‘Penny Pinching’ in Afghanistan

The Times has a blatantly pro-war screed masquerading as unbiased news today, as they attempt to bully Britain into providing more money for Afghanistan. Just look at this lede:

Has a “penny pinching” approach to defense spending by Prime Minister Gordon Brown kept British troops in Afghanistan disastrously short of the helicopters and other equipment their commanders have long demanded, causing unnecessarily heavy combat losses to the Taliban’s most devastating weapon, roadside bombs?

“Disastrously short of helicopters”, “commanders have long demanded”, “unnecessarily heavy combat losses”, “most devastating weapon” – Gee, I wonder if the author thinks Britain ought to invest more money in this black hole of a war! (the answer is yes.)

Then it gets even worse. The author, John F. Burns, decides his best source for this matter is a retired British general – one who was Britain’s top military officer back in 2001:

Gen. Charles Guthrie, Britain’s top military officer until 2001, has spoken bitterly of Mr. Brown’s paring of budgets for helicopters and other defense priorities. “Gordon never cared” about defense, he said in an interview last summer with the Times of London. “It’s no good the prime minister one moment saying success is all important, and then for the sake of a few extra helicopters and 2,000 men allowing the mission in Afghanistan to fail.

“You can’t go to war in a penny-pinching way,” he said.

What exactly is the “mission” I hear everyone talking about? What does “success” even mean in this context? And isn’t ‘penny-pinching’ a rational policy if your country is totally broke? I know we live in a culture that worships success, but this is going a little too far.

I guess the point of the article is that Conservative leader David Cameron is using this “issue” to score some quick points against Labour in the upcoming election. Mr. Burns writes:

Mr. Cameron quoted a former British paratroop commander in Afghanistan as saying that “repeated demands for more helicopters fell on deaf ears” with the Brown government, and that troops ended up “driving into combat when they should have been flying.”

Why don’t they just leave? They would neither have to drive nor fly into combat in that case. The BBC and several other opinion polls all show the war to be deeply unpopular with the British public. But since all of America’s so-called ‘allies’ are shying away from this insane and endless conflict, we have to rely once again on our ‘oldest ally’ to fill the gap – and that often means having to bully them a bit on the front page of our leading newspaper.

Germany Flip-Flops on Greek Bailout

Well, I certainly didn’t expect this. It looks as though Germany is going to rely on the IMF to bail Greece out should the dreaded moment arrive (hint: it will). This does not bode well for the European Union, and indeed, until now, many thought the only way to preserve the integrity of the Euro would be to treat this Greek crisis as an in-house affair. Resorting to IMF loans would do very little to assure investors that the EU is good for its members’ debt, as this basically signals to the rest of the world that Germany (virtually the only healthy economy left in the EU) is either unwilling or unable to shoulder the entire partnership’s burden.

Remember: France, Britain, Spain, Italy, Portugal, Ireland, and Belgium are all facing debt crises of their own, many just as deep, though not as visible, as that of Greece. Germany’s indication that it will not help Greece is effectively a pre-emptive warning to the rest of these countries that when their own respective economies collapse, not to come banging on Germany’s door. Bloomberg reports today that Greece’s Prime Minister has set a deadline for Germany to bail it out, before it goes to the IMF for help. Germany has already indicated that it’s going to let the IMF solve Greece’s problem, effectively rendering that threat moot.

This is big news for several reasons. With Germany, the last healthy EU economy, refusing to bail Greece out, we may be seeing the end of the European Union as a cohesive economic entity. The Euro has been taking a beating ever since fears of a Greek default arose (it’s down more than 10% since this crisis began), and it’s sure to drop further on today’s news. It is unlikely that Greece will default or be forced out of the economic partnership, but if the IMF gets its fingers into Greece, it will only be a matter of time before the rest of the EU comes to the IMF, arms outstretched. Greece will not be the last European country to undergo a debt crisis, as I hope I have shown.

If Greece accepts IMF help, it will be forced into far worse “austerity measures” than anything Germany would have imposed. “Austerity” is generally a euphemism for cutting off social services and indiscriminately firing middle class workers while the rich make off like bandits. Already these measures have caused massive riots and general strikes in Greece, and these are sure to continue if the IMF gets its way.

As always, one can draw a straight line between economic collapse and Wall Street. Many sources have already reported on how Wall Street helped Greece hide its debt for years, and, in fact, encouraged them to take on more debt via “securitized” trades.

