Mitchell in the lion's den

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I agree with Jimmy Carter that George Mitchell is the best man America has to send as an envoy to the Middle East. To send him at least shows serious intent to revive the "peace process".

The problem is with the quotation marks around "peace process".

Mitchell was able to achieve peace in the Northern Ireland conflict which is hundreds of years old. It in no way diminishes his achievement to note that for the first time in history the context, with both Belfast and Dublin in the European Union, had created a workable and prosperous horizon in view for all the parties. The context in the Middle East has no such horizon.

Whatever chance there was for some sort of settlement has probably been cremated in the white phosphorus that fell on Gaza. Americans, with their famously short attention span, have probably forgotten about the Gaza horrors already, but rest assured, the people of the region haven't. The probable election of Benyamin Netanyahu as Israel's new prime minister closes any doors that might have been open, if any really were, which I doubt.

In normal times, Obama's best bet would be send Mitchell, send Hillary, stay our of trouble, and kill time like his last two predecessors and focus, laser-like on the economy.

However, the problem in the Middle East, that now faces President Obama, is the most dangerous for America's well being since 1973.

Here are how the pieces are set on the board:

• Obama will stand or fall on his ability to reinvigorate the economy.
• To do this he will need the broadest possible domestic support.
• If he puts serious pressure on Israel, the Israel lobby will try to destabilize him. The last president to put serious pressure on Israel, George H.W. Bush, is said to believe that doing so cost him his reelection. Dubya, whom many in the Middle East thought would follow in his father's footsteps, decided to avoid his father's fate and simply give the Israelis anything they wanted and thus have his hands free to cut taxes for the super rich, which to use the Maoist term was his "primary contradiction".
• However tempted Obama might be to concentrate on his primary contradiction which is America's self-destructing economy and have his envoys shuttle around having their pictures taken, this would be very dangerous in today's context.
• The rich Arabs of the Middle East are afraid for their very lives and have in their hands enough American dollars and American debt to destabilize the American economy if they began to sell them. Or if, as a variant of their 1973 oil embargo, they simply insisted on taking payment for oil in Euros instead of dollars, as Saddam Hussein did, they would send the US economy, in its present condition, careening off into the abyss.

It will be interesting to see how he gets out of this bind and if he does, he will have converted me to a fan, for one. DS

Cuisine in times of crisis

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I think it is time to trot out some old recipes that were popular during the Great Depression of the 1930s. However, as conditions have changed, so the recipes must be brought up to date with more modern ingredients.

The following is an old family favorite and was collected by my late grandmother.

Recipe for Chicken Shadow Soup

Ingredients:

• One frozen chicken*

• One bright lamp

• Two quarts of water

• Cooking pot

• Salt and pepper

1. Put the water in the pot and put it on the stove.
2. Light the fire under the pot
3. Point the light at the pot*
4. When the water boils take the chicken out of the freezer and hold it between the light and the pot so the shadow of the chicken falls on the boiling water
5. Hold it there for a quarter of an hour: take turns holding it for an hour or more for deeper flavor
   
6. Return the chicken to the freezer
7. Salt the water to taste
8. Serve

With the recipe you can make hundreds of bowls of soup with only one chicken. DS


*During the Depression live chickens and window light were used.

No fault decoupling

World economic growth is set to fall to just 0.5% this year, its lowest rate since World War II, warns the International Monetary Fund (IMF). BBC News

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The most singular feature of the present recession is that it is universal... the entire world is experiencing recession simultaneously.

The crisis has its origins in America's surreal real estate bubble and Wall Street's shenanigans and most informed observers, seeing it coming, expected the world to decouple and continue to grow, thus quickly pulling the US out of the slump. But since globalization is basically the invention of American multinationals, and the dollar, although a fiat currency, is the universal store of value and trading tool, the world could not decouple. That means that the United States has pulled the whole world down into what could be an epoch making catastrophe.

It appears that very few people have understood the full portent of that. As Maureen Dowd puts it:

The former masters of the universe don’t seem to fully comprehend that their universe has crumbled and, thanks to them, so has ours. Real people are losing real jobs at Caterpillar, Home Depot and Sprint Nextel; these and other companies announced on Monday that they would cut more than 75,000 jobs in the U.S. and around the world, as consumer confidence and home prices swan-dived.

The world could not decouple and they probably had never seriously thought about having to decouple before and perhaps the most important thing is that today they are thinking about it. "Gee wouldn't it be nice not to be dragged down into the pit by what appears to be mass American criminality, institutionally aided and abetted".

That a recession that may destroy the prosperity of hundreds of millions, perhaps billions of people, all over the world, has been brought on by frivolous larceny is hard to forgive and harder to forget.

Now, at this very moment, a lot of very intelligent people, all over the world, are rolling the idea of decoupling around in their minds -- disaster often makes people creative -- and before too long somebody will come up with something. They will not want to go down this path ever again.

Except for some movie stars, divorce is not something that happens from one day to the next. Most people suffer quite a lot before breaking a home, and even when the decision is taken, it is rarely simultaneous and one of the couple about to decouple (the one about to be left) is usually surprised and often in denial. I think that is the case of American policy makers right now.

The phrase, "We are ready to lead!", sounds a lot to me like, "honey, we can work this out". DS

Caught in the whirring gears of tragedy

Benjamin Netanyahu is pulling away from his rivals in the race to become Israel's next prime minister, in a sign that the three-week war against Hamas in the Gaza Strip has accelerated Israel's shift to the political right. Financial Times

Backing Bibi will be the Israeli lobby, the Evangelicals, the neocons and a Congress that could find only five members to oppose a resolution endorsing all the Israelis had done and were doing to the people of Gaza. Pat Buchanan

Prince Turki, a man who expresses himself with care and moderation, was recently the Saudi ambassador to the UK and the US and, before that, the long-serving chief of Saudi intelligence. He and his brother, foreign minister Prince Saud al-Faisal, have represented the pro-US kingdom to the world for well over three decades. They are also part of the reforming wing of Saudi Arabia’s absolute monarchy and allies of King Abdullah. Prince Turki, citing equally forthright remarks by King Abdullah and Prince Saud, is now telling the new administration of Barack Obama it can either change course radically on the Israeli-Palestinian conflict or forfeit the US “special relationship” with Saudi Arabia. The US, he warns, risks losing its leadership role in the Middle East. The Bush administration has not only left “a sickening legacy in the region”, he says, but “contributed to the slaughter of innocents”. Mr Obama should embrace the 2002 peace plan of King Abdullah, offering full Arab recognition of Israel for full Israeli withdrawal from occupied Arab land and the creation of a Palestinian state, with Arab east Jerusalem as its capital. Prince Turki reveals that Iran last week called on Saudi Arabia to lead a jihad against Israel. “So far, the kingdom has resisted these calls,” he said, but “eventually, the kingdom will not be able to prevent its citizens from joining the worldwide revolt against Israel”. Strong stuff. Editorial - Financial Times

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The three quotes above lay out the parameters for an epoch making disaster.

First: Netanyahu is going to be elected the next prime minister of Israel and the chances of progress toward a two state solution based on the Saudi peace plan or Taba are nil and the Gazans will continue to be starved and killed.

Second: because of the peculiarities of the American system of political financing the US Congress will refuse to ever seriously twist Israel's arm.

Third: the Saudi royal family, faced with the humiliation of being ejected by their irate subjects, egged on by Iran, from their uniquely prestigious role as protectors of the holy places of Islam and faced with the prospect as Bedouins of spending eternity living on the shores of some frozen Swiss lake with only the company of their money, despised by all Muslims, are finally going to act.

They are not going to cut off the oil like in 1973, they simply will refuse to buy any more US treasury bills until the US government pressures Israel into accepting the two state solution outlined in the Saudi plan.

