Bankrupt quote

Irish econo-pundit David McWilliams before the parliamentary banking crisis inquiry --

The Irish banking crisis began in 2000, not in 2008 as is sometimes suggested. It began in 2000. The great English economist John Stuart Mill, speaking about the railway crash that happened in Ireland during the Famine, said that crashes do not destroy the wealth of a nation, they merely evidence the extent to which wealth has already been destroyed by stupid decisions taken in the boom.

Much of McWilliams' presentation to the inquiry was about the thousands of words he'd written with no apparent effect. We know the feeling. McWilliams keeps attributing that quote to JS Mill, when it's actually a paraphrase of a quote from proto-Austrian economist John Mills. But what did JS Mill say about the 1847 railway speculative crisis? --

It is not, however, universally true that the contraction of credit, characteristic of a commercial crisis, must have been preceded by an extraordinary and irrational extension of it ... This combination of a fresh demand for loans, with a curtailment of the capital disposable for them, raised the rate of interest, and made it impossible to borrow except on the very best security. Some firms, therefore, which by an improvident and unmercantile mode of conducting business had allowed their capital to become either temporarily or permanently unavailable, became unable to command that perpetual renewal of credit which had previously enabled them to struggle on. These firms stopped payment: their failure involved more or less deeply many other firms which had trusted them; and, as usual in such cases, the general distrust, commonly called a panic, began to set in, and might have produced a destruction of credit equal to that of 1825, had not circumstances which may almost be called accidental, given to a very simple measure of the government (the suspension of the Bank Charter Act of 1844) a fortunate power of allaying panic, to which, when considered in itself, it had no sort of claim.

Mill could not be clearer that he's talking about a financial crisis not caused by a prior lending boom, but instead one arising from borrowing to finance physical investment and thus prone to running out of steam when lending for some reason dries up (in this case, a need for increased credit to pay for food imports). Mill also discusses how although there was no ground for panic (because there was no lending boom), the government could prevent panic anyway by allowing the issuance of additional currency to meet the higher demand for credit.

To review, it was a different 19th century Mill talking about a different crisis, although ironically, a crisis that was handled better by the central bank than the 2008 Ireland/Euro crisis was. Nonetheless, the inquiry committee lapped it up!

Nice coastal enclave you've got there

If you'd been relying on the recent conventional wisdom to understand the Syrian civil war, you wouldn't be predicting subsequent events very well. The rebels can't sustain a presence in Damascus. They can. They're stuck in the eastern parts of the country and can't take new territory from the regime. They can. And they can't threaten the regime's Alawite heartland on the coast, and they can't unify to battle the regime. They can, and they can. Reuters has the latest --

Islamist insurgents including al-Qaeda's wing in Syria, Nusra Front, captured the northwestern Syrian town of Jisr al-Shughour on Saturday, for the first time in the four-year-old conflict ... Islamist groups agreed to unite in the battle for Jisr al-Shughour under the name "Battle for Victory". The formation of alliances by groups before major battles is one of the factors behind the advances, sources say. By taking Jisr al-Shughour, the insurgents have edged closer to the coastal province of Latakia, Syrian President Bashar al-Assad's stronghold, and are now less than 8 km (five miles) from villages loyal to the government near the coast. "Jisr al-Shughour is more important than Idlib itself, it is very close to the coastal area which is a regime area, the coast now is within our fire reach," Ahmad from Ahrar al-Sham said.

It's about 75km from Jisr Al-Shughour to Latakia.

A noble transaction embiggens the smallest mind

IMF Managing Director Christine Lagarde speaking at a trade conference in Washington DC; as with all her speeches, she can't resist the just-so quote --

Let me conclude by quoting one of the sharpest thinkers of his generation. Two hundred years ago, the French philosopher Montesquieu said – and I will give you the French version first: “Le commerce guérit des préjugés destructeurs: et; c’est presque une règle générale que, partout où il y a des mœurs douces, il y a du commerce; et; que, partout où il y a du commerce, il y a des mœurs douces.” 

“Trade is the best cure for prejudice. It is an almost general rule that, wherever there is good citizenship, there is trade, and that, wherever there is trade, there is good citizenship.” 

