Already gone

Bob Herbert in the New York Times today asks --

Does anyone know where George W. Bush is?

You don’t hear much from him anymore. The last image most of us remember is of the president ducking a pair of size 10s that were hurled at him in Baghdad.

Indeed, Bush got back from Baghdad and soon disappeared to Camp David and then his vacation home in Texas. Perhaps recognizing the problem of an invisible president in a crisis, the White House has released this photo of Bush on the phone to the Palestinian PM. Note the telltale Bush attire -- he was outdoors before and probably after this photo. Biking and brush clearing to be done.

UPDATE: In his New Year's Day message, Bush claims to be keeping his promise to "sprint to the finish" -- while on vacation in Texas. His single bit of official business today was extending a trade deal for Israel. Awkward timing.

Free wars feel good

Amid the many juicy quotes from Vanity Fair's "oral history" of the Bush administration, this one from Republican operative Mary Matalin captures his brand of cynicism. The context is Bush's failure to signal to the country that the 9/11 response would involve any sacrifice or collective cost --

Mary Matalin: There was so much to do that was more important than—I mean, looking back, the national-unity thing is important, but it was way more important to re-structure the intelligence communities, way more important to harden targets. Know what I mean? It was all hands on deck. We were working on other shit. Everyone’s pulverized and beat, and there’s 24 hours in a day, so woulda, coulda, shoul da, but, you know, there was no office to do “feel-good” stuff.

It's a strange perspective. What office did Winston Churchill have for his "blood, toil, tears, and sweat" speech? The office of leader. Apparently the Bush administration didn't have that. Matalin's sneering contempt is the kind of thing that gets you a job with Dick Cheney.

That'll leave a mark

The IMF on Gordon Brown's cut in VAT (page 6-7) --

Some countries have already introduced, or are considering, temporary decreases in the value-added tax (VAT). If the termination date is credible and not too distant, the intertemporal incentives implied by such a measure are attractive, but the degree of passthrough to consumers is uncertain, and its unwinding can contribute to a further downturn. It is also questionable whether decreases in the VAT of just a few percentage points are salient enough to lead consumers to shift the timing of their purchases. Along these lines, larger but more focused incentives, such as cash transfers for purchases of new, more efficient cars, a measure adopted in France, may attract more attention from consumers and have larger effects on demand.

Less effective than what the French are doing ... of course the real reason for the VAT cut was to make the inflation numbers look good next year, a rationale not discussed by the polite IMF.

UPDATE: This (down in story) confirms that the Fund was referring to the UK.

Words are worse than missiles

Fox News, just before 1700 GMT, reporter Harris Faulkner live on the scene of a Gaza protest outside the Israeli Embassy in London --

"they're saying some pretty nasty things and saying them in English so we can understand them, not the least among them 'Free Palestine' and what they'd like to do to the Israelis for launching what Israel calls a self-defence attack on Hamas."

Gordon Brown and the Lehman failure

It's an interesting story. Gordon has an almost comical emphasis on blaming decisions made in the USA for the global financial crisis. He regularly cites the subprime mortgage loan implosion as the ignition of the crisis but also the 15 September 2008 bankruptcy of Lehman Brothers as the accelerant -- the latter a generally recognized policy mistake that did send the crisis to a new level. But what was Gordon's role in it? He sees it as an American decision (as other accounts, such as this one from Andrew Gowers tend to do), as he said quite clearly in his pre-Christmas news conference --

Question:

And the system itself, the tripartite system [of financial regulation] working well.

Prime Minister:

Well I was talking about the tripartite system and the tripartite system is the Bank of England, the Treasury and the Financial Services Authority, and they came together to look at the big decisions that you have got to make in relation to the financial system. We had to make difficult decisions on Northern Rock. To be quite frank we didn’t want to nationalise Northern Rock, we would have preferred not to do it, but the market deteriorated. I think you have got to bear in mind that what actually happened last autumn, only a few months ago, was when Lehman Brothers collapsed in the States and wasn’t given support by the US government, that was their choice. A totally different set of events followed from that where people had no confidence in any financial institution at all and so that sparked a very different wave of actions that had to be taken and considered.

Here's the problem. The Wall Street Journal (subs. req'd) has a blow-by-blow account of that fateful weekend in September, and a non-decision by the UK government plays a key role in it. Specifically, Lehman Brothers believed it had a deal on the 14th, a Sunday, to be taken over by Barclays, but Barclays needed shareholder approval to confirm the agreement --

At Lehman that [Sunday] morning, Mr. Fuld [Lehman CEO] told his board of directors to gather at the firm's offices. By noon, he expected, the board would be able to approve Lehman's sale to Barclays.

One hurdle remained: To ink a Lehman deal, Barclays needed a shareholder vote. There was no way to get one on a Sunday. Barclays would need the U.S. or British government to back Lehman's trading balances until a vote could be held.

Government approval never came, though there are diverging views on why. Some blame the U.S. government for refusing to commit resources. Others say the British government refused to entertain a deal they worried would expose England (sic) to unnecessary risk.

This is crucial. Barclays was not looking for an open-ended government guarantee or a subsidy (its subsequent behaviour confirms its aversion to government capital infusions). Only a guarantee of Lehman as a counterparty until it could get shareholder approval to buy Lehman. It ended up owning chunks of Lehman anyway, but after the bankruptcy, the step which everyone agrees deepened the crisis to the point of no return.

So who in the UK government considered, but turned down, the Barclays request for a bridging guarantee of Lehman Brothers?

UPDATE 19 JANUARY 2009: The Wall Street Journal story is confirmed by a specific source --

The hitch was “much more technical,” Baxter [New York Federal Reserve’s general counsel Thomas Baxter] said.

“The problem for plan A relates to, what do you do in the period between the announcement of a merger and the actual closing of the merger?” Baxter said. He said plan A failed because Barclays couldn’t guarantee the trading obligations.

Barclays agreed to acquire Lehman after a syndicate of banks consented to backstop a new entity that would take over $55 billion to $60 billion of Lehman’s troubled assets, according to people familiar with the negotiations. The deal fell apart when the U.K.’s Financial Services Authority refused to sign off on the Barclays purchase that day and U.S. officials refused to take further steps to save the deal.

FINAL UPDATE 28 JANUARY: Perhaps the Davos Forum event looking at the critical 36 hours in the Lehman failure will shed light on the possible role of Gordon Brown or Alistair Darling in it.

Hypocrite of the year

10 days ago, Palestinian president Mahmoud Abbas visited the White House. In their brief public remarks, neither of them once mentioned Gaza despite discussing the West Bank several times. This was consistent with the recent de facto agreement between Bush, Israel, and Abbas to sever Gaza from the peace process, such as it is.

Abbas, who is hardly ever in the West Bank, has issued a statement of condemnation today of the huge Israeli strikes -- from Saudi Arabia, the current stop on his endless junketing. It's not clear what the purpose of his statement of condemnation is, since the policymakers of the western world are all on their unearned Christmas holliers -- a bit of timing that no doubt figured into Israeli calculations about when to strike (note incidentally that Israel appears to have used the 6 month truce to build up information on the location of Hamas facilities). US media are faithfully reporting the White House expressions of "concern" from Bush's "ranch" in Texas. But it's Abbas who chooses to play along with Bush. Maybe it's time for a new election in all of the territories.

Long past its sell-by date

Only Karl Rove could be so in love with his own creation as to be still selling the "MBA President" line about George Bush after 8 years in which the nation clearly never wants to see sight of its MBA President again --

In the 35 years I've known George W. Bush, he's always had a book nearby. He plays up being a good ol' boy from Midland, Texas, but he was a history major at Yale and graduated from Harvard Business School. You don't make it through either unless you are a reader.

It may also come as news to the hacks who always filed their reports from "the western White House" at Bush's "ranch" that the whole thing was just played up. But now Rove has let them in on the truth.