In this refusal to finance the American economy that arms and enables Israel, they will be probably be accompanied by all the other kinglets and princelings of the Persian Gulf, who are also anxious to prove their Muslim credentials in the face of militant Iran's growing influence over their infuriated subjects.

In short a creditors strike, which in America present condition would be terminally devastating.

This will mean the bursting of the T-Bill bubble and with it any hope of success for a stimulus plan to save the US economy by printing more money. It might also cause America's creditors, such as China, to unload their dollar reserves. This would mean the collapse of the dollar and a galloping, Argentine style, inflation which would wipe out what little purchasing power America's middle class might still possess and leave all those on fixed incomes destitute.

"Impossible! They wouldn't dare!", you say.

If you don't believe that great disasters that everyone can see coming and would want to avoid can happen, think about the tragic summer of 1914, the lead up to World War One, that Barbara Tuchman so perfectly described in her best-selling masterpiece "The Guns of August".

Like then, a complex mechanism that we do not, perhaps cannot, fully understand, has been set in motion and as in classic Greek tragedies the character of the participants leads irremediably to their downfall. In this play Israel's attack on Gaza takes the role of Gavilo Princip. DS

Israel and what Barack Obama symbolizes

I fear the Israeli public is going to elect that maniac Binyamin Netanyahu on Feb. 10, and that will be the complete end of any 2-state solution, and we just have to live with a horrific Apartheid for decades, which will cause more conflict and further poison much of the world against the United States. Juan Cole

So, just to recap: It’s five to midnight and before the clock strikes 12 all we need to do is rebuild Fatah, merge it with Hamas, elect an Israeli government that can freeze settlements, court Syria and engage Iran — while preventing it from going nuclear — just so we can get the parties to start talking. Whoever lines up all the pieces of this diplomatic Rubik’s Cube deserves two Nobel Prizes. Thomas Friedman - New York Times

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The election of Barack Obama is bound to have a powerful effect on the Middle East and especially on Israel, perhaps for what he does, but certainly for the message the voters are sending in his person or more precisely in what his person symbolizes.

We cannot yet know what America's voters have actually voted for, but we know what they think they have voted for and although they may not realize it, what they think they have voted for sends a powerful message to Israel. A message which conflicts with Israel's very foundations.

Americans have voted for a person who belongs to no particular "tribe" or ethnic group, an amalgam of races and cultures: a person who is a symbol of some sort of "new man", freed from any historical or ethnic preconditioning. This "Adam" quality, perhaps more than any other, excited and continues to excite Americans and many others around the globe.

However this quality is in direct conflict with Israel's whole reason to exist.

If any people in the world have a long view of things, it is the Jewish people, and no people in the world have such a short memory as the Americans.

Israel is all about purity of pedigree and lineage, of maintaining the group intact. There are literally endless discussions in Israel on the subject, "who is a Jew ". I am not criticizing this, it has proven marvelously effective in preserving the Jewish identity over thousands of years (you don't hear much from the Hittites any more, do you?) and I am sure that thousands of years from now, when the United States is merely a subject for archeologists, there will be human beings whose customs and heritage will be recognizably Jewish. The time proven Jewish way may be far superior: America may only be a flicker on the screen of world history, but it must be true to its own light.

In his inaugural speech President Obama observed that 60 years ago his father would not have been served in a Washington restaurant. Americans, in electing Obama, have symbolized the repudiation of their own tribal history and traditions and have chosen to reinvent themselves. Israelis have chosen to reinvent themselves by embracing their own tribal history and traditions. What each country stands for is diametrically opposed to what the other stands for and their national trajectories are traveling in opposite directions.

To avoid being tiresome, only one example that could sum it all up: Israel is a country where a racial-religious qualification is needed to buy land. This simply cannot be squared with what the Americans voted for when they voted for Barack Obama.

I agree with Juan Cole, quoted above: the Israelis are probably going to elect the ultra right-wing thug Binyamin Netanyahu as their new prime minister and the two state solution which now shows clear signs of rigor mortis will begin to stink.

From that point on we are looking at a clear alternative of official apartheid or opportunistic ethnic cleansing as alternatives to the liquidation of the present "Jewish state", not necessarily the end of a state where Jews live comfortably, but the end of a so defined democratic "Jewish state".

I think that Netanyahu would be comfortable with either apartheid or ethnic cleansing although I think he would prefer the latter to the former. The question is: how are those who voted for what Barack Obama symbolizes supposed to have a "special relationship" with that? DS

America's mosaic (maps and discussion)

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Today, instead of pontificating, I'd like to ask readers opinions and conclusions after perusing the maps that I've stuck on here below. They are a map of the 2008 election results, county by county, a map of "purple America" from 2004 and a map of American's median income from 1999 (I haven't found any more recent maps, but I imagine they wouldn't be dramatically different).

Please take a look:



2008 election results - county by county



"Purple America" - 1999



Median family income - 1999

Right off the bat they look to me like a pre-war ethnic map of Bosnia, with the Serbs, Croats and Muslims all mixed up and only held together by Marshall Tito's iron hand.

Like this:



My "start a bar fight" proposition would be that easy, subprime type credit has been America's answer to "Marshall Tito" and that stagnant or shrinking incomes, without access to that easy credit (something that will probably last long beyond the present crisis) will produce great tension in America's mosaic.

Personally I think the income distribution chart is more important than the others as it is much easier to change your vote than to change your income.

In that map we see islands of wealth and archipelagos of poverty in a sea of neither one nor the other. My working hypothesis is that the (permanent) loss of the kind of credit that produced the bubble will be like a painkiller wearing off of someone who has been in a terrible accident and this sudden lucidity and access to agony will produce enormous political tensions.

I would be grateful for all opinions and, of course, but especially for those that are fact-filled and wonky. DS

On a wing and a prayer: a course in miracles

La Virgen del Rocio

One night a jet airliner explodes at 30,000 feet over the Atlantic and all alone, one passenger, strapped into his seat, finds himself falling like a stone out of the sky from amidst the flaming wreckage.

"Saint Francis save me!" he cries out in anguish.

Suddenly he finds himself suspended in the air some 20,000 feet over the moonlit ocean. "Oh thank you Saint Francis!" he exclaims, his heart overflowing with gratitude.

Out of the darkness of the night a deep voice asks him, "Is that Saint Francis of Assisi or Saint Francis Xavier?".

We leave him thinking over his reply.

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Yesterday I compared Obama's inauguration to the Spanish custom of parading images of the Virgin Mary around the street of parched villages to break severe droughts. I must assure readers that I meant no disrespect to Our Lady by this, only indicating the faith and fervor of the devotees gathered in Washington.

Although I am no longer a Catholic, if I ever really was one, I have, since I was a tiny child, an enormous and awed affection for and devotion to Mary. In any tight spot I would be most likely to mutter a Hail Mary, probably proceeded by a "Bismallah" and with a hearty "Hari Ram" for a chaser. I am ecumenically superstitious to a fault and fully understand and empathize with those faithful who packed the Mall in Washington yesterday.

However, this business of begging the intervention of Saints is a complicated affair: if done correctly it has often proven to be very efficient, but if not carried out with full attention to important details it will mostly prove entirely useless. The failure of most petitions can be laid to this sort of error of form and objective.

Heaven is apparently a very busy place with an immense and overworked bureaucracy composed of masses of venerable thisis and blessed thats led by a fast growing multitude of full saints, all of them with their own special, but often overlapping, areas of responsibility and multitasking to distraction, with no time to lose... and like the fellow in the story above, woe be to he that gets the address of his petition wrong.

Take for example the crisis in the American banking sector, most of whose members are now being described by experts as "zombie banks".

