able to predict your response. Keep them off balance and unwilling to take major risks that might threaten their power.

The Central Scrutinizer

Coincident with my previous post, here's a link to the Middle East Media Researsh Institute, a valuable resource for getting the "jist" of the latest and greatest in current Arab thought:

http://www.memri.org/bin/latestnews.cgi?ID=SR2403

Palestinian Authority Sermons 2000-2003

By: Steven Stalinsky
Introduction
The following report consists of Palestinian sermons from 2000-2003. Each Khatib (preacher) is a paid employee of the Palestinian Authority (PA). The sermons are broadcast live every Friday at noon from mosques under control of the PA and are shown on PA television. Part I of this report includes the common themes of the sermons, such as: calls for the destruction of the U.S., the perceived American Crusader war against Islam, honoring Shahids and the rewards of the martyrs, educating children to martyrdom, and antisemitism, including calls for the killing of Jews. Part II includes Palestinian leaders being questioned by Western journalists about the content of the sermons, and is followed by Part III, the transcripts of the Friday sermons.


Part I: Common Themes
Calls for the Destruction of the U.S.

"Allah wreak vengeance on the Jews and the Americans" is a common theme heard in PA sermons, as with Sheikh Ahmad Abd-Al-Razek's sermon on October 4, 2002. [1] Frequent calls for the destruction of the main allies of the U.S. - Britain and Israel - are also heard. As Sheikh Ibrahim Madhi stated, "Allah willing, this unjust state will be erased - Israel will be erased; this unjust state, the United States, will be erased; this unjust state, Britain, will be erased." [2]

Themes of Arab hatred of the U.S. within sermons often have Islamic historical undertones. For example, the leading Palestinian religious figure, Mufti of Jerusalem and the Palestinian Territories Sheikh Ikrimeh Sabri, stated in a sermon on PA radio, "Allah, destroy the U.S., its helpers and its agents. Allah, destroy Britain, its helpers and its agents. Allah, prepare those who will unite the Muslims and march in the steps of Saladin. Allah, we ask you for forgiveness before death, and mercy and forgiveness after death. Allah, grant victory to Islam and the Muslims…" [3] The U.S. and its allies are also commonly referred to as Christian and Jewish Crusaders who must be fought. For example, Dr. Ahmad Abu Halabiya, speaking at a mosque named after UAE President Sheikh Zayed bin Sultan Al-Nahyan, stated, "Allah the almighty has called upon us not to ally with the Jews or the Christians, not to like them, not to become their partners, not to support them, and not to sign agreements with them… Allah, deal with the Jews, your enemies and the enemies of Islam. Deal with the Crusaders, and America, and Europe behind them…" [4]

2003: The Year the American Crusader War Against Islam Began

In the year 2003, a common theme which emerged in PA sermons is that the U.S has begun a Crusader war against the Arabs. Sheikh Muhammad Abu Al-Hunud stated in a sermon on March 28, 2003, "If, God forbid, something happens to Iraq, the aggression and the Crusade will turn tomorrow against the Koran… God forbid, his second assault is on the Koran, [he wants] to change verses and to mess with Allah's book, to Americanize the region, Americanize the religion, Americanize the Koran, Americanize Muhammad's message… To my brothers in Iraq, to the President of Iraq, to the Iraqi leadership, to the Iraqi people… Strike, my brother; may your right arm, oh proud Iraq, be strong… strike Allah's enemies with it. Strike with it the enemies of humanity… from the pulpits of Al-Azhar and other mosques around the world, that any Muslim who does not stand by Iraq and support it against the American-British-Crusaders cruel attack… Allah, grant victory to the Iraqi army… Allah, defeat America and its allies… Allah, purify the Islamic soil from the American and British treason and defilement… Allah, make their possessions a booty for the Muslims, Allah, annihilate them and their weapons, Allah, make their children orphans and their women widows…" [5]

Con't...

Commentary.

One has to really ask themselves exactly what form of govermental and social system
any Palestinian state eventually takes. Aside from the dubious rational for encouraging or rewarding nationalist movements amongst people who lack any of the traditional definitions of a distinct nationality (unique religion, language, culture, or even cuisine), we must ask ourselves whether we're going to permit ourselves to be complicit in the creation of a militant Islamic state.

