AFP- US Defence Secretary Robert Gates flew to Abu Dhabi on Thursday seeking support from oil-rich Gulf allies for tough sanctions on Tehran, drawing an angry response from Iran's hardline president. Gates was due to hold talks with Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al-Nahayan, who is also the deputy commander in chief of the armed forces in the United Arab Emirates, as part of high-stakes diplomacy designed to tighten pressure on Iran over its nuclear programme.
AFP - Israel's Labour Party may quit the ruling coalition over the decision to build 1,600 settler homes in annexed Arab east Jerusalem, Agriculture Minister Shalom Simhon warned on Thursday. "Members of the Labour Party have more and more difficulty in taking part in a coalition government that they joined with the purpose of relaunching the peace process with the Palestinians," Simhon told army radio. "The anger of (US Vice President Joe) Biden is justified. A grave error has been committed (by Israel) and there is a price to pay," he added.
But in closed conversations, Joe Biden took an entirely different tone. ... People who heard what Biden said were stunned. "This is starting to get dangerous for us," Biden castigated his interlocutors. "What you're doing here undermines the security of our troops who are fighting in Iraq, Afghanistan and Pakistan. That endangers us and it endangers regional peace." The vice president told his Israeli hosts that since many people in the Muslim world perceived a connection between Israel's actions and US policy, any decision about construction that undermines Palestinian rights in East Jerusalem could have an impact on the personal safety of American troops fighting against Islamic terrorism.
People who heard what Biden said were stunned. "This is starting to get dangerous for us," Biden castigated his interlocutors. "What you're doing here undermines the security of our troops who are fighting in Iraq, Afghanistan and Pakistan. That endangers us and it endangers regional peace."
The vice president told his Israeli hosts that since many people in the Muslim world perceived a connection between Israel's actions and US policy, any decision about construction that undermines Palestinian rights in East Jerusalem could have an impact on the personal safety of American troops fighting against Islamic terrorism.
REUTERS - A British journalist was freed by the Hamas Islamist rulers of the Gaza Strip on Thursday, nearly four weeks after his arrest on suspicion of spying for Israel, Palestinian and British officials said. Paul Martin was detained on Feb. 14 while on a visit to Gaza to give defence evidence in a court case involving a local man accused of working with the Israeli security services. Mahmoud al-Zahar, a senior Hamas official, told a news conference at which he was flanked by British and South African diplomats that Hamas still held Martin guilty of espionage but would not bring charges. He would instead be deported.
REUTERS - A British journalist was freed by the Hamas Islamist rulers of the Gaza Strip on Thursday, nearly four weeks after his arrest on suspicion of spying for Israel, Palestinian and British officials said.
Paul Martin was detained on Feb. 14 while on a visit to Gaza to give defence evidence in a court case involving a local man accused of working with the Israeli security services.
Mahmoud al-Zahar, a senior Hamas official, told a news conference at which he was flanked by British and South African diplomats that Hamas still held Martin guilty of espionage but would not bring charges. He would instead be deported.
AFP - A US woman operating online under the name "JihadJane" recruited jihadist fighters in the United States, Europe and Asia in a bid to carry out terror plots "or die trying," prosecutors said Tuesday. US authorities said middle-aged Pennsylvania resident Colleen LaRose, who was arrested in October 2009, spent more than a year networking with would-be attackers around the world. She sought to recruit men and women, to raise money and even agreed to carry out the murder of a Swedish resident, pledging "only death will stop me," an indictment charged. The Justice Department unsealed the indictment against LaRose just hours after Irish police arrested seven people accused of plotting to kill a Swedish cartoonist.
The case of Colleen R. LaRose - also known as "Jihad Jane" and "Fatima Rose" [!] - raises troubling questions about the ability of Al Qaeda to attract US-born women to terrorism. Blond and green-eyed [!], Ms. LaRose looks more like a former cheerleader
Blond and green-eyed [!], Ms. LaRose looks more like a former cheerleader
Bring it on! Bring it on again and again and again!
than the Western conception of an Islamist extremist. According to the FBI, she told co-conspirators in an e-mail [!] that her appearance would allow her to blend in "with many people," so that she could achieve "what is in my heart." Her US passport
Her US passport
That's not iiiii-iiiiit
would also allow her to travel easily in and out of the country. US counterterrorism officials long have been concerned about the possibility of Islamic radicalization of US natives [!]. But generally speaking, they have focused on potential terrorist recruits that are males.... LaRose has ties to Texas [!] but most recently has been living in Pennsburg, Pa. [!], outside of Philadelphia [!!!]. The indictment describes her as someone who became gradually radicalized as she trolled [!] the Internet and communicated with Islamist sources around the world. Read more...
US counterterrorism officials long have been concerned about the possibility of Islamic radicalization of US natives [!]. But generally speaking, they have focused on potential terrorist recruits that are males....
