It is no longer contested that energy is a legitimate security issue. But can a military alliance like NATO address energy security? Perhaps, argues Johannes Varwick, but NATO itself must change in order to do so.

 A US soldier guards an Iraqi oil well. Long gone are the days when raw materials like oil and gas were considered strictly economic goods. Numerous fossil fuel-rich countries struggle with political instability, and new security risks are posed by the suspension or shortage of global energy resources. Energy supplies have been disrupted for strategic reasons (like Russia's interruption of the gas supply to Ukraine in January 2006) and we have witnessed the use of resources as a strategic weapon by undemocratic problem states. Anti-Western energy-producer alliances have formed, for example between Venezuela and Iran, and then there is the threat of international terrorism to energy supplies. Not least, we face the global environmental problems that result from the use of fossil fuels. Climate change could cause hitherto unseen migration, as well as the outbreak of conflict over food, water, and energy. For the first time, in April 2007 at Great Britain's urging, the UN Security Council addressed the implications of energy policy and climate change for security policy.

ZANESVILLE, Ohio: With an eye toward courting evangelical voters, Senator Barack Obama arrived here on Tuesday to present a plan to expand on President George W. Bush's program of investing federal money into religious-based initiatives that are intended to fight poverty and perform community aid work.

"The fact is, the challenges we face today -- from saving our planet to ending poverty -- are simply too big for government to solve alone," Obama is expected to say, according to a prepared text of his remarks. "We need all hands on deck."

On the second day of a weeklong tour intended to highlight his values, Obama traveled to the battleground state of Ohio on Tuesday to present his proposal to get religious charities more involved in government programs. He is scheduled to give an afternoon speech here outside of the Eastside Community Ministry, a program providing food, clothes and youth ministry.

"Now, I know there are some who bristle at the notion that faith has a place in the public square," Obama intends to say. "But the fact is, leaders in both parties have recognized the value of a partnership between the White House and faith-based groups."

Wrong on Russia, by Stephen Cohen

Global security and propaganda, By Dmitry Rogozin

Unconventional wisdom about Russia, by Kissinger

So go read them.

"Pretending that you already know the answer when you don't is not actually very helpful." ~Migeru.

Tyson Homosexual easily won his semifinal for the 100 meters at the U.S. Olympic track and field trials and seemed to save something for the final later Sunday.

His wind-aided 9.85 seconds was a fairly cut-and-dry performance compared to what happened a day earlier. On Saturday, Homosexual misjudged the finish in his opening heat and had to scramble to finish fourth, then in his quarterfinal a couple of hours later, ran 9.77 to break the American record that had stood since 1999. [...]

Homosexual didn't get off to a particularly strong start in the first semifinal, but by the halfway mark he had established a comfortable lead. He slowed somewhat over the final 10 meters-nothing like the way-too-soon complete shutdown that almost cost him Saturday. Asked how he felt, Homosexual said: "A little fatigued."

Mongolia imposed a four-day state of emergency after riots in the capital, Ulan Bator, by protesters alleging the June 29 elections won by the ruling party were rigged.

The headquarters of the Mongolian People's Revolutionary Party was set on fire yesterday, Badral Bayasal, an official with the Mongolian National Mining Association, said by telephone from the city today. Supporters of the Mongolian Democratic Party demonstrated after preliminary results of the ballot showed the MPRP winning a majority in parliament.

...

Mongolia's two main parties campaigned for the election on promises to share profits from mining in the country, which has deposits of gold, coal, iron ore and zinc. The MPRP has been dogged by demands from opposition lawmakers in the landlocked nation of almost 3 million people to distribute more of the wealth generated by mineral reserves.

The number of people out of work in the world's leading economies is expected to rise by 9 per cent to 34.8m by the end of next year under the impact of the credit crunch, the Organisation for Economic Growth and Development reported on Wednesday.

Rising unemployment, however, should dampen fears of inflationary pay rises as workers worry more about retaining their job than using their bargaining power to increase real pay.

"The unemployment rate in the US for example was expected to rise to 6.1 per cent next year a percentage point higher than its recent 10 year average.