Personally speaking, I could care less if a Palestinian State is created. Anyone who rationally analyzes the scenario recognizes that it will not be a viable economy or society. Furthermore, it will be far less tolerant of non-Palestinians than the Israelis are of their Arab citizenry (which constitutes 1/5 of their population).

But it appears that a Palestinian state is necessary to diffuse regional tension and militant rhetoric that sustains much of the Islamic militancy, as well as undermining US credibility in the region. Thus, the Bush administration will likely be facing increasing pressure to obtain some kind of peace treaty between the parties, even if it's "coerced", or purchased through bribes between the two parties (ala Camp David).

But it's clear that Israel is going to pursue their wall.. And currently I'm of the opinion that maybe it's the right thing to do... Walls can always be torn down when the animosity and distrust calm down..

But to get to that point, the kinds of militant diatribes we see evidenced in the above link will have to be confronted and defeated.

The Central Scrutinizer

Once in awhile I find a gem of an article which discusses power politics and how it interacts within a government power structure. The following is a fine example of that, analyzing the tenuous balance of power which currently exists in Saudi Arabia and the potential repercussions it may have on US strategy in the region.

http://www.foreignaffairs.org/20040101faessay83105/michael-scott-doran/the-saudi-paradox.html?mode=print

I continue to opine, as the article indicates, that militant Wahabbism is the "head of the snake" which must eventually be confronted in order for the "war on terror" to be won.

It's quite possible that Saudi Arabia might plunge into civil war within the next couple of years, with regional implications for the balance of power between nations. One can hardly expect Iran, or the Iraqi Shiites to stand by idly in the face of Wahabbist repression of the Shiite population in Saudi Arabia.

Thus, it is even more critical, IMO, for the US and Iraqi authorities (whoever they eventually turn out to be) to rebuild Iraq and get its oil infrastructure operational if the West is to avoid a potential disruption in global oil supply as a result of a disruption of Saudi oil.

It is my contention that this is probably one of the primary reasons the US went to war in Iraq. The handwriting on the wall was finally read when 15 Saudis were involved in 9/11, IMO, and policies were proposed for how to deal with it, as well as the steps to facilitate the strategy. It would be incredibly foolish to attempt to confront Saudi Arabia with their complicity over 9/11 without having an alternative source of oil online.. That source is clearly Iraq.

It just benefitted us that we have a casus belli in place via the continued non-compliance of the Baathist regime with regard to over 17 binding UNSC resolutions.

I've made the analogy of overthrowing Saddam to that of invading Vichy France during WWII.. The US was not at war with Vichy France at the time. Nor was Vichy occupied by Nazis troops. But US war strategy dictated that we needed to defeat Rommel's Afrika Korps, as well as using the area as a jumping off point for defeating Italy.

Technically, in terms of international law, the US invaded a neutral country in order to carry out its longer term war strategy.

I believe the same is the case with Iraq.. Except I hardly considered the Baathist regime to be "neutral".

The Central Scrutinizer

Hey all.. Though I haven't posted in several months (been busy), I thought I might offer this little tidbit for your perusal related to the recent Senate Intelligence flap over the controversial memo created by the Senator's aide

I found an interesting link for the memo (although the comments belong to the owner of the site, not me):

http://www.bluestarbase.org/memogate.htm

"We have carefully reviewed our options under the rules and believe we have identified the best approach. Our plan is as follows:

"1) Pull the majority along as far as we can on issues that may lead to major new disclosures regarding improper or questionable conduct by administration officials. We are having some success in that regard.

"For example, in addition to the President's State of the Union speech, the chairman [Sen. Pat Roberts] has agreed to look at the activities of the office of the Secretary of Defense, Rumsfeld, Wolfowitz, as well as Secretary Bolton's office at the State Department.

"The fact that the chairman supports our investigations into these offices and cosigns our requests for information is helpful and potentially crucial. We don't know what we will find but our prospects for getting the access we seek is far greater when we have the backing of the majority. [We can verbally mention some of the intriguing leads we are pursuing.]

"2) Assiduously prepare Democratic 'additional views' to attach to any interim or final reports the committee may release. Committee rules provide this opportunity and we intend to take full advantage of it.