One question Rove never confronts in his article about Bush's prodigious reading during his term is how Bush found the time to read -- or more seriously, whether his reading contaminated Bush's policy decisions. For one thing, Bush's obsession with "legacy" (in evidence with a reading list that easily lends itself to vanity) could have blinded him to the real present day costs of his policies.

Unbelievable

Really. We had promised ourselves no Bush-bashing for the couple of days around Christmas. But then appears this late Christmas Eve news dump --

Yesterday the President forwarded to the Pardon Attorney a Master Warrant of Clemency including 19 requests for pardons with direction that he execute and deliver grants of clemency to the named individuals.

With respect to the case of Mr. Isaac R. Toussie, the Counsel to the President reviewed the application and believed, based on the information known to him at the time, that it was a meritorious application. He so advised the President, who accepted the recommendation.

Based on information that has subsequently come to light, the President has directed the Pardon Attorney not to execute and deliver a Grant of Clemency to Mr. Toussie. The Pardon Attorney has not provided a recommendation on Mr. Toussie's case because it was filed less than five years from completion of his sentence. The President believes that the Pardon Attorney should have an opportunity to review this case before a decision on clemency is made.

This apparent procedural error popped up just in time to pull what could have been a very awkward pardon. Because it was for offences related to mortgage fraud and deception in property sales, two red flag issues in the global financial crisis (and with low income mortgages being a key part of the conservative diagnosis thereof). And no one in the White House noticed! It looks like the New York Times was getting ready to do an unfavourable story and someone started asking questions.

Note also the appearance of a rule that pardon requests shouldn't be entertained till 5 years after completion of a sentence. Where does that leave Scooter Libby, Dick Cheney, and the rest of the Bush gang? Doesn't Dick Cheney think that nay such procedures limit the President's power under Article 2, Section 2?

Merry Christmas

The list of Christmas Number 1 singles is really a horror story; mawkish themed songs, cover versions, girl bands, boy bands. A trajectory that epitomises the decline of the single and indeed of Top of the Pops. So presented for your seasonal viewing pleasure is a song that doesn't fit the season at all, but does happen to have been a Christmas Number 1. A bizarre cartoon video version of the Beatles' Day Tripper.

Let's start again

Here's an example of how strange the US Constitution is. With Hillary Clinton's expected nomination as Secretary of State came the need for special legislation to lower the salary of the Secretary of State to the level that prevailed in 2006 once she takes office. Why? Because as a Senator, she voted for the legislation that increased the salary of the Secretary of State, among many other government positions.

Does anyone think that Hillary voted for this legislation because she expected to be Secretary of State in the future and so stood to personally gain from that vote? Yet the Constitution devotes some of its scarce space to a provision (Article I, Section 6) against such a supposed conflict of interest.

On the other hand, the Constitution gives the President unrestricted pardon power, including the power to pardon law-breaking in his own administration -- a provision likely to be used by George Bush to pardon Scooter Libby and the team involved in torture decisions.

Thus the constitution which is often cited as one of the world's finest examples of the genre finds an imaginary conflict of interest in Cabinet appointments but is silent on a very real one which in effect puts the executive branch above the law. Or, according to Dick Cheney, puts the executive branch above moral law. The best hope is that one of the many unintended consequences of George W. Bush will be to get people thinking about alternatives to this deeply flawed and outdated document.

Picking winners

Last week --

Washington- The U.S. Treasury Department today announced that Thacher, Proffitt & Wood, LLP will assist the Department with its investments in the Federal Reserve's Term Asset Backed Securities Loan Facility authorized under the Emergency Economic Stabilization Act. Treasury awarded the contract for legal services on Wednesday, December 10.

Today --

Dec. 23 (Bloomberg) -- Thacher Proffitt & Wood, a 160-year- old New York-based law firm, will close down after the subprime crisis slashed demand for its structured-finance practice and more than half of its attorneys left for a competitor.

UPDATE: According to the Wall Street Journal, the Treasury contract walks with many attorneys to Chicago-based Sonnenschein Nath & Rosenthal LLP. That's quite a contracting procedure for as broad a lending program as the TALF.

She needs to read up on it

A prominent US foreign policy luminary repeatedly makes false and potentially inflammatory statements about the effects of Israeli military actions in the occupied territories. It's the kind of thing that reliably generates "outrage" and demands for retraction.

Unless that person is Condi Rice. Not long ago she was claiming to have seen on TV the holes from mortar shells (implied to be Israeli) in the Church of the Nativity in Bethlehem. An incident that never happened. In her latest round of interviews, here she is expanding the claims --

QUESTION: You said – yeah, but al-Qaida’s – its central front or where it came from is the Middle East. Now, for many Arabs, the central problem is the Palestinian-Israeli problem. You have taken that up in the past year, but –

SECRETARY RICE: ... And yes, they haven’t gotten to the establishment of a Palestinian state yet. And yes, Hamas is wreaking havoc in Gaza. But if you look at where this was in 2001, you have to remark on how far it’s come. You know, cities like Jenin. Do you remember what was going on in Jenin in 2000? Do you remember the shell that hit the Church of the Nativity in 2000 in Bethlehem? This is a very different situation now [...]

QUESTION: But we rarely hear about the –

SECRETARY RICE: I’ve talked –

QUESTION: – Arab civilians who were killed and apparently –

SECRETARY RICE: I talked about them just the other day. I talked about the fact that that period in 2001, 2002, was, yes, suicide bombings in Israel proper, and also Israeli military operations in response, large-scale military operations in response, in which many, many – probably thousands of innocent Palestinians died.

And so that’s why I say we have left this in a much better place. Because you can go to Jenin now, the site of one of the worst of those incidents,

Condi, in her haste to dump her negative legacy onto Bill Clinton, has conflated the beginnings of 2nd Intifadah in late 2000 with the peak of the Israeli response, Operation Defensive Shield, in 2002. The latter included the much-disputed events in Jenin. A UN report after Jenin estimated a death toll of 1,539 Palestinians for the entire period from the beginnings of the Intifadah and through Operation Defensive Shield, including Jenin, and not including the non-existent shell through the wall of the Church of the Nativity.

Condi's command of the facts would embarrass the most earnest of keffiyeh-wearing protestors, and yet she's allowed to repeat this stuff without a peep. Is there a standard that only those awful liberals could possibly say incorrect things about Israel?

Since I'm here anyway

Today's stops on George Bush's compassioneering (© John O'Sullivan) agenda took him to a charity centre in Washington DC that hands out winter coats and then to visit wounded troops at Walter Reed Army Medical Center.

Except that's not the only reason he went to Walter Reed. He went to get his shoulder checked out. This resulted in the following repartee with the assembled hacks --

Q How is your shoulder, Mr. President?

THE PRESIDENT: Yes, good shape -- it's about an 80 mile-an-hour fastball.

So he's had shoulder pain for a few weeks and decided to use the trip to wounded veterans to get it looked at. Or vice versa. Presumably he has one of those "gold plated" health insurance plans that he had and John McCain have been yelling about, the ones where you could schedule a MRI anytime you want one. By the way, can he mean this fastball?

If it feels good, do it

Dick Cheney is displaying a level of candour in interviews that suggests he expects a blanket torture pardon from George Bush before 20th January and/or that he is reconciled never to leaving the USA again. Here is concluding a discussion (with the Washington Times) of the "enhanced interrogation techniques" including waterboarding --

And come to the question of morality and ethics, in my mind, the foremost obligation we had from a moral or an ethical standpoint was to the oath of office we took when we were sworn in on January 20th of 2001, to protect and defend against all enemies, foreign and domestic. And that's what we've done. And I think it would have been unethical or immoral for us not to do everything we could in order to protect the nation against further attacks like what happened on 9/11. We made the judgment, the President and I and others, that that wasn't going to happen again on our watch. And I feel very good about what we did. I think it was the right thing to do. If I was faced with those circumstances again, I'd do exactly the same thing.