But that isn’t all. Wall Street’s “innovative financial instruments” – its Collateralized Debt Obligations and other over-the-counter derivatives – proliferated throughout the European economy, and are at the heart of the myriad debt crises. They made billions selling Europe these worthless junk bonds, and now they’re slowly walking away, whistling, as though they had nothing to do with it. Greece should be demanding massive reparations for the unprecedented fraud of which they, and the rest of the EU, were the victims.

It’s difficult to see where this will end. The IMF bails out Greece instead of Germany – but then what? Portugal, Italy, Spain… then France? What if Britain needs a bailout? Does the IMF have such resources? Are they just going to print the money? Does anyone know what they’re doing?

Britain Helped Lehman Bros. Hide Billions

The Independent has a good rundown of some recently released documents pertaining to the Lehman Bros. debacle in September ’08:

The failed investment bank [Lehman Bros.] approached a London law firm over plans to use a controversial accounting trick – known internally as “Repo 105” – to temporarily conceal the liabilities.

…

The bank used the Repo 105 tactic in the run-up to the end of its three-month financial reporting periods to help cushion the blow of huge losses in the first half of 2008 and suggest its financial health was far more robust than it was.

Linklaters – which drafted a document which stated that the technique was legal under UK law – was only approached after Lehman was unable to find an American law firm to say that the Repo 105 transactions could be carried out in the US.

…

The bank had become so addicted to using the technique that when executive Bart McDade, who went on to become Lehman’s chief operating officer, was asked if he was aware of the device the report cited he wrote in an April 2008 e-mail: “I am very aware … it is another drug we r [sic] on.”

I don’t know how many of these scandals have to emerge before we realize that financial institutions (and, likely, corporations in general) are not scrupulous organizations, and they are willing to dispense with any ethical norm a) so long a they’re allowed to, and b) so long as it’s profitable.

It’s astounding that we haven’t done a single thing to prevent our banks’ future malfeasance. Their size hasn’t been restricted (indeed, they’ve grown since the crisis), OTC derivatives are still legal, most of the same executives are in place – its a ticking time bomb.

Britain Grapples With Debt of Greek Proportions

The Times has a pretty strong piece in today’s issue about Britain’s massive debt problems. Yet more evidence that the “Greek Problem” isn’t limited to Greece alone. The whole European Union and most of its satellite economies are probably in for a rough decade:

As for the British government, it has been able to finance a budget deficit of 12.5 percent of G.D.P. — equal to Greece’s — at an interest rate more than two full percentage points lower only because the Bank of England bought the majority of the bonds it issued last year.

“It’s not just ‘basket cases’ like Greece that can be considered candidates for sovereign crises,” said Simon White of Variant Perception, a research house in London that caters to hedge funds and wealthy individuals. “Gilts and sterling will continue to come under pressure as scrutiny of the U.K. fiscal situation intensifies.”

Now, unlike the United States, other countries’ deficits actually mean something. They aren’t allowed to go around printing as much money as they want, running absurd amounts of debt, and forcing everyone to except their currency at the barrel of a gun. Running budget-busting deficits isn’t just something they can laugh off, like we can here in America – over a long enough time scale, those deficits can make a country’s currency worthless.

It’s tough to see where this will end. The whole EU and attached economies are vulnerable to this “contagion”, which, I cannot stress enough, has a lot to do with Wall Street’s reckless bets during the aughts. If we were living in a fair world, these Wall Street firms would pay reparations to the affected countries for essentially destroying their economies. As it is, it looks as though we’re going to have to watch the EU go down in flames before anyone does anything.

Then, likely, we’ll see some backdoor deals, a few hurried conferences, and the US Government will come out with a new TARP program, this time for Europe. Washington has always had a flair for publicity – maybe they’ll call it a “second Marshall Plan”. It’s inconceivable that the US would allow its most favored “allies” to go down without assistance. And such a move would likely have incidental benefits – namely, bringing the EU firmly under our political control.

Sure, the American taxpayer will eventually have to foot the bill, but who ever cared about that?

Tony Blair Grilled on Iraq

Poor Mr. Blair. Deceived into a war he wanted nothing to do with, too weak and conciliatory to point out a bad idea when he saw it, a veritable Sancho Panza to our dear Bush’s Quixote, he finds himself the subject of an intense series of questions on the Iraq War. By now everyone knows that the original rationales (WMDs, “evil tyrants”, etc.) were mostly lies, and it is now Mr. Blair’s unhappy task to try and justify his slavish devotion to Mr. Bush, seven years after the fact.