"In that regard we may have already compiled all the public statements on Iraq made by senior administration officials. We will identify the most exaggerated claims. We will contrast them with the intelligence estimates that have since been declassified. Our additional views will also, among other things, castigate the majority for seeking to limit the scope of the inquiry.

"The Democrats will then be in a strong position to reopen the question of establishing an Independent Commission [i.e., the Corzine Amendment.]

"3) Prepare to launch an independent investigation when it becomes clear we have exhausted the opportunity to usefully collaborate with the majority. We can pull the trigger on an independent investigation of the administration's use of intelligence at any time. But we can only do so once.

"The best time to do so will probably be next year, either:

"A) After we have already released our additional views on an interim report, thereby providing as many as three opportunities to make our case to the public. Additional views on the interim report (1). The announcement of our independent investigation (2). And (3) additional views on the final investigation. Or:

"B) Once we identify solid leads the majority does not want to pursue, we would attract more coverage and have greater credibility in that context than one in which we simply launch an independent investigation based on principled but vague notions regarding the use of intelligence.

"In the meantime, even without a specifically authorized independent investigation, we continue to act independently when we encounter footdragging on the part of the majority. For example, the FBI Niger investigation was done solely at the request of the vice chairman. We have independently submitted written requests to the DOD and we are preparing further independent requests for information.

"SUMMARY: Intelligence issues are clearly secondary to the public's concern regarding the insurgency in Iraq. Yet we have an important role to play in revealing the misleading, if not flagrantly dishonest, methods and motives of senior administration officials who made the case for unilateral preemptive war.

"The approach outlined above seems to offer the best prospect for exposing the administration's dubious motives."
************************

Now I know most people might be focused upon why Rockefeller's aide was involved in political strategizing on government time..

Or they might be wondering how Sean Hannity was able to come into possession of a document that was allegedly only "internal" to Rockefeller's officer and not disclosed to other parties (yeah right!!)

But for me, it was the issue about who requested investigation about Wilson's CIA wife, who at some prior time had been a CIA NOC agent (non official cover).

Because all of this time I thought it was the CIA who had requested the investigation by the Justice Department, not the vice-chairman of a political oversight committee (and done without a vote).

Should it not have been the CIA that made such a request?

You decide...

The Central Scrutinizer

I thought this article by Christipher Hitchens were rather pertinent to where my feelings lie this 9/11. I myself was planning on attending some of the activities related to the Pentagon attack, but have decided not to permit that day to be turned into a pep rally.. It should be a day of reflection on the tragedy that befell us, thanksgiving for avoiding the tragedy that could have befallen us (25,000-50,000 dead), and the challenges that await us in coming years as we continue to fight this battle against Islamic militancy.

Don't Commemorate Sept. 11
Fewer flags, please, and more grit.
By Christopher Hitchens
Posted Monday, September 8, 2003, at 9:30 AM PT

http://slate.msn.com/id/2088025/

Unless I have badly mistaken the mood of everyone I know and almost everyone I meet, practically nobody has any particular use for the second anniversary that will soon be upon us. But it is vaguely felt in many quarters that something ought to be done by way of an observance. The first mentality is in my opinion the right one, even if people feel bad about harboring it, and the second one is defensible but somewhat sickly and likely to suffer increasingly from diminishing returns.

In my small way, I tried to anticipate this two years ago. I didn't at all mind what some critics loftily dismissed as "flag-waving." Indeed I was surprised that there wasn't more of it than there was. But I never displayed a flag myself and argued quietly against putting one up over the entrance to the building where I live. This was for a simple reason: How will it look when the effort tapers off? There's nothing more dispiriting than a drooping and neglected flag and nothing more lame than the sudden realization that the number of them so proudly flourished has somehow diminished. (The one over my building went away, nobody can quite remember how or when, and it hasn't been restored.) In the meantime, I refused to accept an invitation to a memorial service for the many murdered British citizens, which seemed to me to miss the same point in the same way.

There were other reasons to oppose flagification. (Very many of the immediate victims were not American, for example, and most of those murdered and enslaved by Islamic fascists have themselves been Muslims.) I was glad for similar reasons when the order was announced that "coalition" flags would not be flown in Iraq. What is required is a steady, unostentatious stoicism, made up out of absolute, cold hatred and contempt for the aggressors, and complete determination that their defeat will be utter and shameful. This doesn't require drum rolls or bagpipes or banners. The French had a saying during the period when the provinces of Alsace and Lorraine were lost to them: "Always think of it. Never speak of it." (Yes, Virginia, we can learn things from the French, even if not from Monsieur Chirac.)