Note the implication in Cheney's thinking that it would have unethical not to torture. Has anyone told Pope Benedict that an oath to the US Constitution trumps all other moral obligations?

UPDATE 27 JANUARY: Cheney's argument, that torture may be moral or ethical, now pops up at National Review via Marc Thiessen and Andrew McCarthy. Thiessen's theology by talking point is what happens when speechwriters become moral philosophers.

Touchy, touchy

The White House is not happy with the very careful New York Times story noting the role that the Bush cocktail of housing ownership boosterism, sluggish income growth, and lax regulation played in producing the housing crisis. George Bush is not happy that he only gets one more month of defending his record on the taxpayer time. On January 21 2009, a statement like this will have to come from his Presidential library.

But anyway, it's a unintentinally funny and clearly written in a huff by someone on the Bush economics team. Just a few things --

For example, the President highlighted a factor that economists agree on: that the most significant factor leading to the housing crisis was cheap money flowing into the U.S. from the rest of the world, so that there was no natural restraint on flush lenders to push loans on Americans in risky ways.

A diagnosis that is correct in so far as it goes, but doesn't ask why there was a rush of foreign money into the USA. Because the answer would have to mention Bush's monster budget deficits, which were financed abroad. Tom Friedman was discussing this very issue today. It also absolves American lenders of any responsibility for their own actions: these rich furriners made me do it.

One other thing. The White House complains of the NYT's "failure to consider the impact of monetary policy". That can only mean the low interest rates that Bush appointees Alan Greenspan and Ben Bernanke have determined. Any chance that Bush will be taking back his claims about the miraculous power of tax cuts, now that he acknowledges there was too much stimulus from monetary policy during his time in office?

Liquid bomb plot leaking

During a brazen interview of Dick Cheney on Fox News Sunday --

Q ... I want to discuss the controversies that we've alluded to over national security over the last eight years. First of all, let's get to the big picture: Was it worth it? Did the decisions that you helped set in place on interrogation, on detention, on surveillance, did they, in fact, save lives that you would maintain would not have been saved under the old rules?

THE VICE PRESIDENT: Yes, I believe that.

Q Can you be specific?

THE VICE PRESIDENT: Well, I guess I'd direct you to the intelligence agencies involved, but I know specifically of attacks that were thwarted -- I think of the airliner attack that was planned out of Heathrow, when they were going to hijack --

Q -- bomb attacks.

THE VICE PRESIDENT: -- six airliners and blow them up over American cities.

This should renew interest in the still poorly understood decision to make arrests in the supposed Lucozade bomb plot, accusations rejected by a jury and with an alleged mastermind, Rashid Rauf, who would always disappear just when it seemed he might shed some light on the issue. Until he disappeared for good in an American missile attack.**

The underlying questions concern the reliability and motivation of the evidence that Dick Cheney claims helped break up the plot, which in turn he uses as justification for the methods. Maybe the likely retrial of the accused plotters should focus more on the American intelligence link.

UPDATE: A lavishly produced Bush Legacy document (large file) claims amongst its "Did you know?" factoids --

Intelligence experts believe the 2006 plot to blow up multiple passenger jets traveling from London was only weeks from being carried out.

The jury didn't.

FINAL UPDATE 7 SEPTEMBER 2009: Some actual convictions related to the on-board liquid bomb portion of the plot.

**8 APRIL 2009: Rauf may not be dead after all. Note the extent to which his alleged career as a terrorist as been associated with bizarre security lapses and pre-empted investigations.

Counter talking point

One of the key talking points of the Bush Legacy Project is 52 uninterrupted months of job growth (which in turn gets attributed to tax cuts). The fact that it all ended so badly is ignored. And here's good context on the claim from Niall Ferguson in the FT --

Looking back, we now see just how big a proportion of US growth since 2001 was financed by mortgage equity withdrawals. Without that as a means of financing consumption, the economy would barely have grown at 1 per cent a year under President George W. Bush.

That's why car dealers have huge flags outside

From the fine print in the US Federal Reserve's latest credit spigot, the Term Asset-Backed Securities Loan Facility (TALF) --

All or substantially all of the credit exposures underlying eligible ABS [asset-backed securities] must be exposures to U.S.-domiciled obligors. The underlying credit exposures of eligible ABS initially must be auto loans, student loans, credit card loans, or small business loans guaranteed by the U.S. Small Business Administration. For these purposes, auto loans will include retail loans and leases relating to cars, light trucks, or motorcycles, and will include auto dealer floorplan loans;

In other words, those cars sitting in the showroom will in effect be financed by the Fed between the time they ship from the manufacturer and sell to a customer -- if they ever sell.

Enough Said

Opening sentence of a Saturday Wall Street Journal op-ed by Kimberley Strassel based on an interview with George Bush last week, done en route to a Texas A&M graduation speech --

As he sits at his mile-high desk, clad in his Air Force One crew jacket, George W. Bush is as he has ever been: upbeat, focused, confident in his past decisions and in the future.

He wears the monogrammed jacket after 8 years on the job and not even when he's in the cockpit. Was it all about the jackets?

Christmas surprise

One of the many things that the last few years have demonstrated is that holidays are an excellent time for geopolitical mischief-making. The mischief makers assume, correctly, that the people who are supposed to keeping an eye on things will be out of town. Most recent exhibit: the Russia-Georgia flareup.

And now Christmas is coming. So what announcement pops out of multi-national forces Iraq (which is going to have to be renamed pretty soon, but anyway) --

BAGHDAD – Coalition forces apprehended a suspected Iranian intelligence agent and an alleged associate during an operation early Friday in Qastin, approximately 30 km north of Baghdad.

Acting on intelligence information, Coalition forces targeted an alleged commander of Iranian special operations in Iraq who is also believed to be involved in facilitating training of Iraqi militants at Islamic Republican Guard Corps-Quds Force training camps.

So they are claiming to have an actual Iranian in custody and not just speculating about links between an Iraqi detainee and Iran. This one needs watching.

UPDATE: We knew it didn't sound right. The press release has been amended --

BAGHDAD – Coalition forces apprehended an Iraqi citizen suspected to be an Iranian intelligence agent and an alleged associate during an operation early Friday in Qastin, approximately 30 km north of Baghdad.

Acting on intelligence information, Coalition forces targeted the suspected agent, an Iraqi who is allegedly a commander of Iranian special operations in Iraq

They still cannot produce any actual Iranians directing insurgent activity in Iraq.

"Arabia", if you will

Conservative writer Mark Helprin has put the cat among the pigeons with a Wall Street Journal op-ed page demolition of George Bush's claims to have made America safer. Much of the article would read well as a catalog of "liberal" critiques of Bush. Out of the gate to defend Bush is, inevitably, Peter Wehner, who was in the White House for much of the disastrous war management years to which Helprin refers.

Wehner undercuts his own arguments in various ways, including by misspelling Helprin's name several times, but even more so by this --

On the matter of reforging the political culture of the Arabs: that, too, is happening. As Charles Krauthammer, America’s best columnist and one of our finest geopolitical thinkers, put it recently:

"[A second hugely important effect of Iraq] is the regional effect of the new political entity on display in Baghdad — a flawed yet functioning democratic polity with unprecedented free speech, free elections and freely competing parliamentary factions. For this to happen in the most important Arab country besides Egypt can, over time (over generational time, the time scale of the war on terror), alter the evolution of Arab society."

It's just laughable to cite Krauthammer as an expert on the Arab world. For one thing, the claim that Iraq is the 2nd most important Arab country after Egypt is as close to factually wrong as an opinion can be. The 2nd most important Arab country is Saudi Arabia. It's where Islam started. It has the mosques. It's where millions of Muslims head every year. It has the oil. It straddles the Gulf and Red Sea. It's the only Arab country with a seat at the table in key international fora (e.g. the G20). It's why George H.W. Bush started making friends with the Saudis in the late 1960s. It's why there's a Bandar Bush. And of course it's where the 9/11 hijackers and their inspiration came from.