Who to pray to?

Spanish banks are under the patronage of Saint Charles of Borromeo, whose day, the fourth of November, is a holiday for all bank employees in the country. His patronage and protection must be most efficacious, as Spanish banks have proven to be the world's least affected by the crisis and in most cases are still highly profitable. However, it doesn't seem that Saint Charles of Borromeo protects banks of any other country than Spain. More's the pity.

Most ecclesiastical authorities that I have consulted favor the apostle Saint Matthew as the patron of bankers by default, as tax collecting was his daytime job. However as an apostle I would imagine that he might be too busy to pencil in the American crisis as Americans are very reluctant to pay taxes or to frequent tax collectors either.

There is an interesting alternative saint, one who may be, in actual fact, already on the case. This holy personage is well known as the patron saint of sailors but also has been known to intervene on behalf of pawnbrokers, prisoners and unmarried women, and yes, bankers too. This versatile and multifaceted saint is none other than Saint Nicholas, better known to most Americans as -- yes, you guessed it -- Santa Claus!

I think that the bailout of the financial sector already has this saint's fingerprints all over it. And from what I am reading about the new stimulus plan it seems sure that President Obama, better his wonders to perform, is placing himself and America's bankers under the protection and patronage of Saint Nicholas too.

Of course Americans have always worshiped Saint Nicolas and all his works with a fervor unmatched in all the world and it can be said that no other people in the world have put more faith, belief and trust in this saint.

Some scoffers of little faith may say that America's devotion to Saint Nicholas is the cause of all her troubles, but I am sure that he wont let America or Obama down in our hour of need. DS

The Night of the Living Un-Bush

...with Barack Obama, the man is the message. Mr Obama inspires not because of anything he says, but because of who he is. (...) People know that Mr Obama looks nice and speaks well, that he is black, that he opposed the Iraq war and that he believes in dialogue. They know, above all, that he is not President Bush. Gideon Rachman - Financial Times

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Symbols are of great value in troubled times.

In Spanish villages during long droughts, ancient images of the Virgin Mary believed to have miraculous powers are traditionally taken out of their alters in the churches and carried around the villages and their surrounding fields in a slowly swaying, majestic, incense-fumigated, procession: all in the hope it will rain.

The invoking of one Romanesque Virgin from the northern province of Asturias, in particular, "Our Lady of the Cave" (la virgen de la cueva), is considered especially effective. Every Spanish schoolchild knows the song, "Qué llueva, qué llueva! La virgen de la cueva".

Our Lady of the Cave is aided in her beneficent labors by the fact that Asturias is one of the rainiest regions in the entire Iberian Peninsula.

Today, we have inaugurated the Presidency of Barack Obama and the whole world, not just America, is waiting for it to rain. DS

Israel, America's tragic looking glass: some notes

John Ging is an ex-Army officer who worked in Rwanda during the genocide and was in the Balkans when ethnic cleansing took place. As one of the UN’s main men on the ground in Gaza, he says the current Palestinian situation is the worst he has ever encountered... Irish Times (hat to P. Weiss)

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As the waters of this unspeakably criminal tsunami momentarily recede and we can briefly assess the damage, push aside some smoking rubble, count the victims and simmer in our impotent rage, I'd like to share with you some of the material I have collected during these few days during which we have had our noses rubbed in so much, and such indigestible, horror.

When I began to work with the Internet in the mid 90s, I soon discovered the beauties of the collage of illustrative quotes from authoritative voices, complete with links.

Standing on the shoulders of giants, as it were, I even made a modest little business out of sending these collages to corporate clients with my comments attached and the buzz the comments produced led to my writing a weekly column in a major Spanish newspaper. I guess I'm another one of those little Internet stories.

So instead of pontificating about the horror of Middle East, today I'll take a step back, revert to default mode and do a collage with minimalist comments of mine own attached.

Except for China Matters and the clipping from the Irish Times, which I found on Philip Weiss's invaluable blog, all the commentators quoted are Jewish. For one of the most heartening developments in all this retched horror is the reaction of so many Jewish people in Israel, America and around the world, whose principals are principals no matter whose tribe is involved.

It was always clear that Israel was going to take advantage of the post-Bush/pre-anybody interregnum to attack one of its enemies. Remember when the possibility of an attack on Iran or Lebanon 2.0 were being chewed over? It turned out badly for the people of Gaza, but Iran & Syria are probably noting that all Israel could do in the end was beat up the little guy on its doorstep. China Matters

This brief review of Israel's record over the past four decades makes it difficult to resist the conclusion that it has become a rogue state with "an utterly unscrupulous set of leaders". A rogue state habitually violates international law, possesses weapons of mass destruction and practises terrorism - the use of violence against civilians for political purposes. Israel fulfils all of these three criteria; the cap fits and it must wear it. Avi Shlaim - Guardian

It is important that Jewish people are at the cutting edge of world outrage because Israel's still being admitted into civilized company after what has been perpetrated in Gaza is enough to fuel a hundred and one conspiracy theories no matter how far fetched and outre they might be.

Apartheid South Africa was never cut so much slack... Serbia was bombed into submission and Milosevic brought to trial, but it is hard to imagine that any Israeli will ever have to stand trial in The Hague, for what the entire world has witnessed.

But as Abba Eban was fond of saying about the Palestinians, the Israelis never miss an opportunity to miss an opportunity. As Immanuel Wallerstein points out:

Had Israel been serious about a two-state solution based on the so-called Green Line - the line of division at the end of the 1948-1949 war - it probably would have achieved a settlement.

Israel however was always one step behind. When it could have negotiated with Nasser, it wouldn't. When it could have negotiated with Arafat, it wouldn't. When Arafat died and was succeeded by the ineffectual Mahmoud Abbas, the more militant Hamas won the Palestinian parliamentary elections in 2006. Israel refused to talk to Hamas.

Time has finally run out on the "two state solution" and what might have been, will never now be. Israel has painted itself and the USA into a corner, from which it seems almost impossible for America to escape.

In my opinion only the reaction of America's Jewish community can save us from this nauseating Albatross without a tragic fracturing of our political culture.

Sadly, you see, Israelis see their Jewish state as a bone in the throat of Palestinians, not just historically, but still. They feel themselves, increasingly, in a desperate “existential” fight where no holds are barred now, because no holds will be barred later. Show weakness about what is yours, and you are a baby-step away from Bosnia. Which is, of course, what Serbians thought, and how "Bosnia" began. Bernard Avishai (hat to P. Weiss)

Throughout the Arab world, from end to end, there echoed the words of Hassan Nasrallah: The leaders of Egypt are accomplices to the crime, they are collaborating with the “Zionist enemy” in trying to break the Palestinian people. It can be assumed that he did not mean only Mubarak, but also all the other leaders, from the king of Saudi Arabia to the Palestinian President. Seeing the demonstrations throughout the Arab world and listening to the slogans, one gets the impression that their leaders seem to many Arabs pathetic at best, and miserable collaborators at worst.

This will have historic consequences. A whole generation of Arab leaders, a generation imbued with the ideology of secular Arab nationalism, the successors of Gamal Abd-al-Nasser, Hafez al-Assad and Yasser Arafat, may be swept from the stage. In the Arab space, the only viable alternative is the ideology of Islamic fundamentalism.

This war is a writing on the wall: Israel is missing the historic chance of making peace with secular Arab nationalism. Tomorrow, It may be faced with a uniformly fundamentalist Arab world, Hamas multiplied by a thousand. Uri Avnery

If Israel's goose isn't yet cooked, it is certainly ready to be tested with a fork. Here is how Professor Immanuel Wallerstein analyzes the resulting juices in an article entitled, "Chronicle of a Suicide Foretold: The Case of Israel".