The most destructive economic prejudice is trade protectionism.

Sacre bleu! She's taking the 200 year old expression mœurs douces, which is typically translated as gentle or agreeable manners, and rendered it as "good citizenship." She's taken Montesquieu's careful discussion of associated changes in societies over time and between each other, and made it into a policy statement that anyone who's against further trade liberalization is like a pre-industrial brute. And she's ignored the rest of his discussion about how trade damages individual relations by forcing more and more interactions between people into a form of exchange.

The hostage curse

The White House statements today on the killing of two Al Qaeda hostages by a CIA drone strike is frank enough but of course words are cheap compared to ultimate frustration of an allied-military death ending to a protracted kidnapping. Words are also cheap compared to the ransoms that might have secured the hostage release. There are particular questions about the Italian hostage, Giovanni Lo Porto, who was kidnapped with a German colleague, Bernd Muelenbeck. It somewhat slipped below the radar screen when it first occurred (German, English), but Muelenbeck was released last October. If the White House is doing a comprehensive evaluation of what went wrong in this case, it needs to focus on hostage policy. Italians might be asking the same question.

UPDATE: The statement from Elaine Weinstein is worth reading.

Those strange foreigners with portraits of royalty on the walls

Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, in the office of Rep. Kevin McCarthy (R-CA), US House Majority Leader.

Photo: Emirates News Agency (WAM).

Scotland and Ireland

David Cameron on the Andrew Marr Show yesterday --

Think about what this means, this is, this would be the first time in our history that a group of nationalists from one part of our country [SNP] would be involved in altering the direction of the government of our country, and I think that is a frightening prospect, for people thinking in their own constituencies is that bypass going to be built, will my hospital get the money it needs?

To the left is Joseph Biggar, one of the foremost practitioners of the Irish Parliamentary Party strategy of disrupting House of Commons business and wielding the balance of power to advance Home Rule in Ireland. This sometimes involved blocking bills that applied to the entire UK, e.g. the Threshing Machines Bill of 1877. It was around this time that he was caricatured in Vanity Fair.

The Libyan migrant crisis

The European Union statements today (example) on the Mediterranean migrant tragedy are filled with references to finding the "root causes of migration." That's a tall order, at least if those root causes are supposed to correspond to immediate solutions.

In fact, the problems begin with the definition of the crisis itself: it's seen as too many people risking their lives trying to get to Europe. That's serious, but it's a smaller order of magnitude than the migrant crisis within the Middle East and North Africa -- millions of Syrian refugees in Lebanon, Jordan, Turkey, and Iraq, at least a million more within Iraq itself (above), and then the extended movement from across the Sahel to go north, the majority of whom won't get as far as a dangerous boat ride to Italy, but will run into plenty of other perils.

The Syrian case also shows the fallacy of linking the migration crisis to the military intervention against Gaddafi: that intervention brought many problems, but so did not intervening against Bashar al-Assad.

There's a high risk that once the EU decides the problem is mainly the sea crossing, the solution will be a de facto blockade of Libya. But that will be nowhere near a solution to a crisis that spans three continents.

Photo: Internally displaced Sunni Iraqis stuck at a checkpoint outside Baghdad; photo Reuters via New York Times.

Back in the USSR

Writing on the Wall Street Journal opinion page, Republican intelligence players Michael Mukasey and Kevin Carroll are outraged about various things, including that current CIA Director John Brennan once referred to Jerusalem as Al Quds (its Arabic name), but they have a solution for all his transgressions --

But the boss has already said that purported concerns about Iran obtaining a nuclear weapon are dishonest. Human nature being what it is at Langley as elsewhere, how likely is it that an evaluation suggesting that Iran is up to something would make it beyond operational channels, through reports officers, analysts and CIA managers, up to policy makers? Not very, unless Congress acts promptly to put in place an alternative team of analysts, much as George H.W. Bush did when he was CIA director in 1976 under President Ford. That was an election year, and détente with the Soviet Union was the overriding administration policy. During the campaign, the question of whether our military power was falling behind Moscow’s was a charged issue. Mr. Bush commissioned a team of independent experts known as “Team B” to provide analysis of the Soviets’ capabilities and intentions that competed with the CIA’s own internal evaluation. Team B highlighted dangers posed by the U.S.S.R.’s growing strategic nuclear forces, informing President Reagan’s later determination to counteract those capabilities. 