One other swipe of Wehner's --

Helprin writes that for “seven years we failed to … make intelligent arguments for policies that were worth pursuing. Thus we capriciously forfeited the domestic and international political equilibrium without which alliances break apart and wars are seldom won.”

In fact, the speeches by the President — from the September 20, 2001 address to a joint session of Congress, to the 2002 and 2003 State of the Union addresses, to his speech to the American Enterprise Institute in early 2003, to his National Endowment for Democracy speeches, to many others — presented the arguments for war in an intelligent and persuasive manner.

So his refutation is to cite a litany of speeches -- the need for speeches being symptomatic of the deeper problems -- and claim they were "intelligent and persuasive". Of course they were -- he worked on them!

Seemingly unrelated statements

George Bush C-Span interview --

THE PRESIDENT: I just work out and stay -- I'm a disciplined person. I work out every day, except for one day, and I make sure my scheduler knows this. Early on in the presidency I said, I want time to work out, because I think it's -- I know part of doing this job is to be a disciplined person. Like, I start meetings on time; I end them on time.

and ...

I didn't realize we'd be in war because, you know, the attacks of September the 11th came out of nowhere.

Indeed it did for the gym-centric President (not to mention his gym-centric National Security Adviser).

He also threatened the nation that he's thinking about an emotional farewell address.

War Pigs

The latest installment in the Bush Legacy Project was a chat at the American Enterprise Institute (AEI), at the end of which he was praised for his "serenity of mind". Anyway, one other lowlight --

MR. DeMUTH [AEI president]: You mentioned the word stimulus. And as you know, your successor is thinking about a big new stimulus program emphasizing public works, I believe. An issue that has interested a lot of people at AEI recently is this: While we're looking for public expenditures to help stimulate the economy, we're also at a point where defense expenditures are I think something like 3.4 or 3.5 percent of GDP -- very, very constrained. A lot of weapons systems that a lot of people like to buy from us are being closed down, even after we've only produced fewer of the weapons than had been anticipated.

One of the things we're pursuing is that a very effective stimulus program would be a significant increase in defense expenditures. Have these ideas been kicking around the White House, the Pentagon? This is just think-tankery so far. I wonder if --

Is there anyone outside of AEI and perhaps the Pentagon who thinks America has a big problem now through not spending enough on weapons? DeMuth did resist the temptation to use the "4 percent for Freedom" slogan of their fellow neocon Heritage Foundation. But it's as if there is a "military-industrial complex" or something.

Sauce for the goose

Now this actually seems clever (Wall Street Journal, subs. req'd) --

ZURICH -- Credit Suisse Group said Thursday it will use its own illiquid assets such as mortgage-backed securities to pay senior staff at its investment bank year-end bonuses.

The Zurich-based bank plans to pool its illiquid assets such as commercial mortgage-backed securities and leveraged loans it can't sell because demand has seized up, then dole out portions of the entity to managing directors and directors, according to a memorandum made available by a spokesman.

"Employees receiving partner asset facility units will participate in the potential gains from these assets over time if they are liquidated at prices above current market values and also bear risk of loss depending on the liquidation proceeds," the memo said.

There are potentially good incentive properties if senior bank staff are getting paid, literally, using the same shite that they hoped to foist onto someone else. Are the Swiss on to something?

Poacher turned gamekeeper

Writing in the Wall Street Journal, Karl Rove is concerned that Barack Obama might be skating close to the edge of the law --

Former [Federal Elections Commission] Chairman Michael Toner, now of Bryan Cave LLP, says running a new grass-roots advocacy group out of the White House could create serious election-law difficulties. The FEC has imposed large civil penalties on some advocacy groups for failing to register as political committees and abide by hard-dollar contribution limits. Also, any White House advocacy group runs the risk of being treated as a Democratic National Committee affiliate, triggering shared contribution limits, reporting requirements, and a prohibition on soft-money contributions. Given Mr. Obama's professed support of campaign finance reform, he could ill afford any of these problems.

God forbid that anyone run an advocacy group out of the White House through an affiliation with the party's national committee. Like the White House Iraq Group. This was formed to "sell" the Irar war. Karl Rove was on it. One interesting thing about this group. Mary Matalin and Karen Hughes worked for it after having left the White House. So they were there as consultants. Who paid for their time? This source claims that it was the Republican National Committee. Pat Fitzgerald, who looked into the activities of the WHIG knows for sure. Maybe with the new legal advice from Rove he should take another look at his transcripts.

Incidentally, Rove is back working for the White House (a fact unmentioned in his WSJ bio) on the Bush Legacy Project. Who's paying for his time?

Fashion query

What is the point of the suit worn over the bullet-proof vest, as Gordon Brown is clearly wearing in this Iraq visit photo? If it's dangerous enough to need a vest, why does the viewing public need to think otherwise?

UPDATE: Welcome Turkey (sic) Yoghurt readers. Our favourite recent Gordon Brown post is here.

Photo: Number 10

Condi Rice, news editor

During an impressively tough interview with Zain Verjee of CNN --

SECRETARY RICE: Zain, the United States is not loathed. The policies of the United States are sometimes not liked. People don’t like that we’ve had to say hard things and do hard things about terrorism. People don’t like that we’ve spoken fiercely for the right of Israel to defend itself at the same time that we’ve advocated for a Palestinian state. But I have to go back. So many people in and around when that [shoe] incident happened told me how embarrassed they were by the fact that that had happened. But the crux --

QUESTION: But didn’t it upset you? Didn’t it?

SECRETARY RICE: No, no, only that the focus of those who are supposed to be reporting for history didn’t focus on the historical moment, which is that this was the President of the United States in Baghdad, for goodness sakes, with a freely elected prime minister in a show of friendship. It didn’t get reported that the Iraqi band spent apparently several – all night trying to learn our national anthem and did it really rather well.

On a more serious note, she is as deluded as her boss in her unwillingness to accept the chaos in Iraq as a source of their unpopularity in the Arab world. In their mind it's because they made "tough decisions".

Packing steel

Dick Cheney carries a knife. It's true. Interview with ABC News (the same interview that may get him an overseas indictment for war crimes). The context is that they are in his office in the Old Executive Office Building, next to the White House --

THE VICE PRESIDENT: Well, I don't know. That's a beautiful desk. But this one that replaced it was -- I think Teddy Roosevelt was the one who originally acquired it.

Q When he was Vice President?

THE VICE PRESIDENT: Well, when he was President.

Q When he was President?

THE VICE PRESIDENT: Yes. And it's been used by a number of Presidents. And of course, it's been the desk of the Vice President in the Ceremonial Office here, really -- in one of these drawers -- which one is it? Yes, this is it. It's got the names and signatures of a lot of the Vice Presidents. Here's Harry Truman, George Bush -- and they've got the dates they had it. Truman signed it in 1965, obviously long after he'd been Vice President. Mondale, Dan Quayle. I can't read it -- oh, Rockefeller, Nelson Rockefeller.

Q Well, your signature is not in here yet.

THE VICE PRESIDENT: Mine is not in there yet.

Q I've got a pen if you want to do it right now.

THE VICE PRESIDENT: No, I think we're going to have a little ceremony --

Q Oh, okay. I thought we could take the opportunity.

THE VICE PRESIDENT: Well, I actually brought my jack-knife here, I could carve it up. (Laughter.)

He's still at it

George Bush is making a deeply dishonest speech at the Army War College in Carlisle, Pennsylvania right now. At the core of the dishonesty is the attribution of the absence of foreign terrorist attacks on the USA since 9/11 to his invasion of Iraq. But he cannot name a single terrorist plot against America that originated from Iraq, either under Saddam or from al-Qaeda in Iraq -- a group that only exists because of his invasion of Iraq. The speech is also a clip-show from his past dishonest speeches, so it's a pretty horrendous listen.

