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David Owen, former Brit Foreign Secretary sees coming strike on Iran.
Some key decision makers in Israel fear that unless they attack Iranian nuclear enrichment facilities in the next few months, while George W Bush is still president, there will not be another period when they can rely on the United States as being anywhere near as supportive in the aftermath of a unilateral attack.
In the past 40 years there have been few occasions when I have been more concerned about a specific conflict escalating to involve, economically, the whole world. We are watching a disinformation exercise involving a number of intelligence services. Reality is becoming ever harder to disentangle.
Last month a story in The Guardian claimed that on May 14 Ehud Olmert, the Israeli prime minister, in a meeting with Bush, had asked for a green light to attack Iran’s nuclear enrichment facilities. We were told that Bush refused. He believed Iran would see the United States as being behind any such assault and Americans would come under renewed attack in Iraq and Afghanistan. Shipping in the Gulf would be vulnerable. We were told that the source of the story was a European head of government and “his” officials – as if to exclude Angela Merkel and Germany. It is, however, improbable that Israel abandoned its option to take unilateral action.
Three weeks later the Israeli military conducted an exercise over the Mediterranean to demonstrate to the United States as well as Iran that it could attack. More recently there have been a number of stories raising concern about what is happening in Iran. …
The author of A Random Walk Down Wall Street says to chill.
As the world economy reels under the weight of the worst financial crisis since the Great Depression, we have been left with a broken financial system. Financial institutions around the world have suffered life-threatening, self-inflicted wounds by purchasing over a trillion dollars of complex mortgage-backed securities backed by dodgy loans based on inflated real-estate values. These assets have been financed with enormous leverage and with short-term debt. Just prior to its “rescue,” Bear Stearns had a debt to equity ratio of over 30 to 1, making it susceptible to a “run on the bank,” although Bear was not a commercial bank but rather part of the “shadow banking system” built on derivatives.
The long-run solution to the present crisis must involve substantial deleveraging and a recapitalization of our financial institutions. In the meantime, credit has been essentially frozen and a world-wide recession seems almost inevitable.
But just because stock markets have panicked, investors should not. The best position for investors today is not “fetal and 100% in cash.” We are not going to have a depression, and we have survived financial crises before. A century of investing experience, as well as insights from the field of behavioral finance, suggest that investors who bail out of equities during times like these are almost always making the wrong decision. …
So does David Warren.
… The things that we produce by our labour we may continue to produce, so far as they are needed; and the things we need may continue to be produced, in exchange. Money itself, so long as it is taken at face value, may continue to be the convenient mode of exchange. Neither now, nor in 1929, nor in any of the other times of stock plunge and bank failure, has anything much been lost, until, to use Franklin Delano Roosevelt’s phrase, “fear itself” became the enemy of the people.
For in practical terms, the stocks on Wall Street are not worth nothing. Formidable agencies of production lie behind each of them. When their heads have cooled, investors may sort out which are over-valued, which under-valued by comparison, and what needs writing off. The more I try to think it through, the clearer it seems to me that every “rescue plan” is counter-productive. The sorting-out process is seriously confused when the government blunders in.
Indeed, the consensus of the economists I have read is that the Great Depression was largely an artifact of government intervention, reacting to a meltdown by freezing it into place. For politicians and bureaucracies characteristically mistake money for goods, words for things, pictures for reality.
ProPublica reports on Clinton SEC Chairman Arthur Levitt who claims Clinton era officials argued against derivatives regulation.
As the world financial system implodes, Democrats have blamed the Bush administration’s lack of regulation for creating the conditions for collapse. But a top Clinton regulator acknowledges that he and his colleagues a decade ago “beat back” regulatory efforts that could have prevented credit markets from becoming so precariously balanced they were “milliseconds” from disaster.
“That was a point in history when perhaps we should have anticipated something like where we are today, at least the possibility,” says Arthur Levitt, chairman of the Securities and Exchange Commission from 1993 to 2001.
In 1998, an obscure federal agency, the Commodity Futures Trading Commission, raised the prospect of regulating the burgeoning market in complex financial instruments, which then had a notional value of $28.7 trillion. Today the notional value is $531.2 trillion, according to the International Swaps and Derivatives Association.
The nation’s leading financial officials – Levitt, Federal Reserve Chairman Alan Greenspan, Secretary of the Treasury Robert Rubin, and his deputy Lawrence Summers – pummeled the proposal, saying it was dangerous to even discuss the idea. Led by Rubin, Levitt and Greenspan, the Clinton White House instead proposed a modest set of reforms. Months later, Clinton Administration officials walked away from their own recommendations, concluding the market could be best managed by the financial industry. …
Mark Steyn comments on the David Warren column in Oct 9th Pickings – The American people and their irreconcilable differences.
Another Steyn Corner post leads to David Harsanyi’s column claiming the GOP has no candidate.
This election has never been about John McCain — though his candidacy is sure to revive a debate about the worst presidential candidates of all time.
No, this is a referendum on Barack Obama. And many Republicans are exuding the confidence of a hopelessly quixotic sports fan — a person who watches his atrocious team struggle for three quarters with the false expectation that some miraculous comeback is imminent in the fourth.
It rarely is.
McCain has consistently remained inconsistent, vacillating between promises and populism. From his support of cap-and-trade to his actions during the bailout, McCain’s positions seem entirely focused on winning the middle- of-the-road vote.
No modern Republican has ever won the presidency solely focused on the ambivalent squishy inattentive center. These people don’t care enough to name their political party, much less pay attention.
But he’s a maverick. One of McCain’s central arguments has been his uncompromising valor in opposing the Bush administration.
Here’s a newsbreak: Disagreeing with the Bush administration on a handful of issues (often the wrong ones, in McCain’s case) doesn’t make you a maverick, it makes you an average American. And, sadly, the second debate proved that McCain would be incapable of making his party’s philosophical or political case even if he genuinely tried. …
Samizdata liked the Sebastian Mallaby column in Pickings last week.
This is a good, very fair-minded take on the current financial turmoil and all the more impressive for its insights precisely because the writer is not some sort of ultra-free market ideologue:
“The real roots of the crisis lie in a flawed response to China. Starting in the 1990s, the flood of cheap products from China kept global inflation low, allowing central banks to operate relatively loose monetary policies. But the flip side of China’s export surplus was that China had a capital surplus, too. Chinese savings sloshed into asset markets ’round the world, driving up the price of everything from Florida condos to Latin American stocks.”
Absolutely. China, and the massive pool of savings that Asian economies have been able to provide to Western borrowers, is the 800 pound gorilla in the room in the current saga. …