Now, Israel has invaded Gaza, seeking to destroy Hamas. If it succeeds, what organization will come next? If, as is more probable, it fails to destroy Hamas, is a two-state solution now possible? Both Palestinian and world public opinion is moving towards the one-state solution. And this is of course the end of the Zionist project.

The three-element strategy of Israel is decomposing. The iron fist no longer succeeds, much as it didn't for George Bush in Iraq. Will the United States link remain firm? I doubt it. And will world public opinion continue to look sympathetically on Israel? It seems not. Can Israel now switch to an alternative strategy, of negotiating with the militant representatives of the Arab Palestinians, as an integral constituent of the Middle East, and not as an outpost of Europe? It seems quite late for that, quite possibly too late. Hence, the chronicle of a suicide foretold. Immanuel Wallerstein

The United States is well caught between a horrid rock and a tragic hard place. If America's most valued allies in the Middle East, the tushy licking Arab "moderate" regimes collapse and are replaced by Islamic republics, which is where Israel's hysterical barbarity is inevitably taking them, this will have a massively detrimental effect on America's standing in the world and might even collapse the dollar; however, if any US government attempts to pressure Israel meaningfully, then AIPAC and all it represents will surely pull out all the stops and use any tool that comes to their hands to destabilize that government... in the middle of the greatest economic crisis since the great depression.

That is the dilemma that President Obama will be facing by tomorrow evening. DS

Assessing George W. Bush

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Thinking it over, I have come to the tentative conclusion that Bush’s greatest virtue as a two term president of the United States of America was his verbal dyslexia.

Huh?

I ask readers to imagine for a minute what it would have been like if a president with Bush’s character, values, instincts and agenda had had the silver tongue and soaring rhetoric of a Barack Obama.

Doesn’t really bear thinking about, does it?

Now we have a president with the silver tongue and soaring rhetoric of a Barack Obama: we have Barack Obama.

We still don’t have a very clear or precise idea what his character, values, instincts and agenda are yet, because he has only been in public life for a short time and during the campaign he ably triangulated his positions.

But, of course, in time, we will.

Perhaps it is just as well.

In my opinion the USA is presently in “Humpty Dumpty” mode, where “all the King’s horses and all the King’s men” etc, etc. And with Barack Obama, at least this shattered mishagoss will be packaged with elegance and taste.

For it is one thing to hear Paul Anka sing, “I did it my way” and quite another to hear Frank Sinatra sing it. It’s still the same tacky song, but something of the depth and saudade of the world’s greatest saloon singer puts it over.

F’yaknowhaddamean. DS

What it's all about

Photo AmyPalko

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Sometimes it is possible to explain up an entire situation , no matter how complex, with only a few words. This is how Dimitri Orlov has masterfully summed up the present dilemma of the United States:

No matter what your political persuasion might be, there is simply no way that an economically insecure, badly educated, badly treated population can be made to thrive, and this sets the stage for some very bad economic performance. Dimitri Orlov

I think that those words should be hung up on the Washington Monument, in flashing neon lights, in time for Barack Obama's inauguration ceremony.

That is what it is all about really, developing people's potential: ignorant, unhealthy, stunted people cannot be either happy or productive. When people are just left hung out to dry they wither. This from BBC News:

The rapid mass privatisation which followed the break up of the Soviet Union fuelled an increase in death rates among men, research suggests.The UK study blames rapidly rising unemployment resulting from the break-neck speed of reform. The researchers said their findings should act as a warning to other nations that are beginning to embrace widespread market reform. The study features online in The Lancet medical journal. The researchers examined death rates among men of working age in the post-communist countries of eastern Europe and the former Soviet Union between 1989 and 2002. They conclude that as many as one million working-age men died due to the economic shock of mass privatisation policies. Following the break up of the old Soviet regime in the early 1990s at least a quarter of large state-owned enterprises were transferred to the private sector in just two years. This programme of mass privatisation was associated with a 12.8% increase in deaths. The latest analysis links this surge in deaths to a 56% increase in unemployment over the same period. However, it found some countries with good social support networks withstood the turmoil better than others.

The suffering that the American people are about to endure, or are already enduring, shouldn't be such a surprise, some people had identified many of the problems we have today several years ago. I was emptying some drawers yesterday when I came across an old article from the March 2003 Guardian, which shows that alarm bells were already going off even then.

The alternative interpretation looks at the effects of 20 years or so of financial deregulation on the demand for consumer and business credit, the size of the US trade deficit, the changing balance between investment in real assets as opposed to speculation, and the quality of corporate earnings. From this perspective, the US economy is in far worse shape now than it was in 1991, sustained only because a bubble in housing has taken the place of the bubble in stocks.While incomes were rising by a modest 2% last year, borrowing was going up by 9%, mainly because consumers were able to borrow on the back of house price increases. As one analyst puts it, you have to ask how sustainable an economy is when consumers are using their homes as cashpoint machines.(...) Like US consumers, companies appear to be in denial about the extent of these structural problems. Sooner or later, they will have to be rectified. Expansionary macro-economic policies help, but only in the way that pain-killers help a struggling athlete; by temporarily deadening the pain.
Larry Elliot- The Guardian, March 10, 2003

What could long term remedies be, beyond the "stimulus", now planned which will probably have the same effect that Larry Elliot describes above, the "pain-killers that momentarily deaden an athlete's pain."? David Walker, until just the other day and for ten years, America's chief accountant and another analyst who has been warning that the sky was falling for a long time, has this to say:

The US is at a critical crossroads. Our future will depend on actions taken within the next few years. We must turn the economy round and address the long-standing challenges associated with our entitlement programmes, spending policies, regulatory approaches and tax systems.(...) The president and Congress must put a process in place that will enable elected officials to reimpose tough statutory budget controls and reform our nation’s Social Security, Medicare, healthcare and tax systems. All these require significant reforms that Washington has delayed for too long. David Walker - Financial Times (the writer was head of the US Government Accountability Office from 1998 to 2008)

We must "address the long-standing challenges associated with our entitlement programs" and "reform our nation’s Social Security, Medicare and health care". When a bookkeeper talks about "reform" he usually means "cutting costs". How does cutting costs in pensions, and health care effect a population that is already "economically insecure, badly educated (and) badly treated".

Did you hear anybody talking about cutting defense spending?

Neither did I.

That millions of their fellow citizens are suffering inadequate health care and poor education seems to leave many Americans completely unfazed.

In Joshua Landis's blog today, I read a quote from Britain's great World War One poet, Wilfred Owen titled "Insensibility".

Wretched are they, and mean
With paucity that never was simplicity.
By choice they made themselves immune
To pity and whatever mourns in man
Before the last sea and the hapless stars

Because, finally, America, like every other country in the world is about people, isn't it?.. Because this, life itself, is all about people isn't it? ... Or isn't it? DS

Behold a dancing Russian bear

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A long time reader of this blog, RC of Puerto Rico, kindly sent me a link to a blog I had never heard of: "ClubOrlov", which is the work of a Leningrad born, Russian-American Engineer named Dimitri Orlov.

Thank you RC, because Orlov is very, very good.

Some of what he writes is so good that I found myself muttering, "Gee I wish I'd said that", while the ghost of Oscar Wilde whispered softly in my ear, "You probably will, David".