Mr. Blair acknowledged that the nature of the Iraqi regime sharpened his perception of Saddam Hussein as a threat not just to the region but to Britain. Calling Mr. Hussein a “probably wicked if not psychopathic man,” Mr. Blair said that if he had been able to pursue a program to develop weapons of mass destruction “at some point we were going to be involved in the consequences of that.”

And so you were, my good sir – so you were.

What’s striking about these hearings is how far removed they seem from American discourse. Witness for instance, the protesters marching outside:

Mr. Blair entered the inquiry building two hours before the scheduled start of hearings in a cramped committee room, using a cordoned-off rear entrance. Demonstrators, outnumbered by police, chanted slogans like “Jail Tony” and “Blair Lied — Thousands Died.”

“We haven’t come here expecting an apology,” one protester, Gary Walker, 31, said, “But it’s important to show seven years on that people still care about the illegal war.”

We in America have moved far from such sentiments, and one cannot help but feel the public just wishes this issue would go away.

The hearings are scheduled all week and they present, at the very least, a humane reaction to an inhumane enterprise.

News from Airstrip One

Our former masters, the British across the sea, have recently pledged their undying support for our “interests” in Yemen.  Prime Minister Brown gave a spirited performance, tarring Yemen as a “failing state” and pledging UK support for pretty much whatever the US decides to do.  One feels faint surprise that the history of the past decade, the blood still flowing in Iraq and Afghanistan, has failed to make a sufficient impression upon him.

Well, then – let’s see what kind of ancillary slop Mr. Brown has for us this go-round.

Have at it, Brownie!

“Yemen has been recognised, like Somalia, to be one of the areas where… we’ve got to do more,” he said.

Ah, that’s it Do more! Vague, yet direct. What we must do, is of course left unsaid, but we would be remiss in doubting our fighting boys’ ability to get it (whatever it may be) well and thoroughly done.

“And of course it’s… how we can prevent the perversion of a good religion, Islam, by a group of people who will stop at nothing in a murderous ideology that tries to create a caliphate, tries to create the sense that everybody is an enemy except those people who believe in a particular version of Islam.”

Yes, my dear sir Brown, how indeed! Perhaps we might consider ceasing our bombardment of no less than five Islamic countries (Iraq, Afghanistan, Yemen, Somalia, Pakistan), actions which are widely acknowledged as a catalyst for  terrorism. Or, you know,  perhaps you might take a look at the oft-quoted study which concludes that terrorism has seen a seven-fold increase since the beginning of our war against it.  (With such a record, one wishes for a “war on equality”). What are your suggestions, Mr. Brown?

“So it’s strengthening counter-terrorism co-operation, it’s working harder on the intelligence efforts.

That sounds just vague enough to work!

Tax ’em!

The Financial Times has a list of 14 reasons why US bankers should be taxed for their outsize bonuses. Both Britain and France have begun to do this.

1. People on Main Street are furious about Wall Street bonuses.

2. This anger is justified because the bonuses are based in large part on windfall profits. These profits derive from taxpayer-backed interventions that stabilised the financial system, paving the way for a  recovery in financial markets and collapse of risk spreads.

3. All banks benefited from this bailout – not just the ones that took or still have Tarp funds. Even the strong gained hugely from Fed liquidity and government actions to ensure none of their weaker counterparties failed (including but by no means limited to the AIG case).

4. In an ideal world, these interventions would have been structured up front in a way that ensured the value created did not leak out to banks and bankers. But they were not.

Bonus Tax

Yet more evidence that our friends across the Atlantic have a firmer grasp on democracy than we do: Britain is set to levy a major one-time tax on those scurrilous “bonuses” the banks are handing out with taxpayer money.

The UK government will hit the bankers with a 50% tax on any bonuses greater than $40,000, this year only. In doing so, they will make up a good portion of their budget shortfalls and send a clear message to the financial industry that the taxpayer bailouts are not a gift to the few.

Can such a thing happen here? In the words of the Brookings Institution: not likely.