LaRose has ties to Texas [!] but most recently has been living in Pennsburg, Pa. [!], outside of Philadelphia [!!!]. The indictment describes her as someone who became gradually radicalized as she trolled [!] the Internet and communicated with Islamist sources around the world.
Read more...
Just how many jihadi does it take to kill a Swedish cartoonist? Diversity is the key to economic and political evolution.
Torrance Shipman: You know, mothers have killed to get their daughters on squads. Christine Shipman: That mother didn't kill anybody. She hired a hit man.
Christine Shipman: That mother didn't kill anybody. She hired a hit man.
Classic. US-born. Diversity is the key to economic and political evolution.
SANTIAGO (Reuters) - As the ground shook and buildings swayed, conservative billionaire Sebastian Pinera took office as Chile's president on Thursday, tasked with rebuilding after a massive earthquake killed hundreds just 12 days ago. A series of strong aftershocks rattled central Chile minutes before Pinera swore in at the Congress building in the coastal city of Valparaiso. Latin American presidents and other dignitaries looked nervously at the ceiling but the inauguration went ahead as planned.
SANTIAGO (Reuters) - As the ground shook and buildings swayed, conservative billionaire Sebastian Pinera took office as Chile's president on Thursday, tasked with rebuilding after a massive earthquake killed hundreds just 12 days ago.
A series of strong aftershocks rattled central Chile minutes before Pinera swore in at the Congress building in the coastal city of Valparaiso. Latin American presidents and other dignitaries looked nervously at the ceiling but the inauguration went ahead as planned.
BAGHDAD (Reuters) - Prime Minister Nuri al-Maliki posted mixed results in initial returns on Thursday from Iraq's parliamentary election, and a rival grouping complained of serious fraud. Results from five provinces, the first to be posted by the electoral commission, were in line with expectations and did not include Baghdad and other hard-to-predict areas that could prove pivotal for the Shi'ite premier's bid to remain in power.
BAGHDAD (Reuters) - Prime Minister Nuri al-Maliki posted mixed results in initial returns on Thursday from Iraq's parliamentary election, and a rival grouping complained of serious fraud.
Results from five provinces, the first to be posted by the electoral commission, were in line with expectations and did not include Baghdad and other hard-to-predict areas that could prove pivotal for the Shi'ite premier's bid to remain in power.
Last week, the conservative broadcaster Glenn Beck called on Christians to leave their churches if they heard any preaching about social or economic justice because, he claimed, those were slogans affiliated with Nazism and Communism. This week, the Rev. Jim Wallis, a liberal evangelical leader in Washington, D.C., called on Christians to leave Glenn Beck. "What he has said attacks the very heart of our Christian faith, and Christians should no longer watch his show," Mr. Wallis, who heads the antipoverty group Sojourners, wrote on his "God's Politics" blog. "His show should now be in the same category as Howard Stern." Mr. Beck, in vilifying churches that promote "social justice," managed to insult just about every mainline Protestant, Roman Catholic, African-American, Hispanic and Asian congregation in the country -- not to mention plenty of evangelical ones. Even Mormon scholars in Mr. Beck's own church, the Church of Jesus Christ of Latter-day Saints, said in interviews that Mr. Beck seemed ignorant of just how central social justice teaching was to Mormonism.
Last week, the conservative broadcaster Glenn Beck called on Christians to leave their churches if they heard any preaching about social or economic justice because, he claimed, those were slogans affiliated with Nazism and Communism.
This week, the Rev. Jim Wallis, a liberal evangelical leader in Washington, D.C., called on Christians to leave Glenn Beck.
"What he has said attacks the very heart of our Christian faith, and Christians should no longer watch his show," Mr. Wallis, who heads the antipoverty group Sojourners, wrote on his "God's Politics" blog. "His show should now be in the same category as Howard Stern."
Mr. Beck, in vilifying churches that promote "social justice," managed to insult just about every mainline Protestant, Roman Catholic, African-American, Hispanic and Asian congregation in the country -- not to mention plenty of evangelical ones.
Even Mormon scholars in Mr. Beck's own church, the Church of Jesus Christ of Latter-day Saints, said in interviews that Mr. Beck seemed ignorant of just how central social justice teaching was to Mormonism.
Mr. Beck seemed ignorant of just how central social justice teaching was to Mormonism.
This month, the dead were Christians. Last month, when Susan Schulman was in the area of Jos -- the epicenter of religious violence in Nigeria -- the dead were Muslims. On assignment for The New York Times, Ms. Schulman, a freelance photographer based in London, traveled to Kuru Karama, a small village outside Jos. "It was like a ghost town," she said. "All the vehicles on the street were burned out, the mosque destroyed. Absolutely everything destroyed. It was shocking. Although I knew about what had happened, the scale was unlike anything I had ever seen."