Here's a good Wikipedia account of Team B. The bottom line is that its analysis was, to use the technical term, shite, and it misread nearly everything about the USSR but especially its potential for aggressive nuclear war and the strength of its economy. But the 1980s saw massively higher defence spending motivated by Team B, jobs for many its members, and its alumni would then play a key role in making the case for the 2003 invasion of Iraq.

And now the Eye of Team B is upon ... Iran!

Bank robbers

General Electric (GE) used to run a large financial operation -- a bank: GE Capital. It's decided to get rid of it. As Paul Krugman explains, this is because US regulators decided that since GE Capital was acting like a large bank, it should be regulated like one. That hasn't stopped the howls of outrage about overzealous regulation. The Wall Street Journal adds more. GE Finance wasn't just a bank; it was a tax dodge factory --

In cutting loose its banking business, General Electric Co. isn’t just shedding a profitable lending operation. It’s also losing a rich source of tax breaks.... GE says its effective tax rate could rise to 20% or more in the future, roughly double last year’s rate of just over 10% ... What that means in practice, a person familiar with the matter said, is that GE Capital can borrow in the U.S., using the interest it pays to offset its industrial profits at home, and then make profits by investing the money out of Uncle Sam’s reach overseas.

Just what your friendly neighbourhood bank was meant for!

Jordan tells Saudi Arabia to get out of Yemen while they can

Seemingly oblique comment from Jordan's King Abdullah in interview with Brett Baier on Fox News --

As commander of special operations many years ago, I was involved in training of Yemeni special forces, so I know the complications of Yemen .. I think that .. I would humbly suggest that the quicker we find a political situation to that issue, the better.

Much of the focus of the subsequent panel discussion was on his remarks about his Iran and the general impact of the Arab Spring. Yet he essentially just told his Gulf neighbours, and the US supporters of their Yemeni operation -- based on personal military experience -- that they're backing a loser.

Springtime for Saleh

Reuters, 18 March 2011 --

Gunmen on rooftops shot dead up to 42 protesters at an anti-government rally in Sanaa after Muslim prayers on Friday, enraging the opposition and prompting President Ali Abdullah Saleh to declare a state of emergency. Medical sources and witnesses told Reuters that Yemeni security forces and plainclothes snipers, who protesters said were government security men, had opened fire on the crowds. The Interior Ministry put the death toll at 25, but doctors said 42 people had died and at least 300 were injured. 

Despite widespread condemnation of that incident and others like it, there's never been any accountability for it. Four years later, Saleh is now bankrolling and supporting the Houthi revolt, and his aligned forces include snipers on rooftops in Aden. You can't teach an old dog new tricks. Not least the trick where he cons gullible western governments that he might be the solution to Yemen's endless faction fighting.

It would be a lot easier if they dumped Bashar

Hypocrisy in the Middle East is nothing new but yes, indeed, Iran did issue a blustering condemnation of alleged Saudi genocide in Yemen while being studiously silent about the Assad regime atrocities against civilians in general and Palestinians in the Yarmouk camp in particular. Slight exception: Iran did issue one statement of "concern" about Yarmouk, but entirely blaming ISIS and not the regime siege, and implying that ISIS is an agent of ... Israel!

If you spin a barrel bomb, it's a centrifuge

If we're going to ridicule Barack Obama, rightly, for his Yemen model of success, then how about Israeli Prime Minister Benjamin Netanyahu (R-Al Quds) presenting as a good model for Iran -- Syria? (CNN State of the Union) --

If you said two years ago, if you said that the Syrian regime of Bashar Assad would remove all the chemicals from Syria, would destroy and remove, dismantle and remove from Syria all the materiel and weapons-making -- chemical weapons that they had, you would have said that's unrealistic. You know, that would have been true then. But the application of subsequent pressure on Syria produced exactly the result that we need here. So, what's unrealistic today with the sufficient application of pressure will become realistic for Iran tomorrow as well. 