He also reiterates his 2nd inaugural address: the policy of the US is "to seek the end of tyranny in all nations for all time". Now that's humility!

Delusion

George Bush, at his Hannukah reception last night--

This evening, we have the great privilege of celebrating Israel's 60th anniversary and Hanukkah in a very special way. Thanks to the generosity of the Truman Library, we are fortunate to light the menorah presented to President Truman in 1951 as a symbol of friendship by Israel's first prime minister, David Ben-Gurion.

A decade after President Truman received this gift, he visited Prime Minister Ben-Gurion for one of the last times. As they parted, Ben-Gurion told the President that as a foreigner he could not judge President Truman's place in American history, but the President's courageous decision to recognize the new state of Israel gave him an immortal place in Jewish history. Those words filled the President's eyes with uncharacteristic tears. And later, Ben-Gurion would say he rarely had seen somebody so moved.

Lately, Bush has been comparing himself to Truman. It's just possible that he thinks he will be seen to a future Arab world as Truman is to Israel. For one thing, he has people near him telling him that. It's the kind of detachment that might drive one to hurl a pair of shoes at him.

That's your problem right there

CEO of Blackwater and Republican donor Erik Prince writes today in the Wall Street Journal defending his firm from accusations of trigger-happiness in Iraq including the Nisour Square massacre --

During the week before the Nisour Square incident (sic), one of Blackwater's helicopters was shot down, a separate team came under fire from armed insurgents, and a third team survived a roadside bomb. Even amidst such an aggressive and ubiquitous enemy, Blackwater's incident reports during that time period show that personnel discharged their weapons less than one half of one percent of the time.

Here's the dictionary definition of ubiquitous --

existing or being everywhere, esp. at the same time; omnipresent

If the CEO of the firm thought the enemy was everywhere, why was the firm let operate among the civilian population?

It was Saddam all along

Dick Cheney interview with ABC News (full text) --

JONATHAN KARL: You probably saw Karl Rove last week said that if the intelligence had been correct, we probably would not have gone to war.

CHENEY: I disagree with that. I think -- as I look at the intelligence with respect to Iraq -- what they got wrong was that there weren't any stockpiles. What we found in the after-action reports, after the intelligence report was done and then various special groups went and looked at the intelligence and what its validity was. What they found was that Saddam Hussein still had the capability to produce weapons of mass destruction. He had the technology, he had the people, he had the basic feed stocks.

They also found that he had every intention of resuming production once the international sanctions were lifted. He had a long reputation and record of having started two wars. Of having brutalized and killed hundreds of thousands of people, some of them with weapons of mass destruction in his own country. He had violated 16 National Security Council resolutions. He had established a relationship as a terror-sponsoring state, according to the State Department. He was making $25,000 payments to the families of suicide bombers.

This was a bad actor and the country's better off, the world's better off, with Saddam gone, and I think we made the right decision, in spite of the fact that the original NIE was off in some of its major judgments.

It's becoming clear that one component of the Bush Legacy Project is to state plainly what crazy bloggers already knew: that the "debate" over whether Saddam was a threat or indeed had WMD was a sham. The decision had already been made.

But we shouldn't be surprised at being told in 2008 that it was a war of regime change, because we were told that 10 years ago. But are wars whose objective is regime change legal?

UPDATE: Cheney can't even get his selective spin about Saddam's WMD "capability" right.

The war costs keep coming

The US Treasury department released yesterday its annual accounts for the US government that follow the accrual principle i.e. recognizing an expense when it is incurred rather than when the money goes out to meet it, which could be years from now. Accrual accounting is the kind of thing that governments expect the private sector to do but exempt themselves from it. So one cheer for producing some real accounts. Anyway, here's the punchline from this year's accounts --

... calculate the ‘bottom line’ or net operating cost. In FY 2008, the Government’s ‘bottom line’ net operating cost totaled $1,009.1 billion or just over $1 trillion, a substantial increase over FY 2007’s net operating cost of $275.5 billion.

changes in the actuarial calculations of [Veterans Administration] VA’s veterans benefit liability were the primary reason behind a nearly seven-fold increase in VA’s actuarial and gross costs during FY 2008, compared with a relatively meager decrease in FY 2007 ... The liability increase of $339 billion in FY 2008, when compared to a $26 billion decrease in FY 2007, combine to cause a $365 billion increase in actuarial cost for FY 2008. This was the largest increase by far at VA in recent years and accounted for: (1) approximately 98 percent of the increase in VA total net costs, and (2) about half of the increase in total net cost across the Government. [The Department of Defense] also experienced a significant increase ($110 billion) due to reestimation of its net postemployment benefit liabilities.

In plainer English, the era of $1 trillion deficits is already here, because on a proper accounting basis, the government ran one in the last fiscal year. And the bulk of the reason it did so was because of future obligations to the military.

But George Bush is the one who complains about messes handed to him 8 years ago.

Accountability is for suckers

One of the many recent banking takeovers rushed through in the USA was that of Philadelphia-based Sovereign Bank by Banco Santander of Spain. The takevoer had to be approved by the US Federal Reserve. As part of the process, the Fed examined the financial and managerial capacity of Banco Santander.

The Board [of the Fed] also has considered the managerial resources of the organizations involved and the proposed combined organization. The Board has reviewed the examination records of Santander’s U.S. operations, Sovereign, and their subsidiary depository institutions, including assessments of their management, risk-management. The Board has previously determined that Santander is subject to comprehensive consolidated supervision by the Bank of Spain ... Based on all the facts of record, the Board has concluded that the financial and managerial resources of the organizations involved in the proposal are consistent with approval under section 4 of the BHC [bank holding company] Act.

So the Fed signed off the takeover based on the fact that everything looked fine with Santander as far as they could see and it was up to the Bank of Spain to catch any funny stuff back home.

Fast forward to the Bernard Madoff collapse and we find out that Santander was running a hedge fund called Optimal Investment Services which had a sub-fund called Optimal Strategic U.S. Equity fund which was run Optimal Multiadvisors Ireland Plc, a Dublin based offshoot of Optimal Investment Serices.

All this Optimality consisted of getting money from clients, charging large fees, and giving it to Bernie Madoff to "invest" for them. If that's what got you past the regulators in the last few years -- the same regulators now in charge of getting us out of the mess -- we're in even deeper trouble than we think.

UPDATE: More on the Irish angle to the Madoff collapse.

Closer to the truth

At one level it's deserving that George Bush's "Rudolph One" photo-op trip to Iraq was dominated by the al-Baghdadiya shoe-thrower. But it does mean that yet another brazen repackaging of the Iraq war (presumably a component of the Bush Legacy Project) will be missed. Here's Bush speaking to the single safe non-Republican audience before which he can appear, the troops --

This is my fourth trip to Iraq -- and you've probably heard I'm heading into retirement -- (laughter) -- so it's going to be my last trip as the President. But thanks to you, the Iraq we stand in tonight is dramatically freer, dramatically safer, and dramatically better than the Iraq we found eight years ago.

AUDIENCE: Hoo-ah!

THE PRESIDENT: And as a result of the sacrifices of our troops, America is safer, and America is more secure.

AUDIENCE: Hoo-ah!

THE PRESIDENT: I want to take you back to what life was like eight years ago here in Iraq.

Note that the eight years was mentioned twice and therefore not a mistake. Thus his claim now is that Iraq was a problem he was handed coming into office.

Perhaps Karl Rove and Ed Gillespie think that's a handy way to implicitly blame Bill Clinton for the war, but it's a strange argument for Bush to make. Does he mean that he was actually gunning for Saddam from Day 1 and 9/11 or WMD was just a handy way of doing it? That's certainly what his March 2003 behaviour might lead one to believe, when it was him, and not Saddam Hussein, who kicked out the UN inspectors.

One other thing from the speech --

Killers who wanted to take the lives of Americans back home have been brought to justice before they reached our shores.