This steely injunction is diluted by Ground Zero kitsch or by yellow-ribbon type events, which make the huge mistake of marking the event as a "tribute" of some sort to those who happened to die that day. One must be firm in insisting that these unfortunates, or rather their survivors, have no claim to ownership. They stand symbolically, as making the point that theocratic terrorism murders without distinction. But that's it. The time to commemorate the fallen is, or always has been, after the war is over. This war has barely begun. The printing of crayon daubs by upset schoolchildren and the tussle over who gets what from the compensation slush fund are strictly irrelevant and possibly distracting. Dry your eyes, sister. You, too, brother. Stiffen up.

I think about it every day, without fail, even though it's difficult (because of the aforementioned and enfeebling "sensitivities") to see a replay of the packed civilian jets slamming into the towers or of the men and women who jumped, in flames, to their deaths. It's perhaps a little easier for me to be reminded than it is for some others: My apartment has a direct view of the flight path to Washington National Airport, and I go past the White House or the Capitol several times a week. But never—quite literally never—without imagining how things would be if that flight from Newark hadn't been delayed and if the United Airlines passengers hadn't got the word in time and decided to make a fight of it.

If our Congress or our executive mansion had been immolated that morning, would some people still be talking as if there was a moral equivalence between the United States and the Taliban? Would they still be prattling as if the whole thing was an oblique revenge for the Florida recount? Of course they would. They don't know any other way to talk or think. My second-strongest memory of that week is still the moaning and bleating and jeering of the "left." Reflect upon it: Civil society is assaulted in the most criminal way by the most pitilessly reactionary force in the modern world. The drama immediately puts the working class in the saddle as the necessary actor and rescuer of the said society. Investigation shows the complicity of a chain of conservative client states, from Pakistan to Saudi Arabia, in the face of which our vaunted "national security" czars had capitulated. Here was the time for radicals to have demanded a war to the utmost against the forces of reaction, as well a full house cleaning of the state apparatus and a league of solidarity with the women of Afghanistan and with the whole nexus of dissent and opposition in the Muslim world. Instead of which, the posturing loons all concentrated on a masturbatory introspection about American guilt, granted the aura of revolutionary authenticity to Bin Laden and his fellow gangsters, and let the flag be duly seized by those who did look at least as if they meant business.

Let me take the strongest objection to my interpretation, which is that the events of Sept. 11, 2001, were exploited by conservatives to settle accounts with Saddam Hussein and that many Americans have been fooled into war by thinking that Iraq was behind the attacks. Leave aside the glaring and germane fact that Saddam was and is in partnership with the forces of jihad; not even the sorriest illusion is in the same category as a book published by The Nation, written by Gore Vidal and flaunted at "anti-war" rallies, which argues that it was essentially George Bush who helped organize and anticipate the atrocity. That's a level of degeneration unplumbed by any other faction. So, the pitiful peaceniks are the chief moral losers, whichever way you slice it.

Should this solemn date be exploited for the settling of scores? Absolutely it should. When confronted with a lethal and determined enemy, one has a responsibility to give short shrift to demoralizing and sinister nonsense. (To take the most recent example of conspiracy babble to have shown up on my screen: I know very well that Bin Laden's family was evacuated from the United States, with FBI and White House help, in the "no-fly" days that followed the aggression. I wrote about it furiously at the time. But this disgraceful scramble surely proves, if it proves anything, that the Bush administration did not have time to prepare for an attack that it allegedly knew was coming. Meanwhile, those who mutter darkly about the Saudi connection overlook the rather salient fact that Saudi influence was exerted consistently and energetically against regime change in Iraq.)

Two beautiful fall seasons ago, this society was living in a fool's paradise while so far from being "in search of enemies" that its governing establishment barely knew how to tell an enemy from a friend. If there is anything to mark or commemorate, it is the day when that realm of illusion was dispelled—the date that will one day be acknowledged as the one on which our enemies made their most truly "suicidal" mistake.