Without further adoo I'll clip some juicy bits from a post called "That Bastion of American Socialism" which prints out at seven A4 pages of Times Roman 12point in MS Word. However quite a few authors (Zakaria, Friedman, for example) say much less in books that run to hundreds of pages

Over the past few months the American mainstream chatter has experienced a sudden spike in the gratuitous use of the term "Socialist." It was prompted by the attempts of the federal government to resuscitate insolvent financial institutions.(...) there is nothing remotely socialist to Henry Paulson's "no banker left behind" bail-out strategy, or to Ben Bernanke's "buy one – get one free" deal on the US Dollar (offered only to well-connected friends) or to any of the other measures, either attempted or considered, to slow the collapse of the US economy. A nationalization of the private sector can indeed be called socialist, but only when it is carried out by a socialist government. In absence of this key ingredient, a perfect melding of government and private business is, in fact, the gold standard of fascism. But nobody is crying "Fascism!" over what has been happening in the US. (...) As a practical matter, failing at capitalism does not automatically make you socialist, no more than failing at marriage automatically make you gay. Even if desperation makes you randy for anything that is warm-blooded and doesn't bite, the happily gay lifestyle is not automatically there for the taking. There are the matters of grooming, and manners, and interior decoration to consider, and these take work, just like anything else.

Then there is a delicious paragraph where Orlov talks about Socialism in education:

Let us start with the observation that intelligence, and the ability to benefit from higher education, occur more or less randomly within a human population. The genetic and environmental variation is such that it is not even conceivable to breed people for high intellectual abilities, although, as a look at any number of aristocratic lineages will tell you, it is most certainly possible to breed blue-blooded imbeciles. Thus, offering higher education to those whose parents can afford it is a way to squander resources on a great lot of pampered nincompoops while denying education to working class minds that might actually soak it up and benefit from it. A case in point: why exactly was it a good idea to send George W. Bush to Yale, and then to Harvard Business School? A wanton misallocation of resources, wouldn't you agree? At this point, I doubt that I would get an argument even from his own parents. Perhaps in retrospect they would have been happier to let someone more qualified decide whether young George should have grown up to incompetently send men into battle or to competently polish hub caps down on the corner.

That is about the best short description of the failure of the US educational system that I have ever seen.

Then in one paragraph of blazing economy he positively eviscerates and disposes of every conservative argument that has been around for the last thirty years.

You might also think that it is unfettered free enterprise that has made mainstream American society the economically stratified, downwardly mobile and economically insecure place that it is, which is just as it should be. Alas, that argument is no longer plausible: the flip side of a socialist defeat is a capitalist defeat. No matter what your political persuasion might be, there is simply no way that an economically insecure, badly educated, badly treated population can be made to thrive, and this sets the stage for some very bad economic performance. As the economy collapses and economic losses mount, social and political instability become inevitable.

Then he lets some air out of the Obama balloon:

Currently, a great many people are filled with hope that the incoming Obama administration will bring much-needed change. Unfortunately, Mr. Obama inherits an office much tainted by his predecessor, whose attempt at securing his legacy included a clandestine trip to Baghdad where, when he attempted to speak of victory, someone threw shoes at him and called him a filthy dog, all on international television. The US presidency is now a carnival side show(...) Due to a certain quirk of the national character, most Americans have trouble understanding that honor is something you lose exactly once.(...) There are countries, in the Muslim part of the world especially, where honor is of paramount importance, and having the highest office in the land turned into a laughing-stock is not conducive to securing their support.

After that Orlov dispatches Obama's stimulus plans and then, in a grand finale worthy of Jonathan Swift he makes a "Modest Proposal" on how to bring socialism to America.

But that you are going to have to go and read for yourselves.

Have fun! DS

The Crisis Rant

Temptation of St Anthony
Hieronymus Bosch
Madrid, Museo del Prado

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Gideon Rachman, the Financial Times chief foreign affairs columnist has written a very fine column called, "Generation L and its fearful future". In Rachman's lexicon "L" stands for "lucky". He writes:

Those of us born in western Europe or the US have never really experienced hard times. Our parents and grandparents lived through world wars and the Great Depression. We have had decades of peace and prosperity.

Could that change? Perhaps Generation L has just had the luxury of an extended “holiday from history”, which is now coming to an end.

I think Rachman has hit the zeitgeist nail on the head here. I think my generation is probably the luckiest group of individuals in the history of humanity, even sinister things like the atom bomb worked in our favor.

I for one having been born an American at the end of WWII have always had a deep affection for the atom bomb.

Without the restraining terror the atom bomb, the USA and the USSR would have surely fought WWIII with highly developed "conventional weapons" and judging what the contending armies were able to achieve with much more primitive stuff in World Wars One and Two, most of us of military age, in both countries probably including me, would have been killed or maimed. So I am all for nuclear proliferation: the more the merrier. I get the feeling that those, like the USA and Israel, who are afraid of others having the bomb are precisely those that would like to go to war. The great lesson of my youth is that mutual nuclear terror means peace.

If I were to pick a nit with Gideon Rachman, I would say that "Generation Ls" golden age really ends not now, but with the oil embargo and stagflation of the 70s and 80s. That was really the end of the genuine good times. That is when the economy lost its balance.

Intense smoke and mirrors have been applied since then to maintain the patient's healthy appearance… What we have now reminds me of the last scenes of Visconti's "Death in Venice", where the aging Dirk Bogarde goes into a barber shop and gets his hair and eyebrows dyed and his face powdered and rouged in order to enamor the teasing Tadzio; then he goes off to the beach and with the heat melting the hair dye and mixing with his sweat and the rouge, he has a heart attack in his beach chair and dies.

Dirk Bogarde would be the economy, the barber would be Alan Greenspan and Tadzio would be "the pursuit of happiness".

Now a new team of former Clintonites join with the providential Barack Obama to pump up the corpse with massive dose of economic Viagra to see if the old thing (the economy) will stand up just one more time.

Tadzio will probably turn out to be the destruction of the dollar, triple digit inflation and and a Wiemar America.

But I am not dismayed or depressed by all of this. Like Rachman, I believe that:

Long periods of peace and prosperity, however, are not always terribly interesting. Amid all the economic gloom, I do not think I am alone in feeling an odd excitement at the sense of living in uncertain and historic times.

Frankly I think we need a good crisis… we need to tear out our hair in clumps and beat our chests and rend our garments and cover ourselves with ashes and scrape at our sores with a pot shard.

After the years of this bloated and fictitious, credit financed “prosperity”, crawling with neo cons and plenty of vieux cons, we need the mental and cultural equivalent of a high colonic enema.

Who knows, maybe somebody will finally write a truly great book again. DS

Israel, the Ponzi state

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A Ponzi scheme consists in the perpetrator offering unrealistic returns on the capital invested and then using the assets of the later investors to pay high profits to the earlier ones. It's success depends on the new investors bringing more and more even newer ones into the game. It all falls apart when people start asking awkward questions and demanding their money back. This causes a panic and the entire pyramid collapses.

Bernard L. Madoff has become a household word with his Ponzi-Pyramid scheme that has bilked billions of dollars from the world's wealthy. Many if not most of Madoff's victims are Jewish. They trusted him and he betrayed them.

My thesis is that the state of Israel is a huge Ponzi scheme: a geo-strategic Ponzi, a military-Ponzi and finally, or perhaps first of all, a moral-Ponzi.

How is Israel a "Ponzi scheme"?

Israel's first "selling point", the much quoted and much disputed old saw, "a land without a people for a people without a land", which, whoever actually said it first, has led to much ethnic cleansing, is the nucleus of the entire "scam". Although in the light of the "New Historians" the phrase is not being used so much anymore, when I lived in Israel in the 1970s, soon after the Six Day War, this phrase was repeated to me endlessly.

Zionism's second and most powerful selling point and the final, by default, defense of everything that Israel does, is that the pain that Europeans inflicted on the Jewish people entitles the Jewish people to inflict pain on a third party, the Palestinians, who played no part whatsoever in the Shoa. This has to be the most curious reading of the law of Talion in all its endless history.