Can the White House name a single terrorist plot against America that has been interrupted by the war in Iraq?

UPDATE: Bush cavalierly admits that he was looking for someplace to turn into a battlefield against al Qaeda. Flypaper is back. Shame about the death toll.

White House photo by Eric Draper

You betcha

Any doubts about the purpose of George Bush's visit to Iraq? --

PRESIDENT TALABANI: They want picture with you, Mr. President.

PRESIDENT BUSH: Oh, absolutely.

UPDATE: Even the photo-op visit runs into a pair of shoes.

Blinkered

It's an interesting comparison. George Bush and Gordon Brown are both on unannounced ("surprise!") war-on-terror visits. George Bush is in Iraq, which after 4200 American deaths, hundreds of thousands of Iraqi deaths, and hundreds of billions of dollars, is still not safe enough for a public visit (the Administration spin this time is that Baghdad was safe enough for a daytime arrival).

Gordon Brown has been to Pakistan and Afghanistan this weekend, as well as India. And just about everyone other than George Bush and those in the bubble around him agree that South Asia is the real crisis of 2009. One reason being the draw on resources and attention on Iraq over the last 5 years.

It's still an agonizing 37 days of the "Bush Legacy Project" before there's someone in the White House who'll share the generally accepted priority. A lot can happen in 37 days.

UPDATE: Bush realizes that he couldn't show up in Iraq to say goodbye and not go to Afghanistan. He arrived in the middle of the night (see photo).

His burnished chariot

George Bush delivered the commencement address at Texas A&M university today. On what might seem like a busy day with the stalled car manufacturer bailout and the aftermath of bedlam in Iraq, he didn't seem that busy. He used the flight to do another Bush Legacy Project interview, this one with Kimberley Strassel of the Wall Street Journal.

But anyway, to the graduation speech itself. His first word was "Howdy". Back in 2000 or 2004, that alone would have been a worth a reporter profile noting how much of a real American he was compared to Al Gore or John Kerry.

On to substance, where he reviewed his presidency --

These days, I'm asked a lot about my time as President. Some days have been happy, some days not so happy -- every day joyous. It's been a tremendous privilege. I have traveled across our nation, and to 74 countries around the world. I have slept in Buckingham Palace; I have feasted in the desert of Abu Dhabi; I've watched the sunrise in Jerusalem. I have spoken to campaign rallies in packed stadiums, and to hundreds of thousands in Romania's Revolution Square. I've taken Marine One into America's biggest cities, and visited many of our smallest towns. Through it all, nothing has inspired me more than the character of the American people -- the acts of courage and service that sustain our free society, and make this the greatest nation on Earth. (Applause.)

So there you have it. He's been a VIP. He's led the high life. He's seen a million faces and he's rocked them all. That's what his presidency was about, in his mind. Wasn't there some other stuff that happened too?

One other thing. He closed with some advice for the graduates after empathizing with their uncertain job prospects ("I know how you feel") --

If you go home at night, look in the mirror and be satisfied that you have done what is right, you will pass the only test that matters. (Applause.)

Hasn't the world had some pretty bad people who would have passed this test?

The few bad apples

Famed blogger Megan McArdle 2 weeks ago --

By contrast, so far the worst misbehavior I've seen has been the two Bear Stearns executives who told people their fund was okay the month before it went belly up. This was a bad thing, and the people who did it no doubt richly deserve the jail terms they are going to get, and then some. But on the scale of dishonesty generally uncovered during recessions, this wouldn't normally rank high enough to trigger more than a "You boys!!!" and a finger-wag.

This probably has something to do with just how tightly regulated financial companies already are; when the SEC wants to know about every transaction you do, it's hard to get too funny with the books. Still, it's pretty impressive.

Well, since that post was written, we've found out about a potential $50 billion fraud at Bernard Madoff, a mere $100 million alleged fraud by Marc Dreier, and some dude in Miami who was rewriting the value of mortgages to make the associated securities more valuable. And that's just in 2 weeks with the limited resources that the FBI and SEC have to find this stuff relative to the total scale of what was going on.

Various things went wrong to produce the current financial shambles. But one of them was an "if it feels good, don't stop it" regulatory ethos that came straight from the top of government. That ethos attracts particular kinds of people.

What is it about the George Bush club and shoulder rubs?

Here it's George's friend Silvio Berlusconi with embattled Greek PM Kostas Karamanlis. The European Council photo editors thought it looked more tasteful in black and white.

Birds of a feather

The photo shows George Bush with one of the recipients of his Presidential Citizens Medal, Professor Robert George of Princeton University. Apparently everyone calls him "Robby". Robby and Dubya wore almost identical ties.

Here's a sample of George's writing about the presidential race --

Barack Obama is the most extreme pro-abortion candidate ever to seek the office of President of the United States.

He's unlikely to be in the White House much after January. But one wonders whether he really expects the number of abortions to rocket under an Obama administration? If he does, it's not clear that sitting in Princeton is the right way to do anything about it.

In the article from which that quote is drawn, he goes on to argue that the pro-choice slogan "Against abortion? Don't have one" is as silly as a hypothetical anti-slavery slogan "Against slavery? Don't own one". It's an interesting analogy for him to make because his extreme anti-abortion position would in a key sense make women property of the state (and it doesn't stop there). It's revealing the kind of acknowledgments that George Bush feels safe making when there isn't an election imminent.

White House photo by Chris Greenberg

It's a Christmas miracle

Condi Rice --

SECRETARY RICE: Well, I’m so gratified that we are leaving a much better situation on Israeli-Palestinian issues than we found. In 2001, the Camp David effort had collapsed, the second intifada had broken out, hundreds of Israelis and Palestinians were dying in multiple suicide bombings against Passover Seders and along the pier in Tel Aviv. We forget – suicide bombers in Tel Aviv.

The Palestinians were governed – or ruled – by Yasser Arafat, who was dealing with Iran, stealing the Palestinian people blind, and rejecting peace. Ariel Sharon had come to power not to make peace with Palestinians, but to defeat the intifada. And so you had massive Israeli military operations in the West Bank. I will never forget the – when a mortar shell blew a hole in the Church of the Nativity.

Condi may never forget it. But the rest of us will never remember it. Because it never happened. She's referring to the siege at the Church in April 2002 when Palestinians fleeing Israeli soldiers went into the Church. When they eventually left as part of an internationally brokered deal, the church had suffered minor damage from the prolonged occupation and a few Israeli smoke grenades. But there was never any mortar shell. Where does Condi get her facts from?

UPDATE: Condi did an interview with Kimberley Strassel of the Wall Street Journal --

Ms. Rice then begins a world tour. "What we inherited were the failed Camp David Accords, and as a result the Second Intifada." She recalls Palestinian bombings of clubs and pizza parlors, the shelling of the Bethlehem Church of the Nativity.

Maybe the Wall Street Journal readers will notice that she's referring to an event that never happened. The editors didn't.

FINAL UPDATE 14 JANUARY: Condi has yet again claimed that Israel shelled the Church of the Nativity but this time has provided enough information to pin down what she's talking about --

QUESTION [Mike Schneider of Bloomberg TV]: But does he – does Abu Mazen have the clout – I mean, there were those who say he’s been – that Hamas prior to this was actually being degraded, that it was weak, it was – its stand in the polls, it was low, and that, in fact, it’s been bolstered by what’s happened here, and Abu Mazen and Fatah have been weakened.

SECRETARY RICE: Well, you hear that, but if you look at the West Bank, the Palestinian people have got to be able to see that the West Bank economy has actually been growing for the first time in years. It’s far more peaceful. Nativity Square in Bethlehem, where in 2002, completely by accident, an Israeli tank shell hit the Church of the Nativity

CNN, April 2002:

Bullets flying in Manger Square
In Bethlehem, witnesses said Israeli helicopter gunships flying over Manger Square exchanged fire with Palestinian gunmen near the Church of the Nativity.