Hey!.. Hey!! I see Blogger has FINALLY fixed the glitch with my(other's?) account so I can no add additional posts..

Maybe I'll restart my commentary this weekend...

The Central Scrutinizer

22nd May, 2003

I found this to be a well-written analysis of the challeges facing the EU as they attempt to create a constitution:

United States of Europe?

By Helle Dale

BRUSSELS.
With all the reports of anti-Americanism in Europe, it may surprise people here to be told that the United States of America is the envy of European politicians. Looked at from Washington, the European Union is not often considered a major factor in U.S.-European relations, and most Americans have a vague notion at best of what the EU actually is. Some European politicians even want a United States of Europe. Where these political ambitions will lead is still uncertain, although they are not in and of themselves likely to solve the economic problems besetting the European economies. On a global scale, they may lead to greater confrontation with the United States, depending on who calls the shots and sets the political agenda in Europe.

The European Union, which started out in the 1950s as a largely economic grouping of six continental European countries (the European Common Market), has today evolved into a semistate-like organization that is expanding to include 25 members, including countries in Eastern and Central Europe. The EU already has a GDP the size of that of the United States and a population that exceeds it.

The EU already has a set of treaties that cover everything from trade to social policy, and even supposedly common foreign and security policy. It has a common currency for 12 European countries (the euro), and the EU now wants a constitution of its own, just like the Americans, to give it a "legal personality" and the other aspects of statehood. In a little over a month, the European Constitutional Convention will present the results of its yearlong work to a conference of the governments of the EU. If adopted, it will be submitted for ratification in each country.

It is difficult, however, to see how this project can work. A single market is one thing. Giving up national political sovereignty is quite another. In almost every case, even in France, European politicians have been far ahead of their electorates.

European constitutional negotiations have sometimes been compared to Philadelphia 1787 in that compromises have to be reached to balance the interests of smaller and bigger states. That comparison is true, but only up to a point. The entrenched political and national cultures of the old nation states of Europe are much harder to weld into a whole than the 13 former British colonies of the New World. And the bigger countries, primarily Germany and France, are deeply reluctant to accept equal representation from smaller neighbors.

What is more, the survival of the U.S. Constitution was precarious enough in itself. As John Adams observed, "The legislators of antiquity ... legislated for single cities, but who can legislate for 20 or 30 states, each of which is greater than Greece or Rome at those times." Before long, there were numerous threats of secession from the Union, including from the states of New England, before the issue burst into full flame with the American Civil War. All of this is frequently overlooked by those who argue if the Americans can do it, so can the Europeans.

The French quickly grasped the lead in the Constitutional Convention, arranging for former French President Valery Giscard d'Estaing to act as its head. Unfortunately, Mr. d'Estaing is no Jefferson or Madison. Representatives of other countries at the convention have complained that he has a way of arriving with a set of finished proposals, sidelining other participants and preempting objections. And after a while, smaller and medium-sized countries started coordinating their efforts to be heard. Specifically, they did not want the trimmings of empire to get out of hand. As a Finnish representative has quipped, "we do not want to import the American presidency, the standing committee of the Soviet politburo and the Chinese People's Congress." This referred to the proposal for an elected European president and a standing convention to deal with constitutional issues.

Finally, it is doubtful that the new European constitution will fix what most ails the continent — economic stagnation, rigid labor markets and declining birthrates. The introduction of the euro has not produced economic growth. The German economy, the euro zone's largest, contracted by 0.2 percent in the first quarter of this year, dragging other economies with it toward recession.

The prestigious French Institute of Internal Relations, in a new report titled "World Trade in the 21st Century," predicts that "The enlargement of the European Union will not be sufficient to guarantee parity with the United States," and that the EU's share of world economic output will shrink from 22 percent today to 12 percent in 50 years.

This is not what you hear in Brussels, of course. But surrounded by the architectural glories of old Europe, it is hard not to get the impression that the busy framers of the European Constitution are whistling past the graveyard, as splendid as it is.

http://www.washingtontimes.com/op-ed/20030520-102303-4620r.htm

The Central Scrutinizer

May 17th, 2003

Thought the following article from the Financial Times of London was interesting and germane. Since I'm a firm believer that all politics are economic (can we say "no duh?"), on a international, or macro-economic level, economics will eventually drive policy.