“I think it is very unlikely that you would see this kind of tax on bonuses here in the U.S.,” Douglas J. Elliott at the Brookings Institution in Washington said. But, he added, “There are going to be big bonuses this season. There will be high levels of public anger. Therefore there will be some bills introduced. I just don’t think they are going to make it through.”

Why? Because unlike in Britain, our entire legislative process has been bought by the major financial institutions, part and parcel.

As Finance Minister Alistair Darling said:

“If they insist on paying substantial rewards, I am determined to claw money back for the taxpayer.”

Can one even imagine such words coming from our own Bailout Chiefs?

An Inquiry, Please?

You’ve got to hand it to the British. Unlike their cowed counterparts across the Atlantic, they refuse to forget the Iraq War, and demand – gasp! – answers as to why their government was led into such a brutal, misbegotten, and ultimately futile endeavor, one for which there has been almost no positive outcome. The official inquiry began last Thursday, and not only will it decisively conclude who was for the war when, it will also be free to apportion blame where it sees fit.

Given our American squeamishness for “political” proceedings, it is difficult to foresee any analogous proceedings over here. After all, we can’t even find the stomach to investigate the 100 deaths by torture that apparently occurred at our secret detention centers. These were outright murders no matter how one looks at it; most of those held illegally by the US turned out to be totally innocent, which, of course, is the inevitable outcome when one offers large sums of cash in exchange for turning in your neighbors. The Obama Administration as well as the American Bar Association have made it abundantly clear that no prosecutions for these murders will be forthcoming, and, in essence, “we must look forward, not back” (whatever that means).

Meanwhile, on the other side of the Atlantic, our island fore-bearers have apparently retained some semblance of governmental accountability. Thus far the proceedings have confirmed what we already knew: that the US was “hell bent” on invading Iraq, that we didn’t care about getting UN support, and that we “actively undermined” British efforts to gain international authorization for the war.

According to British UN Ambassador Jeremy Greenstock,

Grumbling from Washington “included noises about ‘this is a waste of time, what we need is regime change, why are we bothering with this, we must sweep this aside and do what’s going to have to be done anyway — and deal with this with the use of force,'”

“This”, of course, means proof of Saddam’s connection to Al-Qaeda, UN authorization of the war (without which the war would be illegal), international support; you know, wastes of time like that.

Also from The Guardian:

Tony Blair’s government knew that prominent members of the Bush administration wanted to topple Saddam Hussein years before the invasion but initially distanced itself from the prospect knowing it would be unlawful, it was disclosed at the Iraq inquiry today.

And:

The government had intelligence days before the invasion of Iraq in 2003 that Saddam Hussein might not be able to use chemical weapons, the inquiry into the war was told today.

So that’s interesting. The British government knew both that the Bush Administration was “hell bent” on invading Iraq before 9/11, and that allegations of “chemical weapons” were, to say it charitably, overblown. Then why would they agree, in spite of that, to this lunatic war? For those answers we must wait for Tony Blair’s testimony, which is scheduled for early next year.

But I think we should take it as a sign of our democracy’s health that any proceedings even remotely similar to Britain’s Iraq War inquiry would be all but unthinkable.

The Pernicious Bonus

The G-20 economies are set to meet in Pittsburgh in three weeks to discuss various matters, among the most divisive of which stand the obscene “bonuses” awarded to the executives of our once-failing financial institutions.

What the Europeans want, according to The Times, are “‘global standards on pay structure, emphasizing long-term results in awarding pay and urging provisions to take back bonuses if bank profits tumble”, along with “limits on guaranteed bonuses”.

Reasonable enough. However, according to an anonymous source from The Times,  the US is reluctant to accede to such requests (in essence, allowing bankers unlimited pay completely divorced from performance), for the following reason:

American counterparts were seeking to sidestep the bonus issue out of fear the White House could be accused of yielding too easily to European pressure, which might endanger progress on health care reform.”

A likely story. It would be useful to contrast The Times’ coverage with that of Al-Jazeera, who wrote a similar story on the upcoming G-20 summit, but with a far different interpretation. To them, US reluctance to restrain the scandalous pay of its reckless bankers is attributable to its desire “to protect the status of Wall Street and the City of London as the world’s leading financial centers“.

Now that seems to make a bit more sense.

As an addendum, I would like to again point my readers to the Institute for Policy Studies report which informs us that the top five executives at the 20 banks that received the most federal bailout funds received an average of $32 Million in annual personal compensation.