"A land without a people for a people without a land" presupposes that some people are entitled to be more visible than others, have more rights than others, are more "equal" than others. No democracy can be built on sands like these. Take the finest people in the world, and Israel has taken some of the finest, and then flatter, force, entice, fool or trick them into playing out that phrase and despite the quality of the players, nothing but evil can result.

What is happening today in Gaza flows naturally from that phrase.

Why is all this a fraud?

The victims of the Israeli Ponzi are many...

In physical pain, and humiliation, the Palestinians are the greatest victims of course, but immense will be the pain of the Jewish people all over the world as they awake to find that what was sold to them as a safe refuge, a place of regeneration and a "light unto the gentiles", has in fact, become a death trap and a moral sewer of corrupt politicians committing sordid common crimes of every sort while simultaneously bombing entrapped civilians.

When they find that their refuge and light has become a place where the Jewish people's name is being dirtied for the ages, then that awakening will finally have a much more lasting effect on our western world then rivers of innocent blood. In many ways the Jewish people have always been and continue to be the "mirror soul" of western culture, and the tarnishing of that mirror deforms us all.

I also said that Israel is a geo-political and military Ponzi too.

After the Six Day War and especially after the Yom Kippur war Israel and its military have been sold in the USA as an essential American strategic asset in the Middle East, when in fact America's support of Israel's military machine is probably the greatest, perhaps the only obstacle that America faces in having normal relations with the Muslim world.

The Gaza operation is so sordid and criminal and the images of civilian suffering so horrifying, that to be associated with them drains any life out of the soft power that America may still possess.

Gaza has been a wake up call for even the most sober of strategists.

One of America's most highly respected strategic thinkers, Anthony H. Cordesman, writing for the Center for Strategic and International Studies:

Has Israel somehow blundered into a steadily escalating war without a clear strategic goal or at least one it can credibly achieve? Will Israel end in empowering an enemy in political terms that it defeated in tactical terms? Will Israel’s actions seriously damage the US position in the region, any hope of peace, as well as moderate Arab regimes and voices in the process?

To be blunt, the answer so far seems to be yes. (...) As we have seen all too clearly from US mistakes, any leader can take a tough stand and claim that tactical gains are a meaningful victory. If this is all that Olmert, Livni, and Barak have for an answer, then they have disgraced themselves and damaged their country and their friends. If there is more, it is time to make such goals public and demonstrate how they can be achieved. The question is not whether the IDF learned the tactical lessons of the fighting in 2006. It is whether Israel’s top political leadership has even minimal competence to lead them

In short Israel is in the process of destroying any future the United States might still have of influencing events in its favor in the Middle East.

Perhaps there is a window opening briefly where Barack Obama may have the opportunity, by simply washing his hands, to rid the USA of this horrible problem... perhaps by just giving the Israelis enough rope, they may end up hanging themselves.

Read this by Gideon Levy in today's Haaretz:

This past weekend, the UN and the Human Rights Commission in Geneva have demanded an investigation into war crimes allegedly perpetrated by Israel. In a world in which Bosnian leaders and their counterparts from Rwanda have already been put on trial, a similar demand is likely to arise for the fomenters of this war. Israeli basketball players will not be the only ones who have to shamefully take cover in sports arenas, and senior officers who conducted this war will not be the only ones forced to hide in El Al planes lest they be arrested. This time, our most senior statesmen, the members of the war kitchen cabinet, are liable to pay a personal and national price.

I don't write these words with joy, but with sorrow and deep shame. Despite all the slack the world has cut us since as long as we can remember, despite the leniency shown toward Israel, the world might say otherwise this time. If we continue like this, maybe one day a new, special court will be established in The Hague.

A very slender hope, indeed.

I think Barack Obama or any other president of the USA that I can think of, or even imagine, would do anything in their power, up to and including invading Holland in order to prevent Levy's scenario from ever taking place.

However, if Obama does allow a Hague trial of the Israeli "kitchen cabinet" to occur (and why not include Bush, Cheney and Rumsfeld while they are at it?) I will be forced to conclude that Obama's admirers are not blowing smoke out of their hinder parts, but that he is, in fact, the great man they insist he is. DS

Against the genocide of Gaza, in Madrid

Madrid 01/11/09

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There was a big demonstration in Madrid today against Israel's massacre of Gaza, with an estimated crowd of 250,000 people.

The demonstration marched behind a banner that read, "Paremos el genocidio palestino", "Let's end the Palestinian genocide".

It was a cold morning bathed in Madrid's amazingly beautiful January light. My wife and I went and I took a couple of pictures. I hope that it did some good. DS

Naomi Klein advocates boycotting Israel - Guardian

After viewing the video clip from the BBC read this snippet from Naomi Klein's article in the Guardian.

It's time. Long past time. The best strategy to end the increasingly bloody occupation is for Israel to become the target of the kind of global movement that put an end to apartheid in South Africa. In July 2005 a huge coalition of Palestinian groups laid out plans to do just that. They called on "people of conscience all over the world to impose broad boycotts and implement divestment initiatives against Israel similar to those applied to South Africa in the apartheid era". The campaign Boycott, Divestment and Sanctions was born.

Every day that Israel pounds Gaza brings more converts to the BDS cause - even among Israeli Jews. In the midst of the assault roughly 500 Israelis, dozens of them well-known artists and scholars, sent a letter to foreign ambassadors in Israel. It calls for "the adoption of immediate restrictive measures and sanctions" and draws a clear parallel with the anti-apartheid struggle. "The boycott on South Africa was effective, but Israel is handled with kid gloves ... This international backing must stop."

Yet even in the face of these clear calls, many of us still can't go there. The reasons are complex, emotional and understandable. But they simply aren't good enough. Economic sanctions are the most effective tool in the non-violent arsenal: surrendering them verges on active complicity.(...) The world has tried what used to be called "constructive engagement". It has failed utterly. Since 2006 Israel has been steadily escalating its criminality: expanding settlements, launching an outrageous war against Lebanon, and imposing collective punishment on Gaza through the brutal blockade. Despite this escalation, Israel has not faced punitive measures - quite the opposite. The weapons and $3bn in annual aid the US sends Israel are only the beginning. Throughout this key period, Israel has enjoyed a dramatic improvement in its diplomatic, cultural and trade relations with a variety of other allies. For instance, in 2007 Israel became the first country outside Latin America to sign a free-trade deal with the Mercosur bloc. In the first nine months of 2008, Israeli exports to Canada went up 45%. A new deal with the EU is set to double Israel's exports of processed food. And in December European ministers "upgraded" the EU-Israel association agreement, a reward long sought by Jerusalem.

It is in this context that Israeli leaders started their latest war: confident they would face no meaningful costs. It is remarkable that over seven days of wartime trading, the Tel Aviv Stock Exchange's flagship index actually went up 10.7%. When carrots don't work, sticks are needed.

This is an idea whose time has certainly come. DS

Annus horribilis: I can get it for you wholesale

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Here are the two leading stories in today's "Jewish Daily Forward", which is probably America's oldest and certainly its most prestigious Jewish community newspaper.

Peace Groups Lose First Major Gaza Challenge On Capitol Hill
As Israel’s military campaign in Gaza entered its second week, Capitol Hill became the latest battleground where Jewish hawks and doves are trying to shape the American response to the ongoing violence. Dovish groups bombarded lawmakers with calls and e-mails in an attempt to influence the wording of pro-Israel resolutions being shaped in the House and Senate. The groups’ line in the sand on those resolutions was straightforward: Unless the House and Senate included a call for an immediate cease-fire, the dovish groups would call on their supporters to actively oppose them. For the Jewish peace camp, the first Middle East crisis of the new Congress and administration was an opportunity to flex its muscles and show presence on the national scene. But in the end, they lost.