Fears grow that US economy faces deflation
By Jenny Wiggins in New York, Peronet Despeignes in Washington and David Pilling in Tokyo
Published: May 16 2003 21:37 | Last Updated: May 16 2003 21:37

Fears of deflation in the US rose on Friday as stock prices fell and government bond yields dipped to 45-year lows after a key measure of inflation dropped to its lowest level in 37 years.


The concerns were heightened by reports that Japan's deflation gathered pace in the first quarter with prices down 3.5 per cent from a year ago, their fastest 12-month drop on record.

The fall may fuel concerns that the Japanese economy could be in a deflationary spiral. (Note: Also called a "liquidity trap", Scrute) Japanese prices have been falling since 1995 at an average annual rate of 1 to 2 per cent. The latest figures showed deflation accelerating in the 2002 financial year to 2.2 per cent, a record for a full year.

In the US the yield on 10-year and 30-year US Treasury bonds fell to 3.49 per cent and 4.45 per cent in early trading.

Longer-dated US government bonds have rallied sharply this week, with investors convinced that inflation will remain subdued, having less of an impact on the value of long-term assets.

The Labour Department reported that the 12-month rise in its core consumer price index fell to 1.5 per cent in April, its slowest 12-month rate of increase since January 1966. Strategists said the subsequent fall in bond yields could, however, be positive for the economy. "This is what the Federal Reserve wants," said Dominic Konstam, head of interest rates products research at Credit Suisse First Boston. (Note: the Fed wants the market to do this, but has threatened to buy long term bonds to inject "liquidity" into the financial markets. Normally the Fed works in the short term Treasury debt markets).

Falling yields mean falling borrowing costs, which make it easier for businesses to borrow and homeowners to refinance mortgages and get extra cash - factors that have helped keep the economy afloat. But the sharp slowdown in inflation has inflamed talk of Japanese-style deflation.

Japan's deflation figures were released along with gross domestic product figures showing that growth in the first quarter fell to almost zero, leading some economists to conclude that the economy was on the brink of yet another recession. Nominal growth fell 0.6 per cent in the March quarter, or minus 2.5 per cent on an annualised basis.

Paul Sheard, economist at Lehman Brothers, said: "If you look at the chart it looks horrible. It looks as though deflation is going through the floor." However, the headline figure exaggerated the picture, because the GDP deflator in the first quarter of 2002, when Japan began pulling out of recession, was positive, he noted. "It's something of a statistical fluke, though deflation is deflation and it is not a good sign." Most economists in the US have dismissed deflationary risks as marginal. But the Fed said recently that odds of an "unwelcome substantial" slowdown in inflation were now stronger than that of a rebound. "We continue to believe that inflationary pressures are building," said Brian Wesbury, an economist with Chicago-based, bond-trading firm Griffith Kubik, Stepehens and Thomson, but "it is getting harder and harder to argue against the deflation story".

Concerns have also grown about a global-wide deflation which the US could import, as western Europe flirts with recession and Japan looks more likely to enter a deflationary spiral.

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1051390103932&p=1012571727088

As we, ah-hmm, "scrutinize" this report, we see some major macro-economic factors which are, IMO, driving, or at least heavily influencing, international policy. Japan's deflation has been a major concern which goes under-reported in the news we normally hear. Japan is fast approaching, IMO, and economic "perfect storm", where demographics, economics, and a rigid, consensus based, political system which can not act decisively, are laying the foundation for a major disruption in that nation, (and potentially a major political shift to extremism within the next 10-15 years.). The Japanese national public debt is somewhere around 140% of annual GDP (compared to approx 67% for the US), indicating governmental leaders have been running their economy on government spending. And since much of this spending consisted of "make work" public works projects of little to no economic value (parks, expensive off-shore airports, land reclamation.. etc), costing them over $1 Trillion since 1992.