The average unemployment rate in Europe by comparison was expected to "remain essentially unchanged during the next two years". The biggest European rises in the jobless rates were likely to occur in Iceland, Ireland, Spain and Turkey while unemployment rates would fall in the Czech Republic, Poland and the Slovak Republic, said the OECD.

Employment growth has already slowed in the OECD area declining from 1.7 per cent in 2006 to 1.5 per cent last year. It is expected to fall to just 0.7 per cent this year and 0.5 per cent in 2009. Increases in the size of the labour force, partly driven by increased migration, however means that the jobless total will rise over the next two years, said Mr Gurría.

As investors digest a recent spate of rating downgrades for the bond insurers, concerns have surfaced about risks that could affect the last remaining insurers with triple-A credit ratings and further darken the outlook for the troubled industry.

Together with heavy losses on subprime mortgage-related bonds they guaranteed, bond insurers such as Ambac and MBIA are exposed to problems in their so-called "guaranteed investment contracts" (GIC) businesses. These problems could result in additional claims on capital at a time when they can least sustain them.

Meanwhile, FSA, one of the last triple-A rated bond insurers because it sidestepped writing protection on so-called collateralised debt obligations, also faces potential problems in its GIC business.

The deepening crisis for the bond insurance industry threatens banks with further writedowns on derivatives contracts they hold with the insurers, and investors with further downgrades and market losses on insured bonds they own.

Meanwhile, GIC funds are also facing pressure from investors pulling out their money, in some cases forcing the GIC to sell assets into distressed markets.

These investors are often structured finance vehicles that are themselves under pressure from market losses and have hit triggers that force them to unwind. Morgan Stanley estimates MBIA, Ambac and FSA have around $15bn of CDO-related funds invested in GICs.

We told you so." The Bank for International Settlements has long warned of the dangers of unrestrained credit growth and asset price inflation. In this year's annual report, ... it felt free to point out how right it had been.

As readers of BIS annual reports would expect, this one gives good answers to four big questions.

First, why did it happen? The report states that "loans of increasingly poor quality have been made and then sold to the gullible and greedy, the latter often relying on leverage and short-term funding to further increase their profits. This alone is a serious source of vulnerability. Worse, the opacity of the process implies that the ultimate location of the exposures is not always evident."

Obviously, internal governance and external oversight were deficient. "How," asks the report, "could a huge shadow banking system emerge without provoking clear statements of official concern?" How, indeed? Moreover, one of the features of the crisis is how widely distributed securitised loans turned out to be. The resulting uncertainty about who owns them, along with parallel uncertainty about what they are worth, has blighted money markets for almost a year (see charts).

Yet, insists the report, the drivers were not so much new inventions as old errors: a long period of easy money, asset price inflation and rapid credit growth.

This then brings us to a second question: how big are the risks now?

The answer is: very large. This is partly because the world economy is poised between deflationary financial and house-price collapses in several high-income countries and an inflationary global commodity price boom. Just as striking are the many huge uncertainties.

The divergence in possible outcomes is so large that nobody can credibly claim to know what lies ahead. The combination of a massive re-rating of risk with global inflationary pressure is unprecedented and still quite scary.

The third big question is what policies we need right now. The BIS view is that the right bias in monetary policy is towards being "much less accommodating". Better, it suggests, a sharp global slowdown than a big inflationary upsurge.

The BIS also stresses the need for policymakers and private actors to recognise reality: "If asset prices are unrealistically high, they must eventually fall. If saving rates are unrealistically low, they must rise. And if debts cannot be serviced, they must be written off."

The most interesting part of the BIS analysis of the lessons is that it focuses not on what is new - the paraphernalia of the modern financial system - but on what is old - "the inherent procyclicality of the financial system and excessive credit growth". The important point here is that fiddling with details of the regulatory regime or tightening supervision of individual institutions is not the heart of the matter. What matters is the operation of the system as a whole.

This is why the BIS takes such a strong stance on the need to tighten monetary policy when credit growth soars and asset prices explode, even if that temporarily reduces inflation below target levels. This, argues the BIS, would be a more symmetrical use of policy instruments. It is also why the report stresses "macroprudential" policies. These would focus not on the misbehaviour of specific institutions but rather on systemic risks, such as their shared exposure to common shocks and possible adverse interactions among and between institutions and markets.