This month, the dead were Christians.
Last month, when Susan Schulman was in the area of Jos -- the epicenter of religious violence in Nigeria -- the dead were Muslims.
On assignment for The New York Times, Ms. Schulman, a freelance photographer based in London, traveled to Kuru Karama, a small village outside Jos. "It was like a ghost town," she said. "All the vehicles on the street were burned out, the mosque destroyed. Absolutely everything destroyed. It was shocking. Although I knew about what had happened, the scale was unlike anything I had ever seen."
Bubbles are back as a topic of serious discussion, as they were before the financial crisis. The questions are: (1) can you spot bubbles, (2) can policymakers do anything to deflate them gently, and (3) can anyone make money when bubbles get out of control? Our answers are: Spotting pure equity bubbles may sometimes be hard, but we can always see unsustainable finances supported by cheap credit. But policymakers will not act because all great (and dangerous) bubbles build their own political support; bubbles are invincible, until they collapse. A few investors can do well by betting against such bubbles, but it's harder than you might think because you have to get the timing right - and that's much more about luck than skill. Bubbles are usually associated with runaway real estate prices (think Japan in the 1980s and the US more recently) or emerging market booms (parts of Asia in the 1990s and, some begin to argue, China today) or just the stock market gone mad (remember pets.com?) But they are a much more general phenomenon - any time the actual market value for any asset diverges from a reasonable estimate of its "fundamental" value.
Our answers are: Spotting pure equity bubbles may sometimes be hard, but we can always see unsustainable finances supported by cheap credit. But policymakers will not act because all great (and dangerous) bubbles build their own political support; bubbles are invincible, until they collapse. A few investors can do well by betting against such bubbles, but it's harder than you might think because you have to get the timing right - and that's much more about luck than skill.
Bubbles are usually associated with runaway real estate prices (think Japan in the 1980s and the US more recently) or emerging market booms (parts of Asia in the 1990s and, some begin to argue, China today) or just the stock market gone mad (remember pets.com?) But they are a much more general phenomenon - any time the actual market value for any asset diverges from a reasonable estimate of its "fundamental" value.
Bubbles are usually associated with runaway real estate prices (think Japan in the 1980s and the US more recently) or emerging market booms (parts of Asia in the 1990s and, some begin to argue, China today) or just the stock market gone mad (remember pets.com?) But they are a much more general phenomenon - any time the actual market value for any asset diverges from a reasonable estimate of its "fundamental" value. To think about this more specifically, consider the case of Greece today. It might seem odd to suggest there is a bubble in a country so evidently under financial pressure - and working hard to stave off collapse with the help of its neighbors - but the important thing about bubbles is: Don't listen to the "market color" (otherwise known as ex post rationalization), just look at the numbers. By the end of 2011 Greece's debt will around 150% of GDP (the numbers here are based on the 2009 IMF Article IV assessment; we make some adjustments for the worsening economy and the restating of numbers since that time - for example, the fiscal deficit in 2009 will likely turn out to be about 8 percent, which is double what the IMF expected until recently). About 80 percent of this debt is foreign owned, and a large part of this is thought held by residents of France and Germany. Every 1 percentage point rise in interest rates means Greece needs to send an additional 1.2 percent of GDP abroad to those bondholders. What if Greek interest rates rise to, say, 10% - a modest premium for a country which has the highest external public debt/GDP ratio in the world, which continues (under the so-called "austerity" program) to refinance even the interest on that debt without actually paying a centime out of its own pocket, and which is struggling to establish any sustained backing from the rest of Europe? Greece would need to send at total of 12% of GDP abroad per year, once they rollover the existing stock of debt to these new rates (nearly half of Greek debt will roll over within 3 years). This is simply impossible and unheard of for any long period of history. German reparation payments were 2.4 percent of GNP during 1925-32, and in the years immediately after 1982, the net transfer of resources from Latin America was 3.5 percent of GDP (a fifth of its export earnings). Neither of these were good experiences.
To think about this more specifically, consider the case of Greece today. It might seem odd to suggest there is a bubble in a country so evidently under financial pressure - and working hard to stave off collapse with the help of its neighbors - but the important thing about bubbles is: Don't listen to the "market color" (otherwise known as ex post rationalization), just look at the numbers.
By the end of 2011 Greece's debt will around 150% of GDP (the numbers here are based on the 2009 IMF Article IV assessment; we make some adjustments for the worsening economy and the restating of numbers since that time - for example, the fiscal deficit in 2009 will likely turn out to be about 8 percent, which is double what the IMF expected until recently). About 80 percent of this debt is foreign owned, and a large part of this is thought held by residents of France and Germany. Every 1 percentage point rise in interest rates means Greece needs to send an additional 1.2 percent of GDP abroad to those bondholders.