Yet, because of the prodigious saving habits of the Japanese people (an estimated $12 Trillion) over the past 20-30 years, they have been able to finance this debt, despite almost zero percent interest returns on savings. But of course, as prices have declined, the purchasing power of these cash hoard has increased. However, given that an estimated 25% of the Japanese population will hit retirement age over the next 5-10 years, these people are loath to spend or consume, since few really have much faith in the corporate pension system. That's 1 in 4 Japanese workers who will be quitting their jobs, withdrawing retirement funds, and trying to scrape by. But that also means the Japanese income tax base will decline commensurately, depleting tax revenues and either forcing spending cuts or tax hikes to maintain their ability to pay the national debt. And that suggest interest rates will be forced higher as the quality of Japanese national debt becomes more dubious. And devaluing

Some have opined that Japan will be forced to import labor into its primarily homogenous workforce in order to maintain that tax base. Some have argued that Japan should devalue the yen in order to spur consumer spending (as people opt to spend their money rather than see it lose purchasing power through induced inflation). However, it would prove political suicide to suddenly cut the value of cash savings for all of those aging pensioners. Personally, I find such a shock to their social and economic fabric could lead to a return of extremist, perhaps militant, forces within Japanese politics.

And why the above article is pertinent to the US is that some economists and analysts are fearful that what's happening in Japan may happen in the US. A liquidity trap where interest rates are forced so low that effectively savers are paying banks to hold their money, and loans bear little to no cost to the borrower. But is the situation in the US the same as in Japan? There are similarities, a stock market bubble, followed by dramatic crash in equity values (with a commensurate drop in interest rates and booming bond market since bonds paying 5-8% become more valuable than newly issued Treasury bills). And the declining interest rates have led to a dramatic increases in real estate valuations in many areas (especially here in DC). And while we've avoided negative economic growth thus far, without some major change in the economic confidence and performance, there's the distinct possibility we may decline further, or at best, remain stagnant.

We've recently heard about the 40% decline in the value of the US dollar against the Euro in recent months. But it must be recalled that the Euro is still valued less than it was at its inception. That means the US dollar had appreciated that much, effectively setting up a protectionist barrier to US goods being sold in Europe. It would seem the Bush administration and Fed have decided that it was not good policy to subsidize the European and Japanese economies with a strong dollar policy. And one of the pre-requisites for decreasing the value of the dollar, imo, was to bring about a decrease in oil prices worldwide for the next several years (oil transactions are currently priced in USD). And while I'm not even willing to suggest that the recent war in Iraq was solely fought for oil (maybe I'll address the mid-east in a couple of days), it certainly would increase the odds of a US economic recovery, if not a global one.

Unfortunately, it likely will mean the possibility of an economic recession in Europe. And that can only exacerbate the double digit unemployment in many European nations.

Well... Enough for now... I'll leave it on that note.

TheCentralScrutinizer

May 16th, 2003

Well, I've finally done it. Plunging into unknown territory as the net's newest Blogger. As some can obviously see, I'm a Zappa fan (as are many others who merely refuse to admit that a dirty mind is a terrible thing to waste)... ;0)

But this blog is not about music. It's about what really fascinates me; International Politics and the influences that drive these interactions between nations, states, and individuals. This site will provide me a ready repository for any number of articles I come across independently, or through my participation via other discussion forums on Silicon Investor (My handle there is Hawkmoon).

With my previous experience as a military and private investigator, my philosophy on world politics, and pretty much anything else, resides upon answering two seemingly simple, but broad and elusive, questions:

1.) What's the angle? IOW, what is the agenda of the party in question? Is it political, economic, or merely personal?

2.) Who's making money off the deal?... (follow da' money).. Money can be cash, property, or any other number of financial instruments. Follow the money trail and you'll ultimately find the root of international policymaking.

Governments are not monolithic entities. In fact, they are run by a relatively small percentage of the total population. And these people have immense power, whether the governmental system is democratic, authoritarian, or totalitarian.

However, all that being said, I do believe that ideals can, and do, drive many politicians. And while they generally have a financial basis (since we seldom do that which only makes us poorer), those ideals can facilitate wealth creation for a large percentage of a society. I don't subscribe to wealth creation being a zero-sum game of winners and losers. Some will just win more than others... :0)

I also am a firm believer in taking criticism well. I do not pretend to know all the answers. But I'm open to having my opinion influences by facts and documented evidence, depending on their significance to answering the questions above.

So as I get my feet under me with this blog posting, hopefully I'll provide a different and informative perspective that, even if you disagree with me, will cause you to pause and reflect on why you hold the particular beliefs that you do.

Stay tuned!!

TheCentralScrutinizer