There was also a heavy exchange of fire near a convent and a tank shell struck the main mosque in Bethlehem, just outside the church, according to witnesses

And in March of 2002, St Vincent's in Bethlehem was hit by a tank shell.

This monetarist coil

If nothing else, William Kristol's New York Times column this week indicates that some conservatives have noticed the massive expansion in the economic power of the state under George W. Bush. Kristol argues that a conservative response to this along the lines of smaller government always being good won't cut it, because some form of careful intervention will surely be necessary. Maggie Thatcher veteran John O'Sullivan provides some interesting historical perspective, though perhaps not with the interpretation he intends --

If we were lucky, a barrier [such as against a bigger role for the state] might even gain a quasi religious status over time, as the Gold Standard did in England until the first world war, and instill in voters the fear that tampering with it would be an impious act or even simply impossible. This worked for quite a while. When the Tories floated the pound in 1931, a former Labour minister, Lord Passfield (aka Sidney of Sidney and Beatrice Webb) said: "They never told us we could do that."

Well, they know now and since 1931 the rate of inflation has perked up remarkably.

The problem is that when the Tories (or rather the Tories plus a Labour rump) devalued the pound, it was the beginning of Britain's recovery from the Depression. The USA spent two more ruinous years on the Gold Standard parity before FDR also devalued. In other words, breaking through the received wisdom worked. O'Sullivan continues --

It's nice to think, though, that Sidney Webb who was always telling the capitalists how much more rationally socialists could run the economy, was in practice hostage to an unconscious monetary conservatism—like almost the entire Labour party and intelligentsia. Those were the days, my friend.

This passage lends itself to a rephrasing. Shall we try --

Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slave of some defunct economist.

But that of course is John Maynard Keynes, writing in the 1930s, precisely about how an obsolete orthodoxy can impede new thinking about how to deal with an economic crisis. Orthodoxy like an obsession with small government.

There is one other irony. It's not like the 1930s Britain turned out that badly for the Tories. In fact there is renewed attention to this era as a result of Martin Pugh's We Danced All Night, which argues that 1930s Britain created a nascent property-owning democracy i.e. a proto-Thatcherite class who, just over a generation later, would put Maggie in office and so launch John O'Sullivan's career!

Heads up to tax dodgers

US Treasury Announcement --

The Department of the Treasury today announced that the United States and Liechtenstein have signed an agreement to allow for exchange of information on tax matters between the two countries. The agreement was signed by U.S. Charge d'Affairs Leigh Carter and Liechtenstein Prime Minister Otmar Hasler in Vaduz, Liechtenstein.

The Tax Information Exchange Agreement (TIEA) with Liechtenstein will provide the United States with access to information it needs to enforce U.S. tax laws, including information related to bank accounts in Liechtenstein ... The TIEA will allow the United States to ask for information relating to 2009 and years following. Documents or other information created before 2009 can be obtained from Liechtenstein provided that the request relates to an investigation of a post-2008 year.

As with anything that happens late in the Bush administration, this might need a closer look. On the one hand it would appear to open up for scrutiny any American using Liechtenstein bank accounts to evade US taxes, and in particular will reduce the need of the US government to rely on the type of evidence that caused the big Germany-Liechtenstein blowup earlier this year. But note that pre-2009 information can only be accessed if there's a 2009 or later paper trail linking to it, unless there is a criminal (as opposed to tax) investigation. Isn't this telling any American with an undisclosed Liechtenstein bank account that December 2008 would be an excellent time to close it?

The Bourne Subservience

Max Boot, 2007 --

In fighting terrorists, the U.S. won’t always have the freedom of action it enjoys in Somalia. Terrorists find shelter not only in ungoverned spaces like Somalia but in anti-American countries like Iran and Syria, in ambivalent countries like Pakistan and Saudi Arabia, and even in pro-American countries like Germany and Britain. For various political reasons, the potential for swashbuckling, Jack Bauer-style counter-terrorism in such states is less than in non-states like Somalia or Afghanistan, where anything goes.

Max Boot, today (alt. link) --

Given that dismal reality, it makes sense to think of second-best alternatives. In the case of the Somali pirates, creative solutions can include using air and naval power to hit the bases from which they operate, and employing Blackwater and other mercenaries to add their protective efforts to those of the world's navies. In Pakistan that means continuing air strikes and providing assistance to tribal militias which have their own grievances against jihadist interlopers. In both places, the U.S. should be doing what it can, in cooperation with allies and multilateral organizations, to bolster central authority.

But we should not fool ourselves into thinking that any of these measures has much chance of success. Until we are willing to place more ungoverned spaces under international administration, evils such as piracy and terrorism will continue to flourish.

So what happened? How did "Cry 'Havoc' and let slip the dogs of really cool covert operations" become, er, "Could the UN come in and administer this hellhole"? Because we've had 6 years of the 2007 vintage Max Boot approach in Afghanistan, and two years of "Operation Prester John" in Somalia i.e the idea of letting the Ethiopians run it. And both have now conclusively shown their ineffectiveness.

But you won't find Max Boot or any other of the neocons revisting why they've been wrong about everything. Boot just tries to segue into a policy recommendation that he thinks will have some shelf-life in an Obama administration.

Incidentally, Boot's grasp of colonial history is pretty shaky --

The essential problem in both Somalia and Pakistan is a failure of governance. The question is: What if anything can outside powers do to bring the rule of law to these troubled lands? In the 19th century, the answer was simple: European imperialists would plant their flag and impose their laws at gunpoint. The territory that now comprises Pakistan was not entirely peaceful when it was under British rule. Nor was Somalia under Italian and British sovereignty. But they were considerably better off than they are today -- not only from the standpoint of Western countries but also from the standpoint of their own citizens.

He thus assigns no role to the local deals cut by the colonial powers in Somalia and Pakistan, precisely to avoid having to directly control difficult areas. The Federally Administered Tribal Areas in Pakistan, which are now the source of so many problems, were simply the successor arrangements in an independent Pakistan that the tribes already had with British India. And that's Boot's preferred model for running Pakistan now.

There's bad news and good news

The bad news is that George Bush still has 6 weeks on the job. The good news is that, via the Bush Legacy Project being run by Karl Rove out of the White House, he's doing lots of interviews to set out his side of the story. And with no election to fight, his guard is down. So in an interview with MBC's Nadia Bilbassy-Charters, we learn --

He says what we always knew he meant: that his wars are him implementing God's will -

But I also believe there's a moral calling. If you believe there's an Almighty God, and a gift of that Almighty to everybody is freedom, then I think you have to -- if you can do something about it, that you have to act on that -- so that moms can grow up in a society that is hopeful for their children, you know, that their children are -- can realize dreams.

That at some level he has guilt about Abu Ghraib, but at such a low level that the only manifestation is preposterous denial and garbed sentences --

THE PRESIDENT: Well, like, Abu Ghraib was a terrible disappointment. And admittedly, I wasn't there on the site, but I was the Commander-in-Chief of a military where these disgraceful acts took place that sent the absolute wrong image about America and our military.

He wasn't there on the site. But his orders, channelled via the securocrats to the chain of command, were.

That his handlers still haven't told him Saudi King Abdullah's proper title ("majesty" is reserved for God; the King is Custodian of the Two Holy Mosques) --

THE PRESIDENT: I definitely think it was a major breakthrough for then-Crown Prince, now His Majesty King Abdallah, to take the initiative and lay out the conditions for peace

The flattery of King Abdullah also hints at who might on the donor list for his freedom institute.

And that he blames the post-war chaos in Iraq not on his atrocious plan but on his enlightened decision, as he sees it, not to put another dictator in Saddam's stead --

Then the interesting point was, after he was removed, with a broad coalition of countries, what do we do? You know, do we pick a strong man and say, here's America's guy and put him in there? Or do we work so that the Iraqi citizens would be able to pick their own form of government and their own people? And that's what we chose to do, and it's been really hard.