And

AJCongress Crippled by Madoff Scandal
One of the Jewish community’s most storied national organizations revealed that it has been gutted by the financial collapse of investor Bernard Madoff, losing the vast majority of its endowment. Officials at the 90-year-old American Jewish Congress disclosed that apparent fraud at Madoff’s investment firm had cost the organization roughly $21 million of the $24 million in endowments that supported the AJCongress and its programs.(...) It’s ironic that the Madoff scandal, with its tales of exclusive country club life and high-priced international hedge funds, has been so destructive to an organization that was founded to be the voice of the Jewish masses. The AJCongress was founded in 1918 and became a populist counterbalance to the American Jewish Committee, which was dominated by the wealthy and conservative German-Jewish establishment. Under the leadership of its legendary founder, Rabbi Stephen S. Wise, the AJCongress was one of the first national organizations to support Zionism and to protest the Nazi regime, and it established a reputation for being politically liberal. After World War II, it made its mark as an active litigant on church-state issues and civil rights.

When these two stories are juxtaposed in The Forward, it seems to me that a certain American-Jewish "golden age" is coming to an end, one whose beginning we might put arbitrarily in World War One, when financier Bernard Baruch became an adviser to president Wilson and the chairman of the War Industries Board, or perhaps in 1932 when Herbert Hoover named Benjamin Cardozo to the US Supreme Court... or maybe even a bit earlier in 1924 when composer George Gershwin premiered his "Rhapsody in Blue".

We are talking about a golden age of the Jewish diaspora that compares favorably with those of Babylon, Al-Andalus or Wilhelmine Germany.

More than a golden age, a love affair.

It is impossible to exaggerate the significance and harmful consequences of this disenchantment and the effects it will have on the fabric of American life, cultural, social and political in years to come. DS

Annus horribilis: (Clarification)

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I get a feeling that my last post,"Annus horribilis... and you are pretty cute yourself" may have been so chock full of goodies and long winded quotes that some of my readers may have had a bit of trouble seeing just what I was driving at, so today I'll try to be more concise and to the point.

I am coming to believe that at the bottom of the crisis is the creeping impoverishment of the once universally envied American middle class; this impoverishment has been brought on by an American lead revolution in productivity, which has made American workers themselves redundant except as consumers. This process resembles the flight of a legendary bird that flying in ever tighter concentric circles, finally flies up its own behind and disappears.

The communications revolution of the Internet, which makes it possible for Indian and Bangladesh knowledge workers to do the back office work of the American multinationals and for Chinese factory workers to produce most of the world's hard goods at amazingly low prices, has left the American middle class with only the universal role of "consumer of last resort". How does that play?

Since today's Americans are no longer much needed for useful work, they have to be loaned money from the earnings and savings of those around the world who now do that real work, in order for them to be able to buy the things those workers and savers produce. If Americans ever stop borrowing money to buy all of this, or if other people stop lending it to them, then the world will collapse... Or so the story goes. That is about as an encapsulated summing up of the situation as you are likely to find anywhere.

First, lets look at the impoverishment part. In my last post I quoted The Atlantic's James Fallows at length. Today I'll limit myself to one paragraph:

Half this country's households live on less than $50,000 a year. That sounds like a significant improvement from the $44,000 household median in 2003. But a year in private college now costs $83,000, a day in a hospital $1,350, a year in a nursing home $150,000—and a gallon of gasoline $9. Thus we start off knowing that for half our people there is no chance—none—of getting ahead of the game. James Fallows

Now, lets have a quick look at how the "working poor" can consume all they must consume in order for the world to survive:

Today’s global crisis was triggered by the collapse of the U.S. housing bubble, but it wasn’t caused only by it. America’s credit excesses were in residential mortgages, commercial mortgages, credit cards, auto loans and student loans. Nouriel Roubini

Here follows the Financial Times chief economist, Martin Wolf summing it all up and projecting what will probably happen:

What makes rescue so difficult is the force that drove the crisis: the interplay between persistent external and internal imbalances in the US and the rest of the world. The US and a number of other chronic deficit countries have, at present, structurally deficient capacity to produce tradable goods and services.(...) (This)means that US rescue efforts need to be big enough not only to raise demand for US output but also to raise demand for the surplus output of much of the rest of the world.(...) Now think what will happen if, after two or more years of monstrous fiscal deficits, the US is still mired in unemployment and slow growth. People will ask why the country is exporting so much of its demand to sustain jobs abroad. They will want their demand back. Martin Wolf - Financial Times

In plain language, the US government is going to print a lot of money (lots and lots) and hope that it gets into the hands of American consumers so that they can buy Chinese goods in the hopes that the Chinese don't sell off their US treasury bonds and destroy the dollar (think a hundred dollar cardboard cup of coffee in McDonald's, think granny spending her month's pension on a bucket of KFC). If this doesn't work, Wolf thinks the results will be catastrophic:

Once the integration of the world economy starts to reverse and unemployment soars, the demons of our past - above all, nationalism - will return. Achievements of decades may collapse almost overnight.

What I don't have clear is exactly whose "nationalism" it is that Wolf is talking about. As far as I know Americans are, and always have been, very nationalistic, except that they call themselves "patriotic", and only when other people are patriotic do they call it "nationalistic"... I confess that I fail to see much difference and since Wolf is not American, I'm not sure what he means.

In my opinion those are the different forces that are pulling and tugging the situation into one shape or another and what the final shape will be depends on what or who tugs the most.

Optimism or pessimism?

If you think it would be great if things had stayed the way they were, then you should be pessimistic. If you think things sucked the way they were and would like to see things change, then you can be optimistic. Things are going to change anyway and, who knows, they might end up better. DS

Annus horribilis... and you are pretty cute yourself

"My bucket's got a hole in it, and I can't buy no beer"
Hank Williams

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I am getting the feeling that we are entering the most fascinating period since the Second World War, and we are entering it without a road map... if there ever was a road map. Part of me is excited by the idea of finally seeing some meaningful political thought and action and the rest of me is just plain scared.

Nobody seems to know what's going on or when the waves of the tsunami are going to sweep over us. We know how the crisis reads, but we have yet to really see how it plays.

Max Hastings writes in The Guardian:

What seems most striking about the credit crunch is that it reduces most people to silence, because they find its implications and possible solutions beyond their comprehension. It is rendered especially baffling because, metaphorically speaking, no bombs are falling. Shoppers still pack suburban malls, cars crowd motorways, passengers throng airports, the lights stay on. Thus far, for all except some hundreds of thousands who have already lost their jobs, only statistics reveal the bad news. The implications have yet to work through into real life. There seems an overwhelming public mood of fatalism. Anger must follow, sooner or later, and even perhaps social unrest. But this will come only when the consequences literally reach home. Meanwhile, number blindness has overtaken most of us. Max Hastings - Guardian

The huge stimulus plans look just like inflating another bubble to me... it was easy credit and low interest rates that created the mess in the first place

I find myself agreeing with some of the super-orthodox economists that think that all this will lead to hyperinflation and with it Wiemar-like destruction of the middle class which leaves a debt that future generations will curse all their lives or simply refuse to pay... And either choice will have catastrophic consequences.

I'd like to present a little collage of excerpts from articles that for me, alone and together, go some way in summing up the economic situation and the zeitgeist today.