Anyone who's been paying attention to the ground news from Syria knows that (a) chemical weapons have most likely been used by all sides, including Assad, since his stockpile was supposedly removed, and (b) the overall pace of killing has increased. That's what happens when you focus on one weapon and one type of use of a general capability.

New counterparts needed

Seemingly perfectly reasonable White House statement on phone call between Barack Obama and Kenyan President Uhuru Kenyatta --

He reiterated that he looks forward to meeting with President Kenyatta again in Nairobi in July, when the two leaders will discuss how to strengthen counterterrorism cooperation ...

Actual situation today in Kenya (Reuters) --

... as Kenyan churches hired armed guards to protect their Easter congregations.  

The entire anti-terrorism paradigm of the US is they can beef up formal security forces to do the job. But with Thursday's evidence fresh in their minds of a small group of terrorists being given the 15 hour run of a campus to shoot whoever they wanted, Kenyans have concluded they need to do the anti-terror job themselves. Maybe that US anti-terror training will include that someone in uniform has to pick up the phone.

Low ranked refugees

Good BBC News update on the dire situation in the Yarmouk Palestinian refugee "camp" in Damascus but perhaps a lazy, if understandable, choice to illustrate the story with a photograph -- the iconic UNRWA photo -- which is now 15 months old. There is no doubt that the situation in the district has gotten worse since that photograph was taken. In addition to the increased misery, yet another Syrian war narrative has fallen: this time, that the ISIS can't hold territory in the Assad regime stronghold of Damascus. It's nice for Assad that the foreign policy elites have decided to assume that's in his area of permanent control.

UPDATE: Bloomberg News also uses the 2014 photo for a current Yarmouk story, but at least dates the photo. 

Afraid of what they wouldn't find

Another Iraq war anniversary season brings another Iraq defence, this time from Judith Miller (in the Wall Street Journal), she being a key media conduit for incorrect intelligence about Iraq's weapons programs --

One could argue, however, that Hans Blix, the former chief of the international weapons inspectors, bears some responsibility. Though he personally opposed an invasion, Mr. Blix told the U.N. in January 2003 that despite America’s ultimatum, Saddam was still not complying fully with his U.N. pledges. In February, he said “many proscribed weapons and items,” including 1,000 tons of chemical agent, were still “not accounted for.”

From the George Bush de facto declaration of war, 17 March 2003 --

All the decades of deceit and cruelty have now reached an end. Saddam Hussein and his sons must leave Iraq within 48 hours. Their refusal to do so will result in military conflict, commenced at a time of our choosing. For their own safety, all foreign nationals -- including journalists and inspectors -- should leave Iraq immediately. 

Like others looking back at the buildup to war from the perspective of its supporters, Miller focuses on the quality of pre-war intelligence and the extent to which it permitted conclusions like those George Bush and Dick Cheney presented to the public.

But as the essence of Bush's statement makes clear, the logic of war had metastasized into the belief that Saddam himself was the problem. Note that Bush's statement demands that the UN inspectors leave Iraq, dismissing the only mechanism that could have clarified the WMD situation without another war. Once the war was defined as being about Saddam, it could only end with getting rid of Saddam. It's therefore specious to present Robb-Silberman type parsing of intelligence vagueness as a justification for that logic and decision. 

So nefarious, only Iran could have done it

Israeli Prime Minister Benjamin Netanyahu (R-Al Quds) --

At the same time, Iran is accelerating its campaign of terror, subjugation and conquest throughout the region, most recently in Yemen.

Today, 147 people were murdered by Somali militants in Kenya, and Yemen is running out of food.

But everything bad that happens in the region is Iran's fault.

Saudi non-scarf non-outrage escalates

The media rules for whether there's more OUTRAGE when a visiting woman does or doesn't wear a scarf visiting Saudi Arabia get more and more difficult to follow. Anyway, in this picture of the US House Speaker John Boehner delegation visit to Riyadh from a meeting with the Deputy Crown Prince Mohammed bin Nayef, Rep. Ileana Ros-Lehtinen (R-FL) is not wearing a scarf. But since she's not Michelle Obama, the hyper-interpretation machine stays dormant.

Photo: Al Sharq Al Awsat.