Also, he's still telling the rug story.

Whatshisname again?

It's probably not worth paying attention to John McCain. But he and his fellow musketeers, Lindsay Graham and Joe Lieberman, are doing a foreign policy tour of South Asia at the moment. And he's saying things, or at least being interpreted as saying things, that would seem to interfere with the conduct of US foreign policy under its current or future directors.

For instance, here's a Pakistani newspaper quoting him as saying that the US would not support Indian military action against Pakistan. Really? If the Indians find a base from which the Mumbai attack was planned and the Pakistani government can't or won't move in, John McCain says the US won't support military action by India against it? This is a recurrence of one of the strangest policies that McCain boxed himself into against Obama, that he would somehow be explicitly ruling out anti-terrorist strikes in Pakistan while doing them in secret. Or something.

Now here's McCain today meeting quasi-leader of the opposition Nawaz Sharif. Did he discuss with Sharif his claim that Pakistan was a failed state under Sharif's pre-coup premiership? Incidentally, if you thought Pakistani news coverage would still be dominated by the Mumbai attacks and its aftermath (or the bizarre prank phone call that nearly escalated into a war), you'd be wrong. Sharif's post-McCain news conference got into a convoluted scandal about a system in which the children of judges get bonus points on exams. So this is a country that could have a real problem focusing on any demands from India.

Finally, the McCain team seems to be closing their trip with a visit to one of America's vital allies in the War on Terror. Malta. Why Malta? Hopefully the island has some intrepid journalists who can figure out what the junketing Senators are up to.

UPDATE: McCain is now making statements in Pakistan about what President Obama's foreign policy will be! Note the difference in the way the remarks are being reported. The US media emphasize what he said about Pakistan. The Pakistani media emphasize what he said about US policy towards Pakistan. Finally note that as Maverick tours the world, he sends Cindy to frigid Philadelphia for the Army-Navy game.

FINAL UPDATE: McCain and Joe Lieberman stopped in Malta and then Ireland, where McCain told the Defence Minister that he would be taking up the issue of the undocumented Irish with Barack Obama. Lieberman has made much of the fact that McCain will be "reporting" to Obama following the trip.

ONE MORE THING [22 AUGUST 2009] -- Was McCain's Malta stopover a cover for a visit to Libya? We ask because he was in Libya during a key week in the al-Megrahi process. And McCain has a history of murky connections to Libya.

Legacy of failure

George Bush -- still with 45 days left -- spoke last night at the Saban Forum in Washington. The speech was another installment in the "Bush Legacy" project being run by Karl Rove. The obvious intent of the speech was to claim credit for any positive development in the Middle East over the last 8 years, and thus stake a claim to any real progress actually made in the future by Barack Obama and Hillary Clinton. Not unsurprisingly, the speech's omissions and unspoken assumptions reveal a lot more about the state of US policy in the Middle East than its grandiose assertions.

First, given that the speechwriters must have searched far and wide for anything positive to say about political reform in the Middle East, it's telling that the speech makes no mention of Kuwait, easily the most democratic country in the Gulf and one with women cabinet ministers in substantive positions. So what happened? The fact-checkers realized that a mention would have been awkward since the Emir has suspended the parliament (national assembly) until at least January in a row over the accountability of ministers to it.

And thus the Arab country where Bush is probably at his most popular had to be left out. But how much shame can there really be in a suspension of parliament? After all, the representative in Canada of George Bush's friend Queen Elizabeth has suspended parliament on the advice of George Bush's friend Stephen Harper, for the transparent purpose of avoiding a loss of power. Even the Emir of Kuwait would balk at so obvious a motive.

Anyway, Bush's apparent prize project in the speech was Iraq and its place in the War on Terror. Needless to say, Mumbai was nowhere to be mentioned, even though Mumbai makes clear that, as Indian analysts have pointed out, one consequence of the War on Terror is "Jihadistan", the combination of Pakistan, Afghanistan, and Iraq, putting domestic and international terrorism and the ideology and expertise to implement it in one complete package. But George Bush looks at the map of the region and sees just one big problem -- the fairly stable country in the middle of his Jihadistan: Iran. He wants Iran to be a full player in it too.

However the real prize project is of course Israel. And the speech is a perfect illustration of the neocon free lunch: the belief that acceptance of Israel in the region will come naturally with democracy promotion, because after all, "democracies don't war". But there is so little evidence for this thesis. How many Arab democracies sat down at the table during the Annapolis Israel-Palestine process? More to the point, how many would have sat down had they been more democratic?

It promises to be a very frustrating final 6 weeks of Bush. Are the media really going to let him ride in the Dallas sunset thinking how great a president he was? It looks that way.

More propaganda please

Douglas "FSGOTP" Feith pops up in today's Wall Street Journal in praise of India --

At a Pentagon meeting in 2002, a Muslim official from an Asian country observed that there were nearly as many Muslim citizens of India as of Pakistan, yet it was virtually unheard of that an Indian Muslim would join al Qaeda, while many Pakistanis had done so. Why? Because India is free and democratic, he asserted.

Now we know where George Bush heard that story, one that has coloured his relationship with India since. Other bits of the article give a lot of credit to BJP politician Jaswant Singh which suggests that he might be the source of the claim that India was al-Qaeda free. But anyway, Feith has "advice" for President Obama --

He can ask the State Department and intelligence community for formal strategies to counter radical Islamist ideology overtly and covertly and hold them to account for results.

The strategies could (1) identify, region by region, the key Muslim voices -- individuals and institutions -- for and against jihadist violence, (2) analyze their respective support networks and vulnerabilities, (3) develop U.S. and multilateral courses of action to amplify anti-terrorist voices and to undermine the extremists, and (4) establish measures of success and track progress. A key to success would be the quality of U.S. linkages with friendly foreign countries, like India, that share our interests and have relevant knowledge and capabilities.

It's not clear what he has in mind here but it would seem to involve secret campaigns to somehow embarrass "extremists" and promote "anti-terrorist" positions -- and all in a way that could be measured. Not that this scheme is ever likely to make it to Obama's desk, but presumably India would have the sense to stay away from it in any event -- if only from knowing the source.

Santa is a terrorist

Because that gesture between Bush and Santa (one he previously used with Sarko) is what Fox News declared to be a terrorist fist jab.

UPDATE: Watertiger has the same post. Fox News truly sets the zeitgeist.

White House photo by Eric Draper

Fake, fake, fake, fake

White House press release

Statement by Press Secretary Sally Mcdonough

The President and Mrs. Bush have purchased a home in the Preston Hollow neighborhood in Dallas, Texas, where they will live after the President leaves office in January 2009. They will continue to spend time at Prairie Chapel Ranch in Crawford, Texas.

The President and Mrs. Bush do not have occupancy of the home, and therefore, no additional details will be provided.

The Bushes previously lived in Dallas from December 1988 through January 1995, before moving to the Texas Governor's Mansion in Austin, Texas.

So that now we know he won't really be living in the "ranch" after his presidency, how long before he sells it (while retaining the cross)?

UPDATE: The NYT's Caucus blog has a picture. There's a cabana?

Now we know why Gordon cut VAT

As opposed to, say, income tax. Bank of England statement today --

The direct effect of the temporary reduction in Value Added Tax will also lower CPI inflation through much of next year, with a corresponding increase in inflation in 2010.

He needed the Bank to be able to demonstrate lower inflation for 2009, to be able to cut interest rates more. He wouldn't have been able to do that with a cut in income tax, which would have no impact on consumer prices.

He's going to find out who's naughty or nice ..

or ... AMERICAN! Yes. The theme of this year's White House Christmas Parties is that Santa Claus is American, goddamnit, and only Americans will be getting presents. The other theme of the White House parties is excess, as the recession has apparently limited the menu to lobster, salmon, shrimp, lamb, tenderloin, ham, and lots of other good stuff.

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White House photo by Chris Greenberg