First a well observed, artistic even, "slice of life", from Peggy Noonan:

At a certain point in the '00s, I began to notice, on the east side of Manhattan, that the 3-week-old infants, out for the first time in their sleek black Mercedes-like strollers, were amazingly, almost alarmingly, perfect. Perfect round heads, huge perfect eyes, none of the dents, bruises and imperfections that are normal and that tend to accompany birth. I would ask friends: Why are babies perfect now, how did that happen? The answers were the usual: a healthy, well-fed populace, etc. Then a friend said: "These are the children of the scheduled C-sections of the affluent. They are scooped out, perfect." They were little superbabies whose handsome, investment banking, asset-bundling, financial-instrument-creating parents commanded even Nature. Peggy Noonan- Wall Street Journal

Let's move farther into this with a quote from an article by Noam Chomsky on the election that, as always, should be read by anyone not satisfied with the pablum handed out by mainstream analysts. Here Chomsky talks about the recession-cum-depression and the president-elect's economic "new" team:

The power of financial institutions reflects the increasing shift of the economy from production to finance since the liberalization of finance in the 1970s, a root cause of the current economic malaise: the financial crisis, recession in the real economy, and the miserable performance of the economy for the large majority, whose real wages stagnated for 30 years, while benefits declined. The steward of this impressive record, Alan Greenspan, attributed his success to "growing worker insecurity," which led to "atypical restraint on compensation increases" - and corresponding increases into the pockets of those who matter. His failure even to perceive the dramatic housing bubble, following the collapse of the earlier tech bubble that he oversaw, was the immediate cause of the current financial crisis, as he ruefully conceded.(...) Obama's transition team is headed by John Podesta, Clinton's chief of staff. The leading figures in his economic team are Robert Rubin and Lawrence Summers, both enthusiasts for the deregulation that was a major factor in the current financial crisis. As Treasury Secretary, Rubin worked hard to abolish the Glass-Steagall act, which had separated commercial banks from financial institutions that incur high risks. Economist Tim Canova comments that Rubin had "a personal interest in the demise of Glass-Steagall." Soon after leaving his position as Treasury Secretary, he became "chair of Citigroup, a financial-services conglomerate that was facing the possibility of having to sell off its insurance underwriting subsidiary... the Clinton administration never brought charges against him for his obvious violations of the Ethics in Government Act." Rubin was replaced as Treasury Secretary by Summers, who presided over legislation barring federal regulation of derivatives, the "weapons of mass destruction" (Warren Buffett) that helped plunge financial markets to disaster. He ranks as "one of the main villains in the current economic crisis," according to Dean Baker, one of the few economists to have warned accurately of the impending crisis. Placing financial policy in the hands of Rubin and Summers is "a bit like turning to Osama Bin Laden for aid in the war on terrorism," Baker adds. The business press reviewed the records of Obama's Transition Economic Advisory Board, which met on November 7 to determine how to deal with the financial crisis. In Bloomberg News, Jonathan Weil concluded that "Many of them should be getting subpoenas as material witnesses right about now, not places in Obama's inner circle." About half "have held fiduciary positions at companies that, to one degree or another, either fried their financial statements, helped send the world into an economic tailspin, or both." Is it really plausible that "they won't mistake the nation's needs for their own corporate interests?" He also pointed out that chief of staff Emanuel "was a director at Freddie Mac in 2000 and 2001 while it was committing accounting fraud." Noam Chomsky

And back in 2005, James Fallows wrote an astoundingly prophetic piece called Countdown to a Meltdown that makes Nouriel Roubini sound like Little Mary Sunshine:

Half this country's households live on less than $50,000 a year. That sounds like a significant improvement from the $44,000 household median in 2003. But a year in private college now costs $83,000, a day in a hospital $1,350, a year in a nursing home $150,000—and a gallon of gasoline $9. Thus we start off knowing that for half our people there is no chance—none—of getting ahead of the game. And really, it's more like 80 percent of the public that is priced out of a chance for future opportunity. We have made a perfect circle—perfect in closing off options. There are fewer attractive jobs to be had, even though the ones at the top, for financiers or specialty doctors, are very attractive indeed. And those who don't start out with advantages in getting those jobs have less and less chance of moving up to them. Jobs in the middle of the skill-and-income distribution have steadily vanished if any aspect of them can be done more efficiently in China, India, or Vietnam. The K-12 schools, the universities, the ambitious research projects that could help the next generation qualify for better jobs, have weakened or dried up.39 A dynamic economy is always losing jobs. The problem with ours is that we're no longer any good at creating new ones. America is a less attractive place for new business because it's a less attractive place, period.40 In the past decade we've seen the telephone companies disappear. Programming, data, entertainment, conversation—they all go over the Internet now. Pharmaceuticals are no longer mass-produced but, rather, tailored to each patient's genetic makeup. The big airlines are all gone now, and much of publishing, too. The new industries are the ones we want. When their founders are deciding where to locate, though, they'll see us as a country with a big market—and with an undereducated work force, a rundown infrastructure, and a shaky currency. They'll see England as it lost its empire. They'll see Russia without the oil reserves, Brezhnev's Soviet Union without the repression. James Fallows: Countdown to a Meltdown - Atlantic

What Chomsky and Fallows are talking about has more the look of a systemic crisis and not just a recession. Some, like Niall Ferguson, think that the United States is better positioned than other countries to weather the storm... this is how he imagines Obama's New Years message in 2010:

The "unipolar moment" was over, no question. But power is a relative concept, as the president pointed out in his last press conference of the year: "They warned us that America was doomed to decline. And we certainly all got poorer this year. But they forgot that if everyone else declined even further, then America would still be out in front. After all, in the land of the blind, the one-eyed man is king." And, with a wink, President Barack Obama wished the world a happy new year. Niall Ferguson

I think Ferguson is whistling past the graveyard myself. I don't think that any country in world history is less prepared than the citizens of the United States of America: ideologically, culturally or morally for a serious failure of the capitalist system, less prepared for a failure which destroys social mobility and leaves a pauperized ex-middle class to carry wood and draw water for the super-rich that will float above the disaster, ... having the American dream chewed up and spat in their faces will finally mean blood. Of that I have no doubt.

Some observers predict that the global economic crisis will lead to "unrest" in Russia and China and this unrest will lead to greater "democracy" and "liberalization"...

They say this while the USA is effectively nationalizing banks and the auto industry and none of these observers seem to take into account that there might still be a "Communist" wing of the Chinese Communist Party or remember, in case the "villain" Putin falters, that Russia's largest opposition party is the Communist Party. I think the Chinese Communist Party could shift gears without missing a beat. Many if not most Russians already seem quite nostalgic for the good old days.

"Really-existing socialism", as it was called was dull, repressive and gray, but it guaranteed employment, housing and education to the entire population: nobody slept in the street or lacked medical care... "They pretend to pay us and we pretend to work" was how Iron-Curtain wags described the system. With double digit unemployment that might start to look like a pretty good deal again... and not just in Russia and China.

The greatest challenge in foreseeable future may be to keep the need for social justice of some sort compatible with an acceptable degree of freedom of speech and association.

In this line I'd close these reflections with this quote from my favorite historian Eric Hobsbawm:

"None of the major problems facing humanity in the 21st century can be solved by the principles that still dominate the developed countries of the west: unlimited economic growth and technical progress, the ideal of individual autonomy, freedom of choice, electoral democracy. As is evident in the case of the environmental crisis, facing these problems will require in practice regulation by institutions, in theory a revision of both the current political rhetoric and even the more reputable intellectual constructions of liberalism. The question is can this be done within the framework of the rationalist, secularist and civilised tradition of the Enlightenment. As for left vs right, it will plainly remain central in an era which is increasing the gap between haves and have-nots. However, today the danger is that this struggle is being subsumed in the irrationalist mobilisations of ethnic or religious or other group identity." Eric Hobsbawm, historian - Prospect Magazine - March, 2007

Hobsbawm is very old, when he dies I don't know how I'll go on... I survived Edward Said's passing with difficulty, but Hobsbawm? May Noam Chomsky live a hundred years. DS