What if Greek interest rates rise to, say, 10% - a modest premium for a country which has the highest external public debt/GDP ratio in the world, which continues (under the so-called "austerity" program) to refinance even the interest on that debt without actually paying a centime out of its own pocket, and which is struggling to establish any sustained backing from the rest of Europe? Greece would need to send at total of 12% of GDP abroad per year, once they rollover the existing stock of debt to these new rates (nearly half of Greek debt will roll over within 3 years).
This is simply impossible and unheard of for any long period of history. German reparation payments were 2.4 percent of GNP during 1925-32, and in the years immediately after 1982, the net transfer of resources from Latin America was 3.5 percent of GDP (a fifth of its export earnings). Neither of these were good experiences.
The controversy regarded a diary by Upstate NY MIT professor Simon Johnson critical of EU leadership on Greece. Afew questioned the appropriateness of the criticisms. I got the cited article by Simon Johnson and Peter Boone in e-mail late this afternoon and am citing it in greater detail here. The meat of Johnson's argument is below.
On top of all this Greece's debt, even under the IMF's mild assumptions, is on a non-convergent path even with the perceived "austerity" measures. Bubble math is easy. Hide all the names and just look at the numbers. If debt looks like it will explode as a percent of GDP, then a spectacular collapse is in the cards. Seen in this comparative perspective, Greece is bankrupt today without a great deal more European assistance or without a much more drastic austerity program. Probably they need both. Given there's a definite bubble in Greek debt, should we expect European politicians to help deflate this gradually? Definitely not - in fact, it is their misleading statements, supported in recent days (astonishingly) by the head of the International Monetary Fund, that keep the debt bubble going and set us all up for a greater crash later. The French and Germans are apparently actually encouraging banks, pension funds, and individuals to buy these bonds - despite the fact senior politicians must surely know this is a Ponzi scheme, i.e., people can get out of Greek bonds only to the extent that new investors come in. At best, this does nothing more than postpone the crisis - in the business, it is known as "kicking the can down the road." At worst, it encourages less informed people (including perhaps pension funds) to buy bonds as smarter people (and big banks, surely) take the opportunity to exit. While the French and German leadership makes a great spectacle of wanting to end speculation, in fact they are instead encouraging it. The hypocrisy is horrifying - Mr. Sarkozy and Ms. Merkel are helping realistic speculators make money on the backs of those who take seriously misleading statements by European politicians. This is irresponsible.
Seen in this comparative perspective, Greece is bankrupt today without a great deal more European assistance or without a much more drastic austerity program. Probably they need both.
Given there's a definite bubble in Greek debt, should we expect European politicians to help deflate this gradually? Definitely not - in fact, it is their misleading statements, supported in recent days (astonishingly) by the head of the International Monetary Fund, that keep the debt bubble going and set us all up for a greater crash later.
The French and Germans are apparently actually encouraging banks, pension funds, and individuals to buy these bonds - despite the fact senior politicians must surely know this is a Ponzi scheme, i.e., people can get out of Greek bonds only to the extent that new investors come in. At best, this does nothing more than postpone the crisis - in the business, it is known as "kicking the can down the road." At worst, it encourages less informed people (including perhaps pension funds) to buy bonds as smarter people (and big banks, surely) take the opportunity to exit.
While the French and German leadership makes a great spectacle of wanting to end speculation, in fact they are instead encouraging it. The hypocrisy is horrifying - Mr. Sarkozy and Ms. Merkel are helping realistic speculators make money on the backs of those who take seriously misleading statements by European politicians. This is irresponsible.
While Mr. Sarkozy, Ms. Merkel and Dominique Strass-Kahn may be possessed of iron resolve that Greece will not be allowed to default, the specifics as to what will be done have been scant. The article does say, rather vaguely, that "the French and Germans are apparently actually encouraging banks, pension funds, and individuals to buy these bonds..." and elsewhere refers to Sarkozy and Merkel by name and Dominique Strauss-Kahn by his position. (My italics.)
I can see two sides to this issue. With most of the bonds held by French and German citizens or institutions neither Sarkozy nor Merkel want to precipitate a default and must take care not to do so. But if they give the impression that a default will not be allowed to happen without having in place the means to prevent default and if any in their governments encourage institutions or individuals to purchase these bonds, their position in the event of a default will be questionable.
I have read of non-specific plans to provide French and German support for Greek debt and Greece has just issued new bonds--after the question of possible default has arisen. And I recall that the sale of these bonds to Europeans has been favorably characterized in press reports. Unfortunately, I had not seen the arguments put forth by Johnson and Boone when I saw these reports, so I did not bookmark them. But if Johnson and Boone are correct in their analysis and Greece is caught in a debt trap there will be plenty of time and reporters to sift through public statements by all involved. Meanwhile Johnson and Boone are apparently being circumspect by implying more than they can demonstrate. Time will tell who is better serving potential purchasers of Greek debt. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
